Annual Report 2019-2020
Contents
Contents
Officers and Advisors
Chairman’s Statement
Strategic Report
Corporate Governance Statement
Audit Committee Report
Directors’ Remuneration Report
Board of Directors
Directors’ Report
Statements of Directors’ Responsibilities
Stakeholder Engagement
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Company Statement of Financial Position
Company Statement of Changes in Equity
Notes to the Company Financial Statements
2
4
6
17
24
26
28
29
32
33
37
43
44
45
46
47
70
71
72
1
Officers and Advisers
Officers and Advisors
Directors
George Lucan (Managing Director)
Patrick Clanwilliam (Non-Executive Chairman)
Cameron Buchanan (Non-Executive Director)
Carlos Fernandes (Finance Director)
Andrew Hollis (Technical Director)
Secretary
Carlos Fernandes
Registered Office
Building 3, 566 Chiswick Park
Chiswick High Road
London
W4 5YA
Nominated Advisor
Building 3, 566 Chiswick Park
Chiswick High Road
London
W4 5YA
Brokers
WH Ireland Group plc
24 Martin Lane
London
EC4R 0DR
Auditor
Crowe U.K. LLP
55 Ludgate Hill
London
EC4M 7JW
Solicitor
Fladgate LLP
16 Great Queen Street
London
WC2B 5DG
2
Officers and Advisers
Principal Bankers
Metro Bank Plc
One Southampton Row
London
WC1B 5HA
HSBC Holdings Plc
PO Box 10
59 Old Christchurch Road
Bournemouth
Dorset
BH1 1EH
Registrars
Share Registrars Limited
The Courtyard
17 West Street
Farnham
Surrey
GU9 7DR
3
Chairman’s Statement
Chairman’s statement
Dear Fellow Shareholders,
It is my pleasure to present you with the Annual Report of Angus Energy plc (the “Company”
or “Angus Energy”) with its subsidiary undertakings (the “Group”) for the year ended 30
September 2020.
An unusual year for everyone and a particularly challenging one for the hydrocarbon sector.
Crude oil and even gas prices plunged to historic lows during the first Spring 2020 lockdown.
Whilst frustrating to see such slow progress on regulatory and planning approvals at
Balcombe and Brockham, it was perhaps fortuitous that we were not producing and selling
either oil or gas at what might have been an economic loss for much of the period to
September 2020.
Prices stabilized in the latter part of the reporting period with gas prices, at the time of going
to press, comfortably ahead of our long-range assumptions in the Saltfleetby Competent
Persons Report. Additionally, we do foresee a period of relatively tight supply in all
hydrocarbons two to three years hence which should provide good support for oil prices,
although in the longer term, beyond five years, our general view is that gas as a commodity
will hold value much better than oil.
Whilst our long-term picture does not favor oil prices, we do intend to push ahead with
production from our Southern fields in order to exploit the potential for more robust crude
pricing in the medium term. So, we are pressing ahead with our application for water
injection for reservoir support at Brockham and a renewed focus
in improved
production from Lidsey.
Within the 2021 calendar year we anticipate that the Saltfleetby Gas Field will be our core
cash producing asset for the foreseeable future and I am pleased to say that we were able,
during this accounting period, to complete a Competent Persons Report confirming our
original view of the Field as being worth multiples of Angus’ market capitalization at the
period end and justifying the management time and financial resources deployed to develop
the Field. Additionally, we obtained local authority planning permission and began the task
of connecting the old pipeline to the national grid, which is a project considerably advanced
at the time that I am reporting to you now.
There have been delays and cost overruns in the procurement process for the process
facilities. Such delays are not unusual in significant projects of this nature and it should be
said that the procurement environment for gas processing has become more challenging, as
is described and explained in more detail in the Operations Report below. Nonetheless, after
a year’s search for finance to develop the Field we are now approaching a position where
shareholders are able to see a clear runway to cash generative production.
Finally, in last year’s report, my Managing Director, mentioned an intention to pursue projects
supportive of our country’s commitment to energy transition from carbon burning. I am
pleased to report some activities and much to come.
4
Chairman’s Statement
Financial and Statutory Information
Revenue from oil and gas production during the year was down to £0.068m (2019: £0.2m) on
production of a gross 1,594 barrels (2019: 5,346 barrels). This was the result of the Lidsey Oil
Field being shut in due to problems with the downhole pump during the year coupled with
low oil prices.
The Group recorded a loss of £2.516m (2019: £5.043m). During these difficult economic
times, the company has made a conscious effort to cut costs at both corporate and
operational levels while still maintaining high level of professionalism and operatorship. This
has paid off seeing administrative costs being reduced by £1.916m to £2.060m (2019:
£3.976m).
Outlook
Whilst the company maintains its focus on getting Saltfleetby into production this year we
are also planning for the extended well test at Balcombe and look forward to resuming
production at Brockham and Lidsey.
As previously mentioned, we are constantly reviewing projects to complement our existing
portfolio and create shareholder value. We have widened our net to include alternative
energy and infrastructure projects and continue our study into the Geothermal project we
have identified. We believe the company is well positioned to take advantage of opportunities
as they present themselves.
Patrick Clanwilliam
Chairman
08 March 2021
5
Strategic Report
Operating Review
In March 2020 we published the results of the Competent Persons Report completed by
Oilfield International, an independent energy consultancy. The positive results of the report
along with a Gas Sales Agreement entered with Shell Energy Europe Limited, a division of
Royal Dutch Shell plc, reaffirming management’s decision to acquire an interest in the
Saltfleetby Field.
The full report is available on the Company website under Presentations at the following link
http://www.angusenergy.co.uk/media/presentations/. The below tables reflect the gross
and net reserves, resources or present value attributable to Angus’s shareholding of 51%.
6
Strategic Report
Focusing on the mean sales gas reserves, approximately equal to the 2P case, these are
estimated by Oilfield International at 16 billion cubic feet (BCF). Also forming part of mean
reserves are 97,000 barrels of condensate. The total cash flow after costs but before taxes of
these reserves is approximately £50 million at prices derived from the gas forward curve from
ICE exchange and an average forward condensate price of $42/bbl. The report reports the net
present value of the above reserves, but not the contingent resources, which it defines as the
gas and condensate sales revenue minus the grid connection costs, capital expenditure,
operating expenditure, taxation and abandonment cost, and adjusted for the time value of
money. The resulting mean value of the reserves to Angus shareholders, which is also the
central case, is just over £25 million, with a high case of £35 million and a low case of £16.7
million.
Away from Saltfleetby, a further potential large scale geothermal project is under study. The
proposed scheme, located in an area of high geothermal gradient, would be designed to
achieve significant commercial power generation. Current projects in the area have de-risked
some aspects of this technology and this project would seek to build on that experience to
scale up to a full power generation project.
Current work is evaluating possible locations including preliminary discussions with
landowners coupled with technical work on well design, surface facilities and infrastructure
including initial contacts with the electricity grid connection provider. At the same time, the
regulatory and planning framework is being reviewed and initial submissions are in
preparation. Deeper geothermal energy will become increasingly important as a stable
provider of electricity balancing the output from other green energy sources that are subject
to the vagaries of wind and weather. Angus sees a large new market opening for these
projects and wishes to be an early entrant to the field.
Under the heading “Review of activities” below we provide a more in-depth summary of
operational activities. I again repeat my statement of last year that our first concern as a
Group must be for the safety of our staff, contractors, the public at large and the environment
on which we rely on. It is with pleasure that I report that all operations were performed
7
Strategic Report
without any safety incidents or environmental damage. We will continue to work in close co-
operation with all of our regulators, ensuring a spotless record of compliance – the Oil and
Gas Authority (“OGA”), the Environment Agency (“EA”) the Health and Safety Executive
(“HSE”) and our local councils.
Business Review
The principal activity of the Group during the year continued to be onshore, conventional
production and development of hydrocarbons in the UK.
Review of activities
Saltfleetby
In December 2019, the Oil and Gas Authority gave its consent to the assignment of a 51%
share in Saltfleetby Energy Limited’s interest in the Saltfleetby Field blocks of PEDL005 to
Angus Energy Weald Basin No 3 Limited, a wholly owned subsidiary of the Company. The
Authority also gave consent to the appointment of Angus Energy Weald Basin No3 Limited as
Exploration and Production Operator. The Company followed by submitting a Field
Development Plan to the Oil & Gas Authority while completing the Conceptual design of the
reconnection point at the National Grid Entry point at Theddlethorpe and design of on-site
processing facilities. This allowed the Company to start the equipment identification and
procurement and open discussions with planning officers at Lincolnshire County Council.
Applications to Lincolnshire County Council relating to updating current use of the site to
incorporate on-site gas processing and the 750-meter extension of the pipeline to the
National Grid Terminal were approved. Applications for the variation of permit at the
Environment Agency has also been submitted and for sundry permissions and approvals at
Health & Safety Executive.
In Q1 of 2020 the company carried out the final stages of abandonment on wells SF1 & SF3
to full ABIII abandonment. This has left 6 remaining wells on the field, with 2 earmarked for
future production and the remaining 4 under review as sidetrack candidates or for alternative
uses such as heat capture and geothermal. An initial pilot study was commissioned by the
company to assess the use of these remaining wells with respect to a geothermal/heat
capture project. Initial findings appear positive, and the company is now assessing a way
forward on this.
The main operational activities at Saltfleetby consisted of the commencement of the
construction of the pipeline extension from the existing 10” line to the National Grid entry
point. By the end of 2020, the 4” section had been completed, with only a short stretch of
c.150m of 10” steel to be installed in Q1 2021. Once complete a period of testing and
commissioning will begin.
Detailed design of the processing facilities that will be installed on the site itself is well
underway, and down payments have been m on many of the key bits of equipment. It is
8
Strategic Report
the companies view that equipment will begin to arrive on site during 2021 and installation
and commissioning will commence with the expectation of first gas in H2 2021.
Balcombe
Following the initial 7 day well test in the Autumn of 2018, a planning application was
submitted in late 2019 for a longer 3 year well test on the Balcombe 2Z well. The aim of the
planned operation is to recover remaining drilling fluids to prepare the well for an extended
well test. A long term extended well test will indicate to what degree the well and field can
produce hydrocarbons at a commercial rate.
However, in early 2020 the planning officer recommended the application for refusal and the
company withdrew the application before committee stage. A revised application for a 12
month extended well test was then submitted to WSCC, including a wealth of information on
socio economic benefits and the projects’ alignment with the public interest case for oil in
terms energy security and benefit to the national economy from indigenous production.
The Planning Officer recommended the application for approval but despite this the Planning
Committee Meeting held remotely on Tuesday 2 March 2021 at 10.30 am decided against the
application. The Company is of the view that this decision was not in accordance with the
Council’s own policies and will consult with legal advisors on appeal routes once the Decision
is issued in writing.
Lidsey
The Lidsey oilfield continued to provide steady production from well Lidsey X2 during the first
2-3 months of the year, before the well was shut in due to falling brent crude prices as result
of the Covid-19 pandemic. Mechanical problems with the downhole pump and nipple
assembly resulted in a difficult restart to production in the summer. Several small workover
attempts were made to ensure the pump was correctly seated and several joints of the rod
string were replaced due to wear and tear. Following this production resumed, albeit at
slightly reduced rates. The focus of the field is now on enhancing production rates with
optimized pumping routines and ensuring maximal hydrocarbon recovery from the reservoir.
In addition, initial re-mapping of the field has indicated potential sidetrack opportunities from
the existing wellbores, which could be confirmed by the acquisition of further seismic data as
previously advised by the company. This work is being considered with partners.
Brockham
The Group continued with its plan to obtain commercial value from the licence by resuming
production from the Portland reservoir. An application to the Environment Agency for
permission to re-inject formation water to maintain pressure in that reservoir to gain
maximum hydrocarbon recovery was submitted. This included an updated Hydrogeological
Risk Assessment report as per our recent submission regarding Balcombe. A Field
Development Plan was also submitted to this effect to the Oil & Gas Authority which was
approved. The Group believes that, subject to permits being granted, the site would be
9
Strategic Report
commercially profitable without any further significant capital expenditure. Recompletion of
the BR X4Z well as a Portland producer is also under consideration.
A24 Prospect, formerly Holmwood
On 16 October 2020, UKOG Plc, the operator of PEDL 143 Licence (Holmwood/A24 Prospect)
in which Angus had an interest of 12.5%, announced that “a detailed study examining the
viability of drilling the A24 (formerly Holmwood) Portland prospect’s centre from selected
sites outside the Surrey Hills Area of Outstanding Natural Beauty, each over 3 km from the
target, concludes that the required long-reach/shallow target-depth wells are neither
technically viable or economically feasible. Consequently, UKOG and its partners have now
relinquished their interests in the licence. It remains a great disappointment to the Company
that the licence’s former operator, Europa Oil and Gas, whilst in possession of planning
consent, failed to drill the prospect from the Holmwood site, around 1 km from the target.”
This was a decision supported by the Company.
Strategy and Sustainability
The Directors’ objective remains unchanged, to create long term value for shareholders by
building the Group into a profitable energy production company with a reputation for
technical excellence but with great cost discipline. The Director’s will continue to focus on
the UK onshore but do not rule out acquisitions overseas in jurisdictions where the rule of
law is strong. We understand the energy requirements and infrastructure constraints,
combined with a development plan based on fundamentals, can lead to sustainable and
profitable opportunities for investors. As such we are constantly reviewing potential projects
that will complement our existing core skills and portfolio of assets.
From the point of view of sustainability, the Directors are aligned with the national energy
objectives and look forward with enthusiasm to the opportunities ahead in the common goal
of net zero. Whilst we will continue to win a return from legacy oil fields, the preference
remains for the acquisition of gas assets, but the company has widened the net to included
sustainable energy projects. One such example is our Deep Geothermal Project, which
provides the baseload generation which wind and solar cannot do without and contains many
innovative, risk reducing elements for partners and investors alike.
Global Environment and Stewardship
As a Group we do have duties of stewardship to the wider environment of which we are
acutely aware. At Angus we realise there needs to be significant improvement in the Energy
Mix and the transition begins with the proper operation of the existing energy assets and the
responsible development of new ones. We understand hydrocarbons are still needed but
must be produced to the highest ESG standards.
When it comes to our existing operations or evaluating potential new projects we are always
focused on creating the least possible impact to the environmental.
10
Strategic Report
Local Environment
As a responsible OGA approved and Environment Agency (“EA”) permitted UK operator,
Angus Energy is committed to utilising industry best practices and achieving the highest
standards of environmental management and safety. Our operations:
• Continuously assess and monitor environmental impact
•
Promote internally and across our industry best practices for environmental
management and safety
• Constant attention to maintaining our exemplary track record of safe oil and gas
production
There were no reportable health and safety incident during the year.
Community
Angus Energy seeks and maintains positive relationships with its local communities. We
achieve this through our various forms of communication which include community liaison
meetings, social media updates, RNS’s and Investor Q & A sessions.
In general, we are guided by the following principles:
Engagement with stakeholders at all stages of development
Proactively address local concerns
• Open and honest dialogue
•
•
• Actively minimise impact on our neighbours
• Adherence to a strict health and safety code of conduct
On 4 June 2018, the Group established the Bruce Watt Memorial Scholarship, a yearly
scholarship fund of £10,000 per year to support students from Bognor Regis and the
surrounding community to undertake further academic studies beyond secondary school.
Currently there have been 7 recipients of the Scholarship award.
Financial Review
The Group began the period with the following interests: 65% of Brockham (PL235), 80% of
Lidsey (PL241), 25% of Balcombe, 12.5% of the A24 Prospect (PEDL 143) and 51% of
Saltfleetby Gas Field (PEDL005).
The Group had a cash balance of £3.419m as at 30 September 2019.
On 25 October 2019, the Company entered into a £1.5 million Convertible Loan Note facility
led by Riverfort Global Opportunities PCC Limited of which £1m was drawn down
immediately.
11
Strategic Report
On 12 December 2019, the company issued 13,766,520 shares at 0.7264p each. These were
loan reduction shares relating to the Riverfort Global Opportunities PCC Limited convertible
note described in note 21.
On 18 February 2020, the company issued 17,319,016 shares at 0.5774p each. These were
loan reduction shares relating to the Riverfort Global Opportunities PCC Limited convertible
note described in note 21.
On 15 March 2020, the company issued 32,133,676 shares at a price 0.6224p. These were
loan reduction shares relating to the Riverfort Global Opportunities PCC Limited convertible
note described in note 21.
