Annual Report and Financial Statements 2021
Responsibly supporting
the energy transition
for the benefit of all
www.afentraplc.com
Afentra plc (‘Afentra’ or the ‘Company’), together with its subsidiary undertakings (the
‘Group’), is an upstream oil and gas Company listed on the AIM market of the London
Stock Exchange (AIM:AET).
The Company has a strategy built around achieving scale through the acquisition of
operated and non-operated production assets and discovered resources resulting from
the accelerating energy transition in Africa, where the Company and its management has
extensive technical, operational and commercial experience.
The Company currently has the high potential onshore Odewayne exploration block that
is operated by Genel Energy, where its 34% interest is fully carried.
CONTENTS
Introduction
Overview
Purpose
Afentra’s Approach
Chairman’s Statement
Strategic Report
Market Review
Geographic Focus
Business Model
Chief Executive Officer’s Statement
Criteria for Value Creation
Asset Summary
Financial Review
Our Stakeholders
Business Risk
Sustainability
Corporate Governance
Board of Directors
Statement of Corporate Governance
Audit Committee Report
Nominations Committee
Remuneration Committee Report
Extractive Industries Transparency Initiative
Directors’ Report
Statement of Directors’ Responsibilities
Group Accounts
Independent Auditors’ Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes In Equity
Consolidated Statement of Cash Flows
Company Statement of Financial Position
Company Statement of Changes In Equity
Company Statement of Cash Flows
Notes to the Financial Statements
Definitions and Glossary of Terms
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Professional Advisors
100
1Annual Report and Financial Statements 2021 Introduction
The Global Energy Transition will take time, with hydrocarbons being an essential part
in the overall energy mix for years to come. It is therefore vitally important that the
industry responsibly manages what has already been found, by demonstrating operational
excellence and environmental stewardship through the transition, as assets change hands
from divesting IOCs and NOCs to acquiring independents.
The socio-economic impact of the energy transition in Africa needs to be considered
alongside the climate impact to deliver a just transition for the countries and people of Africa.
Afentra was formed to deliver this balance and benefit all stakeholders in the process.
Highlights
Strategic
Operations
• Established a new Executive team and Board,
• Submitted a non-binding Expression of Interest
introduced new institutional and high net worth
shareholders.
to Sonangol EP (‘Sonangol’) to purchase
interests in Block 3/05 and Block 23 in Angola.
• Rebranded Sterling Energy to Afentra (‘African
Energy Transition’) with a strategic imperative
of capitalising on opportunities resulting from
the accelerating energy transition on the African
continent.
• The Company continued to support the
Operator of the Odewayne block, Somaliland,
in progressing the technical understanding of
the block; and continued to review its technical
assessment and outlook on block prospectivity.
• Established key focus areas with a comprehensive
strategy to capture production and development
assets in Africa and create value for all stakeholders.
• Built a small, focused team with a history of
identifying and acquiring high quality assets, to
rapidly assess business development opportunities
technically, operationally and commercially.
• Developed a robust Governance and ESG
framework to support future growth ambitions.
Afentra plc
2 Financial
Cash resources net to the Group at 31 December 2021
Adjusted EBITDAX1: Loss for the Group
$37.7 million
(2020: $42.7 million)
$2.0 million
(2020: $761k loss)
• The Group remains debt free and fully carried for Odewayne operations (Third and the Fourth Period).
Post year end
•
In April, Afentra named preferred bidder to purchase interests in Block 3/05 and Block 23.
• Afentra progressing final due diligence ahead of finalising Sales and Purchase Agreement (‘SPA’) with Sonangol.
1 defined within the definitions and glossary of terms on pages 98 and 99.
Annual Report and Financial Statements 2021
3 4Afentra plc Overview
Year ended 31 December 2021
5Annual Report and Financial Statements 2021 Purpose
Effecting sustainable change
Our purpose is to support the African energy transition as a responsible, well managed independent,
enabling the continued economic and social development of African economies and bridging the gap to
other/renewable forms of energy.
Our enabling role in this connected energy ecosystem is to access, redevelop and unleash the full potential of
existing producing fields or undeveloped discoveries that no longer fit portfolios of major companies. We will
do this in a safe, responsible and sustainable manner. By investing in the region, empowering our people and
working with our partners, we can positively impact local economies and deliver significant economic returns
to all stakeholders.
Mission
Our mission is to be the trusted partner of both IOCs and host governments in the divestment of “legacy”
assets. By managing these assets responsibly, we turn these fields or discoveries into profitable assets by
applying focus, innovation, efficient operating practices and smart commercial arrangements. We use our
approach to unleash the full asset potential whilst also reducing carbon emissions, promoting growth through
employment and facilitating socio-economic development.
Defining legacy assets
Producing fields or undeveloped discoveries that:
• May no longer fit with a company’s strategy in Africa
• May need investment, regeneration or upgrading
• May be sub-economic for larger companies
6Afentra plc Our cultural framework
Afentra’s cultural framework outlines our core principles, philosophies and values that guide our behaviours
and enables us to drive our business forward and deliver on our purpose.
Principles
Values
Approach
Impact
These define our core beliefs
that connect and resonate
strongly with the personal
values of the Afentra team and
those that work alongside us:
These build on our principles
and define how we all behave.
They describe qualities we
always strive for and consider
as the right way to do things:
This defines our core
operating philosophy and
business approach and is
heavily influenced by our
principles and values:
Afentra’s positive impact will
be driven by these principles,
values and approach:
Be respectful
Be transparent
Be inclusive
Be authentic
Inspire
Bring passion and energy
to engage and inspire those
around us
Collaborate
Openly share knowledge
between teams and individuals
Enquire
Think creatively and
constructively challenge the
status quo
Innovate
Be courageous, ambitious,
navigate risk, try, learn and
improve
Think long-term
Work towards the long-term
sustainability of the business
One team
Dynamic, committed and
responsible
Create solutions
Encourage innovation and seek
out opportunity
Positive difference
Changing things for the better,
leaving a positive legacy
Enduring value
Delivering enduring value for all
investors and stakeholders
Leverage learning
Diverse and inclusive approach
that values each others ability
and expertise
Focused and nimble
Stay agile, lean and non-
hierachical
Our framework provides a strong foundation that supports our vision, guides our behaviours and influences
the impact we make on the world around us.
7Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts
Afentra’s Approach
Supporting the exit strategies
of IOCs, ensuring responsible
transition for host governments
Afentra’s objective is to turn legacy producing fields and discovered resources
into profitable assets for Afentra and all of our stakeholders.
Committed to shareholder returns within
a responsible ESG framework
We target high quality assets that have
stability of earnings and implement best
in class fit-for-purpose margin enhancing
operating techniques.
Credible counterparty with access to capital
and proven operator experience.
With the ESG agenda embedded in our
mindset, we have a business model
tailored to generate significant long-term
value for all stakeholders.
Track record of responsible approach and
partnership with host countries.
Process creates long-term value for all stakeholders through effective transition.
8Afentra plc International Oil Companies
• Safe, efficient and smooth transfer
of assets
• Trusted counterparty with financial
and operating capacity
• Experienced partner acceptable to
host governments
Stakeholder objectives
Host Governments/National
Oil Companies
• Commitment to positive socio-
economic and environmental
outcomes
• Responsible stewardship and
investment in assets
• Continued benefit of O&G
revenues to support longer-term
sustainable transition
Asset
e
u
a
v
l
Quality production assets and
discovered resources with
potential to realise upside and
deliver material cashflow.
9Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Chairman’s Statement
Afentra’s leadership has the skill-set and
track record to deliver shareholder value
Dear Shareholders
My first year as Chair of Afentra has
been a period in which we have seen
significant changes in the industry
landscape, and a period where we have
taken large strides to progress the
strategic objectives outlined when the
company was first launched in May 2021.
Starting with the industry macro
backdrop, as the impact of Covid abated
during the second half of the year, and
economies were able to re-open, we
observed a commensurate rebound in
global economic activity. In turn this has
created a surge in global demand for
oil and gas, returning to and exceeding
pre-pandemic levels and leading to
a considerable improvement in the
commodity price environment and
overall confidence in the market. The
easing of travel restrictions has also
enabled a better environment for deal-
making as counter-parties are able to
meet in person which always supports
a better interaction and process for
negotiating and completing deals.
The recent shocking events in Ukraine
have added further upward pressure
on energy prices as Russian crude
“Afentra was set up with a clear objective; to capitalise
on opportunities presented by the energy transition
on the African continent and in doing so support a
responsible transfer of asset ownership that provides
beneficial outcomes for all stakeholders.”
is taken offline and shunned by large
swathes of the Western world and its
allies. Furthermore, the geopolitical
uncertainty engendered by the crisis
has created major volatility in energy
prices. This increase and volatility in
commodity prices is, however, a double
edged sword. Whilst the macro factors
have resulted in increased interest in the
sector from the investment community
it has also emphasised the importance
of continued investment to secure the
required supply to stabilise commodity
prices as we progress through the
energy transition. The price volatility has
also the potential to make the difference
in seller and buyers price expectations
more difficult to bridge. During this
time, Afentra will continue to place
high importance on taking a disciplined
approach to business development as
we screen our opportunity pipeline to
ensure we deliver long-term value for
our shareholders.
Afentra was set up with a clear objective;
to capitalise on opportunities presented
by the energy transition on the African
continent and in doing so support a
responsible transfer of asset ownership
that provides beneficial outcomes for
all stakeholders. This current macro
environment continues to provide an
attractive, opportunity-rich landscape for
ambitious independents like Afentra.
In the past year, we have successfully
established our new Board and
executive team and continued to
build upon the robust governance and
ESG frameworks that underpin our
future growth ambitions. With regards
to the Governance framework that
we established, we will continue to
review and update our policies and
commitments in these areas to ensure
that we fully meet, and, where possible,
exceed our obligations, in line with our
updated strategic objectives.
10Afentra plc Vendors and host governments are
increasingly seeking credible and
responsible counterparties for divested
assets to ensure best practice,
environmental stewardship, and the
highest standards of governance
so that local communities and all
stakeholders can continue to realise
the socio-economic benefits from
existing, discovered resources. With
ESG considerations at the heart of
Afentra’s strategy, and the Executive
team’s significant experience in this area,
the Company is well positioned to be an
acquirer of choice.
Taken together, the strengthening of the
oil price and the increasing importance
of ESG considerations for both vendors
and the capital markets, provide strong
tailwinds for your company in the longer
term. However in the short term oil price
volatility and geopolitical uncertainty may
create a challenging M&A environment
so we will ensure we retain a very strong
focus on value creation for you our
shareholders and will therefore maintain
a disciplined approach to valuation,
especially in this challenging environment.
technical and commercial expertise, and
industry and government networks across
the African continent to capitalise on
opportunities that meet the Company’s
criteria, and we are convinced that over
the period we have put in place the
necessary foundations to deliver long-
term value for all our stakeholders.
In conclusion, your Company finds
itself in a strong position as we enter
the second fiscal year of operation
as Afentra. The market drivers that
underpin the global energy transition
and support our long-term strategy are
gaining momentum and we are confident
that we have the right team and strategy
to capitalise on these opportunities for
the benefit of all our stakeholders.
It only remains for me to thank you, our
shareholders, for your ongoing support
for the Company, the management team
and our strategy. We look forward to
updating you with positive news as we
move through the rest of the year.
Jeffrey MacDonald
Chairman
Afentra’s Executive team, led by your
CEO Paul McDade, have the necessary
25 April 2022
Uniquely positioned
to capitalise on
the African Energy
Transition
1. Significant hydrocarbon
resource base in Africa
with material M&A pipeline
2. Gap in market for credible
operators to facilitate safe
and responsible transition
3. Proven team with
significant experience of
working in Africa
4. Committed to responsible
stewardship and highest
standards of governance
5. African Energy Transition
provides compelling
investment opportunity
11Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts 12Afentra plc Strategic Report
Year ended 31 December 2021
13Annual Report and Financial Statements 2021 Market Review
The Global Energy transition
Drivers of change
The global energy transition is
accelerating, driven by political,
corporate and civil society in pursuit
of the goals set by the international
community to decarbonise globally.
The energy industry is seeing both oil
and gas majors as well as National Oil
Companies recalibrating their strategies
and business models to a lower carbon
energy system.
Whilst the developed world is seeking to
deploy capital in a manner that actively
supports the energy transition and
lower carbon economies, developing
economies across Africa currently
lack the large scale capital required to
support the industrial roll out of renewable
technologies and remain largely reliant on
traditional energy sources.
Despite the sector headwinds, there
is a growing recognition that oil and
natural gas continues to play critical
roles in today’s energy and economic
systems; and that affordable, reliable
supplies of liquids and gas are integral
to the transition to a lower carbon world.
Furthermore, the revenues, taxes and
local employment generated from
hydrocarbon production are essential
for developing countries in Africa,
as well as generating a vital source
of energy across a continent that
remains challenged by a lack of wide-
spread access to reliable electricity or
alternative energy sources.
Africa is the lowest contributor to
global emissions at only 3%, despite
representing 17% of the global
population. The revenues associated
with African oil and gas production have
a material impact on the continent’s
economies, with nearly 50% of export
value coming from fossil fuels. With
population growth across the continent
soaring alongside only c.60% of current
population having access to electricity,
Africa’s generation capacity will need
to be doubled by 2030 in order for the
continent to achieve its Sustainable
Development Goals (‘SDGs’) relating
to energy. It is in this context that the
environmental and investor community
should view the African energy transition
through a different lens that balances
out the environmental drivers with the
socio-economic impact to the continent
and its people that would support a
responsible transition.
Global oil demand is set to rise by
3.3 mb/d in 2022.
Energy demand in Africa has been
increasing at an annual rate of
around 3%, the highest among all
continents.
Africa’s proven fossil fuel reserves
are estimated at more than $15.2tn
based on current market value.
In Sub-Saharan Africa alone, nearly
50% of export value is derived from
fossil fuels with an estimated annual
contribution to GDP from Africa’s
current oil, coal and gas production
of approximately $156.2bn.
The current industry transition is nothing
new, and mature assets in mature basins
have been changing hands from IOCs to
independents for decades. Africa’s oil and
gas industry is in the early stages of the
same operator transition that the North
Sea and the Gulf of Mexico have gone
through with assets being transferred
from majors to independents. Certainly,
the high commodity price environment of
today may have impacted the urgency of
IOCs to divest, however the fundamental
drivers that underpin the industry
transition are pressing, as IOCs are looking
14Afentra plc to responsibly exit out of assets which are
either late life, not material or have a high
carbon footprint.
Responsible investment
The growing awareness and
consciousness of impact and ethical
investment, that seeks to support and
accelerate the global energy transition by
limiting or withdrawing investment into
the extractive industries, has resulted in
years of underinvestment into the sector
which has consequently impacted the
supply and demand dynamics.
This supply crunch has distorted the
market and resulted in an increasingly
volatile and inflated commodity
price environment with Brent crude
prices rising rapidly through Q1’22 to
c.$130/bbl, a 14 year high, and natural
gas prices in Europe reaching a high
trading price of €345 per megawatt
hour. These unprecedented pricing
pressures are impacting everyday life
for the global population in the form
of high petrol prices, record energy
prices for homes, and inflationary
pressures across most sectors. It has
also highlighted the important topic of
energy security, a theme that has been
exacerbated in Europe by the ongoing
Ukraine/Russia crisis.
The requirement throughout the
industry to transparently disclose
environmental data has been a positive
development, and one emphatically
embraced by an industry that has spent
decades as a leader in the components
that comprise ESG. The divestment
by IOCs however may ironically have
a negative impact on climate change
15Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Market Review
The Global Energy transition
unless the acquirer of those assets
remains committed to operational
excellence and best practice reporting
in line with the recommendations set
out by the Task Force on Climate-
related Financial Disclosures (‘TCFD’).
The emissions associated with an
asset do not, of course, cease when the
asset changes hands, and if the capital
is not there to support credible and
responsible operators to acquire these
assets, then the assets may end in the
hands of companies that are not duty
bound or willing to continue to report on
the impact of their activities or invest in
mitigating the impact.
Without a responsible oil and gas
industry, the transformation of the
energy sector globally, and throughout
Africa, will be more difficult and more
expensive. If capital markets are
engaged correctly, independents
can help to accelerate the pace of
change and reduce the impact on
the environment, all while helping
to maintain the vital supply of
hydrocarbons upon which the global
energy mix currently relies.
It has been estimated that achieving global
net zero by 2050 will cost as much as
$130tn
A conservative estimate of the cost to
achieve net zero for Africa by 2050 is
$2.8tn
Africa, the world’s lowest contributor to
global emissions, accounts for only 3% of
cumulative global CO2 emissions vs EU
at 33%
The need for responsible
independents
The market requirement for responsible,
well-managed independents to acquire,
operate and optimise post-peak assets
in Africa is evident. This will ensure the
continued balance between necessary
supply and the positive socio-economic
benefit from these resources – thereby
enabling an effective energy transition
as well as a just transition for Africa and
its people.
Independents can leverage the local
resources and skills of the industry and
ensure that they play a central role in
responsibly managing these assets. The
continuing transfer of knowledge can
play an important role in the reduction
of the emissions intensity of delivered
oil and gas.
Afentra’s founding team have a strong
operating track record throughout
Africa and multi-decade experience of
what’s required to successfully operate
assets on the continent. They also have
first-hand experience of the industry
transition, having been present in the
North Sea industry transition in the
2000s, and this understanding of what
needs to be considered to facilitate
an effective transition provides a
competitive advantage.
With an ESG agenda integrated into
its business model and operating
approach in order to effectively
manage business and opportunity
risk, Afentra has positioned itself as
a credible counterparty, supporting
IOCs and Host Governments on
their strategic objectives through an
effective energy transition.
16Afentra plc Africa is home to 17%
of the world’s population,
but it accounts for only
4% of global power
supply investment.
