ANNUAL FINANCIAL REPORT
2024
Cadogan Energy Solutions is an
independent diversified group in
energy with investments, operations and
services along the energy value chain.
OVERVIEW
Summary of 2024
1
Group Overview
2
STRATEGIC REPORT
4
Chairman’s Statement
5
Chief Executive’s Review
5
Operations Review
7
Financial Review
8
Risks and Uncertainties
9
Statement of Reserves and Resources
13
Corporate Responsibility
13
Task Force on Climate-related Financial Disclosures
16
CORPORATE GOVERNANCE
Board of Directors
21
Report of the Directors
22
Corporate Governance Statement
27
Board Committee Reports
32
Annual Report on Remuneration 2024
38
FINANCIAL STATEMENTS
Statement of Directors’ Responsibilities
53
Independent Auditor’s Report
54
Financial Statements of Cadogan Petroleum plc
Consolidated Income Statement
61
Consolidated Statement of Comprehensive Income
62
Consolidated Balance Sheet
63
Consolidated Cash Flow Statement
64
Consolidated Statement of Changes in Equity
65
Notes to the Consolidated Financial Statements
66
Company Balance Sheet
91
Company Cash Flow Statement
92
Company Statement of Changes in Equity
93
Notes to the Company Financial Statements
94
GLOSSARY
97
SHAREHOLDER INFORMATION
98
OVERVIEW
STRATEGIC
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REMUNERATION
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GLOSSARY
SHAREHOLDER
INFORMATION
www.cadoganenergysolutions.com
01
Cadogan Energy Solutions plc Annual financial report 2024
Key Financial Highlights of 2024:
> Loss for the year: $6.2 million (2023: profit of $1.3 million)
> Average realised price1: $71.13/boe (2023: $59.32/boe)
> Gross revenues2: $9.2 million (2023: $7.6 million)
> G&A3: $3.5 million (2023: $3.6 million)
> Loss per share: 2.6 cents (2023: profit of 0.5 cents)
> Cash at year-end: $14.4 million (2023: $14.2 million)
Key Operational Highlights of 2024:
> Production: 129,272 bbl (2023: 119,057 bbl), a 9% increase
year-on-year
> No LTI/TRI4. All employees and assets have been secured
> SO 14001 and 45001 certifications were re-validated by respective
authority for one year
> Assessment of Blazhiv oil field hydrocarbon reserves by an
independent expert according to PRMS standards
> Qualification of Exploenergy as gas operator in Italy by the Ministry of
Environment and Energy Transition
> Development of the gas-to-power project using the non-commercial
gas of Blazhiv field for producing electricity to be sold on the market;
and
> Launch of an investment for the development of new power
generation projects in Ukraine, with a total installed capacity of
12.3 MW to enter in operation in H2 2025
Summary of 2024
1 Average realised price is calculated as total revenue from oil sales for the period divided by total volume of sold oil for the period
2 Gross revenues of $9.2 million (2023: $7.6 million) included nil (2023: $0.4 million) from trading of natural gas, $9.2 million
(2023: $7.2 million) from production
3 Administrative expenses (“G&A”)
4 LTI: Lost Time Incidents; TRI: Total Recordable Incidents
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Cadogan Energy Solutions plc Annual financial report 2024
Group Overview
In 2024, while continuing to maintain exploration and production assets, and operating an oil services business in Ukraine,
Cadogan started its diversification and development in the electricity market. Cadogan’s oil assets are concentrated in the
west of the country. The oil services business focuses on workover operations, civil works services and other services to
satisfy Cadogan intra-group operational needs and specialised machinery services to third parties. The Cadogan’s power
generation assets are developed in the center and the west of the country.
Our business model
We aim to increase value through:
>
Maintaining a robust balance
sheet, monetising the remaining
value of our Ukrainian assets and
supplementing E&P cash flow with
revenues from gas trading and oil
services
>
Developing new activities along
the energy value chain with a
lower impact on environment
>
Diversifying Cadogan’s portfolio,
both geographically and
operationally
Ukraine
2024 remained a highly challenging
year for Cadogan due to the ongoing
invasion of Ukraine by Russia and
its consequences on the operational
activities of the Group.
West Ukraine
The Group continued to produce oil from
its production Blazhiv license located in
the West of Ukraine. Notwithstanding
severe market volatilities caused by war
time uncertainties Cadogan was able
to avoid shutdowns of its production
during 2024. As a result, production
grew by 9% above the one of 2023.
Net oil production was 129,272 bbl
corresponding to an average of 353 bpd.
In 2024, a new assessment of
hydrocarbon reserves was completed
by an independent expert, according
to PRMS standards. The Blazhiv
field contains 3.05 million boe of 3P
reserves and additionally 0,64 million
boe of 2C contingent resources. The
results of this assessment indicate
a strong reserves base, highlighting
our robust position and revealing
significant potential for further
development.
A substantial move has been done
to ensure the sustainability of the oil
production activities by utilizing the
non-commercial associated gas from
oil production activities for generating
electricity. In 2024, progress has
been made in the development of
the gas infrastructure and the overall
construction works. Because of a delay
in releasing an authorisation from
an administration, the gas-to-power
generator should be operational in
July 2025.
Power Generation Business
In 2024, the Group further advanced
its diversification into the electricity
sector to become an electricity
producer. Cadogan initiated new
investments in power generation
projects in different locations in
Ukraine, with a total installed capacity
of 12.3 MW. These projects are
scheduled to become operational in
H2 2025, reinforcing the Company’s
commitment to expanding its presence
in the energy sector.
Subsidiary businesses
Due to the current situation in Ukraine,
the Company had no gas trading
operations during 2024. Cadogan
continues to monitor the gas markets
in Europe and Ukraine, while keeping in
storage 0.7 million m3 of gas.
Astroservice LLC, the oil services
subsidiary, continued to support
Blazhiv license wells’ operations and
specialised machinery services to third
parties.
Bitlyanske
POLAND
HUNGARY
SLOVAKIA
BELARUS
RUSSIA
ROMANIA
MOLDOVA
BLACK SEA
UKRAINE
Kyiv
Blazhiv
OVERVIEW
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03
Cadogan Energy Solutions plc Annual financial report 2024
Italy
The Group owns a 90% interest in
Exploenergy s.r.l., an Italian company,
which controls two exploration areas
(Reno Centese and Corzano), located in
the Po Valley region (Northern Italy).
In 2024, the Ministry for Environment
and Energy Transition, confirmed again
that Exploenergy is a qualified gas
operator in Italy. In September 2024,
the Ministry for Environment and
Energy Transition notified this decision
to the two corresponding regions for
Exploenergy projects, inviting them to
release the necessary authorisations
for the preliminary exploration phase.
Exploenergy is expecting the release in
June 2025 of this authorisation for the
project located in Lombardia.
In February 2019, Cadogan entered in
a 2-year loan agreement with Proger
Management & Partners Srl (“PMP”)
with a call option which Cadogan
could exercise, with no obligation, to
get a 33% equity interest in Proger
Ingegneria Srl which in turn held at
31 December 2020 a 75.95% equity
interest in Proger Spa. Proger is an
Italian engineering company providing
services in Italy and in different
international areas.
The interpretation of these contracts
led to controversy which has been
settled by the parties in December
2024.
ITALY
Corzano
Reno Centese
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Cadogan Energy Solutions plc Annual financial report 2024
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Strategic Report
The Strategic Report has been prepared in accordance with
Section 414A of the Companies Act 2006 (the “Act”) and presented
hereunder. Its purpose is to inform stakeholders and help them
assess how the Directors have performed their legal duty under
Section 172 of the Act to promote the success of the Company.
Section 172 Statement
The Company’s section 172 statement
is presented on page 30 and forms
part of this strategic report.
Principal activity and status of
the Company
The Company is registered as a
public limited company (registration
number 05718406) in England and
Wales. Up to 2024, the principal
activity was oil and gas exploration,
development and production; the
Company also conducts gas trading
and provides services. In November
2022, the shareholders approved the
change of name and the strategy
to expand its activities along the
energy value chain to new forms
of energy with a reduced impact
on the environment. In December
2023, the Company stepped into
the electricity generation sector
by launching the development of
the gas-to-power project on the
Blazhiv field in Ukraine. Due to
delays deriving from administrative
authorisations, this project will be
operational in July 2025. In 2024,
the Company decided to accelerate
its business diversification in the
electricity market and launched
new investments to develop several
projects in power generation with a
total installed capacity of 12.3 MW to
be operational in H2 2025.
The Company’s shares used to have
a standard listing on the Official
List of the UK Listing Authority and
are traded now on the “transition”
Market of the London Stock
Exchange after the changes in the
listing categories which occurred in
July 2024.
1.
Average production is calculated as the average daily production during the year
2. Basic profit/(loss) per ordinary share is calculated by dividing the net profit/(loss) for the
year attributable to equity holders of the Parent Company by the weighted average number
of ordinary shares during the year
3. Lost time incidents relate to the number of injuries where an employee/contractor is
injured and has time off work (IOGP classification)
Key performance indicators
The Group monitors its performance through five key performance indicators
(“KPIs”):
>
to increase oil, gas and condensate production measured on the number
of barrels of oil equivalent produced per day (“boepd”);
>
to decrease administrative expenses;
>
to increase the Group’s basic earnings per share;
>
to maintain no lost time incidents; and
>
to grow geographically and operationally diversify the portfolio.
The Group’s performance in 2024 against these KPIs is set out in the table
below, together with the prior year performance data.
Unit
2024
2023
2024
vs 2023
Average production (working interest basis)1
boepd
353
326
+8%
Overhead (G&A)
$ million
(3.5)
(3.6)
-3%
Basic (loss)/profit per share2
cents
(2.6)
0.5
-620%
Lost time incidents3
incidents
–
–
–
Geographic and operation diversification
new assets
yes
–
–
OVERVIEW
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05
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Chairman’s Statement
2024 remained a year of persistent
challenges for Ukraine, as the ongoing
conflict with Russia continued
to impact the country’s stability
and economic environment. The
geopolitical uncertainties and security
risks posed significant obstacles
to our operations, yet Cadogan
remained resolute in its commitment
to operational excellence, and
sustainability. The safety of our
employees continues to be our
highest priority, and we have taken
all necessary measures to ensure
their well-being while securing the
continuity of our operations.
Despite these challenges, Cadogan
strengthened its position in the
market by preserving stable oil
production levels, achieving results
that exceeded those of 2023. Through
proactive risk management and
adaptability, we successfully mitigated
the impact of external uncertainties,
ensuring uninterrupted production
and sales.
Furthermore, Cadogan intensified
its focus on diversification and
investment in power generation.
Despite the adverse conditions,
we increased our investments in
this sector, launching a new power
generation project in Ukraine. This
initiative reflects our long-term
commitment to growth, sustainability,
and energy diversification.
Looking ahead, we acknowledge
that geopolitical instability and
economic volatility will continue to
present challenges. However, we
remain committed to overcoming
these hurdles with resilience,
integrity, and determination. Thanks
to our dedicated team and strong
leadership, we are well-positioned
to maximise the value of our assets
while furthering our strategic goals.
The Board remains focused on
strengthening our position and driving
future growth through diversified
investments, ensuring the continued
success and sustainability of Cadogan
in these uncertain times.
Michel Meeus
Non-Independent Non-Executive
Chairman
25 April 2025
Chief Executive’s Review
With the persistence of the war
in Ukraine, 2024 continued to
present big challenges for the
energy sector in general and for
Cadogan in particular. The ongoing
air strikes targeting oil, gas, and
energy infrastructure, combined
with geopolitical and economic
uncertainties, have added further
complexities to operations. Despite
these adversities, Cadogan has
remained resourceful and forward-
thinking, effectively navigating
market complexities to sustain
operations, drive expansion and
implement its strategy aiming
at positioning Cadogan Energy
Solutions as a diversified energy
group developing new activities
along the energy value chain with a
lower impact on environment.
The security of our employees in
Ukraine remains our first concern.
We are pleased to report that all of
them have remained safe throughout
the year. The Group’s local operating
companies in Ukraine have been
recognised critical to the Country’s
economic functioning, reinforcing our
essential role in the energy sector.
In 2024, the Group successfully
increased crude oil production while
achieving higher sales prices and
revenues. With the aim of providing
sustainability for this activity,
Cadogan has developed its gas-to-
power project on the Blazhiv field
to capture the non-commercial gas
and the CO2 emissions for producing
electricity to be sold on the market.
Due to administrative delays for
delivering authorisations for the
infrastructure and connection, this
project is expected to be operational
in July 2025. Furthermore in
2024, Cadogan launched a new
development in power generation in
Ukraine with a total installed capacity
of 12.3 MW to be operational in H2
2025, underscoring its strategy
to broaden its energy portfolio
and reinforcing its commitment to
diversification and long-term energy
sustainability.
Against this challenging background,
Cadogan’s existing operational
activities performed as following:
>
Another year without LTIs;
>
a 9% increase in oil production,
from 119,057 bbl in 2023 to
129,272 bbl in 2024;
>
development of the gas-to-power
project and its infrastructure on
Blazhiv field;
>
$14.3 million of net cash
at 31 December 2024, and
$24.7 million at 31 January
2025 (after the closing of the
Settlement Agreement with
Proger);
>
further diversification in
electricity generation business
with the development of projects
with a total installed capacity
of 12.3 MW in Ukraine to be
operational in H2 2025; and
>
assessment and confirmation
of Blazhiv oil field hydrocarbon
reserves according to PRMS
standards.
Operations
Cadogan has continued to safely
produce from its Blazhiv field in the
West of Ukraine. Oil production has
increased by 9% compared to the
previous year despite ongoing severe
constraints in the country.
Cadogan continued to improve
its subsoil knowledge on Blazhiv
field. In 2024, the assessment of
the reserves, conducted by an
independent expert, confirmed
that the Blazhiv field contains
3.05 million boe of 3P reserves
and additionally 0,64 million boe
of 2C contingent resources. This
robust position is reinforced by the
strategy of Cadogan for developing
the sustainability of these activities.
The gas-to-power project on the
Blazhiv field aiming to utilise the
non-commercial associated gas from
oil production, converting it into
electricity to be sold on the market,
progressed tthroughout 2024. Due
to delays in the authorisations
process, this project is expected to
06
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
be operational in July 2025. On a full
year basis, this project will allow to
drop significantly the CO2 emissions
related to our operations on Blazhiv
field. It is expected that the intensity
ratio for E&P operations (for same
production volumes) will drop from
146 tons CO2e/Kboe to 32 tons
CO2e/Kboe.
Furthermore, in 2024, Cadogan
implemented its strategy, to be a
diversified energy company, and
expanded its electricity generation
business. The Group has launched a
new investment to install new power
generation capacity with a total
of 12.3 MW on different locations
in centre and west of Ukraine.
This strategic move strengthens
Cadogan’s role in the energy sector
and contributes to addressing
the country’s growing electricity
demand. The expansion aligns with
the Company’s commitment to
diversification in energy production.
High operational standards of the
Group have been confirmed again
by zero LTI or TRI, with a total over
1,873,000 manhours since the last
incident, and re-validation of ISO
14001 & 45001 certifications by
respective authority for one year.
Cadogan continues to integrate
environmental considerations
into its operational approach. The
Group has taken proactive steps to
reduce greenhouse gas emissions
by purchasing green certificates,
ensuring that the electricity
consumed for its operations in
Ukraine is entirely sourced from
renewable energy. In 2024, the Group
was able to buy green certificates to
mitigate the CO2 emissions generated
by its operational activities in Q4
2024 and 2025.
In 2024, the Italian Ministry for
Environment and Energy Transition,
confirmed again that Exploenergy
is a qualified gas operator. In
September 2024, the Ministry
for Environment and Energy
Transition notified this decision
to the two corresponding regions
for Exploenergy projects, inviting
them to release the necessary
authorisations for the preliminary
exploration phase. Exploenergy is
expecting the release in June 2025
of this authorisation for the project
located in Lombardia.
Other
Due to high market volatility caused
by military escalation in Ukraine, The
Company had no trading operations
during 2024. Cadogan continues
to monitor the gas markets in
Europe and Ukraine, while keeping
in storage 0.7 million m3 of gas to
secure resources. The oil services
activities were used primarily to
serve the Group’s wells’ operations
and specialised machinery services
to third parties.
Proger
In February 2019, Cadogan used part
of its cash (Euros 13.385 million)
to enter into a 2-year Loan
Agreement with Proger Managers
& Partners, together with a Call
Option Agreement which could
have been exercised by Cadogan,
between September 2019 and
February 2021, into a 33 % equity
interest in Proger Ingegneria which
in turn held, a 75.95% equity
interest in Proger as at 31 December
2020. The interpretation of these
contracts has led to controversy
between the parties, with a refusal
to deliver financial information to
Cadogan. The Call Option was not
exercised. Cadogan demanded the
repayment of the Loan together
with the accumulated interests.
PMP contested the obligation to
reimburse and asked for arbitration.
This arbitration proceeding ended in
July 2022, but the interpretation of
the award led to a new controversy.
Cadogan introduced a claim at
the Appeal Court of Rome and
asked in November 2023 for a new
arbitration. In September 2024,
the parties agreed to suspend the
procedures and find an amicable
settlement. This was done, and
a Settlement Agreement was
signed on 12 December 2024. After
receiving 10 million euros in a single
instalment in January 2025, Cadogan
exited from the above-mentioned
contracts, ended all the litigations
procedures and dissolved the pledge
over the corresponding shares in
Proger Ingegneria. Whilst increasing
the available cash in Cadogan by
$10.4 million, the transaction is
impacting the balance sheet and the
2024 accounts with an impairment of
$5.7 million which is not a cash item.
Outlook
2024 has been an important inflexion
year for Cadogan Energy Solutions.
Despite the tremendous challenges
imposed by the war in Ukraine,
the Group has been successful in
shifting its business model to start
its journey to become a diversified
energy group. We are bringing
sustainability to the existing oil
production activities on Blazhiv field
with a solution which will allow to
drop significantly the emissions of
CO2 and improve the profitability for
the Group. The ongoing investments
and diversification in the electricity
generation sector will create
significant increase in revenues and
cash-flow. In 2025, once obtained the
authorisation, the Group will start the
studies for the exploration phase on
the authorised project in Lombardia
(Italy), confirming its geographical
diversification. Thanks to a robust
balance sheet and available cash, the
Group is ready to continue to develop
its activities along the energy value
chain, increasing its shift towards
activities with a lower impact on
environment.
This strategy is totally aligned with
the Climate Change requirements for
sustainability of Cadogan’s activities.
Fady Khallouf
Chief Executive Officer
25 April 2025
Strategic Report continued
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07
Cadogan Energy Solutions plc Annual financial report 2024
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Operations Review
Overview
At 31 December 2024, the Group held working interests in one
conventional gas, condensate and oil exploration and production
license in the west of Ukraine.
Summary of the Group’s licenses (as at 31 December 2024)
Working interest (%)
License
Expiry
License type
100
Blazhiv
November 2039
Exploration and Production
West Ukraine
E&P activity remained focused
on maintaining its license and
safely and efficiently producing
from the existing wells as well
as implementing non-invasive
production enhancement scenarios
within the Blazhiv oil field.
Blazhivska license
In 2024, the daily average net oil
production reached 353 barrels
per day, indicating a 9% increase
compared to 2023's production of
326 barrels per day. Proper planning,
robust safety measures, and efficient
resource management allowed
to achieve such production levels
demonstrating operational stability
even in harsh war circumstances.
Cadogan continues to deepen its
knowledge of Blazhiv area subsoil.
In 2023, the Company conducted
full hydrodynamic surveys on
the Blazhiv-1, Blazhiv-3, Blazhiv-
Monastyrets-3, and Blazhiv-10 wells.
Further, in 2024, an independent
expert completed the re-assessment
of reserves at the Blazhiv field,
confirming 3.05 million boe of 3P
reserves and 0.64 million boe of 2C
contingent resources associated with
the Blazhiv license. These results
indicate a strong reserves base.
The gas-to-power project, aiming to
utilise non-commercial associated
gas from oil production on Blazhiv
field converting it into electricity to
be sold on the market, progressed
throughout 2024. Operations
focusing on the construction of the
gas collecting infrastructure and
laying down the pipelines advanced
steadily. A power generator from
a leading European manufacturer,
along with essential equipment, was
delivered on the site.
Gas trading
Due to high market volatility caused
by military escalation in Ukraine, The
Company had no trading operations
during 2024. Cadogan continues to
monitor the gas markets in Europe
and Ukraine, while keeping in storage
0.7 million m3 of gas to secure
resources.
Service
The Group continued to provide
services through its wholly owned
subsidiary Astro-Service LLC. The
provided services were primarily
focused on serving intra-group
operational needs in wells’ re-
entry/repairs and stimulation
operations, well surveys and field
on-site activities, but also specialised
machinery services to third parties.
In the context of the prevailing
situation in Ukraine, the services
segment was dedicated totally to
supporting the Group’s production
activities.
Electricity generation
Cadogan has further expanded its
electricity generation business.
The Group has launched a new
investment to install a total of
12.3 MW in different locations
in Ukraine. This strategic move
strengthens Cadogan’s role in the
energy sector and contributes to
addressing the Country’s growing
electricity demand. It is expected
that the new projects will be
operational in H2 2025.
08
Cadogan Energy Solutions plc Annual financial report 2024
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Strategic Report continued
Financial Review
Overview
In 2024, the Group increased its
oil production by 9%. The Group’s
operating divisions delivered a
positive contribution of $4.1 million
(2023: positive contribution of
$2.2 million excluding the impairment
of oil and gas assets).
The average realised oil price
increased by 20% from $59.3 to
$71.13 per barrel.
The cash position slightly increased
to $14.4 million as at 31 December
2024 compared to $14.2 million as at
31 December 2023.
The trading business of the Group
had no activities during the period.
Income statement
The Revenues from production
increased from $7.6 million in 2023
to $9.2 million in 2024. This result is
integrating mainly an increase in oil
average realised prices by 20% and
an increase in crude oil production
by 9%. E&P costs of sales are almost
at the same level: $5.1 million in 2024
and $5.39 million in 2023. These
costs include production royalties
and taxes, fees paid for the rented
wells, depreciations, depletion of
producing wells, direct staff costs
and other costs for exploration and
development. Overall, in 2024, E&P
made a positive contribution of
$4.1 million (2023: $2.2 million) to
gross profit.
Administrative expenses (“G&A”)
continued to be under strict control.
Balance sheet
The Property Plant & Equipment
(PP&E) balance was $5.3 million
at 31 December 2024 (2023:
$5.8 million). It primarily represents
the carrying value of the assets
invested and engaged in relation
with the Blazhiv license. The E&E
and PP&E are held by Ukrainian
subsidiaries with functional currency
Ukrainian Hryvna. The Ukrainian
Hryvna was devaluated by 11% as
at 31 December 2024 compared to
31 December 2023, generating a
movement in the E&E and PP&E value
presented in the US Dollar.
Trade and other receivables of
$0.3 million (2023: $0.3 million)
include $0.2 million of prepayment
for gas-to-power facility construction,
$0.07 million of recoverable VAT
(2023: $0.2 million), which is expected
to be recovered through production
activities, and $0.03 million (2023:
$0.1 million) of other receivables.
Inventories slightly increased from
$0.4 million to $0.5 million principally
due to the revaluation of the gas in
the stock.
The Proger loan was held at
amortised cost at $10.4 million (2023:
$17.1 million). Refer to the Chief
Executive’s Report for further details
together with note 4(d) and 28.
The $1.7 million of trade and other
payables as at 31 December 2024
(2023: $1.4 million) consist of
$0.8 million (2023: $0.4 million) of
accrued expenses, $0.2 million trade
payables (2023:$0.2 million) and
$0.7 million (2023: $0.8 million) of
other payables.
Provisions include $0.2 million (2023:
$0.2 million) of long-term and current
provisions for decommissioning costs
which represents the present value of
these costs that are expected to be
incurred in 2039 for producing assets,
when the existing Blazhiv license
will expire, and current provision for
the decommissioning costs of the
Bitlyanska license.
Net cash slightly increased to
$14.4 million at 31 December
2024 compared to $14.2 million at
31 December 2023.
Cash flow statement
The Consolidated Cash Flow
Statement on page 64 shows
operating cash inflow before
movements in working capital
of $1.4 million (2023: outflow of
$0.6 million), which represents
mostly cash generated by the E&P
net of corporate expenses.
Related party transactions
Related party transactions are set
out in note 30 to the Consolidated
Financial Statements.
Treasury
The Group continually monitors
its exposure to currency risk.
It maintains a portfolio of cash
mainly in US dollars (“USD”) and
Euro held primarily in the UK. The
production revenues from the sale
of hydrocarbons are received in
Hryvna, the local currency in Ukraine.
Since the Martial Law established in
February 2022 in Ukraine, the cash
generated in Ukraine must be kept in
Hryvna.
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War risks
Risk
Mitigation
Since Spring 2021, Russia has gradually increased
the concentration of military equipment, weapons
and troops near the Ukrainian borders. On
24 February 2022, the Russian troops attacked
Ukraine and invaded its territory. Severe fights
have been engaged in Kyiv, and several other
main cities like Kharkiv, Mariupol, Kherson, Sumy
and Chernihiv.
Missile attacks and bombing are used by the
Russian troops to destroy infrastructures
and facilities even in the western cities, like
Lviv. Cyber-attacks have increased. Given
the unpredictability of the issue of this war, a
full-scale invasion of Ukraine or a much longer
duration of this war could have material impacts
on the Group’s operations and on its human,
industrial and financial resources. In 2024,
the situation remained highly challenging and
complicated with the possibility for further
escalation.
Anticipating the beginning of the war, the Group put in place,
since the beginning of February 2022, emergency procedures
communicated to all employees on the different sites in Ukraine
with an Emergency Committee communicating every day.
Safety measures have been dispatched with a remote working
organisation. Specific measures have been put in place for
the operations on site. In case of need, specific measures
were put in place to suspend the operations of the Blazhiv
field wells, with technical measures for decommissioning and
temporary conservation of the wells. The transmission and
internet connection systems have been secured with a satellite
connection. IT security has been reinforced. The Group is
monitoring the situation daily and taking appropriate action to
ensure the safety and the essential needs of its employees. In
2024, Cadogan employees in Ukraine continued operating in the
combined (remote/office) work mode with the key focus on the
safety measures.
Operational risks
Risk
Mitigation
Health, Safety and Environment (“HSE”)
The oil and gas industry by its nature conducts
activities, which can cause health, safety and
environmental incidents. Serious incidents
can have not only a financial impact but can
also damage the Group’s reputation and the
opportunity to undertake further projects.
The Group maintains a HSE management system in place and
demands that management, staff and contractors adhere to it.
The system ensures that the Group meets Ukrainian legislative
standards and, for the CO2 emissions the British standards
and achieves international standards to the maximum extent
possible.
Management systems and processes have been certified as ISO
14001 and ISO 45001 compliant.
Risks and Uncertainties
There are several potential risks
and uncertainties that could have
a material impact on the Group’s
long-term performance and could
cause the results to differ materially
from expected and historical results.
Executive management review the
potential risks and then classify them
as having a high impact if above
$5 million, medium impact if above
$1 million but below $5 million, and
low impact if below $1 million. They
also assess the likelihood of these
risks occurring. Risk mitigation
factors are reviewed and documented
based on the level and likelihood of
occurrence. The Audit Committee
reviews the risk register and
monitors the implementation of risk
mitigation procedures via Executive
management, who are carrying out
a robust assessment of the principal
risks facing the Group, including
those potentially threatening its
business model, future performance,
solvency and liquidity.
The Group has analysed the following
categories as key risks:
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Climate change
After the Paris Agreement (COP 21) the
international community is committed to reduce
greenhouse gas emissions to slow down the
climate change and contain its effects. Countries
may impose moratorium on E&P activities or
enact tight limits to emissions level, which may
curtail production. Shareholders may also request
that the Company adopt stringent targets in
terms of emissions reduction.
A moratorium on domestic production is deemed highly unlikely
in Ukraine given the country’s need for affordable energy.
Such risks exist in Italy. The Italian moratorium ended in 2021.
Exploenergy, Cadogan’s subsidiary has been obtaining, in 2023,
the status of qualified gas operator and its projects validated by
the Ministry for Environment and Energy Transition in 2024.
The Group has adopted a strategy allowing to provide,
sustainability for its existing oil production activities and, to
develop new activities along the energy value chain with a lower
impact on environment.
Management strives to reduce emissions in everything the
Group does and is implementing alternatives to offset and/
or mitigate emissions. In 2024, the Group purchased green
certificates, ensuring that the electricity consumed for its
operations and activities in Ukraine is entirely sourced from
renewable energy.
The Group has also developed its gas-to-power project on its
Blazhiv oil field in Ukraine. The aim of this project is to capture
the gas emissions during oil production and use them to
generate electricity to be sold on the market. This project will
allow to decrease significantly Cadogan’s annual gas emissions
deriving from its oil production activities. The project will be
operational in July 2025.
Furthermore, in 2024, the Group has accelerated its
development in the electricity market and has launched
investments for the development of several power generation
projects totalling an installed capacity of 12.3 MW to be
operational in 2025.
In the future, the Group will continue to diversify its activities by
investing in new energy solutions activities with a lower impact
on environment.
Drilling and work-over operations
The technical difficulty of drilling or re-entering
wells in the Group’s locations and equipment
limitations can result in the unsuccessful
completion of the well.
The incorporation of detailed sub-surface analysis into a robustly
engineered well design and work programme, with appropriate
procurement procedures and competent on-site management,
aims to minimise risk. Only certified personnel are hired to
operate on the rig floor. Contractor’s access to the operational
sites is allowed only after control of staff qualification and
check-up of appropriate technical condition of the equipment
and machinery.
Production and maintenance
There is a risk that production or transportation
facilities could fail due to non-adequate
maintenance, control or poor performance of the
Group’s suppliers.
All plants are operated and maintained at standards above the
Ukrainian minimum legal requirements. Operative staff are
experienced and receive supplemental training to ensure that
facilities are properly operated and maintained. When not in use
the facilities are properly kept under conservation and routinely
monitored.
Service providers are rigorously reviewed at the tender stage
and are monitored during the contract period.
