Fenikso Limited - Annual results for the year ended 31 December 2022
06/06/2023 16:41
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230606:nRSF8532Ba&default-theme=true
RNS Number : 8532B Fenikso Limited 06 June 2023
06 June 2023
Fenikso Limited
("Fenikso" or "the Company")
Annual results for the year ended 31 December 2022
Fenikso Limited (AQSE: FNK) the Cayman Islands enterprise company, announces
its final audited results for the year ended 31 December 2022 (the
"Accounts").
A copy of the Accounts will shortly be available on the Company's website:
https://feniksoplc.com/investors/corporate-documents/
(https://feniksoplc.com/investors/corporate-documents/)
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.
For further information, please visit https://feniksoplc.com/
(https://feniksoplc.com/) or contact:
Fenikso Limited info@feniksoplc.com (mailto:info@feniksoplc.com)
Thomas Richardson Chairman
First Sentinel Corporate Finance Ltd (AQSE Corporate Adviser) +44 203 989 2200
Brian Stockbridge
Fenikso Limited
Financial statements
For the year ended 31 December 2022
Company information
Directors
Tom Richardson (Chairman)
Marco D'Attanasio (Non-Executive Director)
Pade Durotoye (Non-Executive Director)
Company registration number Cayman Islands, CWK-248859
Registered office Intertrust Corporate Services (Cayman) Limited
190 Elgin Avenue
George Town
Grand Cayman KY1-9008
Cayman Islands
Auditor Bright Grahame Murray
Emperor's Gate
114a Cromwell Road
Kensington
London
SW7 4AG
Corporate Adviser First Sentinal Corporate Finance Limited
72 Charlotte Street
London, W1T 4QQ
Broker Tennyson Securities
65 Petty France
London
SW1H 9EU
Website feniksoplc.com
Contents
Chairman's
statement
4
Strategic report
5
Report of the directors
7
Corporate governance
statement
11
Audit & risk committee report
13
Remuneration report
14
Report of the independent auditor
15
Statement of comprehensive income
19
Statement of financial position
20
Statement of changes in equity
21
Statement of cash flows
22
Notes to the financial statements
23
Chairman's statement
2022 was a challenging year for Fenikso Limited (the "Company", formerly known
as Lekoil Limited). The first three quarters of the year were spent in
litigation against Lekoil Nigeria where the Company worked on multiple fronts
to try and recover the value of the assets that its money had funded since the
IPO in 2013. The litigation was across multiple jurisdictions and extremely
complex. In Q4 of 2022 both parties agreed the basis for a settlement that was
finalised on December 31(st) 2022. The settlement resulted in the Company
changing its name to Fenikso and exchanging all subsidiary companies and inter
company loans in return for a US$51.9 million loan from Lekoil Nigeria payable
out of the proceeds of oil sales from the Otakikpo production. The settlement
was supported by the board and the majority of shareholders in the December
EGM.
As a result of the litigation Fenikso was left with significant financial
liabilities which had impacted its position as a going concern throughout
2022. Since the settlement the Company has settled the majority of its current
liabilities and is now looking forward to building a positive cash position
before the end of 2023. The primary focus for the board during 2022 was to try
to recover as much value for Fenikso shareholders as possible. The board is
now focused on ensuring the Company is in a stable financial position in 2023
and can assess the best way forward to further enhance shareholder value with
the cash that it receives from Lekoil Nigeria. The board is focused on
repaying historic creditors as soon as possible, starting to repay the loan to
Savanah Energy and keeping costs at a minimum whilst it stabilises the Company
and works on the new strategy for Fenikso. I believe that the Company will
soon be in a position to consider a number of different options that it can
discuss with shareholders on how best to create value from the money received
from the repayment of the loan from Lekoil Nigeria.
Financial review
The Company's financial position as at the end of 2022 was very simple. It
ended the year with one major asset which the loan outstanding to Lekoil
Nigeria of US$51.9 million that is to be repaid from the proceeds of oil sales
at the Otakikpo field. In terms of liabilities the Company had approximately
US$2.6 million owed to creditors who had provided services during the
litigation and settlement process. In addition the Company agreed to pay
Savanah Energy US$16.2 million (to be paid out of the repayment of the loan
from Lekoil Nigeria) in return for the cancellation of its option agreement
over the Mayfair Loan and the cancellation of its 25% shareholding in Fenikso
Limited. The Company's only current source of income is from the proceeds of
oil sales at the Otakikpo field in Nigeria. The oil sales take place on
approximately a six to eight week basis and so far the Company has received 3
payments under this settlement agreement. The Company has no subsidiaries and
has no remaining liabilities in connection with any of its historic
subsidiaries. The Company has three board members and is listed on the AQSE
stock exchange in the United Kingdom.
Corporate Structure and Board and Management update
The Company has simplified its corporate structure, having sold all its
subsidiaries and restructured all its inter company loans into one loan owed
by Lekoil Oil & Gas Investments (which in turn owns a 40% interest in the
Otakikpo oil and gas field in Nigeria). The board consists of three people
Marco D'Attanasio, Tom Richardson and Pade Durotoye. Pade is a representative
of Savanah Energy and sits on the board to ensure Savanah's rights under their
loan are upheld. Tom Richardson carries out the executive functions required
in the Company as it pays down its creditors. The Board does not intend to
hire any management until such a point where its strategy would require a
management team. The Board is able to carry out the day to day activities of
the Company to keep it listed and stabilise the financial position of the
business.
Outlook
The Board is optimistic we can stabilise the financial position of Fenikso
over 2023 and be in a position to grow shareholder value from the cash
received under the Lekoil Nigeria loan agreement. We thank our shareholders
for their support during this period whilst we work on a new strategy for the
Company.
Tom Richardson
Chairman
6 June
2023
Strategic Report
PRINCIPAL ACTIVITY, FINANCIAL REVIEW, OPERATIONS REPORT AND ASSET SUMMARY
PRINCIPAL ACTIVITY
The Company is an exempted limited liability company incorporated and
registered in the Cayman Islands on 3 December 2010.
Fenikso is the restructured holding company that used to be called Lekoil
Limited. The Company holds one main asset which is a US$51.9 million loan made
to Lekoil Oil & Gas Investments ("LOGI"), a wholly owned subsidiary of
Lekoil Nigeria. The Company is an AQSE listed enterprise company. These
accounts are for the Company only on the basis of the principal accounting
policy for 'Consolidation' included in Note 1.
FINANCIAL REVIEW
Financial overview and performance
The Company reported a loss of $15,397,000 for the year ended 31 December
2022. (restated 2021: $326,417,000) The loss was primarily as a consequence of
the impairment of the Company's intercompany receivables (Note 12) following a
restructure and settlement agreement.
Net assets of the Company at the year end were $19,518,000 (restated 2021:
$34,187,000). Cash balances as at the year end were $208,000. (2021:
$50,000).
OPERATIONS REPORT AND ASSET SUMMARY
The Company no longer operates or oversees operations of any Oil & Gas
assets in Nigeria. The principal business of the Company is to manage and
ensure the full recovery of the LOGI Loan. The Company has received three
payments under the LOGI Loan as at the end of May 2023 and the Board will
continue to monitor the compliance with the terms and conditions of the LOGI
Loan. As at the end of May 2023 LOGI had complied with all conditions of the
settlement agreement save for the cancellation of certain shares in the
Company owned by Lekoil Nigeria, Lekan Akinyami and Samuel Olutu. The total
shares that should have been cancelled are 107,658,847 ordinary shares and the
Company is working with such parties to cancel such shares as soon as
practicably possible. In the interim, the relevant holders have agreed to not
vote such shares in any general meeting. All other conditions under the loan
have been satisfied to date.
Principal risks and uncertainties
The principal risk of the business is the non-payment of the LOGI Loan, which
leads to the Company having no income to cover costs and build shareholder
value. This is the Company's only current source of income. The possible risks
to non payment are:
1. LOGI fails to pass on the proceeds from the sale of oil at the Otakikpo
field
2. The Otakikpo field has to shut in all production and has no sales of
oil
3. The Oil price falls to such an extent that the value of the oil sales
is insufficient to cover the running costs of the Company
4. The crude oil sales are from oil sales in Nigeria. This means the
income of the company is exposed to changes in the political and economic
environment in Nigeria that could prevent the repayment of the loan.
