Annual Report
2020-2021
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
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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
Beaumont Cornish Limited
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
Barclays Bank Plc
Leicester
Leicestershire
LE87 2BB
Registrars
Share Registrars Limited
27/28 Eastcastle Street
London
W1W 8DH
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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 2021.
It has been another difficult year for most, but we are now hopefully through the worst of the
pandemic. Hydrocarbon prices have rebounded from their lows of 2020 with gas prices hitting
unprecedented highs. The speed of transition has surprised the energy market in general and
the resulting shortage of new gas supply, and deficit of renewable sources, is likely to lead to
periodic crises such as we saw recently in the UK and a very high forward gas price in years to
come. Angus continues to make good progress towards reaching its short term production
targets whilst simultaneously addressing the urgent need for transition energy projects.
The closing of the £12m Saltfleetby Debt Facility providing us with the necessary capital to
complete the development of the Saltfleetby processing facilities. Production from Saltfleetby
will provide the Company with a solid platform enabling us to grow our asset base.
The Company continues to extract value from our legacy oil assets by continuing with our
development program and obtaining the various consents necessary to put the fields into
production.
As we move closer to first gas at Saltfleetby, Angus is well set to provide the UK with gas,
being the transition energy of choice. Alongside this progress the Company has been actively
building a portfolio of geothermal development projects in the south west of England. Over
the coming months we will focus more closely on these assets.
Financial and Statutory Information
Revenue from oil and gas production during the year was down to £0.0m (2020: £0.068m) on
production of a gross NIL barrels (2020: 1,594 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 at the beginning of the period.
The Group recorded a loss of £15.598m, which included an unrealized loss of £13.143m in
relation to the derivative instrument, resulting in an adjusted loss of £2.455m (2020:
£2.516m). During these difficult economic times, the company has continued to make 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 £0.14 m to £1.918 m (2020: £2.060m).
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Chairman’s Statement
Outlook
The company maintains its focus on getting Saltfleetby into production this year whilst
continuing our efforts to realise value from Balcombe, Brockham and Lidsey through either
the resuming of production or through a sales process. The company is also excited about the
progress made to date with our Geothermal projects and look forward to updating you
throughout the year.
As always, we are constantly reviewing projects to complement our existing portfolio and
create shareholder value. With the imminent production at Saltfleetby and real progress
made with the Geothermal projects we believe the company is well positioned to take
advantage of opportunities as they present themselves.
Patrick Clanwilliam
Chairman
11 March 2022
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Strategic Report
Operating Review
In October 2021 we published the results of the revised Competent Persons Report for the
Saltfleetby Gas field, which reflected the higher revenues expected from the field. The
positive results of the report along with the closing of the Debt Facility, reaffirming
management’s decision to acquire an interest in the Saltfleetby Field.
The CPR, performed by Oilfield International Limited, gives the net present value of the cash
flows from the Saltfleetby Gas Field, including the impact from the revised capex, the loan
facility debt service costs, the associated royalties and the mandatory hedging. Oilfield
International Limited has used a conservative discount rate of 10%. The previous February
2020 report values in parentheses, presenting the values attributable to Angus:
• A conservative case, or P90, NPV10 of £25.4 million (previously £16.7 million)
• A mid-case, or P50, NPV10 of £38.5 million (previously £25.2 million)
Alternatively expressed as estimates of net future cashflows, again after all taxes, but without
discounting, Angus’ 51% interest can be summarised as follows
• A conservative or P90 sum of future cashflows to Angus of £31.7 million (previously
£21.5million)
• A mid-case, or P50, sum of future cashflows to Angus of £55.9 million (previously
£36.3million)
In summary the Report estimates production giving rise to gross field revenues, before costs
etc on a mid-case basis of £230 million (previously £141 million) of which Angus’s share is
51%. This approximates to a gas price of 64p/therm being a mix of the actual volumes already
hedged at 43p/therm and the remaining unhedged volumes accorded prices derived from the
quoted and traded NBP forward curve to December 2026 and thereafter escalated by 1.5%
per annum. The gross volume of reported Gas Reserves is unchanged.
The full report is available on the Company website under Presentations at the following link
https://www.angusenergy.co.uk/wp-content/uploads/2021/10/Angus-Energy-Saltfleetby-
Reserves-Valuation-Report.pdf.
In 2020 the company set out its intentions to become a low-cost UK producer of baseload
geothermal power. During the year we have made good progress towards achieving this.
Amongst other things we have narrowed down our focus through the identification of three
fault systems and the completion of a full field survey. On the back of these results the
company has entered discussions with five landowners progressed to negotiating draft heads
of terms. The company has also held initial meetings with National Grid to establish a
connection point for up to 200MWe of capacity which will act as a centralized offtake point
for our potential project portfolio in the region.
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
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Strategic Report
on which we rely on. It is with pleasure that I report that all operations were performed
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 on-shore, conventional
production and development of hydrocarbons in the UK.
Review of activities
Saltfleetby
In May 2021 the company announced that the Saltfleetby loan facility had been signed
between Angus and Saltfleetby Energy Limited, as Borrower and Guarantor respectively, and
Mercuria Energy Trading Limited and Aleph Saltfleetby Limited, as the co-Lenders. All
conditions precedent to drawdown were met in June and the full £12 million facility required
for the re-development of the Saltfleetby Gas Field and the drilling of the side-track well was
fully available.
Another milestone was achieved when the Oil & Gas Authority approved the Company’s Field
Development plan in relation to its plans for the Saltfleetby Gas Field, which included the side-
track of well SF07 and consented to the proposals for the recommissioning of the Field.
With funding now in place, along with the approval from the Oil & Gas Authority, the company
continued to work with suppliers and contractors to maintain its procurement and build
schedule targeting First Gas at the Saltfleetby Gas Field before the end of May 2022. All the
long lead items have been ordered with the main components of the facility well under
construction.
The first section of the connection to the national transmission system, was successfully
completed by drilling two extended horizontal directional drills and threading of the Soluforce
4" pipeline to within 15 metres of the national transmission grid entry point at Theddlethorpe
ready to be connected at surface (the first instance of very high pressure, Hydrogen-capable
pipework in a commercial connection to the national transmission system). This was followed
by the connection to the national transmission system with the 10” connection completed
and with the new section hydrotested to 105Barg and air dried to -25 Deg C. Finally, the new
and existing 10” was successfully pigged, ready for export.
Site civil engineering, starting with piling, foundationing and, where appropriate, bunding for
the flare, storage tanks and compressors and ending with pipe racks supports, started in
December 2021 and running through to the end of Jan 2022. This lead into the pipework
procurement and welding which took place on a continuous basis from early January 2022.
Electrical, control and instrumentation installation layout begun at the end of January 2022
with tie-in to particular skids as they arrive on site.
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Strategic Report
Alongside the development of the Saltfleetby process equipment the company has continued
with preparations for the Saltfleetby SF07 side track. In July 2021, planning permission for the
side track was granted by the Lincolnshire County Council. This was followed by rig tender
and selection with tenders for associated equipment also finalised.
Angus also contracted realtime seismic to carry out the reprocessing of our Saltfleetby 3D
seismic dataset which was originally acquired in 1997 over a total area of 79.92km². This
considerable reprocessing project was motivated by the perspective of using up-to-date
techniques to improve the geological interpretability of the dataset. The final deliverable was
a depth model validated by the fields well data. A focused proportion of this reprocessed
seismic is currently undergoing interpretation by the technical team in order to provide an
accurate representation of the sub-surface to aid in the successful design and drilling of the
SF7V side-track.
Over subsequent months a more complete re-interpretation will take place over the whole
field and in particular over the southern satellite reservoir with the aim of shaping a field
development programme to convert some of the 12 BCF of 1C (the low estimate of)
contingent resources into 1P (P90 or proven) reserves to supplement the existing 18 BCF of
1P reserves from the main Westphalian reservoir.
The Company also hedged approximately 50% of the Company's and its partners' share of
future gas sales, estimated under a conservative projection, for three years beginning in July
2022. The average achieved price under the Hedge, including all fees, costs and charges is 43
pence per therm. Since entering into the Hedge agreements we have seen a significant
increase in gas prices. As previously announced, the Hedged limits were set at 50% of our
estimated gas production leaving the company with enough headroom to comfortably meet
the requirements under the Hedge whilst still enjoying unhedged production.
Geothermal
During the year the company continued to progress its ambitions of becoming a low-cost UK
producer of baseload geothermal power. The company completed a desk top based study
which identified an area with the highest heat flow in SW England. In July 2021 the company
acquired radiometric data over the area of interest. Austinbridgeporth, in conjunction with
Imperial College successfully carried out a land gravity and radiometrics survey over a 35km2
area of interest. The gravity data was recorded at 200m intervals along the survey lines with
spacing of 250m and a total of circa 700 stations were acquired. The newly acquired data has
an increased coverage of data points compared to available data and therefore a more
accurate representation of the subsurface.