2.1m
People estimated to be
employed in the energy
sector across Africa.
Africa’s population is set to exceed
2bn by 2040
In order for Africa to achieve its United
Nations Sustainable Development Goals
relating to energy, its generation capacity
will need to be doubled by 2030 and
multiplied fivefold by 2050.
Only 58% of the continent’s
population have access to electricity
and two-thirds of Africa’s existing
grids are considered unreliable.
17Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Geographic Focus
Leveraging our extensive regional
experience and network to realise the
vast potential of proven resources
African Oil & Gas industry: early stages of transition
Africa’s strong economic growth alongside its growing population underpins our belief in the continent’s long-
term oil and gas demand despite the structural evolution of the global energy system. We see a significant
opportunity to drive responsible growth and prosperity for all stakeholders. Our strategy is simple - we only
focus on proven hydrocarbon basins where fields have been discovered or are currently producing. The
significant value opportunity for all stakeholders is clear and Afentra is determined to unlock this potential,
efficiently and economically.
Afentra was created to take advantage of this transitional opportunity in the African market, emulating the
successful precedents set in the Gulf of Mexico and the North Sea.
Africa and the case for a ‘just’ transition
• Hydrocarbon revenues are central to many African countries driving their socio-economic and industrial
development
• Energy poverty to be addressed alongside a transition to a cleaner energy mix
• A requirement for a new responsible approach to reduce carbon footprint of hydrocarbon assets
• Opportunity for new credible operators to manage an effective transition for the benefit of all stakeholders
• African transition will mirror the changing asset ownership landscape of North Sea seen in recent decades
There is a need for a responsible approach and an ability to create significant value for all
stakeholders from an industry transition that has just commenced.
18Afentra plc Prolific oil and gas region
c.100 bn boe
Longevity
>20 years
The opportunity
Afentra’s proposition
Africa remains a prolific oil and gas region with
longevity (c.100billion boe, 20 years+)
Experienced leadership team with proven track
record and established network in Africa
Early stages of an industry transition providing a
significant M&A pipeline
Industry transition experience combined with ability
to identify, high-grade, acquire and integrate assets
Transition will require credible and responsible
operators to manage and optimise assets
Track record of creating value from operating and
asset redevelopment capabilities
Market evolution and investor sentiment towards
sector requires a new approach
Business model focused on value accretive roll-up of
discovered resources generating strong cash flow
Committed to responsible stewardship to ensure
positive socio-economic and environmental impact
19Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Business Model
Committed to investor and broad
stakeholder value creation
Our business model is designed to mitigate geological, political and financial risks to enable
Afentra to deliver sustainable returns to its shareholders in the form of capital appreciation and
dividends when appropriate.
1. Assess and acquire
Legacy production assets and proven discovered
resources with material upside
2. Optimise and produce
Applying proven & innovative technologies to safely
optimise production, emissions reduction and lower
running cost of operations
Our focus
Opportunities that:
Are value accretive
Our focus
Emissions reduction
Optimisation of facilities
Generate robust cash flow
Generation of healthy returns on investment
Have embedded growth opportunities
Performance transparency
Are strategically complementary
Short term
Mid term
Afentra’s model is directly aligned to the creation of shared value for all stakeholders. Our proposition
will increasingly meet the specific targets of the United Nations Sustainable Development Goals as
we progress from acquisition and development through to operatorship and production.
Integrating United Nations Sustainable
Development Goals:
Supporting developing economies, accelerating sustainable
change and transferring value to all stakeholders
Pre-asset aquisition
Drivers of change
20Afentra plc 3. Reinvest and extend
Reinvest in incremental activities and near field
developments to extend production and field life
4. Retire and convert
Responsible stewardship of asset retirement whilst
seeking low carbon conversion opportunities
Our focus
Infield, field extensions and undeveloped resource
investment opportunities
Funding further value accretive acquisitions
Workforce and community development
Acceleration of the de-carbonisation initiatives
Our focus
Responsible stewardship
Restoration of the natural environment
Safe decommissioning
Mid term
Long term
Asset development
Asset Production
Changing responsibly
Impactful change
21Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Chief Executive’s Statement
Creating a responsible
new industry player
“It is our responsibility to remain highly disciplined in our
approach to ensure any deals delivered today stand-up
to retrospective scrutiny in the years ahead.”
Paul McDade, Chief Executive Officer
Dear Shareholders,
The year ended 31 December
2021 was a transformative
period for the Company with
the inception of Afentra; a new
E&P business with a focused
strategy tailored to the long-term
structural changes taking place
within the global energy markets.
As set out at our launch in May 2021,
Afentra has been established as a
responsible and credible independent
E&P company to capitalise on the
opportunities that will result from the
accelerating divestment of producing
assets and discoveries from International
Oil Companies (‘IOCs’) and host
Governments in Africa and to support
an effective and just energy transition for
the continent.
opportunities consistent with our well-
defined strategy. I am pleased to report
that the team has made good progress in
all of these areas, as detailed below.
A tailored strategy
The oil market has changed considerably
since our launch. The oil price has rallied
from around $60/bbl to well above
$100/bbl as a result of recovering
and now growing demand, industry
underinvestment and of course the
impact of the terrible events that are
ongoing in Ukraine. However, the market
drivers that support Afentra’s growth
strategy are unchanged. While the strong
commodity pricing environment has
impacted the urgency of vendors to
divest, and the value they are seeking,
the underlying market drivers for major
oil companies to decarbonise and high-
grade their portfolios remains.
Our focus since launch has been on
developing the appropriate corporate
framework to support Afentra’s long-
term growth objectives, ensuring Afentra
is recognised in the region and the
industry as an attractive counterparty
for divestments and identify and pursue
At the outset, we adopted a highly
disciplined approach to the execution
of our growth strategy to ensure any
acquisitions were strategically consistent
with the criteria that we set ourselves.
As detailed within this report, those
criteria covered technical, operational
and environmental considerations, and
of course the commercial requirement
to deliver value accretive deals to our
shareholders. The latter remains a core
focus in the current market, and our
disciplined approach dictates that we
execute the strategy with patience and
in a manner that supports our longer-
term objectives. We are only too aware
of the volatility within our industry, with
Brent trading below $30/bbl less than
two years ago and therefore we prioritise
cost and value discipline within our
corporate mindset.
During the year there has been a steady
evolution of energy market commentary,
and sector dynamics, that supports
the central themes upon which Afentra
was built. First, the need for continued
and responsible investment into the oil
and gas sector to ensure the necessary
supply of oil and gas to meet growing
global demand as the transition to
renewable energy gradually progresses
around the world. Increasing commodity
prices, which are translating to growing
financial and social concerns about the
economic impact to consumers, is a
direct result of industry underinvestment
22Afentra plc alongside sustained supply and demand
concerns. The growing acceptance
that oil and gas will continue to play an
important role in the global energy mix for
the coming years and decades supports
Afentra’s ambition to be a responsible
producer of discovered resources.
Second, recognition of the social impact
that the energy transition will have on
emerging markets, and particularly on
Africa, has grown. At launch, Afentra
promoted the need to ensure there is
a “Just transition for Africa”, a transition
that recognises the need for the social
impact to be balanced against the climate
impact. The commentary that certain
economies are reliant on hydrocarbons
and should be able to capitalise on the
socio-economic benefits associated
with them has become more prominent
and more widely acknowledged. Further
strengthening this view is the fact that
these emerging nations represent a
small contribution to the global impact
of climate change compared with more
developed nations that champion the
need for a speedy transition. The fact that
the current gas crisis can have such an
impact on western economies highlights
the devastating risks and social impacts
that too rapid a transition could have on
the nations and people of Africa.
It is in this context that Afentra’s
purpose and model is directly aligned
to the creation of shared value for all
stakeholders. By committing to strong
environmental stewardship, responsible
social impact, and strong governance,
we have placed the objectives of all
stakeholders at the core of our business
model. Our ambition to be a credible
counterparty for divesting IOCs and
host governments supports our growth
strategy. The proven operating track
record of the team we have assembled
should provide trust in our ability to safely
and responsibly manage acquired assets,
reducing the environmental impact
through operating techniques wherever
possible, while maintaining the positive
socio-economic impact that any acquired
assets have on the communities and
countries of operation. Our proposition
will increasingly meet the specific targets
of the United Nations Sustainable
Development Goals as we progress from
acquisition through to operatorship,
production and development.
Progress – strong framework to
support future growth
As we reflect on our first year of
existence, we are pleased with
the considerable progress that we
have made. We have successfully
assembled a highly competent and
credible team with the full suite of
expertise required to execute the
growth strategy. We have established
the corporate framework to support
the long-term growth of the Company,
underpinned by robust Governance,
policies and values.
Afentra’s profile is now established
within the industry and our brand is
recognised across our focus region of
West Africa as a competent, reputable,
and ambitious counterparty. On the
back of this, our team has leveraged
well-established relationships with
IOC’s, debt providers and host
governments as we seek opportunities
consistent with the growth strategy,
and we have been involved in ongoing
market sales processes as well as
proactively making approaches to
acquire “off-market” assets.
23Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Chief Executive’s Statement
In October 2021, we submitted an
Expression of Interest to purchase
interests in Block 3/05 and Block 23
in Angola from Sonangol, and updated
in February 2022 that negotiations are
ongoing as we seek to reach agreement
on the detailed terms of the transaction.
In April 2022 Sonangol announced
that Afentra is the preferred bidder to
purchase these interests. These are high
quality assets, in a jurisdiction that we
know well, which meet our acquisition
criteria in terms of the scale of Oil in Place
providing significant upside, with the
potential to invest to increase reserves
and production.
Afentra’s involvement in this process
unfortunately resulted in the suspension
of shares, in accordance with Rule 14 of
the AIM Rules for Companies, however
we hope to progress this process to a
conclusion as soon as possible, ideally
with a satisfactory outcome that sees
Afentra complete its first acquisition.
Afentra has been active in the pursuit of
other production assets in West Africa.
The Company continues to appraise
multiple acquisition opportunities that
support its growth strategy in terms of
acquiring assets in the region with solid
low-cost production, proven reserves and
significant upside.
In parallel to the above, we will continue to
appraise our existing asset in Somaliland
with a view to establishing additional
value on behalf of shareholders. Given
the asset profile is early stage exploration
which benefits from a full carry by our
partner, we need to carefully consider its
positioning within our strategy and ensure
that we maximise the value of this asset.
Outlook – building a platform for long-
term growth
It has been an active period for your
Company and we expect momentum to
accelerate through 2022 as we strive to
deliver our first value accretive transaction
for our shareholders. Afentra’s strategy
to build a material portfolio of operated
and non-operated assets requires a
patient approach, especially as we seek to
navigate the challenges of transacting in a
volatile and high oil price environment.
The market drivers that underpin the
energy transition and our strategic intent
continue to gather momentum and will
undoubtedly evolve over the coming
years, as they did in more mature operating
regions such as the UK North Sea and the
Gulf of Mexico. The current high oil price
may have slowed down ongoing processes
and deterred certain sellers to divest, given
the inflated cash flows being generated by
the assets, but conversely it also creates a
window of opportunity to sell.
It is our responsibility to remain highly
disciplined in our approach to ensure
any deals delivered today stand-up to
retrospective scrutiny in the years ahead.
We are proactively seeking opportunities
and feel confident that we have the
right team and strategy to deliver our
objectives. It is certainly our expectation
to deliver transactions this year that
provide a platform for long-term growth
and value creation.
I’d like to thank all our shareholders for
their support since we began this exciting
journey and I look forward to updating you
all with our progress through this year.
Paul McDade
Chief Executive Officer
25 April 2022
Afentra plc
24 Overview
Strategic Report
Corporate Governance
Group Accounts
Annual Report and Financial Statements 2021
25 Criteria for Value Creation
Asset identification and
acquisition due diligence
Ian Cloke, Chief Operating Officer
The focus since the launch of Afentra has been on high level
asset identification and detailed acquisition due diligence, in line
with the stated growth strategy. All assets reviewed have been
located in Sub-Saharan Africa our focus geography. Oil and gas
assets have been reviewed from onshore to the offshore shelf.
The graphic provides detail on the high-level considerations that
guide our decision making, with a particular emphasis on the
technical, operational, above ground and commercial aspects of
any opportunity. Principally, the focus is to identify assets that are
of scale and provide sufficient scope to enhance value through
improved operating techniques and more creative development
solutions. Upside potential from assets often results from them
being under-invested in, under-developed or poorly developed.
Afentra’s technical and commercial expertise is used to identify
and create solutions to exploit that hidden value and is a key
tenet of the growth strategy.
Environmental considerations are an equally important aspect,
as we seek to have a positive impact on the carbon intensity
of any acquired asset, either directly through an operating
approach, or indirectly through influence and alignment with the
Operator of the asset.
The approach to valuation of assets remains a critical aspect
in the delivery of Afentra’s acquisitive growth strategy, and this
has become ever more important in today’s rapidly inflated
commodity price environment. Afentra’s team remains
disciplined in its approach to ensure acquisitions completed in
the current market are value accretive through a long-term lens.
High-level screening
Subsurface screening
• Material production
• High quality reservoirs and hydrocarbons
• Untapped resource potential
Technology, innovation and hidden value
• Gap in subsurface solutions
• Development innovations
• Field extension and legacy discoveries
Operations screening
• Leverage existing infrastructure in 2nd owner
life cycle
• Asset integrity and lifespan
• Focused well stock and facility upgrade
Above ground
• Manageable non-technical risk
• Pursue operatorship
• Aligned JV partners and stakeholders
Commercial and risk management
• Material cash flow profile
• Low cost and complexity of development
• Short cycle portfolio options
26Afentra plc Detailed screening
Asset acquisition
Technical
Operational
Above ground
Commercial
Quality producing assets
and discovered resources
• Empowering workforce to operate
efficiently
• Safely optimising to enhance margins and
reduce Opex
•
Increasing production and unleashing full
asset potential
• Reducing carbon and environmental
impact through lifespan
• Whilst excluding high risk exploration and
expensive developments
27Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Asset Summary
Asset Summary
Somaliland – Odewayne
Ideally located to commercialise any
discovered hydrocarbons
Somaliland
Somaliland offers one of the last opportunities to target an undrilled onshore rift basin in Africa. The Odewayne
block, with access to Berbera deepwater port less than a 100km to the north, is ideally located to commercialise
any discovered hydrocarbons. A 2D geophysical survey acquired in 2017 and reprocessed in 2019, along with
gravity modelling and legacy geological field studies, was the focus of the Company’s 2021 work programme to
determine if a Mesozoic age sedimentary basin is present in the block and its prospectivity.
Odewayne (W.I. 34%) Exploration block
Overview
This large, unexplored, frontier acreage position covers 22,840km2, the equivalent of c.100 UK North Sea blocks. Exploration activity
prior to the 2017 regional 2D seismic acquisition program has been limited to the acquisition of airborne gravity and magnetic data
and surface fieldwork studies, with no wells drilled on block.
The Company’s wholly owned subsidiary, Afentra (East Africa) Limited (‘A(EA)L’), holds a 34% working interest in the PSA (fully
carried by Genel Energy Somaliland Limited for its share of the costs of all exploration activities during the Third and Fourth Periods
of the PSA).
The Odewayne production sharing agreement was awarded in 2005. It is in the Third Period, with a 1,000km, 10km by 10km
2D seismic grid acquired in 2017 by BGP. The Third Period has been further extended, through the 8th deed of amendment (as
mentioned in the Licence Status, below).
In 2021 the operator carried out 2D & 3D gravity modelling and a re-interpretation of the 2D seismic grid. The data is interpreted
to show fold and thrust structures beneath the interpreted Base Cretaceous Unconformity (‘BCU’). If the fold and thrust belt
model is correct the petroleum system analogous to this would be of Cryogenian in age and produces about 40 kbo/d in Oman.
28Afentra plc Yemen
Aden
Djibouti
Djibouti
Block M-11
Gulf of Aden
Somaliland
SL9, SL12
RAK Gas
Odewayne
Genel Energy /
Afentra / Petrosoma
SL10B, SL13
Genel Energy
SL18
DNO
Afentra Licence
200 Km
Ethiopia
Somalia
Indian Ocean
Contract Summary
Contract type
Contract signed
Contract effective date
Contract area
Exploration term
PSA
6 October 2005
6 October 2005
22,840km2
Participants
Genel Energy Somaliland Limited (Operator)
Afentra plc - A(EA)L
Petrosoma Limited
50%
34%
16%
Current Period 3: to 2 November 2020 (extended to
May 2024, see licence status). Period 3 work commitment:
500km 2D seismic acquisition
Period 4 (optional): to October 2025. Period 4 work commitment:
1,000km 2D seismic acquisition and one exploration well
Period 5 (optional): to October 2026. Period 5 work commitment:
500km 2D seismic acquisition and one exploration well
Period 6 (optional): to October 2027. Period 6 work commitment:
500km 2D seismic acquisition and one exploration well
Production term
Twenty five years, renewable for additional ten years.
State participation
State may back in for up to a 20% participating interest in any development and production area.
Licence status
The block is in the Third Period of the exploration term. The Group’s costs associated with the Third and Fourth period work
programmes are fully carried by Genel Energy Somaliland Limited.
The Third Period expiry, as described in the 8th Amendment to the PSA, is currently extended by 23 months from this date of
publication, as are all subsequent periods. Current expiry date of the Third Period is therefore May 2024.
29Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts
Financial Review
Afentra’s focus on value accretive
M&A, targeting robust cash flow and
proven resources, is intended to support
sustainable shareholder returns
Selected Financial Data
Year end cash net to the Group $million
Adjusted EBITDAX
Loss after tax
Year end share price
$million
$million
Pence
2021
2020
37.7
(2.0)
(5.0)
14.6
42.7
(0.8)
(1.9)
9.4
Finance income in the year of $36k (2020: $326k) represents
interest received ($13k) and foreign exchange gains ($23k) on
cash held by the Group. The reduction in interest received year
on year was as a result of the global pandemic amongst other
factors impacting interest rates.
