TIDMADV
RNS Number : 6191M
Advance Energy PLC
23 September 2021
23 September 2021
Advance Energy PLC
("Advance Energy" or the "Company")
Final Results for the Year Ended 30 April 2021
Advance Energy announces its audited results for the financial
year ended 30 April 2021.
Copies of the Annual Report and Accounts will be posted to
shareholders and made available on the Company's website at:
www.advanceplc.com .
Enquiries:
Advance Energy plc +44 (0)1624 681
Leslie Peterkin (CEO) / Stephen West (CFO) 250
Strand Hanson Limited (Financial and Nominated
Adviser) +44 (0)20 7409
Rory Murphy / James Harris/ James Bellman 3494
Buchanan (Public Relations) +44 (0)20 7466
Ben Romney / Jon Krinks 5000
Tennyson Securities Limited (Joint Broker) +44 (0)20 7186
Peter Krens / Ed Haig-Thomas 9030
Optiva Securities Limited (Joint Broker) +44 (0)20 3411
Christian Dennis 1881
CHAIRMAN'S REPORT
I'm pleased to provide the following statement to support the
final results for the year ended 30 April 2021. This was the first
full year of Advance Energy, having established the rebranded
company in February 2020 and set out our strategic objectives in
March 2020. Those objectives focused on growing the Company through
strategic partnerships on compelling projects where we could
identify and unlock material upside with a view to establishing
near-term cash flow and significant value accretion. I'm pleased to
report that the Company made big strides towards our long-term
objectives in this first year.
The reverse takeover transaction that saw Advance Energy farm
into the Buffalo Field in East Timor alongside Carnarvon Petroleum
is the perfect embodiment of our strategy given the proven
resources and the highly material cash flow that we believe can be
unlocked from that asset. It also saw us establishing a 50/50 joint
venture alongside an Operator with a strong track record in the
region and a shared vision for the potential that remains in the
Buffalo Field.
We were delighted to complete that transaction in April of this
year, having completed an equity placing of GBP21.8m with new and
existing shareholders. The fact that we were able to raise that
equity, at a time when the market conditions were particularly
challenging, reflects the differentiated nature of our investment
proposition and the quality of the opportunity that we presented to
our shareholders and the market.
The focus since completion has been to work alongside Carnarvon
Petroleum in order to prepare for the much anticipated Buffalo-10
well, which is designed to test the significant attic oil
accumulation remaining after the original development, and to
enable us to convert the 2C resources of 34.3 MMstb into 2P
reserves following re-certification. In that regard we were
delighted to recently announce the signing of a rig contract with
Valaris that will see the joint venture spudding the Buffalo-10
well in late October or early November 2021. In the event that this
well is successful and validates the current technical evaluation,
it will be truly transformational for the Company and deliver
significant cash flow over a short time frame.
At the time of announcing the farm-in, the oil price was
US$50/bbl Brent and the independently verified economics of the
project were very compelling indeed. Pleasingly, the oil price has
strengthened and stabilised through the calendar year, and at the
current pricing of circa US$70/bbl the project economics are even
more compelling, resulting in the potential for exceptional cash
flow generation and rates of return in a success case. The joint
venture has also undertaken a lot of technical assessment with
regards to the various development concepts that would be required
to bring the Buffalo field on stream, including the possibility of
a phased approach to deliver even earlier production and associated
cash flow.
The Advance Energy team are, of course, pragmatic about the
risks associated with the well. With multiple decades of combined
industry experience between us, we are cognisant of the operational
and geological hurdles in front of us. That said, the Buffalo
project was selected on the strength of its risk versus reward
ratio - with low geological risk relative to the upside achievable
in the success case.
As well as progressing the Buffalo project to a drill ready
status, the team has also been actively seeking to diversify the
portfolio in line with the strategic vision. To support this, we
have relinquished the legacy assets that we inherited in the UK,
whilst also focusing on business development of opportunities that
meet our investment criteria. We are actively screening numerous
opportunities and hope to bring some of these into fruition in the
current fiscal year. The market drivers for our business
development strategy remain the same, as IOCs and larger
independents continue to divest of assets to conform with their
energy transition strategies. Smaller industry players are also
more focused on innovative and technical solutions to unlock hidden
value from existing resources, and the Advance Energy team brings
specific capabilities in this regard. As such, we continue to
position the Company as a highly competent industry counterparty
that can support the objectives of our partners and look forward to
providing more information on our business development activities
as our ongoing discussions progress.
From a corporate standpoint our focus has been on cost
discipline and developing an appropriate ESG agenda. The first
point is a core strategic objective for the Company, recognising
the importance of cash preservation and financial efficiency. The
second point is now a strategic priority for all companies,
irrespective of sector, but is particularly important for energy
companies given the increasing focus on climate change. Advance
Energy seeks to balance its appreciation of climate change and
commitment to environmental stewardship with the (still) growing
demand for hydrocarbons and the positive socio-economic impact they
play in developing economies such as Timor-Leste. It is for this
reason that we prioritise ESG in our business development process,
to ensure we are partnering with quality operators who have a firm
commitment to operational excellence. We strive to consider all ESG
factors when screening new opportunities to ensure they meet with
our required standards and those of our wider stakeholders.
In summary, it has been a very eventful year for Advance Energy,
and we are pleased to have delivered on all the objectives we set
ourselves when we embarked on this journey in February 2020. The
fact that we have managed to do so against the backdrop of a global
pandemic and wildly volatile commodity environment is particularly
satisfying and speaks volumes of the team we have assembled. We
have built a good platform from which to grow and look forward to
the future with much excitement and anticipation. Finally, I'd like
to thank all our shareholders for their support and faith in the
management team and our strategy. We look forward to providing
regular updates throughout the Buffalo-10 well and hope to be
issuing good news around the end of the calendar year.
Mark Rollins
Non-Executive Chairman
21 September 2021
DIRECTORS' REPORT
The Directors present their report and the audited financial
statements for the year ended 30 April 2021.
Principal activities, business review and future
developments
The principal activity of Advance Energy plc during the year was
oil appraisal and development in the Democratic Republic of
Timor-Leste. Further details on the activities of the Group are
provided in the Review of Operations.
Impact of COVID-19
The global COVID-19 pandemic required us, like many of our
peers, to alter our operational plans and implement strict safety
protocols to protect our staff and our local community. Our
operational activity was not affected. Ultimately the Company was
able continue with the day to day activities with minimal affect.
Whilst there are still certain restrictions imposed on our
activities by the crisis, we are confident of our ability to adapt
to this dynamic situation and continue our day to day
activities.
Results and dividends
Loss on ordinary activities after taxation amounted to
US$2,854,000 (30 April 2020: US$1,231,000). The Directors do not
recommend the payment of a dividend (30 April 2020: US$Nil).
Review of Operations and Business Activity
On 1 June 2020 the Company appointed Mr Stephen West as Chief
Financial Officer and Executive Director of the Company Board and
Mr Graham Smith resigned as Non-Executive Director. In addition, Mr
Ross Warner stepped down from his Executive Director position and
assumed the role of Non-Executive Director on the same date.
