TIDMORCA
RNS Number : 8196V
Orcadian Energy PLC
16 December 2021
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 (MAR). Upon the
publication of this announcement via Regulatory Information Service
(RIS), this inside information is now considered to be in the
public domain.
16 December 2021
Orcadian Energy plc
("Orcadian Energy", "Orcadian" or the "Company")
Results for the year ended 30 June 2021
Orcadian Energy (AIM: ORCA), the North Sea focused oil and gas
development company, is delighted to announce its audited results
for the twelve months ended 30 June 2021.
Highlights:
-- Primary activity was preparing for the Company's admission to trading on AIM.
-- Following the end of the period under review:
o Orcadian admitted to AIM in July 2021 raising gross proceeds
of GBP3 million
o Receipt of Letter of no objection from the Oil and Gas
Authority ("OGA") and entry into the authorisation phase of
development planning for the Pilot Field
o Received three expressions of interest for the provision of an
FPSO for the Pilot Development
o Entered into a non-binding Heads of Terms with Carrick
Resources Limited ("Carrick") in respect of a sub-area of Licence
P2320 which covers the Carra prospect ("Carra")
o Cash position as at 15(th) December 2021 of over GBP1.5
million
o Selected by the OGA to evaluate an approach to the
electrification of North Sea oil and gas platforms which will
dramatically cut carbon emissions.
Steve Brown, Orcadian's CEO, said:
" The last financial year has been transformational for the
Company.
"Whilst these results record our position at the end of June
2021, the rest of this year has seen the Company make significant
progress in delivering its strategy.
"We were admitted to trading on AIM, a market of the London
Stock Exchange. On Admission we raised gross proceeds of GBP3m and
since then we have finalised the Concept Select process and moved
to the 'authorisation phase' for our flagship Pilot development,
whilst earlier this month we surpassed twenty-six other companies,
or consortia, to win funding of GBP466,667 in the OGA
Electrification Competition.
"The publishing of results is often a time for reflection, but
from our perspective time spent resting on laurels is time wasted.
Our focus for 2022 will be to seek to secure the financing for the
Pilot project and to secure a customer for the platform
electrification solution we will design in the coming months.
"We are determined to show the industry and the world that it is
possible to produce the oil and gas, that regular customers need,
in a cost effective way and with much, much lower emissions. We
will do this on Pilot and we believe our electrification system
will offer an opportunity for other operators on the UKCS to reduce
emissions as rapidly as possible.
"North Sea businesses can show the world how to produce oil and
gas with much lower emissions, helping to drive out high cost and
high emissions production elsewhere in the world. We are proud of
the role we are playing in this.
"We look forward to 2022 with optimism and energy and look
forward to a sea change in attitudes to responsible oil and gas
development projects and to the market continuing to recognise the
significant value in our projects."
Report and Accounts and Annual General Meeting
A copy of the annual report and accounts for the year ended 30
June 2021 is available on the Company's website (
https://orcadian.energy ) with effect from today. A further
announcement will be made when the Company posts its annual report
and accounts and notice of Annual General Meeting to its
shareholders.
For further information on the Company please visit the
Company's website: https://orcadian.energy
Contact:
Orcadian Energy plc + 44 20 7920 3150
Steve Brown, CEO
Alan Hume, CFO
-------------------------
WH Ireland (Nomad and Joint Broker) +44 20 7220 1666
-------------------------
Katy Mitchell / Andrew de Andrade (Nomad)
Harry Ansell / Fraser Marshall (Corporate
Broking)
-------------------------
Shore Capital (Joint Broker) +44 20 7408 4090
-------------------------
Toby Gibbs / James O'Neill (Advisory)
-------------------------
Tavistock (PR) + 44 20 7920 3150
-------------------------
Nick Elwes / Simon Hudson / Matthew orcadian@tavistock.co.uk
Taylor
-------------------------
Charlesbye (PR) + 44 7403 050525
-------------------------
Lee Cain / Lucia Hodgson
-------------------------
About Orcadian Energy
Orcadian is a North Sea oil and gas operator with a difference.
In planning its Pilot development, Orcadian has selected wind power
to transform oil production into a cleaner and greener process. The
Pilot project is moving towards approval and will be amongst the
lowest carbon emitting oil production facilities in the world,
despite being a viscous crude. Orcadian may be a small operator,
but it is also nimble, and the Directors believe it has grasped
opportunities that have eluded some of the much bigger companies.
As we strike a balance between Net Zero and a sustainable energy
supply, Orcadian intends to play its part to minimise the cost of
Net Zero and deliver reliable organic energy.
