ANGS Angus Energy Plc

1.            General information

 

Angus Energy Plc (the "Company") is incorporated and domiciled in the United Kingdom. The address of the registered office is Building 3 Chiswick Park, 566 Chiswick High Road, London, W4 5YA.

 

The principal activity of the Company is that of investment holding. The principal activity of the Group is that of oil and gas extraction for distribution to third parties. The principal activities of the various operating subsidiaries are disclosed in note 13.

 

2.            Presentation of financial statements

 

The financial statements have been presented in Pounds Sterling (£) as this is the currency of the primary economic environment that the group operates in. The amount is rounded to the nearest thousand (£'000), unless otherwise stated.

 

3.            Accounting policies

 

The principal accounting policies applied in the preparation of these financial statements are set out below.

 

3.1          Basis of preparation

 

These financial statements have been prepared in accordance with UK adopted international accounting standards and  with the requirements of the Companies Act 2006. The financial statements have been prepared on the historical cost basis except for certain assets and liabilities which are stated at their fair value.

 

3.2          New standards, amendments to and interpretations to published standards not yet effect

 

The Directors have considered those standards and interpretations, which have not been applied in the financial statements but are relevant to the Group's operations, that are in issue but not yet effective and do not consider that they will have a material impact on the future results of the Group.

 

3.3          Going concern

 

The Group recorded a profit of £117.810m, which included a derivative profit of £136.966m in relation to the derivative instrument and an impairment of £3.717m. EBITDA for the period was £17.002m (2022: loss of £0.869m). The Group recorded an Operating profit of £4.794m and adjusted for the derivative financial instrument profit, realized derivative costs and finance costs during the period, resulted in an adjusted operating loss of £19.156m (2022: loss of £1.638m). The derivative profit is based on future production and calculated using forward gas prices as at 30 September 2023. The derivative will be realised to a profit or loss when the payments under the derivative instruments become due (see note 25).

 

The Group meets its day to day working capital requirements through existing cash reserves. At 30 September 2023, the Group had £2.172 million of available cash. During the year, the Group raised gross proceeds of £9.070 million as a result of placing of new ordinary shares and converting warrants to ordinary shares. On 22 February 2024, the Company announced that terms had been agreed with a subsidiary of Trafigura Group PTE Ltd ("Trafigura ") for a refinancing of its existing debt. The Company signed definitive loan documentation and drew down the full £20m available under the facility (see note 32 for further details).

 

Directors continue to take the prudent decision to introduce cost saving measures where possible to preserve working capital. The Directors have assessed the Group's working capital forecasts for a minimum of 12 months from the date of the approval of these financial statements. In undertaking this assessment, the Directors have reviewed the underlying business risks, and the potential implications these risks would have on the Group's liquidity and its business model over the assessment period. This assessment included a detailed cash flow analysis prepared by the management, and   they also considered several reasonably plausible downside scenarios. The scenarios included potential delays to expected future revenues. In making their overall assessment, the Directors took into account the advanced stage of the development of the Saltfleetby gas field and the impact of the derivative instrument if there were delays in gas production. As outlined in note 25 the Group has committed to future cash flows as a result of the derivatives in place which are due even if gas is delayed.

 

Forecast cashflows place reliance on there not being a suspension of gas production for an unforeseen significant period. Current production levels are in excess of derivative requirements. There are no present operational concerns and whilst there are mitigating steps that could be taken, the contracted derivative will need to be settled at a fixed point in time. In the event of any significant delay this would be subject to further negotiation with the derivative holder or further funding may be required.

 

Based on the current management's plan, management considered that the working capital from the expected revenue generation, along with the funds made available from the recently announced Trafigura refinancing, are sufficient for the expenditure to date as well as the planned forecast expenditure for the forthcoming twelve months from the date of the approval of this financial statement. As a result of that review the Directors consider that it is appropriate to adopt the going concern basis preparation, notwithstanding the material uncertainty relating to the continued production of gas as outlined above. The Director has assessed the company's ability to continue as a going concern and have reasonable expectation that the company has adequate resources to continue operations for a period of at least 12 months from the date of approval of these financial statements.

 

These financial statements do not include any adjustment that may result from any significant changes in the assumption used.

 

3.4          Basis of consolidation

 

The consolidated financial statements comprise the financial information of the Company and its subsidiaries (the "Group") made up to the end of the reporting period. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

 

The consolidated financial statements present the results of the Company and its subsidiaries and joint arrangements as if they formed a single entity. Inter-company transactions and balances between group companies are therefore eliminated in full. The financial information of subsidiaries is included in the Group's financial statements from the date that control commences until the date that control ceases.

 

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group. When necessary, adjustments are made to the financial information of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

 

3.5          Property, plant and equipment

 

All fixed assets are initially recorded at cost. Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:

 

Fixtures and fittings              -      25% straight line

Plant and machinery            -      20% straight line

Motor vehicles                      -      20% straight line

 

3.6          Oil and natural gas exploration and evaluation (E&E) expenditure

Oil and natural gas exploration and evaluation expenditure is accounted for using the successful efforts method of accounting.

 

(a)           Licence and property acquisition costs

 

Licence and property leasehold acquisition costs are capitalised within intangible fixed assets and amortised on a straight-line basis over the estimated period of exploration. Upon determination of economically recoverable reserves amortisation ceases and the remaining costs are aggregated with exploration expenditure and held on a field-by-field basis as proved properties awaiting determination within intangible fixed assets. When development is sanctioned, the relevant expenditure is transferred to tangible production assets.

 

(b)           Exploration expenditure

 

Geological and geophysical exploration costs are charged against income as incurred. Costs directly associated with an exploration well are capitalised as an intangible asset until drilling of the well is complete and the results have been evaluated. If hydrocarbons are not found, the exploration expenditure is written off as a dry hole. If hydrocarbons are found, and, subject to further appraisal activity, are likely to be capable of commercial development, the costs continue to be carried as an asset. All such carried costs are subject to regular technical, commercial management review to confirm the continued intent to develop or otherwise extract value from the discovery. When this is no longer the case, the costs are written off. When proven and probable reserves of oil and gas are determined and development is sanctioned, the relevant expenditure is transferred to tangible production assets.

 

(c)            Development expenditure

 

Expenditure on the construction, installation and completion of infrastructure facilities such as platforms, pipelines and the drilling of development wells, including unsuccessful development or delineation wells, is capitalised within tangible production assets.

 

(d)           Maintenance expenditure

 

Expenditure on major maintenance, refits or repairs is capitalised where it enhances the performance of an asset above its originally assessed standard of performance; replaces an asset or part of an asset which was separately depreciated and which is then written off; or restores the economic benefits of an asset which has been fully depreciated. All other maintenance expenditure is charged to income as incurred.

 

                Treatment of E&E assets at conclusion of appraisal activities

 

Intangible E&E assets related to each exploration licence/prospect are carried forward, until the existence (or otherwise) of commercial reserves has been determined. If commercial reserves have been discovered, the related E&E assets are assessed for impairment on a cost pool basis as set out below, and any impairment loss of the relevant E&E assets is then reclassified as development and production assets.

 

                (e)          Financial instruments

 

Financial assets and financial liabilities are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

 

Loan and receivables

Loans and receivables are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

 

Trade receivables are recognised initially at the transaction price and subsequently measured at amortised cost, less any impairment losses.

 

Trade and other payables

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, where applicable, using the effective interest method, with interest expense recognised on an effective yield basis.

 

Borrowing cost

 

Borrowing cost that are directly attributable to the acquisition, development, or production of a qualifying asset, that necessarily takes substantial time to prepare, are capitalized as part of the cost the respective asset. It consists of interest and other cost in connection with the borrowing of the funds. Capitalization commences when activities to prepare the asset are in progress or in future re-development activities and ceases when all activities necessary to prepare the asset are completed. Other borrowing costs are recognized in the statement of profit and loss and other comprehensive income in the period in which they are incurred.

 

Derivative financial instrument

 

The group uses derivative financial instrument, to hedge its commodity price risk, such as commodity swap contracts. The Group has elected not to apply the hedge accounting on this derivative. Derivative financial instruments are recognized at fair value on the date on which the contract is entered into and subsequently measured at fair value. Derivatives are carried as financial asset when the fair value is greater than its initial measurement and financial liabilities when fair value is negative. Any gains or losses arising from the changes in fair value of the derivatives are recognise in the statement of Comprehensive Income as a profit or loss for the year.