On 14 September 2020 the Company announced that the Company's
wholly owned subsidiary Resolute Oil & Gas (UK) Limited's 8%
non-operated working interest in the P1918 Licence would expire,
together with the other joint venture participant's interests, on
31 January 2021. This followed the completion of an earlier
appraisal drilling programme by the Operator of the licence,
Corallian Energy Limited, and a subsequent evaluation of the P1918
Licence which resulted in a recommendation to the joint venture
that the licence not be renewed when the second term expires on 31
January 2021 based on the conclusion that the Colter South
discovery could not be commercially developed.
On 7 October 2020 the Company announced that it had entered into
a Deed of Termination and Release with PT Petroenim Betun-Selo and
PT Celebes Artha Ventura in relation to the Operating Services
& Option Agreement for production on the Betun-Selo KSO field
in Sumatra, Indonesia.
On 12 November 2020 the Company announced that it had raised
GBP300,000 through the issue of 136,363,636 new ordinary shares at
a price of 0.22 pence per share. On the same date the Company
agreed to issue 21,416,515 Ordinary Shares at 0.22 pence per share
to various creditors to settle outstanding amounts.
On 17 December 2020 the Company announced that it had entered
into a subscription agreement with Timor-Leste Petroleum Pty Ltd, a
subsidiary of Carnarvon Petroleum Limited, pursuant to which the
Company's wholly owned subsidiary, Advance Energy TL Limited
("AETL"), would, subject to certain conditions, subscribe for
equity such that it will hold up to 50% of the total equity
interest in Carnarvon Petroleum Timor Unipessoal Lda for
consideration of up to US$20,000,000.
On 16 April 2021 the Company undertook a capital consolidation
whereby every ten existing ordinary shares were consolidated into
one new ordinary share.
On 19 April 2021 the Company announced that it had raised
GBP21,842,600 through the issue of 840,100,000 ordinary shares at a
price of 2.6 pence per share. The net proceeds of the placing were
utilised to fund the subscription by AETL for equity in Carnarvon
Petroleum Timor Unipessoal Lda. In addition, on the same date Mr
Stephen Whyte and Mr Larry Bottomley were appointed to the Board as
independent Non-Executive Directors.
Key Performance Indicators ("KPIs")
The Board monitors the activities and performance of the Group
on a regular basis, including as part of the regular Board updates
and Board meetings. During the year the principal focus of the
Group was to divest legacy assets in the Republic of Indonesia and
to acquire upstream E&P assets in line with the new company
strategy. The KPIs being monitored by the Group as at the date of
this report were as follows:
- Cash management;
- Business development; and
- Project development.
Risks and uncertainties
The principal risks and uncertainties inherent in an Advance
Energy's business strategy are summarised below:
- Volatility of commodity prices which may impact investment
decisions taken. The Group monitors price forecasts in Board
meetings and reacts accordingly.
- Foreign currency volatility impacts the potential cost base of
projects and the Group monitors and assesses, as far as
practicable, the impact on budgets and cash flows.
- Operational risks relate to dealing with stakeholders on any
potential project. The ability of partners to finance and support
projects, customers or governments to approve projects can impact
budgets and cash flows and the Group maintains and monitors its
stakeholder relationships.
- Availability of finance and funding is key to ensuring that
there are funds available for working capital and to allow the
Group to make strategic investment decisions. The Board is
responsible for monitoring the cash flows and cash forecasts of the
business.
Financial Risk Management
The Group's operations expose it to a variety of financial risks
that include the effect of changes in debt market prices, movements
in foreign currency exchange rates, credit risk and liquidity risk.
The Group has a risk management programme in place that seeks to
limit the adverse effects on the financial performance of the Group
by monitoring levels of debt finance and the related finance costs.
The Group does not use derivative financial instruments to manage
interest rate or foreign exchange costs and, as such, no hedge
accounting is applied. Details of the Group's financial risk
management policies are set out in Note 16 to the Financial
Statements.
Internal Controls
The Board recognises the importance of both financial and
non-financial controls and has reviewed the Group's control
environment and any related shortfalls during the year. Since the
Group was established, the Directors are satisfied that, given the
current size and activities of the Group, adequate internal
controls have been implemented.
Going Concern
The financial statements have been prepared on a going concern
basis. The Group has not yet earned revenues from its upstream
E&P assets. The operations of the Group are currently financed
from funds raised from shareholders. In common with many
pre-production entities, the Group may need to raise further funds
in order to progress the project into the production of
revenues.
The Group has cash and cash equivalents of US$8,103,000 at 30
April 2021 and the Directors are of the view this is sufficient to
fund the Group's committed expenditure over the next 12 months from
the date of approval of these financial statements, without raising
funds in this period.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Thus, they continue to adopt the going concern
basis of accounting in preparing the financial statements.
Directors
The following Directors held office during the year and to the
date of this report:
Mark Rollins (appointed 4 February 2020)
Leslie Peterkin (appointed 4 February 2020)
Ross Warner
Graham Smith (resigned 1 June 2020)
Stephen West (appointed 1 June 2020)
Stephen Whyte (appointed 19 April 2021)
Larry Bottomley (appointed 19 April 2021)
The Board considers the directors to be independent other than
in respect of those directors with an interest as disclosed
below.
Directors' interests
The beneficial and non-beneficial interests in the Company's
shares of the Directors (who remain in office at the respective
reporting dates) and their families, as at the date of approval of
the financial statements are as follows:
2021 2020 2021 2020
Ordinary shares Ordinary shares Options (1) Options
Mark Rollins 29,403,153 139,833,333 24,840,000 50,000,000
Leslie Peterkin 26,611,153 138,833,333 29,450,000 50,000,000
Ross Warner 205,287 2,052,875 5,180,000 12,500,000
Stephen West 4,943,590 - 22,340,000 -
Stephen Whyte 391,266 - 1,670,000 -
Larry Bottomley - - 1,670,000 -
Graham Smith 36,000 360,000 - -
(1) These relate to share options which were allocated to the
Directors of the Company on 4 February 2020, 8 July 2020 and 19
April 2021. Various conditions attach to each option as to vesting
periods and each option is subject to the option holder meeting
service commitments during the vesting period. There are no other
performance conditions attached to the options.
Details of the Directors' remuneration are given in note 9 to
the Financial Statements.
Provision of information to auditors
So far as each of the Directors is aware at the time this report
is approved:
-- there is no relevant audit information of which the Group's auditors are unaware; and
-- the Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information
and to establish that the auditors are aware of that
information.
Auditor
Lubbock Fine LLP, who, being eligible, have expressed their
willingness to continue in office in accordance with the Isle of
Man Companies Act 2006.