Finance costs during 2021 totalled $45k (2020: $58k).
Non-IFRS measures
The Group uses certain measures of performance that are not
specifically defined under IFRS or other generally accepted
accounting principles. These non-IFRS measures include
capital investment, debt and adjusted EBITDAX.
Income statement
The loss from operations for 2021 was $5.0 million (2020: loss
$2.2 million) for the reasons described below.
During the year, net administrative expenditure increased to
$5.0 million (2020: $2.2 million) as a result of exceptional
(one off) items relating to costs associated with the migration
to Afentra, a change in management and an increase in
contractors and advisors.
In 2021, a portion of the Group’s staff costs and associated
overheads have been expensed as pre-licence expenditure
($2.4 million), or capitalised/recharged ($77k) where they are
directly assigned to capital projects or recharged. This totalled
$2.4 million in the year (2020: $1.3 million).
The loss for the year was $5.0 million (2020: loss $1.9 million):
$
million
Loss for year 2020
Increase in G&A and pre-licence costs
Decrease in finance income
Loss for year 2021
(1.9)
(2.8)
(0.3)
(5.0)
Adjusted EBITDAX and net loss
Group adjusted EBITDAX loss totalled $2.0 million (2020:
$761k loss):
Loss after tax (page 72)
Interest and finance costs
Depletion and depreciation
Pre-licence costs
Total EBITDAX (Adjusted)
2021
$ million
2020
$ million
(5.0)
0.0
0.2
2.7
(2.0)
(1.9)
(0.3)
0.2
1.2
(0.8)
Afentra plc
30 Overview
Strategic Report
Corporate Governance
Group Accounts
The basic loss per share was 2.3 cents per share (2020: loss
0.9 cents per share). No dividend is proposed to be paid for the
year ended 31 December 2021 (2020: $nil).
Accounting standards
The Group has reported its 2021 and 2020 full year accounts in
accordance with UK adopted international accounting standards.
Cautionary statement
This financial report contains certain forward-looking
statements that are subject to the usual risk factors and
uncertainties associated with the oil and gas exploration
and production business. Whilst the Directors believe the
expectation reflected herein to be reasonable in light of the
information available up to the time of their approval of this
report, the actual outcome may be materially different owing to
factors either beyond the Group’s control or otherwise within
the Group’s control but, for example, owing to a change of plan
or strategy. Accordingly, no reliance may be placed on the
forward-looking statements.
Anastasia Deulina
Chief Financial Officer
25 April 2022
Statement of financial position
At the end of 2021, non-current assets totalled $22.0 million
(2020: $22.1 million) the majority of which relates to the
Odewayne block ($21.3 million).
Net assets/total equity stood at $58.9 million (2020:
$63.9 million).
Net current assets reduced to $37.3 million (2020:
$42.5 million).
At the end of 2021 cash and cash equivalents totalled $37.7
million (2020: $42.7 million), the reduction primarily being
related to spend on G&A.
Cash flow
Total net decrease in cash and cash equivalents in the year
was $4.9 million (2020: $2.2 million), a full reconciliation of
which is provided in the Consolidated Statement of Cash
Flows on page 75.
During the year there were minimal cash investments on the
Odewayne Block in Somaliland due to the Group’s interest being
fully carried by Genel Energy Somaliland Limited for its share of
the costs during the Third and Fourth Periods of the PSA.
Annual Report and Financial Statements 2021
31 Our Stakeholders
Engaging with our key audiences
team and the Board work to ensure
that the Company’s investors have a
sound understanding of the Company’s
strategy and ambitions and how this
may be implemented. Investors’ views
are sought by the Directors to guide the
Company’s strategy and, in particular,
its M&A strategy. The Company’s M&A
strategy has become more targeted
towards seeking particular assets in more
limited jurisdictions as discussed in the
Chairman’s and CEO’s statements.
Principal decisions during 2021
Key decisions made by the Board
were in relation to M&A opportunities
with a significant focus on the likely
consequences of these decisions in the
long-term as well as looking how these
decisions may affect communities and
the environment. In preparation for
the acquisition of assets, key policies
were drafted to replace legacy ones.
As stated above investor feedback in
relation to the Company’s M&A strategy
was considered as part of the Board’s
decision making in this area.
Section 172 Statement
A director of a company must act in a
way they consider, in good faith, would
be most likely to promote the success
of the company for the benefit of its
members as a whole, and in doing so
have regard (amongst other matters) to
the following factors:
• The likely consequences of any
decision in the long-term;
• The interests of the company’s
employees;
• The need to foster the company’s
business relationships with suppliers,
customers and others;
• The impact of the company’s
operations on the community and
the environment;
• The desirability of the company
maintaining a reputation for high
standards of business conduct; and
• The need to act fairly between
members of the Company.
The Board has regard to the provisions
of s.172 of the Companies Act 2006 in
carrying out their duties and have regard
to the matters set out in s.172 (a) – (f)
in the decisions taken during the year
ended 31 December 2021.
Our stakeholder engagement
The Board identifies a number of key
stakeholders of the Company: JV
partners; regulators and government
partners; communities where our
assets are located; shareholders; and
our employees. During the year the
Company actively engaged with its
identified key stakeholders.
The Company is committed to engaging
positively with the communities in which
our assets are located and looks to
support those communities impacted by
our operations.
As set out on page 28 the Company
has worked closely with Genel Energy
during 2021. The Company will continue
to engage with the Operator in relation
to this asset to further evaluate the
prospectivity of the licence. Although
not yet present in Angola, the company
has also worked closely with Sonangol at
all levels to progress the discussions on
Block 3/05 and Block 23.
The Company has a small team of
employees and consultants based in the
UK and Africa all of whom have direct
contact with either the COO or CFO who
engage directly with the workforce, a
benefit of the current size of the company.
Board meetings are held in the UK office
where a number of employees and
consultants are invited to join the meeting
from time to time. The Board have day-
to-day business interactions with various
employees of the Group so receive direct
employee feedback and engagement.
The Directors regularly engage with
investors via the AGM and at other
times during the year. Continued
access to the capital markets is key to
the success of the Company’s M&A
strategy therefore the management
32Afentra plc 33Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Business Risk
Managing and mitigating
our material issues
Principal business risks
The long-term success of the Group depends on its ability to manage its asset portfolio and to find, acquire, develop and/or
commercially produce new oil and natural gas reserves. In achieving its long-term success, the Group is exposed to a number of
risks and uncertainties which could have a material impact on the Company’s performance. Key to mitigating the risks faced by
the Company is ensuring Afentra has the correct Board and senior management team in place who regularly review the business,
approve the annual work programme and budget as well as consider monthly management reporting, financial operating procedures,
health, safety, security and environment (‘HSSE’) and other important factors. The Directors regularly monitor all risks to the
Company using information obtained or developed from external and internal sources and will take actions as appropriate to mitigate
these. The Group utilises a risk management system that identifies key business risks and measures to address these risks. The
Company proactively implements such measures considered appropriate on a case-by-case basis.
The Company’s strategic risk and operational risks remained the same over the past year with no changes in the Company’s portfolio.
The Directors have identified the following principal risks and mitigations in relation to the Group’s future performance:
Category
Risk
Mitigation
Change
Financial,
Commercial and
Economic
• Volatile commodity prices (both low or
high) impacting buyer – seller expectations
impacting ability to acquire assets.
• Group maintains a strong balance sheet
and remains fully funded for its existing
commitments.
• Volatile
• Difficulty in capital raising for new
commodity
prices
acquisitions and/or to fund development
activities.
• Market volatility
• Counterparty
distress
• Licence extension uncertainty. Licences,
permits or approvals may be difficult to
obtain and sustain.
• Fiscal instability.
• Foreign currency risk.
• Management continually assess all existing
assets and proposed new acquisitions
in light of future capital requirements
from a disciplined lifecycle investment
perspective.
• Management maintains an active dialogue
with existing and prospective investors.
• The new management has a strong track
record of successful fundraisings.
• The Group holds the majority of its cash in
US dollars, the predominant currency used
in oil and gas operations.
▲
34Afentra plc Category
External
• Country risk
• Climate change/
TCFD
• Legal
compliance
Risk
Mitigation
Change
• The Group’s assets are located in a non-
OECD country. Governments, regulations,
and the security environment may
adversely change, including the use of tax
claims, real or not. The Group’s assets in
Somaliland have been or are affected by
country-specific situations.
• The regulation of the energy industry to
address climate change is increasingly
international in scope and application. The
Group’s activity focuses on finding and
producing carbon based fuels often with
long investment and production lifecycles.
• Complex Legal and Regulatory Compliance
or litigation risk.
• Failure to recruit and retain key personnel
and/or engage in adequate succession
planning.
• Human error or deliberate negative action.
• The Company is reliant on its IT systems to
maintain operations and communications.
• The Board monitors political, regulatory
and HSSE changes and engages third-
party expertise as required. The Group has
objectives to acquire additional core assets,
to assist in diversifying jurisdictional risk.
• New investments are considered in the light
of changing environmental regulations, fiscal
volatility and geopolitical dynamics.
• Management considers climate-related
strategic and financial risks in its future
growth strategy (including potential
acquisitions), including the potential impact
of both transition and physical risks.
• The Company accords the highest
importance to corporate governance
matters and operates to high ethical
standards.
• Activities are subject to various different
jurisdictional laws, customs, fiscal and
administrative regulations.
• Legal risk assessment and due diligence
(where appropriate) is undertaken for all
counterparties the Company deals with.
• The Company employs suitably experienced
and qualified staff and, when required,
external advisors to ensure full compliance.
• The Company is seeking to build depth of
experience in all key functions to ensure
continuity.
• The Company engages specialist IT support.
• Protection against external intrusion is
incorporated within the system and tested
regularly.
►
35Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Business Risk
Robust internal controls
Risk
Mitigation
Change
Category
Strategic
• Concentration
of portfolio
• Competition
• Group’s asset (Somaliland) is an early
stage frontier and basin exploration
and production asset within the African
continent.
• Competitors have significantly greater
financial and technical resources.
• Concentration of shareholder base.
• Failure to negotiate optimal contract terms.
•
Inadequate management processes.
• Financial control of non-operated assets.
• Fraud, bribery and corruption / increased
third party exposure.
•
Inappropriate or poorly conceived corporate
strategy and failure to deliver on such
strategy including failure to access new
opportunities.
Operational
• Exploration activities may not result in a
• Exploration and
production risk
• Operator and
partner risk
commercial discovery.
• The Group is dependent on other operators
for the performance of E&P activities, due
to lack of control. This may result in delay in
conducting work programmes.
• HSSE incidents or non-compliance under
local rules and/or laws.
• The Board is actively seeking to diversify
the current portfolio risk by acquiring
producing and/or development assets,
using existing financial resources of the
Group and additional capital (as required).
• The Board is pursuing an M&A strategy
and conducts detailed due diligence prior
to engagement with any prospective
transaction.
• Ongoing engagement with shareholders
to inform investment decisions (including
representatives on the Board).
• Key documentation and contract terms are
considered by the Board to ensure the best
possible outcomes are achieved.
• Management regularly monitor and amend
cost structure, investment strategy and
treasury policy.
• The Board meets regularly to review the
business plan, G&A expenses, strategy and
monthly reporting.
• Management aims to diversify and manage
risk across a portfolio of assets, applying
the Group’s experience, expertise and
appropriate technology to minimise risk
through the asset lifecycle.
• The Group carefully considers the
technical, HSSE and financial capabilities of
operators and potential partners during any
JV farm-out or new opportunity acquisition.
Covid-19
Pandemic
• Staff may become ill or require themselves
to be quarantined, excessive numbers of
which may limit the Company’s ability to
continue its normal operations.
• There are no Afentra staff on the ground
at the Odewayne asset. All staff are
based in the UK with access to advanced
healthcare and the NHS.
• Continued focus on enhanced hygiene
and sanitation protocols in place. Regular
testing and ability to work from home when
required if exposed to Covid.
▲ Increased ▼ Decreased ► Unchanged
►
►
►
36Afentra plc Internal control
The Directors are responsible for establishing and maintaining the Group and the Company’s systems of internal control including
financial and compliance controls and risk management. These are designed to safeguard the assets of the Group and to ensure the
reliability of financial information for both internal use and external publication.
The Group’s internal control procedures include Board approval for all significant expenditure. All major expenditures require either
senior management or Board approval at the appropriate stages of each transaction. A system of regular reporting of the state of
the Group’s financial affairs provides appropriate information to management to facilitate control. The Board reviews, identifies,
evaluates and manages the significant risks that face the Group.
Any systems of internal control can only provide reasonable, and not absolute, assurance that material financial irregularities will be
detected or that the risk of failure to achieve business objectives is eliminated. The Directors, having reviewed the effectiveness
of the system of internal financial, operational and compliance controls and risk management, consider that the system of internal
control operated effectively throughout the financial year and up to the date the financial statements were signed.
The Audit Committee, on an annual basis, reviews the need for an internal audit function. Given the nature of the Company’s
business and assets, the current internal control procedures in place and the size of the Company, the Board are satisfied that an
internal audit function is unnecessary at this time.
37Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Sustainability
Acting responsibly
Our approach
Sustainability framework
Our purpose
Our misson
Our values
Key corporate policies
TCFD – or similar principles
Company Policies
The Directors are mindful of the impact of the Company’s business on its employees and contractors, the environment and on the
wider community. In particular, it notes the following with respect to HSSE, corporate responsibility, business integrity, community
responsibility and employees.
Health, safety, security and environment
Core competency of the Group
• Every individual to be aware of his/her responsibility towards providing a safe and
secure working environment;
• Managed through staff training and procedures to reduce HSSE risks as low as
reasonably practical;
• Appropriate emergency response systems are in place to reduce and mitigate the
impact and losses of any incident; and
• Ensure compliance with all relevant laws, regulations and industry standards.
JV partners
• The Group maximises its influence with JV partners to share its HSSE and social
responsibility values; and
• Contractors are required to demonstrate and deliver a credible HSSE and social
responsibility programme.
Environmental
• The Group is committed to minimising its impact on the environment in both field
operations and within its offices; and
• All staff share responsibility for monitoring and improving the performance
of its environmental policies with the objective of reducing our impact on the
environment on a year-on-year basis.
38Afentra plc Corporate responsibility
Conducting business in a responsible
and sustainable way
• The Group has corporate, environmental and social responsibilities to the
indigenous communities in the areas in which it operates, to its partners, to its
employees and to its shareholders; and
•
In pursuing its business objectives, it undertakes not to compromise its Corporate
Social Responsibility with any of these stakeholders.
Business Integrity
Conducting business with integrity,
honesty and fairness
• Highest ethical standards are a cornerstone of the Group’s business;
• All business activities are reviewed to ensure they meet our standards;
• The Group also seeks to ensure that similar standards are applied by its business
partners, contractors and suppliers; and
• All members of staff are individually accountable for their actions to ensure that
they apply and maintain these standards.
Community Responsibility
Committed to being a good partner in
the communities in which we operate
• Engagement and dialogue with local stakeholders to ensure that, as far as possible,
projects benefit both the Group and the communities in which the project is located.
Employees
Workplace free of discrimination
• All employees are afforded equal opportunities and are rewarded on merit and ability;
• All employees are given contracts with clear and fair terms; and
• Staff are offered access to relevant training and encouraged to join professional
bodies to enhance their knowledge, competencies, career development and
opportunities for progression.
Culture of openness
• High standards of conduct, accountability and propriety; and
• Employees can report legitimate concerns without fear of penalty or punishment.
Whistleblowing Policy
Empowers employees to be proactive
• Employees able to make anonymous reports directly to the independent non-
executive Directors; and
• Employees are encouraged to report any failure to comply with legal obligations or
the Group’s regulations, dangers to health and safety, financial malpractice, damage
to the environment, criminal offences and actions which are likely to harm the
reputation of the Group.
Antibribery and Corruption Policy
Committed to using only legitimate
means to further business interests
• The Company commits not to offer, promise, pay or accept bribes in order to obtain
unfair advantage;
• Remuneration, payments and commissions shall be for legitimate business reasons; and
• Systematic procedure supporting the Policy to reduce the risk of bribery and
corruption to as low as reasonably practicable.
39Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Sustainability
Applying an ESG lens to asset selection
Assessment criteria with relation to social and environmental factors, climate related impacts
on the business and our TCFD/similar principles journey.
Afentra strengths
• Afentra Team
• Vision, Mission, Values
• Group Policies
• Advisory Group
Assess
• Detailed management
assessment
• Competent Persons Report
• Determine employee
engagement strategy
• Determine external
stakeholder engagement
strategy
Assemble
project toolkit
Establish independent
emissions
Afentra plc
40 Overview
Strategic Report
Corporate Governance
Group Accounts
Acquire and identify
• Establish integration teams
• Educate and set expectations
re: V, M, V and P
• Design integration plan
• Opportunity and GAP analysis
• Design ESG investment and
engagement plan
• Establish ERM Register
Execute
• Stakeholder engagement
• Employee policy training
• Operational control ESG
investment plan
• Execute supply chain ESG
activism
Opportunity identification,
education and action plan
Near term platform focused,
medium term logistics focused
The Strategic Report was approved by the Board of Directors on 25 April 2022 and signed on its behalf by:
Paul McDade
Chief Executive Officer
25 April 2022
Annual Report and Financial Statements 2021
41 42Afentra plc Corporate Governance
Year ended 31 December 2021
43Annual Report and Financial Statements 2021 Board of Directors
Executive team
Paul McDade
Chief Executive Officer
Ian Cloke
Chief Operating Officer
Anastasia Deulina
Chief Financial Officer
A Petroleum engineer with over 35 years
within the international oil & gas business
has provided Paul with a rich and diverse
set of relevant experiences. From his early
international experience in challenging
operational, social, security and safety
environments, to his 19 years as COO and
then CEO of Tullow Oil, he has essential
first-hand experience of what is required
to build a successful African-focused,
responsible oil & gas company.
