REG - Angus Energy PLC - Annual Report and Accounts and Notice of AGM
06/03/2025 07:15
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RNS Number : 5471Z Angus Energy PLC 06 March 2025
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06 March 2025
Angus Energy PLC
("Angus Energy", the "Company" or together with its subsidiaries, the "Group")
(AIM:ANGS)
Annual Report and Accounts and Notice of Annual General Meeting
Angus Energy is pleased to announce its audited annual accounts for the year
ended 30 September 2024 (the "Accounts"), extracts of which are set out below.
In addition, the Company's 2025 annual general meeting ("AGM") will be held on
31 March 2025 at
11.00 a.m. at the offices of Fieldfisher, 9th Floor, Riverbank House, 2 Swan
Lane, London EC4R 3TT, United Kingdom. The full copy of the Accounts along
with the AGM Notice were posted to all shareholders today and are also
available on the Company's website, http://www.angusenergy.co.uk/
(http://www.angusenergy.co.uk/)
END
For further information please visit www.angusenergy.co.uk
(http://www.angusenergy.co.uk)
Angus Energy Plc
Richard Herbert
Chief Executive
Director
Via Flagstaff
SP Angel Corporate Finance LLP (Nomad and Broker) www.spangel.co.uk
(http://www.spangel.co.uk/)
Stuart Gledhill / Jen Clarke / Richard Hail Tel: +44 (0)20 3470 0470
Flagstaff
PR/IR
angus@flagstaffcomms.com (mailto:angus@flagstaffcomms.com)
Tim Thompson / Fergus Mellon / Alison Alfrey Tel: +44 (0) 207 129 1474
About Angus Energy plc
Angus Energy plc is a UK AIM quoted independent oil and gas company. Angus is
the leading onshore gas producer in the UK and has ambitious plans to grow
onshore production and diversify internationally. Angus Energy has a 100%
interest in the Saltfleetby Gas Field (PEDL005), majority owns and operates
conventional oil production fields at Brockham (PL 235) and Lidsey (PL 241)
and has a 25% interest in the Balcombe Licence (PEDL244). Angus Energy
operates all fields in which it has an interest.
Chairman's statement
Dear Fellow Shareholders,
It is my pleasure to present you with the Annual Report of Angus Energy plc
(the "Company" or "Angus Energy") with its subsidiary undertakings (the
"Group") for the year ended 30 September 2024.
During the year, we focused on maximizing revenue, refinancing of the
Company's debt, improving operational efficiency, and maintaining a
disciplined approach to capital allocation. There has also been a strong focus
on organic and inorganic growth opportunities. Our dedication to sustainable
practices, combined with a strong commitment to shareholder returns, positions
us well for future success.
Angus has delivered strong revenue of £21.802 million and EBITDA of £10.803
million. Historic hedges, set at less than 50% of current spot gas prices
which stop in June 2025, will lead to a substantial improvement in cashflow
and overall profits going forwards.
In February 2024, we successfully closed a £20m senior secured loan facility
provided by Trafigura PTE Ltd. This allowed the company to exit its previous
expensive debt and provided funds to pay legacy creditors and invest in a
booster compressor to increase gas production from Saltfleetby Field in
Lincolnshire and to restart oil production from the Brockham Oil Field in
Southern England.
Operationally, we have maintained steady gas production at Saltfleetby and
work on the installation of the booster compressor is progressing with
commissioning expected in late first quarter of 2025. The new compressor is
planned to boost production and prolong the life of the field.
In line with this strategy, we have completed the geological remapping of the
Saltfleetby Gas Field, enabling us to produce an updated dynamic reservoir
model calibrated with production history data. With this data we are able to
select the best targets for infill drilling opportunities to accelerate
production. Geologically the Saltfleetby Gas Field also has gas storage
potential and has been identified as the best hydrogen storage reservoir
candidate onshore in the UK and 3rd best, including offshore fields. Energy
security is high on the Government's agenda, and we will continue to work with
all stakeholders to assess the viability of storage opportunities covering
hydrogen (production and storage) and carbon capture schemes.
To complement Angus's organic growth, we have created a strong team to look at
inorganic opportunities and are in the process of identifying targets, mergers
and development candidates. This will be a strong theme for 2025.
Financial and Statutory Information
Revenue from oil and gas production during the year were £21.802m (2023:
£28.208m) on production of gross 44 mbbls of condensate oil, 2.6 kbbls of
crude oil and 26.5 million therms of natural gas (2023: 32 kbbls of condensate
oil, NIL crude oil and 25 million therms of natural gas). This was the result
of production from the Saltfleetby Gas Field and Brockham Oil Field.
The Group recorded a loss of £4.301m, which included an impairment of
£4.770m for the Brockam Oil Field due to lower than expected production
rates. EBITDA (Revenue less Expenses - excluding tax, interest, depletion,
impairment and derivative charge) for the period was £10.803m (2023:
£17.022m). The group recorded a derivative profit of £10.822m in relation to
the fair value movement of the derivative instrument which is based on future
production and calculated using forward gas prices as at 30 September 2024.
The derivative will be realised to a profit or loss when the payments under
the derivative instruments become due (see note 22).
The Company has continued to make a conscious effort to maintain a low cost
base at both corporate and operational levels while still maintaining a high
level of safety, professionalism and operatorship. Administrative costs have
increased by £0.347m to £3.253m (2023: £2.906m), reflecting one off
restructuring costs and inflation.
Outlook
With the legacy hedges rolling off in June 2025 the Company looks forward to
the benefit of substantially higher free cashflows. After the installation of
the booster compressor is completed, the Company will turn its intentions to
drilling a fourth well at Saltfleetby, increasing production and adding value
for shareholders.
The market for oil and gas continues to evolve, and we remain confident in our
ability to navigate these changes, leveraging our experienced team,
world-class assets, and strategic partnerships. Looking ahead, we are focused
on maximising production from our existing reserves and advancing key
development projects by expanding our footprint outside of the UK. We deeply
value the trust and support of our shareholders, employees, and stakeholders.
I am excited about the opportunities that lie ahead as we continue to build on
our success.
Krzysztof Zielicki
Interim Non-Executive Chairman
5 March 2025
Operating Review
I am pleased to report that all operations were performed without any safety
incidents or environmental damage.
The Group produced 26.5 million therms of natural gas and 44 mbbls of
condensate oil during the period from its Saltfleetby Gas Field and 2.6 kbbls
of crude oil from its Brockham Oil Field. The performance of the reservoir and
the three producing wells (A4, B2 and B7) have been modelled and well
performance has been optimised to deliver quarterly production targets with
all quarterly production targets met during 2024.
For the period, operational efficiency was 92% including June and August
planned shutdowns for the delivery of safety critical and regulatory driven
maintenance, compressor and engine maintenance work, and gas export metering
maintenance work. This represents a 2% increase over last year's operating
efficiency and was largely due to the improvement in equipment reliability and
continued well performance management.
In October 2023 Angus announced the publication of an updated independent
Competent Persons Report ("CPR") for its Saltfleetby Gas Field ("SGF")
conducted by Oilfields International Limited. The summary of the results,
which includes resources and reserves for both sales gas and associated
liquids is summarised below:
Saltfleetby Field Net Reserves and Contingent Resource as at August 1, 2023 1P 2P 2C
Sales Gas (Bcf) 22 25 17
Sales Liquids (Mstb) 332 415 238
Total (Mboe) 4,194 4,760 3,204
*Energy equivalent factor 5,800 cubic feet of per boe
The new CPR has taken account of production performance from 3 wells currently
in production and the addition of two further development wells in the Main
Westphalian reservoir, SF9 and SF10, which are scheduled to enter production
in January 2025 and January 2026 respectively.
The CPR also gives the net present value of the cash flows from SGF, including
the impact from the revised capex from additional drilling, projected impact
of the Energy Profits Levy, the senior loan facility debt service costs, the
associated royalties and the mandatory hedging. Oilfield International
Limited has used a discount rate of 10%.
We highlight below the NCF and NPV10, discounted to August 1st, 2023: Net
Attributable to the Company:
Net Cash Flow Attributable to the Company NPV10 Attributable to the Company
Scenario 1P 2P 1P 2P
Pre-Tax £125.4m £153.5m £86.9m £104.1m
Post-Tax £78.9m £90.6m £57.1m £64.3m
MOD: money of the day
The full CPR is available for download in the "Presentations" section of the
Company's website (www.angusenergy.co.uk/media/presentations
(http://www.angusenergy.co.uk/media/presentations) ).
Under the heading "Review of activities" below we provide a more in-depth
summary of operational activities. I will reiterate that our first concern as
a Group must be for the safety of our staff, contractors, the public at large
and the environment on which we rely on. We will continue to work in close
co-operation with all of our regulators, ensuring a spotless record of
compliance - the North Sea Transition Authority ("NSTA"), the Environment
Agency ("EA") the Health and Safety Executive ("HSE") and our local councils.
Business Review
The principal activity of the Group during the year continued to be on-shore,
conventional production and development of hydrocarbons in the UK.
Review of activities
Angus is very conscious of the requirement to operate in a safe and
environmentally responsible manner. This is a priority of the management and
all our field operators. The activities for the year were carried out with no
reportable HSE or Environmental breaches.
Saltfleetby
During the period the Company continued to develop its well performance
program and improving equipment reliability. The annual 5-day shutdown in July
was conducted with all safety related maintenance completed without incident.
Planned maintenance included an 8,000-hour service carried out on the 'A'
compressor, including the change out of suction and discharge plate valve
assemblies, piston rods, piston rod seals, and piston rings. Top-end
services on the 'A' and B' engines were completed with a full changeout of
cylinder heads for upgraded non-OEM cylinder head and valve assemblies.
Operational Efficiency for the year improved on the previous year's
performance with an average efficiency of 92% achieved, primarily driven by
improvements in equipment reliability.
Building on the seismic reprocessing and remapping work completed in 2023, a
geocellular, dynamic reservoir model has been constructed across the
Westphalian Sandstone and underlying Namurian reservoir at the Saltfleetby Gas
Field. The reservoir model gives us a great understanding of the reservoir
properties and fluid flow within the reservoir and in turn has then been used
to identify several infill drilling opportunities. Additionally, this
reservoir model will be fundamental in the progression of the long-term plan
for the Satlfleetby field as a storage facility for CO2, Natural Gas or
Hydrogen.
Angus is evaluating the drilling of a new well, adding a fourth producer to
the field to accelerate production and increase shareholder value. The well is
in the preliminary design phase with a target drilling date of late 2025,
pending delivery time for long lead items. The target drill date would allow
for 2-6 mmcf/d incremental field production in early 2026.
The Company met all its obligations under its live hedging programme and has
deferred payments on the crystallised hedges by up to 12 months in agreement
with Trafigura. Legacy monthly hedged volumes are currently set at 1,250,000
Therms per month and terminate in June. In July-December 2025, monthly hedged
volumes are set at an average volume of 1,075,000 Therms per month at an
average price of c. 88 pence per therm. As required under its loan agreement
with Trafigura, Angus has struck hedges in for 2026 set at an average volume
of 530,000 Therms per month at an average price of c. 103 pence per therm.
Please see note 22 and 27 for further details.
Brockham
BRX2Y was brought back on-line May 28th after a successful workover. The well
came on-line producing c. 60% water cut at a total fluids rate of
approximately 120 bbls/d with only minor operational upsets. Since restarting
production, the water cut has fluctuated, with a range of between 60% and 80%,
and total fluid rates have stabilized at c. 90 bbls/d, equating to c. 20-25
bbls/d oil production.
The forward strategy now focuses on the optimization of oil production through
improvements in operational efficiency. The company recognised an impairment
of £4.770 million in relation to the carrying value of Brockham, due to the
lower than expected production rates which have impacted on the expected
future cash flows from the assets. Production will continue to be monitored,
and an assessment is being undertaken to determine if BRX4Z, a suspended
offset well, can be commercially brought into production to increase recovery
from the Portland reservoir.
Balcombe
Following the initial 7-day well test in the Autumn of 2018, a planning
application was submitted in late 2019 for a longer 3-year well test on the
Balcombe-2Z well. The aim of the planned operation is to recover remaining
drilling fluids from the wellbore and conduct a long-term extended well test
to indicate to what degree the well and field can produce hydrocarbons at a
commercial rate. The Planning Inspectorate's decision in October 2023 to grant
the Company the right to test the existing well, was appealed by a residents'
organization and heard in court on the 26th and 27th of January 2025. The
decision of the High Court is expected to be made public in April or May
2025.
Lidsey
Due to the high cost of water disposal, Lidsey has remained shut in, however,
as previously stated, a planning application has been submitted to allow for
transportation of produced water off-site to the Brockham oil field for
voidage replacement and pressure maintenance. Should this application be
granted, work will be progressed to test the integrity of the well in
readiness for future production, confirm the operability of the currently
installed artificial lift, and establish the re-instatement production
potential of the X2 well. This is low-cost operation, and if successful, it
will allow for the reinstatement of the site with produced water trucked to
Brockham for injection.
Strategy and Sustainability
The Directors' objective remains unchanged, to create long-term value for
shareholders by building the Group into a profitable energy production company
with a reputation for technical excellence with strict cost discipline. The
Director's will continue to focus on the UK onshore but do not rule out
acquisitions overseas in jurisdictions where the rule of law is strong. We
understand the energy requirements and infrastructure constraints, combined
with a development plan based on fundamentals, can lead to sustainable and
profitable opportunities for investors. As such we are constantly reviewing
potential projects that will complement our existing core skills and portfolio
of assets.
From the point of view of sustainability, the Directors are aligned with the
national energy objectives and look forward with enthusiasm to the
opportunities ahead in the common goal of net zero. Whilst we will continue to
win a return from legacy oil fields, the long-term preference remains for the
acquisition of gas assets. There will be a requirement for oil and gas in
Britain's energy mix for decades to come and Angus is committed to providing
that energy during the transition to lower-carbon energy in the future.
Global Environment and Stewardship
As a Group we do have duties of stewardship to the wider environment of which
we are acutely aware. At Angus we realise there needs to be significant
improvement in the Energy Mix and the transition begins with the proper
operation of the existing energy assets and the responsible development of new
ones. We understand hydrocarbons are still needed but must be produced to the
highest ESG standards.