This report was approved by the Board and signed on its behalf
by:
Mark Rollins
21 September 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the
For the year year ended
ended 30 April
30 April 2021 2020
Note US$'000 US$'000
----------------------------------- ----- ---------------- ------------
Investment loss:
Unrealised loss on investments 12 - (604)
Impairment of exploration
asset 13 - (267)
----------------------------------- ----- ---------------- ------------
- (871)
----------------------------------- ----- ---------------- ------------
Other income - -
Asset evaluation expenses 6 (47) (23)
Other administrative expenses 6 (2,539) (293)
----------------------------------- ----- ---------------- ------------
Net loss before finance costs
and taxation (2,586) (1,187)
Finance costs (256) (44)
Share of net losses of associate
accounted for using the equity (12) -
method
----------------------------------- ----- ---------------- ------------
Loss before tax (2,854) (1,231)
Tax expense 10 - -
----------------------------------- ----- ---------------- ------------
Loss after tax attributable
to owners of the parent (2,854) (1,231)
----------------------------------- ----- ---------------- ------------
Total comprehensive loss for
the year attributable to owners
of the parent (2,854) (1,231)
----------------------------------- ----- ---------------- ------------
Basic and diluted loss per
share attributable to owners
of the parent during the year
(expressed in US cents per
share) 7 (1.51) (0.11)
----------------------------------- ----- ---------------- ------------
The Statement of Comprehensive Income has been prepared on the
basis that all operations are continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
30 April 30 April
2021 2020
Note US$'000 US$'000
--------------------------------- ----- ---------- ----------
Assets
Non-current assets
Investments accounted for using
the equity method 11 20,262 -
Total non-current assets 20,262 -
--------------------------------- ----- ---------- ----------
Current assets
Other receivables 203 15
Cash and cash equivalents 8,103 562
--------------------------------- ----- ---------- ----------
Total current assets 8,306 577
--------------------------------- ----- ---------- ----------
Total assets 28,568 577
--------------------------------- ----- ---------- ----------
Liabilities
Current liabilities
Trade and other payables 15 (1,138) (323)
Total liabilities (1,138) (323)
--------------------------------- ----- ---------- ----------
Net assets 27,430 254
--------------------------------- ----- ---------- ----------
Equity attributable to the owners
of the parent
Share premium 47,656 18,665
Share reserve 1,039 -
Accumulated deficit (21,265) (18,411)
--------------------------------- ----- ---------- ----------
Total shareholder funds 27,430 254
--------------------------------- ----- ---------- ----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Accumulated Total
premium reserve deficit equity
US$'000 US$'000 US$'000 US$'000
------------------------------- ---------- ---------- ------------ --------
Balance at 1 May 2019 16,878 - (17,131) (253)
Loss for the year to 30 April
2020 - - (1,231) (1,231)
Total comprehensive income - - (1,231) (1,231)
Transactions with equity
shareholders of the parent
Proceeds from shares issued 1,833 - - 1,833
Cost of share issue (95) - - (95)
Share based payments 49 - (49) -
Balance at 30 April 2020 18,665 - (18,411) 254
Loss for the year to 30 April
2021 - - (2,854) (2,854)
Total comprehensive income - - (2,854) (2,854)
Transactions with equity
shareholders of the parent
Proceeds from shares issued 31,589 - - 31,589
Cost of share issues (2,598) - - (2,598)
Share based payments - 1,039 1,039
Balance at 30 April 2021 47,656 1,039 (21,265) 27,430
------------------------------- ---------- ---------- ------------ --------
The accompanying notes form an integral part of these Financial
Statements.
CONSOLIDATED CASH FLOW STATEMENT
For the For the
year ended year ended
30 April 30 April
2021 2020
US$'000 US$'000
------------------------------------------------ ------------ ------------
Cash flows from operating activities:
Net loss for the year (2,854) (1,231)
Adjustments for :
Share of net loss of associate 12 -
Share based payments 1,039 -
Impairment of intangible asset - 267
Change in working capital items:
(Increase)/Decrease in other receivables (188) 59
Increase/(Decrease) in trade and
other payables 815 (529)
------------------------------------------------ ------------ ------------
Net cash used in operations (1,176) (1,434)
------------------------------------------------ ------------ ------------
Cash flows from investing activities
Investment in associate (20,274) -
Other investments - -
------------------------------------------------ ------------ ------------
Net cash used in investing activities (20,274) -
------------------------------------------------ ------------ ------------
Cash flows from financing activities
Proceeds from issue of share capital 31,589 1,833
Share issue costs (2,598) (95)
Net cash generated by financing activities 28,991 1,738
------------------------------------------------ ------------ ------------
Net increase in cash and cash equivalents 7,541 304
Cash and cash equivalents, at beginning
of the year 562 258
Effect of foreign exchange rate changes - -
------------ ------------
Cash and cash equivalents, at end
of the year 8,103 562
------------------------------------------------ ------------ ------------
Major Non-Cash Transactions
Details of major non-cash transactions are described in note
12.
The accompanying notes form an integral part of these Financial
Statements.
NOTES TO FINANCIAL STATEMENTS
1 Reporting Entity
Advance Energy plc (the "Company") is domiciled in the Isle of
Man. The Company's registered office is at 55 Athol Street,
Douglas, Isle of Man IM1 1LA. These consolidated financial
statements comprise the Company and its subsidiaries (together
referred to as the "Group"). The Group is primarily involved in the
E&P business, focussed on the Democratic Republic of
Timor-Leste. The Company is listed on AIM of the London Stock
Exchange.
2 Basis of accounting
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union ("IFRS"). They were authorised for
issue by the Company's board of directors on 21 September 2021.
Details of the Group's accounting policies are included
below:
Standards and amendments effective for periods beginning 1
January 2020 or later
A number of other new standards are effective from 1 January
2020 but they do not have a material effect on the Company's
financial statements:
-- Amendments to IFRS 3: Definition of a business
-- Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform
-- Amendments to IAS 1 and IAS 8 Definition of Material
-- Conceptual Framework for Financial Reporting issued on 29 March 2018
-- Amendments to IFRS 16 COVID - 19 Related Rent Concessions
A number of new standards are effective for annual periods
beginning after 1 January 2020 and earlier application is
permitted; however, the Group has not early adopted the new or
amended standards in preparing these consolidated financial
statements.
The following amended standards and interpretations are not
expected to have a significant impact on the Group's consolidated
financial statements:
-- IFRS 17 Insurance Contracts (effective on or after 1 January 2023)
-- Amendments to IAS 1: Classification of Liabilities as Current
or Non-current (effective on or after 1 January 2023) Reference to
the Conceptual Framework - Amendments to IFRS 3 (effective on or
after 1 January 2022)
-- Property, Plant and Equipment: Proceeds before Intended Use -
Amendments to IAS 16 (effective on or after 1 January 2022)
-- Onerous Contracts - Costs of Fulfilling a Contract -
Amendments to IAS 37 (effective on or after 1 January 2022)
-- IFRS 1 First-time Adoption of International Financial
Reporting Standards - Subsidiary as a first-time adopted (effective
on or after 1 January 2022)
-- IFRS 9 Financial Instruments - Fees in the '10 per cent' test
for derecognition of financial liabilities (effective on or after 1
January 2022)
-- IAS 41 Agriculture - Taxation in fair value measurements
(effective on or after 1 January 2022)
A. Basis of consolidation
i. Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
'controls' an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date on which control
commences until the date on which control ceases.
ii. Non-controlling interests ("NCI")
NCI are measured initially at their proportionate share of the
acquiree's identifiable net assets at the date of acquisition.
