REG - Beacon Energy PLC - Final Results and Publication of Annual Report
29/06/2023 07:00
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RNS Number : 2993E Beacon Energy PLC 29 June 2023
29 June 2023
Beacon Energy plc
("Beacon Energy" or the "Company")
Final Results and Publication of Annual Report
Beacon Energy (AIM:BCE) is pleased to announces its Final Results for the
period ended 31 December 2022.
Copies of the Annual Report and Accounts will today be posted to shareholders
and made available on the Company's website at: https://beaconenergyplc.com/
(https://beaconenergyplc.com/)
Mark Rollins, Non-Executive Chairman of Beacon Energy, commented:
"During this period the Board have worked tirelessly to stabilise the
Company's financial position, refocus the strategy and, in line with that
refocused strategy, pursue the acquisition of value enhancing opportunities to
create a self-funding upstream oil & gas company. The Company is now in an
exciting position having commenced drilling at the SCHB-2 development well so
quickly after the completion of the transaction.
"It only remains for me to thank our new and existing shareholders for their
ongoing support and to look forward to providing updates on our progress as we
move through the rest of the year."
Enquiries:
Beacon Energy plc +44 (0)20 7466 5000
Larry Bottomley (CEO) / Stewart MacDonald (CFO)
Strand Hanson Limited (Financial and Nominated Adviser) +44 (0)20 7409 3494
Rory Murphy / James Bellman
Buchanan (Public Relations) +44 (0)20 7466 5000
Ben Romney / George Pope
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
CHAIRMAN'S REPORT
Dear fellow shareholders,
On behalf of the Board of Directors, I hereby present the financial statements
of Beacon Energy plc ("Beacon" or the "Company") for the 8-month period ended
31 December 2022.
During the period under review, the Board has worked tirelessly to stabilise
the Company's financial position, refocus the strategy for the Company and, in
line with that refocused strategy, pursue the acquisition of value enhancing
opportunities to create a self-funding upstream oil & gas company.
To implement this strategy, on 26 July 2022 the Company successfully raised
£425,000 from new and existing shareholders, including £80,000 from
Directors of the Company, to enable the Company to select, negotiate and
complete an acquisition. The Board appreciates the continued support shown by
shareholders during this fund raise.
Subsequently, and in anticipation of a potential acquisition, the Company
sought approval from shareholders to change the Company's name to Beacon
Energy plc. The change of name was to reflect an exciting new chapter in the
Company's story.
On 16 December 2022, the Company was delighted to announce that it had entered
into a conditional Share Purchase Agreement ("SPA") with Tulip Oil Holding
B.V. ("Tulip") and Deutsche Rohstoff A.G. ("DRAG") (collectively, the
"Sellers") relating to the purchase of the entire issued and to be issued
share capital of Rhein Petroleum GmbH ("Rhein Petroleum"), (the
"Transaction").
The Board of Beacon Energy ("Board") believes that the Transaction represents
a transformational, value enhancing transaction for shareholders, which is
fully aligned with Beacon Energy's growth strategy:
· The Transaction provides Beacon with a beneficial interest in a
proven and producing oil field with material existing resources and a platform
with potential to achieve production of up to 4,000 bopd in the coming years.
· Beacon now has independently certified 2P net reserves of 3.85
mmbbl and a 2C net contingent resource base of 22.96 mmbbl, located across
four core assets in Germany.
· Beacon has a full-cycle portfolio of largely operated production,
development, appraisal and exploration assets in a proven, mature hydrocarbon
basin.
· Onshore Germany presents compelling market dynamics with an
advantageous fiscal and regulatory regime, predictable permitting processes
and supportive regional authorities with a focus on domestic energy security.
· The Transaction provides Beacon with a near-term active work
programme designed to enhance production and cash flow, and a well understood
existing production base which will generate immediate revenue.