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Sub-surface risks
Risk
Mitigation
The success of the business relies on accurate
and detailed analysis of the sub-surface. This can
be impacted by poor quality data, either historic
or recently gathered, and limited coverage.
Certain information provided by external sources
may not be accurate.
All externally provided and historic data is rigorously examined
and discarded when appropriate. New data acquisition is
considered, and appropriate programmes implemented, but
historic data can be reviewed and reprocessed to improve the
overall knowledge base. Agreements with qualified local and
international contractors have been entered into to supplement
and broaden the pool of expertise available to the Company.
Data can be misinterpreted leading to the
construction of inaccurate models and
subsequent plans.
All analytical outcomes are challenged internally and peer
reviewed. Analysis is performed using modern geological
software.
The area available for drilling operations is limited
due to logistics, infrastructures and moratorium.
This increases the risk for setting optimum
well coordinates.
Bottom hole locations are always checked for their operational
feasibility, well trajectory, rig type, and verified on updated
sub-surface models. They are rejected if deemed to be too risky.
The Group may not be successful in proving
commercial production from its licenses and
consequently the carrying values of the Group’s
oil and gas assets may have to be impaired.
The Group performs, on an annual basis, a review of its oil
and gas assets, impairs if necessary, and considers whether to
commission a review from a third party or a Competent Person’s
Report (“CPR”) from an independent qualified contractor
depending on the circumstances.
Financial risks
Risk
Mitigation
The Group is at risk from changes in the
economic environment both in Ukraine and
globally, which can cause foreign exchange
movements, changes in the rate of inflation and
interest rates and lead to credit risk in relation to
the Group’s key counterparties.
The martial law in Ukraine forbids the transfer of
cash outside of Ukraine. The cash held in Ukraine
must be held in the local currency (Hryvna).
The decrease of the value of the Hryvna is a
major risk on the cash held by the Group in
Ukraine. Since the martial law in Ukraine, there is
an obligation to keep the cash held by Cadogan
in Ukraine in Hryvna with period restrictions for
transfers out of the country.
Revenues in Ukraine are received in hryvnia and expenditure is
made in Hryvnia.
The Group continues to hold most of its cash reserves in the
UK mostly in GBP, USD and Euro. Cash reserves are placed with
leading financial institutions, which are approved by the Audit
Committee. Before the war in Ukraine, foreign exchange risk was
considered a normal and acceptable business exposure, and the
Group did not hedge against this risk for its E&P operations. The
Group is currently analysing different options.
In February 2019, Cadogan entered into a 2-year
Loan Agreement (Euros 13.385 million) with
Proger Management & Partners with a Call
Option that could be exercised by Cadogan,
between September 2019 and February 2021,
with no obligation, allowing a 33 % equity interest
in Proger Ingegneria. This represented a key
transaction and element of the Group balance
sheet. At 25 February 2021, being the Maturity
Date, Cadogan did not exercise its Call Option and
PMP must reimburse Euros 14,857,350. At the end
of March 2021, PMP did not reimburse and asked
for an arbitration to get the Loan Agreement
recognised as an equity investment contract.
This Loan Agreement has led to controversy with several
litigation procedures.
In September 2024, the parties agreed to suspend the
procedures and find an amicable settlement. This was done, and
a Settlement Agreement was signed on 12 December 2024. After
receiving 10 million euros in a single instalment in January 2025,
Cadogan exited from the above-mentioned contracts, ended
all the litigations procedures and dissolved the pledge over
the corresponding shares in Proger Ingegneria. The risks and
uncertainties deriving from the Loan Agreement no longer exist
at the date of this report. In January 2025, Cadogan received
the 10 million euros.
Refer to note 28 to the Consolidated Financial Statements for
detail on financial risks.
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The Group is at risk that counterparties will
default on their contractual obligations resulting
in a financial loss to the Group.
Procedures are in place to scrutinise new counterparties via
a Know Your Customer (“KYC”) process, which covers their
solvency. In addition, when trading gas, the Group seeks to
reduce the risk of customer non-performance by limiting the
title transfer to product until the payment is received, prepaying
only to known credible suppliers.
The Group is at risk that fluctuations in gas
prices will have a negative result for the trading
operations resulting in a financial loss to the
Group.
The Group mostly enters back-to-back transactions where the
price is known at the time of committing to purchase and sell the
product. Sometimes the Group takes exposure to open inventory
positions when justified by the market conditions in Ukraine,
which is supported by analysis of the specific transactions,
market trends and models of the gas prices and foreign
exchange rate trends.
Country risks
Risk
Mitigation
Legislative changes may bring unexpected
risk and create delays in securing licenses or
ultimately prevent licenses and license renewals/
conversions from being secured.
Compliance procedures, monitoring and appropriate dialogue
with the relevant authorities are maintained to minimise
the risk. In all cases, deployment of capital in Ukraine is
limited and investments are kept at the level required to fulfil
license obligations.
Other risks
Risk
Mitigation
The Group's success depends upon skilled
management as well as technical and
administrative staff. The loss of service of critical
members from the Group's team could have an
adverse effect on the business.
The Group periodically reviews the compensation and contract
terms of its staff in order to remain a competitive employer in
the markets where it operates.
The Group is at risk of underestimating the risk
and complexity associated with the entry into
new countries.
The Group applies rigorous screening criteria in order to
evaluate potential investment opportunities. It also seeks
input from independent and qualified experts when deemed
necessary. Additionally, the required rate of return is adjusted to
the perceived level of risk.
Local communities and stakeholders may cause
delays to the project execution and postpone
activities.
The Group maintains a transparent and open dialogue with
authorities and stakeholders (i) to identify their needs and
propose solutions which address them as well as (ii) to illustrate
the activities which it intends to conduct and the measures
to mitigate their impact. Local needs and protection of the
environment are always taken into consideration when designing
mitigation measures, which may go beyond the legislative
minimum requirement.
The Group devotes the highest level of attention and engage
qualified consultants to prepare the Environmental Impact
Assessment studies and to attend public hearings, both
introduced in Ukraine in 2019.
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Corporate Responsibility
Under Section 414C of the
Companies Act 2006 (the “Act”),
the Board is required to disclose
information about environmental
matters, employees, human rights
and community issues, including
information about any policies it has
in relation to these matters and the
effectiveness of these policies.
Being sustainable in our activities
means conducting our business with
respect for the environment and for
the communities hosting us, with
the aim of increasing the benefit
and value to our stakeholders. We
recognise that this is a key element
to be competitive and to maintain
our license to operate.
The Board recognises that the
protection of the health and safety of
its employees, the communities, and
the environment in which it operates
is not just an obligation but is part
of the personal ethics and beliefs of
management and staff. These are
the key drivers for a sustainable
development of the Company’s
activity. Cadogan Energy Solutions,
its management and employees are
committed to continuously improve
Health, Safety and Environment
(HSE) performance; follow our Code
of Ethics and apply, in conducting
our operations, internationally
recognised best practices and
standards.
Our activities are carried out in
accordance with a policy manual,
endorsed by the Board, which has
been disseminated to all staff. The
manual includes a “Working with
Integrity” policy and policies on
“business conduct and ethics”, “anti-
bribery”, “acceptance of gifts and
hospitality” and “whistleblowing”.
Such policies are subject to regular
review.
In August 2018, Cadogan Ukraine
LLC obtained ISO 14001 and ISO
45001 certifications for the following
scope: “Supervision, coordination,
management support, control in
the field of oil and gas onshore
exploration and production”. This
provides formal recognition of the
process embedded in the Company
and demonstrates the commitment
and efforts delivered by our
employees and management. It is
considered a baseline to continue
with the efforts to improve the way
we conduct the business. These
certifications have been renewed
every year since then.
The Board believes that health and
safety procedures, and training
across the Group should be in line
with best practice in the oil and gas
sector. Accordingly, it has set up a
committee to review and agree on
the health and safety initiatives for
the Company and to report back to
the Board on the progress of these
initiatives. Management regularly
reports to the Board on HSE and key
safety and environmental issues,
which are discussed at the Executive
Management level. The report of
the Health, Safety and Environment
Committee can be found on pages 34
and 35.
The General Director of Cadogan
Ukraine is presently the acting
Chairman of the HSE Committee
and is supported in his role by
Cadogan Ukraine’s HSE Manager.
In accordance with the ISO 14001
and ISO 45001, his role is to ensure
that the Group continuously
develops suitable procedures,
that operational management and
their teams incorporate them into
daily operations and that the HSE
management has the necessary
level of autonomy and authority to
discharge their duties effectively and
efficiently.
Health, safety and environment
2024 remained extremely
challenging due to the Russian
invasion of Ukraine and the resulting
subsequent war. Since February
2022, Cadogan has been applying
measures to mitigate the risks of
personnel injuries and loss of well
control. Kiev office personnel have
been working in the combined
office-remote work regime with
precise execution of air alert safety
requirements, on-field staff as well as
all offices have been equipped with
satellite means of communication,
established internal emergency
committee that coordinated the
work and liaising with company
management of the daily basis. Two
employees have been demobilised
from the army during 2024, none
remained serving.
The Group has implemented an
integrated HSE management
system in accordance with the
ISO requirements. The system
aims to ensure that a safe and
environmentally friendly/protection
culture is embedded in the
organisation with a focus on the
local community involvement. The
HSE management system ensures
that both Ukrainian and international
standards are met, with the Ukrainian
HSE legislation requirements taken as
an absolute minimum. All the Group’s
local operating companies actively
participate in the process. ISO 14001
and ISO 45001 certification were re-
Statement of Reserves and Resources
In 2024, the company conducted routine rig-less production support activities at the Blazhiv-1, Blazhiv-3 and Blazhiv-
Monastyrets-3 and Blazhiv-10 wells to maintain sustainable production using sucker rod pumping systems.
Summary of Reserves1 at 31 December 2024
Mmboe
Proved, Probable and Possible Reserves at 1 January 2024
3.051
Production
0.13
Proved, Probable and Possible Reserves at 31 December 2024
2.92
1 The new study was completed end of February 2024 by Brend Vik LTD LLC.
In addition to the tabled reserves, Cadogan has 0.64 million boe of 2C contingent resources associated with the
Blazhiv license.
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validated by the respective authority
in August 2024 for a new term.
A proactive approach based on
a detailed induction process and
near miss reporting has been in
place throughout 2024 to prevent
incidents. Staff training on HSE
matters and discussions on near
miss reporting are recognised as the
key factors to continuously improve.
In-house training is provided to help
staff meet international standards
and follow best practice. The
process enacted by the certification,
enhances attention to training
on risk assessments, emergency
response, incident prevention,
reporting and investigation, as well
as emergency drills regularly run-on
operations’ sites and offices. This
process is essential to ensure that
international best practices and
standards are maintained to comply
with, or exceed, those required by
Ukrainian legislation, and to promote
continuous improvement.
The Board monitors the main
Key Performance Indicators (lost
time incidents, mileage driven,
training received, CO2 emissions) as
business parameters. The Board has
benchmarked safety performance
against the HSE performance index
measured and published annually
by the International Association
of Oil and Gas Producers. In 2024,
the Group recorded over 153,000
man-hours worked with no incidents
and over 1,870,000 hours have
been worked since the last injury in
February 2016.
During 2024, the Group continued
to monitor its greenhouse gas
emissions and collect statistical
data relating to the consumption
of electricity, industrial water and
fuel consumption by cars, plants,
and other work sites, recording a
continuous improvement in the
efficient use of resources.
Employees
Wellness and professional
development are part of the
Company’s sustainable development
policy and wherever possible, local
staff are recruited. The Group’s
activity in Ukraine is managed by
local staff. Qualified local contractors
are engaged to supplement the
required expertise when and to the
extent it is necessary.
Procedures are in place to ensure
that recruitment is undertaken on
an efficient, open, transparent, and
fair basis with no discrimination
against applicants. Each operating
company has its own Human
Resources function to ensure that
the Group’s employment policies
are properly implemented and
followed. The Group’s Human
Resources policy covers key areas
such as equal opportunities, wages,
overtime and non-discrimination.
As required by Ukrainian legislation,
Collective Agreements are in place
with the Group’s Ukrainian subsidiary
companies, which outline agreed
level of staff benefits and other
safeguards for employees.
All staff are aware of the Group’s
grievance procedures. All employees
have access to health insurance
provided by the Group to ensure
that all employees have access to
adequate medical facilities.
Each employee’s training needs are
assessed on an individual basis to
ensure that the skills are adequate to
support the Group’s operations, and
to help them to develop.
Diversity
The Board recognises the benefits
and importance of diversity
(gender, ethnic, age, sex, disability,
educational and professional
backgrounds, etc.) and strives to
apply diversity values across the
business. We endeavour to employ
a skilled workforce that reflects the
demographic of the jurisdictions in
which we operate. The board review
the existing policies on a regular
basis and intends to develop a
diversity policy.
The Board of Directors acknowledges
the significance of diversity in
decision-making and the overall
success of the company. As such, the
company actively collects data on
the various dimensions of diversity
mentioned, including but not
limited to gender, ethnicity, age, and
professional backgrounds. This data
is gathered through internal surveys,
recruitment processes, and employee
feedback mechanisms to ensure a
diverse and inclusive workplace.
Board diversity
Until 21 June 2024, the Board
consisted of four male and one
female director of three different
nationalities and resident in four
different jurisdictions. Since then,
the Board consisted of five male and
one female director of four different
nationalities and resident in five
different jurisdictions.
The Board recognises that gender
is only one aspect of diversity, and
there are many other attributes
and experiences that can improve
the Board’s ability to act effectively.
Our policy is to search for the
highest quality people with the
most appropriate experience for the
requirements of the business, be
they men or women.
Gender diversity
The Board of Directors of the
Company comprised of six Directors
as of 31 December 2024.
As at the date of this report, the
Company does not meet the FCA's
recommended target of at least 40%
women on the board. The current
board comprises six directors, of
whom one is a woman, representing
less than 20% female representation.
As a smaller company with and a
correspondingly lean governance
structure, the board has historically
prioritised experience directly
aligned with the Company's market
and operational requirements.
We recognise the importance of
gender diversity in contributing
to a broad range of perspectives
and effective decision-making.
While we currently do not meet the
40% threshold, we are committed
to improving diversity across the
organisation. Gender diversity
has always been included as a
consideration within our board
succession planning framework
and reviewed by the Nomination
Committee as and when new
directors are appointed to the Board.
The appointment of any new Director
is made based on merit. See pages 21
and 22 for more information on the
composition of the Board.
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As at 31 December 2024, the
Company comprised a total of 76
persons, as follows:
Male
Female
Non-Executive Directors
4
1
Executive Directors
1
–
Management, other than
Executive Directors
6
3
Other employees
43
18
Total
54
22
Human rights
Cadogan’s commitment to the
fundamental principles of human
rights is embedded in our HSE
policies and throughout our business
processes. We promote the core
principles of human rights pronounced
in the UN Universal Declaration
of Human Rights and our support
for these principles is embedded
throughout our Code of Conduct,
our employment practices and our
relationships with suppliers and
partners wherever we do business.
Community
The Group’s operational activities
are carried out in rural areas of
Ukraine and the Board is aware
of its responsibilities to the local
communities in which it operates and
from which some of the employees
are recruited. On our operational
sites, management work with the local
councils to ensure that the impact
of operations is as low as practicable
by putting in place measures to
mitigate their effect. Projects
undertaken include improvement of
the road infrastructure in the area,
which provides easier access to the
operational sites while at the same
time minimizing inconvenience for the
local population and allowing improved
road communications in the local
communities, especially during winter
season or harsh weather conditions.
Specific community activities are
undertaken for the direct benefit of
local communities. All activities are
followed and supervised by managers
who are given specific responsibility
for such tasks.
The Group’s companies in Ukraine
see themselves as part of the
community and are involved and offer
practical help and support. All these
activities are run in accordance with
our “Working with Integrity” policy
and procedures. The recruitment
of local staff generates additional
income for areas that otherwise are
predominantly dependent on the
agricultural sector.
The enactment in 2018 of a new
legislation which introduces
Environmental Impact Assessment
studies and public hearings as part of
the license’s award/renewal processes
was anticipated effectively by the
Group. The Group is complying with
these requirements, building on
the recognised competence of its
people and advisors as well as on the
good communication and relations
established with local communities.
Cadogan is committed to the territory
and the communities where it operates
and has fully financed social programs
commitment for 2024 as per signed
Memorandum between the Company,
Lviv Regional Administration and local
communities in 2019.
Approval
The Strategic Report was approved
by the Board of Directors on 25 April
2025 and signed by order of the Board
by:
Ben Harber
Company Secretary
25 April 2025
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Strategic Report continued
Task Force on Climate-related Financial Disclosures (‘TCFD’)
Climate change remains one of
the Group’s principal risks with
governance over climate-related
transition and physical risks provided
at the Board and operational levels.
The Board of Directors recognises
the awareness of Climate Change
and the absolute need to understand
its potential impacts on the oil
and gas industry through relevant
disclosures as recommended by
the Task Force on Climate-related
Financial Disclosures (TCFD) and
those required by the Companies
Act. The Group has complied with
these requirements and has qualified
and quantified the risks and the
opportunities within its strategy.
The Board has ultimate
accountability for ensuring Cadogan
maintains sound climate risk
management and internal control
systems. The Board is ultimately
accountable for Cadogan’s strategic
response to climate change and
the energy transition. Directors
are responsible for ensuring they
remain sufficiently informed of
climate related risks to Cadogan
and the broader energy sector. In
November 2022, the Group has
initiated this transformation to
achieve sustainability of its historic
activities and adopted a new name
“Cadogan Energy Solutions” to
reflect its ambition of being a more
diversified energy operator. In 2023,
the Group reviewed its vision and
strategy for its future business, and
subsequently its administrative and
operational process to identify the
areas of further improvement in
the limitation of its environmental
impact for the existing activities
and the development of new ones
with a lower impact on environment.
The Group decided to minimise the
CO2 emissions deriving from its oil
production activities by investing in
decarbonation project.
TCFD related disclosures
TCFD Disclosure Requirement
Cadogan Energy Solutions Disclosure
Additional
information
Governance
The Board’s oversight of climate-
related risks and opportunities.
The Board of Directors is dedicated to achieving
sustainability of historic activities in oil and gas, and
diversification in new activities along the value chain with
a lower impact on environment as part of the Energy
Transition framework. The Board takes full responsibility for
the governance of climate-related risks and opportunities.
The Group reviews environmental and climate risk factors
quarterly. A dedicated Climate Task Force monitors key
climate metrics and ESG reporting.
p.9 – 12
Management’s role in assessing
and managing climate-related risks
and opportunities.
Management, led by the CEO, is responsible for executing
the climate strategy and ensuring compliance with climate
regulations. The CEO has wide expertise in Environment and
Energy Transition. He has led the activities of international
groups acting in the environment, the energy, and
particularly the renewable energy industries.
Through a combination of executive management,
operations management, HSE management, and financial
reporting, the Group regularly reviews its performance and
the Group’s risks.
p.34 – 35
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Cadogan Energy Solutions plc Annual financial report 2024
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Strategy
The climate-related risks and
opportunities the organisation has
identified over the short, medium,
and long term.
Key risks include landslides, floods, infrastructure instability,
additional costs related to CO2 emissions and financial non
sustainability. Till 2023, the Group was focused on activities
in the oil and gas industry. However, as climate change
becomes increasingly important globally, we consider these
activities alone to be unsustainable in the long term. On the
short and medium term, the existing operations in oil and
gas are in Ukraine. A moratorium on domestic production
is deemed highly unlikely given the country’s need for
affordable energy. However, to be able to ensure the
sustainability of its historic activities in the oil and gas, to
allow the continuous generation of cash-flow to finance its
transformation in the Energy Transition framework, in 2023,
the Group adopted the strategy based on decarbonation of
these activities. Opportunities include capturing methane
and investing in technologies for an effective use of this
methane.
An investment has been launched for collecting the non-
commercial gas generated on Blazhiv field and using it
to produce electricity. Furthermore, in 2024, the Group
adopted the strategy based on diversifying its activities by
entering in the electricity generation industry. This business
model will allow a smooth transition to a lower impact on
environment and provides remedies to the potential climate-
related transition risks.
p.4 – 8
p.20
The impact of climate-related
risks and opportunities on the
organisation’s businesses, strategy,
and financial planning.
Cadogan Energy Solutions PLC acknowledges the evolving
nature of climate-related risks and opportunities and the
importance of robust scenario analysis. While this disclosure
provides a preliminary assessment of potential impacts,
we recognise the need for a more granular and data-driven
evaluation. Accordingly, we are committed to undertaking
a more in-depth assessment of the financial implications
of climate-related risks and opportunities across our
operations and strategy. We aim to enhance the level of
detail and comprehensiveness in our next reporting cycle, in
line with best practice and stakeholder expectations.
p.4 – 8
p.9 – 12
p.20
The resilience of the organisation's
strategy, taking into consideration
different climate-related scenarios,
including a 2°C or lower scenario.
Under a 1.5°C scenario, oil demand may drop 30–40% by
2040.
As at 31 December 2024, the Group held working interest in
one conventional gas, condensate and oil exploration and
production license in the west of Ukraine (Blazhiv field). This
license will end in 2039. In 2023, Cadogan conducted full
hydrodynamic surveys on the four operated wells. In 2024,
an independent expert completed the re-assessment of
reserves at the Blazhiv field confirming 3.05 million boe of 3P
reserves and 0.64 million boe of 2C contingent resources. The
strategy adopted by the Group for the sustainability of this
activity, through investment in decarbonation, together with a
sophisticated planning, reporting and continuous monitoring
of the HSE and the financial indicators allow keeping the
resilience of these activities under the different scenarios.
Cadogan Energy Solutions PLC recognises the importance of
testing the resilience of its business strategy under various
climate scenarios, including a 2°C or lower pathway. While
this disclosure outlines preliminary qualitative scenario
analysis, we are committed to developing a more detailed and
quantitative assessment of climate-related scenario resilience.
In the coming reporting cycle, we aim to enhance the depth of
our scenario modelling, covering both transition and physical
risks, and to refine our strategic responses accordingly.
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Cadogan Energy Solutions plc Annual financial report 2024
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Risk management
Company’s processes for
identifying and assessing climate-
related risks
Company’s processes for managing
climate-related risks
Processes for identifying,
assessing, and managing climate-
related risks are integrated into
the organisation’s overall risk
management.
Climate risks are embedded in the ERM framework and
assessed at each operational site, especially in high-altitude
areas.
Emergency response plans and infrastructure
reinforcements are in place to mitigate physical risks.
All climate risks are integrated into Cadogan’s enterprise
risk management system.
p.9 – 12
p.34 – 35
The principal climate-related
risks and opportunities arising in
connection with the company’s
operations, the time periods over
which these are assessed, and the
actual and potential impacts on
the company’s business model and
strategy.
Principal risks include physical risks such as landslides,
floods, forest fire and temperature variability that may
disrupt operations, and transition risks such as regulatory
changes and carbon pricing. Opportunities include emissions
reduction, energy efficiency, and potential access to green
finance. Risks and opportunities are assessed over short-
term (1–3 years), medium-term (3–10 years), and long-term
(10+ years) horizons. These factors influence Cadogan’s
infrastructure planning, investment decisions, and market
positioning strategy.
p.20
Metrics and targets
Metrics used by the organisation
to assess climate-related risks
and opportunities, in line with its
strategy and risk management
process
Cadogan tracks GHG emissions (Scope 1, 2, and where
relevant Scope 3), carbon intensity, and climate risk
indicators like landslide etc. In order to express the GHG
emissions in relation to a quantifiable factor associated with
the Company's activities, wellhead production of crude oil
and natural gas has been chosen as the normalisation factor
for calculating the intensity ratio. This will allow comparison
of the Company’s performance over time, as well as with
other companies in the Company’s peer group.
p.25 – 26
Strategic Report continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
19
Cadogan Energy Solutions plc Annual financial report 2024
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Targets used by the organisation
to manage climate-related risks,
opportunities, and performances
against targets.
Cadogan has set a target to reduce Scope 1 and Scope 2
GHG emissions by 25% by 2030 compared to 2020 levels.
Performance is tracked annually using key performance
indicators (KPIs) such as:
>
Total tonnes of CO2e emissions (Scopes 1 and 2)
>
Carbon intensity: tonnes CO2e per barrel of oil
equivalent (boe) produced
>
Energy efficiency ratio: energy consumption per boe
KPI calculations are based on internationally accepted
methodologies. The Greenhouse Gases Inventory considers
the effects of the six types of greenhouse gases (GHG),
identified by the Kyoto Protocol: carbon dioxide (CO2),
methane (CH4), nitrous oxide (N2O), hydrofluorocarbons
(HFCs), sulphur hexafluoride (SF6) and perfluorocarbons
(PFCs). The unit with which the result of a carbon footprint
study is expressed, is the CO2 equivalent, which allows to
compare the effects of different gases, which can have
different persistency in the atmosphere. The normalisation
occurs through a specific index called Global Warming
Potential (GWP), which varies according to the considered
time span. Data collection and calculation of GHG emissions
deriving from the activities of Cadogan are performed
according to the guidelines and international standards.
Progress toward targets is monitored internally and reported
by HSE committee on a regular basis.
In 2024, Cadogan has developed its gas-to-power project
on its Blazhiv oil field in Ukraine. The aim of this project
is to capture the gas emissions during oil production and
use them to generate electricity to be sold on the market.
This project, operational in 2025, will allow to decrease
significantly Cadogan’s annual emissions related to the oil
production activities with the intensity ratio emission to
drop from 146 to 32 tons of CO2 e/Kboe on an annual basis.
Furthermore, in 2024 the Group was able to buy green
certificates to mitigate the CO2 emissions generated by its
operational activities.
Governance
As a company, we acknowledge
the increasing significance of
comprehending the effects of
climate change on our operating
environment and its potential
implications for our business.
We view this as a chance to
expand upon our existing efforts
in this area, enhance the quality
of our disclosures, and offer clear
transparency, while continuing our
TCFD reporting roadmap.
The Board recognises the societal
and investor focus on climate change
and especially the potential impacts
of the oil and gas activities which
constitute the historic activities
of Cadogan before the launch
of its diversification activities.
The climate-related risks and
opportunities are at the center
of Cadogan’s strategy. In 2023,
the Board adopted the current
strategy aiming to limit the impact
of its oil production activities and
to mitigate the remaining ones.
The Board takes full responsibility
for the governance of climate-
related risks and opportunities.
The CEO manages climate-related
risks and opportunities. Through
a combination of management
governance and reporting, regular
reviews of the Group performance
and the strategy implementation are
conducted, mitigation actions are
developed where required in order
to support the Group’s initiatives
to limit CO2 emissions and other
impacts on the environment.
Strategy
In 2024, the Group invested in
the infrastructure to collect the
non-commercial gas produced on
Blazhiv field, previously released in
the atmosphere and the generator
to use them to produce electricity.
Furthermore, the Group bought
green certificates to mitigate the
impact of CO2 emissions related
to its operational activities. With
the continuous improvement of
operational margin in these activities,
together with the additional financial
margin which will be generated by
the gas-to-power project, Cadogan
will be able to buy green certificates
on a regular basis to mitigate
the impact of the CO2 emissions
generated by its operational
activities.
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Cadogan Energy Solutions plc Annual financial report 2024
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In 2024, the Group accelerated the
transformation of its business model
towards activities with a lower impact
on environment. Investments were
launched for the development of
new electricity generation projects
which will be operational in H2 2025.
Subsequently, the business model will
not be focused only on oil production
as the Group will be shifting towards
a multi-energy business model.
Risk Management
The Group maintains a HSE
management system in place and
demands that management, staff
and contractors adhere to it. The
system ensures that the Group meets
Ukrainian legislative standards and
for the CO2 emissions the British
standards and achieves international
standards to the maximum extent
possible. Daily parameters outcome
on an operational control basis.
These are monitored, reviewed and
reported to the HSE manager and to
the management on a regular basis.
Corrective actions are implemented
when necessary.
Detailed Breakdown of Climate-related Risks and Opportunities:
Risk description
Timeframe
Potential
Consequences
Business Response
Mitigations /
Actions
Physical Risk
Landslides disrupting
production sites
Short to Medium
Term
Operational
downtime, safety
risks, equipment
damage
Infrastructure
resilience strategy
Geotechnical
monitoring, site
hardening, early
warning systems
Flooding due
to changing
precipitation patterns
Medium to Long
Term
Asset damage,
production halts,
regulatory fines
Flood risk modelling
and preparedness
planning
Drainage upgrades,
seasonal operations
scheduling, flood
insurance
Transition Risk
Regulatory changes
such as new carbon
pricing mechanisms
Medium Term
Increased operational
costs, margin
pressure
Regulatory tracking
and cost modelling
Carbon efficiency
projects: the gas-to-
power investment
implementation
Market shift towards
renewables reducing
oil demand
Long Term
Revenue decline,
asset stranding
Strategic
diversification
Investment in
renewables,
offsetting, portfolio
transition
Opportunity
Methane capture
and utilisation
technologies
Short Term
Revenue generation,
reduced GHG
footprint
Technology
partnerships and
feasibility studies
The gas-to-power
investment
implementation
Increased demand
for low-carbon
energy in Europe
Medium to Long
Term
Market expansion,
new revenue streams
New opportunity
investment road-
mapping
Feasibility studies
into low-carbon
technologies and
green technologies.
Metrics and targets
The principal methodology used to
calculate the emissions is drawn
from the ‘Environmental Reporting
Guidelines: including mandatory
greenhouse gas emissions reporting
guidance (June 2013)’, issued by
the Department for Environment,
Food and Rural Affairs (“DEFRA”)
and DEFRA GHG conversion factors
for company reporting were utilised
to calculate the CO2 equivalent of
emissions from various sources
(2024 update). Also, the used
methodology was also updated based
on methods proposed by DNV GL
and in of GHG emissions Inventory
referring to the following guidelines
and international standards.
The gas-to-power investment will
allow a significant drop in the
intensity ratio from 146 to 32 for the
existing oil production activities on a
full year basis.