Changes in the Group's interest in a subsidiary that do not result
in a loss of control are accounted for as equity transactions.
iii. Interests in equity-accounted investees
The Group's interests in equity-accounted investees comprise
interests in associates.
Associates are those entities in which the Group has significant
influence, but not control or joint control, over the financial and
operating policies.
Interests in associates are accounted for using the equity
method. They are initially recognised at cost, which includes
transaction costs. Subsequent to initial recognition, the
consolidated financial statements include the Group's share of the
profit or loss and other comprehensive income ("OCI") of equity
accounted investees, until the date on which significant influence
ceases.
iv. Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated.
Unrealised gains arising from transactions with equity accounted
investees are eliminated against the investment to the extent of
the Group's interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
B. Foreign currency
i. Foreign currency transactions
Transactions in foreign currencies are translated into the
respective functional currencies of Group companies at the exchange
rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the
exchange rate at the reporting date. Non-monetary assets and
liabilities that are measured at fair value in a foreign currency
are translated into the functional currency at the exchange rate
when the fair value was determined. Non-monetary items that are
measured based on historical cost in a foreign currency are
translated at the exchange rate at the date of the transaction.
Foreign currency differences are generally recognised in profit or
loss and presented within finance costs.
However, foreign currency differences arising from the
translation of the following items are
recognised in OCI:
- an investment in equity securities designated as at FVOCI
(except on impairment, in which case foreign currency differences
that have been recognised in OCI are reclassified to profit or
loss);
- a financial liability designated as a hedge of the net
investment in a foreign operation to the extent that the hedge is
effective; and
- qualifying cash flow hedges to the extent that the hedges are effective.
ii. Foreign operations
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on acquisition, are
translated into USD at the exchange rates at the reporting date.
The income and expenses of foreign operations are translated into
USD at the exchange rates at the dates of the transactions.
Foreign currency differences are recognised in OCI and
accumulated in the translation reserve, except to the extent that
the translation difference is allocated to NCI.
When a foreign operation is disposed of in its entirety or
partially such that control, significant influence or joint control
is lost, the cumulative amount in the translation reserve related
to that foreign operation is reclassified to profit or loss as part
of the gain or loss on disposal. If the Group disposes of part of
its interest in a subsidiary but retains control, then the relevant
proportion of the cumulative amount is reattributed to NCI. When
the Group disposes of only part of an associate or joint venture
while retaining significant influence or joint control, the
relevant proportion of the cumulative amount is reclassified to
profit or loss.
C. Employee benefits
i. Short-term employee benefits
Short-term employee benefits are expensed as the related service
is provided. A liability is recognised for the amount expected to
be paid if the Group has a present legal or constructive obligation
to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
ii. Share-based payment arrangements
The grant-date fair value of equity-settled share-based payment
arrangements granted to employees and other service providers is
generally recognised as an expense, with a corresponding increase
in equity, over the vesting period of the awards. The amount
recognised as an expense is adjusted to reflect the number of
awards for which the related service and non-market performance
conditions are expected to be met, such that the amount ultimately
recognised is based on the number of awards that meet the related
service and non-market performance conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the
grant-date fair value of the share-based payment is measured to
reflect such conditions and there is no true-up for differences
between expected and actual outcomes.
D. Income tax
Income tax expense comprises current and deferred tax. It is
recognised in profit or loss except to the extent that it relates
to a business combination, or items recognised directly in equity
or in OCI.
The Group has determined that interest and penalties related to
income taxes, including uncertain tax treatments, do not meet the
definition of income taxes, and therefore accounted for them under
IAS 37 Provisions, Contingent Liabilities and Contingent
Assets.
i. Current tax
Current tax comprises the expected tax payable or receivable on
the taxable income or loss for the year and any adjustment to the
tax payable or receivable in respect of previous years. The amount
of current tax payable or receivable is the best estimate of the
tax amount expected to be paid or received that reflects
uncertainty related to income taxes, if any. It is measured using
tax rates enacted or substantively enacted at the reporting date.
Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain
criteria are met.
ii. Deferred tax
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes.
Deferred tax is not recognised for:
- temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
- temporary differences related to investments in subsidiaries,
associates and joint arrangements to the extent that the Group is
able to control the timing of the reversal of the temporary
differences and it is probable that they will not reverse in the
foreseeable future; and
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused
tax credits and deductible temporary differences to the extent that
it is probable that future taxable profits will be available
against which they can be used. Future taxable profits are
determined based on the reversal of relevant taxable temporary
differences. If the amount of taxable temporary differences is
insufficient to recognise a deferred tax asset in full, then future
taxable profits, adjusted for reversals of existing temporary
differences, are considered, based on the business plans for
individual subsidiaries in the Group. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be
realised; such reductions are reversed when the probability of
future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each
reporting date and recognised to the extent that it has become
probable that future taxable profits will be available against
which they can be used.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, using tax
rates enacted or substantively enacted at the reporting date, and
reflects uncertainty related to income taxes, if any.
The measurement of deferred tax reflects the tax consequences
that would follow from the manner in which the Group expects, at
the reporting date, to recover or settle the carrying amount of its
assets and liabilities. For this purpose, the carrying amount of
investment property measured at fair value is presumed to be
recovered through sale, and the Group has not rebutted this
presumption.
Deferred tax assets and liabilities are offset only if certain
criteria are met.
E. Exploration expenditure
Costs incurred prior to acquiring the right to explore an area
of interest are expensed as incurred. Exploration and evaluation
assets are intangible assets.
Exploration and evaluation assets represent the costs incurred
on the exploration and evaluation of potential hydrocarbon
resources, and include costs such as seismic acquisition and
processing, exploratory drilling, activities in relation to the
evaluation of technical feasibility and commercial viability of
extracting hydrocarbons, and general administrative costs directly
relating to the support of exploration and evaluation
activities.
The Company assesses exploration and evaluation assets for
impairment when facts and circumstances suggest that the carrying
amount may exceed its recoverable amount. The recoverable amount is
the higher of the assets fair value less costs to sell and value in
use. Assets are allocated to cash generating units not larger than
operating segments for impairment testing. Purchased exploration
and evaluation assets are recognised as assets at their cost of
acquisition or at fair value if purchased as part of a business
combination. They are subsequently stated at cost less accumulated
impairment. Exploration and evaluation assets are not
amortised.
F. Share capital
Incremental costs directly attributable to the issue of ordinary
shares are recognised as a deduction from equity. Income tax
relating to transaction costs of an equity transaction is accounted
for in accordance with IAS 12.
G. Impairment
At each reporting date, the Group reviews the carrying amounts
of its non-financial assets (other than biological assets,
investment property, inventories, contract assets and deferred tax
assets) to determine whether there is any indication of impairment.
If any such indication exists, then the asset's recoverable amount
is estimated.
Impairment losses are recognised in profit or loss. They are
allocated first to reduce the carrying amount of any goodwill
allocated to the CGU, and then to reduce the carrying amounts of
the other assets in the CGU on a pro rata basis.
H. Fair value measurement
'Fair value' is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date in the
principal or, in its absence, the most advantageous market to which
the Group has access at that date. The fair value of a liability
reflects its non-performance risk.
A number of the Group's accounting policies and disclosures
require the measurement of fair values, for both financial and
non-financial assets and liabilities.
