REG-Cadogan Petroleum: Annual Financial Report <Origin Href="QuoteRef">CADP.L</Origin> - Part 3
26/04/2016 14:10
- Part 3: For the preceding part double click ID:nPRrQ1408b
In my statement last year, I
explained that the Company would maintain its current approach to remuneration,
already long-term, balanced and aligned to strategy and performance.
Enrico Testa
Chairman of the Remuneration Committee
25 April 2016
Annual Report On Remuneration 2015
Remuneration Committee Report
The Remuneration Committee is committed to principles of accountability and
transparency to ensure that remuneration arrangements demonstrate a clear link
between reward and performance. In its work, the Remuneration Committee
considers fully the principles and provisions of the Code. In designing
performance-related remuneration schemes for executive Directors, the
Remuneration Committee has considered and applied Schedule A of the Code.
Governance
The Remuneration Committee is appointed by the Board from the non-executive
Directors of the Company. The Remuneration Committee's terms of reference
include all matters indicated by the Code. They are reviewed annually by the
Remuneration Committee and any changes are then referred to the Board for
approval. The terms of reference of the Remuneration Committee are published on
the Company's website, www.cadoganpetroleum.com, and are also available from
the Company Secretary at the Registered Office.
The Remuneration Committee consists of Mr Enrico Testa, Mr Zev Furst and Mr
Gilbert Lehmann. At the discretion of the Remuneration Committee, the Chief
Executive Officer is invited to attend meetings when appropriate, but is not
present when his own remuneration is being discussed. None of the directors are
involved in deciding their own remuneration. The Remuneration Committee is also
supported by the Company Secretary.
Responsibilities
In summary, the Remuneration Committee's responsibilities, as set out in its
terms of reference, are as follows:
* To determine and agree with the Board the policy for the remuneration of
the executive Directors, the Company Secretary and other members of
executive management as appropriate.
* To consider the design, award levels, performance measures and targets for
any annual or long-term incentives and approve any payments made and awards
vesting under such schemes.
* Within the terms of the agreed remuneration policy, to determine the total
individual remuneration package of each executive Director and other senior
executives including bonuses, incentive payments and share options or other
share awards.
* To ensure that contractual terms on termination, and any payments made, are
fair to the individual and the Company, that failure is not rewarded and
that the duty to mitigate loss is fully recognised.
Overview
As a result of its work during the year, the Remuneration Committee has
concluded that it has acted in accordance with its terms of reference. The
chairman of the Remuneration Committee will be available at the Annual General
Meeting to answer any questions about the work of the Committee. The Chairman
and Executive Directors of the Company have a regular dialogue with analysts
and substantial shareholders, which includes the subject of Directors'
Remuneration. The outcome of these discussions are reported to the Board and
discussed in detail both there and during meetings of the Remuneration
Committee. Mr Lehmann, as the Senior Independent Director, is available to
shareholders who have concerns that they feel would be inappropriate to raise
via the Chairman or Executive Directors.
The Remuneration Committee unanimously recommends that shareholders vote to
approve the Annual Report on Remuneration at the 2016 Annual General Meeting.
Remuneration consultants
The Remuneration Committee did not take any advice from external remuneration
consultants.
Single total figure of remuneration for executive and non-executive directors
(audited)
Taxable Annual Long-term
Salary and fees benefits bonus incentives Pension Total
$ $ $ $ $ $
Executive Directors
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
G 242,902 - 15,987 - - - - - - - 313,809 -
Michelotti
B des 357,231 405,433 - 20,734 - - - - - - 357,304 426,167
Pallieres
A Schenato 282,014 333,703 - 18,195 - - - - - - 282,014 351,898
Non-executive Directors
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
Z Furst 129,957 140,089 - - - - - - - - 129,957 140,089
G Lehmann 68,801 74,165 - - - - - - - - 68,801 74,165
E Testa 53,512 57,684 - - - - - - - - 53,512 57,684
M Meeùs 53,512 - - - - - - - - 53,512 -
In 2015 there was no increase in executive and non-executive directors' salary
in base currency. The difference in pay represents the change in exchange rate
between the base currency and USD as a reporting currency.
