Final Results
10/10/2022 07:00
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RNS Number : 2523C Advance Energy PLC 10 October 2022
10 October 2022
Advance Energy plc
("Advance Energy" or the "Company")
Final Results
Advance Energy ( AIM:ADV ), the energy company seeking growth through
acquisition or farm-in to interests in discovered upstream projects, announces
its Final Results for the year ended 30 April 2022.
Copies of the Annual Report and Accounts will be posted to shareholders and
made available on the Company's website at: www.advanceplc.com
(http://www.advanceplc.com/) .
Enquiries:
Advance Energy plc +44 (0)1624 681 250
Larry Bottomley (Interim CEO)
Strand Hanson Limited (Financial and Nominated Adviser) +44 (0)20 7409 3494
Rory Murphy / James Harris / James Bellman
Buchanan (Public Relations) +44 (0)20 7466 5000
Ben Romney / Jon Krinks
Tennyson Securities Limited (Joint Broker) +44 (0)20 7186 9030
Peter Krens / Ed Haig-Thomas
Optiva Securities Limited (Joint Broker) +44 (0)20 3411 1881
Christian Dennis
For further information, please visit www.advanceplc.com
(http://www.advanceplc.com/) and @advanceplc on Twitter
To register for Advance Energy's email alerts, please complete the following
form: https://www.advanceplc.com/media-centre/news/#alerts
(https://www.advanceplc.com/media-centre/news/#alerts)
CHAIRMAN'S REPORT
On behalf of the Board of Directors, I hereby present the financial statements
of Advance Energy plc ("Advance" or the "Company") for the year ended 30 April
2022.
Without doubt, the year under review has been a challenging one for the
Company, with a disappointing outcome on the Buffalo well announced in January
2022.
Since that time, the Board has refocused the strategy for the Company and
substantially reduced its cost base.
The Board has implemented measures to reduce the Company's costs by more than
50% through a number of initiatives including reducing salaries and Director
fees by over 60%. To support these initiatives, CEO Leslie Peterkin and
CFO Stephen West agreed to leave the Company. We thank Leslie and Stephen for
their efforts and contributions. The CEO position has been filled by
Non-Executive Director Larry Bottomley.
In addition to a forensic focus on costs, the Board has refined the strategy
for the Company, which is to create a self-funding oil & gas production
company to take advantage of growth opportunities being generated as industry
players reshape their portfolios to manage the energy transition to net-zero
emissions.
Post period end, on 26 July 2022 the Company successfully raised £425,000
from new and existing shareholders, including £80,000 from Directors of the
Company, to support the pursuit of acquisition opportunities. The Board
appreciates the continued support shown by shareholders during this fund
raise.
On 9 September 2022, the Company announced that it had entered into a
non-binding Heads of Terms ("HoT") with the majority owner of a European oil
and gas company. Under the HoT, Advance would acquire the European company for
a combination of new shares in Advance and an earn out based on oil production
(the "Potential Acquisition"). The HoT includes standard conditions, including
an exclusivity period up to 29 October 2022 and the completion of
satisfactory due diligence.
The Potential Acquisition would be considered a reverse transaction under the
AIM Rules for Companies and is therefore subject, inter alia, to the issue of
a new AIM Admission Document and obtaining shareholder approval for the
Potential Acquisition.
As a result of the announcement, the Company's shares were temporarily
suspended and will remain so until Advance is in a position to publish the
associated AIM Admission Document for the Potential Acquisition. In the event
that the Potential Acquisition does not proceed for whatever reason, it is
expected that the temporary suspension in the Company's shares would be
lifted.
It should be noted there is no certainty that the Potential Acquisition, or
any transaction, will take place.
Outlook
The Board remains confident that its refocused strategy is the right one.
Whilst there can be no guarantee any acquisition will be completed, the
Board's extensive industry relationships and the tenacity of the team provide
a strong basis for confidence. I look forward to updating shareholders as the
Potential Acquisition progresses.
