REG - ADM Energy PLC - Final Results
31/12/2024 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241231:nRSe6595Ra&default-theme=true
RNS Number : 6595R ADM Energy PLC 31 December 2024
31 December 2024
ADM Energy PLC
("ADM" or the "Company")
Final Results and Publication of Annual Report
ADM Energy PLC (AIM: ADME; BER and FSE: P4JC), a natural resource investing
company, announces its audited full year results for the 12 months ended 31
December 2023.
The Company will be publishing its Annual Report and Accounts, which will be
made available on the Company's website at www.admenergyplc.com
(http://www.admenergyplc.com) and are being sent to Shareholders.
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.
Enquiries:
ADM Energy plc +44 7495 779520
Stefan Olivier, Chief Executive Officer
www.admenergyplc.com (http://www.admenergyplc.com/)
Cairn Financial Advisers LLP +44 20 7213 0880
(Nominated Adviser)
Jo Turner, James Caithie
ODDO BHF Corporates & Markets AG +49 69 920540
(Designated Sponsor)
Michael B. Thiriot
Gracechurch Group +44 20 4582 3500
(Financial PR)
Harry Chathli, Alexis Gore, Henry Gamble
About ADM Energy PLC
ADM Energy PLC (AIM: ADME; BER and FSE: P4JC) is a natural resources investing
company with investments including a 100% interest in Vega Oil and Gas; a
30.6% economic interest in JKT Reclamation, LLC; a 46.8% economic interest in
OFX Technologies, LLC (www.ofxtechnologies.com
(http://www.ofxtechnologies.com) ); and, a 9.2% profit interest in the Aje
Field, part of OML 113, which covers an area of 835km² offshore Nigeria. Aje
has multiple oil, gas, and gas condensate reservoirs in the Turonian,
Cenomanian and Albian sandstones with five wells drilled to date.
Forward Looking Statements
Certain statements in this announcement are, or may be deemed to be,
forward-looking statements. Forward looking statements are identified by their
use of terms and phrases such as "believe", "could", "should", "envisage'',
"estimate", "intend", "may", "plan", "potentially", "expect", "will" or the
negative of those, variations or comparable expressions, including references
to assumptions. These forward-looking statements are not based on historical
facts but rather on the Directors' current expectations and assumptions
regarding the Company's future growth, results of operations, performance,
future capital and other expenditures (including the amount, nature and
sources of funding thereof), competitive advantages, business prospects and
opportunities. Such forward-looking statements reflect the Directors' current
beliefs and assumptions and are based on information currently available to
the Directors.
Non-executive Chairman's Statement
Dear Stakeholders,
2023 marked the beginning of a rebuilding of ADM from the ground up. This
rebuilding has to date focused on establishing a solid foundation from which
to grow shareholder value in the future. Steps taken in 2023 entailed
changes to the Board, the management, implementation of cost cutting measures,
the undertaking of a strategic review of the Company's legacy asset - our
12.3% cost share and 9.2% profit share in OML-113, Aje Field, offshore Lagos,
Nigeria - and a focus on identifying and securing cash generative investments
in the United States capable of generating meaningful cash in the near-term.
While the near-term focus of the Board is establishing a solid foundation for
the Company, the Board is keeping an eye on trends in world energy markets,
the world economy and implications of these for the future.
According to bp's Energy Outlook 2024, the world is "in an 'energy addition'
phase of the energy transition in which it is consuming increasing amounts of
both low carbon energy and fossil fuels" (BP Energy Outlook 2024).
The Board of ADM believes bp's observation is even more apropos given the
growth in AI and data centres and the increasing demand for energy that this
growth will require.
While many governments of the world are committed to the energy transition,
and we applaud these efforts, the Board of ADM believes that the world will
witness growing hydrocarbon demand for many years and with declining rates in
legacy oilfields worldwide believed to be greater than 5% per annum, millions
of barrels per day of new production will need to be added to meet world
demand requirements.
ADM therefore remains committed to the production of oil and gas and
businesses that support increased production. This may include development
of producing assets, midstream activities associated with gathering crude oil,
recycling and reclamation of crude oil from waste streams that would otherwise
be disposed of in landfills (and therefore contributing to oil production
levels while preserving valuable and finite landfill space) or oilfield
services and technologies that improve the efficiency of oil and gas
operations.
The Board is focusing on opportunities in the United States as it is a
jurisdiction that, due to political and economic stability and the
organization of its oil and gas industry, continues to present opportunities
that are suitable, from a capital requirement standpoint, for smaller
companies.
From a corporate governance standpoint, the first part of 2023 was highlighted
by the return of Stefan Olivier, a founder of ADM, as executive director and
Chief Executive Officer of the Company and the addition of Mr. Claudio
Coltellini as a non-executive director.
Mr. Coltellini, through investment vehicles managed by him (including OFX
Holdings, LLC - "OFXH" - a substantial shareholder of the Company), provided
significant financial support (in excess of £1 million) to the Company during
the initial phase of our rebuilding strategy and for this we are very
grateful.
I was appointed Chairman of the Board in November 2023 and am committed to
completing the rebuilding of the Company and overseeing its development into a
meaningful and successful company for benefit of all stakeholders.
Lord Henry Bellingham
Non-Executive Chairman
30 December 2024
Independent Auditor Report
To the Shareholders of ADM Energy Plc
For the year ended 31 December 2023
Opinion
We have audited the financial statements of ADM Energy PLC (the 'parent
company') and its subsidiaries (the 'Group') for the year ended 31 December
2023 which comprise the group income statement and statement of comprehensive
income, group and company statements of financial position, group and company
statements of changes in equity, group and company statements of cashflows 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.
In our opinion, the financial statements:
· give a true and fair view of the state of the Group's and of the
parent company's affairs as at 31 December 2023 and of the Group's loss 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the Financial Reporting
Council's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Material uncertainty relating to going concern
We draw attention to note 2 in the financial statements, which discloses that
the Group and Company are considered to be a going concern by management. We
note that the primary source of income generated in recent years, via its
partnership in the OML 113 license, was paused during 2022 as part of a
suspension of production at Aje. This pause was to upgrade and increase the
capacity and production capability of the asset in line with the development
plans. It is not known at this stage if or when this asset will become income
generating again.
Management have subsequently engaged in new investment opportunities, this
includes the acquisitions in the current year of oil generating assets in the
US, which as of the date of the approval of these financial statements are
beginning to generate some modest returns. However, at present the Group
remains heavily reliant on ongoing additional funding to meet its liabilities
as they fall due and this is expected to continue being the case well into
2025. Due to the inherent uncertainty involved with the timings and amounts of
obtaining such funding - added to the inherent uncertainty with respect to the
timings and amounts of income generated from investments held - these events
or conditions along with the other matters set out in note 2 indicate that a
material uncertainty exists that may cast significant doubt on the Group and
Parent company's ability to continue as a going concern.
The disclosure of material uncertainty in relation to going concern is further
demonstrated by the directors shift in focus on to cost control and cash flow
management. There have been significant cashflow constraints faced by the
group during the year and post year end. As at 31 December 2023, the cash
balance was £nil (2022: £25k), which highlights the urgent requirement for
external funding to meet day to day working capital requirements.
Our opinion is not modified in respect of this matter.
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. This conclusion is reached based on
acceptable levels of audit assurance gained from the following procedures in
which we have:
· Evaluated the design and implementation of key internal controls
over management's assessment of going concern, considering in detail the
rationale provided and whether this was consistent with our understanding as
well as audit evidence obtained;
· Considered the accuracy of forecasts produced by management by
reference to key assumptions made, as well as identifying specific elements of
the forecasts that are critical for demonstrating that the business remains a
going concern, taking into account variances that arose;
· Tested the mechanical integrity of the forecast model prepared by
management by checking the accuracy and completeness of the model, including
challenging the appropriateness of estimates and assumptions with reference to
empirical data and external evidence;
· Considered the key financial data of the group and company at
year end and assessed the financial headroom available by reference to ongoing
cash commitments over a period of at least 12 months from the date of the
approval of these financial statements;
· Considered the trends of key commodity prices in the financial
year and in the period up to the date of the approval of these financial
statements;
· Considered the funding facilities currently and potentially
available to the business as well as reviewing the associated covenants where
applicable;
· Specifically considered the willingness and ability of
shareholders to continue to provide equity and debt finance to the business
based on historic track record of support, capital raises after the balance
sheet date and the results of recent shareholder general meetings.
· Considered post year-end financial information, including
performance of US oil generating assets and board minutes and other events in
order to further assess the performance, strength as well as the ability of
the business to settle liabilities as they fall due since the balance sheet
date to the date of the approval of the financial statements.
· Reviewed the adequacy and completeness of the disclosure included
within the financial statements in respect of going concern.
Our responsibilities and the responsibility of the directors with respect to
going concern are described in the relevant sections of the report.
An overview of the scope of our audit
We tailored the scope of our audit to ensure that we performed sufficient work
to be able to give an opinion on the financial statements as a whole, taking
into account the structure of the Group and the parent company, the accounting
processes and controls, and the industry in which they operate.
Our scoping considerations for the Group audit were based both on financial
information and risk. The below table summarises for the parent company, and
its subsidiaries, in terms of the level of assurance gained:
Group component Level of assurance
ADM Energy PLC Full statutory audit
P R Oil & Gas Nigeria Limited Substantial audit procedures
ADM Asset Holdings Limited (Dormant) Limited assurance review
ADM Energy Services Limited (Dormant) Limited assurance review
ADM 113 Limited Limited assurance review
Geo Estratos MXOil, SAPI de CV (Dormant) Limited assurance review
K.O.N.H. (UK) Limited (Dormant) Limited assurance review
ADM 113 One Limited (Dormant) Limited assurance review
ADM Energy USA Inc (Dormant) Limited assurance review
Blade Oil V, LLC Substantial audit procedures
Coverage overview
Group revenue (£'000s) Group profit/(loss) before tax (£'000s) Group gross assets (£'000s) Group net assets (£'000s)
Totals at 31 December 2023: £Nil (£15,031) £6,163 (£1,924)
Full statutory audit and substantial audit procedures £Nil (£15,031) £6,163 (£1,924)
Limited audit procedures £Nil £Nil £Nil £Nil
Our application of materiality
Group financial statements Parent company financial statements
Materiality £123,300 (2022: £224,200) £37,400 (2022: £198,400)
Basis for determining materiality Capped at 2% of gross assets Capped at 2% of gross assets
Rationale for benchmark applied The group's principal activity of that of investing in the natural resources The parent company's business is highly asset focused. Therefore, a benchmark
sector. To this end the business is highly asset focused. Therefore, a for materiality of the Gross Assets of the company is considered to be
benchmark for materiality of the Gross Assets of the group is considered to be appropriate. This is inline with the group benchmark.
appropriate.
Performance materiality £86,300 (2022: £156,900) £26,180 (2022: £138,900)
Basis for determining performance materiality 70% of materiality 70% of materiality
Rationale for performance materiality applied On the basis of our risk assessments, together with our assessment of the On the basis of our risk assessments, together with our assessment of the
Group's overall control environment and going concern status, our judgement Company's overall control environment and going concern status, our judgement
was that performance materiality was 70% of our financial statement was that performance materiality was 70% of our financial statement
materiality. In assessing the appropriate level, we consider the nature, the materiality. In assessing the appropriate level, we consider the nature, the
number and impact of the audit differences identified in the previous year's number and impact of the audit differences identified in the previous year's
audit. audit.
Triviality threshold £6,200 (2022: £11,200) £1,900 (2022: £9,900)
Basis for determining triviality threshold 5% of materiality 5% of materiality
We reported all audit differences found in excess of our triviality threshold
of £6,200 to the directors and the management board.
As part of designing our audit, we determined materiality and assessed the
risks of material misstatement in the financial statements. In particular, we
looked at where the directors made subjective judgements, for example in
respect of significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain. We also addressed
the risk of management override of internal controls, including evaluating
whether there was evidence of bias by the directors that represented a risk of
material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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. Please refer to the Material
uncertainty relating to going concern paragraph of this report to understand
the key audit risk identified with respect to the Group's going concern. This
is not a complete list of all risks identified by our audit.
Valuation/impairment of intangible assets of £5.08m (2022: £17.9m) and
investment in subsidiaries of Nil (2022: £12.3m)
Significance and nature of key risk How our audit addressed the key risk
Intangible assets relate to the Group's capitalised development costs and We have closely examined the nature of items capitalised to ensure that these
proportionate interest in the production assets covered under the joint meet the definition of intangible assets under IAS 38. This included agreement
operating agreement. to sale and purchase agreements as well as other supporting evidence.