Notes to the table
In June 2015 Mr Guido Michelotti was appointed as Chief Executive Officer. Mr
Michelotti's salary is €440,000 ($488,708) per annum.
In June 2015, Mr Bertrand des Pallieres was appointed as Chief Trading Officer.
Mr des Pallieres' salary is £221,400 ($338,498) per annum, comprising £194,400
($297,218) per annum under a consultancy agreement (the terms of which are
reviewed by the Remuneration Committee annually) and £27,000 ($41,280) per
annum under a services agreement.
Adelmo Schenato continued as Chief Operating Officer of the Company throughout
2015. Mr Schenato's basic salary is £184,393 ($281,918) comprising €225,000 per
annum under a consultancy agreement and £21,000 under a services agreement.
In 2015 none of the directors participated in an annual bonus and long-term
incentives.
In May 2011 the Board agreed that the Chairman's fee be set at £85,000
($129,957) and that the fee for acting as an independent non-executive Director
be set at £35,000 ($53,512) with an additional £10,000 ($15,289) for acting as
Chairman of the Audit Committee. There has been no increase in non-executive
Directors' fees since that time.
Benefits may be provided to the executive directors, in the form of private
medical insurance and life assurance.
Scheme interests awarded during the financial year (audited)
There were no scheme interests awarded during the year.
Payments to past directors (audited)
In 2015 there were no payments to past directors.
Payments for loss of office (audited)
No payments were made to directors for loss of office in 2015.
Directors' interests in shares (audited)
The beneficial interests of the Directors in office as at 31 December 2015 and
their connected persons in the Ordinary shares of the Company at 31 December
2015 are set out below.
Shares as at 31 December 2015 2014
Z Furst - -
B des Pallieres 200,000 200,000
G Lehmann - -
M Meeùs 26,000,000 26,000,000
A Schenato - -
E Testa - -
The Company does not currently operate formal shareholding guidelines.
The Company's performance
The graph highlights the Company's total shareholder return ("TSR") performance
for the last seven years compared to the FTSE All Share Oil & Gas Producers
index. This index has been selected on the basis that it represents a sector
specific group which is an appropriate group for the Company to compare itself
against. TSR is the return from a share or index based on share price movements
and notional reinvestment of declared dividends. Full text and all diagrams
will be available in the published version of the Annual Report on the
Company's website.
Historic Remuneration of Chief Executive
Taxable Annual Long-term Loss of
Salary benefits bonus incentives Pension office Total
$ $ $ $ $ $ $
2008 469,438 43,558 - - - - 512,996
2009 422,533 - 284,552 - - - 707,085
2010 547,067 - - - - - 547,067
2011 669,185 - - - - - 669,185
2012 511,459 - - - 31,966 126,808 670,233
2013 384,941 - - - - - 384,941
2014 405,433 20,734 - - - - 426,167
2015 432,409 15,987 - - - - 448,396
In 2015 none of the directors participated in an annual bonus and long-term
incentives.
Percentage change in the remuneration of the Chief Executive
The following table shows the percentage change in the remuneration of the
Chief Executive in 2015 and 2014 compared to that of all employees within the
Group.
2015 2014 Change
$'000 $'000 %
Base salary CEO 432 405 7
All employees 3,121 4,467 (30)
2015 2014
$'000 $'000
Taxable benefits CEO 16 20 (20)
All employees 27 91 (70)
2015 2014
$'000 $'000
Total remuneration CEO 426 5
448
All employees 3,148 4,558 (31)
In 2015 none of the directors participated in an annual bonus.
In 2015 there was no increase in executive and non-executive directors' salary
in base currency. The difference in pay represents the change in exchange rate
between the base currency and USD as a reporting currency. The decrease in
employee remuneration is due to a reduction in employees as at 31 December 2015
to 80 (2014: 100).
Loss of Office
In 2015 no loss of office payments were made to the directors.