Strategic Report continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
21
Cadogan Energy Solutions plc Annual financial report 2024
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Board of Directors
Directors
Fady Khallouf, 64, French
Chief Executive Officer
Fady Khallouf was appointed as
Director and CEO on 15 November
2019. He has more than 35-year
experience in the energy, the
environment, the engineering, and
the infrastructure sectors. He has
previously held the position of CEO
of FUTUREN (Renewable Energy,
listed on Euronext Paris) where he
achieved the restructuring and the
turnaround of the group. Prior to
that, he was the CEO of Tecnimont
group (Petrochemicals and Oil &
Gas), the Vice-President Strategy
and Development of EDISON group
(Electricity and Gas, E&P), the Head
of M&A of EDF group (Energy).
Fady Khallouf had beforehand held
various management positions at
ENGIE (Energy), Suez (Environmental
Services), and DUMEZ (Construction
and Infrastructures).
Michel Meeus, 72, Belgian
Non-Independent
Non-Executive Chairman
Michel Meeus was appointed
as a Non-executive Director on
23 June 2014. Mr Meeus was
former Chairman of the Board of
Directors of Theolia, an independent
international developer and operator
of wind energy projects. Since 2007,
he has been a director within the
Alcogroup SA Company (which
gathers the ethanol production units
of the Group), as well as within some
of its subsidiaries. Before joining
Alcogroup, Mr Meeus carved out
a career in the financial sector, at
Chase Manhattan Bank in Brussels
and London, then at Security Pacific
Bank in London, then finally at
Electra Kingsway Private Equity in
London.
Mr Meeus is currently Chairman of
the Remuneration and Nomination
Committees.
Lilia Jolibois, 60, American
Independent Non-Executive Director
Lilia Jolibois was appointed as
Director on 15 November 2019. She
is currently a member of three
Boards: Cadogan Energy Solutions
Plc, INSEAD Foundation, and Tremau
SA. She is also a Venture and CEO
Advisor at Loyal Venture Capital,
a global VC fund. Her career spans
Merrill Lynch Investment Banking,
Sara Lee, and Lafarge in the USA and
Europe. At Lafarge Group, Ms Jolibois
served in numerous positions
in finance, strategy, business
development, CEO and Chair of
the Board for Lafarge Cement and
Gypsum in Ukraine, and SVP and
Chief Marketing-Sales-Supply Chain
Officer for Lafarge Aggregates,
Asphalt & Paving.
Ms Jolibois is currently Chairman of
the Company’s Audit Committee and
a member of the Remuneration and
Nomination Committees.
Gilbert Lehmann, 79, French
Senior Independent
Non-Executive Director
Gilbert Lehmann was appointed
to the Board on 18 November 2011.
He was an adviser to the Executive
Board of Areva, the French nuclear
energy business, having previously
been its Deputy Chief Executive
Officer responsible for finance. He is
also a former Chief Financial Officer
and deputy CEO of Framatone, the
predecessor to Areva, and was CFO
of Sogee, part of the Rothschild
Group. Mr Lehmann was also Deputy
Chairman and Chairman of the
Audit Committee of Eramet, the
French minerals and alloy business.
He is Deputy Chairman and Audit
Committee Chairman of Assystem
SA, the French engineering and
innovation consultancy. He was
Chairman of ST Microelectronics
NV, one of the world’s largest
semiconductor companies, from
2007 to 2009, and stepped down as
Vice Chairman in 2011.
Mr Lehmann is currently a member
of the Remuneration and Nomination
Committees.
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Cadogan Energy Solutions plc Annual financial report 2024
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Charles Mack, 65, British
Independent Non-Executive Director
Charles Mack is both an advocate and a certified insolvency practitioner focused on cross-border restructuring cases.
He has been appointed as administrator, liquidator and CRO manager in several national/international medium size
as well as large companies. He is a member of the bar in both Munich and Padova and a Registered European Lawyer
at the Bar of England & Wales. Charles has been with Studio Legale Trabucchi since he passed his law examinations
and a partner since 2000 and has been a partner with White & Case as well as Brinkmann Partners in Germany. He is
currently a member of the board of TMA Europe and a former president of Insol Europe.
Mr Mack is currently a member of the Audit, Remuneration and Nomination Committees.
Thibaut de Gaudemar, 64, French
Independent Non-Executive Director
Thibaut de Gaudemar has more than 35 years of experience in investment banking working for prominent international
financial institutions in London. His last position was Vice Chairman of Capital Markets for EMEA at Credit-Suisse. He
previously co-managed the Global Markets Solution Group, which encompassed Equity Capital Markets, Debt Capital
Markets, Leveraged Finance and Derivatives. He was a member of the Global and the European Investment Banking
Committees. Prior to joining Credit-Suisse in 2005, he was a Managing Director at Deutsche Bank and Bankers Trust in
charge of the Strategic Equity Derivative Business in Europe.
Mr de Gaudemar is currently a member of the Audit, Remuneration and Nomination Committees.
Directors
The Directors in office during the year and to the date of this report are as shown below:
Non-Executive Directors
Executive Director
Michel Meeus (Chairman)
Fady Khallouf
Gilbert Lehmann
Charles Mack (appointed 21 June 2024)
Thibaut de Gaudemar (appointed 21 June 2024)
Jacques Mahaux (resigned 19 April 2024)
Directors’ re-election
The Board has decided previously that all Directors are subject to annual election by shareholders, in accordance with
industry best practice and as such, all Directors will be seeking re-election at the Annual General Meeting to be held on
20 June 2025.
The biographies of the Directors in office at the date of this report are shown on pages 21 and 22.
Appointment and replacement of Directors
The Company’s Articles of Association allow the Board to appoint any individual willing to act as a director either to fill a
vacancy or act as an additional Director. The appointee may hold office only until the next annual general meeting of the
Company whereupon his or her election will be proposed to the shareholders.
The Company’s Articles of Association prescribe that there shall be no fewer than three Directors and no more than fifteen.
Directors’ interests in shares
The beneficial interests of the Directors in office at 31 December 2024 and their connected persons in the Ordinary
shares of the Company at 31 December 2024 are set out below.
Director
Number of
Shares
Michel Meeus
26,023,651
Fady Khallouf
17,454,105
Gilbert Lehmann
–
Lilia Jolibois
–
Charles Mack
–
Thibaut de Gaudemar
–
Jacques Mahaux
–
Conflicts of Interest
The Company has procedures in place for managing conflicts of interest. Should a director become aware that they,
or any of their connected parties, have an interest in an existing or proposed transaction with the Company, its
subsidiaries or any matters to be discussed at meetings, they are required to formally notify the Board in writing or
at the next Board meeting. In accordance with the Companies Act 2006 and the Company’s Articles of Association,
the Board may authorise any potential or actual conflict of interest that may otherwise involve any of the directors
Report of the Directors
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
23
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
breaching his or her duty to avoid conflicts of interest. All potential and actual conflicts approved by the Board are
recorded in register of conflicts, which is reviewed by the Board at each Board meeting.
Directors’ indemnities and insurance
The Company’s Articles of Association provide that, subject to the provisions of the Companies Act 2006, all Directors
of the Company are indemnified by the Company in respect of any liability incurred in connection with their duties,
powers or office. Save for such indemnity provisions, there are no qualifying third-party indemnity provisions. In
addition, the Company continues to maintain Directors’ and Officers’ Liability Insurance for all Directors who served
during the year.
Powers of Directors
The Directors are responsible for the management of the business and may exercise all powers of the Company subject
to UK legislation and the Company’s Articles of Association, which includes powers to issue or buy back the Company’s
shares given by special resolution. The authorities to issue and buy back shares, granted at the 2024 Annual General
Meeting, remains unused.
Dividends
The Directors do not recommend payment of a dividend for the year ended 31 December 2024 (2023: nil).
Principal activity and status
The Company is registered as a public limited company (registration number 05718406) in England and Wales. The
principal activity and business of the Company is oil and gas exploration, development and production.
Subsequent events
In January 2025, Cadogan received the 10,000,000 € cash as agreed in the Settlement Agreement signed in December
2024. Subsequently, Cadogan exited from the Loan Agreement and engaged the necessary actions to stop all the
litigation procedures in course. Proger Management & Partners, Proger Ingegneria, MA.LO., and TIFS Partecipazioni,
did the same.
In February 2025, Cadogan Energy Solutions plc issued 7,000,000 new Ordinary shares of £0.03 each, in the capital of
the Company for cash on the basis of £0.03 per share to the CEO, Mr Fady Khallouf, to be satisfied in full using 50% of
the amount of the bonus due relating to the recovery of the loan to Proger Management & Partners srl and approved
by shareholders at the Annual General Meeting held on 25 June 2021. Following the issue of the new ordinary shares,
the total number of ordinary shares in issue is 251,128,487. As there are 66 Ordinary shares held in treasury, the total
number of voting rights in the Company is 251,128,421.
In April 2025, Astroinvest Energy, a fully owned subsidiary in Ukraine entered in negotiations, with one of the main
banks in Ukraine, for a 5-year non-recourse credit line loan (up to € 7.0 M) aiming to finance part of the investment for
the power generation projects in 2025.
Structure of share capital
The authorised share capital of the Company is currently £30,000,000 divided into 1,000,000,000 Ordinary shares
of 3 pence each. The number of shares in issue as at 31 December 2024 was 244,128,487 Ordinary shares (each with
one vote) with a nominal value of £7,323,854.61. The total number of voting rights in the Company is 244,128,421. The
Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003 allow companies to hold shares in treasury
rather than cancel them. Following the consolidation of the issued capital of the Company on 10 June 2008, there
were 66 residual Ordinary shares, which were transferred to treasury. No dividends may be paid on shares whilst held
in treasury and no voting rights attached to shares held in treasury. After the issue of 7,000,000 new Ordinary shares
in February 2025, the number of shares is now 251,128,487 Ordinary shares. The total number of voting rights is now
251,128,421.
Rights and obligations of Ordinary shares
In accordance with applicable laws and the Company’s Articles of Association, holders of Ordinary shares are entitled
to:
>
receive shareholder documentation including the notice of any general meeting;
>
attend, speak and exercise voting rights at general meetings, either in person or by proxy; and
>
a dividend, where declared and paid out of profits available for such purposes. On a return of capital on a winding
up, holders of Ordinary shares are entitled to participate in such a return.
Exercise of rights of shares in employee share schemes
None of the share awards under the Company’s incentive arrangements are held in trust on behalf of the beneficiaries.
Agreements between shareholders
The Board is unaware of any agreements between shareholders, which may restrict the transfer of securities or voting
rights.
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Cadogan Energy Solutions plc Annual financial report 2024
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Restrictions on voting deadlines
The notice of any general meeting of the Company shall specify the deadline for exercising voting rights and
appointing a proxy or proxies to vote at a general meeting. To accurately reflect the views of shareholders, where
applicable it is the Company’s policy at present to take all resolutions at any general meeting on a poll. Following
the meeting, the results of the poll are released to the market via a regulatory news service and published on the
Company’s website.
Substantial shareholdings
As at 31 December 2024 and 22 April 2025, being the last practicable date, the Company had been notified of the
following interests in voting rights attached to the Company’s shares:
31 December 2024
19 April 2025
Major shareholder
Number of
shares held
% of total
voting rights
Number of
shares held
% of total
voting rights
SPQR Capital Holdings SA
67,298,498
27.57
67,298,498
26.8
Mrs Veronique Salik
51,368,000
21.04
59,488,000
23.69
Mr Michel Meeus
26,023,651
10.66
26,023,651
10.36
Mr Fady Khallouf
17,454,105
7.15
24,454,105
9.74
Kellet Overseas Inc.
14,002,696
5.74
14,002,696
5.57
Mr Pierre Salik
8,120,000
3.32
–
–
Cynderella International SA
7,657,886
3.14
7,657,886
3.14
Amendment of the Company’s Articles of Association
The Company’s Articles of Association may only be amended by way of a special resolution of shareholders.
Disclosure of information to auditor
As required by section 418 of the Companies Act 2006, each of the Directors as at 25 April 2025 confirms that:
(a) so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware;
and
(b) the Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any
relevant audit information and to establish that the Company’s auditor is aware of that information.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance, and
position, are set out on pages 9 to 12.
Having considered the Group’s financial position and its principal risks and uncertainties, including uncertainties
regarding the war in Ukraine. The Directors have a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt
the going concern basis in preparing the Consolidated and Company Financial Statements. For further detail please
refer to the detailed discussion of the assumptions outlined in note 3(b) to the Consolidated Financial Statements.
Reporting year
The reporting year coincides with the Company's fiscal year, which is 1 January 2024 to 31 December 2024.
Financial risk management objectives and policies
The Company’s financial risk management objectives and policies including its policy for managing its exposure of the
Company to price risk, credit risk, liquidity risk and cash flow risk.
Management co-ordinates access to domestic and international financial markets and monitors and manages the
financial risks relating to the operations of the Group in Ukraine through internal risks reports, which analyse
exposures by degree and magnitude of risks. These risks include commodity price risks, foreign currency risk, credit
risk, liquidity risk and cash flow interest rate risk. The Group does not enter into or trade financial instruments,
including derivative financial instruments, for speculative purposes.
Report of the Directors continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
25
Cadogan Energy Solutions plc Annual financial report 2024
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Outlook
Future developments in the business of the Company are presented on pages 2 and 6.
Change of control — significant agreements
The Company has no significant agreements containing provisions, which allow a counterparty to alter and amend the
terms of the agreement following a change of control of the Company.
Should a change in control occur then certain Executive Directors are entitled, within a period of six months following
the change of control, to a payment of salary and benefits equal to 24 months’ base salary plus benefits plus
bonus (if any).
Streamlined energy and carbon reporting
This section contains information on greenhouse gas (“GHG”) emissions required by the Companies Act 2006
(Strategic Report and Directors' Report).
Methodology
The principal methodology used to calculate the emissions is drawn from the ‘Environmental Reporting Guidelines:
including mandatory greenhouse gas emissions reporting guidance (June 2013)’, issued by the Department for
Environment, Food and Rural Affairs (“DEFRA”) and DEFRA GHG conversion factors for company reporting were
utilised to calculate the CO2 equivalent of emissions from various sources (2024 update). Also, the used methodology
was also updated based on methods proposed by DNV GL and in of GHG emissions Inventory referring to the following
guidelines and international standards.
The Company has reported on all the emission sources required under the Regulations.
The Company does not have responsibility for any emission sources that are not included in its consolidated statement.
Consolidation approach and organisation boundary
An operational control approach was used to define the Company's organisational boundary and responsibility for GHG
emissions. All material emission sources within this boundary have been reported upon, in line with the requirements
of the Regulations.
Scope of reported emissions
Emissions data from the sources within Scope 1 and Scope 2 of the Company's operational boundaries is detailed below.
This includes direct emissions from assets that fall within the Company’s organisational boundaries (Scope 1 emissions),
as well as indirect emissions from energy consumption, such as purchased electricity and heating (Scope 2 emissions).
Scope 1 emissions in 2024 increased compared to the previous year (18,888 tons in 2024 vs 14,933 tons in 2023). This
was caused by the increase of the annual oil production and associated gas production as well as increase of greenhouse
gas reporting conversion factors for Scope 1 components.
Conversely, Scope 2 emissions decreased in 2024 (76 tons in 2024 vs 111 tons in 2023), as a result of proactive steps
to reduce greenhouse gas emissions by purchasing green certificates, ensuring that the electricity consumed for its
operations in Ukraine is entirely sourced from renewable energy. Total emissions in 2024 were 18,964 tons versus
15,044 tons in 2023.
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Intensity ratio
In order to express the GHG emissions in relation to a quantifiable factor associated with the Company's activities,
wellhead production of crude oil and natural gas has been chosen as the normalisation factor for calculating the
intensity ratio. This will allow comparison of the Company’s performance over time, as well as with other companies in
the Company’s peer group.
The intensity ratio for E&P operations (same reporting perimeter) has increased to 146 tons CO2e/Kboe in 2024 vs
126,36 tons CO2e/Kboe in 2023 mainly due to increase in CH4/CO2 conversion factor (28 in 2024 vs 25 in 2023).
Total greenhouse gas emissions data for the year from 1 January to 31 December.
As previously mentioned in the report, the implementation of the electricity generation project utilising associated gas
will lead to a substantial reduction in the CO2 emissions into the atmosphere starting from 2025.
E&P
Greenhouse gas emissions source
2024
2023
Scope 1
Direct emissions, including combustion of fuel and operation of facilities (tonnes of CO2 equivalent)
18,888
14,933
Scope 2
Indirect emissions from energy consumption, such as electricity and heating purchased for own use
(tonnes of CO2 equivalent)
76
111
Total (Scope 1 & 2)
18,964
15,044
Normalisation factor
Barrels of oil equivalent, net
129,272
119,057
Intensity ratio
Emissions reported above normalised to tonnes of CO2e per total wellhead production of crude oil,
condensates and natural gas, in thousands of Barrels of Oil Equivalent, net
146.70
126.36
Energy consumption
The Company started in 2020 to monitor energy consumption in KwH.
2024
2023
% change
Ukraine
KwH
607,063
557,631
9%
Energy efficiency ratio
KwH/boe
4.69
4.69
–
Energy consumption in the UK is immaterial.
2025 Annual General Meeting
The 2025 Annual General Meeting (“AGM”) of the Company provides an opportunity to communicate with shareholders
and the Board welcomes their participation. Board members constantly strive to engage with shareholders on strategy,
governance, and a number of other issues.
The Board looks forward to welcoming shareholders to the AGM. The AGM notice will be issued to shareholders well in
advance of the meeting with notes to provide an explanation of all resolutions to be put to the AGM.
In addition, shareholder information will be enclosed as usual with the AGM notice to facilitate voting and feedback in
the usual way.
The Chairman of the Board and the members of its committees will be available to answer shareholder questions at the
AGM. All relevant shareholder information including the annual report for 2024 and any other announcements will be
published on our website – www.cadoganenergysolutions.com.
This Report of Directors comprising pages 22 to 26 has been approved by the Board and signed by the order of the
Board by:
Ben Harber
Company Secretary
25 April 2025
Report of the Directors continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
27
Cadogan Energy Solutions plc Annual financial report 2024
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Corporate Governance Statement
This Corporate Governance Statement forms part of the Report of Directors
On 29 July 2024, entities which had a standard listing were moved into a new category called “transition”. The rules of
this category are based on the standard listing rules the Company was used to. As a Company previously listed on the
standard segment of the London Stock Exchange, it is not required to apply a specific corporate governance code and,
given its size, has elected not to do so. However, the Board of the Company is committed to the highest standards of
corporate governance and believe that the 2018 UK Corporate Governance Code (“the Code”) issued by the Financial
Reporting Council (“FRC”) provides a suitable benchmark for the Company’s corporate governance framework.
This Statement outlines how Cadogan Energy Solutions plc (“Cadogan” or the “Company”) has applied the relevant
principles of the Code and complied with its provisions.
During the year under review, the Company complied with all the provisions of the Code, other than the exceptions
noted below or elsewhere in this statement:
>
Provision 5 (Workforce Engagement): Given the size of the business, the Board does not consider it appropriate
to adopt the suggested methods outlined within the UK Corporate Governance Code 2018 to engage with
its employees given the size of the Company. Employee engagement continues to be undertaken by senior
management and any issues are escalated to the Board through the Chief Executive Officer. The Board believes
that the arrangements in place are effective but will continue to keep this under review.
>
Provision 9 (regarding the independence criteria of the Chair on appointment): Under the 2018 Corporate
Governance Code, the Company’s Chair during the year, Mr Michel Meeus, was not considered to be independent
given the size of his shareholding in the Company. Despite this, the Board considered Mr Meeus to be independent
in character, mindset and judgement.
>
Provision 21 (Board Evaluation): Given the size of the Board it was felt that a board evaluation would not provide
added value however the Board will continue to assess this provision periodically.
Board leadership and Company purpose
The Board provides leadership and oversight, and its role is to ensure the long-term success of the Company by
implementing the Company’s strategy and business plan, overseeing its affairs, and providing constructive challenge
to management as they do this. In addition to this, the Board oversees financial matters, governance, internal controls,
and risk management.
The purpose of the Board is to:
>
monitor Group activities to see that sustainable value is being created;
>
evaluate business strategies and monitor their implementation;
>
monitor and review the performance of management;
>
provide accountability to shareholders through appropriate reporting and regulatory compliance;
>
understand and ensure the management of operational business and financial risks to which the Group is exposed;
and
>
ensure that the financial controls and systems of risk management are robust and defensible.
The Board comprises a Non-Independent Non-Executive Chairman, a Chief Executive Officer, and four Independent
Non-Executive Directors. The Board has appointed Mr Lehmann as the Senior Independent Director, given
Mr Lehmann’s tenure the Board remains confident that Mr Lehmann is independent. During the year, the Nomination
Committee reviewed the size and composition of the Board and its committees with regard to increasing the number of
independent non-executive directors and as a subsequence appointed two new independent Non-Executive Directors
to the Board.
The biographical details for each of the Directors and their membership of Committees are incorporated into this
report by reference and appear on pages 21 and 22.
The formal schedule of matters reserved for the Board’s decision is available on the Company’s website.
The Board recognises the importance of building strong relationships with stakeholders and understanding their views
in order to help the Company deliver its strategy and promote the development of the business over the long-term.
The Board is committed to having effective engagement with its stakeholders. Our section 172 statement can be found
on page 30 which summarises the Board’s engagement with the Company’s main stakeholders and some examples of
how their views have been taken into account in the Board’s decision-making.
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Cadogan Energy Solutions plc Annual financial report 2024
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The Company seeks to ensure that it always acts lawfully, ethically and with integrity. The Company has in place the
following policies which the Board reviews periodically:
>
Code of Business Conduct and Ethics
>
Anti-Bribery Policy
>
Share Dealing Code
>
Disclosure Policy
>
Health, Safety and Environmental policies.
The Company has procedures in place for managing conflicts of interest. Should a director become aware that they, or
any of their connected parties, have an interest in an existing or proposed transaction with the Company, its subsidiaries
or any matters to be discussed at meetings, they are required to formally notify the Board in writing or at the next
Board meeting. In accordance with the Companies Act 2006 and the Company’s Articles of Association, the Board may
authorise any potential or actual conflict of interest that may otherwise involve any of the directors breaching his or her
duty to avoid conflicts of interest. All potential and actual conflicts approved by the Board are recorded in register of
conflicts, which is reviewed by the Board at each Board meeting.
Directors’ declarations of interests is a regular Board agenda item. A register of directors’ interests (including any
actual or potential conflicts of interest) is maintained and reviewed regularly to ensure all details are kept up to date.
Authorisation is sought prior to a director taking on a new appointment or if any new conflicts or potential conflicts
arise. New Directors are required to declare any conflicts, or potential conflicts, of interest to the Board at the first Board
meeting after his or her appointment. The Board believes that the procedures established to deal with conflicts of interest
are operating effectively.
Division of responsibilities
The Directors possess a wide range of skills, knowledge and experience relevant to the strategy of the Company, including
financial, legal, governance, regulatory and industry experience as well as the ability to provide constructive challenge to
the views and actions of executive management in meeting agreed strategic goals and objectives.
The roles and responsibilities of the Chairman and Chief Executive Officer are separate with a clear and formal division of
each individual’s responsibilities, which has been agreed and documented by the Board.
The Non-Executive Directors bring an independent view to the Board’s discussions and the development of its strategy. Their
range of experience ensures that management’s performance in achieving the business goals is challenged appropriately.
Ms Lilia Jolibois, Mr Charles Mack and Mr Thibaut de Gaudemar are considered by the Board to be fully independent.
Mr Gilbert Lehmann, Senior Independent non-executive Director, has served on the Board for longer than 9 years since
his appointment, however, the Board is of the view that he retains his independent judgement and continues to make a
valuable contribution to the Board.
Mr Michel Meeus, who is a significant shareholder is not considered independent as defined within the UK Corporate
Governance Code 2018, however the Board believes that Mr Michel Meeus is independent in character and judgement and
free from relationships or circumstances that could affect his judgement.
The Board has access to the advice of the company secretary.
Composition, succession and evaluation
The Company has established a nomination committee which leads the process for Board appointments by identifying
and nominating candidates for the approval of the Board to fill Board vacancies and making recommendations to the
Board on Board’s composition and balance. The Company’s Nomination Committee Report can be found on
pages 36 and 37.
Under the Company’s Articles of Association, all Directors must seek re-election by members at least once every three
years. However, the Board has agreed that all Directors will be subject to annual election by shareholders in line with
Corporate Governance best practice. Accordingly, all members of the Board will be standing for re-election at the 2025
Annual General Meeting due to be held on 20 June 2025.
All Directors continue to be effective and have sufficient time available to perform their duties. The letters of appointment
for the Non-Executive Directors are available for review at the Registered Office and prior to the Annual General Meeting.
Each of the Non-Executive Directors independently ensures that they update their skills and knowledge sufficiently to
enable them to fulfil their duties appropriately.
The Chairman, in conjunction with the Company Secretary, plans the programme for the Board during the year. While no
formal structured continuing professional development program has been established for the non-executive Directors,
every effort is made to ensure that they are fully briefed before Board meetings on the Company’s business. The agenda
for Board and Committee meetings are considered by the relevant Chairman and issued with supporting papers during
the week preceding the meeting. For each Board meeting, the Directors receive a Board pack including management
accounts, briefing papers on commercial and operational matters and major capital projects including acquisitions. The
Board also receives briefings from key management on specific issues.
Corporate Governance Statement continued
This Corporate Governance Statement forms part of the Report of Directors
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
29
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Audit, risk and internal control
The Board has delegated certain responsibilities to its committees including its Audit Committee. The Company’s Audit
Committee Report can be found on pages 32 and 33.
The role of the Audit Committee is to monitor the integrity of the Company’s financial reporting, to review the
Company’s internal control and risk management systems and to oversee the relationship with the Group’s external
auditors. The Audit Committee focuses particularly on compliance with legal requirements, accounting standards and
the rules of the Financial Services Authority. The Audit Committee will meet at least three times a year with further
meetings that are determined by the committee. Any member of the committee or the external auditors may request
any additional meetings they consider necessary.
The Directors are responsible for the Group’s system of internal control and for maintaining and reviewing its
effectiveness. The Group’s systems and controls are designed to safeguard the Group’s assets and to ensure the
reliability of information used both within the business and for publication. The Board has delegated responsibility for
the monitoring and review of the Group’s internal controls to the Audit Committee.
Systems are designed to manage, rather than eliminate the risk of failure to achieve business objectives and can
provide only reasonable, and not absolute assurance against material misstatement or loss.
The key features of the Group’s internal control and risk management systems that ensure the accuracy and reliability
of financial reporting include clearly defined lines of accountability and delegation of authority, policies and procedures
that cover financial planning and reporting, preparing consolidated financial statements, capital expenditure, project
governance and information security.
The key features of the internal control systems, which operated during 2024 and up to the date of signing the
Financial Statements are documented in the Group’s Corporate Governance Policy Manual and Finance Manual. These
manuals and policies have been circulated and adopted throughout the Group throughout the period.
Day-to-day responsibility for the management and operations of the business has been delegated to the Chief
Executive Officer and senior management. Certain specific administrative functions are controlled centrally. Taxation
and treasury functions report to the Group Director of Finance who reports directly to the Chief Executive Officer.
The legal function for Ukraine’s related assets and activities is managed by the General Counsel, who reports to the
General Director of Cadogan Ukraine. The Health, Safety and Environment functions report to the Chairman of the HSE
Committee, the HSE Committee Report can be found on pages 34 and 35. The Group does not have an internal audit
function. Due to the small scale of the Group’s operations at present, the Board does not feel that it is appropriate or
economically viable to have an internal audit function in place, however this will be kept under review by the Audit
Committee on an annual basis.
The Board has reviewed internal controls and risk management processes, in place from the start of the year to
the date of approval of this report. During its review the Board did not identify nor were advised of any failings or
weaknesses which it has deemed to be significant.
A summary of the principal risks facing the Company and the mitigating actions in place are contained on pages 9 to 12
of the annual report.
The Company’s going concern assessment is contained on page 24 of the annual report.
Further information on the work undertaken by the Committee during the year can be found on pages 32 and 33 of the
annual report.
Remuneration
The Board has established a Remuneration Committee and the Company’s Remuneration Committee Report can be
found on pages 36 to 52 of the annual report.
The role of the Remuneration Committee is to determine and agree with the Board the broad policy for the
remuneration of executives and Senior Managers as designated, as well as for setting the specific remuneration
packages, including pension rights and any compensation payments of all executive Directors and the Chairman.
The Company’s remuneration policies and practices are designed to support its long-term strategy and promote the
long-term sustainable success of the Company.
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Cadogan Energy Solutions plc Annual financial report 2024
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Attendance at meetings
Ten Board meetings took place during 2024. The attendance of those Directors in place at the year end at Board and
Committee meetings during the year was as follows:
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
No. Held
10
3
1
1
No. Attended:
M Meeus***
10
2
1
1
F Khallouf
10
N/A
N/A
N/A
L Jolibois
10
3
1
1
G Lehmann
10
N/A
1
1
C Mack*
5
1
–
–
T de Gaudemar*
5
1
–
–
J Mahaux**
1
–
–
–
* Appointed on 21 June 2024
** Resigned 19 April 2024
*** M Meeus was temporarily appointed to the Audit Committee upon the resignation of J Mahaux.
Responsibilities and membership of Board Committees
The Board has agreed written terms of reference for the Nomination Committee, Remuneration Committee, Audit
Committee and HSE Committee. The terms of reference for the Board Committees are published on the Company’s
website, www.cadoganenergysolutions.com, and are also available from the Company Secretary at the Registered
Office. A review of the Committees including their membership and activities of all Board Committees is provided on
pages 32 to 37.
Relations with shareholders
The Chairman and Executive Directors of the Company have a regular dialogue with analysts and substantial
shareholders. The outcome of these discussions is reported to the Board at quarterly meetings and discussed in detail.
Mr Lehmann, as the Senior Independent Director, is available to meet with shareholders who have questions that they
feel would be inappropriate to raise via the Chairman or Executive Directors.
The Annual General Meeting is used as an opportunity to communicate with all shareholders. In addition, financial
results are posted on the Company’s website, www.cadoganenergysolutions.com, as soon as they are announced. The
Notice of the Annual General Meeting is also contained on the Company’s website, www.cadoganenergysolutions.
com. It is intended that the Chairmen of the Nomination, Audit and Remuneration Committees will be present
at the Annual General Meeting. The results of all resolutions will be published on the Company’s website, www.
cadoganenergysolutions.com.
