PRODUCTION, DRILLING,
DEVELOPMENT AND INVESTMENT
IN THE UNITED KINGDOM
HYDROCARBON SECTOR
2022
UNION JACK OIL plc
ANNUAL REPORT AND
FINANCIAL STATEMENTS
Directors, Officers and Advisers
DIRECTORS
David Bramhill
Executive Chairman
Joseph O’Farrell
Executive
Graham Bull
Non-Executive
Raymond Godson
Non-Executive
COMPANY OFFICE
6 Charlotte Street,
Bath BA1 2NE,
England
Telephone: +44 (0) 1225 428139
Email: info@unionjackoil.com
Web: www.unionjackoil.com
Twitter: @unionjackoilplc
REGISTERED NUMBER
07497220
BANKERS
Royal Bank of Scotland plc
Drummond House,
PO Box 1727,
1 Redheughs Avenue,
Edinburgh EH12 9JN,
Scotland
NOMINATED ADVISER
AND JOINT BROKER
SP Angel Corporate Finance LLP
Prince Frederick House,
35-39 Maddox Street,
London W1S 2PP,
England
JOINT BROKER
Shore Capital Stockbrokers Limited
Cassini House,
57 St James’s Street,
London SW1A 1LD,
England
SECRETARY AND
REGISTERED OFFICE
Matthew Small
6 Charlotte Street,
Bath BA1 2NE,
England
REGISTRARS
Computershare Investor Services PLC
The Pavilions,
Bridgwater Road,
Bristol BS13 8AE,
England
AUDITOR
BDO LLP
55 Baker Street,
London W1U 7EU,
England
SOLICITORS
Osborne Clarke
2 Temple Back East,
Temple Quay,
Bristol BS1 6EG,
England
Union Jack Oil plc is primarily an onshore oil
and gas company with a focus on production,
drilling, development and investment in the
United Kingdom hydrocarbon sector. The issued
share capital is traded on the AIM Market of the
London Stock Exchange (Ticker: UJO).
Our strategy is the appraisal and exploitation
of the assets currently owned. Simultaneous
with this process, the Company’s management
expects to continue to use its expertise to
acquire further licence interests over areas
where there is a short lead-time between the
acquisition of the interest and either exploration
drilling or initial production from any oil or gas
fields that may be discovered.
“Fully funded for all
G&A, OPEX and CAPEX
costs for at least the
next 12 months”
Contents
BUSINESS AND STRATEGY
FINANCIAL STATEMENTS
Chairman’s Statement
Strategic Report
Licence Interests
GOVERNANCE
Directors’ Report
Corporate Governance Report
Independent Auditor’s Report
on the Financial Statements
2
10
18
20
23
36
Income Statement
Statement of
Comprehensive Income
Balance Sheet
Statement of Changes in Equity
Statement of Cash Flows
Principal Accounting Policies
Notes to the Financial Statements
ANNUAL GENERAL MEETING
Notice of Annual General Meeting
41
42
43
44
45
46
54
73
1
www.unionjackoil.com
CHAIRMAN’S
STATEMENT
I am delighted to present to the shareholders of Union Jack Oil plc
(“Union Jack” or the “Company”), the Annual Report and Financial
Statements for the year ended 31 December 2022.
Growth and progress continued throughout 2022,
mainly due to the elevated cash flow from our flagship
development Wressle, where revenues increased significantly
from £1,894,875 in 2021, to £8,507,050 in 2022, enabling
Union Jack to announce a maiden net profit of £3,606,624
post tax compared to a loss of £853,013 in 2021.
Post Balance Sheet cash balances and near-term receivables,
stand in excess of £9,750,000 as at 12 May 2023.
The Company is funded for all G&A, OPEX and contracted
or planned CAPEX costs, including any budgeted drilling
activities for at least the next 12 months, without recourse
to the Capital Markets.
Oil from our flagship project, Wressle, remains free flowing
with zero water cut. Wressle continues to perform in an
extremely positive way and our expectations remain high
as we believe there remains scope for material expansion.
The GaffneyCline report, published during September
2022, suggested the possibility of a significantly higher
reserve than originally predicted for the Ashover Grit
reservoir. On current performance we find it difficult to
dismiss this theory and look forward to the technical and
commercial assessment by ERCE, who have recently been
commissioned to review the reserve and resource potential
of the Wressle field through a new CPR. The results of this
report are expected during June 2023.
The material increase in cash flow during 2022, coupled
with a robust oil price and increased hydrocarbon
production, allowed the Company to seek a Capital
Reduction exercise which was granted by the High Court,
during August 2022, enabling the Company to distribute
a Maiden Special Dividend of 0.8 pence per share during
December 2022, totalling £900,527, and also introduce a
share buy-back programme, enhancing earnings per share.
In respect of a Dividend Policy, it is our intention to make
payments to shareholders as and when cash balances
allow. During March 2023, the Board declared an Interim
Dividend of 0.3 pence per share, payable during July 2023
and it is the intention to continue dividend payments based
on a proportion of the free cash available subject to our
project obligations being fulfilled.
I am delighted to be able to report that since the Capital
Reduction was granted in August 2022, return of capital
by way of total dividends paid or announced and share
buybacks has totalled £1,117,154.
Union Jack’s maiden profit, the return of capital, current
record-high cash balances and near-term receivables, all
highlight the achievements of the Company during 2022.
Positive results from independent laboratories and
consultants during 2022 and from the data driven
information received from the West Newton discoveries
expand our confidence in the success of the horizontal
well currently planned to be drilled during H2 2023.
Additional information on our leading projects at Wressle
and West Newton, and overviews on Biscathorpe,
Keddington and North Kelsey can be found later within
this statement.
The results for 2022 are highly positive with the Company
being in a strong financial position and a balanced work
programme of potentially further transformational
development and drilling to look forward to.
Further information can be found on our website
www.unionjackoil.com, presenting detailed technical
information on our projects, designed to inform
shareholders and attract new investors to the Company.
In addition, Union Jack hosts an active twitter account
@unionjackoilplc.
2
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Chairman’s Statement
OPERATIONAL HIGHLIGHTS
• Approvals for the Wressle Field Development
Plan and licences for the production phase
through to 2039 received from the North Sea
Transition Authority (“NSTA”)
• Wressle is currently the second most productive
conventional producing onshore oilfield in the UK
• ERCE commissioned to review the reserve and
resource potential of the Wressle field through
a new Competent Person’s Report (“CPR”)
FINANCIAL HIGHLIGHTS
• Maiden net profit of £3,606,624 post tax
• Oil revenues increased by 340%
• Basic earnings per share increased by over 485%
• Cash balances and near-term receivables stand
in excess of £9,750,000 as at 12 May 2023
• Planning for the drilling of additional wells at
• Debt free
West Newton approved by the East Riding of
Yorkshire Council (“ERYC”)
• RPS delivered a positive revised CPR on West
Newton, where a horizontal well is planned to
be drilled during H2 2023
• Biscathorpe appeal heard - awaiting decision from
the Planning Inspectorate
• North Kelsey appeal hearing set for June 2023
• Funded for all operational, contracted and
planned CAPEX costs, including budgeted
drilling activities for at least the next 12 months
• Capital Reduction granted for share buy-back
programme and the payment of a 0.8 pence
Maiden Special Dividend during December 2022
• Post period end an Interim Dividend of
0.3 pence declared to be paid July 2023
Since the proppant squeeze and coiled tubing operations
conducted during August 2021, Wressle has established
itself as Union Jack’s flagship project with production rates
far exceeding original expectations.
Wressle continues to produce oil under natural flow and
associated gas at high rates with zero water cut from the
Ashover Grit reservoir. To date, over 400,000 barrels of
high-quality oil have been produced and sold from Wressle.
During the past 12 months, a programme of improvements
and upgrades to Wressle site facilities has been successfully
carried out. The implementation of a two-stage gas
utilisation scheme is being progressed which will enable
the oil production to be increased.
WRESSLE DEVELOPMENT PEDL180 AND
PEDL182 (40%)
Wressle is located in Lincolnshire, on the western margin
of the Humber Basin.
The Wressle-1 (“Wressle”) discovery was defined on
proprietary 3D seismic data. The structure is on trend with
the producing Crosby Warren oilfield and the Broughton
oil discovery, both to the immediate northwest and the
Brigg-1 discovery to the southeast. These wells all contain
hydrocarbons in several different sandstone reservoirs
within the Upper Carboniferous succession.
The Ashover Grit gas is being utilised for electricity
generation on-site and will be exported at a later date.
The diesel generator has been replaced by three gas
microturbines which were installed and commissioned
during early 2023. The second phase of the programme
will see the installation of a separate gas engine to
generate and export approximately 1.4 MW of electricity
into a local private power network. A later stage of
the gas monetisation will focus on gas export from the
undeveloped reservoirs that hold significant contingent
hydrocarbon resources and are awaiting production
in due course.
3
Business and Strategywww.unionjackoil.com Chairman’s Statement
Crosby Warren
BROUGHTON NORTH
PROPECT
PEDL182
WRESSLE 1
Scunthorpe
BROUGHTON 1
WRESSLE
PEDL180
GLANDFORD 1
BRIGG 1
Scrawby
HIBALDSTOW 1
PEDL241
NORTH KELSEY
PROSPECT
“Wressle is currently the second
most productive conventional
producing onshore oilfield
in the UK and has generated
in excess of US$15,000,000 in
revenues to Union Jack since
re-commencement of
production in August 2021”
The performance of the Ashover Grit reservoir during
2022 has been nothing short of exceptional. During
September 2022, the Company published the results of
a report, commissioned by Union Jack and compiled by
GaffneyCline, in respect of the potential upside at Wressle
which provided commentary on the reserve and resource
volumes.
During the second half of 2022, the Operator re-processed
the 3D seismic data over the field. This data has been
interpreted and mapped with the objective of identifying
reservoir targets for drilling an additional well/wells at
the earliest opportunity, subject to receipt of regulatory
approvals. The results of this report are expected during
June 2023.
The highlights of this report are as follows:
• Ashover Grit Speculative Deeper Oil-Water Contact
assessment indicates a potentially significant increased
estimate of STOIIP (“Stock Tank Oil Initially in Place”)
of 10.12 million barrels of oil (“mmbbl”) and a
recoverable resource of 2.43 mmbbl
• The Wressle-1 well also indicated additional
hydrocarbon potential within the Santon Sandstone,
where GaffneyCline has estimated a Contingent
Resource being present
A new CPR, considering all oil and gas bearing horizons
has been commissioned, incorporating the new field
interpretation and production performance data. The
results of this report are expected during June 2023.
The management of Union Jack believes that the Company
holds a material interest in a project that will continue
to deliver significant revenues for at least the next decade
and more.
4
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Chairman’s Statement
PEDL183
ELLERBY
PROSPECT
GREAT
HATFIELD 1
A2
WEST
NEWTON
B1Z
A1
B1
CRAWBERRY HILL 1
Beverley
RISBY 1
Hull
SPRING HILL
PROSPECT
WITHERNSEA
PROPECT
WINESTEAD 1
Immingham
Easington
WEST NEWTON APPRAISAL PEDL183 (16.665%)
PEDL183 is located onshore UK, north of the River Humber,
encompassing the town of Beverley, East Yorkshire. The
licence area is within the western sector of the Southern
Zechstein Basin.
Analyses by APT of numerous oil and gas samples recovered
from the West Newton wells during testing, along with
evaluation of mud gases measured during drilling utilising
a proprietary software package, indicates that the Kirkham
Abbey reservoir is predominantly gas (primarily methane
90% plus ethane 5%) with associated light condensate.
Union Jack entered into a farm-in during 2018 with Rathlin
Energy (UK) Limited (“Rathlin”) the Operator, and since that
time the West Newton A-2 (“WNA-2”) and West Newton
B -1Z (“WNB-1Z”) drilling programmes have yielded
substantial hydrocarbon discoveries within the Kirkham
Abbey formation.
Throughout 2022, data collected during drilling operations
and well testing, which included core, oil and gas samples,
wireline log and well test records were analysed by
independent laboratories CoreLab, Applied Petroleum
Technology (“APT”) and RPS Group Limited (“RPS”).
The results of these analyses, in conjunction with internal
evaluations, have been invaluable in informing the upcoming
programme of work and future drilling plans.
The laboratory reports confirm that the hydrocarbon-
bearing Kirkham Abbey reservoir is extremely sensitive
to aqueous fluids and that previous drilling of the West
Newton wells with water-based mud had created near
well-bore damage through the creation of very fine rock
fragments, affecting the natural porosity and permeability
of the formation which had a detrimental effect on its
ability to flow. Further analyses have determined that the
use of dilute water-based acids during well testing would
have also affected the flow characteristics of the Kirkham
Abbey reservoir.
These tests indicate that by drilling the Kirkham Abbey
reservoir with an oil-based drilling fluid, damage to the
oil and gas reservoir should be minimised.
The Operator, Rathlin Energy, has made applications to the
Environment Agency (“EA”) for use of oil-based drilling fluids
within the hydrocarbon bearing Permian section for both the
West Newton A and B sites.
RPS has modelled wells extending up to 1,500 metres
horizontally through the Kirkham Abbey reservoir. These
wells have a much greater likelihood of encountering
significant sections of the naturally fractured reservoir,
enhancing its productive capability.
In preparation for a decision on the potential development
of the West Newton discoveries, the Operator submitted
revised planning applications for the development of
West Newton to the ERYC. This was approved by the
ERYC Planning Committee by a vote of ten to one during
March 2022.
A revised CPR was compiled by RPS during 2022, evaluating
the resources of PEDL183 as of 30 June 2022, (“Effective
Date”).
The results of the CPR were very encouraging, highlighting:
• Kirkham Abbey Best Case Gross Unrisked Contingent
Technically Recoverable Sales Gas is estimated to be
197.6 billion cubic feet (“bcf”)
• Geological Chance of Success of Kirkham Abbey
horizontal well estimated to be 85.5%
• Gross NPV10 risked value of Kirkham Abbey Contingent
Gas Resource as at Effective Date of US$396.1 million
post tax
• Substantial additional Prospective Resource figures for
Ellerby, Spring Hill and Withernsea prospects
5
Business and Strategywww.unionjackoil.com Chairman’s Statement
In the preparation of the CPR, RPS adopted the Petroleum Resource Management System (“PRMS”) standard.
WEST NEWTON GROSS UNRISKED TECHNICALLY RECOVERABLE SALES
CATEGORY
GROSS TECHNICALLY RECOVERABLE
1C
2C
3C
GAS
(BCF)
99.7
197.6
393.0
LIQUIDS
(MBBL)
299.4
593.0
1,178.9
Note: Net data for Union Jack can be calculated by applying its 16.665% economic interest to the above gross data.
WEST NEWTON GEOLOGICAL CHANCE OF SUCCESS
ASSET
West
Newton
SOURCE
ROCK
CHARGE
MIGRATION RESERVOIR
TRAP
SEAL
GEOLOGICAL COS
1.00
1.00
1.00
0.90
0.95
1.00
0.855
A future West Newton development will benefit from
being located in an area that provides access to substantial
regional infrastructure and could deliver significant volumes
of onshore low-carbon sales gas into the UK’s energy
market.
Domestically produced natural gas is, and will remain, a
much-needed part of the energy mix as the UK seeks to
reduce its reliance on imported products.
Union Jack looks forward to the drilling of a 1,500 metre
horizontal well at the earliest opportunity and unlocking the
significant potential of the Greater West Newton project.
KEDDINGTON PEDL005(R) (55%)
The producing Keddington oilfield is located along the highly
prospective East Barkwith Ridge, an east-west structural
high on the southern margin of the Humber Basin.
A technical review by the Operator has confirmed that
there remains an undrained oil resource located on the
eastern side of the Keddington field. Planning consent for
further drilling is already in place, presenting an opportunity
to increase production via a development side-track from
one of the existing wells.
To facilitate confirmation of the target definition and well
design planning, re-processing of legacy 3D seismic data
has been completed.
Modelling indicates that infill drilling is forecast to improve
recovery from the Keddington field by between 113,000
to 183,000 barrels of oil, depending on the reservoir
permeability model selected and the combination of infill
targets.
Subject to finalising the sub-surface location, it is planned to
drill the well, where planning is already granted, in late 2023.
6
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Chairman’s Statement
KELSTERN 1
PEDL334
SCUPHOLME 1
SALTFLEETBY
PEDL5
PEDL253
BISCATHORPE
PROSPECT
BISCATHORPE 2
BISCATHORPE 1
KEDDINGTON
PEDL5
BISCATHORPE PEDL253 (45%)
PEDL 253 is situated within the proven hydrocarbon
fairway of the South Humber Basin and is on-trend with
the Keddington oilfield and the Saltfleetby gasfield.
While drilling the Biscathorpe-2 well, there were
hydrocarbon shows, elevated gas readings and sample
fluorescence observed over the entire interval from the
top of the Dinantian to the Total Depth of the well, with
68 metres being interpreted as being oil-bearing.
Independent consultants APT also conducted analyses,
confirming a hydrocarbon column of 33-34 API gravity oil,
comparable with the oil produced at the nearby Keddington
oilfield.
Further evaluation of the results of the Biscathorpe-2 well,
together with the reprocessing of 264 square kilometres of
3D seismic, indicate a material and potentially commercial
viable hydrocarbon resource remaining to be appraised.
Subject to a favourable planning appeal decision a side-
track well is planned, targeting the Dinantian Carbonate
where the Operator has assessed, in accordance with
the PRMS Standard, a gross Mean Prospective Resource
of 2.55 mmbbl. The overlying Basal Westphalian Sandstone
has the potential to add gross Mean Prospective Resources
of 3.95 mmbbl. Economic modelling demonstrates that
the Westphalian target is economically robust, especially
in the current oil price environment. Commercial screening
indicates break-even full cycle economics to be US$18.07
per barrel.
During November 2021, a planning application for a side-
track drilling operation, associated testing and long-term
production was refused by the Lincolnshire County Council
Planning Committee, despite being recommended for
approval by the planning officers.
The Joint Venture partners are awaiting a decision from
the Planning Inspectorate, where an appeal was heard in
October 2022.
Union Jack’s technical team believe that Biscathorpe remains
one of the largest unappraised conventional onshore
discoveries within the UK.
PEDL241 NORTH KELSEY (50%)
North Kelsey is a conventional oil exploration prospect on
trend with, and analogous to, the Wressle oilfield which
lies approximately 15 kilometres to the northwest. The
prospect has been mapped from 3-D seismic data and has
the potential for oil in four stacked Upper Carboniferous
reservoir targets.
The Operator estimates that gross Prospective Resources
range from 4.66 to 8.47 mmbbl.
During August 2022, the Operator submitted an appeal
on behalf of the Joint Venture, against the refusal of an
extension of time to the existing planning permission by
Lincolnshire County Council to enable the drilling and
testing of a conventional exploration well at the North
Kelsey site.
An Inspector has been appointed and the Joint Venture has
been informed the appeal will be conducted as a two day
hearing in mid-June 2023, the result of which, is expected
within a few months.
7
Business and Strategywww.unionjackoil.com Chairman’s Statement
PIPER CLAYMORE COMPLEX
ROYALTY UNITS (2.5%)
During May 2023, the Management negotiated price and
terms of condition for the sale of the Company’s 2.5%
interest in the Claymore Area Royalty Agreement. The
Company has subsequently disposed of this asset with full
payment received.
This transaction is a post period end event.
OTHER LICENCE INTERESTS
Union Jack has interests in a number of other non-core
projects, namely PEDL118 (Dukes Wood), PEDL203
(Kirklington), PEDL201 (Widmerpool Gulf), PEDL181
(Humber Basin) and PEDL209 (Laughton).
These licence interests have all been fully impaired and are
at various stages of relinquishment with the exception of
Dukes Wood and Kirklington where the geothermal upside
potential is being investigated.
Fiskerton Airfield (EXL294) is currently shut-in whilst
awaiting a workover programme to reinstate production.
Longer term potential for the site is to manage produced
water through the existing water injection well on site and
also for potential geothermal repurposing.
The Company has decided to fully impair the value of
Fiskerton Airfield at a cost of £416,606. This decision was
made as production was not covering costs and substantial
work and capital expenditure was required on the existing
production equipment.
8
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Chairman’s Statement
CORPORATE AND FINANCIAL
OUTLOOK
The 12 month period under review has seen the
Company become a cash generating and profitable
entity, with a strong balance sheet and a clear
focus on the development of its flagship assets.
Union Jack remains debt free and has cash balances and
near-term receivables in excess of £9,750,000 as
at 12 May 2023. We are funded for all operational,
CAPEX and drilling costs for at least the next 12 months.
Revenues from oil sales of £8,507,050 (2021:
£1,894,875) reported for the period have had a
material effect on the Income Statement, resulting
in the Company being able to report a maiden net
profit of £3,606,624 (2021: loss £853,013).
Basic Earnings per share of 3.20 pence were reported
versus a loss per share of (0.83 pence) in 2021.