Working with industry professionals the company carried out a desktop study evaluating well
design, rig analysis and overall project economics. Focusing on drilling and well testing
techniques the company believes it will be able to reduce costs which will greatly improve the
feasibility of the projects for early stage investors.
The company has also held initial meetings with National Grid to establish a connection point
for up to 200MWe of capacity which will act as a centralized offtake point for our potential
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Strategic Report
project portfolio in the region. On the back of these results the company has entered
discussions with five landowners progressed to negotiating draft heads of terms.
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 12
months 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 of 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 on Tuesday 2 March 2021, decided against the application. They
refused the application on the grounds that there are no exceptional circumstances, and that
it is not in the public interest for the development to continue in the area and was this in
contrary to clauses in both the West Sussex and National Planning Policy Framework.
Angus strongly disagrees with their opinion and an application to appeal has been submitted.
Amongst other things, the appeal references the local and national planning policies referred
to by the Planning Committee and why both Angus and the Planning Officer believe the
development is acceptable when it is considered against the development plan and any
relevant material considerations. In summary the principle of the development has been
previously accepted, the site selection represents the best environmental option and is
safeguarded, energy Policy states that the domestic oil and gas industry has a critical role in
maintaining the country’s energy security and is a major contributor to our economy and
minerals are given great weight with the extraction of hydrocarbons seen as central to the UK
energy policy in the immediate and long-term future. In light of the above and the current
energy crisis we find ourselves in the Angus management team are confident that the appeal
will be overturned.
Lidsey
The Company carried out work to reprocess and reinterpret the Lidsey seismic data. One
of the conclusions of the work was that previous seismic mapping both underestimated the
aerial extent of the reservoir and most importantly its shape. The Company therefore
acquired a new line of seismic data and reprocess the existing seismic lines.
The Company’s seismic reinterpretation of the Lidsey field was completed and, having been
subject to rigorous third party verification. This is the last part of the most comprehensive
review of the Lidsey structure ever carried out and includes the reprocessing of all historical
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Strategic Report
seismic lines, the use of a newly acquired east-west seismic line over the field and the data
from both the wells on the field and also nearby wells.
This remapping has resulted in some further changes to the shape of the structure, but it now
fits and is consistent with all of the available data. The Company is confident that the new
field mapping explains the issues which were experienced with the Lidsey X2 well in 2017. It
is now the Directors’ clear belief that the structure culminates near the wellsite area and
extends to the east and northeast. Prior to the drilling of Lidsey X2, it was thought that the
structure extended to the west and the westerly trajectory of the Lidsey X2 well accordingly
targeted an area close to the edge of the structure.
The new mapping shows there to be a significant structure not dissimilar in area to the original
structure considered by the previous Competent Person’s Report, which continues to support
a commercially significant estimate of oil in place. However, the interpretation does allow
Angus to narrow its field of focus in target selection and explore low-cost options for
remediation of the field’s productivity centre around the reuse, workover or side-tracking of
the existing wells and these will be considered with our partners in the next
stage of the work.
The Company’s re-mapping of the structure also shows it to extend a significant distance out
of the licence area in some scenarios and Angus is now opening a dialogue with the holder of
that surrounding licence to consider how we might proceed together to address the future of
the field.
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 which included an updated Hydrogeological
Risk Assessment. The Environment Agency had completed their determination of the permit
variation and the permit was issued on 02 March 2022.
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
in the 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 Prospect
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
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Strategic Report
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.
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.
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Strategic Report
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:
• Open and honest dialogue
• Engagement with stakeholders at all stages of development
• Proactively address local concerns
• 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 8 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 (PEDL244), 12.5% of the A24 Prospect (PEDL 143) and 51%
of Saltfleetby Gas Field (PEDL005).
The Group had a cash balance of £6,160m as at 30 September 2021.
On 21 October 2020, the Group announced the acquisition of Doriemus Plc’s 10% interest in
Brockham License PL235, as a result the Group’s interest in the License increased to 75%.
On 9 November 2020, the company issued 9,678,945 shares. These were loan reduction
shares relating to the Riverfort Global Opportunities PCC Limited convertible note described
in note 22. As per this conversion there are no outstanding liabilities between the Company
and the Noteholders.
On 16 December 2020, the company issued 41,664,999 shares at 0.6 pence per share, raising
gross proceeds of £249,990.
On 27 January 2021, the company issued 150,000,000 shares at 1p per share, raising gross
proceeds of £1.5m. 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 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 9 April 2021, to satisfy additional demand, the company issued 15,000,000 shares at 1p
per share, raising gross proceeds of £150,000. The Placing Shares were also accompanied by
the issue of one warrant to subscribe for one ordinary share in the Company for each Placing
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Strategic Report
Share. 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 13 May 2021, the Saltfleetby loan facility had been signed between Angus Energy (51%)
and Saltfleetby Energy Limited (49%), as Borrower and Guarantor respectively, and Mercuria
Energy Trading Limited and Aleph Saltfleetby Limited, as the co-Lenders.
The terms provide for a four-year amortising loan facility of £12million with a 12% margin
over LIBOR, a 3% commitment, a share grant of 30 million shares in Angus and an override of
8% on gross revenue following repayment of the facility.
On 3 June 2021, all conditions precedent to drawdown of the Saltfleetby loan facility were
met and the full £12 million facility was drawn down.
On 3 June 2021, the company issued 35,000,000 shares at 1p per share. 15,000,000 shares
were issued in relation to the Loan Facility, with a further 20,000,000 issued in relation to
commission payable in respect of the Funding agreement.
On 15 June 2021, the company announced the acquisition of Alba Mineral Resources plc’s
5% interest in the Brockham Field. The net consideration after settlement of outstanding
amounts and a contribution toward eventual abandonment costs involves a payment by Alba
to Angus of £38,400, settled as to £6,400 in cash and £32,000 by the issue of 12,407,910
shares in Alba at the 10 day VWAP of 0.2579p per share representing approximately 0.20% of
the share capital of Alba.
At the end of the financial year the Group had Convertible loan notes outstanding totaling
£1.425m (2020: £1,483).
As at 30 September 2021, the Group retained a 51% interest in the Saltfleetby field, 80% 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 £6.160m at the end of reporting year.
The Group generated NIL revenue from oil and gas production during the year (2020:
£0.068m).
The Group recorded a loss of £15.598m which included an unrealized loss of £13.143m in
relation to the derivative instrument, resulting in an adjusted loss of £2.455m (2020 a loss of
£2.516m). For the year under review, the administrative costs were reduced by £0. 14m to
£1.918m (2020: £2.060).
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.
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Strategic Report
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 13 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. Management regularly reviews currency
exposure with the aim of mitigating any downside exposure where possible.
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 and gas 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 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. The Group has entered into commodity derivatives to protect it from any downside
market risk (see note 24 for further details).
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Strategic Report
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 relating to Lidsey and Brockham contained in the financial statements are
taken from the Competent Person’s Report, at the time of AIM admission on 14 November
2016 and the hydrocarbon reserve and resources data relating to Saltfleetby are taken from
the Saltfleetby Competent Person’s Report published in October 2021.
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
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.
15
Strategic Report
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 £6.160m as at 30 September 2021 subsequent to the
significant cash movements described during the reporting period.
On 20 October 2021, the Company agreed an extension of the £1.4m Convertible Loan Note
repayable on 17 April 2022 by a further 12 months until 17 April 2023. The Note, which was
otherwise convertible at 1p per ordinary share from 17 February 2022, will now only be
convertible at the earliest of 17 July 2022 representing a six month extension. Additionally,
the Company retains the right to repay the Note at any time with the additional grant of
warrants at 1.3p per share as detailed in the RNS of 20 April 2020. All other terms of the Note
remain the same. In consideration for this extension the Company shall issue and allot to the
Noteholder 11,200,000 ordinary shares.
On 3 December 2021, the company issued 115,384,611 shares at 0.065 pence per share,
raising gross proceeds of £750,000.
On 6 January 2022, the company announced that it had received a series of approaches with
interest in, and in one instance an indicative non-binding offer for, some or all of the
Company’s 51% interest in the Saltfleetby Gas Field asset which was under consideration.
Additionally, the Board had received indications that certain parties may be interested in
making an offer for the Company. As such, the Board has been considering options for the
Company with its advisers. Whilst not wishing to be distracted from its immediate aims it
must meet its responsibility to shareholders to evaluate any proposals received and was
therefore entering into a Strategic Review period. These options include, but are not limited
to, a sale of the Company which will be conducted under the framework of a "formal sale
process" in accordance with the Takeover Code.