 

As at 30 September 2023, the Group's derivative liability amounted to £21.714 million as a result of the hedging agreement entered into with Mercuria Energy Trading SA under a Swap Contract (see Note 25)

 

In the determining the fair values of the financial asset and liabilities, instruments are analysed into Level 1 to 3 as follows:

 

Level 1:     Fair value measurements derive from quoted prices (unadjusted) in active market for identical asset or liabilities.

Level 2:     Fair value measurement derive from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3:     Fair value measurements derive from valuation technique that include inputs for the asset or liability that are not based on observable market data.

 

3.8          Impairment of assets

 

(a)           Financial assets

 

Impairment provisions for current receivables are recognised based on the simplified approach within IFRS 9. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within administration costs in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

 

Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those for which credit risk has increased significantly, lifetime expected credit losses are recognised, unless further information becomes available contrary to the increased credit risk. For those that are determined to be permanently credit impaired, lifetime expected credit losses are recognised.

 

(b)           Non-financial assets

 

The carrying amounts of the Group's non-financial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. For assets that have indefinite lives, the recoverable amount is estimated at each reporting date.

 

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the 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 risk specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash generating unit").

 

An impairment loss is recognised if the carrying amount of an asset or its cash generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in the profit or loss.

 

3.9          Oil and gas production assets

 

Expenditures related to the construction, installation or completion of infrastructure facilities, such as platforms and pipelines, and the drilling of development wells, including delineation wells, is capitalised within oil and gas production assets. The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, the initial estimate of the abandonment cost  for qualifying assets, and borrowing costs (see note 3.14 on decommissioning).

 

Oil and gas production assets are depreciated using a unit of production method.  The cost of producing wells is amortised over total proved and undeveloped oil and gas reserves of the field concerned, except in the case of assets whose useful life is shorter than the lifetime of the field, in which case the straight-line method is applied. Rights and concessions are depleted on the unit-of-production basis over the total proved developed and undeveloped reserves of the relevant area. The unit-of-production rate calculation for the depreciation of field development costs takes into account expenditures incurred to date, together with sanctioned future development expenditure.

 

In accounting for a farm-out arrangement outside the exploration and evaluation phase, the Group:

 

·      Derecognises the proportion of the asset that it has sold to the farmee

·      Recognises the consideration received or receivable from the farmee, which represents the cash received and/or the farmee's obligation to fund the capital expenditure in relation to the interest retained by the farmor

·      Recognises a gain or loss on the transaction for the difference between the net disposal proceeds and the carrying amount of the asset disposed of. A gain is recognised only when the value of the consideration can be determined reliably. If not, then the Group accounts for the consideration received as a reduction in the carrying amount of the underlying assets

·      Tests the retained interests for impairment if the terms of the arrangement indicate that the retained interest may be impaired

 

The consideration receivable on disposal of an item of property, plant and equipment or an intangible asset is recognised initially at its fair value by the Group. However, if payment for the item is deferred, the consideration received is recognised initially at the cash price equivalent. The difference between the nominal amount of the consideration and the cash price equivalent is recognised as interest revenue. Any part of the consideration that is receivable in the form of cash is treated as a financial asset and is accounted for at amortised cost.

 

3.10        Contingent liabilities and contingent assets

 

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.  It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required, or the amount of obligation cannot be measured reliably.

 

A contingent liability is not recognised but is disclosed in the notes to the accounts.  When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision. A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly within the control of the Group. Contingent assets are not recognised but are disclosed in the notes to the accounts when an inflow of economic benefits is probable.  When inflow is virtually certain, an asset is recognised.

 

The Company and its subsidiaries are, from time-to-time, parties to legal proceedings and claims which arise in the ordinary course of business. The Directors do not anticipate that the outcome of these proceedings and claims will have a material adverse effect on the Group's financial position or on the results of its operations.

 

3.11        Operating lease agreements

 

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease.

 

3.12        Income tax

 

Income tax expense represents the sum of the tax currently payable and deferred tax.

 

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported comprehensive income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The Group's liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Group and its subsidiaries operate by the end of the financial period.

 

Deferred income taxes are calculated using the balance sheet method. Deferred tax is generally provided on the temporary difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

 

Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period it is recognised, provided they are enacted or substantively enacted at the reporting date.

 

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the Consolidated Statement of Comprehensive Income, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.

 

3.13            Foreign currencies

 

Monetary assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the reporting date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are considered in arriving at the operating profit or loss.

 

3.14        Decommissioning

 

Provision for decommissioning is recognised in full on the installation of oil and gas production facilities. The amount recognised is the present value of the estimated future expenditure determined in accordance with local conditions and requirements. A corresponding tangible fixed asset of an amount equivalent to the provision is also created. This is subsequently depreciated as part of the capital costs of the production and transportation facilities. Any change in the present value of the estimated expenditure is reflected in an adjustment to the provision and fixed asset.

 

3.15        Revenue

 

As described in note 5, the Group's revenue is driven by the sale of natural gas and crude oil, the goods are sold on their own in separate identified contracts with customers. The gas sales agreement has a fixed discount to the ICIS Heren NBP price, the oil offtake agreement has a fixed discount to the Brent forward curve while the condensate offtake agreement has a fixed discount to the Naphtha forward curve. Delivery point of the sale is the point at which the natural gas passes from our pipeline to the national grid or when crude oil passes from the delivery tanker to the customers specified storage terminal, which represents the point at which the Group fulfils its single performance obligation to its customer under contracts for the sale of natural gas or crude oil.  Revenue from the production of oil and gas in which the Group has an interest with other producers is recognised proportionately based on the Group's working interest and the terms of the relevant production sharing contracts.

 

Interest income is accrued on a time basis, by reference to the principal outstanding and at the applicable effective interest rate.

 

3.16        Share-based payments

 

The Group has applied IFRS 2 Share-based Payment for all grants of equity instruments.

 

The Group issues equity-settled share-based payments to its employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the shares that will eventually vest.

 

Fair value is measured using the Black Scholes model. The expected life used in the model has been adjusted, based on management's best estimate. The inputs to the model include: the share price at the date of grant, exercise price expected volatility, risk free rate of interest.

 

4.            Critical accounting estimates and sources of estimation uncertainty

 

In applying the accounting policies, the directors may at times require to make critical accounting judgements and estimates about the carrying amount of assets and liabilities. These estimates and assumptions, when made, are based on historical experience and other factors that the directors consider are relevant.

 

The key estimates and assumptions concerning the future and other key sources of estimation uncertainty at the end of the financial year, that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are reviewed are as stated below.

 

Key accounting judgements

 

(a)           Impairment of non-current asset

 

The Group's non-current assets represent its most significant assets, comprising oil and gas production assets, exploration and evaluation (E&E) assets on its onshore sites.

 

Management is required to assess exploration and evaluation (E&E) assets for indicators of impairment and has considered the economic value of individual E&E assets. The carrying amount of the E&E asset are subject to a separate review for indicators of impairment, by reference to the impairment indicators set out in IFRS 6, which is inherently judgmental.

 

Processing operations are large, scarce assets requiring significant technical and financial resources to operate. Their value may be sensitive to a range of characteristics unique to each asset and key sources of estimation uncertainty include proved reserve estimates, future cash flow expected to arise from the cash-generating unit and a suitable discount rate.

In performing impairment reviews, the Group assesses the recoverable amount of its operating assets principally with reference to the Group's independent competent person's report, estimates of future oil prices, operating costs, capital expenditure necessary to extract those reserves and the discount rate to be applied to such revenues and costs for the purpose of deriving a recoverable value.

 

As detailed in note 11 and 12, the carrying amount of the Group's E&E assets and oil and gas production assets at 30 September 2023 were approximately £5.628 million (2022: £5.572 million) and £80.248 (2022: £80.792 million) respectively.

 

The methods, key assumptions, sensitivity and possible outcomes in relation to the calculation of the estimates are detailed in note 11.