Relative importance of spend on pay
The table below compares shareholder distributions (i.e. dividends and share
buybacks) and total employee pay expenditure of the Group for the financial
years ended 31 December 2014 and 31 December 2015.
2015 2014 Year-on-year
$'000 $'000 change, %
All-employee remuneration 3,596 4,984 (28)
Distributions to shareholders - - N/A
Shareholder voting at the Annual General Meeting
The Directors' Remuneration Report for the year ended 31 December 2014 and the
Director's Remuneration Policy were approved by shareholders at the Annual
General Meeting held on 25 June 2015.
The Remuneration Policy can be found on the Group's website.
The votes cast by proxy were as follows:
Director's Remuneration Number of votes % of votes cast
Report
For 58,983,662 99.91
Against 56,000 0.09
Total votes cast 59,039,662 100.00
Number of votes withheld 0
Director's Remuneration Number of votes % of votes cast
Policy
For 58,983,662 99.91
Against 56,000 0.09
Total votes cast 59,039,662 100.00
Number of votes withheld 0
Implementation of Remuneration Policy in 2016
The Remuneration Committee proposes to continue to implement a Remuneration
Policy approved by the shareholders at the 2015 AGM.
Approval
The Directors' Remuneration Report was approved by the Board on 25 April 2016
and signed on its behalf by:
Zev Furst
Chairman
25 April 2016
FINANCIAL STATEMENTS
Statement of Directors' Responsibilities in respect of the Annual Report and
the Financial Statements
The Directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. The Directors are required by law to prepare the Group
financial statements in accordance with International Financial Reporting
Standards ("IFRSs") as adopted by the European Union and Article 4 of the
International Accounting Standards ("IAS") regulation and have also elected to
prepare the Parent Company financial statements under IFRSs as adopted by the
European Union. Under Company law, the Directors must not approve the Financial
Statements unless they are satisfied that they give a true and fair view of the
state of affairs of the Company and Group and of the profit or loss for that
period. In preparing the Company and Group's financial statements, IAS
Regulation requires that Directors:
* properly select and apply accounting policies;
* present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
* provide additional disclosures when compliance with the specific
requirements in IFRSs are insufficient to enable users to understand the
impact of particular transactions, other events and conditions on the
Company's and Group's financial position and financial performance; and
* make an assessment of the Company's and Group's ability to continue as a
going concern.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company and Group's transactions and
disclose with reasonable accuracy at any time the financial position of the
Company and Group and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, Directors' Report, Annual Report on Remuneration,
Directors' Remuneration Policy and Corporate Governance Statement that comply
with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website,
www.cadoganpetroleum.com. Legislation in the United Kingdom governing the
preparation and dissemination of the financial statements may differ from
legislation in other jurisdictions.
Responsibility Statement of the Directors in respect of the Annual Report
We confirm to the best of our knowledge:
(1) the financial statements, prepared in accordance with International
Financial Reporting Standards as adopted by the European Union, give a true and
fair view of the assets, liabilities, financial position and profit or loss of
the Company and the undertakings included in the consolidation as a whole; and
(2) the Strategic Report, includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face; and
(3) the annual report and the financial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for the
shareholders to assess the Group's position, performance, business model and
strategy.
On behalf of the Board
Zev Furst
Chairman
25 April 2016
Independant Auditor's Report To The Members Of Cadogan Petroleum Plc
Opinion on financial statements of Cadogan Petroleum Plc
In our opinion:
* the financial statements give a true and fair view of the state of the
Group's and of the Parent Company's affairs as at 31 December 2015 and of
the Group's loss for the year then ended;
* the Group financial statements have been properly prepared in accordance
with International Financial Reporting Standards (IFRSs) as adopted by the
European Union;
* the Parent Company financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
* the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
The financial statements comprise the Consolidated Statement of Comprehensive
Income, the Group and Company Balance Sheets, the Group and Company Statement
of Changes in Equity, the Group and Company Cash Flow Statements and the
related notes 1 - 42.