Going concern
The assessment of the going concern risk has been detailed in the Directors'
Report.
Liquidity risk
The Company manages its liquidity through the repayment of the LOGI Loan by
LOGI. The Company's liquidity position could be at risk should the repayments
stop for any reason.
Credit risk
The Company's principal financial asset is the LOGI Loan. This is secured
against the proceeds from oil sales at the Otakikpo field. There is always a
risk with Oil & Gas that production may have to be shut in or that the Oil
price could fall substantially both of which would impact the value of the
Company's assets.
This strategic report was approved by the Board on 6 June 2023 and signed on
its behalf.
Tom Richardson 6 June 2023
Chairman
Report of the Directors
The Directors present their report and the audited financial statements of the
Company for the year ended 31 December 2022.
RESULTS FOR THE YEAR
The Company has made a loss of $15.4 million (restated 2021: loss of US$326.4
million).
DIVIDENDS
The Directors are unable to recommend the payment of a dividend (2021: Nil).
ACCOUNTING POLICIES
The Company's accounting policies and details of the significant judgments and
critical accounting estimates are disclosed within the notes to the financial
statements.
DIRECTORS AND THEIR INTERESTS
The Directors who served during the year are listed below.
Name Period as a Director of the Company
Anthony Hawkins 1 January 2022 to 30 June 2022
Tom Richardson 8 January 2022 to 31 December 2022
Marco D'Attanasio 21 April 2022 to 31 December 2022
Al Tindall 1 January 2022 2021 to 30 June 2022
Olapade Durotoye 1 January 2022 to 31 December 2022
Adeoye Adefulu 1 January 2022 to 31 December 2022
Guy Oxnard 9 June 2022 to 31 December 2022
Dipo Sofola 9 June to 31 December 2022
As at 31 December 2022, none of the then current Directors of the Company had
any legal or beneficial interest in the share capital of the Company other
than as follows:
Director's Name Beneficial Interest held via Number of ordinary shares held by legal or beneficial owner at 31 December Percentage of Company's issued share capital held by legal or beneficial owner
2022 at 31 December 2022
Tom Richardson TDR Enterprises 21,807,151 3.6%
Marco D'Attanasio Hadron Master Fund 25,025,000 4.2%
DIRECTORS' RESPONSIBILITIES STATEMENT
The directors are responsible for preparing the Strategic Report, the
Directors' Report and the financial statements in accordance with applicable
law and regulations.
Company law and the Company's Articles of Association require the directors to
prepare financial statements for each financial year using International
Financial Reporting Standards (as adopted by the European Union (IFRSs)).
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 and profit or loss
of the Company for that period. In preparing these financial statements, the
directors are required to:
§ select suitable accounting policies and then apply them consistently;
§ make judgements and accounting estimates that are reasonable and
prudent;
§ state whether applicable IFRSs have been followed, subject to any
material departures disclosed and explained in the financial statements;
§ prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the company's transactions and disclose with
reasonable accuracy at any time the financial position of the company. 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.
The directors confirm that:
§ in so far as each of the directors is aware, there is no relevant audit
information of which the company's auditor is unaware; and
§ the directors individually have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information and to
establish that the auditor is aware of that information.
GOING CONCERN
The Directors have assessed the ability of the Company to continue as a going
concern having prepared detailed cash, funding and liquidity forecast through
to June 2024. The Directors, having made due and careful enquiry, are of the
opinion that the Company will have access to adequate working capital to meet
its obligations over the next 12 months from the date of approval of these
financial statements. The Directors therefore have made an informed judgement,
at the time of approving the financial statements, that there is a reasonable
expectation that the Company has adequate resources to continue in operational
existence for the foreseeable future. As a result, the Directors have adopted
the going concern basis of accounting in the preparation of the annual
financial statements.
CORPORATE ADVISORS
The Company's AQSE corporate adviser during 2022 was First Sentinel Corporate
Finance Limited. Bright Grahame Murray act as auditors to the Company.
DIRECTORS' INDEMNITY AND INSURANCE
The Company provides indemnity to Directors in respect of liabilities incurred
as a result of their office. However, neither the indemnity nor the insurance
provides cover if the Director is proven to have acted dishonestly or
fraudulently. The Company provided directors and officers insurance for its
directors for the financial year ended 31 December 2022.
POST-REPORTING DATE EVENTS
All events that have occurred since the year end which require reporting have
been disclosed in the financial statements and/or the Chairman's Statement.
HEALTH, SAFETY AND ENVIRONMENT
The Company is committed to fulfil its health, safety, and environmental
responsibility. The Company has limited operational activities outside of
office based activities. There have been no known breaches of HSE or
environmental laws during the reporting period.
FINANCIAL INSTRUMENTS
Details of the use of any financial instruments by the Company are contained
in the financial statements.
INDICATION OF FUTURE DEVELOPMENTS
The details of the future developments of the Company are given in the
Strategic Report.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The details of financial risk management are given in the Strategic Report.
BOARD MEMBERS
The current Board is constituted by the following members:
Mr. Tom Richardson, Chairman
Mr. Richardson has over 20 years of experience across banking and oil &
gas. Mr Richardson served as CFO of Nostrum Oil & Gas Plc a UK premium
listed company. Prior to joining Nostrum in 2011, Mr Richardson has worked for
ING, JP Morgan and NM Rothschild covering investment banking, capital markets
and credit.
Mr. Olapade Durotoye, Non-Executive Director
Pade Durotoye is the Chief Executive Officer and Founder of West Titan
Energy. He has over 32 years of management experience across the value chain
of the oil and gas Industry internationally.
He began his career with Schlumberger Oilfield Services where he worked in
various Management capacities in Field Operations, Operations Management, Line
(Country) Management, Human Resources Management and Business Development for
close to 20 years in 8 countries in Africa, Europe and Asia.
He served as the MD/CEO of Ocean and Oil Holdings Group, a principal
investment and advisory services group, where advised on and in some cases led
the company's Management and Technical Services advisory contract with Oando.
He was a core member of Oando's Group Leadership Council and a key part of the
company's Upstream Diversification Strategy & Execution Team that
acquired oilfield assets and drilling rigs.
Pade served as Managing Director/CEO of Oando Energy Resources (OER), a
position he held for over 8 years. In his capacity as MD/CEO, he led the team
that delivered on the acquisition of the Nigerian upstream
oil and gas business of ConocoPhillips in 2014, making OER Nigeria's leading
Indigenous Independent Oil Company by production with over 40,000boepd of oil
and gas and 16 participating Licenses in Nigeria and the Gulf of Guinea. He
proceeded to join Nigerdock FZE as Managing Director/CEO, where he served for
a year to strategically direct the organization.
Pade has a deep knowledge of the oil and gas sector and is passionate about
resolving value traps in in the industry. He holds a BSc. Electronics and
Engineering from the University of Ife (now Obafemi Awolowo University) and is
a member of several professional bodies and associations which include the
Society of Petroleum Engineers, the Nigeria Society of Engineers, and the
Institute of Directors.
Mr. Marco D'Attanasio, Non-Executive Director
Mr D'Attanasio is a senior banker and investment manager with over 23 years of
experience in banking, finance, technology and oil & gas. He is the
Founder and Portfolio Manager for Hadron Capital LLP and Hadron Capital
(Cayman) Limited, each company managing numerous Alternative Investment Funds
and being FCA and CIMA regulated, respectively. With Hadron Capital LLP he is
the winner of multiple performance-based awards. He is the co-founder of
Cricklo Ltd, an online community of professionals active in transforming their
enterprises into sustainable businesses and a NED with Argo Blockchain plc. Mr
D'Attanasio has a degree in physics ("Laurea") from Pisa University and a PhD
in Theoretical Physics from Parma University.
