REG - Orcadian Energy PLC - Results for the year ended 30 June 2021
16/12/2021 07:00
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RNS Number : 8196V Orcadian Energy PLC 16 December 2021
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 (MAR). Upon the publication of this announcement via
Regulatory Information Service (RIS), this inside information is now
considered to be in the public domain.
16 December 2021
Orcadian Energy plc
("Orcadian Energy", "Orcadian" or the "Company")
Results for the year ended 30 June 2021
Orcadian Energy (AIM: ORCA), the North Sea focused oil and gas development
company, is delighted to announce its audited results for the twelve months
ended 30 June 2021.
Highlights:
· Primary activity was preparing for the Company's admission to
trading on AIM.
· Following the end of the period under review:
o Orcadian admitted to AIM in July 2021 raising gross proceeds of £3
million
o Receipt of Letter of no objection from the Oil and Gas Authority ("OGA")
and entry into the authorisation phase of development planning for the Pilot
Field
o Received three expressions of interest for the provision of an FPSO for
the Pilot Development
o Entered into a non-binding Heads of Terms with Carrick Resources Limited
("Carrick") in respect of a sub-area of Licence P2320 which covers the Carra
prospect ("Carra")
o Cash position as at 15(th) December 2021 of over £1.5 million
o Selected by the OGA to evaluate an approach to the electrification of
North Sea oil and gas platforms which will dramatically cut carbon emissions.
Steve Brown, Orcadian's CEO, said:
"The last financial year has been transformational for the Company.
"Whilst these results record our position at the end of June 2021, the rest of
this year has seen the Company make significant progress in delivering its
strategy.
"We were admitted to trading on AIM, a market of the London Stock Exchange. On
Admission we raised gross proceeds of £3m and since then we have finalised
the Concept Select process and moved to the 'authorisation phase' for
our flagship Pilot development, whilst earlier this month we surpassed
twenty-six other companies, or consortia, to win funding of £466,667 in the
OGA Electrification Competition.
"The publishing of results is often a time for reflection, but from our
perspective time spent resting on laurels is time wasted. Our focus for 2022
will be to seek to secure the financing for the Pilot project and to secure a
customer for the platform electrification solution we will design in the
coming months.
"We are determined to show the industry and the world that it is possible to
produce the oil and gas, that regular customers need, in a cost effective
way and with much, much lower emissions. We will do this on Pilot and we
believe our electrification system will offer an opportunity for other
operators on the UKCS to reduce emissions as rapidly as possible.
"North Sea businesses can show the world how to produce oil and gas with much
lower emissions, helping to drive out high cost and high emissions production
elsewhere in the world. We are proud of the role we are playing in this.
"We look forward to 2022 with optimism and energy and look forward to a sea
change in attitudes to responsible oil and gas development projects and to the
market continuing to recognise the significant value in our projects."
Report and Accounts and Annual General Meeting
A copy of the annual report and accounts for the year ended 30 June 2021 is
available on the Company's website (https://orcadian.energy
(https://orcadian.energy) ) with effect from today. A further announcement
will be made when the Company posts its annual report and accounts and notice
of Annual General Meeting to its shareholders.
For further information on the Company please visit the Company's website:
https://orcadian.energy (https://orcadian.energy)
Contact:
Orcadian Energy plc + 44 20 7920 3150
Steve Brown, CEO
Alan Hume, CFO
WH Ireland (Nomad and Joint Broker) +44 20 7220 1666
Katy Mitchell / Andrew de Andrade (Nomad)
Harry Ansell / Fraser Marshall (Corporate Broking)
Shore Capital (Joint Broker) +44 20 7408 4090
Toby Gibbs / James O'Neill (Advisory)
Tavistock (PR) + 44 20 7920 3150
Nick Elwes / Simon Hudson / Matthew Taylor orcadian@tavistock.co.uk
Charlesbye (PR) + 44 7403 050525
Lee Cain / Lucia Hodgson
About Orcadian Energy
Orcadian is a North Sea oil and gas operator with a difference. In planning
its Pilot development, Orcadian has selected wind power to transform oil
production into a cleaner and greener process. The Pilot project is moving
towards approval and will be amongst the lowest carbon emitting oil production
facilities in the world, despite being a viscous crude. Orcadian may be a
small operator, but it is also nimble, and the Directors believe it has
grasped opportunities that have eluded some of the much bigger companies. As
we strike a balance between Net Zero and a sustainable energy supply, Orcadian
intends to play its part to minimise the cost of Net Zero and deliver reliable
organic energy.
Orcadian Energy (CNS) Ltd ("CNS"), Orcadian's operating subsidiary, was
founded in 2014 and is the sole licensee of P2244, which contains 78.8 MMbbl
of 2P Reserves in the Pilot discovery, and of P2320 and P2482, which contain a
further 77.8 MMbbl of 2C Contingent Resources in the Elke, Narwhal and
Blakeney discoveries (as audited by Sproule, see the CPR in the Company's
Admission Document for more details). Within these licences there are also 191
MMbbl of unrisked Prospective Resources. These licences are in blocks 21/27,
21/28, 28/2 and 28/3, and lie 150 kms due East of Aberdeen. The Company also
has a 50% working interest in P2516, which contains the Fynn discoveries.
P2516 is administered by the Parkmead Group and covers blocks 14/20g and
15/16g, which lie midway between the Piper and Claymore fields, 180 kms due
East of Wick.
Pilot, which is the largest oilfield in Orcadian's portfolio was discovered by
Fina in 1989 and has been well appraised. In total five wells and two
sidetracks were drilled on Pilot, including a relatively short horizontal well
which produced over 1,800 bbls/day on test. Orcadian's proposed development
plan for Pilot is based upon a Floating Production Storage and Offloading
vessel, with over thirty wells to be drilled by a Jack-up rig through a pair
of well head platforms and will include a floating wind turbine to provide
much of the energy used in the production process. Emissions per barrel
produced are expected to be about an eighth of the 2020 North Sea average and
to lie in the lowest 5% of global oil production.
ANNUAL RESULTS FOR THE TWELVE MONTHS ENDED 30 JUNE 2021
Chairman's Statement
The year ended 30 June 2021 has been a watershed year for the Orcadian Energy
plc and its subsidiary (the "Group"). At the start of the year the Group was a
single private company, then called Pharis Energy Ltd, now called Orcadian
Energy (CNS) Ltd; by the end of the year that company had been acquired by the
newly formed Orcadian Energy PLC (the "Company"), which was well on the road
to being admitted to the AIM market, an event which occurred on 15 July 2021.
Operationally, the Group has made very substantial progress with the process
of preparing the Pilot oilfield, the Group's principal asset, for development.
During the year £530,818 was spent on intangible assets. This has occurred
during a period when the Government has raised the bar for emissions
performance for the oil and gas industry. The Oil and Gas Authority (the
"OGA") had already started to focus on emissions performance as we were
preparing a Concept Select Report ("CSR") for the Pilot field development
which we submitted in September 2020. A revised Strategy for the Oil & Gas
Authority which placed a range of new net zero obligations on the UK oil and
gas industry, on a par with the existing central obligation to maximise
economic recovery, was laid before Parliament in December 2020 and came into
force in February 2021.