Notwithstanding challenging market conditions in the first quarter of 2023,
the Company successfully completed a fundraise of £6 million with new and
existing shareholders in March 2023, the proceeds of which are currently being
used to fund the drilling of the SCHB-2 development well. Following receipt of
shareholder approval, the Company completed the Transaction on 11 April 2023.
As part of the Transaction, the Board and management team have been
strengthened. In December 2022, the Company was delighted to announce that
Interim CEO Larry Bottomley had agreed to become CEO on a permanent basis.
Larry's transition into the permanent role reflects the focused determination
that he has delivered and his significant experience and expertise in
leadership roles of this kind.
Following completion of the Transaction, Stewart MacDonald and Leo Koot joined
the Board as CFO and NED respectively. Stewart has over 20 years of energy
industry and investment banking experience including 8 years as CFO of AIM
listed Rockhopper Exploration plc and prior to that, 12 years energy
investment banking experience with Rothschild. Leo Koot has over 30 years of
experience in the energy and power sectors. Leo's previous roles include
Drilling Engineer at Shell plc, Managing Director UK then President Iraq for
TAQA, Executive Chairman of Columbus Energy Resources plc, and Independent
Non-Executive Director for Sterling Energy plc. Leo is currently Executive
Chairman of Tulip Oil Holdings B.V. and partner at Concordia Capital
Partners (MENA GULF).
Immediately upon completion of the Transaction, the Company announced that it
had secured a drilling rig from RED Drilling & Services GmbH to drill the
SCHB-2 development well on the Erfelden field. Drilling operations commenced
on 19 June 2023 and are expected to take in the region of 25 days to reach the
prognosed TD drilling depth of 2,255m (1,709m True Vertical Depth), with an
additional 12 days scheduled for testing.
Assuming success, this well has the scope to deliver a step-change in the
Company's production and cash flow.
It only remains for me to thank our new and existing shareholders for their
ongoing support for the Company, management team and our strategy. We are very
excited about the year ahead with an active work programme designed to create
long-term value for Beacon's shareholders. We very much see the acquisition of
Rhein Petroleum as a first step in our strategy to build a material
international upstream oil and gas business with a focus on cash generative
assets and those with the potential to add significant value in the short to
medium term. We look forward to providing updates on our progress as we move
through the rest of the year.
Mark Rollins
Non-Executive Chairman
28 June 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Note For the 8 month period ended For the year ended
31 December 2022
30 April 2022
US$'000 US$'000
Investment loss:
Impairment 11 - (23,885)
- (23,885)
Other income: - -
Other administrative expenses 6 (1,004) (2,878)
Net loss before finance costs and taxation (1,004) (26,763)
Finance costs (47) (198)
Share of net losses of associate accounted for using the equity method
- (428)
Loss before tax (1,051) (27,389)
Tax expense 10 - -
Loss after tax attributable to owners of the parent (1,051) (27,389)
Total comprehensive loss for the year attributable to owners of the parent (1,051) (27,389)
Basic loss per share attributable to owners of the parent during the year
(expressed in US cents per share)
7 (0.08) (2.67)
The Statement of Comprehensive Income has been prepared on the basis that all
operations are continuing.
The accompanying notes form an integral part of these Financial Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note As at As at
31 December 2022
30 April 2022
US$'000 US$'000
Assets
Non-current assets
Investments accounted for using the equity method 11 - -
Total non-current assets - -
Current assets
Other receivables 564 89
Cash and cash equivalents 306 662
Total current assets 870 751
Total assets 870 751
Liabilities
Current liabilities
Trade and other payables 13 (411) (304)
Total liabilities (411) (304)
Net assets 459 447
Equity attributable to the owners of the parent
Share premium 12 48,128 47,656
Share reserve 2,036 1,445
Accumulated deficit (49,705) (48,654)
Total shareholder funds 459 447
The Financial Statements were approved and authorised for issue by the Board
of Directors on 27 June 2023 and were signed on its behalf by: Director
The accompanying notes form an integral part of these Financial Statements.