His strong focus on delivering
stakeholder value, shared prosperity,
environmental performance and
strong governance, coupled with his
understanding of the role that oil & gas
has to play in both the global and African
energy transitions, makes him the ideal
leader to deliver Afentra’s ambitious
growth strategy, a company that will
have stakeholder objectives and ESG
embedded at its core.
A Geoscientist with over 25 years of
international oil & gas experience and
a proven track record of deploying
innovative technologies across global
upstream projects that positively impact
operational, technical and commercial
results for the benefit of all stakeholders.
As EVP at Tullow Oil, he led multi-cultural
and diverse teams focused on safely
improving production and operations at
pace across Africa and South America,
effectively managing risk and social-
environmental sensitivities whilst
embedding strong financial discipline.
He has first-hand experience in making a
difference in countries having discovered
and successfully delivered commercial
oil & gas in Uganda, Kenya and Guyana
amongst others. Having lived and travelled
throughout Africa, he has enjoyed the
full spectrum of life and business on the
continent, making him an ideal founding
partner and COO of Afentra.
Anastasia’s multicultural upbringing
and over 20 years of working in the
energy sector within global, multinational
investment banks, private equity and
corporates has given her extensive
experience in strategy development, deal
origination, structuring and execution,
M&A and business transformation.
Her primary focus is always on driving
sustainable business growth that has a
visible positive impact on the bottom-
line. This, along with her significant prior
Board experience, both as a NED and
committee member, and her strong global
business development and financial
network means that Anastasia provides
expert leadership as Afentra’s CFO.
44Afentra plc Non-executive team
Jeffrey MacDonald
Independent non-executive Chairman
Gavin Wilson
Independent non-executive Director
Jeffrey MacDonald was a former
managing director with private equity
firm, First Reserve, with responsibility
for investment origination, structuring,
execution, monitoring and exit strategy,
with particular emphasis on the oil &
gas sector.
Gavin Wilson has held the position
of Investment Director at Meridian
Capital Limited, a Hong Kong based
international investment firm, for over a
decade, managing an oil & gas portfolio
focused on world-class assets in
emerging markets.
Before joining First Reserve, he was
a founder and CEO of Caledonia Oil
& Gas Ltd., a U.K. based exploration
and production firm, and a founding
member and managing director of
Highland Energy Ltd. Most recently he
held the position of Interim CEO and,
prior to that, non-executive Director, of
Kris Energy.
Mr. Wilson founded and managed, for over
seven years, two successful investment
funds - RAB Energy and RAB Octane.
Previously he was Managing Partner
of Canaccord Capital London’s Oil &
Gas division, responsible for Sales and
Corporate Broking/Finance.
45Annual Report and Financial Statements 2021OverviewStrategic ReportGroup AccountsCorporate Governance Statement of Corporate Governance
Afentra has been established to help facilitate a responsible energy transition
on the African continent that delivers positive outcomes for all stakeholders.
Our purpose is to support the African energy transition as a responsible,
well managed independent, enabling the continued economic and social
development of African economies and bridging the gap to other/renewable
forms of energy. We aim to be the trusted partner of IOCs, NOCs and host
governments in Africa in the divestment of legacy assets.
Our approach is to manage assets
responsibly, achieving the full asset
potential whilst also reducing carbon
emissions. We aim to achieve these
objectives with the robust ESG
principles embedded into the core
fabric of our business model and
operating structure.
The Board has been appointed to lead
the Company to achieve our purpose
and to work with the management team
to set out our culture and ensure we
succeed in our mission.
The Company follows the principles
of best practice set out in the Quoted
Companies Alliance Governance Code
(the ‘QCA Code’). The appropriate
Corporate Governance Code will remain
under review as the Company grows and
evolves. Following the appointment of
the new Board and executive team, the
Company has developed its corporate
governance and is satisfied with the
structure now in place. Our governance
structure will continue to evolve as the
company develops and grows and we
will ensure stakeholders remain informed
through regulatory announcements and
updates on our website.
Corporate culture
Afentra is building its business on a
strong ESG foundation and the core
elements of those principles are being
embedded in our strategy and business
model. Our vision is to establish
the Company as a leading pan-
African operator with an unwavering
commitment to operational excellence,
environmental stewardship, transparent
governance, positive socio-economic
impact, and strong sustainable
shareholder returns. Oil and gas remain
important in the energy mix and as
IOCs change their business models
with a view to developing a lower-
carbon footprint driven by societal
and investor pressure, these assets
must continue producing to meet
global demand, enable an effective
energy transition and allow the host
countries to benefit from the revenues
they generate. Afentra seeks to be
a credible acquirer of these assets
enabling IOCs and host governments to
have confidence that those assets will
be managed in a responsible way, with
strong environmental stewardship and
transparent governance ensuring we
hold ourselves to account as a best-in-
class operator.
To implement our acquisition and
growth strategy we have a thorough
due diligence process to scrutinise
opportunities for their suitability. Initial
high-level screening covers subsurface,
operational, commercial and risk
management before progressing
to more detailed assessment of a
potential target asset against our
acquisition criteria. The Board is
focused on reducing and managing
identified risks rather than eliminating
all risk. Any acquisition of hydrocarbon
assets inherently includes technical,
subsurface, operational, above ground
and commercial risks and the Board
has regard to such risks within its
acquisition parameters. The Board
seeks to eliminate HSSE risks and
reputational risk.
Board composition
Following the transformation of the
Company in 2021, the Board was
refreshed with Jeffrey MacDonald
appointed as non-executive Chairman
and Paul McDade as CEO. Ian Cloke
was appointed as COO, Gavin Wilson
joined the Board at the end of March as
an independent non-executive Director
and Anastasia Deulina was appointed
46Afentra plc CFO in early May. The Chairman,
Jeffrey MacDonald, was independent
on appointment and the Board intend
to appoint a further independent non-
executive Director in 2022.
Gavin Wilson holds 1.22% of the issued
share capital of the Company. He also
has a consultancy agreement in place
with YF Finance Limited who own
11.96% of the issued share capital of the
Company, however, Gavin Wilson is not
appointed to the Board as a shareholder
representative for YF Finance,
therefore the Board consider him to be
independent.
The Directors acknowledge that
shareholder expectation is that at least
half of the Directors of the Board will
be independent NEDs. Composition
of the various Board Committees
will also remain under review and will
change once a further independent
non-executive Director has been
appointed to the Board. Anastasia
Deulina was appointed to the Audit
Committee on a temporary basis until
a further appointment has been made
with the requisite financial knowledge
and experience. Board and Committee
composition will be considered
again once the Company has begun
implementation of its acquisition and
growth strategy.
Tony Hawkins, Michael Kroupeev, Leo
Koot and Ilya Belyaev all stepped down
from the Board in March 2021.
Functioning of the Board
The Board is responsible to the
shareholders for the proper management
of the Company. A Statement of
Directors’ Responsibilities in respect of
the financial statements is set out on
page 62 and 63.
Each Director takes their continuing
professional development seriously
and undertakes training from relevant
professional and industry bodies
in the form of attending seminars,
conferences and continual updates
of knowledge and industry practice.
Each Director and the employees of
the Company are required to undertake
Anti-Bribery and Corruption training
on an annual basis as well as regular
updates on new and evolving areas of
governance and compliance.
The Directors have access to the
Company’s other advisors as required
including legal advisors and auditors
and have the authority to obtain
external advice as deemed necessary.
The Remuneration Committee, upon
appointment, have sought advice
from FIT Remuneration Consultants
LLP (‘FIT Remuneration’) regarding
updating the Company’s remuneration
policy and further details regarding
this can be found in the Remuneration
Committee’s report on pages 51 - 58.
The Independent non-executive
Chairman is available to all shareholders
and staff if they have concerns which,
through the normal channels of contact,
have not been resolved or for which such
contact is inappropriate. The Company
has not historically detailed the roles of
Chairman, non-executive Director and
Company Secretary however this will be
reviewed going forward. The CEO, CFO
and COO have contractual obligations to
the Company.
47Annual Report and Financial Statements 2021OverviewStrategic ReportGroup AccountsCorporate Governance Statement of Corporate Governance (cont.)
Conflicts of interest
Whilst conflicts should be avoided, the
Board acknowledges that instances
arise where this is not always possible.
In such circumstances, Directors are
required to comply with the Company’s
Conflicts of Interest Policy and notify the
Chairman before the conflict arises and
the details are recorded in the minutes.
If a Director notifies the Board of such
an interest, they may be, if requested by
the Chairman, excluded from any related
discussion and will always be excluded
from any formal decision.
Retirement and re-election
The Company’s Articles of Association
require that any Director who has been
a Director at the preceding two Annual
General Meetings and who had not
been appointed or re-appointed by the
Company, retire and stand for re-election.
All new Directors appointed since the
previous Annual General Meeting are
required to stand for election at the
following Annual General Meeting.
Meetings and time commitment of
the Board
The Board and each of the Board
Committees are provided with timely and
accurate information sufficiently ahead
of each scheduled Board and Committee
meeting to enable Board and Committee
members to have sufficient time to
review and analyse the information
provided. The Board meets at least five
times a year and in addition holds ad hoc
meetings. The Audit Committee meets
at least once a year, the Remuneration
Committee and the Nominations
Committee meet as required.
The Chief Executive, Chief Operating
Officer and Chief Financial Officer
are full-time positions. Non-executive
Directors are expected to commit
sufficient time to ensure they are fully
aware of the Company’s affairs and it is
expected that this time commitment
will vary over the course of the term with
intensive periods requiring significant
director focus.
The following table summarises the
number of Board and committee
meetings held during the year ended 31
December 2021 and the attendance
record of the individual Directors who
were appointed to the Board during
2021:
Board
Meetings
Audit
Committee
Remuneration
Committee
Nominations
Committee
11
4
4
3
7
3
3
8
8
8
1
-
-
1
-
-
1
-
-
-
1
-
-
-
-
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
Number of meetings in year
Paul McDade
Ian Cloke
Anastasia Deulina
Tony Hawkins
Jeffrey MacDonald
Gavin Wilson
Michael Kroupeev
Leo Koot
Ilya Belyaev
No formal Board performance evaluation took place in 2021.
Jeffrey MacDonald
Independent non-executive Chairman
25 April 2022
48Afentra plc Audit Committee Report
Members
This Committee currently
comprises:
• Gavin Wilson (Chairman)
• Anastasia Deulina (Chief
Financial Officer)
Committee composition
Anastasia is the CFO and will only
remain on the Committee until a further
independent non-executive Director
has been appointed with the requisite
financial experience. The Company
intends to commence a search for a
further independent non-executive
Director as the Company begins to
deliver its buy and build strategy.
The Audit Committee met once during
2021. The Auditors have unrestricted
access to the Chairman of the
Audit Committee. Audit Committee
meetings are attended by the Auditor
where and when appropriate and, by
invitation, the other Directors and
senior management.
Summary of responsibilities:
• monitoring the integrity of the
Group’s financial statements,
including review of the financial
statements of the Company
including its annual and half-
yearly reports and any formal
announcements relating to its
financial performance;
•
reviewing the effectiveness of the
Group’s financial reporting, internal
control policies and procedures for
the identification, assessment and
reporting of risk;
• monitoring the effectiveness of the
internal control environment;
• making recommendations to the
Board on the appointment of the
Auditors;
• making a recommendation to the
Board on Auditors’ fees;
• agreeing the scope of the Auditors’
annual audit programme and
reviewing the output;
• ensuring the independence of the
Auditors is maintained;
• assessing the effectiveness of the
audit process; and
• developing and implementing policy
on the engagement of the Auditors
to supply non-audit services.
The Audit Committee has considered
the Group’s internal control and
risk management policies and
systems, their effectiveness and the
requirements for an internal audit
function in the context of the Group’s
overall risk management system. The
Committee is satisfied that the Group
does not currently require an internal
audit function, however, it will continue
to periodically review the situation.
An essential part of the integrity of
the financial statements lies around
the key assumptions and estimates or
judgments to be made. Key estimates
reviewed by the Committee during
included the expected credit loss model
prescribed by IFRS 9 and the discount
rate to be used (IFRS 16, leases). The
Committee reviews key judgments
prior to publication of the financial
statements, as well as considering
significant issues throughout the year,
which included the carrying value of
investments and impairment of assets
(IFRS 6, Exploration for and Evaluation
of Mineral Resources). The Committee
reviewed and was satisfied that the
judgments exercised by management
contained within the Report and
Financial Statements are reasonable.
The external audit function plays
an important part in assessing the
effectiveness of financial reporting and
internal controls, and the effectiveness
and quality of audit is of key importance.
Our Auditors, BDO LLP, have been
in place since 2010. The Committee
notes that it is considered best practice
for companies to put the external
audit contract out to tender at least
every ten years. In line with the audit
profession’s own ethical guidance, the
current audit engagement partner
is due to rotate off the Company’s
account in the year ending 31 December
2023, having served for a period of five
years. Having considered the Financial
Reporting Council’s (‘FRC’s’) guidance,
the Committee’s current intentions
are that it will initiate a re-tendering
process during 2022. The Committee
has recommended to the Board that
shareholders support the re-appointment
of BDO LLP at the 2022 AGM.
Further disclosure relating to the
Auditors is set out within the Directors
Report on pages 60 and 61.
Details of fees payable to the Auditors
are set out in Note 4.
Gavin Wilson
Chairman of the Audit Committee
25 April 2022
49Annual Report and Financial Statements 2021OverviewStrategic ReportGroup AccountsCorporate Governance
of the Board. The Company intends
to commence a search for a further
independent non-executive Director,
at which point the Committee will then
consider the composition of the other
Board Committees and, in particular,
that of the Audit Committee, and will
recommend any changes to the Board.
As at the date of this report, the
Committee is satisfied that, subject to the
appointment of a further non-executive
Director, the composition of the Board is
appropriate for the Company at this stage
of its development.
Jeffrey MacDonald
Chairman of the Nominations
Committee
25 April 2022
Nominations Committee
Members
This Committee currently
comprises:
• Jeffrey MacDonald (Chairman)
• Gavin Wilson
• Paul McDade
Roles and responsibilities
The Committee is focused on ensuring
that the composition of the Board
and Committees of Afentra and its
balance is optimal in order to help
Afentra achieve its vision and deliver
its strategy to its stakeholders. The
Committee considers governance best
practice taking account of the stage of
development of the Company.
Key responsibilities include:
• Reviewing the structure, size and
composition of the Board taking
into account the skills, knowledge,
experience and diversity of the
various Board members and making
recommendations to the Board
regarding potential changes;
• Considering succession planning for
directors and senior management
and identifying and nominating
for approval of the Board any
candidates to fill Board vacancies as
and when they arise;
• Reviewing the leadership needs of
the Group, both executive and non-
executive, with a view to ensuring
that the Company can continue to
deliver its strategy to stakeholders;
• Reviewing the time commitment
required from non-executive
Directors;
• Appointing any external advisors
to facilitate the search for Board
candidates or approving the use of
open advertising; and
• Facilitating Board evaluation.
Report on activities
The Committee is focused on ensuring
that the composition and balance of the
Board is optimal to help the Company
to achieve its purpose of supporting the
African energy transition as a responsible,
well managed independent oil and gas
development and production company.
The Committee is confident that it has an
exceptional leadership team with a proven
track record of operational excellence,
value creation and stakeholder
engagement across Africa.
Following the complete refreshment
of the Board in 2021 the Committee
will meet in 2022 to review the balance
of skills, knowledge and experience
50Afentra plc
Remuneration Committee Report
I am pleased to present the Remuneration Committee’s report for 2021. Following the
appointment of an entirely new Board, including a new executive team, in March 2021, this
report is focused on the future, setting out how the new Board will be remunerated to deliver
our strategy and to ensure the Company fulfils its purpose to support the African energy
transition as a responsible, well managed independent oil and gas (or energy) company,
enabling the continued economic and social development of African economies whilst
creating material value for all our shareholders. The report also details how the Board was paid
in the year ended 31 December 2021.
Members
This Committee currently
comprises:
• Gavin Wilson (Chairman)
• Jeffrey MacDonald
Details of the Remuneration
Committee and its operation
The Remuneration Committee makes
recommendations to the Board, within
its agreed terms of reference, on the
structure and quantum of remuneration
packages for executive Directors and
it reviews the remuneration for senior
management. The Committee consists
entirely of non-executive Directors
and, where appropriate, will invite other
individuals such as the Chief Executive,
HR Manager and external advisors to
attend meetings to provide suitable
context for its discussions. Only
members of the Committee participate
in discussions and reach conclusions
on matters for which the Committee is
responsible. No member or attendee
is authorised to participate in matters
relating to their own remuneration.
Summary of responsibilities:
•
recommending to the Board
a remuneration policy for the
remuneration of the Chairman,
non-executive Directors,
executive Directors and other
senior management;
• within the agreed policy,
determining individual
remuneration packages for the
executive Directors and other
senior management;
• agreeing the policy on terms
and conditions to be included
in service agreements for the
Chairman, executive Directors,
and other senior management,
including termination payments
and compensation commitments,
where applicable; and
• the approval of any employee
incentive schemes and the
performance conditions to be
used for such schemes including
share performance targets.
Committee composition will remain under
review and may be subject to change
when the Company appoints further
independent non-executive Director(s) to
the Board. The Company Secretary acts
as secretary to the Committee.