The financial reporting framework that has been applied in their preparation is
applicable law and IFRSs as adopted by the European Union and, as regards the
Parent Company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
Going concern and the directors' assessment of the principal risks that would
threaten the solvency or liquidity of the group
We have nothing material to add or draw attention to in relation to:
* the Directors' confirmation on page 27 that they have carried out a robust
assessment of the principal risks facing the Group, including those that
would threaten its business model, future performance, solvency or
liquidity;
* the disclosures on pages 13 to 15 that describe those risks and explain how
they are being managed or mitigated;
* the Directors' statement in note 3 to the financial statements about
whether they considered it appropriate to adopt the going concern basis of
accounting in preparing them and their identification of any material
uncertainties to the Group's ability to continue to do so over a period of
at least 12 months from the date of approval of the financial statements;
and
* the Director's explanation on page 27 as to how they have assessed the
prospects of the Group, over what period they have done so and why they
consider that period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due over the period of
their assessment.
We agreed with the Directors' adoption of the going concern basis of accounting
and we did not identify any such material uncertainties. However, because not
all future events or conditions can be predicted, this statement is not a
guarantee as to the Group's ability to continue as a going concern.
Independence
We are required to comply with the Financial Reporting Council's Ethical
Standards for Auditors and we confirm that we are independent of the Group and
we have fulfilled our other ethical responsibilities in accordance with those
standards. We also confirm we have not provided any of the prohibited non-audit
services referred to in those standards.
Our assessment of risks of material misstatement
The assessed risks of material misstatement described below are those that had
the greatest effect on our audit strategy, the allocation of resources in the
audit and directing the efforts of the engagement team:
Risk How the scope of our audit responded
to the risk:
Political and economic turmoil in
Ukraine Using sensitivity analysis we have
Substantially all the Group's operating assessed the potential impact of
activities and assets are located in ongoing political instability in
Ukraine. The potential future impact of Ukraine on the key assumptions used by
the political and economic situation on management in the calculation of the
the business operations is highly recoverable amount of non-current
uncertain. assets and assessment of the going
Consideration is required whether the concern, including gas prices,
carrying values of non-current assets inflation assumption, the discount
of the $6.7m and receivables of the factor and currency exchange rates.
$15.1m remain recoverable, whether
assumptions including future gas We also assessed the potential impact
prices, foreign currency exchange of the ongoing political instability
rates, discount factor and inflation on the going concern assumption by
assumptions used in impairment modelling the impact of various
assessments are reasonable, whether the downside scenarios, including
going concern assumption is appropriate inflation caused by depreciation of
and whether sufficiently detailed the national currency, potential
disclosures have been made. difficulties with the upcoming
The Group has assessed its portfolio of extension of licences and changes to
the assets in the context of the oil and gas trading regulation in
political and economic situation in Ukraine.
Ukraine, including the considerations
mentioned above, and potential We considered the adequacy of the
difficulties with the current and disclosures made in the financial
upcoming extension of licences. As a statements and the annual report.
result management decided to impair the
exploration and evaluation assets
associated with the Pirkovska licence
by $10.1m down to $0m due to a
significant uncertainty in relation to
the timing of the renewal of the
Pirkovska licence that expired in
October 2015.
Details of the Group's assessment of
the operating environment in Ukraine
and uncertainties about key assumptions
made by management in assessing the
recoverable amount of oil and gas
assets are disclosed in notes 4 and 35.
Risk How the scope of our audit responded
to the risk:
Recoverability of non-current assets
The carrying value of the Group's We evaluated management's assessment
non-current assets, which includes of indicators of impairment and
intangible exploration and evaluation recoverability assessment for the
assets, property, plant and equipment Group's non-current assets, including
and investments in joint ventures, potential difficulties with the
amounted to $6.7 million at 31 December upcoming extension of licences. We
2015. analysed the reasonableness of the
estimates such as oil and gas
Assessment of the carrying value of resources and future production
non-current assets requires significant levels, future oil and gas prices,
judgement, including the Group's future costs and performed the
intention and ability to proceed with a benchmarking of inflation and discount
future work programme for a prospect or rates to estimates used by the peer
licence, the likelihood of licence companies and Deloitte developed
renewal or extension, and the expected discount rates. We also considered
or actual success of drilling and actual facts and circumstances of the
geological analysis. Recoverability of operating environment of the Group.