When it comes to our existing operations or evaluating potential new projects,
we are always focused on creating the least possible impact on the
environment.
Local Environment
As a responsible North Sea Transition Authority ("NSTA") approved and
Environment Agency ("EA") permitted UK operator, Angus Energy is committed to
utilising industry best practices and achieving the highest standards of
environmental management and safety. Our operations:
· Continuously assess and monitor environmental impact
· Promote internally and across our industry best practices for
environmental management and safety
· Constant attention to maintaining our exemplary track record of safe
oil and gas production
There were no reportable health and safety incidents during the year.
Community
Angus Energy seeks and maintains positive relationships with its local
communities. We achieve this through our various forms of communication which
include community liaison meetings, social media updates, RNS's and Investor Q
& A sessions.
In general, we are guided by the following principles:
· Open and honest dialogue
· Engagement with stakeholders at all stages of development
· Proactively addressing local concerns
· Actively minimise impact on our neighbours
· Adherence to a strict health and safety code of conduct
Section 172 Statement
Under Section 172, Directors have a duty to promote the success of the Company
for the benefit of the members as a whole and, in doing so, they should have
regard to specified areas that relate, by and large, to wider stakeholder
interest. Further details of these areas have been enumerated in the
Stakeholder Engagement section on page 31 of the annual report.
Financial Review
The Group began the period with the following interests: 80% of Brockham
(PL235), 80% of Lidsey (PL241), 25% of Balcombe (PEDL244) and 100% of
Saltfleetby Gas Field (PEDL005) after acquisition of Saltfleetby Energy
Limited on 23 May 2022.
The Group had a cash balance of £2.172m as at 30 September 2023.
During the period, the Company issued the following shares (please refer to
note 15 for a detailed breakdown):
· 516,033,308 ordinary shares in relation to the conversion of the
Kemexon Bridge facility,
· 25,000,000 ordinary shares in relation to the settlement of fees,
· 226,513,000 ordinary shares in relation to the settlement of fees,
· 27,447,470 ordinary shares in relation to the Overriding Royalty
Interest ("ORRI") payable on production from the Saltfleetby Gas Field,
The Group had a cash balance of £2.163m at the end of the reporting year.
The Group generated £21.802m revenue from oil and gas production during the
year (2023:
£28.208m).
The Group recorded a loss of £4.301m, which included an impairment of
£4.770m. EBITDA for the period was £10.803m (2023: £17.002m). The group
recorded a derivative profit of £10.822m in relation to the fair value
movement of the derivative instrument which is based on future production and
calculated using forward gas prices as at 30 September 2024. The derivative
will be realised to a profit or loss when the payments under the derivative
instruments become due (see note 22).
The Group's overall financial objectives are to increase revenue, return to
profitability and enhance the asset base supporting the business. In order to
monitor its progress towards achieving these objectives, the Group has set a
number of key performance indicators, which deal predominately with revenue,
profitability, margin and cash flow as above.
Governance, Compliance and Shareholder Relations
The Board consists of a Chief Executive Officer and Finance Director
supervised by two experienced Non-Executive Directors. The Board meets
regularly alongside with AIM Rules Committee, Remuneration Committee and Audit
Committee meetings.
In general, the management structure is very flat. In total we have 27
employees, including management. The Company also relies on experienced
third-party contractors.
We have appointed three compliance officers to deal with all our regulators
and planning authorities, which are presently Surrey, Lincolnshire and West
Sussex County Council, the NSTA, the Environment Agency and the Health &
Safety Executive. Additionally, as a publicly listed company, we are
answerable to the AIM Market Division and to the Financial Conduct Authority.
Compliance is an area which has grown more complicated and expensive in recent
years, and we expect it to get more so. Regulators are being more proactive
and pre-emptive, and we must anticipate their needs and expectations better
than we have in the past. We should aim to maintain better dialogue with all
regulators and planners and engage in more frequent use of pre-approval
procedures where they are available.
Principal risks and uncertainties
Currency risks
The Group sells its produced crude oil and gas; oil is priced in US dollars
and gas is priced in GBP. As the bulk of the Company's revenue and costs are
in GBP, fluctuations in the US dollar, sterling exchange rate or fluctuations
in the oil price have a minimal impact on the Group's financial position and
performance. Notwithstanding the latter, the value of such transactions may be
adversely affected by changes in currency exchange rates, which may have an
adverse effect on the business, financial condition, results of operations and
prospects of the Group. Management regularly reviews currency exposure with
the aim of mitigating any downside exposure where possible.
Market risk
The demand for, and price of, oil and gas are highly dependent on a variety of
factors beyond the Group's control. The continued marketing of the Group's oil
and gas will be dependent on market fluctuations and the availability of
processing and refining facilities and transportation infrastructure,
including pipelines, access to roads, train lines and any other relevant
options at economic tariff rates over which the Group may have limited or no
control. Transport links (including roads and pipelines) may be inadequately
maintained and subject to capacity constraints and economic tariff rates may
be increased with little or no notice and without taking into account producer
concerns. Producers of oil and gas negotiate sales contracts directly with oil
and gas purchasers, with the result that the market determines the price of
oil and gas. The price depends in part on oil and gas quality, prices of
competing fuels, distance to market, the value of refined products and the
supply/demand balance. The marketability and prices of oil and gas that may be
discovered or acquired by the Group will be affected by numerous factors
beyond its control. The Group has entered into commodity derivatives for its
gas product to protect it from any downside market risk (see note 22 for
further details).
Permitting risk
The Group exposed to the planning, environmental, licensing and other
permitting risks associated with its operations particularly with development
and exploration drilling operations.
The Group has to date been successful in obtaining the required permits to
operate. Therefore, the Group considers that such risks are mitigated through
compliance with regulations, proactive engagement with regulators, communities
and the expertise and experience of the management team.
Reserve and resource estimates
No assurance can be given that hydrocarbon reserves and resources reported by
the Group in the future are present as estimated, will be recovered at the
rates estimated or that they can be brought into profitable production.
Hydrocarbon reserve and resource estimates may require revisions and/or
changes (either up or down) based on actual production experience and in light
of the prevailing market price of oil and gas. A decline in the market price
of oil and gas could render reserves uneconomic to recover and may ultimately
result in a reclassification of reserves as resources. Unless stated
otherwise, the hydrocarbon reserve and resources data relating to Lidsey and
Brockham contained in the financial statements are taken from the Competent
Person's Report, at the time of AIM admission on 14 November 2016 and the
hydrocarbon reserve and resources data relating to Saltfleetby are taken from
the Saltfleetby Competent Person's Report published in October 2023.
There are uncertainties inherent in estimating the quantity of reserves and
resources and in projecting future rates of production, including factors
beyond the Group's control. Estimating the amount of hydrocarbon reserves and
resources is an interpretive process and, in addition, results of drilling,
testing and production subsequent to the date of an estimate may result in
material revisions to original estimates.
The hydrocarbon resources data extracted from the Competent Person's Report
are estimates only and should not be construed as representing exact
quantities. The nature of reserve quantification studies means that there can
be no guarantee that estimates of quantities and quality of the resources
disclosed will be available for extraction. Therefore, actual production,
revenues, cash flows, royalties and development and operating expenditures may
vary from these estimates. Such variances may be material. Reserves estimates
are based on production data, prices, costs, ownership, geophysical,
geological and engineering data, and other information assembled by the Group
(which it may not necessarily have produced).
The estimates may prove to be incorrect, and potential investors should not
place reliance on the forward-looking statements (including data included in
the Competent Person's Report
or taken from the Competent Person's Report and whether expressed to have been
certified by the Competent Person or otherwise) concerning the Group's
reserves and resources or production levels. Hydrocarbon reserves and
resources estimates are expressions of judgment based on knowledge, experience
and industry practice. They are therefore imprecise and depend to some extent
on interpretations, which may prove to be inaccurate. Estimates that were
reasonable when made may change significantly when new information from
additional analysis and drilling becomes available.
This may result in alterations to development and production plans which may,
in turn, adversely affect operations. If the assumptions upon which the
estimates of the Group's hydrocarbon resources have been based prove to be
incorrect, the Group (or the operator of an asset in which the Group has an
interest) may be unable to recover and produce the estimated levels or quality
of hydrocarbons set out in this document and the Group's business, prospects,
financial condition or results of operations could be materially and adversely
affected.
Events after the reporting period
On 25 February 2025, the Company struck additional hedges as per the
requirements of the rolling gas price protection policy in the Trafigura
Facility. Please see note 27 for details.
Outlook
With the successful refinancing of the Company's debt and steady production at
Saltfleetby, the Company looks forward to achieving positive operational
cashflow with the introduction of the new booster compressor, the rolling off
of unfavourable legacy hedges and the potential drilling of an additional
production well. The Company will continue to explore further oil and gas
opportunities and mature its storage project with the intention of not only
creating shareholder value but also to address the urgent need for transition
energy projects.
Approved by the Board of Directors and signed on behalf of the Board.
Richard Herbert
Chief Executive Officer
5 March 2025
Details of all our assets and operations can be found at www.angusenergy.co.uk
(http://www.angusenergy.co.uk)
Directors' Report
The Directors present their report together with the audited consolidated
financial statements of Angus Energy plc for the year ended 30 September 2024.
Results and Dividends
The Group recorded a loss of £4.301m, which included an impairment of
£4.770m. EBITDA for the period was £10.803m (2023: £17.002m). The Group
recorded an Operating loss of £2.697m and when adjusted for the derivative
financial instrument profit, realised derivative costs and finance costs
during the period, resulted in an adjusted operating loss of £15.123m (2023:
loss of £19.156m). The derivative profit is based on future production and
calculated using forward gas prices as at 30 September 2024. The derivative
will be realised to a profit or loss when the payments under the derivative
instruments become due (see note 22).
Directors
The Directors who were in office during the year and up to the date of signing
the financial statements, unless stated, were:
Executive Directors
Richard Herbert (Chief Executive Officer)
Carlos Fernandes (Finance Director)
Non-Executive Directors
Patrick Clanwilliam (resigned 22 March 2024)
Paul Forrest (resigned 30 April 2024)
Krzysztof Zielicki (appointed 22 March 2024)
Antoine Vayner (appointed 19 June 2024)
The Directors of the Company at the date of this report, and their
biographical summaries, are given on page 26 of the annual report.
The Directors' remuneration is detailed in the Directors' Remuneration Report
on page 24 to 25 of the annual report. All Directors benefit from the
provision of Directors' and Officers' indemnity insurance policies. Premiums
payable to third parties were £26,000 (2023- £23,000).
Research and development
As disclosed in Note 10 and 11, the Group incurred expenditure in the
development of oil and gas fields.
Share Capital
At the date of this report ordinary shares are issued and fully paid. Details
of movement in share capital during the year are given in note 15 to the
financial statements.
Substantial Shareholders
As of the date of this report the Group had been notified of the following
interests of 3% or more in the Group's ordinary share capital:
Percentage of shareholding
Kemexon Ltd 22.19%
Forum Energy Limited 8.49%
Knowe Properties 5.46%
Aleph Commodities Ltd 4.80%
Atanas Djumaliev 4.15%
Share options
There were 57,500,000 Share Options issued and 50,999,803 surrendered during
the reporting period. See note 16 for further details.
Financial Instruments
The financial risk management objectives and policies of the Group in relation
to the use of financial instruments and the exposure of the Group and its
subsidiary undertakings to its main risks, credit risk and liquidity risk, are
set out in note 23 to the financial statements.
Employees
The Group had an average 27 employees as of 30 September 2024 (2023: 28).
Employees are encouraged to directly participate in the business through an
Enterprise Management Incentive Scheme, which set out in note 16 to the
financial statements. In accordance with the Company's Bonus arrangements, the
Board has approved a performance-related bonus scheme for all employees which
will pay out if business targets in 2025 are achieved.
Going Concern
The Directors have assessed the Group's working capital forecasts for a
minimum of 12 months from the date of the approval of these financial
statements. In undertaking this assessment, the Directors have reviewed the
underlying business risks, and the potential implications these risks would
have on the Group's liquidity and its business model over the assessment
period. This assessment included a detailed cash flow analysis prepared by the
management, and they also considered several reasonably plausible downside
scenarios. The scenarios included potential delays to expected future
revenues. In making their overall assessment, the Directors took into account
the advanced stage of the development of the Saltfleetby gas field and the
impact of any breaches in covenants under the Trafigura Debt Facility and the
derivative instrument if there were delays in gas production. As outlined in
note 22 the Group has committed to future cash flows as a result of the
derivatives in place which are due even if gas is delayed.
Forecast cashflows place reliance on there not being a suspension of gas
production for an unforeseen significant period. Current production levels
are in excess of derivative requirements. There are no present operational
concerns and whilst there are mitigating steps that could be taken, the
contracted derivative will need to be settled at a fixed point in time. In the
event of any significant production delays or continued covenant breaches,
this would be subject to negotiation with Trafigura or further funding may be
required.
Based on the current management plan, management considered that the working
capital from the expected revenue generation, along with the funds made
available from the recently announced Trafigura refinancing, are sufficient
for the expenditure to date as well as the planned forecast expenditure for
the forthcoming twelve months from the date of the approval of this financial
statement. As a result of that review the Directors consider that it is
appropriate to adopt the going concern basis preparation, notwithstanding the
material uncertainty relating to the continued production of gas as outlined
above. The Director has assessed the company's ability to continue as a going
concern and has reasonable expectation that the company has adequate resources
to continue operations for a period of at least 12 months from the date of
approval of these financial statements.
These financial statements do not include any adjustment that would be
required if the Group or Company was not a going concern.
Events after the reporting period
Events after the reporting period have been disclosed in Note 27.
Disclosure of Information to the Auditor
In the case of each person who was a Director at the time this report was
approved:
· so far as the Director was aware there was no relevant audit
information of which the Company's auditor was unaware; and
· the Director has taken all steps that he ought to have taken as a
Director to make himself aware of any relevant audit information and to
establish that the Company's auditor was aware of that information.
Auditor
A resolution to reappoint the auditor, Crowe U.K. LLP, will be proposed at the
forthcoming Annual General Meeting.
Approved by the Board of Directors and signed on behalf of the Board.