Directors’ section 172 statement
The disclosure describes how the Directors have regard to the matters set out in section 172(1)(a) to (f) and forms the
Directors’ statement required under section 414CZA of the Companies Act 2006.
The matters set out in section 172(1) (a) to (f) are that a Director must act in the way they consider, in good faith, would
be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have
regard (amongst other matters) to:
(a) the likely consequences of any decision in the long term;
(b) the interests of the Company’s employees;
(c) the need to foster the Company’s business relationships with suppliers, customers and others;
(d) the impact of the Company’s operations on the community and the environment;
(e) the desirability of the Company maintaining a reputation for high standards of business conduct; and
(f) the need to act fairly between members of the Company.
Being sustainable in our activities means conducting our business with respect for the environment and for the
communities hosting us, with the aim of increasing the benefit and value to our stakeholders. We recognize that this is
a key element to be competitive and to maintain our licence to operate.
Further details of how the Directors have regard to the issues, factors and stakeholders considered relevant in
complying with S 172 (1) (a)-(f), the methods used to engage with stakeholders and the effect on the Group’s decision
making can be found throughout the annual report and in particular page 30 (which outlines how the Company
engages with its stakeholders), pages 13 to 15 (which contains Cadogan’s corporate responsibility statement),
and pages 25 and 26 (which contains the Company’s report on greenhouse gas emissions).
Corporate Governance Statement continued
This Corporate Governance Statement forms part of the Report of Directors
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
31
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
The Group has implemented an integrated HSE management system aiming to ensure a safe and environmentally
friendly culture in the organisation (pages 13 and 14). However, regarding the environmental sustainability of the
Group’s activities, the Directors are fully aware of the need to direct future development in new activities with a lower
impact on environment (CEO outlook page 6).
When assessing the Proger Loan, the Directors carefully considered the issues and decisions with their impact on the
Group and all its stakeholders (pages 5, 6, 14, 15).
The Board has a formal schedule of matters specifically reserved for its decision, including approval of acquisitions and
disposals, major capital projects, financial results, Board appointments, dividend recommendations, material contracts
and Group strategy. For each Board meeting, the Directors receive a Board pack including management accounts,
briefing papers on commercial and operational matters and major capital projects including acquisitions. The Board
also receives briefings from key management on specific issues.
In particular, as a consequence of the invasion of Ukraine by Russia in February 2022, and the war situation prevailing
in Ukraine, the Board discussed the current situation and its consequences on the security of the employees, the
organisation of the operations in Ukraine and the potential impacts on its human, financial and operational assets.
The Group has been able to implement immediately emergency procedures with safety and protection measures
communicated to all employees and put in place for every location. Specific measures have been put in place for the
operations on site to ensure the human, the industrial and the environmental safety. The Group is monitoring the
situation daily and taking appropriate action to ensure the safety and essential needs of employees.
32
Cadogan Energy Solutions plc Annual financial report 2024
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Board Committee Reports
Audit Committee Report
The Audit Committee is appointed by the Board, on the recommendation of the Nomination Committee, from the
Non-Executive Directors of the Group. The Audit Committee’s terms of reference are reviewed from time to time by
the Audit Committee and any changes are then referred to the Board for approval. The terms of reference of the
Committee are published on the Company’s website www.cadoganenergysolutions.com, and are also available from the
Company Secretary at the Registered Office. Two members constitute a quorum.
Responsibilities
>
To monitor the integrity of the annual and interim financial statements, the accompanying reports to shareholders,
and announcements regarding the Group’s results;
>
To review and monitor the effectiveness and integrity of the Group’s financial reporting and internal financial controls;
>
To review the effectiveness of the process for identifying, assessing and reporting all significant business risks and the
management of those risks by the Group;
>
To oversee the Group’s relations with the external auditor and to make recommendations to the Board, for approval
by shareholders, on the appointment and removal of the external auditor;
>
To consider whether an internal audit function is appropriate to enable the Audit Committee to meet its objectives;
and
>
To review the Group’s arrangements by which staff of the Group may, in confidence, raise concerns about possible
improprieties in matters of financial reporting or other matters.
Governance
Ms Jolibois, Mr Meeus (partly), Mr Mack and Mr de Gaudemar (from 21 June till 31 December 2024) were members
of the Audit Committee during the period. The Audit Committee is chaired by Ms Jolibois who had relevant financial
experience within a major European company as well as holding several non-executive roles in major international
entities.
At the invitation of the Audit Committee, the Group Director of Finance and external auditor regularly attend meetings.
The Company Secretary attends all meetings of the Audit Committee.
The Audit Committee also meets the external auditor without management being present.
Activities of the Audit Committee
During the year, the Audit Committee discharged its responsibilities as follows:
Assessment of the effectiveness of the external auditor
The Committee has assessed the effectiveness of the external audit process. They did this by:
>
Reviewing the 2024 external audit plan;
>
Discussing the results of the audit including the auditor’s views on material accounting issues and key judgements
and estimates, and their audit report;
>
Considering the robustness of the audit process;
>
Reviewing the quality of the service and people provided to undertake the audit; and
>
Considering their independence and objectivity.
Financial statements
The Audit Committee examined the Group’s consolidated and Company’s financial statements and, prior to
recommending them to the Board, considered:
>
the appropriateness of the accounting policies adopted;
>
reviewed critical judgements, estimates and underlying assumptions; and
>
assessed whether the financial statements are fair, balanced and understandable.
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
33
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Going concern
After making enquiries and considering the uncertainties described on pages 9 to 12, the Committee has a reasonable
expectation that the Company and the Group has adequate resources to continue in operational existence for the
foreseeable future and consider the going concern basis of accounting to be appropriate. For further detail including
the basis for the conclusion, please refer to the detailed discussion of the assumptions outlined in note 3 (b) to the
Consolidated Financial Statements.
Internal controls and risk management
The Audit Committee reviews and monitors financial and control issues throughout the Group including the Group’s key
risks and the approach for dealing with them. Further information on the risks and uncertainties facing the Group are
detailed on pages 86 to 88 and in note 28 to the financial statements.
External auditor
The Audit Committee is responsible for recommending to the Board, for approval by the shareholders, the appointment
of the external auditor.
The Audit Committee considers the scope and materiality for the audit work, approves the audit fee, and reviews the
results of the external auditor’s work. Following the conclusion of each year’s audit, it considers the effectiveness of
the external auditor during the process. An assessment of the effectiveness of the audit process was made, considering
reports from the auditor on its internal quality procedures. The Committee reviewed and approved the terms and scope
of the audit engagement, the audit plan and the results of the audit with the external auditor, including the scope of
services associated with audit-related regulatory reporting services. Additionally, auditor independence and objectivity
were assessed, considering the auditor’s confirmation that its independence is not impaired, the overall extent of non-
audit services provided by the external auditor and the past service of the auditor.
Internal audit
The Audit Committee considers annually the need for an internal audit function and believes that, due to the size of
the Group and its current stage of development, an internal audit function will be of little benefit to the Group.
Whistleblowing
The Group’s whistleblowing policy encourages employees to report suspected wrongdoing and sets out the procedures
employees must follow when raising concerns. The policy, which was implemented during 2008 is reviewed
periodically. The Group’s policies on anti-bribery, the acceptance of gifts and hospitality, and business conduct and
ethics are circulated to staff as part of a combined manual on induction with changes regularly communicated.
Overview
As a result of its work during the year, the Audit Committee has concluded that it has acted in accordance with its
terms of reference and has ensured the independence and objectivity of the external auditor.
The Chairman of the Audit Committee will be available at the Annual General Meeting to answer any questions about
the work of the Audit Committee.
Lilia Jolibois
Chairman of the Audit Committee
25 April 2025
34
Cadogan Energy Solutions plc Annual financial report 2024
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Health, Safety and Environment Committee Report
The Health, Safety and Environment Committee (the "HSE Committee”) is appointed by the Board, on the
recommendation of the Nomination Committee. The HSE Committee’s terms of reference are reviewed annually by
the Committee and any changes are then referred to the Board for approval. The terms of reference of the Committee
are published on the Company’s website www.cadoganenergysolutions.com, and are also available from the Company
Secretary at the Registered Office. Two members constitute a quorum, one of whom must be a Director.
Governance
The Committee is chaired by Mr Andrey Bilyi (Cadogan Ukraine General Director) as acting Head of the HSE Committee
and its other member is Ms Snizhana Buryak (HSE Manager). The CEO attends meetings of the HSE Committee as
necessary. During 2024, the HSE Committee held four meetings to monitor the HSE risks and activities across the
business, following which actions were identified for the continuous improvement of the various processes and the
mitigation of risk.
Responsibilities
>
To regularly maintain and implement the continuous improvement of the HSE Management System with the aim of
improving the Company’s performances;
>
Assessments of the risks to employees, contractors, customers, partners, and any other people who could be
affected by the Group’s activities with the aim of reducing the global risk of the Group and increasing its level of
acceptability;
>
Evaluate the effectiveness of the Group’s policies and systems for identifying and managing health, safety and
environmental risks within the Group’s operation;
>
Assess the policies and systems within the Group for ensuring compliance with health, safety and environmental
regulatory requirements;
>
Assess the performance of the Group with regard to the impact of health, safety, environmental and community
relations decisions and actions upon employees, communities and other third parties and also assess the impact of
such decisions and actions on the reputation of the Group and make recommendations to the Board on areas for
improvement;
>
On behalf of the Board, receive reports from management concerning any fatalities and serious accidents within
the Group and actions taken by management as a result of such fatalities or serious accidents;
>
Evaluate and oversee, on behalf of the Board, the quality and integrity of any reporting to external stakeholders
concerning health, safety, environmental and community relations issues; and
>
Where it deems it appropriate to do so, appoint an independent auditor to review performance with regard
to health, safety, environmental and community relations matters and review any strategies and action plans
developed by management in response to issues raised and, where appropriate, make recommendations to the
Board concerning the same.
Board Committee Reports continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
35
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Activities of the Health, Safety and Environment Committee
The HSE Committee in discharging its duties reviewed and considered the following:
>
Company activities execution and control over contractors services execution in line with Company policies and
HSE procedures;
>
Monthly statistics and reports on the activity were regularly distributed to the CEO, Management and to the
members of the committee;
>
Ensured that the implementation of new legislation and requirements were punctually followed-up and promptly
updated;
>
Compliance with HSE regulatory requirements was ensured through discussion of the results of inspections,
both internal inspections and those carried out by the Authorities. The results of the inspections and drills were
analysed and commented to assess the need for corrective actions and/or training initiatives;
>
A standing item was included on the agenda at every meeting to monitor monthly HSE performance, key indicators
and statistics allowing the HSE Committee to assess the Company’s performance by analysing any lost-time
incidents, near misses, HSE training and other indicators;
>
Interaction with contractors, Authorities, local communities and other stakeholders were discussed among other
HSE activities;
>
Compliance to ISO 14001 and ISO 45001 has been proved by the authorised third party auditor. Also, the Company
had its entire data calculation process as well as emissions measurement system re-validated by a different
independent third party; and
>
Ensuring all the Observation and Actions requested by the Certification Body have been implemented.
Overview
The Company’s HSE Management System and the Guidelines and Procedures have been updated to fit with the ISO
requirements and are adequate for the proper execution of the Company’s operations.
As a result of its work during the year, the HSE Committee has concluded that it has acted in accordance with its terms
of reference.
36
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Nomination Committee Report
The Board delegates some of its duties to the Nomination Committee and appoints the members of the Nomination
Committee which are non-executive Directors of the Group. The membership of the Committee is reviewed from time
to time and any changes to its composition are referred to the Board for approval. The terms of reference of the
Nomination Committee are published on the Company’s website, www.cadoganenergysolutions.com, and are available
from the Company Secretary at the Registered Office. Two members constitute a quorum.
Governance
Mr Michel Meeus (Remuneration and Nomination Committee Chairman), Ms Lilia Jolibois, and Mr Gilbert Lehmann,
Mr Charles Mack and Mr Thibaut de Gaudemar (Non-Executive Directors) are the members of the Nomination
Committee. The Company Secretary attends all meetings of the Nomination Committee.
Responsibilities
>
To regularly review the structure, size and composition (including the skills, knowledge and experience) required of
the Board compared to its current position and make recommendations to the Board with regard to any changes;
>
Be responsible for identifying and nominating candidates to fill Board vacancies as and when they arise, for the
Board’s approval;
>
Before appointments are made by the Board, evaluate the balance of skills, knowledge, experience and diversity
(gender, ethnic, age, sex, disability, educational and professional backgrounds, etc.) on the Board and, in the light of
this evaluation, prepare a description of the role and capabilities required for a particular appointment; and
>
In identifying suitable candidates, the Nomination Committee shall use open advertising or the services of external
advisers to facilitate the search and consider candidates from a wide range of backgrounds on merit, ensuring that
appointees have enough time available to devote to the position.
The Nomination Committee shall also make recommendations to the Board concerning:
>
Formulating plans for succession for both executive and non-executive Directors and in particular for the key roles
of Chairman and Chief Executive Officer;
>
Membership of the Audit and Remuneration Committees, in consultation with the Chairmen of those committees;
>
The reappointment of any non-executive Director at the conclusion of their specified term of office, having given
due regard to their performance and ability to continue to contribute to the Board in the light of the knowledge,
skills and experience required; and
>
The re-election by shareholders of any Director having due regard to their performance and ability to continue to
contribute to the Board in the light of the knowledge, skills and experience required.
Any matters relating to the continuation in office of any Director at any time including the suspension or termination
of service of an executive Director as an employee of the Company subject to the provisions of the law and their
service contract.
Michel Meeus
Nomination Committee Chairman
25 April 2025
Board Committee Reports continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
37
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Remuneration Committee
Statement from the Chairman
I am pleased to present the Annual Report on Remuneration for the year ended 31 December 2024.
Cadogan’s Remuneration Policy was approved as proposed by the shareholders at the Annual General Meeting on
21 June 2024 and is attached at the end of the Annual Report on Remuneration. The Remuneration Committee is not
proposing to make any changes to the existing Policy however in line with industry best practice and the three-year
Policy cycle the Company will be seeking shareholder approval at this year’s AGM.
The key elements of the Remuneration Policy are:
>
A better long-term alignment of the executives’ remuneration with the interests of the shareholders;
>
A material reduction in the maximum remuneration level for the Executive Directors, both in terms of annual bonus
and of long-term incentive (performance share plan);
>
The payment of at least 50% of the Annual Bonus in shares with the remaining 50% to be paid in cash or shares at
the discretion of the Remuneration Committee. Shares will be priced for this award based on their market value at
closing on the Business Day prior to the Subscription Date;
>
The introduction of claw-back and malus provisions on both bonuses and share awards; and
>
The expectation that the Executive Directors build a substantial shareholding position in the Company through
their mandate.
Michel Meeus
Chairman of the Remuneration Committee
25 April 2025
38
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Remuneration Committee Report
The Remuneration Committee is committed to principles of accountability and transparency to ensure that
remuneration arrangements demonstrate a clear link between reward and performance.
Governance
The Remuneration Committee is appointed by the Board from the non-executive Directors of the Company. The
Remuneration Committee’s terms of reference are reviewed annually by the Remuneration Committee and any
changes are then referred to the Board for approval. The terms of reference of the Remuneration Committee are
published on the Company’s website, www.cadoganenergysolutions.com, and are also available from the Company
Secretary at the Registered Office.
The Remuneration Committee consists of Mr Michel Meeus, Ms Lilia Jolibois, Mr Gilbert Lehmann, Mr Charles Mack
and Mr Thibaut de Gaudemar. At the discretion of the Remuneration Committee, the Chief Executive Officer is invited
to attend meetings when appropriate but is not present when his own remuneration is being discussed. None of
the directors are involved in deciding their own remuneration. The Company Secretary attends the meetings of the
Remuneration Committee.
Responsibilities
In summary, the Remuneration Committee’s responsibilities, as set out in its terms of reference, are as follows:
>
To determine and agree with the Board the policy for the remuneration of the executive Directors, the Company
Secretary and other members of executive management as appropriate;
>
To consider the design, award levels, performance measures and targets for any annual or long-term incentives and
approve any payments made and awards vesting under such schemes;
>
Within the terms of the agreed remuneration policy, to determine the total individual remuneration package of
each executive Director and other senior executives including bonuses, incentive payments and share options or
other share awards; and
>
To ensure that contractual terms on termination, and any payments made, are fair to the individual and the
Company, that failure is not rewarded and that the duty to mitigate loss is fully recognised.
Overview
The Chairman and Executive Directors of the Company have a regular dialogue with analysts and substantial
shareholders, which includes the subject of Directors’ Remuneration. The outcome of these discussions is reported to
the Board and discussed in detail both there and during meetings of the Remuneration Committee.
As a result of its work during the year, the Remuneration Committee has concluded that it has acted in accordance
with its terms of reference. The chairman of the Remuneration Committee will be available at the Annual General
Meeting to answer any questions about the work of the Committee.
Remuneration consultants
The Remuneration Committee did not take any advice from external remuneration consultants in the year.
Annual Report on Remuneration 2024
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
39
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Single total figure of remuneration for Executive and Non-Executive Directors (audited)
$
Salary and fees
$
Taxable benefit1
$
Contributions to
pension schemes
$
Annual bonus
$
Total
Executive Director
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
F Khallouf
467,282
493,136
20,957
27,037
80,263
78,258
–
– 568,502
598,431
Non-Executive Directors
M Meeus
62,041
89,000
–
-
-
-
-
-
62,041
89,000
L Jolibois
48,000
48,000
-
-
-
-
-
-
48,000
48,000
J Mahaux
26,505
43,000
-
-
-
-
-
-
26,505
43,000
G Lehmann
38,000
38,000
-
-
-
-
-
-
38,000
38,000
C Mack
22,516
-
-
-
-
-
-
-
22,516
-
T de Gaudemar
22,516
-
-
-
-
-
-
-
22,516
-
$
Total Fixed
Remuneration
$
Total Variable
Remuneration
2024
2023
2024
2023
Executive Director
568,502
598,431
–
–
Non-Executive Directors
219,578
218,000
–
–
Notes to the table
Mr Fady Khallouf
Mr Khallouf was appointed as Chief Executive Officer on 15 November 2019. Mr Khallouf’s salary is €440,000 per annum.
KPIs
The CEO is subject to a performance-related, bonus scheme built around a scorecard with a set of challenging KPI’s
aligned with the Company strategy. Given the current situation in Ukraine and any potential future difficulties for the
Company, Mr Fady Khallouf had requested that any annual performance related bonus to be considered and paid by
the Remuneration Committee during 2024, in respect of the financial year ended 31 December 2024, be waived. Whilst
the bonus of Euros 500,000 has been accrued at 31 December 2024 it was still conditional on receiving the funds from
the Proger loan according to the Settlement Agreement, which occurred in January 2025. Therefore, on that basis the
bonus has been excluded from the 2024 directors’ remuneration and will be included in 2025 when it became due and
payable.
Benefits
Benefits may be provided to the executive director, in the form of private medical insurance and life assurance.
The Chairman and Non-Executive Directors
As mentioned above, fees for non-Executive Directors were reduced by 20% on 15 January 2020 with effect from
15 November 2019. The fees are as follows: the Chairman’s fee at $89,000 and the fee for acting as a non-executive
Director at $38,000 with an additional $10,000 for acting as Chairman of the Audit Committee and an additional
$5,000 for a committee membership. Since July 2024, the Chairman’s fee is $65,000.
Scheme interests awarded during the financial year (audited)
There were no scheme interests awarded during the year.
Payments to past Directors (audited)
In 2024 there were no payments to past Directors.
Payments for loss of office (audited)
No notice period was either worked or paid.
1 Taxable benefits include insurance provided to the executive and leased car.
40
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Directors’ interests in shares (audited)
The beneficial interests of the Directors in office as at 31 December 2024 and their connected persons in the Ordinary
shares of the Company at 31 December 2024 are set out below.
Shares as at 31 December
2024
2023
Michel Meeus
26,023,651
10,200,000
Fady Khallouf
17,454,105
10,875,455
Gilbert Lehmann
–
–
Lilia Jolibois
–
–
Charles Mack
–
–
Thibaut de Gaudemar
–
–
Jacques Mahaux
–
–
The Company does not currently operate formal shareholding guidelines. Whilst there is no specified level, the
Company expects that under the new Remuneration Policy, the Executive Director will continue to build up a significant
shareholding position in the Company during his mandate.
The Company’s performance
The graph below highlights the Company’s total shareholder return (“TSR”) performance for the last fourteen years
compared to the FTSE All Share Oil & Gas Producers index. This index has been selected on the basis that it represents
a sector specific group, which is an appropriate group for the Company to compare itself against, and has been
retained ever since, primarily for continuity purposes TSR is the return from a share or index based on share price
movements and notional reinvestment of declared dividends.
0
50
100
150
200
250
01/01/2009
30/06/2009
31/12/2009
30/06/2010
31/12/2010
30/06/2012
31/12/2012
30/06/2011
31/12/2011
30/06/2013
31/12/2013
30/06/2014
30/06/2015
30/06/2017
31/12/2014
31/12/2015
31/12/2017
30/06/2016
31/12/2016
FTSE All Share Oil & Gas
Cadogan Petroleum plc
30/06/2022
31/12/2021
30/06/2021
30/06/2024
31/12/2022
31/12/2024
30/06/2023
31/12/2023
31/12/2020
30/06/2020
30/06/2018
31/12/2018
30/06/2019
31/12/2019
Annual Report on Remuneration 2024
continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
41
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Historic Remuneration of Chief Executive
Salary
$
Taxable
benefits
$
Annual
bonus
$
Long-term
incentives
$
Pension
$
Loss of
office
$
Total
$
2009
422,533
–
284,552
–
–
–
707,085
2010
547,067
–
–
–
–
–
547,067
2011
669,185
–
–
–
–
–
669,185
2012
511,459
–
–
–
31,966
126,808
670,233
2013
384,941
–
–
–
–
–
384,941
2014
405,433
20,734
–
–
–
–
426,167
2015
432,4091
15,987
243,132
–
–
–
691,528
2016
487,080
15,353
210,5042
–
–
–
712,937
2017
497,288
27,273
81,3923
–
–
–
651,553
2018
521,664
39,838
201,872
–
–
–
763,374
2019
492,581
45,453
495,1094
–
–
–
1,033,143
2020
517,389
59,294
–
–
58,300
–
634,983
2021
535,999
30,173
–
–
78,619
–
644,791
2022
479,720
29,486
–
–
75,035
–
584,241
2023
493,136
27,037
–
–
78,258
–
598,431
2024
467,282
20,957
–
–
80,263
–
568,502
1 2015 CEO’s salary is the sum of Mr des Pallieres' salary for the period January to June and of Mr Michelotti's salary for the period July to
December.
2 In relation to performance in 2016 and 2015, the CEO used the entire amount of the bonus to buy at market price newly issued company
shares on 22 September 2017.
3 According to the 2017 performance results, the CEO was awarded a bonus that partially comprised shares; However, Mr Michelotti never
exercised his right to claim those shares.
4 2019 Annual bonus is a sum of Mr Michelotti’s bonus of $112,140 and welcome bonus for Mr Khallouf equivalent in value of 5,500,000
Ordinary shares based on share’s price of £0.0525. Welcome bonus for Mr Khallouf was provided in May 2020 based on share’s price of £0.03.
Respective correction of the bonus reserve equivalent to $185,000 was recognised through share premium account in 2020.
In 2024, the Remuneration Committee, after consultation with the CEO, have decided to postpone any variable
performance related bonus for the year ended 31 December 2024.
The annual bonus received by the CEO as a percentage of the maximum opportunity is presented in the following table.
Year
CEO
CEO single
figure of total
remuneration $
Annual bonus
payout against
maximum
opportunity %
2024
Mr Khallouf
568,502
–
2023
Mr Khallouf
598,431
–
2022
Mr Khallouf
584,241
–
2021
Mr Khallouf
628,717
–
2020
Mr Khallouf
634,983
–
2019
Mr Khallouf1
444,465
–
Mr Michelotti
588,678
10
2018
Mr Michelotti
763,374
32
2017
Mr Michelotti
651,553
12
2016
Mr Michelotti
712,937
222
2015
Mr Michelotti
502,021
273
Mr des Pallieres
189,507
–
2014
Mr des Pallieres
426,167
–
2013
Mr des Pallieres
384,941
–
2012
Mr des Pallieres
389,935
–
Mr Barron
280,2984
–
2011
Mr Michelotti5
273,201
–
Mr Barron
395,984
–
2010
Mr Barron
547,067
–
2009
Mr Barron6
707,085
67
1 Includes a welcome bonus for Mr Khallouf equivalent in value of 5,500,000 Ordinary shares based on share’s price of £0.0525.
2 Mr Michelotti undertook to use the entire bonus to buy company’s share at market price in order to leave the Company cash neutral.
3 Year-end performance-based bonus was an alternative to an up-front sign-on bonus. Mr Michelotti used the entire bonus to buy company’s
share at market price on 22 September 2017.
4 $280,298 paid as fees, pension, and loss of office.
5 From 1 August 2011.
6 From 19 March 2009.
42
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Percentage change in the remuneration of the Chief Executive
The following table shows the percentage change in the remuneration of the Chief Executive in 2024 and 2023
compared to that of all employees within the Group.
2024
$’000
2023
$’000
Average
Change %
Base salary
CEO
467
493
(5%)
All employees7
1,750
2,042
(14%)
Taxable benefits
CEO
101
105
(4%)
All employees
121
119
2%
Annual Bonus
CEO
–
–
N/A
All employees
40
–
N/A
Total
CEO
568
598
(5%)
All employees
1,911
2,161
(12%)
In 2024 none of the directors participated in long-term incentive schemes.
In 2024 there was no increase in executive and non-executive directors' salary in base currency. The difference in pay
represents the change in exchange rate between the base currency and USD as a reporting currency.
Percentage change in Non-Executive Director remuneration
Michel Meeus
All employees
2024
$’000
2023
$’000
% change
2024 – 2023
% change
2024 – 2023
Base salary/fees
62,041
89,000
(30%)
(14%)
Taxable benefits (including pensions)
–
–
–
2%
Annual bonus
–
–
–
–
Total
62,041
89,000
(30%)
(11.6%)
The 1 January 2024, Michel Meeus stepped down as Chairman of the Company, remained as a non-executive director
and became a member of the Audit Committee. Starting from 22 April 2024, Mr Meeus has been appointed by the
Board as Interim Chairman of the Company (Note: previous remuneration level has been reinstated).
Lilia Jolibois
All employees
2024
$’000
2023
$’000
% change
2024 – 2023
% change
2024 – 2023
Base salary/fees
48,000
48,000
–
(14%)
Taxable benefits (including pensions)
–
–
–
2%
Annual bonus
–
–
–
–
Total
48,000
48,000
–
(11.6%)
Jacques Mahaux
All employees
2024
$’000
2023
$’000
% change
2024 – 2023
% change
2024 – 2023
Base salary/fees
26,505
43,000
(38%)
(14%)
Taxable benefits (including pensions)
–
–
–
2%
Annual bonus
–
–
–
–
Total
26,505
43,000
(38%)
(11.6%)
Gilbert Lehmann
All employees
2024
$’000
2023
$’000
% change
2024 – 2023
% change
2024 – 2023
Base salary/fees
38,000
38,000
–
(14%)
Taxable benefits (including pensions)
–
–
–
2%
Annual bonus
–
–
–
–
Total
38,000
38,000
–
(11.6%)
7 All employees mean all employees of the Group, including CEO and other Directors (note 12, page 77).
Annual Report on Remuneration 2024
continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
43
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Charles Mack
All employees
2024
$’000
2023
$’000
% change
2024 – 2023
% change
2024 – 2023
Base salary/fees
22,516
–
N/A
(14%)
Taxable benefits (including pensions)
–
–
N/A
2%
Annual bonus
–
–
N/A
–
Total
22,516
–
N/A
(11.6%)
Thibaut de Gaudemar
All employees
2024
$’000
2023
$’000
% change
2024 – 2023
% change
2024 – 2023
Base salary/fees
22,516
–
N/A
(14%)
Taxable benefits (including pensions)
–
–
N/A
2%
Annual bonus
–
–
N/A
–
Total
22,516
–
N/A
(11.6%)
Relative importance of spend on pay
The table below compares shareholder distributions (i.e. dividends and share buybacks) and total employee pay
expenditure of the Group for the financial years ended 31 December 2023 and 31 December 2024.
2024
$’000
2023
$’000
Year-on-year
change, %
All-employee remuneration
1,911
2,161
(12%)
Distributions to shareholders
–
–
–
Shareholder voting at the Annual General Meeting
The Directors’ Remuneration Policy was approved by shareholders at the Annual General Meeting held on 21 June
2024 and remains unchanged. The Remuneration Policy can be found on the Group’s website and at pages 44 to 52 of
this Annual Report on Remuneration. The votes cast by proxy were as follows:
Directors’ Remuneration Policy
Number of votes
% of votes cast
For
120,854,549
63.29
Against
70,110,197
36.71
Total votes cast
190,964,746
100.00
Number of votes withheld
6,908,137
The Directors’ Annual Report on Remuneration is approved by shareholders at each Annual General Meeting. A
summary of the votes cast by proxy in 2024 and 2023 were as follows:
2024
2023
Director’s Annual Report on Remuneration
Number of votes
% of votes cast
Number of votes
% of votes cast
For
120,854,549
63.29
105,995,725
99.97
Against
70,110,197
36.71
26,984
0.03
Total votes cast
190,964,746
100.00
106,022,709
100.00
Number of votes withheld
6,908,137
Implementation of Remuneration Policy in 2025
The performance related elements of remuneration remain unchanged and will be built around a scorecard with a set
of KPI’s aligned with the Group strategy. The Remuneration Policy can be found on the Group’s website and at pages
44 to 52 of this Annual Report on Remuneration.
Approval
The Directors’ Annual Report on Remuneration was approved by the Board on 25 April 2025 and signed on its behalf by:
Michel Meeus
Chairman
25 April 2025
44
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Directors’ Remuneration Policy
Introduction
This Directors’ Remuneration Policy (the “Policy”) contains the information required to be set out as the directors’
remuneration policy for the purposes of The Large and Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013.