During the period, a further £542,000 of the Convertible Loan Note was repaid in cash leaving
a balance of £58,000 at the end of the period which was subsequently converted in ordinary
shares as detailed in note 24.
On 20 April 2020, the Company issued a 4% per annum £1,400,000 Convertible Loan Note
(the “New Loan Note”) to Knowe Properties Limited, a significant shareholder in the
Company. The New Loan Note is unsecured and is convertible at maturity after two years at
the lower of (a) £0.01; or (b) if there is an issue of Shares or options in respect of Shares
(excluding options granted to directors, managers or employees) by way of a single or directly
related offer to the public with an aggregate subscription amount of £250,000 or more made
without the prior written approval of the Noteholder then the price attaching to the lowest
of those issues.
Alternatively, and at the Company’s option, the Loan Note is repayable in part or whole at
any time up to two months before maturity with an accompanying grant of warrants equal to
the face value of the amount repaid. The warrants are exercisable at the lower of 1.3 pence
or a 30% premium to the Conversion Price. Additionally, the Company has undertaken not to
issue options to directors or staff at an exercise price below £0.01 during the term of the New
Loan Note.
On 29 September 2020, the company issued 111,111,105 shares at 0.9p per share, raising
gross proceed of £1,000,000.
At the end of the financial year the Group had Convertible loan notes outstanding totaling
£1.483m (2019: £nil).
As at 30 September 2020, the Group retained a 51% interest in the Saltfleetby field, 65% in
Brockham field, 80% interest in Lidsey field, 25% in the Balcombe field where the Group is the
operator of all 4 fields.
The Group had cash balance of £1.852m at the end of reporting year.
On 21 October 2020, the Group announced the acquisition of Doriemus Plc’s 10% interest in
Brockham License PL235, as a result the Group will have an interest in the License of 75%
once the transaction concludes.
12
Strategic Report
The Group generated £0.068m revenue from oil and gas production during the year (2019:
£0.200m). This was the result of the sale of 1,594 bbls of oil.
The Group recorded a loss of £2.516m (2019 a loss of £5.043m). For the year under review,
the administrative costs were reduced by £1.219m to £2.060m (2019: £3.976m).
The Group’s overall financial objectives are to increase revenue, return to profitability and
enhance the asset base supporting the business. In order to monitor its progress towards
achieving these objectives, the Group has set a number of key performance indicators, which
deal predominately with revenue, profitability, margin and cash flow as above.
Governance, Compliance and Shareholder Relations
The Board consists of a Managing, Finance and Technical Director supervised by two
experience non-executive Directors. The Board which meets regularly alongside with Aim
Rules Committee meeting, Remuneration Committee and Audit Committee meetings.
In general, the management structure is very flat. In total we have 11 employees, including
management. The Company relies heavily on third party experienced contractors.
We have appointed two compliance officers to deal with all our regulators and planning
authorities which are presently Surrey, Lincolnshire and West Sussex County Council, the Oil
& Gas Authority, the Environment Agency and the Health & Safety Executive. Additionally, as
a publicly listed company, we are answerable to the AIM Market Division and to the Financial
Conduct Authority.
Compliance is an area which has grown more complicated and expensive in recent years and
we expect it to get more so. Regulators are being more pro-active and pre-emptive, and we
must anticipate their needs and expectations better than we have in the past. We should aim
to maintain better dialogue with all regulators and planners and engage in more frequent use
of pre-approval procedures where they are available.
Principal risks and uncertainties
Currency risks
The Group sells its produced crude oil; oil is priced in US dollars whilst the bulk of its costs are
in GBP and therefore the Group’s financial position and performance will be affected by
fluctuations in the US dollar, sterling exchange rate along with fluctuations in the oil price.
Accordingly, the value of such transactions may be adversely affected by changes in currency
exchange rates, which may have a material adverse effect on the business, financial condition,
results of operations and prospects of the Group.
Market risk
The demand for, and price of, oil and gas are highly dependent on a variety of factors beyond
the Group’s control. The continued marketing of the Group’s oil will be dependent on market
fluctuations and the availability of processing and refining facilities and transportation
infrastructure, including access to roads, train lines and any other relevant options at
13
Strategic Report
economic tariff rates over which the Group may have limited or no control. Transport links
(including roads and pipelines) may be inadequately maintained and subject to capacity
constraints and economic tariff rates may be increased with little or no notice and without
taking into account producer concerns. Producers of oil negotiate sales contracts directly with
oil purchasers, with the result that the market determines the price of oil. The price depends
in part on oil quality, prices of competing fuels, distance to market, the value of refined
products and the supply/demand balance. The marketability and prices of oil that may be
discovered or acquired by the Group will be affected by numerous factors beyond its control.
Permitting risk
The Group exposed to the planning, environmental, licensing and other permitting risks
associated with its operations particularly with exploration drilling operations.
The Group has to date been successful in obtaining the required permits to operate.
Therefore, the Group considers that such risks are mitigated through compliance with
regulations, proactive engagement with regulators, communities and the expertise and
experience of the management team.
Reserve and resource estimates
No assurance can be given that hydrocarbon reserves and resources reported by the Group
in the future are present as estimated, will be recovered at the rates estimated or that they
can be brought into profitable production. Hydrocarbon reserve and resource estimates may
require revisions and/or changes (either up or down) based on actual production experience
and in light of the prevailing market price of oil and gas. A decline in the market price for oil
and gas could render reserves uneconomic to recover and may ultimately result in a
reclassification of reserves as resources. Unless stated otherwise, the hydrocarbon reserve
and resources data contained in the financial statements are taken from the Competent
Person’s Report, at the time of AIM admission on 14 November 2016.
There are uncertainties inherent in estimating the quantity of reserves and resources and in
projecting future rates of production, including factors beyond the Group’s control.
Estimating the amount of hydrocarbon reserves and resources is an interpretive process and,
in addition, results of drilling, testing and production subsequent to the date of an estimate
may result in material revisions to original estimates.
The hydrocarbon resources data extracted from the Competent Person’s Report are
estimates only and should not be construed as representing exact quantities. The nature of
reserve quantification studies means that there can be no guarantee that estimates of
quantities and quality of the resources disclosed will be available for extraction. Therefore,
actual production, revenues, cash flows, royalties and development and operating
expenditures may vary from these estimates. Such variances may be material. Reserves
estimates are based on production data, prices, costs, ownership, geophysical, geological and
engineering data, and other information assembled by the Group (which it may not
necessarily have produced).
The estimates may prove to be incorrect and potential investors should not place reliance on
the forward-looking statements (including data included in the Competent Person’s Report
14
Strategic Report
or taken from the Competent Person’s Report and whether expressed to have been certified
by the Competent Person or otherwise) concerning the Group’s reserves and resources or
production levels. Hydrocarbon reserves and resources estimates are expressions of
judgment based on knowledge, experience and industry practice. They are therefore
imprecise and depend to some extent on interpretations, which may prove to be inaccurate.
Estimates that were reasonable when made may change significantly when new information
from additional analysis and drilling becomes available.
This may result in alterations to development and production plans which may, in turn,
adversely affect operations. If the assumptions upon which the estimates of the Group’s
hydrocarbon resources have been based prove to be incorrect, the Group (or the operator of
an asset in which the Group has an interest) may be unable to recover and produce the
estimated levels or quality of hydrocarbons set out in this document and the Group’s
business, prospects, financial condition or results of operations could be materially and
adversely affected.
Events after the reporting period
The Group had a cash balance of £1.852m as at 30 September 2020 subsequent to the
significant cash movements described during the reporting period.
On 16 October 2020, UKOG Plc, the operator of PEDL 143 Licence (Holmwood/A24 Prospect)
in which Angus had an interest of 12.5%, announced that “a detailed study examining the
viability of drilling the A24 (formerly Holmwood) Portland prospect’s centre from selected
sites outside the Surrey Hills Area of Outstanding Natural Beauty, each over 3 km from the
target, concludes that the required long-reach/shallow target-depth wells are neither
technically viable or economically feasible. Consequently, UKOG and its partners have now
relinquished their interests in the licence. It remains a great disappointment to the Company
that the licence’s former operator, Europa Oil and Gas, whilst in possession of planning
consent, failed to drill the prospect from the Holmwood site, around 1 km from the target.”
This was a decision supported by the Company.
On 21 October 2020, the Company executed a Sale & Purchase Agreement for the purchase
of Doriemus plc’s (“Doriemus”) 10% interest in the Brockham PL235 Licence, thereby
increasing the Company’s interest from 65% to 75%. The purchase price for the Licence is
adjusted for the settlement of outstanding amounts due from Doriemus to the Company and
a contribution towards the estimated share of long-term abandonment liabilities and results
in a net payment to the Company of approximately £260,000 in cash in Completion.
On 4 November 2020, the Company announced that, in relation to the £1.5 million
convertible loan facility announced on 25 October 2019 (the "Loan") and amended on 20 April
2020, it received a notice from Riverfort Global Opportunities PCC Limited and YA II PN Ltd
("Investors") to convert the final £58,335 of the Loan into Angus shares. After the conversion
there were no outstanding liabilities between the Company and the Noteholders. The
Company had therefore allotted 9,678,945 new ordinary shares to the noteholders.
On 30 November 2020, the Company together with its partner, Saltfleetby Energy Limited
(“SEL”), it had entered into a Memorandum of Understanding (the “MOU”) with Aleph Energy
15
Strategic Report
Limited and Aleph Commodities Limited (“Aleph”) detailing non-binding Heads of Terms to
provide up to £12 million towards the Saltfleetby Finance Facility required to develop the
Saltfleetby Gas Field (“Saltfleeby”). The indicative terms provide for a four year amortising
loan facility of up to £12million with a 12% margin over LIBOR, a 3% commitment fee payable
out of the facility, a share grant of 30 million shares in Angus, issued over the life of the facility
and an override of 8% on gross revenue following repayment of the facility. Given the share
grant to be issued by Angus under the MOU, SEL has agreed net drawdowns from the facility
to cover elements of the pipeline completion, thereby keeping the relative funding liabilities
on the agreed pro rata basis of 51%/49%.
On 16 December 2020, the company raised gross proceeds of £249,990 as result of a placing
of new ordinary shares. A total of 41,664,999 new ordinary shares in the capital of the
Company have been placed by WH Ireland Limited with new and existing investors at a price
of 0.6 pence per share.
On 27 January 2021, the company raised gross proceeds of £1,5000,000 as result of a placing
of new ordinary shares. A total of 150,000,000 new ordinary shares in the capital of the
Company have been placed by WH Ireland Limited with new and existing investors at a price
of 1 pence per share. The Placing Shares were also accompanied by the issue of one warrant
to subscribe for one ordinary share in the Company for each Placing Share (the “Placing
Warrant”). The Placing Warrants are exercisable at any time, for a period of 2 years, from the
date of Admission at the following exercise prices: 50% at 1.2p; 25% at 1.35p and 25% at 1.5p.
On 1 February 2021, to satisfy additional demand, the company conditionally placed a further
15,000,000 new ordinary shares in the Company at a price of 1 pence per share to raise gross
proceeds of £150,000. The Further Placing Shares were also accompanied by the issue of one
warrant to subscribe for one ordinary share in the Company for each Further Placing Share
(the “Further Placing Warrants”). When issued, the Further Placing Warrants will be
exercisable at any time, for a period of 2 years, from the date of admission of the Further
Placing Shares at the following exercise prices: 50% at 1.2p; 25% at 1.35p and 25% at 1.5p.
Outlook
The company looks forward to completing the pipeline reconnection works at Saltfleetby and
seeing first gas delivered to National Grid. This milestone will be complemented by
production at our Southern Fields and the exciting prospect of a near term Geothermal
project.
Approved by the Board of Directors and signed on behalf of the Board.
George Lucan
Managing Director
08 March 2021
Details of all our assets and operations can be found at www.angusenergy.co.uk
16
Corporate Governance Statement
Corporate Governance Statement
The Directors recognise that good corporate governance is a key foundation for the long term
success of the Group. The Company is listed on the AIM market of the London Stock Exchange
and is subject to the continuing requirements of the AIM Rules. The Board has therefore
adopted the principles set out in the Corporate Governance Code for small and mid-sized
companies published by the Quoted Companies Alliance (“QCA Code”). The principles are
listed below with an explanation of how the Company applies each principle, and the reasons
for any aspect of non-compliance.
1. Establish a strategy and business model which promote long- term value for shareholders
Angus Energy Plc provides shareholders with a full discussion of corporate strategy within our
Annual Report. A dedicated section explains how we will establish long term shareholder
value, as set out on page
10.
The Company is focused around 3 key strategic goals:
•
•
•
increase production and recovery from its existing asset portfolio;
grow the asset portfolio through select onshore development and appraisal projects;
actively manage costs and risks through operational and management control of the
entire process of exploring, appraising and developing its assets.
The Management team actively evaluates projects that simultaneously de-risk the current
portfolio and create long term shareholder value. Projects are evaluated based on many
characteristics to mitigate risk to our current activities they include but are not limited to
alignment with the Company’s core competencies, geography, time horizon and value
creation. Further, a core component of the Company’s activities include an active dialogue
with our legal and legislative advisors to ensure the Company remains up to date on current
legislation, policy and compliance issues.
The key challenges to the business and how they may be mitigated are detailed in the
Strategic Report on pages
6 to 16.
2. Seek to understand and meet shareholder needs and expectations
Angus Energy encourages two-way communication with institutional and private investors.
The Group’s major shareholders maintain an active dialogue to and ensure that their views
are communicated fully to the Board. Where voting decisions are not in line with the
company’s expectations the Board will engage with those shareholders to understand and
address any issues. The Company Secretary is the main point of contact for such matters.
The Company seeks out appropriate platforms to communicate to a broad audience its
current activities, strategic goals and broad view of the sector and other related issues. This
includes but is not limited to media interviews, website videos in -person investor
presentations and written content.
17
Corporate Governance Statement
Communication to all stakeholders is the direct responsibility of the Senior Management
team. Managers work directly with professionals to ensure all inquiries (through established
channels for this specific purpose such as email or phone) are addressed in a timely matter.
And that the Company communicates with clarity on its proprietary internet platforms. Senior
management routinely provides interviews to local media, and business reporters in support
of the company’s activities. The Board routinely reviews the Company communication policy
and programmes to ensure the quality communication with all stakeholders.
3. Take into account wider stakeholder and social responsibilities and their implications
for long term success
In all endeavours, the Company gives due consideration to the impact on its neighbours. The
Company seeks out methodologies, processes and expertise in order to address the concerns
of the non-investment community. As such, it actively identifies the bespoke needs of local
communities and their respective planners.
For example, the company provides for local hotlines and establishes community liaison
groups to address local questions and concerns.
Angus Energy seeks to maintain positive relationships within the communities we operate. As
such, Angus Energy is dedicated to ensuring:
Engagement with stakeholders at all stages of development;
• Open and honest dialogue;
•
• Proactively address local concerns;
• Actively minimise impact on our neighbours; and
• Adherence to a strict health and safety code of conduct
As a responsible OGA approved and EA permitted UK operator, Angus Energy is committed
to utilising industry best practices and achieving the highest standards of environmental
management and safety.
Our operations:
• Continuously assess and monitor environmental impact;
• Promote internally and across our industry best practices for environmental
management and safety; and
• Constant attention to maintaining our exemplary track record of safe oil and gas
production.
The Company has also established a scholarship programme for community residents seeking
secondary or further education.
For more information please refer to the page
Community section within the Company’s corporate website.
11
of the Annual Report as well as the
18
Corporate Governance Statement
4. Embed effective risk management, considering both opportunities and threats,
throughout the organization
Risk Management in the Strategic Report details risks to the business, how these are
mitigated and the change in the identified risk over the last reporting period.
The Board considers risk to the business at every Board meeting (at least 8 meetings are held
each year) and the risk register is updated at each meeting. The Company formally reviews
and documents the principal risks to the business at least annually.
Both the Board and senior managers are responsible for reviewing and evaluating risk and
the Executive Directors meet at least monthly to review ongoing trading performance, discuss
budgets and forecasts and new risks associated with ongoing trading.