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 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
Loss for the period to 31 December 2022 - - (1,051) (1,051)
Total comprehensive income - - (1,051) (1,051)
Transactions with equity shareholders of the parent
Proceeds from shares 490 - - 490
issues
Cost of share issues (18) - - (18)
Share based payments - 591 - 591
Balance at 31 December 2022 48,128 2,036 (49,705) 459
The accompanying notes form an integral part of these Financial Statements.
CONSOLIDATED CASH FLOW STATEMENT
For the 8 month period ended For the year ended
31 December 2022
30 April 2022
US$'000 US$'000
Cash flows from operating activities:
Net loss for the year (1,051) (27,389)
Adjustments for:
Share of net loss of associate - 428
Share based payments 591 406
Impairment of investment - 23,885
Change in working capital items:
Decrease/(Increase) in other receivables (475) 114
(Decrease)/Increase in trade and other payables 107 (834)
Net cash used in operations (828) (3,390)
Cash flows from investing activities
Investment in associate - (4,051)
Net cash used in investing activities - (4,051)
Cash flows from financing activities
Proceeds from issue of share capital 490 -
Share issue costs (18) -
Net cash generated by financing activities 472 -
Net decrease in cash and cash equivalents (356) (7,441)
Cash and cash equivalents, at beginning of the year 662 8,103
Effect of foreign exchange rate changes - -
Cash and cash equivalents, at end of the year 306 662
The accompanying notes form an integral part of these Financial Statements
NOTES TO FINANCIAL STATEMENTS
1 Reporting Entity
Beacon 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 and on 16 December 2022 announced the
proposed acquisition of Rhein Petroleum GmbH, an upstream oil and gas business
operating in Germany. The Company's shares were suspended from trading on AIM
on 9 September 2022. Please see Note 18 in the financial statements for
further details regarding subsequent events.
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 approved and authorised for issue by the Company's Board
of directors on 27 June 2023.
The comparatives are not entirely comparable and reflect the period from 1 May
2021 to 30 April 2022 whilst the current period figures represent the period
from 1 May 2022 to 31 December 2022. The change in period length was to align
the accounting period with the newly acquired subsidiary (see Note 18).
Details of the Group's accounting policies are included below:
Standards and amendments effective for periods beginning 1 May 2022 or later
A number of new standards are effective for annual periods beginning after 1
May 2022 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)
· Amendments to IAS 12: Deferred Tax Related to Assets and
Liabilities Arising from a Single Transaction.
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.
On 11 April 2023, the Group completed the acquisition of Rhein Petroleum GmbH
including a fund raise the proceeds of which will be used to fund the drilling
of the SCHB-2 development well. Drilling operations for the SCHB-2 well
commenced on 19 June 2023. As at 21 June 2023, the Group had cash resources
including 'restricted cash' of US$7.1 million.
Management's base case is that the SCHB-2 well will be drilled, tested and
completed by the end of July and that production flow rates from the well will
be consistent with the "best estimate" outlined in the Competent Persons
Report ("CPR") published in December 2022.
Management have also considered a number of downside scenarios, including
scenarios where the well is delayed, the cost of the well increases or the
production flow rate from the well is materially below the "best estimate"
outlined in the CPR.
Under the base case forecast, the Group will have sufficient financial
headroom to meet forecast cash requirements for the 12 months from the date of
approval of these consolidated financial statements. However, in the downside
scenarios, in the absence of any mitigating actions, the Group may have
insufficient funds to meet its forecast cash requirements. Potential mitigants
include deferral and/or reduction of expenditure and raising additional equity
or debt funding.
Accordingly, after making enquiries and considering the risks described above,
the Directors have assessed that the cash balance and forecast cash flows
provide the Group with adequate headroom for the following 12 months - as a
result, the Directors are of the opinion that the Group is able to operate as
a going concern for at least the next twelve months from the date of approval
of these financial statements.
