Annual Report
2021-2022
Contents
Contents
Officers and Advisors
Chairman’s Statement
Strategic Report
Corporate Governance Statement
Audit Committee Report
Directors’ Remuneration Report
Board of Directors
Directors’ Report
Statements of Directors’ Responsibilities
Stakeholder Engagement
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Company Statement of Financial Position
Company Statement of Changes in Equity
Notes to the Company Financial Statements
2
4
6
18
25
27
29
30
31
34
38
45
46
47
48
49
79
80
81
1
Officers and Advisers
Officers and Advisors
Directors
George Lucan (Chief Executive Officer)
Patrick Clanwilliam (Non-Executive Chairman)
Carlos Fernandes (Finance Director)
Andrew Hollis (Technical Director)
Cameron Buchanan (Non-executive Director, resigned 4 October 2022)
Paul Forrest (Non-Executive Director, appointed 18 July 2022)
Krzysztof Zielicki (Non-Executive Director, appointed 4 October 2022)
Richard Herbert (Non-Executive Director, appointed 24 January 2023)
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
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
3
Chairman’s Statement
Chairman’s statement
Dear Fellow Shareholders,
It is my pleasure to present you with the Annual Report of Angus Energy plc (the “Company”
or “Angus Energy”) with its subsidiary undertakings (the “Group”) for the year ended 30
September 2022.
It’s been another busy year for Angus, with the acquisition of Saltfleetby Energy Limited that
culminated with first gas from Saltfleetby delivered at the end of August 2022. With the
completion of the onsite processing facilities, the Company has enjoyed several months of
steady gas production.
With oil and gas prices looking to remain high for the foreseeable future, Angus will look to
maximise its portfolio by turning its attention to the evaluation of the Southern Lobe at
Saltfleetby which has a further 20 BCF of 2C contingent resources. Geologically the Saltfleetby
gas field also has great gas storage potential. Energy security is high on the Governments
agenda and we will continue to work with all stakeholders to assess the viability of storage
opportunities either now or at the end of field life. The Company will focus on resuming
production from its oil assets.
Angus remains focused on the energy transition narrative and as such will accelerate its
geothermal developments which is targeted on the acquisition and origination of new further
gravimetric data, and toward a seismic program, in the south west of England.
Financial and Statutory Information
Revenue from oil and gas production during the year is £3.142m (2021: NIL) on production of
a gross 1,378 bbls of oil and 1,273,994 Therms of natural gas (2021: NIL). This was the result
of resuming production from the Brockham Oil Field and at the Saltfleetby Gas Field.
The Group recorded a loss of £111.947m, which included a derivative loss of £110.309m in
relation to the derivative instrument, resulting in an adjusted operating loss of £1.638m
(2021: loss of £2.455m). The derivative loss is based on future production and calculated using
forward gas prices as at 30 September 2022. The derivative will be realised to a profit or loss
when the payments under the derivative instruments become due (see note 25).
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. In line with starting gas production the administrative
costs have increased by £0.701m to £2.619m (2021: £1.918m).
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Chairman’s Statement
Outlook
With gas production at Saltfleetby increasing the Company looks forward to positive
cashflows for the year ahead.
The Board will focus on maximizing the potential from our existing portfolio, including its
geothermal projects and accelerate its evaluation of new projects to complement production
from Saltfleetby.
Patrick Clanwilliam
Chairman
7 March 2023
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Strategic Report
Operating Review
On 30 August 2022, Angus successfully exported its first commercial sales gas from Saltfleetby
Gas Field to the national grid. In December 2022, Angus instructed Oil Field International
(“OIL”) to review the early performance of the Saltfleetby gas reservoir since production was
restarted on 25th August 2022, after a five-year shut in. We requested that OIL consider
whether in light of this new information, the gross reserves and forecast production profiles
contained in OIL’s CPR of Effective Date October 1st, 2021 were still valid.
Despite the delays to installing the second compressor and the drilling of SF7, OIL concluded
there is no reason to modify the sales gas production profiles or gross gas reserves as reported
in October 2021.
Table 1 Sales Gas Production August 30th to Dec 7th, 2022 (from two wells)
Month
Avg Sales
Gas
Flowrate
Recorded Gas Sales for
first 100 days
CV
MMSCFD
MM Th
MMSCF
BTU/SCF
2 Wells on production during period
Aug 30-31 2022
Sep-22
Oct-22
Nov-22
Dec 1-7 2022
0.6
3.8
5.4
6.0
5.8
Total 100 days
5.04
0.01
1.26
1.86
1.99
0.45
5.56
1
115
168
180
40
504
1107
1099
1104
1107
1106
1104
The drilling of the SF7v sidetrack at the Saltfleetby Field has now concluded, reaching a total
measured depth of 2746 meters in the Westphalian 1D reservoir. The well bore has been
secured with 4.5” liner to that depth, slotted across the reservoir. Completion operations
have commenced.
Following the setting of the well completion production tubing, well cleanup operations will
be conducted in the middle of March once coiled tubing equipment becomes available. Flow
testing will follow shortly afterward and, assuming coiled tubing services are available at the
scheduled date, the additional flow from this well should be available for export from 1 April.
The Company will announce results of the flow test once complete.
The Company is confident from the electric logging, mud logging and gas shows in the
reservoir section that the well will be a successful producer. Furthermore, the well is drilled
alongside and replicates what was previously the best producing well in the field.
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Strategic Report
Wet commissioning of the second compressor began at the end of February and we expect
successful full running in the coming days and are confident that the unit will be available for
duty well before 1 April.
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 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%. Presenting 100% of the
field values:
• A conservative case, or P90, NPV10 of £63.3 million (Pre-Tax)
• A mid-case, or P50, NPV10 of £95.6 million (Pre-Tax)
Alternatively expressed as estimates of net future cashflows, but without discounting, can be
summarised as follows:
• A conservative or P90 sum of future cashflows to Angus of £82 million (Pre-Tax)
• A mid-case, or P50, sum of future cashflows to Angus of £147.7 million (Pre-Tax)
In summary the CPR estimates production giving rise to gross field revenues, before costs etc.
on a mid-case basis of £230 million (previously £141 million). 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.
Under the heading “Review of activities” below we provide a more in-depth summary of
operational activities. I again repeat my statement of last year that our first concern as a
Group must be for the safety of our staff, contractors, the public at large and the environment
on which we rely on. It is with pleasure that I report that all operations were performed
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 North Sea
Transition Authority (“NSTA”), 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.
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Strategic Report
Review of activities
Saltfleetby
In August 2022, the Company had completed the installation of the onsite processing facilities
and the first compressor. With all the necessary NSTA, EA and HSE permissions in place,
commissioning of the Saltfleetby Gas Field commenced, with first sales gas exported to the
national grid on 30 August 2022.
Spudding of the SF7 sidetrack began on 28 October 2022 and completed on 28 February 2023.
The sidetrack reached a measured depth of 2,746 meters in the Westphalian 1D reservoir.
Wet commissioning of the second compressor began the week commencing 20 February
2023 and we expect successful full running in the coming days and are confident that the unit
will be available for duty well before 1 April 2023.
The Company also hedged approximately 50% of the Company's 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. Based on the acquired land gravity and radiometrics
as well as the desk top study on overall project economics the company has produced a
detailed Geothermal Development Plan.
The Geothermal Development Plan is split over 2 focused areas, with each area’s work
program broken down into 4 Phases. The program kicks off with further 2D/3D gravity and
heat flow modelling, a comprehensive seismic survey, shallow drilling and finally a third party
Feasibility Study.
Phase 1 is slated to commence in H1 2023 with the work to include date review and
processing, structural mapping, depth estimation and heat flow analysis.
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.
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Strategic Report
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 disagreed with their opinion and an application to appeal had 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.
On 14 February 2023, our appeal against the decision by West Sussex County Council to refuse
permission for an extended well test at the Balcombe oil site was upheld. As a consequence
of the decision by the Planning Inspectorate, the Company is now capable of pursing this well
test subject to satisfaction of planning conditions noted in the Appeal Decision as well as the
determination of the variation to the Environmental Permit by the Environment Agency which
we understand to be imminent.
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
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
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Strategic Report
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 center 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 NSTA which was approved.
Recompletion of the BR X4Z well as a Portland producer is slated for the end of Q2 2023 which
will increase production to circa 150 bopd.
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.
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Strategic Report
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 North Sea Transition Authority (“NSTA”) 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 incidents during the year.
Community
Angus Energy seeks and maintains positive relationships with its local communities. We
achieve this through our various forms of communication which include community liaison
meetings, social media updates, RNS’s and Investor Q & A sessions.
In general, we are guided by the following principles:
Engagement with stakeholders at all stages of development
Proactively address local concerns
• Open and honest dialogue
•
•
• Actively minimise impact on our neighbours
• Adherence to a strict health and safety code of conduct
On 4 June 2018, the Group established the Bruce Watt Memorial Scholarship, a yearly
scholarship fund of £10,000 per year to support students from Bognor Regis and the
surrounding community to undertake further academic studies beyond secondary school.
Currently there have been 10 recipients of the Scholarship award.
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Strategic Report
Section 172 Statement
Under Section 172, Directors have a duty to promote the success of the Company for the
benefit of the members as a whole and, in doing so, they should have regard to specified
areas that relates, by and large, to wider stakeholder interest. Further details of these areas
have been enumerated in Stakeholders Engagement section on page 33.
Financial Review
The Group began the period with the following interests: 80% of Brockham (PL235), 80% of
Lidsey (PL241), 25% of Balcombe (PEDL244) and 51% of Saltfleetby Gas Field (PEDL005).
The Group had a cash balance of £6.160m as at 30 September 2021.
During the period, the Company issued 897,748,245 ordinary shares for cash, raising gross
proceeds of £8,825,000. Please refer to note 17 for a detailed breakdown.
During the period the Company also issued 3,461,538 at 0.65 pence per share, 8,750,000 at
0.8 pence per share, 5,555,555 at 0.9 pence per share, 20,250,000 at 1 pence per share,
3,068,182 at 1.1 pence per share, 61,398,568 at 1.2 pence per share, 30,462,639 at 1.35 pence
per share, 29,341,672 at 1.5 pence per share and 18,025,597 at 1.663 pence per share. They
were issued in relation to an exercise of Company Warrants. Please refer to note 18 for a
detailed breakdown.