Investment in subsidiaries relate to the Group's interest in the ADM 113's We have considered the Group's investment in subsidiaries in accordance with
sole asset, which is its wholly owned subsidiary, P R Oil & Gas Nigeria the requirements of IFRS 3, including the examination of relevant supporting
Limited ("PROG"), a Nigerian registered company which holds a 9.2% revenue evidence to gain comfort over the balance recognised.
interest in the OML 113 licence, offshore Nigeria, which includes the Aje
Field ("Aje"), where oil production commenced in May 2016. During the year, We have obtained management's assessment of the impairment of intangibles and
the investment was impaired to nil. the investment in subsidiaries. In analysing this we have considered external
factors, such as the consideration received for transfer of interest in the
Due to the recognition requirements under IAS 38 there is inherent management license between other partners, to gain evidence of potential impairment in
judgement in the treatment of these as assets of the Group rather than the value of the Group's holding - which is effectively represented in the
expenses. financial statements by this intangible.
We have considered the appropriateness of the valuation model used and agree
this is reasonable given the nature of the underlying asset that these
development costs relate to.
Key observations communicated to the Audit Committee
Following our audit procedures, we concluded that material impairments were
required with respect to the development costs related to the Aje investment
capitalised in the consolidated statement of financial position of £12.6m. We
also concluded that an impairment was required to the related investment in
the in P R Oil & Gas Nigeria Limited subsidiary of £12.3m. Following
these adjustments, we have no concerns over the material accuracy of the
remaining intangible asset values recognised in the financial statements.
Valuation of liabilities in P R Oil & Gas Nigeria Limited £1.3m (2022:
£2.7m)
Significance and nature of key risk How our audit addressed the key risk
There are cost sharing obligations relating to the Group's interest in the OML We have obtained reconciliations produced by the asset's operator directly
113 License, as specified in the joint operating agreement. from this third party and confirmed the Group's stated share to underlying
signed contracts.
These liabilities have increased with the acquisition of additional interest
in the OML 113 license by the Group in recent years. The independence and competence of the operator was also assessed along with
their control environment in place for the production of accurate financial
There is a risk that the expense share reported to the group to be accrued for reports for partners in the OML 113 License.
is materiality understated.
We have confirmed that the specific audit of the operator's accounting for
project costs was concluded in the financial year and that the results of this
did not indicate increased risk of material misstatement of the Group's share
of operating liabilities.
Key observations communicated to the Audit Committee
Following our audit procedures, we concluded that an adjustment of £1.4m was
required to the OML 113 license liabilities. Following these adjustments, we
have no concerns over the material accuracy of liabilities relating to OML 113
license operations recognised in the financial statements.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report, other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements, or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
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; an
· the strategic report and the directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the Group and parent
company and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters 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 by the parent
company, or returns adequate for our audit have not been received from
branches not visited by us; or
· the parent company financial statements are not in agreement with
the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement (set out
on page 10), the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Group's and parent company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the Group or parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the group and industry, and through discussion
with the directors and other management (as required by auditing standards),
we identified that the principal risks of non-compliance with laws and
regulations related to health and safety, anti-bribery and employment law. We
considered the extent to which non-compliance might have a material effect on
the financial statements. We also considered those laws and regulations that
have a direct impact on the preparation of the financial statements such as
the Companies Act 2006. We communicated identified laws and regulations
throughout our team and remained alert to any indications of non-compliance
throughout the audit. We evaluated management's incentives and opportunities
for fraudulent manipulation of the financial statements (including the risk of
override of controls), and determined that the principal risks were related to
posting inappropriate journal entries to increase revenue or reduce
expenditure, management bias in accounting estimates and judgemental areas of
the financial statements such as the valuation of intangible assets. Audit
procedures performed by the group engagement team included:
· Detailed discussions were held with management to identify any
known or suspected instances of non- compliance with laws and regulations.
· Identifying and assessing the design effectiveness of controls
that management has in place to prevent and detect fraud.
· Challenging assumptions and judgements made by management in its
significant accounting estimates, including assessing the capabilities of
management to consider sufficient impairment criteria in making their
assessment over the value of intangible assets.
· Performing analytical procedures to identify any unusual or
unexpected relationships, including related party transactions, that may
indicate risks of material misstatement due to fraud.
· Confirmation of related parties with management, and review of
transactions throughout the period to identify any previously undisclosed
transactions with related parties outside the normal course of business.
· Reading minutes of meetings of those charged with governance and
reviewing correspondence with relevant tax and regulatory authorities.
· Review of significant and unusual transactions and evaluation of
the underlying financial rationale supporting the transactions.
· The cashbook used to create the initial financial information
with respect to ADM Energy PLC and P R Oil & Gas Nigeria Limited was
reviewed to ensure no entries in the cash book indicated fraudulent activity
by management.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance.
As part of an audit in accordance with ISAs (UK), we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
· Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Group's internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
directors.
· Conclude on the appropriateness of the directors' use of the
going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group's or the parent company's ability to
continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's report to the
related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's report. However, future
events or conditions may cause the Group or the parent company to cease to
continue as a going concern.
· Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that
achieves fair presentation.
· Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within the Group
to express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the Group audit.
We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
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.
Anne Dwyer BSc(Hons) FCA (Senior Statutory
Auditor)
For and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
London
Date: 30 December 2024
GROUP INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 December 2023
2023 2022
Note £'000 £'000
Continuing operations
Revenue 3 - 662
Other operating losses (210) (369)
Administrative expenses (1,575) (1,723)
Other gains 9 1,020 -
Impairment 10 (16,843) (576)
Operating loss 4 (17,608) (2,006)
Finance costs 5 (191) (116)
Loss on ordinary activities before taxation (17,799) (2,122)
Taxation 7 - -
Loss for the year (17,799) (2,122)
Other Comprehensive income:
Exchange translation movement (615) 1,339
Total comprehensive income for the year (18,414) (783)
Basic and diluted loss per share: 8
From continuing and total operations (5.0)p (0.8)p
The notes form part of these financial statements.
GROUP AND COMPANY STATEMENTS OF FINANCIAL POSITION
AS AT 31 December 2023 GROUP COMPANY
2023 2022 2023 2022
Notes £'000 £'000 £'000 £'000
NON-CURRENT ASSETS
Intangible assets 10 357 17,899 - -
Investment in subsidiaries 11 - - 668 12,343
Investment in associates 12 1,062 - 1,062 -
1,419 17,899 1,730 12,343
CURRENT ASSETS
Investments held for trading 13 - 28 - 28
Inventory 14 - 36 - -
Trade and other receivables 15 18 22 18 17
Cash and cash equivalents 16 - 25 - 25
18 111 18 70
CURRENT LIABILITIES
Trade and other payables 17 2,273 2,240 2,235 2,207
Convertible loans 18 427 - 427 -
2,700 2,240 2,662 2,207
NET CURRENT LIABILITIES (2,682) (2,129) (2,644) (2,137)
NON-CURRENT LIABILITIES
Other borrowings 18 638 287 638 287
Other payables 17 1,586 2,718 282 -
Decommissioning provision 19 1,621 1,557 - -
3,845 4,562 920 287
NET ASSETS (5,108) 11,208 (1,834) 9,919
EQUITY
Share capital 20 13,072 11,194 13,072 11,194
Share premium 20 38,236 38,090 38,236 38,090
Other reserves 21 1,036 962 1,036 962
Currency translation reserve 15 630 - -
Retained deficit (57,467) (39,668) (54,178) (40,327)
Equity attributable to owners of the Company and total equity (5,108) 11,208 (1,834) 9,919
The notes form part of these financial statements.
The financial statements were approved by the Board and ready for issue on 30
December 2024.
Stefan Olivier
Chief Executive Officer
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 December 2023
Share Share Exchange translation reserve Other reserves Retained deficit Total
capital premium equity
£'000 £'000 £'000 £'000 £'000 £'000
At 31 December 2021 10,267 38,014 (709) 960 (37,546) 10,986
Loss for the year - - - - (2,122) (2,122)
Exchange translation movement - - 1,339 - - 1,339
Total comprehensive income / (expense) for the year - - 1,339 - (2,122) (783)
Issue of new shares 927 134 - - - 1,061
Share issue costs - (56) - - - (56)
Issue of warrants - (2) - 2 - -
Settlement of convertible loans - - - (19) 19 -
At 31 December 2022 11,194 38,090 630 962 (39,668) 11,208
Loss for the year - - - - (17,799) (17,799)
Exchange translation movement - - (615) - - (615)
Total comprehensive income / (expense) for the year - - (615) - (17,799) (18,414)
Issue of new shares 1,878 146 - - - 2,024
Issue of options & warrants - - - 33 - 33
Issue of convertible loans - - - 41 - 41
At 31 December 2023 13,072 38,236 15 1,036 (57,467) (5,108)
The notes form part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 December 2023
Share Share Other reserves Retained deficit Total
capital premium equity
£'000 £'000 £'000 £'000 £'000
At 31 December 2021 10,267 38,014 960 (38,037) 11,204
Loss for the period and total comprehensive expense - - - (2,290) (2,290)
Issue of new shares 927 134 - - 1,061
Share issue costs - (56) - - (56)
Issue of warrants - (2) 2 - -
Settlement of convertible loans - - (19) 19 -
At 31 December 2022 11,194 38,090 962 (40,327) 9,919
Loss for the period and total comprehensive expense - - - (13,851) (13,851)
Issue of new shares 1,878 146 - - 2,024
Issue of warrants - - 33 - 33
Settlement of convertible loans - - 41 - 41
At 31 December 2023 13,072 38,236 1,036 (54,178) (1,834)
The notes form part of these financial statements.
GROUP AND COMPANY STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 December 2023
GROUP COMPANY
Note 2023 2022 2023 2022
£'000 £'000 £'000 £'000
OPERATING ACTIVITIES
Loss for the period (17,799) (2,122) (13,851) (2,290)
Adjustments for:
Warrants issued in settlement of fees 22 10 - 10 -
Finance costs and interest 5 184 116 184 116
FX on developments (intangibles) 10 420 - - -
Impairment of investment 13/10 29 576 12,370 576
Depreciation 57 - - -
Other amounts written off 54 - 54 -
Share based payments 22 18 - 18 -
Gains on settlement 9 (1,521) - (65) -
Loss on disposal of leases 9 501 - - -
Shares issued as incentives 127 - 127 -
Impairment of intangibles 10 16,843 65 - -
Decommissioning provision 19 57 138 - -
Operating cashflow before working capital changes (1,020) (1,227) (1,153) (1,598)
Decrease/(increase) in receivables 15 - 108 - 113
Decrease in inventories 14 36 - - -
Increase/(decrease) in trade and other payables 17 258 138 362 522
Net cash outflow from operating activities (726) (981) (791) (963)
INVESTMENT ACTIVITIES
Acquisition of subsidiary (8) - (8) -
Loans to subsidiary operation - - - (8)
Net cash outflow from investment activities (8) - (8) (8)
FINANCING ACTIVITIES
Issue of ordinary share capital 20 - 1,061 - 1,061
Share issue costs 20 - (56) - (56)
Proceeds from convertible loan note 18 450 - 450 -
Repayment of borrowings (20) (328) (20) (328)
Proceeds from borrowings 343 210 344 210
Net cash inflow from financing activities 773 887 774 887
Net increase/(decrease) in cash and cash equivalents from continuing and total 39 (94) (25) (84)
operations
Exchange translation difference (64) 9 - -
Cash and cash equivalents at beginning of period 25 110 25 109
Cash and cash equivalents at end of period 16 - 25 - 25
Major non cash transactions
Non-cash investing and financing activities
Shares in consideration for the investment in Blade Oil V 188,576 - 188,576 -
Shares in conversion of outstanding contractual liabilities 683,117 - 683,117 -
Shares in settlement of certain outstanding trade and other creditors 291,145 - 291,145 -
Share options to Directors and employees 17,626 - 17,626 -
Investor warrants 1,695 - 1,695 -
Incentive warrants 679 - 679 -
Warrants in consideration for loan settlement 13,212 - 13,212 -
The notes form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2023
1 general information
The Company is a public limited company incorporated in the United Kingdom and
its shares are listed on the AIM market of the London Stock Exchange. The
Company also has secondary listings on the Quotation Board Segment of the Open
Market of the Berlin Stock Exchange ("BER") and Xetra, the electronic trading
platform of the Frankfurt Stock Exchange ("FSE").