Richard Herbert
Chief Executive Officer
5 March 2025
Opinion
We have audited the financial statements of Angus Energy plc (the "Parent
Company") and its subsidiaries (the "Group") for the year ended 30 September
2024, which comprise:
· the Consolidated statement of comprehensive income for the year ended
30 September 2024;
· the Consolidated and Parent Company statements of financial position
as at 30 September 2024;
· the Consolidated and Parent Company statements of changes in equity
for the year then ended;
· the Consolidated statement of cash flows for the year then ended; and
· the notes to the financial statements, including a summary of
accounting policies.
The financial reporting framework that has been applied in the preparation of
the Group financial statements is in accordance with UK adopted international
accounting standards. The financial reporting framework that has been applied
in the preparation of the Parent Company financial statements is applicable
law and United Kingdom Accounting Standards, including Financial Reporting
Standard 102 'The Financial Reporting Standard applicable in the UK and
Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
· the financial statements give a true and fair view of the state of
the Group's and of the Parent
Company's affairs as at 30 September 2024 and of the Group's loss for the year
then ended;
· the Group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
· the Parent Company financial statements have been properly prepared
in accordance with United Kingdom Generally Accepted Accounting Practice; and
· the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the Group and Parent Company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 3.3 in the financial statements, which identifies
that the Group and Parent Company are reliant on the ability to generate
working capital from their producing assets in order to meet their obligations
under the Group's derivative agreements. As stated in note 3.3, these events
or conditions, along with the other matters as set forth in note 3.3, indicate
that a material uncertainty exists that may cast significant doubt on the
Group's and Parent Company's ability to continue as a going concern. 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. Our evaluation of the Directors'
assessment of the Group's and Parent Company's ability to continue to adopt
the going concern basis of accounting included:
• Reviewing management's detail cash flow analysis for the Group
and parent company for a period of more than 12 months from the date of
approval of the financial statements.
• Checking the numerical accuracy of management's detail cash
flow analysis
• Challenging management on the assumptions underlying those
detail cash flow analysis and sensitised them to reduce anticipated net cash
inflows from future trading activities.
• Obtained the latest management results post year end 30
September 2024 to review how the Group and parent company are trending toward
achieving the forecast.
• Performed sensitivity analysis on key inputs of the forecast
by calculating the impact of various scenarios and considering the impact on
the group and parent Company's ability to continue as a going concern in the
event that a downward scenario occurs.
• Reviewed post year end production levels against budgeted
amounts.
• Assessing the completeness and accuracy of the matters described
in the going concern disclosure within the accounting policies as set out in
Note 3.3.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An
item is considered material if it could reasonably be expected to change the
economic decisions of a user of the financial statements. We used the concept
of materiality to both focus our testing and to evaluate the impact of
misstatements identified.
Based on our professional judgement, we determined overall materiality is
£1,000,000 (2023: £2,739,000) which is based on approximately 2.5% of Group
net assets (2023: based on 2% of the derivative's fair value movement of
£136.9m). In 2023, a Specific materiality for the Group financial statements
other than the derivative was determined to be £917,000 based on 3% of Group
net assets excluding the derivative balance. The parent company overall
materiality is set at £500,000 based on a percentage of total assets.
We use a different level of materiality ('performance materiality') to
determine the extent of our testing for the audit of the financial statements.
Performance materiality is set based on the audit materiality as adjusted for
the judgements made as to the entity risk and our evaluation of the specific
risk of each audit area having regard to the internal control environment.
This is set at £700,000 (2023: £512,000) for the group and £350,000 (2023:
£55,000) for the parent company.
Where considered appropriate performance materiality may be reduced to a lower
level, such as, for
related party transactions and directors' remuneration.
We agreed with the Audit Committee to report to it all identified errors in
excess of £50,000 (2023:
£46,000). Errors below that threshold would also be reported to it if, in our
opinion as auditor, disclosure was required on qualitative grounds.
Overview of the scope of our audit
Our Group audit scope included full scope audits of the three Group companies
which account for 100% of the Group's net assets and loss before tax by the
Group audit team.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters
included those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. We set out below,
together with the material uncertainty related to going concern above, those
matters we identified as key audit matters.
This is not a complete list of all risks identified by our audit.
Key audit matter How the scope of our audit addressed the key audit matter
Carrying value of oil & gas production assets (note 10) We evaluated management's assessment of indicators of impairment and
recoverability assessment for the Group's oil & gas production assets. We
have:
At 30 September 2024, the carrying value of oil & gas production assets
was £70.9 million (2023: £80.2 million).
· assessed the design and implementation of controls over management's
assessment of impairment.
Management performed a review for indications of impairment to its producing · tested price and discount rate assumptions by comparing forecast oil
assets as of 30 September 2024 and identified impairment indicators. They then and gas price assumptions to the latest market evidence available. We involved
assessed the recoverable amount of the Saltfleetby, Brockham and Lidsey our Valuations specialists in challenging the discount rate applied by
assets. Impairment of £4.8m was recognised for the Brockham asset (the Lidsey management;
asset having been fully impaired in the prior year).
· tested the expected production profiles by comparing to recent
production levels and to those included in the Competent Person's Reports.
The directors' consideration of the impairment indicators requires them to · tested the mathematical accuracy of the forecast cash flows and the
make certain estimates and judgements. These matters are considered to make assumptions used within the cash flow projection model.
this a key audit matter.
· assessed the quality of management's previous budgets and forecasts
by comparing them to actual performance.
· Reviewed the disclosures in the Financial Statements, including the
appropriateness of key judgements and sensitivities regarding asset carrying
values and impairment; and
· We considered the adequacy of the disclosure to the financial
statements.
Carrying value of exploration and evaluation (E&E) assets (note 11) We performed the following procedures as part of our audit of management's
assessment of the carrying value of exploration and evaluation assets:
At 30 September 2024, the carrying value of exploration and evaluation assets
was £5.5 million (2023: £5.6 million). • We assessed the design and implementation of controls over the
impairment assessment process.
The assets relate to the Balcombe site, which is still in the exploration
and evaluation phase as technical and economic feasibility have yet to be • We obtained a copy of the Balcombe license and performed
established. procedures to confirm the Group's control of the license, and that it remains
valid.
At each reporting date, the directors are required to assess whether there are
any indicators of impairment, that would require an impairment assessment to • We made specific enquiries of the directors and key staff
be carried out. The directors concluded there were no indicators of involved in the exploration work, and assessed planned works to support the
impairment. Group continuing with further exploration work
The directors' consideration of the impairment indicators requires them to • We considered other matters detailed within IFRS 6 that may
make certain judgements and may include certain estimates. These matters are give rise to an indication of impairment.
considered to make this a key audit matter.
• We reviewed the adequacy of disclosures in the financial
statements in relation to the impairment consideration.
Carrying value of derivative financial instrument (note 4 and note 22) We performed the following procedures as part of our audit of management's
assessment of the carrying value of the derivative financial instrument:
At 30 September 2024, the carrying value of the gas swap derivative financial
instrument was £10.9 million (2023: £21.7 million), recorded in · We obtained copies of the contracts between the Group and the
liabilities. provider of the Gas Swap arrangements.
The valuation of this instrument is subjective and variations in this value · We obtained the Independent pricing curve data (I.C.I.S Heren) as at
would have a material impact on the income statement and the statement of 30 September 2024.
financial position.
· We recalculated management's assessment of the valuation of the
derivative as at 30 September 2024 benchmarked to the I.C.I.S Heren curve.
· We compared the valuation per accounting records to the year-end
valuation provided by the issuer of the instrument.
· We discussed the process of valuation with management to establish
whether there had been any changes in methodology from the prior year.
Carrying value of parent company investment in subsidiaries (note 5 to parent We performed audit procedures including the following in relation to
company accounts) management's assessment:
At 30 September 2024, the parent company has investment in its subsidiaries of • The key considerations included the recoverable amount of the oil and gas
£47.2m (2023: £56.5m). assets, together with the other assets and liabilities held, and the market
capitalisation of the parent company.
• In assessing whether impairment was required, our work was substantially
Management are required to consider indications of impairment to the the same as described in the impairment consideration for oil and gas assets
investments. Where indicators of impairment are identified, an impairment above, as the recoverability of the investment values is closely linked to
assessment should be performed, which requires management to make a number of these assets.
judgements and estimates.
Management identified indications of impairment as of 30 September 2024.
Management then performed an impairment assessment, the results of which did
not identify any impairment in relation to the investment in subsidiaries.
Our audit procedures in relation to these matters were designed in the context
of our audit opinion as a whole. They were not designed to enable us to
express an opinion on these matters individually and we express no such
opinion.
Other information
The directors are responsible for the other information contained within the
annual report. The other information comprises the information included in the
annual report, other than the financial statements and our auditor's report
thereon. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matter prescribed by the Companies Act 2006
• In our opinion based on the work undertaken in the course of
our audit the information given in the strategic report and the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and;
• the strategic report and directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Group and the Parent
Company and their environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received from
branches not visited by us; or
• the parent company financial statements are not in agreement
with the accounting records and returns; or
• certain disclosures of directors' remuneration specified by
law are not made; or
• we have not received all the information and explanations we
require for our audit.
Responsibilities of the directors for the financial statements
As explained more fully in the directors' responsibilities statement set out
on page 30, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and
for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible
for assessing the group's and parent company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below however the primary
responsibility for the prevention and detection of fraud lies with management
and those charged with governance of the Company.
We obtained an understanding of the legal and regulatory frameworks that are
applicable to the Company and the procedures in place for ensuring compliance.
Based on our understanding of the Company and industry, discussions with those
charged with governance we identified financial reporting standards and
Companies Act 2006 as having a direct effect on the amounts and disclosures in
the Financial Statements. Our work included direct enquiry of those charged
with governance, reviewing Board and relevant committee minutes and inspection
of correspondence.
As part of our audit planning process, we assessed the different areas of the
Financial Statements, including disclosures, for the risk of material
misstatement. This included considering the risk of fraud where direct
enquiries were made of those charged with governance concerning both whether
they had any knowledge of actual or suspected fraud and their assessment of
the susceptibility of fraud. We considered the risk was greater in areas
involving significant estimate or judgement. Based on this assessment we
designed audit procedures to focus on key areas of estimate or judgement, this
included specific testing of journal transactions, both at the year end and
throughout the year.
We identified the significant laws and regulations of the UK to be those
relating to the industry including, Oil & Gas Regulations, the financial
reporting framework, tax legislation and the AIM listing rules. The Company is
subject to laws and regulations where the consequence of non-compliance could
have a material impact on the amount or disclosures in the financial
statements, through the imposition of fines or litigations. These laws and
regulations include those relating to health and safety, licensing and the
environment.
Our audit procedures included:
• enquiry of directors about the Company's policies, procedures
and related controls regarding compliance with laws and regulations and if
there are any known instances of non-compliance including fraud discussions
with directors to consider any known or suspected instances of non-compliance
with laws and regulations identified by them
· We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group and the procedures in place for
ensuring compliance. The most significant identified were the Companies Act
2006 and the terms of the Group's licence. Our work included direct enquiry of
the Company Secretary who oversees all legal proceedings, reviewing Board and
relevant committee minutes and inspection of correspondence. We tested the
appropriateness of journal entries recorded in the general ledger and other
adjustments made in the preparation of the Financial Statements
· We used data analytic techniques to identify any unusual transactions
or unexpected relationships, including considering the risk of undisclosed
related party transactions; and
· Reviewing accounting estimates for biases and financial statement
disclosures and agreeing to surround information.
Owing to the inherent limitations of an audit, there is an unavoidable risk
that some material misstatements of the financial statements may not be
detected, even though the audit is properly planned and performed in
accordance with the ISAs (UK).
The potential effects of inherent limitations are particularly significant in
the case of misstatement resulting from fraud because fraud may involve
sophisticated and carefully organised schemes designed to conceal it,
including deliberate failure to record transactions, collusion or intentional
misrepresentations being made to us.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Use of our report
This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent
Company's members as a body, for our audit work, for this report, or for the
opinions we have formed.
Leo Malkin
Senior Statutory Auditor
For and on behalf of
Crowe U.K. LLP
Statutory Auditor
55 Ludgate Hill
London EC4M 7JW
Date: 5 March 2025
2024 2023
Note £'000 £'000
5
Revenue 21,802 28,208
Cost of sales (7,334) (6,923)
Depletion cost (8,732) (8,491)
Gross profit 5,736 12,794
Administrative expenses (3,253) (2,906)
Impairment charge 10 (4,770) (3,717)
Share based payment 16 (410) (1,377)
Operating (loss)/profit (2,697) 4,794
Derivative financial instrument profit 22 10,822 136,966
Realised Derivative cost 22 (8,322) (19,963)
Finance cost 7 (4,104) (3,987)
(Loss)/profit before taxation (4,301) 117,810
Taxation 9 - -
(Loss)/profit for the year (4,301) 117,810
Total comprehensive loss for the year (4,301) 117,810
(Loss)/profit for the year attributable to:
Owners of the parent company (4,301) 117,810
Total comprehensive profit attributable to:
Owners of the parent company (4,301) 117,810
(4,301) 117,810
(Loss)/earnings per share ((LPS)/EPS) attributable to owners of the parent: 18
Basic (LPS)/EPS (in pence) (0.10) 3.48
Diluted (LPS)/EPS (in pence) (0.10) 2.91
The notes on page 47 to 74 of the annual report form part of these financial
statements
All amounts are derived from continuing operations.