On 4 February 2022, the company issued 175,000,000 shares at 0.08 pence per share, raising
gross proceeds of £1,400,000.
On 10 March 2022, and further to our announcement of 9 June 2021, the Company
announced that it had reached a settlement agreement with a financial services provider with
whom it was in dispute. As part of this settlement agreement the Company has issued
39,200,000 ordinary shares of 0.002 pence each representing approximately 3% of the
enlarged issued and allotted share capital of the Company. The Board considers this
settlement to be in the best interests of all shareholders as it will avoid further and
considerable expenditures on legal costs and the considerable utilisation of management
time.
16
Strategic Report
Outlook
With first gas at Saltfleetby imminent, the company will continue to explore further gas
opportunities and mature its geothermal projects in the south west of England with the
intention of not only creating shareholder value but also to address the urgent need for
transition energy projects.
Approved by the Board of Directors and signed on behalf of the Board.
George Lucan
Managing Director
11 March 2022
Details of all our assets and operations can be found at www.angusenergy.co.uk
17
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 promotes 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 11.
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 includes 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 14 to 22.
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.
18
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:
• Open and honest dialogue;
• Engagement with stakeholders at all stages of development;
• Proactively address local concerns;
• Actively minimise impact on our neighbors; 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 12 of the Annual Report as well as the
Community section within the Company’s corporate website.
19
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.
20
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 27-28.
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 11 and 12 and 32 to 36 of the Annual Report.
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,
21
Corporate Governance Statement
Remuneration Committee, Nomination Committee and AIM Rules compliance committee can
be found on pages 23.
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 23.
The Board and its committees
At the beginning of the reporting year, the Board of the Group consisted of three Executive
Directors and two non-Executive Directors. At the date of approval these financial
statements, this remained unchanged.
The Board met on 14 occasions during the year to 30
September 2021. The table below sets out the Board meetings
held by the Company for the financial year ended 30
September 2021 and attendance of each Director:
Executive Directors
George Lucan
Carlos Fernandes
Andrew Hollis
Non-Executive Directors
Patrick Clanwilliam
Cameron Buchanan
Board
meetings
[13/14]
[14/14]
[14/14]
[14/14]
[12/14]
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.
22
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 25 to 26.
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 27 to 28.
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
23
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 general compliance issues.
Other matters
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
11 March 2022
24
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:
1. 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 it prudent not to impair the oil production assets based on the estimated oil
reserves and forecast level of future production.
25
Audit Committee Report
2. 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 (b). The directors are satisfied that the going concern basis is appropriate for
the preparation of the financial statements.
3. Valuation of Derivative
The Committee has reviewed the carrying value of the closing derivative liability. Based
on the work performed during the audit, and through discussions with management, the
committee considers that the carrying value of the liability is appropriate.
Carlos Fernandes
Chairman – Audit Committee
26
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
calibre 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 twenty 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 28. The share options will vest at various future
dates as described in the note 17 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.
27
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:
2021
George Lucan
Andrew Hollis
Carlos Fernandes
Cameron Buchanan
Patrick Clanwilliam
2020
George Lucan
Andrew Hollis
Carlos Fernandes
Cameron Buchanan
Patrick Clanwilliam
Salary
£’000
127
127
120
45
75
---------------
494
===========
Salary
£’000
120
120
120
30
60
---------------
450
===========
Termination
payment
-
-
-
-
-
---------------
-
===========
Termination
payment
-
-
-
-
-
--------------
-
==========
Share based
payment
£’000
7
7
7
--------------
-
==========
Share based
payment
£’000
-
-
-
-
-
--------------
-
==========
Total
£’000
134
134
127
45
75
-------------
494
=========
Total
£’000
120
120
120
30
60
-------------
450
=========
The Remuneration Committee met three times during the year to review the scale and
structure of the executive directors’ and senior employees’ remuneration.
Patrick Clanwilliam
Chairman – remuneration Committee
28
Directors’ Remuneration Report
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 13 years commercial experience working in the Mining and
Oil & Gas industry.
Cameron Buchanan
Non-Executive Chairman
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 Director
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.
29
Statement of Directors’ Responsibilities
Directors’ Report
The Directors present their report together with the audited consolidated financial
statements of Angus Energy plc for the year ended 30 September 2021.
Results and Dividends
The Group recorded a loss after tax of £15.598m, which included an unrealized loss of
£13.143m in relation to the derivative instrument, resulting in an adjusted loss of £2.455m
(2020: £2.516m). 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 29.
The Directors’ remuneration is detailed in the Directors’ Remuneration Report on page 28. All
Directors benefit from the provision of Directors’ and Officers’ indemnity insurance policies.
Premiums payable to third parties were £34,500 (2020 – £39,200).
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. The company has also
acquired seismic lines and conducted a ground magnetic survey to better understand the
geothermal potential of certain sites in the UK. 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 16 to the financial statements.
30
Statement of Directors’ Responsibilities
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
Sebastian Marr
Jaspal Singh
Percentage of
shareholding
12.08%
7.60%
3.76%
3.15%
Share options
There were 26,000,000 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 25 to the financial statements.
Employees
The Group had 13 employees as at 30 September 2021 (2020: 11). Employees are encouraged
to directly participate in the business through an Enterprise Management Incentive Scheme,
which set out in note 17 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 29.
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.
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
31
Statement of Directors’ Responsibilities
Managing Director
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 accounting standards in
conformity with the requirements of the Companies Act 2006; 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
Statement of Directors’ Responsibilities
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 11 and 12
and pages 35 to 36. Review of the key decisions and issues discussed in Board meetings and
by various committees in 2021 is contained in the Corporate Governance Statement from
pages 18 to 24.
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
Statement of Directors’ Responsibilities
Highlights include:
Investor conference calls
•
• Online interviews
•
• Signing with Mercuria Energy Trading and Aleph Commodities of the £12m
Investor questions regularly answered on the company’s website
Saltfleetby Debt Facility
• Negotiating an extension of the £1,400,000 Convertible Loan Note issued on 20 April
2020.
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:
• Saltfleetby Energy Limited providing security towards the Saltfleetby debt facility
• Processing of seismic data 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 and we are closely
involved and help shape the strategy and timing.
Highlights include:
• Working with National Grid to connect the Saltfleetby pipeline to the national
transmission system
• 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
34
Statement of Directors’ Responsibilities
are recognised and their contributions are valued, helps to ensure that we can deliver our
shared objectives.
Important issues include:
• Group strategy
• Diversity of thinking
• Corporate culture
During 2021, 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
•
• Providing views on upcoming legislation and factors that are important to the
Identifying and securing new opportunities
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 Saltfleetby Field Development Plan by the OGA
• Successful planning permissions for the Saltfleetby side track
• Approval of the transfer of the Brockham Licence by the OGA
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
Statement of Directors’ Responsibilities
Constant attention to maintaining our exemplary track record of safe oil and gas production
• Open and honest dialogue
• Engagement with stakeholders at all stages of development
• Proactively address local concerns
• Actively minimise impact on our neighbours
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 2021
• Continued community engagement
• Continued awards through the company’s local scholarship program
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 2021, which comprise:
•
•
•
•
•
the Group statement of comprehensive income for the year ended 30 September 2021;
the Group and parent company statements of financial position as at 30 September 2021;
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 international accounting standards in conformity with the requirements of the
Companies Act 2006. 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 2021 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared
in accordance with
international accounting standards in conformity with the requirements of the Companies Act
2006;
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
In auditing the financial statements, we have concluded that the director's use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the
directors’ assessment of the entity’s ability to continue to adopt the going concern basis of accounting
included Reviewing management’s financial projections for the Group and parent company for a
period of more than 12 months from the date of approval of the financial statements.
•
•
•
Reviewing management’s financial projections for the Group and parent company for a period of
more than 12 months from the date of approval of the financial statements.
Checking the numerical accuracy of management’s financial projections
Challenging management on the assumptions underlying those projections and sensitised them
to reduce anticipated net cash inflows from future trading activities.
• Obtained the latest management results post year end 30 Septmeber 2021 to review how the
•
Group and parent company are trending toward achieving the forecast.
Performed sensitivity analysis on key inputs of the forecast by calculating the impact of various
scenarios and considering the impact on the group and parent Company’s ability to continue as
a going concern in the event that a downward scenario occurs.
• Assessing the completeness and accuracy of the matters described in the going concern
disclosure within the significant accounting policies as set out in Note 3.3.
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 £420,000 (2020: £250,000), based on 1% of Group total assets (2% of
Group net assets). The benchmark has been changed due to changes in the financing structure of the
group in the year. The parent company overall materiality is set at £75,000 (2020: £80,000) based on a
percentage of loss before tax.
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. This is set at £225,000 (2020: £187,500)
for the group and £56,260 (2020: £60,000 ) for the parent company.