Orcadian Energy (CNS) Ltd ("CNS"), Orcadian's operating
subsidiary, was founded in 2014 and is the sole licensee of P2244,
which contains 78.8 MMbbl of 2P Reserves in the Pilot discovery,
and of P2320 and P2482, which contain a further 77.8 MMbbl of 2C
Contingent Resources in the Elke, Narwhal and Blakeney discoveries
(as audited by Sproule, see the CPR in the Company's Admission
Document for more details). Within these licences there are also
191 MMbbl of unrisked Prospective Resources. These licences are in
blocks 21/27, 21/28, 28/2 and 28/3, and lie 150 kms due East of
Aberdeen. The Company also has a 50% working interest in P2516,
which contains the Fynn discoveries. P2516 is administered by the
Parkmead Group and covers blocks 14/20g and 15/16g, which lie
midway between the Piper and Claymore fields, 180 kms due East of
Wick.
Pilot, which is the largest oilfield in Orcadian's portfolio was
discovered by Fina in 1989 and has been well appraised. In total
five wells and two sidetracks were drilled on Pilot, including a
relatively short horizontal well which produced over 1,800 bbls/day
on test. Orcadian's proposed development plan for Pilot is based
upon a Floating Production Storage and Offloading vessel, with over
thirty wells to be drilled by a Jack-up rig through a pair of well
head platforms and will include a floating wind turbine to provide
much of the energy used in the production process. Emissions per
barrel produced are expected to be about an eighth of the 2020
North Sea average and to lie in the lowest 5% of global oil
production.
ANNUAL RESULTS FOR THE TWELVE MONTHSED 30 JUNE 2021
Chairman's Statement
The year ended 30 June 2021 has been a watershed year for the
Orcadian Energy plc and its subsidiary (the "Group"). At the start
of the year the Group was a single private company, then called
Pharis Energy Ltd, now called Orcadian Energy (CNS) Ltd; by the end
of the year that company had been acquired by the newly formed
Orcadian Energy PLC (the "Company"), which was well on the road to
being admitted to the AIM market, an event which occurred on 15
July 2021.
Operationally, the Group has made very substantial progress with
the process of preparing the Pilot oilfield, the Group's principal
asset, for development. During the year GBP530,818 was spent on
intangible assets. This has occurred during a period when the
Government has raised the bar for emissions performance for the oil
and gas industry. The Oil and Gas Authority (the "OGA") had already
started to focus on emissions performance as we were preparing a
Concept Select Report ("CSR") for the Pilot field development which
we submitted in September 2020. A revised Strategy for the Oil
& Gas Authority which placed a range of new net zero
obligations on the UK oil and gas industry, on a par with the
existing central obligation to maximise economic recovery, was laid
before Parliament in December 2020 and came into force in February
2021.
The adoption of a polymer flooding strategy, an outcome of our
concept select work, had already substantially reduced expected
emissions from the Pilot development project, actually well below
the North Sea average, but the OGA asked us to do better, and we
responded positively to that challenge. The result is that expected
Scope 1 emissions from the Pilot development are just 2.6
kgCO2e/bbl, a performance which places the Pilot development at the
low end of the lowest 5% of global oil production (further details
of which are set out in the Company's Admission Document).
Following the end of the period under review, an addendum to the
CSR was submitted to the OGA on the 1st of July 2021 and the OGA
confirmed on the 29th November 2021 that they were content with our
proposal and that the project can move from the Assessment phase
into the Authorisation phase of the OGA's field development plan
process.
The financial results of the Group largely reflect the
investment in progressing the Pilot field and the costs of
preparing the Group for admission to AIM, a costly but necessary
process to position the Group for success. Since Orcadian Energy
(CNS) Ltd was established to apply for the Pilot licence in 2014
much has been achieved with few resources, indeed the admission to
AIM of Orcadian, when measured by the metric of proven plus
probable reserves, was the largest ever UKCS focussed admission of
an oil and gas company to the AIM market. Being quoted gives the
Group access to capital and multiplies the options the Group has to
progress the development of Pilot.
Finally, also following the end of the period under review, on
the 6th December 2021 the OGA announced that Orcadian had been
awarded GBP466,667 in the OGA Electrification Competition. In
return, we will evaluate a new concept for the electrification of
key producing oil and gas fields, initially focussing on Central
Graben area fields, which are owned and controlled by third parties
(see announcement dated 6 December 2021 for more information).
Our concept would use renewable energy, generated from local
wind farms, for the bulk of the electricity required; with back-up
power generated from gas or net zero fuels, supported by batteries
for a fast response. We will be working with Crondall Energy,
Enertechnos, Petrofac, North Sea Midstream Partners ("NSMP") and
Wärtsilä to deliver a report to the OGA and Central Graben
Operators by the end of March 2022. The OGA funding covers all our
external costs in doing this work.
We have also formed a partnership with North Sea Midstream
Partners to make a commercial proposal for the delivery of
electrical power to Central Graben and Central North Sea Operators.
It remains to be seen whether this opportunity can be developed
into a new business, but we remain committed to making the best of
every opportunity to create value for shareholders.
In any event, the Company is now well positioned to make the
best of its assets and to deliver real value for shareholders from
the very substantial reserve base the Group holds.