Advisors to the Committee
FIT Remuneration Consultants LLP
(‘FIT Remuneration’) was appointed
following the transformation of the
Company in March 2021 to provide
advice to the Committee in respect
of the introduction and operation of
a new Remuneration Policy and the
drafting of this report. FIT is a member
and signatory of the Remuneration
Consultants Group and voluntarily
operates under the Code of Conduct
in relation to executive remuneration
consulting in the UK, details of which
can be found at:
www.remunerationconsultantsgroup.com
In addition, PricewaterhouseCoopers
LLP (‘PwC’) was appointed to advise the
Committee on the structure and terms
of the Founders Share Plan (‘FSP’) which
is described further below.
This report presents:
• The Directors’ Remuneration
Policy, which summarises the
Remuneration Policy which has
been introduced by the Committee
following the appointment of the
new Board; and
• The Annual Report on
Remuneration, which details how
the Committee operated the Policy
for 2021 and how it intends to
operate the Policy going forwards.
51Annual Report and Financial Statements 2021OverviewStrategic ReportGroup AccountsCorporate Governance Remuneration Committee Report (cont.)
Directors’ Remuneration Policy
Following the new Board being appointed, the Remuneration Policy was reviewed and aligned to the Company’s strategy, purpose
and vision and recognises the experience of the new leadership team which has led the transformation of the Company and
facilitated the opportunity for shareholders and other stakeholders. To recognise this and ensure the new Executive team are
adequately incentivised, by sharing in the value created from the new corporate strategy, it was proposed that a Founder Share Plan
(‘FSP’) was established. Following advice from PwC, FIT and consultation with the Company’s major shareholders, this plan has now
been adopted by the Company. Details of the FSP are set out below.
In addition to the FSP, a market consistent Long Term Incentive Plan (‘LTIP’) has also been adopted to ensure that all members
of staff can share in the value created from the new corporate strategy. Whilst the FSP and LTIP have both been adopted by
the Company, it is intended that no awards will be made under these share plans until the first acquisition in Afentra’s buy and
build strategy is completed. In addition the FSP has been designed to ensure that rewards from this plan are only made following
significant value creation relative to the share price at the time the new Executive team joined the Company.
The Remuneration Policy is set out below..
Base salary
Purpose and link to strategy
To recruit and reward executives of the quality required and with appropriate skills to
manage and develop the Company and deliver the strategy.
Operation
• Base salary is normally reviewed annually taking into account the executive Directors’
Benefits
Purpose and link to strategy
Operation
performance, individual responsibilities and experience.
• The Committee may use market data where appropriate and will also consider
matters of retention, motivation and economic climate as well as the challenges
facing the business.
• The Committee will also consider pay increases awarded to the Company’s
employees when determining increases for the executive Directors.
• There is no maximum opportunity.
To provide appropriate levels of benefits to executives of the quality required and
appropriate skills to manage and develop the Company successfully.
• The Company may offer benefits for employees and Directors which may include
life assurance, travel insurance, income protection, subsidised gym membership
and private medical insurance (or associated cash plan which is subject to an annual
limit). Where appropriate some of these benefits are linked to base salary. Given
the international nature of the business, relocation and expatriate benefits and
reimbursed business expenses (including any tax liability) incurred when travelling
overseas in performance of duties will be provided. This will be reviewed by the
Committee as the Company delivers its buy and build strategy.
• The maximum potential value is the cost of the provision of these benefits.
52Afentra plc Pension
Purpose and link to strategy
To provide appropriate levels of pension provision to executives of the quality required
and appropriate skills to manage and develop the Company successfully.
Operation
•
10% of salary (delivered as a pension and/or a cash allowance).
Annual bonus
Purpose and link to strategy
To incentivise and reward the delivery of the Company’s short-term strategic objectives.
Operation
• Maximum opportunity is up to 100% of salary p.a.
• Annual targets are normally set at the start of the relevant financial year (or shortly
after a new executive joins the Board) based on financial, operational, strategic and/or
personal performance.
• Any bonus payment is subject to the Company’s malus and claw-back policy.
Long-term incentives
Purpose and link to strategy
To retain, incentivise and reward the delivery of the Company’s strategic objectives, and
to provide further alignment with shareholders
Operation
• The Company has introduced a Founder Share Plan (‘FSP’) whereby:
• participation will be limited to the founders (being those executive Directors who
have invested their own funds in the Company’s shares);
• participants will share in the growth delivered by the Company above a threshold
that the Directors believe represents a challenging hurdle;
• malus and clawback provisions will apply.
• Further details of the FSP are set out below.
•
In addition, a market standard Long Term Incentive Plan (‘LTIP’) has been
introduced.
• The LTIP is initially intended to operate for below Board employees albeit the
Committee may extend the plan to Executive Directors in the future (subject to
the FSP).
• LTIP awards will normally be granted annually to employees with vesting subject
to continued service and the achievement of stretching performance targets
(whether share price based, financial, operational or strategic).
• The maximum annual opportunity is 100% of annual salary and there is an
aggregate limit whereby the Company may issue no more than 15% of its share
capital within a ten-year period to satisfy awards to participants in the LTIP, FSP
and any other share plan.
53Annual Report and Financial Statements 2021OverviewStrategic ReportGroup AccountsCorporate Governance Remuneration Committee Report (cont.)
Shareholding guideline
Purpose and link to strategy
To align executive and shareholder interests.
Operation
• The Committee recognises the importance of executive Directors aligning their
interests with shareholders through building up significant shareholdings in the
Group. Executive Directors are expected to buy, and/or retain all shares acquired on
the vesting of share awards (net of tax) until they reach a 100% of salary ownership
guideline.
Non-executive Director fees
Purpose and link to strategy
Operation
To attract and retain a high-calibre Chairman and non-executive Directors by offering
appropriate fees.
• The Chairman and non-executive Directors will receive an annual fee (they will not be
eligible to participate in the Company’s pension arrangements, annual bonus plan or
receive share awards).
• Fees are normally reviewed annually taking into account the Directors’ role, time
commitment and comparator data where relevant.
• Each non-executive Director is entitled to be reimbursed travel and business
associated expenses (including any tax liability) incurred in the normal course of
business.
Service contracts and termination of employment
No Director currently has a notice period greater than 12 months and the service contract of the executive Directors contain no
provision for pre-determined compensation on termination which exceeds 12 months’ salary and benefits. If an executive Director’s
appointment is terminated within three months of a change of control of the Company, the relevant executive Director will be entitled
to an amount equivalent to the gross value of (i) one year’s salary and other contractual benefits (save in respect of holiday entitlement)
and (ii) sixty five per cent. (65%) of the annual bonus (if any) paid or to be paid to that Director in respect of the financial year
immediately preceding the financial year in which notice of termination was given to the Director, less any sums paid to the Director by
way of notice or payment in lieu of notice.
Termination payments made to Directors on loss of office that are not provided for within their service contracts are only made if the
Committee considers them appropriate, has recommended them to the Board and the Board has given its approval.
A bonus payment will not normally be made to a Director under notice, although there may be circumstances where one or more clear,
specific and determinable KPIs has been achieved which justify a limited bonus payment.
Introduction of the Founder Share Plan (‘FSP’)
The Company has introduced an incentive arrangement for the founders of the Company designed to incentivise participants to deliver
exceptional returns for shareholders over a five-year period. Under the FSP, participants are eligible to receive 15% of the growth in
returns of the Company from 16 March 2021 (being the date on which Paul McDade and Ian Cloke were appointed to the Board), should
a hurdle of doubling of the total shareholder return be met. For further capital raises that occur during the performance period, additional
tranches under the FSP will be created with their own threshold values, which will be calculated with reference to the growth rates
required for the initial award, as well as the time remaining to each of the measurement dates. Additional tranches will follow the same
timetable as the initial awards (i.e. performance will be measured on the same dates).
54Afentra plc Not more than 10% of the Company’s issued ordinary share capital may be issued under the FSP and no more than 15% of the
Company’s issued share capital may be issued in aggregate under the FSP, LTIP and any other share plan of the Company.
Performance Conditions – a share price of £0.15 (being the share price at which new investors acquired their interest in the
Company) will be used to measure the level of return at each measurement date. Testing of the level of return achieved will be at
the end of years three, four and five from the 16 March 2021. At each measurement date the value of the award will be driven by the
return generated above the initial price of £0.15, being the threshold value.
Although the FSP has been adopted by the Company, no awards will be made until the first acquisition to be made by Afentra pursuant
to its new corporate strategy is completed.
Measurement Date
Threshold Total Shareholder Return
Measurement Total Shareholder Return
First Measurement
Date
25.99% compound annual growth from the initial
price of £0.15 as at the First Measurement Date.
16 March 2024
Second Measurement
Date
16 March 2025
Third Measurement
Date
16 March 2026
The higher of:
•
•
18.92% compound annual growth from the initial
price of £0.15 as at the Second Measurement
Date; and
the highest previous measurement total
shareholder return which resulted in Conversion.
The higher of:
•
•
14.87% compound annual growth from the initial
price of £0.15 as at the Third Measurement
Date; and
the highest previous measurement total
shareholder return which resulted in Conversion.
Average of the market value for the Company’s
shares for the 30-day period ending on the
First Measurement Date plus the dividends
paid per share from 16 March 2021 to the First
Measurement Date.
Average of the market value for the Company’s
shares for the 30-day period ending on the
Second Measurement Date plus the dividends
paid per share from 16 March 2021 to the Second
Measurement Date.
Average of the market value for the Company’s
shares for the 30-day period ending on the
Third Measurement Date plus the dividends
paid per share from 16 March 2021 to the Third
Measurement Date.
If at the Measurement Dates in years three and/or four the threshold value has been reached, then nil cost options will be awarded of
which half will vest and can be exercised immediately. The remaining half will be deferred until the Measurement Date at year five. All
nil cost options awarded in respect of the Measurement Date at year five will vest immediately.
Awards of all nil cost options will be made after approval by the Remuneration Committee taking into account the overall
performance of the Company during the performance period. Malus and clawback provisions apply.
Introduction of the Long Term Incentive Plan (‘LTIP’)
In addition to the FSP, a market standard LTIP has been introduced, initially to be used for below Board employees. The terms of the
LTIP are set out in the Policy table above.
55Annual Report and Financial Statements 2021OverviewStrategic ReportGroup AccountsCorporate Governance Remuneration Committee Report (cont.)
Remuneration of Directors for the year ended 31 December 2021
The table below reports single figure remuneration of the Directors received in 2021 and the prior year.
2021 Remuneration
Fees and
basic salary
Bonus
Defined
contribution
pension
Benefits
in kind
Single figure
remuneration
Total 2021
Executive Directors:
Paul McDade (appointed 15 March 2021) 1
Ian Cloke (appointed 15 March 2021) 1
Anastasia Deulina (appointed 4 May 2021) 1
Tony Hawkins (resigned 15 March 2021) 1
Non-executive Directors:
Jeffrey MacDonald (appointed 30 March 2021)
Gavin Wilson (appointed 30 March 2021)
Michael Kroupeev (resigned 30 March 2021)
Leo Koot (resigned 30 March 2021)
Ilya Belyaev (resigned 30 March 2021)
Aggregate remuneration 2021 (£)
Aggregate remuneration 2021 (US$)
£
291,667
237,500
244,000
130,836
72,738
33,750
52,800
26,400
19,050
1,108,741
1,526,585
£
-
-
-
-
-
-
-
-
-
-
-
£
£
£
29,167
23,750
19,000
5,625
-
-
-
-
-
7,775
6,001
2,876
858
-
-
-
-
-
328,609
267,251
265,876
137,319
72,738
33,750
52,800
26,400
19,050
77,542
106,666
17,510
1,203,793
24,087
1,657,338
2020 Remuneration
Executive Directors:
Fees and
basic salary
Bonus
Defined
contribution
pension
Benefits
in kind
Single figure
remuneration
Total 2020
£
£
£
£
£
David Marshall (resigned 4 December 2020) 2
204,509
33,750
21,540
5,515
265,314
Non-executive Directors:
Michael Kroupeev
Leo Koot
Ilya Belyaev
Aggregate remuneration 2020 (£)
100,625
50,312
36,305
391,751
Aggregate remuneration 2020 (US$)
502,907
-
-
-
-
-
-
-
-
-
33,750
43,326
21,540
27,652
5,515
7,080
100,625
50,312
36,305
452,556
580,965
1 Defined pension contributions paid as cash.
2 Includes 2019 bonus amount of £34k accrued at 2019 year-end, which was paid on 26 March 2020.
56Afentra plc Annual Bonus Awards for 2021
The annual bonus KPIs for 2021 were based on a combination of the effective management of the 2021 budget for the Company
and the delivery of the Company’s “buy and build” acquisition strategy. As no acquisitions were completed in 2021, it has been
determined that no bonuses will be paid to the Executive Directors for that period.
Board Changes
In respect of the Board changes which took place during 2021:
• Michael Kroupeev, Leo Koot and Ilya Belyaev stepped down from the Board on 30 March 2021. No payments for loss of office
were paid.
• Tony Hawkins was appointed as CEO on 1 January 2021 and stepped down from the Board on 15 March 2021 (he was appointed
to the Board of Directors on 7 December 2020). Other than being paid salary and benefits for his 3 month notice period, no
payments for loss of office were paid.
• Paul McDade was appointed CEO and Ian Cloke was appointed COO on 15 March 2021. Anastasia Deulina was appointed CFO
on 4 May 2021. Details of their remuneration arrangements from appointment is set out below.
• Jeffrey MacDonald was appointed as independent non-executive Chairman and Mr Gavin Wilson was appointed as non-
executive Director on 30 March 2021. Details of their fees from appointment is set out below.
Remuneration Policy for 2022
Base salary
Paul McDade, Ian Cloke and Anastasia Deulina will receive base salaries for 2022 of £350,000,
£285,000 and £285,000 respectively.
Pension
10% of salary in line with the Remuneration Policy.
Annual bonus
Annual Bonus will be capped at 100% of base salary.
The payment of the bonus will be dependent on the achievement of financial, operational, strategic
and personal performance targets. The targets and performance against these targets will be disclosed
in the Remuneration report for the year ending 31 December 2022 unless the Committee considers
these to be commercially sensitive.
FSP
Although the FSP has been adopted by the Company, no awards will be made until the first acquisition
to be made by Afentra pursuant to its new corporate strategy is completed.
Non-executive fees
The non-executive Chairman and non-executive Director will receive fees for 2022 of £96,000 and
£45,000 respectively.
57Annual Report and Financial Statements 2021OverviewStrategic ReportGroup AccountsCorporate Governance Remuneration Committee Report (cont.)
Statement of Directors interests (audited)
The Directors’ beneficial interests in the issued share capital of the Company are as follows:
Ordinary shares of 10p each
Executive Directors:
Paul McDade (appointed 15 March 2021)
Ian Cloke (appointed 15 March 2021)
Anastasia Deulina (appointed 4 May 2021)
Non-executive Directors:
22 April 2022
31 December 2021
31 December 2020
2,267,000
1,920,555
954,141
2,267,000
1,920,555
954,141
Gavin Wilson (appointed 30 March 2021)
2,681,666
2,681,666
Jeffrey MacDonald (appointed 30 March 2021)
-
-
Beneficial shareholdings include the shareholdings of a Director’s spouse and infant children.
-
-
-
-
-
Directors’ and Officers’ liability insurance
The Company has granted an indemnity to its Directors (including subsidiary undertakings) under which the Company will, to the maximum
extent possible by law, indemnify them against all costs, charges, losses and liabilities incurred by them in the performance of their duties.
The Company provides limited Directors’ and Officers’ liability insurance, at a cost of approximately $59.9k in 2021 (2020: $27.5k).
External directorships
None of the executive Directors receive fees in relation to directorships in other companies.
Gavin Wilson
Chairman of the Remuneration Committee
25 April 2021
58Afentra plc Extractive Industries Transparency Initiative (‘EITI’)
In accordance with the Transparency Criteria as set out by the EITI, the following payments to Government bodies have been made
during the year ended 31 December 2021:
Somaliland - Odewayne 1
1 Payments made by Genel Energy (A(EA)L fully carried for its share of cost).
2021
$000
75
75
2020
$000
75
75
59Annual Report and Financial Statements 2021OverviewStrategic ReportGroup AccountsCorporate Governance Directors’ Report
The Directors present their Annual Report and Financial
Statements on the affairs of the Company and its subsidiaries,
together with the independent Auditors’ Report for the year
ended 31 December 2021.
Principal activity and business review
The principal activity of the Group and Company throughout
the year was identifying and progressing acquisition targets in
line with the stated strategy and the exploration of oil and gas,
with Africa as the geographic focus. The future strategy and
prospects for the Group are reviewed in detail in the Chairman’s
Statement, Chief Executive Officer’s Statement and the
Strategic Report section of this report.
The Group operates through subsidiary undertakings as
appropriate to the fiscal environment. Subsidiary undertakings
of the Group are set out in Note 11 to the financial statements.
In 2021 the Group used a number of KPIs to assess the
business performance against strategy, these included: M&A
led growth initiatives and managing the Group’s financial
exposure to its existing assets.
Results and dividends
The Group loss for the financial year was $5.0 million (2020:
loss $1.9 million). This leaves an accumulated Group retained
earnings of $31.0 million (2020: retained earnings of $35.9
million) to be carried forward. The Directors do not recommend
the payment of a dividend (2020: $nil).
Directors Liabilities
Qualifying third-party indemnity provisions for the benefit of all of
the Directors were in force throughout the financial year and they
remained in force as at the date of approval of the Annual Report as
described in the Remuneration Committee report pages 51 – 58.
Going concern
The Group business activities, together with the factors likely
to affect its future development, performance and position are
set out in the Asset summary on page 28 and 29. The financial
position of the Group and Company, its cash flows and liquidity
position are described in the Financial Review on pages 30 and
31. In addition, Note 18 to the financial statements includes the
Group’s objectives, policies and processes for managing its
capital financial risk: details of its financial instruments and its
exposures to credit risk and liquidity risk.