The adoption of a polymer flooding strategy, an outcome of our concept select
work, had already substantially reduced expected emissions from the Pilot
development project, actually well below the North Sea average, but the OGA
asked us to do better, and we responded positively to that challenge. The
result is that expected Scope 1 emissions from the Pilot development are just
2.6 kgCO2e/bbl, a performance which places the Pilot development at the low
end of the lowest 5% of global oil production (further details of which are
set out in the Company's Admission Document). Following the end of the period
under review, an addendum to the CSR was submitted to the OGA on the 1st of
July 2021 and the OGA confirmed on the 29th November 2021 that they were
content with our proposal and that the project can move from the Assessment
phase into the Authorisation phase of the OGA's field development plan
process.
The financial results of the Group largely reflect the investment in
progressing the Pilot field and the costs of preparing the Group for admission
to AIM, a costly but necessary process to position the Group for success.
Since Orcadian Energy (CNS) Ltd was established to apply for the Pilot licence
in 2014 much has been achieved with few resources, indeed the admission to AIM
of Orcadian, when measured by the metric of proven plus probable reserves, was
the largest ever UKCS focussed admission of an oil and gas company to the AIM
market. Being quoted gives the Group access to capital and multiplies the
options the Group has to progress the development of Pilot.
Finally, also following the end of the period under review, on the 6th
December 2021 the OGA announced that Orcadian had been awarded £466,667 in
the OGA Electrification Competition. In return, we will evaluate a new concept
for the electrification of key producing oil and gas fields, initially
focussing on Central Graben area fields, which are owned and controlled by
third parties (see announcement dated 6 December 2021 for more information).
Our concept would use renewable energy, generated from local wind farms, for
the bulk of the electricity required; with back-up power generated from gas or
net zero fuels, supported by batteries for a fast response. We will be working
with Crondall Energy, Enertechnos, Petrofac, North Sea Midstream Partners
("NSMP") and Wärtsilä to deliver a report to the OGA and Central Graben
Operators by the end of March 2022. The OGA funding covers all our external
costs in doing this work.
We have also formed a partnership with North Sea Midstream Partners to make a
commercial proposal for the delivery of electrical power to Central Graben and
Central North Sea Operators. It remains to be seen whether this opportunity
can be developed into a new business, but we remain committed to making the
best of every opportunity to create value for shareholders.
In any event, the Company is now well positioned to make the best of its
assets and to deliver real value for shareholders from the very substantial
reserve base the Group holds.
Financial Results
The Group incurred a loss for the year to 30 June 2021 of £296,338 (30 June
2020 - loss of £230,519). The 2020 comparative numbers are that of wholly
owned subsidiary Orcadian Energy (CNS) Ltd. Refer to note 2.2 for further
detail.
In the year to 30 June 2021 the loss mainly arose from expenses in connection
to the transaction, costs associated with the admission process including
Advisory and Consultancy Fees, salaries, consulting and professional fees
along with general administration expenses. These expenses have been met from
the proceeds of the issue of shares.
Cash flow and cash position
Cash used in operations totalled £312,189 (30 June 2020 - £141,254)
As at 30 June 2021, the Group had a cash balance of £179,556 (30 June 2020 -
£31,318). Following the end of the financial period under review the Company
raised gross proceeds of £3m as part of its Admission to AIM.
Oil Price Outlook
When the Company's shares were admitted to trading on AIM, we stated in the
Admission Document that, based on an internal assessment of the supply and
demand outlook, the Directors believed that we were entering a period of
relative scarcity of oil, which we also believed was supportive of a higher
oil price. We believe that is now the consensus view, with demand above 100
million barrels per day, politicians calling for OPEC to increase supply and
Brent oil prices having exceeded $80/bbl, before falling back to the low
$70s/bbl.
We also stated that the Directors expected that governments around the world
would continue their efforts to reduce carbon dioxide emissions, obviously
that could temper demand in the future, but we also noted that
under-investment in the upstream oil industry could well counteract that
pressure.
We still believe that oil prices will always be volatile, but we also believe
it is not unreasonable to plan the Group's projects on the assumption that
there is a robust outlook for oil; and the Directors believe the Group's
flagship project should be economically robust as the NPV breakeven price for
the Pilot development scheme is approximately US$39/bbl. (see the Company's
Admission Document for details of the assumption behind that NPV) and since
January 2015 the oil price has been above US$39/bbl 94% of the time.
UK Oil and Gas Sector
On 24 March 2021, the Government announced the North Sea Transition Deal
demonstrating the Government's commitment to the UKCS oil and gas sector.
Through this deal the UK's oil and gas sector and the government will work
together to deliver the skills, innovation and new infrastructure required to
decarbonise North Sea oil and gas production. The Group is a part of these
discussions and with the support of the OGA will be making a proposal to
supply clean reliable energy to Platform Operators. The Directors are
confident that the Government will continue to support the oil and gas
industry, especially those companies and projects which can demonstrate their
contribution to delivering a Net Zero basin.
Business Outlook
The key challenge for the Group is the financing of the Pilot project. The
Directors are pursuing two parallel and complementary paths to achieve this
aim. The reserves have been established, and with the receipt of a "Letter of
no objection" from the OGA the development plan is clear. We are working to
attract oil companies and contractors as partners in the development and we
will continue to do that through 2022. We are confident that, as the mist
clears after COP26, that companies will once again recognise that the UKCS is
a great place to invest and that appetite for well-designed development
opportunities which have substantial proven reserves will re-emerge.
Joseph Darby
Chairman and Non-Executive Director
15 December 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
FOR THE YEAR ENDED 30 JUNE 2021
Year ended 30 June 2021 Year ended 30 June 2020
Note £ £
Revenue - -
Administrative expenses 5 (258,909) (200,225)
Operating Loss (258,909) (200,225)
Finance costs 9 (44,349) (40,294)
Other income 7 3,000 10,000
Listing costs (76,500) -
Loss before tax (376,758) (230,519)
Taxation 10 80,420 -
Loss for the year (296,338) (230,519)
Other comprehensive income:
Items that will or may be reclassified to profit or loss:
Other comprehensive income - -
Total comprehensive income (296,338) (230,519)
Earnings per share 11 (1.34) (1.32p)
All operations are continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
30 June 2021 30 June 2020
Note £ £
Non-current assets
Property, plant and equipment 12 1,842 107
Intangible assets 13 1,814,615 1,283,797
1,816,457 1,283,904
Current assets
Trade and Other Receivables 14 88,548 78,138
Cash and cash equivalents 15 179,556 31,318
268,104 109,456
Total assets 2,084,561 1,393,360
Non-current liabilities
Borrowings 17 (762,686) (953,152)
(762,686) (953,152)
Current liabilities
Trade and other payables 18 (328,601) (250,596)
Borrowings 17 (1,100,000) -
(1,428,601) (250,596)
Total liabilities (2,191,287) (1,203,748)
Net (liabilities) / assets (106,726) 189,612
19 52,202 17,401
Equity
Ordinary share capital
Share premium 19 - 563,561
Reverse acquisition reserve 4 (38,848) -
Retained earnings (120,080) (391,350)
Total equity (106,726) 189,612
The consolidated Financial Statements of Orcadian Energy PLC were approved by
the Board of Directors and authorised for issue on 15 December 2021.