5. Maintain the Board as a well- functioning, balanced team led by the chair
Oversight of Angus Energy is performed by the Company’s Board of Directors. Patrick
Clanwilliam, the acting Non-Executive Chairman, is responsible for the running of the Board
and George Lucan, the Managing Director, has executive responsibility for running the
Group’s business and implementing Group strategy. All Directors receive regular and timely
information regarding the Group’s operational and financial performance. Relevant
information is circulated to the Directors in advance of meetings. In addition, minutes of the
meetings of the Directors of the main UK subsidiary are circulated to the Group Board of
Directors. All Directors have direct access to the advice and services of the Company Secretary
and are able to take independent professional advice in the furtherance of the duties, if
necessary, at the company’s expense.
The Board comprises of three Executive Directors and two Non-Executive Directors with a mix
of significant industry and business experience within public companies. The Board considers
that all Non- executive Directors bring an independent judgement to bear. All Directors must
commit the required time and attention to thoroughly fulfil their duties.
The Board has a formal schedule of matters reserved to it and is supported by the Audit,
Remuneration, Nomination and AIM Rules compliance committee. The Schedule of Matters
Reserved and Committee Terms of Reference are available on the Company’s website and
can be accessed on the Corporate Governance page of the website.
6. Ensure that between them the directors have the necessary up-to-date experience, skills
and capabilities
The nomination committee will determine the composition of the Board of the Group and
appointment of senior employees. It will develop succession plans as necessary and report to
the Directors. Where new Board appointments are considered the search for candidates is
conducted, and appointments are made, on merit, against objective criteria and with due
regard for the benefits of diversity on the Board, including gender.
19
Corporate Governance Statement
The Company Secretary supports the Chairman in addressing the training and development
needs of Directors.
As a small company, all members of the Board share responsibility for all Board functions. As
such the Board will from time to time engage outside consultants to provide an independent
assessment.
7. Evaluate Board performance based on clear and relevant objectives, seeking
continuous improvement
The Board carries out an evaluation of its performance annually, taking into account the
Financial Reporting Council’s Guidance on Board Effectiveness. All Directors undergo a
performance evaluation before being proposed for re- election to ensure that their
performance is and continues to be effective, that where appropriate they maintain their
independence and that they are demonstrating continued commitment to the role.
Details of the Board performance effectiveness process will be included in the Directors’
Remuneration Report on page 27.
27.
8. Promote a corporate culture that is based on ethical values and behaviours
The Group is committed to maintaining and promoting high standards of business integrity.
Company values, which incorporate the principles of corporate social responsibilities (CSR)
and sustainability, guide the Group's relationships with clients, employees and the
communities and environment in which we operate. The Group's approach to sustainability
addresses both our environmental and social impacts, supporting the Group's vision to
remain an employer of choice, while meeting client demands for socially responsible partners.
Company policy strictly adheres to local laws and customs while complying with international
laws and regulations. These policies have been integral in the way group companies have
done business in the past and will continue to play a central role in influencing the Group's
practice in the future.
The ethical values of Angus Energy including environmental, social and community and
relationships, are set out on pages 10 and 11 and 33 to 36 of the Annual Report.
10 and 11 and 33 to 36
9. Maintain governance structures and processes that are fit for purpose and support good
decision- making by the Board
The Company has adopted a model code for directors' dealings and persons discharging
managerial responsibilities appropriate for an AIM company, considering the requirements
of the Market Abuse Regulations ("MAR"), and take reasonable steps to ensure compliance is
also applicable to the Group's employees (AIM Rule 21 in relation to directors' dealings).
The Corporate Governance Statement details the company’s governance structures, the role
and responsibilities of each director. Details and members of the Audit Committee,
20
Corporate Governance Statement
Remuneration Committee, Nomination Committee and AIM Rules compliance committee can
be found on pages 22.
22.
10. Communicate how the company is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders.
The Company encourages two- way communication with both its institutional and private
investors and responds quickly to all queries received. The Managing Director talks regularly
with the Group’s major shareholders and ensures that their views are communicated fully to
the Board.
The Board recognises the AGM as an important opportunity to meet private shareholders.
The Directors are available to listen to the views of shareholders informally immediately
following the AGM.
To the extent that voting decisions are not in line with expectations, the Board will engage
with shareholders to understand and address any issues.
In addition to the investor relations activities carried out by the Company as set out above,
and other relevant disclosures included on this Investor Relations section of the Company’s
website, reports on the activities of each of the Committees during the year will be set out in
the Annual Report on page 22.
22.
The Board and its committees
The Board of the Group consists of three Executive Directors and two non-Executive Directors.
The Board met on 8 occasions during the year to 30 September
2020. The table below sets out the Board meetings held by the
Company for the financial year ended 30 September 2020 and
attendance of each Director:
Executive Directors
George Lucan
Carlos Fernandes
Andrew Hollis
Non-Executive Directors
Patrick Clanwilliam
Cameron Buchanan
Board
meetings
[08/08]
[08/08]
[08/08]
[08/08]
[07/08]
The Group has established an audit committee, a remuneration committee, a nomination
committee and an AIM Rules compliance committee with formally delegated duties and
responsibilities.
21
Corporate Governance Statement
Audit committee
The audit committee comprised of Carlos Fernandes, George Lucan and Patrick Clanwilliam,
with Carlos Fernandes as chairman. The composition of these committees may change over
time as the composition of the Board changes.
The Audit Committee helps the Board discharge its responsibilities regarding financial
reporting, external and internal audits and controls as well as reviewing the Group’s annual
and half-year financial statements, other financial information and internal Group reporting.
The Auditor Committee Report is presented on page 24 to 25.
24 to 25.
Remuneration committee
The remuneration committee comprised of Patrick Clanwilliam and Cameron Buchanan, with
Patrick Clanwilliam as chairman. The composition of these committees may change over time
as the composition of the Board changes.
The remuneration committee will determine the scale and structure of the executive
directors’ and senior employees’ remuneration and the terms of their respective service or
employment contracts, including share option schemes and other bonus arrangements. The
remuneration and terms and conditions of the non-executive directors of the Group will be
set by the Chairman and executive members of the Board.
The Directors’ Remuneration Report is presented on page 26 to 27.
26 to 27.
Nomination committee
The nomination committee comprised of Patrick Clanwilliam, Andrew Hollis and Cameron
Buchanan with Patrick Clanwilliam as chairman. The composition of these committees may
change over time as the composition of the Board changes.
The nomination committee will determine the composition of the Board of the Group and
appointment of senior employees. It will develop succession plans as necessary and report to
the Directors.
Where new Board appointments are considered the search for candidates is conducted, and
appointments are made, on merit, against objective criteria and with due regard for the
benefits of diversity on the Board, including gender.
The Board carries out an evaluation of its performance annually, taking into account the
Financial Reporting Council’s Guidance on Board Effectiveness.
AIM Rules compliance committee
The AIM Rules compliance committee comprised of George Lucan, Cameron Buchanan and
Patrick Clanwilliam with George Lucan as chairman. The composition of these committees
may change over time as the composition of the Board changes.
The AIM Rules compliance committee will ensure that procedures, resources and controls are
in place to ensure that AIM Rules compliance by the Group is operating effectively at all times
22
Corporate Governance Statement
and that the executive directors are communicating effectively with the Group’s nominated
adviser regarding the Group’s ongoing compliance with the AIM Rules and in relation to all
announcements and notifications and potential transactions.
The Board will keep the Group’s compliance with the new Market Abuse Regulation (MAR)
regime under review and will adopt such policies and practices as the Board consider
necessary to ensure such compliance from time to time. This includes compliance with
requirements regarding directors’ dealings.
The AIM Rules compliance committee met three times during the period under review to
discuss Jonathan Tidswell-Pretorius and general compliance issues.
Other matters
In 2017, a loan of £200,000 was advanced to former director, Jonathan Tidswell-Pretorius, in
connection with settling certain tax obligations arising from historical company matters,
approved by the non-executive directors in accordance with the Company's corporate
governance guidelines. The loan was repayable on demand and unsecured, and restrictions
were placed on equity or share option dealing by the director during the tenure of the loan.
The loan was subsequently repaid on 7 January 2020.
The Board believes that the Group has a strong governance culture and this has been
reinforced by the adoption of the QCA Code and recognition of the key principles of corporate
governance set out in the QCA Code, which the Board continually considers in a manner
appropriate for a company of its size.
Patrick Clanwilliam
Chairman
08 March 2021
23
Audit Committee Report
The Audit Committee helps the Board discharge its responsibilities regarding financial
reporting, external and internal audits and controls as well as reviewing the Group’s annual
and half-year financial statements, other financial information and internal Group reporting.
This includes:
considering whether the Company has followed appropriate accounting standards and,
where necessary, made appropriate estimates and judgments taking into account the views
of the external auditors; reviewing the clarity of disclosures in the financial statements and
considering whether the disclosures made are set properly in context; where the audit
committee is not satisfied with any aspect of the proposed financial reporting of the
Company, reporting its view to the Board of directors; reviewing material information
presented with the financial statements and corporate governance statements relating to the
audit and to risk management; and reviewing the adequacy and effectiveness of the
Company’s internal financial controls and, unless expressly addressed by a separate board
risk committee composed of independent directors, or by the Board itself, review the
Company’s internal control and risk management systems and, except where dealt with by
the Board or risk management committee, review and approve the statements included in
the annual report in relation to internal control and the management of risk.
The Audit Committee assists by reviewing and monitoring the extent of non-audit work
undertaken by external auditors, advising on the appointment of external auditors and
reviewing the effectiveness of the Group’s internal controls and risk management systems.
The ultimate responsibility for reviewing and approving the Annual Report and financial
statements and the half-yearly reports remains with the Board.
During the year, no non-audit services were provided to the group for the year under review.
The audit committee considered the nature, scope of engagement and remuneration paid
were such that the independence and objectivity of the auditors were not impaired. Fees paid
for audit services are disclosed in Note 6.
During the financial year, the Audit Committee met twice with the auditor, Crowe U.K. LLP,
to review audit planning and findings with regard to the Annual Report and review comments
of the interim financial statements.
Significant reporting issues considered during the year included the following:
Impairments of oil assets
The Committee has reviewed the carrying values of the Groups oil assets, comprised of the
oil production assets, exploration and evaluation (E&E) assets. Based on the work performed
during the audit, and through discussions with management, the committee considers that
the carrying value of E&E assets are not impaired. The committee have considerate prudent
not to impair the oil production assets based on the estimated oil reserves and forecast level
of future production.
24
Audit Committee Report
Going concern
The Committee also considered the Going Concern basis on which the accounts have been
prepared and can refer shareholders to the Group’s accounting policy set out in Note 3.3 and
Note 4 (c). The directors are satisfied that the going concern basis is appropriate for the
preparation of the financial statements.
Carlos Fernandes
Chairman – Audit Committee
25
Directors’ Remuneration Report
This report sets out the remuneration policy operated by the Company in respect of the
Executive and Non-Executive Directors. The remuneration policy is the responsibility of the
Remuneration Committee, a sub-committee of the Board. No Director is involved in
discussions relating to their own remuneration.
Remuneration policy
The objective of the proposed remuneration policy is to attract, retain and motivate high
caliber executives to deliver outstanding shareholder returns and at the same time maintain
an appropriate compensation balance with the other employees of the Group.
Directors’ remuneration
The normal remuneration arrangements for Executive Directors consists of base salary,
performance bonuses and other benefits as determined by the Board. Each of the Executive
Directors has a service agreement that can be terminated at any time by either party giving
to the other twelve months’ written notice. Compensation for loss of office is restricted to
base salary and benefits only.
The remuneration packages for the Executive Directors are detailed below:
• Base Salary:
Annual review of the base salaries of the Executive Directors are concluded after
taking into account the Executive Directors’ role, responsibilities and contribution to
the Group performance.
• Performance Bonus:
Bonus arrangements are discretionary and are payable depending on the
performance of the Executive Directors in meeting their key performance indicators
and in the wider context with the performance of the Group.
• Benefits:
Benefits include payments for provident funds that are mandatory and statutory
pension payments as required by laws of the resident countries of the Executive
Directors, health insurance and other benefits.
•
Longer term incentives:
In order to further incentivise the Directors and employees, and align their interests
with shareholders, the Company has granted share options in the current and
previous years, as set out on page 27. The share options will vest at various future
dates as described in the note 16 to the financial statements. There are no conditions
attached to vesting other than service conditions.
Non-Executive Directors are remunerated solely in the form of Director Fees determined by
the Board and are not entitled to pensions, annual bonuses or employee benefits.
26
Directors’ Remuneration Report
Performance evaluation
All Directors undergo a performance evaluation before being proposed for re- election to
ensure that their performance is and continues to be effective, that where appropriate they
maintain their independence and that they are demonstrating continued commitment to the
role.
Appraisals are carried out each year with all Executive Directors. All continuing Directors stand
for re-election every 3 years. Succession planning at the current time is limited due to the
current size of the Board.
The tables below set out the respective Directors’ remuneration and fees:
2020
George Lucan
Andrew Hollis
Carlos Fernandes
Cameron Buchanan
Patrick Clanwilliam
2019
George Lucan
Andrew Hollis
Carlos Fernandes
Cameron Buchanan
Patrick Clanwilliam
Paul Vonk
Chris De Goey
Robert Shepherd
Salary
£’000
120
120
120
30
60
---------------
415
===========
Salary
£’000
82
60
60
26
68
30
8
6
---------------
340
===========
Termination
payment
-
-
-
-
-
---------------
-
===========
Share based
payment
£’000
-
-
-
-
-
--------------
-
==========
Termination
payment
-
-
-
-
-
300
-
-
---------------
300
===========
Share based
payment
£’000
10
10
10
10
10
-
-
-
--------------
50
==========
Total
£’000
120
120
120
30
60
-------------
415
=========
Total
£’000
92
70
70
36
78
330
8
6
-------------
690
=========
The Remuneration Committee met twice during the year to review the scale and structure of
the executive directors’ and senior employees’ remuneration.
Patrick Clanwilliam
Chairman – Remuneration Committee
27
Board of Directors
George Lucan
Managing Director
Experienced finance professional with over thirty years' behind him in debt and equity
markets. After graduating from Cambridge University, he began his career at Dresdner
Kleinwort Benson where he spent 10 years, mainly within the Structured Finance team, and
continued in alternative fund management, most recently with Rudolf Wolff Limited. He
brings, in addition, private equity experience in the fields of energy and alternative energy.
Andrew Hollis
Technical Director
Andrew has over 40 years’ experience in all technical aspects of oil and gas, exploration and
production. After 25 years in petroleum and reservoir engineering for British Gas he became
an independent consultant specialising in Russia, the FSU and Eastern Europe and also
provided specialist reserves determination skills to Gaffney Cline and Associates.
Carlos Fernandes
Finance Director
Carlos has been part of the Angus team since 2013 and has seen the company’s transition
from private to public. Prior to his appointment as Finance Director, he was the Chief Financial
Officer of the group. He has over 14 years commercial experience working in the Mining and
Oil & Gas industry.
Cameron Buchanan
Non-Executive Director
Cameron Buchanan is a former Scottish politician, who served as a Scottish Conservative Party
Member of the Scottish Parliament for the Lothian region from 2013 to 2016. After a career
in the Scottish textile industry, he also served as vice-chairman of the Scottish Conservatives.
Buchanan was educated at St Edward's School & Sorbonne University.
Patrick Clanwilliam
Non-Executive Chairman
Paddy’s previous responsibilities include the Chair of Eurasia Drilling Company Limited
(EDCL.LI) the largest drilling and work-over company in Eurasia. He is also a former non-
executive director of SOMA Oil & Gas, a private exploration play in deepwater offshore
Somalia and OJSC Polyus Gold (OPYGY) the largest Russian gold mining company by market
share.
28
Directors’ Report
Directors’ Report
The Directors present their report together with the audited consolidated financial
statements of Angus Energy plc for the year ended 30 September 2020.
Results and Dividends
The Group recorded a loss after tax of £2.516m for the year (2019: £5.043m). The Directors
do not recommend the payment of a dividend.
Directors
The Directors who were in office during the year and up to the date of signing the financial
statements, unless stated, were:
Executive Director
George Lucan
Carlos Fernandes
Andrew Hollis
Non-Executive Director
Patrick Clanwilliam
Cameron Buchanan
The Directors of the Company at the date of this report, and their biographical summaries,
are given on page 28.
The Directors’ remuneration is detailed in the Directors’ Remuneration Report on page 27. All
Directors benefit from the provision of Directors’ and Officers’ indemnity insurance policies.
Premiums payable to third parties were £39,200 (2019 – 7,840).