Given the strong and improved cash position of the
Company during 2022, a decision was made by the Board
to undertake a Capital Reduction exercise to enable
the payment of a cash dividend and activate a share
buy-back programme. During August 2022, the High
Court granted the Capital Reduction. A maiden Special
Dividend of 0.8 pence per share was made to shareholders
during December 2022. Post period end, during March
2023, the Company announced an Interim Dividend
of 0.3 pence per share to be paid during July 2023.
The Company also commenced a share buy-back
programme in October 2022, which has continued during
2023. Post period end, as at 12 May 2023, a total of
3,050,000 shares have been bought and are held in
Treasury. Shares held in Treasury, increase the Earnings
Per Share, hold no voting rights and are not entitled to
a dividend payment.
I would be remiss not to mention the Energy Profits
Levy of 25% introduced in May 2022 by the Chancellor
and subsequent increase to 35% in 2023. Union Jack has
a development and drilling programme planned for the
remainder of 2023 and beyond. The tax breaks available
for future investment in our projects provides an effective
cushion to help mitigate this unfair and punitive tax on
smaller energy companies.
I take this opportunity to thank our shareholders for their
continued support, as well as my co-directors and advisers,
all who continue to support the development and growth
of the Company.
My confidence at the close of 2022 has been vindicated by
the Company’s excellent 2022 financial results, confirming
its transformation, both financially and operationally.
The Board is of the opinion that within the Wressle
development there remains significant material upside
which will support the Company with revenues for at least
another decade.
I also look forward to the drilling of a horizontal well
at West Newton. Independent technical analyses have
concluded that using extended horizontal development
wells and oil-based muds should maximise hydrocarbon
productivity. Encouragingly, the results from West Newton
to date, signal a potentially highly valuable onshore project
with resources comparable to those usually reported
offshore. A significant onshore domestic gas resource as
indicated at West Newton has the potential to become an
important transition fuel in helping the UK achieve its 2050
Net Zero targets.
The Company will remain focused on the development of
its flagship projects, Wressle and West Newton, where
the respective Operators and joint venture partners have
ambitious appraisal and development programmes planned.
I am confident that the news-flow emanating from our
balanced portfolio which contains elements of production,
development, appraisal and exploration, will continue
to attract the attention of shareholders and investors
and generate support for the Company in its pursuit of
shareholder value.
In closing, Union Jack is in sound financial health with a
robust balance sheet, continues to be free of debt, has
significant cash reserves with no requirement to raise
capital for its planned operations for the foreseeable future.
The future of Union Jack remains bright.
David Bramhill
Executive Chairman
12 May 2023
9
Business and Strategywww.unionjackoil.com STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
STRATEGY
Our strategy is the appraisal and development of the licence
interests currently owned.
BUSINESS REVIEW
Union Jack Oil plc is a UK registered company, focused on
the exploration and future development of the hydrocarbon
project interests held by the Company.
A review of the Company’s operations during the year
ended 31 December 2022 and subsequent to the date
of this report is contained in the Chairman’s Statement
and this Strategic Report.
The profits for the year amounted to £3,606,624 (2021: loss
£853,013).
The profit for the year includes impairments to Property,
Plant and Equipment of which total costs are £478,584
(2021: £156,995). These impairments are in relation
to PEDL118, £33,718 (2021: £67,598), PEDL203, £28,260
(2021: £83,057) and EXL294, £416.606 (2021: £nil).
The profit for the year includes impairments to Intangible
Assets of which total costs are -£3,028 (2021: £6,340).
These impairments are in relation to a reverse impairment
to PEDL181, -£5,306 and an impairment to PEDL201,
£2,278.
Administrative expenses, excluding impairment costs,
amounted to £1,665,174 (2021: £1,740,962). This decrease
is largely due to lower share based costs for share options.
Cash and cash equivalents at year end amounted to
£7,155,100 (2021: £5,977,541), with the increase in oil
revenue contributing.
Total Assets at year end amounted to £26,361,337 (2021:
£24,472,708).
Non-current assets at year end amounted to £17,157,286
(2021: £16,392,416).
Intangible Assets totalled £9,134,006 (2021: £8,525,373).
Tangible assets totalled £5,666,212 (2021: £7,575,525).
Of the assets figures above, the net effect is an increase
overall consisting of an increase to Intangible Assets
of £608,633 from investment in projects; Investments
of £260,525, from a revaluation of shares held; Other
Receivables, being the deferred tax asset of £1,805,005; and
Current Assets of £1,123,759 being due to increased oil
revenues. There has also been a decrease in Tangible Assets
of £1,909,313 largely through the calculated depreciation
of the producing assets.
The Company’s Income Statement reports revenues
of £8,507,050 (2021: £1,894,875) in respect of production
income from Wressle, Keddington oilfield and the Fiskerton
Airfield oilfield.
10
The directors have recommended a payment of an interim
dividend of 0.3 pence, payable during July 2023.
In January 2022, the Company announced a summary of
the results of an analysis of the bottom hole pressure data
acquired from the Wressle-1 well during December 2021.
The interpretation was completed by ERCE, an independent
energy consultancy, on behalf of the Wressle Joint Venture
partners. Results demonstrated the significant potential of
the Wressle-1 well and the production rates that could be
achieved once the surface facilities are optimised and a gas
monetisation scheme is in place.
During January 2022, the Company announced the
intention of the Operator of PEDL253, Biscathorpe,
to appeal against the refusal of planning permission by
Lincolnshire County Council, for a side track drilling
operation, associated testing and long-term oil production.
This appeal was heard during October 2022 by the Planning
Inspectorate, the result of which is expected during 2023.
During March 2022, planning for the extension for
PEDL241, North Kelsey, was refused by the Lincolnshire
County Council. The Joint Venture Partners have lodged
an appeal to be heard by the Planning Inspectorate.
During March 2022, planning for the drilling of additional
wells and production at West Newton A site was approved
by the East Riding of Yorkshire Council. Separately,
permission was granted for a time extension to allow
further exploratory drilling at West Newton B site.
During March 2022, settlement of £2,083,333 for the
consideration payment of a 25% interest in PEDL180
and PEDL182 was made to Calmar LLP.
In July 2022, 150,000 new ordinary shares were issued
for cash at a price of 22 pence per ordinary share, raising
£33,000 before expenses of nil, by way of exercising options.
The enlarged issued share capital following the issue of
the new ordinary shares described above is 112,865,896
ordinary shares of 5 pence each and 831,680,400 deferred
shares of 0.225 pence each.
The approval of a Capital Reduction exercise in August
2022, was granted by the High Court of Justice. The
Capital Reduction created additional reserves to the value
of £21,553,557 providing flexibility to deliver shareholder
returns in the form of dividends and/or share buy-backs.
During December 2022, a maiden dividend of 0.8 pence
per ordinary share was paid to qualifying shareholders
(2021: £nil).
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Strategic Report
FOR THE YEAR ENDED 31 DECEMBER 2022
FUTURE DEVELOPMENTS
The directors intend to continue with the Company’s stated
strategy, reviewing the licence interests held in respect of
future viability, any potential impairment indicators that
may arise during the year and adjusting immediately to any
changes that may be required in the operation of the licence
interests held.
The Company holds a number of key, quality project
interests, namely, Wressle, West Newton, Biscathorpe,
Keddington and North Kelsey, where development,
appraisal and exploration plans are in place for the future
benefit of stakeholders and the Company.
KEY PERFORMANCE INDICATORS
In the past, reporting traditional Key Performance Indicators
(KPIs) were deemed inappropriate for the Company.
Performance was measured by monitoring exploration
costs and ensuring sufficient funds were available to meet
project commitments.
Table of Key Performance Indicators
These Financial Statements for the year end 31 December
2022, show a full year’s production from Wressle and focus
has now changed showing traditional KPIs and not E&E
expenditure.
The Board are extremely pleased with the business
performance of the Company and note the significant
positive financial figures reported within the KPI table.
These figures have been enhanced by a material increase
in production at Wressle and firm oil prices.
During the year, the Company has also achieved profitability,
paid a maiden dividend and commenced a share buy-back
programme with a view to increasing earnings per share.
Further events which took place after the Balance Sheet
date are described in the Directors’ Report and note 24.
KEY PERFORMANCE INDICATORS
Revenues
Total Comprehensive Income/(Loss)
Cash and cash equivalents
Net Current Assets
Total Equity
FOR THE YEAR ENDING
31 DECEMBER 2022
£
FOR THE YEAR ENDING
31 DECEMBER 2021
£
8,507,050
3,777,124
7,155,100
8,425,761
23,005,231
1,894,875
(798,593)
5,977,541
5,689,689
20,205,347
11
Business and Strategywww.unionjackoil.com Strategic Report
FOR THE YEAR ENDED 31 DECEMBER 2022
SECTION 172 STATEMENT
All large companies must include a separate statement
within their Strategic Report that explains how the
directors have had regard to broader stakeholder interests
when performing their duty under section 172 of the
Companies Act 2006 to promote the success of the
Company for the benefit of its members as a whole.
The past few years have seen intense focus and debate
on UK corporate governance. A decline in public trust in
business has been caused in part by high-profile business
failures, accusations of excessive executive pay, unethical
tax avoidance by multinational businesses and deteriorating
relationships with employees over pay and contractual
terms. These factors have led to Prime Ministerial
statements, select committee inquiries, public consultations,
a Government white paper and, ultimately, to changes in
legislation, stock exchange rules and governance codes.
Many of the matters noted have resulted from decisions
made in the board room and their effects have been felt
by the employees, pension scheme members, customers,
suppliers and other stakeholders, as well as shareholders,
the interests of all of whom the directors have a statutory
duty to consider when making a decision.
Under section 172, directors have a duty to promote the
success of the Company for the benefit of the members
as a whole and, in doing so, they should have regard to
(amongst other matters) six specified areas that relate,
by-and-large, to wider stakeholder interests.
Act fairly as
between members
of the Company
Interests of
employees
Likely consequence
of any decision in
the long term
Duty to promote the success
of the Company for the
benefit of its members
as a whole, having regard to:
Foster business
relationships
with suppliers,
customers and others
Maintain a
reputation for
high standards of
business conduct
Impact of
operations on
the community
and the environment
12
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Strategic Report
FOR THE YEAR ENDED 31 DECEMBER 2022
Likely consequences of any decision in the
long-term
The Company has a clear aim which is to build a
safe, sustainable and successful conventional onshore
hydrocarbon exploration, development and production
business.
The Company’s activities of investment in licence interests
to explore and/or produce oil and/or gas are in general
focused on the longer term. This is particularly the case
given that the Company itself is not an operator of any of
the oil or gas fields in which it has an interest, which means
that the Board is able to focus on longer term strategic
decisions rather than day-to-day operating decisions.
The Company undertakes its strategic acquisitions in
conjunction with two JOA partners, Egdon Resources plc
and Rathlin Energy (UK) Limited (the “JOA Partners”).
Through its financing activities and production revenues,
the Board has ensured that the Company is well
capitalised and has cash resources for all of its current
and anticipated capital requirements, to ensure that the
Company has a viable operating plan for the long-term.
Stakeholder identification and engagement
The Company recognises the importance of fostering
strong relationships with its stakeholders in order
to create sustainable long-term value, and the Board
encourages active dialogue and transparency with all
its stakeholder groups.
Business decisions are made with the needs of the
Company’s key stakeholders in mind, the Company has
identified external and internal stakeholder groups which
are principally relevant to the proper discharge of the
duty of the directors under section 172(1) to promote
the success of the Company.
Customers and Suppliers
The Company does not deal directly with customers
or suppliers in relation to the oil and gas fields, save for
its relationship with the JOA Partners who operate the
relevant fields.
The Company’s strategy in respect of its customers and
suppliers is to ensure a sustainable relationship with its
JOA Partners.
The Company has implemented this strategy in the
following ways:
• The Board ensures that there is a direct relationship
at Board level with the Company’s partners
• The Board is careful to select JOA and other partners
with experience, resources and similar values to the
Company
• The Board only invests in interests in licences where
the Company has a degree of influence over the manner
in which the operations of that block are operated
• The Board is mindful in its decisions of the indirect
impact that the Company’s decisions may have through
the activities of its operators and other partners on
suppliers, customers and others
• The Board maintains good relations with its suppliers
by adhering to a strict policy of settling all invoices
in a timely manner
Regulators
The Company is subject to a variety of laws and regulations
that involve matters central to the business.
In particular, site operations are also subject to scrutiny
by the North Sea Transition Authority, the Environment
Agency and the Health and Safety Executive before
commencement. In response to regulation in this area, the
Board ensures that the Company is partnered with JOA
partners that adhere diligently to all requirements for a safe
working environment via the Operators. For example, the
JOA Partners ensure that all site personnel are subject to all
health and safety measures which include induction courses
before admission to site and the mandatory wearing of
safety equipment in order to ensure the wellbeing of site
staff and visitors.
As an AIM quoted company, the Company is subject to
various governance regimes. Please see “The need to act
fairly as between members of the Company” section within
this Strategic Report for further information.
13
Business and Strategywww.unionjackoil.com Strategic Report
FOR THE YEAR ENDED 31 DECEMBER 2022
Shareholders
The Company recognises the importance of active
shareholder engagement, to enable the views of the
Company’s wider shareholder base to be considered
as part of the Board’s decision making process.
The Board has implemented this strategy in the following
ways:
• The Board is very active in encouraging and participating
in direct dialogue with shareholders in order to ensure
the Company’s shareholders are kept regularly updated
and are able to discuss strategy and performance
directly with the Board (subject always to compliance
with legal and regulatory requirements, including
the Market Abuse Regulations (“MAR”)). This also
allows the Board to obtain a clear understanding of
shareholders’ motivations and concerns
• The Board facilitates direct communication
with shareholders through the timely release
of regulatory news, via a regulatory information
service, which can be accessed through various
channels, including the London Stock Exchange
website www.londonstockexchange.com and
the Company’s website www.unionjackoil.com
• The Board also seeks to keep its shareholders informed
of current developments and performance
• The Executive Chairman and the Company’s Nominated
Adviser and Public Relations consultants manage
investor communications. For example, there has been
recent investor speculation around junior hydrocarbon
companies and the Board recognises the particular
importance of regular, clear and timely communications
with shareholders, to ensure that they are kept updated
of major developments and potential risks in respect of
the Company and the Industry in a timely manner
• The Board believes that shareholders are seeking a
return on their investment primarily through capital
appreciation as a result of exploration and appraisal
success. As a result, the Company ensures that work
programmes are fully funded and utilises the Board’s
technical expertise to reduce or mitigate the risk of
exploration
• The Board also believes, given the current stage of the
Company’s development and its cash position, that
it is appropriate to benefit shareholders through the
commencement of dividend payments and a share
buyback programme, which began in the year
Employees
The Company directly employs four people. As part of
its strategy, the Board recognises that the Company’s
employees are, nevertheless, critical to the success of the
Company and takes steps to ensure that the interests of
employees are protected, for example:
• The Company ensures that the employees possess
a variety of complementary experiences and skill sets,
including experience of industry-specific technical,
financial and public capital markets sectors
• The Company has a Remuneration Committee to
review the executive directors’ remuneration package
• The Board determine the non-executive directors’
remuneration package
14
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Strategic Report
FOR THE YEAR ENDED 31 DECEMBER 2022
Impact on the environment and the community
Environment, communities and supply chains
The Company is committed to the highest standards
of health, safety and environmental protection. These
aspects command equal prominence with other business
considerations and the Board is committed to operating
the Company in a sustainable way. In particular, the Board
is keenly aware of the local environment and the inhabitants
in which the Company’s licence interests are situated.
The need to act fairly as between members
of the Company
As an AIM quoted company, Union Jack is subject to
governance requirements and rules (including the AIM Rules
for Companies and MAR) which are intended to ensure
that shareholders are treated fairly. The Board takes its
obligations to comply with these requirements seriously
and has regular contact with its experienced professional
advisers to ensure that these requirements are satisfied.
The directors all hold shares in the Company and their
interests are therefore aligned to those of the other
shareholders.
For example, the Company chooses to produce oil and
gas in the UK, instead of importing from overseas. This
has resulted in local employment, a stream of tax revenues
and direct investment into the surrounding communities.
The onshore oil and gas industry has an excellent record
in relation to health, safety and the protection of the
environment.
The industry is also regulated by a number of statutory
bodies including the Environment Agency in England and
is recognised as being robust. Please refer to “Regulators”
within this Strategic Report for further details.
The desirability of the Company maintaining a
reputation for high standards of business conduct
The Company has adopted various strategies and
governance structures. The Board believes that its
reputation for high standards of business conduct will
follow from ensuring that appropriate governance
structures are in place and from taking the right decisions,
as noted within this Strategic Report. These strategies also
ensure the continued success of the Company’s business
model and response to specific risks.
15
Business and Strategywww.unionjackoil.com Strategic Report
FOR THE YEAR ENDED 31 DECEMBER 2022
PRINCIPAL RISKS AND UNCERTAINTIES
As with the majority of companies within the energy sector,
the business of oil and gas exploration and development
includes varying degrees of risk. These risks broadly include
operating reliance on third parties, the ability to monetise
discoveries and the risk of cost overruns. There are also
specific political, regulatory and licensing risks attached
to various projects as well as issues of commerciality,
environmental, economic, competition, reliance on key
personnel, contractor and judicial factors.
Commodity prices will have an impact on potential
revenues and forward investment decisions by the
Operator on the projects invested in, as the economics may
be adversely affected. However, onshore development costs
are lower than for offshore developments. The Company
does not use hedging facilities. The Company holds
adequate Directors’ Insurance cover and the Company
is covered by the Operator’s insurance during drilling and
other operational situations. The Board, in its opinion, has
mitigated risks as far as reasonably practicable.
The principal risks to the Company as well as the mitigation
actions are set out below.
Strategic: A weak or poorly executed
development process fails to create shareholder
value
This risk is mitigated through performing a detailed technical
review, both internally by management and externally by
advisers before an investment decision is taken, for each
investment which includes a valuation exercise on the
potential return on monies spent. The amount of interest
acquired in each project is dependent upon the Company’s
financial capability to fulfil its obligation. The Company’s
technical management team is highly skilled with many
years’ industry experience.
Operational: Operational events can have
an adverse effect
The main risk is the potential failure to obtain planning
permission in respect of the Company’s licence interests.
This risk is mitigated by the appointment of specialist
professional entities who work together to compile planning
applications designed to achieve a positive result.
A further potential risk is the reliance upon the Operators,
Egdon Resources U.K. Limited and Rathlin Energy (UK)
Limited and their ability to determine timetables and
priorities which are beyond the control of the Company.
External Risk: Lack of growth caused by political,
industry or market factors
The Company operates exclusively within the United
Kingdom (“UK”) and the Board considers that the
UK onshore hydrocarbon arena offers excellent value
under a regime with a very clearly spelt out protocol
giving the opportunity to develop assets unhindered.
As mentioned in this review, oil and gas price volatility
can cause concern. However, onshore developments can
continue as planned in most cases as development costs
are lower than for offshore.
The oil price environment is always being monitored,
however, the Company’s key assets are cashflow positive
at a breakeven oil price of approximately US$18. Lack
of control over key assets is mitigated by the fact that
our Operators of choice, Egdon Resources U.K. Limited
and Rathlin Energy (UK) Limited have a very transparent
operating protocol and all partners are involved, both
formally and informally, with offering input to the ongoing
development of the projects in which they are involved. The
Company’s in-house technical team capabilities are further
supported by external consultants involved at all times and
whom together participate in regular technical meetings.
Union Jack has considered the effects of the Russian
and Ukrainian conflict on its business and have concluded
that there is no near-term negative impact to the Company,
to date.
16
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Strategic Report
FOR THE YEAR ENDED 31 DECEMBER 2022
Financial Risk: The lack of ability to meet financial
obligations
The main risk is the lack of funds being available to pay
for our future project commitments.
All expenditure associated with exploration and
development assets is forecast and budgeted at least
12 months in advance. The Company raises its funds
through the financial market by share issues and does
not become involved in derivatives and borrowing
to fund its financial obligations. Further comment in
respect of Financial Risk Management Objectives and
Policies, Cash Flow Risk, Credit Risk, and Liquidity
Risk are also covered within this Strategic Report.
FINANCIAL RISK MANAGEMENT OBJECTIVES
AND POLICIES
The Company’s activities expose it to a number of financial
risks including liquidity risk, oil price risk, credit risk, and
cash flow risk.
The use of financial derivatives is governed by the
Company’s policies approved by the Board of Directors,
which provide written principles on the use of financial
derivatives to manage these risks. The Company does not
use derivative financial instruments for speculative purposes.
LIQUIDITY RISK
In order to maintain liquidity to ensure that sufficient
funds are available for ongoing operations and future
developments, the Company uses its existing cash funds.
OIL PRICE RISK
The Company is exposed to oil price risk associated
with sales of oil from production. The Company does
not currently consider it necessary to use hedging
instruments to manage its exposure to this risk.
CREDIT RISK
The Company’s principal financial assets are its cash
balances. The credit risk on liquid funds is limited because
the counterparty is a bank with high credit-rating.
CASH FLOW RISK
During the year, the Company’s activities did not
expose it to financial risks of changes in foreign currency
exchange rates.