Signed on behalf of the Board of Directors by:
Alan Hume
Director
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
30 June 2021
Note £
Non-current assets
Investment in subsidiary 16 52,202
52,202
Current assets
Trade and Other Receivables 14 -
Cash and cash equivalents 15 -
-
Total assets 52,202
Non-current liabilities
Borrowings 17 -
-
Current liabilities
Trade and other payables 18 -
-
Total liabilities -
Net assets 52,202
19 52,202
Equity
Ordinary share capital
Retained earnings -
Total equity 52,202
Orcadian Energy PLC, company number 13298968, has used the exemption granted
under s408 of the Companies Act 2006 that allows for the non-disclosure of the
Income Statement of the parent company. The after-tax loss attributable to
Orcadian Energy PLC for the three months to 30 June 2021 was £nil .
The Financial Statements were approved by the Board of Directors and
authorised for issue on 15 December 2021.
Signed on behalf of the Board of Directors by:
Alan Hume
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2021
Ordinary Share capital Share premium Reverse acquisition reserve Retained earnings Total
Note £ £ £ £ £
Balance as at 1 July 2019 17,346 492,215 - (160,831) 348,730
Loss for the year and total comprehensive income - - - (230,519) (230,519)
Proceeds of share issues (net of costs) 19 55 71,346 - - 71,401
Balance as at 30 June 2020 17,401 563,561 - (391,350) 189,612
Balance as at 1 July 2020 17,401 563,561 - (391,350) 189,612
Loss for the year and total comprehensive income - - (296,338) (296,338)
-
Bonus issue of shares 19 34,801 (34,801) - - -
Issue of shares 19 52,202 - (52,202) - -
Transfer to reverse acquisition reserve 4 (52,202) (528,760) 13,354 567,608 -
Balance as at 30 June 2021 52,202 - (38,848) (120,080) (106,726)
The following describes the nature and purpose of each reserve within equity:
Reserve Description and purpose
Ordinary share capital Represents the nominal value of shares issued
Share premium account Amount subscribed for share capital in excess of nominal value
Reverse acquisition reserve Reserve created in accordance with the acquisition of Orcadian Energy (CNS)
Ltd on 11 May, 2021 (Refer to Note 4)
Cumulative net gains and losses recognised in the Consolidated Statement of
Retained earnings Comprehensive Income
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2021
Ordinary Share capital Retained earnings Total
Note £ £ £
Balance as at Incorporation 29 March 2021 - - -
Loss for the period and total comprehensive income - - -
Issue of shares upon acquisition of subsidiary 19 52,202 - 52,202
Balance as at 30 June 2021 52,202 - 52,202
The following describes the nature and purpose of each reserve within equity:
Reserve Description and purpose
Ordinary share capital Represents the nominal value of shares issued
Retained earnings Cumulative net gains and losses recognised in the Consolidated Statement of
Comprehensive Income
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2021
Year ended 30 June 2021 Year ended 30 June 2020
Note £ £
Cash flows from operating activities
Loss before tax for the year (376,758) (230,519)
Adjustments for:
Depreciation 12 217 694
Unrealised foreign exchange (gain) 5 (129,511) -
(Increase) / decrease trade and other receivables 14 (10,409) 4,435
(Decrease) / Increase in trade and other payables 18 79,504 43,842
Finance costs in the year 9 44,349 40,294
Cash generated from operations (392,608) (141,254)
Income taxes paid 80,420 -
Net cash flows from operating activities (312,188) (141,254)
Investing activities
Purchases of property, plant and equipment 14 (1,952) -
Purchases of exploration and evaluation assets 13 (530,818) (750,799)
Net cash used in investing activities (532,770) (750,799)
Financing activities
Borrowings from Directors and Officers 21 - (882)
Proceeds from issue of convertible loan notes 17 1,100,000 100,000
Repayment of convertible loan notes 17 (100,000) -
Proceeds from loans obtained 17 - 814,260
Interest paid (6,804) -
Proceeds from issue of ordinary share capital 19 - -
Net cash used in financing activities 993,196 913,378
Net increase in cash and cash equivalents 148,238 21,325
Cash and cash equivalents at beginning of period 15 31,318 9,993
Cash and cash equivalents and end of period 15 179,556 31,318
There were no significant non-cash transactions in the year to 30 June 2021.
COMPANY STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2021
30 June 2021
Note £
Cash flows from operating activities
Loss for the year -
Adjustments for:
Depreciation 12 -
Decrease in trade and other receivables 4 -
Increase in trade and other payables 18 -
Finance costs in the year -
Cash generated from operations -
Income taxes paid -
Net cash flows from operating activities -
Investing activities
Purchases of property, plant and equipment 12 -
Purchases of exploration and evaluation assets 13 -
Net cash used in investing activities -
Financing activities
Borrowings from Directors and Officers 21 -
Proceeds from issue of ordinary share capital 19 -
Net cash used in financing activities -
Net increase in cash and cash equivalents -
Cash and cash equivalents at beginning of period 15 -
Cash and cash equivalents and end of period 15 -
No cash was held by the Company during the period to 30 June 2021
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
Orcadian Energy PLC (the "company") is a public limited company which is
domiciled and incorporated in England and Wales under the Companies Act 2006
with the registered number 13298968. The Company's registered office is 6(th)
floor, 60 Gracechurch Street, London, EC3V 0HR, and its ordinary shares are
admitted to trading on AIM, a market of the London Stock Exchange.
The principal activity of the Group is managing oil and gas assets and it
holds a 100% interest in, and is administrator for, UKCS Seaward Licences
P2244, which contains the Pilot and Harbour heavy oil discoveries, and P2320,
which contains the Blakeney, Feugh, Dandy & Crinan discoveries.
The financial statements presented for Group are for the year ended 30 June
2021 and these have are shown alongside figures for the year ended 30 June
2020 for comparative purposes.
2. Summary of significant accounting policies
The principal accounting principles applied in the preparation of these
financial statements are set out below. These principles have been
consistently applied to all years presented, unless otherwise stated.
2.1. Basis of preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) and IFRS Interpretations Committee
(IFRIC) and the Companies Act 2006 applicable to companies reporting under
IFRS.
The financial statements have been prepared under the historical cost
convention.