Research and development
As disclosed in Note 11 and 12, the Group incurred expenditure in development of oil and gas
fields. An initial pilot study was commissioned by the company to assess the use of these
remaining wells with respect to a geothermal/heat capture project. Initial findings appear
positive, and the company is now assessing a way forward on this. There is no other research
and development activity during the year under review.
Share Capital
At the date of this report ordinary shares are issued and fully paid. Detail of movement in
share capital during the year is given in note 15 to the financial statements.
29
Directors’ Report
Substantial Shareholders
As of the date of this report the Group had been notified of the following interests of 3% or
more in the Group’s ordinary share capital:
G.P (Jersey) Limited
Knowe Properties Limited
HSBC Bank Plc
JDA Consulting Ltd
Percentage of
shareholding
8.43%
6.60%
5.87%
3.27%
Share options
There were no Share Options issued during the reporting period.
Financial Instruments
The financial risk management objectives and policies of the Group in relation to the use of
financial instruments and the exposure of the Group and its subsidiary undertakings to its
main risks, credit risk and liquidity risk, are set out in note 22 to the financial statements.
Employees
The Group had 11 employees as at 30 September 2020 (2019: 11). Employees are encouraged
to directly participate in the business through an Enterprise Management Incentive Scheme,
which set out in note 16 to the financial statements.
Going Concern
As disclosed in Note 3.3 to the financial statements, it refers to the assumptions made by the
Directors when concluding that it remains appropriate to prepare the financial statements on
the going concern basis.
Events after the reporting period
Events after the reporting period have been disclosed in Note 26.
Disclosure of Information to the Auditor
In the case of each person who was a Director at the time this report was approved:
•
•
so far as the Director was aware there was no relevant audit information of which the
Company’s auditor was unaware; and
the Director has taken all steps that he ought to have taken as a Director to make himself
aware of any relevant audit information and to establish that the Company’s auditor was
aware of that information.
30
Directors’ Report
Auditor
A resolution to reappoint the auditor, Crowe U.K. LLP, will be proposed at the forthcoming
Annual General Meeting.
Approved by the Board of Directors and signed on behalf of the Board.
George Lucan
Managing Director
31
Statement of Directors’ Responsibilities
Statement of Director’s Responsibilities
The Directors are responsible for preparing the Strategic Report, Directors’ Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for
each financial year. The Directors are required by the AIM Rules of the London Stock Exchange
to prepare Group financial statements in accordance with International Financial Reporting
Standards (‘IFRS’) as adopted by the European Union (‘EU’) and have elected under the
company law to prepare the Company statements in accordance with UK accounting
standards.
The financial statements are required by law and applicable accounting standards to present
fairly the financial position of the Group and the Company and the financial performance of
the Group. The Companies Act 2006 provides in relation to such financial statements that
references in the relevant part of that Act to financial statements giving a true and fair view
are references to their achieving a fair presentation.
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 the
Company and of the profit or loss of the Group for that period.
In preparing the Group and Company 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 applicable accounting standards have been followed, subject to any
material departures disclosed and explained in the financial statements;
• prepare the Strategic Report and Directors’ report which comply with the
requirements of the Companies Act 2006;
• prepare financial statements on the going concern basis unless it is inappropriate to
presume that the Group and 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 and the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Group and the Company and enable them
to ensure that the financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial
information included on the Angus Energy PLC website www.angusenergy.co.uk.
Legislation in the United Kingdom governing the preparation and dissemination of financial
statement may differ from legislation in other jurisdictions.
32
Stakeholder Engagement
Stakeholder Engagement
As a public company operating in one of the most regulated industries Angus Energy
recognise that stakeholder engagement is a key foundation for the long term success of the
Group. Stakeholders include not only our shareholders, lenders, and our partners, but also
our suppliers & customers, our workforce, governments & regulators, and the communities
in which we operate. The Company seeks out appropriate platforms to communicate to a
broad audience its current activities, strategic goals and broad view of the sector and other
related issues.
The section below, describes how the directors of the Company have regard for the matters
set out in Section 172(1) of the Companies Act 2006, these are:
•
•
•
•
•
•
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 as between members of the company.
The section below forms the Board’s statement on such matters as required by the Act.
Further information regarding Angus’s assessment of environmental and community issues
associated with our operations, can be found in the Sustainability Review on pages 10 and
11. Review of the key decisions and issues
discussed in Board meetings and by various committees in 2020 is contained in the
Corporate Governance Statement from pages 17 to 23.
Shareholders and Lenders
Angus seeks to develop an investor base of long-term holders that are aligned with our
strategy. By clearly communicating our strategy and objectives, we maintain continued
support for what we do.
Important issues include:
Sustainable financial and operational performance
•
• Continued revue of new opportunities which can leverage our cost discipline and
technical skills base
Sustainable financial and operational performance
•
• Capital allocation
There is regular dialogue between both institutional and retail investors and lenders
through meetings, calls, conferences, presentations and through our Investor Questions on
our website.
33
Stakeholder Engagement
• Highlights Include:
Investor conference calls
•
• Online interviews
•
•
•
Investor questions regularly answered on the company’s website
4% per annum £1,400,000 Convertible Loan Note issued on 20 April 2020
Signing MOU with Aleph Commodities for £12m Saltfleeby Debt Facility
Partners
Sharing of risk is a fundamental component of our industry and by maintaining aligned and
collaborative relationships with our joint venture partners, we can ensure that maximum
value can be extracted from our operations in a safe and sustainable manner.
Important issues include:
• Operational performance & HSE
• Budget setting and work programs
Angus ensures that we maintain an open dialogue with all our partners in the Saltfleetby,
Balcombe, Lidsey and Brockham licence. We seek to ensure that all partners are aligned
around common objectives for the asset and maintain safe and efficient operations.
Highlights include:
• Completion of the Saltfleetby Farm-in agreement
• Re-mapping of the field with our Lidsey partners
Customers & suppliers
Angus has through the year’s development good customer base. The supply chain is
managed by Angus on behalf of its partners. We have further developed strong
relationships with key corporate suppliers.
Important issues include:
• Contract management strategy
• Uninterrupted service for customers
•
Enhance value
Engagement with suppliers usually takes place with the operator but we are closely involved
and help shape the strategy and timing.
Highlights include:
•
•
Signing GSA for the entire production from the Saltfleetby Gas Field with Shell
Energy Europe Limited, a division of Royal Dutch Shell plc
Procurement of equipment for the Saltfleetby development
Workforce
Our current and future success is underpinned by our ability to engage, motivate and adapt
our workforce. Creating the right environment for employees where their various strengths
are recognised and their contributions are valued, helps to ensure that we can deliver our
shared objectives.
34
Stakeholder Engagement
Important issues include:
• Group strategy
• Diversity of thinking
• Corporate culture
During 2020, internal communications were upscaled, so employees were kept informed of
all the workstreams across the Company and helped to raise key issues with directors and
executives.
Highlights include:
Production & strategy updates
Twice daily conference calls
•
•
• All staff involvement in CSR initiatives
Government & Regulators
Maintaining respectful and collaborative relationships with our regulatory authorities is vital
to our ‘licence to operate’. We believe that the strength of these relationships will allow us
to make a sustainable and beneficial contribution to the regions in which we operate.
Important issues include:
• Renewal of Licences
•
•
Identifying and securing new opportunities
Providing views on upcoming legislation and factors that are important to the
industry
• CSR commitments
Angus maintains an open dialogue with the OGA, EA, HSE and local authorities in the areas it
operates. Angus is also a member of UKOOG, OGUK and IGEM.
Highlights include:
• Approval of the transfer of the Saltfleetby Licence by the OGA
• Approval of the transfer of the Saltfleetby Licence Operatorship by the OGA
•
Successful planning and permitting permissions for the Saltfleetby pipeline and
surface upgrades
Communities & Environment
As a responsible OGA approved and Environment Agency (“EA”) permitted UK operator,
Angus Energy is committed to utilising industry best practices and achieving the highest
standards of environmental management and safety. Angus Energy also seeks and
maintains positive relationships with its local communities.
Important issues include:
• Continuously assess and monitor environmental impact
•
Promote internally and across our industry best practices for environmental
management and safety
35
Stakeholder Engagement
• Constant attention to maintaining our exemplary track record of safe oil and gas
production
• Open and honest dialogue
•
•
• Actively minimise impact on our neighbours
Engagement with stakeholders at all stages of development
Proactively address local concerns
Regular engagement with HSE and EA officers occurs through operational committee
meetings maintaining positive focus on health, safety and the environment.
Highlights include:
Zero environmental or HSE incidents during operations in 2020
•
• Continued community engagement
• Continued awards through the company’s local scholarship program
• Discussions to become an active participant in the UN Global Compact. As part of
this partnership, we will make an annual public disclosure on the progress we have
made in implementing their 10 sustainability principles and in supporting broader
UN development goals.
36
Independent Auditor’s Report To The Members of Angus Energy Plc
Opinion
We have audited the financial statements of Angus Energy plc (the “Parent Company”) and its
subsidiaries (the “Group”) for the year ended 30 September 2020, which comprise:
•
•
•
•
•
the Group statement of comprehensive income for the year ended 30 September 2020;
the Group and parent company statements of financial position as at 30 September 2020;
the Group statement of cash flows for the year then ended;
the Group and parent company statements of changes in equity for the year then ended; and
the notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial
statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union. The financial reporting framework that has been applied in the preparation of the
Parent Company financial statements is applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and
Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice).
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 30 September 2020 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union;
the Parent Company financial statements have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements 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 are independent of
the Group and 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, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
On forming our opinion on the financial statements, which is not modified, we have considered the
adequacy of the disclosure made in note 3.3 to the financial statements concerning the group and
company’s ability to continue as a going concern. The financial statements have been prepared on the
going concern basis, which depends on the group and company’s ability to raise further financing to
cover its ongoing working capital requirements. These conditions, along with other matters explained
in note 3.3 to the financial statements, indicate the existence of a material uncertainty which may cast
a significant doubt about the group and company’s ability to continue as a going concern. The financial
statements do not include adjustments that would result if the group and company were unable to
continue as a going concern.
37
Independent Auditor’s Report To The Members of Angus Energy Plc
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An item is considered
material if it could reasonably be expected to change the economic decisions of a user of the financial
statements. We used the concept of materiality to both focus our testing and to evaluate the impact
of misstatements identified.
Based on our professional judgement, we determined overall materiality for the Group financial
statements as a whole to be £250,000 (2019: £330,000), based on 2% of Group total assets.
We use a different level of materiality (‘performance materiality’) to determine the extent of our testing
for the audit of the financial statements. Performance materiality is set based on the audit materiality
as adjusted for the judgements made as to the entity risk and our evaluation of the specific risk of each
audit area having regard to the internal control environment.
Where considered appropriate performance materiality may be reduced to a lower level, such as, for
related party transactions and directors’ remuneration.
We agreed with the Audit Committee to report to it all identified errors in excess of £10,000 (2019:
£13,750). Errors below that threshold would also be reported to it if, in our opinion as auditor, disclosure
was required on qualitative grounds.
Overview of the scope of our audit
Our Group audit scope included a full audit of all three reporting entities which account for 100% of
the Group’s net assets and loss before tax.
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. These matters included
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. These matters were 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 these matters.
This is not a complete list of all risks identified by our audit.
Key audit matter
How the scope of our audit addressed the key audit matter
Carrying value of oil & gas
production assets
At 30 September 2020,
the carrying value of oil &
gas production assets
was £6.406 million.
The recoverable value of
the Brockham and Lidsey
We focused on this area due to the significance of the carrying
value of the assets. The risk of impairment was considered likely to
be highly sensitive to assumptions and estimates about future oil
and gas prices and discount rate. Other assumption include
exchange rates, future production levels, reserves and operating
costs.
We evaluated management’s assessment of indicators of impairment
and recoverability assessment for the Group’s oil & gas production
assets. We have:
38
Independent Auditor’s Report To The Members of Angus Energy Plc
production assets are
based on the net present
value of estimated future
net cash flow after the
application of an
appropriate discount
rate. If the production
rate or reserve quantity
are less than anticipated,
appropriate adjustments
would be necessary to
further impair the
carrying value of these
assets.
•
•
tested price and discount rate assumptions by comparing
forecast oil price assumptions to the latest market evidence
available and reviewed the reasonableness of the discount rate
applied;
tested the accuracy of the forecast cash flows and the
assumptions used within the cash flow projection model.
• We assessed the quality of management’s previous budgets and
forecasts by comparing them to actual performance.
We have considered the adequacy of the disclosure to the financial
statements in respect of the impairment recognised and the work
performed by management including the key judgement and
sensitivity analysis presented in note 4 and note 11 respectively.
We reviewed management’s assessment of indicators of
impairment for the ongoing exploration assets under
IFRS 6 including the review of the validity of the licence
and the progress of the technical work to date. In
addition, we evaluated management’s Net Present Value
(NPV) models for the Balcombe assets. We challenged
the key estimates and assumptions used by
management.
We also reviewed management’s assessment of the
future decommissioning costs and assessed the
appropriateness of the assumptions concerning the
timing and discounting of the estimated cost of
decommissioning.
We reviewed the disclosure made concerning this matter
to ensure that it is consistent with our understanding.
Carrying value of exploration and
evaluation (E&E) assets
At 30 September 2020, the
carrying value of exploration and
evaluation assets was £8.183
million.
The Balcombe and Saltfleetby
sites are still in the exploration
and evaluation phase as
technical and economic
feasibility have yet to be
established.
The recoverable value of these
assets are based on the net
present value of estimated
future net cash flow after the
application of an appropriate
discount rate. If the production
rate or reserve quantity are less
than anticipated, appropriate
adjustments would be necessary
to further impair the carrying
value of these assets.
39
Independent Auditor’s Report To The Members of Angus Energy Plc
Going concern
Our procedures on the Directors’ going concern
assessment were as follows:
The Directors’ are responsible for
assessing whether the preparation
of the accounts on a going
concern basis is appropriate. Their
assessment must cover a
minimum period of 12 months
from the date of the financial
statements.
The Company has been operating
at a loss for a number of years and
has 2 sites still in the exploration
and evaluation phase, and
considering the liquidity position
of the entity for the year ended 30
September 2020, there is risk that
the preparation of the accounts
on a going concern basis may not
be appropriate or that adequate
disclosures are not made in the
financial statements.
Management has also considered
the range of possible impacts of
COVID-19 and the potential
continuing disruption to the wider
business environment.
• We reviewed management’s financial projections for
the Group for a period of more than 12 months from
the date of approval of the financial statements.
• We challenged management on the assumptions
underlying those projections and sensitised them to
reduce anticipated net cash inflows from future
trading activities.
• We obtained the latest financial results post year end
30 September 2020 to review how the company is
trending toward achieving the forecast.
• We performed sensitivity analysis on key inputs of the
forecast by calculating the impact of various scenarios
and considering the impact on the Company’s ability
to continue as a going concern in the event of not
meeting the forecast. This included what
management considered to be a severe worst-case
scenario, modelled with respect to COVID-19 impacts
and management’s experience of matters over the
course of 2020.
We assessed the completeness and accuracy of the
matters described in the going concern disclosure
within the significant accounting policies and the
critical judgements, as set out in Note 3.3 and 4
respectively.
Our audit procedures in relation to these matters were designed in the context of our audit
opinion as a whole. They were not designed to enable us to express an opinion on these
matters individually and we express no such opinion.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report, 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.
In connection with our audit of the financial statements, 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 audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether there is a material
40
Independent Auditor’s Report To The Members of Angus Energy Plc
misstatement in the financial statements or a material misstatement of the other information.
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.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of our 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 directors’ report have been prepared in accordance with
applicablelegal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Group and the Parent Company and
their 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 where 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 the directors for the financial statements
As explained more fully in the directors’ responsibilities statement set out on page 32, 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 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.
41
Independent Auditor’s Report To The Members of Angus Energy Plc
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.
A further description of our responsibilities for the audit of the financial statements is located
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 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 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 company and
the company's members as a body, for our audit work, for this report, or for the opinions
we have formed.