2024 2023
Note £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 6 17
Exploration and evaluation assets 11 5,456 5,628
Oil & gas production assets 10 70,951 80,248
Lease assets 5 25
Total non-current assets 76,418 85,918
Current assets
Trade and other receivables 14 3,374 2,976
AFS financial investments 13 5 11
Lease assets 1 1
Cash and cash equivalents 2,163 2,172
Total current assets 5,543 5,160
TOTAL ASSETS 81,961 91,078
EQUITY
Equity attributable to owners of the parent:
Share capital 15 8,844 7,254
Share premium 15 48,412 45,500
Merger reserve 17 (200) (200)
Accumulated loss (18,368) (15,295)
TOTAL EQUITY 38,688 37,259
Current liabilities
Trade and other payables 19 8,315 10,270
Loans payable - current 21 3,380 13,829
Derivatives liability 22 10,702 12,827
Total current liabilities 22,397 36,926
Non-current Liabilities
Provisions 20 5,698 4,970
Trade and other payables 19 - 23
Loan payable - non-current 21 14,988 3,013
Derivatives liability 22 190 8,887
Total non-current liabilities 20,876 16,893
TOTAL LIABILITIES 43,273 53,819
TOTAL EQUITY AND LIABILITIES 81,961 91,078
The notes on page 47 to 74 of the annual report form part of these financial
statements
The financial statements were approved by the Board of Directors and
authorised for issue on 5 March 2025 and were signed on its behalf by:
Richard Herbert - Director
Company number: 09616076
Share capital Share premium Accumulated loss Total equity
Merger Loan Note
reserve reserves
£'000 £'000 £'000 £'000 £'000 £'000
5,529 38,708 (138,599) (94,456)
Balance at 30 September 2022
(200) 106
- - -
Profit for the year - 117,810 117,810
Total comprehensive income for the year - - -
- 117,810 117,810
Transaction with owners
Issue of shares 1,725 10,297 - (106) - 11,916
Less: issuance costs - (3,477) - - - (3,477)
Grant of share options - - - - 1,377 1,377
Grant of Warrant as fund raise and finance costs - (28) - 4,117 4,089
-
7,254 45,500 (200)
Balance at 30 September 2023 - (15,295) 37,259
- - - (4,301) (4,301)
Loss for the year -
Total comprehensive income for the year - - - (4,301) (4,301)
-
Transaction with owners
Issue of shares 1,590 2,919 - - - 4,509
Less: issuance costs - (7) - - - (7)
Grant of share options - - - - 410 410
Grant of Warrant as finance costs - - - - 818 818
8,844 48,412 (200) (18,368) 38,688
Balance at 30 September 2024 -
The notes on page 47 to 74 of the annual report form part of these financial
statements
Year ended 30 September Year ended 30 September
2024 2023
£'000 £'000
Cash flow from operating activities
(Loss)/profit for the year before taxation (4,301) 117,810
Adjustment for:
Derivative financial instrument profit (10,822) (136,966)
Share option charge 410 1,377
Grant of Warrants as finance costs 818 1,663
Interest payable 3,284 2,315
Depletion charge 8,732 8,491
Impairment of Oil & Gas Production asset 4,770 3,717
Lease amortization charges - 55
Write-off Inventory - 3
Write off of property, plant and equipment 5 -
Write off of Exploration and Evaluation assets 192 -
Depreciation on Right-of-use assets 20 -
Lease interest expense 2 -
Investment revaluation 6 9
Depreciation of owned assets 6 10
Cash generated from/(used in) operating activities before changes in working 3,122 (1,516)
capital
(398) 1,131
Change in trade and other receivables
Change in other payables and accruals 402 1,629
3,126 1,244
Cash used in operating activities before tax
Income tax paid - -
3,126 1,244
Net cash flow generated from operations
Cash flow from investing activities
Payment of deferred consideration (2,357) (490)
Acquisition of exploration and evaluation assets (18) (52)
Acquisition of oil and gas production assets (3,479) (11,067)
(5,854) (11,609)
Net cash flow used in investing activities
Cash flow from financing activities
Repayment of loan facility (8,872) (4,337)
Drawdown of loans, net of transaction costs 14,885 9,000
Transaction cost on loan issue (548) -
Lease principal repayment (22) (47)
Interest paid on lease liability (2) -
Proceeds from the issuance of shares - 8,518
Interest paid (2,722) (1,344)
2,719 11,790
Net cash flow generated from financing activities
Net (decrease)/increase in cash & cash equivalents (9) 1,425
Cash and cash equivalent at beginning of year 2,172 747
2,163 2,172
Cash and cash equivalent at end of year
The notes on page 47 to 74 of the annual report form part of these financial
statements
1. General information
Angus Energy Plc (the "Company") is incorporated and domiciled in the United
Kingdom. The address of the registered office is Building 3 Chiswick Park, 566
Chiswick High Road, London, W4 5YA.
The principal activity of the Company is that of investment holding. The
principal activity of the Group is that of oil and gas extraction for
distribution to third parties. The principal activities of the various
operating subsidiaries are disclosed in note 12.
2. Presentation of financial statements
The financial statements have been presented in Pounds Sterling (£) as this
is the currency of the primary economic environment that the group operates
in. The amount is rounded to the nearest thousand (£'000), unless otherwise
stated.
3. Accounting policies
The material accounting policies applied in the preparation of these financial
statements are set out below.
3.1 Basis of preparation
These financial statements have been prepared in accordance with UK adopted
international accounting standards and with the requirements of the Companies
Act 2006. The financial statements have been prepared on the historical cost
basis except for certain assets and liabilities which are stated at their fair
value.
3.2 New standards, amendments to and interpretations to
published standards not yet effect
The Directors have considered those standards and interpretations, which have
not been applied in the financial statements but are relevant to the Group's
operations, that are in issue but not yet effective and do not consider that
they will have a material impact on the future results of the Group.
3.3 Going concern
The Group recorded a loss of £4.301m, which included an impairment of
£4.770m. EBITDA for the period was £10.803m (2023: £17.002m). The group
recorded a derivative profit of £10.822m in relation to the fair value
movement of the derivative instrument which is based on future production and
calculated using forward gas prices as at 30 September 2024. The derivative
will be realised to a profit or loss when the payments under the derivative
instruments become due (see note 22).
The Group meets its day to day working capital requirements through existing
cash reserves. At 30 September 2024, the Group had £2.163 million of
available cash. During the year, the Group raised capital to cover outstanding
liabilities of £4.405 million as a result of placing of new ordinary shares.
On 27 February 2024, the Company announced that the terms had been agreed with
a subsidiary of Trafigura Group PTE Ltd ("Trafigura ") for a refinancing of
its existing debt. The Company signed definitive loan documentation and drew
down the full £20m available under the facility (see note 21 for further
details), with the funds used to pay down existing debt, stabilise the
Company's creditor position and provide the short and medium-term capex needs
to advance key programmes at Saltfleetby and Brockham Fields.
The Directors continue to take the prudent decisions to preserve working
capital. The Directors have assessed the Group's working capital forecasts for
a minimum of 12 months from the date of the approval of these financial
statements. In undertaking this assessment, the Directors have reviewed the
underlying business risks, and the potential implications these risks would
have on the Group's liquidity and its business model over the assessment
period. This assessment included a detailed cash flow analysis prepared by the
management, and they also considered several reasonably plausible downside
scenarios. The scenarios included potential delays to expected future
revenues. In making their overall assessment, the Directors took into account
the performance of the Saltfleetby gas field, the introduction of a third
compressor (booster compressor) to increase production in the short term and
extend field life. The Directors also assessed the impact of any breaches
under the Trafigura Debt Facility and the derivative instrument if there were
delays in gas production. As outlined in note 22 the Group has committed to
future cash flows as a result of the derivatives in place which are due even
if gas is delayed.
Forecast cashflows place reliance on there not being a suspension of gas
production for an unforeseen significant period. Current production levels
are in excess of derivative requirements and there are no present operational
concerns. Contracted derivatives will need to be settled at fixed points in
time. In the event of any significant production delays or ongoing breaches
under the Trafigura Facility, this would be subject to negotiation with
Trafigura or further funding may be required.
Based on the Company's current plan, management considered that the working
capital from available cash and the expected revenue generation are sufficient
for the expenditure to date as well as the planned forecast expenditure for
the forthcoming twelve months from the date of the approval of this financial
statement. As a result of that review the Directors consider that it is
appropriate to adopt the going concern basis of preparation, notwithstanding
the material uncertainty relating to the continued production of gas as
outlined above. The Directors have assessed the company's ability to continue
as a going concern and have reasonable expectation that the Company has
adequate resources to continue operations for a period of at least 12 months
from the date of approval of these financial statements.
These financial statements do not include any adjustment that would be
required if the Group or Company was not a going concern.
3.4 Basis of consolidation
The consolidated financial statements comprise the financial information of
the Company and its subsidiaries (the "Group") made up to the end of the
reporting period. Control is achieved when the Group is exposed, or has
rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee.
The consolidated financial statements present the results of the Company and
its subsidiaries and joint arrangements as if they formed a single entity.
Inter-company transactions and balances between group companies are therefore
eliminated in full. The financial information of subsidiaries is included in
the Group's financial statements from the date that control commences until
the date that control ceases.
Profit or loss and each component of other comprehensive income (OCI) are
attributed to the equity holders of the parent of the Group. When necessary,
adjustments are made to the financial information of subsidiaries to bring
their accounting policies into line with the Group's accounting policies. All
intragroup assets and liabilities, equity, income, expenses and cash flows
relating to transactions between members of the Group are eliminated in full,
on consolidation.
3.5 Oil and natural gas exploration and evaluation (E&E)
expenditure
Oil and natural gas exploration and evaluation expenditure are accounted for
by using the successful efforts method of accounting.
(a) Licence and property acquisition costs
Licence and property leasehold acquisition costs are capitalised within
intangible fixed assets and amortised on a straight-line basis over the
estimated period of exploration. Upon determination of economically
recoverable reserves, amortisation the remaining costs are aggregated with
exploration expenditure and held on a field-by-field basis as proved
properties awaiting determination within intangible fixed assets. When
development is sanctioned, the relevant expenditure is transferred to tangible
production assets.
(b) Exploration expenditure
Geological and geophysical exploration costs are charged against income as
incurred. Costs directly associated with an exploration well are capitalised
as an intangible asset until drilling of the well is complete and the results
have been evaluated. If hydrocarbons are not found, the exploration
expenditure is written off as a dry hole. If hydrocarbons are found, and
subject to further appraisal activity, are likely to be capable of commercial
development, the costs continue to be carried as an asset. All such carried
costs are subject to regular technical and commercial management review to
confirm the continued intent to develop or otherwise extract value from the
discovery. When this is no longer the case, the costs are written off. When
proven and probable reserves of oil and gas are determined and development is
sanctioned, the relevant expenditure is transferred to tangible production
assets.
(c) Development expenditure
Expenditure on the construction, installation and completion of infrastructure
facilities such as platforms, pipelines and the drilling of development wells,
including unsuccessful development or delineation wells, is capitalised within
tangible production assets.
(d) Maintenance expenditure
Expenditure on major maintenance, refits or repairs is capitalised where it
enhances the performance of an asset above its originally assessed standard of
performance; replaces an asset or part of an asset which was separately
depreciated, and which is then written off; or restores the economic benefits
of an asset which has been fully depreciated. All other maintenance
expenditure is charged to income as incurred.
Treatment of E&E assets at conclusion of
appraisal activities
Intangible E&E assets related to each exploration licence/prospect are
carried forward, until the existence (or otherwise) of commercial reserves has
been determined. If commercial reserves have been discovered, the related
E&E assets are assessed for impairment on a cost pool basis as set out
below, and any impairment loss of the relevant E&E assets is then
reclassified as development and production assets.
3.6 Financial instruments
Financial assets and financial liabilities are recognised in the Group's
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Loan and receivables
Loans and receivables are recognised initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition, loans and
receivables are measured at amortised cost using the effective interest
method, less any impairment losses.
Trade receivables are recognised initially at the transaction price and
subsequently measured at amortised cost, less any impairment losses.
Trade and other payables
Trade and other payables are initially measured at fair value, net of
transaction costs, and are subsequently measured at amortised cost, where
applicable, using the effective interest method, with interest expense
recognised on an effective yield basis.
Borrowing cost
Borrowing costs that are directly attributable to the acquisition,
development, or production of a qualifying asset, that necessarily takes
substantial time to prepare, are capitalised as part of the cost the
respective asset. It consists of interest and other costs in connection with
the borrowing of the funds. Capitalisation commences when activities to
prepare the asset are in progress or in future re-development activities and
ceases when all activities necessary to prepare the asset are completed. Other
borrowing costs are recognised in the statement of profit and loss and other
comprehensive income in the period in which they are incurred.
Derivative financial instrument
The group uses derivative financial instruments to hedge its commodity price
risk, such as commodity swap contracts. The Group has elected not to apply
hedge accounting on this derivative. Derivative financial instruments are
recognised at fair value on the date on which the contract is entered into and
subsequently measured at fair value. Derivatives are carried as a financial
asset when the fair value is greater than its initial measurement and
financial liabilities when fair value is negative. Any gains or losses arising
from the changes in fair value of the derivatives are recognised in the
statement of Comprehensive Income as a profit or loss for the year.
As at 30 September 2024, the Group's derivative liability amounted to £10.892
million as a result of the hedging agreement entered into with Trafigura Group
PTE Ltd under a Swap Contract (see Note 22)
In determining the fair values of the financial asset and liabilities,
instruments are analysed into Level 1 to 3 as follows:
Level 1: Fair value measurements derive from quoted prices
(unadjusted) in active market for identical assets or liabilities.
Level 2: Fair value measurement derives from inputs other than quoted
prices included within level 1 that are observable for the asset or liability,
either directly or indirectly.
Level 3: Fair value measurements derive from valuation techniques that
include inputs for the asset or liability that are not based on observable
market data.
The carrying value of the financial instrument approximates their fair value
and was valued using Level 2 fair value hierarchy valuation.
3.7 Impairment of assets
(a) Financial assets
Impairment provisions for current receivables are recognised based on the
simplified approach within IFRS 9. During this process the probability of the
non-payment of the trade receivables is assessed. This probability is then
multiplied by the amount of the expected loss arising from default to
determine the lifetime expected credit loss for the trade receivables. For
trade receivables, which are reported net, such provisions are recorded in a
separate provision account with the loss being recognised within
administration costs in the consolidated statement of comprehensive income. On
confirmation that the trade receivable will not be collectable, the gross
carrying value of the asset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to
related parties are recognised based on a forward looking expected credit loss
model. The methodology used to determine the amount of the provision is based
on whether there has been a significant increase in credit risk since initial
recognition of the financial asset. For those for which credit risk has
increased significantly, lifetime expected credit losses are recognised,
unless further information becomes available contrary to the increased credit
risk. For those that are determined to be permanently credit impaired,
lifetime expected credit losses are recognised.
(b) Non-financial assets
The carrying amounts of the Group's non-financial assets, other than deferred
tax assets, are reviewed at each reporting date to determine whether there is
any indication of impairment. If any such indication exists, then the asset's
recoverable amount is estimated. For assets that have indefinite lives, the
recoverable amount is estimated at each reporting date.