GOING CONCERN
The Company’s business activities, together with the factors
likely to affect its future development, performance and
position are set out in the Chairman’s Statement and this
Strategic Report. The directors’ forecasts demonstrate
that the Company will meet its day-to-day working
capital and share of estimated project costs over the
forecast period being at least 12 months from the sign-
off of these financial statements. The principal risk to
the Company’s working capital position is drilling cost
overruns. The Company has sufficient funding to meet
planned drilling expenditures and a level of contingency.
Taking account of these risks, sensitised forecasts show
that the Company is able to operate within the level
of funds currently held at the date of approval of these
financial statements. The directors have a reasonable
expectation that the Company has adequate resources
to continue in operational existence for the foreseeable
future. Thus they continue to adopt the going concern
basis of accounting in preparing the financial statements.
APPROVAL OF THE BOARD
This Strategic Report contains certain forward-looking
statements that are subject to the usual risk factors and
uncertainties associated with the oil and gas exploration
and production business. While the directors believe the
expectation reflected within the Annual Report to be
reasonable in light of the information available up to the
time of their approval of this report, the actual outcome
may be materially different owing to factors either beyond
the Company’s control or otherwise within the Company’s
control, for example owing to a change of plan or strategy.
Accordingly, no reliance may be placed on the forward-
looking statements.
On behalf of the Board
David Bramhill
Executive Chairman
12 May 2023
17
Business and Strategywww.unionjackoil.com UNION JACK’S
CURRENT LICENCE
INTERESTS
1
2
3
5
6
7
8
9
PEDL183 West Newton
16.665%
PEDL180
PEDL182
Wressle Discovery
Broughton North
PEDL253
Biscathorpe
4
PEDL005(R)
Keddington Oilfield
Louth
North Somercotes
EXL294
Fiskerton Oilfield
PEDL241 North Kelsey
PEDL118 Dukes Wood
PEDL203
Kirklington
40%
45%
55%
20%
50%
16.67%
PEDL201 Widmerpool Gulf
26.25%
PEDL209
Laughton
10%
10 PEDL181 Humber Basin
12.5%
18
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC PEDL183
West Newton
PEDL146
PEDL183
WEST NEWTON A-1
NORTH SEA
PEDL241
North Kelsey
PEDL181
Humber Basin
PEDL180
PEDL182
Wressle
Oilfield
PL162
PEDL182
Broughton
North
PEDL182
PEDL173
PEDL180
EXL288
1
6
1
L
D
E
P
8
8
2
L
X
E
TRUMFLEET
PL161
HATFIELD
PEDL209
Laughton
9
6
1
L
D
E
P
HATFIELD
PL162
PEDL181
PEDL241
PEDL043
PEDL043
PEDL209
PEDL140
ML004
ML004
BECKINGHAM
CORRINGHAM
ML004
PEDL012
PEDL200
PEDL
210
PEDL006
PEDL
210
WEST FIRSBY
PEDL006
COLD HANWORTH
EAST
GLENTWORTH
PEDL253
SOUTH LEVERTON
ML007
SCAMPTON NORTH
SCAMPTON
PEDL007
BOTHAMSALL
NEWTON-ON-TRENT
NETTLEHAM
PEDL210
PL179
FARLEYS WOOD
ML003
PEDL130
PEDL090
EGMANTON
WHISBY
BECKERING
STAINTON
WELTON
EXL294
PEDL005(R)
North
Somercotes
Prospect
PEDL005
PEDL005
PEDL005
SALTFLEETBY
PEDL005(R)
Keddington
Oilfield
PEDL005(R)
Louth
Prospect
PEDL253
Biscathorpe
EAKRING
KIRKLINGTON
PEDL
118
PEDL
203
PEDL202
PEDL118
Dukes Wood
PEDL203
Kirklington
PEDL255
PEDL208
PEDL254
PEDL204
PL220
PEDL201
REMPSTONE
PL220
PEDL201
Widmerpool
Gulf
EXL294
Fiskerton Oilfield
10km
Gas Field
Oil Field/Discovery
Prospect
19
PEDL021
GOODWORTH
PL116
HUMBLY GROVE
PL233
PL249
STOCKBRIDGE
PEDL070
AVINGTON
DL004
ALBURY
BROCKHAM
PL235
PALMERS WOOD
ML021
PEDL246
BLETCHINGLEY
ML018
PL182
EXL189
EXL189
PEDL137
PEDL143
PEDL246
PEDL235
PEDL243
PEDL231
PEDL234
PEDL244
PL240
HORNDEAN
PL211
PEDL126
PEDL233
SINGLETON
PL205
STORRINGTON
PL241
LIDSEY
Business and Strategywww.unionjackoil.com
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their report together with the
financial statements for the year ended 31 December 2022.
The directors have chosen, in accordance with section
414C(11) of the Companies Act 2006, to set out in the
Company’s Strategic Report information required by
Schedule 7 to the Accounting Regulations to be contained
in the Directors’ Report. This information includes future
developments of the Company and the risks associated
with the use of financial instruments.
DIRECTORS
The directors in office at the end of the year, and their
interests in the shares of the Company as at 1 January 2022
and 31 December 2022, were as shown in the table below:
ORDINARY SHARES
31 December
2022
1 January
2022
416,646
1,897,914
392,058
20,000
416,646
1,897,914
242,058
20,000
D Bramhill
J O’Farrell
R Godson
G Bull
Directors who served during the year are as follows:
David Bramhill (Executive Chairman)
Joseph O’Farrell (Executive Director)
Raymond Godson (Non-executive Director)
Graham Bull (Non-executive Director)
DIRECTORS’ REMUNERATION
The remuneration of the directors in office at the year end
31 December 2022 was as follows:
D Bramhill
J O’Farrell
R Godson
G Bull
D Bramhill
J O’Farrell
R Godson
G Bull
SALARIES AND FEES
2021
2022
£
£
287,083
120,000
40,000
40,000
2022
1,200,000
700,000
150,000
550,000
287,083
120,000
40,000
40,000
OPTIONS
2021
1,200,000
700,000
300,000
550,000
Directors’ remuneration is disclosed in note 3 of these
financial statements.
No options were granted to directors or officers during
2022.
Raymond Godson exercised 150,000 options at a strike
price of 22 pence each.
Further information in respect of options can be found
in note 14(c) within the Notes to the Financial Statements
section.
Copies of the Service Agreements in respect of David
Bramhill and Joseph O’Farrell are available for inspection
at the Company’s Registered Office. Copies of the Letters
of Appointment in respect of Graham Bull and Raymond
Godson are available for inspection at the Company’s
Registered Office.
20
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC
Directors’ Report
FOR THE YEAR ENDED 31 DECEMBER 2022
DIRECTORS’ RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors are responsible for preparing the Annual
Report and Financial Statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors have elected to prepare the Company financial
statements in accordance with UK adopted international
accounting standards (IFRSs) in conformity with the
requirements of the Companies Act 2006. Under company
law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view
of the state of affairs of the Company and of the profit or
loss of the Company for that period. The directors are also
required to prepare financial statements in accordance with
the rules of the London Stock Exchange for companies
trading securities on the Alternative Investment Market.
In preparing these financial statements the directors are
required to:
•
select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
•
state whether they have been prepared in accordance
with UK adopted international accounting standards in
conformity with the requirements of the Companies
Act 2006, subject to any material departures disclosed
and explained in the financial statements;
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position of
the Company and enable them to ensure that the financial
statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for ensuring the Annual
Report and Financial Statements are made available
on a website. Financial statements are published on
the Company’s website in accordance with legislation
in the United Kingdom governing the preparation and
dissemination of financial statements, which may vary
from legislation in other jurisdictions. The maintenance
and integrity of the Company’s website is the responsibility
of the directors. The directors’ responsibility also extends
to the ongoing integrity of the financial statements
contained therein.
ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held
on 22 June 2023, in accordance with the Notice of Annual
General Meeting on page 73. Details of the resolutions to
be passed are included in this notice.
21
Governancewww.unionjackoil.com Directors’ Report
FOR THE YEAR ENDED 31 DECEMBER 2022
EVENTS AFTER THE BALANCE SHEET DATE
The following events have taken place after the year end:
During March 2023, the Board declared an interim dividend
of 0.3 pence per ordinary share, with a London Stock
Exchange ex-dividend date of Thursday 6 July 2023, a
record date of Friday 7 July 2023 and payment date of
Friday 28 July 2023.
The share buy-back programme has continued and since
1 January 2023 to 12 May 2023 a total of 2,350,000
ordinary shares were purchased and placed in Treasury.
The number of ordinary shares held in Treasury as at
12 May 2023, is 3,050,000.
During May 2023, the Management negotiated price and
terms of condition for the sale of the Company’s 2.5%
interest in the Claymore Area Royalty Agreement. The
Company has subsequently disposed of this asset with
full payment received.
CAPITAL STRUCTURE
Details of the issued share capital, together with details
of the movements in the Company’s issued share capital
during the year, are shown in note 14(a).
DISCLOSURE OF INFORMATION
TO THE AUDITOR
The directors at the date of the approval of this Annual
Report confirm that:
•
•
so far as the directors are aware, there is no relevant
audit information of which the Company’s auditor
is unaware; and
the directors have taken all the steps that they ought
to have taken as directors in order to make themselves
aware of any relevant audit information and to establish
that the Company’s auditor is aware of that information.
This confirmation is given and should be interpreted
in accordance with the provisions of Section 418 of
the Companies Act 2006.
AUDITOR
A resolution to reappoint BDO LLP will be proposed
at the forthcoming Annual General Meeting.
COMPANY NAME AND REGISTERED NUMBER
The registered number of Union Jack Oil plc is 07497220.
On behalf of the Board
David Bramhill
Executive Chairman
12 May 2023
22
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC CORPORATE
GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
CORPORATE GOVERNANCE REPORT
The Company’s securities are traded on the Alternative
Investment Market (“AIM”) of the London Stock Exchange.
The London Stock Exchange requires all AIM listed
companies to adopt and comply with a recognised
corporate governance code.
The Corporate Governance Report has been prepared
by David Bramhill, the Executive Chairman of the
Company, and has been approved by the Company’s
Board of directors (the “Board”) in accordance with the
recommendations of the QCA Corporate Governance
Code 2018 (the “Code”), which the Company has adopted
as its code of governance.
This statement explains how the 10 principles of the Code
are applied by the Company, and where the Company
departs from the Code, an explanation of the reasons
for doing so is provided.
QCA Code
Recommendation
1
Principle 1
Establish a strategy and
business model which
promotes long-term
value for shareholders.
Application by the Company
The primary objective of the Company is to build a safe, sustainable and successful
conventional onshore hydrocarbon exploration, development and production
business, which the Board seeks to deliver through the acquisition of, and
subsequent investment in, carefully selected licence interests. The Company
undertakes this in conjunction with two JOA partners, Egdon Resources plc and
Rathlin Energy (UK) Limited.
The Board must be able to
express a shared view of the
Company’s purpose, business
model and strategy.
The Company’s strategy is the appraisal and exploitation of the assets currently
owned. Simultaneous with this process, the Board expects to continue to use its
expertise and cash resources to acquire further or expand licence interests and
production in the UK.
It should go beyond the simple
description of products and
corporate structures and set
out how the Company intends
to deliver shareholder value in
the medium to long-term.
It should demonstrate that the
delivery of long-term growth is
underpinned by a clear set of
values aimed at protecting the
Company from unnecessary
risk and securing its long-term
future.
The Board is optimistic about the prospect of delivering shareholder value in the
medium to long-term via the acquisition and increased interest in various high
impact licence areas with proven reserves, contingent resources and drill-ready
prospects.
The Board is acutely aware of the risks associated with hydrocarbon exploration,
development and production and seeks to mitigate the risk of exploration by
having interests in a portfolio of petroleum licences thereby not being overly
exposed to any single asset.
The Company’s strategy is underpinned by a well-balanced and diverse onshore
UK asset portfolio, ensuring the relevant components of production, development,
appraisal and discovery are all in place, as is adequate and prudently sourced
funding for the Company’s commitments going forward.
23
Governancewww.unionjackoil.com Corporate Governance Report
FOR THE YEAR ENDED 31 DECEMBER 2022
QCA Code
Recommendation
2
Principle 2
Seek to understand and
meet shareholders’ needs
and expectations.
Directors must develop a
good understanding of the
needs and expectations of all
elements of the Company’s
shareholder base.
The Board must manage
shareholders’ expectations
and should seek to understand
the motivations behind
shareholder voting decisions.
Application by the Company
Since the Company’s incorporation in January 2011, members of the Board
have been very active in encouraging and participating in direct dialogue with
shareholders in order to ensure the Company’s shareholders are kept regularly
updated and are able to discuss strategy and performance directly with the Board
(subject always to compliance with legal and regulatory requirements, including the
Market Abuse Regulations (“MAR”)). This also allows the Board to obtain a clear
understanding of shareholders’ motivations and concerns.
Direct communication with shareholders is achieved primarily through the
timely release of regulatory news, via a regulatory information service, which
can be accessed through various channels, including the London Stock Exchange
website www.londonstockexchange.com and the Company’s website
www.unionjackoil.com.
In addition to the dissemination of regulatory news, the Company also seeks to
keep its shareholders informed of current developments and performance via
interviews and speaking events at various conferences.
All shareholders are encouraged to attend the Company’s Annual General Meeting
(“AGM”), where the directors are available to answer questions. Investors also
have access to current information on the Company through its website and via
genuine enquiries sent to: info@unionjackoil.com.
Investor communications are managed by the Executive Chairman, in conjunction
with the Company’s Nominated Adviser.
Due to investor speculation around junior hydrocarbon companies, the Board
recognises the particular importance of regular, clear and timely communications
with shareholders, to ensure that they are kept abreast of major developments
and potential risks in respect of the Company and the industry without delay.
Management believes that shareholders are seeking a return on their investment
primarily through capital appreciation as a result of exploration and appraisal
success. Management prudently manages the Company to ensure that work
programmes are fully funded and uses the Board’s technical expertise to reduce
or mitigate the risk of exploration.
24
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Corporate Governance Report
FOR THE YEAR ENDED 31 DECEMBER 2022
QCA Code
Recommendation
3
Principle 3
Take into account wider
stakeholder and social
responsibilities and their
implications for long-
term success.
Long-term success relies upon
good relations with a range of
different stakeholder groups
both internal (workforce) and
external (suppliers, customers,
regulators and others). The
Board needs to identify the
Company’s stakeholders
and understand their needs,
interests and expectations.
Feedback is an essential part
of all control mechanisms.
Systems need to be in place
to solicit, consider and act on
feedback from all stakeholder
groups.
Application by the Company
The Board is keenly aware of the local environment and the inhabitants in
which the Company’s licence interests are situated. While the Company does
not manage these relationships directly on a day-to-day basis, the Board works
with the Company’s JOA partners to ensure that any queries or concerns any
community members may have are swiftly addressed and, at the same time, all
community members are treated with the respect and attention they deserve.
The JOA partnerships act, via the Operators, to the highest standards and operate
in a safe and conscientious manner in respect of site safety and environmental
policies. Site operations are subject to scrutiny by the North Sea Transition
Authority, Environment Agency and the Health and Safety Executive before
commencement. The Operator adheres diligently to all requirements for a safe
working environment. All site personnel are subject to all Health and Safety
measures which include induction courses before admission to site and the
mandatory wearing of safety equipment in order to ensure the wellbeing of site
staff and visitors.
As set out above, due to the specific nature of the Company’s business, the
Company currently relies on two key JOA partners, Egdon Resources U.K. Limited
and Rathlin Energy (UK) Limited, who manage and operate the Company’s licence
interests on its behalf.
The Company takes its relationship with its JOA partners and its third party
professional advisers (both of whom it sees as its key stakeholders) very seriously
and the Board continues to discuss any issues and queries the Company’s JOA
partners may have in an open, direct and constructive manner.
The Company also acknowledges the importance of maintaining good relations
with its suppliers and creditors and it adheres to a strict policy of settling all
invoices in a timely manner.
25
Governancewww.unionjackoil.com Corporate Governance Report
FOR THE YEAR ENDED 31 DECEMBER 2022
QCA Code
Recommendation
4
Principle 4
Embed effective risk
management, considering
both opportunities and
threats, throughout the
organisation.
The Board needs to ensure
that the Company’s risk
management framework
identifies and addresses all
relevant risks in order to
execute and deliver strategy.
Setting strategy includes
determining the extent of
exposure to the identified
risks that the Company is able
to bear and willing to take (risk
tolerance and risk appetite).
Application by the Company
The management of the business and the execution of the Company’s strategy
are subject to a number of risks. The Board ensures risks are mitigated as far as
reasonably practicable by performing a detailed review of the issues pertaining to
each significant decision. Significant decisions are reviewed by the Board having
consulted the Company’s professional third party advisers (be they legal, financial or
technical). The Board convenes on a regular basis, either by telephone or in person
on a formal basis to discuss risk management as explained in Principle 5.
As with the majority of companies within the energy sector, the business of oil and
gas exploration and development includes varying degrees of risk. These risks include
operating reliance on third parties, the ability to monetise discoveries, the price of
products and the costs of exploration and/or production.
The principal risks to the Company as well as the mitigation actions by the Board
are set out below:
Strategic risk: a weak or poorly executed acquisition and development process
fails to create shareholder value. This risk is mitigated through performing a detailed
technical review, both internally by management and externally by advisers, for each
investment which includes valuation exercises on the potential return on capital
invested.
Operational risk: operational events can have an adverse effect. The main risk
is the potential failure to obtain planning permission in respect of the Company’s
licence interests. This risk is mitigated by the appointment of specialist professional
entities who work together to compile planning applications designed to achieve a
positive result. On-site operational risks are managed by the site Operators, Egdon
Resources U.K. Limited, Rathlin Energy (UK) Limited and Europa Oil & Gas Limited,
who have, to date, safety records of the highest standard.
External Risk: lack of growth caused by political, industry or market factors. The
Company operates exclusively within the UK and the Board considers that the
UK onshore hydrocarbon arena offers political security and excellent value under
a regime with a very clearly spelt out protocol giving the opportunity to develop
assets unhindered. The future ramifications of Brexit remain unknown, however, the
directors are of the opinion that there is no reason to believe there will be any effect
in respect of the Company’s going concern status for the foreseeable future.
Financial Risk: the lack of ability to meet financial obligations. The Company has
historically raised its funds through equity capital markets by share issues and has
not been involved in derivative instruments and debt financing to meet its financial
obligations.
Product Price Risk: due to the nature of the periodic fluctuation of oil prices, any
such adverse fluctuation could potentially have an impact on the Company’s resulting
return to its shareholders.
The Company also holds Directors’ and Officers’ Liability Insurance cover and the
Company is covered by the Operators’ insurance policies during drilling and other
operational situations for specific projects.
26
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Corporate Governance Report
FOR THE YEAR ENDED 31 DECEMBER 2022
QCA Code
Recommendation
5
Principle 5
Maintain the Board
as a well-functioning,
balanced team led by the
Chairman.
The Board members have a
collective responsibility and
legal obligation to promote the
interests of the Company, and
are collectively responsible for
defining corporate governance
arrangements. Ultimate
responsibility for the quality
of, and approach to, corporate
governance lies with the chair
of the Board.
The Board (and any
committees) should be
provided with high quality
information in a timely manner
to facilitate proper assessment
of the matters requiring a
decision or insight.
The Board should have an
appropriate balance between
executive and non-executive
directors and should have
at least two independent
non-executive directors.
Independence is a Board
judgement.
The Board should be
supported by committees
(e.g. audit, remuneration,
nomination) that have the
necessary skills and knowledge
to discharge their duties and
responsibilities effectively.
Directors must commit
the time necessary to fulfil
their roles.
Application by the Company
The Board consists of two executive directors, David Bramhill and Joseph
O’Farrell, and two non-executive directors, Graham Bull and Raymond Godson,
who are responsible for the management of the Company.
Raymond Godson and Graham Bull are classified as independent directors.
Although Ray Godson and Graham Bull hold shares and options in the Company,
these are considered to be de minimus and are not deemed to affect their
independent thought and judgement.
No members of the Board have other commitments that would prevent them
from spending as much time as required to ensure the aims and best interests of
the Company are met. Any changes to directors’ commitments and interests will
be reported to and, where appropriate, agreed with the rest of the Board.
The Board meets formally in person and by telephone multiple times throughout
the year, attendance of which has always been 100% since the Company’s
incorporation. The Board also holds regular informal project appraisal and
strategy discussions, and meets every quarter, on a formal basis, to review trading
performance, budgets, ensure adequate funding, set and monitor strategy, examine
acquisition opportunities and assess risks on an ongoing basis in respect of
operational projects.
The directors encourage a collaborative Board culture to ensure that each decision
reached is always in the Company’s and its shareholders’ best interests and that
any one individual opinion never dominates the decision making process. The
Board seeks, so far as possible, to achieve decisions by consensus and all directors
are encouraged to use their independent judgement and to challenge all matters
whether strategic or operational. To date all decisions have been unanimous.