BOARD COMMITTEES
As at 31 December 2022, the Audit& Risk and Remuneration Committees of the
Board of Directors have the following directors as members:
Audit & Risk Committee
Name Position
Tom Richardson Member
Marco D'Attanasio Member
Remuneration Committee
Name Position
Tom Richardson Member
Marco D'Attanasio Member
This report was approved by the board on 6 June 2023 and signed on its behalf.
T Richardson
Chairman 6 June 2023
Corporate Governance Statement
The Company has formally adopted the Quoted Companies Alliance Corporate
Governance Code for Small and Mid-Size Quoted Companies ("QCA Code") and its
replacement, the QCA Corporate Governance Code that was published in April
2018. The Company's application of the QCA Code is set out on its website
(feniksoplc.com (http://www.lekoilplc.com) ) and is updated from time to time.
The Company recognises the importance of sound corporate governance
commensurate with the size, corporate structure and nature of the Company,
even though there is no applicable regime of corporate governance to which
Directors of a Cayman Islands company must adhere to over and above the
general fiduciary duties of care, diligence and skill imposed on such
Directors under Cayman Islands law.
The Company updated its policies in line with the EU Market Abuse Regulation
("MAR") with effect from 3 July 2016 (and as applied in the United Kingdom
pursuant to applicable English law).
The Company will continue to implement internal policies as necessary to
provide guidance on Corporate Governance issues. These policies are the same
as those summarised in the Company's Annual Report for the year ended 31
December 2021. These policies are reviewed periodically to ensure continued
relevance:
· Related Party Transactions Policy
· Disclosure and Insider Trading Policy
· Share Dealing Code
· Whistleblowing Policy
· Anti-Bribery Policy
· Risk Management Policy
· Gifts and Hospitality Policy
· Code of Ethics
· Safety, Health, Environment and Security Policy
The Company implements these policies in a manner commensurate with the size
and available resources. In the course of preparing this Annual Report and
Accounts, the Board has noted the need to review the Corporate Governance
framework and its practical implementation.
Website publication
The Company's Corporate Governance statement is published on its website.
The Directors are responsible for ensuring the annual report and the
financial statements are made available on a website. Financial statements
are published on the Company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company's website is the responsibility of
the Directors.
Auditor
All of the current Directors have taken all the steps that they ought to have
taken to make themselves aware of any information needed by the Company's
auditor for the purposes of their audit and to establish that the auditor is
aware of that information. The Directors are not aware of any relevant audit
information of which the auditor is unaware.
Business model and strategy
Information on our strategy is included in the Strategic Report set out above.
Obligations to our stakeholders
We are committed to communicating openly with our shareholders and
stakeholders to ensure that our strategy, our financial position and the
effects of those on our stakeholder is clearly understood.
Review of risks
The Board is responsible for setting the Company's risk philosophy and
appetite and approving the overall risk management policy. It is responsible
for maintaining a sound system of internal control that supports the
achievement of its goals and objectives.
The Board is also responsible for overseeing the establishment, implementation
and review of the Company's risk management systems and, to this end, has
delegated certain functions relating to risk to the Audit and Risk Committee
and to management.
The Company has adopted a Risk Management Policy appropriate for a company of
its size and resources.
Management framework
As at 31 December 2022, the Board comprised of an Executive Chairman and two
Non-Executive Directors. The Company believes that its current composition is
appropriate for the Company given its current corporate structure and
financial resources. Each Board member brings a wealth of business leadership
experience to foster the collective strength of the Board in setting the
strategic goals of the Company and overseeing the effective performance of
management in achieving these goals.
Under their appointment letters, the Company may call on the Directors to
spend at least 20 days per year on Company business.
Directors
We believe that our Board has the appropriate balance of skills, experience
and capabilities required to direct the management of the Company. These
include sector-specific experience in the oil and gas industry, as well as
more general finance, accounting and business management skills.
The Board is supported by the Audit & Risk and Remuneration Committees,
the terms of reference of which can be found on our website.
Succession planning is managed through regular reviews and management
discussions. The composition of the Board will reflect the size of the Company
and the resources available to it.
Reward
The Company manages its activities via the Board of Directors and one
executive director. Of the Company's two non-executive directors, one is
rewarded in cash, while the other receives no fee.
Further information
The Corporate Governance section of our website sets out our approach to
corporate governance, and the roles and responsibilities of the Chairman and
any other Directors who have specific individual responsibilities or remits
(e.g. for engagement with shareholders or other stakeholder groups) are shown.
The roles and terms of reference of the Audit & Risk Committee and
Remuneration Committee, and a formal written schedule of matters reserved for
the Board are also shown on the Company's website https://feniksoplc.com/
(https://feniksoplc.com/) .
Previous annual reports and other corporate documents, including notices of
all general meetings held in the last five years, are also available on the
Company's website https://feniksoplc.com/ (https://feniksoplc.com/) .
Audit & Risk Committee Report
Composition
As at 31 December 2022, the Committee was composed of Tom Richardson and Marco
D'Attanasio, each of whom have relevant financial experience.
Role and Responsibilities
The Audit & Risk Committee's terms of reference designate the role and
responsibilities of the audit committee
These are available on the Company's website https://feniksoplc.com/
(https://feniksoplc.com/)
2022 Financial reporting
The following are the main key judgements and new accounting standards that
were considered by the Committee in its review of the 2022 full year Financial
Statements:
· Going Concern basis of accounting;
· Assessment of impairment;
· Assessment of impairment of inter-company receivables; and
· the impact of new accounting standards.
Internal Controls
The internal control framework is based on the Company's assessment of the
risks it faces. The effectiveness of the internal control system is monitored
by the Board, and material exceptions are reported to the Committee. The
Company does not consider it appropriate, given its size and complexity, to
have an internal audit function.
External auditor
Bright Grahame Murray were first appointed auditors of the Company in May
2022. The Committee has recommended to the Board that the auditors are
reappointed for the year ending 31 December 2023. Bright Grahame Murray has
expressed a willingness to continue in office as auditor and a resolution to
re-appoint them will be proposed at the next Annual General Meeting of the
Company.
Remuneration report
Composition and Role
As at 31 December 2022, the remuneration committee (the "Remuneration
Committee") was composed of Thomas Richardson and Marco D'Attanasio.
The Remuneration Committee is responsible for determining and reviewing the
terms and conditions of service (including remuneration) and termination of
employment of Executive Director(s), and the administration of the Company's
share option and share award schemes. It is responsible for determining
individual remuneration packages including, where appropriate, bonuses,
incentives and share options.
Remuneration Policy
The Remuneration Committee, in forming its policy on remuneration has given
due consideration to the needs of the Company, Shareholders and best practice
provisions set out in the QCA Code.
There is no pension scheme for Non-Executive Directors.
Performance Share Plan
There were no share awards in 2022.
Options
There were no share awards in 2022.
Independent auditor's report to the members of Fenikso Limited
Opinion
We have audited the financial statements of Fenikso Limited (the 'company')
for the year ended 31 December 2022 which comprise the statement of
comprehensive income, the statement of financial position, the statement of
changes in equity, the statement of cash flows and notes to the financial
statements, including significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law and
United Kingdom adopted International Accounting Standards.
In our opinion the financial statements:
· give a true and fair view of the state of the company's affairs as at
31 December 2022 and of its loss for the year then ended;
· have been properly prepared in accordance with United Kingdom adopted
International Accounting Standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC's Ethical
Standard, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of matter - LOGI Loan
The directors have prepared the financial statements on the going concern
basis as they do not intend to liquidate the company or to cease its
operations, and as they have concluded that the company's financial position
means that this is realistic. They have also concluded that there are no
material uncertainties that could have cast significant doubt over its ability
to continue as a going concern for at least a year from the date of approval
of the financial statements ("the going concern period").
We are required to report to you if we have concluded that the use of the
going concern basis of accounting is inappropriate or there is an undisclosed
material uncertainty that may cast significant doubt over the use of that
basis for a period of at least a year from the date of approval of the
financial statements. In our evaluation of the director's conclusions, we
considered the inherent risks to the company's business model and analyzed how
those risks might affect the company's financial resources or ability to
continue operations over the going concern period. We have nothing to report
in these respects.
However, as we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent with judgments
that were reasonable at the time they were made, the absence of reference to a
material uncertainty in this auditor's report is not a guarantee that the
company will continue in operation.