The Group has sufficient cash resources for its working capital
needs and its committed capital expenditure programme at
least for the next 12 months. As a consequence, the Directors
believe that both the Group and Company are well placed to
manage their business risks successfully despite the ongoing
pandemic and uncertain economic outlook.
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Group has
adequate resources to continue in operational existence for
the foreseeable future. This assessment has been made by
the Directors who remain confident the Group has sufficient
cash resources at the date of signing the annual report to
meet its liabilities as they fall due for a period of at least 12
months from the date of signing these financial statements,
notwithstanding; the impact COVID-19 has had, and continues
to have internationally and the current situation in Ukraine
and the impact to commodity prices and foreign exchange
rates. The Group currently has no unconditional, legally binding
commitments in relation to the disclosed transaction in Note
20. The Directors believe that the Group is in a strong position
to absorb any potential impact on the Group arising from
COVID-19, and thus, they continue to adopt the going concern
basis of accounting in preparation of the financial statements.
Capital structure
Details of the issued share capital, together with details of the
movements in the Company’s issued share capital during the
year, are shown in Note 14 to the financial statements. The
Company has one class of ordinary share, which carries no
right to fixed income. Each share carries the right to one vote at
general meetings of the Company.
There are no specific restrictions on the size of a holding nor
on the transfer of shares, which are both governed by the
general provisions of the Articles of Association and prevailing
legislation. The Directors are not aware of any agreements
between holders of the Company’s shares that may result in
restrictions on the transfer of securities or on voting rights. No
person has any special rights of control over the Company’s
share capital and all issued shares are fully paid.
60Afentra plc Directors
The Directors who served during the year were as follows:
Business risk
A summary of the principle and general business risks can be
found within the Strategic Report on pages 34 - 37.
• Mr. Paul McDade
• Mr. Ian Cloke
• Ms. Anastasia Deulina
• Mr. Jeffrey MacDonald
• Mr. Gavin Wilson
• Mr. Tony Hawkins
• Mr. Michael Kroupeev
• Mr. Leo Koot
• Mr. Ilya Belyaev
Financial instruments
Information about the use of financial instruments, the Group’s
policy and objectives for financial risk management is given in
Note 18 to the financial statements.
Auditors
Each of the persons who are a Director at the date of approval
of this Report and Financial Statements confirms that:
Biographical details of the current serving Directors can be found
in the Board of Directors section of this report on page 44.
• so far as the Director is aware, there is no relevant
audit information of which the Company’s Auditors are
unaware; and
Directors and election rotation
With regard to the appointment and re-election of the Directors,
the Company is governed by its Articles of Association,
the Companies Acts and related legislation. The powers of
Directors are described within this report.
•
the Directors have taken all the steps that they ought to
have taken as a director in order to make themselves aware
of any relevant audit information and to establish that the
Company’s Auditors are aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the
Companies Act 2006.
BDO LLP has expressed its willingness to continue in office as
Auditors and a resolution to appoint BDO will be proposed at the
forthcoming Annual General Meeting, to be held on 24 May 2022.
Paul McDade
Chief Executive Officer
25 April 2022
Significant shareholdings
Except for the holdings of ordinary shares listed below, the
Company has not been notified by or become aware of any
persons holding 3% or more of the 220,053,520 issued ordinary
shares of 10 pence each of the Company at 22 April 2022:
YF Finance
Zion SPC - Access Fund SP
Denis O'Brien
Credit Suisse
Kite Lake Capital Management
(UK) LLP
Richard Griffiths and controlled
undertakings
Athos Capital Limited
Hadron Capital LLP
Number
26,315,423
21,789,361
15,750,000
14,930,358
13,500,000
%
11.96
9.90
7.16
6.78
6.13
13,105,000
5.96
9,000,000
7,444,800
4.09
3.38
61Annual Report and Financial Statements 2021OverviewStrategic ReportGroup AccountsCorporate Governance Statement of Directors’ Responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected
to prepare the Group and Company financial statements in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006. Under company law the Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that
period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for
companies whose securities are admitted to trading on AIM.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006, subject to any material departures disclosed and explained in the financial
statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable
them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
62Afentra plc Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial
statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of
the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the
financial statements contained therein.
Disclosure of audit information
In the case of each person who is a Director of the Company at the date when this report is approved:
• So far as they are individually aware, there is no relevant audit information of which the Company’s auditor is unaware; and
• Each of the Directors has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant
audit information and to establish that the Company’s auditor is aware of the information.
For and on behalf of the Board
Paul McDade
Chief Executive Officer
Anastasia Deulina
Chief Financial Officer
25 April 2022
25 April 2022
63Annual Report and Financial Statements 2021OverviewStrategic ReportGroup AccountsCorporate Governance 64Afentra plc Group Accounts
Year ended 31 December 2021
65Annual Report and Financial Statements 2021 Independent Auditors’ Report
to the members of Afentra plc
Opinion on the financial statements
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31
December 2021 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
the Parent Company financial statements have been properly prepared in accordance with UK adopted international
accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Afentra Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the
year ended 31 December 2021 which comprise the consolidated statement of comprehensive income, the consolidated and
company statements of financial position, the consolidated and company statement of changes in equity, the consolidated
and company statement of cash flows and notes to the financial statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted
international accounting standards and, as regards the Parent Company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent
Company’s ability to continue to adopt the going concern basis of accounting included:
• Obtaining and assessing the Group and Parent Company’s cash flow forecasts for the period to June 2023 and the underlying
assumptions, including verification of the opening cash position and agreeing to available supporting documentation.
• Comparing the level of committed exploration spend per the Group’s contractual arrangements to the level of such expenditure
included in the going concern model.
• Comparing the Group’s actual results for the year ended 31 December 2021 to the planned budgeted out turn for 2021 to assess the
quality of Management’s budgetary process and the Director’s assessment.
• Discussing and seeking views from Management and the Audit Committee on their assessment of risks and uncertainties and
corroborating these with relevant evidence.
• Reviewing and considering the adequacy of the disclosure within the financial statements relating to the Directors’ assessment of the
going concern basis of preparation.
Afentra plc
66 Overview
Strategic Report
Corporate Governance
Group Accounts
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections
of this report.
Overview
Coverage
100% (2020: 100%) of Group total assets and loss before tax
Key audit matters
Carrying value of exploration assets
• 2021
• 2020
Materiality
Group financial statements as a whole
• $900k (2020: $970k) based on 1.5% (2020:1.5%) of total assets.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system
of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of
management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
Our Group audit scope focused on the Group’s principal operating entities, Afentra plc and Afentra Northwest Africa Holdings
Limited. We have identified both entities as significant components for the purposes of our financial statement audit, based on their
relative share of total assets. Full scope audits were performed on these significant components.
The remaining components of the Group were considered non-significant and these components were principally subject to
analytical review procedures, together with additional specified audit procedures over the risk areas detailed above where applicable
to that component.
All audit work was conducted by BDO LLP.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit,
and directing the efforts of the engagement team. This matter was addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.
Annual Report and Financial Statements 2021
67 Independent Auditors’ Report (cont.)
to the members of Afentra plc
Carrying value of exploration assets (Note 9)
As at 31 December 2021, the carrying value of Odewayne was $21.3 million (2020: $21.2 million), as disclosed in Note 9 to the
financial statements. The Group holds a 34% interest in the Odewayne Block, fully carried by Genel Energy Somaliland Limited
(‘Genel’) for its share of the costs of all exploration activities during the Third and Fourth Periods of the production sharing agreement.
The Third Period has been extended to May 2024 and has a minimum work obligation of 500km of 2D seismic. The Fourth Period,
which is due to begin after the third period, has a minimum work obligation of 1,000km of 2D seismic and one exploration well.
Management performed an impairment indicator review in accordance with accounting standards to assess whether there were
any indicators of impairment for the exploration assets and whether a full impairment assessment was required. Following this
assessment, the Board concluded that no impairment indicators existed.
Management have disclosed all the relevant information used in the indicators of impairment in the financial statements.
Given the inherent judgement involved in the assessment of the carrying value of the exploration assets, we considered the carrying
value of exploration assets and the related disclosures to be a key audit matter.
How the scope of our audit addressed the key audit matter
• We considered Management’s assessment of the indicators of impairment and we assessed if there is an ongoing expectation
•
that exploration in the licence areas will continue. We have also reviewed the licence agreement and the Production Sharing
Agreement. We have also reviewed the signed amendment which extends the third period out to 2024.
• We made enquires at appropriate management levels of possible commitments and contingent liabilities and reviewed these
for accuracy.
• Contracts were reviewed to determine if the Group is being carried until the Fourth Period by Genel, and that Genel are
contractually committed to develop the prospect until then.
• We have reviewed management reports, OCM minutes and public announcements to understand the future prospects of the
asset and the desire to further develop the asset.
• We reviewed the FY22 budgets and work programmes to consider the Group’s intention to continue to fund exploration
activity on this licence.
• We reviewed all provided correspondence between Genel and Afentra regarding whether the asset was in the third or fourth Period.
• We have reviewed the disclosures in the financial statements and ensured these are consistent with our audit work performed
on this key audit matter.
Key observations
Our procedures above did not indicate any instances which may suggest that management’s assessment of the carrying value of
the exploration assets, including the relative disclosures in the financial statements, to be inappropriate. The key judgements and
assumptions used by management in the impairment assessment were reasonable.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We
consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily
be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality
as follows:
Afentra plc
68 Overview
Strategic Report
Corporate Governance
Group Accounts
Group financial statements
Parent Company financial statements
2021
$’000
900
2020
$’000
970
2021
$’000
675
2020
$’000
728
Materiality
Basis for determining materiality
1.5% total assets
75% of Group
Rationale for the benchmark
applied
We consider total assets to be the most
significant determinant of the Group’s
financial performance on the basis that the
Group’s principal activity is the development
of oil and gas exploration assets and it is the
value of assets that is of greatest interest to
the users of the financial statements.
The rationale behind the materiality of the
Parent Company was the same as that of
the Group however in line with the auditing
standards we considered aggregation risk
within the Group and therefore capped the
materiality at 75% of the Group’s level.
Performance materiality
675
728
506
546
Basis for determining
performance materiality
Performance materiality was set at 75%
of the above materiality level based on
our assessment of a number of factors
including the expected total value of known
and likely misstatements (based on past
experience), our knowledge of the group’s
internal controls and management’s attitude
towards proposed adjustments.
Performance materiality was set at 75% of
the above materiality level as the level of
adjustments in the prior year was immaterial.
Component materiality
We set materiality for the significant component of the Group based on a percentage of 75% (2020: 75%) of Group materiality this was
after considering the size and our assessment of the risk of material misstatement of that component. Component materiality for the
significant component was $675k (2020: $728k). Non-significant components had a materiality range of $1 to $18k (2020: $1 to $23k).
In the audit of each significant component, we further applied performance materiality levels of 75% (2020: 75%) of the component
materiality, giving $506k (2020: $546k), to our testing to ensure that the risk of errors exceeding component materiality was
appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of $18k (2020: $19k). We
also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in the report and
financial statements other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required
to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Annual Report and Financial Statements 2021
69 Independent Auditors’ Report (cont.)
to the members of Afentra plc
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
Matters on which we
are required to report
by exception
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic report and the Directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the Strategic report and the Directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report
or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our
audit have not been received from branches not visited by us; or
•
the Parent Company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below.
Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations
We gained an understanding of the legal and regulatory framework applicable to the Group and the industry in which it operates, and
considered the risk of acts by the Group which were contrary to applicable laws and regulations, including fraud. These included but
were not limited to compliance with Companies Act 2006 and international accounting standards.
Afentra plc
70 Overview
Strategic Report
Corporate Governance
Group Accounts
Our audit procedures included:
• Obtaining an understanding of the control environment in monitoring compliance with laws and regulations.
• Enquiries of management and those charged with governance regarding known and suspected Group non-compliance with laws and
regulations;
• Review of minutes of Board meetings throughout the period.
• Making enquiries of Management as to whether there was any correspondence from regulators iregarding matters related to the
financial statements.
Identifying and responding to risks of material misstatement due to fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud and considered the fraud risk
areas to be in relation to judgement areas such as the carrying value of exploration assets (see Key Audit Matters section above),
management override of controls and misappropriation of cash.
Our audit procedures included:
• Testing the financial statement disclosures to supporting documentation;
• Enquiries of management and those charged with governance regarding known and suspected instances of fraud;
• Performing testing on account balances which were considered to be a greater risk of susceptibility to fraud; and
• Performing targeted journal entry testing based on identified characteristics the audit team considered could be indicative of fraud, for
example capitalisation entries to exploration assets.
We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained
alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud
may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations
in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Matt Crane (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor,
55 Baker Street, Marylebone, London W1U 7EU
25 April 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Annual Report and Financial Statements 2021
71 Consolidated Statement of Comprehensive Income
Year ended 31 December 2021
Note
31 December 2021
$000
31 December 2020
$000
Other administrative expenses
Pre-licence costs
Total administrative expenses
Loss from operations
Finance income
Finance expense
Loss before tax
Tax
Loss for the year attributable to the owners of the parent
Other comprehensive (expense)/income - items to be
reclassified to the income statement in subsequent periods
Currency translation adjustments
Total other comprehensive (expense)/income for the year
Total comprehensive expense for the year attributable
to the owners of the parent
Basic and diluted loss per share (US cents)
4
6
6
7
8
(2,249)
(2,734)
(4,983)
(4,983)
36
(45)
(4,992)
-
(4,992)
(5)
(5)
(4,997)
(2.3)
(953)
(1,221)
(2,174)
(2,174)
326
(58)
(1,906)
-
(1,906)
7
7
(1,899)
(0.9)
72Afentra plc Consolidated Statement of Financial Position
Year ended 31 December 2021
Note
31 December 2021
$000
31 December 2020
$000
Non-current assets
Intangible exploration and evaluation assets
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Share capital
Currency translation reserve
Retained earnings
Total equity
Current liabilities
Trade and other payables
Lease liability
Non-current liabilities
Lease liability
Long-term provision
Total liabilities
Total equity and liabilities
9
10
12
13
14/15
15
15
16
17
17
21,289
725
22,014
288
37,727
38,015
60,029
28,143
(202)
30,953
58,894
518
234
752
347
36
383
1,135
60,029
21,209
844
22,053
193
42,674
42,867
64,920
28,143
(197)
35,945
63,891
209
205
414
581
34
615
1,029
64,920
The financial statements of Afentra plc, registered number 1757721, were approved by the Board of Directors and authorised for
issue on 25 April 2022.
Signed on behalf of the Board of Directors
Paul McDade
Chief Executive Officer
25 April 2022
73Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Consolidated Statement of Changes in Equity
Year ended 31 December 2021
At 1 January 2020
Loss for the year
Currency translation adjustments
Total comprehensive expense for the year attributable to
the owners of the parent
At 31 December 2020
Loss for the year
Currency translation adjustments
Total comprehensive expense for the year attributable to
the owners of the parent
Share capital
$000
28,143
-
-
-
Currency
translation
reserve
$000
(204)
-
7
7
28,143
(197)
-
-
-
-
(5)
(5)
Retained
earnings
$000
37,851
(1,906)
-
(1,906)
35,945
(4,992)
-
(4,992)
Total
$000
65,790
(1,906)
7
(1,899)
63,891
(4,992)
(5)
(4,997)
At 31 December 2021
28,143
(202)
30,953
58,894
74Afentra plc Consolidated Statement of Cash Flows
Year ended 31 December 2021
Note
Operating activities
Loss before tax
Depreciation, depletion and amortisation
10
Finance income and gains
Finance expense and losses
Operating cash flow prior to working capital movements
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Increase in provision
Net cash flow used in operating activities
Investing activities
Interest received
Purchase of property, plant and equipment
Exploration and evaluation costs
Net cash used in investing activities
Financing activities
Principal paid on lease liability
Interest paid on lease liability
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
6
10
9
Cash and cash equivalents at end of year
13
2021
$000
(4,992)
241
(13)
45
(4,719)
(95)
309
2
(4,503)
13
(127)
(80)
(194)
(234)
(39)
(273)
(4,970)
42,674
23
37,727
2020
$000
(1,906)
193
(326)
59
(1,980)
57
(230)
4
(2,149)
326
(12)
(90)
224
(237)
(46)
(283)
(2,208)
44,851
31
42,674
75Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Company Statement of Financial Position
Year ended 31 December 2021
Non-current assets
Investments
Trade and other receivables
Current assets
Cash and cash equivalents
Trade and other receivables
Total assets
Equity
Share capital
Retained earnings
Total equity
Current liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
Note
31 December 2021
$000
31 December 2020
$000
11
12
13
12
14/15
15
16
20,140
24,829
44,969
37,725
91
37,816
82,785
28,143
21,580
49,723
33,062
33,062
33,062
82,785
20,140
22,6001
42,740
42,672
37
42,709
85,449
28,143
24,385
52,528
32,921
32,921
32,921
85,449
1 Refer to Note 12 for details on the change in classification
The loss for the financial year within the Company accounts of Afentra plc was $2.8 million (2020: $566k loss). As provided by s408 of
the Companies Act 2006, no individual statement of comprehensive income and expense is provided in respect of the Company.
The financial statements of Afentra plc, registered number 1757721, were approved by the Board of Directors and authorised for issue
on 25 April 2022.