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 £15,000 (2020:
£10,000). 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
38
Independent Auditor’s Report To The Members of Angus Energy Plc
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 2021, the
carrying value of oil & gas
production assets was £6.406
million.
The recoverable value of the
Brockham and Lidsey 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.
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:
•
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.
39
Independent Auditor’s Report To The Members of Angus Energy Plc
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 2021, the
carrying value of
exploration and evaluation
assets was £13.073 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
impair the carrying value of
these assets.
Carrying value of derivative
financial instrument
We obtained copies of the contracts between the
Group and the provider of the Gas Swap arrangements.
At 30 September 2021, the
carrying value of the gas swap
derivative financial instrument
was £25.770 million, recorded in
liabilities.
The valuation of this instrument
is subjective and variations in
this value would have a material
impact on the income statement
and the statement of financial
position.
We recalculated management’s assessment of the
valuation of the derivative as at 30 September 2021.
We discussed the process of valuation with
management and the provider of the gas swap
arrangements.
We instructed an external valuer to provide us with an
indicative benchmark so as to inform our expectations
of value.
40
Independent Auditor’s Report To The Members of Angus Energy Plc
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 contained within the annual report. 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.
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 this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
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
applicable
legal 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.
41
Independent Auditor’s Report To The Members of Angus Energy Plc
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.
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is detailed below however
the primary responsibility for the prevention and detection of fraud lies with management
and those charged with governance of the Company.
•
• We obtained an understanding of the legal and regulatory frameworks that are
applicable to the Group and the procedures in place for ensuring compliance. The
most significant identified were the Companies Act 2006 and the QCA Corporate
Governance Code. Our work included direct enquiry of the Company Secretary who
oversees all legal proceedings, reviewing Board and relevant committee minutes and
inspection of correspondence.
As part of our audit planning process we assessed the different areas of the financial
statements, including disclosures, for the risk of material misstatement. This included
considering the risk of fraud where direct enquiries were made of management and
those charged with governance concerning both whether they had any knowledge of
actual or suspected fraud and their assessment of the susceptibility of fraud. We
considered the risk was greater in areas that involve significant management estimate
or judgement. Based on this assessment we designed audit procedures to focus on the
key areas of estimate or judgement, this included specific testing of journal
transactions, both at the year end and throughout the year.
• We used data analytic techniques to identify any unusual transactions or unexpected
relationships, including considering the risk of undisclosed related party transactions.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material
misstatements of the financial statements may not be detected, even though the audit is
properly planned and performed in accordance with the ISAs (UK).
42
Independent Auditor’s Report To The Members of Angus Energy Plc
The potential effects of inherent limitations are particularly significant in the case of
misstatement resulting from fraud because fraud may involve sophisticated and carefully
organised schemes designed to conceal it, including deliberate failure to record transactions,
collusion or intentional misrepresentations being made to us.
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
St Bride’s House
10 Salisbury Square
London EC4Y 8EH
Date: 11 March 2022
43
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 30 SEPTEMBER 2021
Revenue
Cost of sales
Gross loss
Administrative expenses
Impairment charge
Share option charge
Operating loss
Derivative financial instrument loss
Finance cost
Loss before taxation
Taxation
Loss for the year
Total comprehensive loss for the year
Loss for the year attributable to:
Owners of the parent company
Total comprehensive loss attributable to:
Owners of the parent company
Earnings per share (EPS) attributable to owners of the parent:
Basic and diluted EPS (in pence)
The notes on page 48 to 75 form part of these of financial statements
All amounts are derived from continuing operations.
Note
5
12
17
6
24
7
9
6
6
19
2021
£’000
-
(294)
(294)
(1,918)
-
(182)
(2,394)
(13,143)
(61)
(15,598)
-
2020
£’000
68
(162)
(94)
(2,060)
(300)
(30)
(2,484)
-
(32)
(2,516)
-
(15,598)
(2,516)
(15,598)
(2,516)
(15,598)
(2,516)
(15,598)
(15,598)
(2,516)
(2,516)
(1.78)
(0.43)
44
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2021
ASSETS
Non-current assets
Property, plant and equipment
Exploration and evaluation assets
Oil & gas production assets
Lease Assets
Trade and other receivables
Total non-current assets
Current assets
Trade and other receivables
AFS financial investments
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
Current liabilities
TOTAL EQUITY
Trade and other payables
Loan payable - current
Derivatives Liability
Total current liabilities
Non-current Liabilities
Provisions
Amount falling due more than 1 year
Loan payable – non current
Derivatives Liability
Total non-current liabilities
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Note
2021
£’000
2020
£’000
10
12
11
27
15
15
14
16
16
18
22
20
23
24
21
20
23
24
8
13,073
6,534
11
11,117
30,743
5,132
28
6,160
11,320
11
8,183
6,406
35
14,635
609
-
1,852
2,461
42,063
17,096
1,933
23,605
(200)
106
(27,463)
1,430
21,982
(200)
106
(12,047)
(2,019)
11,271
1,974
1,500
3,083
6,557
3,007
1,331
10,500
22,687
37,525
1,488
-
-
1,488
3,007
1,330
-
-
4,337
44,082
5,825
42,063
17,096
The notes on page 48 to 75 form part of these of financial statements
The financial statements were approved by the Board of Directors and authorized for issue on 11 March 2022 and
were signed on its behalf by:
George Lucan - Director
Company number: 09616076
45
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 SEPTEMBER 2021
Share capital
£’000
Share
premium
£’000
Merger
reserve
£’000
Loan Note
reserves
£’000
Accumulated
loss
£’000
Total
equity
£’000
Balance at 30 September 2019
1,082
21,117
(200)
Loss for the year
Total comprehensive income
for the year
Transaction with owners
Issue of shares
Less: issuance costs
Issue of convertible loan
Grant of share options
-
-
348
-
-
-
-
-
1,051
(186)
-
-
-
-
-
-
-
-
Balance at 30 September 2020
1,430
21,982
(200)
Loss for the year
Total comprehensive loss for
the year
-
-
-
-
Transaction with owners
Issue of shares
Less: issuance costs
Grant of share options
503
-
-
1,770
(147)
-
-
-
-
-
-
-
-
-
-
-
106
-
106
-
-
-
-
-
(9,561)
12,438
(2,516)
(2,516)
(2,516)
(2,516)
-
-
-
30
1,399
(186)
106
30
(12,047)
11,271
(15,598)
15,598)
(15,598)
(15,598)
-
-
182
2,273
(147)
182
Balance at 30 September 2021
1,933
23,605
(200)
106
(27,463)
(2,019)
The notes on page 48 to 75 form part of these of financial statements
46
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 30 SEPTEMBER 2021
Cash flow from operating activities
Loss for the year before taxation
Adjustment for:
Derivative financial instrument loss
Share option charge
Equity settled in lieu professional fees
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
Cash used in operating activities before tax
Income tax paid
Year ended 30
September
2021
£’000
Year ended 30
September
2020
£’000
(15,598)
(2,516)
13,143
182
61
-
-
7
-
30
-
32
300
147
(2,205)
(2,007)
(3,013)
433
(4,785)
-
185
369
(1,453)
-
Net cash flow used in operations
(4,785)
(1,453)
Cash flow from investing activities
Decommissioning cost
Acquisition of property, plant and equipment
Acquisition of exploration and evaluation assets
Acquisition of oil production assets
Net cash flow from investing activities
Cash flow from financing activities
Drawdown of debt facility
Lease principal repayment
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 year
Cash and equivalent at end of year
10
12
11
-
-
(4,890)
(131)
(45)
3
(2,605)
-
(5,021)
(2,647)
12,000
(12)
-
2,126
14,114
4,308
1,852
6,160
-
(138)
1,458
1,213
2,533
(1,567)
3,419
1,852
Details of the non-cash transaction are disclosed in note 16.
The notes on page 48 to 75 form part of these of financial statements
47
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 accounting standards in
conformity with the requirements of 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.
IFRS 9 Phase 2 with amendments that address issues that might affect financial reporting after the reform of
an interest rate benchmark, including its replacement with alternative benchmark rates. The amendments
are effective for annual periods beginning on or after 1 January 2021, with earlier application permitted.
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 £15.598 million which included an unrealized loss of £13.143 million for the derivative
instrument resulting in an adjusted loss of £2.455 million (2020: loss of £2.516 million) and recorded a net
cash outflow from operating activities of £4.797 million (2020: £1.59 million).
The Group meets its day to day working capital requirements through existing cash reserves. At 30 September
2021, the Group had £6.16 million of available cash. During the year, the Group raised gross proceeds of
£1.899 million as a result of placing of new ordinary shares. The Group also entered into a £12m debt facility
to fund the development of the Saltfleetby gas field.