We specifically draw attention to the principal risks and uncertainties
surrounding the LOGI loan as set out in the Strategic Report. This loan is the
company's sole source of income and any issues with the recoverability of this
loan will have a consequential impact on the company's income and its ability
to build shareholder value. These risks include:
· LOGI not adhering to the terms of the settlement agreement by
failing to pass on the proceeds from the sale of oil at Otakikpo field.
· Production being shut with no consequential sale of oil.
· Fall in oil prices to such an extent that the overhead costs
cannot be covered.
· Political and economic risks prevalent in Nigeria.
Our opinion is not modified in this regard.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the company's ability to continue
as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Responsibilities of directors
As explained more fully in the director's 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, and for such internal
control as the directors determines are necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error. In preparing the financial statements, the directors are
responsible for assessing the company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Extent to which the audit was considered capable of detecting irregularities, including fraud
We identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, and then design and perform audit
procedures responsive to those risks, including obtaining audit evidence that
is sufficient and appropriate to provide a basis for our opinion.
In identifying and addressing risks of material misstatement in respect of
irregularities, including fraud and non- compliance with laws and regulations,
our procedures included the following:
· We obtained an understanding of laws and regulations that affect the
company, focusing on those that had a direct effect on the financial
statements such as or that had a fundamental effect on its operations such as
AQSE Growth Market regulations .
· We enquired of the directors and reviewed directors meeting minutes
for evidence of non-compliance with relevant laws and regulations. We also
reviewed controls the directors have in place to ensure compliance.
· We gained an understanding of the controls that the directors have in
place to prevent and detect fraud. We enquired of the directors about any
incidences of fraud that had taken place during the accounting period.
· The risk of fraud and non-compliance with laws and regulations and
fraud was discussed within the audit team and tests were planned and performed
to address these risks. We identified the potential for fraud in the following
areas: related parties outside normal course of business, management override,
misappropriation of cash and other assets and compliance with specific legal
frameworks that are applicable to the client, as detailed above.
· We reviewed financial statements disclosures and tested to supporting
documentation to assess compliance with relevant laws and regulations
discussed above.
· We enquired of the directors about actual and potential litigation
and claims.
· We performed analytical procedures to identify any unusual or
unexpected relationships that might indicate risks of material misstatement
due to fraud.
· In addressing the risk of fraud due to management override of
internal controls we tested the appropriateness of journal entries and
assessed whether the judgements made in making accounting estimates were
indicative of a potential bias.
Due to the inherent limitations of an audit, there is an unavoidable risk that
we may not have detected some material misstatements in the financial
statements, even though we have properly planned and performed our audit in
accordance with auditing standards. For example, as with any audit, there
remained a higher risk of non-detection of irregularities, as these may
involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal controls. We are not responsible for preventing fraud or
non-compliance with laws and regulations and cannot be expected to detect all
fraud and non-compliance with laws and regulations.
A further description of our responsibilities is available on the Financial
Reporting Council's website at: https://
www.frc.org.uk/auditorsresponsibilities.
(http://www.frc.org.uk/auditorsresponsibilities) This description forms part
of our auditor's report.
Use of our report
This report is made solely to the company's members as a body. Our audit work
has been undertaken so that we might state to the company's member those
matters we are required to state to the member in an auditor's report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company's
member for our audit work, for this report, or for the opinions we have
formed.
Ahsan Miraj
Senior Statutory Auditor
For and on behalf of Bright Grahame Murray
Emperor's Gate
114a Cromwell Road
Kensington
London
SW7 4AG
Date: 6 June 2023
Statement of comprehensive income
Note 2022 2022 2021 2021
Restated Restated
$000 $000 $000 $000
Continuing Total Continuing Total
Operations Operations
OTHER OPERATING INCOME
Cost of sales -
- - -
Gross (loss) -
- - -
Impairment of investments 11 - - (7,396) (7,396)
Cancellation of share based payment reserve 16 - (10,259)
- (10,259)
Impairment of intercompany receivables 12 - (306,697)
- (306,697)
Fair value adjustment of receivables 12 (20,710) -
(20,710) -
Impairment of loan receivable 12 - (1,647)
- (1,647)
Fair value adjustment borrowings 14 6,839 -
6,839 -
Recurring administrative costs (1,526) (1,526) (418) (418)
3
OPERATING LOSS (15,397) (15,397) (326,417) (326,417)
Finance income 6 - - - -
Finance cost 7 - - - -
PROFIT/(LOSS) FROM CONTINUING ACTIVITIES BEFORE TAXATION (15,397) (15,397) (326,417) (326,417)
Tax expense 8 - - - -
LOSS FOR THE YEAR ATTRIBUTABLE TO THE EQUITY HOLDERS (15,397) (15,397) (326,417) (326,417)
TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO THE EQUITY HOLDERS (15,397) (15,397) (326,417) (326,417)
Loss per share - basic 9 (0.02) (0.02) (0.61) (0.61)
Loss per share - diluted 9 (0.02) (0.02) (0.61) (0.61)
Statement of financial position
2022 2021
Restated
Note $000 $000
CURRENT ASSETS
Trade and other receivables falling due within one year 12 2,114 -
Cash and cash equivalents 208 50
TOTAL CURRENT ASSETS 2,322 50
Trade and other receivables falling after one year
12 29,095 51,919
TOTAL ASSETS 31,417 51,969
EQUITY
Share capital 15 30 27
Share premium account 264,729 264,004
Share based payment reserve - -
Retained earnings (245,241) (229,844)
TOTAL EQUITY 19,518 34,187
CURRENT LIABILITIES
Trade and other payables falling due within one year 13 4,501 1,526
TOTAL CURRENT LIABILITIES 4,501 1,526
Trade and other payables falling due after one year
13 7,398 16,256
TOTAL LIABILITIES 11,899 17,782
TOTAL EQUITY AND LIABILITIES 31,417 51,969
These financial statements were approved by the directors on 6 June 2023 and
are signed on their behalf by:
T Richardson
Chairman 6 June 2023
Statement of changes in equity
Share capital Share Share based payment reserve Retained Total
premium
earnings
equity
account
$000 $000 $000 $000 $000
At 1 January 2022 27 264,004 - (229,844) 34,187
Loss for the year - - - (15,397) (15,397)
Total comprehensive income 27 264,004 - 18,790
(245,241)
Transactions with owners:
Shares issued 13 1,863 - - 1,876
Shares cancelled (10) (1,138) - - (1,148)
Total transactions with owners 3 725 - 728
-
At 31 December 2022 30 264,729 - (245,241) 19,518
Share capital Share Share based payment reserve Retained Total
premium
earnings
equity
account
Restated Restated Restated
$000 $000 $000 $000 $000
At 1 January 2021 27 264,004 10,173 96,573 370,777
Loss for the year - - (10,259) (326,417) (336,676)
Total comprehensive income 27 264,004 (86) 34,101
(229,844)
Transactions with owners: - - 86 86
-
Total transactions with owners - - 86 -
-
At 31 December 2021 27 264,004 - (229,844) 34,187
Statement of cash flows
Note 2022 2021
$000 $000
CASH FLOWS USED IN OPERATING ACTIVITIES 17 158 (187)
INVESTING ACTIVITIES
Loans received - 237
CASH FLOWS FROM INVESTING ACTIVITIES 237
NET INCREASE IN CASH AND CASH EQUIVALENTS 158 50
Cash and cash equivalents brought forward 50 -
CASH AND CASH EQUIVALENTS CARRIED FORWARD 18 208 50
Notes to the financial statements
1. ACCOUNTING POLICIES
a. General Information
Fenikso Limited ("the Company") is a company incorporated and domiciled in the
Cayman Islands. The address of the registered office is 190 Elgin Avenue,
George Town,Grand Cayman KY1-9008,Cayman Islands. These financial statements
are prepared in US dollars, because that is the currency of the primary
economic environment in which the Company operates. The review of the business
is contained within the Strategic Report on page 5.
b. Basis of preparation of financial statements
The financial statements have been prepared in accordance with EU-endorsed
International Financial Reporting Standards ('IFRSs'), IFRIC interpretations
as adopted by the EU.