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
remained the same. In consideration for this extension. On 4 November 21, the Company
issued and allot to the Noteholder 11,200,000 ordinary shares.
On 16 March 2022, the company issued 39,200,000 ordinary shares at 0.8 pence per share.
The shares were used to settle litigation with a financial provider (not being the Company’s
broker or Nomad) in dispute relating to the Saltfleetby Loan Facility.
On 24 May 2022, the Company executed a share purchase agreement to acquire the entire
issued share capital of Saltfleetby Energy Limited from Forum Energy Services Limited, giving
the Company 100% ownership of the Saltfleetby Gas Field. The total effective consideration
payable pursuant to the SPA is the sum of £14,052,000.
On 24 May 2022, the company issued 91,000,000 ordinary shares at 1.0989 pence per share.
These were consideration shares paid for the acquisition of Saltfleetby Energy Limited.
On 24 May 2022, and in relation to the acquisition of Saltfleetby Energy Limited, the Company
issued 546,000,000 ordinary shares at 1.2 pence per share.
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Strategic Report
On 24 May 2022, and in relation to the acquisition of Saltfleetby Energy Limited, the Company
issued 273,000,000 ordinary shares at 1.0989 pence per share, raising gross proceeds of
£3,000,000.
On 24 May 2022, the Company issued 5,000,000 ordinary shares at 0.9429 pence per share.
The shares were issued to the Lenders or their representatives in lieu of a cash facility fee
pursuant to the Company’s Saltfleetby Loan Development Facility at or around the first
anniversary of the Loan Completion.
On 12 July 2022, the Company issued 27,300,000 ordinary shares at 1.0989 pence per share.
The shares were fee shares relating to the Direct Subscription and acquisition of Saltfleetby
Energy Limited.
The Group had cash balance of £0.747m at the end of reporting year.
The Group generated £3.142m revenue from oil and gas production during the year (2021:
NIL).
The Group recorded a loss of £111.947m which included a derivative loss of £110.309m in
relation to the derivative instrument, resulting in an adjusted loss of £1.638m (2021: loss of
£2.455m). The derivative loss is based on future production and calculated using forward gas
prices as at 30 September 2022. The derivative will be realised to a profit or loss when the
payments under the derivative instruments become due (see note 25). For the year under
review, the administrative costs increased by £0.701m to £2.619m (2021: £1.918m).
The Group’s overall financial objectives are to increase revenue, return to profitability and
enhance the asset base supporting the business. In order to monitor its progress towards
achieving these objectives, the Group has set a number of key performance indicators, which
deal predominately with revenue, profitability, margin and cash flow as above.
Governance, Compliance and Shareholder Relations
The Board consists of a Chief Executive, Finance and Technical Director supervised by three
experienced 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 23 employees, including
management. The Company also relies on third party experienced contractors.
We have appointed three 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
13
Strategic Report
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 and gas; oil is priced in US dollars and gas is priced in
UK pounds, 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 and gas negotiate sales
contracts directly with oil and gas purchasers, with the result that the market determines the
price of oil and gas. The price depends in part on oil and gas quality, prices of competing fuels,
distance to market, the value of refined products and the supply/demand balance. The
marketability and prices of oil and gas 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 for its gas product to protect it from any downside market risk (see note 25 for
further details).
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
14
Strategic Report
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.
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 £0.747m as at 30 September 2022 subsequent to the
significant cash movements described during the reporting period.
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Strategic Report
On 13 October 2022, the Company issued 127,400,127 ordinary shares at 1.0989 pence per
share. They were issued in relation to the exercise of Company Warrants.
On 24 October 2022, the Company agreed the grant of 165.5 million share options under the
Company's existing Employee Incentive Scheme to Directors and other staff. The share
options have an exercise price of 2 pence per share (being a premium of 23% to the closing
price on 21 October 2022) and vest as to 100%, upon the closing mid‐market price of the
Ordinary Shares being 3 pence or above (being 50% above the Exercise Price). The options
have a 4 year term from the date of issue.
On 28 October 2022, the Company issued 10,193,759 ordinary shares at varying prices of
1.0989 pence per share, 1.2 pence per share, 1.35 pence per share and 1.5 pence per share.
They were issued in relation to the exercise of Company Warrants.
On 02 November 2022, the Company issued 36,599,864 ordinary shares at 1.0989 pence per
share. They were issued in relation to the exercise of Company Warrants.
On 21 November 2022, the Company issued 312,000 ordinary shares at varying prices of 1.35
pence per share and 1.5 pence per share. They were issued in relation to the exercise of
Company Warrants.
On 8 December 2022, the Company issued 500,000 ordinary shares at varying prices of 1.2
pence per share, 1.35 pence per share and 1.5 pence per share. They were issued in relation
to the exercise of Company Warrants.
On 19 December 2022 the Company announced that it had successfully raised gross proceeds
of approximately £7 million by means of a placing to certain institutional and other investors
to raise approximately £2 million, (the "Placing") and a direct subscription to raise
approximately £5 million (the "Subscription") (together, the "Fundraising"), in each case at a
price of 1.65 pence per share (the "Fundraising Price").
The Fundraising was conducted in two tranches, with the initial tranche of new Ordinary
Shares under the Fundraising (comprising in aggregate 341,219,000 Ordinary Shares, being
the shares issued under the Placing and 226,219,000 shares issued under the Subscription)
being issued under the Company's pre-existing share capital authorities, and the second
tranche of 89,781,000 new Ordinary Shares ("Conditional Subscription"), together with
311,250,000 warrants in respect of the entire Fundraising ("Warrants"), being subject to
shareholders passing the certain resolutions ("Resolutions") at a General Meeting ("GM").
In addition, and conditional upon the passing of the Resolutions, Forum Energy Services Ltd
("Forum") has agreed to accept the allotment and issue of 60,606,061 new Ordinary Shares
(the "Forum Share Issue") at the Fundraising Price (together with the issue of 30,303,030
warrants on the same basis as applicable to the Fundraising ("Forum Warrants")) in
settlement of the Company's obligation to pay certain deferred consideration of £1,000,000
to Forum in accordance with the Saltfleetby SPA as announced on 24 May 2022.
16
Strategic Report
As announced on 2 March 2023, the Board resolved to make the following changes, subject
to final terms being agreed:
Richard Herbert has agreed to assume the role of Chief Executive Officer in charge of day to
day management of the Company and responsibility for the ongoing development of the
management team. Richard's background at the helm of independent oil and gas companies,
such as Frontera Energy, combined with his experience as Head of Exploration at BP, his
particular experience in the UK onshore makes him the ideal candidate for strengthening the
execution of the Company's strategy. George Lucan will take up the role of Executive
Chairman with particular responsibility for stakeholder and governmental relations and
strategic direction. Andrew Hollis will remain Technical Director of the Company but will be
stepping down from his Board responsibilities. Paddy Clanwilliam will step down as Non-
Executive Chairman to become Senior Independent Non-Executive Director, alongside
Krzysztof Zielicki, who remains our second Independent Non-Executive Director.
Outlook
With production at Saltfleetby increasing, the Company looks forward to achieving positive
operational cashflow. 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
7 March 2023
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 10.
The Company is focused around 3 key strategic goals:
increase production and recovery from its existing asset portfolio;
•
• grow the asset portfolio through select onshore development and appraisal projects;
• actively manage costs and risks through operational and management control of the
entire process of exploring, appraising and developing its assets.
The Management team actively evaluates projects that simultaneously de-risk the current
portfolio and create long term shareholder value. Projects are evaluated based on many
characteristics to mitigate risk to our current activities. They include, but are not limited to,
alignment with the Company’s core competencies, geography, time horizon and value
creation. Further, a core component of the Company’s activities 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 6 to 17.
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 manner
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 it operates in.
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 11 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 Chief Executive Officer, 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 three 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, considering 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 behaviors
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 37 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 22-24.
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, the Board of the Group consisted of three Executive Directors and three non-
Executive Directors.
The Board met on 12 occasions during the year to 30
September 2022. The table below sets out the Board meetings
held by the Company for the financial year ended 30
September 2022 and attendance of each Director:
Board
meetings
Executive Directors
George Lucan
Carlos Fernandes
Andrew Hollis
Non-Executive Directors
Patrick Clanwilliam
Cameron Buchanan
Paul Forrest
[12/12]
[12/12]
[12/12]
[10/12]
[10/12]
[01/12]
22
Corporate Governance Statement
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.
Audit committee
The audit committee comprised of Paul Forrest, Carlos Fernandes and Patrick Clanwilliam,
with Paul Forrest 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.
Remuneration committee
The remuneration committee comprised of Paul Forrest, Patrick Clanwilliam and Krzysztof
Zielicki, with Paul Forrest 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 Paul Forrest
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.
23
Corporate Governance Statement
AIM Rules compliance committee
The AIM Rules compliance committee comprised of George Lucan, Carlos Fernandes 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
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
7 March 2023
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.
Paul Forrest
Chairman – Audit Committee
7 March 2023
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 18 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:
2022
George Lucan
Andrew Hollis
Carlos Fernandes
Cameron Buchanan
Patrick Clanwilliam
Paul Forrest
2021
George Lucan
Andrew Hollis
Carlos Fernandes
Cameron Buchanan
Patrick Clanwilliam
Salary
£’000
127
127
120
41
75
7
---------------
497
===========
Salary
£’000
127
127
120
45
75
---------------
494
===========
Termination
payment
-
-
-
30
-
-
---------------
30
===========
Termination
payment
-
-
-
-
-
--------------
-
==========
Share based
payment
£’000
-
-
-
-
-
-
--------------
-
==========
Share based
payment
£’000
7
7
7
-
-
--------------
21
==========
Total
£’000
127
127
120
71
75
7
-------------
527
=========
Total
£’000
134
134
127
45
75
-------------
515
=========
The Remuneration Committee met three times during the year to review the scale and
structure of the executive directors’ and senior employees’ remuneration.