Mark Rollins
Non-Executive Chairman
7 October 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Note For the year ended For the year ended
30 April 2022
30 April 2021
US$'000 US$'000
Investment loss:
Impairment 11 (23,885) -
(23,885) -
Other income: - -
Asset evaluation expenses 6 (60) (47)
Other administrative expenses 6 (2,818) (2,539)
Net loss before finance costs and taxation (26,763) (2,586)
Finance costs (198) (256)
Share of net losses of associate accounted for using the equity method
(428) (12)
Loss before tax (27,389) (2,854)
Tax expense 10 - -
Loss after tax attributable to owners of the parent (27,389) (2,854)
Total comprehensive loss for the year attributable to owners of the parent (27,389) (2,854)
Basic loss per share attributable to owners of the parent during the year
(expressed in US cents per share)
7 (2.67) (1.51)
The Statement of Comprehensive Income has been prepared on the basis that all
operations are continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note As at As at
30 April 2022
30 April 2021
US$'000 US$'000
Assets
Non-current assets
Investments accounted for using the equity method 11 - 20,262
Total non-current assets - 20,262
Current assets
Other receivables 89 203
Cash and cash equivalents 662 8,103
Total current assets 751 8,306
Total assets 751 28,568
Liabilities
Current liabilities
Trade and other payables 13 (304) (1,138)
Total liabilities (304) (1,138)
Net assets 447 27,430
Equity attributable to the owners of the parent
Share premium 12 47,656 47,656
Share reserve 1,445 1,039
Accumulated deficit (48,654) (21,265)
Total shareholder funds 447 27,430
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share premium Share reserve Accumulated Total
deficit equity
US$'000 US$'000 US$'000 US$'000
Balance at 1 May 2020 18,665 - (18,411) 254
Loss for the year to 30 April 2021 - - (2,854) (2,854)
Total comprehensive income - - (2,854) (2,854)
Transactions with equity shareholders of the parent
Proceeds from shares issued 31,589 - - 31,589
Cost of share issue (2,598) - - (2,598)
Share based payments - 1,039 - 1,039
Balance at 30 April 2021 47,656 1,039 (21,265) 27,430
Loss for the year to 30 April 2022 - - (27,389) (27,389)
Total comprehensive income - - (27,389) (27,389)
Transactions with equity shareholders of the parent
Share based payments - 406 - 406
Balance at 30 April 2022 47,656 1,445 (48,654) 447
CONSOLIDATED CASH FLOW STATEMENT
For the year ended For the year ended
30 April 2022
30 April 2021
US$'000 US$'000
Cash flows from operating activities:
Net loss for the year (27,389) (2,854)
Adjustments for:
Share of net loss of associate 428 12
Share based payments 406 1,039
Impairment of investment 23,885 -
Change in working capital items:
Decrease/(Increase) in other receivables 114 (188)
(Decrease)/Increase in trade and other payables (834) 815
Net cash used in operations (3,390) (1,176)
Cash flows from investing activities
Investment in associate (4,051) (20,274)
Other investments - -
Net cash used in investing activities (4,051) (20,274)
Cash flows from financing activities
Proceeds from issue of share capital - 31,589
Share issue costs - (2,598)
Net cash generated by financing activities - 28,991
Net (decrease)/increase in cash and cash equivalents (7,441) 7,541
Cash and cash equivalents, at beginning of the year 8,103 562
Effect of foreign exchange rate changes - -
Cash and cash equivalents, at end of the year 662 8,103
NOTES TO FINANCIAL STATEMENTS
1 Reporting Entity
Advance Energy plc (the "Company") is domiciled in the Isle of Man. The
Company's registered office is at 55 Athol Street, Douglas, Isle of Man IM1
1LA. These consolidated financial statements comprise the Company and its
subsidiaries (together referred to as the "Group"). The Group is primarily
involved in the E&P business. The Company is listed on AIM of the London
Stock Exchange.
2 Basis of accounting
These consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
("IFRS"). They were authorised for issue by the Company's board of directors
on 7 October 2022.
Details of the Group's accounting policies are included below:
Standards and amendments effective for periods beginning 1 May 2021 or later
A number of other new standards are effective from 1 May 2021, but they do not
have a material effect on the Company's financial statements:
· Amendments to IFRS 16 COVID - 19 Related Rent
Concessions
A number of new standards are effective for annual periods beginning after 1
May 2021 and earlier application is permitted; however, the Group has not
early adopted the new or amended standards in preparing these consolidated
financial statements.
The following amended standards and interpretations are not expected to have a
significant impact on the Group's consolidated financial statements:
· IFRS 17 Insurance Contracts (effective on or after 1
January 2023)
· Amendments to IAS 1: Classification of Liabilities as
Current or Non-current (effective on or after 1 January 2023)
· Reference to the Conceptual Framework - Amendments to
IFRS 3 (effective on or after 1 January 2022)
· Property, Plant and Equipment: Proceeds before Intended
Use - Amendments to IAS 16 (effective on or after 1 January 2022)
· Onerous Contracts - Costs of Fulfilling a Contract -
Amendments to IAS 37 (effective on or after 1 January 2022)
· IFRS 1 First-time Adoption of International Financial
Reporting Standards - Subsidiary as a first-time adopted (effective on or
after 1 January 2022)
· IFRS 9 Financial Instruments - Fees in the '10 per cent'
test for derecognition of financial liabilities (effective on or after 1
January 2022)
· IAS 41 Agriculture - Taxation in fair value
measurements (effective on or after 1 January 2022)
A. Basis of consolidation
i. Subsidiaries
Subsidiaries are entities controlled by the Group. The Group 'controls' an
entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power over the entity. The financial statements of subsidiaries
are included in the consolidated financial statements from the date on which
control commences until the date on which control ceases.
ii. Non-controlling interests ("NCI")
NCI are measured initially at their proportionate share of the acquiree's
identifiable net assets at the date of acquisition. Changes in the Group's
interest in a subsidiary that do not result in a loss of control are accounted
for as equity transactions.
iii. Interests in equity-accounted investees
The Group's interests in equity-accounted investees comprise interests in
associates.
Associates are those entities in which the Group has significant influence,
but not control or joint control, over the financial and operating policies.
Interests in associates are accounted for using the equity method. They are
initially recognised at cost, which includes transaction costs. Subsequent to
initial recognition, the consolidated financial statements include the Group's
share of the profit or loss and other comprehensive income ("OCI") of equity
accounted investees, until the date on which significant influence ceases.
iv. Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses
arising from intra-group transactions, are eliminated. Unrealised gains
arising from transactions with equity accounted investees are eliminated
against the investment to the extent of the Group's interest in the
investee. Unrealised losses are eliminated in the same way as unrealised
gains, but only to the extent that there is no evidence of impairment.
B. Foreign currency
i. Foreign currency transactions
Transactions in foreign currencies are translated into the respective
functional currencies of Group companies at the exchange rates at the dates of
the transactions.