The recoverable amount of an asset or cash-generating unit is the greater of
its value in use and its fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the
time value of money and risk specific to the asset. For the purpose of
impairment testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or groups of assets (the "cash
generating unit").
An impairment loss is recognised if the carrying amount of an asset or its
cash generating unit exceeds its estimated recoverable amount. Impairment
losses are recognised in the profit or loss.
3.8 Oil and gas production assets
Expenditures related to the construction, installation or completion of
infrastructure facilities, such as platforms and pipelines, and the drilling
of development wells, including delineation wells, are capitalised within oil
and gas production assets. The initial cost of an asset comprises its purchase
price or construction cost, any costs directly attributable to bringing the
asset into operation, the initial estimate of the abandonment cost for
qualifying assets, and borrowing costs (see note 3.13 on decommissioning).
Oil and gas production assets are depreciated using a unit of production
method. The cost of producing wells is amortised over total proved and
undeveloped oil and gas reserves of the field concerned, except in the case of
assets whose useful life is shorter than the lifetime of the field, in which
case the straight-line method is applied. Rights and concessions are depleted
on the unit-of-production basis over the total proved developed and
undeveloped reserves of the relevant area. The unit-of-production rate
calculation for the depreciation of field development costs takes into account
expenditures incurred to date, together with sanctioned future development
expenditure.
The consideration receivable on disposal of an item of property, plant and
equipment or an intangible asset is recognised initially at its fair value by
the Group. However, if payment for the item is deferred, the consideration
received is recognised initially at the cash price equivalent. The difference
between the nominal amount of the consideration and the cash price equivalent
is recognised as interest revenue. Any part of the consideration that is
receivable in the form of cash is treated as a financial asset and is
accounted for at amortised cost.
3.9 Contingent liabilities
A contingent liability is a possible obligation that arises from past events
and whose existence will only be confirmed by the occurrence or non-occurrence
of one or more uncertain future events not wholly within the control of the
Group. It can also be a present obligation arising from past events that is
not recognised because it is not probable that outflow of economic resources
will be required, or the amount of obligation cannot be measured reliably.
A contingent liability is not recognised but is disclosed in the notes to the
accounts. When a change in the probability of an outflow occurs so that the
outflow is probable, it will then be recognised as a provision. A contingent
asset is a possible asset that arises from past events and whose existence
will be confirmed only by the occurrence or non-occurrence of one or more
uncertain events not wholly within the control of the Group.
The Company and its subsidiaries are, from time-to-time, parties to legal
proceedings and claims which arise in the ordinary course of business. The
Directors do not anticipate that the outcome of these proceedings and claims
will have a material adverse effect on the Group's financial position or on
the results of its operations.
3.10 Cash and Cash Equivalent
Cash in the statement of financial position is cash held on call with banks.
3.11 Income tax
Income tax expense represents the sum of the tax currently payable and
deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from profit as reported in the comprehensive income statement
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are not taxable or tax
deductible. The Group's liability for current tax is calculated using tax
rates (and tax laws) that have been enacted or substantively enacted in
countries where the Group and its subsidiaries operate by the end of the
financial period.
Deferred income taxes are calculated using the balance sheet method. Deferred
tax is generally provided on the temporary difference between the carrying
amounts of assets and liabilities and their tax bases. However, deferred tax
is not provided on the initial recognition of goodwill, nor on the initial
recognition of an asset or liability unless the related transaction is a
business combination or affects tax or accounting profit or at the time of the
transaction, it does not give rise to equal taxable and deductible temporary
differences. Deferred tax on temporary differences associated with shares in
subsidiaries and joint ventures is not provided if reversal of these temporary
differences can be controlled by the Group and it is probable that reversal
will not occur in the foreseeable future. In addition, tax losses available to
be carried forward as well as other income tax credits to the Group are
assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred
tax assets are recognised to the extent that it is probable that the
underlying deductible temporary differences will be able to be offset against
future taxable income. Current and deferred tax assets and liabilities are
calculated at tax rates that are expected to apply to their respective period
it is recognised, provided they are enacted or substantively enacted at the
reporting date.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the Consolidated Statement of Comprehensive Income, except
where they relate to items that are charged or credited directly to equity in
which case the related deferred tax is also charged or credited directly to
equity.
3.12 Foreign currencies
Monetary assets and liabilities in foreign currencies are translated into
sterling at the rates of exchange ruling at the reporting date. Transactions
in foreign currencies are translated into sterling at the rate of exchange
ruling at the date of the transaction. Exchange differences are recognised in
profit or loss.
3.13 Decommissioning
Provision for decommissioning is recognised in full on the installation of oil
and gas production facilities. The amount recognised is the present value of
the estimated future expenditure determined in accordance with local
conditions and requirements. A corresponding tangible fixed asset of an amount
equivalent to the provision is also created. This is subsequently depreciated
as part of the capital costs of the production and transportation facilities.
Any change in the present value of the estimated expenditure is reflected in
an adjustment to the provision and fixed assets.
3.14 Revenue
As described in note 5, the Group's revenue is driven by the sale of natural
gas, condensate and crude oil, the goods are sold on their own in separate
identified contracts with customers. The gas sales agreement has a fixed
discount to the ICIS Heren NBP price, the oil offtake agreement has a fixed
discount to the Brent forward curve while the condensate offtake agreement has
a fixed discount to the Naphtha forward curve. Delivery point of the sale is
the point at which the natural gas passes from the Company's pipeline to the
national grid or when crude oil passes from the delivery tanker to the
customers specified storage terminal, which represents the point at which the
Group fulfils its single performance obligation to its customer under
contracts for the sale of natural gas or crude oil. Revenue from the
production of oil and gas, in which the Group has an interest with other
producers is recognised proportionately based on the Group's working interest
and the terms of the relevant production sharing contracts.
Interest income is accrued on a time basis, by reference to the principal
outstanding and at the applicable effective interest rate.
3.15 Share-based payments
The Group has applied IFRS 2 Share-based Payment for all grants of equity
instruments.
The Group issues equity-settled share-based payments to its employees.
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over the vesting
period, based on the Group's estimate of the shares that will eventually vest.
Fair value is measured using the Black Scholes model. The expected life used
in the model has been adjusted, based on management's best estimate. The
inputs to the model include: the share price at the date of grant, exercise
price expected volatility, risk free rate of interest.
4. Critical accounting estimates and sources of
estimation uncertainty
In applying the accounting policies, the directors may at times require to
make critical accounting judgements and estimates about the carrying amount of
assets and liabilities. These estimates and assumptions, when made, are based
on historical experience and other factors that the directors consider are
relevant.
The key estimates and assumptions concerning the future and other key sources
of estimation uncertainty at the end of the financial year, that have
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are reviewed are as
stated below.
Key accounting judgements
(a) Impairment of non-current asset
The Group's non-current assets represent its most significant assets,
comprising oil and gas production assets, exploration and evaluation (E&E)
assets on its onshore sites.
Management is required to assess exploration and evaluation (E&E) assets
for indicators of impairment and has considered the economic value of
individual E&E assets. The carrying amount of the E&E assets are
subject to a separate review for indicators of impairment, by reference to the
impairment indicators set out in IFRS 6, which is inherently judgmental.
Processing operations are large, scarce assets requiring significant technical
and financial resources to operate. Their value may be sensitive to a range of
characteristics unique to each asset and key sources of estimation uncertainty
include proved reserve estimates, future cash flow expected to arise from the
cash-generating unit and a suitable discount rate.
In performing impairment reviews, the Group assesses the recoverable amount of
its operating assets principally with reference to the Group's independent
competent person's report, estimates of future oil and gas prices, operating
costs, capital expenditure necessary to extract those reserves and the
discount rate to be applied to such revenues and costs for the purpose of
deriving a recoverable value.
As detailed in notes 10 and 11, the carrying amount of the Group's E&E
assets and oil and gas production assets at 30 September 2024 were
approximately £70.951 (2023: £80.248 million) and £5.456 million (2023:
£5.628 million) respectively.
The methods, key assumptions, sensitivity and possible outcomes in relation to
the calculation of the estimates are detailed in note 10.
(b) Going concern
Forecast cashflows place reliance on there not being a suspension of gas
production for an unforeseen significant period. Current production levels
are in excess of derivative requirements. There are no present operational
concerns and whilst there are mitigating steps that could be taken, the
contracted derivative will need to be settled at a fixed point in time. In the
event of any significant delay this would be subject to further negotiation
with the derivative holder or further funding may be required.
As disclosed in note 3.3, the directors consider the Group and the Company to
be a going concern while the Group will continue to operate under the
management's plan and the Group expects to be able to continue to meet all
finance obligations as they fall due for at least next twelve months from the
date of approval these financial statements.
Key accounting estimates
(a) Decommissioning costs
Decommissioning costs will be incurred by the Group at the end of the
operating life of some of the Group's facilities and properties. The Group
assesses its decommissioning provision at each reporting date. The ultimate
decommissioning costs are uncertain, and cost estimates can vary in response
to many factors, including changes to relevant legal requirements, the
emergence of new restoration techniques or experience at other production
sites. The expected timing, extent and amount of expenditure may also change -
for example, in response to changes in reserves or changes in laws and
regulations or their interpretation. Therefore, significant estimates and
assumptions are made in determining the provision for decommissioning. As a
result, there could be significant adjustments to the provisions established
which would affect future financial results.
External valuers may be used to assist with the assessment of future
decommissioning costs. The involvement of external valuers is determined on a
case-by-case basis, taking into account factors such as the expected gross
cost and timing of abandonment, and is approved by the directors. Selection
criteria include market knowledge, reputation, independence and whether
professional standards are maintained.
As detailed in note 20, the provision at the reporting date represents
management's best estimate of the present value of the future decommissioning
costs required.
(b) Valuation of derivative liability
On 01 June 2021, Angus Energy Weald Basin no. 3 Limited (AWB3) entered into a
derivative agreement with Mercuria Energy Trading SA (METS) under a Swap
contract as part of the condition of the Loan Facility (see note 21). The
derivative instrument was used to mitigate price risk on the expected future
cash flow from the production of Saltfleetby Gas Field. Under the Swap
contract, AWB3 will pay METS the floating price while METS will pay AWB3 the
fixed price on the sale of gas from the field.
After the refinancing with Trafigura, the existing Mercuria hedges were
novated and restructured with Trafigura, incurring a credit charge of 6 pence
per therm.
The carrying value of the financial instrument approximates their fair value
and was valued using Level 2 fair value hierarchy valuation. The fair value
has been determined with reference to commodity yield curves, as adjusted for
liquidity and trading volumes as at the reporting date supplied by the Group's
hedging partner, Trafigura. Management also assessed the valuation of these
swaps using publicly available forward pricing curves.
5. Revenue and segment information
Currently, the Group's principal revenue is derived from the sale of natural
gas and oil. All revenue arose from continuing operations within the United
Kingdom. Therefore, management considers no detail of operating and
geographical segments information is to be reported. Nonetheless, the Group's
revenue can be classified into the following streams:
2024 2023
£'000 £'000
Sale of oil 1,721 1,372
Sale of natural gas 20,081 26,836
21,802 28,208
All the non-current assets of the Group are located in the United Kingdom. All
revenue arising from the sale of natural gas is derived from sales to
Trafigura and represents over 92% of the Company's revenue.
6. Operating profit
Operating profit is stated after charging:
2024 2023
£'000 £'000
Depreciation of owned assets 6 10
Employee benefit expense 2,177 1,620
Auditor's remuneration
Fees payable to the company's auditor in respect to the audit of the Parent 73 70
Company and consolidated financial statements
73 70
Adjusted operating loss
The adjusted operating loss has been arrived at
after crediting:
2024 2023
£'000 £'000
(Loss)/profit after tax (4,301) 117,810
Derivative financial instrument profit (10,822) (136,966)
Adjusted loss after tax (15,123) (19,156)
7. Finance cost
2024 2023
£'000 £'000
Loss on revaluation of AFS investment 6 9
Other finance costs 1,376 1,766
Loan interest expense 2,722 2,212
4,104 3,987
8. Employee benefit expense
2024 2023
£'000 £'000
Wages and salaries excluding directors salary 1,895 1,426
Social security costs excluding directors NI 282 194
2,177 1,620
In addition to the above, directors remuneration from the group totalled
£609,000 which comprised £574,000 salaries and £35,000 termination payment
(2023: £1,188,000 salaries).
Key management are considered to be the directors. Details of each director's
emoluments are in the directors' remuneration report.
2024 2023
Number Number
The average number of employees during the year was:
Director 4 5
Management 12 9
Operators 11 14
27 28
9. Taxation on ordinary activities
No liability to corporation tax arose for the years ended 30 September 2024
and 2023, as a result of underlying losses brought forward.
Reconciliation of effective tax rate
2024 2023
£'000 £'000
(4,301) 117,810
(Loss) / Gain before tax
UK Ring Fenced Corporation Tax rate of 40% (2023: 40%) (1,720) 47,124
Expenses not deductible for tax purposes 6,803 5,438
Unrecognised deferred tax (5,083) (52,562)
- -
The Group has incurred indefinitely available tax losses of £166.4m (2023:
£179.1m), which includes tax loss incurred on the acquisition of Saltfleetby
Energy Limited, to carry forward against future taxable income of the
subsidiaries in which the losses arose and they cannot be used to offset
taxable profits elsewhere in the Group.
10. Oil and gas production assets
Total
£'000
Cost or valuation
At 1 October 2022 82,288
Additions 11,067
Increase abandonment provision 597
At 30 September 2023 93,952
Additions 3,479
Increase abandonment provision 726
At 30 September 2024 98,157
Depreciation and impairment
At 1 October 2022 1,496
Impairment of asset 3,717
Charge for the year 8,491
At 30 September 2023 13,704
Impairment of asset 4,770
Charge for the year 8,732
At 30 September 2024 27,206
Net book value
At 30 September 2023 80,248
At 30 September 2024 70,951
As at 30 September 2024, the Group retained a 100% interest in the Saltfleetby
Gas Field, an 80% interest in the Lidsey Oil Field, an 80% interest in the
Brockham Oil Field and is still the operator of all the fields.