Financial Results
The Group incurred a loss for the year to 30 June 2021 of
GBP296,338 (30 June 2020 - loss of GBP230,519). The 2020
comparative numbers are that of wholly owned subsidiary Orcadian
Energy (CNS) Ltd. Refer to note 2.2 for further detail.
In the year to 30 June 2021 the loss mainly arose from expenses
in connection to the transaction, costs associated with the
admission process including Advisory and Consultancy Fees,
salaries, consulting and professional fees along with general
administration expenses. These expenses have been met from the
proceeds of the issue of shares.
Cash flow and cash position
Cash used in operations totalled GBP312,189 (30 June 2020 -
GBP141,254)
As at 30 June 2021, the Group had a cash balance of GBP179,556
(30 June 2020 - GBP31,318). Following the end of the financial
period under review the Company raised gross proceeds of GBP3m as
part of its Admission to AIM.
Oil Price Outlook
When the Company's shares were admitted to trading on AIM, we
stated in the Admission Document that, based on an internal
assessment of the supply and demand outlook, the Directors believed
that we were entering a period of relative scarcity of oil, which
we also believed was supportive of a higher oil price. We believe
that is now the consensus view, with demand above 100 million
barrels per day, politicians calling for OPEC to increase supply
and Brent oil prices having exceeded $80/bbl, before falling back
to the low $70s/bbl.
We also stated that the Directors expected that governments
around the world would continue their efforts to reduce carbon
dioxide emissions, obviously that could temper demand in the
future, but we also noted that under-investment in the upstream oil
industry could well counteract that pressure.
We still believe that oil prices will always be volatile, but we
also believe it is not unreasonable to plan the Group's projects on
the assumption that there is a robust outlook for oil; and the
Directors believe the Group's flagship project should be
economically robust as the NPV breakeven price for the Pilot
development scheme is approximately US$39/bbl. (see the Company's
Admission Document for details of the assumption behind that NPV)
and since January 2015 the oil price has been above US$39/bbl 94%
of the time.
UK Oil and Gas Sector
On 24 March 2021, the Government announced the North Sea
Transition Deal demonstrating the Government's commitment to the
UKCS oil and gas sector. Through this deal the UK's oil and gas
sector and the government will work together to deliver the skills,
innovation and new infrastructure required to decarbonise North Sea
oil and gas production. The Group is a part of these discussions
and with the support of the OGA will be making a proposal to supply
clean reliable energy to Platform Operators. The Directors are
confident that the Government will continue to support the oil and
gas industry, especially those companies and projects which can
demonstrate their contribution to delivering a Net Zero basin.
Business Outlook
The key challenge for the Group is the financing of the Pilot
project. The Directors are pursuing two parallel and complementary
paths to achieve this aim. The reserves have been established, and
with the receipt of a "Letter of no objection" from the OGA the
development plan is clear. We are working to attract oil companies
and contractors as partners in the development and we will continue
to do that through 2022. We are confident that, as the mist clears
after COP26, that companies will once again recognise that the UKCS
is a great place to invest and that appetite for well-designed
development opportunities which have substantial proven reserves
will re-emerge.
Joseph Darby
Chairman and Non-Executive Director
15 December 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
FOR THE YEARED 30 JUNE 2021
Year ended Year ended
30 June 30 June
2021 2020
Note GBP GBP
Revenue - -
Administrative expenses 5 (258,909) (200,225)
Operating Loss (258,909) (200,225)
---------- ------------
Finance costs 9 (44,349) (40,294)
Other income 7 3,000 10,000
Listing costs (76,500) -
Loss before tax (376,758) (230,519)
---------- ------------
Taxation 10 80,420 -
Loss for the year (296,338) (230,519)
---------- ------------
Other comprehensive income:
Items that will or may be
reclassified to profit or
loss:
Other comprehensive income - -
---------- ----------
Total comprehensive income (296,338) (230,519)
---------- ----------
Earnings per share 11 (1.34) (1.32p)
All operations are continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
30 June 30 June
2021 2020
Note GBP GBP
Non-current assets
Property, plant and equipment 12 1,842 107
Intangible assets 13 1,814,615 1,283,797
1,816,457 1,283,904
----------- -----------
Current assets
Trade and Other Receivables 14 88,548 78,138
Cash and cash equivalents 15 179,556 31,318
268,104 109,456
----------- -----------
Total assets 2,084,561 1,393,360
----------- -----------
Non-current liabilities
Borrowings 17 (762,686) (953,152)
(762,686) (953,152)
----------- -----------
Current liabilities
Trade and other payables 18 (328,601) (250,596)
Borrowings 17 (1,100,000) -
(1,428,601) (250,596)
----------- -----------
Total liabilities (2,191,287) (1,203,748)
----------- -----------
Net (liabilities) / assets (106,726) 189,612
----------- -----------
Equity
Ordinary share capital 19 52,202 17,401
Share premium 19 - 563,561
Reverse acquisition reserve 4 (38,848) -
Retained earnings (120,080) (391,350)