Monetary assets and liabilities denominated in foreign currencies are
translated into the functional currency at the exchange rate at the reporting
date. Non-monetary assets and liabilities that are measured at fair value in a
foreign currency are translated into the functional currency at the exchange
rate when the fair value was determined. Non-monetary items that are measured
based on historical cost in a foreign currency are translated at the exchange
rate at the date of the transaction. Foreign currency differences are
generally recognised in profit or loss and presented within finance costs.
However, foreign currency differences arising from the translation of the
following items are recognised in OCI:
- an investment in equity securities designated as at FVOCI (except
on impairment, in which case foreign currency differences that have been
recognised in OCI are reclassified to profit or loss);
- a financial liability designated as a hedge of the net investment
in a foreign operation to the extent that the hedge is effective; and
- qualifying cash flow hedges to the extent that the hedges are
effective.
ii. Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on acquisition, are translated into USD at the
exchange rates at the reporting date. The income and expenses of foreign
operations are translated into USD at the exchange rates at the dates of the
transactions.
Foreign currency differences are recognised in OCI and accumulated in the
translation reserve, except to the extent that the translation difference is
allocated to NCI.
When a foreign operation is disposed of in its entirety or partially such that
control, significant influence or joint control is lost, the cumulative amount
in the translation reserve related to that foreign operation is reclassified
to profit or loss as part of the gain or loss on disposal. If the Group
disposes of part of its interest in a subsidiary but retains control, then the
relevant proportion of the cumulative amount is reattributed to NCI. When the
Group disposes of only part of an associate or joint venture while retaining
significant influence or joint control, the relevant proportion of the
cumulative amount is reclassified to profit or loss.
C. Employee benefits
i. Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid if the Group has
a present legal or constructive obligation to pay this amount as a result of
past service provided by the employee and the obligation can be estimated
reliably.
ii. Share-based payment arrangements
The grant-date fair value of equity-settled share-based payment arrangements
granted to employees and other service providers is generally recognised as an
expense, with a corresponding increase in equity, over the vesting period of
the awards. The amount recognised as an expense is adjusted to reflect the
number of awards for which the related service and non-market performance
conditions are expected to be met, such that the amount ultimately recognised
is based on the number of awards that meet the related service and non-market
performance conditions at the vesting date. For share-based payment awards
with non-vesting conditions, the grant-date fair value of the share-based
payment is measured to reflect such conditions and there is no true-up for
differences between expected and actual outcomes.
D. Income tax
Income tax expense comprises current and deferred tax. It is recognised in
profit or loss except to the extent that it relates to a business combination,
or items recognised directly in equity or in OCI.
The Group has determined that interest and penalties related to income taxes,
including uncertain tax treatments, do not meet the definition of income
taxes, and therefore accounted for them under IAS 37 Provisions, Contingent
Liabilities and Contingent Assets.
i. Current tax
Current tax comprises the expected tax payable or receivable on the taxable
income or loss for the year and any adjustment to the tax payable or
receivable in respect of previous years. The amount of current tax payable or
receivable is the best estimate of the tax amount expected to be paid or
received that reflects uncertainty related to income taxes, if any. It is
measured using tax rates enacted or substantively enacted at the reporting
date. Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are
met.
ii. Deferred tax
Deferred tax is recognised in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Deferred tax is not recognised
for:
- temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss;
- temporary differences related to investments in subsidiaries,
associates and joint arrangements to the extent that the Group is able to
control the timing of the reversal of the temporary differences and it is
probable that they will not reverse in the foreseeable future; and
- taxable temporary differences arising on the initial recognition
of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits
and deductible temporary differences to the extent that it is probable that
future taxable profits will be available against which they can be used.
Future taxable profits are determined based on the reversal of relevant
taxable temporary differences. If the amount of taxable temporary differences
is insufficient to recognise a deferred tax asset in full, then future taxable
profits, adjusted for reversals of existing temporary differences, are
considered, based on the business plans for individual subsidiaries in the
Group. Deferred tax assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax benefit will
be realised; such reductions are reversed when the probability of future
taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and
recognised to the extent that it has become probable that future taxable
profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, using tax rates enacted or
substantively enacted at the reporting date, and reflects uncertainty related
to income taxes, if any.
The measurement of deferred tax reflects the tax consequences that would
follow from the manner in which the Group expects, at the reporting date, to
recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if certain criteria are
met.
E. Exploration expenditure
Costs incurred prior to acquiring the right to explore an area of interest are
expensed as incurred. Exploration and evaluation assets are intangible assets.
Exploration and evaluation assets represent the costs incurred on the
exploration and evaluation of potential hydrocarbon resources, and include
costs such as seismic acquisition and processing, exploratory drilling,
activities in relation to the evaluation of technical feasibility and
commercial viability of extracting hydrocarbons, and general administrative
costs directly relating to the support of exploration and evaluation
activities.
The Group assesses exploration and evaluation assets for impairment when facts
and circumstances suggest that the carrying amount may exceed its recoverable
amount. The recoverable amount is the higher of the assets fair value less
costs to sell and value in use. Assets are allocated to cash generating units
not larger than operating segments for impairment testing. Purchased
exploration and evaluation assets are recognised as assets at their cost of
acquisition or at fair value if purchased as part of a business combination.
They are subsequently stated at cost less accumulated impairment. Exploration
and evaluation assets are not amortised.
F. Share capital
Incremental costs directly attributable to the issue of ordinary shares are
recognised as a deduction from equity. Income tax relating to transaction
costs of an equity transaction is accounted for in accordance with IAS 12.
G. Impairment
At each reporting date, the Group reviews the carrying amounts of its
non-financial assets (other than deferred tax assets) to determine whether
there is any indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated.