The financial statements have been prepared under the historical cost
convention except for financial instruments and share based payments which are
measured at fair value. Monetary amounts in these financial statements are
rounded to the nearest $000.
As at 31 December 2022 the Company had cash balances of $208,000 (2021:
$50,000). The Directors have prepared a cash flow forecast for the coming
12 months which demonstrates the ability for the Company to actively pursue
its stated strategy. Accordingly, the Directors consider it appropriate to
continue to prepare the financial statements of the Company on a going concern
basis.
c. Basis of consolidation
The financial statements incorporate the financial statements of the Company
made up to 31 December each year. Control is achieved where the company has
the power to govern the financial statements and operating policies of an
investee entity so as to obtain benefits from its activities.
There are no subsidiaries where control was exercised accordingly these
financial statements show only the result of the Company.
d. Segment reporting
In identifying its operating segments management generally follows the
Company's service lines, which represent the main products and services
provided by the Company.
Management considers that all activities undertaken by the Company are from
one operating segment. The on-going sole activity of the Company, being the
pursuit of acquisition opportunities have been allocated to one continuing
operating segment.
The measurement policies the Company uses for segment reporting under IFRS 8
are the same as those used in its financial statements.
e. Taxation
Under current laws of the Cayman Islands, there is no income, estate,
transfer, sales or other Cayman Islands taxes payable by the Company and
management believes the Company is not liable for tax in any other
jurisdiction. Accordingly no tax charges or tax liabilities are reflected in
the financial statements.
f. Investments
Subsidiary Undertakings
Investments in subsidiaries are valued at cost less provision for impairment.
Notes to the financial statements
1. ACCOUNTING POLICIES (continued)
g. Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that
are either designated to this category or do not qualify for inclusion in any
of the other categories of financial assets.
The equity investment is measured at fair value with gains and losses
recognised in other comprehensive income and reported within the available for
sale financial asset reserve within equity, except for impairment losses,
which are recognised in profit or loss, An assessment for impairment is
undertaken at least at each balance sheet date. Reversals of impairment losses
are not recognised in profit or loss and any subsequent increase in fair value
is recognised in other comprehensive income.
When the asset is disposed of or determined to be impaired, the cumulative
gain or loss recognised in other comprehensive income is reclassified from the
equity reserve to profit or loss.
h. Impairment
An impairment test of assets is performed whenever events and circumstances
indicate that the carrying value of the asset may exceed its recoverable
amount. The carrying amounts of the Company's assets, are reviewed at each
reporting date to determine whether there is any indication of impairment. If
such indication exists, the asset's recoverable amount is estimated. An
impairment loss is recognised whenever the carrying amount of an asset exceeds
its recoverable amount. Impairment losses are recognised in the income
statement.
i. Financial assets and liabilities
Financial assets and liabilities are recognised on the Company's balance sheet
when the Company
becomes a party to the contractual provisions of the instrument.
(i) Trade and other receivables
Trade and other receivables are measured at initial recognition at fair value
plus transaction costs, and are subsequently measured at amortised cost using
the effective interest rate method, less provision for impairment. Any change
in their value through impairment or reversal of impairment is recognised in
the income statement.
Provision against trade and other receivables is made when there is objective
evidence that the Company will not be able to collect all amounts due to it in
accordance with the original terms of those receivables. The amount of the
write-down is determined as the difference between the asset's carrying amount
and the present value of estimated future cash flows.
(ii) Cash and cash equivalents
Cash and cash equivalents comprises cash on hand and demand deposits, and
other short term highly liquid investments that are readily convertible to a
known amount of cash and are subject to an insignificant risk of changes in
value.
(iii) Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the
Company after deducting all of its liabilities. A financial liability is any
liability which gives rise to a contractual obligation to deliver cash or
another financial asset to another entity.
Notes to the financial statements
1. ACCOUNTING POLICIES (continued)
(iv) Bank borrowings
Interest-bearing bank loans and overdrafts are initially recorded at fair
value, net of direct issue costs and subsequently at amortised cost using the
effective interest rate method. Finance charges, including premiums payable
on settlement or redemption and direct issue costs, are accounted for on an
accruals basis in the income statement using the effective interest rate
method.
(v) Convertible loan notes containing embedded derivatives
The Company may issue convertible loan notes which carry an option for the
issuer to convert the liability into a variable number of equity shares.
Contracts which result in the entity delivering a variable number of its own
equity instruments are classed as financial liabilities.
The conversion option is an embedded derivative and is carried at fair value
through profit and loss.
The convertible loan is also classified as a financial liability. It is
recorded initially at fair value and subsequently measured at amortised cost
using the effective interest rate method.
When shares are issued in consideration for extinguishment of debt any
difference between the face value of the loan notes and the fair value of
shares issued is recognised in profit and loss.
(vi) Convertible loan notes accounted for as compound instruments
The Company may issue convertible loan notes which carry an option for the
issuer to convert the liability into a fixed number of equity shares.
Contracts which result in the entity delivering a fixed number of its own
equity instruments are classed as compound instruments, containing both a
financial liability and an equity instrument.
Equity instruments are instruments that evidence a residual interest in the
assets of an entity after deducting all of its liabilities. Therefore, when
the initial carrying amount of the compound financial instrument is allocated
to its equity and liability components, the equity component is assigned the
residual amount after deducting from the fair value of the instrument as a
whole the amount separately determined for the liability component.
No gain or loss arises from initially recognising the components of the
instrument separately.
(vii) Trade and other payables
Trade payables are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method.
(viii) Equity instruments
Equity instruments issued by the Company or company are recorded at the
proceeds received, net of direct issue costs.
Share warrants
The Company has issued share warrants which have been accounted for as equity
instruments as the substance of the contractual arrangement is such that the
warrants evidence a residual interest in the assets of the Company after
deducting all liabilities.
Notes to the financial statements
1. ACCOUNTING POLICIES (continued)
(ix) Held for trading financial assets
Assets held in this category are measured at fair value with gains or losses
recognised in profit or loss. The fair value of financial assets in this
category are determined with reference to active market transactions.
j. Equity and reserves
(i) Share capital
Share capital represents the nominal value of shares that have been issued.
(ii) Share premium
Share premium includes any premiums received on issue of share capital. Any
transaction costs associated with the issuing of shares are deducted from
share premium, to the extent there is a premium on that issue, net of any
related income tax benefits.
(iii) Equity-settled share based payment
All goods and services received in exchange for the grant of any share-based
payment are measured at their fair values. Where employees are rewarded
using share-based payments, the fair values of employees' services are
determined indirectly by reference to the fair value of the instrument granted
to the employee. This fair value is appraised at the grant date and excludes
the impact of non-market vesting conditions (for example, profitability and
sales growth targets).
All equity-settled share-based payments are ultimately recognised as an
expense in profit and loss with a corresponding credit to equity reserve.
If vesting periods or other non-market vesting conditions apply, the expense
is allocated over the vesting period, based on the best available estimate of
the number of share options expected to vest. Estimates are revised
subsequently if there is any indication that the number of share options
expected to vest differs from previous estimates. Any cumulative adjustment
prior to vesting is recognized in the current period. No adjustment is made
to any expense recognised in prior periods if share options that have vested
are not exercised.
Upon exercise of share options, the proceeds received net of attributable
transaction costs are credited to share capital, and where appropriate share
premium.
k. Exceptional items
The Company identified and reports material, non-recurring costs and income as
exceptional items separately from underlying operating expenses and income.
Exceptional items may include impairment charges and acquisition costs.
l. Key estimates and judgements
The directors have identified the following as key judgements in the
preparation of the Company accounts:
· assessment of recoverability of intercompany receivables (Note
12 )
· assessment of going concern (Note 2)
m. New standards, interpretations and amendments adopted from 1
January 2022
The following amendments are effective for the period beginning 1 January
2022:
• Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);
• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to
IAS 16);
• Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1,
IFRS 9, IFRS 16 and IAS 41); and
Notes to the financial statements
1. ACCOUNTING POLICIES (continued)
• References to Conceptual Framework (Amendments to IFRS 3). These
amendments to various IFRS standards are mandatorily effective for reporting
periods beginning on or after 1 January 2022.