John Glasby
Senior Statutory Auditor
For and on behalf of
Crowe U.K. LLP
Statutory Auditor
55 Ludgate Hill
London EC4M 7JW
Date: 08 March 2021
42
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 30 SEPTEMBER 2020
Revenue
Cost of sales
Gross loss
Administrative expenses
Impairment charge
Share option charge
Operating loss
Finance income
Finance cost
Loss before taxation
Taxation
Loss for the year
Note
5
12
16
7
7
9
2020
£’000
68
(162)
(94)
(2,060)
(300)
(30)
(2,484)
-
(32)
(2,516)
-
(2,516)
2019
£’000
200
(295)
(95)
(3,976)
(900)
(79)
(5,050)
7
-
(5,043)
-
(5,043)
Total comprehensive loss for the year
(2,516)
(5,043)
Loss for the year attributable to:
Owners of the parent company
Total comprehensive loss attributable to:
Owners of the parent company
(2,516)
(5,043)
(2,516)
(2,516)
(5,043)
(5,043)
Earnings per share (EPS) attributable to owners of the parent:
Basic and diluted EPS (in pence)
18
(0.43)
(1.08)
The notes on page 47 to 69 form part of these of financial statements
All amounts are derived from continuing operations.
43
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2020
ASSETS
Non-current assets
Property, plant and equipment
Exploration and evaluation assets
Oil & gas production assets
Lease assets
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
EQUITY
Equity attributable to owners of the parent:
Share capital
Share premium
Merger reserve
Loan note reserve
Accumulated loss
TOTAL EQUITY
Current liabilities
Trade and other payables
Total current liabilities
Non-current Liabilities
Provisions
Trade and other payables
Total non-current liabilities
TOTAL LIABILITIES
Note
2020
£’000
2019
£’000
10
12
11
25
14
15
15
17
21
19
20
19
11
8,183
6,406
35
14
5,878
6,416
-
14,635
12,308
609
1,852
2,461
794
3,419
4,213
17,096
16,521
1,430
21,982
(200)
106
(12,047)
1,082
21,117
(200)
-
(9,561)
11,271
12,438
1,488
1,488
3,007
1,330
4,337
5,825
1,031
1,031
3,052
-
3,052
4,083
TOTAL EQUITY AND LIABILITIES
17,096
16,521
The notes on page 47 to 69 form part of these of financial statements
The financial statements were approved by the Board of Directors and authorized for issue on 08 March 2021
and were signed on its behalf by:
George Lucan - Director
Company number: 09616076
44
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 SEPTEMBER 2020
Share capital
Share
premium
Merger
reserve
Loan Note
reserve
Accumulated
Loss
Total equity
£’000
£’000
£’000
£’000
£’000
£’000
Balance at 30 September 2018
763
14,142
(200)
Loss for the year
Total comprehensive income for
the year
Transaction with owners
Issue of shares
Less: issuance costs
Grant of share options
-
-
319
-
-
-
-
7,450
(475)
-
-
-
-
-
-
Balance at 30 September 2019
1,082
21,117
(200)
Loss for the year
Total comprehensive loss for the
year
Transaction with owners
Issue of shares
Less: issuance costs
Issue of convertible loan note
Grant of share options
-
-
348
-
-
-
-
-
1,051
(186)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
106
-
(4,597)
10,108
(5,043)
(5,043)
(5,043)
(5,043)
-
-
79
7,769
(475)
79
(9,561)
12,438
(2,516)
(2,516)
(2,516)
(2,516)
-
-
30
1,399
(186)
106
30
Balance at 30 September 2020
1,430
21,982
(200)
106
(12,047)
11,271
The notes on page 47 to 69 form part of these of financial statements
45
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 30 SEPTEMBER 2020
Cash flow from operating activities
Loss for the period before taxation
Adjustment for:
Share option charge
Equity settled in lieu professional fees
Interest receivables
Interest payable
Impairment charge
Depreciation of owned assets
Cash used in operating activities before changes in working
capital
Change in trade and other receivables
Change in other payables and accruals
Lease principal repayments
Cash used in operating activities before tax
Income tax paid
Year ended
30 September
2020
£’000
Year ended
30 September
2019
£’000
(2,516)
(5,043)
30
-
-
32
300
147
79
60
(7)
-
900
36
(2,007)
(3,975)
185
369
(138)
(1,591)
-
3
(408)
-
(4,380)
-
Net cash flow used in operations
(1,591)
(4,380)
Cash flow from investing activities
Proceeds from acquisition exploration and evaluation assets
Decommissioning cost
Acquisition of property, plant and equipment
Acquisition of exploration and evaluation assets
Acquisition of oil production assets
10
12
11
-
(45)
3
(2,605)
-
2,500
-
(660)
(1,684)
Net cash flow from investing activities
(2,647)
156
Cash flow from financing activities
Net proceeds from issuance of convertible loan notes
Proceeds from issuance of shares
Net cash flow from financing activities
Net increase/(decrease) in cash & cash equivalents
Cash and equivalent at beginning of period
Cash and equivalent at end of period
Details of the non-cash transaction are disclosed in note 16.
The notes on page 47 to 69 form part of these of financial statements
1,458
1,213
2,671
(1,567)
3,419
1,852
-
6,797
6,797
2,573
846
3,419
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
General information
Angus Energy Plc (the “Company”) is incorporated and domiciled in the United Kingdom. The address of the
registered office is Building 3 Chiswick Park, 566 Chiswick High Road, London, W4 5YA.
The principal activity of the Company is that of investment holding. The principal activity of the Group is that
of oil and gas extraction for distribution to third parties. The principal activities of the various operating
subsidiaries are disclosed in note 13.
2.
Presentation of financial statements
The financial statements have been presented in Pounds Sterling (£) as this is the currency of the primary
economic environment that the group operates in. The amount is rounded to the nearest thousand (£’000),
unless otherwise stated.
3.
Accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below.
3.1
Basis of preparation
These financial statements have been prepared in accordance with International financial Reporting
standards (IFRSs) as adopted by the European Union and the Companies Act 2006. The financial statements
have been prepared on the historical cost basis except for certain assets which are stated at their fair value.
3.2
New standards, amendments to and interpretations to published standards not yet effect
The Directors have considered those standards and interpretations, which have not been applied in the
financial statements but are relevant to the Group’s operations, that are in issue but not yet effective and do
not consider that they will have a material impact on the future results of the Group.
3.3
Going concern
The consolidated financial statements have been prepared on a going concern basis. The Group made a loss
for the year of £2.516 million (2019: loss of £5.04 million) and recorded a net cash outflow from operating
activities of £1.592 million (2019: £4.38 million).
The Group meets its day to day working capital requirements through existing cash reserves. As at 30
September 2020, the Group had £1.85 million of available cash. Subsequent to the year end the Group
raised gross proceeds of £1,749,990 as a result of a placing of new ordinary shares.
The COVID-19 pandemic has not had a significant immediate impact on the company’s operations. The Oil
and Gas industry has been deemed critical and thus we have been allowed to continue operations. The
Directors are aware that if the current situation becomes prolonged then this may change. The
consolidated financial statements have been prepared on a going concern basis.
In response to this extraordinary period, the Directors have taken the prudent decision to introduce cost
saving measures where possible to preserve working capital. The Directors have assessed the Group’s
working capital forecasts for a minimum of 12 months from the date of the approval of these financial
statements. In undertaking this assessment, the Directors have reviewed the underlying business risks, and
the potential implications these risks would have on the Group’s liquidity and its business model over the
assessment period. This assessment included a detailed cash flow analysis prepared by the management,
and they also considered several reasonably plausible downside scenarios. The scenarios included
consideration of the likelihood of not closing the Saltfleetby debt facility, as well as considering potential
delays to expected future revenue. In making their overall assessment the Directors took into account the
advanced stage of the documentation in relation to the debt facility and the indicative commitments
received to date. In respect of Balcombe the Directors have considered the likelihood of a successful
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
appeal. Although there will remain material uncertainty until the funds have been drawn down, the
Directors are confident in closing the facility imminently. Based on the current management’s plan,
management considered that the working capital from the expected revenue generation and the
Saltfleetby Debt Financing Facility are sufficient for the expenditure to date as well as the planned forecast
expenditure for the forthcoming twelve months from the date of the approval of this financial statement.
As a result of that review the Directors consider that it is appropriate to adopt the going concern basis of
preparation.
As noted above, in the event that the Group is not successful in concluding the debt financing
arrangements, there would exist a material uncertainty that may cast doubt regarding the Group’s ability to
continue as a going concern and therefore, it might be required to raise additional funding to realise its
assets and extinguish its liabilities in the normal course of business and at the amounts stated in the report.
These financial statements do not include any adjustment that may result from any significant changes in
the assumption used.
3.4
Basis of consolidation
The consolidated financial statements comprise the financial information of the Company and its subsidiaries
(the “Group”) made up to the end of the reporting period. Control is achieved when the Group is exposed,
or has rights, to variable returns from its involvement with the investee and has the ability to affect those
returns through its power over the investee.
The consolidated financial statements present the results of the Company and its subsidiaries and joint
arrangements as if they formed a single entity. Inter-company transactions and balances between group
companies are therefore eliminated in full. The financial information of subsidiaries is included in the Group’s
financial statements from the date that control commences until the date that control ceases.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders
of the parent of the Group. When necessary, adjustments are made to the financial information of
subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intragroup
assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of
the Group are eliminated in full on consolidation.
The acquisition of Angus Energy Holding Limited by the Company, by way of share exchange, for the year
ended 30 September 2016 was that of a re-organisation of entities which were under common control. As
such, that combination also falls outside the scope of IFRS 3 ‘Business Combinations’ (Revised 2008). The
Directors have, therefore, decided that it is appropriate to reflect the combination using the merger basis of
accounting in order to give a true and fair view. No fair value adjustments were made as a result of that
combination.
3.5
Property, plant and equipment
All fixed assets are initially recorded at cost. Depreciation is calculated so as to write off the cost of an asset,
less its estimated residual value, over the useful economic life of that asset as follows:
Fixtures and fittings
Plant and machinery
Motor vehicles
Lease assets
-
-
-
-
25% straight line
20% straight line
20% straight line
over the term of the lease
3.6
Oil and natural gas exploration and evaluation (E&E) expenditure
Oil and natural gas exploration and evaluation expenditure is accounted for using the successful efforts
method of accounting.
(a)
Licence and property acquisition costs
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Licence and property leasehold acquisition costs are capitalised within intangible fixed assets and amortised
on a straight-line basis over the estimated period of exploration. Upon determination of economically
recoverable reserves amortisation ceases and the remaining costs are aggregated with exploration
expenditure and held on a field-by-field basis as proved properties awaiting determination within intangible
fixed assets. When development is sanctioned, the relevant expenditure is transferred to tangible production
assets.
(b)
Exploration expenditure
Geological and geophysical exploration costs are charged against income as incurred. Costs directly
associated with an exploration well are capitalised as an intangible asset until drilling of the well is complete
and the results have been evaluated. If hydrocarbons are not found, the exploration expenditure is written
off as a dry hole. If hydrocarbons are found, and, subject to further appraisal activity, are likely to be capable
of commercial development, the costs continue to be carried as an asset. All such carried costs are subject to
regular technical, commercial management review to confirm the continued intent to develop or otherwise
extract value from the discovery. When this is no longer the case, the costs are written off. When proven and
probable reserves of oil and gas are determined and development is sanctioned, the relevant expenditure is
transferred to tangible production assets.
(c)
Development expenditure
Expenditure on the construction, installation and completion of infrastructure facilities such as platforms,
pipelines and the drilling of development wells, including unsuccessful development or delineation wells, is
capitalised within tangible production assets.
(d)
Maintenance expenditure
Expenditure on major maintenance, refits or repairs is capitalised where it enhances the performance of an
asset above its originally assessed standard of performance; replaces an asset or part of an asset which was
separately depreciated and which is then written off; or restores the economic benefits of an asset which has
been fully depreciated. All other maintenance expenditure is charged to income as incurred.
Treatment of E&E assets at conclusion of appraisal activities
Intangible E&E assets related to each exploration licence/prospect are carried forward, until the existence
(or otherwise) of commercial reserves has been determined. If commercial reserves have been discovered,
the related E&E assets are assessed for impairment on a cost pool basis as set out below, and any
impairment loss of the relevant E&E assets is then reclassified as development and production assets.
3.7
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s statement of financial position when
the Group becomes a party to the contractual provisions of the instrument.
Loan and receivables
Loans and receivables are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective
interest method, less any impairment losses.
Trade receivables are recognised initially at the transaction price and subsequently measured at amortised
cost, less any impairment losses.
Trade and other payables
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently
measured at amortised cost, where applicable, using the effective interest method, with interest expense
recognised on an effective yield basis.
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3.8
Impairment of assets
(a)
Financial assets
Impairment provisions for current and non-current trade receivables are recognised based on the simplified
approach within IFRS 9 using a historical provision matrix in the determination of the lifetime expected credit
losses. During this process the probability of the non-payment of the trade receivables is assessed. This
probability is then multiplied by the amount of the expected loss arising from default to determine the
lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such
provisions are recorded in a separate provision account with the loss being recognised within administration
costs in the consolidated statement of comprehensive income. On confirmation that the trade receivable will
not be collectable, the gross carrying value of the asset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to related parties are recognised based
on a forward looking expected credit loss model. The methodology used to determine the amount of the
provision is based on whether there has been a significant increase in credit risk since initial recognition of
the financial asset. For those for which credit risk has increased significantly, lifetime expected credit losses
are recognised, unless further information becomes available contrary to the increased credit risk. For those
that are determined to be permanently credit impaired, lifetime expected credit losses are recognised.
(b)
Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at
each reporting date to determine whether there is any indication of impairment. If any such indication exists,
then the asset’s recoverable amount is estimated. For assets that have indefinite lives, the recoverable
amount is estimated at each reporting date.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value
less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and
risk specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest
group of assets that generates cash inflows from continuing use that are largely independent of the cash
inflows of other assets or groups of assets (the “cash generating unit”).
An impairment loss is recognised if the carrying amount of an asset or its cash generating unit exceeds its
estimated recoverable amount. Impairment losses are recognised in the profit or loss.
3.9
Oil and gas production assets
Expenditures related to the construction, installation or completion of infrastructure facilities, such as
platforms and pipelines, and the drilling of development wells, including delineation wells, is capitalised
within oil and gas production assets. The initial cost of an asset comprises its purchase price or construction
cost, any costs directly attributable to bringing the asset into operation, the initial estimate of the well asset
retirement obligation, for qualifying assets, and borrowing costs.
Oil and gas production assets are depreciated using a unit of production method. The cost of producing wells
is amortised over total proved and undeveloped oil and gas reserves of the field concerned, except in the
case of assets whose useful life is shorter than the lifetime of the field, in which case the straight-line method
is applied. Rights and concessions are depleted on the unit-of-production basis over the total proved
developed and undeveloped reserves of the relevant area. The unit-of-production rate calculation for the
depreciation of field development costs takes into account expenditures incurred to date, together with
sanctioned future development expenditure.
In accounting for a farm-out arrangement outside the exploration and evaluation phase, the Group:
• Derecognises the proportion of the asset that it has sold to the farmee
• Recognises the consideration received or receivable from the farmee, which represents the cash
received and/or the farmee’s obligation to fund the capital expenditure in relation to the interest
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
•
•
retained by the farmor
Recognises a gain or loss on the transaction for the difference between the net disposal proceeds
and the carrying amount of the asset disposed of. A gain is recognised only when the value of the
consideration can be determined reliably. If not, then the Group accounts for the consideration
received as a reduction in the carrying amount of the underlying assets
Tests the retained interests for impairment if the terms of the arrangement indicate that the
retained interest may be impaired
The consideration receivable on disposal of an item of property, plant and equipment or an intangible asset
is recognised initially at its fair value by the Group. However, if payment for the item is deferred, the
consideration received is recognised initially at the cash price equivalent. The difference between the
nominal amount of the consideration and the cash price equivalent is recognised as interest revenue. Any
part of the consideration that is receivable in the form of cash is treated as a financial asset and is accounted
for at amortised cost.
3.10
Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past events and whose existence will only be
confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within
the control of the Group. It can also be a present obligation arising from past events that is not recognised
because it is not probable that outflow of economic resources will be required or the amount of obligation
cannot be measured reliably.
A contingent liability is not recognised but is disclosed in the notes to the accounts. When a change in the
probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision. A
contingent asset is a possible asset that arises from past events and whose existence will be confirmed only
by the occurrence or non-occurrence of one or more uncertain events not wholly within the control of the
Group. Contingent assets are not recognised but are disclosed in the notes to the accounts when an inflow
of economic benefits is probable. When inflow is virtually certain, an asset is recognised.
3.11
Operating lease agreements
Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain
with the lessor are charged against profits on a straight line basis over the period of the lease.
3.12
Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported
comprehensive income statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are not taxable or tax deductible. The Group’s
liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively
enacted in countries where the Group and its subsidiaries operate by the end of the financial period.