Impairment losses are recognised in profit or loss. They are allocated first
to reduce the carrying amount of any goodwill allocated to the CGU, and then
to reduce the carrying amounts of the other assets in the CGU on a pro rata
basis.
H. Fair value measurement
'Fair value' is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date in the principal or, in its absence, the most
advantageous market to which the Group has access at that date. The fair value
of a liability reflects its non-performance risk.
A number of the Group's accounting policies and disclosures require the
measurement of fair values, for both financial and non-financial assets and
liabilities.
When one is available, the Group measures the fair value of an instrument
using the quoted price in an active market for that instrument. A market is
regarded as 'active' if transactions for the asset or liability take place
with sufficient frequency and volume to provide pricing information on an
ongoing basis.
If there is no quoted price in an active market, then the Group uses valuation
techniques that maximise the use of relevant observable inputs and minimise
the use of unobservable inputs. The chosen valuation technique incorporates
all of the factors that market participants would take into account in pricing
a transaction.
If an asset or a liability measured at fair value has a bid price and an ask
price, then the Group measures assets and long positions at a bid price and
liabilities and short positions at an ask price.
The best evidence of the fair value of a financial instrument on initial
recognition is normally the transaction price - i.e. the fair value of the
consideration given or received. If the Group determines that the fair value
on initial recognition differs from the transaction price and the fair value
is evidenced neither by a quoted price in an active market for an identical
asset or liability nor based on a valuation technique for which any
unobservable inputs are judged to be insignificant in relation to the
measurement, then the financial instrument is initially measured at fair
value, adjusted to defer the difference between the fair value on initial
recognition and the transaction price. Subsequently, that difference is
recognised in profit or loss on an appropriate basis over the life of the
instrument but no later than when the valuation is wholly supported by
observable market data or the transaction is closed out.
I. Going concern
The financial statements have been prepared on a going concern basis. The
Group monitors its cash position, cash forecasts and liquidity on a regular
basis and takes a conservative approach to cash management. At 30 April 2022,
the Group had cash resources of US$662,000. Cash resources increased following
the £425,000 equity fund raise completed in July 2022.
On 9 September 2022, the Group announced that it had signed a Heads of Terms
and Exclusivity Agreement in relation to a potential acquisition. The Company
expects to incur due diligence and other transaction costs associated with the
proposed acquisition.
Management's base case is that the potential acquisition will complete in late
2022 and that as part of the acquisition the Company will seek to raise
additional equity funding.
Management have also considered a number of downside scenarios including
scenarios where the potential acquisition does not complete, or where
completion is delayed beyond December 2022.
Under the base case forecast, the Group will have sufficient financial
headroom to meet forecast cash requirements for the 12 months from the date of
approval of these consolidated financial statements. However, in the downside
scenarios, in the absence of any mitigating actions, the Group may have
insufficient funds to meet its forecast cash requirements. Potential mitigants
include deferral of expenditure and raising additional equity.
Accordingly, after making enquiries and considering the risks described above,
the Directors have assessed that following closing of the proposed acquisition
the cash balance provides the Group with adequate headroom over the forecast
expenditure for the following 12 months - as a result, the Directors are of
the opinion that the Group is able to operate as a going concern for at least
the next twelve months from the date of approval of these financial
statements.
Nonetheless, these conditions indicate the existence of a material uncertainty
which may cast doubt on the Group's ability to continue as a going concern.
The financial statements do not include the adjustments that would be required
if the Group were unable to continue as a going concern.
3 Functional and presentation currency
These consolidated financial statements are presented in US Dollars ("USD" or
"US$"), which is the Group's functional currency. All amounts have been
rounded to the nearest thousand, unless otherwise indicated.
4 Use of judgements and estimates
In preparing these consolidated financial statements, management has made
judgements and estimates that affect the application of the Group's accounting
policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to estimates are recognised prospectively.
A. Judgements
Information about judgements made in applying accounting policies that have
the most significant effects on the amounts recognised in the financial
statements is included in the following notes:
- Note 11 - equity-accounted investees: whether the Group has significant
influence over an investee;
- Note 15 - consolidation: whether the Group has de facto control over an
investee.
B. Assumptions and estimation uncertainties
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the group's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated
financial statements, are disclosed below:
Share based payments (note 8)
The Group has made awards of options and warrants over its unissued capital.
The valuation of these options and warrants involve making a number of
estimates relating to price volatility, future dividend yields, expected life
and forfeiture rates.
Acquisition of associate (Note 11)
The Group acquired a 50% holding in an associate during the year and has fair
valued the assets acquired including the rights to the Buffalo Field. The
investment in the associate was not successful and has been fully impaired at
30 April 2022.
i) Measurement of fair values
A number of the Group's accounting policies and disclosures require the
measurement of fair values, for both financial and non-financial assets and
liabilities. The Group has an established control framework with respect to
the measurement of fair values.
When measuring the fair value of an asset or a liability, the Group uses
observable market data as far as possible. Fair values are categorised into
different levels in a fair value hierarchy based on the inputs used in the
valuation techniques as follows.
- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall
into different levels of the fair value hierarchy, then the fair value
measurement is categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire
measurement.
The Group recognises transfers between levels of the fair value hierarchy at
the end of the reporting period during which the change has occurred.