 

(b)           Going concern

 

Forecast cashflows place reliance on there not being a suspension of gas production for an unforeseen significant period.  Current production levels are in excess of derivative requirements. There are no present operational concerns and whilst there are mitigating steps that could be taken, the contracted derivative will need to be settled at a fixed point in time. In the event of any significant delay this would be subject to further negotiation with the derivative holder or further funding may be required.

 

As disclosed in note 3.3, the directors consider the Group and the Company to be a going concern while the Group will continue to operate under the management's plan and the Group expects to be able to continue to meet all finance obligations as they fall due for at least next twelve months from the date of approval these financial statements.

 

(c) Acquisition of Saltfleetby Energy Limited

 

The group has determined the acquisition of Saltfleetby Energy Limited as being outside the definition of IFRS 3 and therefore is not accounting as a business combination.

 

Key accounting estimates

 

(a)   Decommissioning costs

 

Decommissioning costs will be incurred by the Group at the end of the operating life of some of the Group's facilities and properties. The Group assesses its decommissioning provision at each reporting date. The ultimate decommissioning costs are uncertain and cost estimates can vary in response to many factors, including changes to relevant legal requirements, the emergence of new restoration techniques or experience at other production sites. The expected timing, extent and amount of expenditure may also change - for example, in response to changes in reserves or changes in laws and regulations or their interpretation. Therefore, significant estimates and assumptions are made in determining the provision for decommissioning. As a result, there could be significant adjustments to the provisions established which would affect future financial results.

 

External valuers may be used to assist with the assessment of future decommissioning costs. The involvement of external valuers is determined on a case by case basis, taking into account factors such as the expected gross cost and timing of abandonment, and is approved by the directors. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.

 

As detailed in note 22, the provision at reporting date represents management's best estimate of the present value of the future decommissioning costs required.

 

(b) Valuation of derivative liability

 

On 01 June 2021, Angus Energy Weald Basin no. 3 Limited (AWB3) entered into a derivative agreement with Mercuria Energy Trading SA (METS) under a Swap contract as part of the condition of the Loan Facility (see note 25). The derivative instrument was used to mitigate price risk on the expected future cash flow from the production of Saltfleetby Gas Field. Under the Swap contract, AWB3 will pay METS the floating price while METS will pay AWB3 the fixed price on the sale of gas from the field.

 

The carrying value of the financial instrument approximates their fair value and was valued using Level 2 fair value hierarchy valuation. The fair value has been determined with reference to commodity yield curves, as adjusted for liquidity and trading volumes as at the reporting date supplied by the Group's hedging derivative partner, Mercuria Energy Trading.  Management also assessed the valuation of these swaps using publicly available forward pricing curves.

 

5.            Revenue and segment information

         

Currently, the Group's principal revenue is derived from the sale of natural gas and oil. All revenue arose from continuing operations within the United Kingdom. Therefore, management considers no detail of operating and geographical segments information is to be reported. Nonetheless, the Group's revenue can be classified into the following streams:

 

			2023		2022
			£'000		£'000
Sale of oil			1,372		97
Sale of natural gas			26,836		3,045
			28,208		3,142

All the non-current assets of the Group are located in the United Kingdom. All revenue arising from the sale of natural gas is derived from sales to Shell plc and represents over 95% of the Company's revenue.

 

6.            Operating profit / (loss)

 

Operating profit is stated after charging/(crediting):

	2023		2022
	£'000		£'000
Depreciation of owned assets	10		11
Employee benefit expense	1,620		1,299
Auditor's remuneration
Fees payable to company's auditor in respect to the audit of the Parent Company and consolidated financial statements	70		48
	70		48

                Adjusted operating profit/ (loss)

 

                The adjusted operating profit has been arrived at after charging/(crediting):

	2023		2022
	£'000		£'000
Operating profit/(loss )after tax	117,810		(111,947)
Derivative financial instrument profit/(loss)	(136,966)		110,309
Adjusted loss after tax	(19,156)		(1,638)

 

7.            Finance cost

			2023		2022
			£'000		£'000
Interest payable on convertible loan notes			-		78
Loss on revaluation of AFS investment			9		8
Other finance costs			1,766		5
Loan interest expense			2,212		149
			3,987		240

 

All interest paid under the loan payable described in note 24 has been capitalised pre-production, in line with the Company's accounting policies. 

8.            Employee benefit expense

			2023		2022
			£'000		£'000
Wages and salaries			1,426		1,159
Social security costs			194		140
			1,620		1,299

 

The directors received salary from the group totaling £925,000 (2022: £497,000)

 

Key management are considered to be the directors. Details of each director's emoluments are in the directors' remuneration report.

 

	2023		2022
	Number		Number
The average number of employees during the year was:
Director	5		5
Management	9		8
Operators	14		10
	28		23

9.            Taxation on ordinary activities

 

No liability to corporation tax arose for the years ended 30 September 2023 and 2022, as a result of underlying losses brought forward.

 

                Reconciliation of effective tax rate

		2023		2022
		£'000		£'000
Gain/(Loss) before tax		117,810		(111,947)
UK Ring Fenced Corporation Tax rate of 40% (2022: 19%)		47,124		(21,270)
Revenue		(11,283)		(597)
Expenses not deductible for tax purposes		5,438		107
Unrecognised deferred tax		(41,279)		21,760
		-		-

 

The Group has incurred indefinitely available tax losses of £179.1m (2022: £173.5m), which includes tax loss incurred on the acquisition of Saltfleetby Energy Limited, to carry forward against future taxable income of the subsidiaries in which the losses arose and they cannot be used to offset taxable profits elsewhere in the Group. In addition, there is approximately £344,000 (2022: £154,000) of deductible temporary difference in respect of the share-based payment.

 

 

 

 

 

 

 

 

 

 

 

10.        Property, plant and equipment     

	Plant and machinery	Motor vehicles	Fixtures and fittings	Total
	£'000	£'000	£'000	£'000
Cost or valuation
At 1 October 2021	25	35	8	68
Additions	9	6	-	15
Acquisition of Saltfleetby Energy Limited	121	32	227	380
At 30 September 2022	155	73	235	463
Additions	-	-	-	-
At 30 September 2023	155	73	235	463
Depreciation and impairment
At 1 October 2021	17	35	8	60
Charge for the year	8	3	-	11
Acquisition of Saltfleetby Energy Limited	110	28	227	365
At 30 September 2022	135	66	235	436
Charge for the year	5	5	-	10
At 30 September 2023	140	71	235	446
Net book value
At 30 September 2022	20	7	-	27
At 30 September 2023	15	2	-	17

Depreciation of property, plant and equipment is included in administrative expenses in the consolidated statement of comprehensive income.

 

11.          Oil and gas production assets

	Total
	£'000
Cost or valuation
At 1 October 2021	7,501
Additions	276
Increase abandonment provision	125
Acquisition of Saltfleetby Energy Limited	54,535
Transfer from Exploration and Evaluation assets	19,851
At 30 September 2022	82,288
Additions	11,067
Increase abandonment provision	597
At 30 September 2023	93,952
Depreciation and impairment
At 1 October 2021	967
Charge for the year	529
At 30 September 2022	1,496
Impairment of asset	3,717
Charge for the year	8,491
At 30 September 2023	13,704
Net book value
At 30 September 2022	80,792
At 30 September 2023	80,248

 

Saltfleetby went into production on 30 August 2022. In line with the company's accounting policy the asset has been reclassified as an Oil & Gas Production Asset, including assets acquired from Saltfleetby Energy Limited

 

As at 30 September 2023, the Group retained a 100% interest in the Saltfleetby field, an 80% interest in the Lidsey field, an 80% interest in the Brockham field and is still the operator of all the fields.

 

In assessing whether an impairment is required, the carrying value of the asset or cash generating unit ("CGU") is compared with its recoverable amount. The recoverable amount is determined from value in use calculations based on cash flow projections from revenue and expenditure forecasts covering a 5 to 10 year period. Assumptions involved in impairment measurement include estimates of commercial reserves and production volumes, future crude oil and gas prices, discount rates and the level and timing of expenditures, all of which are inherently uncertain. The key assumptions used are as follow:

 

		2023	2022
Discount rate (post-tax)		11%	10%
Crude oil price (per barrels)		$34	$75
Natural gas price (per Therm)		£1.13	£1.14

 

The growth rate is assumed to be zero and the level of production is constant on the basis the production plant is assumed to be at the most efficient capacity over the period of extraction.