The Policy was approved by shareholders at the 2024 AGM of the Company. The Remuneration Committee is not
proposing to make any changes to the existing Policy however in line with industry best practice and the three-year
Policy cycle the Company will be seeking shareholder approval at this year’s AGM. The effective date of this Policy is
the date on which the Policy is approved by shareholders.
The Policy applies in respect of all executive officers appointed to the Board of Directors (“executive directors”) and
non-executive directors. Other senior executives may be subject to the Policy, including in relation to annual bonus
and shares incentive arrangements in particular if and to the extent that the Remuneration Committee determines it is
appropriate.
The Remuneration Committee will keep the Policy under review to ensure that it continues to promote the long-term
success of the Company by giving the Company its best opportunity of delivering on the business strategy. It is the
Remuneration Committee’s intention that the Policy be put to shareholders for approval every three years unless there
is a need for the Policy to be approved at an earlier date.
The Company aims to provide sufficient flexibility in the Policy for unanticipated changes in compensation practices
and business conditions to ensure the Remuneration Committee has appropriate discretion to retain its top executives
who perform. The Remuneration Committee reserves the right to approve any payments that may be outside the
terms of this Policy, where the terms of that payment were agreed before the Policy came into effect, or before the
individual became a director of the Company.
Maximum caps are provided to comply with the required legislation and should not be taken to indicate an intent to
make payments at that level. The maximum caps are valid at the time that the relevant employment agreement or
appointment letter is entered into and the caps may be adjusted to take into account fluctuations in exchange rates.
Remuneration policy table: Executive Directors
Component
Purpose and
link to strategy
Maximum
opportunity
Operation and performance measures
Salary and
Fees
To provide fixed
remuneration at
an appropriate
level, to attract
and retain
Directors as part
of the overall
compensation
package.
The maximum
annual base
combined salary
and fees for
Executive Directors
is €440,0001.
The Remuneration
Committee will
consider the factors
set out under the
"Operation" column
when determining
the appropriate
level of base salary
within the formal
Policy maximum.
Salary is paid on a monthly basis.
The Remuneration Committee takes into account a number of
factors when setting salaries including:
>
scope and difficulty of the role;
>
skills and experience of the individual;
>
salary levels for similar roles within the international
industry; and
>
pay and conditions elsewhere in the Group. Salaries are
reviewed on an annual basis, but are not necessarily
increased at each review.
No performance measures.
1
Please note that the salary of the CEO for 2024 remained at €440,000.
Annual Report on Remuneration 2024
continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
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Cadogan Energy Solutions plc Annual financial report 2024
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Component
Purpose and
link to strategy
Maximum
opportunity
Operation and performance measures
Annual Bonus
To incentivise
and reward the
achievement
of individual
and business
objectives which
are key to the
delivery of the
Company's
business
strategy.
The maximum award
is 125% of combined
base salary and
fees.
The payment of any bonus is at the discretion of the Board with
reference to the performance year.
>
The Remuneration Committee sets, in advance, a scorecard
with a set of Key Performance Indicators ("KPIs") aligned
with the Company's strategy. The measures and the relative
weightings are substantiated by the Remuneration Committee
and aim to be stretching and to support the Company's
business strategy. Measures are related to Company financial
performance, operational performance and the Company’s
health and safety record. In general, relative weightings of
each KPI are expected not to exceed 50% and not to be less
than 10%.
>
The Remuneration Committee retains the flexibility to
determine and, if it considers appropriate, change the KPIs
and weightings of the KPIs based on the outcome of its
annual review. The Remuneration Committee may also adjust
KPIs during the year to take account of material events, such
as (without limitation) material corporate events, changes in
responsibilities of an individual and/ or currency exchange
rates. Any such changes will be within the overall target and
maximum payouts approved in the policy.
>
The KPI targets and specific weightings in the scorecard
are defined annually early in the year, once the budget has
been approved. A summary of the KPI targets, weightings
for the KPIs and how far the KPIs are met will be included
retrospectively each year in the Implementation Report for
the year.
>
All bonuses that may become payable are subject to malus
and clawback provisions in the event of material financial
misstatement of the Company or fraud or material misconduct
on the part of the executive, as explained further below.
>
50% of the bonuses that may become payable must be
applied to subscribe for or acquire shares in the Company
(after the deduction of any income tax and/ or employee
social security contributions payable). The Company is
proposing to adopt and operate a Deferred Bonus Plan as a
framework plan for the delivery of shares to executives, which
may be satisfied by the issue of new shares or transfer of
existing or treasury shares.
>
The Remuneration Committee will determine whether
the remainder of the bonus shall be paid in cash or must
be applied to subscribe for or acquire shares (after the
deduction of any income tax and/ or employee social security
contributions payable). In making its determination as to how
the remainder of the bonus shall be paid, the Remuneration
Committee may take into account: profitability of the
Company; the executive's shareholding as measured against
any Company shareholding guidelines; potential liabilities of
the recipients to income tax and social security contributions,
among other things. Additional shares representing the value
of dividends payable on the deferred shares may be paid.
>
The Remuneration Committee may impose holding periods of
up to three years on any of the shares delivered pursuant to
the annual bonus plan.
>
There are no prescribed minimum levels of performance in
the annual bonus structure and so it is possible that no bonus
award would be made.
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Component
Purpose and
link to strategy
Maximum
opportunity
Operation and performance measures
Share Incentive
Arrangements
To incentivise,
retain and
reward eligible
employees
and align their
interests with
those of the
shareholders of
the Company.
Awards can be
made under the
PSP with a value of
up to a maximum
of 200% of base
salary and fees or
300% in exceptional
circumstances.
The Company has adopted and operates the 2018
Performance Share Plan ("PSP") to replace the 2008
Performance Share Plan. The PSP offers the opportunity to
earn shares in the Company subject to the achievement of
stretching but realistic performance conditions. Performance
conditions will be a main feature of the PSP.
The PSP will be administered by the Remuneration Committee.
>
Awards can be made under the PSP at the direction of the
Remuneration Committee within the policy maximum in the
form of contingent share awards.
>
PSP awards will have a minimum vesting period of 3 years
and, for directors, the PSP awards have a further holding
period of 2 years following the end of the vesting period
(subject to any number of shares that may need to be
sold to meet any income tax and employee social security
contributions due on vesting).
>
The Remuneration Committee will develop clear KPIs that
aim to align directors with Company strategy over time
periods in excess of one financial year. Any performance
measures and targets used for share incentive awards during
2019 will be relevant and stretching in line with the overall
strategy of the Company.
>
The Remuneration Committee may adjust or change the PSP
measures, targets and weightings for new awards under the
PSP to ensure continued alignment with Company strategy.
>
PSP awards are subject to malus and clawback in the event
of material financial misstatement of the Company or fraud
or material misconduct on the part of the executive.
>
Upon vesting of an award, the award holder must pay the
nominal value in respect of each share that vests.
>
PSP Awards will normally lapse where the award holder
ceases employment with the Company before vesting. PSP
Awards will not lapse and will vest immediately if the award
holder is considered to be a Good Leaver (leaves due to
death or disability) subject to the Remuneration Committee
being satisfied that performance conditions have been
satisfied or are likely to be satisfied as at the end of the
relevant performance period. In other circumstances, the
Remuneration Committee may determine that awards will
not lapse and will continue to vest at their normal vesting
date, subject to pro-ration to reflect the period of service
during the performance period and performance conditions.
The Remuneration Committee has residuary discretions to
disapply pro ration and bring forward the date of vesting.
>
In the event of a change of control of the Company, if the
acquiring company agrees, awards will be exchanged for
equivalent awards over shares in the acquiring company and
continue to vest according to the original vesting schedule.
If the acquiring company does not agree to exchange the
awards, the awards will vest at the Committee's absolute
discretion. Awards that vest will be subject to time pro-ration
and performance conditions.
>
Benefits under the PSP will not be pensionable.
>
The PSP Plan Limits are set out at Note 2.4 below.
Annual Report on Remuneration 2024
continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
47
Cadogan Energy Solutions plc Annual financial report 2024
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Component
Purpose and
link to strategy
Maximum
opportunity
Operation and performance measures
Pension
To provide a
retirement
benefit that will
foster loyalty
and retain
experienced
Executive
Directors.
Any pension
benefits will be set
at an appropriate
level in line with
market practice, and
in no event will the
contributions paid
by the Company
exceed 15% of
combined base
salary and fees.
No performance measures.
Benefits
To provide
a market
competitive
level of benefits
to Executive
Directors.
Any benefits
will be set at an
appropriate level
in line with market
practice, and in no
event will the value
of the benefits
exceed 15% of
combined base
salary and fees.
>
The executive directors are entitled to private medical
insurance and life assurance cover (of four times the
combined salary and fee) and directors' and officers' liability
insurance.
>
The Remuneration Committee may decide to provide other
benefits commensurate with the market. Such benefits may
include (for instance) company car or allowance, physical
examinations and medical support, professional advice,
assistance with filling out tax returns and occasional minor
benefits. A tax equalisation payment may be paid to an
executive director if any part of the remuneration of the
executive director becomes subject to double taxation. Tax
gross ups may be paid, where appropriate. The Company
does not, at present, provide other taxable benefits to the
executive directors.
>
Executive directors are reimbursed for reasonable business
expenses incurred in the course of carrying out their duties.
>
No performance measures.
Notes to the Executive Directors' remuneration policy table
The Remuneration Committee's philosophy is that remuneration arrangements should be appropriately positioned to
support the Group's business strategy over the longer term and the creation of value for shareholders. In this context
the following key principles are considered to be important:
>
remuneration arrangements should align executive and employee interests with those of shareholders;
>
remuneration arrangements should help retain key executives and employees; and
>
remuneration arrangements should incentivise executives to achieve short, medium and long-term business
targets which represent value creation for shareholders. Targets should relate to the Group's performance in terms
of overall revenue and profit and the executive's own performance. Exceptional rewards should only be delivered if
there are exceptional returns.
The Remuneration Committee reserves the right to make any remuneration payments (including satisfying awards of
variable remuneration) and payments for loss of office notwithstanding that they are not in line with the Policy set
out above, where the terms of that payment were agreed before the Policy came into effect, or before the individual
became a director of the Company (provided the payment was not in consideration for the individual becoming a
director).
Performance measures and targets
(a) Annual Bonus
The performance measures for executive directors comprise of financial measures and business goals linked to the
Company's strategy, which could include financial and non-financial measures. The business goals are tailored to
reflect each executive director's role and responsibilities during the year. The performance measures are chosen to
enable the Remuneration Committee to review the Company's and the individual's performance against the Company's
business strategy and appropriately incentivise and reward the executive directors.
Annual bonus targets are set by the Remuneration Committee each year. They are stretching but realistic targets
which reflect the most important areas of strategic focus for the Company. The factors taken into consideration
when setting targets include the Company's Key Performance Indicators (which are determined annually by the
Remuneration Committee), and the extent to which they are under the control or influence of the executive whose
remuneration is being determined.
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Performance is measured over the financial year against the measures and targets set according to the scorecard. The
Remuneration Committee retains the right to exercise its judgement to adjust the bonus outcome for an individual
to ensure the outcome reflects any other aspects of the Company's performance that become relevant during the
financial year.
The Remuneration Committee used Company operational and financial performances and safety as performance
measures for the 2020 scorecard. For years following 2020, the structure of the annual bonus scorecard will be
reviewed by the Remuneration Committee.
2024 Annual bonus scorecard measures for Executive Director
40% weighting
50% weighting
Operational performance, such as production, sales,
geographical diversification, and starting new projects.
Company financial performance, including cash targets and
profit targets.
10% weighting
Indicators of health and safety to promote the effective risk
management of the Company.
(b) Share Plans
The Remuneration Committee will make the vesting of a Plan award conditional upon the satisfaction of stretching
but realistic performance conditions. These conditions are meant to achieve a long-term alignment of the executives’
remuneration with the interest of the shareholders.
EBITDA growth, increase of P1 reserves (in millions boe), and changes to the free cash-flow are the key KPIs to be used
by the Remuneration Committee and will be measured over time periods of three financial years. The performance
measures are chosen to align the performance of participants with the attainment of financial performance
targets over the vesting period of the award. The targets are set by the Remuneration Committee by reference to
the Company's strategy and business plan and the results achieved at the time of the vest are determined by the
Remuneration Committee.
Under the PSP plan rules, the Board may vary a performance target where it considers that any performance target to
which an award is subject is no longer a true or fair measure of the participant's performance, provided that the Board
must act fairly and reasonably and that the new performance target is materially no more difficult and no less difficult
to satisfy than the original performance target.
Malus and clawback (applicable to bonuses and share awards)
The Remuneration Committee has the discretion to reduce the bonus before payment or require the executive director
to pay back shares or a cash amount in the event of material financial misstatement of the Company or fraud or material
misconduct on the part of the executive. The amount that may be clawed back on any such event is limited to the value of
the bonus, taking into account the cash paid and the shares delivered to the executive, taking the value of the shares at
the time of the clawback, less any income tax or employee social security contributions paid on the bonuses.
Share ownership guidelines for executives
The Remuneration Committee is planning to implement share ownership guidelines for executive directors to further
align the interests of the executive directors with those of shareholders. The share ownership guidelines will include
an expectation that executive directors build up their shareholding to 200% of base salary over a period of five years
from the later of: the date of adoption of this policy and the date of appointment.
Once the shareholding guideline is reached, executive directors would be expected to maintain it. The intention
would be for the shareholding guideline to be reached through the retention of vested shares from share plans
(e.g. the deferred share element of the annual bonus and shares vested under the PSP). As such, the Remuneration
Committee's discretion may be used to increase the proportion of an annual bonus to be delivered in shares to assist
the executive director in meeting this guideline. The deferred share mechanism in the annual bonus and the design
of the PSP will assist executive directors in reaching the guidelines. Executive directors will not be expected to top up
their shareholding with personal acquisitions of Company shares outside the usual share plans described in the Policy.
The Remuneration Committee will monitor the executive directors' shareholdings and may adjust the guideline in
special individual and Company circumstances, for example in the case of a share price fall.
Annual Report on Remuneration 2024
continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
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Cadogan Energy Solutions plc Annual financial report 2024
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PSP Plan Limits
The PSP may operate over new issue shares, treasury shares or shares purchased in the market. In any ten-calendar
year period, the Company may not issue (or grant rights to issue) more than:
(a) 10% of the issued ordinary share capital of the Company under the Plan and any other employee share plan
adopted by the Company; and
(b) 5% of the issued ordinary share capital of the Company under the Plan and any other executive share plan adopted
by the Company.
Treasury shares will count as new issue shares for the purposes of these limits unless institutional investors decide
that they need not count. These limits do not include rights to shares which have been renounced, released, lapsed
or otherwise become incapable of vesting, awards that the Remuneration Committee determines after grant to be
satisfied by the transfer of existing shares and shares allocated to satisfy bonuses (including pursuant to the Deferred
Bonus Plan).
Remuneration throughout the Group
Differences in the Company's pay policy for executive directors from that applying to employees within the Group
generally reflect the appropriate market rate for the individual executive roles.
Remuneration policy table: Non-Executive Directors
Component
Purpose and
link to strategy
Maximum
opportunity
Operation and performance measures
Fees
To provide an
appropriate
reward to attract
and retain
high-calibre
individuals with
the relevant
skills, knowledge
and experience
to progress
the Company
strategy.
The maximum
annual fees paid
to non-executive
directors is £50,000
for a non-executive
director role, and
£100,000 for the
role of Chairman. An
additional £10,000
will be paid to the
individual acting
as Chairman of the
Audit Committee.
Non-executive directors receive a standard annual fee, which is
paid on a quarterly basis in arrears.
Additional fees may also be paid to recognise the additional
work performed by members of any committees set up by the
Board, and for the role of chair of a committee.
Fees are reviewed on an annual basis, but are not necessarily
increased at each review. Fees are set at a rate that takes into
account:
>
market practice for comparative roles;
>
the financial results of the Company;
>
the time commitment and duties involved; and
>
the requirement to attract and retain the quality of
individuals required by the Company.
The remuneration of the non-executive directors is a matter for
the Board to consider and decide upon.
There are no performance measures related to non-executive
directors' fees.
Notes to the Policy table
The payment policy for non-executive directors is to pay a rate which will secure persons of a suitable calibre. The
remuneration of the non-executive directors is determined by the Board. External benchmarking data and specialist
advisers are used when setting fees, which will be reviewed at appropriate intervals. The maximum caps are valid
at the time that the relevant appointment letter is entered into and the caps may be adjusted to take into account
fluctuations in exchange rates.
Expenses reasonably and wholly incurred in the performance of the role of non-executive director of the Company may
be reimbursed or paid for directly by the Company, as appropriate, and may include any tax due on the expense.
The non-executive directors' fees are non-pensionable. The non-executive directors have not to date been eligible
to participate in any incentive plans (such as bonuses or share plans); however, the Board considers that it may be
appropriate in the future to enable such participation, subject to suitably stretching performance thresholds.
Non-executive directors may receive professional advice in respect of their duties with the Company which will be paid
for by the Company. They will be covered by the Company's insurance policy for directors.
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Recruitment
The Company's policy on the recruitment of directors is to pay a fair remuneration package for the role being
undertaken and the experience of the individual being recruited. The Remuneration Committee will consider all
relevant factors, which include the abilities of the individual, their existing remuneration package, market practice, and
the existing arrangements for the Company's current directors.
The Remuneration Committee will determine that any arrangements offered are in the best interests of the Company
and shareholders and will endeavour to pay no more than is necessary.
The Remuneration Committee intends that the components of remuneration set out in the policy tables, and the
approach to the components as set out in the policy tables, will be equally applicable to new recruits, i.e. salary, annual
bonus, share plan awards, pension and benefits for executive directors, and fees for non-executive directors. However,
the Company acknowledges that additional flexibility may be required to ensure the Company is in the best position to
recruit the best candidate for any vacant roles and, as such, a buy-out arrangement may be required.
Flexibility
The salary and compensation package designed for a new recruit may be higher or lower than that applying for
existing directors. The Remuneration Committee may decide to appoint a new executive director to the Board at a
lower than typical salary, such that larger and more frequent salary increases may then be awarded over a period of
time to reflect the individual's growth in experience within the role.
Remuneration will normally not exceed those set out in the policy table above. However, to ensure that the Company
can sufficiently compete with its competitors, the Remuneration Committee considers it important that the
recruitment policy has sufficient flexibility in order to attract and appropriately remunerate the high-performing
individuals that the Company requires to achieve its strategy. As such, the Remuneration Committee reserves
discretion to provide a buy-out arrangement and benefits (such as a sign-on bonus and additional share awards)
in addition to those set out in the policy table (or mentioned in this section) where the Remuneration Committee
considers it reasonable and necessary to do so in order to secure an external appointment (see below for more detail
in relation to buy-out arrangements).
Buy-out arrangements
The Remuneration Committee retains the discretion to enter into buy-out arrangements to compensate new hires for
incentive awards forfeited in joining the Company. The Remuneration Committee will use its discretion in awarding and
setting any such compensation, which will be decided on a case-by-case basis and likely on an estimated like-for-like
basis. In deciding the appropriate type and quantum of compensation to replace existing awards, the Remuneration
Committee will take into account all relevant factors, including the type of award being forfeited, the likelihood of
any performance measures attached to the forfeited award being met, and the proportion of the vesting period
remaining. The Remuneration Committee will appropriately discount the compensation payable to take account of any
uncertainties over the likely vesting of the forfeited award to ensure that the Company does not, in the view of the
Remuneration Committee, pay in excess of what is reasonable or necessary.
Compensation for awards forfeited may take the form of a bonus payment or a share award. For the avoidance
of doubt, the maximum amounts of compensation contained in the policy table will not apply to such buy-out
arrangements. The Company has not placed a maximum value on the compensation that can be paid under this
section, as it does not believe it would be in shareholders' interests to set any expectations for prospective candidates
regarding such awards.
Payments for loss of office
Any compensation payable in the event that the employment of an executive director is terminated will be determined
in accordance the terms of the employment contract between the Company and the executive, as well as the relevant
rules of any share plan and this Policy, and in accordance with the prevailing best practice.
The Remuneration Committee will consider a variety of factors when considering leaving arrangements for an
executive director and exercising any discretions it has in this regard, including (but not limited to) individual and
business performance during office, the reason for leaving, and any other relevant circumstances (for example, ill
health).
In addition to any payment that the Remuneration Committee may decide to make, the Remuneration Committee
reserves discretion as it considers appropriate to:
(a) pay an annual bonus for the year of departure;
(b) continue providing any benefits for a period of time; and
(c) provide outplacement services.
Non-executive directors are subject to one month notice periods prior to termination of service and are not entitled
to any compensation on termination save for accrued fees as at the date of termination and reimbursement of any
expenses properly incurred prior to that date.
Annual Report on Remuneration 2024
continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
51
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Share plan awards
The treatment of any share award on termination will be governed by the PSP rules.
Under the PSP, outstanding share awards held by an individual who ceases to be a director or employee of the
Company will lapse, unless the cessation is due to death, illness, injury or disability, redundancy, retirement, the
Company ceasing to be a member of the Group or the transfer of an undertaking or part of an undertaking to a person
who is not a member of the Group, or the Board exercises its discretion otherwise.
Under the PSP, the Board has discretion to decide the period of time for which the award will continue, and whether
any unvested award shall be treated as vesting on the date of cessation of employment or in accordance with the
original vesting schedule, in both cases have regard to the extent to which the performance targets have been satisfied
prior to the date of cessation.
For executive directors, the vesting period will be set by the Remuneration Committee with a minimum three-year
period. The Remuneration Committee will (unless the vesting period is set as a period equal to or longer than five
years) impose a holding period on shares (or awards) so that the executive is not able to sell the shares that the
executive director acquires through the PSP until the fifth anniversary of the date of the award. The holding period
will not apply to the number of shares equivalent in value to the amount required by the Company or the executive
director to fund any income tax and employee social security contributions due on the vesting of the awards or
otherwise in connection with the awards.
Executive Director employment agreements
This section contains the key employment terms and conditions of the executive directors that could impact on their
remuneration or loss of office payments.
The Company's policy on employment agreements is that executive directors' agreements should be terminable
by either the Company or the director on not more than six months' notice. The employment agreements contain
provision for early termination, among other things, in the event of a breach by the executive but make no provision
for any termination benefits except in the event of a change of control of the Company, where the executive becomes
entitled to a lump sum equal to 24 months' base salary plus benefits plus (if any), bonus received on termination by the
Company. The employment agreements contain restrictive covenants for a period of 12 months following termination
of the agreement. Details of employment agreements in place as at the date of this report are set out below:
Director
Current agreement start date
Notice period
F Khallouf
15 November 2019
Six months
Directors' employment agreements are available for inspection at the Company's registered office in London.
Non-Executive Directors' letters of appointment
This section contains the key terms of the appointments of non-executive directors that could impact on their
remuneration.
Typically, the non-executive directors are appointed by letter of appointment for an initial term of three years which
may be extended. All non-executive directors are subject to annual re-election by the Company's shareholders and
their appointments may be terminated earlier with one month's prior written notice (or with immediate effect, in the
case of specific serious circumstances such as fraud or dishonesty). On termination of appointment, non-executive
directors are usually only entitled to accrued fees as at the date of termination together with reimbursement of
any expenses properly incurred prior to that date and the company has no obligation to pay further compensation
when the appointment terminates. Non-executive directors' letters of appointment are available for inspection at the
Company's registered office in London.
Non-Executive Director
Current agreement start date
Term
Michel Meeus
23 June 2023
Two years
Lilia Jolibois
23 June 2023
Two years
Gilbert Lehmann
23 June 2023
Two years
Charles Mack
21 June 2024
Three years
Thibaut de Gaudemar
21 June 2024
Three years
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Illustration of the Remuneration Policy
The bar chart below show the levels of remuneration that the CEO could earn over the coming year under the Policy.
CEO: minimum and maximum remuneration
0
1,000
2,000
3,000
500
1,500
2,500
3,500
1,000 EUR
Share
incentive
plan
Annual
bonus
Base
salary
Current policy
New policy
Minimum
remuneration
Maximum
remuneration
“On-target”
remuneration
Notes:
I. The remuneration for an “on-target” scenario is purely illustrative as actual remuneration will depend on how challenging the target is for the
relevant year as well as on the financial conditions of the Company.
II. The maximum award under the share incentive plan is 200% which can increase up to 300% (400% in the old policy) in exceptional
circumstances.
The bar chart shows future possible maximum remuneration.
Pension entitlements were provided in 2024.
Consideration of shareholder views
The Chairman and executive directors of the Company have a regular dialogue with analysts and substantial
shareholders, which includes the subject of directors' remuneration. The outcome of these discussions is reported to
the Board and discussed in detail both there and during meetings of the Remuneration Committee.
The Remuneration Committee will take into account the results of the shareholder vote on remuneration matters when
making future remuneration decisions. The Remuneration Committee remains mindful of shareholder views when
evaluating and setting ongoing remuneration strategy.
Consideration of employment conditions within the Group
When determining remuneration levels for its executive directors, the Board considers the pay and employment
conditions of employees across the Group. The Remuneration Committee will be mindful of average salary increases
awarded across the Group when reviewing the remuneration packages of the executive directors.
Minor changes
The Remuneration Committee may make, without the need for shareholder approval, minor amendments to the Policy
for regulatory, exchange control, tax or administrative purposes or to take account of changes in legislation.
Michel Meeus
Chairman
25 April 2025
Annual Report on Remuneration 2023
continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
53
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
Statement of Directors’ Responsibilities in respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulation.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have prepared the group and company financial statements in accordance with UK-adopted International
Accounting Standards. In preparing the Company and Group’s financial statements, IAS Regulation requires that
Directors:
>
properly select and apply accounting policies;
>
make judgements and accounting estimates that are reasonable and prudent;
>
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information;
>
state whether applicable UK-adopted International Accounting Standards have been followed, subject to any
material departures disclosed and explained in the financial statements;
>
provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable
users to understand the impact of particular transactions, other events and conditions on the Company’s and
Group’s financial position and financial performance; and
>
make an assessment of the Company’s and Group’s ability to continue as a going concern, prepare the financial
statements on the going concern basis unless it is inappropriate to presume that the Company and Group will
continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company and Group’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and Group 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 Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities. Under applicable law and regulations, the Directors are
also responsible for preparing a Strategic Report, Report of the Directors, Annual Report on Remuneration, Directors’
Remuneration Policy and Corporate Governance Statement that comply with that law and those regulations. The
Directors are responsible for the maintenance and integrity of the corporate and financial information and statements
included on the Company’s website, www.cadoganenergysolutions.com. Legislation in the United Kingdom governing
the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions. The
directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
Responsibility Statement of the Directors in respect of the Annual Report
We confirm to the best of our knowledge:
i.
the financial statements, prepared in accordance with UK-adopted International Accounting Standards in
conformity with the requirements of the Companies Act 2006, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings included in the consolidation as a whole;
and
ii. the Annual Report, includes a fair review of the development and performance of the business and the position of
the Company and the undertakings included in the consolidation taken as a whole, together with a description of
the principal risks and uncertainties that they face; and
iii. the annual report and the financial statements, taken as a whole, are fair, balanced and understandable, and
provide the information necessary for the shareholders to assess the Group’s position, performance, business
model and strategy.
On behalf of the Board
Michel Meeus
Chairman
25 April 2025
Statement of Directors’ Responsibilities
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Qualified opinion
We have audited the financial statements of Cadogan Energy Solutions Plc (the ‘Parent Company’) and its subsidiaries
(the Group) for the year ended 31 December 2024 which comprise the Consolidated Income Statement, the Consolidated
Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement, the
Consolidated Statement of Changes in Equity, the Company Balance Sheet, the Company Cash Flow Statement, the
Company Statement of Changes in Equity, and Notes to the Financial Statements, including significant accounting
policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted
International Accounting Standards and, as regards the Parent company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
In our opinion, except for the effect of the matter described in the Basis for qualified opinion paragraph below:
>
the financial statements give a true and fair view of the state of the Group’s and of the Parent company’s affairs as at
31 December 2024 and of the Group’s loss for the year then ended;
>
the Group financial statements have been properly prepared in accordance with UK adopted International Accounting
Standards;
>
the Parent Company financial statements have been properly prepared in accordance with UK adopted International
Accounting Standards and as applied in accordance with the provisions of the Companies Act 2006; and
>
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for qualified opinion
In February 2019, the Group advanced a Euro 13,385,000 loan to Proger Managers & Partners Srl (“PMP”), a privately owned
Italian company whose only asset is a 72.92% interest in Proger Ingegneria Srl (“Proger Ingegneria”), a privately owned
company which itself held a 67.91% participating interest in Proger S.P.A (“Proger”) at the date of the loan was advanced.
The loan carries an entitlement to interest at a rate of 5.5% per year, payable at maturity (which is 24 months after the
execution date of February 2019 and assuming that the call option described below was not exercised). The principal of the
loan is secured by a pledge over PMP’s current participating interest in Proger Ingegneria Srl, up to a maximum guaranteed
amount of Euro 13,385,000.
Through the Agreement, the Group was granted a call option to acquire, at its sole discretion, a 33% participating interest
in Proger Ingegneria; the exercise of the option would have given Cadogan, through Cadogan Petroleum Holdings BV, an
indirect 25% interest in Proger. The call option was granted at no additional cost and could be exercised at any time between
the 6th and 24th months following the execution date of the loan agreement.
The call option was not exercised within the relevant timeframe (February 2021) and consequently in accordance with the
loan agreement the principal amount and any accrued interest became repayable in full. At that date the Group reclassified
the asset from a financial asset held at fair value through profit and loss to a financial asset held at amortised cost.
In March 2021, PMP requested arbitration to have the loan agreement recognised as an equity investment contract. In July
2022, the Arbitral panel in Rome decided to reject the main claim of PMP to recognise the loan as an equity investment.
In November 2023, the Group initiated a second arbitration to assert its right to restitution and obtain PMP’s condemnation
of the consequent payment.