5 Operating Segments
Operating segments are reported in a manner consistent with the internal
reporting provided to the Chief Operating Decision Maker ("CODM"). The CODM,
who is responsible for allocating resources and assessing performance of the
operating segments and make strategic decisions, has been identified as the
Directors of the Group. In the opinion of the Directors, the operations of
the Group comprise two operating segments comprising firstly of that of
developer of gas to power projects in the Republic of Indonesia and secondly
with projects within the UK. The Group considers that it only has one
reportable segment, and the Directors consider that the primary financial
statements presented substantially reflect all the activities of the
Company.
6 Administrative expenses
Administration fees and expenses consist of the following:
2022 2021
US$'000 US$'000
Audit fees 45 69
Professional fees 1,178 1,047
Administration costs 104 104
Employee costs 95 219
Directors' fees (Note 9) 1,396 1,100
Other administrative expenses 2,818 2,539
Office costs 60 30
Consulting and farm-in expenses - 6
Travel and accommodation - 11
Asset evaluation expenses 60 47
7 Earnings per share
Basic loss per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year.
2022 2021
Loss attributable to owners of the Group (USD (27,389) (2,854)
thousands)
Weighted average number of ordinary shares in issue (thousands) 1,027,614 188,796
Loss per share (US cents) (2.67) (1.51)
In accordance with International Accounting Standard 33 'Earnings per share',
no diluted earnings per share is presented as the Group is loss making.
Details of potentially dilutive share instruments are detailed in notes 8.
8 Share-based payment arrangements
The following is a summary of the share options and warrants outstanding and
exercisable as at 30 April 2022 and 30 April 2021, and the changes during each
year:
Number of options and warrants Weighted average exercise price (Pence)
Outstanding and exercisable at 1 May 2020 197,637,934 1.12
Cancelled options (2,186,897) (1.92)
Expired warrants (3,529,413) (5.00)
Options granted as consideration - pre consolidation 93,750,000 0.30
Warrants granted - pre consolidation 39,057,099 0.03
Consolidation - options (150,300,000) -
Consolidation - warrants (142,432,339) -
Options granted post consolidation 83,710,000 2.60
Warrants granted with share issue 45,553,120 2.60
Outstanding and exercisable at 30 April 2021 161,259,504 3.41
Cancelled options (66,600,000) (0.13)
Expired warrants (6,399,993) (0.57)
Options granted post consolidation 30,000,000 0.03
Outstanding and exercisable at 30 April 2022 118,259,511 2.68
The above weighted average exercise prices have been expressed in pence and
not cents due to the terms of the options and warrants. The following share
options or warrants were outstanding and exercisable in respect of the
ordinary shares:
Grant Date Expiry Date 1 May Issued Expired 30 April Exercise Price
2020 2021
Warrants
13.05.16 13.05.21 42,000,000 - - 42,000,000 0.20p
31.01.17 31.01.22 10,000,000 - - 10,000,000 0.20p
31.01.17 31.01.22 8,000,000 - - 8,000,000 0.25p
31.01.17 31.01.22 6,666,666 - - 6,666,666 0.30p
22.05.17 22.05.22 15,000,000 - - 15,000,000 0.10p
22.05.17 22.05.22 35,000,000 - - 35,000,000 0.10p
31.07.17 31.07.22 150,000,000 - (150,000,000) - 0.10p
19.08.17 19.08.22 90,769,231 - - 90,769,231 0.06p
01.09.17 01.09.22 70,769,231 - - 70,769,231 0.06p
06.12.17 06.12.22 638,569,604 - - 638,569,604 0.05p
29.04.18 29.04.21 264,705,882 - (264,705,882) - 0.017p
03.08.18 02.08.21 300,000,000 - - 300,000,000 0.02p
Consolidation (1,598,851,001) - 406,411,762 (1,192,439,239)
20.09.18 20.09.21 5,217,391 - - 5,217,391 1.15p
20.09.18 20.09.21 34,782,608 - - 34,782,608 2.00p
15.03.19 14.03.22 16,666,666 - - 16,666,666 0.45p
21.06.19 20.06.22 18,059,856 - - 18,059,856 0.155p
21.06.19 20.06.22 10,833,334 - - 10,833,334 0.155p
02.07.19 01.07.22 3,178,235 - - 3,178,235 0.157p
03.07.19 02.07.22 833,334 - - 833,334 0.157p
10.12.20 09.12.23 - 545,455 - 545,455 0.22p
31.03.21 31.03.26 - 38,511,644 - 38,511,644 0.00p
Consolidation (137,667,632) (137,667,632)
19.04.21 19.04.24 - 21,488,500 - 21,488,500 2.60p
19.04.21 19.04.26 - 24,064,620 - 24,064,620 2.60p
Options
05.06.15 05.06.18 34,344,865 - (34,344,865) - 0.40p
Consolidation (33,657,968) - 33,657,968 -
01.10.18 01.10.23 6,000,000 - (1,500,000) 4,500,000 2.00p
01.02.20 01.02.25 68,750,000 - - 68,750,000 0.30p
01.02.20 01.02.25 - 68,750,000 - 68,750,000 0.30p
08.07.020 08.07.25 - 25,000,000 - 25,000,000 0.30p
Consolidation (150,300,000) (150,300,000)
19.04.21 19.04.26 - 83,710,000 - 83,710,000 2.60p
197,637,934 262,070,219 (298,448,649) 161,259,504
Grant Date Expiry Date 1 May Issued Expired 30 April Exercise Price
2021 2022
Warrants
13.05.16 13.05.21 42,000,000 - (42,000,000) - 0.20p
31.01.17 31.01.22 10,000,000 - (10,000,000) - 0.20p
31.01.17 31.01.22 8,000,000 - (8,000,000) - 0.25p
31.01.17 31.01.22 6,666,666 - (6,666,666) - 0.30p
22.05.17 22.05.22 15,000,000 - - 15,000,000 0.10p