The Company’s two non-executive directors hold shares and options in the
Company. The Board is satisfied that these shareholdings and options are not
“significant”. Therefore, such shareholdings do not contravene the provisions
of the Code.
During 2022, the Board held seven meetings, either by telephone or in person.
Board Member
Board Meetings
Attended
(7 held in the
period)
Audit
Committee
(2 held in the
period)
Remuneration
Committee
(2 held in the
period)
D Bramhill
J O’Farrell
G Bull
R Godson
7
7
7
7
–
–
2
2
–
–
2
2
There are no mandatory hours for directors to be available for Company
business. The executive directors and non-executive directors are available for any
Company business when it may arise.
The Board delegates certain decisions to an Audit Committee and a Remuneration
Committee. The Audit Committee has joint responsibility for reviewing the
year end accounts with the Auditor. The Remuneration Committee reviews the
remuneration of the executive directors on an annual basis. Both committees are
dedicated to establish and maintain robust internal financial control systems for
the Company.
27
Governancewww.unionjackoil.com Corporate Governance Report
FOR THE YEAR ENDED 31 DECEMBER 2022
QCA Code
Recommendation
6
Principle 6
Ensure that between
them the directors have
the necessary up-to-date
experience, skills and
capabilities.
The Board must have an
appropriate balance of sector,
financial and public markets
skills and experience, as well
as an appropriate balance
of personal qualities and
capabilities. The Board should
understand and challenge
its own diversity, including
gender balance, as part of its
composition.
The Board should not be
dominated by one person
or a group of people. Strong
personal bonds can be
important but can also divide
a board.
As companies evolve, the
mix of skills and experience
required on the Board
will change, and Board
composition will need to
evolve to reflect this change.
Succession planning has been
considered at Board level and
a strategy agreed upon.
The directors are committed
to promoting diversity and
equal opportunities and
consider the Company to
be a supportive employer.
Application by the Company
The current Board composition of the Company and each director’s experience
is set out in this report. The Board’s view is that the directors have a variety of
complementary experiences and skillsets, including experience of industry-specific
technical, financial and public capital markets sectors. An overview of the directors
are as follows:
David Bramhill, Executive Chairman, 72
Mr Bramhill has over 40 years’ experience in the natural resources industry.
Mr Bramhill has directed and managed several energy companies and was the
former managing director of OilQuest Resources plc, subsequently acquired by
EnCore Oil plc. Mr Bramhill was an executive director at the time of Nighthawk
Energy plc’s AIM flotation in March 2007 and a non-executive Chairman of
Wessex Exploration plc when that company floated on AIM in March 2011.
He resigned from these companies in 2010 and 2012 respectively.
Mr Bramhill had previously consulted in an engineering capacity for over 20 years
on projects for Shell, ExxonMobil, Petrofina, BP and numerous other international
energy companies.
Joseph O’Farrell, Executive Director, 71
Mr O’Farrell has over 30 years’ corporate experience in the hydrocarbon and
mining industry. He has managed several energy companies and is a former
director of OilQuest Resources plc and Nighthawk Energy plc, having been a
director of these two companies at the time of their respective flotations on AIM.
He has assisted a number of companies working in conjunction with corporate
advisers in pre-IPO fundraising and project acquisition.
Graham Bull, Non-Executive Director, 77
Mr Bull is a geologist with 52 years’ of international oil and gas industry
exploration experience. Following graduation from the University of Leicester
in 1968 with a BSc Hons Geology he worked in Canada and held positions
with Chevron, Dome Petroleum, Siebens Oil and Gas and Poco Petroleum and
also provided exploration expertise to a Canadian drilling fund. He returned
to the UK in 1982 taking the position as Chief Geologist to Sovereign Oil
and Gas plc. In addition, Mr Bull has operated as a geological adviser for EnCore
Oil plc (formerly OilQuest Resources plc), Premier Oil plc, Cirque Energy and
DSM Energy.
Mr Bull is a member of the Petroleum Exploration Society of Great Britain, the
American Association of Petroleum Geologists and a Fellow of the Geological
Society of London.
Mr Bull is the Chairman of the Remuneration Committee and a member of the
Audit Committee.
28
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Corporate Governance Report
FOR THE YEAR ENDED 31 DECEMBER 2022
QCA Code
Recommendation
6
Principle 6 (continued)
Application by the Company
Raymond Godson, Non-Executive Director, 79
Mr Godson is a chartered accountant with 44 years’ experience in the provision
of oil and gas related services to energy companies. Mr Godson joined the Rio
Tinto group in 1973 where he spent 16 years rising to become the financial and
commercial director of the oil and gas subsidiary RTZ Oil & Gas Limited. In 1988 he
joined Teredo Petroleum PLC (“Teredo”) where he became the managing director
in 1992. Following the takeover of Teredo in 1993, he became a full time accountant
in general practice, where the majority of his business has been oil and gas related.
Mr Godson acted as Company Secretary for Fusion Oil & Gas plc from IPO to its
takeover by Sterling Energy Plc. He was subsequently company secretary for both
Ophir Energy Plc and Aurelian Oil & Gas Plc. He is currently an executive director
of Montrose Industries Limited.
Mr Godson is the Chairman of the Audit Committee and a member of the
Remuneration Committee.
The directors are mindful of the need to ensure the Company has in place a diverse
Board that encompasses the right skills required to ensure the Company’s continued
success, including creating an atmosphere of constructive challenge and consensus
for any decision reached. As such, and given the current size of the Company, the
Board is of the opinion its composition and skillset is sufficient to maintain and drive
the long-term success for the Company’s shareholders.
Each director takes his continued professional and technical development seriously,
so in order to ensure the Board keeps abreast of the current challenges faced by
the industry the Company operates in, the directors attend both trade shows and
technical sessions during the course of any given year.
The Board ensures it is well advised and supported by utilising a range of external
experts in various fields, and employs accountants, legal counsel, a Company
Secretary and a Nominated Adviser, in accordance with the AIM rules. On the
industry specific front, it also employs three technical consultancies:
JL Geophysics, Calderdale Geoscience Limited and Oil & Gas Advisers Limited.
JL Geophysics and Calderdale Geoscience Limited are responsible for supplying
technical advice on specific projects. Both companies work closely with non-
executive director, Graham Bull and are responsible, on a permanent basis, for
updating and reviewing independently all technical information provided to the
Company on its key projects.
Oil & Gas Advisers Limited provides a financial overview in respect of due diligence
on potential project acquisitions and ongoing economics of our project interests.
Matthew Small is Company Secretary and, via an established accounting entity,
Berkeley Hall Marshall Limited, represents the Company as de facto Financial
Controller, working closely with the Executive Chairman and the Audit and
Remuneration Committees.
29
Governancewww.unionjackoil.com Corporate Governance Report
FOR THE YEAR ENDED 31 DECEMBER 2022
Application by the Company
While the Board is very much aware of the needs of the Company in ensuring
effectiveness of Board performance and the periodic refreshment of the
composition of the Board, the Board believes that due to the Company’s current
size and its current corporate culture of constructive challenge and consensus
on each decision reached, the procedures already in place are sufficient for
monitoring Board performance and no external performance reviews are required
at this time. This will be kept under review.
The Board is also of the opinion that the Company has appropriate measures
in place to ensure any refreshment of the Board occurs in a timely manner, and
always with the best interests of the shareholders in mind.
QCA Code
Recommendation
7
Principle 7
Evaluate Board
performance based
on clear and relevant
objectives, seeking
continuous improvement.
The Board should regularly
review the effectiveness of its
performance as a unit, as well
as that of its committees and
the individual directors.
The Board performance
review may be carried out
internally or, ideally, externally
facilitated from time to time.
The review should identify
development or mentoring
needs of individual directors or
the wider senior management
team.
It is healthy for membership
of the Board to be periodically
refreshed. Succession planning
is a vital task for the board.
No member of the Board
should become indispensable.
30
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Corporate Governance Report
FOR THE YEAR ENDED 31 DECEMBER 2022
Application by the Company
The directors recognise that their decisions regarding strategy and risk will impact
the corporate culture of the Company as a whole and that this will impact the
performance of the Company. The Board seeks to embody and promote a
corporate culture that is based on sound ethical values as it believes the tone and
culture set by the Board impacts all aspects of the Company, including the way
that employees and other stakeholders behave.
The Company has adopted a share dealing code which is appropriate for a
company whose securities are traded on AIM and is in accordance with the
requirements of MAR.
The Board believes that, as evidenced through the disclosures made throughout
this statement, its corporate governance regime and culture are at the core of its
operations and are appropriate given the current size of the Company.
Furthermore, through its interaction with its stakeholders and in the communities
in which it operates (described above), it maintains a collaborative and constructive
dialogue that embodies a dynamic, accessible, open door and vibrant corporate
culture.
The Company’s corporate culture is monitored/assessed regularly,
taking on board immediately any changes made by AIM Rule 26 and where
advisers may advise. All financial transactions are reviewed independently
by Berkeley Hall Marshall Limited. An anti-bribery policy is in place.
As such, and taking into account the Board interaction with each of its
professional advisers described above, the Board is satisfied that its governance
regime is more than adequate given the size of the Company, its shareholder base
and business pipeline.
QCA Code
Recommendation
8
Principle 8
Promote a corporate
culture that is based
on ethical values and
behaviours.
The Board should embody and
promote a corporate culture
that is based on sound ethical
values and behaviours and use
it as an asset and a source of
competitive advantage.
The policy set by the Board
should be visible in the actions
and decisions of the chief
executive and the rest of the
management team. Corporate
values should guide the
objectives and strategy of
the Company.
The culture should be
visible in every aspect of the
business, including recruitment,
nominations, training and
engagement. The performance
and reward system should
endorse the desired ethical
behaviours across all levels of
the Company.
The corporate culture should
be recognisable throughout
the disclosures in the Annual
Report, website and any other
statements issued by the
Company.
31
Governancewww.unionjackoil.com Corporate Governance Report
FOR THE YEAR ENDED 31 DECEMBER 2022
QCA Code
Recommendation
9
Principle 9
Maintain governance
structures and processes
that are fit for purpose
and support good
decision-making by
the Board.
The Company should maintain
governance structures
and processes in line with
its corporate culture and
appropriate to its:
•
size and complexity; and
• capacity, appetite and
tolerance for risk.
The governance structures
should evolve over time in
parallel with its objectives,
strategy and business model
to reflect the development
of the Company.
Application by the Company
As disclosed throughout this statement, the Company maintains and employs robust
corporate governance practices to support an effective and collaborative Board, always
working in the best interests of its shareholders.
The roles of the individual Board members are as follows:
• The Executive Chairman, David Bramhill, is responsible for running the
business of the Board, ensuring strategic focus and direction and for managing
investor communications
• The Executive Director, Joseph O’Farrell, is responsible for assisting the
Executive Chairman to execute the Board’s strategy and coordinating corporate
finance activities
• The Non-Executive Director, Graham Bull, is a petroleum geologist and is
responsible for identifying and evaluating potential projects and to provide technical
oversight of the Company’s existing projects. Mr Bull chairs the Remuneration
Committee
• The Non-Executive Director, Raymond Godson, is a Chartered Accountant
who has abundant experience in the oil & gas industry.
Mr Godson chairs the Audit Committee
Two Board committees are in place to ensure control over the Company’s financial
reporting processes and directors’ remuneration. Details of the two Board committees
are as follows:
The Audit Committee
The Audit Committee comprises Raymond Godson, who acts as its Chairman, and
Graham Bull. The Audit Committee is responsible for considering a wide range of
financial matters which include the reviewing of Half Yearly and Annual Reports,
discussions with the Auditor, share placing agreements and the oversight of internal
controls and new accounting standards relevant to the Company.
This Committee also provides a forum for reporting by the Company’s auditor.
The executive directors may attend meetings by invitation.
The Remuneration Committee
The Remuneration Committee comprises Graham Bull, who acts as its Chairman, and
Raymond Godson.
The current executive director remuneration package comprises basic salary and share
options. Directors’ remuneration for the year is noted in the Directors’ Report in the
Company’s Annual Report.
The remuneration of non-executive directors is determined by the executive directors.
Due to the size of the Company, it is not considered necessary to have a separate
Nominations Committee at this time. Instead this role is fulfilled by the Board as
a whole. The Board also reserves to itself the process by which a new director is
appointed.
Each committee has access to such resources, information and advice as it deems
necessary, at the cost of the Company, to enable the committee to discharge its
duties.
The Board intends that the Company’s governance structures will evolve over
time in parallel with its objectives, strategy and business model to reflect the
development of the Company.
32
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Corporate Governance Report
FOR THE YEAR ENDED 31 DECEMBER 2022
QCA Code
Recommendation
Application by the Company
10
Principle 10
The Company ensures:
Communicate how the
Company is governed and
is performing by
maintaining a dialogue
with shareholders
and other relevant
stakeholders.
A healthy dialogue should exist
between the Board and all
of its stakeholders, including
shareholders, to enable all
interested parties to come to
informed decisions about the
Company.
In particular, appropriate
communication and reporting
structures should exist
between the Board and
all constituent parts of its
shareholder base.
This will assist:
•
the communication of
shareholders’ views to the
Board; and
•
the shareholders’
understanding of the
unique circumstances and
constraints faced by the
Company.
•
•
•
a printed Annual Report is delivered to each registered shareholder, and also made
available on the Company’s website
a Half Yearly Report is made available on the Company’s website
all RNS announcements are released in a timely manner, while also ensuring all
announcements are drafted in a clear and concise fashion
In addition, all shareholders are encouraged to attend the Company’s Annual General
Meeting. The outcome of all shareholder votes are disclosed in a clear and transparent
manner via a RNS.
The Company includes historical Annual Reports, Notices of General Meetings and
RNS announcements over the last five years on its website. The Company also lists
contact details on its website, should shareholders wish to communicate with the
Board.
The Company intends to include, where relevant, in its Annual Report, any matters
of note arising from the Audit or Remuneration Committees. A Remuneration or
Audit Committee report is not included separately within these financial statements.
All relevant information has been included where required.
Shareholders are actively encouraged to both attend the Company’s Annual General
Meeting and throughout the year to contact the Chairman to discuss any queries or
concerns they may have.
Given the size of the Company, the Board is of the opinion that no formal
communication structures are required at this time.
The Company does however:
• ensure continued disclosure of all items in conjunction with AIM Rule 26
on its website
• disclose the results of all shareholder votes once held, in conjunction with the
It should be clear where these
communication practices are
described (Annual Report or
website).
•
Company’s Annual General Meeting
keep in constant communication and dialogue with its key stakeholders and JOA
partners through an accessible and open-door policy, with the Executive Chairman
acting as the key conduit. For avoidance of doubt, it is important to note that
any conversations shareholders and the Executive Chairman may have are always
conducted in accordance of what is permissible under MAR
The Company’s communication practices are set out on its website at:
www.unionjackoil.com/aim-rule-26/
33
Governancewww.unionjackoil.com Corporate Governance Report
FOR THE YEAR ENDED 31 DECEMBER 2022
THE BOARD
During the year the Board of Union Jack Oil plc consisted
of two executive directors and two non-executive directors
as disclosed within the Directors, Officers and Advisers
section of this report, who were responsible for the proper
management of the Company. The Board met in person
or by telephone, as permitted by the current Articles
of Association, seven times during the year. In addition,
the Board held numerous project appraisal and strategy
discussions during the year.
The Board will meet at least four times in the coming
year to review trading performance and budgets, ensure
adequate funding, set and monitor strategy, examine
acquisition opportunities and report to shareholders.
The Board has a formal schedule of matters specifically
reserved to it for decisions.
REMUNERATION COMMITTEE
The Remuneration Committee comprises Graham Bull,
who acts as its Chairman, and Raymond Godson.
The current executive director remuneration package
comprises basic salary and share options. Directors’
remuneration for the year is noted in the Directors’ Report
and shown in note 3 on page 56.
Those disclosures form part of this report and are disclosed
within the Directors’ Report, and note 3 within the Notes
to the Financial Statements section of this Annual Report.
The remuneration of non-executive directors is determined
by the Board.
AUDIT COMMITTEE
The Audit Committee comprises Raymond Godson,
who acts as its Chairman, and Graham Bull. The Audit
Committee is responsible for considering a wide range of
financial matters, which include the reviewing of Half Yearly
and Annual Reports, discussions with the Auditor, share
placing agreements and the oversight of internal controls
and new accounting standards relevant to the Company.
This Committee also provides a forum for reporting by
the Company’s auditor. The executive directors may attend
meetings by invitation.
INTERNAL FINANCIAL CONTROL
The directors are responsible for establishing and
maintaining the Company’s internal financial control
systems. These are designed to meet the particular needs
of the Company and the risks to which it is exposed, and
by their nature can provide reasonable but not absolute
assurance against material misstatement or loss.
The key procedures that the directors have established
to provide effective internal financial controls are:
•
Identification of Business Risks
The Board is responsible for identifying the major
business risks faced by the Company and for
determining the appropriate course of action
to manage these risks
Investment Appraisal
•
Capital expenditure is regulated by authorisation limits.
For expenditure beyond the specified limits including
investments in exploration projects, detailed proposals
are submitted to the Board for review and sign-off.
• Financial Reporting
The Company has a comprehensive system for
reporting financial results to the Board
• Audit Committee
The Audit Committee considers and determines
relevant action in respect of any control issues raised
by the external auditor
34
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC
Corporate Governance Report
FOR THE YEAR ENDED 31 DECEMBER 2022
CLIMATE CHANGE POLICY
Union Jack does not operate the projects in which the
Company is invested.
The Company’s policy is to work with Operators whose
vision is to provide locally derived, secure, affordable
and sustainable energy to meet the UK’s evolving needs.
In addition, the companies that we align with must be
committed to attaining Net Zero emissions no later
than 2050, in line with the Paris Climate Agreements,
with at least a 25% reduction in emissions by 2025. This
commitment by the Operator’s include their share of Scope
1 (direct emissions) and Scope 2 (purchase of indirect
power) emissions from operated and non-operated assets
This forms part of Union Jack’s commitment to safety,
environmental and social responsibility.
To achieve the above our Operator’s will:
• Establish time bound targets that support the ambitions
of the UN Paris Climate Agreement
•
Identify and pursue opportunities to minimise their
carbon footprint and greenhouse gas emissions within
their operations
• Participate with industry and academic partners to
evaluate, identify and invest in technology and studies
that can help mitigate or offset their emissions
• Communicate with internal and external stakeholders
in a transparent manner on their climate related
performance and their associated governance, risk
management and target setting
• Consider carbon emissions as part of their decision-
making process across our asset portfolio to test the
robustness of investments against net zero strategy
•
Incentivise emission reduction opportunities identified
by their staff and contractors with an emphasis on
operational plant efficiency
The management of Union Jack have been assured that
the policies highlighted above will be continually reviewed
and updated as understanding of climate related risks, new
technologies and associated regulations evolve.
35
Governancewww.unionjackoil.com INDEPENDENT AUDITOR’S REPORT
ON THE FINANCIAL STATEMENTS
TO THE MEMBERS OF UNION JACK OIL PLC
OPINION ON THE FINANCIAL STATEMENTS
In our opinion the financial statements:
•
give a true and fair view of the state of the
Company’s affairs as at 31 December 2022
and of its profit for the year then ended;
• have been properly prepared in accordance with UK
adopted international accounting standards; and
• have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements of Union
Jack Oil plc (the “Company”) for the year ended
31 December 2022 which comprise the Income
Statement, the Statement of Comprehensive
Income, the Balance Sheet, the Statement of
Changes in Equity, the Statement of Cash Flows
and Notes to the Financial Statements, including
a summary of significant accounting policies.
The financial reporting framework that has been
applied in their preparation is applicable law and
UK adopted international accounting standards.
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
INDEPENDENCE
We remain independent of the Company in accordance
with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements.
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the
Company’s ability to continue to adopt the going concern
basis of accounting included:
• Reviewing the Company’s cash flow forecasts for
the period to 31 August 2024 and considering the
completeness and accuracy of the future cash flows
by evaluating the key underlying assumptions, including
oil price, production, operating costs and capital
expenditure and known contractual arrangements.
In doing so, we considered empirical data, historical
performance and trading to date. We reviewed the
Company’s project commitments and verified that these
were included in the cash flow forecast.
• Considering the reasonableness of assumptions used by
the directors in the preparation of the cash flow forecast
which included comparing the 2022 actual results to the
2022 forecast.
• Performing an accuracy check on the mechanics of the
cash flow forecast model prepared by management and
approved by the directors.
• Performing sensitivity analysis on the base case scenario
prepared by the directors including oil price sensitivities,
production sensitivities and assumptions around investing
activities to determine the impact on going concern.
• Reviewing the adequacy of disclosures made within
the financial statements on the going concern basis
of preparation.
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 Company’s ability to continue as a
going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
OVERVIEW
Key audit
matters
Carrying value of the oil
and gas assets
2022
✓
2021
✓
Materiality Company financial statements as a whole
£154,000 (2021: £230,000) based on 5%
of profit before taxation (2021: 1% of total
assets).