2.2. Consolidation and acquisitions
The financial statements consolidate the financial information of the Group
and companies controlled by the Group (its subsidiaries) at each reporting
date. Control is achieved where the Company has the power to govern the
financial and operating policies of an investee entity, has the rights to
variable returns from its involvement with the investee and has the ability to
use its power to affect its returns. The results of subsidiaries acquired or
sold are included in the financial information from the effective date of
acquisition or up to the effective date of disposal, as appropriate. Where
necessary, adjustments are made to the results of acquired subsidiaries to
bring their accounting policies into line with those used by the Group. All
intra-Group transactions, balances, income and expenses are eliminated on
consolidation. The financial statements of all Group companies are adjusted,
where necessary, to ensure the use of consistent accounting policies.
The Company's shares were admitted to trading on AIM, a market operated by the
London Stock Exchange, on 15 July 2021. These financial statements are the
Company's first subsequent to its admission to AIM. In connection with the
admission to AIM, the Group undertook a Group reorganisation of its corporate
structure which resulted in the Company becoming the ultimate holding company
of the Group. Prior to the reorganisation there was no ultimate holding
company as Orcadian Energy (CNS) Ltd ("CNS") was a standalone entity. The
transaction was accounted for as a capital reorganisation rather than a
reverse acquisition since it did not meet the definition of a business
combination under IFRS 3. In a capital reorganisation, the consolidated
financial statements of the Group reflect the predecessor carrying amounts of
CNS with comparative information of CNS presented for all periods since no
substantive economic changes have occurred. The difference arising on
acquisition has been accounted for with the recognition of a merger reserve on
the balance sheet following the reorganisation of the share capital of the
Group at the point of completion of the transaction.
2.3. Going concern
The financial statements have been prepared on a going concern basis. The
Group is not yet revenue generating and an operating loss has been reported.
The Directors have reviewed a detailed forecast based on the funds raised, and
including all required spend to meet licence requirements. This forecast has
been stress tested by management in reaching their going concern conclusion.
Having made due and careful enquiry, the Directors are of the opinion that the
Group has adequate working capital to execute its operations over the next 12
months. The Directors, therefore, have made an informed judgement, at the time
of approving financial statements, that there is a reasonable expectation that
the Company has adequate resources to continue in operational existence for
the foreseeable future.
The Directors acknowledge that COVID-19 has had and may continue to have
significant adverse impacts on the global economy and capital markets.
However, the Company has been able to raise funds during this time and are of
the opinion that COVID-19 does not pose a risk sufficient to call in to
question the Group's ability to operate as a Going Concern. The Directors are
of the opinion that the Group has adequate working capital to be able to meet
its obligations as they fall due over the next 12 months
As a result, the Directors have continued to adopt the going concern basis of
accounting in preparing the annual financial statements for the year ended 30
June 2021.
2.4. Changes in accounting policies
2.4.1. New standards, amendments to standards and interpretations
i) New and amended standards adopted by the Group
During the financial year, the Group has adopted the following new IFRSs
(including amendments thereto) and IFRIC interpretations that became effective
for the first time.
Standard Impact on initial application Effective date
IFRS 3 (amendments) Definition of a Business 01 January 2020
IFRS standards (amendments) References to the Conceptual Framework 01 January 2020
IAS 1 (amendments) Definition of Material 01 January 2020
IAS 8 (amendments) Definition of Material 01 January 2020
IFRS 9, IAS 39 and IFRS 7 (amendments) Interest Rate Benchmark Reform 01 January 2020
IFRS 3 (amendments) Definition of a Business 01 January 2020
IFRS standards (amendments) References to the Conceptual Framework 01 January 2020
IFRS 3 (amendments) Definition of a Business 01 January 2020
IFRS standards (amendments) References to the Conceptual Framework 01 January 2020
IAS 1 (amendments) Definition of Material 01 January 2020
IAS 8 (amendments) Definition of Material 01 January 2020
None of the standards or interpretations that came into effect for the first
time for the financial year beginning 1 July 2020 had a material impact on the
Group.
2.4.2. New standards and amended standards and interpretations issued but not
yet effective for the financial year beginning 1 July 2021
At the date of approval of these financial statements, the following standards
and interpretations which have not been applied in these financial statements
were in issue but not yet effective (and in some cases had not been adopted by
the UK):
Standard Impact on initial application Effective date
IFRS standards (amendments) Interest rate benchmark reform 01 January 2021
IFRS 3 (amendments) Business combinations 01 January 2022
IAS 37 (amendments) Onerous contracts 01 January 2022
IFRS standards (amendments) 2018-2020 annual improvement cycle 01 January 2022
IAS 16 (amendments) Proceeds before intended use 01 January 2022
IFRS 17 Insurance Contracts 01 January 2023
IFRS 17 (amendments) Insurance contracts 01 January 2023
IAS 1 (amendments) Reclassification of liabilities as current or non-current 01 January 2023
The new and amended Standards and Interpretations which are in issue but not
yet mandatorily effective is not expected to be material.
2.5. Foreign currency
2.5.1. Functional and presentation currency
Items in the company's financial statements are measured in the currency of
the primary economic environment in which the entity operates (functional
currency). Τhe functional currency of the Company is Pounds sterling (£).
Monetary amounts in these financial statements are rounded to the nearest £.
2.4.2.Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation where items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement, except when
deferred in other comprehensive income as qualifying cash flow hedges and
qualifying net investment hedges. Foreign exchange gains and losses that
relate to borrowings and cash and cash equivalents are presented in the income
statement within 'finance income or costs.' All other foreign exchange gains
and losses are presented in the income statement within 'Other
(losses)/gains.'
Translation differences on non-monetary financial assets and liabilities such
as equities held at fair value through profit or loss are recognised in profit
or loss as part of the fair value gain or loss. Translation differences on
non-monetary financial assets measure at fair value are included in other
comprehensive income.
2.6. Government grants
The Group recognises an unconditional government grant in profit or loss as
other income when the grant becomes receivable.
2.7. Taxation
Tax is recognised in the Statement of Comprehensive Income, except to the
extent that it relates to items recognised in other comprehensive income or
directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity respectively.
R&D tax credits are recognised through the Consolidated Statement of
Comprehensive Loss upon receipt of funds.
2.8. Leases
The Group assesses whether a contract is or contains a lease at the inception
of the contract. The Group recognises a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements in which it is the
lessee, except for short-term leases (defined as leases with a lease term of
12 months or less) and leases of low value assets (such as tablets and
personal computers, small items of office furniture and telephones). For these
leases, the Group recognises the lease payments as an administrative expense
on a straight-line basis over the term of the lease unless another systematic
basis is more representative of the time pattern in which economic benefits
from the leased assets are consumed.
2.9. Intangible assets
Exploration and evaluation expenditures (E&E)
The Group applies the successful efforts method of accounting for oil and gas
assets, having regard to the requirements of IFRS 6 'Exploration for and
Evaluation of Mineral Resources'. Costs incurred prior to obtaining the legal
rights to explore an area are expensed immediately to the Statement of
Comprehensive Income.