Paul Forrest
Chairman – Remuneration Committee
7 March 2023
28
Directors’ Remuneration Report
George Lucan
Chief Executive Officer
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.
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.
Paul Forrest
Non-Executive Director
Paul Forrest has nineteen years’ experience on the natural resources sector, including ten
years in offshore oil and gas in the Philippines, and more recently seven years UK onshore oil
and gas culminating in the acquisition of the Saltfleetby Project in 2019. He is the former
Financial Controller of AIM traded Forum Energy Plc and Celtic Resources Plc.
Krzysztof Zielicki
Non-Executive Director
Krzysztof has over four decades of experience in the oil and gas industry. He has held senior
leadership positions in several Energy Majors, including BP, TNK/BP and Rosneft, where he
was Vice President for M&A and Strategy.
29
Directors’ Remuneration Report
Richard Herbert
Non-Executive Director
Richard is a geologist by profession, with over 42 years in the upstream oil and gas business.
His previous roles include COO Exploration at BP, Executive Vice-President for Technology at
TNK-BP in Russia, Vice-President of Exploration for Talisman Energy in Alberta, Canada and
CEO of Canadian independent Frontera Energy Corporation, operating in Latin America. He
was formerly General Manager of the Wytch Farm oil field in Dorset and is currently a non-
executive director of Norwegian service company PGS.
30
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 2022.
Results and Dividends
The Group recorded a loss after tax of £111.947m, which included a derivative loss of
£110.309m in relation to the derivative instrument, resulting in an adjusted loss of £1.638m
(2021: loss of £2.455m). The derivative loss is based on future production and calculated
using forward gas prices as at 30 September 2022. The derivative will be realised to a profit
or loss when the payments under the derivative instruments become due. 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 (appointed on 29 January 2019)
Carlos Fernandes (appointed on 6 March 2019)
Andrew Hollis (appointed on 6 March 2019)
Non-Executive Director
Patrick Clanwilliam (appointed on 6 March 2019)
Cameron Buchanan (appointed on 18 October 2016, resigned 4 October 2022)
Paul Forrest (appointed 18 July 2022)
Krzysztof Zielicki (appointed 4 October 2022)
Richard Herbert (appointed 24 January 2023)
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 £33,300 (2021 – £34,500).
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 17 to the financial statements.
31
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:
Forum Energy Limited
Kemexon Ltd
Aleph Fin C
Percentage of
shareholding
15.17%
9.00%
7.90%
Share options
There were no Share Options issued during the reporting period. See also note 18 for further
details.
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 26 to the financial statements.
Employees
The Group had 23 employees as at 30 September 2022 (2020: 13). Employees are encouraged
to directly participate in the business through an Enterprise Management Incentive Scheme,
which set out in note 18 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 31.
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
Managing Director
32
Statement of Directors’ Responsibilities
Statement of Director’s Responsibilities
The Directors are responsible for preparing the Strategic Report, Directors’ Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for
each financial year. The Directors are required by the AIM Rules of the London Stock Exchange
to prepare Group financial statements in accordance with UK adopted 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.
33
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 10 and
11 and pages 35 to 37. Review of the key decisions and issues discussed in Board meetings
and by various committees in 2022 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.
34
Statement of Directors’ Responsibilities
Highlights include:
Investor conference calls
•
• Online interviews
•
• Negotiating an extension of the £1,400,000 Convertible Loan Note issued on 20 April
Investor questions regularly answered on the company’s website
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:
• Acquisition of Saltfleetby Energy Limited with consideration paid in shares and
deferred consideration from gas sales (see note 30)
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:
• Procurement of equipment for the Saltfleetby development
• Signing offtake agreement for the sale of condensate from Saltfleetby
Workforce
Our current and future success is underpinned by our ability to engage, motivate and adapt
our workforce. Creating the right environment for employees where their various strengths
are recognised and their contributions are valued, helps to ensure that we can deliver our
shared objectives.
35
Statement of Directors’ Responsibilities
Important issues include:
• Group strategy
• Diversity of thinking
• Corporate culture
During 2022, 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:
Identifying and securing new opportunities
• Renewal of Licences
•
• Providing views on upcoming legislation and factors that are important to the industry
• CSR commitments
Angus maintains an open dialogue with the NSTA, 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 acquisition of Saltfleetby Energy Limited by the NSTA
• Successful EA permit received for the restart of production at Saltfleetby
• Approval of the company’s HSE safety case to export gas to the National Grid
Communities & Environment
As a responsible NTSA 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. 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
36
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 2022
• Continued community engagement
• Continued awards through the company’s local scholarship program
37
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 2022, which comprise:
•
•
•
•
•
the Group statement of comprehensive income for the year ended 30 September 2022;
the Group and parent company statements of financial position as at 30 September 2022;
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 in accordance with UK adopted 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 2022 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with UK
adopted international accounting standards 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 as applied to listed
entities, 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.
38
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 September 2022 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.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
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 is £2,200,000 (2021:
£420,000) which is based on 2% of the derivative’s fair value movement of £110.309m. A Specific
materiality for the Group financial statements other than the derivative was determined to be £450,000
based on 3% of Group net assets. The parent company overall materiality is set at £100,000 (2021:
£75,000) 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 £315,000 (2021: £225,000)
for the group and £71,429 (2021: £56,260) 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 £23,000 (2021:
£15,000). 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.
39
Independent Auditor’s Report To The Members of Angus Energy Plc
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we identified. These matters included
those which had the greatest effect on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. We set out below, together with the material uncertainty
related to going concern above, those matters we are identified as key audit 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 and recovery of
Investment in subsidiaries.
At 30 September 2022, the carrying
value of oil & gas production assets
was £80.792 million.
value of
recoverable
the
The
Saltfleetby, 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 assessed the timing of when Saltfleetby was
reclassified from E&E asset to Production asset as a
result of entering gas production during the
financial year.
• Considered
future recoverability of
the
the
Saltfleetby production asset
respect of
recoverability of the parent company’s investment
in subsidiary.
in
We have considered the adequacy of the disclosure to
the financial statements and the work performed by
management including the key judgement and sensitivity
analysis presented in note 4, note 11, and note 5 the
Parent Company’s Investment in subsidiary (pg 82)
respectively.
40
Independent Auditor’s Report To The Members of Angus Energy Plc
Carrying value of exploration and
evaluation (E&E) assets
At 30 September 2022, the
carrying value of exploration and
evaluation assets was £5.572
million.
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.
The Balcombe site is still in the
exploration and evaluation phase
technical and economic
as
feasibility have
to be
established.
yet
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.
cash
after
The recoverable value of these
assets are based on the net
present value of estimated future
the
flow
net
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.
We obtained the Independent pricing curve data (I.C.I.S
Heren) as at 30 September 2022.
We recalculated management’s assessment of the
valuation of the derivative as at 30 September 2022
benchmarked to the I.C.I.S Heren curve.
We discussed the process of valuation with management
and the provider of the gas swap arrangements.
At 30 September 2022, the
carrying value of the gas swap
instrument
derivative financial
was £158.680 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.
41
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.
42
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).
43
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
55 Ludgate Hill
London EC4M 7JW
Date: 7 March 2023
44
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 30 SEPTEMBER 2022
Revenue
Cost of sales
Depletion cost
Gross profit / (loss)
Administrative expenses
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
Note
5
18
6
25
7
9
6
6
2022
£’000
3,142
(581)
(529)
2,032
(2,619)
(811)
(1,398)
(110,309)
(240)
(111,947)
-
2021
£’000
-
(294)
-
(294)
(1,918)
(182)
(2,394)
(13,143)
(61)
(15,598)
-
(111,947)
(15,598)
(111,947)
(15,598)
(111,947)
(15,598)
(111,947)
(15,598)
(111,947)
(15,598)
Earnings per share (EPS) attributable to owners of the parent:
20
Basic and diluted EPS (in pence)
(6.79)
(1.78)
The notes on page 49 to 78 form part of these of financial statements
All amounts are derived from continuing operations.
45
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2022
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
Lease assets
Inventory
Cash and cash equivalents
Total current assets
TOTAL ASSETS
EQUITY
Equity attributable to owners of the parent:
Share capital
Share premium
Merger reserve
Loan note reserve
Accumulated loss
TOTAL EQUITY
Current liabilities
Trade and other payables
Loan payable - current
Derivatives liability
Total current liabilities
Non-current Liabilities
Provisions
Trade and other payables
Loan payable – non current
Derivatives liability
Total non-current liabilities
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Note
2022
£’000
2021
£’000
10
12
11
28
15
15
14
28
16
17
17
19
23
21
24
25
22
21
24
25
27
5,572
80,792
48
-
86,439
4,107
20
33
3
747
4,910
8
13,073
6,534
11
11,117
30,743
5,132
28
-
-
6,160
11,320
91,349
42,063
5,529
38,708
(200)
106
(138,599)
(94,456)
11,154
5,250
86,583
102,987
4,369
52
6,300
72,097
82,818
1,933
23,605
(200)
106
(27,463)
(2,019)
1,974
1,500
3,083
6,557
3,007
1,331
10,500
22,687
37,525
185,805
44,082
91,349
42,063
The notes on page 49 to 78 form part of these of financial statements
The financial statements were approved by the Board of Directors and authorized for issue on 7 March 2023 and were
signed on its behalf by:
George Lucan – Director
Company number: 09616076
46
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 SEPTEMBER 2022
Share capital
£’000
Share
premium
£’000
Merger
reserve
£’000
Loan Note
reserves
£’000
Accumulated
loss
£’000
Total
equity
£’000
Balance at 30 September 2020
1,430
21,982
(200)
106
(12,047)
11,271
Loss for the year
Total comprehensive income
for the year
Transaction with owners
Issue of shares
Less: issuance costs
Grant of share options
‐
-
‐
-
503
‐
‐
1,770
(147)
-
-
-
‐
‐
‐
-
-
-
-
-
(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)
Loss for the year
Total comprehensive loss for
the year
‐
-
‐
-
Transaction with owners
Issue of shares
Less: issuance costs
Grant of share options
3,596
‐
‐
15,615
(512)
-
-
-
‐
‐
‐
-
-
-
-
-
(111,947)
(111,947)
(111,947)
(111,947)
-
-
811
19,211
(512)
811
Balance at 30 September 2022
5,529
38,708
(200)
106
(138,599)
(94,456)
The notes on page 49 to 78 form part of these of financial statements
47
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 30 SEPTEMBER 2022
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
Depletion charge
Lease amortization charges
Depreciation of owned assets
Cash generated/(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
2022
£’000
Year ended 30
September
2021
£’000
(111,947)
(15,598)
110,309
811
683
234
529
35
11
13,143
182
-
61
-
-
7
665
(2,205)
1,860
(5,043)
(2,518)
-
(3,013)
433
(4,785)
-
Net cash flow used in operations
(2,518)
(4,785)
Cash flow from investing activities
Acquisition cost of Saltfleetby Energy Limited
Acquisition of property, plant and equipment
Acquisition of exploration and evaluation assets
Acquisition of oil and gas production assets
10
12
11
(250)
(15)
(12,338)
(276)
-
(4,890)
(131)
Net cash flow from investing activities
(12,879)
(5,021)
Cash flow from financing activities
(Repayment)/drawdown of debt facility
Lease principal repayment
Proceeds from issuance of shares
Net cash flow from financing activities
Net (decrease)/increase in cash & cash equivalents
Cash and cash equivalent at beginning of year
Cash and cash equivalent at end of year
(450)
(30)
10,464
12,000
(12)
2,126
9,984
14,114
(5,413)
6,160
747
4,308
1,852
6,160
The notes on page 49 to 78 form part of these of financial statements
48
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 UK adopted 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 and liabilities which are stated at their
fair value.