The Company is an investing company, mainly investing in natural resources and
oil and gas projects. The registered office and principal place of business of
the Company is as detailed in the Company Information section of the report
and accounts on page 3.
As permitted by section 408 of the Companies Act 2006, the profit and loss
account of the company is not presented as part of these financial statements.
The Company's total comprehensive loss for the financial year was £13.9
million (2022: £2.3 million).
2 PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies in the preparation of these financial
statements are set out below. These policies have been consistently applied
throughout all periods presented in the financial statements.
As in prior periods, the Group and Parent Company financial statements have
been prepared in accordance with International Financial Reporting Standards,
International Accounting Standards and interpretations issued by the
International Accounting Standards Board (IASB) UK-adopted International
Financial Reporting Standards (adopted IFRSs). The financial statements have
been prepared using the measurement bases specified by IFRS for each type of
asset, liability, income and expense. The measurement bases are more fully
described in the accounting policies below.
The current period covered by these financial statements is the year to 31
December 2023. The comparative figures relate to the year ended 31 December
2022. The financial statements are presented in pounds sterling (£) which
is the functional currency of the Group.
An overview of standards, amendments and interpretations to IFRSs issued but
not yet effective, and which have not been adopted early by the Group are
presented below under 'Statement of Compliance'.
GOING CONCERN
Going Concern
The Group and Company financial statements have been prepared under the going
concern assumption, which presumes that the Group and Company will be able to
meet its obligations as they fall due for the foreseeable future.
The group made a loss before tax of £17,799,000, had net current liabilities
of £2,682,000, had negative equity of £5,108,000 and had net operating cash
outflow of £726,000 for the year. In assessing whether the going concern
assumption is appropriate, the Directors take into account all available
information for the foreseeable future, in particular for the twelve months
from the date of approval of the financial statements. This information
includes growing revenue opportunities, management prepared cash flows
forecasts, the group's current cash balances, the group's existing and
projected monthly running costs and need for further fundings.
Following this assessment, the directors have reasonable expectation that the
group can secure adequate liquidity to continue for the foreseeable future
through further funding. The Directors therefore have made an informed
judgement at the time of approving the financial statements that there is a
reasonable expectation that the group 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.
Whilst the directors are confident, there is no absolute guarantee that such
funding and payment plan would be secured within the required timelines and
therefore indicates that a material uncertainty exists that may cast
significant doubt on the group's ability to continue as a going concern and,
therefore the group and company may be unable to realise their assets and
discharge their liabilities in the normal course of business. The auditors
have included material uncertainty in relation to going concern in the audit
opinion.
STATEMENT OF COMPLIANCE
The financial statements of the Group and Company have been prepared in
accordance with UK-adopted international accounting standards and with the
requirements of the Companies Act 2006.
The Group's and Company's financial statements for the year ended 31 December
2023 were approved and authorised for issue by the Board of Directors on 30
December 2024 and the Statements of Financial Position were signed on behalf
of the Board by Stefan Olivier.
Both the Parent Company financial statements and the Group financial
statements give a true and fair view and have been prepared and approved by
the Directors in accordance with UK-adopted international accounting standards
and with the requirements of the Companies Act 2006.
New standards, amendments and interpretations adopted by the Company.
The following new standards have come into effect this year however they have
no impact on the Group:
Standard Description Effective date
IAS 1 amendments Non-current Liabilities with Covenants; and Classification of Liabilities as 1 January 2024
Current or Non-current
IFRS 17 IFRS 17 will replace IFRS 4 Insurance Contracts, 1 January 2024
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors 1 January 2024
Amendments to IAS 12 Introduces an exception to the "initial recognition exemption" when the 1 January 2024
transaction gives rise to equal taxable and deductible temporary differences.
The following amendment is effective for the period beginning 1 July 2024:
Standard Description Effective date
IAS 21 (Amendments) Lack of Exchangeability 1 January 2025
There are no IFRS's or IFRIC interpretations that are not yet effective that
would be expected to have a material impact on the Company or Group.
KEY ESTIMATES AND ASSUMPTIONS
Estimates and assumptions used in preparing the financial statements are
reviewed on an ongoing basis and are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances. The results of these estimates and assumptions form the basis
of making judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Judgement also applies in determining
whether costs associated with contingent liabilities can be reliably estimated
or not and the extent to which it is appropriate to make disclosure in this
area.
USEFUL ECONOMIC LIFE OF INTANGIBLE ASSETS
The Group's intangible assets relate to oil field development expenditure
which is considered capital in nature. Intangible assets are amortised over
their useful economic life in accordance with the expected pattern of
consumption of the benefits arising from the Group's interest in OML 113
license (the Unit of Production method). The timing and pattern of production
represents an estimation made with reference to according research performed
by third parties and the Directors assessment of the timing and level of
activity over the life of developed assets.
Note 25 summaries the acquisition of Blade Oil V, LLC and the return of some
of the leases back to the seller. This resulted in Blade Oil V, LLC's
remaining lease, Altoona, being recognised as an exploration asset under
intangibles. Intangible assets such as this are with finite useful lives that
are acquired separately are carried at cost less accumulated amortisation and
accumulated impairment losses, £280,000 (2022: nil)
IMPAIRMENT OF INTANGIBLE ASSETS
Note 10 summarises the cumulative cost less amortisation of the Group's
indirect investment in the Aje Field (OML 113). During the year, the Directors
noted indicators of impairment related to this asset. They have therefore
reviewed the value of the Group's proportionate share of the Aje fixed assets
(which as a cash generating unit is represented by the intangible asset
relating to the cumulative cost of its acquisition and funding of its interest
in the Aje Field) and have determined that it is appropriate to impair the
asset by £12,619,000 (2022: nil) down to nil as oil production has ceased
here. This therefore resulted in the investment in PR Oil & Gas Nigeria
Ltd being impaired to nil as this company holds the Aje Field.
CONTINGENT CONSIDERATION
Note 26 summaries the contingent consideration of £765,000 (2022: nil)
recognised as part of the purchase price of Blade Oil V, LLC. The assessment
of contingent considerations inherently involves the exercise of significant
judgment and estimates of the outcome of future events. This judgement
involves the Directors making assessment as to whether an economic outflow
relating to a past event is considered probable, possible or remote, and the
extent to which its outcome can be reliably estimated.
CONTINGENT LIABILITIES
The assessment of contingent liabilities inherently involves the exercise of
significant judgment and estimates of the outcome of future events. This
judgement involves the Directors making assessment as to whether an economic
outflow relating to a past event is considered probable, possible or remote,
and the extent to which its outcome can be reliably estimated. In making this
judgement, the Directors make reference to correspondence with parties
relevant to the contingent liability and make their own assessment of whether
they have sufficient information from such correspondence to reliably predict
an outcome.
INVESTMENTS HELD FOR TRADING
Investments held for trading are held at fair value through profit and loss.
At both reporting dates they are considered to be Level 3 investments whereby
their valuation is determined by whole or in part using valuation techniques
based on assumptions that are not supported by observable prices in comparable
market transactions in the same instrument or similar observable data.
The Directors regularly review the valuation of such investments against both
ongoing results of the business in which it has made investments and the price
at which any further investment has taken place if such investment is
considered to give sufficient and appropriate indication of fair value. The
investment in Superdielectrics Ltd has been impaired by £28,000 (2022: nil)
to nil during the year.
DECOMMISSIONING PROVISION
Decommissioning costs will be incurred by the Group, in accordance with the
terms of the Joint Operating Agreement, at the end of the operating life of
the production facilities associated with the Group's interest in OML 113. The
Group assesses its retirement obligation at each reporting date. The ultimate
asset retirement costs are uncertain and cost estimates can vary in response
to many factors, including changes to relevant legal requirements, the
emergence of new restoration techniques or experience at other production
sites. The expected timing, extent and amount of expenditure can also change,
for example in response to changes in reserves or changes in laws and
regulations or their interpretation. Therefore, significant estimates and
assumptions are made in determining the provision for asset retirement
obligation. As a result, there could be significant adjustments to the
provisions established which would affect future financial results. The
provision at reporting date represents management's best estimate of the
present value of the future asset retirement costs required using an annual
discount rate of 10%. The provision during the year increased by £147,000,
(2022: £138,000).
SHARE BASED PAYMENTS
The Group has made awards of options and warrants over its unissued share
capital to certain Directors, employees and professional advisers as part of
their remuneration.
The fair value of options and warrants are determined by reference to the fair
value of the options and warrants granted, excluding the impact of any
non-market vesting conditions. In accordance with IFRS 2 'Share Based
Payments', the Group has recognised the fair value of options and warrants,
calculated using the Black-Scholes option pricing model. The Directors apply
this model on the basis that there are considered to be no performance
obligations included within these issued options. The share based payment
charge for the year was £33,211 (2022: £2,000). The Directors have made
assumptions particularly regarding the volatility of the share price at the
grant date in order to reach a fair value. Further information is disclosed in
Note 21.
GOING CONCERN
See note 2, Going Concern accounting policy.
ACCOUNTING POLICIES
REVENUE RECOGNITION
The Group follows IFRS 15. The standard provides a single comprehensive model
for revenue recognition in a 5 step process.
1. Identify all contract(s) with customers and ensure that these are clearly The group hold a signed agreement confirming their
documented. interest in the OML 113
license. These details the revenue and cost sharing
arrangements in place.
2. Identify separate performance obligations in a contract. Will a contract There is no performance obligation as such on ADM's
need to be 'unbundled' into two or more components? Alternatively, will two or part. The contract in
more contracts need to be 'bundled' into a single overall obligation? place gives them legal rights to their share of the
revenues in the operations
relating to the OML 113 license in the financial year as
calculated by the 3rd
party operations and management company.
3. Determine the transaction price. The transaction price is the calculated share of
revenues in the financial
period which are to be allocated to ADM. This
calculation is based on ADM's
interest in the OML 113 license in the period.
Therefore, there is no pre-set transaction price as this
is a derived return
from the performance of the underlying asset under the
OML 113 license in the
year.
4. Is revenue recognised at a single point in time, or over a period of time? Revenue theoretically accrues over the course of the
financial period based on
the performance of the asset. In practice this revenue
is recognised in the
group as a year end adjustment as the final revenue
posting is made based on
the billing statement provided by the 3rd party
operations and management
company. This billing statement covered the entire
financial year.
5. If revenue is recognised over time, how should progress towards completion As above - revenues relate to performance of the asset
be measured and recognised? in the year. However,
in terms of final accounting the revenue is recognised
at a single point in
time as part of the YE adjustments following the receipt
of the 3rd party
billing statement.
TAXATION
UK taxes
Current income tax assets and/or liabilities comprise those obligations to, or
claims from, fiscal authorities relating to the current or prior reporting
period, that are unpaid at the statement of financial position date. They are
calculated according to the tax rates and tax laws applicable to the fiscal
periods to which they relate, based on the taxable result for the year. All
changes to current tax assets or liabilities are recognised as a component of
tax expense in the income statement.
Deferred income taxes are calculated using the liability method on temporary
differences. This involves the comparison of the carrying amounts of assets
and liabilities in the consolidated financial statements with their respective
tax bases. However, deferred tax is not provided on the initial recognition
of goodwill, nor on the initial recognition of an asset or liability, unless
the related transaction is a business combination or affects tax or accounting
profit. In addition, tax losses available to be carried forward as well as
other income tax credits to the Group are assessed for recognition as deferred
tax assets.
Deferred income taxes are calculated using the liability method on temporary
differences. This involves the comparison of the carrying amounts of assets
and liabilities in the consolidated financial statements with their respective
tax bases. However, deferred tax is not provided on the initial recognition
of goodwill, nor on the initial recognition of an asset or liability, unless
the related transaction is a business combination or affects tax or accounting
profit. In addition, tax losses available to be carried forward as well as
other income tax credits to the Group are assessed for recognition as deferred
tax assets.
Deferred tax liabilities are always provided for in full. Deferred tax assets
are recognised to the extent that it is probable that they will be able to be
offset against future taxable income. Deferred tax assets and liabilities are
calculated, without discounting, at tax rates that are expected to apply to
their respective period of realisation, provided they are enacted or
substantively enacted at the statement of financial position date.
Most changes in deferred tax assets or liabilities are recognised as a
component of tax expense in the income statement. Only changes in deferred tax
assets or liabilities that relate to a change in value of assets or
liabilities that is charged directly to equity are charged or credited
directly to equity.