All licence acquisitions, exploration and evaluation costs are capitalised, a
share of administration costs is capitalised insofar as they relate to
exploration, evaluation and development activities. These costs are written
off unless commercial reserves have been established or the determination
process has not been completed and there are no indications of impairment. If
a project is deemed commercial all of the attributable costs are transferred
into Property, Plant and Equipment. These costs are then depreciated from the
commencement of production on a unit of production basis.
2.10. Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that
an asset may be impaired. This includes consideration of the IFRS 6 impairment
indicators for any intangible exploration and evaluation assets capitalised as
intangible costs. If any such indication exists, or when annual impairment
testing for an asset is required, the Group makes an estimate of the asset's
recoverable amount.
An asset's recoverable amount is the higher of its fair value less costs to
sell and its value in use. This is determined for an individual asset, unless
the asset does not generate cash inflows that are largely independent of those
from other assets or Groups of assets, and the asset's value in use cannot be
estimated to be close to its fair value. In such cases, the asset is tested
for impairment as part of the cash-generating unit to which it belongs. When
the carrying amount of an asset or cash-generating unit exceeds its
recoverable amount, it is considered impaired and is written down to its
recoverable amount.
In assessing value in use, estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
Impairment losses relating to continuing operations are recognised in those
expense categories consistent with the function of the impaired asset, unless
the asset is carried at revalued amount (in which case the impairment loss is
treated as a revaluation decrease). An assessment is also made at each
reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If
such indication exists, the recoverable amount is estimated.
A previously recognised impairment loss is reversed only if there has been a
change in the estimates used to determine the asset's recoverable amount since
the last impairment loss was recognised. If that is the case, the carrying
amount of the asset is increased to its recoverable amount. That increased
amount cannot exceed the carrying amount that would have been determined, net
of depreciation, had no impairment loss been recognised for the asset in prior
years. Such reversal is recognised in the Statement of Comprehensive Income
unless the asset is carried at revalued amount, in which case the reversal is
treated as a revaluation increase. After such a reversal, the depreciation
charge is adjusted in future periods to allocate the asset's revised carrying
amount, less any residual value, on a systematic basis over its remaining
useful life.
2.11. Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation
and any accumulated impairment losses. Depreciation is provided on all
property, plant and equipment to write off the cost less estimated residual
value of each asset over its expected useful economic life on a straight-line
basis at the following annual rates:
· Property, plant and equipment - 3 years straight line.
All assets are subject to annual impairment reviews.
2.12. Financial Instruments
2.11.1 Initial recognition
A financial asset or financial liability is recognised in the statement of
financial position of the Group when it arises or when the Group becomes part
of the contractual terms of the financial instrument.
2.11.2 Classification
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of the following
conditions are met:
(1) the asset is held within a business model whose objective is to
collect contractual cash flows; and
(2) the contractual terms of the financial asset generating cash flows at
specified dates only pertain to capital and interest payments on the balance
of the initial capital.
Financial assets which are measured at amortised cost, are measured using the
Effective Interest Rate Method (EIR) and are subject to impairment. Gains and
losses are recognised in profit or loss when the asset is derecognised,
modified or impaired.
Financial liabilities at amortised cost
Financial liabilities measured at amortised cost using the effective interest
rate method include current borrowings and trade and other payables that are
short term in nature. Financial liabilities are derecognised if the Group's
obligations specified in the contract expire or are discharged or cancelled.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the effective
interest rate ("EIR"). The EIR amortisation is included as finance costs in
profit or loss. Trade payables other payables are non-interest bearing and are
stated at amortised cost using the effective interest method.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial
liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss. Financial liabilities are
classified as held for trading if they are incurred for the purpose of
repurchasing in the near term. Gains or losses on liabilities held for trading
are recognised in the statement of profit or loss and other comprehensive
income.
2.11.3. Derecognition
A financial asset is derecognised when:
(1) the rights to receive cash flows from the asset have expired, or
(2) the Group has transferred its rights to receive cash flows from the
asset or has undertaken the commitment to fully pay the cash flows received
without significant delay to a third party under an arrangement and has either
(a) transferred substantially all the risks and the assets of the asset or (b)
has neither transferred nor held substantially all the risks and estimates of
the asset but has transferred the control of the asset.
2.11.4 Impairment
The Group recognises a provision for impairment for expected credit losses
regarding all financial assets. Expected credit losses are based on the
balance between all the payable contractual cash flows and all discounted cash
flows that the Group expects to receive. Regarding trade receivables, the
Group applies the IFRS 9 simplified approach in order to calculate expected
credit losses. Therefore, at every reporting date, provision for losses
regarding a financial instrument is measured at an amount equal to the
expected credit losses over its lifetime without monitoring changes in credit
risk. To measure expected credit losses, trade receivables and contract assets
have been Grouped based on shared risk characteristics.
2.13. Trade and other receivables
Trade and other receivables are initially recognised at fair value when
related amounts are invoiced then carried at this amount less any allowances
for doubtful debts or provision made for impairment of these receivables.
2.14. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and are subject to
an insignificant risk of changes in value.
2.15. Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
2.16. Share premium
Share premium account represents the excess of the issue price over the par
value on shares issued. Incremental costs directly attributable to the issue
of new ordinary shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
2.17. Trade payables
These financial liabilities are all non-interest bearing and are initially
recognised at the fair value of the consideration payable.
2.18. Convertible loan notes and borrowings
Convertible loan notes classified as financial liabilities and borrowings are
recognised initially at fair value, net of transaction costs incurred. After
initial recognition, loans are measured at the amortised cost using the
effective interest rate method. Any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the income
statement over the period of the borrowings using the effective interest rate
method.
2.19 Finance income and finance costs
Finance income comprises interest income on bank funds. Interest income is
recognised as it accrues in profit or loss, using the effective interest
method. Finance costs comprise interest expense on borrowings. Borrowing costs
are recognised in profit or loss in the period in which they are incurred.
2.20 Earnings per share
Basic Earnings per share is calculated as profit attributable to equity
holders of the parent for the period, adjusted to exclude any costs of
servicing equity (other than dividends), divided by the weighted average
number of ordinary shares, adjusted for any bonus element.
2.21 Operating segments
The Chief Operating Decision Maker (CODM) is considered to be the Board of
Directors. They consider that the Group operates in a single segment, that of
oil and gas exploration, appraisal and development, in a single geographical
location, the North Sea of the United Kingdom. As a result, the financial
information of the single segment is the same as set out in the statement of
comprehensive income, statement of financial position, statement of Changes in
Equity and Statement of Cashflows.
2.22 Investment in Subsidiaries
The consolidated financial statements incorporate the financial statements of
the company and entities controlled by the Group (its subsidiaries). Control
is achieved where the Group has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are
included in total comprehensive income from the effective date of acquisition
and up to the effective date of disposal, as appropriate using accounting
policies consistent with those of the parent. All intra-group transactions,
balances, income and expenses are eliminated in full on consolidation.