3.2
New standards, amendments to and interpretations to published standards not yet effect
The Directors have considered those standards and interpretations, which have not been applied in the
financial statements but are relevant to the Group’s operations, that are in issue but not yet effective and do
not consider that they will have a material impact on the future results of the Group.
3.3
Going concern
The consolidated financial statements have been prepared on a going concern basis. The Group made a loss
for the year of £111.947 million which included a derivative loss of £110.309 million for the derivative
instrument resulting in an adjusted loss of £1.638 million (2021: loss of £2.455 million) and recorded net cash
outflow used from operating activities of £1.118 million (2021: £4.785 million ). The derivative loss is based
on future production and calculated using forward gas prices as at 30 September 2022. The derivative will be
realised to a profit or loss when the payments under the derivative instruments become due.
The Group meets its day to day working capital requirements through existing cash reserves. At 30 September
2022, the Group had £0.747 million of available cash. During the year, the Group raised gross proceeds of
£8,825 million as a result of placing of new ordinary shares and converting warrants to ordinary shares.
The war in Ukraine and the level of inflation in the UK has not had a significant immediate impact on the
company’s operations. The Directors are aware that if the current situation becomes further prolonged then
this may change. The consolidated financial statements have been prepared on a going concern basis.
In response to this extraordinary period, the Directors have taken the prudent decision to introduce cost
saving measures where possible to preserve working capital. The Directors have assessed the Group’s
working capital forecasts for a minimum of 12 months from the date of the approval of these financial
statements. In undertaking this assessment, the Directors have reviewed the underlying business risks, and
the potential implications these risks would have on the Group’s liquidity and its business model over the
assessment period. This assessment included a detailed cash flow analysis prepared by the management, and
they also considered several reasonably plausible downside scenarios. The scenarios included potential
delays to expected future revenues. In making their overall assessment, the Directors took into account the
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
advanced stage of the development of the Saltfleetby gas field and the impact of the derivative instrument
if there were delays in gas production. As outlined in note 25 the Group has committed to future cash flows
as a result of the derivatives in place which are due even if gas is delayed.
Forecast cashflows place reliance on there not being a suspension of gas production for an unforeseen
significant period. Current production levels are in excess of derivative requirements.There are no present
operational concerns and whilst there are mitigating steps that could be taken, the contracted derivative will
need to be settled at a fixed point in time. In the event of any significant delay this would be subject to further
negotiation with the derivative holder or further funding may be required. It is also noted there is a catch-up
derivative payment of £4,175k due in June 2023 which the group is forecast to meet however should there
be a timing difference between cash inflows and outflows then Further funding may be required. The
Directors have therefore identified a material uncertainty which may cast doubt over the Group’s ability to
continue as a going concern.
Based on the current management’s plan, management considered that the working capital from the
expected revenue generation 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, notwithstanding the material uncertainty as outlined above. The Director has assessed the
company's ability to continue as a going concern and have reasonable expectation that the company has
adequate resources to continue operations for a period of at least 12 months from the date of approval of
these financial statements.
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
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3.6
Oil and natural gas exploration and evaluation (E&E) expenditure
Oil and natural gas exploration and evaluation expenditure is accounted for using the successful efforts
method of accounting.
(a)
Licence and property acquisition costs
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.
51
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
Pre-acquisition of Saltfleetby Energy Limited, gains and losses due by Saltfleetby Energy Limited in relation
to their 49% share of the Derivative Instrument was recorded in Trade & Receivables as a contract debtor
with the debt repayable from gas sales as per the terms in the Joint Venture Agreement. Post-acquisition of
Saltfleetby Energy Limited, these are removed on Group consolidation.
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 2022, the Group’s derivative liabilities amounted to £158.680 million as a result of the
hedging agreement entered into with Mercuria Energy Trading SA under a Swap Contract (see Note 25)
In the determining the fair values of the financial asset and liabilities, instruments are analysed into Level 1
to 3 as follows:
Level 1: Fair value measurements derive from quoted prices (unadjusted) in active market for identical
asset or liabilities.
Level 2: 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.
Level 3: 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.
52
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.
53
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 considered in arriving at the operating profit or loss.
3.14 Decommissioning
Provision for decommissioning is recognised in full on the installation of oil and gas production facilities. The
amount recognised is the present value of the estimated future expenditure determined in accordance with
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 natural gas and 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
the natural gas passes from our pipeline to the national grid or when 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 natural gas or crude oil. Revenue from
the production of oil and gas 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. 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.
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.
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 and gas production
assets at 30 September 2022 were approximately £5.572 million (2021: £13.073 million) and £80.792 (2021:
£6.534 million) respectively.
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 22, the provision at reporting date represents management’s best estimate of the present
value of the future decommissioning costs required.
(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 25). 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
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
available forward pricing curves.
(e) Acquisition of Saltfleetby Energy Limited
The group has determined the acquisition of Saltfleetby Energy Limited as being outside the definition of IFRS
3 and therefore is not accounting as a business combination.
5.
Revenue and segment information
Currently, the Group’s principal revenue is derived from the sale of natural gas and 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
Sale of natural gas
2022
£’000
97
2021
£’000
-
3,045
-----------------------------------------------------------
-
-----------------------------------------------------------
3,142
= =
================================================
================================================
-
= =
All the non-current assets of the Group are located in the United Kingdom. All revenue arising from sale of
natural gas is derived from sales to Shell plc and represents over 97% of the Company’s revenue.
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
2022
£’000
11
-
1,299
2021
£’000
7
-
1,078
48
-----------------------------------------------------------
48
================================================= =
45
-----------------------------------------------------------
45
==================================================
2022
£’000
2021
£’000
111,947
(110,309)
-----------------------------------------------------------
1,638
==================================================
15,598
(13,143)
-----------------------------------------------------------
2,455
==================================================
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7.
Finance cost
Interest payable on convertible loan notes
Loss on revaluation of AFS investment
Other finance costs
Loan interest payment
2022
£’000
78
8
2021
£’000
56
4
5
149
-----------------------------------------------------------
1
-
-----------------------------------------------------------
61
==================================================
All interest paid under the loan payable described in note 24 has been capitalised pre-production, in line
with the Company’s accounting policies.
240
==================================================
8.
Employee benefit expense
Wages and salaries
Social security costs
2022
£’000
2021
£’000
1,159
140
-----------------------------------------------------------
1,299
==================================================
971
107
-----------------------------------------------------------
1,078
==================================================
The directors received salary from the group totaling £497,000 (2021: £494,000)
Key management 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
Operators
2022
Number
2021
Number
5
8
10
-----------------------------------------------------------
23
==================================================
5
8
-
-----------------------------------------------------------
13
==================================================
9.
Taxation on ordinary activities
No liability to corporation tax arose for the years ended 30 September 2022 and 2021, 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% (2021
19%)
Revenue
Expenses not deductible for tax purposes
Unrecognised deferred tax
2022
£’000
2021
£’000
(111,947)
(15,598)
(21,270)
(2,964)
(597)
107
21,760
-----------------------------------------------------------
-
56
2,908
-----------------------------------------------------------
-
==================================================
-
==================================================
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Group has incurred indefinitely available tax losses of £173,495,965 (2021: £21,014,268), which includes
tax loss incurred on the acquisition of Saltfleetby Energy Limited, to carry forward against future taxable
income of the subsidiaries in which the losses arose and they cannot be used to offset taxable profits
elsewhere in the Group. In addition, there is approximately £154,000 (2021: £35,000) 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, in line with this a deferred tax asset of £376k was
also not recognised for in the money outstanding share options.
10.
Property, plant and equipment
Cost or valuation
At 1 October 2020
Additions
At 30 September 2021
Additions
Acquisition of Saltfleetby Energy Limited
At 30 September 2022
Depreciation and impairment
At 1 October 2020
Charge for the year
At 30 September 2021
Charge for the year
Acquisition of Saltfleetby Energy Limited
At 30 September 2022
Net book value
At 30 September 2021
At 30 September 2022
Plant and
machinery
£’000
Motor
vehicles
£’000
Fixtures and
fittings
£’000
23
2
---------------------------------------
25
9
121
---------------------------------------
155
---------------------------------------
14
3
---------------------------------------
17
8
110
---------------------------------------
135
---------------------------------------
35
-
---------------------------------------
35
6
32
---------------------------------------
73
---------------------------------------
33
2
---------------------------------------
35
3
28
---------------------------------------
66
---------------------------------------
8
-
---------------------------------------
8
-
227
---------------------------------------
235
---------------------------------------
8
-
---------------------------------------
8
-
227
---------------------------------------
235
---------------------------------------
Total
£’000
66
2
---------------------------------------
68
15
380
---------------------------------------
463
---------------------------------------
55
5
---------------------------------------
60
11
365
---------------------------------------
436
---------------------------------------
8
=======================================
-
=======================================
20
=======================================
7
=======================================
-
=======================================
-
=======================================
8
=======================================
27
=======================================
Depreciation of property, plant and equipment is included in administrative expenses in the consolidated
statement of comprehensive income.