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
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 potential
delays to expected future revenues. In making their overall assessment the Directors took into account the
advanced stage of the development of the Saltfleetby gas field and the impact of the derivative instrument
if there were delays to first gas. As outlined in note 24 the Group has committed to future cash flows as a
result of the derivatives in place which are due even if first gas is delayed.
In respect of Balcombe the Directors have considered the likelihood of a successful appeal.
Based on the current management’s plan, management considered that the working capital from the
expected revenue generation and the Saltfleetby Debt Financing 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 preparation.
As noted above, in the event that the Group is not successful in meeting its timeline for first gas, there would
exist a material uncertainty that may cast doubt regarding the Group’s ability to continue as a going concern.
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
-
-
-
25% straight line
20% straight line
20% straight line
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.
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(a)
Licence and property acquisition costs
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.
(e) 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.
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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.
Contract Debtor
Gains and losses due by Saltfleetby Energy Limited in relation to their 49% share of the Derivative Instrument
is recorded in Trade & Receivables as a contract debtor with the debt repayable from gas sales as per the
terms in the Joint Venture Agreement.
Borrowing cost
Borrowing cost that are directly attributable to the acquisition, development, or production of a qualifying
asset, that necessarily takes substantial time to prepare, are capitalized as part of the cost the respective
asset. It consists of interest and other cost in connection with the borrowing of the funds. Capitalization
commences when activities to prepare the asset are in progress or in future re-development activities and
ceases when all activities necessary to prepare the asset are completed. Other borrowing costs are
recognized in the statement of profit and loss and other comprehensive income in the period in which they
are incurred.
Derivative financial instrument
The group uses derivative financial instrument, to hedge its commodity price risk, such as commodity swap
contracts. The Group has elected not to apply the hedge accounting on this derivative. Derivative financial
instruments are recognized at fair value on the date on which the contract is entered into and subsequently
measured at fair value. Derivatives are carried as financial asset when the fair value is greater than its initial
measurement and financial liabilities when fair value is negative. Any gains or losses arising from the changes
in fair value of the derivatives are recognise in the statement of profit and loss and other comprehensive
income.
As at 30 September 2021, the Group’s derivative liabilities amounted to £25.770 million as a result of the
hedging agreement entered into with Mercuria Energy Trading SA under a Swap Contract (see Note 24)
In the determining the fair values of the financial asset and liabilities, instruments are analysed into Level 1
to 3 as follows:
Level 1:
Level 2:
Level 3:
Fair value measurements derive from quoted prices (unadjusted) in active market for identical
asset or liabilities.
Fair value measurement derive from inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly or indirectly.
Fair value measurements derive from valuation technique that include inputs for the asset or
liability that are not based on observable market data.
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. 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.
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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
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.
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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
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.
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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
behavioral 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.
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.
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 E&E assets and oil production assets at 30
September 2021 were approximately £13.073million (2020: £8.183 million) and £6.534million (2020: £6.406
million) respectively. Management have not impaired the oil production assets based on oil reserves and
future production forecasts.
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 and note 11. 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
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 21, the provision at reporting date represents management’s best estimate of the present
value of the future decommissioning costs required.
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(d) Valuation of derivative liability
On 01 June 2021, Angus Energy Weald Basin no. 3 Limited (AWB3) entered into a derivative agreement with
Mercuria Energy Trading SA (METS) under a Swap contract as part of the condition of the Loan Facility (see
Note 23). The derivative instrument was used to mitigate price risk on the expected future cash flow from
the production of Saltfleetby Gas Field. Under the Swap contract, AWB3 will pay METS the floating price while
METS will pay AWB3 the fixed price on the sale of gas from the field.
The carrying value of the financial instrument approximates their fair value and was valued using Level 2 fair
value hierarchy valuation. The fair value has been determined with reference to commodity yield curves, as
adjusted for liquidity and trading volumes as at the reporting date supplied by the Group’s hedging derivative
partner, Mercuria Energy Trading. Management also assessed the valuation of these swaps using publicly
available forward pricing curves.
As detailed in note 24, 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
2021
£’000
2020
£’000
-
=======================================
68
=======================================
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
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
Adjusted operating loss
The adjusted operating loss has been arrived at after charging/(crediting):
Operating loss after tax
Derivative financial instrument loss
Adjusted loss after tax
2021
£’000
7
-
1,078
2020
£’000
147
2
1,091
45
-----------------------------------------------------------
45
==================================================
40
-----------------------------------------------------------
40
==================================================
2021
£’000
2020
£’000
15,598
(13,143)
-----------------------------------------------------------
2,455
==================================================
2,516
-
-----------------------------------------------------------
2,516
==================================================
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7.
Finance cost
Interest payable on convertible loan notes
Loss on revaluation of AFS investment
Lease costs
8.
Employee benefit expense
Wages and salaries
Social security costs
2021
£’000
56
4
2020
£’000
25
-
1
-----------------------------------------------------------
7
-----------------------------------------------------------
61
==================================================
32
==================================================
2021
£’000
2020
£’000
971
107
-----------------------------------------------------------
1,078
==================================================
981
110
-----------------------------------------------------------
1,091
==================================================
The directors received salary from the group totaling £494,000 (2020: £450,000)
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
2021
Number
2020
Number
5
8
-----------------------------------------------------------
13
==================================================
5
6
-----------------------------------------------------------
11
==================================================
9.
Taxation on ordinary activities
No liability to corporation tax arose for the years ended 30 September 2021 and 2020, 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% (2020:
19%)
Expenses not deductible for tax purposes
Unrecognised deferred tax
2021
£’000
2020
£’000
(15,598)
(2,516)
(2,964)
56
2,908
-----------------------------------------------------------
(478)
75
403
-----------------------------------------------------------
-
==================================================
-
==================================================
The Group has incurred indefinitely available tax losses of £21,014,268 (2020: £19,678,919) to carry forward
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 £35,000 (2020: £6,000) of
deductible temporary difference in respect of the share-based payment.
No deferred tax asset was recognised in respect to these accumulated tax losses as there is insufficient
evidence that the amount will be recovered in future years.
10.
Property, plant and equipment
Cost or valuation
At 1 October 2019
Additions
At 30 September 2020
Additions
At 30 September 2021
Depreciation and impairment
At 1 October 2019
Charge for the year
At 30 September 2020
Charge for the year
At 30 September 2021
Net book value
At 30 September 2020
At 30 September 2021
Plant and
machinery
£’000
Motor
vehicles
£’000
Fixtures and
fittings
£’000
21
2
---------------------------------------
23
2
---------------------------------------
25
---------------------------------------
11
3
---------------------------------------
14
3
---------------------------------------
17
---------------------------------------
35
-
---------------------------------------
35
-
---------------------------------------
35
---------------------------------------
31
2
---------------------------------------
33
2
---------------------------------------
35
---------------------------------------
8
-
---------------------------------------
8
-
---------------------------------------
8
---------------------------------------
8
-
---------------------------------------
8
-
---------------------------------------
8
---------------------------------------
Total
£’000
64
2
---------------------------------------
66
2
---------------------------------------
68
---------------------------------------
50
5
---------------------------------------
55
5
---------------------------------------
60
---------------------------------------
9
=======================================
8
=======================================
2
=======================================
-
=======================================
-
=======================================
-
=======================================
11
=======================================
8
=======================================
Depreciation of property, plant and equipment is included in administrative expenses in the consolidated
statement of comprehensive income.
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11.
Oil and gas production assets
Cost or valuation
At 1 October 2019
At 30 September 2020
Additions
At 30 September 2021
Depreciation and impairment
At 1 October 2019
Charge for the year
At 30 September 2020
At 30 September 2021
Net book value
At 30 September 2020
At 30 September 2021
Total
£’000
7,373
---------------------------------------
7,373
128
---------------------------------------
7,501
---------------------------------------
957
10
---------------------------------------
967
---------------------------------------
967
---------------------------------------
6,406
=======================================
6,534
=======================================
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. £128
(2020: £nil) at both operating fields.
In June 2021, the Group acquired additional 5% interest in Brockham field for consideration of settlement of
all the outstanding amount and contribution towards eventual abandonment cost of £38,400
As at 30 September 2021, the Group retained an 80% interest in Lidsey field and 80% 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)
2021
10%
$63
2020
10%
$50
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.
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 points 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.
12.
Exploration and evaluation assets
Cost or valuation
At 1 October 2019
Additions
Impairment charge
At 1 October 2020
Additions
At 30 September 2021
Total
£’000
5,878
2,605
(300)
-----------------------------------------------------------
8,183
4,890
-----------------------------------------------------------
13,073
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 was fully impaired in the prior year.
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. Should the appeal be
unsuccessful the management will consider further legal options and asses wether an impairment is
necessary. See Strategic Review on page 9.