Investments in subsidiaries are accounted for at cost less impairment in the
individual financial statements.
2.23 Research and development
Research and development expenditure is charged to the Consolidate Statement
of Comprehensive Income in the year in which the claim is submitted and
recovered as prior to this the recovery of the income is not deemed to be
probable.
3. Significant accounting estimates and judgements, estimates and
assumptions
The preparation of financial statements using accounting policies consistent
with IFRS requires the Directors to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities and the reported amounts of income and expenses. The
preparation of financial statements also requires the Directors to exercise
judgement in the process of applying the accounting policies. Changes in
estimates, assumptions and judgements can have a significant impact on the
financial statements.
Recoverable value of intangible assets
As at 30 June 2021, the Group held oil and gas exploration and evaluation
intangible assets of £1,814,615 (2020: £1,283,797). The carrying values of
intangible assets are assessed for indications of impairment, as set out in
IFRS 6, on an annual basis. As part of this impairment assessment, the
recoverable value of the intangible assets is required to be estimated.
When estimating the recoverable value of the intangibles Management consider
the proved, probably and potential resources per the latest CPR, likely
production costs and the forecasted oil prices.
As a result of the budget exploration costs, the licenses being valid and the
assessed recoverable value of the intangibles being in excess of the carrying
value, Management do not consider that any intangible assets are impaired as
at 30 June 2021.
These estimates and assumptions are subject to risk and uncertainty and
therefore a possibility that changes in circumstances will impact the
assessment of impairment indicators.
There was only one critical judgement identified, apart from those involving
estimations (which are dealt with separately above) that the Directors have
made in the process of applying the Group's accounting policies and that have
the most significant effect on the amounts recognised in the financial
statements.
Approach to account for the acquisition of Orcadian Energy (CNS) Ltd
The acquisition of Orcadian Energy (CNS) Ltd during the year via a share for
share agreement, as detailed in note 4, falls outside of the scope of IFRS 3
as Orcadian Energy Plc at the time of the transaction did not meet the
definition of a business. The acquisition constituted a group reorganisation
since the two entities were under common control at the date of acquisition.
As such, the Directors were required to apply judgement in deciding the most
appropriate way to account for this acquisition. The Directors decided to
adopt the predecessor value approach which requires the assets and liabilities
acquired being accounted for using their carrying values at the date of
acquisition and the difference between the cost of the acquisition and the net
assets of the legal subsidiary at the date of acquisition being taken to the
merger reserve.
Furthermore, the Consolidated Statement of Comprehensive Loss, Consolidated
Statement of Financial Position, Consolidate Statement of Changes in Equity
and the Consolidated Statement of Cashflows have been presented to show the
group as if it were in existence since the beginning of the comparative
period.
4. Group reorganisation under common control
The acquisition met the definition of a group reorganisation due to the
Company and the subsidiary being under common control at the date of
acquisition. As a result, and since Orcadian Energy Plc did not meet the
definition of a business per IFRS 3, the acquisition fell outside of the scope
of IFRS 3 and the predecessor value method was used to account for the
acquisition.
These consolidated financial statements represent a continuation of the
consolidated financial statements of Orcadian Energy (CNS) Ltd and include:
a. The assets and liabilities of Orcadian Energy (CNS) Ltd at their
pre-acquisition carrying amounts and the results for both periods; and
b. The assets and liabilities of the Company as at 11 May 2021 and
it's results from 11 May to 30 June 2021.
On 11 May 2021, the Company issued 52,201,601 shares entire issued share
capital of Orcadian Energy (CNS) Ltd.
The net assets of Orcadian Energy (CNS) Ltd at the date of acquisition was as
follows:
£
Property Plant & Equipment 1,357
Intangible Assets 1,719,292
Current Assets 447,425
Current Liabilities (284,745)
Non-Current Liabilities (1,869,975)
Net assets 13,354
The reserve that arose from the acquisition is made up as follows:
Year ended 30 June 2021
£
As at start of year -
Cost of the investment in Orcadian Energy (CNS) Ltd 52,202
Less: net assets of Orcadian Energy (CNS) Ltd at acquisition (13,354)
As at end of year 38,848
5. Administrative expenses
2021 2020
£ £
Office costs, rates and services 18,672 18,649
Wages and salaries 128,125 60,000
Consultants and advisers 56,113 11,335
Audit fees (note 18) 38,090 8,000
Pre-award licence costs - 17,821
Insurance 44,466 4,603
Other expenses 65,234 28,991
National Insurance 35,594 16,310
Foreign Exchange (127,603) 33,822
Depreciation 217 694
258,909 200,225
6. Auditor's Remuneration
During the year, the Company obtained the following services from the
Company's auditors and its associates:
2021 2020
£ £
Audit of the financial statements 25,000 8,000
Transaction services 5,000 -
30,000 8,000
7. Other Income
2021 2020
£ £
Consulting fees 3,000 -
Coronavirus support grant - 10,000
Other Income 3,000 10,000
The Company undertook a minor consulting role during the year for which it
billed £3,000.
As part of the Government's support for small businesses during the
Coronavirus crisis a non-repayable Coronavirus support grant of £10,000 was
provided to any business whose premises were eligible for Small Business Rate
Relief as of 11 March 2020, having a rateable value up to £15,000. The
Company qualified for this support and applied for and received the grant.
8. Staff numbers and costs
Group Group
2021 2020
Staff costs (including directors) £ £
Wages and salaries 128,125 138,133
Social security costs 35,594 16,309
163,719 154,442
No pension benefits are provided for any Directors (2020: £nil).
The average number of persons (including directors) employed by the Company
during the year was:
Group and Company 2021 2020
Management and Administration 5 6
5 6
9. Finance costs
2021 2020
£ £
Interest paid 44,349 40,293
44,349 40,293
10. Taxation
Analysis of charge for the year:
2021 2020
£ £
Current income tax charge - -
R&D tax credits 80,420 -
Deferred tax charge - -
Total taxation credit/(charge) 80,420 -
Taxation reconciliation
The below table reconciles the tax charge for the year to the theoretical
charge based on the result for the year and the corporation tax rate.
2021 2020
£
£
Loss before income tax (296,338) (230,519)
Tax at the applicable rate of 19% (2020: 19%) (56,304) (43,799)
Effects of:
R&D tax credits 80,420 -
Expenses not deducted for tax purposes - 1,661
Unutilised tax losses 56,304 42,138
Total income tax credit / (expense) 80,420 -
Due to the nature of the expenditure incurred by the Company on the Offshore
Steam Flood during the periods ending 30 June 2019 and 30 June 2020 claims
were made under the SME R&D tax rebate provisions which resulted in
refunds totalling £80,420.
As at 30 June 2021, the Group had unused tax losses of £139,767 (2020:
£83,463) for which no deferred tax asset has been recognised. This is due to
uncertainty over the availability of future taxable profits to offset these
losses against.