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11.
Oil and gas production assets
Cost or valuation
At 1 October 2020
Additions
At 30 September 2021
Additions
Increase abandonment provision
Acquisition of Saltfleetby Energy Limited
Transfer from Exploration and Evaluation assets
At 30 September 2022
Depreciation and impairment
At 1 October 2020
At 30 September 2021
Charge for the year
At 30 September 2022
Net book value
At 30 September 2021
At 30 September 2022
Total
£’000
7,373
128
---------------------------------------
7,501
276
125
54,535
19,851
---------------------------------------
82,288
---------------------------------------
967
967
529
---------------------------------------
1,496
---------------------------------------
6,534
=======================================
80,792
=======================================
Saltfleetby went into production on 30 August 2022. In line with the company’s accounting policy the asset
has been reclassified as an Oil & Gas Production Asset, including assets acquired from Saltfleetby Energy
Limited
As at 30 September 2022, the Group retained a 100% interest in the Saltfleetby field, an 80% interest in the
Lidsey field, an 80% interest in the Brockham field and is still the operator of all the 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 and gas 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)
Natural gas price (per Therm)
2022
10%
$75
£1.14
2021
10%
$63
-
The growth rate is assumed to be zero and the level of production is constant on the basis the production
plant is assumed to be at the most efficient capacity over the period of extraction.
Commercial reserves are proven and probable (“2P”) oil and gas reserves, calculated on an entitlement basis.
Estimates of commercial reserves underpin the calculation of depletion and amortisation on a Unit of
Production (“UOP”) basis. Estimates of commercial reserves include estimates of the amount of oil and gas
in place, assumptions about reservoir performance over the life of the field and assumptions about
commercial factors which, in turn, will be affected by the future oil and gas price.
Annual estimates of oil and gas reserves are generated internally by the Group with external input from
operator profiles and/or a Competent Person. These are reported annually to the Board. The self-certified
estimated future production profiles are used in the life of the fields which in turn are used as a basis in the
value-in-use calculation.
60
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 Saltfleetby gas field and Brockham and Lidsey oil
fields and the results of the analysis can be summarised as follow:
•
•
The estimated natural gas price would need to fall by circa 30 percentage points lower than the basis
assumption before an impairment of the Saltfleetby gas field would need to be considered.
The estimated brent crude price would need to fall by circa 55 percentage points lower than the
basis assumption for Balcombe, 25 percentage points lower than the base assumption for Brockham
and 10 percentage points lower than the base assumption for Lidsey before an impairment of the
respective oil fields would need to be considered.
12.
Exploration and evaluation assets
Cost or valuation
At 1 October 2020
Additions
At 1 October 2021
Additions
Increase abandonment provision
Acquisition Saltfleetby Energy Limited
Transfer to Oil and Gas Production Asset
At 30 September 2022
Total
£’000
8,183
4,890
-----------------------------------------------------------
13,073
12,338
12
54,535
(74,386)
-----------------------------------------------------------
5,572
Saltfleetby went into production on 30 August 2022. In line with the company’s accounting policy the asset
has been reclassified as an Oil & Gas Production Asset, this relates to the £74.386m in the above note.
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 assess whether an impairment is
necessary. See Strategic Review on page 10.
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 2022, total capitalised
Interest on Loan amounts to £899,000 (2021: £475,000) and total capitalised commitment fee amounts to
£585,000 (2021: £360,000)
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13.
Subsidiaries
The details of the subsidiaries are as follows:
Name of subsidiary/ place of incorporation
Principal activity
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
Saltfleetby Energy Limited **
Investment holding company
Investment holding company
Investment holding company
Oil extraction for distribution to third parties
Dormant company
Natural Gas Extraction
* indirect wholly owned by Angus Energy Weald Basin No.2 Limited (AEWB2).
**Saltfleetby Energy Limited was acquired by the Group on 24 May 2022, see further details on Note 30.
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.
6 South Charlotte Street, Edinburgh, Scotland,
EH2 4AN
Angus Energy Weald Basin No.2 Limited
Angus Energy North America Limited
Saltfleetby Energy Limited
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
Loss on revaluation for the year
At 30 September
2022
£’000
2021
£’000
28
(8)
-----------------------------------------------------------
20
==================================================
32
(4)
-----------------------------------------------------------
28
==================================================
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.
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15.
Trade and other receivables
Non-Current
Contract debtor – derivative
Current
Contract debtor – derivative
Accrued sales income
Amounts due from farmees
Rent deposit
VAT recoverable
Other receivables
TOTAL
2022
£’000
2021
£’000
-
11,117
-----------------------------------------------------------
-
-----------------------------------------------------------
11,117
-
2,975
3
4
206
919
-----------------------------------------------------------
4,107
1,510
-
3,073
-
218
331
-----------------------------------------------------------
5,132
-----------------------------------------------------------
-----------------------------------------------------------
4,107
==================================================
16,249
==================================================
The carrying amount of trade and other receivables approximates to their fair value.
Trade and other receivables
Less: Impairment allowance
2022
£’000
4,211
(104)
-----------------------------------------------------------
4,107
==================================================
2021
£’000
16,353
(104)
-----------------------------------------------------------
16,249
==================================================
In 2021 The receivables from Contract Debtors amounting to £12.627m was recognised in the statement of
financial position. It represented the 49% share of Saltfleetby Energy Limited on the Derivative Liability as a
result of a fair value valuation on the instruments. In 2022, and due to the acquisition of Saltfleetby Energy
Limited, this has been removed on consolidation. See also note 25 and note 30
16.
Inventory
Inventory
Acquired with Saltfleetby Energy Limited
Movements
Total
As at 30 September
2021
£’000
2022
£’000
3
-
-----------------------------------------------------------
3
==================================================
-
-
-----------------------------------------------------------
-
==================================================
Stocks Inventories held are raw materials and consumables that has been acquired by the Group thru its
acquisition of Saltfleetby Energy Limited. They have been valued at net realisable value.
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17.
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 2020
715,158,325
1,430
21,982
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 costs
At 30 September 2021
Issue of shares 4 November 2021
Issue of shares 5 November 2021
Issue of shares 4 February 2022
Issue of shares 16 March 2022
Issue of shares 11 April 2022
Issue of shares 24 May 2022
Issue of shares 24 May 2022
Issue of shares 24 May 2022
Issue of shares 24 May 2022
Issue of shares 4 July 2022
Issue of shares 12 July 2022
Issue of shares 13 July 2022
Issue of shares 13 July 2022
Issue of shares 13 July 2022
Issue of shares 5 September 2022
Issue of shares 5 September 2022
Issue of shares 5 September 2022
Issue of shares 5 September 2022
Issue of shares 5 September 2022
Issue of shares 5 September 2022
Issue of shares 5 September 2022
Issue of shares 13 September 2022
Issue of shares 13 September 2022
Issue of shares 13 September 2022
Issue of shares 13 September 2022
Issue of shares 16 September 2022
Issue of shares 16 September 2022
Issue of shares 16 September 2022
Issue of shares 16 September 2022
Issue of shares 23 September 2022
Issue of shares 23 September 2022
Issue of shares 23 September 2022
Less: Issuance of costs
At 30 September 2022
0.6
0.6
1.0
1.0
0.9429
0.002
0.65
0.8
0.8
1.1
1.09896
1.2
1.0989
0.9429
1.0989
1.0989
1.2
0.9
1.2
0.65
0.8
0.9
1.1
1.2
1.35
1.5
0.974
1.2
1.35
1.5
1
1.2
1.35
1.5
1.2
1.35
1.5
9,678,945
41,664,999
150,000,000
15,000,000
35,000,000
-
=========================================================
966,502,269
11,200,000
115,384,611
175,000,000
39,200,000
61,363,634
91,000,000
546,000,000
273,000,000
5,000,000
273,000,000
27,300,000
403,226
150,000
5,250,000
3,461,538
8,750,000
5,405,555
3,068,182
8,750,000
4,375,000
4,375,000
18,025,596
5,370,967
1,193,549
2,685,484
15,000,000
25,774,375
12,731,187
11,731,188
21,100,000
12,162,903
10,550,000
-
========================================================
2,764,264,264
20
83
300
30
70
-
==================================================
1,933
22
231
350
78
123
182
1,092
546
10
546
54
2
1
10
7
17
11
6
18
9
9
36
11
2
5
30
52
25
23
42
24
22
-
==================================================
5,529
39
167
1,200
120
245
(148)
==================================================
23,605
-
519
1,050
235
552
818
5,460
2,454
37
2,454
245
4
1
53
15
52
38
28
88
50
56
140
53
14
35
120
257
146
153
211
140
137
(512)
==================================================
38,708
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On 4 November 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 5 November 2021, the company issued 115,384,611 ordinary shares at 0.65 pence per share, raising gross
proceeds of £750,000.
On 4 February 2022, the company issued 175,000,000 ordinary shares at a price 0.8 pence per share, raising
gross proceeds of £1,4000,000.
On 16 March 2022, the company issued 39,200,000 ordinary shares at 0.8 pence per share. The shares were
used to settle litigation with a financial provider (not being the Company’s broker or Nomad) in dispute
relating to the Saltfleetby Loan Facility.
On 11 April 2022, the company issued 61,363,634 ordinary shares at 1.1 pence per share, raising gross
proceeds of £675,000.
On 24 May 2022, the company issued 91,000,000 ordinary shares at 1.0989 pence per share. These were
consideration shares paid for the acquisition of Saltfleetby Energy Limited.
On 24 May 2022, and in relation to the acquisition of Saltfleetby Energy Limited, the Company issued
546,000,000 ordinary shares at 1.2 pence per share.