Nigerian taxes
The Company's subsidiary, P R Oil & Gas Nigeria Ltd operates offshore
Nigeria and is subject to the tax regulations of that country.
Current income tax assets and liabilities for current period are measured at
the amount expected to be recovered from or paid to the taxation authorities.
The tax rates and tax laws are those that are enacted or substantially enacted
at the reporting date. The Company engaged in exploration and production of
crude oil (upstream activity). Therefore, its profits are taxable under the
Petroleum Profit Tax Act.
US taxes
The Company's subsidiary, ADM Energy USA Inc operates in the USA and is
subject to the tax regulations of that country.
Current income tax assets and liabilities for current period are measured at
the amount expected to be recovered from or paid to the taxation authorities.
The tax rates and tax laws are those that are enacted or substantially enacted
at the reporting date. The Company engaged in exploration and production of
crude oil (upstream activity). Therefore, its profits are taxable under the
relevant federal tax codes of the Internal Revenue Service as well as under
the relevant state tax codes of the State of California.
INTANGIBLE ASSETS
Intangible assets relate to the Group's capitalised Exploration &
Evaluation (E&E) costs and proportionate interest in the production assets
of joint operations (development costs).
The share of development costs incurred on specific projects are capitalised
when all the following conditions are satisfied:
· completion of the asset is technically feasible so that it will
be available for use or sale
· the Group intends to complete the asset and use or sell it
· the Group has the ability to use or sell the asset
· the asset will generate probable future economic benefits
· there are adequate technical, financial and other resources to
complete the development and to use or sell the asset, and
· the expenditure attributable to the asset during its
development can be measured reliably.
Other development expenditure that does not meet these criteria is recognised
as an expense as incurred. Development costs previously recognised as an
expense are not recognised as an asset in a subsequent period. There were no
development costs recognised as an expense during the year (2022: £Nil). The
interest in the Altoona lease has been recognised as an E&E asset on
consolidation.
Intangible assets are amortised as the benefits associated with them are
consumed.
IMPAIRMENT OF INTANGIBLE ASSETS
Proven oil and gas properties and intangible assets are reviewed annually for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset's carrying amount exceeds its recoverable
amount. The carrying value is compared against the expected recoverable amount
of the asset, generally by net present value of the future net cash flows,
expected to be derived from production of commercial reserves or consideration
expected to be achieved through the sale of its interest in an arms-length
transaction, less any associated costs to sell. The cash generating unit
applied for impairment test purposes is generally the field and the Group's
interest in its underlying assets, except that a number of field interests may
be grouped together where there are common facilities.
FINANCIAL ASSETS
Financial assets are recognised in the Group's statement of financial position
when the Group becomes a party to the contractual provisions of the
instrument.
The Group's financial assets are classified into the following specific
categories: 'Investments measured at fair value through other comprehensive
income', 'investments held for trading', and 'loans and receivables'. The
classification depends on the nature and purpose of the financial assets and
is determined at the time of initial recognition.
All Trade receivables, loans, and other receivables that have fixed or
determinable payments that are not quoted in an active market are classified
as 'loans and receivables'. Loans and receivables are measured at amortised
cost using the effective interest method, less any impairment. Interest
income is recognised by applying the effective interest rate, except for
short-term receivables when the recognition of interest would be immaterial.
INVESTMENTS MEASURED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
Financial assets measured at fair value through other comprehensive income are
designated as Fixed Asset Investments and are recognised on the Balance Sheet
when the Group becomes a party to the contractual provisions of a financial
instrument and are initially measured at fair value and carried at fair value.
Fair value gains or losses are recognised and posted to Other Comprehensive
Income and held in the Financial Instruments Revaluation Reserve. Fair value
measurements and techniques are set out in the accounting policy on page 39
and referred to in Financial Assets Measured at Fair Value through Profit and
Loss. Financial Assets Revaluation Reserve is included in Other Reserves in
Equity
INVESTMENTS HELD FOR TRADING
All investments determined upon initial recognition as held at fair value
through profit or loss were designated as investments held for trading.
Investment transactions are accounted for on a trade date basis. Assets are
de-recognised at the trade date of the disposal. Assets are sold at their fair
value, which comprises the proceeds of sale less any transaction cost. The
fair value of the financial instruments in the statement of financial position
is based on the quoted bid price at the statement of financial position date,
with no deduction for any estimated future selling cost. Unquoted investments
are valued by the directors using primary valuation techniques such as recent
transactions, last price at which shares have been issued and net asset value.
Changes in the fair value of investments held at fair value through profit or
loss and gains and losses on disposal are recognised in the consolidated
statement of comprehensive income as "Net gains on investments". Investments
are initially measured at fair value plus incidental acquisition costs.
Subsequently, they are measured at fair value in accordance with IFRS 9
Financial Instruments. This is either the bid price or the last traded price,
depending on the convention of the exchange on which the investment is quoted.
INVESTEMENTS IN ASSOCIATES
The Group accounts for investments in associates in accordance with IAS 28.
An associate is an entity over which the Group has significant influence but
does not have control or joint control, typically evidenced by holding between
20% and 50% of the voting power of the investee. Investments in associates are
initially recognised at cost. Subsequently, the carrying amount is adjusted to
recognise the Group's share of the associate's post-acquisition profits or
losses, and other comprehensive income. The carrying amount of investments in
associates is tested for impairment whenever there is an indication that the
investment may be impaired. Impairment losses are recognised in the statement
of profit and loss.
INVENTORY
Inventory comprises stock of unsold oil in storage and is valued at the lower
of cost and net realisable value.
BASIS OF CONSOLIDATION
The consolidated financial statements present the results of ADM Energy plc
and its subsidiaries ("the Group") as if they formed a single entity.
Intercompany transactions and balances between Group companies are therefore
eliminated in full.
The consolidated financial statements incorporate the results of business
combinations using the purchase method. In the Statement of Financial
Position, the acquiree's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition
date. The results of acquired operations are included in the Consolidated
Income Statement
The company has the following subsidiaries which were effectively dormant in
the current and prior period and are considered to be highly immaterial to the
Group's financial statements. As such these subsidiaries have not been
included in the consolidated financial statements:
• Geo Estratos MXOil, SAPI de CV
• ADM Asset Holdings Limited
• ADM Energy Services Limited
• ADM 113 Limited BVI
• K.O.N.H. (UK) Limited
• ADM 113 One Limited
JOINT OPERATIONS (OML 113 OPERATING AGREEMENT)
The Group has a 9.2% profit share and 12.3% cost share in the OML 113
operating licence. The operating agreement for OML 113 is a joint
arrangement, with the fundamental decisions requiring unanimity between the
partners. Other decisions require a qualified majority decision. As no
corporate entity exists the agreement cannot be considered to meet the
definition of a joint venture.
In relation to its interests in the OML 113 operations, the Group recognises:
· The fair value of the Group's share of the underlying assets of
the joint operation (classified as intangible assets), measured at historical
cost less amortisation and impairment.
· Amounts owed in respect of the joint operating agreement
· Revenue from the sale of its share of the output arising from the
joint operation
· Expenses, including its share of any expenses incurred jointly
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and demand deposits, together
with other short-term, highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an insignificant risk of
changes in value.
EQUITY
An equity instrument is any contract that evidences a residual interest in the
assets of the Company after deducting all of its liabilities. Equity
instruments issued by the Company are recorded at the proceeds received net of
direct issue costs.
Equity comprises the following:
· Share capital represents the nominal value of equity shares
issued.
· The share premium account represents premiums received on the
initial issuing of the share capital. Any transaction costs associated with
the issuing of shares are deducted from share premium, net of any related
income tax benefits.
· Option reserve represents the cumulative cost of share based
payments in respect of options granted.
· Warrant reserve represents the cumulative cost of share based
payments in respect of warrants issued.
· Convertible loan note reserve represents the equity portion
of convertible loan notes issued.
· Currency translation reserve is used to recognise foreign
currency exchange differences arising on translation of functional currency to
presentation currency.
Retained earnings include all current and prior period results as disclosed in the statement of comprehensive income.
FINANCIAL LIABILITIES
Financial liabilities are recognised in the Group's statement of financial
position when the Group becomes a party to the contractual provisions of the
instrument. All interest related charges are recognised as an expense in
finance cost in the income statement using the effective interest rate
method.
The Group's financial liabilities comprise trade and other payables.
Trade payables are recognised initially at their fair value and subsequently measured at amortised cost less settlement payments.
DECOMMISSIONING LIABILITY
A decommissioning liability is recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of obligation can be made. A corresponding amount equivalent to the obligation is also recognised as part of the cost of the related production plant and equipment. The amount recognised is the estimated cost of decommissioning, discounted to its present value, using a discount rate of 10%. Changes in the estimated timing of decommissioning cost estimates are dealt with prospectively by recording an adjustment
to the provision, and a corresponding adjustment to production plant and equipment. The unwinding of the discount on the decommissioning provision will be included in the income statement.
CONTINGENT LIABILITIES
Contingent liabilities are possible obligations arising from past events whose
existence will be confirmed by uncertain future events that are not wholly
within the control of the Group. Contingent liabilities also include
obligations that are not recognised because their amount cannot be measured
reliably or because settlement is not probable.
Unless the possibility of an outflow of economic resources is remote a contingent liability is disclosed in the notes.
The following amendment is effective for the period beginning 1 July 2024:
Standard Description Effective date
IAS 21 (Amendments) Lack of Exchangeability 1 January 2025
There are no IFRS's or IFRIC interpretations that are not yet effective that
would be expected to have a material impact on the Company or Group.
KEY ESTIMATES AND ASSUMPTIONS
Estimates and assumptions used in preparing the financial statements are
reviewed on an ongoing basis and are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances. The results of these estimates and assumptions form the basis
of making judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Judgement also applies in determining
whether costs associated with contingent liabilities can be reliably estimated
or not and the extent to which it is appropriate to make disclosure in this
area.
USEFUL ECONOMIC LIFE OF INTANGIBLE ASSETS
The Group's intangible assets relate to oil field development expenditure
which is considered capital in nature. Intangible assets are amortised over
their useful economic life in accordance with the expected pattern of
consumption of the benefits arising from the Group's interest in OML 113
license (the Unit of Production method). The timing and pattern of production
represents an estimation made with reference to according research performed
by third parties and the Directors assessment of the timing and level of
activity over the life of developed assets.
Note 25 summaries the acquisition of Blade Oil V, LLC and the return of some
of the leases back to the seller. This resulted in Blade Oil V, LLC's
remaining lease, Altoona, being recognised as an exploration asset under
intangibles. Intangible assets such as this are with finite useful lives that
are acquired separately are carried at cost less accumulated amortisation and
accumulated impairment losses, £280,000 (2022: nil)
IMPAIRMENT OF INTANGIBLE ASSETS
Note 10 summarises the cumulative cost less amortisation of the Group's
indirect investment in the Aje Field (OML 113). During the year, the Directors
noted indicators of impairment related to this asset. They have therefore
reviewed the value of the Group's proportionate share of the Aje fixed assets
(which as a cash generating unit is represented by the intangible asset
relating to the cumulative cost of its acquisition and funding of its interest
in the Aje Field) and have determined that it is appropriate to impair the
asset by £12,619,000 (2022: nil) down to nil as oil production has ceased
here. This therefore resulted in the investment in PR Oil & Gas Nigeria
Ltd being impaired to nil as this company holds the Aje Field.
CONTINGENT CONSIDERATION
Note 26 summaries the contingent consideration of £765,000 (2022: nil)
recognised as part of the purchase price of Blade Oil V, LLC. The assessment
of contingent considerations inherently involves the exercise of significant
judgment and estimates of the outcome of future events. This judgement
involves the Directors making assessment as to whether an economic outflow
relating to a past event is considered probable, possible or remote, and the
extent to which its outcome can be reliably estimated.
CONTINGENT LIABILITIES
The assessment of contingent liabilities inherently involves the exercise of
significant judgment and estimates of the outcome of future events. This
judgement involves the Directors making assessment as to whether an economic
outflow relating to a past event is considered probable, possible or remote,
and the extent to which its outcome can be reliably estimated. In making this
judgement, the Directors make reference to correspondence with parties
relevant to the contingent liability and make their own assessment of whether
they have sufficient information from such correspondence to reliably predict
an outcome.
INVESTMENTS HELD FOR TRADING
Investments held for trading are held at fair value through profit and loss.