As discussed in note 4(d) and note 28 to the financial statements, the Group and PMP entered into a settlement agreement
in December 2024 to conclude their litigation in respect of the loan agreement with PMP entered into in February 2019.
Consequently, management recorded the carrying value of Proger loan at USD $10,388,000, which was management’s best
estimate of its recoverable amount in accordance with the settlement agreement signed with PMP. Subsequently the Group
received an amount of Euro 10,001,000 (USD $10,388,000) in January 2025 in accordance with the settlement agreement.
As a result an impairment charge of USD $5,657,000 was recorded for the year ended 31 December 2024, as shown in note
13 to the financial statements.
Due to the litigation, which was ongoing at 31 December 2023, we were unable to obtain sufficient appropriate audit
evidence as to whether the carrying value of the loan note recorded at $17,074,000 in the consolidated balance sheet
represented its recoverable amount as at 31 December 2023 and as a result the audit opinion for the year ended
31 December 2023 was qualified. Consequently, we were unable to determine whether the impairment charge recognised
for the year ended 31 December 2024 was materially correct and we were therefore unable to obtain sufficient appropriate
audit evidence in respect of the loss of the Group for the year.
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 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 public
interest 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 qualified opinion. Our audit
opinion is consistent with the additional report to the audit committee.
Independent Auditor’s Report to the Members
of Cadogan Energy Solutions plc
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
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Our approach to the audit
We tailored the scope of our audit to ensure we performed sufficient work to be able to express an opinion on the financial
statements as a whole, taking into account the structure of the Group and the Company, its environment, including the
group’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by
the directors that may have represented a risk of material misstatement.
The significant majority of the Group’s operations are located in the Ukraine and account for 100% of the Group’s revenue.
We instructed a component audit team in the Ukraine to perform a full scope audit of the Ukrainian sub-group. In our
assessment the Group comprises three full scope components together with the Ukrainian sub-group and one limited scope
component. The audit of the Ukrainian sub-group was performed by Crowe Erfolg in the Ukraine under the supervision and
direction of the Group audit engagement team, as described in more detail below. The remaining full scope components
of the Group namely Cadogan Energy Solutions Plc (the Parent Company), Cadogan Petroleum Holdings Limited and the
limited scope component Cadogan Petroleum Holdings B.V. were audited by the Group audit engagement team.
Our involvement with the component auditors
As part of our supervision and direction of the component audit team, we determined the level of involvement needed
in order to be able to conclude whether sufficient appropriate audit evidence has been obtained in respect of the
Ukraine sub-group as a basis for our opinion on the Group financial statements as a whole. Our involvement with the
component auditors included the following:
>
We issued detailed Group reporting instructions to the component auditor, which included the significant areas to be
covered by the audit (including areas that were considered to be key audit matters as detailed below) and set out the
information required to be reported to the Group audit team.
>
Due to the travel restrictions resulting from the ongoing war in the Ukraine, the Group audit engagement partner
and senior members of the Group audit engagement team were unable to visit the Ukraine to meet with component
management and the component audit team during the audit. Accordingly, we performed a remote review of the
component audit files in the Ukraine using appropriate technologies and held regular calls and video conferences with
component management and component audit team during the audit.
>
The Group audit team performed reviews of relevant working papers and undertook additional procedures where
necessary in respect of the significant risk areas that represented Key Audit Matters for the Group.
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) we identified, including those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the audit 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.
In addition to the matter described in the basis for qualified opinion section, we have determined the matters
described below to be the key audit matters to be communicated in our report.
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Key Audit Matters
How our scope addressed this matter
Valuation of development and production assets
Refer to page 66 (Accounting policy) and 81 (note 17
Property, plant and equipment).
As at 31 December 2024 the Group held development and
production assets with a carrying value of $4.5m (2023:
$5.6m).
Management has performed an impairment review of
development and production assets and concluded that
no impairment is required.
The assessment of the recoverable amount of the
development and production assets required judgments
and estimates by management regarding the inputs
applied in the models including future oil prices,
production forecasts, estimates of reserves, operating
and development costs and discount rates.
The carrying value of the Group’s development and
production assets was therefore considered to be a key
audit matter.
>
We critically assessed management’s impairment
assessment which was based on the value in use
model (ViU).
>
We challenged the key judgements and estimates
made by management, including forecast oil prices
and the production output levels.
>
We critically assessed management’s assumptions in
estimating the discount rate used.
>
We compared forecast production included in the
model to the most recent geological and economic
evaluation report produced by the management’s
external expert.
>
We assessed the independence and competence of
management’s external expert.
>
We held discussions with operational management to
evaluate the basis of production forecasts associated
with wells, considered the historical impact of
such activities and evaluated the extent to which
appropriate costs were included in the forecasts.
>
We performed sensitivity analysis on the impairment
model to establish the impact of possible changes of
the key assumptions and estimates.
>
We reviewed the adequacy of the disclosures in the
financial statements in accordance with IAS 36.
Based on our procedures performed we were satisfied
that there was no impairment of development and
production assets and that the associated disclosures
included in the financial statements were appropriate.
Independent Auditor’s Report to the Members
of Cadogan Energy Solutions plc continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
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Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit, the nature,
timing and extent of our audit procedures, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as follows:
The Group
The Parent Company
Overall group materiality
$470,000 (2023: $570,000)
$300,000 (2023: $350,000)
Basis for determining
materiality
1.5% of total assets (2023: 1.5% of total
assets)
1.5% of total assets restricted to
$300,000 (2023: 1.5% of total assets
restricted to $350,000)
Rationale for the
benchmark applied
When determining materiality, we determine an appropriate percentage of our chosen
benchmark, with the choice of an appropriate benchmark as our starting point. We
determined that an asset based measure of materiality is appropriate as the Group and
the Company holds significant cash and loan balances and its principal activity is the
exploration and development of oil and gas assets. As a result we concluded that the
asset base is a key financial metric for the users of the financial statements.
Performance materiality
$235,000 (2023: $285,000)
$150,000 (2023: $175,000)
Basis for determining
performance materiality
We use performance materiality to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements exceeds overall
materiality. Specifically, we use performance materiality in determining the scope
of our audit and the nature and extent of our testing of account balances, classes of
transactions and disclosures, for example in determining sample sizes.
Our performance materiality was 50% of overall materiality, amounting to £235,000
for the Group financial statements and $150,000 for the Company financial
statements.
When considering the level at which to set performance materiality, we considered
a number of factors, including the risk assessment and aggregation risk, the
effectiveness of controls and our knowledge of the business.
We agreed with the Board and Audit Committee that we would report to them misstatements identified during the
audit greater than 5% of overall materiality. We also agreed to report differences below this threshold that, in our view,
warranted reporting on qualitative grounds.
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Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group’s and
the Parent Company’s ability to continue to adopt the going concern basis of accounting included:
>
We reviewed management’s going concern assessment paper and the cash flow forecast prepared by management
and approved by the Board.
>
We critically assessed the going concern paper and the forecast taking into account key assumptions and various
scenarios prepared by management and the impact they would have on the Group’s ability to continue operating as a
going concern.
>
We performed sensitivity assessments over the key assumptions in the forecast including the impact of severe but
plausible scenarios and severe but unlikely downside scenarios, and extended these beyond the 12 months from the
date of approval of these financial statements to assess the Group’s ability to continue as a going concern.
>
As part of our sensitivity assessment of these forecasts and scenarios we critically assessed the level of headroom
available and the assumptions used including, mitigating actions available to management, potential geopolitical
impacts, oil production, oil prices, operating expenditure and capital expenditure.
>
We compared production forecasts to historical trends and considered the oil price assumptions against consensus
market prices and historical discount levels between Brent oil prices and the local market. We also compared forecast
costs with historical expenditure.
>
We reviewed the adequacy of the disclosures in the financial statements in respect of going concern against the
requirements of UK-adopted international accounting standards.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s and Parent company's ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Emphasis of Matter
We draw attention to Note 3 (b) on page 67 to the financial statements which describes the uncertainty related to the
outcome of the ongoing war in Ukraine. The Group has included various scenarios that take into account the ongoing war
in the Ukraine in its cash flow projections. However, due to the unpredictable outcome, length, scale and extent of the
conflict its impact on the Group and the Company cannot be predicted with any certainty. Our opinion is not modified in
respect of this matter.
Other information
The other information comprises the information included in the annual report, other than the financial statements
and our auditor’s report thereon. The directors are responsible for the other information contained within the annual
report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether there is 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.
As described in the basis for qualified opinion section of our report, our audit opinion is qualified because we were unable
to obtain sufficient appropriate audit evidence in respect of the loss of the Group for the year ended 31 December 2024,
as a consequence of our qualified opinion in respect of certain loan receivables for the year ended 31 December 2023.
We have concluded that where the other information refers to the loss for the year, the prior year loan receivables or to
related balances or classes of transactions it may also be materially misstated for the same reason.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with
the Companies Act 2006.
Except for the possible effect of the matter described in the basis for the qualified opinion section of our report, in our
opinion, based on the work undertaken in the course of the audit:
>
the information given in the Strategic report and the Directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
>
the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
Independent Auditor’s Report to the Members
of Cadogan Energy Solutions plc continued
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
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Matters on which we are required to report by exception
Except for the possible effect of the matter described in the basis for the qualified opinion section of our report, in the
light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the Strategic report or the Directors’ report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you
if, in our opinion:
>
returns adequate for our audit have not been received from branches not visited by us; or
>
the Parent Company financial statements and the part of the Directors’ remuneration report to be audited are not
in agreement with the accounting records and returns; or
>
certain disclosures of Directors’ remuneration specified by law are not made; or
>
a corporate governance statement has not been prepared by the Parent Company.
Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement set out on page 53, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities is available on the FRC’s website at https://wwww.frc.org.uk/auditors/auditor-
assurance/auditor-s-responsibilities-for-the-audit-of-the-fi/description-of-the-auditor's-responsibilities-for
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The
extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the
financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material
misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and
to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary
responsibility for the prevention and detection of fraud rests with both management and those charged with governance
of the company.
Based on our understanding of the Group and its operations, we identified the principal risks of non-compliance with
laws and regulations related to UK and Ukrainian tax legislation, employment and health and safety regulations, and
licensing regulations and we considered the extent to which non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations that have a direct impact on the financial statements such
as UK adopted International Accounting Standards, the Companies Act 2006, the Listing Rules and the Disclosure and
Transparency Rules.
>
We obtained an understanding of how the Group and the Parent Company complies with these requirements by
discussions with management and those charged with governance;
>
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-
compliance with laws and regulations. This included making enquiries of management and those charged with
governance and obtaining additional corroborative evidence as required;
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Independent Auditor’s Report to the Members
of Cadogan Energy Solutions plc continued
>
We inquired of management and those charged with governance as to any known instances of non-compliance or
suspected non-compliance with laws and regulations;
>
We performed a review of external press releases;
>
We assessed the risk of material misstatement of the financial statements, including the risk of material
misstatement due to fraud and how it might occur, by holding discussions with management and those charged
with governance;
>
We challenged assumptions and judgements made by management in relation to the estimates made in respect of
development and production assets.;
>
Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations,
and unusual users.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances
of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the
financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Other matters which we are required to address
We were appointed by the Board of Directors on 17 February 2023 to audit the financial statements for the year ended
31 December 2022. Our total uninterrupted period of engagement is three years, covering the year ended 31 December
2022 to the year ended 31 December 2024.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Parent Company
and we remain independent of the Group and the Parent Company in conducting our audit.
Our audit opinion is consistent with the additional report to the Audit Committee.
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 for no purpose other than to draw to the attention of the
company’s members those matters which we are required to include in an auditor’s report addressed to them. To the
fullest extent permitted by law, we do not accept or assume responsibility to any party other than the company and
company’s members as a body, for our work, for this report, or for the opinions we have formed.
Matthew Banton
(Senior Statutory Auditor)
For and on behalf of
Moore Kingston Smith LLP
Statutory Auditor
6th Floor
9 Appold Street
London
EC2A 2AP
25 April 2025
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
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Notes
2024
$’000
2023
$’000
CONTINUING OPERATIONS
Revenue
6
9,152
7,550
Cost of sales
7
(5,047)
(5,391)
Gross profit
4,105
2,159
Administrative expenses
8
(3,522)
(3,574)
Adjustments of end of concession obligations for E&E assets
16
(6)
218
Reversal of impairment of other assets
9
39
56
Impairment of other assets
9
(39)
(49)
Other operating (expenses)/income, net
10
(19)
25
Net foreign exchange (losses)/gain
(1,123)
538
Operating loss
(565)
(627)
(Loss)/profit on Proger loan, net
13
(5,657)
757
Finance income, net
13
759
1,128
(Loss)/profit before tax
(5,463)
1,258
Taxation
14
(769)
–
(Loss)/profit for the year
(6,232)
1,258
Attributable to:
Owners of the Company
(6,232)
1,259
Non-controlling interest
–
(1)
(6,232)
1,258
(Loss)/earnings per Ordinary share
cents
cents
Basic and diluted
15
(2.6)
0.5
Consolidated Income Statement
For the year ended 31 December 2024
The notes on pages 66 to 90 form an integral part of these financial statements.
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Consolidated Statement of Comprehensive
Income
For the year ended 31 December 2024
2024
$’000
2023
$’000
(Loss)/profit for the year
(6,232)
1,258
Other comprehensive loss
Items that may be reclassified subsequently to profit or loss:
Unrealised currency translation differences
(1,141)
(321)
Other comprehensive loss
(1,141)
(321)
Total comprehensive (loss)/profit for the year
(7,373)
937
Attributable to:
Owners of the Company
(7,373)
938
Non-controlling interest
–
(1)
(7,373)
937
The notes on pages 66 to 90 form an integral part of these financial statements.
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
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Cadogan Energy Solutions plc Annual financial report 2024
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Notes
2024
$’000
2023
$’000
ASSETS
Non-current assets
Intangible exploration and evaluation assets
16
–
–
Property, plant and equipment
17
5,329
5,768
Right-of-use assets
23
165
246
Deferred tax asset
22
–
370
5,494
6,384
Current assets
Inventories
19
515
364
Trade and other receivables
20
354
310
Loan receivable at amortised cost
27
10,388
17,074
Cash
21
14,381
14,155
25,638
31,903
Total assets
31,132
38,287
LIABILITIES
Non-current liabilities
Long-term lease liability
23
(75)
(148)
Provisions
25
(110)
(114)
(185)
(262)
Current liabilities
Trade and other payables
24
(1,652)
(1,366)
Short-term lease liability
23
(98)
(87)
Current provisions
25
(129)
(131)
(1,879)
(1,584)
Total liabilities
(2,064)
(1,846)
NET ASSETS
29,068
36,441
EQUITY
Share capital
26
13,832
13,832
Share premium
514
514
Retained earnings
179,571
185,803
Cumulative translation reserves
(166,438)
(165,297)
Other reserves
27
1,589
1,589
Equity attributable to owners of the Company
29,068
36,441
Non-controlling interest
–
–
TOTAL EQUITY
29,068
36,441
The consolidated financial statements of Cadogan Energy Solutions plc, registered in England and Wales no. 05718406,
were approved by the Board of Directors and authorised for issue on 25 April 2025. They were signed on its behalf by:
Fady Khallouf
Chief Executive Officer
25 April 2025
Consolidated Balance Sheet
As at 31 December 2024
The notes on pages 66 to 90 form an integral part of these financial statements.
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Notes
2024
$’000
2023
$’000
Operating loss
(565)
(627)
Adjustments for:
Depreciation and depletion of property, plant and equipment, and
right-of-use assets
17,23
813
821
Changes in provision of oil and gas assets
16
6
(218)
Loss on disposal of property, plant and equipment
17
–
19
Impairment of inventories
9
28
44
Impairment of receivables
9
11
3
Reversal of impairment/(impairment) of VAT recoverable
9,20
(39)
(54)
Effect of foreign exchange rate changes
1,122
(538)
Operating cash outflow/(inflow) before movements in working capital
1,376
(550)
Increase in inventories
(219)
(131)
Increase in receivables
(663)
(127)
Increase in payables
644
370
Cash used by operations
1,131
(438)
Income tax paid
(447)
–
Net cash inflow/(outflow) from operating activities
691
(438)
Investing activities
Purchases of property, plant and equipment
(1,048)
(58)
Interest received
800
796
Net cash (used by)/generated in investing activities
(248)
738
Financing activities
Repayment of lease liability
(118)
(132)
Net cash from financing activities
(118)
(132)
Net increase in cash
326
168
Effect of foreign exchange rate changes
(100)
53
Cash at beginning of year
14,155
13,934
Cash at end of year
14,381
14,155
As at 31 January 2025, following the conclusion of the Settlement Agreement with Proger, the Group’s cash balance
stood at $24.7 million.
Consolidated Cash Flow Statement
For the year ended 31 December 2024
The notes on pages 66 to 90 form an integral part of these financial statements.
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
65
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Share
capital
$’000
Share
premium
account
$’000
Retained
earnings
$’000
Cumulative
translation
reserves
$’000
Other
reserves
$’000
Equity
attributable to
owners of the
Company
$’000
Non-
controlling
interest
$’000
Total
$’000
As at 1 January 2023
13,832
514
184,331
(164,976)
1,589
35,290
237
35,527
Net loss for the year
–
–
1,259
–
–
1,259
(1)
1,258
Other comprehensive
profit/(loss)
–
–
–
(321)
–
(321)
–
(321)
Total comprehensive
profit/(loss) for the year
–
–
1,259
(321)
–
(938)
(1)
937
Acquisition of
non-controlling interests
–
–
213
–
–
213
(236)
(23)
As at 1 January 2024
13,832
514
185,803
(165,297)
1,589
36,441
–
36,441
Net income for the year
–
–
(6,232)
–
–
(6,232)
–
(6,232)
Other comprehensive
profit/(loss)
–
–
–
(1,141)
–
(1,141)
–
(1,141)
Total comprehensive
loss for the year
–
–
(6,232)
(1,141)
–
(7,373)
–
(7,373)
As at 31 December 2024
13,832
514
179,571
(166,438)
1,589
29,068
–
29,068
Consolidated Statement of Changes in Equity
For the year ended 31 December 2024
The notes on pages 66 to 90 form an integral part of these financial statements.
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1. General information
Cadogan Energy Solutions plc (the “Company”, together with its subsidiaries the “Group”), is registered in England and
Wales under the Companies Act 2006. The address of the registered office is 6th Floor, 60 Gracechurch Street, London
EC3V 0HR.
The Group principal activity has been up to 2024 oil and gas exploration, development and production; the Group
also conducts gas trading and provides services to other E&P operators. The strategy of the Group is to expand its
activities along the energy value chain, beyond current activities to new forms of energy with a reduced impact on the
environment. The Group is developing several projects for electricity generation, operational in 2025. Starting from
2025, this activity will become also a main one.
The Company’s shares have a standard listing on the Official List of the UK Listing Authority and are traded now on the
“transition” Market of the London Stock Exchange after the changes in the listing categories which occurred in July 2024.
2. Adoption of new and revised standards
New IFRS accounting standards, amendments and interpretations effective from 1 January 2024
The disclosed policies have been applied consistently by the Group for both the current and previous financial year
with the exception of the new standards adopted.
The IFRS financial information has been drawn up on the basis of accounting policies consistent with those applied in
the financial statements for the year to 31 December 2024, except for the following:
(a) Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current
and Non-current Liabilities with Covenants;
(b) Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback;
(c) Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance
Arrangements;
(d) Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting
Estimates; and
(e) Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single
Transaction.
The application of the above standards has had no impact on the disclosures or the amounts recognised in the Group's
consolidated financial statements.
New IFRS accounting standards, amendments and interpretations not yet effective
Below is a list of new and revised IFRSs that are not yet mandatorily effective (but allow early application) for the year
ended 31 December 2024 and have not been early adopted by the Group. These standards are not expected to have a
material impact on the Group in the future reporting periods and on foreseeable future transactions.
IFRS accounting standards
Effective periods
beginning on or after
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of
Exchangeability
1 January 2025
Amendments to IFRS 9, Financial Instruments and IFRS 7, Financial Instruments: Disclosures:
Classification and Measurement of Financial Instruments
1 January 2026
Amendments to IFRS 9 and IFRS 7: Power Purchase Agreements (PPAs), Contracts
Referencing Nature-dependent Electricity
1 January 2026
IFRS 18, Presentation and Disclosure in Financial Statements
1 January 2027
IFRS 19, Subsidiaries without Public Accountability: Disclosures
1 January 2027
3. Significant accounting policies
(a) Basis of accounting
The financial statements have been prepared in accordance with UK-adopted International Accounting Standards in
conformity with the requirements of the Companies Act 2006, applicable to companies reporting under IFRS.
The financial statements have been prepared on the historical cost convention basis.
The financial statements are prepared to nearest thousand.
The principal accounting policies adopted are set out below:
Notes to the Consolidated Financial Statements
For the year ended 31 December 2024
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
67
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3. Significant accounting policies continued
(b) Going concern
The Group’s cash balance at 31 December 2024 was $14.4 million (2023: $14.2 million). Following the closing of the
Settlement Agreement with Proger in January 2025, the Group’s cash balance was $24.7 million as at 31 January 2025.
The Directors consider that the funds available at the date of the issue of these financial statements are sufficient for
the Group to manage its business risks and planned investments successfully and meet its ongoing liabilities as they
full due for at least twelve months from the date of signing of these financial statements.
The Directors’ have carried out a robust assessment of the principal risks facing the Group.
The Group’s forecasts and projections, taking into account reasonably possible changes in trading activities,
operational performance, flow rates for commercial production and the price of hydrocarbons sold to Ukrainian
customers, show that there are reasonable expectations that the Group will be able to operate on funds currently held
and those generated internally, for the foreseeable future.
Notwithstanding the Group’s current financial performance and position, the Board are cognisant of the actual risks
related to the war situation in Ukraine. The Board has considered possible reverse stress case scenarios for the impact
on the Group’s operations, financial position and forecasts. Whilst the potential future impacts of the invasion of
Ukraine by Russia are unknown, the Board has considered operational disruption that may be caused by the factors
such as a) restrictions applied by governments, illness amongst our workforce and disruption to supply chain and sales
channels; b) market volatility in respect of commodity prices associated in addition to military and geopolitical factors.
In addition to sensitivities that reflect future expectations regarding country, commodity price and currency risks that
the Group may encounter reverse stress tests have been run to reflect possible negative effects of the war in Ukraine.
The Group’s forecasts demonstrate that owing to its cash resources the Group is able to meet its operating cash flow
requirements and commitments whilst maintaining significant liquidity for a period of at least the next 12 months from
the date of signing of these financial statements allowing for sustained reductions in commodity prices and extended
and severe disruption to operations should such a scenario occur.
After making enquiries and considering the uncertainties described above, the Directors have a reasonable expectation
that the Company and the Group have adequate resources to continue in operational existence for the foreseeable
future and consider the going concern basis of accounting to be appropriate and, thus, they continue to adopt the
going concern basis of accounting in preparing the annual financial statements.
(c) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by
the Company (its subsidiaries) made up to 31 December each year. IFRS 10 defines control to be investor control over
an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the
ability to control those returns through its power over the investee. The results of subsidiaries disposed of during the
year are included in the consolidated income statement from the effective date of acquisition or up to the effective
date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to
bring accounting policies used into line with those used by the Group. All intra-group transactions, balances, income
and expenses are eliminated on consolidation.
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Those interests of
non-controlling shareholders that are present ownership interests entitling their holders to a proportionate share of
net assets upon liquidation may be initially measured at fair value or at the non-controlling interests’ proportionate
share of the fair value of the acquiree’s identifiable net assets. The choice of measurement is made on an acquisition-
by-acquisition basis. Other non-controlling interests are initially measured at fair value.
Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial
recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is
attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity
transactions. The carrying amount of the Group’s interests and the non-controlling interests are adjusted to reflect the
changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling
interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and
attributed to the owners of the Company.
(d) Revenue recognition
Revenue from contracts with customers is recognised when or as the Group satisfies a performance obligation by
transferring a promised good or service to a customer. A good or service is transferred when the customer obtains
control of that good or service. Revenue is measured based on measurement principles of IFRS 15 and represents
amounts receivable for hydrocarbon products and services provided in the normal course of business, net of value
added tax (‘VAT’) and other sales-related taxes, excluding royalties on production. Royalties on production are recorded
within cost of sales.
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3. Significant accounting policies continued
(d) Revenue recognition continued
The crude oil produced by the upstream operations is sold to external customers. Revenue from the sale of crude
oil is recognised at the point in time when control of the product is transferred to the customer, which is typically
when goods are despatched, and title has passed. The Group despatches oil at the production point (EXW incoterms)
therefore the Group has no transportation and shipping costs associated with the transfer of the product to the
customer.
The Group’s sales of crude oil are priced based on the consideration specified in contracts with customers based on a
conducted tender result on the opened tender platform. Invoices are typically paid at the day of product despatch.
E&P and Trading business segments
The transfer of control of hydrocarbons usually coincides with title passing to the customer and the customer taking
physical possession as the product passes a physical point such as a designated point in the pipeline for the sale of gas
or loading point in the case of oil. The Group principally satisfies its performance obligations at a point in time.
To the extent that revenue arises from test production during an evaluation programme, an amount is credited to
evaluation costs and charged to cost of sales, to reflect a zero-net margin.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount on initial recognition. .
(e) Foreign currencies
The functional currency of the Group’s Ukrainian operations is Ukrainian Hryvnia. The functional currency of the
Group’s UK subsidiaries and the parent company is US Dollar. The Group’s presentational currency is US Dollar
accordingly.
In preparing the financial statements of the individual companies, transactions in currencies other than the functional
currency of each Group company (‘foreign currencies’) are recorded in the functional currency at the rates of
exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated into the functional currency at the rates prevailing on the
balance sheet date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies
are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are
measured in terms of historical cost in a foreign currency are not retranslated. Foreign exchange differences on cash
are recognised in operating profit or loss in the period in which they arise.
Exchange differences are recognised in the profit or loss in the period in which they arise except for exchange
differences on monetary items receivable from or payable to a foreign operation for which settlement is neither
planned nor likely to occur. This forms part of the net investment in a foreign operation, which is recognised in the
foreign currency translation reserve and in profit or loss on disposal of the net investment.
For the purpose of presenting consolidated financial statements, the results and financial position of each entity of the
Group, where the functional currency is not the US dollar, are translated into US dollars as follows:
i.
assets and liabilities of the Group’s foreign operations are translated at the closing rate on the balance sheet date;
ii. income and expenses are translated at the average exchange rates for the period, where it approximates to actual
rates. In other cases, if exchange rates fluctuate significantly during that period, the exchange rates at the date of
the transactions are used; andd
iii. all resulting exchange differences arising, if any, are recognised in other comprehensive income and accumulated
equity (attributed to non-controlling interests as appropriate), transferred to the Group’s translation reserve. Such
translation differences are recognised as income or as expenses in the period in which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of
the foreign entity and translated at the closing rate.
Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2024
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
69
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3. Significant accounting policies continued
(e) Foreign currencies continued
The relevant exchange rates used were as follows:
Year ended
31 December 2024
Year ended
31 December 2023
GBP/USD
EURO/USD
USD/UAH
GBP/USD
EURO/USD
USD/UAH
Closing rate
1.25369
1.0388
42.3997
1.2732
1.1038
38.3480
Average rate
1.2782
1.0821
40.4528
1.2440
1.0817
37.0867
(f) Taxation
The 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 net profit as reported in the
consolidated 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 never taxable or deductible. The Group’s liability for current tax is calculated
using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. This
is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised
if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in
a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the
temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred
tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited
in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
In case of the uncertainty of the tax treatment, the Group assesses, whether it is probable or not, that the tax treatment
will be accepted, and to determine the value, the Group use the most likely amount or the expected value in determining
taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.
(g) Other property, plant and equipment
Property, plant and equipment (‘PP&E’) are carried at cost less accumulated depreciation and any recognised impairment
loss. Depreciation and amortisation is charged so as to write-off the cost or valuation of assets, other than land, over
their estimated useful lives, using the straight-line method, on the following bases:
Other PP&E
10% to 30%
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in income.
(h) Right-of-use assets
The Group leases various offices, equipment, wells, and land. Contracts may contain both lease and non-lease
components. The Group allocates the consideration in the contract to the lease and non-lease components based on their
relative stand-alone prices.
Assets arising from a lease are initially measured on a present value basis.
Right-of-use assets are measured at cost comprising the following:
>
the amount of the initial measurement of the lease liability;
>
any lease payments made at or before the commencement date less any lease incentives received;
>
any initial direct costs; and
>
costs to restore the asset to the conditions required by lease agreements.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a
straight-line basis.
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3. Significant accounting policies continued
(i) Intangible exploration and evaluation assets
The Group applies the modified full cost method of accounting for intangible exploration and evaluation (‘E&E’)
expenditure, which complies with requirements set out in IFRS 6 Exploration for and Evaluation of Mineral Resources.
Under the modified full cost method of accounting, expenditure made on exploring for and evaluating oil and gas
properties is accumulated and initially capitalised as an intangible asset, by reference to appropriate cost centres being
the appropriate oil or gas property. E&E assets are then assessed for impairment on a geographical cost pool basis,
which are assessed at the level of individual licences.
E&E assets comprise costs of (i) E&E activities which are in progress at the balance sheet date, but where the existence
of commercial reserves has yet to be determined (ii) E&E expenditure which, whilst representing part of the E&E
activities associated with adding to the commercial reserves of an established cost pool, did not result in the discovery
of commercial reserves.
Costs incurred prior to having obtained the legal rights to explore an area are expensed directly to the income
statement as incurred.
Exploration and Evaluation costs
E&E expenditure is initially capitalised as an E&E asset. Payments to acquire the legal right to explore, costs of
technical services and studies, seismic acquisition, exploratory drilling, and testing are also capitalised as intangible
E&E assets.
Tangible assets used in E&E activities (such as the Group’s vehicles, drilling rigs, seismic equipment and other property,
plant and equipment) are normally classified as PP&E. However, to the extent that such assets are consumed in
developing an intangible E&E asset, the amount reflecting that consumption is recorded as part of the cost of the
intangible asset. Such intangible costs include directly attributable overheads, including the depreciation of PP&E
items utilised in E&E activities, together with the cost of other materials consumed during the exploration and
evaluation phases.