When one is available, the Group measures the fair value of an
instrument using the quoted price in an active market for that
instrument. A market is regarded as 'active' if transactions for
the asset or liability take place with sufficient frequency and
volume to provide pricing information on an ongoing basis.
If there is no quoted price in an active market, then the Group
uses valuation techniques that maximise the use of relevant
observable inputs and minimise the use of unobservable inputs. The
chosen valuation technique incorporates all of the factors that
market participants would take into account in pricing a
transaction.
If an asset or a liability measured at fair value has a bid
price and an ask price, then the Group measures assets and long
positions at a bid price and liabilities and short positions at an
ask price.
The best evidence of the fair value of a financial instrument on
initial recognition is normally the transaction price - i.e. the
fair value of the consideration given or received. If the Group
determines that the fair value on initial recognition differs from
the transaction price and the fair value is evidenced neither by a
quoted price in an active market for an identical asset or
liability nor based on a valuation technique for which any
unobservable inputs are judged to be insignificant in relation to
the measurement, then the financial instrument is initially
measured at fair value, adjusted to defer the difference between
the fair value on initial recognition and the transaction price.
Subsequently, that difference is recognised in profit or loss on an
appropriate basis over the life of the instrument but no later than
when the valuation is wholly supported by observable market data or
the transaction is closed out.
I. Going concern
The financial statements have been prepared on a going concern
basis. The Group has not yet earned revenues from its E&P
assets. The operations of the Group are currently financed from
funds raised from shareholders. In common with many pre-production
entities, the Group may need to raise further funds in order to
progress projects into the production of revenues.
The Group has cash and cash equivalents of US$ 8,103,000 at 30
April 2021 and the Directors are of the view this is sufficient to
fund the Group's committed expenditure over the next 12 months from
the date of approval of these financial statements, without raising
funds in this period.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Thus, they continue to adopt the going concern
basis of accounting in preparing the financial statements.
3 Functional and presentation currency
These consolidated financial statements are presented in US
Dollars ("USD" or "US$"), which is the Company's functional
currency. All amounts have been rounded to the nearest thousand,
unless otherwise indicated.
4 Use of judgements and estimates
In preparing these consolidated financial statements, management
has made judgements and estimates that affect the application of
the Group's accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from
these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised prospectively.
A. Judgements
Information about judgements made in applying accounting
policies that have the most significant effects on the amounts
recognised in the financial statements is included in the following
notes:
- Note 11 - equity-accounted investees: whether the Group has
significant influence over an investee;
- Note 17 - consolidation: whether the Group has de facto
control over an investee.
B. Assumptions and estimation uncertainties
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements, are disclosed below:
Share based payments (note 8)
The Group has made awards of options and warrants over its
unissued capital. The valuation of these options and warrants
involve making a number of estimates relating to price volatility,
future dividend yields, expected life and forfeiture rates.
Acquisition of associate (Note 11)
The Group acquired a 50% holding in an associate during the year
and has fair valued the assets acquired including the rights to the
Buffalo Field.
Valuation of investments
The Group held two significant assets in the previous year: an
intangible exploration asset in respect of the Colter licence
(discussed in note 13) and an Incremental Production Agreement
asset in respect of Betun Selo (note 12). The board reviewed the
expected returns from both projects and determined that both
projects should be fully impaired at the previous year-end.
i) Measurement of fair values
A number of the Group's accounting policies and disclosures
require the measurement of fair values, for both financial and
non-financial assets and liabilities. The Group has an established
control framework with respect to the measurement of fair
values.
When measuring the fair value of an asset or a liability, the
Group uses observable market data as far as possible. Fair values
are categorised into different levels in a fair value hierarchy
based on the inputs used in the valuation techniques as
follows.
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a
liability fall into different levels of the fair value hierarchy,
then the fair value measurement is categorised in its entirety in
the same level of the fair value hierarchy as the lowest level
input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value
hierarchy at the end of the reporting period during which the
change has occurred.
Level 3 inputs
The following table gives information about how the fair values
of Group's investments are determined (in particular, the valuation
techniques and inputs used).
Assets and Nature of Fair value Fair value Valuation Significant
liabilities investment as at 30 as at 30 techniques unobservable
April 2021 April 2020 and key inputs input
Financial 25% of equity Disposed USD Nil Recent purchase Expected
assets at investment price and realisable
fair value in Eagle market knowledge value from
through profit Gas Ltd sale
or loss
-------------- ------------ ------------ ------------------ --------------
Financial 20% of equity Disposed USD Nil Purchase Expected
assets at investment price and realisable
fair value in Peelwood market knowledge value from
through profit Pty Ltd sale
or loss
-------------- ------------ ------------ ------------------ --------------
Financial Production Disposed USD Nil Cashflow Future cash
assets at agreement forecasting flows
fair value returns from
through profit Betun Selo
or loss
-------------- ------------ ------------ ------------------ --------------
5 Operating Segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Operating Decision Maker
("CODM"). The CODM, who is responsible for allocating resources and
assessing performance of the operating segments and make strategic
decisions, has been identified as the Directors of the Group. In
the opinion of the Directors, the operations of the Group comprise
two operating segments comprising firstly of that of developer of
gas to power projects in the Republic of Indonesia and secondly
with projects within the UK. The Group considers that it only has
one reportable segment and the Directors consider that the primary
financial statements presented substantially reflect all the
activities of the Company.
6 Administrative expenses
Administration fees and expenses consist of the following:
2021 2020
US$'000 US$'000
Audit fees 69 32
Bad debts - 117
Professional fees 1,047 241
Administration costs 104 49
Employee costs 219 -
Directors' fees (Note 9) 1,100 (146)
-------- --------
Other administrative expenses 2,539 293
======== ========
Office costs 30 13
Consulting and farm-in expenses 6 (36)
Travel and accommodation 11 46
-------- --------
Asset evaluation expenses 47 23
======== ========
7 Earnings per share
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
2021 2020
Loss attributable to owners of the Group
(USD thousands) (2,854) (1,231)
Weighted average number of ordinary shares
in issue (thousands) 188,796 1,107,577
Loss per share (US cents) (1.51) (0.11)
In accordance with International Accounting Standard 33
'Earnings per share', no diluted earnings per share is presented as
the Group is loss making. Details of potentially dilutive share
instruments are detailed in notes 8 and 14.