In assessing whether an impairment is required, the carrying value of the
asset or cash generating unit ("CGU") is compared with its recoverable amount.
The recoverable amount is determined from value in use calculations based on
cash flow projections from revenue and expenditure forecasts covering the
economic life of the field. Assumptions involved in impairment measurement
include estimates of commercial reserves and production volumes, future crude
oil and gas prices, discount rates and the level and timing of expenditures,
all of which are inherently uncertain. The key assumptions used are as follow:
2024 2023
Discount rate (post-tax) 10% 11%
Natural gas price (per Therm) £0.86 £1.13
Crude oil price (per barrels) $83 $34
The growth rate is assumed to be zero and the level of production is constant
on the basis the production plant is assumed to be at the most efficient
capacity over the period of extraction.
Commercial reserves are proven and probable ("2P") oil and gas reserves,
calculated on an entitlement basis. Estimates of commercial reserves underpin
the calculation of depletion and amortisation on a Unit of Production ("UOP")
basis. Estimates of commercial reserves include estimates of the amount of oil
and gas in place, assumptions about reservoir performance over the life of the
field and assumptions about commercial factors which, in turn, will be
affected by the future oil and gas price.
Annual estimates of oil and gas reserves are generated internally by the Group
with external input from operator profiles and/or a Competent Person. These
are reported annually to the Board. The self-certified estimated future
production profiles are used in the life of the fields which in turn are used
as a basis in the value-in-use calculation.
The discount rate is based on the specific circumstances of the Group and its
operating segment, with appropriate adjustments made to reflect the risks
specific to the CGU and to determine the pre-tax rate. In considering the
discount rates applying to the CGU, the directors have considered the relative
sizes, risks and the inter-dependencies of its CGU. An increase of 6% to the
discount rate used for the Saltfleetby Gas Field would lead to an increased
impairment to the carrying value of the CGU and an increase of 4% to the
discount rate used for the Brockham Oil Field would lead to an increased
impairment of £100,000 to the carrying value of the CGU.
In performing the impairment review, management assessed the economic value of
individual production assets. Following the analysis in which management
considered the lower than expected production rates of BRX4Z following the
workover performed in May 2024, an impairment charge of £4.770m was recorded
for Brockham Oil Field.
Furthermore, a sensitivity analysis has been carried out for Saltfleetby gas
field and Brockham oil field and the results of the analysis can be summarised
as follows:
· The estimated natural gas price would need to fall by circa 10
percentage points lower than the basis assumption before an impairment of the
Saltfleetby gas field would need to be considered.
· The estimated brent crude price would need to fall by circa 4
percentage points lower than the base assumption for Brockham before an
increased impairment of £100,000 to the respective oil field would need to be
considered.
11. Exploration and evaluation assets
Total
£'000
Cost or valuation
At 1 October 2022 5,572
Additions 52
Increase abandonment provision 4
At 1 October 2023 5,628
Additions 18
Increase abandonment provision 2
Disposal (192)
At 30 September 2024 5,456
In performing impairment review, the Group assessed the economic value of
individual exploration and evaluation (E&E) assets and had considered no
indication of impairment to these E&E assets. In respect of Balcombe, the
Directors have considered the likelihood of a successful appeal. Should the
appeal be unsuccessful the management will consider further legal options and
assess whether an impairment is necessary. See Strategic Review on page 6 of
the annual report.
12. Subsidiaries
The details of the subsidiaries are as follows:
Name of subsidiary/ place of incorporation Principal activity
Angus Energy Holdings UK Limited Investment holding company
Angus Energy Weald Basin No.1 Limited Investment holding company
Angus Energy Weald Basin No.2 Limited Investment holding company
Angus Energy Weald Basin No.3 Limited* Oil extraction for distribution to third parties
Angus Energy North America Limited Dormant company
Saltfleetby Energy Limited Natural Gas Extraction
* indirect wholly owned by Angus Energy Weald Basin No.2 Limited (AEWB2).
The registered office address of the respective entity as follow:
Registered address Name of subsidiary
Building 3 Chiswick Park, 566 Chiswick High Road, London, W4 5YA. Angus Energy Weald Basin No.2 Limited
Angus Energy North America Limited
Saltfleetby Energy Limited
5 South Charlotte Street, Edinburgh, Scotland, EH2 4AN Angus Energy Holdings UK Limited
Angus Energy Weald Basin No.1 Limited
Angus Energy Weald Basin No.3 Limited
13. Available for sale financial investments
2024 2023
£'000 £'000
At 1 October 11 20
Loss on revaluation for the year (6) (9)
At 30 September 5 11
Financial investments are shares held in Alba Mineral Resources
Plc (Alba) consisting of 12,407,910 shares.
The changes in the value of these investments have been
determined directly by reference to the published price quoted on AIM at the
reporting date.
14. Trade and other receivables
2024 2023
£'000 £'000
Current
Accrued sales income 1,801 2,121
Amounts due from customers/farmees 285 195
Rent deposit 150 130
VAT recoverable 610 196
Other receivables 528 334
TOTAL 3,374 2,976
The carrying amount of trade and other receivables approximates to their fair
value.
2024 2023
£'000 £'000
Trade and other receivables 3,374 3,080
Less: Impairment allowance - (104)
3,374 2,976
15. Share capital and Share Premium
Allotted, called up and fully paid:
Issue price Number of shares Ordinary share capital Share premium
In pence
Ordinary share of £0.002 each £'000 £'000
At 30 September 2022 2,764,264,264 5,529 38,708
Issue of shares 14 October 2022 1.0989 127,400,127 255 1,145
Issue of shares 28 October 2022 1.0989 10,193,759 20 92
Issue of shares 2 November 2022 1.0989 36,599,864 73 329
Issue of shares 21 November 2022 1.35 156,000 0.5 2
Issue of shares 21 November 2022 1.5 156,000 0.5 2
Issue of shares 8 December 2022 1.2 250,000 0.5 3
Issue of shares 8 December 2022 1.35 125,000 0.25 1
Issue of shares 8 December 2022 1.5 125,000 0.25 1
Issue of shares 19 December 2022 1.65 341,219,000 682 4,940
Issue of shares 20 January 2023 1.65 89,781,000 180 1,302
Issue of shares 20 January 2023 1.65 60,606,061 122 879
Issue of shares 25 January 2023 1.2 806,452 2 8
Issue of shares 25 January 2023 1.35 403,226 0.5 5
Issue of shares 25 January 2023 1.5 403,226 0.5 5
Issue of shares 5 February 2023 1.2 1,612,903 3 16
Issue of shares 4 April 2023 1 145,293,100 290 1,162
Issue of shares 6 April 2023 1.3638 10,998,719 22 128
Issue of shares 21 July 2023 0.9534 31,466,331 63 237
Issue of shares 20 September 2023 1 5,000,000 10 40
Less: Issuance of costs - - (3,505)
At 30 September 2023 3,626,860,032 7,254 45,500
Issue of shares 6 November 2023 0.66 516,033,308 1,032 2,374
Issue of shares 7 March 2024 0.4 25,000,000 50 50
Issue of shares 27 March 2024 0.4 226,513,000 453 453
Issue of shares 15 May 2024 0.3544 27,448,470 55 42
Less: Issuance of costs - - (7)
At 30 September 2024 4,421,854,810 8,844 48,412
On 6 November 2023, the company issued 516,033,308 ordinary shares at 0.66
pence per share. They were issued in relation to the Kemexon £3m Bridge Loan
facility conversion.
On 7 March 2024, the company issued 25,000,000 ordinary shares at 0.4 pence
per share. They were fee shares issued in relation to Trafigura Loan Facility.
On 27 March 2024, the company issued 226,513,000 ordinary shares at 0.4 pence
per share. They were fee shares issued in relation to Trafigura Loan Facility.
On 15 May 2024, the company issued 27,448,470 shares at 0.3544 pence per
share. They were issued in relation to the agreed ORRI settlement.
16. Share-based payments
In 2016, the Group implemented an Enterprise Management Incentive Scheme
followed by a NED and Consultant Share Option Scheme (The Scheme).
At 30 September 2024, the following share options and warrants were
outstanding in respect of the Ordinary shares:
Outstanding as at 01 Oct 2023 Granted during the year No. of options forfeited during the year Exercised during the year Outstanding as at Final expiry dates
Exercise price 30 September 2024
£0.06 15,775,991 - (2,149,803) - 13,626,188 13 Nov 2026
£0.09 1,050,000 - - - 1,050,000 13 Nov 2026
£0.08 9,400,000 - (1,000,000) - 8,400,000 24 Aug 2028
£0.02 20,300,000 - (3,100,000) - 17,200,000 15 Jul 2029
£0.015 24,500,000 - (5,750,000) - 18,750,000 31 Mar 2031
£0.02 156,500,000 - (39,000,000) - 117,500,000 9 October 2026
£0.018 70,000,000 - - - 70,000,000 16 April 2033
£0.0067 - 25,000,000 - - 25,000,000 19 Dec 2034
£0.0067 - 30,000,000 - - 30,000,000 29 August 2034
£0.0067 - 2,500,000 - - 2,500,000 29 August 2034
£0.0165 341,633,886 - - - 341,633,886 20 June 2026
£0.0165 150,000,000 - - - 150,000,000 24 March 2026
£0.015 - 300,000,000 - - 300,000,000 25 July 2026
Warrant 491,633,886 300,000,000 - - 791,633,886
Share options 297,525,991 57,500,000 (50,999,803) - 304,026,188
The weighted average exercise price of share options and warrants was
£0.01717 at 30 September 2024 (2023: £0.0195). The weighted average
remaining contractual life of options and warrants outstanding at the end of
the year was 5 years (2023:3 years). The weighted average fair value of share
option was £0.0067 (2023: £0.0128) each on the grant date. The vesting
criteria for the share options are subject to share price growth reaching the
target level.
These fair values were calculated using the Black Scholes warrant pricing
model. The inputs into the model were as follows:
Options Options Warrants
Stock price 0.25p 0.48p 0.48p
Exercise price 0.67p 0.67p 0.66p
Risk-free rate 4.75% 4.75% 4.75%
Volatility 99.35% 99.35% 99.35%
Time to maturity 10 years 10 years 3 years
The Group recognised a share-based payment charge of approximately £0.410m
(2023: £1.377m) relating to the options issued in the period. The Group
recognised finance costs of £0.817m (2023: £1,663) relating to the warrants
issued as part of the loan arrangement during the period.
No options were exercised in both reporting year 2023 and 2024. There were
50,999,803 share options cancelled during 2024. There were no Warrants
exercised during 2024. There remain 33,426,188 options and 791,633,886
warrants exercisable as at 30 September 2024.
17. Reserves
2024 2023
£'000 £'000
Merger reserve (200) (200)
Merger reserve
The merger reserve arose on the acquisition of Angus Energy Holdings Limited
by the Company.
18. (Loss)/Earnings per share ((LPS)/EPS)
Basic LPS/EPS amounts are calculated by dividing the profit or loss for the
year attributable to equity holders of the Group by the weighted average
number of ordinary shares outstanding during the period.
Diluted LPS/EPS amounts are calculated by dividing the profit or loss for the
year attributable to equity holders of the Group by the weighted average
number of ordinary shares outstanding during the period plus the weighted
average number of ordinary shares that would be issued on conversion of all
the dilutive potential ordinary shares into ordinary shares.
The earnings per share information based upon the 4,421,854,810 (2023:
3,626,860,032) ordinary shares are as follows:
2024 2023
£'000 £'000
Net (loss)/profit attributable to equity holders of the parent company (4,301) 117,810
Weighted average number of basic ordinary shares 4,232,601,890 3,385,813,578
Basic (LPS)/EPS (in pence) (0.10) 3.48
2024 2023
£'000 £'000
Net (loss)/profit attributable to equity holders of the parent company (4,301) 117,810
Weighted average number of diluted ordinary shares 4,232,601,890 4,046,981,983
Diluted (LPS)/EPS (in pence) (0.10) 2.91
At 30 September 2024 the outstanding options and warrants has an antidilutive
effect on the weighted average number of diluted ordinary shares.
19. Trade and other payables
2024 2023
Due within one year £'000 £'000
Trade payables 3,637 4,249
Deferred consideration on Saltfleetby Energy Limited acquisition 2,887 5,244
Lease liability 18 17
Accruals 857 176
Interest payable - loan 231 315
Other payables 241 269
ORRI 444 -
8,315 10,270
Due after more than one year 2024 2023
£'000 £'000
Lease liabilities - 23
- 23
The carrying amount of trade and other payables approximates to their fair
value.
On 24 May 2022, the Company executed a share purchase agreement to acquire the
entire issued share capital of Saltfleetby Energy Limited from Forum Energy
Services Limited, giving the Company 100% ownership of the Saltfleetby Gas
Field. The total effective consideration payable pursuant to the SPA is the
sum of £14,052,000 of which up to £6,250,000 is deferred consideration.
After the Trafigura refinancing in February 2024, the deferred consideration
had been reduced to £2.88 million. Forum agreed to restructure the remaining
payments with a new profile of £400,000 in June 2024 and £300,000 in each
calendar quarter end thereafter until June 2025 when the balance of £1.59
million will become payable, together with interest on the balance, payable in
shares, charged at 8% over SONIA. Forum can (in the event that the Company
does not pay in cash) elect to receive payment either in cash or new ordinary
shares issued at a 15% discount to the 30-Day Volume Weighted Average Price.
As at the approval date of the Financial Statements, the balance is £2.88
million.
20. Provisions for other liabilities and charges
2024 2023
£'000 £'000
Abandonment costs
Balance b/fwd 4,970 4,369
Increased provision for Saltfleetby 436 288
Increased provision Brockham 80 128
Increased provision for Lidsey 210 176
Increase provision Balcombe 2 9
Balance c/fwd 5,698 4,970
The Group makes full provision for the future costs of decommissioning oil and
gas production facilities, pipelines and the installation of those facilities.
The above provision was calculated over the economic life of the field and is
dependent on when the producing oil and gas properties are expected to cease
operations. This is entirely dependent on economic factors which include
commodity pricing, the performance and the reserves of the Asset.
These provisions have been created based on the Group's internal estimates and
expectations of the decommissioning costs likely to incur in the future. For
the period under review, the directors have assessed that the discount rate
and inflation rate to be applied to the current cost of decommissioning to be
similar. On this basis, the current cost is considered to be similar to the
discounted net present value.