Additional cost related to Exploration assets, which are directly attributable to the qualifying asset that
necessarily takes substantial time to prepare, are capitalized as part of the cost of the respective asset and it
consist of interest and other cost in connection with the borrowing of the funds. In 2021, total capitalized
Interest on Loan amounts to £475,000 (2020: £nil) and total capitalised commitment fee amounts to
£360,000 (2020: £nil)
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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
2021
2020
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
14.
Available for sale financial investments
At 1 October
Additions
Loss on revaluation for year
At 30 September
2021
£’000
-
32
(4)
-----------------------------------------------------------
28
==================================================
2020
£’000
-
-
-
-----------------------------------------------------------
-
==================================================
Financial investment are shares held in Alba Mineral Resources Plc (Alba) consisting of 12,407,910 shares.
The shares represents consideration received by Angus for the disposal of Alba’s 5% interest in Brockham
oilfield.
The changes in the value of these investment have been determined directly by reference to the published
price quoted on AIM at reporting date.
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15.
Trade and other receivables
Non-Current
Contract debtor – derivative
Current
Contract debtor – derivative
Amounts due from farmees
Rent deposit
VAT recoverable
Other receivables
TOTAL
2021
£’000
2020
£’000
11,117
-----------------------------------------------------------
11,117
-
-----------------------------------------------------------
-
1,510
3,073
-
218
331
-----------------------------------------------------------
5,132
-----------------------------------------------------------
-
272
29
201
107
-----------------------------------------------------------
609
-----------------------------------------------------------
16,249
==================================================
609
==================================================
The carrying amount of trade and other receivables approximates to their fair value.
Trade and other receivables
Less: Impairment allowance
2021
£’000
16,353
(104)
-----------------------------------------------------------
16,249
==================================================
2020
£’000
872
(263)
-----------------------------------------------------------
609
==================================================
The receivables from farmees amounting to £3,073m is recognised in the statement of financial position. It
includes £3.240m which represents the 49% share of Saltfleetby Energy Limited’s share of due under the
£12m Debt Facility (see note 23) and £0.103m impairment for potential uncertainty over recovering
additional amounts from farmees. The Group is in discussions to recover the full amount due from farmees.
The receivables from Contract Debtors amounting to £12.627m is recognised in the statement of financial
position. It represents the 49% share of Saltfleetby Energy Limited on the Derivative Liability as a result of a
fair value valuation on the instruments. Details are provided in Note 24.
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16.
Share capital
Allotted, called up and fully paid:
Ordinary share of £0.002 each
Issue price
In pence
Number of
shares
Ordinary share
capital Share premium
£’000
£’000
As at 30 September 2019
540,828,007
1,082
21,117
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 costs
At 30 September 2020
Issue of shares 3 November 2020
Issue of shares 23 December 2020
Issue of shares 27 January 2021
Issue of shares 8 April 2021
Issue of shares 3 June 2021
Less: Issuance of costs
At 30 September 2021
0.7264
0.5774
0.6224
0.9
0.6
0.6
1.0
1.0
0.9429
13,766,520
17,319,016
32,133,676
111,111,105
-
=========================================================
715,158,324
9,678,945
41,664,999
150,000,000
15,000,000
35,000,000
-
========================================================
966,502,268
27
35
64
222
-
==================================================
1,430
20
83
300
30
70
-
==================================================
1,933
72
65
136
778
(186)
==================================================
21,982
39
167
1,200
120
245
(148)
==================================================
23,605
On 3 November 2020, the company issued 9,678,945 shares at 0.6p each. These were loan reduction shares
relating to the Riverfort Global Opportunities PCC Limited convertible note described in note 22. As per this
conversion there are no outstanding liabilities between the Company and the Noteholders.
On 23 December 2020, the company issued 41,664,999 shares at 0.6p each. These were general working
capital for the Company’s ongoing activities.
On 27 January 2021, the company issued 150,000,000 shares at a price 1p. These were used to advance the
Company’s current assets and for general working capital purpose.
On 8 April 2021, the company issued 15,000,000 shares at 1p. These were used to advance the Company’s
current assets and for general working capital purpose.
On 3 June 2021, the company issued 35,000,000 shares at average 0.9429p. There were used in relation to
the Loan Facility, as well as commission payable in respect of Funding agreement.
As at 30 September 2021 the total issued ordinary shares of the Company were 966,502,268 (2020:
715,158,324)
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17.
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 2021, the following share options and warrants were outstanding in respect of the Ordinary
shares:
Exercise price
Outstanding as
at 01 Oct 2020
Granted
during
year
the
£0.06
£0.09
£0.068
£0.08
£0.02
£0.01663
£0.01
£0.009
£0.015
£0.012
£0.0135
£0.015
£0.01
£0.012
£0.0135
£0.015
Warrant
Share options
17,818,304
1,050,000
2,469,914
10,650,000
23,900,000
18,025,597
15,000,000
5,555,555
-
-
-
-
-
-
-
-
-
26,000,000
75,000,000
37,500,000
37,500,000
5,250,000
7,500,000
3,750,000
3,750,000
41,051,066 170,250,000
26,000,000
53,418,304
No. of
options
surrendered
or cancelled
during the
year
Outstanding
and
exercisable as
at
30
September
2021
Exercised
during the
year
Final expiry dates
(967,412)
-
-
(500,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
16,850,892 13 Nov 2026
1,050,000 13 Nov 2026
2,469,914 15 Feb 2022
10,150,000 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
26,000,000 31 Mar 2031
75,000,000 27 January 2023
37,500,000 27 January 2023
37,500,000 27 January 2023
5,250,000 9 April 2023
7,500,000 9 April 2023
3,750,000 9 April 2023
3,750,000 9 April 2023
-
(1,467,412)
-
-
211,301,066
77,950,892
The weighted average exercise price of share options and warrants was £0.01275 at 30 September 2021
(2020: £0.0334). The weighted average remaining contractual life of options outstanding at the end of the
year was 4 years (2020:5 years). The weighted average fair value of share option was £0.0148(2020: £0.0118)
each on the grant date. The vesting criteria of the share options are subject to share price growth reaching
to the target level. The share options granted during the year had an exercise price of 1.5 pence per share
and vest as to 100 per cent., upon the share price being 2 pence or greater. 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
Warrant
Warrants
Warrants
Warrants
0.90p
0.009p
0.5%
30%
3 years
0.90p
0.0118p
0.5%
30%
3 years
0.90p
0.0133p
0.5%
30%
3 years
0.90p
0.0148p
0.5%
30%
3 years
The Group recognised a share-based payment charge of approximately £182,000 (2020: £30,000).
No options on warrants were exercised in both reporting year 2020 and 2021. There remain 77,950,892
options and 211,301,066 warrants outstanding and exercisable as at 30 September 2021.
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
18.
Reserves
Merger reserve
Merger reserve
2021
£’000
(200)
==================================================
2020
£’000
(200)
==================================================
The merger reserve arose on the acquisition of Angus Energy Holdings Limited by the Company.
19.
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 966,502,268 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)
2021
£’000
2020
£’000
(15,598)
======================================================
(2,516)
=======================================================
875,710,640
======================================================
580,889,428
=======================================================
(1.78)
======================================================
(0.43)
=======================================================
The diluted loss per share was not applicable as there were no dilutive potential ordinary shares outstanding
at the end of the reporting period.
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
20.
Trade and other payables
Trade payables
Convertible loan note
Other taxation
VAT payable
Lease liability
Accruals
Interest payable – loan
Other payables
Due after more than one year
Convertible loan note
Lease liabilities
2021
£’000
1,068
-
-
22
-
231
364
289
2020
£’000
1,168
58
170
-
24
60
-
8
-----------------------------------------------------------
1,974
==================================================
-----------------------------------------------------------
1,488
==================================================
2021
£’000
2020
£’000
1,319
12
-----------------------------------------------------------
1,331
==================================================
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.
21.
Provisions for other liabilities and charges
Abandonment costs
Balance b/fwd
Abandonment cost incurred
Balance c/fwd
2021
£’000
2020
£’000
3,007
-
-----------------------------------------------------------
3,007
==================================================
3,052
(45)
-----------------------------------------------------------
3,007
==================================================
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.
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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.
22.
Convertible loan
On 25 October 2019, the Company entered into a £1.5 million Convertible Loan Note facility led by Riverfort
Global Opportunities PCC Limited. At the beginning of the period the total amount outstanding was £58,000
which was subsequently converted in ordinary shares as detailed in note 16.
On 20 April 2020, the Company issued a 4% per annum £1,400,000 Convertible Loan Note to Knowe
Properties Limited, a significant shareholder in the Company. The 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.