----------- -----------
Total equity (106,726) 189,612
----------- -----------
The consolidated Financial Statements of Orcadian Energy PLC
were approved by the Board of Directors and authorised for issue on
15 December 2021.
Signed on behalf of the Board of Directors by:
Alan Hume
Director
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
30 June
2021
Note GBP
Non-current assets
Investment in subsidiary 16 52,202
52,202
-------
Current assets
Trade and Other Receivables 14 -
Cash and cash equivalents 15 -
-
-------
Total assets 52,202
-------
Non-current liabilities
Borrowings 17 -
-
-------
Current liabilities
Trade and other payables 18 -
-
-------
Total liabilities -
-------
Net assets 52,202
-------
Equity
Ordinary share capital 19 52,202
Retained earnings -
-------
Total equity 52,202
-------
Orcadian Energy PLC, company number 13298968, has used the
exemption granted under s408 of the Companies Act 2006 that allows
for the non-disclosure of the Income Statement of the parent
company. The after-tax loss attributable to Orcadian Energy PLC for
the three months to 30 June 2021 was GBPnil .
The Financial Statements were approved by the Board of Directors
and authorised for issue on 15 December 2021.
Signed on behalf of the Board of Directors by:
Alan Hume
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 30 JUNE 2021
Ordinary Reverse
Share Share acquisition Retained
capital premium reserve earnings Total
Note GBP GBP GBP GBP GBP
Balance as at 1 July 2019 17,346 492,215 - (160,831) 348,730
-------- --------- ------------ --------- ---------
Loss for the year and total
comprehensive income - - - (230,519) (230,519)
Proceeds of share issues
(net of costs) 19 55 71,346 - - 71,401
-------- --------- ------------ --------- ---------
Balance as at 30 June 2020 17,401 563,561 - (391,350) 189,612
-------- --------- ------------ --------- ---------
Balance as at 1 July 2020 17,401 563,561 - (391,350) 189,612
-------- --------- ------------ --------- ---------
Loss for the year and total
comprehensive income - - - (296,338) (296,338)
Bonus issue of shares 19 34,801 (34,801) - - -
Issue of shares 19 52,202 - (52,202) - -
Transfer to reverse acquisition
reserve 4 (52,202) (528,760) 13,354 567,608 -
-------- --------- ------------ --------- ---------
Balance as at 30 June 2021 52,202 - (38,848) (120,080) (106,726)
-------- --------- ------------ --------- ---------
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
Ordinary share Represents the nominal value of shares issued
capital
Share premium account Amount subscribed for share capital in excess
of nominal value
Reverse acquisition Reserve created in accordance with the acquisition
reserve of Orcadian Energy (CNS) Ltd on 11 May, 2021
(Refer to Note 4)
Retained earnings Cumulative net gains and losses recognised
in the Consolidated Statement of Comprehensive
Income
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 30 JUNE 2021
Ordinary Retained
Share capital earnings Total
Note GBP GBP GBP
Balance as at Incorporation
29 March 2021 - - -
-------------- --------- ------
Loss for the period and total
comprehensive income - - -
Issue of shares upon acquisition
of subsidiary 19 52,202 - 52,202
-------------- --------- ------
Balance as at 30 June 2021 52,202 - 52,202
-------------- --------- ------
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
Ordinary share Represents the nominal value of shares issued
capital
Retained earnings Cumulative net gains and losses recognised
in the Consolidated Statement of Comprehensive
Income
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIODED 30 JUNE 2021
Year ended Year ended
30 June 2021 30 June 2020
Note GBP GBP
Cash flows from operating activities
Loss before tax for the year (376,758) (230,519)
Adjustments for:
Depreciation 12 217 694
Unrealised foreign exchange (gain) 5 (129,511) -
(Increase) / decrease trade and other
receivables 14 (10,409) 4,435
(Decrease) / Increase in trade and
other payables 18 79,504 43,842
Finance costs in the year 9 44,349 40,294
------------- -------------
Cash generated from operations (392,608) (141,254)
------------- -------------
Income taxes paid 80,420 -
------------- -------------
Net cash flows from operating activities (312,188) (141,254)
------------- -------------
Investing activities
Purchases of property, plant and
equipment 14 (1,952) -
Purchases of exploration and evaluation
assets 13 (530,818) (750,799)
------------- -------------
Net cash used in investing activities (532,770) (750,799)
------------- -------------
Financing activities
Borrowings from Directors and Officers 21 - (882)