21. Loan Payable
£12m Loan Facility
On 17 May 2021, the Group signed a Loan Facility, conditional on the setting
of the hedge (see Note 22) and regulatory approval of the royalty from the
NSTA, between Angus Energy and Saltfleetby Energy Limited and Mercuria Energy
Trading Limited and Aleph Saltfleetby Limited as the co-Lender. The term of
the Loan Facility provides for a four-year amortisation loan facility of up to
£12 million with a 12% margin over LIBOR, a 3% commitment fee payable out of
the facility, a share granted of 30 million shares in Angus, issued over the
life of the facility and an override of 8% of gross revenue following the
repayment of the facility.
The £12 million facility was required for the re-development of the
Saltfleetby Gas Field and the drilling of the side-track well in line with the
Field Development Plan and the Plans for the acceleration of production
through the fast-tracking of the side-track well. The full amount of the
facility together with arising interest was fully repaid through Trafigura
Loan facility on 27 February 2024.
2024 2023
Repayment date schedule are as follows: £'000 £'000
Current
30 September 2024 - 4,200
Non-Current
30 September 2025 - 3,013
Total Facility Loan - £7,213
£3m Bridge Loan
On 28 March 2023, the Company entered into a £3m junior debt facility (the
"Bridge Facility"). The Bridge Facility had an initial term of three months,
extendable with the payment of a 3% roll fee for a further three months. The
Bridge Facility was priced at SONIA + 15% and committed the Company to issue
150 million warrants, struck at 1.65p/share. The Bridge Facility was then
rolled according to its terms by a further three months with a final maturity
date of 28 September 2023.
£3m Bridge Loan 2024 2023
£'000 £'000
Principle - 3,000
Interest and fees - 406
- 3,406
On 30 October 2023, and previously announced on 28 September 23, Kemexon Ltd
agreed to convert its £3m Junior Bridge Facility, together with interest and
fees, into equity in the Company at a price of 0.66 pence per share.
Accordingly, on 6 November 2023, the Company issued 516,033,308 ordinary
shares at 0.66 pence per share.
£6m Bridge Loan
On 21 July 2023, the Company entered into a £6m junior debt facility (the
"2(nd) Bridge Facility") with Aleph Finance Limited ("AFL"), an associate of
the Company's Substantial Shareholder Aleph Commodities Limited ("ACL"). The
2(nd) Bridge Facility had an initial term of three months, extendable, at the
option of the Company, for a further 3-month period. Thereafter any roll is
with mutual agreement. A roll fee of 3% applies. Interest on the Bridge
Facility, which is payable quarterly, is capitalised on each 3-month period
and added to loan balance. There is no exit fee. A 3% penalty fee applies
should the Bridge Facility be repaid earlier than its stated maturity.
The 2(nd) Bridge Facility was priced at SONIA (Sterling Overnight Index
Average) + 15%. The Company issued 300 million 3 year warrants to ACL (or
associates or parties nominated by ACL) at a strike of 0.67p per share. The
warrant strike price will adjust to the price of any equity issued during the
term of the Bridge Facility if such equity issuance is at a price which is
lower than the Warrant strike price.
The Bridge Facility was then rolled according to its terms by a further three
months and then again by one month with a final maturity date of 19 February
2024. The loan was repaid in full on 22 February 2024 out of the proceeds of
the £20m refinancing.
£6m Bridge Loan 2024 2023
£'000 £'000
Principal - 6,000
Interest and fees - 223
- 6,223
£20m Trafigura Loan
On 22 February 2024, the Company announced that terms had been agreed with a
subsidiary of Trafigura Group PTE Ltd ("Trafigura") for a refinancing of its
existing debt. The Company signed definitive loan documentation which allows
it to draw down in full on the £20 million loan facility (the "Facility")
with Trafigura. The existing senior debt of £4.56 million was transferred to
Trafigura and the proceeds of the Facility was applied to repay the bridge
facility of £6 million, and £1.75 million of Forum Energy's deferred
consideration from the sale of Saltfleetby Energy Limited's 49% interest in
the Saltfleetby Field to Angus in 2022. The balance of funds from the Facility
has been used to pay legacy creditors and invest in wells and equipment to
increase gas production from Saltfleetby and restart oil production from
Brockham Field in Southern England. The existing security package encompassing
first fixed and floating charges over all the Group's leases, licences and
equipment has been novated to Trafigura as has the Gas Sales Agreement with
Shell Trading Europe Limited. The existing hedge contract was novated to
Trafigura and replaced with a gas offtake agreement with embedded price
protection. The Group incurred transaction costs of £1.85m, which have been
capitalisied against the loan proceeds and will be amortised over the life of
the loan facility. £0.548m of the cost was paid in cash, 0.550m was offset
against the loan proceeds drawn down, and 0.750m was settled by the issue of
shares. At 30 September 2024, the remaining unamortised amount was £1.632m.
£20m Trafigura Loan 2024 2023
£'000 £'000
Principal 20,000 -
20,000 -
LOAN PAYABLES SUMMARY: 2024 2023
£'000 £'000
CURRENT
£12m Loan Facility - 4,200
£3m Bridge Loan - 3,406
£6m Bridge Loan - 6,223
£20m Trafigura Loan 3,380 -
3,380 13,829
NON-CURRENT
£12m Loan Facility - 3,013
£20m Trafigura Loan 14,988 -
14,988 3,013
22. Derivative Liability
On 01 June 2021, Angus Energy Weald Basin no. 3 Limited (AWB3) entered into a
derivative agreement with Mercuria Energy Trading SA (METS) under a Swap
contract as part of the condition of the Loan Facility (see Note 21). The
derivative instrument was used to mitigate price risk on the expected future
cash flow from the production of Saltfleetby Gas Field. Under the Swap
contract, AWB3 will pay METS the floating price while METS will pay AWB3 the
fixed price on the sale of gas from the field.
Due to the delay in the production of the Saltfleetby field, which pushed
first gas production to 30 August 2022, the hedge profile had been revised.
The Company's hedge counterparty agreed to allow the Company to crystallise
(i.e. unwind) 50% of its forward hedge liability from Q3 2024 to the end of
the hedge profile in June 2025. Settlement for each unwind is deferred until
the periods in question and no interest is charged.
After the refinancing with Trafigura, the existing Mercuria hedges were
novated and restructured with Trafigura, incurring a credit charge of 6 pence
per therm. The Trafigura Facility requires a rolling gas price protection
policy to be put in place which stipulates a minimum price protected amount
equal to 45% of gas produced for the 12 months immediately ahead, and 33% for
the following 6 months and 0% thereafter.
The Company also struck 7.3 million therms of new hedges to price protect the
Mercuria hedges crystallised in July 2023. The Company has received further
flexibility under its financing facility with Trafigura to manage these
commitments ahead of the installation of the booster compressor and the expiry
of the legacy hedges by deferring the settlement date up to 11 months at its
discretion. Any deferral will bear interest at SONIA plus 10%. The resulting
revised hedge profile as at 30 September 2024 as shown below:
Mercuria hedges restructured with Trafigura as at 30 September 2024:
Period of Gas Production Quantity in Therms Fixed price in pence per Therm
1-Oct-24 31-Mar-25 7,500,000 39.00
1-Apr-25 30-Jun-25 3,750,000 29.25
11,250,000
Hedges struck under the Trafigura Facility as at 30 September 2024:
Period of Gas Production Quantity in Therms Fixed price in pence per Therm
1-Jul-25 31-Jul-25 1,085,000 86.05
1-Aug-25 31-Aug-25 1,085,000 86.05
1-Sep-25 30-Sep-25 1,050,000 86.05
1-Oct-25 31-Oct-25 1,085,000 90.26
1-Nov-25 30-Nov-25 1,050,000 90.26
1-Dec-25 31-Dec-25 1,085,000 90.26
6,440,000
Crystalised hedges at fixed price as at 30 September 2024:
Period of Gas Production Quantity in Therms Fixed price in pence per Therm
1-Sep-24 30-Sep-24 600,000 66.60
1-Oct-24 31-Oct-24 620,000 70.75
1-Nov-24 30-Nov-24 600,000 70.75
1-Dec-24 31-Dec-24 620,000 70.75
1-Jan-25 31-Jan-25 620,000 64.10
1-Feb-25 28-Feb-25 560,000 64.10
1-Mar-25 31-Mar-25 620,000 64.10
1-Apr-25 30-Apr-25 600,000 43.60
1-May-25 31-May-25 620,000 43.60
1-Jun-25 30-Jun-25 600,000 43.60
6,060,000
During the period, the Company realised a derivative cost of £8.322m.
As of the reporting date, the expected cash flow on the sale of natural gas
amounted to £13.689m resulting in a loss of £10.892m of which the Group has
now recorded a 100% share of its new working interest due to the acquisition
of Saltfleetby Energy Limited. The resulting loss on the Swap contract was a
result of the steep rise in the prices of natural gas, affecting the Group as
the floating price payer as of the reporting date.
The Group has recognised the gross liability at 100%, due to the acquisition
of Saltfleetby Energy Limited (SEL) with a working interest of 49% plus the
Group's working interest of 51% prior to acquiring SEL.
Cash Flow of Derivative Instruments 30 Sep 2025 30 Sep 2026 Total
£'000 £'000 £'000
Net Liability on Swap Contract (10,702) (190) (10,892)
Specific valuation technique used to value the financial instruments includes
fair value measurement derived from inputs other than quoted prices included
within Level 1 of fair value hierarchy valuation, that are observable for the
instrument either directly or indirectly (see accounting policy for
Derivatives Instrument).
The carrying value of the financial instrument approximates their fair value
and was valued using Level 2 fair value hierarchy valuation. The fair value
has been determined with reference to commodity yield curves, as adjusted for
liquidity and trading volumes as at the reporting date supplied by the Group's
derivative partner, Mercuria Energy Trading. Management has carried out its
own valuation of the hedge using the same method. Future dated market prices
have been taken from the Heren Report dated 30 September 2024. This has
resulted in a liability of £10,873m and represents a 0.18% variance to
Trafigura's calculation. Management considered that the value provided by
Trafigura best represented the fair value of these arrangements as the forward
pricing curves did not take into account other market conditions. This is a
key estimate and has been disclosed in note 4.
The nature of these arrangements in the present environment is such that
material fluctuations in the value of the derivatives are occurring on a daily
basis. Wholesale gas prices have increased substantially since entering into
the contracts, but remain highly volatile, and as a result, the loss on these
contracts has also increased significantly.
The loss on these contracts at 30 September 2024 represents the forecast
spot-price value of the gas to be extracted against the value fixed to be
provided to the Group. Under projected gas production volumes, these
arrangements will fix the amount payable to the group for the contracted
volumes, with any excess volume being able to be sold at the available spot
price.
In the event that the Group does not meet its production timetable, the swaps
will crystallise as a liability at the dates at the proposed periods of gas
production in the swap agreements.
23. Financial instruments
The Group's principal financial instruments comprise cash and cash
equivalents, trade and other receivables, derivative instruments and trade and
other payable. The Group's accounting policies and method adopted, including
the criteria for recognition, the basis on which income and expenses are
recognised in respect of each class of financial assets, financial liability
and equity instrument are set out in Note 3. The Group do not use financial
instruments for speculative purposes.
The principal financial instruments used by the Group, from which financial
instrument risk arises, are as follows:
Financial Asset at amortised cost Financial Liabilities at amortised cost Financial Liabilities at fair value through profit and loss TOTAL
30 September 2024 £'000 £'000 £'000 £'000
Asset
Trade and other receivables 3,374 - - 3,374
Cash and cash equivalents 2,163 - - 2,163
Total financial assets 5,537 - - 5,537
Liabilities
Trade and other payable - 5,410 - 5,410
Deferred consideration on acquisition of Saltfleetby Energy Limited -
- 2,887 2,887
Lease liabilities - 18 - 18
Debt financing - 18,368 - 18,368
Derivative liability - - 10,892 10,892
Total financial liabilities - 26,683 10,892 37,575
Financial Asset at amortised cost Financial Liabilities at amortised cost Financial Liabilities at fair value through profit and loss TOTAL
30 September 2023 £'000 £'000 £'000 £'000
Asset
Trade and other receivables 2,976 - - 2,976
Cash and cash equivalents 2,172 - - 2,172
Total financial assets 5,148 - - 5,148
Liabilities
Trade and other payable - 5,010 - 5,010
Deferred consideration on acquisition of Saltfleetby Energy -
Limited
5,244
- 5,244
Lease liabilities - 40 - 40
Debt Financing - 16,841 - 16,841
Derivative Liability - - 21,714 21,714
Total financial liabilities - 27,135 21,714 48,849
Capital management
The Group manages its capital to ensure that it will be able to continue as a
going concern while attempting to maximise the return to stakeholders through
the optimisation of the debt and equity balance. The capital structure of the
group consists of issued capital (see note 15) and external loans (see note
21).
Credit risk
Credit risk is the risk that a counter-party will cause a financial loss to
the Group by failing to discharge its obligations to the Group. The Group
manages its exposure to this risk by applying limits to the amount of credit
exposure to any one counterparty and employs strict minimum credit worthiness
criteria as to the choice of counterparty. The maximum exposure to credit risk
for receivables and other financial assets is represented by their carrying
amount.
Fair values
Management assessed that the fair values of cash and short-term deposits,
trade receivables, trade payables and other current liabilities approximate
their carrying amounts largely due to the short-term maturities of these
instruments.
Interest rate risk
The Group and company's policy is to fund its operations through the use of
retained earnings and equity.
The Group exposure to changes in interest rates relates primarily to cash at
bank, loan facility and amount owed by related parties. Cash is held either on
current or short term deposits at a floating rate of interest determined by
the relevant bank's prevailing base rate.
Interest rate sensitivity
The following table demonstrates the sensitivity to reasonably possible
changes in the interest add-on rate for the £20 million loan with the
principal interest rate held constant at 8% (see note 21). The add-on-interest
rate is linked to SONIA (Sterling Over Night Indexed Average) and based on the
September 2024 average of 5.133% it had an immaterial impact of £103,000.