non-current assets is dependent on
macro-economic assumptions and Our work included discussion of the
estimates about future oil and gas latest status and future appraisal
prices, inflation, discount and plans on each licence with operational
exchange rates as well as forecast staff and Group management. We
assumptions related to future gathered evidence such as budgets,
production levels, reserves and field development plans, contracts for
operating costs. The outcome of future drilling and geological and
impairment assessments could vary geophysical activities to verify that
significantly were different management intention to continue
assumptions applied. exploration efforts is supported by
funding commitments.
The continued instability of political
and economic situation in Ukraine and We have also obtained and reviewed
devaluation of functional currency to documentary evidence, such as budgets,
which the Group is significantly field working programmes, contracts
exposed and the Group's reduction in for future geological and geophysical
production and exploration activities activities, and licence documents.
are factors which heighten the risk of
impairment associated with the Group's We evaluated management's assessment
non-current assets. of whether there were any indicators
of impairment for the Group's
In total, impairments of intangible interests in joint ventures, taking
exploration and evaluation assets, into consideration the impairment
property plant and equipment and indicators outlined in IFRS 6 for the
investments in joint ventures amounting purpose of impairment assessment of
to $10.1 million, $0.4 million and $8.8 exploration and evaluation assets
million, respectively were recognised within the joint ventures. We held
in the year ended 31 December 2015. discussions on the latest status and
future appraisal plans on each licence
Refer to Group's policies and key with operational staff and Group
estimates and assumptions within note 1 management and compared these plans
and additional notes 16,17 and 19. with approved budgets and considered
Group's future funding
responsibilities.
We undertook a detailed analysis and
challenge of the significant
judgements and estimates used in
management's impairment tests of
exploration and evaluation assets held
by the joint ventures of the Group.
Our analysis included comparison of
gas price assumptions to publicly
available forecasts, benchmarking the
discount rate applied by management to
Deloitte developed discount rate, and
the comparison of future cost
estimates against actual historic cost
levels and budgets.
Although separate impairment assessments have been undertaken and audited, we
have aggregated our explanation of risks and the scope for the recoverability
of intangible exploration and evaluation (E&E) assets, development of producing
oil and gas properties within property, plant and equipment, recoverability of
investments in joint ventures into the recoverability of non-current assets.
The description of risks above should be read in conjunction with the
significant issues considered by the Audit Committee and discussed on page
32-34.
Our audit procedures relating to these matters were designed in the context of
our audit of the financial statements as a whole, and not to express an opinion
on individual accounts or disclosures. Our opinion on the financial statements
is not modified with respect to any of the risks described above, and we do not
express an opinion on these individual matters.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial
statements that makes it probable that the economic decisions of a reasonably
knowledgeable person would be changed or influenced. We use materiality both in
planning the scope of our audit work and in evaluating the results of our work.
When determining materiality, among other factors we considered the Group's
pre-tax loss in the current period as well as in recent periods; the occurrence
of any non-recurring or fluctuating gains and losses (such as exploration and
evaluation assets impairments) and the level of consolidated shareholders'
equity.
We determined our materiality based on the expected consolidated shareholders'
equity as at 31 December 2015. Consistent with the prior year, we used
consolidated shareholders' equity to determine materiality as the entity has a
history of operating losses. Materiality was determined to be $2,020,000, which
was 3% of expected consolidated shareholders' equity. Subsequently, a
non-current assets impairment of $19.3 million was recognised which impacted
consolidated shareholders' equity and thus the benchmark based on which we
determined our materiality initially. We assessed whether the scope of the
business had changed as a result of this impairment and determined that it had
not. Therefore we consider it appropriate to retain our original materiality of
$2,020,000, which is now 3.7% of consolidated shareholders' equity (2014:
$2,700,000 which was 3% of consolidated shareholders' equity).