Proceeds from issue of convertible
loan notes 17 1,100,000 100,000
Repayment of convertible loan notes 17 (100,000) -
Proceeds from loans obtained 17 - 814,260
Interest paid (6,804) -
Proceeds from issue of ordinary share
capital 19 - -
------------- -------------
Net cash used in financing activities 993,196 913,378
------------- -------------
Net increase in cash and cash equivalents 148,238 21,325
Cash and cash equivalents at beginning
of period 15 31,318 9,993
------------- -------------
Cash and cash equivalents and end
of period 15 179,556 31,318
------------- -------------
There were no significant non-cash transactions in the year to
30 June 2021.
COMPANY STATEMENT OF CASH FLOWS
FOR THE PERIODED 30 JUNE 2021
30 June 2021
Note GBP
Cash flows from operating activities
Loss for the year -
Adjustments for:
Depreciation 12 -
Decrease in trade and other receivables 4 -
Increase in trade and other payables 18 -
Finance costs in the year -
------------
Cash generated from operations -
------------
Income taxes paid -
------------
Net cash flows from operating activities -
------------
Investing activities
Purchases of property, plant and
equipment 12 -
Purchases of exploration and evaluation
assets 13 -
------------
Net cash used in investing activities -
------------
Financing activities
Borrowings from Directors and Officers 21 -
Proceeds from issue of ordinary share
capital 19 -
------------
Net cash used in financing activities -
------------
Net increase in cash and cash equivalents -
Cash and cash equivalents at beginning
of period 15 -
------------
Cash and cash equivalents and end
of period 15 -
------------
No cash was held by the Company during the period to 30 June
2021
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
Orcadian Energy PLC (the "company") is a public limited company
which is domiciled and incorporated in England and Wales under the
Companies Act 2006 with the registered number 13298968. The
Company's registered office is 6(th) floor, 60 Gracechurch Street,
London, EC3V 0HR, and i ts ordinary shares are admitted to trading
on AIM, a market of the London Stock Exchange .
The principal activity of the Group is managing oil and gas
assets and it holds a 100% interest in, and is administrator for,
UKCS Seaward Licences P2244, which contains the Pilot and Harbour
heavy oil discoveries, and P2320, which contains the Blakeney,
Feugh, Dandy & Crinan discoveries.
The financial statements presented for Group are for the year
ended 30 June 2021 and these have are shown alongside figures for
the year ended 30 June 2020 for comparative purposes.
2. Summary of significant accounting policies
The principal accounting principles applied in the preparation
of these financial statements are set out below. These principles
have been consistently applied to all years presented, unless
otherwise stated.
2.1. Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) and IFRS
Interpretations Committee (IFRIC) and the Companies Act 2006
applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical
cost convention.
2.2. Consolidation and acquisitions
The financial statements consolidate the financial information
of the Group and companies controlled by the Group (its
subsidiaries) at each reporting date. Control is achieved where the
Company has the power to govern the financial and operating
policies of an investee entity, has the rights to variable returns
from its involvement with the investee and has the ability to use
its power to affect its returns. The results of subsidiaries
acquired or sold are included in the financial information from the
effective date of acquisition or up to the effective date of
disposal, as appropriate. Where necessary, adjustments are made to
the results of acquired subsidiaries to bring their accounting
policies into line with those used by the Group. All intra-Group
transactions, balances, income and expenses are eliminated on
consolidation. The financial statements of all Group companies are
adjusted, where necessary, to ensure the use of consistent
accounting policies.
The Company's shares were admitted to trading on AIM, a market
operated by the London Stock Exchange, on 15 July 2021. These
financial statements are the Company's first subsequent to its
admission to AIM. In connection with the admission to AIM, the
Group undertook a Group reorganisation of its corporate structure
which resulted in the Company becoming the ultimate holding company
of the Group. Prior to the reorganisation there was no ultimate
holding company as Orcadian Energy (CNS) Ltd ("CNS") was a
standalone entity. The transaction was accounted for as a capital
reorganisation rather than a reverse acquisition since it did not
meet the definition of a business combination under IFRS 3. In a
capital reorganisation, the consolidated financial statements of
the Group reflect the predecessor carrying amounts of CNS with
comparative information of CNS presented for all periods since no
substantive economic changes have occurred. The difference arising
on acquisition has been accounted for with the recognition of a
merger reserve on the balance sheet following the reorganisation of
the share capital of the Group at the point of completion of the
transaction.
2.3. Going concern
The financial statements have been prepared on a going concern
basis. The Group is not yet revenue generating and an operating
loss has been reported. The Directors have reviewed a detailed
forecast based on the funds raised, and including all required
spend to meet licence requirements. This forecast has been stress
tested by management in reaching their going concern conclusion.
Having made due and careful enquiry, the Directors are of the
opinion that the Group has adequate working capital to execute its
operations over the next 12 months. The Directors, therefore, have
made an informed judgement, at the time of approving financial
statements, that there is a reasonable expectation that the Company
has adequate resources to continue in operational existence for the
foreseeable future.