23. Loan Payable
On 17 May 2021, the Group signed a Loan Facility, conditional on the setting of the hedge (see Note 24) and
regulatory approval of the royalty from the Oil and Gas Authority, between Angus Energy and Saltfleetby
Energy Limited and Mercuria Energy Trading Limited and Aleph Saltfleetby Limited as the co-Lender. The term
of the Loan Facility provides for a four year amortisation loan facility of up to £12 million with a 12% margin
over LIBOR, a 3% commitment fee payable out of the facility, a share granted of 30 million shares in Angus,
issued over the life of the facility and an override of 8% of gross revenue following the repayment of the
facility.
The £12 million facility is required for the re-development of the Saltfleetby Gas Field and the drilling of the
side-track well in line with the Field Development Plan and the Plans for the acceleration of production
through the fast-tracking of the side-track well.
Repayment date schedule were as follows:
2022
£’000
2021
£’000
Current
30 September 2022
Non-Current
30 September 2023
30 September 2024
31 March 2025
Total Facility Loan
1,500
4,200
4,200
2,100
£12,000
-
-
-
-
-
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24. Derivative Liability
On 01 June 2021, Angus Energy Weald Basin no. 3 Limited (AWB3) entered into a derivative agreement with
Mercuria Energy Trading SA (METS) under a Swap contract as part of the condition of the Loan Facility (see
Note 23). The derivative instrument was used to mitigate price risk on the expected future cash flow from
the production of Saltfleetby Gas Field. Under the Swap contract, AWB3 will pay METS the floating price while
METS will pay AWB3 the fixed price on the sale of gas from the field.
Further details of the contract as at 30 September 2021 are as below:
Period of Gas Production
Quantity in Therms
1-Jul-22
1-Oct-22
1-Apr-23
1-Jul-23
1-Oct-23
1-Apr-24
1-Jul-24
1-Oct-24
1-Apr-25
30-Sep-22
31-Mar-23
30-Jun-23
30-Sep-23
31-Mar-24
30-Jun-24
30-Sep-24
31-Mar-25
30-Jun-25
3,375,000
10,500,000
5,250,000
4,500,000
9,000,000
4,500,000
3,750,000
7,500,000
3,750,000
52,125,000
Fixed price in
pence per
Therms
0.4140
0.5205
0.3755
0.3755
0.4655
0.3560
0.3560
0.4500
0.3525
As of reporting date, the expected cash flow on the sale of natural gas amounted to £48.117m resulting in a
loss of £25.770m of which the Groups effective share is at £13.142m on its 51% participating interest. The
resulting loss on the Swap contract was a result of the steep rise in the prices of natural gas affecting the
Group as the floating price payer as of reporting date.
The Group has recognized the gross liability and the corresponding reciavable due from the Contract Debtor
as per note 15.
The cash flow forecast for the coming years on the on the derivatives on the accompanying
consolidated financial position as of 30 September 2021 are:
Cash
Flow
Instruments
of
Derivative
Cash Inflow
Cash Outlflow
30 Sep
2022
£’000
1,397
4,480
30 Sep
2023
£’000
9,126
22,448
30 Sep
2024
£’000
7,127
13,353
30 Sep
2025
£’000
Total
£’000
4,697
7,836
22,347
48,117
Net Liability on Swap Contract
3,083
13,322
6,226
3,139
25,770
Specific valuation technique used to value the financial instruments includes fair value measurement derived
from inputs other than quoted prices included within Level 1 of fair value hierarchy valuation, that are
observable for the instrument either directly or indirectly (see accounting policy for Derivatives Instrument).
The carrying value of the financial instrument approximates their fair value and was valued using Level 2 fair
value hierarchy valuation. The fair value has been determined with reference to commodity yield curves, as
adjusted for liquidity and trading volumes as at the reporting date supplied by the Group’s derivative partner,
Mercuria Energy Trading. Management also assessed the valuation of these swaps using publicly available
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
forward pricing curves, which indicated a loss of £22.72 million. Management considered that the value
provided by Mercuria Energy Trading best represented the fair value of these arrangements as the forward
pricing curves did not take into account other market conditions. This is a key estimate and has been
disclosed in note 4.
The nature of these arrangements in the present environment is such that material fluctuations in the value
of the derivatives are occurring on a daily basis. Wholesale gas prices have increased substantially, but
remain highly volatile, in February and March 2022 and as a result, the loss on these contracts has also
increased significantly.
The loss on these contracts at 30 September 2021 represents the forecast spot-price value of the gas to be
extracted against the value fixed to be provided to the Group. Under projected gas production volumes,
these arrangements will fix the amount payable to the group for the contracted volumes, with any excess of
volume being able to be sold at the available spot price.
In the event that the Group does not meet its production timetable, the swaps will crystallise as a liability at
the dates at the proposed periods of gas production in the swap agreements.
There were no commodity swaps in 2020.
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
25. Financial instruments
The Group’s principal financial instruments comprise cash and cash equivalents, trade and other receivables,
derivative instruments 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:
30 September 2021
Asset
Trade and other receivables
Cash and cash equivalents
Total financial assets
Liabilities
Trade and other payable
Convertible loan notes
Lease liabilities
Debt Financing
Derivative Liability
Total financial liabilities
30 September 2020
Asset
Trade and other receivables
Cash and cash equivalents
Total financial assets
Liabilities
Trade and other payable
Convertible loan notes
Lease liabilities
Total financial liabilities
Financial
Asset at
amortised
cost
Financial
Liabilities at
amortised
cost
Financial
Liabilities at
fair value
through
profit and
loss
16,429
6,160
22,589
-
-
-
-
-
-
-
-
-
1,068
1,319
12
12,000
-
14,399
Financial
Asset at
amortised
cost
Financial
Liabilities at
amortised
cost
-
-
-
25,770
25,770
Financial
Liabilities at
fair value
through
profit and
loss
609
1,852
2,461
-
-
-
-
-
-
-
1,406
1,377
35
2,818
-
-
-
-
-
-
-
TOTAL
16,429
6,160
22,589
1,068
1,319
12
12,000
25,770
40,169
TOTAL
609
1,852
2,461
1,406
1,377
35
2,818
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (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 15, the Group recognised an impairment
provision of £104,000 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, loan facility 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.
Interest rate sensitivity
The following table demonstrates the sensitivity to reasonably possible changes in the interest add-on rate
for the £12 million loan with the principal interest rate held constant at 12%. (Also see Note 23). The add-on-
interest rate is linked to SONIA (Sterling Over Night Indexed Average) and had an immaterial impact of £200.
Increase/decrease in add-on Interest rate
+ 10%
- 10%
Foreign currency exchange risks
Increase / (decrease)
30 September
2020
£
2021
£
-
-----------------------------------------------------------
-
-----------------------------------------------------------
-
-----------------------------------------------------------
-
-----------------------------------------------------------
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
2021, the GBP cash balance held denominated in USD was £34,733 (2020; £36,000).
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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
Lease liabilities
Within one month
Within two to three months
Within four to six months
Within six to twelve months
More than twelve months
.
Commodity price risk
2021
£’000
2020
£’000
617
1,357
-----------------------------------------------------------
1,974
==================================================
1,404
60
-----------------------------------------------------------
1,464
==================================================
2021
£’000
2020
£’000
-
-
-
-
12
-----------------------------------------------------------
12
==================================================
2
4
6
12
11
-----------------------------------------------------------
35
==================================================
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
There is no revenue recorded for 2021. The analysis is based on the assumption that the crude oil price moves
10% resulting in a change of US$7/bbl for 2020, 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.
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Increase/decrease in crude oil prices
Average spot price increased by 10%
Average spot price decreased by 10%
Increase/decrease in gas prices
Average spot price increased by 10%
Average spot price decreased by 10%
Increase / (decrease) in profit
before tax for the year ended
30 September
2021
£’000
-
-----------------------------------------------------------
-
-----------------------------------------------------------
2020
£’000
7
-----------------------------------------------------------
(7)
-----------------------------------------------------------
Increase / (decrease) in derivative
loss or gain for the year ended
30 September
2021
£’000
(1,314)
-----------------------------------------------------------
1,314
-----------------------------------------------------------
2020
£’000
-
-----------------------------------------------------------
-
-----------------------------------------------------------
26.
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 22)
Loan payable (note 23)
Net debt
2021
£’000
6,160
(1,433)
(12,000)
-----------------------------------------------------------
(7,273)
==================================================
2020
£’000
1,852
(1,377)
-
-----------------------------------------------------------
475
==================================================
Cash and
cash
equivalents
£’000
Convertible
loan note
Facility
Loan
Total
£’000
£’000
£’000
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 as at 1 October 2020
Cash flow
Issue of new equity (net proceeds)
Interest on convertible loan note
Facility Loan
3,419
(4,238)
813
2,400
-
(542)
-
1,852
(9,818)
2,126
-
12,000
-
-
-
(2,294)
400
542
(25)
(1,377)
-
-
(56)
-
Net debt as at 30 September 2021
6,160
(1,433)
-
-
-
-
-
-
-
-
-
-
-
(12,000)
(12,000)
3,419
(4,238)
813
106
400
-
(25)
475
(9,818)
2,126
(56)
-
(7,273)
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
27.