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our audit was scoped by obtaining an understanding of the
Company and its environment, including the Company’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.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified, including
those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit, and
directing the efforts of the engagement team. 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.
36
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Independent Auditor’s Report
on the Financial Statements
TO THE MEMBERS OF UNION JACK OIL PLC
Key audit matter
How the scope of our audit addressed the key audit matter
Carrying
value of the
oil and gas
assets
Refer to the
Accounting
Policies and
notes 7 and 8.
The Company’s oil and gas
assets are classified as intangible
assets where the Company
has exploration and evaluation
interests (“E&E”) of £9,063,254
and as property, plant and
equipment where the
Company has development
and producing interests
(“D&P”) of £5,559,420 at
31 December 2022. In respect
of both the Company’s
E&E and D&P assets, the
directors are required to
assess annually for any
indicators of impairment of
the assets. If an indicator of
impairment is identified the
directors are required to
perform an assessment of the
carrying value of the assets.
The directors identified that
the Fiskerton Airfield D&P
assets were considered to be
impaired in the year due to the
uncertainty in respect of the
future oil production from the
licence. In the prior years, the
directors identified that the
Duke’s Wood and Kirklington
D&P assets were considered to
be impaired, and remained fully
impaired in the year due to the
uncertainty in respect of the
future oil production from the
licences. There were no further
impairment indicators identified
on any of the other material
assets.
Given the significance of the
assets on the Company’s
Balance Sheet and the
significant judgement involved
in the assessment of potential
indicators of impairment, we
considered this to be a key
audit matter.
In respect of both the E&E assets and the D&P assets we evaluated
the directors’ impairment indicator review for each of the assets held.
We challenged the considerations made as to whether or not there
were any indicators of impairment identified in accordance with the
requirements of the relevant accounting standards.
Our specific audit procedures for the E&E assets included obtaining
and challenging the directors’ assessment of impairment indicators
under IFRS 6 Exploration and Evaluation of Mineral Resources.
This included:
•
•
•
verifying of the licence status to publicly available information in
order to confirm the legal title and validity of each of the licences.
reviewing approved budget forecasts and minutes of management
and Board meetings to confirm the Company’s intention to
continue exploration work on the licences.
reviewing available technical documentation and discussion of
results and operations with management in order to obtain
an understanding of management’s expectation of commercial
viability.
Our specific audit testing for the D&P assets included:
• assessing the appropriateness of the cash generating unit
classification and the impairment indicator considerations against
the provisions of IAS 36 Impairment of Assets.
•
verifying the licence status to publicly available information in
order to confirm legal title and validity of each of the licences.
• assessing available market data on oil prices and the impact on
the Company’s assets to assess whether there are indicators of
impairment.
• undertaking an assessment of whether there were further internal
potential impairment indicators identified (i.e. obsolescence
from internal reporting such as minutes of meetings) or external
potential indicators of impairment (i.e. the market capitalisation
of the Company, economic trends in interest rates etc.)
•
reviewing the external and internal sources of information, such
as third party reports assessing the value in use of each asset, and
reports provided by operators in order to assess whether any
impairment triggers were identified.
• evaluating management’s judgement regarding the basis for the
full impairment of the carrying value of Fiskerton Airfield being
the uncertainty of timings for future oil production. In doing so
we considered the Company’s operating strategy for the asset,
the 2022 actual production results and status of post year end
production.
Key observations:
Based on our procedures performed we consider the assumptions
used in determining the carrying value of the oil and gas assets to be
appropriate.
37
Governancewww.unionjackoil.com Independent Auditor’s Report
on the Financial Statements
TO THE MEMBERS OF UNION JACK OIL PLC
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below
these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements,
and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:
Company Financial Statements
2022
£154,000
2021
£230,000
5% of profit before taxation
1% of total assets calculated based on draft
figures at the planning stage of our audit
We considered profit before taxation to be an
important performance metric and likely to be
the primary focus for the users of the financial
statements as a result of a full year of operations
at Wressle.
We considered total assets to be the relevant
benchmark as the Company generated minimal
revenue and total assets were likely to be the
primary focus for the users of the financial
statements given the majority of the Company’s
activities are in exploration and development
phase.
£116,000
£172,000
75% of materiality. The level of performance
materiality was set after considering a number of
factors including the expected value of known and
likely misstatements and management’s attitude
towards proposed misstatements.
75% of materiality. The level of performance
materiality was set after considering a number
of factors including the expected value of known
and likely misstatements and management’s
attitude towards proposed misstatements.
Materiality
Basis for
determining
materiality
Rationale for
the benchmark
applied
Performance
materiality
Basis for
determining
performance
materiality
SPECIFIC MATERIALITY
In 2021, the Company had increased income statement activity as a result of production at Wressle commencing in the
period and we applied a specific materiality to the Income Statement of £57,000 based on 2% of total expenditure. We
further applied a performance materiality level of 75% of specific materiality of £43,000 to ensure that the risk of errors
exceeding specific materiality was appropriately mitigated. In 2022, we did not consider it necessary to apply a specific
materiality to the Income Statement on the basis that the Company has a full year of operations at Wressle.
REPORTING THRESHOLD
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £7,000
(2021: £5,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
38
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Independent Auditor’s Report
on the Financial Statements
TO THE MEMBERS OF UNION JACK OIL PLC
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information included in the
Annual Report and the Financial Statements other than the financial statements and our Auditor’s Report thereon. Our
opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
OTHER COMPANIES ACT 2006 REPORTING
Based on the responsibilities described below and our work performed during the course of the audit, we are required by
the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic
Report and
Directors’
Report
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic Report and the Directors’ Report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the 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.
Matters on
which we
are required
to report by
exception
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept, or returns adequate for our audit have not been
received from branches not visited by us; or
•
the financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ Responsibilities Statement, 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 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 Company or to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
39
Governancewww.unionjackoil.com Independent Auditor’s Report
on the Financial Statements
TO THE MEMBERS OF UNION JACK OIL PLC
EXTENT TO WHICH THE AUDIT WAS CAPABLE OF
DETECTING IRREGULARITIES, INCLUDING FRAUD
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
• Our understanding of the legal and regulatory framework
applicable to the Company and the industry in which it
operates; and
• Discussion with directors and our knowledge of the
industry,
we considered the significant laws and regulations of the
UK to be those relating to the industry including, Oil & Gas
Regulation, the financial reporting framework, tax legislation
and the AIM listing rules.
The Company is also subject to laws and regulations where
the consequence of non-compliance could have a material
effect on the amount or disclosures in the financial statements,
for example through the imposition of fines or litigations. We
identified such laws and regulations to be the health and safety
legislation, licensing and environmental regulations.
Our procedures in respect of the above included:
• Discussions with directors to consider any known or
suspected instances of non-compliance with laws and
regulations identified by them;
• Review of minutes of meetings of those charges with
governance for any instances of non-compliance with laws
and regulations;
• Review of correspondence with regulatory and tax
authorities for any instances of non-compliance with laws
and regulations;
Involvement of tax specialists in the audit to assess
compliance with relevant laws and regulations; and
•
• Review of financial statement disclosures and agreeing to
supporting documentation.
Fraud
We assessed the susceptibility of the financial statements to
material misstatement, including fraud. Our risk assessment
procedures included:
• Discussions with directors to consider any known or
suspected instances of fraud identified by them;
• Obtaining an understanding of the controls that the
Company has established to address risks identified by the
entity, or that otherwise seek to prevent, deter or detect
fraud; and
Based on our risk assessment, we considered the areas most
susceptible to fraud to be revenue recognition and management
override of controls.
Our procedures in respect of the above included:
· Testing a sample of revenue transactions to supporting
documentation, including testing revenue transactions in the
period proceeding and preceding year end to assess that
they were recorded in the correct period; and
· Testing a risk-based selections of journals to supporting
documentation and evaluating whether there was evidence
of bias in the directors’ estimates (Refer to the ‘key audit
matters’ section) that represented a material misstatement
due to fraud.
We also communicated relevant identified laws and regulations
and potential fraud risks to all engagement team members,
who were all deemed to have appropriate competence and
capabilities and remained alert to any indications of fraud or
non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of
material misstatement in the financial statements, recognising
that the risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by,
for example, forgery, misrepresentations or through collusion.
There are inherent limitations in the audit procedures
performed and the further removed non-compliance with laws
and regulations is from the events and transactions reflected
in the financial statements, the less likely we are to become
aware of it.
A further description of our responsibilities is available
on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our Auditor’s Report.
USE OF OUR REPORT
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so
that we might state to the Company’s members those matters
we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than
the Company and the Company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
Jill MacRae (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor London,
United Kingdom
12 May 2023
• Review of minutes of meeting of those charged with
governance for any known or suspected instances of fraud.
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
40
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
Notes
31.12.22
£
31.12.21
£
Revenue
Cost of sales - operating costs
Cost of sales - depreciation
Cost of sales - Net Profit Interest payment
Gross profit
Administrative expenses (excluding impairment charge)
Impairment
Total administrative expenses
Operating profit / (loss)
Finance income
Royalty income
Profit / (loss) before taxation
Taxation
Profit / (loss) for the financial year
Attributable to:
Equity shareholders of the Company
Earnings / (loss) per share
Basic (pence)
Diluted (pence)
2
2
4
4
5
6
6
8,507,050
1,894,875
(1,143,967)
(2,125,425)
(137,179)
(377,153)
(735,160)
–
5,100,479
782,562
(1,665,174)
(1,740,962)
(475,556)
(156,995)
(2,140,730)
(1,897,957)
2,959,749
(1,115,395)
86,586
42,444
3,088,779
517,845
112,611
149,771
(853,013)
–
3,606,624
(853,013)
3,606,624
(853,013)
3.20
3.16
(0.83)
(0.83)
The accompanying accounting policies and notes on pages 46 to 72 form an integral part of these financial statements.
41
Financial Statementswww.unionjackoil.com
STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
Notes
31.12.22
£
31.12.21
£
Profit / (loss) for the financial year
3,606,624
(853,013)
Items which will not be reclassified
subsequently to profit or loss
Other comprehensive income
Profit on investment revaluation
10
170,500
54,420
Total comprehensive profit / (loss) for the financial year
3,777,124
(798,593)
The accompanying accounting policies and notes on pages 46 to 72 form an integral part of these financial statements.
42
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC
BALANCE SHEET
AS AT 31 DECEMBER 2022
Assets
Non-current assets
Exploration and evaluation assets
Property, plant and equipment
Investments
Deferred tax asset
Current assets
Inventories
Loan receivables
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Non-current liabilities
Provisions
Deferred Tax Liability
Total liabilities
Net assets
Notes
31.12.22
£
31.12.21
£
7
8
10
5
11
12
13
20
21
5
9,134,006
5,666,212
552,043
1,805,025
8,525,373
7,575,525
291,518
–
17,157,286
16,392,416
28,038
–
2,020,913
7,155,100
9,204,051
8,829
1,028,110
1,065,812
5,977,541
8,080,292
26,361,337
24,472,708
778,290
2,390,603
1,700,069
877,747
1,876,758
–
2,577,816
1,876,758
3,356,106
4,267,361
23,005,231
20,205,347
7,514,576
–
712,634
(214,227)
14,992,248
7,507,076
21,528,077
638,586
–
(9,468,392)
23,005,231
20,205,347
Capital and reserves attributable to the
Company’s equity shareholders
Share capital
Share premium
Share-based payments reserve
Treasury reserve
Accumulated profit / (deficit)
Total equity
14(a)
15
15
15
15
The financial statements of Union Jack Oil plc, registered number 07497220, were approved and authorised for issue
by the Board of Directors on 12 May 2023 and were signed on its behalf by:
David Bramhill
Director
The accompanying accounting policies and notes on pages 46 to 72 form an integral part of these financial statements.
43
Financial Statementswww.unionjackoil.com
STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Share-based
Share
capital
£
Share
premium
£
payment Treasury
reserve
£
reserve
£
(deficit) /
retained
earnings
£
Total
£
Accumulated
Balance at 1 January 2022
7,507,076
21,528,077
638,586
–
–
–
–
–
–
–
–
–
–
–
–
(9,468,392)
20,205,347
3,606,624
3,606,624
170,500
170,500
3,777,124
3,777,124
Profit for the financial year
Other comprehensive profit
Total comprehensive
profit for the year
Contributions by and
distributions to owners
Exercise of share options
Capital reduction
Dividends
Expiry of warrants
Treasury Shares
Share-based payments
Total contributions by
and distributions to owners
Balance at
31 December 2022
Loss for the financial year
Other comprehensive profit
Total comprehensive loss
for the year
Contributions by and
distributions to owners
Issue of share capital
Share issue costs
Share-based payments
Total contributions by
and distributions to owners
Balance at
31 December 2021
7,500
–
–
–
–
–
25,500
(21,553,577)
–
–
–
–
(19,368)
–
–
(11,098)
–
104,514
–
–
–
–
(214,227)
–
19,368
21,553,577
(900,527)
11,098
–
–
33,000
–
(900,527)
–
(214,227)
104,514
7,500 (21,528,077)
74,048
(214,227) 20,683,516
(977,240)
7,514,576
–
712,634
(214,227) 14,992,248 23,005,231
–
–
–
–
–
–
–
–
–
–
–
–
(8,669,799)
18,089,305
(853,013)
(853,013)
54,420
54,420
–
(798,593)
(798,593)
681,818
–
–
2,318,182
(312,484)
–
–
–
227,119
–
–
–
–
–
–
3,000,000
(312,484)
227,119
681,818
2,005,698
227,119
–
(798,593) 2,116,042
7,507,076 21,528,077
638,586
–
(9,468,392) 20,205,347
Balance at 1 January 2021
6,825,258
19,522,379
411,467
The accompanying accounting policies and notes on pages 46 to 72 form an integral part of these financial statements.
44
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
Notes
31.12.22
£
31.12.21
£
Cash flow from operating activities
16
5,811,734
(646,726)
Cash flow from investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Fixed term deposit
Loan advanced
Loan repaid
Purchase of investments
Sale of investments
Interest received
(712,935)
(2,852,254)
(1,000,000)
(1,000,000)
2,000,000
(100,000)
6,772
105,996
(2,277,224)
(1,022,055)
–
–
–
(100,000)
–
67,016
10
10
Net cash used in investing activities
(3,552,421)
(3,332,263)
Cash flow from financing activities
Proceeds on issue of new shares
Cost of issuing new shares
Dividends paid
Treasury shares
14(a)
14(a)
33,000
–
(900,527)
(214,227)
3,000,000
(312,484)
–
–
Net cash (used in) / generated from financing activities
(1,081,754)
2,687,516
Net increase / (decrease) in cash and cash equivalents
1,177,559
(1,291,473)
Cash and cash equivalents at beginning of financial year
5,977,541
7,269,014
Cash and cash equivalents at end of financial year
13
7,155,100
5,977,541
The accompanying accounting policies and notes on pages 46 to 72 form an integral part of these financial statements.
45
Financial Statementswww.unionjackoil.com
PRINCIPAL
ACCOUNTING POLICIES
The Company has sufficient funding to meet planned
expenditures and a level of contingency. Taking account
of the risks, the stress test shows that the Company is
able to operate within the level of funds currently held
at the date of approval of these financial statements.
The directors have a reasonable expectation that the
Company has adequate resources to continue in operational
existence for the foreseeable future. Thus, they continue
to adopt the going concern basis of accounting in preparing
the financial statements.
REVENUES
The Company’s revenue is derived from selling goods,
and revenue is recognised at the point in time when the
performance obligation to supply oil has been satisfied, i.e.
when control of goods has passed to the customer. This is
when oil sold is delivered to a third-party storage on behalf
of the customer.
Transaction prices are agreed in writing in advance of sales
and do not include any variable elements, including the oil
price. As the product sold is clearly identifiable, there is a
single performance obligation in each case to which the
transaction price is allocated. There are no volume rebates
offered and nor are there any payments in the nature of
financing arrangements.
ROYALTIES
The Company does not believe the ownership of royalties
meet the definition of a revenue contract, given there are no
contracts with the customer, or performance obligations to
fulfil, and the Company has no input in the running of the
Piper, Claymore and Scapa oilfields. As a result, revenue is
recognised as other income.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and
deposits held at call with banks.
Union Jack Oil plc is a company incorporated in the United
Kingdom under the Companies Act 2006. The address
of the registered office is 6 Charlotte Street, Bath BA1 2NE,
England. The nature of the Company’s operations and its
principal activities are set out in the Chairman’s Statement,
Strategic Report and the Directors’ Report. These financial
statements are presented in pounds sterling because that is
the currency of the primary economic environment in which
the Company operates.
BASIS OF PREPARATION
The annual financial statements of Union Jack Oil plc
(“the Company”) have been prepared in accordance
with UK adopted international accounting standards (“IFRS”)
applied in accordance with the provisions of the Companies
Act 2006.
IFRS is subject to amendment and interpretation by the
International Accounting Standards Board (“IASB”) and
the IFRS Interpretations Committee. These accounting
policies comply with each IFRS that is mandatory for
accounting periods ending on 31 December 2022 and
subject to adoption by the UK Endorsement Board (“UKEB”).
The financial statements have been prepared under the
historical cost convention except for the valuation of
investments that have been measured at fair value through
other comprehensive income. The principal accounting
policies set out below have been consistently applied to
all periods presented.
GOING CONCERN
The Company’s business activities, together with the
factors likely to affect its future development, performance
and position are set out in the Chairman’s Statement and
this Strategic Report. The directors’ forecasts demonstrate
that the Company will meet its day-to-day working capital
and share of estimated project costs over the forecast
period being at least 12 months from the sign-off of these
financial statements through to 31 August 2024.
There are a number of risks to the Company’s working
capital position, which have been identified by the directors
and its independent advisor, OGA, namely: (i) timing of
incurred costs; (iii) scope of work programmes undertaken;
and (iii) realised oil price.
The impact of those risks on the Company’s working
capital position has been assessed under a range of differing
scenarios, with the most adverse, given the current operating
environment and stage of development that the Company’s
assets are at, being identified as being the basis for evaluating
the impact for the Going Concern assessment using the worst
case “stress test.”
46
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Principal Accounting Policies
FINANCIAL INSTRUMENTS
Recognition and Derecognition
Financial assets and financial liabilities are recognised when
the Company becomes a party to the contractual provisions
of the financial instrument.
Financial assets are derecognised when the contractual rights
to the cash flows from the financial asset expire, or when
the financial asset and substantially all the risks and rewards
are transferred.
A financial liability is derecognised when it is extinguished,
discharged, cancelled or expires.
Classification and Initial Measurement of Financial
Assets
Except for those trade receivables that do not contain a
significant financing component and are measured at the
transaction price in accordance with IFRS 9, all financial assets
are initially measured at fair value adjusted for transaction
costs (where applicable).
Financial assets are classified into the following categories:
•
•
•
amortised cost
fair value through profit or loss (“FVTPL”)
fair value through other comprehensive income
(“FVOCI”)
In the periods presented the Company does not have any
financial assets categorised as FVTPL.
The classification is determined by both:
•
•
the entity’s business model for managing the financial
asset
the contractual cash flow characteristics of the financial
asset
Subsequent Measurement of Financial Assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets
meet the following conditions:
•
•
they are held within a business model whose objective
is to hold the financial assets and collect its contractual
cash flows
the contractual terms of the financial assets give rise
to cash flows that are solely payments of principal
and interest on the principal amount outstanding
After initial recognition, these are measured at amortised cost
using the effective interest method. Discounting is omitted
where the effect of discounting is immaterial. The Company’s
cash and cash equivalents, trade and most other receivables
fall into this category of financial instruments.
Financial assets at Fair Value through Other Comprehensive
Income (“FVOCI”)
The Company accounts for financial assets at FVOCI if the
assets meet the following conditions:
•
they are held under a business model whose objective
it is “hold to collect” the associated cash flows and sell
•
the contractual terms of the financial assets give rise
to cash flows that are solely payments of principal and
interest on the principal amount outstanding
The Company’s investments are classified as financial assets
at FVOCI based on the fair value hierarchy groups listed
in note 17. The fair value of quoted securities are based
on published market prices (Level 1 inputs). The fair value
of the unquoted securities are based on Level 3 inputs.
Classification and Measurement of Financial
Liabilities
The Company’s financial liabilities include trade and other
payables.
Financial liabilities are initially measured at fair value, and,
where applicable, adjusted for transaction costs.
Subsequently, financial liabilities are measured at amortised
cost using the effective interest method.
All interest-related charges are included within finance costs
or finance income.
Impairment of Financial Assets
In relation to the impairment of financial assets, IFRS 9
requires an expected credit loss model to be applied. The
expected credit loss model requires the Company to account
for expected credit losses and changes in those expected
credit losses at each reporting date to reflect changes in
credit risk since initial recognition of the financial assets.
IFRS 9 requires the Company to recognise a loss allowance
for expected credit losses on trade receivables.
In particular, IFRS 9 requires the Company to measure the
loss allowance for a financial instrument at an amount equal
to the lifetime expected credit losses (“ECL”) if the credit risk
on that financial instrument has increased significantly since
initial recognition, or if the financial instrument is a purchased
or originated credit-impaired financial asset. However, if
the credit risk on a financial instrument has not increased
significantly since initial recognition, the Company is required
to measure the loss allowance for that financial instrument
at an amount equal to 12 months ECL.