We agreed with the Audit Committee that we would report to the Committee all
audit differences in excess of $40,000 (2014: $54,000), as well as differences
below that threshold that, in our view, warranted reporting on qualitative
grounds. We also report to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the financial statements.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the group and its
environment, including group-wide controls, and assessing the risks of material
misstatement at the group level. Based on that assessment, we have included in
the group audit scope the full audit of all significant entities in Ukraine and
in the UK. These businesses account for over 90% (2014: over 90%) of the
Group's net assets, revenue and loss before tax. The group audit team was led
by the Deloitte UK Senior Statutory Auditor and managers and included junior
audit members and senior tax specialists from Deloitte Ukraine as all assets
are located there and appropriate knowledge of local legislation and tax
regulations is required.
The Senior Statutory Auditor and managers from the Deloitte UK visited the
Ukraine during the planning and fieldwork stages of the audit.
At the parent entity level we also tested the consolidation process and carried
out analytical procedures to confirm our conclusion that there were no
significant risks of material misstatement of the aggregated financial
information of the remaining balances not subject to audit or audit of
specified account balances.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion:
• the part of the Directors' Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act 2006; and
• the information given in the Strategic Report and the
Directors' Report for the financial year for which the financial statements are
prepared is consistent with the financial statements.
Matters on which we are required to report by exception
Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our
opinion:
* we have not received all the information and explanations we require for
our audit; or
* adequate accounting records have not been kept by the Parent Company, or
returns adequate for our audit have not been received from branches not
visited by us; or
* the Parent Company financial statements are not in agreement with the
accounting records and returns.
We have nothing to report in respect of these matters
Directors' remuneration
Under the Companies Act 2006 we are also required to report if in our opinion
certain disclosures of directors' remuneration have not been made, or the part
of the Directors' Remuneration Report to be audited is not in agreement with
the accounting records and returns. We have nothing to report arising from
these matters.
Our duty to read other information in the Annual Report
Under International Standards on Auditing (UK and Ireland), we are required to
report to you if, in our opinion, information in the annual report is:
* materially inconsistent with the information in the audited financial
statements; or
* apparently materially incorrect based on, or materially inconsistent with,
our knowledge of the Group acquired in the course of performing our audit;
or
* otherwise misleading.
In particular, we are required to consider whether we have identified any
inconsistencies between our knowledge acquired during the audit and the
Directors' statement that they consider the annual report is fair, balanced
and understandable and whether the annual report appropriately discloses
those matters that we communicated to the audit committee which we consider
should have been disclosed. We confirm that we have not identified any such
inconsistencies or misleading statements.
Other matter
Although not required to do so, the directors have voluntarily chosen to make a
corporate governance statement detailing the extent of their compliance with
the UK Corporate Governance Code. We reviewed the part of the Corporate
Governance Statement relating to the company's compliance with certain
provisions of the UK Corporate Governance Code. We have nothing to report
arising from our review.
Respective responsibilities of Directors and Auditor
As explained more fully in the Directors' Responsibilities Statement, the
Directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view. Our responsibility is
to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's Ethical
Standards for Auditors. We also comply with International Standard on Quality
Control 1 (UK and Ireland). Our audit methodology and tools aim to ensure that
our quality control procedures are effective, understood and applied. Our
quality controls and systems include our dedicated professional standards
review team and independent partner reviews.