At both reporting dates they are considered to be Level 3 investments whereby
their valuation is determined by whole or in part using valuation techniques
based on assumptions that are not supported by observable prices in comparable
market transactions in the same instrument or similar observable data.
The Directors regularly review the valuation of such investments against both
ongoing results of the business in which it has made investments and the price
at which any further investment has taken place if such investment is
considered to give sufficient and appropriate indication of fair value. The
investment in Superdielectrics Ltd has been impaired by £28,000 (2022: nil)
to nil during the year.
DECOMMISSIONING PROVISION
Decommissioning costs will be incurred by the Group, in accordance with the
terms of the Joint Operating Agreement, at the end of the operating life of
the production facilities associated with the Group's interest in OML 113. The
Group assesses its retirement obligation at each reporting date. The ultimate
asset retirement costs are uncertain and cost estimates can vary in response
to many factors, including changes to relevant legal requirements, the
emergence of new restoration techniques or experience at other production
sites. The expected timing, extent and amount of expenditure can also change,
for example in response to changes in reserves or changes in laws and
regulations or their interpretation. Therefore, significant estimates and
assumptions are made in determining the provision for asset retirement
obligation. As a result, there could be significant adjustments to the
provisions established which would affect future financial results. The
provision at reporting date represents management's best estimate of the
present value of the future asset retirement costs required using an annual
discount rate of 10%. The provision during the year increased by £147,000,
(2022: £138,000).
SHARE BASED PAYMENTS
The Group has made awards of options and warrants over its unissued share
capital to certain Directors, employees and professional advisers as part of
their remuneration.
The fair value of options and warrants are determined by reference to the fair
value of the options and warrants granted, excluding the impact of any
non-market vesting conditions. In accordance with IFRS 2 'Share Based
Payments', the Group has recognised the fair value of options and warrants,
calculated using the Black-Scholes option pricing model. The Directors apply
this model on the basis that there are considered to be no performance
obligations included within these issued options. The share based payment
charge for the year was £33,211 (2022: £2,000). The Directors have made
assumptions particularly regarding the volatility of the share price at the
grant date in order to reach a fair value. Further information is disclosed in
Note 21.
GOING CONCERN
See note 2, Going Concern accounting policy.
ACCOUNTING POLICIES
REVENUE RECOGNITION
The Group follows IFRS 15. The standard provides a single comprehensive model
for revenue recognition in a 5 step process.
1. Identify all contract(s) with customers and ensure that these are clearly
documented.
The group hold a signed agreement confirming their interest in the OML 113
license. These details the revenue and cost sharing arrangements in place.
2. Identify separate performance obligations in a contract. Will a contract
need to be 'unbundled' into two or more components? Alternatively, will two or
more contracts need to be 'bundled' into a single overall obligation?
There is no performance obligation as such on ADM's part. The contract in
place gives them legal rights to their share of the revenues in the operations
relating to the OML 113 license in the financial year as calculated by the 3rd
party operations and management company.
3. Determine the transaction price.
The transaction price is the calculated share of revenues in the financial
period which are to be allocated to ADM. This calculation is based on ADM's
interest in the OML 113 license in the period.
Therefore, there is no pre-set transaction price as this is a derived return
from the performance of the underlying asset under the OML 113 license in the
year.
4. Is revenue recognised at a single point in time, or over a period of time?
Revenue theoretically accrues over the course of the financial period based on
the performance of the asset. In practice this revenue is recognised in the
group as a year end adjustment as the final revenue posting is made based on
the billing statement provided by the 3rd party operations and management
company. This billing statement covered the entire financial year.
5. If revenue is recognised over time, how should progress towards completion
be measured and recognised?
As above - revenues relate to performance of the asset in the year. However,
in terms of final accounting the revenue is recognised at a single point in
time as part of the YE adjustments following the receipt of the 3rd party
billing statement.
TAXATION
UK taxes
Current income tax assets and/or liabilities comprise those obligations to, or
claims from, fiscal authorities relating to the current or prior reporting
period, that are unpaid at the statement of financial position date. They are
calculated according to the tax rates and tax laws applicable to the fiscal
periods to which they relate, based on the taxable result for the year. All
changes to current tax assets or liabilities are recognised as a component of
tax expense in the income statement.
Deferred income taxes are calculated using the liability method on temporary
differences. This involves the comparison of the carrying amounts of assets
and liabilities in the consolidated financial statements with their respective
tax bases. However, deferred tax is not provided on the initial recognition
of goodwill, nor on the initial recognition of an asset or liability, unless
the related transaction is a business combination or affects tax or accounting
profit. In addition, tax losses available to be carried forward as well as
other income tax credits to the Group are assessed for recognition as deferred
tax assets.
Deferred income taxes are calculated using the liability method on temporary
differences. This involves the comparison of the carrying amounts of assets
and liabilities in the consolidated financial statements with their respective
tax bases. However, deferred tax is not provided on the initial recognition
of goodwill, nor on the initial recognition of an asset or liability, unless
the related transaction is a business combination or affects tax or accounting
profit. In addition, tax losses available to be carried forward as well as
other income tax credits to the Group are assessed for recognition as deferred
tax assets.
Deferred tax liabilities are always provided for in full. Deferred tax assets
are recognised to the extent that it is probable that they will be able to be
offset against future taxable income. Deferred tax assets and liabilities are
calculated, without discounting, at tax rates that are expected to apply to
their respective period of realisation, provided they are enacted or
substantively enacted at the statement of financial position date.
Most changes in deferred tax assets or liabilities are recognised as a
component of tax expense in the income statement. Only changes in deferred tax
assets or liabilities that relate to a change in value of assets or
liabilities that is charged directly to equity are charged or credited
directly to equity.
Nigerian taxes
The Company's subsidiary, P R Oil & Gas Nigeria Ltd operates offshore
Nigeria and is subject to the tax regulations of that country.
Current income tax assets and liabilities for current period are measured at
the amount expected to be recovered from or paid to the taxation authorities.
The tax rates and tax laws are those that are enacted or substantially enacted
at the reporting date. The Company engaged in exploration and production of
crude oil (upstream activity). Therefore, its profits are taxable under the
Petroleum Profit Tax Act.
US taxes
The Company's subsidiary, ADM Energy USA Inc operates in the USA and is
subject to the tax regulations of that country.
Current income tax assets and liabilities for current period are measured at
the amount expected to be recovered from or paid to the taxation authorities.
The tax rates and tax laws are those that are enacted or substantially enacted
at the reporting date. The Company engaged in exploration and production of
crude oil (upstream activity). Therefore, its profits are taxable under the
relevant federal tax codes of the Internal Revenue Service as well as under
the relevant state tax codes of the State of California.
INTANGIBLE ASSETS
Intangible assets relate to the Group's capitalised Exploration &
Evaluation (E&E) costs and proportionate interest in the production assets
of joint operations (development costs).
The share of development costs incurred on specific projects are capitalised
when all the following conditions are satisfied:
· completion of the asset is technically feasible so that it will
be available for use or sale
· the Group intends to complete the asset and use or sell it
· the Group has the ability to use or sell the asset
· the asset will generate probable future economic benefits
· there are adequate technical, financial and other resources to
complete the development and to use or sell the asset, and
· the expenditure attributable to the asset during its
development can be measured reliably.
Other development expenditure that does not meet these criteria is recognised
as an expense as incurred. Development costs previously recognised as an
expense are not recognised as an asset in a subsequent period. There were no
development costs recognised as an expense during the year (2022: £Nil). The
interest in the Altoona lease has been recognised as an E&E asset on
consolidation.
Intangible assets are amortised as the benefits associated with them are
consumed.
IMPAIRMENT OF INTANGIBLE ASSETS
Proven oil and gas properties and intangible assets are reviewed annually for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset's carrying amount exceeds its recoverable
amount. The carrying value is compared against the expected recoverable amount
of the asset, generally by net present value of the future net cash flows,
expected to be derived from production of commercial reserves or consideration
expected to be achieved through the sale of its interest in an arms-length
transaction, less any associated costs to sell. The cash generating unit
applied for impairment test purposes is generally the field and the Group's
interest in its underlying assets, except that a number of field interests may
be grouped together where there are common facilities.
FINANCIAL ASSETS
Financial assets are recognised in the Group's statement of financial position
when the Group becomes a party to the contractual provisions of the
instrument.
The Group's financial assets are classified into the following specific
categories: 'Investments measured at fair value through other comprehensive
income', 'investments held for trading', and 'loans and receivables'. The
classification depends on the nature and purpose of the financial assets and
is determined at the time of initial recognition.
All Trade receivables, loans, and other receivables that have fixed or
determinable payments that are not quoted in an active market are classified
as 'loans and receivables'. Loans and receivables are measured at amortised
cost using the effective interest method, less any impairment. Interest
income is recognised by applying the effective interest rate, except for
short-term receivables when the recognition of interest would be immaterial.
INVESTMENTS MEASURED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
Financial assets measured at fair value through other comprehensive income are
designated as Fixed Asset Investments and are recognised on the Balance Sheet
when the Group becomes a party to the contractual provisions of a financial
instrument and are initially measured at fair value and carried at fair value.
Fair value gains or losses are recognised and posted to Other Comprehensive
Income and held in the Financial Instruments Revaluation Reserve. Fair value
measurements and techniques are set out in the accounting policy on page 39
and referred to in Financial Assets Measured at Fair Value through Profit and
Loss. Financial Assets Revaluation Reserve is included in Other Reserves in
Equity
INVESTMENTS HELD FOR TRADING
All investments determined upon initial recognition as held at fair value
through profit or loss were designated as investments held for trading.
Investment transactions are accounted for on a trade date basis. Assets are
de-recognised at the trade date of the disposal. Assets are sold at their fair
value, which comprises the proceeds of sale less any transaction cost. The
fair value of the financial instruments in the statement of financial position
is based on the quoted bid price at the statement of financial position date,
with no deduction for any estimated future selling cost. Unquoted investments
are valued by the directors using primary valuation techniques such as recent
transactions, last price at which shares have been issued and net asset value.
Changes in the fair value of investments held at fair value through profit or
loss and gains and losses on disposal are recognised in the consolidated
statement of comprehensive income as "Net gains on investments". Investments
are initially measured at fair value plus incidental acquisition costs.
Subsequently, they are measured at fair value in accordance with IFRS 9
Financial Instruments. This is either the bid price or the last traded price,
depending on the convention of the exchange on which the investment is quoted.
INVESTEMENTS IN ASSOCIATES
The Group accounts for investments in associates in accordance with IAS 28.
An associate is an entity over which the Group has significant influence but
does not have control or joint control, typically evidenced by holding between
20% and 50% of the voting power of the investee. Investments in associates are
initially recognised at cost. Subsequently, the carrying amount is adjusted to
recognise the Group's share of the associate's post-acquisition profits or
losses, and other comprehensive income. The carrying amount of investments in
associates is tested for impairment whenever there is an indication that the
investment may be impaired. Impairment losses are recognised in the statement
of profit and loss.
INVENTORY
Inventory comprises stock of unsold oil in storage and is valued at the lower
of cost and net realisable value.
BASIS OF CONSOLIDATION
The consolidated financial statements present the results of ADM Energy plc
and its subsidiaries ("the Group") as if they formed a single entity.
Intercompany transactions and balances between Group companies are therefore
eliminated in full.
The consolidated financial statements incorporate the results of business
combinations using the purchase method. In the Statement of Financial
Position, the acquiree's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition
date. The results of acquired operations are included in the Consolidated
Income Statement
The company has the following subsidiaries which were effectively dormant in
the current and prior period and are considered to be highly immaterial to the
Group's financial statements. As such these subsidiaries have not been
included in the consolidated financial statements:
• Geo Estratos MXOil, SAPI de CV
• ADM Asset Holdings Limited
• ADM Energy Services Limited
• ADM 113 Limited BVI
• K.O.N.H. (UK) Limited
• ADM 113 One Limited
JOINT OPERATIONS (OML 113 OPERATING AGREEMENT)
The Group has a 9.2% profit share and 12.3% cost share in the OML 113
operating licence. The operating agreement for OML 113 is a joint
arrangement, with the fundamental decisions requiring unanimity between the
partners. Other decisions require a qualified majority decision. As no
corporate entity exists the agreement cannot be considered to meet the
definition of a joint venture.
In relation to its interests in the OML 113 operations, the Group recognises:
· The fair value of the Group's share of the underlying assets of
the joint operation (classified as intangible assets), measured at historical
cost less amortisation and impairment.