8 Share-based payment arrangements
The following is a summary of the share options and warrants
outstanding and exercisable as at 30 April 2021 and 30 April 2020
and the changes during each year:
Number of Weighted average
options and exercise price
warrants (Pence)
Outstanding and exercisable at 1 May
2020 125,983,175 1.294
Cancelled options (30,000,000) (0.304)
Options granted as consideration 68,750,000 0.104
Warrants granted with share issue 32,904,758 0.026
Outstanding and exercisable at 30 April
2020 197,637,934 1.120
Cancelled options (2,186,897) (1.92)
Expired warrants (3,529,413) (5.00)
Options granted as consideration - pre
consolidation 93,750,000 0.30
Warrants granted - pre consolidation 39,057,099 0.03
Consolidation - options (150,300,000) -
Consolidation - warrants (142,432,339) -
Options granted post consolidation 83,710,000 2.60
Warrants granted with share issue 45,553,120 2.60
-------------- -----------------
Outstanding and exercisable at 30 April
2021 161,259,504 3.41
============== =================
The above weighted average exercise prices have been expressed
in pence and not cents due to the terms of the options and
warrants. The following share options or warrants were outstanding
and exercisable in respect of the ordinary shares:
Grant Date Expiry Date 1 May Issued Expired 30 April Exercise
2019 2020 Price
Warrants
------------ ------------- ---------------- ------------ ------------- ---------------- ---------
13.05.16 13.05.21 42,000,000 - - 42,000,000 0.20p
31.01.17 31.01.22 10,000,000 - - 10,000,000 0.20p
31.01.17 31.01.22 8,000,000 - - 8,000,000 0.25p
31.01.17 31.01.22 6,666,666 - - 6,666,666 0.30p
22.05.17 22.05.22 15,000,000 - - 15,000,000 0.10p
22.05.17 22.05.22 35,000,000 - - 35,000,000 0.10p
31.07.17 31.07.22 150,000,000 - - 150,000,000 0.10p
19.08.17 19.08.22 90,769,231 - - 90,769,231 0.06p
01.09.17 01.09.22 70,769,231 - - 70,769,231 0.06p
06.12.17 06.12.22 638,569,604 - - 638,569,604 0.05p
29.04.18 29.04.21 264,705,882 - - 264,705,882 0.017p
03.08.18 02.08.21 300,000,000 - - 300,000,000 1.00p
Consolidation (1,598,851,001) - - (1,598,851,001)
20.09.18 20.09.21 5,217,391 - - 5,217,391 1.15p
20.09.18 20.09.21 34,782,608 - - 34,782,608 2.00p
15.03.19 14.03.22 16,666,666 - - 16,666,666 0.45p
21.06.19 20.06.22 - 18,059,856 - 18,059,856 0.155p
21.06.19 20.06.22 - 10,833,334 - 10,833,334 0.155p
02.07.19 01.07.22 - 3,178,235 - 3,178,235 0.157p
03.07.19 02.07.22 - 833,334 - 833,334 0.157p
Options
------------ ------------- ---------------- ------------ ------------- ---------------- ---------
05.06.15 05.06.18 34,344,865 - - 34,344,865 0.40p
Consolidation (33,657,968) - - (33,657,968)
01.10.18 01.10.23 36,000,000 - (30,000,000) 6,000,000 2.00p
01.02.20 01.02.25 - 68,750,000 - 68,750,000 0.30p
---------------- ------------ ------------- ---------------- ---------
125,983,175 101,654,759 (30,000,000) 197,637,934
================ ============ ============= ================
Grant Date Expiry Date 1 May Issued Expired 30 April Exercise
2020 2021 Price
Warrants
------------ ------------- ---------------- ------------ -------------- ---------------- ---------
13.05.16 13.05.21 42,000,000 - - 42,000,000 0.20p
31.01.17 31.01.22 10,000,000 - - 10,000,000 0.20p
31.01.17 31.01.22 8,000,000 - - 8,000,000 0.25p
31.01.17 31.01.22 6,666,666 - - 6,666,666 0.30p
22.05.17 22.05.22 15,000,000 - - 15,000,000 0.10p
22.05.17 22.05.22 35,000,000 - - 35,000,000 0.10p
31.07.17 31.07.22 150,000,000 - (150,000,000) - 0.10p
19.08.17 19.08.22 90,769,231 - - 90,769,231 0.06p
01.09.17 01.09.22 70,769,231 - - 70,769,231 0.06p
06.12.17 06.12.22 638,569,604 - - 638,569,604 0.05p
29.04.18 29.04.21 264,705,882 - (264,705,882) - 0.017p
03.08.18 02.08.21 300,000,000 - - 300,000,000 0.02p
Consolidation (1,598,851,001) - 406,411,764 (1,192,439,237)
20.09.18 20.09.21 5,217,391 - - 5,217,391 1.15p
20.09.18 20.09.21 34,782,608 - - 34,782,608 2.00p
15.03.19 14.03.22 16,666,666 - - 16,666,666 0.45p
21.06.19 20.06.22 18,059,856 - - 18,059,856 0.155p
21.06.19 20.06.22 10,833,334 - - 10,833,334 0.155p
02.07.19 01.07.22 3,178,235 - - 3,178,235 0.157p
03.07.19 02.07.22 833,334 - - 833,334 0.157p
10.12.20 09.12.23 - 545,455 - 545,455 0.22p
31.03.21 31.03.26 - 38,511,644 - 38,511,644 0.00p
Consolidation (137,667,632) (137,667,632)
19.04.21 19.04.24 - 21,488,500 - 21,488,500 2.60p
19.04.21 19.04.26 - 24,064,620 - 24,064,620 2.60p
Options
------------ ------------- ---------------- ------------ -------------- ---------------- ---------
05.06.15 05.06.18 34,344,865 - (34,344,865) - 0.40p
Consolidation (33,657,968) - 33,657,968 -
01.10.18 01.10.23 6,000,000 - (1,500,000) 4,500,000 2.00p
01.02.20 01.02.25 68,750,000 - - 68,750,000 0.30p
01.02.20 01.02.25 - 68,750,000 - 68,750,000 0.30p
08.07.020 08.07.25 - 25,000,000 - 25,000,000 0.03p
Consolidation (150,300,000) (150,300,000)
19.04.21 19.04.26 - 83,710,000 - 83,710,000 2.60p
---------------- ------------ -------------- ----------------
197,637,934 262,070,219 (298,448,647) 161,259,504
================ ============ ============== ================
The options and warrants issued during year were valued using
the Black-Scholes valuation method and the assumptions used are
detailed below. The expected future volatility has been determined
by reference to the historical volatility:
Grant Share Exercise Volatility Option Dividend Risk-free Fair value
date price price life yield investment per option
at grant rate
01.02.20 1.15p 3.00p 40% 5 years 0% 3% 0.13p
08.07.21 1.85p 3.00p 95% 5 years 0% 0.7% 1.19p
19.04.21 2.40p 2.60p 70% 5 years 0% 0.7% 1.33p
The Group recognised US$1,609,000 (30 April 2020: US$nil)
relating to equity-settled share-based payment transactions during
the year arising from Option or Warrant grants, which was charged
US$838,000 (2020: US$nil) in respect of services performed in
connection with the issue of new shares charged to share premium,
US$667,000 (2020: US$nil) in respect of directors' fees and
US$104,000 (2020: US$nil) in respect of employee costs to the
income statement. Shares totalling US$570,000 were issued to three
of the Directors following the share raise and re-admission to AIM
on 19 April 2021 in relation to options earned during the
period.
The 83,710,000 options granted on 19 April 2021 will vest on 1
January 2022 and 1 January 2023 in equal amounts. Vesting of the
options is subject to the option holder providing continuous
service during the vesting period and there are no other
performance conditions attached to the options.
There were 68,750,000 of unvested options at the 30 April 2020
held by current Directors and consultants, which vested on 1
February 2021.