 

Commercial reserves are proven and probable ("2P") oil and gas reserves, calculated on an entitlement basis. Estimates of commercial reserves underpin the calculation of depletion and amortisation on a Unit of Production ("UOP") basis. Estimates of commercial reserves include estimates of the amount of oil and gas in place, assumptions about reservoir performance over the life of the field and assumptions about commercial factors which, in turn, will be affected by the future oil and gas price.

 

Annual estimates of oil and gas reserves are generated internally by the Group with external input from operator profiles and/or a Competent Person. These are reported annually to the Board. The self-certified estimated future production profiles are used in the life of the fields which in turn are used as a basis in the value-in-use calculation.

 

The discount rate is based on the specific circumstances of the Group and its operating segment, with appropriate adjustments made to reflect the risks specific to the CGU and to determine the pre-tax rate. In considering the discount rates applying to the CGU, the directors have considered the relative sizes, risks and the inter-dependencies of its CGU. An increase of between 2% to 4% to the discount rate would lead to an impairment of the carrying value of the CGU.

 

Furthermore, a sensitivity analysis has been carried out for Saltfleetby gas field and Brockham and Lidsey oil fields and the results of the analysis can be summarised as follow:

 

·      The estimated natural gas price would need to fall by circa 5 percentage points lower than the basis assumption before an impairment of the Saltfleetby gas field would need to be considered.

·      The estimated brent crude price would need to fall by circa 10 percentage points lower than the base assumption for Brockham before an impairment of the respective oil fields would need to be considered.

 

In performing impairment review, the Group assessed the economic value of individual production assets. Following the Company's analysis of the re-mapping of the Lidsey structure, the company has decided, for the time being, not to continue with any further exploration at the site. Instead, it has focused its attention on re-starting production from the Lidsey X2 well, which has previously produced from the Jurassic Great Oolite Limestones. On this basis it has considered an Impairment on Lidsey of £3.717m.

 

 

 

 

12.          Exploration and evaluation assets

	Total
	£'000
Cost or valuation
At 1 October 2021	13,073
Additions	12,338
Increase abandonment provision	12
Acquisition Saltfleetby Energy Limited	54,535
Transfer to Oil and Gas Production Asset	(74,386)
At 1 October 2022	5,572
Additions	52
Increase abandonment provision	4
At 30 September 2023	5,628

 

Saltfleetby went into production on 30 August 2022. In line with the company's accounting policy the asset has been reclassified as an Oil & Gas Production Asset, this relates to the £74.386m in the above note.

 

In performing impairment review, the Group assessed the economic value of individual exploration and evaluation (E&E) assets and had considered no indication for impairment to these E&E assets. In respect of Balcombe, the Directors have considered the likelihood of a successful appeal. Should the appeal be unsuccessful the management will consider further legal options and assess whether an impairment is necessary. See Strategic Review on page 6.

 

                Additional cost related to Exploration assets, which are directly attributable to the qualifying asset that necessarily takes substantial time to prepare, are capitalized as part of the cost of the respective asset and it consist of interest and other cost in connection with the borrowing of the funds. In 2023, total capitalised Interest on Loan amounts to £Nil (2022: £899,000) and total capitalised commitment fee amounts to £Nil (2022: £585,000)

 

13.          Subsidiaries

         

The details of the subsidiaries are as follows:

Name of subsidiary/ place of incorporation		Principal activity
Angus Energy Holdings UK Limited		Investment holding company
Angus Energy Weald Basin No.1 Limited		Investment holding company
Angus Energy Weald Basin No.2 Limited		Investment holding company
Angus Energy Weald Basin No.3 Limited*		Oil extraction for distribution to third parties
Angus Energy North America Limited		Dormant company
Saltfleetby Energy Limited **		Natural Gas Extraction

* indirect wholly owned by Angus Energy Weald Basin No.2 Limited (AEWB2).

**Saltfleetby Energy Limited was acquired by the Group on 24 May 2022, see further details on Note 30.

 

The registered office address of the respective entity as follow:

Registered address	Name of subsidiary
Building 3 Chiswick Park, 566 Chiswick High Road, London, W4 5YA.	Angus Energy Weald Basin No.2 Limited Angus Energy North America Limited Saltfleetby Energy Limited
5 South Charlotte Street, Edinburgh, Scotland, EH2 4AN	Angus Energy Holdings UK Limited Angus Energy Weald Basin No.1 Limited Angus Energy Weald Basin No.3 Limited

 

 

 

 

 

 

 

 

 

 

 

14.          Available for sale financial investments

	2023		2022
	£'000		£'000
At 1 October	20		28
Loss on revaluation for the year	(9)		(8)
At 30 September	11		20

 

        Financial investments are shares held in Alba Mineral Resources Plc (Alba) consisting of 12,407,910 shares. The shares represent consideration received by Angus for the disposal of Alba's 5% interest in the Brockham oilfield.

 

        The changes in the value of these investments have been determined directly by reference to the published price quoted on AIM at reporting date.

 

15.          Trade and other receivables

 

			2023		2022
			£'000		£'000
Current
Accrued sales income			2,121		2,975
Amounts due from farmees			195		3
Rent deposit			130		4
VAT recoverable			196		206
Other receivables			334		919
TOTAL			2,976		4,107

 

The carrying amount of trade and other receivables approximates to their fair value.

 

			2023		2022
			£'000		£'000
Trade and other receivables			3,080		4,211
Less: Impairment allowance			(104)		(104)
			2,976		4,107

 

 

16.          Inventory

		As at 30 September
		2023		2022
		£'000		£'000
Inventory
Acquired with Saltfleetby Energy Limited		3		3
Write-off		(3)		-
Total		-		3

 

Stocks Inventories held are raw materials and consumables that have been acquired by the Group through its acquisition of Saltfleetby Energy Limited. They have been valued at net realisable value.

 

 

 

 

17.          Share capital and Share Premium

 

                Allotted, called up and fully paid:

 

	Issue price In pence	Number of shares	Ordinary share capital	Share premium
Ordinary share of £0.002 each			£'000	£'000
As at 30 September 2021		966,502,269	1,933	23,605
Issue of shares 4 November 2021	0.002	11,200,000	22	-
Issue of shares 5 November 2021	0.65	115,384,611	231	519
Issue of shares 4 February 2022	0.8	175,000,000	350	1,050
Issue of shares 16 March 2022	0.8	39,200,000	78	235
Issue of shares 11 April 2022	1.1	61,363,634	123	552
Issue of shares 24 May 2022	1.09896	91,000,000	182	818
Issue of shares 24 May 2022	1.2	546,000,000	1,092	5,460
Issue of shares 24 May 2022	1.0989	273,000,000	546	2,454
Issue of shares 24 May 2022	0.9429	5,000,000	10	37
Issue of shares 4 July 2022	1.0989	273,000,000	546	2,454
Issue of shares 12 July 2022	1.0989	27,300,000	54	245
Issue of shares 13 July 2022	1.2	403,226	2	4
Issue of shares 13 July 2022	0.9	150,000	1	1
Issue of shares 13 July 2022	1.2	5,250,000	10	53
Issue of shares 5 September 2022	0.65	3,461,538	7	15
Issue of shares 5 September 2022	0.8	8,750,000	17	52
Issue of shares 5 September 2022	0.9	5,405,555	11	38
Issue of shares 5 September 2022	1.1	3,068,182	6	28
Issue of shares 5 September 2022	1.2	8,750,000	18	88
Issue of shares 5 September 2022	1.35	4,375,000	9	50
Issue of shares 5 September 2022	1.5	4,375,000	9	56
Issue of shares 13 September 2022	0.974	18,025,596	36	140
Issue of shares 13 September 2022	1.2	5,370,967	11	53
Issue of shares 13 September 2022	1.35	1,193,549	2	14
Issue of shares 13 September 2022	1.5	2,685,484	5	35
Issue of shares 16 September 2022	1	15,000,000	30	120
Issue of shares 16 September 2022	1.2	25,774,375	52	257
Issue of shares 16 September 2022	1.35	12,731,187	25	146
Issue of shares 16 September 2022	1.5	11,731,188	23	153
Issue of shares 23 September 2022	1.2	21,100,000	42	211
Issue of shares 23 September 2022	1.35	12,162,903	24	140
Issue of shares 23 September 2022	1.5	10,550,000	22	137
Less: Issuance of costs		-	-	(512)
At 30 September 2022		2,764,264,264	5,529	38,708
Issue of shares 14 October 2022	1.0989	127,400,127	255	1,145
Issue of shares 28 October 2022	1.0989	10,193,759	20	92
Issue of shares 2 November 2022	1.0989	36,599,864	73	329
Issue of shares 21 November 2022	1.35	156,000	0.5	2
Issue of shares 21 November 2022	1.5	156,000	0.5	2
Issue of shares 8 December 2022	1.2	250,000	0.5	3
Issue of shares 8 December 2022	1.35	125,000	0.25	1
Issue of shares 8 December 2022	1.5	125,000	0.25	1
Issue of shares 19 December 2022	1.65	341,219,000	682	4,940
Issue of shares 20 January 2023	1.65	89,781,000	180	1,302
Issue of shares 20 January 2023	1.65	60,606,061	122	879
Issue of shares 25 January 2023	1.2	806,452	2	8
Issue of shares 25 January 2023	1.35	403,226	0.5	5
Issue of shares 25 January 2023	1.5	403,226	0.5	5
Issue of shares 5 February 2023	1.2	1,612,903	3	16
Issue of shares 4 April 2023	1	145,293,100	290	1,162
Share Capital and Share Premium (continue)
Issue of shares 6 April 2023	1.3638	10,998,719	22	128
Issue of shares 21 July 2023	0.9534	31,466,331	63	237
Issue of shares 20 September 2023	1	5,000,000	10	40
Less: Issuance of costs		-	-	(3,505)
At 30 September 2023		3,626,860,032	7,254	45,500