Deferred income taxes are calculated using the balance sheet method. Deferred tax is generally provided on
the temporary difference between the carrying amounts of assets and liabilities and their tax bases. However,
deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or
liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred
tax on temporary differences associated with shares in subsidiaries and joint ventures is not provided if
reversal of these temporary differences can be controlled by the Group and it is probable that reversal will
not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other
income tax credits to the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the
extent that it is probable that the underlying deductible temporary differences will be able to be offset against
future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are
expected to apply to their respective period of realisation, provided they are enacted or substantively
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
enacted at the reporting date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the Consolidated
Statement of Comprehensive Income, except where they relate to items that are charged or credited directly
to equity in which case the related deferred tax is also charged or credited directly to equity.
3.13
Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the
reporting date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling
at the date of the transaction. Exchange differences are taken into account in arriving at the operating profit
or loss.
3.14
Decommissioning
Provision for decommissioning is recognised in full on the installation of oil and gas production facilities. The
amount recognised is the present value of the estimated future expenditure determined in accordance with
local conditions and requirements. A corresponding tangible fixed asset of an amount equivalent to the
provision is also created. This is subsequently depreciated as part of the capital costs of the production and
transportation facilities. Any change in the present value of the estimated expenditure is reflected in an
adjustment to the provision and fixed asset.
3.15
Revenue
As described in note 5, the Group’s revenue is driven by sale of crude oil, the goods are sold on their own
in separate identified contracts with customers. Delivery point of the sale is the point at which Crude oil
passes from the delivery tanker to the customers specified storage terminal, which represents the point at
which the Group fulfils its single performance obligation to its customer under contracts for the sale of crude
oil. Revenue from the production of oil in which the Group has an interest with other producers is recognised
proportionately based on the Group’s working interest and the terms of the relevant production sharing
contracts.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the applicable
effective interest rate.
3.16
Share-based payments
The Group has applied IFRS 2 Share-based Payment for all grants of equity instruments.
The Group issues equity-settled share-based payments to its employees. Equity-settled share-based
payments are measured at fair value at the date of grant. The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on
the Group’s estimate of the shares that will eventually vest.
Fair value is measured using the Black Scholes model. The expected life used in the model has been adjusted,
based on management’s best estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations. The inputs to the model include: the share price at the date of grant, exercise
price expected volatility, risk free rate of interest.
4
Critical accounting estimates and sources of estimation uncertainty
In applying the accounting policies, the directors may at times require to make critical accounting judgements
and estimates about the carrying amount of assets and liabilities. These estimates and assumptions, when
made, are based on historical experience and other factors that the directors consider are relevant.
The key estimates and assumptions concerning the future and other key sources of estimation uncertainty
at the end of the financial year, that have significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are reviewed are as stated below.
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Key accounting judgements
(a)
Impairment of non-current asset
The Group’s non-current assets represent its most significant assets, comprising oil production assets,
exploration and evaluation (E&E) assets on its onshore site.
Management is required to assess exploration and evaluation (E&E) assets for indicators of impairment and
has considered the economic value of individual E&E assets. The carrying amount of the E&E asset 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.
Processing operations are large, scarce assets requiring significant technical and financial resources to
operate. Their value may be sensitive to a range of characteristics unique to each asset and key sources of
estimation uncertainty include proved reserve estimates, future cash flow expected to arise from the cash-
generating unit and a suitable discount rate.
In performing impairment reviews, the Group assesses the recoverable amount of its operating assets
principally with reference to the Group’s independent competent person’s report, estimates of future oil
prices, operating costs, capital expenditure necessary to extract those reserves and the discount rate to be
applied to such revenues and costs for the purpose of deriving a recoverable value.
As detailed in note 11 and 12, the carrying amount of the Group’s oil production assets and E&E assets at
30 September 2020 were approximately £6.406million (2019: £6.416 million) and £8.183million (2019:
£5.878 million) respectively. Management have impaired the oil production assets by £0.3 million based on
operator market revaluation.
The methods, key assumptions, sensitivity and possible outcomes in relation to the calculation of the
estimates are detailed in note 11.
(b)
Going concern
While there can be no certainty the local authority will grant the planning permission to the fields as
described in the Strategic Report. After making the enquiries, the Directors have a reasonable expectation
that the positive outcomes of these decision will be achieved. For this reason, the Group and the Company
continue to adopt the going concern basis in preparing the financial statements.
As disclosed in note 3.3, the directors consider the Group and the Company to be a going concern while the
Group will continue to operate under the management’s plan and the Group expects to be able to continue
to meet all finance obligations as they fall due for at least next twelve months from the date of approval
these financial statements.
Key accounting estimates
(c)
Decommissioning costs
Decommissioning costs will be incurred by the Group at the end of the operating life of some of the Group’s
facilities and properties. The Group assesses its decommissioning provision at each reporting date. The
ultimate decommissioning costs are uncertain and cost estimates can vary in response to many factors,
including changes to relevant legal requirements, the emergence of new restoration techniques or
experience at other production sites. The expected timing, extent and amount of expenditure may also
change — for example, in response to changes in reserves or changes in laws and regulations or their
interpretation. Therefore, significant estimates and assumptions are made in determining the provision for
decommissioning. As a result, there could be significant adjustments to the provisions established which
would affect future financial results.
External valuers may be used to assist with the assessment of future decommissioning costs. The involvement
of external valuers is determined on a case by case basis, taking into account factors such as the expected
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
gross cost or timing of abandonment, and is approved by the directors. Selection criteria include market
knowledge, reputation, independence and whether professional standards are maintained.
As detailed in note 20, the provision at reporting date represents management’s best estimate of the present
value of the future decommissioning costs required.
5.
Revenue and segment information
Currently, the Group’s principal revenue is derived from the sale of oil. All revenue arose from continuing
operations within the United Kingdom. Therefore, management considers no detail of operating and
geographical segments information is to be reported. Nonetheless, the Group’s revenue can be classified into
the following streams:
Sale of oil
2020
£’000
2019
£’000
68
=======================================
200
=======================================
All the non-current assets of the Group are located in the United Kingdom. All revenue arising from sale of
oil is derived from a single customer.
6.
Operating loss
Operating loss is stated after charging/(crediting):
Depreciation of owned assets
Net loss on foreign currency translation
Operating lease payments
Employee benefit expense
Auditor’s remuneration
Fees payable to company’s auditor in respect to the audit of the
Parent Company and consolidated financial statements
Non audit fees payable to company’s auditor relating to the tax
advisory services
7.
Finance income and finance cost
Finance income
Interest received on directors’ loan
Finance costs
Interest payable on convertible loan notes
Lease costs
2020
£’000
147
2
-
1,091
2019
£’000
36
3
180
1,309
40
40
-
---------------------------------------
40
---------------------------------------
-
---------------------------------------
40
---------------------------------------
2020
£’000
2019
£’000
-
=======================================
7
=======================================
2020
£’000
25
7
2019
£’000
-
-
---------------------------------------
---------------------------------------
32
=======================================
-
=======================================
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8.
Employee benefit expense
Wages and salaries
Social security costs
2020
£’000
2019
£’000
981
110
---------------------------------------
1,091
=======================================
1,193
116
---------------------------------------
1,309
=======================================
The directors received salary from the group totaling £415,000 (2019: £690,000).
Key managements are considered to be the directors. Details of each director’s emoluments are in the
directors’ remuneration report.
The average number of employees during the year was:
Director
Management
2020
Number
2019
Number
5
6
=======================================
11
=======================================
5
6
=======================================
11
=======================================
9.
Taxation on ordinary activities
No liability to corporation tax arose for the years ended 30 September 2020 and 2019, as a result of
underlying losses brought forward.
Reconciliation of effective tax rate
Loss before tax
Tax at the UK Corporation tax rate of 19%
(2019: 19%)
Expenses not deductible for tax purposes
Unrecognised deferred tax
2020
£’000
2019
£’000
(2,516)
(5,043)
(478)
75
403
(958)
248
710
---------------------------------------
-
=======================================
---------------------------------------
-
=======================================
The Group has incurred indefinitely available tax losses of £19,678,919 (2019: £18,533,000) to carry forward
against future taxable income of the subsidiaries in which the losses arose and they cannot be used to
offset taxable profits elsewhere in the Group. In addition, there is approximately £6,000 (2019:
£147,000) of deductible temporary difference in respect of the share-based payment.
No deferred tax asset was recognised in respect to these accumulated tax losses and the decommissioning
provisions as there is insufficient evidence that the amount will be recovered in future years.
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10.
Property, plant and equipment
Cost or valuation
At 1 October 2018
Additions
At 30 September 2019
Additions
At 30 September 2020
Depreciation and impairment
At 1 October 2018
Charge for the year
At 30 September 2019
Charge for the year
At 30 September 2020
Net book value
At 30 September 2019
At 30 September 2020
Plant and
machinery
£’000
Motor
vehicles
£’000
Fixtures and
fittings
£’000
21
-
---------------------------------------
21
3
---------------------------------------
24
---------------------------------------
8
3
---------------------------------------
11
3
---------------------------------------
14
---------------------------------------
35
-
---------------------------------------
35
-
---------------------------------------
35
---------------------------------------
28
3
---------------------------------------
31
2
---------------------------------------
33
---------------------------------------
8
-
---------------------------------------
8
-
---------------------------------------
8
---------------------------------------
8
-
---------------------------------------
8
-
---------------------------------------
8
---------------------------------------
Total
£’000
64
-
---------------------------------------
64
3
---------------------------------------
67
---------------------------------------
44
6
---------------------------------------
50
5
---------------------------------------
55
---------------------------------------
10
=======================================
10
=======================================
4
=======================================
2
=======================================
-
=======================================
-
=======================================
14
=======================================
12
=======================================
Depreciation of property, plant and equipment is included in administrative expenses in the consolidated
statement of comprehensive income.
11.
Oil and gas production assets
Cost or valuation
At 1 October 2018
Additions
At 30 September 2019
Additions
At 30 September 2020
Depreciation and impairment
At 1 October 2018
Depreciation charge for the year
Impairment charge for the year
At 30 September 2019
Depreciation charge for the year
Impairment charge for the year
At 30 September 2020
Net book value
At 30 September 2019
At 30 September 2020
Total
£’000
5,252
2,121
---------------------------------------
7,373
-
---------------------------------------
7,373
---------------------------------------
27
30
900
---------------------------------------
957
10
-
---------------------------------------
967
---------------------------------------
6,416
=======================================
6,406
=======================================
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Depreciation of oil production assets is included in cost of sales in the consolidated statement of
comprehensive income. During the year, the Group incurred further development costs of approx. £nil (2019:
£1.65 million) at both operating fields.
In April 2019, the Group acquired an additional 20% interest in the Lidsey field for a consideration of £467,377
by issuing 8,324,024 new shares at 5.6148p each.
As at 30 September 2020, the Group retained an 80% interest in Lidsey field and 65% in Brockham field and
is still the operator of both fields.
In assessing whether an impairment is required, the carrying value of the asset or cash generating unit
(“CGU”) is compared with its recoverable amount. The recoverable amount is determined from value in use
calculations based on cash flow projections from revenue and expenditure forecasts covering a 5 year period.
Assumptions involved in impairment measurement include estimates of commercial reserves and production
volumes, future crude oil prices, discount rates and the level and timing of expenditures, all of which are
inherently uncertain. The key assumptions used are as follow:
Discount rate
Crude oil price (per barrels)
2020
10%
$50
2019
10%
$63
The growth rate is assumed to be zero and the level of production is constant on the basis the production
plant is assumed to be at the most efficient capacity over the period of extraction.
Commercial reserves are proven and probable (“2P”) oil and gas reserves, calculated on an entitlement basis.
Estimates of commercial reserves underpin the calculation of depletion and amortisation on a Unit of
Production (“UOP”) basis. Estimates of commercial reserves include estimates of the amount of oil and gas
in place, assumptions about reservoir performance over the life of the field and assumptions about
commercial factors which, in turn, will be affected by the future oil and gas price.
Annual estimates of oil and gas reserves are generated internally by the Group with external input from
operator profiles and/or a Competent Person. These are reported annually to the Board. The self-certified
estimated future production profiles are used in the life of the fields which in turn are used as a basis in the
value-in-use calculation.
The discount rate is based on the specific circumstances of the Group and its operating segments and is
derived from its Weighted Average Cost of Capital (“WACC”), with appropriate adjustments made to reflect
the risks specific to the CGU and to determine the pre-tax rate. In considering the discount rates applying to
the CGUs, the directors have considered the relative sizes, risks and the inter-dependencies of its CGUs. No
reasonably possible change in a key assumption would produce a significant movement in the carrying value
of the CGUs and therefore no sensitivity analysis is presented.
Furthermore, a sensitivity analysis has been carried out for Brockham and Lidsey oil fields and the results of
the analysis can be summarised as follow:
•
•
If the estimated crude oil price had been 10 percentage point lower than the basis assumption, total
recoverable amount would be 1% lower.
If the estimated discount rate used for the Group’s discount cash flow had been one percentage
point higher than the starting assumption of 10%, total recoverable amount would be 3% lower.
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12.
Exploration and evaluation assets
Cost or valuation
At 1 October 2018
Additions
Decommissioning cost
At 1 October 2019
Additions
Impairment charge
At 30 September 2020
Total
£’000
5,218
660
-
---------------------------------------
5,878
2,605
(300)
---------------------------------------
8,183
================================
On 19 June 2019, the Group acquired 51% of the Saltfleetby Gas Field for £nil consideration receiving a cash
contribution of £2.5m from the vendor in relation to the site restoration costs and the abandonment costs if
commercial rates are not available.
On 16 October 2020, UKOG Plc, the operator of PEDL 143 Licence (Holmwood/A24 Prospect) in which Angus
had an interest of 12.5%, announced that a detailed study examining the viability of drilling the A24 (formerly
Holmwood) Portland prospect’s center from selected sites outside the Surrey Hills Area of Outstanding
Natural Beauty, each over 3 km from the target, concludes that the required long-reach/shallow target-depth
wells are neither technically viable or economically feasible. Consequently, UKOG and its partners have now
relinquished their interests in the licence. This was a decision supported by the Company and as such the
asset has been fully impaired.
In performing impairment review, the Group assessed the economic value of individual exploration and
evaluation (E&E) assets and had considered no indication for impairment to these E&E assets. In respect of
Balcombe the Directors have considered the likelihood of a successful appeal. See note 26 for further details.
13.
Subsidiaries
The details of the subsidiary are as follows:
Name of subsidiary/ place of incorporation
Principal activity
Effective equity interest
held by the Group
2020
2019
Angus Energy Holdings UK Limited
Angus Energy Weald Basin No.1 Limited
Angus Energy Weald Basin No.2 Limited
Angus Energy Weald Basin No.3 Limited*
Angus Energy North America Limited
Investment holding company
Investment holding company
Investment holding company
Oil extraction for distribution to
third parties
Dormant company
100%
100%
100%
100%
80%
100%
100%
100%
100%
80%
*indirect wholly owned by Angus Energy Weald Basin No.2 Limited (AEWB2).
The registered office address of the respective entity as follow:
Registered address
Name of subsidiary
Building 3 Chiswick Park, 566 Chiswick High
Road, London, W4 5YA.
Angus Energy Weald Basin No.2 Limited
Angus Energy North America Limited
Westpoint 4 Redheughs Rigg, South Gyle
Edinburgh, Scotland, EH12 9DQ
Angus Energy Holdings UK Limited
Angus Energy Weald Basin No.1 Limited
Angus Energy Weald Basin No.3 Limited
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14.
Trade and other receivables
Amounts due from farmees
Amount owed by a related party
Rent deposit
VAT recoverable
Accrued income
Other receivables
2020
£’000
272
-
29
201
-
107
---------------------------------------
609
=======================================
2019
£’000
296
216
-
90
57
135
---------------------------------------
794
=======================================
The carrying amount of trade and other receivables approximates to their fair value.
Trade and other receivables
Less: Impairment allowance
2020
£’000
872
(263)
---------------------------------------
609
---------------------------------------
2019
£’000
1,196
(402)
---------------------------------------
794
---------------------------------------
The Group is in discussions to recover the full amount due from farmees. The Group has made an allowance
for impairment to reflect the potential uncertainty over the recovery of these amounts.
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15.