· Amounts owed in respect of the joint operating agreement
· Revenue from the sale of its share of the output arising from the
joint operation
· Expenses, including its share of any expenses incurred jointly
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and demand deposits, together
with other short-term, highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an insignificant risk of
changes in value.
EQUITY
An equity instrument is any contract that evidences a residual interest in the
assets of the Company after deducting all of its liabilities. Equity
instruments issued by the Company are recorded at the proceeds received net of
direct issue costs.
Equity comprises the following:
· Share capital represents the nominal value of equity shares
issued.
· The share premium account represents premiums received on the
initial issuing of the share capital. Any transaction costs associated with
the issuing of shares are deducted from share premium, net of any related
income tax benefits.
· Option reserve represents the cumulative cost of share based
payments in respect of options granted.
· Warrant reserve represents the cumulative cost of share based
payments in respect of warrants issued.
· Convertible loan note reserve represents the equity portion
of convertible loan notes issued.
· Currency translation reserve is used to recognise foreign
currency exchange differences arising on translation of functional currency to
presentation currency.
Retained earnings include all current and prior period results as disclosed in the statement of comprehensive income.
FINANCIAL LIABILITIES
Financial liabilities are recognised in the Group's statement of financial
position when the Group becomes a party to the contractual provisions of the
instrument. All interest related charges are recognised as an expense in
finance cost in the income statement using the effective interest rate
method.
The Group's financial liabilities comprise trade and other payables.
Trade payables are recognised initially at their fair value and subsequently measured at amortised cost less settlement payments.
DECOMMISSIONING LIABILITY
A decommissioning liability is recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of obligation can be made. A corresponding amount equivalent to the obligation is also recognised as part of the cost of the related production plant and equipment. The amount recognised is the estimated cost of decommissioning, discounted to its present value, using a discount rate of 10%. Changes in the estimated timing of decommissioning cost estimates are dealt with prospectively by recording an adjustment to the provision, and a corresponding adjustment to production plant and equipment. The unwinding of the discount on the decommissioning provision will be included in the income statement.
CONTINGENT LIABILITIES
Contingent liabilities are possible obligations arising from past events whose
existence will be confirmed by uncertain future events that are not wholly
within the control of the Group. Contingent liabilities also include
obligations that are not recognised because their amount cannot be measured
reliably or because settlement is not probable.
Unless the possibility of an outflow of economic resources is remote a contingent liability is disclosed in the notes.
SHARE BASED PAYMENTS
Where share options are awarded, or warrants issued to employees, the fair value of the options/warrants at the date of grant is charged to the statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account
by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options/warrants that eventually vest. As long as all other
vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where warrants or options are issued for services provided to the Group,
including financing, the fair value of the service is charged to the statement
of comprehensive income or against share premium where the warrants or options
were issued in exchange for services in connection with share issues. Where
the fair value of the services cannot be reliably measured, the service is
valued using Black Scholes valuation methodology taking into consideration the
market and non-market conditions described above.
Where the share options are cancelled before they vest, the remaining unvested
fair value is immediately charged to the statement of comprehensive income.
FOREIGN CURRENCIES
The Directors consider Sterling to be the currency that most faithfully
represents the economic effects of the underlying transactions, events and
conditions. The financial statements are presented in Sterling, which is the
Group's functional and presentation currency.
Foreign currency transactions are translated into Sterling using the exchange rates prevailing at the date of the transactions. Foreign currency exchange gains and losses resulting from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in the income statement. Non-monetary items that are measured at historical costs in a foreign currency are translated at the exchange rate at the
date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated into the functional currency using the exchange rates at the date when the fair value was determined.
SEGMENTAL REPORTING
A segment is a distinguishable component of the Group's activities from which
it may earn revenues and incur expenses, whose operating results are regularly
reviewed by the Group's chief operating decision maker to make decisions about
the allocation of resources and assessment of performance and about which
discrete financial information is available.
As the chief operating decision maker reviews financial information for and
makes decisions about the Group's investment activities as a whole, the
directors have identified a single operating segment, that of holding and
trading in investments in natural resources, minerals, metals, and oil and gas
projects. The Directors consider that it would not be appropriate to
disclose any geographical analysis of the Group's investments.
No segmental analysis has been provided in the financial statements as, for
the period ending 31 December 2023, the investment in OFX Technologies, Inc,
is recorded on an equity basis and no material activity occurred related to
the Blade Oil V, LLC assets prior to the unwind of this transaction.
Therefore, the Directors consider that the Group's operations were
substantially comprised of one segment, the Group's activities related to
OML-113.
3 REVENUE
The Group has a share in an oil and gas licence offshore Nigeria and all the
Group's revenue is derived from this source.
2023 2022
£'000 £'000
Revenue from share in offshore oil and gas licence in Nigeria - 662
- 662
4 OPERATING LOSS
2023 2022
£'000 £'000
Loss from continuing operations is arrived at after charging:
Directors' remuneration (see note 6) 243 492
Employee salaries and other benefits - 23
Amortisation 57 65
Decommissioning costs - Unwinding of provision 111 138
Decommissioning costs - Change in provision estimate - -
Impairment of intangible assets 16,843 -
Auditors' remuneration:
fees payable to the principal auditor for the audit of the Group's financial 47 35
statements
5 FINANCE COSTS
2023 2022
£'000 £'000
Short term loan finance costs 166 116
Bank interest and charges 7 -
Interest on convertible loan note 18 -
191 116
6 EMPLOYEE REMUNERATION
The expense recognised for employee benefits for continuing operations is
analysed below:
2023 2022
£'000 £'000
Wages and salaries (including directors and employee benefits) 253 487
Pensions 19 -
Amounts written off as due to directors (100) -
Social security costs 71 28
243 515
Directors' remuneration:
Wages and salaries (including benefits) 253 466
Pensions 19 -
Social security costs 71 26
343 492
Further details of Directors' remuneration are included in the Report on
Directors' Remuneration on page 18.
Only the directors are deemed to be key management, there are no employees and
no employee remuneration. The average number of employees (including
directors) in the Group was 6 (2022:6).
7 INCOME TAX EXPENSE
2023 2022
£'000 £'000
Current tax - ordinary activities - -
2023 2022
£'000 £'000
Loss before tax from ordinary activities (17,799) (2,122)
Loss before tax multiplied by rate of corporation tax in the UK of 23.5%
(2022: 19%)
(4,183) (403)
Effect of tax rates in foreign jurisdictions 2,184 -
Expenses not deductible for tax purposes 2,537 23
Unrelieved tax losses carried forward (538) 380
Total tax charge for the year - -
The corporation tax assessed for the year is different from that at the
standard rate of corporation tax in the United Kingdom of 23.5% (2022: 19%).
No deferred tax asset has been recognised in respect of the Group's losses as
the timing of their recoverability is uncertain.
8 EARNINGS AND NET ASSET VALUE PER SHARE
Earnings
The basic and diluted earnings per share is calculated by dividing the loss
attributable to owners of the Group by the weighted average number of ordinary
shares in issue during the year.
2023 2022
£'000 £'000
Loss attributable to owners of the Group
- Continuing operations (17,799) (2,122)
Continuing and discontinued operations (17,799) (2,122)
2023 2022
Weighted average number of shares for calculating basic and fully diluted 352,852,268 252,369,021
earnings per share
2023 2022
Pence pence
Earnings per share:
Loss per share from continuing and total operations (5.0) (0.8)
As the result for the year was a loss, the basic and diluted loss per share
are the same. The weighted average number of shares used for calculating the
diluted loss per share for 2023 and 2022 was the same as that used for
calculating the basic loss per share as the effect of exercise of the
outstanding share options was anti-dilutive.
9 OTHER OPERATING LOSSES
GROUP COMPANY
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Loss on disposal of leases in Blade Oil V,LLC (501) - - -
Gain on reduction of OML 113 JV creditor 1,456
Gain on settlement of OFX Holdings, LLC loan 65 - - -
Total 1,020 - - -
10 INTANGIBLE ASSETS
GROUP
The brought forward intangible asset relates to the Group's 9.2% revenue
interest (12.3% cost share) in the OML 113 licence, which includes the Aje
Field ("Aje") and the further costs of bringing the Aje 4 and Aje 5 wells into
production.
During the year, 32.08% share of OML 113 was purchased by a third party for a
consideration of $6,000,000. This was compared to the carrying value of the
Company's share of OML 113 of £17,899,000 and was impaired down to the
corresponding value of the Company's share of OML133, £4,803,000. A further
impairment assessment was carried out and Aje was impaired by £4,606,013.
Acquisition of Blade V
During the year, the Company purchased 100% of the membership interest of
Blade Oil V, LLC. The lease and goodwill from the acquisition has been
recognised as an exploration asset in intangibles. Further details around this
balance can be found in note 25.
Development costs
2023 2022
£'000 £'000
Cost
At 1 January 2023 23,719 21,323
Additions - -
Exploration assets addition 160 -
Foreign currency exchange translation difference (1,122) 2,396
At 31 December 2023 22,757 23,719
Amortisation
At 1 January 2023 5,820 5,174
Charge for year 57 65
Impairment 16,843 -
Foreign currency exchange translation difference (320) 581
At 31 December 2023 22,400 5,820
Net book value at 31 December 2023 357 17,899
Development costs are amortised on a useful economic basis which is aligned
with output in a given financial period compared to total proven and possible
production.
11 INVESTMENT IN SUBSIDIARIES
ADM Energy PLC (the Company) together with its below mentioned subsidiaries
are the Group.
On 10 August 2016, the Group completed the agreement for the acquisition of
Jacka Resources Nigeria Holdings Limited, now renamed ADM 113 Limited ("ADM
113"), a BVI registered company, in which Jacka Resources Limited ("JRL") held
the single issued share. ADM 113's sole asset is its wholly owned
subsidiary, P R Oil & Gas Nigeria Limited ("PROG"), a Nigerian registered
company which holds a 9.2% revenue interest in the OML 113 licence, offshore
Nigeria, which includes the Aje Field ("Aje"), where oil production commenced
in May 2016. During the year, the investment was impaired to nil.
In April 2021 the Group acquired 51% of the equity in K.O.N.H. (UK) Limited
for a nominal fee.
On 1 May 2023, the Group acquired 100% of the equity of Blade Oil V, LLC for
£668,416. Further details can be found in note 25.
2023 2022
£'000 £'000
Balance at beginning of period 12,343 12,335
Advances to PROG - 8
Acquisition of Blade V 668 -
Impairment of PROG (12,343) -
Balance at end of period 668 12,343
The Group's subsidiary companies are as follows:
Name Principal activity Country of incorporation Proportion of ownership interest and voting rights
and principal held by the Group
place of business
ADM 113 Limited Holding company British Virgin Islands 100% of ordinary shares
Maples Corporate Services (BVI) Ltd
Kingston Chambers
P.O. Box 173, Road Town, Tortola
*P R Oil & Gas Nigeria Limited Oil exploration & production Nigeria 100% of ordinary shares
1, Murtala Muhammed Drive
Ikoyi, Lagos
K.O.N.H. (UK) Limited Dormant 60 Gracechurch Street, London, 51% of ordinary shares
United Kingdom, EC3V 0HR
Geo Estratos MXOil, SAPI de CV Dormant Mexico 100% of ordinary shares
Lago Alberto 319, Piso 6 IZA Punto
Col. Granada, Del. Miguel Hidalgo
CP 11520, Ciudad de Mexico
ADM Asset Holdings Limited Dormant 60 Gracechurch Street, London, 100% of ordinary shares
United Kingdom, EC3V 0HR
ADM 113 One Limited Dormant 60 Gracechurch Street, London, 100% of ordinary shares
United Kingdom, EC3V 0HR
ADM Energy Services Limited Dormant 60 Gracechurch Street, London, 100% of ordinary shares
United Kingdom, EC3V 0HR
ADM Energy USA Inc Dormant 4001 Shady Valley Court, Arlington, Texas 76013 100% of ordinary shares
Blade Oil V, LLC Oil exploration & production 4001 Shady Valley Court, Arlington, Texas 76013 100% of ordinary shares
12 INVESTMENT IN ASSOCIATES
On 1 November 2023, the Group acquired 53% of the equity of OFX Technologies,
LLC for £1,062,148. Of this amount, £860,355 was recognised as share
consideration for 86,035,489 ordinary shares of 1p each. The shareholding
subsequently dropped to 46.8%. By virtue of its shareholding, ADM owned 46% of
the voting rights of OXFT and 51.2% of the non-voting right. Therefore, the
investment in OFX Technologies, LLC has been recognised as an associate using
the equity method of accounting.