11. Earnings per share
The calculation of the basic and diluted earnings per share is calculated by
dividing the loss for the year for continuing operations for the Company by
the weighted average number of ordinary shares in issue during the year.
There is no difference between the basic and diluted earnings per share as
there were no securities on issue as at 30 June 2021 that would have a
dilutive effect on earnings per share.
2021 2020
£
£
Loss for the purposes of basic earnings per share being net loss attributable (296,338) (230,519)
to the owners
Weighted average number of Ordinary Shares 22,167,804 17,362,614
Loss per share (1.34p) (1.32p)
The weighted average number of shares is adjusted for the impact of the
acquisition as follows:
- Prior to the acquisition, the number of shares is based on Orcadian Energy
(CNS) Ltd, adjusted using the share exchange ratio arising on the acquisition;
and
- From the date of the acquisition, the number of shares is based on the
Company.
12. Property, plant and equipment
IT hardware & software Office equipment Total
£ £ £
Cost
As at 30 June 2019 2,842 202 3,044
Additions - - -
As at 30 June 2020 2,842 202 3,044
Additions 1,952 - 1,952
As at 30 June 2021 4,794 202 4,996
IT hardware & software Office equipment Total
£ £ £
Depreciation
As at 30 June 2019 2,092 151 2,243
Charged in the year 643 51 694
As at 30 June 2020 2,735 202 2,937
Charged in the year 217 - 217
As at 30 June 2021 2,952 202 3,154
Net book value as at 30 June 2021 1,842 - 1,842
Net book value as at 30 June 2020 107 - 107
The depreciation expense is recognised in administrative expenses as set out
in note 6.
13. Intangible assets
Oil and gas exploration assets
£
Cost
As at 30 June 2019 532,998
Additions 750,799
As at 30 June 2020 1,283,797
Additions 530,818
As at 30 June 2021 1,814,615
No general office expenses incurred during the year were capitalised (2020:
£nil).
The carrying value of the prospecting and exploration rights is supported by
the estimated resource and current market values as contained in the Competent
Person's Report date 1 April 2021 which was prepared by Sproule B.V.
14. Trade and other receivables
Group 2021 2020
£ £
VAT receivable 50,925 5,914
Prepayments relating to the issue of equity 13,500 -
Prepayments other 24,123 -
Amounts due from related parties - 72,224
88,548 78,138
Amounts due from related parties were unsecured, interest free and had no
fixed repayment date.
The fair value of other receivables is the same as their carrying values as
stated above.
The maximum exposure to credit risk at the reporting date is the carrying
value of each class of receivable mentioned above. The Company does not hold
any collateral as security.
15. Cash and cash equivalents
Group 2021 2020
£ £
Cash at bank and in hand 179,556 31,318
179,556 31,318
There is no material difference between the fair value of cash and cash
equivalents and their book value.
16. Investment in subsidiary
Name Address of the registered office Nature of business Proportion of ordinary shares held directly by parent (%)
Orcadian Energy (CNS) Ltd 6(th) floor, 60 Gracechurch Street, London, EC3V 0HR Managing oil and gas assets 100
The acquisition of Orcadian Energy (CNS) Ltd took place on 11 May 2021. Refer
to note 4 for further details.
17. Borrowings
2021
Convertible loan note 2020 Convertible loan note 2021
£ STASCO Loan £
£ Total
£
As at 30 June 2020 100,000 853,152 - 953,152
Convertible loan note issues 380,000 - 720,000 1,100,000
Convertible loan note repayments (100,000) - - (100,000)
Interest accrued - 39,045 - 39,045
Effect of foreign exchange - (129,511) - (129,511)
As at 30 June 2021 380,000 762,686 720,000 1,862,686
Between July and December 2020 the Company issued £380,000 of convertible
loan notes. In January 2021 £100,000 of convertible loan notes were repaid in
cash and a further CLN for £100,000 was issued to a further lender. The term
for these CLN's was three years with an interest rate of 12% per annum if they
were redeemed. If conversion to Ordinary Shares no interest is applied.
In March 2021 the Company issued £705,000 of convertible loan notes, and in
June 2021 the Company issued £15,000 of convertible loan notes. These CLN's
had a term of one year and a zero interest rate.
Subsequent to reporting date on 15 July 2021, all CLNs were converted in to
ordinary shares at a price of 28 pence each, which was a 30% discount to the
fundraise price. In total 3,928,572 ordinary shares were issued in full
discharge of the CLNs. No interest was paid on the CLNs as they were converted
in to ordinary shares.
2020
Convertible loan note 2018 Convertible loan note 2020
£ STASCO Loan £ Total
£ £
As at 30 June 2019 70,000 - - 70,000
Convertible loan note issues - - 100,000 100,000
Convertible loan notes redeemed for shares
(70,000) - - (70,000)
Loan drawdowns - 814,260 814,260
Interest accrued - 38,892 - 38,892
As at 30 June 2020 - 853,152 100,000 953,152
Convertible loan notes were exercised in the year leading to shares being
issued for a total value of £71,400. No cash was received in consideration
for these shares.
The STASCO loan was drawn down on 23 August 2019. The loan is repayable by 23
August 2023 and is subject to an interest rate at LIBOR plus 5% with interest
accruing on a compounding basis.
On 20 March 2020 and 28 May 2020 the Company issued £50,000 of convertible
loan notes on each of those dates.
18. Trade and other payables - due within one year
2021 2020
£ £
Trade payables 35,443 8,003
Accruals 276,133 242,593
Other creditor 17,025 -
328,601 250,596
The carrying values of trade and other payables are considered to be a
reasonable approximation of the fair value and are considered by the Directors
as payable within one year.
19. Ordinary share capital and share premium
Group
Issued Number of shares Ordinary share capital Share
£ premium
£
As at 30 June 2019 17,345,610 17,346 492,215
Issue of shares 54,924 55 71,346
As at 30 June 2020 17,400,534 17,401 563,561
Transfer between reserves - 34,801 (34,801)
Issued capital of Company at acquisition 1 - -
Issue of shares upon acquisition of subsidiary 52,201,601 52,202 -
Transfer of Ltd paid up capital to reverse acquisition reserve
(17,400,534) (52,202) (528,760)
As at 30 June 2021 52,201,601 52,202 -
The issued capital of the Group for the period 1 July 2020 to 11 May 2021 is
that of Orcadian Energy (CNS) Ltd. Upon completion of the acquisition the
share capital of Orcadian Energy (CNS) Ltd was transferred to the Acquisition
reserve (Refer to note 4) and the share capital of Orcadian Energy PLC was
brought to account.
The ordinary shares confer the right to vote at general meetings of the
Company, to a repayment of capital in the event of liquidation or winding up
and certain other rights as set out in the Company's articles of association.
Company
Issued Number of shares Share capital Share
£ premium
£
Balance as at Incorporation 29 March 2021 1 - -
Issue of shares upon acquisition of subsidiary 52,201,601 52,202 -
As at 30 June 2021 52,202,602 52,202 -
On 29 March 2021, the Company issued one new ordinary shares of £0.001 upon
incorporation.