47
Financial Statementswww.unionjackoil.com Principal Accounting Policies
INTANGIBLE ASSETS – EXPLORATION AND
EVALUATION ASSETS
Costs (including research costs) incurred prior to obtaining
the legal rights to explore an area will be expensed
immediately to the Income Statement, as these are classified
as pre-licence costs.
Expenditure incurred on the acquisition of a licence interest
will initially be capitalised on a licence-by-licence basis.
Costs will be held within exploration and evaluation costs
until such a time as the exploration phase on the licence area
is complete or commercial reserves have been discovered.
Exploration expenditure incurred in the process of
determining exploration targets will be capitalised initially
within intangible assets as exploration and evaluation costs.
Exploration costs will initially be capitalised whilst exploration
and evaluation activities are continuing, and until the success
or otherwise has been established. The success or failure of
each exploration/evaluation effort will be judged generally on
a licence-by-licence basis. Capitalised costs will be written off
on completion of exploration and evaluation activities unless
the results indicate that hydrocarbon reserves exist and that
these reserves are commercially viable.
All such costs will be subject to regular technical, commercial
and management review for indicators of impairment
which includes confirming the continued intent to develop
or otherwise extract value from the licence, prospect or
discovery. Where this is no longer the case, the costs will
be immediately expensed.
Following evaluation of successful exploration wells, if
commercial reserves are established and the technical
feasibility of extraction is demonstrated, and once a project
is sanctioned for commercial development, then the related
capitalised exploration/evaluation costs will be transferred
into a single field cash generating unit within development/
producing assets after testing for impairment, within Property,
Plant and Equipment. Where results of exploration drilling
indicate the presence of hydrocarbons which are ultimately
not considered commercially viable, all related costs will be
written off to the Income Statement.
INTANGIBLE ASSETS – ROYALTIES
Royalties are classified as intangible assets by the Company.
The Company considers the substance of the royalty to
be economically similar to holding a direct interest in the
underlying asset. Existence risk (the commodity physically
existing in the quantity demonstrated), production risk
(that the operator can achieve production and operate a
commercially viable project), timing risk (commencement and
quantity produced, determined by the operator) and price
risk (returns vary depending on the future commodity price,
driven by future supply and demand) are all risks which the
Company participates in on a similar basis to an owner of the
underlying licence. Furthermore, in the royalty, there is only
a right to receive cash to the extent there is a production and
there are no interest payments, minimum payment obligations
or means to enforce production or guarantee repayment.
These are accounted for as intangible assets under IAS 38 and
accordingly are amortised over their useful economic life.
48
PROPERTY, PLANT AND EQUIPMENT –
DEVELOPMENT AND PRODUCTION ASSETS
Development and Production (“D&P”) assets are accumulated
into cash generating units ("CGU") and represent the cost of
developing the commercial reserves and bringing them into
production together with the Exploration and Evaluation
(“E&E”) expenditures previously transferred from E&E assets
as outlined in the policy above.
All costs incurred after the technical feasibility and commercial
viability of producing hydrocarbons have been demonstrated
will be capitalised within development/producing assets on a
field-by-field basis. Subsequent expenditure will be capitalised
only where it either enhances the economic benefits of the
development/producing asset or replaces part of the existing
development/producing asset.
On acquisition of a D&P asset from a third party, the asset
will be recognised in the financial statements on signature
of the sale and purchase agreement, subject to satisfaction
of any substantive conditions within the agreement.
Costs relating to each CGU are depleted on a unit of
production method based on the commercial Proven and
Probable Reserves for that CGU. Development assets
are not depreciated until production commences. The
depreciation calculation takes account of the residual
value of site equipment and the estimated future costs of
development of recognised Proven and Probable Reserves,
based on current price levels. Changes in reserve quantities
and cost estimates are recognised prospectively.
DECOMMISSIONING AND SITE RESTORATION
PROVISIONS
Licensees have an obligation to restore fields to a condition
acceptable to the relevant authorities at the end of their
commercial lives.
Provision for decommissioning and reinstatement is
recognised in full as a liability and an asset when the
obligation arises.
The asset is included within exploration and evaluation
assets or property, plant and equipment as is appropriate.
The liability is included within provisions.
The amount recognised is the estimated cost of
decommissioning and reinstatement, discounted where
appropriate to its net present value, and is reassessed each
year in accordance with local conditions and requirements.
Revisions to the estimated costs of decommissioning and
reinstatement which alter the level of the provisions required
are also reflected in adjustments to the decommissioning
and reinstatement asset.
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Principal Accounting Policies
CONTINGENT LIABILITIES
Contingent consideration payable in respect of the Company’s
interest in certain licences is considered to be a contingent
liability, which is not recognised due to the lack of estimation
certainty of both the timing and amount payable. These will
be recognised as a provision when it is possible to accurately
estimate costs and the timing is known.
IMPAIRMENT
The carrying amounts of non-current assets are reviewed for
impairment, under IAS 36 for Production and Development
assets and IFRS 6 for Exploration and Evaluation assets, if
events or changes in circumstances indicate the carrying value
may not be recoverable. If there are indicators of impairment,
such as a well not encountering commercial quantities of oil
or a site being shut-in, an exercise is undertaken to determine
whether the carrying values are in excess of their recoverable
amount. Such review is undertaken on an asset by asset
basis, except where such assets do not generate cash flows
independent of other assets, in which case the review is
undertaken at the cash generating unit level on a field-by-field
basis. For intangible exploration and evaluation assets potential
industry-specific impairment triggers may include the short
term expiry of a licence, lack of budgeted spend, or the lack of
potential for commercial development of the asset, and more
general triggers would include external sources such
as significant changes in the industry or internal evidence such
as changes in expectation of an asset’s economic performance.
The potential recoverable value of such assets is assessed
by the directors based on their knowledge of the assets and
available information. The Company’s cash-generating units are
the smallest identifiable groups of assets that generate
cash inflows that are largely independent of the cash inflows
from other assets or groups of assets.
A previously recognised impairment loss is reversed if the
recoverable amount increases as a result of a reversal of
the conditions that originally resulted in the impairment.
This reversal is recognised in the Income Statement and
is limited to the carrying amount that would have been
determined, net of depreciation, had no impairment loss
been recognised in the prior years.
The recoverable amount of assets is the higher of their value
in use and fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and
the risks specific to the asset. For an asset that does not
generate cash inflows largely independent of those from other
assets, the recoverable amount is determined for the cash-
generating unit to which the asset belongs.
Impairments are recognised in the Income Statement to
the extent that the carrying amount exceeds the assets’
recoverable amount. The revised recoverable amounts are
amortised in line with the Company’s accounting policies.
JOINT ARRANGEMENTS, FARM-IN AND PROFIT
SHARING AGREEMENTS
The Company is party to a joint arrangement when there
is a contractual agreement that sets out the terms of the
relationship over the relevant activities of the Company
and at least one other party.
Management has a legal degree of control over these joint
operating arrangements through Joint Operating Agreements.
The Company classifies its interests in joint arrangements
as joint operations: where the Company has both the
rights to assets and obligations for the liabilities of the joint
arrangement.
The Company accounts for its interests in joint operations
by recognising its share of assets, liabilities, revenues and
expenses in accordance with its contractually conferred
rights and obligations.
The Company accounts for its own assets, liabilities and
cash flows measured in accordance with the terms of the
production sharing agreement and the accounting treatment
reflects the agreement’s commercial effect. The Company’s
revenue and cost of sales include revenues and operating costs
associated with the Company’s interest.
Where the percentage ownership in joint arrangements
changes during a reporting period, the arrangement is
reassessed to ensure it is still appropriately classified, and
the Company’s share of income and expenses is adjusted
prospectively from the date of change.
49
Financial Statementswww.unionjackoil.com 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 Company
intends to settle its current tax assets and liabilities on a
net basis.
EQUITY INSTRUMENTS
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are
recognised at the proceeds received, net of direct issue costs.
The equity instrument in respect of the Company is in
relation to the issue of ordinary shares.
SHARE-BASED PAYMENTS AND WARRANTS
Equity-settled share-based payments in respect of warrants
and options issued by the Company are measured at the fair
value of the equity instruments at the grant date, on the basis
that this is immaterially different from the fair value of the
services provided. During the year all outstanding warrants
expired.
Details regarding the determination of the fair value of
equity-settled share-based transactions are set out in note
14(b) and 14(c). The fair value determined at the grant date
of the equity-settled share-based payments is expensed over
the vesting period, based on the Company’s estimate of the
number of equity instruments that will eventually vest.
At each Balance Sheet date, the Company revises its estimate
of the number of equity instruments expected to vest as a
result of the effect of non-market-based vesting conditions.
The impact of the revision of the original estimates, if any, is
recognised in the Income Statement such that the cumulative
expense reflects the revised estimate, with a corresponding
adjustment to equity reserves.
When a share-based payment or warrant expires, the
cumulative expense recognised in the share based payment
reserve is reclassified to the relevant component of equity
in line with the original recognition of the expense.
Principal Accounting Policies
CURRENT TAX
Current tax is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the 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
Company’s liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by
the Balance Sheet date.
ENERGY PROFITS LEVY
On 26 May 2022, the government introduced an Energy
Profit Levy (“EPL”) of 25% on profits. The EPL cost to the
Company during 2022, after an OPEX allowance of 100% and
CAPEX relief of 180% was £409,433 (2021: nil).
The EPL for the year 2023, has been increased to 35% and
the CAPEX relief decreased to 129%. OPEX allowance
remains at 100%.
The planned development and drilling programme for 2023
are expected to provide a robust cushion in respect of EPL
payments made by the Company during the year.
DEFERRED TAX
Deferred tax is the tax expected to be payable or
recoverable on differences between the carrying amounts
of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable
profit, and 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.
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 based on tax laws and rates that have been
enacted or substantively enacted at the Balance Sheet date.
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.
50
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC
Principal Accounting Policies
ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
The Company has adopted the following standards, amendments to standards and interpretations which are effective for the
first time this year. The impact is shown below:
New and revised International Financial
Reporting Standards
Effective Date:
Annual periods
beginning on or
after:
UK
adopted
Impact on the
Company
Various Amendments to
1 January 2022
Yes
• IFRS 3 Business Combinations;
• IAS 16 Property, Plant and Equipment;
• IAS 37 Provisions, Contingent Liabilities and
Contingent Assets;
• Annual Improvements 2018-2020
No material
impact
At the date of authorisation of the consolidated financial statements, the IASB and IFRS Interpretations Committee have issued
standards, interpretations and amendments which are applicable to the Company. For the next reporting period, applicable
International Financial Reporting Standards will be those endorsed by the UK Endorsement Board (UKEB).
Whilst these standards and interpretations are not effective for, and have not been applied in the preparation of, these
consolidated financial statements, the following could potentially have a material impact on the Company’s financial statements
going forward:
New and revised International Financial Reporting Standards Effective Date:
Annual periods
beginning on or after:
UKEB adopted
IAS 12
Amendments to IAS 12: Deferred Tax relating to Assets and
Liabilities arising from a Single Transaction
1 January 2023
IAS 1
Amendments to IAS 1: Classification of Liabilities as Current
or Non-current and Classification of Liabilities as Current or
Non-current
1 January 2024
No
No
New and revised International Financial Reporting Standards which are not considered to potentially have a material impact on
the Company’s financial statements going forwards have been excluded from the above.
Management anticipates that all relevant pronouncements will be adopted in the Company’s accounting policies for the first
period beginning after the effective date of the pronouncement.
There are no other standards and interpretations in issue but not yet adopted that the directors anticipate will have a material
effect on the reported income or net assets of the Company.
51
Financial Statementswww.unionjackoil.com
Principal Accounting Policies
CRITICAL ACCOUNTING JUDGEMENTS AND KEY
SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Company’s accounting policies, which
are described in this note, the directors are required to make
judgements regarding the choice and application of accounting
policies, as well as estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if
the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current
and future periods.
The following are the critical judgements and estimates
that the directors have made in the process of applying
the Company’s accounting policies and that have the most
significant effect on the amounts recognised in the financial
statements:
Exploration and Evaluation Costs
The Company’s accounting policy leads to the development
of tangible and intangible fixed assets, where it is considered
likely that the amount will be recoverable by future
exploitation or sale, or alternatively where the activities
have not reached a stage which permits a reasonable
assessment of the existence of reserves.
This requires management to make assumptions as to the
future events and circumstances, especially in relation to
whether an economically viable extraction operation can
be established. Such estimates are subject to change and
following initial capitalisation, should it become apparent that
recovery of the expenditure is unlikely, the relevant capitalised
amount will be written off to the Income Statement.
Decommissioning and Reinstatement Provisions
Management use independent estimates for future
decommissioning expenditure. Discount rates of 3.88%
and inflation rates of 1.8% are used to determine appropriate
decommissioning provisions. These may change as a result
of revisions to the estimated timing and future cost of
decommissioning.
CRITICAL ESTIMATES
Share-based Payments and Warrants
In determining the fair value of warrants and options and
the related charges to the Income Statement, the Company
makes assumptions about future events and market
conditions.
The fair value is determined using a valuation model which
is dependent on estimates, including the future volatility
of the Company’s share price and the expected life of the
share-based payments. This is determined by using historic
data from similar companies and historic trends on exercising
share-based payments by holders. See note 14(b) and 14(c).
Carrying Value of Property, Plant and Equipment
The Company assesses at each reporting period whether
there is any indication that these assets may be impaired
as indicated in note 8.
If such indication exists, the Company estimates the
recoverable amount of the asset. The recoverable amount
is assessed by reference to the higher of ‘value in use’ (being
the net present value of expected future cash flows of the
relevant cash generating unit) and ‘fair value less cost to sell’.
The Company considers the quantities of the Proven and
Probable Reserves, future production levels and future oil
prices as well as other IAS 36 criteria in their assessment of
indicators of impairment. The directors do not believe there
are any indicators of impairment in respect of the assets.
Depreciation
Production assets are depreciated on a unit of production
method based on the commercial proven reserves for each
separate asset. Development assets are not depreciated
until production commences. The unit of production rate
calculation for the depreciation of costs takes into account
expenditures incurred to date.
52
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Principal Accounting Policies
Reserve Estimates
Reserves are estimates of the amount of product that can
be economically and legally extracted from the Company’s
properties. In order to calculate the reserves, estimates
and assumptions are required about a range of geological,
technical and economic factors, including quantities,
production techniques, recovery rates, production costs,
transport costs, commodity demand, commodity prices
and exchange rates.
Estimating the quantity and/or grade of reserves requires the
size, shape and depth of fields to be determined by analysing
geological data such as drilling samples. This process may
require complex and difficult geological judgements and
calculations to interpret the data.
Given that the economic assumptions used to estimate
reserves change from year to year, and because additional
geological data is generated during the course of operations,
estimates of reserves may change from year to year. Changes
in reported reserves may affect the Company’s financial
results and financial position in a number of ways, including
the following:
• Asset carrying values may be affected by possible
impairment due to adverse changes in estimated future
cash flows;
• Depreciation, depletion and amortisation charged in the
Income Statement may change where such charges are
determined by the units of production basis, or where
the useful economic lives of assets change.
Judgements in Applying Accounting Policies
and Key Sources of Estimation Uncertainty –
Impairment
Management is required to assess the Exploration and
Evaluation assets and the Development and Production
assets for indicators of impairment. Note 7 discloses the
carrying value of the Exploration and Evaluation assets.
Note 8 discloses the carrying value of the Development
and Production assets.
Impairment is considered on a licence-by-licence basis.
In assessing the need to impair Exploration and Evaluation
assets and Development and Production assets the Board
makes assumptions about the future progress and likely
successful outcome of exploration and drilling activities as
well as the estimated level of reserves and resources and the
discount rate. Due diligence is performed at the outset of the
investment before an investment is made. At an early stage
of exploration of each investment the need for impairment
is determined through monitoring market and industry
conditions, competent person reports on each prospect and
any available information from each licence’s main Operator.
In the case of those licences where drilling has commenced
and management is committed to further exploration
and evaluation with sufficient financial resources available
to do so, impairment is not recognised unless technical
analysis confirms that commercially viable hydrocarbons
are insufficient to recover costs incurred.
Investments
The Company’s investments in equity instruments are not
held for trading. Instead they are for medium to long-term
strategic purposes and as such these investments are held
at Fair Value Through Other Comprehensive Income
(“FVTOCI”). Management assesses these assets for any
indication of change in their fair value by reviewing the
market value of the relevant companies and therefore
the value of the underlying asset.
Expected credit loss model
IFRS 9 requires the Company to make assumptions when
implementing the forward-looking expected credit loss model.
This model is required to be used to assess the loan to Egdon
Resources plc for impairment, the royalties due, and trade
receivables. Arriving at the expected credit loss allowance
involved considering different scenarios for the recovery of
receivables, the possible credit losses that could arise and the
probabilities for these scenarios. The risks considered included
exploration project risk, country risk, expected future oil
prices, and the value of the potential reserves.
Deferred tax
In determining the deferred tax asset to recognise, the
Directors have considered the likelihood of generating taxable
profits in the foreseeable future against which losses and other
timing differences can be offset. The Directors have used
assumptions consistent with those adopted in preparing the
going concern assessment and have not anticipated profits that
may arise following future exploration activity. Foreseeable
future has been considered to be 24 months. The deferred
tax asset recognised is disclosed in note 5 and amounted
to £1,805,025 at the year end. The deferred tax liability is
calculated on temporary differences based on accelerated
tax relief calculations. The liability recognised amounted to
£877,747 at the year end.
53
Financial Statementswww.unionjackoil.com NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1
BUSINESS AND OPERATING SEGMENTS
The Company is considered to have two operating segments, being the exploration and evaluation of, and the development
and production of hydrocarbon discoveries onshore United Kingdom.
For the year ending 31 December 2022
Exploration
and Evaluation
£
Development
and Production
£
Corporate
£
Total
£
Revenue
Operating expenses
Depreciation
Impairment
Other administrative expenses
Profit / (Loss) from continuing operations before tax
Finance income
Royalty income
Profit before taxation
–
–
–
3,028
–
3,028
–
–
3,028
8,507,050
(1,281,146)
(2,125,425)
(478,584)
–
4,621,895
–
–
4,621,895
–
–
–
–
(1,665,174)
(1,665,174)
86,586
42,444
(1,536,144)
8,507,050
(1,281,146)
(2,125,425)
(475,556)
(1,665,174)
2,959,749
86,586
42,444
3,088,779
For the year ending 31 December 2021
Exploration
and Evaluation
£
Development
and Production
£
Corporate
£
Total
£
Revenue
Operating expenses
Depreciation
Impairment
Other administrative expenses
Profit / (Loss) from continuing operations before tax
Finance income
Royalty income
Loss before taxation
–
–
–
(6,340)
–
(6,340)
–
–
(6,340)
1,894,875
(377,153)
(735,160)
(150,655)
–
631,907
–
–
631,907
–
–
–
–
(1,740,962)
(1,740,962)
112,611
149,771
(1,478,580)
1,894,875
(377,153)
(735,160)
(156,995)
(1,740,962)
(1,115,395)
112,611
149,771
(853,013)
For the year ending 31 December 2022
Exploration
and Evaluation
£
Development
and Production
£
Corporate
£
Total
£
Non-current assets
Current assets
Non-current liabilities
Current liabilities
9,134,006
203,511
(484,177)
(73,450)
5,559,420
761,223
(766,847)
(594,307)
2,463,860
8,239,317
(1,326,792)
(110,533)
17,157,286
9,204,051
(2,577,816)
(778,290)
Net assets
8,779,890
4,959,489
9,265,852
23,005,231
54
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
1
BUSINESS AND OPERATING SEGMENTS (CONTINUED)
For the year ending 31 December 2021
Exploration Development
and Evaluation and Production
£
£
Corporate
£
Total
£
Non-current assets
Current assets
Non-current liabilities
Current liabilities
8,525,373
278,635
(609,448)
(35,261)
7,575,525
720,561
(1,267,310)
(2,291,014)
291,518
7,081,096
–
(64,328)
16,392,416
8,080,292
(1,876,758)
(2,390,603)
Net assets
8,159,299
4,737,762
7,308,286
20,205,347
2
OPERATING PROFIT / (LOSS)
Operating profit/loss is stated after charging:
Reverse of impairment / impairment charge on Intangible Assets
Impairment charge on Property, Plant and Equipment
Depletion of producing assets
Net Profit Interest payment
Staff costs (see note 3)
Fees payable to the Company’s auditor for:
– The audit of these financial statements
– Tax compliance services
31.12.22
£
31.12.21
£
(3,028)
478,584
2,125,425
137,179
638,605
68,100
10,000
6,340
150,655
735,160
–
748,471
39,500
6,437
The impairment charges of £475,556 (2021: £156,995) are £478,584 in respect of Property, Plant and Equipment,
PEDL118, PEDL203, EXL294 and £2,278 in respect of Intangible Asset, PEDL201, and the reverse impairment of £5,306
in respect of Intangible Asset, PEDL181.