 

On 14 October 2022, the company issued 127,400,127 ordinary shares at 1.0989 pence per share. They were issued in relation to an exercise of Company Warrants.

 

On 28 October 2022, the company issued 10,193,759 ordinary shares at 1.0989 pence per share. They were issued in relation to an exercise of Company Warrants.

 

On 2 November 2022, the company issued 36,599,864 ordinary shares at 1.0989 pence per share. The shares were issued in relation to an exercise of Company Warrants.

 

On 21 November 2022, the company issued 156,000 shares at 1.35 pence per share and 156,000 at 1.5 pence per share. They were issued in relation to an exercise of Company Warrants.

 

On 8 December 2022, the company issued 250,000 shares at 1.2 pence per share, 125,000 shares at 1.35 pence per share and 125,000 at 1.5 pence per share. They were issued in relation to an exercise of Company Warrants.

 

On 19 December 2022, the Company issued 341,219,000 ordinary shares at 1.65 pence per share, raising gross proceeds of £5,630,113.

 

On 20 January 2023, the Company issued 89,781,000 ordinary shares at 1.65 pence per share, raising gross proceeds of £1,481,387 (in addition to the ordinary shares raised on 19 December 2022) and 60,606,061 ordinary shares at 1.65 pence per share to settle £1,000,000 deferred consideration of purchasing Saltfleetby Energy Limited on 22 May 2022.

 

On 25 January 2023, the company issued 806,452 shares at 1.2 pence per share, 403,226 shares at 1.35 pence per share and 403,226 at 1.5 pence per share. They were issued in relation to an exercise of Company Warrants.

 

On 5 February 2023, the company issued 1,612,903 shares at 1.2 pence per share. They were issued in relation to an exercise of Company Warrants.

 

On 4 April 2023, the Company issued 145,293,100 ordinary shares at 1 pence per share to Knowe Properties Limited to settle the £1.4m Convertible Loan Note plus accrued interest of £52,931.

 

On 6 April 2023, the Company issued 10,998,719 ordinary shares at 1.3638 pence per shares. The shares were fees shares relating to £3,000,000 bridge loan facility agreed on 28 March 2023;

 

On 21 July 2023, the Company issued 31,466,331 ordinary shares at 0.9534 pence per share. The shares were fees shares relating to £6,000,000 bridge loan facility agreed on 14 July 2023;

 

On 20 September 2023, the Company issued 5,000,000 ordinary shares at 1 pence per share. The shares were issued to the Lenders or their representatives in lieu of a cash facility fee pursuant to the Company's Saltfleetby Loan Development Facility at or around the first anniversary of the Loan Completion;

 

As at 30 September 2023 the total issued ordinary shares of the Company were 3,626,860,032 (2022: 2,764,264,264)

 

 

18.          Share-based payments

               

In 2016, the Group implemented an Enterprise Management Incentive Scheme followed by a NED and Consultant Share Option Scheme (The Scheme).

 

At 30 September 2023, the following share options and warrants were outstanding in respect of the Ordinary shares:

Exercise price	Outstanding as at 01 Oct 2022	Granted during the year	No. of options surrendered during the year	Exercised during the year	Outstanding and exercisable as at 30 September 2023	Final expiry dates
£0.06	16,850,892	-	(1,074,901)	-	15,775,991	13 Nov 2026
£0.09	1,050,000	-	-	-	1,050,000	13 Nov 2026
£0.08	10,050,000	-	(650,000)	-	9,400,000	24 Aug 2028
£0.02	23,400,000	-	(3,100,000)	-	20,300,000	15 Jul 2029
£0.015	25,250,000	-	(750,000)	-	24,500,000	31 Mar 2031
£0.012	21,101,432	-	(20,554,557)	(546,875)	-	27 January 2023
£0.0135	10,787,361	-	(10,513,924)	(273,437)	-	27 January 2023
£0.015	11,908,328	-	(11,634,890)	(273,438)	-	27 January 2023
£0.010989	173,100,000	-	-	(173,100,000)	-	5 July 2027
£0.02		156,500,000	-	-	156,500,000	9 October 2026
£0.018		98,000,000	(28,000,000)	-	70,000,000	16 April 2033
£0.0165		341,633,886	-	-	341,633,886	20 June 2026
£0.0165		150,000,000	-	-	150,000,000	24 March 2026
Warrant	216,897,121	519,633,886	(43,704,272)	(174,193,750)	518,632,985
Share options	76,600,892	254,500,000	(32,574,000)	-	270,526,892

 

The weighted average exercise price of share options and warrants was £0.0195 at 30 September 2023 (2022: £0.01784). The weighted average remaining contractual life of options outstanding at the end of the year was 3 years (2022:4 years). The weighted average fair value of share option was £0.0128 (2022: £0.0148) each on the grant date. The vesting criteria of the share options are subject to share price growth reaching the target level.

 

These fair values were calculated using the Black Scholes warrant pricing model. The inputs into the model were as follows:

	Options	Options	Warrants	Warrants	Warrants
Stock price	1.95p	1.73p	1.5p	1.5p	1.5p
Exercise price	2.0p	1.8p	1.65p	1.65p	1.65p
Risk-free rate	3.5%	3.5%	3.5%	3.5%	3.5%
Volatility	75.84%	75.84%	75.84%	75.84%	75.84%
Time to maturity	10 years	10 years	3 years	4 years	6 years

 

 

The Group recognised a share-based payment charge of approximately £1.377m (2022: £0.811m) relating to the options issued in the period. The Group recognised finance costs of £1.663m (2022: £nil) relating to the warrants issued as part of the loans made during the period.  

 

No options were exercised in both reporting year 2022 and 2023. There were 28,000,000 share options cancelled and 5,574,000 surrendered during 2023. There were 174,193,750 Warrants exercised and 42,703,372 expired during 2023. There remain 297,525,991 options and 491,633,885 warrants outstanding and exercisable as at 30 September 2023.

 

19.          Reserves

		2023		2022
		£'000		£'000
Merger reserve		(200)		(200)

Merger reserve

The merger reserve arose on the acquisition of Angus Energy Holdings Limited by the Company.

 

20.          Earnings per share (EPS)

 

Basic EPS amounts are calculated by dividing the profit or loss for the year attributable to equity holders of the Group by the weighted average number of ordinary shares outstanding during the period.