The Directors acknowledge that COVID-19 has had and may continue
to have significant adverse impacts on the global economy and
capital markets. However, the Company has been able to raise funds
during this time and are of the opinion that COVID-19 does not pose
a risk sufficient to call in to question the Group's ability to
operate as a Going Concern. The Directors are of the opinion that
the Group has adequate working capital to be able to meet its
obligations as they fall due over the next 12 months
As a result, the Directors have continued to adopt the going
concern basis of accounting in preparing the annual financial
statements for the year ended 30 June 2021.
2.4. Changes in accounting policies
2.4.1. New standards, amendments to standards and
interpretations
i) New and amended standards adopted by the Group
During the financial year, the Group has adopted the following
new IFRSs (including amendments thereto) and IFRIC interpretations
that became effective for the first time.
Standard Impact on initial application Effective date
----------------------------- ------------------------------- -----------------
IFRS 3 (amendments) Definition of a Business 01 January 2020
IFRS standards (amendments) References to the Conceptual 01 January 2020
Framework
IAS 1 (amendments) Definition of Material 01 January 2020
IAS 8 (amendments) Definition of Material 01 January 2020
IFRS 9, IAS 39 and Interest Rate Benchmark Reform 01 January 2020
IFRS 7 (amendments)
IFRS 3 (amendments) Definition of a Business 01 January 2020
IFRS standards (amendments) References to the Conceptual 01 January 2020
Framework
IFRS 3 (amendments) Definition of a Business 01 January 2020
IFRS standards (amendments) References to the Conceptual 01 January 2020
Framework
IAS 1 (amendments) Definition of Material 01 January 2020
IAS 8 (amendments) Definition of Material 01 January 2020
----------------------------- ------------------------------- -----------------
None of the standards or interpretations that came into effect
for the first time for the financial year beginning 1 July 2020 had
a material impact on the Group.
2.4.2. New standards and amended standards and interpretations
issued but not yet effective for the financial year beginning 1
July 2021
At the date of approval of these financial statements, the
following standards and interpretations which have not been applied
in these financial statements were in issue but not yet effective
(and in some cases had not been adopted by the UK):
Standard Impact on initial application Effective date
---------------------------- -------------------------------- ----------------
IFRS standards (amendments) Interest rate benchmark reform 01 January 2021
IFRS 3 (amendments) Business combinations 01 January 2022
IAS 37 (amendments) Onerous contracts 01 January 2022
IFRS standards (amendments) 2018-2020 annual improvement 01 January 2022
cycle
IAS 16 (amendments) Proceeds before intended 01 January 2022
use
IFRS 17 Insurance Contracts 01 January 2023
IFRS 17 (amendments) Insurance contracts 01 January 2023
IAS 1 (amendments) Reclassification of liabilities 01 January 2023
as current or non-current
---------------------------- -------------------------------- ----------------
The new and amended Standards and Interpretations which are in
issue but not yet mandatorily effective is not expected to be
material.
2.5. Foreign currency
2.5.1. Functional and presentation currency
Items in the company's financial statements are measured in the
currency of the primary economic environment in which the entity
operates (functional currency). he functional currency of the
Company is Pounds sterling (GBP).
Monetary amounts in these financial statements are rounded to
the nearest GBP.
2.4.2.Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the income statement, except when deferred in
other comprehensive income as qualifying cash flow hedges and
qualifying net investment hedges. Foreign exchange gains and losses
that relate to borrowings and cash and cash equivalents are
presented in the income statement within 'finance income or costs.'
All other foreign exchange gains and losses are presented in the
income statement within 'Other (losses)/gains.'
Translation differences on non-monetary financial assets and
liabilities such as equities held at fair value through profit or
loss are recognised in profit or loss as part of the fair value
gain or loss. Translation differences on non-monetary financial
assets measure at fair value are included in other comprehensive
income.
2.6. Government grants
The Group recognises an unconditional government grant in profit
or loss as other income when the grant becomes receivable.
2.7. Taxation
Tax is recognised in the Statement of Comprehensive Income,
except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax
is also recognised in other comprehensive income or directly in
equity respectively.
R&D tax credits are recognised through the Consolidated
Statement of Comprehensive Loss upon receipt of funds.
2.8. Leases
The Group assesses whether a contract is or contains a lease at
the inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets (such as tablets and personal
computers, small items of office furniture and telephones). For
these leases, the Group recognises the lease payments as an
administrative expense on a straight-line basis over the term of
the lease unless another systematic basis is more representative of
the time pattern in which economic benefits from the leased assets
are consumed.
2.9. Intangible assets
Exploration and evaluation expenditures (E&E)
The Group applies the successful efforts method of accounting
for oil and gas assets, having regard to the requirements of IFRS 6
'Exploration for and Evaluation of Mineral Resources'. Costs
incurred prior to obtaining the legal rights to explore an area are
expensed immediately to the Statement of Comprehensive Income.