E&E assets are not amortised prior to the conclusion of appraisal activities.
Treatment of E&E assets at conclusion of appraisal activities
Intangible E&E assets related to each exploration property 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 individual assets basis as set out below and any impairment loss is recognised in the income
statement. Upon approval of a development programme, the carrying value, after any impairment loss, of the relevant
E&E assets is reclassified to the development and production assets within PP&E.
Intangible E&E assets which relate to E&E activities that are determined not to have resulted in the discovery of commercial
reserves remain capitalised as intangible E&E assets at cost less accumulated amortisation, subject to meeting a pool-wide
impairment test in accordance with the accounting policy for impairment of E&E assets set out below.
Impairment of E&E assets
E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed
its recoverable amount. Such indicators include, but are not limited to those situations outlined in paragraph 20 of IFRS
6 Exploration for and Evaluation of Mineral Resources such as, a) license expiry during year or in the near future and
will not likely to be renewed; b) expenditure on E&E activity neither budgeted nor planned; c) commercial quantities of
mineral resources have been discovered; and d) sufficient data exists to indicate that carrying amount of E&E asset is
unlikely to be recovered in full from successful development or sale.
Where there are indications of impairment, the E&E assets concerned are tested for impairment. Where the E&E assets
concerned fall within the scope of an established full cost pool, which are not larger than an operating segment, they
are tested for impairment together with all development and production assets associated with that cost pool, as a
single cash generating unit.
The aggregate carrying value of the relevant assets is compared against the expected recoverable amount of the
pool, generally by reference to the present value of the future net cash flows expected to be derived from production
of commercial reserves from that pool. Where the assets fall into an area that does not have an established pool or if
there are no producing assets to cover the unsuccessful exploration and evaluation costs, those assets would fail the
impairment test and be written off to the income statement in full.
Impairment losses are recognised in the income statement and are separately disclosed.
(j) Development and production assets
Development and production assets are accumulated on a field-by-field basis and represent the cost of developing
the commercial Reserves discovered and bringing them into production, together with E&E expenditures incurred in
finding commercial Reserves transferred from intangible E&E assets.
Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2024
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
71
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3. Significant accounting policies continued
(j) Development and production assets continued
The cost of development and production assets comprises the cost of acquisitions and purchases of such assets,
directly attributable overheads, finance costs capitalised, and the cost of recognising provisions for future restoration
and decommissioning.
Depreciation of producing assets
Depreciation is calculated on the net book values of producing assets on a field-by-field basis using the unit of
production method. The unit of production method refers to the ratio of production in the reporting year as a
proportion of the Proved and Probable Reserves of the relevant field based on assessments of internal geologists
utilising the most recent Competent Person Report and subsequent drilling and exploration, taking into account future
development expenditures necessary to bring those Reserves into production.
Producing assets are generally grouped with other assets that are dedicated to serving the same Reserves for
depreciation purposes, but are depreciated separately from producing assets that serve other Reserves.
(k) Impairment of development and production assets and other property, plant and equipment
At each balance sheet date, the Group reviews the carrying amounts of its PP&E to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not
generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value in use. 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 the risks specific to the asset for which the estimates of future
cash flows have not been adjusted. In determining fair value less cost to sell, the estimated future cash flows are
discounted to their present value using a post-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Such cash flows include relevant development expenditure that a market participant would reasonably be expected to
undertake.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount,
the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased
to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-
generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately.
(l) Inventories
Oil and gas stock and spare parts are stated at the lower of cost and net realisable value. Costs comprise direct
materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the
inventories to their present location and condition. Cost is allocated using the weighted average method. Net realisable
value represents the estimated selling price less all estimated costs of completion and costs to be incurred in
marketing, selling and distribution.
(m) Financial instruments
Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the
Group becomes party to the contractual provisions of the instrument.
Loan classified at amortised cost
Loan is measured at the amount recognised at initial recognition minus principal repayments, plus or minus the
cumulative amortisation of any difference between that initial amount and the maturity amount, and any loss
allowance. Interest income is calculated using the effective interest method and is recognised in profit and loss.
Changes in fair value are recognised in profit and loss when the asset is derecognised or reclassified. In accordance
with IFRS 9, the loan is measured at amortised cost. The Group applies the simplified approach to providing for
expected credit losses (ECL) prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for
the loan. Expected credit losses are assessed on a forward-looking basis. The loss allowance is measured at initial
recognition and throughout its life at an amount equal to lifetime ECL. Any impairment is recognised in the income
statement.
Trade and other payables
Payables are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost
using the effective interest method.
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3. Significant accounting policies continued
(m) Financial instruments continued
Trade and other receivables
Trade and other receivables are recognised initially at their transaction price in accordance with IFRS 9 and are
subsequently measured at amortised cost. The Group applies the simplified approach to providing for expected
credit losses (ECL) prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade
receivables. Expected credit losses are assessed on a forward-looking basis. The loss allowance is measured at initial
recognition and throughout its life at an amount equal to lifetime ECL. Any impairment is recognised in the income
statement.
Cash
Cash comprise cash on hand and on-demand deposits. Deposits are recorded as cash and cash equivalents when they
have a maturity of less than 90 days at inception.
(n) Equity instruments
Ordinary shares are classified as equity. Equity instruments issued by the Company and the Group are recorded at the
proceeds received, net of direct issue costs. Any excess of the fair value of consideration received over the par value of
shares issued is recorded as share premium in equity.
(o) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that the Group will be required to settle that obligation, and a reliable estimate can be made of the
amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the
obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows.
(p) Decommissioning
A provision for decommissioning is recognised in full when the related facilities are installed. The decommissioning
provision is calculated as the net present value of the Group’s share of the expenditure expected to be incurred
at the end of the producing life of each field in the removal and decommissioning of the production, storage and
transportation facilities currently in place. The cost of recognising the decommissioning provision is included as part of
the cost of the relevant asset and is thus charged to the income statement on a unit of production basis in accordance
with the Group’s policy for depletion and depreciation of tangible non-current assets. Period charges for changes in the
net present value of the decommissioning provision arising from discounting are included within finance costs.
(q) Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease based on whether the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Service
agreements for equipment on the working sites are not considered leases as, based upon an assessment of the terms and
nature of their contractual arrangements, the contracts do not convey the right to control the use of an identified asset.
The right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments
made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and
remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives
received.
The asset is depreciated to the earlier of the end of the useful life of the right-of-use asset or the lease term using the
straight-line method as this most closely reflects the expected pattern of consumption of the future economic benefits.
The lease term includes periods covered by an option to extend if the Group is reasonably certain to exercise that option. In
addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements
of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental
borrowing rate. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when
there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s
estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment
of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the right-of-use asset, or the effect is recorded in profit or loss
if the carrying amount of the right-of-use asset has been reduced to zero.
The Group elected to apply the practical expedient not to recognise right-of-use assets and lease liabilities for short-term
leases that have a lease term of 12 months or less and leases of low-value assets. The Group also made use of the practical
expedient to not recognise a right-of-use asset or a lease liability for leases for which the lease term ends within 12 months
of the date of initial application.
The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term.
Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2024
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
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4. Critical accounting judgments and key sources of estimation uncertainty
In the application of the Group’s accounting policies, which are described in note 3, the Directors are required to make
judgements, estimates and assumptions about the carrying amounts of the assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both the current and future periods.
The following are the critical judgements and estimates that the Directors have made in the process of applying the
Group’s accounting policies and that have the most significant effect on the amounts recognised in the financial
statements.
Critical judgments and estimates
(a) Impairment indicator assessment for E&E assets
Cadogan had fully complied with legislative requirements and submitted its application for a 20-year exploration and
production license 5 months before its expiry on 23 December 2019. A decision on the award was expected to be provided
by State Geological Service of Ukraine before 19 January 2020, since all other intermediary approvals had been secured in
line with the applicable legislation requirements. Given the delay in granting of the new license beyond the regular timeline
provided by legislation in Ukraine, Cadogan launched a claim before the Administrative Court to challenge the non-granting
of the 20-year production license by the Licensing Authority.
In 2022, the claims of Usenco Nadra have been rejected by the Court of 1st Instance, the Court of Appeal and the Supreme
Court. Considering the circumstances, the Bitlyanska license was fully impaired in 2021.
(b) Impairment of PP&E
Management assesses its development and production assets for impairment indicators and if indicators of impairment are
identified performs an impairment test. Management performed an impairment assessment using a discounted cash flow
model which required estimates including forecast oil prices, reserves and production, costs and discount rates (note 17).
This test compares the carrying value of the assets at the reporting date with the expected discounted cash flows from
each project prepared under the fair value less cost of disposal approach. For the discounted cash flows to be calculated,
management has used a production profile based on its best estimate of proven reserves of the assets and a range of
assumptions, including an internal oil and gas price profile benchmarked to mean analysts’ consensus and third party
estimates and a discount rate which, taking into account other assumptions used in the calculation, management considers
to be reflective of the risks.
This assessment involves judgement as to (i) the likely commerciality of the asset, (ii) proven (‘1P’) reserves which are
estimated using standard recognised evaluation techniques (iii) future revenues and estimated development costs pertaining
to the asset, (iv) the discount rate to be applied for the purposes of deriving a recoverable value including estimates of the
relevant levels of risk premiums applied to the assets.
The carrying value of PP&E assets at 31 December 2024 was $5.3 million. The impairment assessment was identified at the
level of $13.97 million. Thus, no other impairment was identified.
(c) Recoverability and measurement of VAT
Judgment is required in assessing the recoverability of VAT assets and the extent to which historical impairment provisions
remain appropriate, particularly noting the recent recoveries against historically impaired VAT. In forming this assessment,
the Group considers the nature and age of the VAT, the likelihood of eligible future supplies to VAT, the pattern of recoveries
and risks and uncertainties associated with the operating environment (note 9).
Historically, the general volume of accumulated VAT credit was fully reserved as there were no permanent sources of its
utilisation yet (at 31 December 2024: $0.8 million). However, over the course of the year, the Group managed to realise
$39,000, and the reserve was accordingly reversed (note 9). Starting in 2025, the new electricity generation initiative is set
to provide a dynamic solution for utilising the accumulated VAT credit, enabling its realisation within the first year of the
project's operation.
(d) Proger loan recoverability
The recoverability of the carrying value of the loan to PMP represents a significant accounting judgment. In making their
assessment over estimated recoverability of the loan, management considered the Settlement Agreement signed with
Proger in December 2024. As a result, management concluded that $10.4 million represents its best estimate of recoverable
amount as at 31 December 2024 (2023: $17.1 million). For further details please refer to note 28.
(e) Well services and rental agreements
The Group’s well rental arrangements in Ukraine for oil and gas extraction activities are outside of the scope of IFRS
16. Judgment was required in forming this assessment, based on analysis of the scope of IFRS 16 and the nature of
the well rental arrangements. This assessment focused on the extent to which the rental agreements provided access
to sub-surface well structures to extract hydrocarbons versus surface level infrastructure for the transport and
processing of extracted hydrocarbons.
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(f) Deferred tax assets
Deferred tax assets and liabilities require management judgement in determining the amounts to be recognised. In
particular, significant judgement is used when assessing the extent to which deferred tax assets should be recognised,
with consideration given to the timing and level of future taxable income in the relevant tax jurisdiction.
Deferred tax assets are recognised only to the extent it is considered probable that those assets will be recoverable.
This involves an assessment of when those deferred tax assets are likely to reverse, and a judgement as to whether
or not there will be sufficient taxable profits available to offset the tax assets when they do reverse. This requires
assumptions regarding future profitability and is therefore inherently uncertain. To the extent assumptions regarding
future profitability change, there can be an increase or decrease in the level of deferred tax assets recognised that can
result in a charge or credit in the period in which the change occurs
(g) Determination of oil and gas reserves
Proven oil and gas reserves is the expected quantity of crude oil, natural gas and gas condensate liquids, the geological
and engineering features of which reliably indicate that such reserves can be produced from known deposits within
future years under existing economic and operating conditions. Proven developed reserves are reserves that are
expected to be produced through the use of existing wells using existing equipment and operating methods. The
determination of the level of oil and gas reserves is inherently characterised by uncertainty and requires the use of
professional judgment and periodic revisions in the future. All proven reserves are subject to revision in accordance
with new information regarding exploration drilling, production activity or changes in economic factors, including
commodity prices, contract terms and exploration plans. Accordingly, financial and accounting estimates based on
proven reserves are also subject to changes.
Changes in the level of proven developed reserves, affect the depreciation charges recognised in the financial
statements in the property, plant and equipment item related to development and production assets. Such changes, for
example, can be both the result of production and revision of estimates. A reduction in proven developed reserves will
increase depreciation charges (provided constant production) and will also increase costs.
The last independent valuation of the Group's oil and gas reserves was carried out as at 31 December 2023.
(h) Depreciation of wells related to hydrocarbon production
Wells related to the production of hydrocarbons (hereinafter referred to as "Wells") are depreciated using the unit
of production method. The cost of Wells is depreciated based on the available reserves of the relevant hydrocarbons
categories (proven developed produced), estimated in accordance with the standards of the Petroleum Resources
Management System (PRMS), prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers
(SPE).
(i) Depreciation of special subsoil use permits related to hydrocarbon extraction
Special permits for the subsoil use, which grant the right to extract hydrocarbons (hereinafter referred to as the
"Permit"), are depreciated using the unit of production method. The cost of the Permit is depreciated based on the
volumes of available reserves of the relevant hydrocarbons of the proved, probable and possible categories assessed in
accordance with SPE-PRMS.
(j) Decommissioning costs
The provision for asset decommissioning represents the present value of costs of decommissioning oil and gas facilities
that are expected to be incurred in the future (Note 25). These provisions were recognised based on the Company's
internal estimates. The underlying estimates include future market prices for the required decommissioning costs and
are based on market conditions and factors, as well as a discount rate. An additional uncertainty relates to the deadline
of decommissioning costs, which depend on the field depletion, future oil and gas prices and, as a result, the expected
point in time when future economic benefits from production are not expected to be realised. Changes in these
estimates may result in changes in the provisions recognised in the Statement of financial position.
5. Segment information
Segment information is presented on the basis of management’s perspective and relates to the parts of the Group that
are defined as operating segments. Operating segments are identified on the basis of internal reports provided to the
Group’s chief operating decision maker (“CODM”). The Group has identified its senior management team as its CODM
and the internal reports used by the senior management team to oversee operations and make decisions on allocating
resources serve as the basis of information presented. These internal reports are prepared on the same basis as these
consolidated financial statements.
Segment information is analysed on the basis of the type of activity, products sold, or services provided. The majority
of the Group’s operations and all Group’s revenues are located within Ukraine. Segment information is analysed on the
basis of the types of goods supplied by the Group’s operating divisions. The Group’s reportable segments under IFRS 8
are therefore as follows:
Exploration and Production
>
E&P activities on the exploration and production licences for natural gas, oil and condensate.
Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2024
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
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5. Segment information continued
Trading
>
Import of natural gas from European countries; and
>
Local purchase and sales of natural gas operations with physical delivery of natural gas.
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in note
3. Sales between segments are carried out at rates considered to approximate market prices. The segment result
represents operating profit under IFRS before unallocated corporate expenses. Unallocated corporate expenses
include management remuneration, representative expenses and expenses incurred in respect of the maintenance of
office premises. This is the measure reported to the CODM for the purposes of resource allocation and assessment of
segment performance. The Group does not present information on segment assets and liabilities as the CODM does not
review such information for decision-making purposes.
As at 31 December 2024 and for the year then ended the Group’s segmental information was as follows:
Exploration and
Production
$’000
Trading
$’000
Consolidated
$’000
Sales of hydrocarbons
9,119
–
9,119
Other revenue
33
–
33
Sales between segments
–
–
–
Total revenue
9,152
–
9,152
Cost of sales
(5,047)
–
(5,047)
Administrative expenses
(378)
–
(378)
Impairment of other assets
(39)
–
(39)
Adjustments of end of concession obligations for E&E assets
(6)
–
(6)
Other operating income, net
(19)
–
(19)
Reversal of impairment of other assets
39
–
39
Finance income1
507
–
507
Segment results
4,209
–
4,209
Unallocated administrative expenses
–
–
(3,144)
Finance income/costs, net
–
–
(5,405)
Net foreign exchange gain
–
–
(1,123)
Loss before tax
–
–
(5,463)
1 Net finance income includes $507 thousand of interest on cash deposits in Ukraine.
As at 31 December 2023 and for the year then ended the Group’s segmental information was as follows:
Exploration and
Production
$’000
Trading
$’000
Consolidated
$’000
Sales of hydrocarbons
7,141
403
7,544
Other revenue
6
–
6
Sales between segments
–
–
–
Total revenue
7,147
403
7,550
Cost of sales
(4,991)
(400)
(5,391)
Administrative expenses
(497)
(118)
(615)
Impairment of oil and gas assets
(49)
–
(49)
Other operating expenses, net
218
–
218
Impairment of other assets
25
–
25
Reversal of impairment of other assets
2
54
56
Finance income2
431
–
431
Segment results
2,286
(61)
2,225
Unallocated administrative expenses
–
–
(2,959)
Other income, net
–
–
1,454
Net foreign exchange loss
–
–
538
Loss before tax
–
–
1,258
2 Net finance income includes $431 thousand of interest on cash deposits used for operations.
Fixed assets related to Exploration and Production segment are disclosed in the note 17.
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6. Revenue
2024
$’000
2023
$’000
Sale of oil (production) – point in time
9,152
7,147
Sale of gas (trading) – point in time
–
403
9,152
7,550
Revenue is generated in Ukraine. Refer to note 3(e) for details of the performance obligations. Service revenue and
associated contract assets and liabilities are immaterial.
Information about major customers
79% of production business segment revenue arose from sales to five largest customers. Three of them contributed
more than 10% of the total revenue of the production business segment revenue for the year ended 31 December
2024.
81% of prior year production business segment revenue arose from sales to five largest customers. Each of them
contributed more than 10% of the total revenue of the production business segment revenue for the year ended
31 December 2023.
7. Cost of sales
2024
$’000
2023
$’000
Subsoil tax
2,804
2,668
Well rent
870
699
Depreciation
718
713
Staff cost
232
237
Machinery services
110
115
Materials cost
102
126
Electricity
100
80
Security services
69
68
Other expenses
67
81
Insurance
22
204
Natural Gas cost
(47)
400
Total
5,047
5,391
8. Administrative expenses
2024
$’000
2023
$’000
Staff
2,126
1,805
Professional fees
746
1,051
Insurance
170
188
Depreciation
124
169
Office costs including utilities and maintenance
57
57
IT and communication
53
43
Cars and travel
28
43
Bank charges
26
23
Travelling
37
23
Other
155
172
Total
3,522
3,574
9. Reversal of impairment/(impairment) of other assets
2024
$’000
2023
$’000
VAT recoverable
39
54
Other receivables
–
2
Reversal of impairment of other assets
39
56
Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2024
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
77
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9. Reversal of impairment/(impairment) of other assets continued
$0.8 million (2023: $0.9 million) of historical VAT receivables remain impaired. Refer to Note 4 and 20.
2024
$’000
2023
$’000
Inventories
(28)
(44)
Other receivables
(11)
–
Other assets
–
(5)
Impairment of other assets
(39)
(49)
10. Other operating expenses, net
2024
$’000
2023
$’000
(expenses)/income
(19)
25
Total
(19)
25
11. Auditor’s remuneration
The analysis of auditor’s remuneration is as follows:
2024
$’000
2023
$’000
Audit fees
Fees payable to the Company’s auditor and their associates for the audit of the
Company’s annual accounts
255
192
Fees payable to the Company’s auditor and their associates for other services to the Group:
– The audit of the Company’s subsidiaries
8
8
Total audit fees
263
200
12. Staff costs
The average monthly number of employees (including Executive Directors) was:
2024
Number
2023
Number
Executive Directors
1
1
Other employees
75
73
Total
76
74
$’000
$’000
Their aggregate remuneration comprised:
Wages and salaries
1,566
1,757
Provision for bonus
260
–
Provision for bonus granted in shares
260
–
Social security costs
193
207
Pension costs
79
78
Total
2,358
2,042
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Cadogan Energy Solutions plc Annual financial report 2024
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13. Finance income/(costs), net
2024
$’000
2023
$’000
Reversal of liability accrual
–
395
Interest income on cash deposits in United Kingdom
292
367
Interest income on cash deposits in Ukraine
507
431
Total interest income on financial assets
799
1,193
Interest on lease
(22)
(10)
Unwinding of discount on decommissioning provision (note 25)
(18)
(55)
Total
759
1,128
2024
$’000
2023
$’000
Loss on Proger loan, net
Interest on loan (note 28)
1,515
1,457
Total interest income on financial assets
1,515
1,457
Impairment of loan
(7,172)
(700)
Total
(5,657)
757
14. Tax
2024
$’000
2023
$’000
Current tax
434
–
Deferred tax
335
–
Total
769
–
The Group’s operations are conducted primarily outside the UK, namely in Ukraine. The most appropriate tax rate
for the Group is therefore considered to be 18% (2023: 18%), the rate of profit tax in Ukraine, which is the primary
source of revenue for the Group. Taxation for other jurisdictions is calculated at the rates prevailing in the respective
jurisdictions.
The taxation charge for the year can be reconciled to the (loss)/profit per the income statement as follows:
2024
$’000
2032
$’000
(Loss)/Profit before tax
(5,463)
1,258
Tax (credit)/charge at Ukraine corporation tax rate of 18% (2023: 18%)
(1,031)
226
Permanent differences
1,353
(583)
Unrecognised tax losses generated in the year
835
47
Recognition of previously unrecognised deferred tax assets
–
318
Reversal of deferred tax assets
(335)
–
Effect of different tax rates
(101)
(8)
721
_
Adjustments recognised in the current year in relation with the current tax of prior years
48
–
Income tax expense recognised in profit or loss
769
–
Permanent differences mostly represent items, including provisions, accruals and impairments related to taxation in
Ukraine, these are items not deductible in tax computations.
Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2024
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
79
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
15. (Loss)/earnings per Ordinary share
Basic earnings/(loss) per Ordinary share is calculated by dividing the net profit/(loss) for the year attributable to
owners of the Company by the weighted average number of Ordinary shares outstanding during the year. In 2024 the
Group generated a loss and therefore there is no difference between basic and diluted EPS.
(Loss)/earnings attributable to owners of the Company
2024
$’000
2023
$’000
(Loss)/earnings for the purposes of basic loss per share being net loss attributable to owners of the
Company
(6,232)
1,259
Number of shares
Number
‘000
Number
‘000
Weighted average number of Ordinary shares used in calculation of earnings per share:
Basic
244,128
244,128
Diluted
244,128
244,128
(Loss)/earnings per Ordinary share
Cent
Cent
Basic and diluted
(2.55)
0.5
16. Intangible exploration and evaluation assets
Cost
$’000
At 1 January 2023
7,515
Additions
1
Disposals
(615)
Change in estimate of decommissioning assets (note 25)
(218)
Exchange differences
(224)
At 1 January 2024
6,459
Additions
–
Disposals
–
Change in estimate of decommissioning assets (note 25)
6
Exchange differences
(617)
At 31 December 2024
5,848
Impairment
At 1 January 2023
7,515
Disposals
1
Addition
(615)
Change in estimate of decommissioning assets (note 25)
(218)
Exchange differences
(224)
At 1 January 2024
6,459
Addition
–
Disposals
–
Change in estimate of decommissioning assets (note 25)
6
Exchange differences
(617)
At 31 December 2024
5,848
Carrying amount
At 31 December 2024
–
At 31 December 2023
–
The carrying amount of E&E assets at 31 December 2024 relates to the Bitlyanska license.
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16. Intangible exploration and evaluation assets continued
Usenco Nadra has fully complied with legislative requirements and submitted its application for a 20-year exploration
and production license 5 months before its expiry on 23 December 2019. A decision on the award was expected to
be provided by State Geological Service of Ukraine before 19 January 2020, since all other intermediary approvals
had been secured in line with the applicable legislation requirements. Given the delay for granting of the new license
beyond the regular timeline provided by legislation in the Ukraine, Cadogan filed a claim before the Administrative
Court to challenge the non-granting of the 20-year production license by the Licensing Authority.
After the rejection of its claims, in February 2022, the Company exercised its right for appeal. The Appeal Court and
further on the Supreme Court rejected all the Company’s claims.
The Company fully impaired the Bitlyanska license in 2022.
17. Property, plant and equipment
Cost
Development
and production
assets
$’000
Construction
in progress
$’000
Other
$’000
Total
$’000
At 1 January 2023
10,286
–
2,200
12,486
Additions
43
–
15
58
Change in estimate of decommissioning assets (note 25)
20
–
–
20
Disposal
(1,734)
–
(1,160)
(2,894)
Exchange differences
(288)
–
(35)
(323)
At 1 January 2024
8,327
–
1,020
9,347
Additions
120
709
26
855
Change in estimate of decommissioning assets (note 25)
(6)
–
–
(6)
Reclassification to inventory
–
–
(40)
(40)
Disposal
(5)
–
(137)
(142)
Exchange differences
(800)
(33)
(90)
(923)
At 31 December 2024
7,636
676
779
9,091
Accumulated depreciation and impairment
At 1 January 2023
3,846
–
2,007
5,853
Charge for the year
692
–
37
729
Disposals
(1,711)
–
(1,167)
(2,878)
Exchange differences
(95)
–
(30)
(125)
At 1 January 2024
2,732
–
847
3,579
Charge for the year
702
–
30
732
Reversal of impairment
-
–
(37)
(37)
Disposals
(7)
–
(139)
(146)
Exchange differences
(293)
–
(73)
(366)
At 31 December 2024
3,134
–
628
3,762
Carrying amount
At 31 December 2024
4,502
676
151
5,329
At 31 December 2023
5,595
–
173
5,768
Other property, plant and equipment include fixtures and fittings for the development and production activities.
Construction in progress represents new assets acquired by the Group for its emerging business segment, the gas-
to-power project. As at 31 December 2024, the assets' value includes an electricity generator Janbacher delivered in
December, which is expected for starting operations in July 2025.
The carrying amount of development and production assets at 31 December 2024 of $4.5 million relates to the Blazhiv
license. Depreciation includes $0.7 million for the Blazhiv license.
Management has performed an impairment review of Development and production assets based on the underlying
discounted cash flow forecasts. The impairment review supported the conclusion that no impairment was applicable.
Key assumptions, used in the impairment assessment, were: future oil prices which were assumed at a constant $445
(2023: $467), real per tonne; a production forecast with a natural decline; estimated reserves and a discount rate of
25% for first four years then declining by 1.5% each year to 8.5% in 2039.
Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2024
OVERVIEW
STRATEGIC
REPORT
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17. Property, plant and equipment continued
Sensitivity analysis for the development and production assets
Any impairment is dependent on judgement used in determining the most appropriate basis for the assumptions and
estimates made by management, particularly in relation to the key assumptions described above. Sensitivity analysis
to potential changes in key assumptions to reach break-even has been provided below:
Change in the assumptions to be break-even
Change in the assumptions to be break-even
Oil price
(25 %)
Oil production volumes
(17 %)
Discount rate
56 %
18. Subsidiaries
The Company had investments in the following subsidiary undertakings at 31 December 2024:
Name
Country of
incorporation
and operation
Proportion
of voting
interest %
Activity
Registered office
Directly held
Cadogan Petroleum Holdings Ltd
UK
100
Holding company
6th Floor 60 Gracechurch Street, London,
EC3V 0HR, United Kingdom
Indirectly held
Cadogan Petroleum Holdings BV
Netherlands
100
Holding company
Hoogoorddreef 15, 1101 BA Amsterdam
Cadogan Bitlyanske BV
Netherlands
100
Holding company
Hoogoorddreef 15, 1101 BA Amsterdam
Zagoryanska Petroleum BV
Netherlands
100
Holding company
Hoogoorddreef 15, 1101 BA Amsterdam
LLC Cadogan Ukraine
Ukraine
100
Management company 48/50a, Zhylyanska Street, Kyiv, Ukraine
LLC Astroinvest-Energy
Ukraine
100
Trading
5a, Pogrebnyak Street, ap. 2, Zinkiv,
Poltava region, Ukraine, 38100
SE USENCO Ukraine
Ukraine
100
Production
8, Mitskevycha sq., Lviv, Ukraine,79000
LLC USENCO Nadra
Ukraine
100
Production
9a, Karpenka-Karoho str., Sambir, Lviv
region, Ukraine
LLC Astro-Service
Ukraine
100
Service Company
3 Petro Kozlaniuk str, Kolomyia, Ukraine
Exploenergy s.r.l.
Italy
90
Exploration
Via Adige 17, San Donato Milanese
Milano, CAP 20097, Italy
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19. Inventories
2024
$’000
2023
$’000
Natural gas
239
265
Crude oil
126
105
Other inventories
1,178
1,116
Impairment provision
(1,028)
(1,122)
Carrying amount
515
364
2024
$’000
2023
$’000
At 1 January
1,122
1,116
Accrual of provision
61
52
Reversal of provision
(47)
(8)
Exchange differences
(108)
(38)
At 31 December
1,028
1,122
The impairment provision at 31 December 2024 is made so as to reduce the carrying value of the inventories to the
net realisable value and includes $1.03 million provision for other inventories (2023: $1.07million provision for other
inventories, and $52,000 provision for natural gas).
20. Trade and other receivables
2024
$’000
2023
$’000
Trade receivables
32
68
Impairment provision for bad debts
(38)
(49)
VAT recoverable
862
1,097
Impairment provision for VAT
(793)
(918)
Prepayments
256
81
Other receivables
35
31
354
310
2024
2023
VAT
recoverable
$’000
Trade and
Other
Receivables
$’000
VAT
recoverable
$’000
Trade and
Other
Receivables
$’000
At 1 January
918
49
1,003
52
Accrual of provision
–
11
–
–
Reversal of provision
(39)
–
(54)
(2)
Exchange differences
(86)
(22)
(31)
(1)
At 31 December
793
38
918
49
The Group considers that the carrying value of receivables approximates their fair value.