This report is made solely to the Company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company's members those matters we are
required to state to them in an auditor's report and/or those further matters
we have expressly agreed to report to them on in our engagement letter and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the Company's
members as a body, for our audit work, for this report, or for the opinions we
have formed.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are
appropriate to the Group's and the Parent Company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness of
significant accounting estimates made by the Directors; and the overall
presentation of the financial statements. In addition, we read all the
financial and non-financial information in the annual report to identify
material inconsistencies with the audited financial statements and to identify
any information that is apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of performing the
audit. If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Timothy Biggs FCA (Senior statutory auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
25 April 2016
FINANCIAL STATEMENTS OF CADOGAN PETROLEUM PLC
Consolidated Income Statement
Notes
2015 2014
$'000 $'000
CONTINUING OPERATIONS
Revenue 6 75,440 32,623
Cost of sales (69,562) (29,813)
Gross profit 5,878 2,810
Administrative expenses (6,115) (7,002)
Impairment of oil and gas assets 8 (10,480) (5,134)
Reversal of impairment of other assets 8 1,300 877
(15,295) (11,259)
Share of losses in joint ventures 19 (12,844) (54,664)
Net foreign exchange gains 2,494 3,036
Other operating income, net 7 31 547
Operating loss (19,736) (59,530)
Investment income 12 118 852
Finance costs 13 (2,625) (468)
Loss before tax (22,243) (59,146)
Tax credit/(charge) 14 (1,040) (166)
Loss for the year 9 (23,283) (59,312)
Attributable to:
Owners of the Company (23,261) (59,271)
Non-controlling interest (22) (41)
(23,283) (59,312)
Loss per Ordinary share cents cents
Basic 15 (10.1) (25.6)
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2015
2015 2014
$'000 $'000
Loss for the year (23,283) (59,312)
Other comprehensive loss
Items that may be reclassified subsequently
to profit or loss:
Unrealised currency translation differences (11,521) (28,153)
Other comprehensive loss (11,521) (28,153)
Total comprehensive loss for the year (34,804) (87,465)
Attributable to:
Owners of the Company (34,782) (87,424)
Non-controlling interest (22) (41)
(34,804) (87,465)
Consolidated Balance Sheet
As at 31 December 2015
Notes
2015 2014
$'000 $'000
ASSETS
Non-current assets
Intangible exploration and evaluation assets 16 2,700 18,289
Property, plant and equipment 17 1,661 3,846
Investments in joint ventures 19 2,181 14,325
6,542 36,460
Current assets
Inventories 20 3,503 9,940
Trade and other receivables 21 14,411 17,891
Cash and cash equivalents 22 49,407 48,927
67,321 76,758
Total assets 73,863 113,218
LIABILITIES
Non-current liabilities
Deferred tax liabilities 23 - (288)
Provisions 26 (726) (55)
(726) (343)
Current liabilities
Short-term borrowings 24 (12,903) (17,327)
Trade and other payables 25 (3,682) (5,068)
Provisions 26 (1,523) (647)
(18,108) (23,042)
Total liabilities (18,834) (23,385)
NET ASSETS 55,029 89,833
EQUITY
Share capital 27 13,337 13,337
Retained earnings 200,339 223,600
Cumulative translation reserves (160,512) (148,991)
Other reserves 1,589 1,589
Equity attributable to owners of the Company 54,753 89,535
Non-controlling interest 276 298
TOTAL EQUITY 55,029 89,833
The consolidated financial statements of Cadogan Petroleum plc, registered in
England and Wales no. 5718406, were approved by the Board of Directors and
authorised for issue on 25 April 2016. They were signed on its behalf by:
Guido Michelotti
Chief Executive Officer
25 April 2016
The notes on pages 57 to 95 form an integral part of these financial
statements.
Consolidated Cash Flow Statement
For the year ended 31 December 2015
2015 2014
$'000 $'000
Operating loss (19,736) (59,530)
Adjustments for:
Depreciation of property, plant and equipment 434 938
Impairment of oil and gas assets 10,480 5,134
Share of losses in joint ventures 12,844 54,664
Charge of impairment of inventories (note 8) 90 253
Reversal of impairment of VAT recoverable (note 8) (1,390) (727)
Loss on disposal of property, plant and equipment 24 211
Effect of foreign exchange rate changes (3,827) (4,892)
Operating cash flows before movements in working capital (1,081) (3,949)
Decrease/(increase) in inventories 1,258 (7,242)
Decrease/(increase) in receivables 4,871 (10,285)
Decrease/(increase) in payables and provisions (1,429) 1,424
Cash from/(used in) operations 3,619 (20,052)
Interest paid (2,379) (218)
Income taxes paid - (373)
Net cash inflow/(outflow) from operating activities 1,240 (20,643)
Investing activities
Investments in joint ventures (700) (3,024)
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