Lease asset 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
Leased assets
Balance
Depreciation charged
Total
The maturity of the lease liability is as follows:
Leased liabilities
Balance
Payments
Total
Leases which expire:
Not later than one year
Later than one year and not later than five years
More than five years
Total
28.
Commitments
As at 30 September
2020
2021
£’000
£’000
35
(24)
-----------------------------------------------------------
11
==================================================
166
(131)
-----------------------------------------------------------
35
==================================================
As at 30 September
2021
£’000
2020
£’000
35
(23)
-----------------------------------------------------------
35
-
-----------------------------------------------------------
12
35
-
12
-
-----------------------------------------------------------
12
==================================================
24
11
-
-----------------------------------------------------------
35
==================================================
At 30 September 2021, the Group had contractual capital commitments of the amount of £2.973m (2020
£nil) in respect to the Group’s Saltfleetby development activities.
29.
Subsequent events
On 20 October 2021, the Company agreed an extension of the £1.4m Convertible Loan Note repayable on 17
April 2022 by a further 12 months until 17 April 2023. The Note, which was otherwise convertible at 1p per
ordinary share from 17 February 2022, will now only be convertible at the earliest of 17 July 2022
representing a six month extension. Additionally, the Company retains the right to repay the Note at any time
with the additional grant of warrants at 1.3p per share as detailed in the RNS of 20 April 2020. All other terms
of the Note remain the same. In consideration for this extension the Company shall issue and allot to the
Noteholder 11,200,000 ordinary shares.
On 3 December 2021, the company issued 115,384,611 shares at 0.065 pence per share, raising gross
proceeds of £750,000.
On 6 January 2022, the company announced that it had received a series of approaches with interest in, and
in one instance an indicative non-binding offer for, some or all of the Company’s 51% interest in the
Saltfleetby Gas Field asset which was under consideration. Additionally, the Board had received indications
that certain parties may be interested in making an offer for the Company. As such, the Board has been
considering options for the Company with its advisers. Whilst not wishing to be distracted from its immediate
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
aims it must meet its responsibility to shareholders to evaluate any proposals received and was therefore
entering into a Strategic Review period. These options include, but are not limited to, a sale of the Company
which will be conducted under the framework of a "formal sale process" in accordance with the Takeover
Code.
On 4 February 2022, the company issued 175,000,000 shares at 0.08 pence per share, raising gross proceeds
of £1,400,000.
On 10 March 2022, and further to our announcement of 9 June 2021, the Company announced that it had
reached a settlement agreement with a financial services provider with whom it was in dispute. As part of
this settlement agreement the Company has issued 39,200,000 ordinary shares of 0.002 pence each
representing approximately 3% of the enlarged issued and allotted share capital of the Company. The Board
considers this settlement to be in the best interests of all shareholders as it will avoid further and considerable
expenditures on legal costs and the considerable utilisation of management time.
75
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 reserves
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
TOTAL EQUITY AND LIABILITIES
Note
2021
£’000
2020
£’000
5
6
8
8
8
7
7
15,336
15,336
12,830
12,830
101
26
127
174
1,531
1,705
15,463
14,535
1,933
23,605
1,500
106
(13,362)
1,430
21,982
1,500
106
(12,182)
13,782
12,836
362
362
1,319
1,319
380
380
1,319
1,319
1,681
1,699
15,463
14,535
The loss for the Company for the year ended 30 September 2021 was £1,362,000 (2020: £1,336,000)
The note on page 78 to 81 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
76
COMPANY STATEMENT OF CHANGES IN EQUITY
Balance at 1 October 2019
Loss for the year
Total comprehensive income for the year
Transaction with owners
Issue of shares
Less: issuance costs
Issue of convertible loan notes
Granted of share options
Share
capital
£’000
1,082
Share
premium
£’000
21,117
Merger
relief
reserve
£’000
1,500
Loan
note
reserves
£’000
-
Accumulated
loss
£’000
(10,876)
Total
equity
£’000
12,823
-
-
348
-
-
-
-
-
1,051
(186)
-
-
-
-
-
-
-
(1,336)
(1,336)
(1,336)
(1,336)
-
-
-
30
1,399
(186)
106
30
106
-
Balance at 30 September 2020
1,430
21,982
1,500
106
(12,182)
12,836
Loss for the year
Total comprehensive income for the year
Transaction with owners
Issue of shares
Less: issuance costs
Granted of share options
-
-
503
-
-
-
-
1,770
(147)
-
-
-
-
-
-
(1,362)
(1,362)
(1,362)
(1,362)
-
-
182
2,273
(147)
182
Balance at 30 September 2021
1,933
23,605
1,500
106
(13,362)
13,782
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 78 to 81 form part of these of financial statements.
77
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.
78
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 £1,362,000 (2020: £1,336,000).
4.
Staff costs
There are four employees and five directors 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 2019
Movement of the intercompany loan for the year
At 30 September 2020
Movements of the intercompany loan for the year
Allowance for Impairment
At 30 September 2021
Cost of
investment
£’000
228
-
-----------------------------------------------------------
228
-
-
-----------------------------------------------------------
228
==================================================
Loan to group
undertakings
£’000
12,212
390
-----------------------------------------------------------
12,602
2,506
-
-----------------------------------------------------------
15,108
==================================================
Total
£’000
12,440
390
-----------------------------------------------------------
12,830
2,506
-
-----------------------------------------------------------
15,336
==================================================
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, which 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.
79
NOTES TO THE COMPANY FINANCIAL STATEMENTS
6.
Trade and other receivables
Trade receivables
Vat recoverable
Other receivables
7.
Trade and other payables
Trade payables
Amounts due to group undertakings
Other taxation
Convertible loan note
Other payables
2021
£’000
2020
£’000
-
-
101
-----------------------------------------------------------
101
==================================================
96
11
67
-----------------------------------------------------------
174
==================================================
2021
£’000
2020
£’000
121
100
45
-
96
-----------------------------------------------------------
362
==================================================
110
100
46
58
66
-----------------------------------------------------------
380
==================================================
The carrying amount of trade and other payables approximates to their fair value.
Due after more than one year
Convertible loan note
2021
£’000
2020
£’000
1,319
===================================================
1,319
======================================================
8.
Share capital
The movement of share capital are set out in the note 16 to the consolidated financial statements.
As at 30 September 2021 the total issued ordinary shares of the Company were 966,502,268 (2020 –
715,158,324).
9.
Subsequent events
On 20 October 2021, the Company agreed an extension of the £1.4m Convertible Loan Note repayable
on 17 April 2022 by a further 12 months until 17 April 2023. The Note, which was otherwise convertible
at 1p per ordinary share from 17 February 2022, will now only be convertible at the earliest of 17 July
2022 representing a six month extension. Additionally, the Company retains the right to repay the Note
at any time with the additional grant of warrants at 1.3p per share as detailed in the RNS of 20 April
2020. All other terms of the Note remain the same. In consideration for this extension the Company
shall issue and allot to the Noteholder 11,200,000 ordinary shares.
On 3 December 2021, the company issued 115,384,611 shares at 0.065 pence per share, raising gross
proceeds of £750,000.
On 6 January 2022, the company announced that it had received a series of approaches with interest
in, and in one instance an indicative non-binding offer for, some or all of the Company’s 51% interest
80
NOTES TO THE COMPANY FINANCIAL STATEMENTS
in the Saltfleetby Gas Field asset which was under consideration. Additionally, the Board had received
indications that certain parties may be interested in making an offer for the Company. As such, the
Board has been considering options for the Company with its advisers. Whilst not wishing to be
distracted from its immediate aims it must meet its responsibility to shareholders to evaluate any
proposals received and was therefore entering into a Strategic Review period. These options include,
but are not limited to, a sale of the Company which will be conducted under the framework of a "formal
sale process" in accordance with the Takeover Code.
On 4 February 2022, the company issued 175,000,000 shares at 0.08 pence per share, raising gross
proceeds of £1,400,000.
On 10 March 2022, and further to our announcement of 9 June 2021, the Company announced that it
had reached a settlement agreement with a financial services provider with whom it was in dispute. As
part of this settlement agreement the Company has issued 39,200,000 ordinary shares of 0.002 pence
each representing approximately 3% of the enlarged issued and allotted share capital of the Company.
The Board considers this settlement to be in the best interests of all shareholders as it will avoid further
and considerable expenditures on legal costs and the considerable utilisation of management time.
81
Contact
Angus Energy Plc
www.angusenergy.co.uk
Managing Director:
George Lucan
T: 0208 899 6380
info@angusenergy.co.uk