2023 2022
£'000 £'000
Balance at beginning of period - -
Investment in OFX Technologies, LLC 1,062 -
Balance at end of period 1,062 -
The Group's associate companies are as follows:
OFX Technologies, LLC Holding company 4001 Shady Valley Court, Arlington, Texas 76013 46.8% of ordinary shares
* Efficient Oilfield Solutions, LLC Oil exploration & production 4001 Shady Valley Court, Arlington, Texas 76013 100% of ordinary shares
*Indirectly held
13 INVESTMENTS HELD FOR TRADING
The table of investments sets out the fair value measurements using the IFRS 7
fair value hierarchy. Categorisation within the hierarchy has been
determined on the basis of the lowest level of input that is significant to
the fair value measurement of the relevant asset.
The investments held by the Group are designated as at fair value through
profit or loss.
GROUP AND COMPANY
2023 2022
£'000 £'000
Fair value of investments brought forward 28 28
Impairment of investments (28) -
Fair value of investments held for trading - 28
Investments held at the year end were categorised as follows
Level 3 - 28
- 28
The table of investments sets out the fair value measurements using the IFRS 7
fair value hierarchy. Categorisation within the hierarchy has been
determined on the basis of the lowest level of input that is significant to
the fair value measurement of the relevant asset as follows:
Level 1 valued using quoted prices in active markets for identical assets.
Level 2 valued by reference to valuation techniques using observable inputs
other than quoted prices included within Level 1.
Level 3 valued by reference to valuation techniques using inputs that are
not based on observable market data.
The valuation techniques used by the company are explained in the accounting
policy note, "Financial assets held at fair value through profit and loss".
There are no Level 1 and Level 2 investments.
14 INVENTORY
GROUP COMPANY
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Inventory - 36 - -
Total inventory - 36 - -
Inventory represents the Group's share of the stock of oil lifted but unsold,
stated at the lower of cost and market value. £36,000 was recognised as an
expense during the year (2022 £Nil) as the inventory was unsaleable and
written off during the year.
15 TRADE AND OTHER RECEIVABLES
GROUP COMPANY
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Other receivables 13 18 13 13
Prepayments and accrued income 5 4 5 4
18 22 18 17
The fair value of other receivables is considered by the Directors not to be
materially different to carrying amounts. At the date of the Statement of
Financial Position in 2023 and 2022 there were no trade receivables.
16 CASH AND CASH EQUIVALENTS
GROUP COMPANY
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Cash at bank - 25 - 25
Cash and cash equivalents - 25 25
17 TRADE AND OTHER PAYABLES
GROUP COMPANY
2023 2022 2023 2022
CURRENT PAYABLES £'000 £'000 £'000 £'000
Trade payables 668 883 660 883
Tax and social security 352 414 352 414
Other payables 29 38 30 38
Short term loan finance 155 170 155 170
Accruals and deferred income 574 735 543 702
Contingent consideration 495 - 495 -
2,273 2,240 2,235 2,207
NON-CURRENT PAYABLES
Amount owed in respect of OML 113 operating agreement 1,303 2,718 - -
Long term loan finance 283 - 282 -
1,586 2,718 282 -
Total current and non current payables 3,859 4,958 2,517 2,207
It is expected that the amount owed in relation to the Group's proportionate
share of costs incurred as part of the OML 113 joint operating agreement will
be offset against net revenues of the project.
The long term loan finance from Hessia Group Limited, is accruing interest at
£200 per day. The principle loan amount was £120,000 and was originally due
to be repaid by 29 August 2022. A default payment of £10,000 has been charged
as the repayment date was missed, and an additional £60,000 has been charged
as a finance fee.
The fair value of trade and other payables is considered by the Directors not
to be materially different to carrying amounts.
18 BORROWINGS
Convertible loans ("CLNs")
On 25 May 2023, the Company issued secured convertible loan notes for up to
$1,500,000. The loan notes carry an interest rate of 15% per annum. Other key
terms of the secured convertible loan notes are as follows:
· Date of maturity of 3 years
· Repayment in cash on the maturity date
· Conversion can take place at any time at 1p per share
· 12 months after completion, the loan will convert up to 29.9% of
the Company's total shares
The net proceeds received from the issue of the CLNs have been split between
the liability element and an equity component, representing the fair value of
the embedded option to convert the liability into equity of the Group, as
follows:
GROUP AND COMPANY
2023 2022
£'000 £'000
Liability component at 1 January - 212
Nominal value of convertible Loans 450 -
Equity component (41) -
Interest charged 18 9
Repayments - (221)
Liability component at 31 December 427 -
Current portion of loans 427 -
Non-current portion of loans - -
427 -
The interest charged for the year is calculated by applying an effective
average interest rate of 15% to the liability component for the period since
the loan notes were issued.
Other borrowings (non-current)
2023 2022
£'000 £'000
Other loans 638 287
£285,000 (2022: £247,000) of other borrowings is non-interest bearing and
its repayment date was 15 May 2023. As this date has lapsed, interest is now
accruing at 2% per month. The loan agreement gives the Group the right to
convert the balance owed into shares at the ruling market rate at any time
during the remaining term of the loan at the discretion of the Group. The loan
is treated as a liability because while the value of equity to be issued on
conversion is fixed, the number of shares is variable, meaning it meets the
definition of a financial liability as set out by IFRS 9. The balance of other
borrowings, £353,000 (2022: £40,000), is a loan that carries interest at 15%
(2022: 6%) p.a and is repayable in full on 31 December 2025 (2022: 28 October
2024).
19 DECOMMISSIONING PROVISION
In accordance with the agreements and legislation, the wellheads, production
assets, pipelines and other installations may have to be dismantled and
removed from oil and natural gas fields when the production has ceased. The
exact timing of the obligations is uncertain and depends on the rate the
reserves of the field are depleted. However, based on the existing production
profile of the OML 113 licence area and the size of the reserves, it is
expected that expenditure on retirement is likely to be after more than ten
years. The current basis for the provision is a discount rate of 10%.
The following table presents a reconciliation of the beginning and ending
aggregate amounts of the obligations associated with the decommissioning of
oil and natural gas properties
2023 2022
£'000 £'000
Balance brought forward 1,557 1,264
Arising during the year 147 138
Foreign currency exchange translation difference (83) 155
As at 31 December 1,621 1,557
20 CALLED UP SHARE CAPITAL
Number of Value Number of Value Total Share Premium
Ordinary £'000 deferred shares £'000 value £'000
shares £'000
Issued and fully paid
At 1 January 2022 (ordinary shares of 1p) 204,480,863 2,045 8,222,439,370 8,222 10,267 38,014
Shares issued 92,666,667 927 - - 927 134
Issue of warrants - - - - - (2)
Share issue costs - - - - - (56)
At 31 December 2022 297,147,530 2,972 8,222,439,370 8,222 11,194 38,090
Shares issued (see notes below) 187,791,081 1,878 - - 1,878 146
At 31 December 2023 484,938,611 4,850 8,222,439,370 8,222 13,072 38,236
The deferred shares have restricted rights such that they have no economic
value.
Share issues in the year ended 31 December 2023
On 25 May 2023, 15,714,667 ordinary shares of 1p each were issued at 1.2p as
consideration for the investment in Blade Oil V, LLC, for a total of
£188,576.
On 25 May 2023, 56,926,417 ordinary shares of 1p each were issued at 1.2p in
exchange for the conversion of outstanding contractual liabilities, for a
total conversion of £683,117 debt to equity.
On 14 November 2023, 29,114,508 ordinary shares of 1p each were issued as
settlement of certain outstanding trade and other creditors, for a total of
£291,145.
On 29 November 2023, 86,035,489 ordinary shares of 1p each were issued as
consideration for the investment in OFX Technologies, LLC, for a total of
£860,355.
Share issues in the year ended 31 December 2022
On 21 January 2022, 51,000,000 ordinary shares of 1p each were issued at 1.11p
each as a result of a placing, raising £561,000 before expenses.
On 28 October 2022, 41,666,667 ordinary shares of 1p each were issued at 1.2p
each as a result of a placing, raising £500,000 before expenses.
21 OTHER RESERVES
Reserve for options/ warrants issued Convertible loan note reserve Other reserves
£'000 £'000 £'000
Balance at 1 January 2022 941 19 960
Warrants issued in settlement of fees 2 - 2
Balance at 31 December 2022 943 19 962
Issue of options 18 - 18
Issue of warrants 15 - 15
Convertible loan note equity reserve - 41 41
Balance at 31 December 2023 976 60 1,036
22 SHARE OPTIONS & WARRANTS
Options issued during the year ended 31 December 2023
On 25 May 2023, the Company issued 44,374,630 share options to Directors and
employees. The options are exercisable at 1.2p per share for a period of 5
years from the date of issue.
Warrants issued during the year ended 31 December 2023
On 1 November 2023, the Company issued 39,959,017 investor warrants and
16,000,000 incentive warrants. The warrants are exercisable at 1p per share
for a period of 3 years from the date of issue.
On 9 November 2023, the Company issued 34,410,000 warrants in respect of the
debt restructure. The warrants are exercisable at 1.5p per share for a period
of 3 years from the date of issue.
Warrants issued during the year ended 31 December 2022
In the following paragraphs the number of warrants issued prior to 31 December
2022 have been adjusted to reflect the 1 for 100 share consolidation.
On 26 January 2022, the Company issued 15,300,000 share warrants to
subscribers in respect of a private placing. The warrants are exercisable at
4.5p per share for a period of 2 years from the date of issue
The fair value of the share options and warrants at the date of issue was
calculated by reference to the Black-Scholes model. The significant inputs to
the model in respect of the warrants issued in the year were as follows:
Issue date 1 November 2023 9 November 2023 26 January 2022
25 May 2023
Issue date share price 0.68p 0.5p 0.5p 1.11p
Exercise price per share 1.2p 1p 1.5p 4.5p
No. of options/ warrants 44,374,630 55,959,017 34,410,000 15,300,000
Risk free rate 2% 2% 2% 1%
Expected volatility 50% 50% 50% 50%
Expected life of option/warrant 5 years 3 years 3 years 2 years
Calculated fair value per share 0.1968p 0.076p 0.038p 0.0144p
The share warrants outstanding at 31 December 2023 and their weighted average
exercise price are as follows:
2023 2022
Weighted average exercise price Weighted average exercise price
Number (pence) Number (pence)
Outstanding at 1 January 38,076,372 4.89 31,581,012 5.15
Issued 97,369,017 0.72 15,300,000 4.50
Lapsed or cancelled (7,000,000) - (8,804,640) -
Outstanding at 31 December 128,445,389 2.99 38,076,372 4.89
The fair value of the share warrants recognised as part of the premium paid in
respect of the share subscriptions in the year was £15,586. This amount was
credited to the share warrant reserve and of this £10,175 (2022: nil) was
recognised in the profit and loss account as these warrants were issued in
exchange for credit facility fees. In 2022, £2,000 was recognised in the
financial statements as the fair value of warrants issued.
23 RISK MANAGEMENT OBJECTIVES AND POLICIES
CAPITAL RISK MANAGEMENT
The Group's objectives when managing capital are:
· to safeguard the Group's ability to continue as a going concern, so
that it continues to provide returns and benefits for shareholders;
· to support the Group's growth; and
· to provide capital for the purpose of strengthening the Group's risk
management capability.
The Group actively and regularly reviews and manages its capital structure to
ensure an optimal capital structure and equity holder returns, taking into
consideration the future capital requirements of the Group and capital
efficiency, prevailing and projected profitability, projected operating cash
flows, projected capital expenditures and projected strategic investment
opportunities. Management regards total equity as capital and reserves, for
capital management purposes.
The Group is exposed to a variety of financial risks which result from both
its operating and investing activities. The Group's risk management is
coordinated by the board of directors, and focuses on actively securing the
Group's short to medium term cash flows by minimising the exposure to
financial markets.
Management review the Group's exposure to currency risk, interest rate risk,
liquidity risk on a regular basis and consider that through this review they
manage the exposure of the Group on a near term needs basis
There is no material difference between the book value and fair value of the
Group's cash.
MARKET PRICE RISK
The Group's exposure to market price risk mainly arises from potential
movements in the fair value of its investments. The Group manages this price
risk within its long-term investment strategy to manage a diversified exposure
to the market. If each of the Group's equity investments were to experience
a rise or fall of 10% in their fair value, this would result in the Group's
net asset value and statement of comprehensive income increasing or decreasing
by £185,000 (2022: £60,000).