For the share options and warrants outstanding as at 30 April
2021, the weighted average remaining contractual life is 4.14 years
(30 April 2020: 3.42 years).
9 Employee benefits (including directors)
The group employed an average of 4 individuals during the year,
including the directors (2019: 5).
The group employed an average of 5 individuals during the year,
including the directors (2020: 5).
2021 2020
US$'000 US$'000
Directors' remuneration (see
below) 409 (149)
Share based payments - Directors 667 -
(see below)
Share based payments - Employees 104
Directors' health insurance 24 3
Employees 115 -
1,319 (146)
======== ========
Key management of the Group are considered to be the
Directors.
The remuneration of the directors during the year ended 30 April
2021 was as follows:
Short term Social Share
employee security Pension based Total
benefits payments contribution payments 2021
US$'000 US$'000 US$'000 US$'000 US$'000
Ross Warner 60 - - 4 64
Mark Rollins 71 - - 231 302
Leslie Peterkin 139 - 3 234 376
Graham Smith 2 - - - 2
Stephen West 97 33 - 196 326
Steve Whyte 2 - - 1 3
Larry Bottomley 2 - - 1 3
Total Key Management 373 33 3 667 1,076
=========== ========== =============== ========== ========
The remuneration of those in office during the year ended 30
April 2020 was as follows:
Short term Social
employee security Pension Waiver Total
benefits payments contribution of fees 2020
US$'000 US$'000 US$'000 US$'000 US$'000
Ross Warner 150 - - (248) (98)
Simon Gorringe 135 - - (227) (92)
Mark Rollins 15 - - 15
Leslie Peterkin 30 - - 30
Graham Smith 27 - - 27
Robert Arnott 39 4 1 44
Daniel Jorgensen 12 - - (87) (75)
Total Key Management 408 4 1 (562) (149)
=========== ========== =============== ========== ========
10 Income tax expense
The Company is resident for tax purposes in the Isle of Man and
is subject to Isle of Man tax at the current rate of 0% (2020:
0%).
Taxation reconciliation
The charge for the year can be reconciled to the loss per the
consolidated statement of comprehensive income as follows:
2021 2020
US$'000 US$'000
Loss before income tax (2,854) (1,231)
======== ========
Tax on loss at the weighted average corporate - -
tax rate of 0% (2020: 0%)
-------- --------
Total income tax expense - -
======== ========
The deferred tax asset has not been recognised for in accordance
with IAS 12. The Group does not have a material deferred tax
liability at the year end.
11 Business combination
On 19 April 2021, Advance Energy plc, via its wholly owned
subsidiary Advance Energy TL Limited, acquired a 50% equity
interest in Carnarvon Petroleum Timor Unipessoal Lda which in turn
is the holder of a 100% working interest in, and the contractor of,
the Buffalo Production Sharing Contract ("PSC").
Details of the purchase consideration and the net assets
acquired are as follows:
Purchase consideration
2021
US$'000
Cash paid 20,000
Purchase costs 274
--------
Total 20,274
========
The assets and liabilities recognised as a result of the
acquisition are as follows:
Fair value
2021
US$'000
Rights * 21,149
Buffalo exploration & appraisal 1,685
Property, plant and equipment 1
Cash 20,023
Creditors (31)
Loan payable to Carnarvon (2,278)
-----------
Net identifiable assets at acquisition 40,548
Less: Other interests (20,274)
Goodwill -
-----------
Net assets acquired 20,274
===========
* Carnarvon Petroleum Timor Unipessoal Lda owns the Buffalo Oil
Field re-development project located in the Buffalo PSC Contract
Area (the "Buffalo Project") and is the Contractor and Operator of
the Buffalo PSC. The rights attached to this have been fair valued
by Advance Energy in determining the purchase price
apportionment.
Equity investment in associate
2021 2020
US$'000 US$'000
Carrying value at beginning of year - -
Additions 20,274 -
Share of losses post acquisition (12) -
Carrying value at year end 20,262 -
======== ========
Summarised financial information for associate
The table below provide summarised financial information for
those associates that are material to the group. The information
disclosed reflects the amounts presented in the financial
statements of the relevant associate and not Advance Energy's share
of those amounts. They have been amended to reflect adjustments
made by the entity when using the equity method, including fair
value adjustments and modifications for differences in accounting
policy.
2021
Summarised balance sheet at 30 April 2021 US$'000
Rights 21,148
Buffalo exploration & appraisal 1,794
Property, plant and equipment 1
Cash 20,023
Creditors (58)
Loan payable to Carnarvon (2,375)
--------
Net assets 40,533
Group's share as a % 50%
Carrying amount 20,267
========
2021
Summarised statement of comprehensive income for the 12 months to 30 April 2021 US$'000
Revenue -
Cost of sales -
--------
Gross profit -
Administrative expenses (391)
--------
Operating loss (391)
Finance costs (1)
--------
Loss on ordinary activities before taxation (392)
Taxation -
--------
Loss from continuing operations (392)
Group share of post acquisition losses (12)
========
12 Financial assets at fair value through profit or loss
2021 2020
US$'000 US$'000
Fair value at beginning of year - -
Additions - 604
Impairment - (604)
Fair value at year end - -
========= ========
On 29 April 2018 the Company entered into a subscription
agreement with Eagle Gas Limited, a UK private company that held
licence P2112. Under this agreement the Company acquired a 14.75%
interest in Eagle Gas Limited. During the year to 30 April 2019 the
Company increased its holding in Eagle Gas Limited to a 25%
interest. Management considered this to provide significant
influence over the entity and the asset was reclassified to that of
an associate investment.
Eagle Gas Limited, with support from its joint venture partner
secured a 3-month extension to the P2112 licence but failed in the
end to secure a farminee. The licence was subsequently dropped, and
the licence area has now been put back into the OGA's open acreage
and will be available for application in the next licencing round.
As such, the investment was provided for in full during the prior
year.
Eagle Gas Limited's wholly owned subsidiary Holywell Resources
Limited ("Holywell") re-applied for acreage covering the Badger
prospect as well as additional complementary areas in the 32nd
Licence Round. The OGA announced the results of the 32nd Round in
September 2020, with the Company's wholly owned subsidiary Resolute
Oil & Gas (UK) Limited and Holywell each being awarded, subject
to documentation, a 50% working interest in block 43/25 and
part-blocks 43/29, 43/30, 48/4 and 48/5. Accordingly, Advance
Energy holds a non-operated indirect 62.5% interest in these blocks
once they have been formally issued. In November 2020 the Board
decided not to proceed with these opportunities and expects the
subsidiary Resolute (and therefore indirectly the North Sea
Licences) will be sold to a third party for a nominal sum without
further expenditure on such assets by the Company.
In June 2019 the Company entered into a Service Agreement for
production on the Betun-Selo KSO field in Sumatra, Indonesia with
PT Petroenim Betun-Selo and PT Celebes Artha Ventura. As a result
of disappointing production performance of the field the company
did not realise any incremental production beyond April 2020. The
investment was fully impaired on 31 October 2020.