The impairment shown for 2021 in last year’s Annual Report and Financial Statements was in respect of Property,
Plant and Equipment PEDL118 and PEDL203 and in respect of Intangible Assets, PEDL181 and PEDL201.
An historical Net Profit Interest (“NPI”) agreement between Egdon Resources U.K. Limited and Union Jack Oil plc and
Valhalla Oil & Gas AS (“Valhalla”) was activated in September 2022.
Under this agreement Union Jack Oil plc, pay Valhalla a maximum of 2.75% NPI of PEDL180 income, less deductible
expenditure.
55
Financial Statementswww.unionjackoil.com
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
3
EMPLOYEE INFORMATION AND REMUNERATION OF DIRECTORS
The aggregate payroll cost in the year of the employees, all of whom are directors, was as follows:
Salaries
Share-based payment expense
Social security costs
31.12.22
£
487,083
95,450
56,072
31.12.21
£
487,083
199,050
62,338
638,605
748,471
The number of persons employed by the Company was 4 (2021: 4).
Details of each director’s emoluments are included in the Directors’ Report and within this note.
The salaries, fees and share-based payments of individual directors were as follows:
Year ended December 2022
D Bramhill
J O’Farrell
R Godson
G Bull
Year ended December 2021
D Bramhill
J O’Farrell
R Godson
G Bull
Salaries
£
287,083
120,000
40,000
40,000
487,083
Salaries
£
287,083
120,000
40,000
40,000
487,083
Share-based
payment expense
£
36,257
25,958
9,064
24,171
Total
£
323,340
145,958
49,064
64,171
95,450
582,533
Share-based
payment expense
£
77,267
49,664
22,114
50,005
Total
£
364,350
169,664
62,114
90,005
199,050
686,133
The emoluments of the highest paid director were £287,083 (2021: £287,083).
Share-based payments are non-cash remuneration by way of share options in the Company. No share options were
granted to the directors or officers in 2021 or 2022.
Directors’ share options outstanding at 31 December 2022 and at 31 December 2021:
D Bramhill
J O’Farrell
R Godson
G Bull
No share options were granted during 2021 or 2022.
56
2022
2021
1,200,000
700,000
150,000
550,000
1,200,000
700,000
300,000
550,000
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
4
OTHER INCOME
Finance Income
Bank interest
Loan interest receivable
Royalty Income
Royalties
5
TAXATION
31.12.22
£
31.12.21
£
30,330
56,256
86,586
516
112,095
112,611
31.12.22
31.12.21
£
£
42,444
149,771
The major components of income expense for the years ended 31 December 2022 and 2021 are:
Current tax expense
Current income tax charge
Total current tax
Deferred tax
Origination of temporary differences
Recognition of deferred tax asset previously unrecognised
Total deferred tax
Total tax credit
2022
£
2021
£
409,433
409,433
877,747
(1,805,025)
(927,278)
(517,845)
–
–
–
–
–
–
A reconciliation between tax the credit and the product of the accounting profit/(loss) and the standard rate of tax in the
UK for the years ended 31 December 2022 and 2021 is as follows:
Accounting profit/(loss) before tax from continuing operations
Profit/(loss) multiplied by the standard rate of tax of 40% (2021: 40%)
Expenses not permitted for tax
Impairment of intangible assets not deductible for tax purposes
Recognition of deferred tax asset not previously recognised
Energy profits levy
Origination of temporary differences
Losses utilised on which no deferred tax was recognised
2022
£
3,088,779
1,235,512
41,806
190,222
(1,805,025)
409,433
877,747
(1,467,540)
2021
£
(853,013)
(341,205)
69,080
62,798
–
–
–
209,327
Total tax credit
(517,845)
–
57
Financial Statementswww.unionjackoil.com
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
5 TAXATION (CONTINUED)
Deferred tax
The movement on the deferred tax asset account is shown below:
At 1 January
Recognised in profit and loss
Tax losses
At 31 December
The movement on the deferred tax liability account is as shown below:
At 1 January
Recognised in profit and loss
Accelerated capital allowances
At 31 December
2022
£
–
1,805,025
1,805,025
2022
£
–
877,747
877,747
2021
£
–
–
–
2021
£
–
–
–
In determining the deferred tax asset to recognise, the Directors have considered the likelihood of generating taxable
profits in the foreseeable future against which losses can be offset. The Directors have used assumptions consistent with
those adopted in preparing the going concern assessment and have not anticipated profits that may arise following future
exploration activity. Foreseeable future has been considered to be 24 months. The deferred tax asset recognised amounted
to £1,805,025 at the year end. The deferred tax liability is calculated on temporary differences based on accelerated tax
relief calculations. The liability recognised amounted to £877,747 at the year end.
Energy Profits Levy
On 26 May 2022, the government introduced an Energy Profit Levy (“EPL”) of 25% on profits. The EPL cost to the
Company during 2022, after an OPEX allowance of 100% and CAPEX relief of 180% was £409,433 (2021: nil).
The EPL for the year 2023, has been increased to 35% and the CAPEX relief decreased to 129%. OPEX allowance remains
at 100%.
The planned development and drilling programme for 2023 are expected to provide a robust cushion in respect of EPL
payments made by the Company during the year.
Tax losses
In addition to the above recognised tax losses the Company also has the following tax losses for which no deferred tax
asset has been recognised:
Unrecognised tax losses
Potential tax benefit @ 40% (2021: 40%)
2022
£
2021
£
12,505,980
21,525,777
5,002,392
8,610,311
These are tax losses the use of which are considered by the Directors to be beyond the appropriate forseeable future to
be recognised as an asset on the Balance Sheet.
58
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
6
EARNINGS PER SHARE
The Company has issued warrants and options over ordinary shares which could potentially dilute the basic earnings per
share in the future. Further details are given in note 14(b) and 14(c).
Basic earning per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
During the current and prior year, the Company had warrants and options in issue as detailed in note 14(b) and 14(c).
At 31 December 2022, the Company had no warrants in issue (2021: 30,373) and 3,050,000 (2021: 3,200,000)
options in issue.
These warrants and options have been taken into account when calculating the diluted earnings per share.
Earnings per share
Profit / (loss) per share from continuing operations
– Basic
– Diluted
2022
Pence
2021
Pence
3.20
3.16
(0.83)
(0.83)
The profit / (loss) and weighted average number of ordinary shares used in the calculation of profit / (loss) per share are as
follows:
2022
£
2021
£
Profit/(loss) used in the calculation of total basic and diluted profit / (loss) per share
3,606,624
(853,013)
Number of shares
2022
2021
Weighted average number of ordinary shares for the purposes of basic
and diluted profit / (loss) per share
– Basic
– Diluted
112,706,307
114,132,334
102,628,722
102,628,722
As detailed in note 14, the Company has 831,680,400 (2021: 831,680,400) deferred shares. These have not been
included within the calculations of basic shares above on the basis that IAS 33 defines an ordinary share as an equity
instrument that is subordinate to all other classes of equity instruments. Any residual interest in the assets of the Company
would not currently, on liquidation, go to the deferred shareholders, hence they are not currently considered subordinate.
These deferred shares have not been taken into account when calculating the diluted loss per share as their impact was
anti-dilutive.
The Company issued 150,000 new ordinary shares during the year (2021: 13,636,364).
59
Financial Statementswww.unionjackoil.com
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
7
INTANGIBLE ASSETS
31.12.22
Exploration and evaluation
£
31.12.22
Royalty
£
31.12.22
Total
£
31.12.21
Total
£
Cost
At 1 January
Transfer to development and
production assets
Costs incurred in the year
8,450,460
93,610
8,544,070
6,134,717
–
616,106
–
–
–
616,106
(18,092)
2,427,445
At 31 December
9,066,566
93,610
9,160,176
8,544,070
Depreciation and impairment
At 1 January
Amortisation charge for the year
Costs impaired
At 31 December
Net book value
At 31 December
At 1 January
6,340
–
(3,028)
12,357
10,501
–
18,697
10,501
(3,028)
–
12,357
6,340
3,312
22,858
26,170
18,697
9,063,254
8,444,120
70,752
81,253
9,134,006
8,525,373
8,525,373
6,134,717
Additions to exploration and evaluation costs represent exploration and appraisal costs incurred in the year in respect
of unproven properties and provisions recognised for decommissioning and restoration liabilities.
The directors have reviewed whether there were any potential indicators for impairment evidence for each of the assets.
If an indicator was identified, the directors considered the potential value of the projects and licences. The directors have
also considered the likely opportunities for realising the value of licences and have concluded that the likely value of each
exploration area is individually in excess of its carrying amount. There was a reverse impairment for 2022 of £5,306 with
regard to PEDL181 (2021: £6,340), and an impairment of £2,278 with regard to PEDL201 (2021: £2,136).
Included in the above intangible asset additions during the year are amounts arising in relation to changes in decommissioning
and restoration provisions (note 21).
Intangible assets (less any impairment and provisions) comprise amounts capitalised as follows:
31.12.22
£
31.12.21
£
5,689,647
3,045,506
328,101
70,752
5,184,442
2,992,694
266,984
81,253
9,134,006
8,525,373
West Newton
Biscathorpe
North Kelsey
Royalty
PEDL183
PEDL253
PEDL241
60
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
8
PROPERTY, PLANT AND EQUIPMENT
31.12.22
Development
and production
£
31.12.22
Equipment
£
31.12.22
Total
£
31.12.21
Total
£
Cost
At 1 January
Transfer from exploration and evaluation assets
Additions
8,707,703
–
587,904
–
–
116,539
8,707,703
–
704,443
6,698,650
18,092
1,990,961
At 31 December
9,295,607
116,539
9,412,146
8,707,703
Depreciation and impairment
At 1 January
Depreciation charge for the year
Costs impaired
At 31 December
Net book value
At 31 December
At 1 January
1,132,178
2,125,425
478,584
3,736,187
–
9,747
–
9,747
1,132,178
2,135,172
478,584
246,363
735,160
150,655
3,745,934
1,132,178
5,559,420
7,575,525
106,792
–
5,666,212
7,575,525
7,575,525
6,452,287
The Board has assessed the Development and Production assets as at 31 December 2022 and has identified indicators of
impairment as set out in IAS36 Impairment of assets in respect of PEDL118 Dukes Wood, PEDL203 Kirklington and EXL294
Fiskerton Airfield, respectively. This impairment amounts to a total of £478,584 (2021: £150,655). The total impairment
charge for these assets was PEDL118, £33,718 (2021: £67,598), PEDL203, £28,260 (2021: £83,057) and EXL294 £416,606
(2021: £nil).
There were no indicators for impairment on any other assets.
Development and Production assets comprise amounts capitalised as follows:
Wressle
Fiskerton Airfield
Keddington
PEDL180
EXL294
PEDL005(R)
31.12.22
£
4,695,402
–
864,018
31.12.21
£
6,176,515
373,582
1,025,428
5,559,420
7,575,525
61
Financial Statementswww.unionjackoil.com
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
9
JOINT OPERATIONS
The Company is party to 11 joint arrangements which carry out exploration and development of hydrocarbons in the
United Kingdom. The joint operations in which the Company held an interest as at 31 December 2022 are as below:
Licence
Name
Proportion of
ownership interest
2022
Proportion of Principal place
of business
ownership interest
2021
PEDL180/182
PEDL183
PEDL201
PEDL005(R)
PEDL253
PEDL241
PEDL118
PEDL203
EXL294
PEDL181
PEDL209
Wressle/Broughton North
West Newton
Widmerpool Gulf
Keddington
Biscathorpe
North Kelsey
Dukes Wood
Kirklington
Fiskerton Airfield
Humber Basin
Laughton
10
INVESTMENTS
40%
16.665%
26.25%
55%
45%
50%
16.67%
16.67%
20%
12.5%
10%
Investments in equity instruments designated as at FVTOCI
Shares
40%
16.665%
26.25%
55%
45%
50%
16.67%
16.67%
20%
12.5%
10%
England
England
England
England
England
England
England
England
England
England
England
2022
£
2021
£
552,043
291,518
These investments in equity instruments are not held for trading. Instead, they are held for medium to long-term strategic
purposes. Accordingly, the directors of the Company have elected to designate these investments in equity instruments as
at FVTOCI as they believe that recognising short-term fluctuations in these investments’ fair value in profit or loss would
not be consistent with the Company’s strategy of holding these investments for long-term purposes and realising their
performance potential in the future. Measurement criteria for investments are given in note 17.
31 December
2022
£
31 December
2021
£
291,518
100,000
(9,975)
170,500
137,098
100,000
–
54,420
552,043
291,518
At 1 January
Additions
Disposals
Changes in fair value of investments
At 31 December
62
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
10
INVESTMENTS (CONTINUED)
Elephant Oil Corp
The Company is the beneficial holder of 56,650 (2021: 56,650) ordinary shares of Elephant Oil Corp, registered
in Nevada, United States of America (USA).
The principal activity of Elephant Oil Corp is the exploration and evaluation of hydrocarbon assets in West Africa.
Elephant Oil Corp has applied for admission on NASDAQ, a USA trading market during 2023.
The value of the unquoted Elephant Oil Corp shares are deemed to be US$2.25 per share and, on this basis, the Company
has valued its holding at £93,043 (2021: £93,043).
UK Oil & Gas plc
The Company was the beneficial owner of 9,731,834 (2021: 9,731,834) ordinary shares in UK Oil & Gas plc (“UKOG”), a
company registered in England and Wales, which represented a 0.06% (2021: 0.078%) interest in that company at year end.
The investment in UKOG was disposed of in October 2022, for £6,772.
Egdon Resources plc
The Company is the beneficial owner of 17,000,000 (2021: 13,000,000) ordinary shares in Egdon Resources plc (“Egdon”),
a company registered in England and Wales, which represents a 3.13% (2021: 2.52%) interest in that company at year end.
Payment for the 4,000,000 new shares acquired was by means of a subscription at a price of 2.5 pence per Subscription
Share, for total consideration of £100,000. In addition each Subscription Share was granted a right to subscribe for 0.5
of a new Ordinary Share at a price of 2.5 pence per share, exercisable at any time until the date of the second anniversary
of their issue.
The principal activity of Egdon is the production and exploration of hydrocarbons onshore UK.
The investment in Egdon was revalued at the year end to the value of £459,000 (2.7 pence per share).
The change in valuation for the above investments are reported in the Statement of Comprehensive Income on page 42.
11
LOAN RECEIVABLES
Amounts falling due within 1 year
31.12.22
£
–
–
31.12.21
£
1,028,110
1,028,110
Summary of loan arrangements:
During 2020, a loan was issued to Egdon Resources plc with an 18 month term, which was repaid in full during 2022.
During September 2022, a loan was issued to Europa Oil & Gas (Holdings) plc with an 18 month term. The loan interest
was 11% per annum, payable quarterly in arrears, and the loan was secured against an unencumbered 10% interest in
the Borrower’s UK onshore licence interest over PEDL180 and PEDL182 including the Wressle oilfield and associated
infrastructure. The loan was repaid in full in October 2022, together with £12,055 of interest, and the security cancelled.
63
Financial Statementswww.unionjackoil.com
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
12
TRADE AND OTHER RECEIVABLES - CURRENT
The average credit period on sales of goods is 30 days. No interest is charged on outstanding trade receivables. The
Company measures the loss allowance for trade receivables at an amount equal to 12 months ECL. The expected credit
losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor
and an analysis of the debtor current financial position, adjusted for factors that are specific to the debtors, general
economic conditions of the industry in which the debtors operate and an assessment of both the current as well as
the forecast direction of conditions at the reporting date.
The Company has recognised no loss allowance for the trade receivables as there has been no historical experience to
indicate that these receivables are not recoverable. All outstanding trade receivables have been received prior to the
Balance Sheet date.
The Company has other receivables of £192,215 (2021: £149,771) which are accrued royalty income. The company is
in advanced negotiation to facilitate the payment through the arrangement of a manager to administer historic and then
current and future funds. Therefore through the Company’s formal process of assessment it does not consider that it
would be appropriate or necessary to make any credit loss adjustment.
There has been no change in the estimation techniques or significant assumptions made during the current reporting period.
Trade receivables
Term deposit
Other debtors
VAT
Prepayments
31.12.22
£
649,439
1,000,000
200,915
135,471
35,088
31.12.21
£
667,329
–
149,771
80,782
167,930
2,020,913
1,065,812
The term deposit of £1,000,000 is a bank deposit, at a fixed rate of interest, for an agreed period of 12 months. It therefore
does not meet the criteria for cash and cash equivalents defined as short term bank deposits with an original maturity of
three months or less.
13
CASH AND CASH EQUIVALENTS
Cash at bank
31.12.22
£
31.12.20
£
7,155,100
5,977,541
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less.
The carrying amount of these assets is equal to their fair value.
64
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
14(a)
SHARE CAPITAL
Allotted and issued:
Number
Class
Nominal
value
31.12.22
£
31.12.21
£
112,865,896
(31 December 2021: 112,715,896)
831,680,400
(31 December 2021: 831,680,400)
Total
Ordinary
5p
5,643,295
5,635,795
Deferred
0.225p
1,871,281
1,871,281
7,514,576
7,507,076
Ordinary shares hold voting rights and are entitled to any distributions made on winding up. Deferred shares do not hold
voting rights and are not entitled to distributions made on winding up.
Allotments during the year
In July 2022, 150,000 new ordinary shares were issued for cash at 22 pence per share, raising approximately £33,000 by
way of exercised options by Raymond Godson, non-executive director.
Treasury shares
2022
2021
Number
£
Number
Ordinary shares held in treasury
by the Company
700,000
214,227
–
£
–
Own shares acquired by the Company are held in treasury. The shares were acquired during 2022. There are no plans to
cancel these shares.
14(b) SHARE-BASED PAYMENTS – WARRANTS
Details of the number of warrants and the weighted average exercise price (WAEP) outstanding during the year are as follows:
Year ended December 2022
Number of warrants
Outstanding and exercisable at the beginning of the year
Outstanding and exercisable at the end of the year
30,373
–
Year ended December 2021
Number of warrants
Outstanding and exercisable at the beginning of the year
Outstanding and exercisable at the end of the year
During the year 30,373 warrants expired (2021: nil).
30,373
30,373
WAEP
£
0.6
–
WAEP
£
0.6
0.6
65
Financial Statementswww.unionjackoil.com
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
14(c) SHARE-BASED PAYMENTS – OPTIONS
No options were granted to directors of the Company during 2022. Options are Issued with an exercise price equating
to the mid-market closing price on the date of Issue.
Options have a vesting period of 3 years and are subject to a further condition that the options can only be exercised
if the share price is at a 30% premium to the exercise price.
Details of the number of options and the weighted average exercise price (WAEP) outstanding during the year are
as follows:
Year ended December 2022
Number of options
Outstanding at the beginning of the year
Granted during 2022
Exercised during 2022
Outstanding at the end of the year
Exercisable at the end of the year
3,200,000
–
(150,000)
3,050,000
3,050,000
Year ended December 2021
Number of options
Outstanding at the beginning of the year
Granted during 2021
Outstanding at the end of the year
Exercisable at the end of the year
3,200,000
–
3,200,000
–
WAEP
£
0.374
–
0.374
0.374
0.374
WAEP
£
0.374
–
0.374
–
The fair values of options in issue are calculated using the Black-Scholes model. The inputs into the model are as follows:
Date of grant
06.08.19
19.07.19
04.12.18
07.11.18
18.07.18
Number in issue at 31 December 2022
Share price at date of grant
Exercise price
Expected volatility
Expected life (years)
Risk-free rate
Expected dividend yield
Fair value at date of grant
Earliest vesting date
Expiry date
400,000
53p
53p
70%
6.5
0.3161%
0%
£133,497
06.08.22
06.08.29
1,300,000
53p
53p
70%
6.5
0.5187%
0%
£435,086
19.07.22
19.07.29
150,000
22p
22p
63%
6.5
0.8840%
0%
£19,491
04.12.21
04.12.28
300,000
22p
22p
62%
6.5
1.1035%
0%
£58,106
07.11.21
07.11.28
900,000
18p
18p
55%
6.5
0.9427%
0%
£85,822
18.07.21
18.07.28
The Company recognised total expenses in the Income Statement of £104,515 in relation to share options accounted
for as equity-settled share-based payment transactions during the year (2021: £227,119).
Expected volatility was determined based on a historic 5-year volatility of the Company.
66
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
15
RESERVES
The nature and purpose of each reserve within equity is as follows:
Share capital – represents the nominal value of shares issued.
Share premium – represents the amount subscribed for share capital in excess of nominal value, less related
share issue costs.
Share-based payment reserve – represents the cumulative cost of warrants and options issued in return for
professional services.
Treasury reserve – own shares held in treasury by the Company.
Retained earnings/Accumulated deficit – represents cumulative profits or losses, and all other net gains and losses
and transactions with owners not recognised elsewhere.