All licence acquisitions, exploration and evaluation costs are
capitalised, a share of administration costs is capitalised insofar
as they relate to exploration, evaluation and development
activities. These costs are written off unless commercial reserves
have been established or the determination process has not been
completed and there are no indications of impairment. If a project
is deemed commercial all of the attributable costs are transferred
into Property, Plant and Equipment. These costs are then
depreciated from the commencement of production on a unit of
production basis.
2.10. Impairment of non-financial assets
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. This includes
consideration of the IFRS 6 impairment indicators for any
intangible exploration and evaluation assets capitalised as
intangible costs. If any such indication exists, or when annual
impairment testing for an asset is required, the Group makes an
estimate of the asset's recoverable amount.
An asset's recoverable amount is the higher of its fair value
less costs to sell and its value in use. This is determined for an
individual asset, unless the asset does not generate cash inflows
that are largely independent of those from other assets or Groups
of assets, and the asset's value in use cannot be estimated to be
close to its fair value. In such cases, the asset is tested for
impairment as part of the cash-generating unit to which it belongs.
When the carrying amount of an asset or cash-generating unit
exceeds its recoverable amount, it is considered impaired and is
written down to its recoverable amount.
In assessing value in use, estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. Impairment losses relating to
continuing operations are recognised in those expense categories
consistent with the function of the impaired asset, unless the
asset is carried at revalued amount (in which case the impairment
loss is treated as a revaluation decrease). An assessment is also
made at each reporting date as to whether there is any indication
that previously recognised impairment losses may no longer exist or
may have decreased. If such indication exists, the recoverable
amount is estimated.
A previously recognised impairment loss is reversed only if
there has been a change in the estimates used to determine the
asset's recoverable amount since the last impairment loss was
recognised. If that is the case, the carrying amount of the asset
is increased to its recoverable amount. That increased amount
cannot exceed the carrying amount that would have been determined,
net of depreciation, had no impairment loss been recognised for the
asset in prior years. Such reversal is recognised in the Statement
of Comprehensive Income unless the asset is carried at revalued
amount, in which case the reversal is treated as a revaluation
increase. After such a reversal, the depreciation charge is
adjusted in future periods to allocate the asset's revised carrying
amount, less any residual value, on a systematic basis over its
remaining useful life.
2.11. Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and any accumulated impairment losses. Depreciation is
provided on all property, plant and equipment to write off the cost
less estimated residual value of each asset over its expected
useful economic life on a straight-line basis at the following
annual rates:
-- Property, plant and equipment - 3 years straight line.
All assets are subject to annual impairment reviews.
2.12. Financial Instruments
2.11.1 Initial recognition
A financial asset or financial liability is recognised in the
statement of financial position of the Group when it arises or when
the Group becomes part of the contractual terms of the financial
instrument.
2.11.2 Classification
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of
the following conditions are met:
(1) the asset is held within a business model whose objective is
to collect contractual cash flows; and
(2) the contractual terms of the financial asset generating cash
flows at specified dates only pertain to capital and interest
payments on the balance of the initial capital.
Financial assets which are measured at amortised cost, are
measured using the Effective Interest Rate Method (EIR) and are
subject to impairment. Gains and losses are recognised in profit or
loss when the asset is derecognised, modified or impaired.
Financial liabilities at amortised cost
Financial liabilities measured at amortised cost using the
effective interest rate method include current borrowings and trade
and other payables that are short term in nature. Financial
liabilities are derecognised if the Group 's obligations specified
in the contract expire or are discharged or cancelled.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the effective interest rate ("EIR"). The EIR amortisation
is included as finance costs in profit or loss. Trade payables
other payables are non-interest bearing and are stated at amortised
cost using the effective interest method.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value
through profit or loss. Financial liabilities are classified as
held for trading if they are incurred for the purpose of
repurchasing in the near term. Gains or losses on liabilities held
for trading are recognised in the statement of profit or loss and
other comprehensive income.
2.11.3. Derecognition
A financial asset is derecognised when:
(1) the rights to receive cash flows from the asset have
expired, or
(2) the Group has transferred its rights to receive cash flows
from the asset or has undertaken the commitment to fully pay the
cash flows received without significant delay to a third party
under an arrangement and has either (a) transferred substantially
all the risks and the assets of the asset or (b) has neither
transferred nor held substantially all the risks and estimates of
the asset but has transferred the control of the asset.
2.11.4 Impairment
The Group recognises a provision for impairment for expected
credit losses regarding all financial assets. Expected credit
losses are based on the balance between all the payable contractual
cash flows and all discounted cash flows that the Group expects to
receive. Regarding trade receivables, the Group applies the IFRS 9
simplified approach in order to calculate expected credit losses.
Therefore, at every reporting date, provision for losses regarding
a financial instrument is measured at an amount equal to the
expected credit losses over its lifetime without monitoring changes
in credit risk. To measure expected credit losses, trade
receivables and contract assets have been Grouped based on shared
risk characteristics.