On 24 May 2022, and in relation to the acquisition of Saltfleetby Energy Limited, the Company issued
273,000,000 ordinary shares at 1.0989 pence per share, raising gross proceeds of £3,000,000.
On 24 May 2022, the Company issued 5,000,000 ordinary shares at 0.9429 pence per share. The shares were
issued to the Lenders or their representatives in lieu of a cash facility fee pursuant to the Company’s
Saltfleetby Loan Development Facility at or around the first anniversary of the Loan Completion.
On 4 July 2022, and in relation to the acquisition of Saltfleetby Energy Limited, the Company issued
273,000,000 ordinary shares at 1.0989 pence per share, raising gross proceeds of £3,000,000.
On 12 July 2022, the Company issued 27,300,000 ordinary shares at 1.0989 pence per share. The shares were
fee shares relating to the Direct Subscription and acquisition of Saltfleetby Energy Limited.
On 13 July 2022, the Company issued 5,803,226 ordinary shares at varying exercise prices of exercise prices
of 150,000 shares at 0.9 pence per share, 5,250,000 shares at 1 pence per share and 403,226 shares at 1 2
pence per share. They were issued in relation to an exercise of Company Warrants.
On 5 September 2022, the Company issued 38,185,275 ordinary shares at varying exercise prices of 3,461,538
shares at 0.65 pence per share, 8,750,000 share at 0 8 pence per share, 5,405,555 shares at 0.9 pence per
share, 3,068,182 shares at 1.1 pence per share, 8,750,000 shares at 1.2 pence per share, 4,375,000 shares at
1 35 pence per share and 4,375,000 shares at 1 5 pence per share. They were issued in relation to an exercise
of Company Warrants.
On 13 September 2022 the Company issued 27,275,596 ordinary shares at varying exercise prices of
18,025,596 shares at 0.974 pence per share, 5,370,967 share at 1.2 pence per share, 1,193,549 shares at 1
35 pence per share and 2,685,484 at 1 5 pence per share. They were issued in relation to an exercise of
Company Warrants.
On 16 September 2022 the Company issued 65,236,750 ordinary shares at varying exercise prices of
15,000,000 shares at 1 pence per share, 25,774,375 shares at 1.2 pence per share, 12,731,187 shares at 1.35
pence per share and 11,731,188 shares at 1.5 pence per share. They were issued in relation to an exercise of
Company Warrants.
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
On 28 September 2022 the Company issued 43,812,903 ordinary shares at varying exercise prices of
21,100,000 shares at 1.2 pence per share, 12,162,903 shares at 1.35 pence per share and 10,550,000 shares
at 1.5 pence per share. They were issued in relation to an exercise of Company Warrants.
As at 30 September 2022 the total issued ordinary shares of the Company were 2,764,264,264 (2021:
966,502,268)
18.
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 2022, the following share options and warrants were outstanding in respect of the Ordinary
shares:
Outstanding as
at 01 Oct 2021
16,850,892
1,050,000
2,469,914
3,541,235
10,150,000
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
-
-
-
-
214,842,301
77,950,892
Granted
during the
year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,461,538
8,750,000
3,068,182
173,100,000
188,379,720
-
Exercise price
£0.06
£0.09
£0.068
£0.0425
£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
£0.0065
£0.008
£0.011
£0.010989
Warrant
Share
options
No. of
options
surrendered
during the
year
-
-
(2,469,914)
(3,541,235)
(100,000)
(500,000)
-
-
-
(750,000)
-
-
-
-
-
-
-
-
-
-
-
(6,011,149)
(1,350,000)
Outstanding
and
exercisable
at
as
September
2022
30
Final expiry dates
16,850,892 13 Nov 2026
1,050,000 13 Nov 2026
- 15 Feb 2022
- 30 April 2022
10,050,000 24 Aug 2028
23,400,000 15 Jul 2029
24 Oct 2022
17 Apr 2023
29 Sep 2023
25,250,000 31 Mar 2031
21,101,432 27 January 2023
10,787,361 27 January 2023
11,908,328 27 January 2023
-
-
-
9 April 2023
9 April 2023
9 April 2023
9 April 2023
9 December 2023
4 February 2025
8 April 2025
173,100,000 5 July 2027
-
-
-
-
-
-
-
Exercised
during the year
-
-
-
-
-
-
(18,025,597)
(15,000,000)
(5,555,555)
-
(53,898,568)
(26,712,639)
(25,591,672)
(5,250,000)
(7,500,000)
(3,750,000)
(3,750,000)
(3,461,538)
(8,750,000)
(3,068,182)
-
(180,313,751) 216,897,121
76,600,892
-
The weighted average exercise price of share options and warrants was £0.01784 at 30 September 2022
(2021: £0.0334). The weighted average remaining contractual life of options outstanding at the end of the
year was 3 years (2021:4 years). The weighted average fair value of share option was £0.0128 (2021: £0.0148)
each on the grant date. The vesting criteria of the share options are subject to share price growth reaching
to the target level.
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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
0.68p
0.65p
0.5%
30%
2 years
0.80p
0.80p
0.5%
30%
3 years
1.23p
1.10p
0.5%
30%
3 years
1.32p
1.0989p
0.5%
30%
5 years
The Group recognised a share-based payment charge of approximately £810,927 (2021: £182,000).
No options were exercised in both reporting year 2021 and 2022. There are 180,313,751 Warrants exercised
and 6,011,149 cancelled during 2022. There remain 76,600,892 options and 216,897,121 warrants
outstanding and exercisable as at 30 September 2022.
19.
Reserves
Merger reserve
Merger reserve
2022
£’000
(200)
==================================================
2021
£’000
(200)
==================================================
The merger reserve arose on the acquisition of Angus Energy Holdings Limited by the Company.
20.
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 2,764,264,263 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)
2022
£’000
2021
£’000
(111,947)
======================================================
(15,598)
=======================================================
1,648,593,936
======================================================
875,710,640
=======================================================
(6.79)
======================================================
(1.78)
=======================================================
The diluted loss per share is the same as the basic loss per share as there were no dilutive potential ordinary
shares outstanding at the end of the reporting period.
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21.
Trade and other payables
Due within one year
Trade payables
Convertible loan note
VAT payable
Deferred consideration on Saltfleetby
Energy Limited acquisition
Lease liability
Accruals
Interest payable – loan
Other payables
Due after more than one year
Convertible loan note
Lease liabilities
2022
£’000
2,319
1,319
-
6,734
35
62
392
293
2021
£’000
1,068
-
22
-
-
231
364
289
-----------------------------------------------------------
11,154
==================================================
-----------------------------------------------------------
1,974
==================================================
2022
£’000
2021
£’000
-
52
-----------------------------------------------------------
52
==================================================
1,319
12
-----------------------------------------------------------
1,331
==================================================
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. On 04 November 2022 the Company issued 11,200,000 shares in respect of extending the
Convertible Loan Note for another 12 months. The new maturity is 17 April 2023.
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.
On 24 May 2022, the Company executed a share purchase agreement to acquire the entire issued share
capital of Saltfleetby Energy Limited from Forum Energy Services Limited, giving the Company 100%
ownership of the Saltfleetby Gas Field. The total effective consideration payable pursuant to the SPA is the
sum of £14,052,000 of which up to £6,250,000 is deferred consideration and £484,000 ,representing the
debt free cash free amount, to be paid in instalments from net cash payments to Angus Energy from the
Project through to 31 March 2025 (and subject to an upward or downward net cash adjustment) as and
when those payments would have been available to Saltfleetby Energy Limited under the Company’s Senior
Debt Facility of May 2021. It is expected that all material payments with be paid within 12 months.
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
22.
Provisions for other liabilities and charges
Abandonment costs
Balance b/fwd
Abandonment cost incurred through acquisition of Saltfleetby Energy
Limited
Increase provision Lidsey & Brockham
Increase provision Balcombe
Balance c/fwd
2022
£’000
2021
£’000
3,007
3,007
1,225
125
12
-----------------------------------------------------------
4,369
==================================================
-
-
-
-----------------------------------------------------------
3,007
==================================================
The Group makes full provision for the future costs of decommissioning oil and gas production facilities and
pipelines on the installation of those facilities. The amount provision is expected to be incurred up to 2033
when the producing oil and gas properties are expected to cease operations.
These provisions have been created based on the Group’s internal estimates and expectation of the
decommissioning costs likely to incur in the future. For the period under review, the directors have assessed
that the discount rate and inflation rate to be applied to the current cost of decommissioning to be similar.
On this basis, the current cost is considered to be similar to the discounted net present value.
23.
Convertible loan
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.
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 has issued and allotted to the
Noteholder 11,200,000 ordinary shares.
24.
Loan Payable
On 17 May 2021, the Group signed a Loan Facility, conditional on the setting of the hedge (see Note 25) 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.
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The £12 million facility was 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:
Current
30 September 2023
Non-Current
30 September 2023
30 September 2024
31 March 2025
Total Facility Loan
25. Derivative Liability
2022
£’000
2021
£’000
5,250
1,500
-
4,200
2,100
4,200
4,200
2,100
£11,550
£12,000
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 24). 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.
Due to the delay in the production of the Saltfleetby field, which further pushed the first gas production on
30 August 2022, the hedge profile has been revised as at 30 September 2022 as shown below:
Further details of the contract as at 30 September 2022 are as below:
Period of Gas Production
Quantity in Therms
1-Sep-2022
1-Oct-22
1-Jan-22
1-Apr-23
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
31-Mar-23
30-Jun-23
30-Jun-23
30-Sep-23
31-Mar-24
30-Jun-24
30-Sep-24
31-Mar-25
30-Jun-25
843,750
10,500,000
843,750
5,250,000
843,750
4,500,000
9,000,000
4,500,000
3,750,000
7,500,000
3,750,000
51,281,250
Fixed price in
pound per
Therm
0.4140
0.5205
4.3800
0.3755
3.1500
0.3755
0.4655
0.3560
0.3560
0.4500
0.3525
As of the reporting date, the expected cash flow on the sale of natural gas amounted to £186.332m resulting
in a loss of £158.680m of which the Group has now recorded a 100% share on its new working interest due
to the acquisition of Saltfleetby Energy Limited. 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.