On 11 May 2021, the Company issued 52,202,601 new ordinary shares of £0.001
each at nominal value for the acquisition of 100% of the issued capital of
Orcadian Energy (CNS) Ltd pursuant to a share swap arrangement (Refer to Note
4).
20. Related parties
21.1 Transactions with related parties
The Company had the following related party transactions:
(1) The Company makes use of an office at 70 Claremont Road which is
currently provided to the Company by Mrs Julia Cane-Honeysett and Mr Stephen
Brown at a rental of £1,000 per calendar month. The company pays for the
services and business rates associated with the property.
21.2 Loans to/from related parties
During the year, several Directors and shareholders provided funds to the
Company as a working capital injection.
The following balances are outstanding at the end of the reporting period in
relation to these transactions:
Amount due (to)/from related parties
£
As at 30 June 2020 72,224
Funds advanced to the Company (135,000)
Loan amounts settlement by the Related Party 72,224
As at 30 June 2021 (135,000)
As at 30 June 2021 the Company had issued convertible loan notes (CLNs") from
Company Directors Alan Hume totalling £135,000. These CLNs were converted in
to 482,142 ordinary shares post year end on 15 July 2021 at 28 pence per
share.
21.3. Key management personnel
Directors of the Company are considered to be key management personnel. The
remuneration of the Directors has been set out in note 8.
21. Ultimate controlling party
The Directors consider Stephen Brown and Julia Cane-Honeysett to be the
ultimate controlling parties given their combined holding of 55.87% of the
issued capital of the Company.
22. Financial instruments
The Company holds the following financial instruments:
Financial assets
2021 2020
Financial assets at amortised cost: £ £
Trade receivables
Other financial assets at amortised cost - 72,224
Cash and cash equivalents 179,556 31,318
179,556 103,542
The maximum exposure to credit risk at the end of the reporting period is the
carrying amount of each class of financial assets mentioned above.
Financial liabilities
2021 2020
Financial liabilities at amortised cost: £ £
Trade payables 35,443 8,003
Borrowings 762,686 853,152
798,129 861,155
2021 2020
Financial liabilities at fair value through profit and loss
£ £
Borrowings 1,100,000 100,000
1,100,000 100,000
23. Financial risk management
23.1. Financial risk factors
The Company's activities expose it to a variety of financial risks: market
risk, credit risk and liquidity risk. The Company's overall risk management
programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Company's financial performance.
Risk management is carried out by the executive management team.
a) Market risk
The Company is exposed to market risk, primarily relating to interest rate,
foreign exchange and commodity prices. The Company does not hedge against
market risks as the exposure is not deemed sufficient to enter into forward
contracts. The Company has not sensitised the figures for fluctuations in
interest rates, foreign exchange or commodity prices as the Directors are of
the opinion that these fluctuations would not have a significant impact on the
Financial Statements at the present time. The Directors will continue to
assess the effect of movements in market risks on the Company's financial
operations and initiate suitable risk management measures where necessary.
b) Credit risk
Credit risk arises from cash and cash equivalents as well as outstanding
receivables. To manage this risk, the Company periodically assesses the
financial reliability of customers and counterparties.
The amount of exposure to any individual counter party is subject to a limit,
which is assessed by the Board.
The Company considers the credit ratings of banks in which it holds funds in
order to reduce exposure to credit risk. The Company will only keep its
holdings of cash with institutions which have a minimum credit rating of 'A'.
c) Liquidity risk
The Company's continued future operations depend on the ability to raise
sufficient working capital through the issue of equity share capital or debt.
The Directors are reasonably confident that adequate funding will be
forthcoming with which to finance operations. Controls over expenditure are
carefully managed.
The following table summarizes the Company's significant remaining contractual
maturities for financial liabilities at 30 June 2021, and 30 June 2020.
Contractual maturity analysis as at 30 June 2021
Less than 12
Months 1 - 5 Total
£ Year £
£
Accounts payable 35,443 - 35,443
Accrued liabilities 276,133 - 293,158
Other creditor 17,025 - 17,025
STASCO Loan - 762,686 762,686
328,601 762,686 1,091,287
Contractual maturity analysis as at 30 June 2020
1 - 5 Longer than
Year 5 years Total
£ £ £
Accounts payable 8,003 - 8,003
Accrued liabilities 242,593 - 242,593
STASCO Loan - 853,152 853,152
250,596 853,152 1,103,748
23.2. Capital risk management
The Company's objectives when managing capital are to safeguard the Company's
ability to continue as a going concern, in order to enable the Company to
continue its exploration and development of oil and gas resources. In order to
maintain or adjust the capital structure, the Company may adjust the issue of
shares or sell assets to reduce debts.
The Company defines capital based on the total equity and reserves of the
Company. The Company monitors its level of cash resources available against
future planned operational activities and may issue new shares in order to
raise further funds from time to time.
24. Commitments
The Company has entered into the following non-cancellable commitments in
respect of exploration licences:
2021 2020
£ £
Due within one year 197,771 94,348
Later than one year but not later than five years 112,729 298,951
Total commitments 310,500 393,299
25. Events after the reporting period
The Company listed on the Alternative Investment Market (AIM) on the 15(th)
July 2021. At the same time the Company placed 7,500,000 New Ordinary Shares
to raise gross proceeds of £3,000,000.
On the 15(th) July 2021 the Company issued 125,000 new shares of 40p each to a
supplier in part payment of an outstanding bill.
On 15(th) July all Convertible Loan Notes ("CLNs") were converted in to
ordinary shares at a price of 28 pence each. In total 3,928,572 ordinary
shares were issued in full discharge of the CLNs.
On the 15(th) July the Company filed an addendum to the Pilot field Concept
Select Report ("CSR") with the Oil and Gas Authority ("OGA"). This followed
the execution of an agreed work programme which included polymer core flood
tests and work to reduce the carbon dioxide emissions from the project. The
selected concept has now been revised to include a significant improvement in
process heat management and power generation efficiency.
On the 29(th) November 2021 the Company received a "Letter of no objection"
from the Oil and Gas Authority ("OGA") in respect of the development concept
for the Pilot field. This letter signals the finalisation of the "Assessment
phase" and the entry into the "Authorisation phase" of development planning
for the Pilot Field.
On 6(th) December 2021 the Company was awarded £466,667 by the OGA to
evaluate a new concept for the electrification of key producing oil and gas
fields initially focussing on Central Graben area fields owned and operated by
others. Orcadian is working with Crondall Energy, Enertechnos, Petrofac, North
Sea Midstream Partners ("NSMP") and Wärtsilä; together the working group
will undertake an evaluation of this concept and deliver a report to the OGA
and Central Graben Operators by the end of March 2022. The evaluation will
include a commercial proposal for the delivery of electrical power to Central
Graben and Central North Sea Operators interested in rapidly implementing
electrification of their platforms.
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