22.05.17 22.05.22 35,000,000 - - 35,000,000 0.10p
19.08.17 19.08.22 90,769,231 - - 90,769,231 0.06p
01.09.17 01.09.22 70,769,231 - - 70,769,231 0.06p
06.12.17 06.12.22 638,569,604 - - 638,569,604 0.05p
03.08.18 02.08.21 300,000,000 - (300,000,000) - 0.02p
Consolidation (1,192,439,239) - 359,333,333 (833,105,906)
20.09.18 20.09.21 5,217,391 - (5,217,391) - 1.15p
20.09.18 20.09.21 34,782,608 - (34,782,608) - 2.00p
15.03.19 14.03.22 16,666,666 - (16,666,666) - 0.45p
21.06.19 20.06.22 18,059,856 - - 18,059,856 0.155p
21.06.19 20.06.22 10,833,334 - - 10,833,334 0.155p
02.07.19 01.07.22 3,178,235 - - 3,178,235 0.157p
03.07.19 02.07.22 833,334 - - 833,334 0.157p
10.12.20 09.12.23 545,455 - - 545,455 0.22p
31.03.21 31.03.26 38,511,644 - - 38,511,644 0.00p
Consolidation (137,667,632) - 57,600,005 (80,067,627)
19.04.21 19.04.24 21,488,500 - - 21,488,500 2.60p
19.04.21 19.04.26 24,064,620 - - 24,064,620 2.60p
Options
01.10.18 01.10.23 4,500,000 - - 4,500,000 2.00p
01.02.20 01.02.25 68,750,000 - (37,500,000) 31,250,000 0.30p
01.02.20 01.02.25 68,750,000 - (37,500,000) 31,250,000 0.30p
08.07.20 08.07.25 25,000,000 - (25,000,000) - 0.30p
Consolidation (150,300,000) - 90,000,000 (60,300,000)
19.04.21 19.01.26 83,710,000 - (56,600,000) 27,110,000 2.60p
17.03.22 17.03.27 - 30,000,000 - 30,000,000 0.03p
161,259,504 30,000,000 (72,999,993) 118,259,511
The options and warrants issued during year were valued using the
Black-Scholes valuation method and the assumptions used are detailed below.
The expected future volatility has been determined by reference to the
historical volatility:
Grant date Share price at grant Exercise price Volatility Option life Dividend yield Risk-free investment rate Fair value per option
01.02.20 1.15p 3.00p 40% 5 years 0% 3% 0.13p
08.07.21 1.85p 3.00p 95% 5 years 0% 0.7% 1.19p
19.04.21 2.40p 2.60p 70% 5 years 0% 0.7% 1.33p
17.03.22 0.03p
0.03p 231% 5
years 0%
1.5% 0.025p
The Group recognised US$552,000 (30 April 2021: US$1,609,000) relating to
equity-settled share-based payment transactions during the year arising from
Option or Warrant grants, which was charged US$Nil (2021: US$838,000) in
respect of services performed in connection with the issue of new shares
charged to share premium, US$559,000 (2021: US$667,000) in respect of
directors' fees and US$7,000 reversed (2021: US$104,000) in respect of
employee costs to the income statement. Shares totalling US$Nil (2021:
US$570,000) were issued to three of the Directors following the share raise
and re-admission to AIM on 19 April 2021 in relation to options earned during
the period.
The 83,710,000 options granted on 19 April 2021 will vest on 1 January 2022
and 1 January 2023 in equal amounts. Vesting of the options is subject to
the option holder providing continuous service during the vesting period and
there are no other performance conditions attached to the options.
There were 68,750,000 of unvested options at the 30 April 2020 held by current
Directors and consultants, which vested on 1 February 2021.
The 30,000,000 options granted on 17 March 2022 will vest on 17 September 2022
and 17 March 2023 in equal amounts. Vesting of the options is subject to the
option holder providing continuous service during the vesting period and there
are no other performance conditions attached to the options.
For the share options and warrants outstanding as at 30 April 2022, the
weighted average remaining contractual life is 4.64 years (30 April 2021: 4.14
years).
9 Employee benefits (including directors)
The group employed an average of 5 individuals during the year, including the
directors (2020: 5).
2022 2021
US$'000 US$'000
Directors' remuneration (see below) 1,133 409
Share based payments - Directors (see below) 406 667
Share based payments - Employees - 104
Directors' health insurance 16 24
Employees 84 115
Amount due to former consultant (160) -
1,479 1,319
Key management of the Group are considered to be the Directors.
The remuneration of the directors during the year ended 30 April 2022 was as
follows:
Short term employee benefits Social security payments Share based payments
Pension contribution Total
2022
US$'000 US$'000 US$'000 US$'000 US$'000
Ross Warner 53 - - 56 109
Mark Rollins 158 - - 284 442
Leslie Peterkin 484 - 28 - 535
Stephen West 233 30 27 - 333
Steve Whyte 54 6 - 23 60
Larry Bottomley 54 6 - 43 60
Total Key Management 1,036 42 55 406 1,539
The remuneration of the directors during the year ended 30 April 2021 was as
follows:
Short term employee benefits Social security payments Share based payments
Pension contribution Total
2021
US$'000 US$'000 US$'000 US$'000 US$'000
Ross Warner 60 - - 4 64
Mark Rollins 71 - - 231 302
Leslie Peterkin 139 - 3 234 376
Graham Smith 2 - - - 2
Stephen West 97 33 - 196 326
Steve Whyte 2 - - 1 3
Larry Bottomley 2 - - 1 3
Total Key Management 373 33 3 667 1,076
10 Income tax expense
The Company is resident for tax purposes in the Isle of Man and is subject to
Isle of Man tax at the current rate of 0% (2020: 0%).