These standards have not had any material impact on the amounts reported for
the current and prior years.
New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the company has decided not to adopt early. The following
amendments are effective for the period beginning 1 January 2023:
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice
Statement 2);
• Definition of Accounting Estimates (Amendments to IAS 8); and
• Deferred Tax Related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12).
The company is currently assessing the impact of these new accounting
standards and amendments and expects there will be no material impact on the
financial statements of the company.
m. Prior year adjustment
The prior year comparatives have been adjusted to reflect the true economic
value of the Company following the Settlement Agreement, which was finalised
on 31 December 2022. The adjustments better and more accurately represent the
true financial position of the Company. The corrections and adjustments are
noted below, further detail is included in the relevant notes to the financial
statements. The following line items within the financial statements were
affected:
31 December Movement for the year 31 December 2021
2020
Ref
As reported As previously reported Prior year adjustment As restated
$'000 $'000 $'000 $'000
STATEMENT OF COMPREHENSIVE INCOME
Loss for the year 1 - (237,164) (89,253) (326,417)
STATEMENT OF FINANCIAL POSITION
Trade and other receivables 2 382,115 (246,941) (83,255) 51,919
Trade and other payables 3 18,734 (17,209) 10,374 11,899
STATEMENT OF CHANGES IN EQUITY
Share based payment reserve 4 10,173 86 (10,259) -
Retained earnings 5 96,573 (237,164) (89,253) (229,844)
Total 106,746 (237,078) (99,512) (229,844)
1 Adjustment represents net effect on the income statement of the 2021
adjustments noted below.
2 Adjustment reflects the final agreed position on intercompany receivables
and former director's loan as reached under the Settlement Agreement (Note 12)
3 Adjustment reflects the final agreed position on the Savannah Energy loan
(Note 14).
4 Adjustment represents the effect of the cancellation of all share based
schemes following the Settlement Agreement (Note 16).
5. Adjustment represents the net effect on retained deficit.
There was a negative impact of 0.17 on loss per share in respect of the
comparative year as a result of the prior year adjustments. There is no
impact on the cash flow statement as a result of the adjustments.
2. GOING CONCERN
The Directors have assessed the ability of the Company to continue as a going
concern having prepared detailed cash, funding and liquidity forecast through
to June 2024. The Directors, having made due and careful enquiry, are of the
opinion that the Company will have access to adequate working capital to meet
its obligations over the next 12 months from the date of approval of these
financial statements. The Directors therefore have made an informed judgement,
at the time of approving the financial statements, that there is a reasonable
expectation that the Company has adequate resources to continue in operational
existence for the foreseeable future. As a result, the Directors have adopted
the going concern basis of accounting in the preparation of the annual
financial statements.
3. OPERATING LOSS
Operating loss is stated after charging: 2022 2021
Restated
$000 $000
Impairment of investments 7,396
Cancellation of share option reserve - 10,259
Loan write off - 1,647
Impairment of intercompany receivables - 306,697
Fair value adjustment on receivable 20,710 -
Fair value adjustment on borrowings (6,839) -
Fees payable to the company's auditor : 43 51
- for the audit of the financial statements
4. STAFF COSTS
Staff costs, being amounts payable to key management personnel, were as
follows:
2022 2021
$000 $000
Wages and salaries 220 295
220 295
The average monthly number of employees during the year, including directors
was as follows:
No. No.
Directors 6 6
5. DIRECTORS' REMUNERATION
Directors' emoluments were as follows:
2021
2022
Director Salary and total emoluments Salary and total emoluments
$000 $000
T Hawkins (resigned 30 June 2022) 20 144
A Tindall (resigned 30 June 2022) 20 63
T Richardson 40 26
A Adefulu 40 4
M D'Attanasio 40 19
P Durotoye 40 4
A Oyebode* (resigned 18/6/21) - 35
D Sofola 20 -
220 295
Total
No retirement benefits were accruing to directors at 31 December 2022 (2021:
£nil).The directors received £nil (2021: £nil) in respect of share based
payments.
6. FINANCE INCOME
2022 2021
Restated
$000 $000
Interest on intercompany loan - -
- -
7. FINANCE COST
2022 2021
$000 $000
Total interest expense for financial liabilities - -
- -
8. TAX EXPENSE
As per accounting policy 1 (e) under current laws of the Cayman Islands, there
is no income, estate, transfer, sales or other Cayman Islands taxes payable by
the Company and management believes the Company is not liable for tax in any
other jurisdiction. Accordingly, no tax charges or tax liabilities are
reflected in the financial statements.
9. (LOSS)/EARNINGS PER SHARE
Basic earnings per ordinary share for the year is based on the loss of
$15,397,000 (restated 2021: loss:$326,417,000) and a weighted average of
736,566,685 (2021: 536,779,983) ordinary shares.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all potential dilutive ordinary
shares. Items included in the calculation are options and warrants for
ordinary shares.
The effect of conversion of all potential dilutive ordinary shares would have
an anti-dilutive effect on earnings per share and therefore they have not been
incorporated in the diluted earnings per share calculation. Potential ordinary
shares are only treated as dilutive when their conversion to ordinary shares
would decrease profit per share or increase loss per share.
10. SEGMENT REPORTING
Management currently considers that the Company has
one operating segment as described in accounting policy 1(c). Segment
information can be analysed as follows for the reporting periods under
review.
Investment strategy Investment strategy
2022 2021
Total 2022 Total 2021
Continuing operations Continuing operations
Restated Restated
$000 $000 $000 $000
Segment operating profit/(loss) (15,397) (15,397) (326,417) (326,417)
Segment assets 31,417 51,969
31,417 51,969
11. INVESTMENTS
Company investment in subsidiaries - Shares in Company undertakings
2022 2021
Non-current $000 $000
At 1 January - 7,396
Impairment - (7,396)
At 31 December - -
The Directors assessed the carrying value of its investments in its
subsidiaries as part of its formal review of its various intercompany and
related party loan positions in 2021 and wrote down the value of the shares in
Company undertakings to nil at that point. The Company no longer has
subsidiaries (Note 21).
12. TRADE AND OTHER RECEIVABLES
2022 2021
Restated
$000 $000
Current - falling due within one year
Other receivables - -
Intercompany receivable 2,114 -
2,114 -
Non current - falling due after one year
Intercompany receivable 29,095 51,919
Total 31,209 51,919
An unsecured loan of US$1,500,000 was granted to a Director on 9 December
2014. The loan had a three-year term and bore interest at a rate of four per
cent per annum. In September 2017, the loan's maturity date was extended by 3
years to 9 December 2020 under the same terms and conditions. On 9 December
2020, at the expiration of the extension, the Board approved a final extension
to loan for 12 months conditional on the adherence to the following repayment
terms: immediate payment of US$0.4 million, while the balance on the loan is
settled by quarterly payments of interest and principal at a revised interest
rate of 10% plus 3-month LIBOR. The initial US$0.4 million was settled by the
Director although no other settlements were made and the loan is in default
and accruing interest at a rate of LIBOR plus 14 per cent on the default
amount. At 31 December 2021, the balance outstanding was US$1,646,696. During
2022, the Company sought litigation proceedings to recover the amounts
owing. Under a settlement deed on 7 December 2022, the Company agreed with
the party, with no admission of liability, to agree to, among other things,
the release and discharge of all relevant claims, the withdrawal of legal
proceedings, surrenders of certain shares and other transactions, a new
framework for their future relationship and fully and finally to resolve their
differences, dispose of ongoing litigation and agree certain ancillary
matters. Accordingly, the Company waived all rights to repayment in respect of
any and all existing indebtedness. The amount outstanding at the end of 31
December 2021 of $1,646,696 has therefore been written off to reserves as at
31 December 2022, the balance being reduced to nil.
In 2021, the Company commenced a formal review of all the various intercompany
and related party loan positions and impaired certain intercompany balances,
resulting in a balance owed at 31 December 2021 of $133,527,153. Under the
settlement deed of 7 December 2022, the Company granted a new loan of
approximately $51,919,467 to Lekoil Oil and Gas Investments Limited ("LOGI")
(the "LOGI Loan") in consideration for the transfer of certain loans granted
to Lekoil Nigeria and its related entities to LOGI, the release of security
related to such loans and the waiver of any repayment of amounts due under
such loans. Accordingly the balance of intercompany receivable at 31 December
2022 is $51,919,467 with residual balances written off to reserves. The loan
is to be repaid by 8.653% of the aggregate proceeds of the sales received from
Shell Western in respect of each lifting of crude oil by LOGI. Thus far, in
2023, the Company has announced it has received a total of $1,305,970 as
partial repayment of the loan of US$51,919,467. The amount received equates to
8.65% of the value of the crude oil sales by LOGI. The proceeds will go
towards reducing the Company's creditor balances. The Company has carried out
an assessment of the value of the amounts due at 31 December 2022 on a
discounted basis using a rate of 16.821% to effect a current market value of
the loan of $31,209,408. The difference of $20,710,059 has been recognised in
the statement of comprehensive income.