INTEREST RATE RISK
The Group and Company manage the interest rate risk associated with the
Group's cash assets by ensuring that interest rates are as favourable as
possible, whilst managing the access the Group requires to the funds for
working capital purposes.
The Group's cash and cash equivalents are subject to interest rate exposure
due to changes in interest rates. Short-term receivables and payables are not
exposed to interest rate risk.
CREDIT RISK
The Group's financial instruments, which are exposed to credit risk, are
considered to be mainly loans and receivables, and cash and cash
equivalents. The credit risk for cash and cash equivalents is not considered
material since the counterparties are reputable banks. The maximum exposure
to credit risk for loans and receivables is as set out in the table below, and
relates to the financing of the Group's joint venture interests.
The Group's exposure to credit risk is limited to the carrying amount of the
financial assets recognised at the balance sheet date, as summarised below:
2023 2022
£'000 £'000
Cash and cash equivalents - 25
Loans and receivables 13 18
13 43
LIQUIDITY RISK
Liquidity risk is managed by means of ensuring sufficient cash and cash
equivalents are held to meet the Group's payment obligations arising from
administrative expenses. The cash and cash equivalents are invested such
that the maximum available interest rate is achieved with minimal risk.
Liquidity risk is managed by means of ensuring sufficient cash and cash
equivalents are held to meet the Group's payment obligations arising from
administrative expenses. The cash and cash equivalents are invested such that
the maximum available interest rate is achieved with minimal risk. In the
current financial year and subsequent to the year end the Group has been
carefully managing limited cash flows to ensure that working capital
commitments can be met. Crucial to this is additional funding secured to
ensure the continued going concern of the Group. Further details of this are
included in the going concern accounting policy on page 35.
24 FINANCIAL INSTRUMENTS
The Group uses financial instruments, other than derivatives, comprising cash
to provide funding for the Group's operations.
CATEGORIES OF FINANCIAL INSTRUMENTS
The IFRS 9 categories of financial asset included in the statement of
financial position and the headings in which they are included are as follows:
2023 2022
£'000 £'000
FINANCIAL ASSETS:
Cash and cash equivalents - 25
Investments held for trading (see fair value measurements below) - 28
FINANCIAL ASSETS BY IFRS 7 FAIR VALUE HIERARCHY
Level 3 - Investments held for trading - 28
- 28
FAIR VALUE MEASUREMENTS
The Group holds quoted investments that are measured at fair value at the end
of each reporting period using the IFRS 7 fair value hierarchy as set out
below.
Level 1 - valued using quoted prices in active markets for identical assets.
Level 2 - valued by reference to valuation techniques using observable inputs
other than quoted prices included within Level 1.
Level 3 - valued by reference to valuation techniques using inputs that are
not based on observable market data.
The valuation techniques used by the Group are explained in the accounting
policy note, "Investments held for trading".
FINANCIAL LIABILITIES AT AMORTISED COST:
The IFRS 9 categories of financial liabilities included in the statement of
financial position and the headings in which they are included are as follows:
2023 2022
£'000 £'000
Trade and other payables 3,542 4,193
Borrowings 793 457
The following table details the Group's remaining contractual maturity for its
non-derivative financial liabilities with agreed repayment periods. The
table has been drawn up based on the undiscounted cash flows of financial
liabilities based on the earliest repayment date on which the Group can be
required to pay. The table includes both interest and principal cash
flows. To the extent that interest flows are floating rate, the undiscounted
amount is derived from the interest rate curves at the balance sheet date.
The contractual maturity is based on the earliest date on which the Group may
be required to pay.
Less than 1-3 3 months 1-5 Over 5
1 month months to 1 year years years
£'000 £'000 £'000 £'000 £'000
2023
Interest bearing:
Borrowings - - 155 638 -
Non-interest bearing:
Trade and other payables - 1,664 - 1,303 -
2022
Interest bearing:
Borrowings - - 170 287 -
Non-interest bearing:
Trade and other payables - 1,475 - 2,718 -
As at 31 December 2023 the Group had net debt (defined as cash less
borrowings) of £795,000 (2022: net debt of £432,000). The movement arose
from cash flows.
25 Contingent LIABILITIES
OML 113 joint agreement
The Group recognises a liability in respect of its participation in the OML
113 Joint Operating Agreement. The liability disclosed in these accounts is
based on a reconciliation of the amounts owed under the operating
agreement entered into by the Group and other participators in the OML 113
operation. The reconciliation is based on returns and reconciliations provided
by the project's operator, which references the Group's share of revenue
received and costs incurred.
Liabilities subject to dispute
The Group and company's statement of financial position includes some
liabilities subject to dispute with the counterparty. The Directors have taken
the decision to accrue the maximum plausible exposure in each case in order to
ensure the financial statements are not prepared on a materially misleading
basis. Due to commercial and legal sensitivities no further specific details
with respect to these disputes can be included here.
Other contingent liabilities
Due to financial solvency circumstances relating to a former director a claim
of up to £150,000 could potentially be made against the company in the
future. As the outcome of this situation is considered to be highly uncertain
the directors have made no provision in the financial statements at this time.
26 ACQUISITION
Blade Oil V, LLC
On 25 May 2023, the Company purchased 100% of the membership interest of Blade
Oil V, LLC from OFX Holdings, LLC. Blade Oil V,LLC has five on-shore US oil
leases.
The total consideration payable was £999,208. This comprised of US$235,720
(£188,576) financed via the issuance of 15,714,667 new ordinary shares at a
price of 1.2p per share, US$235,720 (£190,557) loan note issued by ADM Energy
USA, the issue of warrants over 7 million ordinary shares in the Company and
contingent deferred consideration of £618,432.
The contingent deferred consideration will be payable on the first 180,000
barrels of oil produced. The production payment will be US$5.00 per barrel if
the realised price is greater than US$70.00 per barrel and US$3.50 if the
realised price is greater than US$50.00 per barrel and less than US$70.00 per
barrel. There will be no payment in periods when the realised oil price is
less than US$50.00 per barrel. It was determined that there was a 50%
probability of achieving either benchmark. This resulted in the contingent
deferred consideration being valued at £618,432.
On 9 November, 2023, the Company returned all of the leases with the exception
of the Altoona lease to OFX Holdings, LLC. The total consideration was reduced
by the cancellation of US$250,000 of debt obligations owed to OFX Holdings,
LLC., the reduction of the contingent deferred consideration of US$150,000 and
the 7 million warrants were terminated. After returning the leases, the
investment in Blade Oil V, LLC reduced by £836,047.
The following table summarises the consideration paid for Blade Oil V,LLC and
the fair values of the assets and equity assumed at the acquisition date and
then after the remaining leases were returned:
£
Total proceeds from share issue 188,576
Total proceeds from loan facility 190,557
Total proceeds from warrants issue 1,643
Total proceeds from contingent liability 618,432
Less proceeds from warrants terminated (1,643)
Less reduction on loan facility (156,326)
Less reduction in total consideration due (49,366)
Less reduction in contingent liability (123,416)
Total consideration payable 668,457
Recognised assets and liabilities acquired:
Intangible assets - Exploration asset 41,900
Altoona lease 121,261
Other leases 505,296
Total identifiable net assets 668,457
Goodwill -
In accordance with IFRS 3, the Group conducted a Purchase Price Allocation
(PPA) analysis to split out separately identifiable assets from acquired
goodwill. Upon completing this analysis, the Group acknowledged a £161,926
decrease to goodwill and a corresponding uplift in exploration assets.
In accordance with IFRS 3, the Group conducted a Purchase Price Allocation
(PPA) analysis to split out separately identifiable assets from acquired
goodwill. Upon completing this analysis, the Group acknowledged a £161,926
decrease to goodwill and a corresponding uplift in exploration assets.
27 RELATED PARTY TRANSACTIONS
The remuneration of the Directors, who are key management personnel of the
Group, is set out in the report on Directors' Remuneration.
OFX Holdings, LLC
OFX Holdings, LLC is a substantial shareholder of the Company. Stefan Olivier
and Claudio Coltellini are nominee directors for OFX Holdings, LLC.
On 25 May 2023, the Company purchased Blade Oil V, LLC from OFX Holdings, LLC.
The details of this transaction are in note 25. On the same date, the Company
entered into a 'USA loan facility' agreement with OFX Holdings, LLC, for
$235,720 (£190,557) at 9% interest per annum. A secured convertible loan note
was issued to OFX Holdings, LLC for a total of $250,000 (£209,410). On 9
November 2023, OFX Holdings, LLC discounted and converted $275,000 (£226,000)
of the outstanding loan with the company to 15,820,000 ordinary shares for a
total of £158,200 and 7,910,000 3 year warrants, resulting in a gain to the
company of £65,024 (note 9). A further 26,500,000 warrants of 1.5p each with
an expiry date of 3 years were issued to OFX Holdings, LLC. On 14 November
2023, the remaining loan amounts of £352,990 outstanding with OFX Holdings,
LLC was consolidated onto one loan agreement with a 15% interest rate per
annum and a maturity date of 31 December 2025.
On 29 November 2023, the company acquired 53.1% of the economic interest in
OFX Technologies, LLC from OFX Holdings, LLC for a total consideration of
£801,553, made up 79,918,033 shares are 1p each, 39,959,017 restricted
warrants at 1p each with a 3 year term, and a further 16 million incentive
warrants at the same price and terms.
Directors
On 25 May 2023, the Company issued a secured convertible loan note to Oliver
Andrews, who was a director of the Company during the year, for a total of
$100,000 (£78,905). On the same date, £100,000 of ordinary shares were
issued to Oliver Andrews in exchange for his services to the Company during
the year.
On 25 May 2023, ordinary shares of 1p each were issued to Stefan Olivier and
Richard Carter as an incentive, for £50,000 to each of them.
28 ULTIMATE CONTROLLING PARTY
· The Directors do not consider there to be a single ultimate
controlling party.
29 POST PERIOD END EVENTS
Post period events are detailed in the Directors' Report
On 1 January 2024, the Company acquired 100% of SW Oklahoma Reclamation, LLC
from Bargo Capital, LLC and OFX Holdings, LLC. As a result of the investment,
the Company will have a 30.6% interest in JKT Reclamation LLC. The total
consideration was US$827,500 comprising; 43,200,000 ordinary shares of 1p each
for US$540,000, a cash investment of US$287,500 and the grant of 14,640,000
3-year, 1.0p warrants.
In April 2024, Concepta Consulting AG entered into an investment agreement
with the Company. It will invest US$380,000 by way of a loan conversion and
subscription for 30,400,000 new ordinary shares of the Company at 1p per
share. The investment comprises loan conversions of US$180,000 and a further
cash subscription for US$200,000. A further 6,050,000 new ordinary shares at
1p per share were also issued. In aggregate £220,500 was raised. Concepta
Consulting AG now holds 5.4% of the enlarged share capital of the Company.
The remaining contingent payment of up to US$615,000 associated with the Blade
Oil V, LLC assets debt reduction was terminated by OFX Holdings, LLC.
On 1 June 2024, the Company acquired 100% of the equity interest of Vega Oil
and Gas, LLC for a consideration of US$150,000 capital commitment by ADM USA,
a US$100,000 borrowing facility and the issuance of 20 million, 5-year
warrants in the Company with an exercise price of 1.0 pence.
ADM USA has entered into a financing agreement with OFX Holdings, LLC, who
will provide up to US$600,000 financing, with an interest rate of 12.0% per
annum.
£532,752 total debt with OFX Holdings, LLC; Ventura Energy Advisors, LLC;
and, Catalyse Capital, Ltd was converted into 53,275,200 ordinary shares in
the Company at a price of 1.0p per share. A further £100,000 due to Catalyse
Capital, Ltd has been settled by the issue of an additional 10,000,000 shares
at a price of 1.0p per share.
On 1 July 2024, the Company was temporarily suspended from trading on AIM. The
suspension will be lifted once these audited accounts are published.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR DZMFZRGMGDZMRecent news on Adm Energy
See all newsREG - AIM - AIM Notice - 02/05/2025
AnnouncementREG - ADM Energy PLC - Debt Settlement and Issue of Equity
AnnouncementRCS - ADM Energy PLC - Publication of Media Interview
AnnouncementREG - ADM Energy PLC - Altoona Lease Farm-Out
AnnouncementREG - ADM Energy PLC - OFXT Operations Update
Announcement