Taxation reconciliation
The charge for the year can be reconciled to the loss per the consolidated
statement of comprehensive income as follows:
2022 2021
US$'000 US$'000
Loss before income tax (27,389) (2,854)
Tax on loss at the weighted average corporate tax rate of 0% (2020: 0%) - -
Total income tax expense - -
The deferred tax asset has not been recognised for in accordance with IAS 12.
The Group does not have a material deferred tax liability at the year end.
11 Business combination
On 19 April 2021, Advance Energy plc, via its wholly owned subsidiary Advance
Energy TL Limited, acquired a 50% equity interest in Carnarvon Petroleum Timor
Unipessoal Lda which in turn is the holder of a 100% working interest in, and
the contractor of, the Buffalo Production Sharing Contract ("PSC").
Details of the purchase consideration and the net assets acquired are as
follows:
Purchase consideration
2021
US$'000
Cash paid 20,000
Purchase costs 274
Total 20,274
On 24 January 2022 the company announced that the Buffalo project had not been
successful. The Operator, Carnarvon Petroleum Timor, Lda, had advised the
company that the wireline logging operations have been completed with only
residual oil being encountered. The Company announced that the well will
therefore be plugged and abandoned, and the rig demobilised. As a result of
this, the carrying amount of the investment in the associate of US$19,834,000
will be written off and a share of the losses for 2022 will be recognised in
the consolidated statement of comprehensive income US$428,000 (2021: loss
US$12,000). The investment in associate has been fully impaired at 30 April
2022.
The assets and liabilities recognised as a result of the acquisition are as
follows:
Fair value
2021
US$'000
Rights * 21,149
Buffalo exploration & appraisal 1,685
Property, plant and equipment 1
Cash 20,023
Creditors (31)
Loan payable to Carnarvon (2,278)
Net identifiable assets at acquisition 40,549
Less: Other interests (20,274)
Goodwill -
Net assets acquired 20,275
* Carnarvon Petroleum Timor Unipessoal Lda owns the Buffalo Oil Field
re-development project located in the Buffalo PSC Contract Area (the "Buffalo
Project") and is the Contractor and Operator of the Buffalo PSC. The rights
attached to this have been fair valued by Advance Energy in determining the
purchase price apportionment.
Equity investment in associate
2022 2021
US$'000 US$'000
Carrying value at beginning of year 20,262 -
Additions - 20,274
Cash call 4,051 -
Share of losses post acquisition (428) (12)
Impairment (23,885) -
Carrying value at year end - 20,262
Summarised financial information for associate
The table below provide summarised financial information for those associates
that are material to the group. The information disclosed reflects the amounts
presented in the financial statements of the relevant associate and not
Advance Energy's share of those amounts. They have been amended to reflect
adjustments made by the entity when using the equity method, including fair
value adjustments and modifications for differences in accounting policy.
2022 2021
Summarised balance sheet at 30 April 2022 US$'000 US$'000
Rights 21,148 21,148
Buffalo exploration & appraisal 33,225 1,794
Property, plant and equipment 2 1
Cash 115 20,023
Creditors (736) (58)
Loan payable to Carnarvon (2,042) (2,375)
Cash call Carnarvon (7,993) -
Cash call Advance Energy (4,051) -
Net assets 39,668 40,533
Group's share as a % 50% 50%
Carrying amount before cash calls 19,834 20,267
Cash call Advance Energy 4,051 -
Carrying amount before impairment 23,885 20,267
Impairment (23,885) -
Carrying amount - 20,267
Summarised statement of comprehensive income for the 12 months to 30 April
2022
2022 2021
US$'000 US$'000
Revenue - -
Cost of sales - -
Gross profit - -
Administrative expenses (802) (391)
Operating loss (802) (391)
Finance costs (53) (1)
Loss on ordinary activities before taxation (855) (392)
Taxation - -
Loss from continuing operations (855) (392)
Group share of post-acquisition losses (428) (12)
12 Capital and reserves
All shares are Nil Coupon fully paid and each ordinary share carries one vote.
No warrants have been exercised at the reporting date.
Allotted, called-up and fully paid: Number Pence per share Share premium
US$'000
Balance at 30 April 2020 1,560,636,834 18,665
12/11/2020 - Equity Placing 157,780,151 0.22 470
Cost of issue - - (24)
19/04/2021 - Consolidation 1:10 (1,546,575,287) - -
19/04/2021 - Equity Placing 840,100,000 2.60 30,549
Cost of issue - - (2,574)
19/04/2021 - Accrued Director fee shares 15,672,310 2.60 570
Balance at 30 April 2021 1,027,614,008 47,656
Balance at 30 April 2022 1,027,614,008 47,656
13 Trade and other payables
Trade and other payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business. Accounts payable are
classified as current liabilities if payment is due within one year or less
(or in the normal operating cycle of the business if longer). If not, they are
presented as non-current liabilities. Trade payables are recognised initially
at fair value, and subsequently measured at amortised cost using the effective
interest method.
2022 2021
US$'000 US$'000
Trade payables 51 517
Accruals and other payables 253 621
304 1,138
14 Risk Management
Financial Risks
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency exchange risk and interest rate risk), credit risk and liquidity risk. The Board of Directors seek to identify and evaluate financial risks.