Intercompany receivable: 2022
$000
Book value 51,919
Fair value adjustment (20,710)
At 31 December 31,209
13. TRADE AND OTHER PAYABLES
2022 2021
Restated
$000 $000
Current - falling due within one year
Trade payables 1,494 1,019
Other payables (Note14) 2,020 237
Accruals 987 270
4,501 1,526
Non current - falling due after one year
Other payables (Note 14) 7,398 16,256
Total 11,899 17,782
The carrying values are considered to be a reasonable approximation to fair
value.
14. BORROWINGS
2022 2021
Restated
$000 $000
Current
Short term loans - falling due within one year 2,020 237
Non current - falling due after one year 7,398 16,256
Total 9,418 16,493
In 2021, the Company entered into a Convertible Facility Agreement ("CFA")
with Hadron Master Fund, TDR Enterprises Ltd (a company controlled by Tom
Richardson) and a non-related third party (together "the Lenders") to allow it
access GBP200,000 for working capital purposes for a 6-month period. Hadron
would provide GBP100,000 while TDR Enterprises Ltd and the third party will
provide up to GBP50,000 each. The purpose of the facility was for the payment
of corporate costs (regulatory and compliance and legal fees) and for general
corporate purposes as approved by the Board of Directors. There was an option
to convert the facility in the event of non-payment and expiration of term to
ordinary shares of the Group at the conservation price of 0.5 pence. Interest
rate as at 10% per annum.
On 28 February 2022, the Company announced that Savannah Energy had entered
into a convertible facility agreement (the "CFA2") and option agreement (the
"Option Agreement") with the Company, together with the grant of certain
related security by the Company over the loans owed by the Lekoil Nigeria
group, in order to support the Company's restructuring. Lekoil Nigeria brought
legal proceedings
against the Company seeking (among other remedies) orders to set aside CFA1,
CFA2 and the Option Agreement with Savannah Energy and to set aside the issue
of shares to the CFA1 Parties and Savannah Energy pursuant to those
agreements.
The Company entered into the Option Agreement with Savannah Energy granting it
an option to be assigned the intercompany debt owed to the Company by Mayfair,
its associated security related to OPL 310 and all rights and benefits of the
Company with respect to the Mayfair Loan. A US$1 million payment is payable by
Savannah Energy to the Company upon such exercise and assignment (which has
not currently been exercised). Pursuant to the Option Agreement, the Company
would be paid deferred consideration in the event that Savannah Energy obtains
a working interest in OPL 310 (for example, upon enforcement of security for
repayment of the Mayfair Loan) and OPL 310 is
14. BORROWINGS (cont)
developed. Such deferred consideration (capped at US$50 million) is
structured as a royalty of 0.5% on crude oil sales attributable to Mayfair's
actual participating interest in OPL 310 (being a 17.14% participating
interest).
Pursuant to the Settlement Deed, the Company has agreed to terminate the
Option Agreement (and the associated security related to OPL 310).
Under the terms of a separate agreement with Savannah Energy, Savannah Energy
shall surrender all of its shares in the Company (the "SEIL Shares").
Savannah Energy currently holds 179,997,756 Ordinary Shares. Savannah Energy
has converted £100,000 of the outstanding amount due under the CFA2 into
Ordinary Shares, resulting in the issue of 20,000,000 Ordinary Shares to
Savannah Energy in respect of such repayment and conversion.
In consideration for the surrender of Savannah Energy's interests, the
termination of the Option Agreement, the release by Savannah Energy of any
security interests in favour of it in respect of the Mayfair Loan and the
release of all remaining amounts due under the CFA2, the Company has entered
into a loan agreement with Savannah Energy pursuant to which the Company shall
agree to pay Savannah Energy certain upfront payments together with 25% of all
amounts received by the Company from LOGI pursuant to the LOGI Loan, subject
to a maximum total payment of approximately $16,256,159. The Company has
assessed the value of the loan amount at 31 December 2022 on a discounted
basis using a rate of 16.821% to effect a current market value of $9,417,555.
The difference of $6,838,604 has been recognised in the statement of
comprehensive income.
Borrowings: 2022
$000
Book value 16,256
Fair value adjustment (6,838)
At 31 December 9,418
15. SHARE CAPITAL
2022 2021
$ $
Authorised, Allotted, called up and fully paid
Ordinary shares
Beginning of the year 26,839 26,839
New Shares issued (262,614,194 ordinary shares) 13,131 -
Shares cancelled (199,997,756 ordinary shares) (10,000) -
As at 31 December: 599,396,421 ordinary shares of $0.00005 (2021: 536,779,583 29,970 26,839
ordinary shares of $0.00005 each)
The authorised share capital is 1,000,000,000 shares at par value of $0.00005
each
Following the Settlement Arrangements agreed at the Company's EGM on 29
December 2022, it was agreed that between the Company and Savannah Energy that
it would surrender all of its shares in the Company comprising 199,997,756
Ordinary Shares.
As at the end of May 2023 LOGI had complied with all conditions of the
settlement agreement save for the cancellation of certain shares in the
Company owned by Lekoil Nigeria, Lekan Akinyami and Samuel Olutu. The total
shares that should have been cancelled are 107,658,847 ordinary shares. The
Company is working with such parties to cancel such shares as soon as
practicably possible.
16. SHARE-BASED PAYMENTS
Following the Settlement Agreement in December 2022 the Company has
transferred or cancelled all previous share arrangements. The balance on the
reserve account at 31 December 2022 of $10,258,792 has been written off to the
Statement of Comprehensive Income.
Long Term Incentive Plan scheme (equity-settled)
The long-term incentive plan ("LTIP") was approved on 19 November 2014 and
amended on 21 December 2015. The Company awarded no share options under the
plan in the year (2021: nil). The existing options have all been transferred
as part of the Settlement Agreement. Accordingly no share based payment
arrangements exist at 31 December 2022.
Weighted average exercise price US$ Number of options Weighted average exercise price US$ Number of options
2022 2021
Outstanding at 1 January 0.32 20,106,500 0.33 30,099,000
Granted during the year - - 0.03 -
Transferred during the year 0.33 (20,106,500) 0.33 (9,992,500)
Outstanding at 31 December 0.32 - 0.32 20,106,500
Share option scheme (equity-settled)
The Group established a share option scheme available to Directors, key
management personnel, employees and consultants providing employment-type
services, which provides the opportunity to purchase shares in the Group. In
accordance with the scheme, holders of vested options are entitled to purchase
shares at prices of the shares established at the date of grant, during a
period expiring on the tenth anniversary of the effective date i.e. grant
date. The grant dates for awards were 3 December 2010, 1 June 2011, 1 November
2011, 4 June 2012, 19 February 2013, 7 April 2013, 17 May 2013 and 26 March
2014 based upon a shared understanding of the terms of the awards at that
time. This share option scheme has been replaced by the LTIP scheme described
above. No new options were granted in 2022 under this scheme and all options
expired in the year to 31 December 2022.