Share capital
Allotted, called up and fully paid:
Ordinary share of £0.002 each
Number of
shares
Ordinary share
capital Share premium
£’000
£’000
As at 30 September 2018
381,721,985
481
5,753
Issue of shares 22 November 2018
Issue of shares 15 February 2019
Issue of shares 18 April 2019
Issue of shares 30 April 2019
Issue of shares 25 May 2019
Issue of shares 17 July 2019
Less: Issuance of costs
At 30 September 2019
Issue of shares 12 December 2019
Issue of shares 18 February 2020
Issue of shares 5 March 2020
Issue of shares 29 September 2020
Less: Issuance of costs
At 30 September 2020
22,222,222
55,000,000
8,324,024
70,824,700
735,076
2,000,000
-
=======================================
540,828,007
13,766,520
17,319,016
32,133,676
111,111,105
-
=======================================
715,158,324
44
110
17
142
2
4
-
=======================================
1,082
27
35
64
222
-
=======================================
1,430
1,956
2,090
450
2,868
30
56
(475)
=====================================
21,117
72
65
136
778
(186)
=====================================
21,982
On 12 December 2019, the company issued 13,766,520 shares at 0.7264p each. These were loan reduction
shares relating to the Riverfort Global Opportunities PCC Limited convertible note described in note 21.
On 18 February 2020, the company issued 17,319,016 shares at 0.5774p each. These were loan reduction
shares relating to the Riverfort Global Opportunities PCC Limited convertible note described in note 21.
On 15 March 2020, the company issued 32,133,676 shares at a price 0.6224p. These were loan reduction
shares relating to the Riverfort Global Opportunities PCC Limited convertible note described in note 21.
On 29 September 2020, the company issued 111,111,105 shares at 0.9p per share, raising gross proceed of
£1,000,000.
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16.
Share-based payments
In 2016, the Group implemented an Enterprise Management Incentive Scheme followed by a NED and
Consultant Share Option Scheme (The Scheme).
At 30 September 2020, the following share options and warrants were outstanding in respect of the Ordinary
shares:
Exercise
price
Outstanding
as at 01 Oct
2019
Granted during
the year
No. of
options
surrendered
or cancelled
during the
year
£0.06
£0.09
£0.10
£0.068
£0.08
£0.02
£0.01663
£0.01
£0.009
Warrant
Share
options
17,818,304
1,050,000
5,000,000
2,469,914
10,650,000
23,900,000
-
-
-
-
-
-
-
-
18,025,597
15,000,000
5,555,555
-
-
(5,000,000)
-
-
-
-
-
-
7,469,914
53,418,304
38,581,152
-
(5,000,000)
-
Exercised
during the
year
Outstanding
and exercisable
as at 30
September
2020
Final expiry
dates
-
-
-
-
-
-
-
-
-
-
-
17,818,304 13 Nov 2026
1,050,000 13 Nov 2026
- 23 Apr 2020
2,469,914 15 Feb 2022
10,650,000 24 Aug 2028
23,900,000 15 Jul 2029
18,025,597 24 Oct 2022
15,000,000 17 Apr 2023
5,555,555 29 Sep 2023
41,051,066
53,418,304
The weighted average exercise price of share options and warrants was £0.0334 at 30 September 2020 (2019:
£0.0519). The weighted average remaining contractual life of options outstanding at the end of the year was
5 years (2019: 8 years). The weighted average fair value of the warrants was £0.0118 (2019: £0.0013) each
on the grant date. The vesting criteria of the share options are subject to share price growth reaching to the
target level. All the vesting conditions were met during the year and the options were fully vested.
These fair values were calculated using the Black Scholes warrant pricing model. The inputs into the model
were as follows:
Stock price
Exercise price
Interest rate
Volatility
Time to maturity
Warrants Warrants Warrants
0.83p
1.6643p
0.5%
30%
3 years
0.83p
1p
0.5%
30%
3 years
0.83p
0.9p
0.5%
30%
3 years
The Group recognised a share-based payment charge of approximately £30,000 (2019: £79,000).
No options or warrants were exercised in both the 2019 and 2020 reporting year. There remain 53,418,304
options and 41,051,066 warrants outstanding and exercisable as at 30 September 2020.
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17.
Reserves
Merger reserve
Merger reserve
2020
£’000
(200)
2019
£’000
(200)
The merger reserve arose on the acquisition of Angus Energy Holdings Limited by the Company.
18.
Earnings per share (EPS)
Basic EPS amounts are calculated by dividing the profit or loss for the year attributable to equity holders of
the Group by the weighted average number of ordinary shares outstanding during the period
Diluted EPS amounts are calculated by dividing the profit or loss for the year attributable to equity holders of
the Group by the weighted average number of ordinary shares outstanding during the period plus the
weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential
ordinary shares into ordinary shares.
The earnings per share information based upon the 715,158,324 ordinary shares are as follows:
Net loss attributable to equity holders of the parent
company
Weighted average number of basic ordinary shares
Basic EPS (in pence)
2020
£’000
2019
£’000
(2,516)
=======================================
(5,043)
=======================================
580,889,428
=======================================
466,441,729
=======================================
(0.43)
=======================================
(1.08)
=======================================
The diluted loss per share was not applicable as there were no dilutive potential ordinary shares outstanding
at the end of the reporting period.
19.
Trade and other payables
Due within one year
Trade payables
Convertible loan note
Other taxation
VAT payable
Lease liabilities
Accruals
Other payables
2020
£’000
2019
£’000
1,168
58
170
-
24
60
8
---------------------------------------
1,488
=======================================
678
-
135
185
-
30
3
---------------------------------------
1,031
=======================================
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19.
Trade and other payables (continued)
Due after more than one year
Convertible loan note
Lease liabilities
2020
£’000
2019
£’000
1,319
11
---------------------------------------
1,330
=======================================
-
-
---------------------------------------
-
=======================================
The carrying amount of trade and other payables approximates to their fair value.
On 20 April 2020, the Company issued a 4% per annum £1,400,000 Convertible Loan Note (the “New Loan
Note”) to Knowe Properties Limited, a significant shareholder in the Company. The New Loan Note is
unsecured and is convertible at maturity after two years at the lower of (a) £0.01; or (b) if there is an issue of
Shares or options in respect of Shares (excluding options granted to directors, managers or employees) by
way of a single or directly related offer to the public with an aggregate subscription amount of £250,000 or
more made without the prior written approval of the Noteholder then the price attaching to the lowest of
those issues.
The equity element of the convertible loan note recognised is £106,000.
Alternatively, and at the Company’s option, the Loan Note is repayable in part or whole at any time up to
two months before maturity with an accompanying grant of warrants equal to the face value of the amount
repaid. The warrants are exercisable at the lower of 1.3 pence or a 30% premium to the Conversion Price.
Additionally, the Company has undertaken not to issue options to directors or staff at an exercise price below
£0.01 during the term of the New Loan Note.
20.
Provisions for other liabilities and charges
Abandonment costs
Balance b/fwd
Addition
Abandonment cost incurred
Balance b/cwd
2020
£’000
2019
£’000
3,052
-
(45)
---------------------------------------
3,007
---------------------------------------
552
2,500
-
---------------------------------------
3,052
---------------------------------------
The Group makes full provision for the future costs of decommissioning oil production facilities and pipelines
on the installation of those facilities. The amount provision is expected to be incurred up to 2029 when the
producing oil and gas properties are expected to cease operations.
These provisions have been created based on the Group’s internal estimates and expectation of the
decommissioning costs likely to incur in the future. For the period under review, the directors have assessed
that the discount rate and inflation rate to be applied to the current cost of decommissioning to be similar.
On this basis, the current cost is considered to be similar to the discounted net present value.
As described in note 12, the additional provision was relating to the acquisition of Saltfleetby gas field during
the year.
21.
Convertible loan
On 25 October 2019, the Company entered into £1.5 million Convertible Loan Note facility led by Riverfort
Global Opportunities PCC Limited of which £1m was drawn down immediately.
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The equity element of the convertible loan note was not recognised as the amount was not considered
material.
On 12 December 2019, the company issued 13,766,520 shares at 0.7264p each. These were loan reduction
shares relating to the Riverfort Global Opportunities PCC Limited convertible note.
On 18 February 2020, the company issued 17,319,016 shares at 0.5774p each. These were loan reduction
shares relating to the Riverfort Global Opportunities PCC Limited convertible note.
On 15 March 2020, the company issued 32,133,676 shares at a price 0.6224p. These were loan reduction
shares relating to the Riverfort Global Opportunities PCC Limited convertible note.
During the period, a further £542,000 of the Convertible Loan Note was repaid in cash leaving a balance of
£58,000 at the end of the period which was subsequently converted in ordinary shares as detailed in note
26.
On 20 April 2020, the Company issued a 4% per annum £1,400,000 Convertible Loan Note (the “New Loan
Note”) to Knowe Properties Limited, a significant shareholder in the Company. The New Loan Note is
unsecured and is convertible at maturity after two years at the lower of (a) £0.01; or (b) if there is an issue
of Shares or options in respect of Shares (excluding options granted to directors, managers or employees)
by way of a single or directly related offer to the public with an aggregate subscription amount of £250,000
or more made without the prior written approval of the Noteholder then the price attaching to the lowest
of those issues. The equity element of the convertible loan note recognised is £106,000.
Alternatively, and at the Company’s option, the Loan Note is repayable in part or whole at any time up to
two months before maturity with an accompanying grant of warrants equal to the face value of the amount
repaid. The warrants are exercisable at the lower of 1.3 pence or a 30% premium to the Conversion Price.
Additionally, the Company has undertaken not to issue options to directors or staff at an exercise price
below £0.01 during the term of the New Loan Note.
22.
Financial instruments
The Group’s principal financial instruments comprise cash and cash equivalents, trade and other receivables
and trade and other payable. The Group’s accounting policies and method adopted, including the criteria for
recognition, the basis on which income and expenses are recognised in respect of each class of financial
assets, financial liability and equity instrument are set out in Note 3. The Group do not use financial
instruments for speculative purposes.
The principal financial instruments used by the Group, from which financial instrument risk arises, are as
follows:
Financial assets measured at amortised cost
Loans and receivables
Trade and other receivables
Cash and cash equivalents
Total financial assets
Financial liabilities measured at amortised cost
Trade and other payables
Convertible loan notes
Lease liabilities
Total financial liabilities
2020
£’000
2019
£’000
609
1,852
---------------------------------------
2,461
=======================================
1,406
1,377
35
---------------------------------------
2,818
=======================================
611
3,419
---------------------------------------
4,030
=======================================
1,031
-
-
---------------------------------------
1,031
=======================================
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
22.
Financial instruments (continued)
Capital management
The Group manages its capital to ensure that it will be able to continue as a going concern while attempting
to maximise the return to stakeholders through the optimisation of the debt and equity balance. The capital
structure of the group consists of issued capital and external loans.
Credit risk
Credit risk is the risk that a counter-party will cause a financial loss to the Group by failing to discharge its
obligations to the Group. The Group manages its exposure to this risk by applying limits to the amount of
credit exposure to any one counterparty and employs strict minimum credit worthiness criteria as to the
choice of counterparty. The maximum exposure to credit risk for receivables and other financial assets is
represented by their carrying amount. As described in note 14, the Group recognised an impairment
provision of £263,000 against the amount due from farmees that are past due in the year.
Fair values
Management assessed that the fair values of cash and short-term deposits, trade receivables, trade payables
and other current liabilities approximate their carrying amounts largely due to the short-term maturities of
these instruments.
Interest rate risk
The Group and company’s policy is to fund its operations through the use of retained earnings and equity.
The Group exposure to changes in interest rates relates primarily to cash at bank and amount owed by a
related party. Cash is held either on current or short term deposits at a floating rate of interest determined
by the relevant bank’s prevailing base rate.
Foreign currency exchange risks
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because
of the changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange
rates relates primarily to the Group’s operating activities (when revenue or expense is denominated in a
foreign currency and the Group’s net investments in foreign subsidiaries.
The Group does not hedge its foreign currencies. Transactions with customers are mainly denominated in US
Dollars. The Group has bank accounts in US Dollars to mitigate against the exchange risks. At 30 September
2020, the GBP cash balance held denominated in USD was £81,000 (2019; £36,000).
Liquidity risks
The principal risk to the Group is liquidity, which arises from the Group’s management of working capital. It
is a risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. This aspect
is kept under review by the directors and in this respect management carries out rolling 12 month cash flow
projections on a monthly basis as well as information regarding cash balances. It is the Group’s policy as
regards liquidity to ensure sufficient cash resources are maintained to meet short-term liabilities.
The maturity profile of the Group’s financial liabilities at the reporting dates based on contractual
undiscounted payments are summarised below:
Trade and other payable
Within one month
Within two to three months
2020
£’000
2019
£’000
1,404
60
---------------------------------------
1,464
=======================================
1,031
-
---------------------------------------
1,031
=======================================
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
22.
Financial instruments (continued)
Lease liabilities
Within one month
Within two to three months
Within four to six months
Within six to twelve months
More than twelve months
2020
£’000
2
4
6
12
11
---------------------------------------
35
=======================================
2019
£’000
-
-
-
-
-
---------------------------------------
-
=======================================
Commodity price risk
The Group is exposed to the risk of fluctuations in prevailing market commodity prices of oil products it
produces. The table below summarises the impact on profit before tax for changes in commodity prices
Commodity price sensitivity
The analysis is based on the assumption that the crude oil price moves 10% resulting in a change of US$5/bbl
in 2020 (2019: US$6.61/bbl), with all other variables held constant. Reasonably possible movements in
commodity prices were determined based on a review of the average spot prices at each reporting periods.
Increase/decrease in crude oil prices
Average spot price increased by 10%
Average spot price decreased by 10%
23.
Related party transactions
Increase / (decrease) in profit
before tax for the year ended
30 September
2020
£’000
7
---------------------------------------
(7)
---------------------------------------
2019
£’000
20
---------------------------------------
(20)
---------------------------------------
Transaction with related party
The advance loan made to the former director Mr Jonathan Tidswell-Pretorius was unsecured with
repayment on demand. During the year under review, the Group charged approximately 3% interest annually
on the advance loan to the director of £7,000 (2018: £6,000). This can be analysed at below table:
Opening balance
-
-
Amount repaid
Accrued interest on loan
Closing balance
2020
£’000
216
(216)
-
---------------------------------------
-
=======================================
2019
£’000
209
-
7
---------------------------------------
216
=======================================
On 6 January 2020, Mr Jonathan Tidswell repaid the outstanding amount in full.
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24.
Net debts reconciliation
The below table sets out an analysis of net debt and the movement in net debt for the years presented
Cash and cash equivalent
Convertible loan note (note 21)
Net debt
Net cash as at 1 October 2018
Cash flow
Issue of new equity (net proceeds)
Net debt as at 1 October 2019
Cash flow
Issue of new equity (net proceeds)
Issue of convertible loan note
Conversion of loan note to equity
Repayment of convertible loan note
Interest on convertible loan note
Net debt
2020
£’000
1,852
(1,377)
---------------------------------------
475
=======================================
Convertible
loan note
£’000
-
-
-
---------------------------------------
-
-
-
(2,294)
400
542
(25)
---------------------------------------
(1,377)
=======================================
2019
£’000
3,419
-
---------------------------------------
3,419
=======================================
Total
£’000
846
(4,641)
7,214
---------------------------------------
3,419
(4,238)
813
106
400
-
(25)
---------------------------------------
475
=======================================
Cash and cash
equivalents
£’000
846
(4,641)
7,214
---------------------------------------
3,419
(4,238)
813
2,400
-
(542)
-
---------------------------------------
1,852
=======================================
25.
Lease assets and liabilities
The Groups lease assets are offices. Leases to explore for or use minerals, oil, natural gas and similar non-
regenerative resources are outside the scope of IFRS 16 and therefore the leases that the Group have for the
various sites are outside the scope given these leases are wholly for the purposes of exploration and
extraction from the leased land only. Key movements relating to the lease balances are presented below
2020 Leased assets
Balance as at 1 October 2019
Additions to leased assets
Depreciation charged
Balance at 30 September 2020
£’000
166
-
(131)
---------------------------------------
35
=======================================
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
25.
Lease assets and liabilities (continued)
2019 Leased liability restated
Operating lease commitment disclosed as at 30 Sept 2019
Discounted using incremental borrowing rate at the date of
initial application
Less leases not recognised as a liability
Lease liability recognised as at 1 October 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
The maturity of the lease liability is as follows:
Leases which expire:
Not later than one year
Later than one year and not later than five years
More than five years
Total
26.