Market risk
A. Foreign currency exchange risk
Foreign exchange risk arises because the Group entities enter into
transactions in currencies that are not the same as their functional
currencies, resulting in gains and losses on retranslation into US Dollars. It
is the Group's policy to ensure that individual Group entities enter into
local transactions in their functional currency wherever possible and that
only surplus funds over and above working capital requirements should be
transferred to the treasury of the Parent Company. The Group and Company
considers this policy minimises any unnecessary foreign exchange exposure.
Despite this policy, the Group cannot avoid being exposed to gains or losses
resulting from foreign exchange movements, at the reporting date a 5% decrease
in the strength of the US Dollar would result in a corresponding reduction of
US$6,000 (2021: US$373,000) in the net assets of the Group.
B. Cash flow interest rate risk
The Group's cash and cash equivalents are invested at short term market
interest rates. As market rates are low, the Group is not subject to
significant cash flow interest rate risk and no sensitivity analysis is
provided. The Group is also not subject to significant fair value interest
rate risk.
2022 2021
US$'000 US$'000
Cash & Cash Equivalents
USD 511 646
GBP 151 7,457
Total Financial Assets 662 8,103
Trade & other payables
USD 253 858
GBP 51 219
AUD - 61
Total Financial Liabilities 304 1,138
Credit risk
Credit risk arises on investments, cash balances and receivable balances. The
amount of credit risk is equal to the amounts stated in the Statement of
Financial Position for each of these assets. Cash balances and transactions
are limited to high-credit-quality financial institutions. There are no
impairment provisions as at 30 April 2022 (2021: nil).
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and
marketable securities, the availability of funding through an adequate amount
of committed credit facilities and the ability to close out market positions.
The Group has adopted a policy of maintaining surplus funds with approved
financial institutions.
Management of liquidity risk is achieved by monitoring budgets and forecasts
against actual cash flows. Should the Group enter into borrowings during the
year, management monitor the repayment and servicing of these arrangements
against the contractual terms and reviewed cash flows to ensure that
sufficient cash reserves were maintained.
Capital Risks
The Directors determine the appropriate capital structure of the Group,
specifically, how much is raised from shareholders (equity) and how much is
borrowed from financial institutions (debt), in order to finance the Group's
business strategy. The Group's policy in the long term is to seek to maintain
the level of equity capital and reserves to maintain an optimal financial
position and gearing ratio which provides financial flexibility to continue as
a going concern and to maximise shareholder value. The capital structure of
the Group consists of shareholders' equity together with net debt (where
relevant). The Group's funding requirements are met through a combination of
debt, equity and operational cash flow.
15 List of subsidiaries and associates
The parent of the Group has shareholdings in the following entities:
Name Interest 2022 Interest Country of incorporation Nature of business
2021
Advance Energy TL Limited 100% 100% UK Intermediate Hold Co
Carnarvon Petroleum Timor Unipessoal Lda 50% 50% Timor-Leste Oil exploration
Resolute Oil & Gas (UK) Limited - 100% UK Trading subsidiary
Eagle Gas Limited 25% 25% UK Gas Exploration
On 7 January 2022 Resolute Oil & Gas (UK) Limited made an application to
strike the company off the register and on 5 April 2022 the company was
dissolved.
16 Commitments
There were no capital commitments authorised by the Directors or contracted
other than those provided for in these financial statements as at 30 April
2022 (30 April 2021: None).
17 Related parties
Parties are considered to be related to the Group if the Group has the
ability, directly or indirectly, to control the party or exercise significant
influence over the party in making financial and operating decisions, or vice
versa, or where the Group and the party are subject to common control or
common significant influence.
Related parties may be individuals (being members of key management personnel,
significant shareholders and/or their close family members) or other entities
and include entities which are under significant influence of related parties
of the Group where those parties are individuals, and post-employment benefit
plans which are for the benefit of employees of the Group or of any entity
that is a related party of the Group.
Details of Directors remuneration are disclosed in Note 9 Directors
Remuneration. For details of any related party transactions entered into after
the year-end please refer to Note 18 Subsequent Events.
18 Subsequent events
On 26 July 2022, the Company successfully raised £425,000 from new and
existing shareholders, through share placing. The £425,000 included £40,000
each from the existing directors Mark Rollins and Larry Bottomley. A total of
500,000,000 shares placed at £0.00085 were issued for a consideration of
£425,000 and this was inclusive of broker fees of 5% which is £21,250. One
warrant was issued for every share at a price of £0.0013 at any time from the
issue of the warrant up to 26 July 2025.
On 9 September 2022, the Company announced that it had entered into a
non-binding Heads of Terms ("HoT") with the majority owner of a European oil
and gas company. Under the HoT, Advance would acquire the European company for
a combination of new shares in Advance and an earn out based on oil production
(the "Potential Acquisition"). The HoT includes standard conditions, including
an exclusivity period up to 29 October 2022 and the completion of
satisfactory due diligence.
The Potential Acquisition would be considered a reverse transaction under the
AIM Rules for Companies and is therefore subject, inter alia, to the issue of
a new AIM Admission Document and obtaining shareholder approval for the
Potential Acquisition.
As a result of the announcement, the Company's shares were temporarily
suspended and will remain so until Advance is in a position to publish the
associated AIM Admission Document for the Potential Acquisition. In the event
that the Potential Acquisition does not proceed for whatever reason, it is
expected that the temporary suspension in the Company's shares would be
lifted.
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