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Group has recognized the gross liability at 100%, due to the acquisition of Saltfleetby Energy Limited (SEL)
with working interest of 49% plus the Group’s working interest of 51% prior to acquiring SEL.
The cash flow forecast for the coming years on the on the derivatives on the accompanying
consolidated financial position as of 30 September 2022 are:
Cash
Flow
Instruments
of
Derivative
30 Sep
2023
£’000
30 Sep
2024
£’000
30 Sep
2025
£’000
Total
£’000
Cash Inflow
Cash Outflow
15,829
(102,412)
7,127
(57,690)
4,697
(26,231)
27,653
(186,333)
Net Liability on Swap Contract
(86,583)
(50,563)
(21,534)
(158,680)
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 has carried out its own valuation of the hedge using the same
method. Future dated market prices have been taken from the Heren Report dated 30 September 2022. This
has resulted in a liability of £157.124m and represents a 0.98% variance to Mercuria’s calculation.
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, and as a result, the loss on these contracts has also increased significantly.
The loss on these contracts at 30 September 2022 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.
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
26. 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:
Financial
Asset at
amortised
cost
Financial
Liabilities at
amortised
cost
Financial
Liabilities at
fair value
through
profit and
loss
4,107
747
4,854
-
-
-
-
-
-
-
-
-
-
3,066
6,734
1,319
87
11,550
4,175
26,931
-
-
-
-
-
-
-
-
154,505
154,505
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
-
-
-
-
-
-
-
25,770
25,770
30 September 2022
Asset
Trade and other receivables
Cash and cash equivalents
Total financial assets
Liabilities
Trade and other payable
Deferred consideration on acquisition of
Saltfleetby Energy Limited
Convertible loan notes
Lease liabilities
Debt financing
Derivative liability
Total financial liabilities
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
TOTAL
4,107
747
4,854
3,066
6,734
1,319
87
11,550
158,680
181,436
TOTAL
16,429
6,160
22,589
1, 068
1,319
12
12,000
25,770
40,169
72
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 in 2021 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 related parties. 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 24). The add-on-
interest rate is linked to SONIA (Sterling Over Night Indexed Average) and based on September 2022 average
of 1.85% it had an immaterial impact of £200.
Increase/decrease in add-on Interest rate
+ 10%
- 10%
Foreign currency exchange risks
Increase / (decrease)
30 September
2021
£
2022
£
22
-----------------------------------------------------------
(22)
-----------------------------------------------------------
-
-----------------------------------------------------------
-
-----------------------------------------------------------
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 regarding oil sales are
denominated in US Dollars. The Group has bank accounts in US Dollars to mitigate against the exchange risks.
At 30 September 2022, the GBP cash balance held denominated in USD was £19,869 (2021; £34,733).
73
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
Within four to twelve 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
2022
£’000
2021
£’000
454
2,612
8,088
-----------------------------------------------------------
11,154
==================================================
617
1.357
-
-----------------------------------------------------------
1,974
==================================================
2022
£’000
2021
£’000
-
-
35
-
52
-----------------------------------------------------------
87
==================================================
-
-
-
-
12
-----------------------------------------------------------
12
==================================================
The Group is exposed to the risk of fluctuations in prevailing market commodity prices of oil and gas products
it produces. The table below summarised the impact on profit before tax for changes in commodity prices
Commodity price sensitivity
The analysis is based on the assumption that the crude oil and natural gas prices move 10% resulting in a
change of US$10/bbl for crude oil and GBP 0.24/Therm for natural gas sales for 2022, with all other variables
held constant. Reasonably possible movements in commodity prices were determined based on a review of
the average spot prices at each reporting periods.
Increase/decrease in crude oil prices
Average spot price increased by 10%
Average spot price decreased by 10%
Increase / (decrease) in profit
before tax for the year ended
30 September
2022
£’000
11
-----------------------------------------------------------
(11)
-----------------------------------------------------------
2021
£’000
-
-----------------------------------------------------------
-
-----------------------------------------------------------
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Increase/decrease in gas prices
Average spot price increased by 10%
Average spot price decreased by 10%
27.
Net debts reconciliation
Increase / (decrease) in profit before
tax for the year ended
30 September
2022
£’000
306
-----------------------------------------------------------
(306)
-----------------------------------------------------------
2021
£’000
-
-----------------------------------------------------------
-
-----------------------------------------------------------
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 23)
Loan payable (note 24)
Deferred consideration on Saltfleetby Energy
Limited acquisition
Net debt
2022
£’000
747
(1,433)
(11,550)
2021
£’000
6,160
(1,433)
(12,000)
(6,734)
-----------------------------------------------------------
(18,970)
==================================================
-
-----------------------------------------------------------
(7,273)
==================================================
Cash and
cash
equivalents
Convertible
loan note
Facility
Loan
£’000
£’000
£’000
Deferred
consideration
on acquisition
of SEL
£’000
Total
£’000
475
(9,818)
2,126
(56)
-
(7,273)
-
-
-
-
-
-
-
-
(6,734)
-
(7,273)
(15,427)
10,464
(6,734)
-
Net debt as at 1 October 2020
Cash flow
Issue of new equity (net proceeds)
Interest on convertible loan note
Facility Loan
Net debt as at 30 September 2021
Net debt as at 1 October 2021
Cash flow
Issue of new equity (net proceeds)
Saltfleetby acquisition cost
Facility Loan repayment
1,852
(9,818)
2,126
-
12,000
6,160
6,160
(15,427)
10,464
-
(450)
(1,377)
-
-
(56)
-
(1,433)
(1,433)
-
-
-
-
-
-
-
-
(12,000)
(12,000)
(12,000)
-
-
-
450
Net debt as at 30 September 2022
747
(1,433)
(11,550)
(6,734)
(18,970)
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
28.
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
New leases in the year - discounted
Depreciation charged
Total
The maturity of the lease liability are as follows:
Leased liabilities
Balance
New Leases in the year
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
29.
Commitments
As at 30 September
2021
2022
£’000
£’000
11
97
(27)
-----------------------------------------------------------
81
==================================================
35
-
(24)
-----------------------------------------------------------
11
==================================================
As at 30 September
2021
2022
£’000
£’000
12
105
(30)
-----------------------------------------------------------
35
-
(23)
-----------------------------------------------------------
87
12
35
52
-
-----------------------------------------------------------
87
==================================================
-
12
-
-----------------------------------------------------------
12
==================================================
At 30 September 2022, the Group had contractual a capital commitments of £0.245m (2021 £2.973m) in
respect to the Group’s Saltfleetby development activities.
30.
Acquisition of Saltfleetby Energy Limited
In 24 May 2022, the Group has executed a Share and Purchase Agreement (SPA) with Forum Energy Service
Limited to acquire the entire issued capital of Saltfleetby Energy Limited which owns the 49% working interest
and the sole project partner in one of the key asset of the Company which is the Saltfleetby Gas Field, thereby
giving the Company a 100% interest in the project.
The total effective consideration payable pursuant to the SPA is the sum of £14,052,000 which comprise of
the following:
•
•
£250,000 to be paid in cash at Completion;
the issue of 91 million Ordinary Shares at 1.09896011 pence per share (the "Funding Price") at
Completion (the "Initial Consideration Shares");
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
•
•
the issue and allotment of the 546,000,000 Ordinary Shares at a price of 1.2 pence per Ordinary
Share (the ("Acquisition Price") at Completion (the "Additional Consideration Shares"); and
up to £6,250,000 deferred consideration to be paid in instalments from net cash payments to Angus
Energy from the Project through to 31 March 2025.
On the acquisition date, Saltfleetby Energy Limited has net asset value of £12.581m before its share in
Derivative Liability of the hedging instrument valued at £35.228m on its 49% share as a partner.
The net asset comprises of Saltfleetby production asset valued at £15.951m, fixed asset at £.015m and a total
receivable of £2.348m while being adjusted with payables consisting of a project related provision for plug
and abandonment of the field at £1.225m and payables at £4.508m wherein £3.566m is being owed to a
subsidiary of the Company, Angus Energy Wield Basin no. 3 and a project related cost.
The Derivative Liability is also considered a related liability arising from the hedging of gas sales and further
discussed in Note 25.
The management believes that such opportunity has arisen and being advantageous to the company to
consolidate the partners’ 49% holdings on the asset which provides a significant discount to the valuation of
the Saltfleetby Gas Field while also considering the project’s progress which is at its excellent status with all
major equipment already on site and other components in place, and with an expectation of its First Gas
towards the third quarter of the current year.
31.
Related Party transactions
Amounts due at the year end to Forum Energy Services Limited is £6,734,000 (see note 21). Forum Energy
Services Limited is a related party by virtue of Paul Forrest joining the board of Angus Energy Plc on 18 July
2022 and being the majority of Forum Energy Services Limited.
32.
Subsequent events
On 13 October 2022, the Company issued 127,400,127 ordinary shares at 1.0989 pence per share. They were
issued in relation to the exercise of Company Warrants.
On 24 October 2022, the Company agreed the grant of 165.5 million share options under the Company's
existing Employee Incentive Scheme to Directors and other staff. The share options have an exercise price of
2 pence per share (being a premium of 23% to the closing price on 21 October 2022) and vest as to 100 per
cent., upon the closing mid‐market price of the Ordinary Shares being 3 pence or above (being 50 per cent.
above the Exercise Price. The options have a 4 year term from the date of issue.
On 28 October 2022, the Company issued 10,193,759 ordinary shares at varying prices of 9,100,009 shares
at 1.0989 pence per share, 546,875 shares at 1.2 pence per share, 273,437 shares at 1.35 pence per share
and 273,437 shares 1.5 pence per share. They were issued in relation to the exercise of Company Warrants.
On 02 November 2022, the Company issued 36,599,864 ordinary shares at 1.0989 pence per share. They
were issued in relation to the exercise of Company Warrants.
On 21 November 2022, the Company issued 312,000 ordinary shares at varying prices of 156,000 shares at
1.35 pence per share and 156,000 shares at 1.5 pence per share. They were issued in relation to the exercise
of Company Warrants.