Nonetheless, these conditions indicate the existence of a material uncertainty
which may cast doubt on the Group's ability to continue as a going concern.
The financial statements do not include the adjustments that would be required
if the Group were unable to continue as a going concern.
3 Functional and presentation currency
These consolidated financial statements are presented in US Dollars ("USD" or
"US$"), 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.
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 one operating segment comprising oil and gas exploration
and production operations in Germany. As a result, 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 2022
December April
US$'000 US$'000
Audit fees 20 45
Professional fees 103 1,178
Administration costs 63 164
Employee costs - 95
Share based payments - warrants issued with July 2022 fund raise 425 -
Directors' fees (Note 9) 393 1,396
Other administrative expenses 1,004 2,878
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 2022
December April
Loss attributable to owners of the Group (USD (1,051) (27,389)
thousands)
Weighted average number of ordinary shares in issue (thousands) 1,350,063 1,027,614
Loss per share (US cents) (0.08) (2.67)
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 31 December 2022 and 30 April 2022, and the changes during
each year:
Number of options and warrants Weighted average exercise price (Pence)
Outstanding and exercisable at 1 May 2021 161,259,504 3.41
Outstanding and exercisable at 30 April 2022 118,259,511 2.68
Outstanding and exercisable at 31 December 2022 613,268,824 0.43
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
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
Grant Date Expiry Date 1 May Issued Expired 31 December Exercise Price
2022 2022
Warrants
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
Consolidation (833,105,906) - 833,105,906 -
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 (80,067,627) - 44,916,232 (35,151,395)
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
26.07.22 27.07.25 - 500,000,000 - 500,000,000 0.13p
Options
01.10.18 01.10.23 4,500,000 - - 4,500,000 2.00p
01.02.20 01.02.25 31,250,000 - - 31,250,000 0.30p
01.02.20 01.02.25 31,250,000 - - 31,250,000 0.30p
Consolidation (60,300,000) - - (60,300,000)
19.04.21 19.01.26 27,110,000 - - 27,110,000 2.60p
17.03.22 17.03.27 30,000,000 - - 30,000,000 0.30p
118,259,511 500,000,000 (4,990,687) 613,268,824
The options and warrants issued during the period 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$591,000 (30 April 2022: US$552,000) relating to
equity-settled share-based payment transactions during the year arising from
Option or Warrant grants, which was charged US$Nil (2022: US$Nil) in respect
of services performed in connection with the issue of new shares charged to
share premium, US$472,000 (2022: US$559,000) in respect of directors' fees and
US$7,000 reversed (2022: US$7,000) in respect of employee costs to the income
statement.
The 83,710,000 options granted on 19 April 2021 will vest on 1 January 2022
and 1 January 2023 in equal amounts. Vesting of the options is subject to
the option holder providing continuous service during the vesting period and
there are no other performance conditions attached to the options.
There were 68,750,000 of unvested options at the 30 April 2020 held by current
Directors and consultants, which vested on 1 February 2021.
The 30,000,000 options granted on 17 March 2022 will vest on 17 September 2022
and 17 March 2023 in equal amounts. Vesting of the options is subject to the
option holder providing continuous service during the vesting period and there
are no other performance conditions attached to the options.
For the share options and warrants outstanding as at 31 December 2022, the
weighted average remaining contractual life is 4 years (30 April 2022: 4.64
years).
9 Employee benefits (including directors)
The group employed an average of 4 individuals during the period, including
the directors (2021: 5).
2022 2022
December April
US$'000 US$'000
Directors' remuneration (see below) 227 1,133
Share based payments - Directors (see below) 166 406
Directors' health insurance - 16
Employees - 84
Amount due to former consultant - (160)
393 1,479
Key management of the Group are considered to be the Directors.