16
RECONCILIATION OF PROFIT / (LOSS) TO CASH GENERATED FROM OPERATIONS
Profit for the year
Depletion of producing assets
Impairment of intangibles
Share-based payments
Amortisation / depreciation
Loss on disposal of shares
Finance income
Royalty income
(Increase) in inventories
(Increase) in trade and other receivables
Increase / (decrease) in trade and other payables
31.12.22
£
31.12.21
£
3,606,624
2,125,425
475,556
104,514
20,248
3,203
(86,586)
(42,444)
(853,013)
735,160
156,995
227,119
–
–
(112,611)
(149,771)
6,206,540
3,879
(19,209)
(1,708,982)
1,333,385
(8,829)
(550,868)
(90,908)
Cash generated from / (used in) operations
5,811,734
(646,726)
Income taxes paid
–
–
Net cash flows from operating activities
5,811,734
(646,726)
67
Financial Statementswww.unionjackoil.com
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
17
FINANCIAL INSTRUMENTS
Classification of measurement of financial instruments
The fair value hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used
in measuring the fair value of the financial assets and liabilities.
The fair value hierarchy has the following levels:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The level within which the financial asset or liability is classified is determined based on the lowest level of significant
input to the fair value measurement.
The Company holds investments at fair value through other comprehensive income. Investments in listed shares
are a level 1 valuation. Investments in unlisted shares are a level 3 valuation as the quoted price is not available.
The tables below set out the Company’s accounting classification of each class of its financial assets and liabilities.
Financial assets measured at fair value
At 31 December 2022
Investments: FVOCI
At 31 December 2021
Investments: FVOCI
Financial assets measured at amortised cost
At 31 December 2022
Other receivables
Trade receivables
Cash and cash equivalents
Within
1 Month
327,686
649,439
7,155,100
Level 1
459,000
Level 3
93,043
£
Total
552,043
198,475
93,043
291,518
Within
2 Months to
1 Year
Within
1 to 2 years
1,008,700
–
–
1,028,110
–
–
Total carrying value
8,132,225
1,008,700
At 31 December 2021
Loan receivables
Trade receivables
Cash and cash equivalents
Within
1 Month
–
667,329
5,977,541
Within
2 Months to
1 Year
Within
1 to 2 years
Total carrying value
6,644,870
1,028,110
All of the above financial assets’ carrying values approximate to their fair values at 31 December 2022 and
31 December 2021 given their nature and short times to maturity.
68
£
Total
1,336,386
649,439
7,155,100
9,140,925
Total
1,028,110
667,329
5,977,541
7,672,980
–
–
–
–
–
–
–
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
17
FINANCIAL INSTRUMENTS (CONTINUED)
Financial liabilities measured at amortised cost
At 31 December 2022
Trade payables
Other payables
Accruals
Total carrying value
At 31 December 2021
Trade payables
Other payables
Accruals
Total carrying value
£
223,538
409,433
145,319
778,290
242,910
2,080,000
67,693
2,390,603
All of the above financial liabilities’ carrying values approximate to their fair values at 31 December 2022 and
31 December 2021 given their nature and short times to maturity.
18
FINANCIAL INSTRUMENT RISK EXPOSURE AND MANAGEMENT
The principal financial risks to which the Company is exposed are: liquidity risk, oil price risk and credit risk. This note
describes the Company’s objectives, policies and processes for managing those risks and the methods used to measure
them.
Credit risk
The Company measures credit risk on trade receivables using a provision matrix by reference to past default experience
of the debtor and an analysis of the debtor current financial position, adjusted for factors that are specific to the debtors,
general economic conditions of the industry in which the debtors operate and an assessment of both the current as well
as the forecast direction of conditions at the reporting date. The Company has recognised no loss allowance for the trade
receivables as there has been no historical experience to indicate that these receivables are not recoverable. All outstanding
trade receivables have been received prior to the balance sheet date and the credit risk is believed to be unchanged from
previous years.
The Company has other receivables which are accrued royalty income. The company is in advanced negotiation to facilitate
the payment through the arrangement of a manager to administer historic and then current and future funds. The credit
risk is not considered to have changed since initial recognition.
Under IFRS 9 the 12 month expected credit losses have been considered on all of these receivables and these assessments
resulted in no credit losses being recognised after taking into consideration the credit risk associated with the trade and
other receivables.
The Company’s credit risk is otherwise largely attributable to its cash balances and such risk is limited because the third
party is an international bank of which the latest Standard & Poors rating is BBB.
The Company’s total credit risk amounts to the total of the sum of the receivables, cash and cash equivalents. At the year
end this amounted to £9,140,925 (2021: £8,091,826).
69
Financial Statementswww.unionjackoil.com
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
18
FINANCIAL INSTRUMENT RISK EXPOSURE AND MANAGEMENT (CONTINUED)
Liquidity risk
In managing liquidity risk, the main objective of the Company is to ensure that it has the ability to pay all of its liabilities as
they fall due. The Company monitors its levels of working capital to ensure that it can meet its debt repayments as they fall
due.
The table below shows the undiscounted cash flows on the Company’s financial liabilities as at 31 December 2022
and 31 December 2021, on the basis of their earliest possible contractual maturity.
At 31 December 2022
Trade payables
Other payables
Accruals
At 31 December 2021
Trade payables
Other payables
Accruals
Total
£
223,538
409,433
145,319
Within
2 months
£
Within Greater than
6 months
£
2-6 months
£
223,538
–
138,719
–
–
6,600
–
409,433
–
778,290
362,257
6,600
409,433
242,910
2,080,000
67,693
242,910
–
61,093
–
2,080,000
6,600
2,390,603
304,003
2,086,600
–
–
–
–
Oil price risk
The Company is exposed to oil price risk associated with sales of oil from production. The Company does not currently
consider it necessary to use hedging instruments to manage its exposure to this risk.
Capital management
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern, add shareholder
value and to maintain an optimal capital structure to reduce the cost of capital. The Company defines capital as being share
capital plus reserves as disclosed in the Balance Sheet.
The Board of Directors monitors the level of capital as compared to the Company’s commitments, and adjusts the level
of capital as is determined to be necessary, by issuing shares.
The Company is not subject to any externally imposed capital requirements.
19
FINANCIAL COMMITMENTS
The Company had no financial commitments as at 31 December 2022 or 31 December 2021, other than those recognised
in the Financial Statements and where Authority for Expenditure has been agreed with the Operator.
70
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
20
TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accruals
21
PROVISIONS
As at 1 January 2021
Adjustment to provision estimates
Accretion of provision
At 31 December 2021
Adjustment to provision estimates
Accretion of provision
At 31 December 2022
At 31 December 2021
31.12.22
£
31.12.21
£
223,538
409,433
145,319
242,910
2,080,000
67,693
778,290
2,390,603
Decommissioning
and reinstatement
provision
£
803,772
1,059,010
13,976
1,876,758
(190,500)
13,811
1,700,069
1,876,758
A provision has been made for decommissioning costs on productive fields. A provision has also been made for
reinstatement costs relating to exploration and evaluation assets where work performed to date gives rise to an obligation,
principally for site restoration. Assumptions, based on the current economic environment, have been made which the
directors believe are a reasonable basis upon which to estimate the future liability. This estimate will be reviewed regularly
to take into account any material changes to assumptions. Actual costs will depend on a number of factors, including future
market prices and any variation in the extent of decommissioning and reinstatement to be performed.
Decommissioning and reinstatement costs are currently expected to be utilised between 2024 and 2043.
Provisions created during the year, based on an independent review, relate to obligations in respect of Keddington,
Fiskerton Airfield, Dukes Wood, Kirklington, Wressle and West Newton assets. No provisions have been utilised
during the year.
71
Financial Statementswww.unionjackoil.com
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
22
CONTINGENT LIABILITIES
In respect of PEDL253 a contingent cash payment of £500,000 is due to Humber Oil & Gas Limited following receipt
of planning consents for drilling the Biscathorpe-2Z side-track, testing and subsequent production in the event of drilling
success. The Company is currently awaiting the results of a planning appeal and so do not consider this payment should be
recognised the the statement of financial position.
23
RELATED PARTY TRANSACTIONS
Details of key management personnel remuneration are disclosed in note 3. Key management comprises only the directors.
Charnia Resources (UK), an entity owned by Graham Bull, non-executive director, was paid £120,807 (2021: £120,721)
in respect of consulting fees. £12,053 was outstanding at the year end (2021: £12,031).
Jayne Bramhill, spouse of David Bramhill, received the sum of £12,000 (2021: £12,000) from the Company in respect
of IT maintenance and administration costs. No amounts were outstanding at the year end (2021: £nil).
Raymond Godson, non-executive director is also a director of Montrose Industries Limited whom hold an interest in
PEDL253 containing the Biscathorpe Prospect. Raymond Godson takes no part in any decision making in respect of
PEDL253 and is excluded from any board meetings relating to PEDL253 financial matters.
24
EVENTS AFTER THE BALANCE SHEET DATE
The following events have taken place after the year end:
During March 2023, the Board declared an interim dividend of 0.3 pence per ordinary share, with a London Stock Exchange
ex-dividend date of Thursday 6 July 2023, a record date of Friday 7 July 2023 and payment date of Friday 28 July 2023.
The share buy-back programme has continued and since 1 January 2023 to 12 May 2023 a total of 2,350,000 ordinary
shares were purchased and placed in Treasury. The number of ordinary shares held in Treasury as at 12 May 2023, is
3,050,000.
During May 2023, the Management negotiated price and terms of condition for the sale of the Company’s 2.5% interest in
the Claymore Area Royalty Agreement. The Company has subsequently disposed of this asset with full payment received.
72
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC NOTICE OF
ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting (the
“AGM”) of Union Jack Oil plc (the “Company”) will be held
in the George White Suite at The Bristol Hotel, Prince Street,
Bristol BSI 4QF on 22 June 2023 at 11.00 a.m. to consider and,
if thought fit, pass the following resolutions, of which resolutions
numbered 1 to 6 will be proposed as ordinary resolutions and
resolution numbered 7 will be proposed as a special resolution:
ORDINARY RESOLUTIONS
1 Report and accounts
To receive the audited annual accounts of the Company
for the year ended 31 December 2022, together with the
Directors’ Report and the Auditor’s Report on those annual
accounts.
2 Re-election of director retiring by rotation
To re-elect Raymond Godson as a director, who retires
by rotation in accordance with the Company’s Articles of
Association.
3 Re-appointment of auditor
To re-appoint BDO LLP as auditor of the Company to hold
office from the conclusion of this AGM until the conclusion
of the next general meeting at which accounts are laid before
the Company.
4 Auditor’s remuneration
To authorise the directors to determine the remuneration
of the auditor.
5 Directors’ authority to allot shares
That, in substitution for any equivalent authorities and
powers granted to the directors prior to the passing of
this resolution, the directors be and they are generally and
unconditionally authorised pursuant to Section 551 of the
Companies Act 2006 (the “Act”) to exercise all powers of the
Company to allot shares in the Company, and to grant rights
to subscribe for or to convert any security into shares in the
Company (“Relevant Securities”) up to an aggregate nominal
amount of £2,821,648 (representing approximately 50% of
the issued share capital of the Company at the date of this
notice) provided that, unless previously revoked, varied or
extended, this authority shall expire on the conclusion of the
next AGM of the Company, except that the Company may
at any time before such expiry make an offer or agreement
which would or might require Relevant Securities to be
allotted after such expiry and the directors may allot Relevant
Securities in pursuance of such an offer or agreement as if
this authority had not expired.
6 Directors’ authority to repurchase shares
That the Company be and is hereby unconditionally and
generally authorised for the purposes of Section 701 of the
Act to make market purchases (within the meaning of Section
693(4) of the Act) of its ordinary shares of 5 pence each
(“Ordinary Shares”) provided that:
(a)
the maximum number of Ordinary Shares authorised
to be purchased is 11,286,589;
(b) the minimum price which may be paid for any such
Ordinary Share is 5 pence;
(c) the maximum price which may be paid for an Ordinary Share
shall be the higher of:
(i) 105% of the average of the middle market quotations
for an Ordinary Share derived from the London
Stock Exchange Daily Official List for the five
business days immediately prior to the day on which
the share is contracted to be purchased, and
(ii) an amount equal to the higher of the price of:
(A) the last independent trade of an Ordinary Share;
and
(B) the highest current independent bid for an
Ordinary Share, as derived from the London
Stock Exchange Trading System; and
(d) this authority shall, unless previously renewed, revoked
or varied, expire on the earlier of the date falling 15
months after the date of the passing of this resolution
and the conclusion of the next Annual General Meeting,
but the Company may enter into a contract for the
purchase of Ordinary Shares before the expiry of this
authority which would or might be completed (wholly
or partly) after its expiry.
SPECIAL RESOLUTIONS
7 Directors’ power to issue shares for cash
That, conditional upon the passing of resolution number
5, the directors be and they are empowered pursuant
to Section 570(1) of the Act to allot equity securities (as
defined in Section 560(1) of the Act) of the Company, and/
or by way of a sale of treasury shares (in accordance with
Section 573 of the Act), wholly for cash pursuant to the
authority of the directors under Section 551 of the Act
conferred by resolution 5 above as if Section 561(1) of the
Act did not apply to such allotment provided that the power
conferred by this resolution shall be limited to the allotment
of equity securities up to an aggregate nominal value equal
to £2,821,648 (representing approximately 50% of the issued
share capital of the Company at the date of this notice)
and, unless previously revoked, varied or extended, this
power shall expire on the conclusion of the next AGM of
the Company, except that the Company may before the
expiry of this power make an offer or agreement which
would or might require equity securities to be allotted after
such expiry and the directors may allot equity securities in
pursuance of such an offer or agreement as if this power had
not expired.
By order of the Board
Matthew Small
Company Secretary
Dated: 12 May 2023
Registered Office: 6 Charlotte Street, Bath BA1 2NE
73
Annual General Meetingwww.unionjackoil.com
Resolution 7 – Directors’ power to issue shares
for cash
This resolution authorises the directors to allot equity
securities for cash other than in accordance with the
statutory pre-emption rights (which require a company to
offer all allotments for cash first to existing shareholders in
proportion to their holdings). The authorisation is limited
to a maximum nominal amount of £2,821,648, representing
approximately 50% of the nominal value of the issued
ordinary share capital of the Company as at the date of
this AGM notice. Unless revoked, varied or extended, this
authority will expire at the conclusion of the next AGM of
the Company.
The Company may hold any shares it buys back “in
treasury” and then sell them at a later date for cash
rather than simply cancelling them. Any such sales are
required to be made on a pre-emptive, pro-rata basis to
existing shareholders unless shareholders agree by special
resolution to disapply such pre-emption rights. Accordingly,
in addition to giving the directors power to allot unissued
ordinary shares on a non pre-emptive basis, resolution 7
will also give directors power to sell ordinary shares held in
treasury on a non- pre-emptive basis, subject always to the
limitations noted above.
The directors consider that the power proposed to be
granted by resolution 7 is necessary to retain flexibility,
although they do not have any intention at the present
time of exercising such power.
Notice of Annual General Meeting
EXPLANATORY NOTES RELATING TO
RESOLUTIONS
Resolution 1 - Report and accounts
All quoted companies are required by law to lay their
annual accounts before a general meeting of the Company,
together with the directors’ reports and auditors’ report
on the accounts. At the AGM, the directors will present
these documents to the shareholders for the financial year
ended 31 December 2022.
Resolutions 2 - Re-election of director
These resolutions concern the re-election of Raymond
Godson who retires at the meeting by rotation in
accordance with the Company’s articles of association.
Resolutions 3 and 4 - Auditors
Resolution 3 concerns the re-appointment of BDO LLP as
auditors until the conclusion of the next general meeting
at which accounts are laid, that is, the next Annual General
Meeting.
Resolution 4 authorises the directors to fix the auditors’
remuneration.
Resolution 5 – Directors’ authority to allot shares
This resolution grants the directors authority to allot
shares in the capital of the Company and other relevant
securities up to an aggregate nominal value of £2,821,648,
representing approximately 50% of the nominal value of
the issued ordinary share capital of the Company as at the
date of this AGM notice.
Unless revoked, varied or extended, this authority will
expire at the conclusion of the next AGM of the Company.
Resolution 6 – Authority to repurchase shares
This resolution authorises the board to make market
purchases of up to 11,286,589 ordinary shares
(representing approximately 10% of the Company’s issued
ordinary shares as at the date of this AGM notice). Shares
so purchased may be cancelled or held as treasury shares.
The authority will expire at the end of the next Annual
General Meeting of the Company or 15 months from the
passing of the resolution, whichever is the earlier.
The minimum price that can be paid for an ordinary share
is 5p being the nominal value of an ordinary share. The
maximum price that can be paid is 5% over the average
of the middle market prices for an ordinary share, derived
from the Daily Official List of the London Stock Exchange,
for the five business days immediately before the day on
which the share is contracted to be purchased.
74
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Notice of Annual General Meeting
NOTES
1 Pursuant to Regulation 41 of the Uncertificated
Securities Regulations 2001 (as amended), only those
members registered in the register of members of the
Company at 6.00 p.m. on 20 June 2023 (or if the AGM
is adjourned, 48 hours before the time fixed for the
adjourned AGM) shall be entitled to attend and vote at
the AGM in respect of the number of shares registered
in their name at that time. In each case, changes to the
register of members after such time shall be disregarded
in determining the rights of any person to attend or
vote at the AGM.
2 A member who is entitled to attend, speak and vote
at the AGM may appoint a proxy to attend, speak and
vote instead of him. A member may appoint more
than one proxy provided each proxy is appointed
to exercise rights attached to different shares (so a
member must have more than one share to be able
to appoint more than one proxy). A proxy need not
be a member of the Company but must attend the
AGM in order to represent you. A proxy must vote in
accordance with any instructions given by the member
by whom the proxy is appointed. Appointing a proxy
will not prevent a member from attending in person
and voting at the AGM (although voting in person at
the AGM will terminate the proxy appointment). A
proxy form is enclosed. The notes to the proxy form
include instructions on how to appoint the Chairman of
the AGM or another person as a proxy. You can only
appoint a proxy using the procedures set out in these
notes and in the notes to the proxy form.
3 To be valid, a Proxy Form, and the original or
duly certified copy of the power of attorney or
other authority (if any) under which it is signed or
authenticated, should reach the Company’s registrar,
Computershare Investor Services PLC of The Pavilions,
Bridgwater Road, Bristol BS99 6ZY, by no later than
11.00 a.m. on 20 June 2023. A proxy form which
may be used to make such appointment and give
proxy instructions accompanies this notice. If you
do not have a proxy form and believe that you should
have one, or if you require additional forms, please
contact Computershare Investor Services PLC on
0370 702 0000.
4 CREST members who wish to appoint a proxy
or proxies through the CREST electronic proxy
appointment service may do so for the AGM and any
adjournment by using the procedures described in the
CREST manual (euroclear.com/crest). CREST personal
members or other CREST-sponsored members
and those CREST members who have appointed a
voting service provider should refer to their CREST
sponsor or voting service provider, who will be able
to take the appropriate action on their behalf. In
order for a proxy appointment or instruction made
using the CREST service to be valid, the appropriate
CREST message (a CREST proxy instruction) must be
properly authenticated in accordance with Euroclear’s
specifications and must contain the information required
for such instructions, as described in the CREST manual.
All messages relating to the appointment of a proxy or
an instruction to a previously appointed proxy must
be transmitted so as to be received by Computershare
(ID: 3RA50) by 11.00 a.m. on 20 June 2023. It is the
responsibility of the CREST member concerned to
take such action as shall be necessary to ensure that a
message is transmitted by means of the CREST system
by any particular time. In this connection, CREST
members and, where applicable, their CREST sponsors
or voting service providers, are referred, in particular,
to those sections of the CREST manual concerning
practical limitations of the CREST system and timings.
The Company may treat a CREST proxy instruction as
invalid in the circumstances set out in Regulation 35(5)
(a) of the Uncertificated Securities Regulations 2001.
75
Annual General Meetingwww.unionjackoil.com Notice of Annual General Meeting
NOTES (CONTINUED)
5 In the case of joint holders of shares, the vote of the first
named in the register of members who tenders a vote,
whether in person or by proxy, shall be accepted to the
exclusion of the votes of other joint holders.
6 A member that is a company or other organisation not
having a physical presence cannot attend in person but can
appoint someone to represent it. This can be done in one of
two ways: either by the appointment of a proxy (described
in notes 4 and 5) or of a corporate representative. Members
considering the appointment of a corporate representative
should check their own legal position, the Company’s Articles
of Association and the relevant provision of the Companies
Act 2006.
7 Copies of the executive directors’ service contracts with the
Company and letters of appointment of the non-executive
directors are available for inspection at the registered office
of the Company during the usual business hours on any
weekday (Saturday, Sunday or public holidays excluded) from
the date of this notice until the conclusion of the AGM.
76
ANNUAL REPORT AND FINANCIAL STATEMENTS 2022UNION JACK OIL PLC Union Jack Oil plc
6 Charlotte Street,
Bath BA1 2NE,
England
Telephone: +44 (0) 1225 428139
Email: info@unionjackoil.com
Twitter: @unionjackoilplc
Web: www.unionjackoil.com