13 Other investments
2021 2020
US$'000 US$'000
Value at beginning of year - 267
Additions - -
Impairment - (267)
Value at year end - -
========= ========
The capitalised cost in the prior period related to the
acquisition of an 8% interest in the Colter project via a farm-in.
The agreement to farm-in to the Colter licences was entered into on
20 September 2018. The cost to Advance Energy of farming into the
licence, included the funding of the back costs on the licence,
together with the obligation to fund 10.67% of the forward costs
related to this well. Following disappointing results in the area,
all historic capitalised expenditure in relation to this amount was
written off during the year to 30 April 2020.
14 Capital and reserves
All shares are Nil Coupon fully paid and each ordinary share
carries one vote. No warrants have been exercised at the reporting
date.
Pence Share premium
Allotted, called-up and fully paid: Number per share US$'000
---------------- ----------- --------------
Balance at 30 April 2019 603,970,170 16,878
02/07/2019 - Equity Placing 373,333,333 0.150 705
Cost of issue - - (73)
11/07/2019 - Equity Placing 66,666,666 0.150 126
Cost of issue - - (6)
23/12/2019 - Equity Placing 166,666,667 0.150 320
Cost of issue - - (16)
04/02/2020 - Equity Placing 349,999,998 0.150 683
Removal of warrants - - 48
Balance at 30 April 2020 1,560,636,834 18,665
12/11/2020 - Equity Placing 157,780,151 0.22 470
Cost of issue - - (24)
19/04/2021 - Consolidation 1:10 (1,546,575,287) - -
19/04/2021 - Equity Placing 840,100,000 2.60 30,549
Cost of issue - - (2,574)
19/04/2021 - Accrued Director fee
shares 15,672,310 2.60 570
---------------- ----------- --------------
Balance at 30 April 2021 1,027,614,008 47,656
================ =========== ==============
15 Trade and other payables
Trade and other payables are obligations to pay for goods or
services that have been acquired in the ordinary course of
business. Accounts payable are classified as current liabilities if
payment is due within one year or less (or in the normal operating
cycle of the business if longer). If not, they are presented as
non-current liabilities. Trade payables are recognised initially at
fair value, and subsequently measured at amortised cost using the
effective interest method.
2021 2020
US$'000 US$'000
Trade payables 517 299
Accruals and other payables 621 24
-------- --------
1,138 323
======== ========
16 Risk Management
Financial Risks
The Group's activities expose it to a variety of financial
risks: market risk (including foreign currency exchange risk and
interest rate risk), credit risk and liquidity risk. The Board of
Directors seek to identify and evaluate financial risks.
Market risk
A. Foreign currency exchange risk
Foreign exchange risk arises because the Group entities enter
into transactions in currencies that are not the same as their
functional currencies, resulting in gains and losses on
retranslation into US Dollars. It is the Group's policy to ensure
that individual Group entities enter into local transactions in
their functional currency wherever possible and that only surplus
funds over and above working capital requirements should be
transferred to the treasury of the Parent Company. The Group and
Company considers this policy minimises any unnecessary foreign
exchange exposure. Despite this policy the Group cannot avoid being
exposed to gains or losses resulting from foreign exchange
movements, at the reporting date a 5% decrease in the strength of
the US Dollar would result in a corresponding reduction of
US$373,000 (2020: US$18,000) in the net assets of the Group.
B. Cash flow interest rate risk
The Group's cash and cash equivalents are invested at short term
market interest rates. As market rates are low the Group is not
subject to significant cash flow interest rate risk and no
sensitivity analysis is provided. The Group is also not subject to
significant fair value interest rate risk. No interest rate
sensitivity has been presented in respect of the outstanding
convertible loan note as it is considered not material.
2021 2020
US$'000 US$'000
Cash & Cash Equivalents
USD 646 11
GBP 7,457 551
Total Financial Assets 8,103 562
================== ==============
Trade & other payables
USD 858 310
CHF - 1
GBP 219 12
AUD 61 -
Total Financial Liabilities 1,138 323
================== ==============
Credit risk
Credit risk arises on investments, cash balances and receivable
balances. The amount of credit risk is equal to the amounts stated
in the Statement of Financial Position for each of these assets.
Cash balances and transactions are limited to high-credit-quality
financial institutions. There are no impairment provisions as at 30
April 2021 (2020: nil).
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash and marketable securities, the availability of funding through
an adequate amount of committed credit facilities and the ability
to close out market positions. The Group has adopted a policy of
maintaining surplus funds with approved financial institutions.
Management of liquidity risk is achieved by monitoring budgets
and forecasts against actual cash flows. Where the Group entered
into borrowings during the year management monitor the repayment
and servicing of these arrangements against the contractual terms
and reviewed cash flows to ensure that sufficient cash reserves
were maintained.
Capital Risks
The Directors determine the appropriate capital structure of the
Group, specifically, how much is raised from shareholders (equity)
and how much is borrowed from financial institutions (debt), in
order to finance the Group's business strategy. The Group's policy
in the long term is to seek to maintain the level of equity capital
and reserves to maintain an optimal financial position and gearing
ratio which provides financial flexibility to continue as a going
concern and to maximise shareholder value. The capital structure of
the Group consists of shareholders' equity together with net debt
(where relevant). The Group's funding requirements are met through
a combination of debt, equity and operational cash flow.
17 List of subsidiaries and associates
The parent of the Group has shareholdings in the following
entities:
Name Interest Interest Country Nature of business
2021 2020 of incorporation
Advance Energy TL Limited 100% N/A UK Intermediate Hold Co
Carnarvon Petroleum Timor Unipessoal 50% N/A Timor-Leste Oil exploration
Lda
Resolute Oil & Gas (UK) Limited 100% 100% UK Trading subsidiary
Eagle Gas Limited 25% 25% UK Gas Exploration
18 Commitments
There were no capital commitments authorised by the Directors or
contracted other than those provided for in these financial
statements as at 30 April 2021 (30 April 2020: None).
19 Related parties
Parties are considered to be related to the Group if the Group
has the ability, directly or indirectly, to control the party or
exercise significant influence over the party in making financial
and operating decisions, or vice versa, or where the Group and the
party are subject to common control or common significant
influence.
Related parties may be individuals (being members of key
management personnel, significant shareholders and/or their close
family members) or other entities and include entities which are
under significant influence of related parties of the Group where
those parties are individuals, and post-employment benefit plans
which are for the benefit of employees of the Group or of any
entity that is a related party of the Group.
Details of Directors remuneration are disclosed in Note 9
Directors Remuneration. For details of any related party
transactions entered into after the year-end please refer to Note
20 Subsequent Events.
As at 30 April 2021 the following balances were included in
trade and other payables and were outstanding in respect of
Directors remuneration or remuneration incurred prior to their
appointment as a Director at the year end.
Outstanding Outstanding
at 30 April at 30 April
2021 2020
US$'000 US$'000
Daniel Jorgensen - 12
Graham Smith - 2
-------------- -------------
Total Key Management - 14
============== =============
20 Subsequent events
There were no events after the end of the reporting period which
require adjustment to or disclosure within the financial
statements.
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END
FR UURARAAUKUAR
(END) Dow Jones Newswires
September 23, 2021 01:59 ET (05:59 GMT)
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