The remuneration of the directors during the period ended 31 December 2022 was
as follows:
Short term employee benefits Social security payments Share based payments
Pension contribution Total
2022
US$'000 US$'000 US$'000 US$'000 US$'000
Ross Warner 33 - - 14 47
Mark Rollins 67 - - 70 137
Stephen West - (2) - - (2)
Steve Whyte 33 4 - 6 43
Larry Bottomley 88 4 - 76 168
Total Key Management 221 6 - 166 393
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$'000
Ross Warner 53 - - 56 109
Mark Rollins 158 - - 284 442
Leslie Peterkin 484 - 28 - 535
Stephen West 233 30 27 - 333
Steve Whyte 54 6 - 23 60
Larry Bottomley 54 6 - 43 60
Total Key Management 1,036 42 55 406 1,539
10 Income tax expense
The Parent Company is resident for tax purposes in the Isle of Man and is
subject to Isle of Man tax at the current rate of 0% (2021: 0%). During the
period and in the prior year, no subsidiaries were subject to corporation tax.
Taxation reconciliation
The charge for the year can be reconciled to the loss per the consolidated
statement of comprehensive income as follows:
2022 2022
December April
US$'000 US$'000
Loss before income tax (1,051) (27,389)
Tax on loss at the weighted average corporate tax rate of 0% (2022: 0%) - -
Total income tax expense - -
The deferred tax asset has not been recognised for in accordance with IAS 12.
The Group does not have a material deferred tax liability at the year end.
11 Business combination
On 19 April 2021, Beacon Energy plc, via its wholly owned subsidiary Advance
Energy TL Limited, acquired a 50% equity interest in Carnarvon Petroleum Timor
Unipessoal Lda which in turn is the holder of a 100% working interest in, and
the contractor of, the Buffalo Production Sharing Contract ("PSC").
Details of the purchase consideration and the net assets acquired are as
follows:
Purchase consideration
2021
US$'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 Beacon Energy in determining the
purchase price apportionment.
Equity investment in associate
2022 2022
December April
US$'000 US$'000
Carrying value at beginning of year - 20,262
Cash call - 4,051
Share of losses post acquisition - (428)
Impairment - (23,885)
Carrying value at year end - -
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 Beacon
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.
Summarised statement of comprehensive income for the 12 months to 30 April
2022
2022 2022
December April
US$'000 US$'000
Revenue - -
Cost of sales - -
Gross profit - -
Administrative expenses - (802)
Operating loss - (802)
Finance costs - (53)
Loss on ordinary activities before taxation - (855)
Taxation - -
Loss from continuing operations - (855)
Group share of post-acquisition losses - (428)
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$'000
Balance at 30 April 2021 1,027,614,008 47,656
Equity Placing - - -
Cost of issue - - -
Balance at 30 April 2022 1,027,614,008 47,656
26 July 2022-Equity placing 500,000,000 0.13 490
Cost of issue - - (18)
Balance at 31 December 2022 1,527,614,008 48,128
13 Trade and other payables
Trade and other payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business. Accounts payable are
classified as current liabilities if payment is due within one year or less
(or in the normal operating cycle of the business if longer). If not, they are
presented as non-current liabilities. Trade payables are recognised initially
at fair value, and subsequently measured at amortised cost using the effective
interest method.
2022 2022
December April
US$'000 US$'000
Trade payables 230 51
Accruals and other payables 181 253
411 304
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$373,000) in the net assets of the Group.
B. Cash flow interest rate risk
The Group's cash and cash equivalents are invested at short term market
interest rates. As market rates are low, the Group is not subject to
significant cash flow interest rate risk and no sensitivity analysis is
provided. The Group is also not subject to significant fair value interest
rate risk.