Signed on behalf of the Board of Directors
Paul McDade
Chief Executive Officer
25 April 2022
76Afentra plc
Company Statement of Changes in Equity
Year ended 31 December 2021
At 1 January 2020
Total comprehensive expense for the year
At 31 December 2020
Total comprehensive expense for the year
At 31 December 2021
Share capital
$000
28,143
-
28,143
-
28,143
Retained
earnings
$000
24,951
(566)
24,385
(2,805)
21,580
Total
$000
53,094
(566)
52,528
(2,805)
49,723
77Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Company Statement of Cash Flows
Year ended 31 December 2021
Operating activities
Loss before tax
Finance income and gains
Operating cash flow prior to working capital movements
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
Net cash flow used in operating activities
Investing activities
Interest received
Net cash generated from investing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
Note
6
13
2021
$000
(2,805)
(13)
(2,818)
(2,283)
141
(4,960)
13
13
(4,947)
42,672
-
37,725
2020
$000
(566)
(326)
(892)
(1,577)
(34)
(2,503)
326
326
(2,177)
44,849
-
42,672
78Afentra plc Notes to the Financial Statements
Year ended 31 December 2021
1. ACCOUNTING POLICIES
a) General information
Afentra plc is a public company limited by shares, incorporated in the United Kingdom under the UK Companies Act 2006. The
address of the registered office is High Holborn House, 52-54 High Holborn, London WC1V 6RL. The Company and the Group are
engaged in the exploration, development and production of commercial oil and gas.
These financial statements are presented in US dollars as this is the currency in which the majority of the Group’s Cash and cash
equivalents, revenues and expenditure are transacted. The functional currency of the Company is US dollars.
b) Basis of accounting and adoption of new and revised standards
The Group and Company financial statements have been prepared in accordance with IFRSs except that the Company financial
statements do not include a Statement of Comprehensive Income as permitted by s408 of the Companies Act 2006. They have
also been prepared in accordance with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
(i) New and amended standards adopted by the Group:
No standards adopted this year had a material effect.
(ii) Standards, amendments and interpretations, which are effective for reporting periods beginning after the date of these
financial statements which have not been adopted early:
Standard
Description
Amendments - Business Combination
Amendments – Provisions, Contingent Liabilities and
Contingent Assets
Amendments – Property, Plant and Equipment
Annual Improvements to IFRSs (2018-2020 Cycle)
Effective date
1 January 2022
1 January 2022
1 January 2022
1 January 2022
Status
TBC
TBC
TBC
TBC
Amendments – Disclosure of Accounting Polices
Amendments – Definition of Accounting Estimates
Amendments – Deferred Tax related to Assets and
Liabilities (single transaction)
1 January 2023
1 January 2023
1 January 2023
TBC
TBC
TBC
c) Going concern
The Group business activities, together with the factors likely to affect its future development, performance and position are set out in the
Asset summary on pages 28 and 29. The financial position of the Group and Company, its cash flows and liquidity position are described
in the Financial Review on pages 30 and 31. In addition, Note 18 to the financial statements includes the Group’s objectives, policies and
processes for managing its capital financial risk: details of its financial instruments and its exposures to credit risk and liquidity risk.
The Group has sufficient cash resources for its working capital needs and its committed capital expenditure programme at least
for the next 12 months. As a consequence, the Directors believe that both the Group and Company are well placed to manage their
business risks successfully despite the ongoing pandemic and uncertain economic outlook.
IFRS 3
IAS 37
IAS 16
IFRS 1
IFRS 9
Illustrative Examples
accompanying IFRS 16
IAS 41
IAS 1
IAS 8
IAS 12
79Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2021
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future. This assessment has been made by the Directors who
remain confident the Group has sufficient cash resources at the date of signing the annual report to meet its liabilities as they fall due
for a period of at least 12 months from the date of signing these financial statements, notwithstanding; the impact COVID-19 has had,
and continues to have internationally and the current situation in Ukraine and the impact to commodity prices and foreign exchange
rates. The Group currently has no unconditional, legally binding commitments in relation to the disclosed transaction in Note 20. The
Directors believe that the Group is in a strong position to absorb any potential impact on the Group arising from COVID-19, and thus,
they continue to adopt the going concern basis of accounting in preparation of the financial statements.
d) Basis of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 31 December each year. Control is recognised where an investor is exposed, or has rights, to
variable returns from its investment with the investee and has the ability to affect these returns through its power over the investee.
The results of subsidiaries acquired, or disposed of, during the year are included in the Statement of Comprehensive Income from
the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line
with those used by the Group.
(ii) Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
A separate Statement of Comprehensive Income and expense for the Parent Company has not been published in accordance with
section 408 of the Companies Act 2006.
e) Joint arrangements
The Group is a party to a joint arrangement when there is a contractual arrangement that confers joint control over the relevant
activities of the arrangement to the Group and at least one other party. Joint control is assessed under the same principles as
control over subsidiaries. The Group classifies its interest in joint arrangements as joint operations as the Group has both the rights
to assets and obligations for the liabilities of the joint arrangement.
In assessing the classification of interests in joint arrangements, the Group considers:
•
the structure of the joint arrangement;
•
the contractual terms of the joint arrangement; and
• any other facts and circumstances.
The Group accounts for its interests in joint operations by recognising its share of assets, liabilities, revenues and expenses in
accordance with its contractually conferred rights and obligations.
The Odewayne PSA is classified as a joint arrangement within the Group (see Note 9).
80Afentra plc f) Oil and gas interests
Exploration and evaluation (‘E&E’) assets
Capitalisation
Pre-acquisition costs on oil and gas assets are recognised in the profit or loss when incurred. Costs incurred after rights to explore
have been obtained, such as geological and geophysical surveys, drilling and commercial appraisal costs, and other directly
attributable costs of exploration and appraisal including technical and administrative costs, are capitalised as intangible E&E assets.
The assessment of what constitutes an individual E&E asset is based on technical criteria but essentially either a single licence
area or contiguous licence areas with consistent geological features are designated as individual E&E assets. Costs relating to the
exploration and evaluation of oil and gas interests are carried forward until the existence, or otherwise, of commercial reserves have
been determined.
E&E costs are not amortised prior to the conclusion of appraisal activities. Once active exploration is completed the asset is
assessed for impairment. If commercial reserves are discovered then the carrying value of the E&E asset is reclassified as a
development and production (‘D&P’) asset, following development sanction, but only after the carrying value is assessed for
impairment and where appropriate its carrying value adjusted. If it subsequently assessed that commercial reserves have not been
discovered, the E&E asset is written off to the profit or loss.
Impairment
In accordance with IFRS 6 E&E assets are reviewed for impairment when circumstances arise which indicate that the carrying value
of an E&E asset exceeds the recoverable amount. The recoverable amount of the individual asset is determined as the higher of
its fair value less costs to sell and value in use. Impairment losses resulting from an impairment review are recognised in the profit
or loss within the Statement of Comprehensive Income. Any impairment loss is separately recognised within the Statement of
Comprehensive Income.
Impaired assets are reviewed annually to determine whether any substantial change to their fair value amounts previously impaired
would require reversal.
As previously recognised, impairment loss is reversed if the recoverable amount increases as a result of a change in the estimates
used to determine the recoverable amount, but not to an amount higher than the carrying amount that would have been determined
(net of depletion or amortisation) had no impairment loss been recognised in prior periods. Reversal of impairments and impairment
charges are credited/(charged) under total administration expenses within the Statement of Comprehensive Income.
Refer to Note 2 for detailed disclosure of the results of impairments and impairment reviews performed.
g) Property, plant and equipment assets other than oil and gas assets
Property, plant and equipment other than oil and gas assets are stated at cost, less accumulated depreciation, and any provision
for impairment. Depreciation is provided at rates estimated to write off the cost, less estimated residual value, of each asset over its
expected useful life as follows:
• Office lease, straight-line over the lease term
• Computer and office equipment depreciation, 33% straight-line
81Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2021
h) Foreign currencies
The US dollar is the functional and reporting currency of the Company and the reporting currency of the Group. Transactions
denominated in other currencies are translated into US dollars at the rate of exchange ruling at the date of the transaction. Assets
and liabilities in other currencies are translated into US dollars at the rate of exchange ruling at the reporting date. All exchange
differences arising from such translations are dealt with in current year profit and loss.
The results of entities with a functional currency other than the US dollar are translated at the average rates of exchange during the
period and their statement of financial position at the rates ruling at the reporting date. Exchange differences arising on translation of
the opening net assets and on translation of the results of such entities are dealt with through the currency translation reserve.
i) Taxation
Current tax
Tax is payable based upon taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of
Comprehensive Income because it excludes items of income or expense that are taxable or deductible on other years and it further
excludes items that are never taxable or deductible. Any Group liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the reporting date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are
generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and
interests in JV’s, except where the Group is able to control the reversal of the temporary differences and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset is realised.
Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
j) Investments (Company)
Investments in subsidiaries are carried at cost less accumulated impairment losses in the Company’s balance sheet. Investments
in subsidiaries are assessed for impairment in line with the requirements of IAS 36 and where evidence of non-recoverability is
identified an appropriate impairment is accounted for in the profit or loss.
82Afentra plc k) Leases
In accordance with IFRS 16, at the lease commencement date, the Group recognises a right-of-use asset and a lease liability on the
balance sheet. The Group also assesses the right-of-use asset for impairment when such indicators exist. At the commencement
date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the
interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate.
l) Financial instruments
There are no other categories of financial instrument other than those listed below:
Trade receivables and amounts due from subsidiaries
Trade receivables are recognised and carried at the original invoice amount less any provision for impairment. Other receivables and
amounts due from subsidiaries are recognised and measured at nominal value less any provision for impairment.
The Group and Company applies the expected credit loss model in respect of trade receivables and amounts due from subsidiaries.
The Group and Company track changes in credit risk and recognise a loss allowance based on lifetime ECLs at each reporting date.
Cash and cash equivalents
Cash and cash equivalents comprise demand deposits, and other short-term investments, with an original maturity of 3 month, are
readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
The Group has the following financial liabilities; all are classified as held at amortised cost. The Group holds no other categories of
financial liability.
Trade payables
Trade payables are stated at their amortised cost.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.
An equity instrument is any contract that evidences a residual interest in the asset of the Group after deducting all of its liabilities.
Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.
m) Pension costs
The Group operates a number of defined contribution pension schemes. The amount charged to the Statement of Comprehensive
Income for these schemes is the contributions payable in the year. Differences between contributions payable in the year and
contributions actually paid are shown as either accruals or prepayments in the Statement of Financial Position.
n) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers.
The chief operating decision makers have been identified as the Board of Directors.
The operating results of each geographical segment are regularly reviewed by the Group’s chief operating decision makers in order to
make decisions about the allocation of resources and to assess their performance. Africa has exploration activities and the United
Kingdom office is an administrative cost centre.
83Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2021
2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
In the application of the Group’s accounting policies, which are described in Note 1, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if
the revision affects both current and future periods.
Judgements
Company – Investment
If circumstances indicate that impairment may exist, investments in subsidiary undertakings of the Company are evaluated using
market values, where available, or the discounted expected future cash flows of the investment. If these cash flows are lower than the
Company’s carrying value of the investment, an impairment charge is recorded in the Company. Where impairments have been booked
against the underlying exploration assets, the investments in subsidiaries have been written down to reflect their recoverable value.
Evaluation of impairments on such investments involves significant management judgement and may differ from actual results.
A full impairment review has not been performed in 2021 and thus no impairments were recognised during the year, by the Company.
As at 31 December 2021, Company investments in subsidiaries totalled $20.1 million (see Note 11), being underpinned by the
Odewayne exploration block in Somaliland. After reviewing the feasibility of the asset detailed in the Asset summary on pages 28
and 29, management did not note any impairment indicators that would result in a full impairment review to be undertaken.
Impairment of assets
Management is required to assess oil and gas assets for indicators of impairment and has considered the economic value of
individual E&E assets. E&E assets are subject to a separate review for indicators of impairment, by reference to the impairment
indicators set out in IFRS 6, which is inherently judgmental.
After reviewing the feasibility of the asset detailed in the Asset summary on pages 28 and 29 and considering the key factors
including; the extension to the current period and further exploration work streams planned in 2022, management did not note any
impairment indicators that would result in a full impairment review to be undertaken.
The Directors judgement was that a full impairment review wasn’t required and thus no impairments were recognised during the year,
by the Group.
Estimates
Company – expected credit loss model prescribed by IFRS 9
IFRS 9 requires the Parent Company to make assumptions when implementing the forward-looking expected credit loss model.
This model is required to be used to assess the intercompany loan receivables from Afentra (UK) Limited and Afentra (East Africa)
Limited for impairment.
84Afentra plc Arriving at the expected credit loss allowance involved considering different scenarios for the recovery of the intercompany loan
receivables, the possible credit losses that could arise and the probabilities for these scenarios. The following was considered; the
exploration project risk, country risk, the expected future oil prices, the value of the potential reserves, the ability to sell the project,
and the ability to find a new farm-out partner.
The credit loss allowance was assessed at 31 December 2021. No movement in credit loss allowances for amounts owed from
subsidiary undertakings occurred during the period.
Discount rates – IFRS 16 leases
The lease liabilities were measured at the present value of the remaining lease payments, discounted using the Group’s incremental
borrowing rate as at 31 December 2021. The Group’s incremental borrowing rate is the rate at which a similar borrowing could be
obtained from an independent creditor on the basis of external figures derived from the market.
3. OPERATING SEGMENTS
Africa operations in 2021 focused on exploration and appraisal activities in Somaliland. The UK corporate office is a technical and
administrative cost centre focused on new ventures. The operating results of each segment are regularly reviewed by the Board of
Directors in order to make decisions about the allocation of resources and to assess their performance.
The accounting policies of these segments are in line with those set out in Note 1.
The following tables present income, expense and certain asset and liability information regarding the Group’s operating segments
for the year ended 31 December 2021 and for the year ended 31 December 2020.
Corporate
Africa
Total
Other administrative expenses
Pre-licence costs
Loss from operations
Finance income
Finance expense
Note
6
6
2021
$000
(2,249)
(2,734)
(4,983)
36
(45)
2020
$000
(953)
(1,221)
(2,174)
326
(58)
Segment loss before tax
(4,992)
(1,906)
2021
$000
2020
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2021
$000
(2,249)
(2,734)
(4,983)
36
(45)
2020
$000
(953)
(1,221)
(2,174)
326
(58)
(4,992)
(1,906)
241
193
Other segment information
Depreciation
Segment assets and liabilities
Non-current assets 1
Segment assets 2
Segment liabilities 3
241
193
725
844
21,289
21,209
22,014
22,053
38,015
42,867
(1,121)
(1,016)
-
(14)
-
(13)
38,015
42,867
(1,135)
(1,029)
1 Segment non-current assets of $21.3 million in Somaliland (2020: $21.2 million).
2 Corporate segment assets include $37.7 million cash and cash equivalents (2020: $42.7 million). Carrying amounts of segment assets exclude investments in subsidiaries.
3 Carrying amounts of segment liabilities exclude intra-group financing.
85Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts
Notes to the Financial Statements (cont.)
Year ended 31 December 2021
4. LOSS FROM OPERATIONS
Loss from operations is stated after charging:
Staff costs
Depreciation of Property, plant and equipment
An analysis of auditor’s remuneration is as follows:
Fees payable to the Group's auditors for the audit
of the Group's annual accounts
Audit of the Company's subsidiaries pursuant to legislation
Total audit fees
Note
5
10
2021
$000
3,080
241
62
4
66
2020
$000
1,471
193
32
5
37
5. EMPLOYEE INFORMATION
The average monthly number of employees of the Group and Company was as follows:
Group
Company
2021
2020
2021
2020
Africa
Corporate
Non-executive
-
6
3
9
-
7
3
10
-
-
2
2
Group and Company employee costs during the year amounted to:
Wages and salaries
Social security costs
Other pension costs
Group
Company
2021
$000
2,579
316
185
3,080
2020
$000
1,218
153
100
1,471
2021
$000
283
23
-
306
-
-
3
3
2020
$000
242
29
-
271
Key management personnel include Directors who have been paid $1.7 million (2020: $581k). See Remuneration Committee Report
(pages 51 - 58) and Note 19 for additional detail.
A portion of the Group’s staff costs and associated overheads are expensed as pre-licence expenditure ($2.4 million) or capitalised
($77k). In 2021 this amounted to $2.4 million (2020: $1.3 million).
86Afentra plc 6. FINANCE INCOME AND FINANCE EXPENSE
Finance income:
Interest revenue on short-term deposits
Exchange differences
Finance expense:
Bank charges
Interest expense for leasing arrangement
Exchange differences
7. TAXATION
The tax charge for the year is calculated by applying the applicable standard rate of tax as follows:
Loss before tax
Tax on loss on ordinary activities at standard UK corporation tax rate of 19% (2020: 19%)
Effects of:
Deferred tax movement on provision not provided
Expenses not deductible for tax purposes
Capital allowances in excess of depreciation
Adjustment for tax losses
Tax charge for the year
2021
$000
2020
$000
13
23
36
6
39
-
45
2021
$000
(4,992)
(948)
-
(36)
(174)
1,158
-
326
-
326
13
46
(1)
58
2020
$000
(1,906)
(362)
(4)
78
(216)
504
-
Deferred tax
At the reporting date the Group had an unrecognised deferred tax asset of $23.1 million (2020: $22.1 million) relating primarily to
unused tax losses and unutilised capital allowances. No deferred tax asset has been recognised due to the uncertainty of future
profit streams against which these losses could be utilised. At the reporting date the Company had an unrecognised deferred tax
asset of $17.2 million (2020: $16.7 million) relating primarily to unused losses and unutilised capital allowances.
87Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2021
8. LOSS PER SHARE (BASIC AND DILUTED)
Loss for the year
2021
$000
(4,992)
2020
$000
(1,906)
Weighted average number of ordinary shares in issue during the year
220,053,520
220,053,520
Dilutive effect of share options outstanding
Fully diluted average number of ordinary shares during the year
EPS (US cents)
-
-
220,053,520
220,053,520
(2.3)
(0.9)
9. INTANGIBLE EXPLORATION AND EVALUATION ASSETS
Net book value at 1 January 2020
Additions during the year
Net book value at 31 December 2020
Additions during the year
Net book value at 31 December 2021
Group
$000
21,119
90
21,209
80
21,289
Group intangible assets at the year end 2021: Odewayne PSA, Somaliland; A(EA)L 34%, Genel Energy Somaliland Limited 50%,
Petrosoma 16%. Classified as a joint arrangement in accordance with IFRS 11.