 

Diluted EPS amounts are calculated by dividing the profit or loss for the year attributable to equity holders of the Group by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

The earnings per share information based upon the 3,626,860,032 ordinary shares are as follows:

 

		2023		2022
		£'000		£'000
Net profit /loss attributable to equity holders of the parent company		117,810		(111,947)
Weighted average number of basic ordinary shares		3,385,813,578		1,648,593,936
Basic EPS (in pence)		3.48		(6.79)
		2023		2022
		£'000		£'000
Net profit /loss attributable to equity holders of the parent company		117,810		(111,947)
Weighted average number of diluted ordinary shares		4,046,981,983		1,648,593,936
Basic EPS (in pence)		2.91		(6.79)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21.          Trade and other payables

 

			2023		2022
Due within one year			£'000		£'000
Trade payables			4,249		2,319
Convertible loan note			-		1,319
Deferred consideration on Saltfleetby Energy Limited acquisition			5,244		6,734
Lease liability			17		35
Accruals			176		62
Interest payable - loan			315		392
Other payables			269		293
			10,270		11,154

 

 

Due after more than one year			2023		2022
			£'000		£'000
Lease liabilities			23		52
			23		52

The carrying amount of trade and other payables approximates to their fair value.

 

On 4 April 2023, the Company issued 145,293,100 ordinary shares at 1 pence per share to Knowe Properties Limited to settle the £1.4m Convertible Loan Note issued on 20 April 2022, plus accrued interest of £52,931.

 

On 24 May 2022, the Company executed a share purchase agreement to acquire the entire issued share capital of Saltfleetby Energy Limited from Forum Energy Services Limited, giving the Company 100% ownership of the Saltfleetby Gas Field.  The total effective consideration payable pursuant to the SPA is the sum of £14,052,000 of which up to £6,250,000 is deferred consideration and £484,000 ,representing the debt free cash free amount, to be paid in instalments from net cash payments to Angus Energy from the Project through to 31 March 2025 (and subject to an upward or downward net cash adjustment) as and when those payments would have been available to Saltfleetby Energy Limited under the Company's Senior Debt Facility of May 2021.  It is expected that all material payments will be paid within 24 months following the new loan facility from Trafigura.

 

22.          Provisions for other liabilities and charges

 

	2023		2022
	£'000		£'000
Abandonment costs
Balance b/fwd	4,369		3,007
Abandonment cost incurred through acquisition of Saltfleetby Energy Limited	-		1,225
Increased provision for Saltfleetby	288		-
Increased provision Brockham	128		63
Increased provision for Lidsey	176		62
Increase provision Balcombe	9		12
Balance c/fwd	4,970		4,369

 

The Group makes full provision for the future costs of decommissioning oil and gas production facilities and pipelines on the installation of those facilities. The above provision was calculated over a 5 to 10 year period, depending on when the producing oil and gas properties are expected to cease operations. This is entirely dependent on economic factors which include commodity pricing, the performance and the reserves of the Asset.

 

These provisions have been created based on the Group's internal estimates and expectations of the decommissioning costs likely to incur in the future. For the period under review, the directors have assessed that the discount rate and inflation rate to be applied to the current cost of decommissioning to be similar. On this basis, the current cost is considered to be similar to the discounted net present value.

 

23.          Convertible loan

 

On 20 October 2021, the Company agreed an extension of the £1.4m Convertible Loan Note repayable on 17 April 2022 by a further 12 months until 17 April 2023.

 

On 4 April 2023, the Company issued 145,293,100 ordinary shares at 1 pence per share to Knowe Properties Limited to settle and convert the £1.4m Convertible Loan Note issued on 20 April 2022, plus accrued interest of £52,931. The equity element of the convertible loan note recognized at £106,000 is reversed upon conversion of the loan.

 

24.          Loan Payable

 

£12m Loan Facility

 

On 17 May 2021, the Group signed a Loan Facility, conditional on the setting of the hedge (see Note 25) and regulatory approval of the royalty from the NSTA, between Angus Energy and Saltfleetby Energy Limited and Mercuria Energy Trading Limited and Aleph Saltfleetby Limited as the co-Lender. The term of the Loan Facility provides for a four year amortisation loan facility of up to £12 million with a 12% margin over LIBOR, a 3% commitment fee payable out of the facility, a share granted of 30 million shares in Angus, issued over the life of the facility and an override of 8% of gross revenue following the repayment of the facility.

 

The £12 million facility was required for the re-development of the Saltfleetby Gas Field and the drilling of the side-track well in line with the Field Development Plan and the Plans for the acceleration of production through the fast-tracking of the side-track well.

				2023		2022
Repayment date schedule are as follows:				£'000		£'000
Current
30 September 2024				4,200		5,250
Non-Current
30 September 2025				3,013		4,200
31 March 2025						2,100
Total Facility Loan				£7,213		£11,550

 

 

 

 

 

 

 

 

 

 

 

£3m Bridge Loan

 

On 28 March 2023, the Company entered into a GBP 3 million junior debt facility (the "Bridge Facility"). The Bridge Facility has an initial term of three months, extendable with the payment of a 3% roll fee for a further three months.  The Bridge Facility is priced at SONIA + 15% and committed the Company to issue 150 million warrants, struck at 1.65p/share. The Bridge Facility was then rolled according to its terms by a further three months with a final maturity date of 28 September 2023.

£3m Bridge Loan			2023		2022
			£'000		£'000
Principle			3,000		-
Interest and fees			406		-
			3,406		-

On 30 October 2023, and previously announced on 28 September 23, Kemexon Ltd agreed to convert its £3m Junior Bridge Facility, together with interest and fees, into equity in the Company at a price of 0.66 pence per share. Accordingly, the Company issued 516,033,308 ordinary shares at 0.66 pence per share.

                £6m Bridge Loan

On 21 July 2023, entered into a GBP 6 million junior debt facility (the "2^nd Bridge Facility") with Aleph Finance Limited ("AFL"), an associate of the Company's Substantial Shareholder Aleph Commodities Limited ("ACL"). The 2^nd Bridge Facility has an initial term of three months, extendable, at the option of the Company, for a further 3-month period. Thereafter any roll is with mutual agreement. A roll fee of 3% applies.  Interest on the Bridge Facility, which is payable quarterly, is capitalized on each 3-month period and added to loan balance. There is no exit fee. A 3% penalty fee applies should the Bridge Facility be repaid earlier than its stated maturity. 

The Bridge Facility is priced at SONIA (Sterling Overnight Index Average) + 15% . The Company will also issue 300 million 3 year warrants to ACL (or associates or parties nominated by ACL) at a strike of 1.5p per share.  The warrant strike price will adjust to the price of any equity issued during the term of the Bridge Facility if such equity issuance is at a price which is lower than the Warrant strike price. 

The Bridge Facility was then rolled according to its terms by a further three months and then again by one month with a final maturity date of 19 February 2024. The loan was repaid in full on 22 February 2024 out of the proceeds of the £20m refinancing.

£6m Bridge Loan			2023		2022
			£'000		£'000
Principal			6,000		-
Interest and fees			223		-
			6,223		-

 

LOAN PAYABLES SUMMARY:			2023		2022
			£'000		£'000
CURRENT
£12M Loan Facility			4,200		5,250
£3M Bridge Loan			3,406		-
£6M Bridge Loan			6,223		-
			13,829		5,250
NON-CURRENT
£12M Loan Facility			3,013		6,300
			3,013		6,300

25.    Derivative Liability

 

On 01 June 2021, Angus Energy Weald Basin no. 3 Limited (AWB3) entered into a derivative agreement with Mercuria Energy Trading SA (METS) under a Swap contract as part of the condition of the Loan Facility (see Note 24). The derivative instrument was used to mitigate price risk on the expected future cash flow from the production of Saltfleetby Gas Field. Under the Swap contract, AWB3 will pay METS the floating price while METS will pay AWB3 the fixed price on the sale of gas from the field.