Increase / (decrease)
Increase/decrease in add-on Interest rate 30 September
2024 2023
£ £
+ 10% 103 -
- 10% (103) -
Foreign currency exchange risks
Foreign currency risk is the risk that the fair value or future cash flows of
an exposure will fluctuate because of the changes in foreign exchange rates.
The Group's exposure to the risk of changes in foreign exchange rates relates
primarily to the Group's operating activities (when revenue or expense is
denominated in a foreign currency).
The Group does not hedge its foreign currencies. Transactions with customers
regarding oil sales are denominated in US Dollars. The Group has bank accounts
in US Dollars to mitigate against the exchange risks, which is very minimal to
its value. At 30 September 2024, the GBP cash balance denominated in USD was
£113,621 (2023; £323).
Liquidity risks
The principal risk to the Group is liquidity, which arises from the Group's
management of working capital. It is a risk that the Group will encounter
difficulty in meeting its financial obligations as they fall due. This aspect
is kept under review by the directors and in this respect, management carries
out rolling 12-month cash flow projections on a monthly basis as well as
information regarding cash balances. It is the Group's policy as regards
liquidity to ensure sufficient cash resources are maintained to meet
short-term liabilities.
The maturity profile of the Group's financial liabilities at the reporting
dates based on contractual undiscounted payments are summarised below:
2024 2023
£'000 £'000
Trade and other payable
Within one month 2,508 3.564
Within two to three months 2,459 1,463
Within four to twelve months 3,330 5,243
8,297 10,270
2024 2023
£'000 £'000
Lease liabilities
Within one month - -
Within two to three months - -
Within four to six months 18 23
Within six to twelve months - -
More than twelve months - 17
18 40
2024 2023
£'000 £'000
Loan liabilities
Within one month - 9,629
Within two to three months - 1,050
Within four to six months 2,552 1,050
Within six to twelve months 3,680 2,100
More than twelve months 19,945 3,013
26,177 16,842
*The table included estimate on interest for the loan duration
2024 2023
£'000 £'000
Derivative liabilities
Within one month 1,518 874
Within two to three months 2,347 1,903
Within four to six months 3,468 3,493
Within six to twelve months 3,369 6,557
More than twelve months 190 8,887
10,892 21,714
Commodity price risk
The Group is exposed to the risk of fluctuations in prevailing market
commodity prices of oil and gas products it produces. The table below
summarised the impact on profit before tax for changes in commodity prices
Commodity price sensitivity
The analysis is based on the assumption that the crude oil, condensate oil and
natural gas prices move 10% resulting in a change of US$7.89/bbl for crude
oil, US$63.18/ton for condensate oil and GBP 0.07/Therm for natural gas sales
for 2024, with all other variables held constant. Reasonably possible
movements in commodity prices were determined based on a review of the average
spot prices at each reporting periods.
Increase/decrease in crude oil prices Increase / (decrease) in profit
before tax for the year ended
30 September
2024 2023
£'000 £'000
Average spot price increased by 10% 16 -
Average spot price decreased by 10% (16) -
Increase/decrease in condensate oil prices Increase / (decrease) in profit
before tax for the year ended
30 September
2024 2023
£'000 £'000
Average spot price increased by 10% 158 143
Average spot price decreased by 10% (158) (143)
Increase / (decrease) in profit before tax for the year ended
Increase/decrease in gas prices 30 September
2024 2023
£'000 £'000
Average spot price increased by 10% 2,008 2,683
Average spot price decreased by 10% (2,008) (2,683)
24. Net debts reconciliation
The below table sets out an analysis of net debt and the movement in net debt
for the years presented
2024 2023
£'000 £'000
Cash and cash equivalent 2,163 2,172
Loan payable (note 21) (18,368) (7,213)
Bridge Loans (note 21) - (9,000)
Deferred consideration on Saltfleetby Energy Limited acquisition
(2,887) (5,244)
Net debt (19,092) (19,285)
Cash and cash equivalents Convertible loan note Loans Bridge Loans Deferred consideration on acquisition of SEL Total
£'000 £'000 £'000 £'000 £'000 £'000
Net debt as at 1 October 2022 747 (1,433) (11,550) - (6,734) (18,970)
Cash flow (11,266) - - - - (11,266)
Convertible Loan notes - 1,433 - - - 1,433
Issue of new equity (net proceeds) 8,518 - - - 1,000 9,518
Bridge Loans 9,000 - - (9,000) - -
Deferred consideration payment (490) - - - 490 -
Facility Loan repayment (4,337) 4,337 - - -
Net debt as at 30 September 2023 2,172 - (7,213) (9,000) (5,244) (19,285)
Net debt as at 1 October 2023 2,172 - (7,213) (9,000) (5,244) (19,285)
Cash flow (3,117) - - - - (3,117)
Loan settlement (equity ) - - - 3,000 - 3,000
Trafigura Loan 14,885 - (14,885) - - -
Deferred consideration (2,357) - - - 2,357 -
Facility Loan repayment (8,872) - 2,872 6,000 - -
Transaction cost paid (548) - 548 - - -
Transaction cost off set the loan proceeds - - - - 526
526
Amortisation of finance cost - - (216) - - (216)
Net debt as at 30 September 2024 2,163 - (18,368) - (2,887) (19,092)
25. Commitments
At 30 September 2024, the Group had a
contractual capital commitments of NIL (2023: NIL) in respect to the Group's
Saltfleetby development activities.
26. Related Party transactions
Amounts due at the year end to Forum Energy Services Limited are £2,887,000
(2023: £5,244,000) (see note 19). Forum Energy Services Limited is a related
party by virtue of Paul Forrest joining the board and resigning on 30 April
2024 which is within 12 months of publishing these accounts. Paul Forrest is
also the sole shareholder of Forum Energy Services Limited.
Aleph Commodities Limited ("ACL") and its associates are Substantial
Shareholders in the Company and accordingly ACL and its associates, which
includes Aleph Finance Limited, are related parties under the AIM Rules.
Therefore, both the first and second Bridge Facility (see note 21) and
associated warrants and fees were related party transactions under the AIM
Rules.
Kemexon Ltd, the lender of the Bridge Loan (see note 21), is a Substantial
Shareholder in the Company as defined under the AIM Rules, and therefore the
conversion of The Bridge Facility was a Related Party Transaction under AIM
Rule 13.
27. Subsequent events
The Trafigura Facility requires a rolling gas price protection policy to be
put in place which stipulates a minimum protected amount equal to 45% of gas
produced for the 12 months immediately ahead, and 33% for the following 6
months and 0% thereafter. As such, on 25 February 2025, the following hedges
were struck.
Additional Hedges struck under the Trafigura Facility:
Period of Gas Production Quantity in Therms Fixed price in pence per Therm
1-Jan-26 31-Jan-26 620,000 123.08
1-Feb-26 28-Feb-26 560,000 121.33
1-Mar-26 31-Mar-26 620,000 115.35
1-Apr-26 30-Apr-26 600,000 101.53
1-May-26 31-May-26 620,000 97.27
1-Jun-26 30-Jun-26 600,000 95.82
1-Jul-26 31-Jul-26 465,000 95.20
1-Aug-26 31-Aug-26 465,000 95.85
1-Sep-26 30-Sep-26 450,000 96.50
1-Oct-26 31-Oct-26 465,000 92.28
1-Nov-26 30-Nov-26 450,000 98.16
1-Dec-26 31-Dec-26 465,000 100.07
6,380,000
2024 2023
Note £'000 £'000
ASSETS
Non-current assets
Investment 5 47,210 56,455
Total non-current assets 47,210 56,455
Current assets
Trade and other receivables 6 67 170
Cash and cash equivalents 97 395
Total current assets 164 565
TOTAL ASSETS 47,374 57,020
EQUITY
Equity attributable to owners of the parent:
Share capital 8 8,844 7,254
Share premium 8 48,412 45,500
Merger relief reserve 1,500 1,500
Loan note reserves - -
Accumulated loss (16,459) (14,200)
TOTAL EQUITY 42,297 40,054
Current liabilities
Trade and other payables 7 5,077 7,337
Bridge Loans - 9,629
Total current liabilities 5,077 16,966
TOTAL LIABILITIES 5,077 16,966
TOTAL EQUITY AND LIABILITIES 47,374 57,020
The loss for the Company for the year ended 30 September 2024 was £3,487,000
(2023: £5,475,000)
The notes on page 77 to 79 of the annual report form part of these financial
statements
The financial statements were approved by the Board of Directors and
authorised for issue on 5 March 2025 and were signed on its behalf by:
Richard Herbert - Director
Company number: 09616076
Share capital Share premium Accumulated loss Total equity
Merger Loan
relief note
reserve reserves
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 October 2022 5,529 38,708 1,500 106 (14,719) 31,124
- - (5,475) (5,475)
Loss for the year -
Total comprehensive income for the year - - (5,475) (5,475)
-
Transaction with owners
Issue of shares 1,725 10,297 - (106) - 11,916
Less: issuance costs - (3,477) - - - (3,477)
Grant of share options - - - - 1,377 1,377
Grant of warrant as fund raise and finance cost - (28) - 4,617 4,589
-
7,254 45,500 (14,200) 40,054
Balance at 30 September 2023 1,500 -
- -
Loss for the year - - (3,487) (3,487)
Total comprehensive income for the year - -
- - (3,487) (3,487)
Transaction with owners
Issue of shares 1,590 2,919 - - - 4,509
Less: issuance costs - (7) - - - (7)
Grant of share options - - - - 410 410
Grant of Warrant as finance costs - - - - 818 818
8,844 48,412 1,500 (16,459) 42,297
Balance at 30 September 2024 -
Share capital comprises the ordinary issued share capital of the company.
Share premium comprises of the excess above the nominal value of the new
ordinary shares issued during the period.
The merger relief reserve represents the difference between the cost of the
investment in Angus Energy Holding UK Limited (initially measured at fair
value) and the nominal value of the shares transferred as consideration.
Retained earnings represent the aggregate retained earnings of the company.
The notes on page 77 to 79 of the annual report form part of these financial
statements.
1. General information
The company was incorporated in England and Wales on 1 June 2015 as a private
limited company. Its registered office is located at Building 3, Chiswick
Park, 566 Chiswick High Street, London, W4, 5YA.
The financial information of the company is presented in British Pounds
Sterling ("£") and rounded into thousand (£'000).
2. Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with the historical
cost convention as modified by the revaluation of certain fixed assets. The
financial statements have been prepared in accordance with FRS 102 - The
Financial Reporting Standard applicable in the UK and Republic of Ireland and
the Companies Act 2006. The principal accounting policies are described below.
They have all been applied consistently throughout the period.
Investment
Investments in subsidiaries are stated at cost less provision for impairment.
Where merger relief is applicable, the cost of the investment is recorded at
the fair value on the date of the transaction. The difference between the fair
value of the investment and the nominal value of the shares (plus the fair
value of any other consideration given) is shown as a merger relief reserve
and no share premium is recognised.
Cash and cash equivalents
Cash in the statement of financial position is cash held on call with banks.
Financial assets
The directors classify the company's financial assets held at amortised cost
less provisions for impairment. The directors determine the classification of
its financial assets at initial recognition.
Creditors
Short term creditors are measured at the transaction price. Other financial
liabilities, including bank loans, are measured initially at fair value, net
of transaction costs, and are measured subsequently at amortised cost using
the effective interest method.
Taxation
Tax is recognised in the Statement of comprehensive income, except that a
charge attributable to an item of income and expense recognised as other
comprehensive income or to an item recognised directly in equity is also
recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws
that have been enacted or substantively enacted by the reporting date in the
countries where the Company operates and generates income.
2. Accounting policies (continued)
Taxation (continued)
Deferred tax balances are recognised in respect of all timing differences that
have originated but not reversed by the Statement of financial position date,
except that:
· The recognition of deferred tax assets is limited to the extent
that it is probable that they will be recovered against the reversal of
deferred tax liabilities or other future taxable profits; and
· Any deferred tax balances are reversed if and when all conditions
for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences
except in respect of business combinations, when deferred tax is recognised on
the differences between the fair values of assets acquired and the future tax
deductions available for them and the differences between the fair values of
liabilities acquired and the amount that will be assessed for tax. Deferred
tax is determined using tax rates and laws that have been enacted or
substantively enacted by the reporting date.
3. Loss for the financial period
The Company has taken advantage of section 408 of the Companies Act 2006 and,
consequently, a profit and loss account for the Company alone has not been
presented. The Company's loss for the financial period was approximately
£3,487,000 (2023: £5,475,000).
4. Staff costs
There is one employee and four directors employed by the company. The
directors are regarded as the key management and their remunerations are
disclosed in note 8 to the consolidated financial statements.
5. Investment
Cost of investment Loan to group undertakings
Total
£'000 £'000 £'000
At 1 October 2022 15,680 22,952 38,632
Movement of the intercompany loan for the year - 17,823 17,823
At 30 September 2023 15,680 40,775 56,455
Movements of the intercompany loan for the year - (9,501) (9,501)
Saltfleetby Energy Limited investment 256 - 256
At 30 September 2024 15,936 31,274 47,210
The details of the subsidiary are set out in note 12 to the consolidated
financial statements.
The Company is required to assess the carrying value of each of its
investments in subsidiaries and loans to group undertakings for impairment. To
a large extent the oil & gas production assets and exploration and
evaluation assets, which have been funded by loans from the Company, are
represented by the value of the operating segment cash generating units.
Recoverability of these loans is therefore dependent upon the operating
segments producing sufficient cash surplus such that the segment achieves a
positive net asset position.
6. Trade and other receivables
2024 2023
£'000 £'000
Other receivables 67 170
67 170
7. Trade and other payables
2024 2023
£'000 £'000
Trade payables 2,124 2,000
Deferred consideration on acquisition of Saltfleetby Energy Limited 2,887 5,244
Other taxation 65 92
Other payables 1 1
5,077 7,337
The carrying amount of trade and other payables approximates to their fair
value.
8. Share capital
The movement of share capital and share premium are set out in note 15 to the
consolidated financial statements.
As at 30 September 2024 the total issued ordinary shares of the Company were
4,421,854,810 (2023: 3,626,860,032).
9. Related Party transactions
See Note 26 of the Notes to the consolidated Financial Statements for further
details of related party transactions.
10. Subsequent events
See Note 27 of the Notes to the consolidated
Financial Statements for further details of subsequent events.
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