Subsequent events
£’000
508
-------------------------------------
423
(257)
---------------------------------------
166
=======================================
132
34
---------------------------------------
166
=======================================
As at 30 September
2020
£’000
2019
£’000
24
11
-
---------------------------------------
35
=======================================
88
191
35
---------------------------------------
314
=======================================
On 16 October 2020, UKOG Plc, the operator of PEDL 143 Licence (Holmwood/A24 Prospect) in which Angus
had an interest of 12.5%, announced that “a detailed study examining the viability of drilling the A24
(formerly Holmwood) Portland prospect’s center from selected sites outside the Surrey Hills Area of
Outstanding Natural Beauty, each over 3 km from the target, concludes that the required long-
reach/shallow target-depth wells are neither technically viable or economically feasible. Consequently,
UKOG and its partners have now relinquished their interests in the licence. It remains a great
disappointment to the Company that the licence’s former operator, Europa Oil and Gas, whilst in possession
of planning consent, failed to drill the prospect from the Holmwood site, around 1 km from the target.” This
was a decision supported by the Company.
On 21 October 2020, the Company executed a Sale & Purchase Agreement for the purchase of Doriemus
plc’s (“Doriemus”) 10% interest in the Brockham PL235 Licence, thereby increasing the Company’s interest
from 65% to 75%. The purchase price for the Licence is adjusted for the settlement of outstanding amounts
due from Doriemus to the Company and a contribution towards the estimated share of long-term
abandonment liabilities and results in a net payment to the Company of approximately £260,000 in cash in
Completion.
On 4 November 2020, the Company announced that, in relation to the £1.5 million convertible loan facility
announced on 25 October 2019 (the "Loan") and amended on 20 April 2020, it received a notice from
Riverfort Global Opportunities PCC Limited and YA II PN Ltd ("Investors") to convert the final £58,335 of the
Loan into Angus shares. After the conversion there were no outstanding liabilities between the Company
and the Noteholders. The Company had therefore allotted 9,678,945 new ordinary shares to the
noteholders.
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
26.
Subsequent events (continued)
On 30 November 2020, the Company together with its partner, Saltfleetby Energy Limited (“SEL”), it had
entered into a Memorandum of Understanding (the “MOU”) with Aleph Energy Limited and Aleph
Commodities Limited (“Aleph”) detailing non-binding Heads of Terms to provide up to £12 million towards
the Saltfleetby Finance Facility required to develop the Saltfleetby Gas Field (“Saltfleeby”). The indicative
terms provide for a four year amortising loan facility of up to £12million with a 12% margin over LIBOR, a
3% commitment fee payable out of the facility, a share grant of 30 million shares in Angus, issued over the
life of the facility and an override of 8% on gross revenue following repayment of the facility. Given the
share grant to be issued by Angus under the MOU, SEL has agreed net drawdowns from the facility to cover
elements of the pipeline completion, thereby keeping the relative funding liabilities on the agreed pro rata
basis of 51%/49%.
On 16 December 2020, the company raised gross proceeds of £249,990 as result of a placing of new
ordinary shares. A total of 41,664,999 new ordinary shares in the capital of the Company have been placed
by WH Ireland Limited with new and existing investors at a price of 0.6 pence per share.
On 27 January 2021, the company raised gross proceeds of £1,5000,000 as result of a placing of new
ordinary shares. A total of 150,000,000 new ordinary shares in the capital of the Company have been placed
by WH Ireland Limited with new and existing investors at a price of 1 pence per share. The Placing Shares
were also accompanied by the issue of one warrant to subscribe for one ordinary share in the Company for
each Placing Share (the “Placing Warrant”). The Placing Warrants are exercisable at any time, for a period of
2 years, from the date of Admission at the following exercise prices: 50% at 1.2p; 25% at 1.35p and 25% at
1.5p.
On 1 February 2021, to satisfy additional demand, the company conditionally placed a further 15,000,000
new ordinary shares in the Company at a price of 1 pence per share to raise gross proceeds of £150,000.
The Further Placing Shares were also accompanied by the issue of one warrant to subscribe for one
ordinary share in the Company for each Further Placing Share (the “Further Placing Warrants”). When
issued, the Further Placing Warrants will be exercisable at any time, for a period of 2 years, from the date of
admission of the Further Placing Shares at the following exercise prices: 50% at 1.2p; 25% at 1.35p and 25%
at 1.5p.
On 2 March 2021, West Sussex County Council's Planning Committee rejected the Company's planning
application for an Extended Well Test at Balcombe. The Company is presently evaluating all of the options
available with its partners to appeal this decision.
69
COMPANY STATEMENT OF FINANCIAL POSITION
ASSETS
Non-current assets
Investment
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
EQUITY
Equity attributable to owners of the parent:
Share capital
Share premium
Merger relief reserve
Loan note reserve
Accumulated loss
TOTAL EQUITY
Current liabilities
Trade and other payables
Total current liabilities
Non-Current liabilities
Trade and other payables
Total non-current liabilities
TOTAL LIABILITIES
Note
2020
£’000
2019
£’000
5
6
8
8
7
7
12,830
12,830
12,440
12,440
174
1,531
1,705
360
239
599
14,535
13,039
1,430
21,982
1,500
106
(12,182)
1,082
21,117
1,500
-
(10,876)
12,836
12,823
380
380
1,319
1,319
1,699
216
216
216
TOTAL EQUITY AND LIABILITIES
14,535
13,039
The loss for the Company for the year ended 30 September 2020 was £1,336,000 (2019: £8,414,000)
The note on page 72 to 75 form part of these of financial statements
The financial statements were approved by the Board of Directors and authorized for issue on and were signed on its
behalf by:
George Lucan - Director
Company number: 09616076
70
COMPANY STATEMENT OF CHANGES IN EQUITY
Balance at 1 October 2018
Loss for the year
Total comprehensive income for the
year
Transaction with owners
Issue of shares
Less: issuance costs
Granted of share options
Share
capital
£’000
763
Share
premium
£’000
14,142
-
-
-
-
319
-
-
7,450
(475)
-
Balance at 30 September 2019
1,082
21,117
1,500
Loss for the year
Total comprehensive income for the
year
Transaction with owners
Issue of shares
Less: issuance costs
Issue of convertible loan note
Granted of share options
-
-
348
-
-
-
-
-
1,051
(186)
-
-
-
-
-
-
-
-
Merger
relief
reserve
£’000
1,500
Loan note
reserve
£’000
-
Accumulated
loss
£’000
(2,541)
Total
equity
£’000
13,864
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
106
-
(8,414)
(8,414)
(8,414)
(8,414)
-
-
79
7,769
(475)
79
(10,876)
12,823
(1,336)
(1,336)
(1,336)
(1,336)
-
-
-
30
1,399
(186)
106
30
Balance at 30 September 2020
1,430
21,982
1,500
106
(12,182)
12,836
Share capital comprises the ordinary issued share capital of the company.
Share premium comprises of the excess above the nominal value of the new ordinary shares issued during the period.
The merger relief reserve represents the difference between the cost of the investment in Angus Energy Holding UK
Limited (initially measured at fair value) and the nominal value of the shares transferred as consideration.
Retained earnings represent the aggregate retained earnings of the company.
The note on page 72 to 75 form part of these of financial statements.
71
NOTES TO THE COMPANY FINANCIAL STATEMENTS
1.
General information
The company was incorporated in England and Wales on 1 June 2015 as a private limited company. Its
registered office is located at Building 3, Chiswick Park, 566 Chiswick High Street, London, W4, 5YA.
The financial information of the company is presented in British Pounds Sterling (“£”) and rounded into
thousand (£’000).
2.
Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with the historical cost convention
as modified by the revaluation of certain fixed assets. The financial statements have been
prepared in accordance with FRS 102 – The Financial Reporting Standard applicable in the UK
and Republic of Ireland and the Companies Act 2006. The principal accounting policies are
described below. They have all been applied consistently throughout the period.
The company meets the definition of a qualifying entity under FRS 102 and has therefore taken
advantage of the disclosure exemptions available to it in respect of its separate financial
statements, which are presented alongside the consolidated financial statements. Exemptions
have been taken in relation to financial instruments, presentation of a cash flow statement and remuneration of
key management personnel.
Investment
Investments in subsidiaries are stated at cost less provision for impairment. Where merger relief is applicable,
the cost of the investment is recorded at the fair value on the date of the transaction. The difference
between the fair value of the investment and the nominal value of the shares (plus the fair value of
any other consideration given) is shown as a merger relief reserve and no share premium is recognized
Cash and cash equivalents
Cash in the statement of financial position is cash held on call with banks.
Financial assets
The directors classify the company’s financial assets held at amortised cost less provisions for
impairment. The directors determine the classification of its financial assets at initial recognition.
Creditors
Short term creditors are measured at the transaction price. Other financial liabilities, including bank
loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at
amortised cost using the effective interest method.
Taxation
Tax is recognised in the Statement of comprehensive income, except that a charge attributable to an item
of income and expense recognised as other comprehensive income or to an item recognised directly in
equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or
substantively enacted by the reporting date in the countries where the Company operates and
generates income.
72
NOTES TO THE COMPANY FINANCIAL STATEMENTS
2.
Accounting policies (continued)
Taxation (continued)
Deferred tax balances are recognised in respect of all timing differences that have originated but not
reversed by the Statement of financial position date, except that:
•
•
The recognition of deferred tax assets is limited to the extent that it is probable that they will
be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax
allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of
business combinations, when deferred tax is recognised on the differences between the fair values of
assets acquired and the future tax deductions available for them and the differences between the fair
values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined
using tax rates and laws that have been enacted or substantively enacted by the reporting date.
3.
Profit for the financial period
The Company has taken advantage of section 408 of the Companies Act 2006 and, consequently, a
profit and loss account for the Company alone has not been presented. The Company's loss for the
financial period was approximately £1,336,000 (2019: £8,414,000).
4.
Staff costs
There are four employees (2019: four) and five directors (2019: five) employed by the company. The
directors are regarded as the key management and their remunerations are disclosed in note 8 to the
consolidated financial statements.
5.
Investment
At 1 October 2018
Movement of the intercompany loan for the year
Allowance for impairment
At 30 September 2019
Movements of the intercompany loan for the year
Allowance for Impairment
At 30 September 2020
Cost of
investment
£’000
2,028
-
(1,800)
---------------------------------------
228
-
-
---------------------------------------
228
=======================================
Loan to group
undertakings
£’000
10,990
5,722
(4,500)
---------------------------------------
12,212
390
-
---------------------------------------
12,602
=======================================
Total
£’000
13,018
5,722
(6,300)
---------------------------------------
12,440
390
-
---------------------------------------
12,830
=======================================
The details of the subsidiary are set out in the note 13 to the consolidated financial statements.
The Company is required to assess the carrying values of each of its investments in subsidiaries and
loans to group undertakings for impairment. To a large extent the oil & gas production assets and
exploration and evaluation assets have been funded by loans from the Company is represented by the
value of the operating segment cash generating units. Recoverability of these loans is therefore
dependent upon the operating segments producing sufficient cash surplus such that the segment
achieves a positive net asset position.
73
NOTES TO THE COMPANY FINANCIAL STATEMENTS
6.
Trade and other receivables
Trade receivables
Directors accounts
Vat recoverable
Other receivables
7.
Trade and other payables
Trade payables
Amounts due to group undertakings
Other taxation
Convertible loan note
Other payables
2020
£’000
96
-
11
67
---------------------------------------
174
=======================================
2020
£’000
110
100
46
58
66
---------------------------------------
380
=======================================
2019
£’000
24
216
54
66
---------------------------------------
360
=======================================
2019
£’000
60
100
24
-
32
---------------------------------------
216
=======================================
The carrying amount of trade and other payables approximates to their fair value.
Due after more than one year
Convertible loan note
2020
£’000
1,319
2019
£’000
-
---------------------------------------
1,319
=======================================
---------------------------------------
-
=======================================
8.
Share capital
The movement of share capital is set out in the note 15 to the consolidated financial statements. As at 30
September 2020 the total issued ordinary shares of the Company were 715,158,325 (2019: 540,828,007).
9.
Subsequent events
On 16 October 2020, UKOG Plc, the operator of PEDL 143 Licence (Holmwood/A24 Prospect) in which
Angus had an interest of 12.5%, announced that “a detailed study examining the viability of drilling the
A24 (formerly Holmwood) Portland prospect’s centre from selected sites outside the Surrey Hills
Area of Outstanding Natural Beauty, each over 3 km from the target, concludes that the required
long- reach/shallow target-depth wells are neither technically viable or economically feasible.
Consequently, UKOG and its partners have now relinquished their interests in the licence. It
remains a great disappointment to the Company that the licence’s former operator, Europa Oil
and Gas, whilst in possession of planning consent, failed to drill the prospect from the Holmwood
site, around 1 km from the target.” This was a decision supported by the Company.
74
NOTES TO THE COMPANY FINANCIAL STATEMENTS
9.
Subsequent events (continued)
On 21 October 2020, the Company executed a Sale & Purchase Agreement for the purchase of
Doriemus plc’s (“Doriemus”) 10% interest in the Brockham PL235 Licence, thereby increasing the
Company’s interest from 65% to 75%. The purchase price for the Licence is adjusted for the settlement
of outstanding amounts due from Doriemus to the Company and a contribution towards the estimated
share of long-term abandonment liabilities and results in a net payment to the Company of
approximately £260,000 in cash in Completion.
On 4 November 2020, the Company announced that, in relation to the £1.5 million convertible loan
facility announced on 25 October 2019 (the "Loan") and amended on 20 April 2020, it received a notice
from Riverfort Global Opportunities PCC Limited and YA II PN Ltd ("Investors") to convert the final
£58,335 of the Loan into Angus shares. After the conversion there were no outstanding liabilities
between the Company and the Noteholders. The Company had therefore allotted 9,678,945 new
ordinary shares to the noteholders.
On 30 November 2020, the Company together with its partner, Saltfleetby Energy Limited (“SEL”), it had
entered into a Memorandum of Understanding (the “MOU”) with Aleph Energy Limited and Aleph
Commodities Limited (“Aleph”) detailing non-binding Heads of Terms to provide up to £12 million
towards the Saltfleetby Finance Facility required to develop the Saltfleetby Gas Field (“Saltfleeby”). The
indicative terms provide for a four year amortising loan facility of up to £12million with a 12% margin
over LIBOR, a 3% commitment fee payable out of the facility, a share grant of 30 million shares in Angus,
issued over the life of the facility and an override of 8% on gross revenue following repayment of the
facility. Given the share grant to be issued by Angus under the MOU, SEL has agreed net drawdowns
from the facility to cover elements of the pipeline completion, thereby keeping the relative funding
liabilities on the agreed pro rata basis of 51%/49%.
On 16 December 2020, the company raised gross proceeds of £249,990 as result of a placing of new
ordinary shares. A total of 41,664,999 new ordinary shares in the capital of the Company have been
placed by WH Ireland Limited with new and existing investors at a price of 0.6 pence per share.
On 27 January 2021, the company raised gross proceeds of £1,5000,000 as result of a placing of new
ordinary shares. A total of 150,000,000 new ordinary shares in the capital of the Company have been
placed by WH Ireland Limited with new and existing investors at a price of 1 pence per share. The Placing
Shares were also accompanied by the issue of one warrant to subscribe for one ordinary share in the
Company for each Placing Share (the “Placing Warrant”). The Placing Warrants are exercisable at any
time, for a period of 2 years, from the date of Admission at the following exercise prices: 50% at 1.2p;
25% at 1.35p and 25% at 1.5p.
On 1 February 2021, to satisfy additional demand, the company conditionally placed a further
15,000,000 new ordinary shares in the Company at a price of 1 pence per share to raise gross proceeds
of £150,000. The Further Placing Shares were also accompanied by the issue of one warrant to subscribe
for one ordinary share in the Company for each Further Placing Share (the “Further Placing Warrants”).
When issued, the Further Placing Warrants will be exercisable at any time, for a period of 2 years, from
the date of admission of the Further Placing Shares at the following exercise prices: 50% at 1.2p; 25% at
1.35p and 25% at 1.5p.
On 2 March 2021, West Sussex County Council's Planning Committee rejected the Company's planning
application for an Extended Well Test at Balcombe. The Company is presently evaluating all of the
options available with its partners to appeal this decision.
75
Contact
Angus Energy Plc
www.angusenergy.co.uk
Managing Director:
George Lucan
T: 0208 899 6380
info@angusenergy.co.uk