 

Due to the delay in the production of the Saltfleetby field, which further pushed first gas production to 30 August 2022, the hedge profile had been revised. The Company's hedge counterparty agreed to allow the Company to crystallise (i.e. unwind) 50% of its forward hedge liability from Q3 2024 to the end of the hedge profile in June 2025.  Settlement for each unwind is deferred until the periods in question and no interest is being charged.  The resulting revised hedge profile as at 30 September 2023 as shown below:

Further details of the contract as at 30 September 2023 are as below:
	Period of Gas Production		Quantity in Therms	Fixed price in pence per Therms
	1-Oct-23	31-Mar-24	9,000,000	46.55
	1-Apr-24	30-Jun-24	4,500,000	35.60
	1-Jul-24	30-Sep-24	1,910,000	35.60
	1-Jul-24	30-Sep-24	1,840,000	1.226*
	1-Oct-24	31-Mar-25	3,860,000	45.00
	1-Oct-24	31-Mar-25	3,640,000	1.370*
	1-Apr-25	30-Jun-25	1,930,000	0.3525
	1-Apr-25	30-Jun-25	1,820,000	1.070*
			28,500,000

 

*crystalised hedges at fixed price

 

During the period, the Company realised a derivative cost of £19.963m.

 

As of the reporting date, the expected cash flow on the sale of natural gas amounted to £11.480m resulting in a loss of £21.714m of which the Group has now recorded a 100% share on its new working interest due to the acquisition of Saltfleetby Energy Limited. The resulting loss on the Swap contract was a result of the steep rise in the prices of natural gas affecting the Group as the floating price payer as of the reporting date.

The Group has recognized the gross liability at 100%, due to the acquisition of Saltfleetby Energy Limited (SEL) with a working interest of 49% plus the Group's working interest of 51% prior to acquiring SEL.

 

Cash Flow of Derivative Instruments		30 Sep 2024	30 Sep 2025	Total
		£'000	£'000	£'000
Cash Inflow		6,956	4,524	11,480
Cash Outflow		(19,783)	(13,411)	(33,194)
Net Liability on Swap Contract		(12,827)	(8,887)	(21,714)

 

 

 

 

 

 

 

 

 

 

 

 

 

Specific valuation technique used to value the financial instruments includes fair value measurement derived from inputs other than quoted prices included within Level 1 of fair value hierarchy valuation, that are observable for the instrument either directly or indirectly (see accounting policy for Derivatives Instrument).

The carrying value of the financial instrument approximates their fair value and was valued using Level 2 fair value hierarchy valuation. The fair value has been determined with reference to commodity yield curves, as adjusted for liquidity and trading volumes as at the reporting date supplied by the Group's derivative partner, Mercuria Energy Trading.  Management has carried out its own valuation of the hedge using the same method. Future dated market prices have been taken from the Heren Report dated 30 September 2023. This has resulted in a liability of £22,094m and represents a 0.98% variance to Mercuria's calculation. Management considered that the value provided by Mercuria Energy Trading best represented the fair value of these arrangements as the forward pricing curves did not take into account other market conditions.  This is a key estimate and has been disclosed in note 4.

 

The nature of these arrangements in the present environment is such that material fluctuations in the value of the derivatives are occurring on a daily basis.  Wholesale gas prices have increased substantially since entering into the contracts, but remain highly volatile, and as a result, the loss on these contracts has also increased significantly.

 

The loss on these contracts at 30 September 2023 represents the forecast spot-price value of the gas to be extracted against the value fixed to be provided to the Group.  Under projected gas production volumes, these arrangements will fix the amount payable to the group for the contracted volumes, with any excess volume being able to be sold at the available spot price.

 

In the event that the Group does not meet its production timetable, the swaps will crystallise as a liability at the dates at the proposed periods of gas production in the swap agreements.

 

26.    Financial instruments

 

The Group's principal financial instruments comprise cash and cash equivalents, trade and other receivables, derivative instruments and trade and other payable.  The Group's accounting policies and method adopted, including the criteria for recognition, the basis on which income and expenses are recognised in respect of each class of financial assets, financial liability and equity instrument are set out in Note 3. The Group do not use financial instruments for speculative purposes.

 

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

 

	Financial Asset at amortised cost	Financial Liabilities at amortised cost	Financial Liabilities at fair value through profit and loss	TOTAL
30 September 2023
Asset
Trade and other receivables	2,976	-	-	2,976
Cash and cash equivalents	2,172	-	-	2,172
Total financial assets	5,148	-	-	5,148
Liabilities
Trade and other payable	-	5,010	-	5,010
Deferred consideration on acquisition of Saltfleetby Energy Limited	-	5,244	-	5,244
Lease liabilities	-	40	-	40
Debt financing	-	16,841	-	16,841
Derivative liability	-	-	21,714	21,714
Total financial liabilities	-	27,135	21,714	48,849
	Financial Asset at amortised cost	Financial Liabilities at amortised cost	Financial Liabilities at fair value through profit and loss	TOTAL
30 September 2022
Asset
Trade and other receivables	4,107	-	-	4,107
Cash and cash equivalents	747	-	-	747
Total financial assets	4,854	-	-	4,854
Liabilities
Trade and other payable	-	3,066	-	3, 066
Deferred consideration on        acquisition of Saltfleetby Energy Limited	-	6,734	-	6,734
Convertible loan notes	-	1,319	-	1,319
Lease liabilities	-	87	-	87
Debt Financing	-	11,550		11,550
Derivative Liability	-	4,175	154,505	158,680
Total financial liabilities	-	26,931	154,505	181,436

 

Capital management

 

The Group manages its capital to ensure that it will be able to continue as a going concern while attempting to maximise the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the group consists of issued capital (see note 17) and external loans (see note 24). Post the year end, the Company reorganised its external debt with a £20m senior secured loan (see note 32).

 

Credit risk

 

Credit risk is the risk that a counter-party will cause a financial loss to the Group by failing to discharge its obligations to the Group. The Group manages its exposure to this risk by applying limits to the amount of credit exposure to any one counterparty and employs strict minimum credit worthiness criteria as to the choice of counterparty. The maximum exposure to credit risk for receivables and other financial assets is represented by their carrying amount. As described in note 15, the Group recognised an impairment provision of £104,000 in 2021 against the amount due from farmees that are past due in the year.

 

Fair values

 

Management assessed that the fair values of cash and short-term deposits, trade receivables, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

 

      Interest rate risk

 

The Group and company's policy is to fund its operations through the use of retained earnings and equity.

The Group exposure to changes in interest rates relates primarily to cash at bank, loan facility and amount owed by related parties. Cash is held either on current or short term deposits at a floating rate of interest determined by the relevant bank's prevailing base rate.

 

 

 

 

Interest rate sensitivity

 

The following table demonstrates the sensitivity to reasonably possible changes in the interest add-on rate for the £12 million loan with the principal interest rate held constant at 12% and the Bridge Loans with the principal interest rate held constant at 15% (see Note 24). The add-on-interest rate is linked to SONIA (Sterling Over Night Indexed Average) and based on September 2023 average of 5.24% it had an immaterial impact of £7,000. 

		Increase / (decrease)
Increase/decrease in add-on Interest rate		30 September
		2023		2022
		£		£
+ 10%		64		22
-  10%		(64)		(22)

 

      Foreign currency exchange risks

 

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of the changes in foreign exchange rates. The Group's exposure to the risk of changes in foreign exchange rates relates primarily to the Group's operating activities (when revenue or expense is denominated in a foreign currency).

The Group does not hedge its foreign currencies. Transactions with customers regarding oil sales are denominated in US Dollars. The Group has bank accounts in US Dollars to mitigate against the exchange risks which is very minimal to its value. At 30 September 2023, the GBP cash balance held denominated in USD was £323 (2022; £19,869).

 

                Liquidity risks

 

The principal risk to the Group is liquidity, which arises from the Group's management of working capital. It is a risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. This aspect is kept under review by the directors and in this respect, management carries out rolling 12 month cash flow projections on a monthly basis as well as information regarding cash balances. It is the Group's policy as regards liquidity to ensure sufficient cash resources are maintained to meet short-term liabilities.