The number and weighted average exercise prices of share options are as
follows:
Weighted average exercise price US$ Number of options Weighted average exercise price US$ Number of options
2022 2021
Outstanding at 1 January 0.46 16,358,125 0.46 16,358,125
Granted during the year - - - -
Expired during the year - (16,358,125) 0.46 -
Exercised during the year - - - -
Outstanding at 31 December - - 0.46 16,358,125
Exercisable at 31 December - - 0.46 16,358,125
16. SHARE-BASED PAYMENTS (cont)
Non-Executive Director Share Plan (equity-settled)
The Board established the Non-Executive Director share plan on 21 December
2015. Following the Settlement Agreement in December 2022, the plan has
ceased.
The number and weighted average exercise prices of share options are as
follows:
Weighted average exercise price US$ Number of options Weighted average exercise price US$ Number of options
2022 2021
Outstanding at 1 January 0.20 250,000 0.20 2,600,000
Granted during the year - - - -
Transferred during the year - (250,000) - (2,350,000)
Outstanding at 31 December 0.03 - 0.03 250,000
17. RECONCILIATION OF OPERATING LOSS TO NET CASH USED IN OPERATING
ACTIVITIES
2022 2021
Restated
$000 $000
Loss for the year (15,397) (326,416)
Impairment - 7,396
Decrease/(increase) in receivables 20,710 325,668
Increase/(decrease) in payables (5,155) (6,835)
Net cash used in continuing operations 158 (187)
Net cash outflow used in operations 158 (187)
18. FINANCIAL INSTRUMENTS
The carrying amounts presented in the statement of financial position relate
to the following categories of assets and liabilities:
Company 2022 2021
$000 Restated
$000
Financial assets
Loans and receivables:
Trade and other receivables 31,209 51,919
Cash and cash equivalents 208 50
31,417 51,969
Financial liabilities
Financial liabilities measured at amortised cost:
Current:
Loans 9,418 16,493
Trade and other payables 2,481 1,289
11,899 17,782
The carrying values of the Company's financial assets and liabilities
approximate to their fair values.
Financial assets comprise cash and cash equivalents, trade and other
receivables and exclude prepayments. The financial liabilities are all
short-term liabilities and due on demand or within agreed contractual terms.
18. FINANCIAL INSTRUMENTS (cont)
Risk management
The board is charged with managing the various risk exposures, including those
which arose through holding the following financial instruments which apply to
both the Company and the Company:
(a) Capital risk management
The Company manages its capital to ensure that all the companies within the
Company will be able to continue as a going concern while maximising the
return to equity holders, through optimisation of debt equity balance. The
capital structure of the Company includes debt, consisting of borrowings, cash
and cash equivalents and equity attributable to the equity holders of the
parent. Where necessary additional loans are provided to the Company to ensure
liquidity at critical times.
Capital for the reporting period under review is summarised as follows:
2022 2021
$000 Restated
$000
Total equity 19,518 34,187
Borrowings 9,418 16,493
Cash and cash equivalents 208 50
Capital 29,144 50,730
(b) Interest rate risk
The Company is exposed to interest rate risk as it has borrowings and cash and
cash equivalent balances that are subject to variable interest rates. The
Company does not enter into hedging transactions for the purposes of
minimising its exposure to interest rate risk, but manages its exposure by
monitoring the levels of interest payable and receivable on a regular basis.
At 31 December 2022 amounts on short term deposits totalled $208,000 (2021:
$50,000). Loans receivables and loan notes are contracted at a fixed rate of
interest.
(c) Liquidity rate risk
The Company's approach to liquidity risk is to ensure that sufficient
liquidity is available to meet foreseeable requirements, by having adequate
reserves, banking and borrowing facilities and by investing funds securely and
profitably. The board further manages its exposure to liquidity risk by
ensuring that cash flow forecasts and budgets are produced annually and
monitored on a regular basis. All trade payables and borrowings have a
maturity date of within one year.
(d) Credit rate risk
Credit risk refers to the risk that a third party will default on its
contractual obligations resulting in financial loss to the Company. The
Company manages the exposure to this risk by carrying out credit verification
procedures on all clients and monitoring receivable balances on an ongoing
basis. The Company's receivable balance principally comprises amounts due
from other Company companies for financing purposes.
19. RELATED PARTY TRANSACTIONS
Transactions with key management personnel
Key management personnel are those persons having authority and responsibility
for planning, directing and controlling the activities of the Company,
directly or indirectly. These are the Directors.
Loans and transactions with key management personnel
An unsecured loan of US$1,500,000 granted to a Director on 9 December 2014.
The loan had a three-year term and bore interest at a rate of four per cent
per annum. In September 2017, the loan's maturity date was extended by 3 years
to 9 December 2020 under the same terms and conditions. On 9 December 2020, at
the expiration of the extension, the Board approved a final extension to loan
for 12 months conditional on the adherence to the following repayment terms:
immediate payment of US$0.4 million, while the balance on the loan is settled
by quarterly payments of interest and principal at a revised interest rate of
10% plus 3-month LIBOR. The initial US$0.4 million was settled by the Director
although no other settlements were made and the loan is in default and
accruing interest at a rate of LIBOR plus 14 per cent on the default amount.
At 31 December 2021, the balance outstanding was US$1,646,696. During 2022,
the Company sought litigation proceedings to recover the amounts owing.
Under a settlement deed on 7 December 2022, the Company agreed with the party,
with no admission of liability, to agree to, among other things, the release
and discharge of all relevant claims, the withdrawal of legal proceedings,
surrenders of certain shares and other transactions, a new framework for their
future relationship and fully and finally to resolve their differences,
dispose of ongoing litigation and agree certain ancillary matters.
Accordingly, the Company waived all rights to repayment in respect of any and
all existing indebtedness. The amount outstanding at the end of 31 December
2021 has therefore been written off to reserves as at 31 December 2022, the
balance being reduced to nil.
On 2 September 2021, the Company entered into a Convertible Facility Agreement
("CFA") with Hadron Master Fund ("Hadron") (a company associated with Marco
D'Attanasio), TDR Enterprises Ltd (a company controlled by Tom Richardson) and
a non-related third party (together "the Lenders") to allow it to access up to
£200,000 for working capital purposes. The key terms of the CFA were: (i)
Amount: an amount of up to £200,000 in total, with Hadron providing up to
£100,000 and each of TDR Enterprises Ltd and the third party providing up to
£50,000 each; (ii) Use of proceeds: for payment of corporate costs
(regulatory and compliance and legal fees) and for general corporate purposes
as approved by the Board and the Lenders; (iii) Availability: £100,000
available immediately, with £100,000 available after 1 October 2021. (iv)
Term: 6 months. (v) Repayment: Principal and interest to be repaid from
proceeds of capital raise and/or monies recovered from CEO Loan. Repayment
immediately due on a change of control of the Company. No conversion before
expiry of the Term. (vi) Conversion right: In the event of non-payment at the
expiry of the Term, Lenders have the option to convert the outstanding amounts
into ordinary shares of the Company at the Conversion Price of 0.5 pence.
(vii) Interest Rate: 10% per annum. (viii) Shareholder approval/Security for
Repayment: Approval at Company's AGM. In the event shareholder approval was
not obtained, the Lenders would have been be entitled to an assignment by way
of security of the CEO Loan.
Anthony Hawkins, whilst the Interim Executive Chairman of the Company, made a
number of interest free loans to the Company to pay its day to day
administrative costs. Those loans have been repaid by the Company.
20. ULTIMATE CONTROLLING PARTY
As at 31 December 2022 and 31 December 2021 there is no single ultimate
controlling party.
21. PRINCIPAL SUBSIDIARIES
As at 31 December 2022, following the Settlement Agreement, there are no
principal subsidiaries.
As at 31 December 2021 the Company had the following subsidiaries:
Company name Country Ownership interest
Lekoil Nigeria Limited Nigeria 40%
Lekoil Exploration and Production (Pty) Limited Namibia 80%
Lekoil Management Corporation USA 100%
Lekoil 310 Limited Cayman 100%
Princeton Assets and Trust Pte Limited Singapore 100%
Lekoil Management Services Cayman 100%
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END NEXEQLFBXQLXBBK