88Afentra plc 10. PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 January 2020
Modification during the year
Additions during the year
At 31 December 2020
Modification during the year
Additions during the year
At 31 December 2021
Accumulated depreciation and impairment
At 1 January 2020
Charge for the year
At 31 December 2020
Charge for the year
At 31 December 2021
Net book value at 31 December 2021
Net book value at 31 December 2020
Net book value at 31 December 2019
Office Lease
Computer
and office
equipment
$000
$000
1,158
28
22
1,208
(5)
-
1,203
(187)
(190)
(377)
(221)
(598)
605
831
971
140
-
12
152
-
127
279
(136)
(3)
(139)
(20)
(159)
120
13
4
Total
$000
1,298
28
34
1,360
(5)
127
1,482
(323)
(193)
(516)
(241)
(757)
725
844
975
The right of use asset (office lease) is depreciated on a straight-line basis over the lifetime of the lease contract. The current lease
term is for 8 years, ending in 2024.
See Note 1 for details (Leases) and Note 17 (Lease liability).
89Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2021
11. INVESTMENT IN SUBSIDIARIES
Cost
At 1 January 2020
At 31 December 2020
At 31 December 2021
Company
$000
20,140
20,140
20,140
See Note 2 (Company – Investment) for details on the impairment assessment methodology.
The subsidiary undertakings at 31 December 2021 are as follows (included on consolidation):
Country of
incorporation
Class of
shares held
Type of
ownership
Proportion of
voting rights
held 2021
Proportion of
voting rights
held 2020
Nature of
business
Afentra (UK) Limited
Afentra Overseas
Limited
Afentra Northwest
Africa Holdings Limited
Afentra Holdings
Limited 1
Afentra (East Africa)
Limited 2
United
Kingdom 3
United
Kingdom 3
Ordinary
Direct
Ordinary
Direct
Jersey, CI 4
Ordinary
Direct
Jersey, CI 4
Ordinary
Indirect
Jersey, CI 4
Ordinary
Indirect
100%
100%
100%
100%
100%
100%
Exploration for oil
and gas
100% Investment holding
company
100%
Exploration for oil
and gas
100% Investment holding
company
100%
Exploration for oil
and gas
1 Held directly by Afentra Northwest Africa Holdings Limited
2 Held directly by Afentra Holdings Limited
3 Registered address - 52-54 High Holborn, London, WC1V 6RL
4 Registered address - 12 Castle Street, St Helier, Jersey, JE2 3RT
90Afentra plc 12. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Other receivables
Prepayments and accrued income
Non-current
Amounts owed from subsidiary undertakings
Group
Company
2021
$000
86
62
140
288
2020
$000
87
37
69
193
2021
$000
2020
$000
-
39
52
91
3
10
24
37
Company
2021
$000
24,829
24,829
2020
$000
22,600
22,600
Trade and other receivables, not credit impaired, consist of current receivables that the Group views as recoverable in the short term.
Credit loss allowances for amounts owed from subsidiary undertakings amount to $9.1 million.
The Directors consider that the carrying amount of trade and other receivables is a reliable estimate of their fair value.
The comparative loan to subsidiary of $22.6 million has been reclassified from current to non-current assets reflecting the expected
realisation profile of the asset at 31 December 2020. The presentation has been corrected from the prior period when it was classified
as current based on its contractual term.
Transactions between subsidiaries are non-interest bearing and repayable on demand.
See Note 1 for details (Financial instruments - Trade receivables).
91Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2021
13. CASH IN BANK AND SHORT-TERM DEPOSITS
Group
Company
Cash at bank available on demand
Short-term deposits
Cash on hand
Group and Company
Development Bank of Singapore (‘DBS’)
14. SHARE CAPITAL
2021
$000
37,725
-
2
37,727
2020
$000
19,064
23,608
2
42,674
Term
3 months
2021
$000
37,725
-
-
37,725
2021
$000
-
-
2020
$000
19,064
23,608
-
42,672
2020
$000
23,608
23,608
2021
$000
2020
$000
Authorised, called up, allotted and fully paid
220,053,520 ordinary shares of 10p (2020: 220,053,520 ordinary shares of 10p)
28,143
28,143
15. RESERVES
Reserves within equity are as follows:
Share capital
Amounts subscribed for share capital at nominal value.
Currency translation reserve
The foreign currency translation reserve includes movements that relate to the retranslation of the subsidiaries whose functional
currencies are not designated in US dollars.
Retained earnings
Cumulative net gains and losses recognised in the Statement of Comprehensive Income less any amounts reflected directly in
other reserves.
92Afentra plc 16. TRADE AND OTHER PAYABLES
Current liabilities
Trade payables
Amounts owed to subsidiary undertakings
Accruals
Group
Company
2021
$000
2020
$000
256
-
262
518
113
-
96
209
2021
$000
48
32,784
230
33,062
2020
$000
42
32,800
79
32,921
The Directors consider that the carrying amount of trade and other payables is a reliable estimate of their fair value. Transactions
between subsidiaries are non-interest bearing and repayable on demand.
17. LEASES
The Group has a lease for the head office and classifies it as a right-of-use asset in a consistent manner to its property, plant and
equipment (see Note 10).
On adoption of IFRS 16, the Company recognised lease liabilities in relation to the head office which had previously been classified
as ‘operating leases’ under IAS 17. These liabilities were measured at the present value of the remaining lease payments, discounted
using the lessee’s incremental borrowing rate as of 1 January 2021. The incremental borrowing rate applied to the lease liabilities on 1
January 2021 was 5%.
Lease liabilities are presented in the statement of financial position as follows:
Current
Non-current
2021
$000
234
347
581
2020
$000
205
581
786
Extension options are included in the lease liability when it, based on the management’s judgement, is reasonably certain that an
extension will be exercised. As at 31 December 2021, the contractual maturities of the Company’s lease liabilities are as follows:
Within one
year
Between one
to two years
$000
$000
Over two
years
$000
Total
Interest
$000
$000
Carrying
amount
$000
Group
Lease liability
234
234
169
637
(56)
581
93Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts
Notes to the Financial Statements (cont.)
Year ended 31 December 2021
18. FINANCIAL INSTRUMENTS
Capital risk management and liquidity risk
The Group and Company is not subject to externally imposed capital requirements. The capital structure of the Group and
Company consists of cash and cash equivalents held for working capital purposes and equity attributable to the equity holders of
the parent, comprising issued capital, reserves and retained earnings as disclosed in the Statement of Changes in Equity. The Group
and Company uses cash flow models and budgets, which are regularly updated, to monitor liquidity risk.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement
and the basis on which income and expenses are recognised, in respect of each material class of financial asset, financial liability
and equity instrument are disclosed in Note 1 to the financial statements. Due to the short-term nature of these assets and liabilities
such values approximate their fair values at 31 December 2021 and 31 December 2020.
Group
Financial assets at amortised cost
Cash and cash equivalents
Trade and other receivables
Total
Financial liabilities at amortised cost
Trade and other payables
Total
Company
Financial assets at amortised cost
Cash and cash equivalents
Current trade and other receivables
Non-current trade and other receivables
Total
Financial liabilities at amortised cost
Trade and other payables
Total
Carrying amount/Fair value
2021
$000
37,727
148
37,875
518
518
2020
$000
42,674
123
42,797
209
209
Carrying amount/Fair value
2021
$000
37,725
39
24,829
62,593
33,062
33,062
2020
$000
42,672
13
22,600
65,285
32,921
32,921
Financial risk management objectives
The Group’s and Company’s objective and policy is to use financial instruments to manage the risk profile of its underlying
operations. The Group continually monitors financial risk including oil and gas price risk, interest rate risk, equity price risk, currency
translation risk and liquidity risk and takes appropriate measures to ensure such risks are managed in a controlled manner including,
where appropriate, through the use of financial derivatives. The Group and Company does not enter into or trade financial
instruments, including derivative financial instruments, for speculative purposes.
94Afentra plc Interest rate risk management
The Group and Company does not have any outstanding borrowings and thus, the Group and Company is only exposed to interest
rate risk on its short-term cash deposits.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates at the reporting date and assumes the
amount of the balances at the reporting date were outstanding for the whole year.
A 100 basis point change represents management’s estimate of a possible change in interest rates at the reporting date. If interest
rates had been 100 basis points higher/lower and all other variables were held constant the Group’s profits and equity would be
impacted as follows:
Cash and cash equivalents
Increase
Decrease
2021
$000
377
2020
$000
427
2021
$000
(377)
2020
$000
(427)
Foreign currency risk
The Company’s functional currency is the US dollar, being the currency in which the majority of the Group’s revenue and expenditure
is transacted. Small elements of its management, services and treasury functions are held and transacted in Pounds sterling. Such
elements transacted in pounds sterling have been exchanged at; the average rate of $1.3756/£1.00 (2020: $1.2837/£1.00) or the year
end spot rate of $1.3477/£1.00 (2020: $1.3649/£1.00), depending on its nature and timing. The Group does not enter into derivative
transactions to manage its foreign currency. Foreign currency risk is immaterial to the Group and Company – see the following table:
Financial assets
Cash and cash equivalents
Cash and cash equivalents held in US$
Cash and cash equivalents held in GBP
Trade and other receivables
Current trade and other receivables held in US$
Current trade and other receivables held in GBP
Non-current trade and other receivables held in US$
Non-current trade and other receivables held in GBP
Group
Company
2021
$000
36,793
934
37,727
2020
$000
42,565
109
42,674
2021
$000
36,791
934
37,725
Group
Company
2021
$000
-
148
-
-
148
2020
$000
3
120
-
-
123
2021
$000
-
39
11,589
13,240
24,868
2020
$000
42,564
108
42,672
2020
$000
-
13
11,589
11,011
22,613
95Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Notes to the Financial Statements (cont.)
Year ended 31 December 2021
Financial liabilities
Trade and other payables
Trade and other payables held in US$
Trade and other payables held in GBP
Group
Company
2021
$000
17
501
518
2020
$000
8
201
209
2021
$000
27,567
5,495
33,062
2020
$000
27,576
5,345
32,921
Credit risk management
The Group has to manage its currency exposures and the credit risk associated with the credit quality of the financial institutions
in which the Group maintains its cash resources. At the year end the Group held approximately 97.5% (2020: 99.7%) of its cash in
US dollars. At the year end the Group held the majority of its balances with AA-/A Standard & Poor’s or equivalent rated institutions.
The Group continues to proactively monitor its treasury management to ensure an appropriate balance of the safety of funds and
maximisation of yield.
Trade and other receivables are non-interest bearing. The Group does not hold any collateral as security and the Group does not
hold any significant allowance in the impairment account for trade and other receivables as they relate to customers with no default
history. There are no financial instruments held at fair value under the level 1, 2 and 3 hierarchy.
The Company is exposed to credit risk through amounts due from its subsidiary undertakings. Refer to Note 1 for details on the
credit loss allowance made.
Liquidity and interest rate tables
The following tables detail the remaining contractual maturity for the non-derivative financial assets and liabilities of the Group and
Company. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on
which the Group can be required to pay. The table includes both interest and principal cash flows including rates for loan liabilities
and cash deposits on actual contractual arrangements. The weighted average interest rate used in 2021 is nil % (2020: nil %).
Less than
six months
Six
months
to one year
One to
six years
Total
Interest
Principal
$000
$000
$000
$000
$000
$000
Group
Trade and other payables (2021)
Trade and other payables (2020)
149
76
-
-
Company
Trade and other payables (2021)
Trade and other payables (2020)
43
33
32,784
32,800
-
-
-
-
149
76
32,827
32,833
-
-
-
-
-
-
-
-
96Afentra plc
19. RELATED PARTY TRANSACTIONS
Details of Directors’ remuneration, which comprise key management personnel, are provided below:
Short-term employee benefits
Social security costs
Defined contribution pension
Group
Company
2021
$000
1,551
194
107
1,852
2020
$000
512
64
28
604
2021
$000
283
23
-
306
2020
$000
242
29
-
271
Further information on Directors’ remuneration is detailed in the Remuneration Committee Report, on pages 51 - 58.
The Company’s subsidiaries are listed in Note 11. The following table provides the balances which are outstanding with subsidiary
undertakings at the balance sheet date:
Amounts owed from subsidiary undertakings
Amounts owed to subsidiary undertakings
2021
$000
24,829
(32,784)
(7,955)
2020
$000
22,600
(32,800)
(10,200)
The Group and Company has no other disclosed related party transactions.
20. Subsequent events
On the 11 April 2022 the Company confirmed that Sonangol had announced Afentra had been selected as preferred bidder to
purchase interests in Block 3/05 and Block 23. The next steps in the process have involved finalising a sale and purchase agreement
that contains a number of conditions precedent that will need to be satisfied or waived before the Acquisition can be completed.
In addition, a final due diligence exercise is required to be completed in connection therewith. If Afentra ultimately proceeds with
the Acquisition, it would be classified as a reverse takeover transaction in accordance with Rule 14 of the AIM Rules for Companies.
There is, however, no guarantee at this stage that the Acquisition will be completed.
97Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Definitions and Glossary of Terms
$
US dollars
Companies Act or Companies Act 2006 The Companies Act 2006, as amended
2D
AIM
AGM
Articles
Board
Company
Directors
E&E
E&P
EBITDAX (Adjusted)
EITI
Farm-in & farm-out
G&A
G&G
GBP
Genel Energy
Group
HSSE
Hydrocarbons
IAS
IFRS
IOCs
JV
k
km
km2
KPIs
Lead
Two dimensional
AIM, a SME Growth market of the London Stock Exchange
Annual General Meeting
The Articles of Association of the Company
The Board of Directors of the Company
Afentra plc
The Directors of the Company
Exploration and evaluation assets
Exploration and production
Earnings before interest, taxation, depreciation, depletion and amortisation,
impairment, share-based payments, provisions and pre-licence expenditure.
Extractive Industries Transparency Initiative
A transaction under which one party (farm-out party) transfers part of its interest to a
contract to another party (farm-in party) in exchange for a consideration which may
comprise the obligation to pay for some of the farm-out party costs relating to the
contract and a cash sum for past costs incurred by the farm-out party.
General and administrative
Geological and geophysical
Pounds sterling
Genel Energy Somaliland Limited
The Company and its subsidiary undertakings
Health, Safety, Security and Environment
Organic compounds of carbon and hydrogen
International Accounting Standards
International Financial Reporting Standards
International oil company
Joint venture
Thousands
Kilometre(s)
Square kilometre(s)
Key performance indicators
Indication of a potential exploration prospect
98Afentra plc
London Stock Exchange or LSE
London Stock Exchange Plc
LTIP
M&A
m
OECD
Long-term incentive plan
Mergers and acquisitions
Metre(s)
Organisation for Economic Cooperation and Development
Ordinary Shares
Ordinary shares of 10 pence each
Petroleum
Petrosoma
Prospect
PSA
QCA Code
Reserves
Seismic
Shares
Shareholders
Subsidiary
United Kingdom or UK
Working Interest or WI
Oil, gas, condensate and natural gas liquids
Petrosoma Limited (JV partner in Somaliland)
An area of exploration in which hydrocarbons have been predicted to exist in
economic quantity. A group of prospects of a similar nature constitutes a play.
Production sharing agreement
Corporate Governance Code for Small and Mid-Size Quoted Companies 2018
Reserves are those quantities of petroleum anticipated to be commercially
recoverable by application of development projects to known accumulations from
a given date forward under defined conditions. Reserves must satisfy four criteria;
they must be discovered, recoverable, commercial and remaining based on the
development projects applied. Reserves are further categorised in accordance with
the level of certainty associated with the estimates and may be sub-classified based
on project maturity and/or characterised by development and production status.
Data, obtained using a sound source and receiver, that is processed to provide a
representation of a vertical cross-section through the subsurface layers.
10p ordinary shares
Ordinary shareholders of 10p each in the Company
A subsidiary undertaking as defined in the 2006 Act
The United Kingdom of Great Britain and Northern Ireland
A Company’s equity interest in a project before reduction for royalties or production
share owed to others under the applicable fiscal terms.
99Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts
Professional Advisors
Nominated Advisor and
Joint Corporate Broker
Peel Hunt LLP
100 Liverpool Street
London
EC2M 2AT
Joint Corporate Broker
Tennyson Securities
65 Petty France
London
SW1H 9EU
Financial PR
Buchanan
107 Cheapside
London
EC2V 6DN
Corporate Bankers
The Royal Bank of Scotland Plc
1 Albyn Place
Aberdeen
AB10 1BR
Legal
Pinsent Masons LLP
30 Crown Place
Earl Street
London
EC2A 4ES
Auditors
BDO LLP
55 Baker Street
London
W1U 7EU
Registrars
Link Group
10th Floor Central Square
29 Wellington Street
Leeds
LS1 4DL
Registered Office
High Holborn House
52-54 High Holborn
London
WC1V 6RL
100Afentra plc
101Annual Report and Financial Statements 2021OverviewCorporate GovernanceStrategic ReportGroup Accounts Afentra plc
High Holborn House
52-54 High Holborn
London WC1V 6RL
+44 (0)20 7405 4133
info@afentraplc.com
www.afentraplc.com
Printed sustainably in the UK
using 100% post-consumer
recycled paper, Carbon Balanced
with the World Land Trust™,
by Pureprint a CarbonNeutral®
company with FSC® chain of
custody and an ISO 14001
certified environmental
management system recycling
over 99% of all dry waste.