2022 2022
December April
US$'000 US$'000
Cash & Cash Equivalents
USD 294 511
GBP 12 151
Total Financial Assets 306 662
Trade & other payables
USD 181 253
GBP 184 51
EUR 46 -
Total Financial Liabilities 411 304
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 31 December 2022 (30 April 2022: 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 2021 Country of incorporation Nature of business
Advance Energy TL Limited 100% 100% UK Intermediate Hold Co
Carnarvon Petroleum Timor Unipessoal Lda 0% 50% Timor-Leste Oil exploration
Eagle Gas Limited 25% 25% UK Oil and gas Exploration
Beacon Energy RP Limited 100% N/A Isle of Man Dormant
16 Commitments
There were no capital commitments authorised by the Directors or contracted
other than those provided for in these financial statements as at 31 December
2022 (30 April 2022: 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 3 January 2023, the Company announced the approval of the proposed
acquisition of Rhein Petroleum announced on 16 December 2022. On the same day,
there was also a proposal to appoint Stewart MacDonald as an Executive
director and Chief financial officer subject to the completion of the proposed
acquisition transaction. Tulip Oil also nominated Leo Koot as its
representative non-executive director, subject to completion of the proposed
transaction in accordance with the share purchase agreement announced on 16
December 2022.
On 7 March 2023, Beacon Energy Plc announced that, subject to the completion
of the acquisition of Rhein Petroleum GmbH, it changed its accounting
reference from 30 April to 31 December so that it aligns with the report
periods for Rhein Petroleum GmbH. On the same date the board agreed on and
subject to the completion of the acquisition of Rhein Petroleum, the company
will issue options, exercisable at nil cost, to the existing Company Directors
in lieu of accrued and unpaid fees of £212,185. The publication of the
pathfinder admission document was done on the same date.
On 21 March 2023, the Company announced that it had issued 5,491,516,026 new
ordinary shares by way of placing and a Primary Bid Offer at a fundraise price
of 0.11 pence to raise £6.04 million (the "Fundraise"). The net proceeds of
the Fundraise together with the Company's existing cash resources will be used
to fund the drilling of the SCHB-2 development well (onshore South West
Germany) and for general working capital requirements. The Company's existing
and proposed (now current) Directors (excluding Ross Warner) subscribed for,
in aggregate, £0.47 million of new ordinary shares pursuant to the Fundraise.
On 5 April 2023, the Company held an extraordinary general meeting to announce
that the existing ordinary shares were to be cancelled from trading on AIM and
the new ordinary shares would be admitted to trading on 11 April 2023.
Following admission, the company had 10,507,679,620 ordinary shares in issue.
The director shareholding was also announced and set out as below:
Director Number of Existing Ordinary shares Director Subscription Shares Number of Director Fee Share(1) Number of Ordinary Shares on Admission Percentage of Enlarged Share Capital (%)
Mark Rollins 76,461,976 159,090,909 89,728,363 325,281,248 3.10
Stephen Whyte(2) 391,266 22,727,272 29,610,360 52,728,898 0.50
Ross Warner 205,287 - - 205,287 0.00
Larry Bottomley 47,058,823 68,181,818 246,753,000 361,993,641 3.45
Stewart MacDonald - 18,181,818 192,727,272 210,909,090 2.01
Leo Koot(3) - 159,090,909 - 159,090,909 1.51
¹ The majority of Director Fee Shares will be held in escrow in a subsidiary
of the Company and will be released to the Directors as appropriate after two
years.
² Stephen Whyte's interest is held in the name of Nicola Louise Whyte, his
wife.
(3) 29,610,360 Director Fee Shares that were to be held for the benefit of Leo
Koot will now be held for the benefit of Tulip Oil Holding B.V. on Admission
and as such are included in its holding as set out below.
On 11 April 2023, the Company announced that it had successfully completed the
acquisition of Rhein Petroleum, Beacon Energy was re-admitted to trading on
AIM. On the same date Stewart MacDonald and Leo Koot were appointed as
directors.
On 19 June 2023, the Company announced that drilling had started at the
Schwarzbach-2 ("SCHB-2") development well within the Erfelden Field,
onshore South West Germany.
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