VAT recoverable is presented net of the cumulative provision of $0.8 million (2023: $0.9 million) against Ukrainian VAT
receivable that has been recognised as at 31 December 2024. VAT recoverable relates to the oil production and gas
trading operations and is expected to be recovered through the gas and oil sales VAT.
Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2024
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21. Notes supporting statement of cash flows
Cash at 31 December 2024 of $14.4 million (2023: $14.2 million) comprise cash held by the Group. Ukrainian
subsidiaries of the Group hold $7.3 million as at 31 December 2024 (2023: $5.4 million).
With the start of the Russian invasion into Ukraine on 24 February 2022, the Ukrainian government introduced Martial
Law affecting, among others, aspects relating to lending agreements, foreign exchange and currency controls and
banking activities. As a result of the introduced Martial Law, the National Bank of Ukraine (“NBU”) has introduced
significant currency and capital control restrictions in Ukraine. These measures are affecting the Group in terms of its
cross-border payments to be made, which are restricted and may be carried out only in exceptional cases specified in
the amendments to the resolution No. 18.
Based on the regulations, Ukrainian subsidiaries of the Group are not able to pay dividends to the parent Company but
are able to use the cash in normal course of business.
The Directors consider that the carrying amount of these assets approximates to their fair value.
In addition, lease liability payments have been included as part of the financing activities for the year 2024.
22. Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during
the current and prior reporting period:
Temporary
differences
$’000
Asset at 1 January 2023
319
Deferred tax benefit
–
Exchange differences
51
Asset at 1 January 2024
370
Deferred tax benefit
(335)
Exchange differences
(35)
Asset at 31 December 2024
–
At 31 December, the Group had the following unused tax losses available for offset against future taxable profits:
2024
$’000
2023
$’000
UK
18,685
18,197
Ukraine
39,367
42,113
Netherlands
1,957
1,902
60,009
62,212
Deferred tax assets have been disposed due to reorganisation and new projects implementation. After launching new
projects, the Group is going to recalculate potential deferred tax assets in respect of those tax losses where there will
be sufficient certainty that profit will be available in future periods against which they can be utilised. The Group’s
unused tax losses of $18.7 million (2023: $18.2 million) relating to losses incurred in the UK are available to shelter
future non-trading profits arising within the Company. Unused tax losses incurred by Netherlands subsidiaries amount
to $1.96 million (2023: $1.9 million). These losses are not subject to a time restriction on expiry. No deferred tax asset is
recorded.
Unused tax losses incurred by Ukraine subsidiaries amount to $39.4 million (2023: $42.1 million). Under general tax
law provisions, these losses may be carried forward indefinitely to be offset against any type of taxable income arising
from the same company. Tax losses may not be surrendered from one Ukraine subsidiary to another.
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23. Lease liabilities
The Group continued to recognise right-of-use assets and lease liabilities based on a rental contract for the rent of a Kyiv
office with maturity date end of February 2024. Additionally, in December 2023 a new rental contract for the rent of a Kyiv
office was signed with the maturity date at the end of January 2027. Right-of-use assets are depreciated over the useful life
of the underlying asset. Depreciation represented as a part of administrative expenses. Total carrying value of right-of-use
assets is $165,000 as of 31 December 2024.
Right-of-use assets
Cost
$’000
Accumulated
depreciation
$’000
Net book
value
$’000
Right-of-use asset
292
–
–
Accumulated charge
–
(184)
–
As at 1 January 2023
292
(184)
108
Additions for the new agreement
230
–
–
Charge for the year
–
(92)
–
As at 1 January 2024
522
(276)
246
Disposal for the prior agreement
(292)
–
–
Charge for the prior agreement
–
(16)
–
Disposal of accumulated charge for the prior agreement
–
292
–
Charge for the year
–
(65)
–
At 31 December 2024
230
(65)
165
The following table sets out a maturity analysis of lease liabilities, showing the undiscounted lease payments to be paid
after the reporting date.
2024
$’000
2023
$’000
2024
–
95
2025
87
88
2026
92
92
2027
8
8
Less: unearned interest
(14)
(48)
Lease liabilities
173
235
2024
$’000
2023
$’000
Analysed as:
Current
98
87
Non-current
75
148
Lease liabilities
173
235
Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2024
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24. Trade and other payables
2024
$’000
2023
$’000
Accruals
826
430
Trade creditors
89
140
Prepayments received
49
54
Other payables
688
742
1,652
1,366
Trade payables and accruals principally comprise amounts outstanding for ongoing costs. The average credit period
taken for trade purchases is 31 days (2023: 29 days). The Group has financial risk management policies to ensure that
all payables are paid within the credit timeframe.
Other payables include unused vacation reserve provision of $0.4 million (2023: $0.39 million), subsoil tax payables of
$0.22 million (2023: $0.22) and other payables of $0.07 million (2023: $0.13 million).
The Directors consider that the carrying amount of trade and other payables approximates to their fair value. No
interest is generally charged on outstanding balances.
25. Provisions
The provisions at 31 December 2024 comprise $0.2 million (2023: $0.2 million) of decommissioning provision.
Decommissioning
$’000
At 1 January 2023
397
Change in estimate: exploration and evaluation assets (note 16)
(218)
Change in estimate: development and production assets
20
Unwinding of discount on decommissioning provision (note 13)
55
Exchange differences
(9)
At 1 January 2024
245
Change in estimate: exploration and evaluation assets (note 16)
6
Change in estimate: development and production assets
(6)
Unwinding of discount on decommissioning provision (note 13)
18
Exchange differences
(24)
At 31 December 2024
239
$’000
Non-current
114
Current
131
At 31 December 2023
245
Non-current
110
Current
129
At 31 December 2024
239
In accordance with the Group’s environmental policy and applicable legal requirements as of 31 December 2024 the
Group intends to restore the sites it is working on after completing the development activities.
Provision for the decommissioning and site restoration used by development and production assets has been
decreased by $6 thousand due to change in discounting rate used for the provision calculation (2024: 15%; 2023: 17%).
The change in the provision has been recognised as development and production assets charge for the year together
with unwinding of discount on decommissioning provision. The change in the provision of E&E assets has been
recognised as impairment.
A long-term provision of $0.11 million (2023: $0.11 million) has been made for decommissioning costs for Borynya-3
well, which is expected to be incurred in 2039, and Blazhiv-10 well, which is to be incurred at the end of Blazhiv license
period as a result of the demobilisation of oil and gas facilities and respective site restoration. Current provision of
$0.13 million (2023: $0.13 million) has been made for decommissioning costs, which are expected to be incurred in 2025
as a result of the demobilisation of oil and gas facilities and respective site restoration on Bitlyanska license.
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26. Share capital
2024
2023
Authorised and issued equity share capital
Number
(’000)
$’000
Number
(‘000)
$’000
Authorised
Ordinary shares of £0.03 each
1,000,000
57,713
1,000,000
57,713
Issued
Ordinary shares of £0.03 each
244,128
13,832
244,128
13,832
Authorised but unissued share capital of £30 million has been translated into US dollars at the historic exchange rate
of the issued share capital. The Company has one class of Ordinary shares, which carry no right to fixed income.
Issued equity share capital
Ordinary shares
of £0.03
At 31 December 2022
244,128,487
Issued during year
–
At 31 December 2023
244,128,487
Issued during year
–
At 31 December 2024
244,128,487
27. Other reserves
Reorganisation
$’000
At 1 January 2024
1,589
Charge for the year
–
At 31 December 2024
1,589
The accumulated amount of reserves at 31 December 2024 is made as accounting entry relating to the acquisition of
CPHL by PLC by means of share exchange in 2006. This was not deemed to be a business combination as there was no
change in control.
28. Financial instruments
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern, while
maximising the return to shareholders.
The capital resources of the Group consist of cash arising from equity attributable to owners of the Company,
comprising issued capital, reserves and retained earnings as disclosed in the Consolidated Statement of Changes in
Equity.
Externally imposed capital requirement
The Group is not subject to externally imposed capital requirements.
Categories of financial instruments
2024
$’000
2023
$’000
Financial assets (includes cash)
Loan provided at amortised cost
10,388
17,074
Cash
14,381
14,155
Trade and other receivables – amortised cost
29
50
24,798
31,279
Financial liabilities – measured at amortised cost
Trade payables
89
140
Lease liabilities
173
235
Accruals
826
430
Other payables
688
742
1,776
1,547
Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2024
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28. Financial instruments continued
The Proger loan is recorded at management’s best estimate of recoverable amount according to the Settlement
Agreement signed with Proger in December 2024.
Since the Call Option was not exercised before the Maturity Date and the asset is held within a business model whose
objective is to hold assets in order to collect contractual cash flows, the Loan provided was reclassified from ‘Financial
assets at fair value through profit and loss’ to ‘Financial assets at amortised cost’.
$’000
As at 1 January 2023
15,825
Movement in accrued interest
1,457
Movement in accrued provision
(700)
Exchange differences
492
As at 1 January 2024
17,074
Movement in accrued interest
1,515
Movement in accrued provision
(7,172)
Exchange differences
(1,029)
As at 31 December 2024
10,388
The year-end loan balance of $10.4 million, the €10 million equivalent, which aligns with the amount stipulated in the
Settlement Agreement. The payment of this amount was made to the Group in January 2025.
Financial risk management objectives
Management co-ordinates access to domestic and international financial markets and monitors and manages the
financial risks relating to the operations of the Group in Ukraine through internal risks reports, which analyse exposures
by degree and magnitude of risks. These risks include commodity price risks, foreign currency risk, credit risk, liquidity
risk and cash flow interest rate risk. The Group does not enter into or trade financial instruments, including derivative
financial instruments, for speculative purposes.
The Audit Committee of the Board reviews and monitors risks faced by the Group at meetings held throughout the year.
Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect the value of the financial instruments.
The Group is not exposed to interest rate risk because entities of the Group borrow funds at fixed interest rates.
Commodity price risk
The commodity price risk related to Ukrainian gas and condensate prices and prices for crude oil are the Group’s most
significant market risk exposures. World prices for gas and crude oil are characterised by significant fluctuations that
are determined by the global balance of supply and demand and worldwide political developments, including actions
taken by the Organisation of Petroleum Exporting Countries.
The Group does not hedge market risk resulting from fluctuations in gas, condensate and oil prices, and holds no
financial instruments, which are sensitive to commodity price risk.
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28. Financial instruments continued
Foreign exchange risk and foreign currency risk management
The Group holds a large portion of its monetary assets in the US Dollars and Euro, mitigating the exchange risk
between the US Dollars and Euro and monetary liability in the US Dollars. Besides, The Group has accumulated cash
position in hryvnia in Ukraine for new projects, so the hryvnias was added to sensitivity analysis.
Sensitivity analysis is represented below based on 10% exchange rate deviation:
As at 31 December 2023
Change in EURO/USD
exchange rate
Change in UAH/USD
exchange rate
$’000
+10%
(10%)
+10%
(10%)
Cash position
14,381
139
(139)
723
(723)
Loan receivable at amortised cost
10,388
1,039
(1,039)
–
–
Net assets
29,068
1,178
(1,178)
723
(723)
Inflation risk management
Inflation in Ukraine and in the international market for oil and gas may affect the Group’s cost for equipment and
supplies. The Directors will proceed with the Group’s practices of keeping deposits in US dollar accounts until funds are
needed and selling its production in the spot market to enable the Group to manage the risk of inflation.
Credit risk management
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group’s credit management process includes the assessment, monitoring and reporting of counterparty
exposure on a regular basis. Credit risk with respect to receivables is mitigated by active and continuous monitoring
the credit quality of its counterparties through internal reviews and assessment. There was no material past due
receivables as at year-end.
The Group makes allowances for expected credit losses on receivables in accordance with its accounting policy.
The credit risk on liquid funds (cash) is considered to be limited because the counterparties are financial institutions
with high and good credit ratings, assigned by international credit-rating agencies in the UK and Ukraine respectively.
The carrying amount of financial assets as at 31 December 2024 of $24.8 million (2023: $31.3 million) recorded in the
financial statements represents the Group’s maximum exposure to credit risk.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate
liquidity risk management framework for the management of the Group’s short, medium and long-term funding and
liquidity management requirements. The Group manages liquidity risk by maintaining adequate cash reserves and by
continuously monitoring forecast and actual cash flows.
The following tables sets out details of the expected contractual maturity of financial liabilities.
Within
3 months
$’000
3 months to
1 year
$’000
More than
1 year
$’000
Total
$’000
At 31 December 2023
Trade and other payables
1,312
–
–
1,312
Lease liability
5
90
188
283
At 31 December 2024
Trade and other payables
1,603
–
–
1,603
Lease liability
22
65
86
173
The carrying amount of financial liabilities as at 31 December 2024 of $1.8 million (2023: $1.6 million) recorded in the
financial statements demonstrates the stable financial condition of the Group.
Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2024
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29. Commitments and contingencies
Licence contingent liability
The Group has working interests in Blazhiv license to conduct its exploration and development activities in Ukraine.
The license held does not include any obligation on a settlement of exploration activities within its term.
Tax contingent liabilities
The Group assesses its liabilities and contingencies for all tax years open for audit by UK, Netherlands and Ukraine tax
authorities based upon the latest information available.
Where management concludes that it is not probable that a particular tax treatment is accepted, a provision is
recorded based on the most likely amount or the expected value of the tax treatment when determining taxable
profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. The decision should be based on which
method provides better predictions of the resolution of the uncertainty.
Inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax
laws.
Whilst the Group believes it has adequately provided for the outcome of these matters, certain periods are under
audit by the UK, Netherlands and Ukraine tax authorities, and therefore future results may include favourable or
unfavourable adjustments to these estimated tax liabilities in the period the assessments are made or resolved. The
final outcome of tax examinations may result in a materially different outcome than assumed in the tax liabilities.
Electricity Generation Commitments
As part of Group’s strategic objectives and approved budget for 2025, the Group is embarking on a new line of
business "electricity generation”. To ensure timely implementation and the launch of the project by year-end, several
agreements were signed with contractors in late 2024 for the provision of essential services. The total value of these
commitments amounts to about $451,000 including VAT.
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30. Related party transactions
All transactions between the Company and its subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
In February 2019, the Group entered in a 2-year loan agreement with Proger Management & Partners Srl with an
option to convert it into a direct 33% equity interest in Proger Ingegneria. At that time, Mr Michelotti was a non-
executive Director of Proger Ingegneria Srl and Proger Spa, and CEO of Cadogan Petroleum PLC. Mr Michelotti did not
participate to the voting for the approval of the loan agreement at the Board of Cadogan.
Directors’ remuneration
The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate
for each of the categories specified in IAS 24 Related Party Disclosures. Further information about the remuneration of
individual Directors is provided in the audited part of the Annual Report on Remuneration 2024 on page 39.
Purchase of services
Amounts owing
2024
$’000
2023
$’000
2024
$’000
2023
$’000
Directors’ remuneration
687
712
23
54
Social contribution on Directors’ remuneration
75
72
–
–
The total remuneration of the highest paid Director was $0.5 million in the year (2023: $0.5 million).
No guarantees have been given or received and no provisions have been made for doubtful debts in respect of the
amounts owed by related parties.
31. Events after the balance sheet date
In January 2025, Cadogan received 10 million euros as provided in the Settlement Agreement signed with Proger in
December 2024. Subsequently, Cadogan exited from the Loan Agreement, ended all the litigations procedures and
dissolved the pledge over the corresponding shares in Proger Ingegneria.
At the AGM in June 2021, the shareholders approved the resolution 11 for an exceptional bonus of 5% of the monies
recovered from Proger to be paid to Mr Khallouf upon the successful resolution of the reimbursement of the Proger Loan.
After receiving the €10 million in January 2025, the exceptional bonus of Euros 500,000 was due.
In February 2025, AstroInvest Energy signed a €6.2 million purchase agreement for several generators totalling 12.3 MW
of installed capacity to be delivered, installed and be operational in H2 2025.
Exploenergy is expecting the release in June 2025 of the authorisation for the preliminary exploration phase for its
project located in Lombardia (Italy).
Notes to the Consolidated
Financial Statements continued
For the year ended 31 December 2024
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Company Balance Sheet
As at 31 December 2024
Notes
2024
$’000
2023
$’000
ASSETS
Non-current assets
Receivables from subsidiaries
35
33,874
35,659
33,874
35,659
Current assets
Trade and other receivables
35
–
2
Cash
35
1,211
1,796
1,211
1,798
Total assets
35,085
37,457
LIABILITIES
Current liabilities
Trade and other payables
36
(915)
(350)
(915)
(350)
Total liabilities
(915)
(350)
Net assets
34,170
37,107
EQUITY
Share capital
37
13,832
13,832
Share premium
514
514
Retained earnings
128,543
131,480
Cumulative translation reserves
38
(108,719)
(108,719)
Total equity
34,170
37,107
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its profit and loss
account for the year. The loss for the financial year ended 31 December 2024 was $2.9 million (2023: loss $0.9 million).
The financial statements of Cadogan Energy Solution plc, registered in England and Wales no. 05718406, were
approved by the Board of Directors and authorised for issue on 25 April 2025.
They were signed on its behalf by:
Fady Khallouf
Chief Executive Officer
25 April 2025
The notes on pages 94 to 96 form part of these financial statements.
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The notes on pages 94 to 96 form part of these financial statements.
Company Cash Flow Statement
For the year ended 31 December 2024
2024
$’000
2023
$’000
Operating activities
Loss for the year
(2,937)
(865)
Adjustments for:
Interest received
(25)
(26)
Effect of foreign exchange rate changes
953
(491)
Movement in provisions
570
45
Operating cash outflows before movements in working capital
(1,439)
(1,337)
Decrease in receivables
912
698
Decrease in payables
(6)
(37)
Cash used in operations
(533)
(676)
Income taxes paid
–
–
Net cash outflow from operating activities
(533)
(676)
Investing activities
Interest received
25
26
Net cash generated from investing activities
25
26
Net decrease in cash
(508)
(650)
Effect of foreign exchange rate changes
(77)
55
Cash at beginning of year
1,796
2,391
Cash at end of year
1,211
1,796
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Company Statement of Changes in Equity
For the year ended 31 December 2024
Share
capital
$’000
Share
premium
account
$’000
Retained
earnings
$’000
Other
reserve
$’000
Cumulative
translation
reserves
$’000
Total
$’000
As at 1 January 2023
13,832
514
132,345
–
(108,719)
37,972
Net loss for the year
–
–
(865)
–
–
(865)
Total comprehensive loss for
the year
–
–
(865)
–
–
(865)
Issue of ordinary shares
–
–
–
–
–
–
As at 1 January 2024
13,832
514
131,480
–
(108,719)
37,107
Net loss for the year
–
–
(2,937)
–
–
(2,937)
Total comprehensive loss for
the year
–
–
(2,937)
–
–
(2,937)
As at 31 December 2024
13,832
514
128,543
–
(108,719)
34,170
The notes on pages 94 to 96 form part of these financial statements.
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Notes to the Company Financial Statements
For the year ended 31 December 2024
32. Significant accounting policies
The separate financial statements of the Company are presented as required by the Companies Act 2006 (the “Act”).
As permitted by the Act, the separate financial statements have been prepared in accordance with UK-adopted
International Accounting Standards.
The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are
the same as those set out in note 3 to the Consolidated Financial Statements except as noted below.
Investments
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Receivables from subsidiaries
Loans to subsidiary undertakings are subject to IFRS 9’s expected credit loss model. As all intercompany loans are
repayable on demand, the loan is considered to be in stage 3 of the IFRS 9 ECL model on the basis the subsidiary
does not have enough liquid assets in order to repay the loans if demanded. Lifetime ECLs are determined using all
relevant, reasonable and supportable historical, current and forward-looking information that provides evidence about
the risk that the subsidiaries will default on the loan and the amount of losses that would arise as a result of that
default. Analysis indicated that the Company will fully recover the carrying value of the loans (net of historic credit loss
provisions) so no additional ECL has been recognised in the current period.
Critical accounting judgment and key sources of estimation uncertainty
The Company’s financial statements, and in particular its investments in and receivables from subsidiaries, are affected
by certain of the critical accounting judgements and key sources of estimation uncertainty.
The critical estimates and judgments referred to application of the expected credit loss model to intercompany
receivables (note 34). Management determined that the interest free on demand loans were required to be assessed
on the lifetime expected credit loss approach and assessed scenarios considering risks of loss events and the
amounts which could be realised on the loans. In doing so, consideration was given to factors such as the cash held
by subsidiaries and the underlying forecasts of the Group’s divisions and their incorporation of prospective risks and
uncertainties.
33. Auditor’s remuneration
The auditor’s remuneration for audit and other services is disclosed in note 11 to the Consolidated Financial Statements.
34. Investments
The Company’s subsidiaries are disclosed in note 18 to the Consolidated Financial Statements. The investments in
subsidiaries are all stated at cost less any provision for impairment.
35. Financial assets
The Company’s principal financial assets are bank balances and cash and receivables from related parties none of
which are past due. The Directors consider that the carrying amount of receivables from related parties approximates
to their fair value. .
Receivables from subsidiaries
At the balance sheet date gross amounts receivable from the fellow Group companies were $346.9 million (2023:
$348.7 million). The Company did not recognise additional expected credit loss provisions in relation to receivables
from subsidiaries in 2024 (2023: nil). The accumulated provision on receivables at 31 December 2024 was $313 million
(2023: $313 million). The carrying value of the receivables from the fellow Group companies at 31 December 2024 was
$33.9 million (2023: $35.7 million). Receivables from subsidiaries are interest free and repayable on demand. There
are no past due receivables. The receivables are classified as non-current based on the expected timing of receipt
notwithstanding their terms.
Cash
Cash comprises cash held by the Company and short-term bank deposits with an original maturity of three months or
less. The carrying value of these assets approximates to their fair value.
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
95
Cadogan Energy Solutions plc Annual financial report 2024
www.cadoganenergysolutions.com
36. Financial liabilities
Trade and other payables
2024
$’000
2023
$’000
Accruals
211
166
Unused vacation provision
111
105
Amounts owing to Directors
542
54
Trade creditors
51
25
915
350
Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit
period taken for trade purchases is 30 days (2023: 30 days).
Unused vacation provision of $111,450 accrued for CEO of the Company (2023: $105,000).
The Directors consider that the carrying amount of trade and other payables approximates to their fair value. No
interest is charged on balances outstanding.
37. Share capital
The Company’s share capital is disclosed in note 26 to the Consolidated Financial Statements.
38. Cumulative translation reserve
The directors decided to change the functional currency of the Company from sterling to US dollars with effect
from 1 January 2016. The effect of a change in functional currency is accounted for prospectively. In other words,
the Company translates all items into the US dollar using the exchange rate at the date of the change. The resulting
translated amounts for non-monetary items are treated as their historical cost. Exchange differences arising from the
translation of an operation previously recognised in other comprehensive income in accordance with paragraphs 32
and 39(c) IAS 21 “Foreign Currency” are not reclassified from equity to profit or loss until the disposal of the operation.
39. Financial instruments
The Company manages its capital to ensure that it is able to continue as a going concern while maximising the return
to shareholders. Refer to note 28 for the Group’s overall strategy and financial risk management objectives.
The capital resources of the Company consist of cash arising from equity, comprising issued capital, reserves and
retained earnings.
Categories of financial instruments
2024
$’000
2023
$’000
Financial assets – measured at amortised cost
Cash
1,211
1,796
Amounts due from subsidiaries
33,874
35,659
35,085
37,455
Financial liabilities – measured at amortised cost
Trade creditors
(185)
(184)
(185)
(184)
Interest rate risk
All financial liabilities held by the Company are non-interest bearing. As the Company has no committed borrowings,
the Company is not exposed to any significant risks associated with fluctuations in interest rates.
Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the
Company. For cash, the Company only transacts with entities that are rated equivalent to investment grade and above.
Other financial assets consist of amounts receivable from related parties.
The Company’s credit risk on liquid funds is limited because the counterparties are banks with high credit ratings
assigned by international credit-rating agencies.
The carrying amount of financial assets recorded in the Company financial statements, which is net of any impairment
losses, represents the Company’s maximum exposure to credit risk.
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39. Financial instruments continued
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate
liquidity risk management framework for the management of the Company’s short, medium and long-term funding and
liquidity management requirements. The Company maintains adequate reserves, by continuously monitoring forecast
and actual cash flows.
The Company’s financial liabilities are immaterial and therefore no maturity analysis has been presented.
Foreign exchange risk and foreign currency risk management
The Company holds a large portion of its monetary assets in the US Dollars and Euro, mitigating the exchange risk
between the US Dollars and Euro and monetary liability in the US Dollars. More information on the foreign exchange
risk and foreign currency risk management is disclosed in note 28 to the Consolidated Financial Statements.
40. Related parties
Amounts due from subsidiaries
The Company has entered into a number of unsecured related party transactions with its subsidiary undertakings. The
most significant transactions carried out between the Company and its subsidiary undertakings are mainly for short
and long-term financing. Amounts owed from these entities are detailed below:
2024
$’000
2023
$’000
Cadogan Petroleum Holdings Limited
33.874
35,659
33,874
35,659
Refer to note 34 for details on the Company’s receivables due from subsidiaries.
The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate
for each of the categories specified in IAS 24 Related Party Disclosures. In 2024 there were no other employees in the
Company. Further information about the remuneration of individual Directors is provided in the audited part of the
Annual Report on Remuneration 2024 on pages 39 to 43.
Purchase of services
Amounts owing
2024
$’000
2023
$’000
2024
$’000
2023
$’000
Directors’ remuneration
687
712
23
54
Social contribution on Directors’ remuneration
75
72
–
–
The total remuneration of the highest paid Director was $0.47 million in the year (2023: $0.5 million).
41. Events after the balance sheet date
Events after the balance sheet date are disclosed in note 31 to the Consolidated Financial Statements.
Notes to the Company
Financial Statements continued
For the year ended 31 December 2024
OVERVIEW
STRATEGIC
REPORT
CORPORATE
GOVERNANCE
REMUNERATION
REPORT
FINANCIAL
STATEMENTS
GLOSSARY
SHAREHOLDER
INFORMATION
97
Cadogan Energy Solutions plc Annual financial report 2024
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IFRSs
International Financial Reporting Standards
JAA
Joint activity agreement
UAH
Ukrainian hryvnia
GBP
Great Britain pounds
$
United States dollars
bbl
Barrel
boe
Barrel of oil equivalent
mmboe
Million barrels of oil equivalent
mboe
Thousand barrels of oil equivalent
mboepd
Thousand barrels of oil equivalent per day
boepd
Barrels of oil equivalent per day
bcf
Billion cubic feet
mmcm
Million cubic metres
mcm
Thousand cubic metres
Reserves
Those quantities of petroleum anticipated to be commercially recoverable by application
of development projects to known accumulations from a given date forward under
defined conditions. Reserves include proved, probable and possible reserve categories.
Proved Reserves
Those additional Reserves which analysis of geoscience and engineering data can be
estimated with reasonable certainty to be commercially recoverable, from a given date
forward, from reservoirs and under defined economic conditions, operating methods and
government regulations.
Probable Reserves
Those additional Reserves which analysis of geoscience and engineering data indicate
are less likely to be recovered than proved Resources but more certain to be recovered
than possible Reserves.
Possible Reserves
Those additional Reserves which analysis of geoscience and engineering data indicate
are less likely to be recoverable than probable Reserves.
Contingent Resources
Those quantities of petroleum estimated, as of a given date, to be potentially recoverable
from known accumulations by application of development projects, but which are not
currently considered to be commercially recoverable due to one or more contingencies.
Prospective Resources
Those quantities of petroleum which are estimated as of a given date to be potentially
recoverable from undiscovered accumulations.
P1
Proved Reserves
P2
Probable Reserves
P3
Possible Reserves
1P
Proved Reserves
2P
Proved plus Probable Reserves
3P
Proved plus Probable plus Possible Reserves
Workover
The process of performing major maintenance or remedial treatment of an existing oil or
gas well
E&E/E&P
Exploration and Evaluation/Exploration and Production
LTI
Lost time incidents
Glossary
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Enquiries relating to the following administrative matters should be addressed to the Company’s registrars: Link Group,
10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL.
Telephone: 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the
United Kingdom will be charged at the applicable international rate. Lines are open between 09:00 – 17:30, Monday to
Friday excluding public holidays in England and Wales.
>
Loss of share certificates.
>
Notification of change of address.
>
Transfers of shares to another person.
>
Amalgamation of accounts: if you receive more than one copy of the Annual Financial Report, you may wish to
amalgamate your accounts on the share register.
You can access your shareholding details and a range of other services at the Shareholder Portal www.signalshares.com.
Information concerning the day-to-day movement of the share price of the Company can be found on the Group’s website
www.cadoganenergysolutions.com or that of the London Stock exchange www.prices.londonstockexchange.com.
Unsolicited mail
As the Company’s share register is, by law, open to public inspection, shareholders may receive unsolicited mail
from organisations that use it as a mailing list. To reduce the amount of unsolicited mail you receive, contact:
The Mailing Preference Service, FREEPOST 22, London W1E 7EZ.
Telephone: 0845 703 4599. Website: www.mpsonline.org.uk.
Financial calendar 2024/2025
Annual General Meeting
20 June 2025
Half Yearly results announced
10 September 2024
Annual results announced
25 April 2025
Investor relations
Enquiries to: info@cadogan-es.com , info@cadoganpetroleum.com
Registered office
Shakespeare Martineau LLP, 6th Floor, 60 Gracechurch Street, London EC3V 0HR
Registered in England and Wales no. 05718406
Ukraine
48/50A Zhylyanska Street
Business center “Prime”, 8th Floor
01033 Kyiv
Ukraine
Email:
info@cadoganpetroleum.com
Telephone:
+38 044 594 58 70
Fax:
+38 044 594 58 71
www.cadoganenergysolutions.com
Shareholder Information
Investor relations
Enquiries to: info@cadogan-es.com
Registered office
Shakespeare Martineau LLP
6th Floor, 60 Gracechurch Street, London EC3V 0HR
Company number
Registered in England and Wales no. 5718406
Ukraine
48/50A Zhylyanska Street
Business Center “Prime”, 8th Floor
01033 Kyiv
Ukraine
Email: info@cadoganpetroleum.com
Tel:
+38 044 594 58 70
Fax:
+38 044 594 58 71
www.cadoganenergysolutions.com