On 19 December 2022 the Company announced that it had successfully raised gross proceeds of
approximately £7 million by means of a placing to certain institutional and other investors to raise
approximately £2 million, (the "Placing") and a direct subscription to raise approximately £5 million (the
"Subscription") (together, the "Fundraising"), in each case at a price of 1.65 pence per share (the "Fundraising
Price").
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Fundraising was conducted in two tranches, with the initial tranche of new Ordinary Shares under the
Fundraising (comprising in aggregate 341,219,000 Ordinary Shares, being the shares issued under the Placing
and 226,219,000 shares issued under the Subscription) being issued under the Company's pre-existing share
capital authorities, and the second tranche of 89,781,000 new Ordinary Shares ("Conditional Subscription"),
together with 311,250,000 warrants in respect of the entire Fundraising ("Warrants"), being subject to
shareholders passing the certain resolutions ("Resolutions") at a General Meeting ("GM").
In addition, and conditional upon the passing of the Resolutions, Forum Energy Services Ltd ("Forum") has
agreed to accept the allotment and issue of 60,606,061 new Ordinary Shares (the "Forum Share Issue") at
the Fundraising Price (together with the issue of 30,303,030 warrants on the same basis as applicable to the
Fundraising ("Forum Warrants")) in settlement of the Company's obligation to pay certain deferred
consideration of £1,000,000 to Forum in accordance with the Saltfleetby SPA as announced on 24 May 2022.
As announced on 2 March 2023, the Board resolved to make the following changes, subject to final terms
being agreed:
Richard Herbert has agreed to assume the role of Chief Executive Officer in charge of day to day management
of the Company and responsibility for the ongoing development of the management team. Richard's
background at the helm of independent oil and gas companies, such as Frontera Energy, combined with his
experience as Head of Exploration at BP, his particular experience in the UK onshore makes him the ideal
candidate for strengthening the execution of the Company's strategy. George Lucan will take up the role of
Executive Chairman with particular responsibility for stakeholder and governmental relations and strategic
direction. Andrew Hollis will remain Technical Director of the Company but will be stepping down from his
Board responsibilities. Paddy Clanwilliam will step down as Non-Executive Chairman to become Senior
Independent Non-Executive Director, alongside Krzysztof Zielicki, who remains our second Independent Non-
Executive Director.
78
COMPANY STATEMENT OF FINANCIAL POSITION
Note
2022
£’000
2021
£’000
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
5
6
8
8
8
7
7
38,632
38,632
15,336
15,336
207
534
741
101
26
127
39,373
15,463
5,529
38,708
1,500
106
(14,719)
1,933
23,605
1,500
106
(13,362)
31,124
13,782
8,249
8,249
-
-
362
362
1,319
1,319
8,249
1,681
39,373
15,463
The loss for the Company for the year ended 30 September 2022 was £2,168,000 (2021: £1,362,000)
The note on page 81 to 84 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
79
COMPANY STATEMENT OF CHANGES IN EQUITY
Balance at 1 October 2020
Loss for the year
Total comprehensive income for the year
Transaction with owners
Issue of shares
Less: issuance costs
Grant of share options
Share
capital
£’000
1,430
Share
premium
£’000
21,982
Merger
relief
reserve
£’000
1,500
Loan
note
reserves
£’000
106
Accumulated
loss
£’000
(12,182)
Total
equity
£’000
12,836
‐
-
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
Loss for the year
Total comprehensive income for the year
Transaction with owners
Issue of shares
Less: issuance costs
Grant of share options
‐
-
‐
-
3,596
‐
‐
15,615
(512)
‐
-
-
‐
‐
‐
(2,168)
(2,168)
(2,168)
(2,168)
-
-
811
19,211
(512)
811
Balance at 30 September 2022
5,529
38,708
1,500
106
(14,719)
31,124
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 81 to 84 form part of these of financial statements.
80
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.
81
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 £2,168,000 (2021: £1,362,000).
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 2020
Movement of the intercompany loan for the year
At 30 September 2021
Movements of the intercompany loan for the year
Saltfleetby Energy Limited investment
At 30 September 2022
Cost of
investment
£’000
228
-
-----------------------------------------------------------
228
-
15,452
-----------------------------------------------------------
15,680
==================================================
Loan to group
undertakings
£’000
12,602
2,506
-----------------------------------------------------------
15,108
7,844
-
-----------------------------------------------------------
22,952
==================================================
Total
£’000
12,830
2,506
-----------------------------------------------------------
15,336
7,844
15,452
-----------------------------------------------------------
38,632
==================================================
The details of the subsidiary are set out in the note 13 to the consolidated financial statements.
On 24 May 2022, the Company executed a share purchase agreement to acquire the entire issued share
capital of Saltfleetby Energy Limited from Forum Energy Services Limited, giving the Company 100%
ownership of the Saltfleetby Gas Field.
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.
82
NOTES TO THE COMPANY FINANCIAL STATEMENTS
6.
Trade and other receivables
Other receivables
7.
Trade and other payables
Trade payables
Convertible loan note
Deferred consideration on acquisition of
Saltfleetby Energy Limited
Amounts due to group undertakings
Other taxation
Other payables
2022
£’000
2021
£’000
207
-----------------------------------------------------------
207
==================================================
101
-----------------------------------------------------------
101
==================================================
2022
£’000
114
1,319
2021
£’000
121
-
6,734
-
20
62
-----------------------------------------------------------
8,249
==================================================
-
100
45
96
-----------------------------------------------------------
362
==================================================
The carrying amount of trade and other payables approximates to their fair value.
Due after more than one year
Convertible loan note
8.
Share capital
2022
£’000
2021
£’000
-
===================================================
1,319
======================================================
The movement of share capital are set out in the note 17 to the consolidated financial statements.
As at 30 September 2022 the total issued ordinary shares of the Company were 2,764,264,264 (2021 –
966,502,268).
9.
Related Party transactions
Amounts due at the year end to Forum Energy Services Limited is £6,734,000 (see note 21). Forum
Energy Services Limited is a related party by virtue of Paul Forrest joining the board of Angus Energy
Plc on 18 July 2022 and being the majority of Forum Energy Services Limited.
10.
Subsequent events
On 13 October 2022, the Company issued 127,400,127 ordinary shares at 1.0989 pence per share.
There were issued in relation of exercise of the Company Warrants.
On 24 October 2022, the Company agreed the grant of 165.5 million share options under the Company's
existing Employee Incentive Scheme to Directors and other staff. The share options have an exercise
price of 2 pence per share (being a premium of 23% to the closing price on 21 October 2022) and vest
83
NOTES TO THE COMPANY FINANCIAL STATEMENTS
as to 100 per cent., upon the closing mid‐market price of the Ordinary Shares being 3 pence or above
(being 50 per cent. above the Exercise Price. The options have a 4 year term from the date of issue.
On 28 October 2022, the Company issued 10,193,759 ordinary shares at varying prices of 9,100,009
shares at 1.0989 pence per share, 546,875 shares at 1.2 pence per share, 273,437 shares at 1.35
pence per share and 273,437 shares 1.5 pence per share. They were issued in relation of exercise
of the Company Warrants.
On 02 November 2022, the Company issued 36,599,864 ordinary shares at 1.0989 pence per
share. They were issued in relation of exercise of the Company Warrants.
On 21 November 2022, the Company issued 312,000 ordinary shares at varying prices of 156,000
shares at 1.35 pence per share and 156,000 shares at 1.5 pence per share. They were issued in
relation of exercise of the Company Warrants.
On 8 December 2022, the Company issued 500,000 ordinary shares at varying prices of 250,000
shares at 1.2 pence, 125,000 at 1.35 pence per share and 125,000 shares at 1.5 pence per share.
They were issued in relation of exercise of the Company Warrants.
On 19 December 2022 the Company announced that it had successfully raised gross proceeds of
approximately £7 million by means of a placing to certain institutional and other investors to raise
approximately £2 million, (the "Placing") and a direct subscription to raise approximately £5 million (the
"Subscription") (together, the "Fundraising"), in each case at a price of 1.65 pence per share (the
"Fundraising Price").
The Fundraising was conducted in two tranches, with the initial tranche of new Ordinary Shares under
the Fundraising (comprising in aggregate 341,219,000 Ordinary Shares, being the shares issued under
the Placing and 226,219,000 shares issued under the Subscription) being issued under the Company's
pre-existing share capital authorities, and the second tranche of 89,781,000 new Ordinary Shares
("Conditional Subscription"), together with 311,250,000 warrants in respect of the entire Fundraising
("Warrants"), being subject to shareholders passing the certain resolutions ("Resolutions") at a General
Meeting ("GM").
In addition, and conditional upon the passing of the Resolutions, Forum Energy Services Ltd ("Forum")
has agreed to accept the allotment and issue of 60,606,061 new Ordinary Shares (the "Forum Share
Issue") at the Fundraising Price (together with the issue of 30,303,030 warrants on the same basis as
applicable to the Fundraising ("Forum Warrants") in settlement of the Company's obligation to pay
certain deferred consideration of £1,000,000 to Forum in accordance with the Saltfleetby SPA as
announced on 24 May 2022.
As announced on 2 March 2023, the Board resolved to make the following changes, subject to final
terms being agreed:
Richard Herbert has agreed to assume the role of Chief Executive Officer in charge of day to day
management of the Company and responsibility for the ongoing development of the management
team. Richard's background at the helm of independent oil and gas companies, such as Frontera
Energy, combined with his experience as Head of Exploration at BP, his particular experience in the UK
onshore makes him the ideal candidate for strengthening the execution of the Company's strategy.
George Lucan will take up the role of Executive Chairman with particular responsibility for stakeholder
and governmental relations and strategic direction. Andrew Hollis will remain Technical Director of the
Company but will be stepping down from his Board responsibilities. Paddy Clanwilliam will step down
as Non-Executive Chairman to become Senior Independent Non-Executive Director, alongside Krzysztof
Zielicki, who remains our second Independent Non-Executive Director.
84
Contact
Angus Energy Plc
www.angusenergy.co.uk
Managing Director:
George Lucan
T: 0208 899 6380
info@angusenergy.co.uk