     

The maturity profile of the Group's financial liabilities at the reporting dates based on contractual undiscounted payments are summarised below:

			2023		2022
			£'000		£'000
Trade and other payable
Within one month			3,564		454
Within two to three months			1,463		2,612
Within four to twelve months			5,243		8,088
			10,270		11,154
			2023		2022
			£'000		£'000
Lease liabilities
Within one month			-		-
Within two to three months			-		-
Within four to six months			23		35
Within six to twelve months			-		-
More than twelve months			17		52
			40		87

 

 

			2023		2022
			£'000		£'000
Loan liabilities
Within one month			9,629		1,050
Within two to three months			1,050		1,050
Within four to six months			1,050		1,050
Within six to twelve months			2,100		2,100
More than twelve months			3,013		6,300
			16,842		11,550
			2023		2022
			£'000		£'000
Derivative liabilities
Within one month			874		6,754
Within two to three months			1,903		14,412
Within four to six months			3,493		24,663
Within six to twelve months			6,557		40,754
More than twelve months			8,887		72,097
			21,714		158,680

         Commodity price risk

 

The Group is exposed to the risk of fluctuations in prevailing market commodity prices of oil and gas products it produces. The table below summarised the impact on profit before tax for changes in commodity prices

 

          Commodity price sensitivity

 

The analysis is based on the assumption that the crude oil and natural gas prices move 10% resulting in a change of US$7.71/bbl for crude oil and GBP 0.11/Therm for natural gas sales for 2023, with all other variables held constant. Reasonably possible movements in commodity prices were determined based on a review of the average spot prices at each reporting periods.

 

Increase/decrease in crude oil prices		Increase / (decrease) in profit before tax for the year ended 30 September
		2023		2022
		£'000		£'000
Average spot price increased by 10%		143		11
Average spot price decreased by 10%		(143)		(11)

 

 

 

 

Increase/decrease in gas prices		Increase / (decrease) in profit before tax for the year ended 30 September
		2023		2022
		£'000		£'000
Average spot price increased by 10%		2,683		306
Average spot price decreased by 10%		(2,683)		(306)

 

 

 

 

27.          Net debts reconciliation

 

The below table sets out an analysis of net debt and the movement in net debt for the years presented

		2023		2022
		£'000		£'000
Cash and cash equivalent		2,172		747
Convertible loan note (note 23)		-		(1,433)
Loan payable (note 24)		(7,213)		(11,550)
Bridge Loans (note 25)		(9,000)		-
Deferred consideration on Saltfleetby Energy Limited acquisition		(5,244)		(6,734)
Net debt		(19,285)		(18,970)

 

 

	Cash and cash equivalents	Convertible loan note	Loans	Bridge Loans	Deferred consideration on acquisition of SEL	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Net debt as at 1 October 2021	6,160	(1,433)	(12,000)	-		(7,273)
Cash flow	(15,427)	-	-	-		(15,427)
Issue of new equity (net proceeds)	10,464	-	-	-		10,464
Saltfleetby acquisition cost	-	-	-	-	(6,734)	(6,734)
Facility Loan repayment	(450)		450	-
Net debt as at 30 September 2022	747	(1,433)	(11,550)	-	(6,734)	(18,970)
Net debt as at 1 October 2022	747	(1,433)	(11,550)	-	(6,734)	(18,970)
Cash flow	(11,266)	-	-	-		(11,266)
Convertible Loan notes	-	1,433	-	-	-	1,433
Issue of new equity (net proceeds)	8,518	-	-		1,000	9,518
Bridge Loans	9,000	-		(9,000)	-	-
Deferred consideration payment	(490)	-	-	-	490	-
Facility Loan repayment	(4,337)	-	4,337	-	-	-
Net debt as at 30 September 2023	2,172	-	(7,213)	(9,000)	(5,244)	(19,285)

 

 

28.          Lease asset and liabilities

 

The Groups lease assets are offices. Leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources are outside the scope of IFRS 16 and therefore the leases that the Group have for the various sites are outside the scope given these leases are wholly for the purposes of exploration and extraction from the leased land only. Key movements relating to the lease balances are presented below.

 

		As at 30 September
		2023		2022
		£'000		£'000
Leased assets
Balance		81		11
New leases in the year - discounted		-		97
Depreciation charged		(55)		(27)
Total		26		81

 

 

The maturity of the lease liability are as follows:

		As at 30 September
		2023		2022
		£'000		£'000
Leased liabilities
Balance		87		12
New Leases in the year		-		105
Payments		(47)		(30)
Total		40		87
Leases which expire:
Not later than one year		17		35
Later than one year and not later than five years		23		52
More than five years		-		-
Total		40		87

29.          Commitments

 

                At 30 September 2023, the Group had a contractual capital commitments of NIL (2022 £0.245m) in respect to the Group's Saltfleetby development activities.

 

30.          Acquisition of Saltfleetby Energy Limited

 

In 24 May 2022, the Group has executed a Share and Purchase Agreement (SPA) with Forum Energy Service Limited to acquire the entire issued capital of Saltfleetby Energy Limited which owns the 49% working interest and the sole project partner in one of the key asset of the Company which is the Saltfleetby Gas Field, thereby giving the Company a 100% interest in the project.

 

The total effective consideration payable pursuant to the SPA is the sum of £14,052,000 which comprise of the following:

 

·      £250,000 to be paid in cash at Completion;

 

·      the issue of 91 million Ordinary Shares at 1.09896011 pence per share (the "Funding Price") at Completion (the "Initial Consideration Shares");

 

·      the issue and allotment of the 546,000,000 Ordinary Shares at a price of 1.2 pence per Ordinary Share (the ("Acquisition Price") at Completion (the "Additional Consideration Shares"); and

 

·      up to £6,250,000 and additional £484,000 deferred consideration to be paid in instalments from net cash payments to Angus Energy from the Project through to 31 March 2025.At the reporting date the outstanding deferred consideration is £5,244,000 after settlement of £1,000,000 in ordinary shares and warrants and payments in cash of £490,000;

 

On the acquisition date, Saltfleetby Energy Limited had a net asset value of £12.581m before its share in Derivative Liability of the hedging instrument valued at £35.228m on its 49% share as a partner.

 

The Derivative Liability is also considered a related liability arising from the hedging of gas sales and further discussed in Note 25.

 

With the consolidation of the partner's 49% holdings on the asset. The Company is successful in progressing the asset to its production stage with first gas achieved in September 2022 continuing to generate Revenue for the year.

 

 

 

 

31.          Related Party transactions

 

Amounts due at the year end to Forum Energy Services Limited are £5,244,000 (2022: £6,734,000) (see note 21). Forum Energy Services Limited is a related party by virtue of Paul Forrest joining the board of Angus Energy Plc on 18 July 2022 and being the majority of Forum Energy Services Limited.

 

Aleph Commodities Limited ("ACL") and its associates are Substantial Shareholders in the Company and accordingly ACL and its associates, which includes Aleph Finance Limited, are related parties under the AIM Rules. Therefore, both the first and second Bridge Facility (see note 25) and associated warrants and fees are related party transactions under the AIM Rules.  

 

Kemexon Ltd, the lender of the Bridge Loan (see note 25), is a Substantial Shareholder in the Company as defined under the AIM Rules, and therefore the conversion of The Bridge Facility is a Related Party Transaction under AIM Rule 13.

 

32.          Subsequent events

 

On 30 October 2023, and previously announced on 28 September 23, Kemexon Ltd agreed to convert its £3m Junior Bridge Facility, together with interest and fees, into equity in the Company at a price of 0.66 pence per share. Accordingly, the Company issued 516,033,308 ordinary shares at 0.66 pence per share. 

 

On 22 February 2024, the Company announced that terms had been agreed with a subsidiary of Trafigura Group PTE Ltd ("Trafigura ") for a refinancing of its existing debt. The Company signed definitive loan documentation which allows it to draw down in full on the £20 million loan facility (the "Facility") with Trafigura. The existing senior debt of £4.56 million was transferred to Trafigura and the proceeds of the Facility will was applied to repay the bridge facility of £6 million, and £1.75 million of Forum Energy's deferred consideration from the sale of Saltfleetby Energy Limited's 49% interest in the Saltfleetby Field to Angus in 2022. The balance of funds from the Facility would be used to pay legacy creditors and invest in wells and equipment to increase gas production from Saltfleetby and restart oil production from the Brockham Field in Southern England. The existing security package encompassing first fixed and floating charges over all the Group's leases, licences and equipment has been novated to Trafigura as has the Gas Sales Agreement with Shell Trading Europe Limited. The existing hedge contract was replaced with a gas offtake, with embedded price protection.

 

On 6 March 2024, the Company issued 25,000,000 Ordinary Shares at 0.4 pence per share in relation to a £750,000 fee for structuring and assistance in securing the Trafigura £20 million Loan Facility. The total number of fee shares is 187,500,000. The balance to be issued after receiving additional authorities at the General Meeting on 14^th March 2024.