2.13. Trade and other receivables
Trade and other receivables are initially recognised at fair
value when related amounts are invoiced then carried at this amount
less any allowances for doubtful debts or provision made for
impairment of these receivables.
2.14. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and
are subject to an insignificant risk of changes in value.
2.15. Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
2.16. Share premium
Share premium account represents the excess of the issue price
over the par value on shares issued. Incremental costs directly
attributable to the issue of new ordinary shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
2.17. Trade payables
These financial liabilities are all non-interest bearing and are
initially recognised at the fair value of the consideration
payable.
2.18. Convertible loan notes and borrowings
Convertible loan notes classified as financial liabilities and
borrowings are recognised initially at fair value, net of
transaction costs incurred. After initial recognition, loans are
measured at the amortised cost using the effective interest rate
method. Any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in the income
statement over the period of the borrowings using the effective
interest rate method.
2.19 Finance income and finance costs
Finance income comprises interest income on bank funds. Interest
income is recognised as it accrues in profit or loss, using the
effective interest method. Finance costs comprise interest expense
on borrowings. Borrowing costs are recognised in profit or loss in
the period in which they are incurred.
2.20 Earnings per share
Basic Earnings per share is calculated as profit attributable to
equity holders of the parent for the period, adjusted to exclude
any costs of servicing equity (other than dividends), divided by
the weighted average number of ordinary shares, adjusted for any
bonus element.
2.21 Operating segments
The Chief Operating Decision Maker (CODM) is considered to be
the Board of Directors. They consider that the Group operates in a
single segment, that of oil and gas exploration, appraisal and
development, in a single geographical location, the North Sea of
the United Kingdom. As a result, the financial information of the
single segment is the same as set out in the statement of
comprehensive income, statement of financial position, statement of
Changes in Equity and Statement of Cashflows.
2.22 Investment in Subsidiaries
The consolidated financial statements incorporate the financial
statements of the company and entities controlled by the Group (its
subsidiaries). Control is achieved where the Group has the power to
govern the financial and operating policies of an entity so as to
obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in total comprehensive income from the effective
date of acquisition and up to the effective date of disposal, as
appropriate using accounting policies consistent with those of the
parent. All intra-group transactions, balances, income and expenses
are eliminated in full on consolidation.
Investments in subsidiaries are accounted for at cost less
impairment in the individual financial statements.
2.23 Research and development
Research and development expenditure is charged to the
Consolidate Statement of Comprehensive Income in the year in which
the claim is submitted and recovered as prior to this the recovery
of the income is not deemed to be probable.
3. Significant accounting estimates and judgements, estimates and assumptions
The preparation of financial statements using accounting
policies consistent with IFRS requires the Directors to make
estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and
liabilities and the reported amounts of income and expenses. The
preparation of financial statements also requires the Directors to
exercise judgement in the process of applying the accounting
policies. Changes in estimates, assumptions and judgements can have
a significant impact on the financial statements.
Recoverable value of intangible assets
As at 30 June 2021, the Group held oil and gas exploration and
evaluation intangible assets of GBP1,814,615 (2020: GBP1,283,797).
The carrying values of intangible assets are assessed for
indications of impairment, as set out in IFRS 6, on an annual
basis. As part of this impairment assessment, the recoverable value
of the intangible assets is required to be estimated.
When estimating the recoverable value of the intangibles
Management consider the proved, probably and potential resources
per the latest CPR, likely production costs and the forecasted oil
prices.
As a result of the budget exploration costs, the licenses being
valid and the assessed recoverable value of the intangibles being
in excess of the carrying value, Management do not consider that
any intangible assets are impaired as at 30 June 2021.
These estimates and assumptions are subject to risk and
uncertainty and therefore a possibility that changes in
circumstances will impact the assessment of impairment
indicators.
There was only one critical judgement identified, apart from
those involving estimations (which are dealt with separately above)
that the Directors have made in the process of applying the Group
's accounting policies and that have the most significant effect on
the amounts recognised in the financial statements.
Approach to account for the acquisition of Orcadian Energy (CNS)
Ltd
The acquisition of Orcadian Energy (CNS) Ltd during the year via
a share for share agreement, as detailed in note 4, falls outside
of the scope of IFRS 3 as Orcadian Energy Plc at the time of the
transaction did not meet the definition of a business. The
acquisition constituted a group reorganisation since the two
entities were under common control at the date of acquisition.
As such, the Directors were required to apply judgement in
deciding the most appropriate way to account for this acquisition.
The Directors decided to adopt the predecessor value approach which
requires the assets and liabilities acquired being accounted for
using their carrying values at the date of acquisition and the
difference between the cost of the acquisition and the net assets
of the legal subsidiary at the date of acquisition being taken to
the merger reserve.
Furthermore, the Consolidated Statement of Comprehensive Loss,
Consolidated Statement of Financial Position, Consolidate Statement
of Changes in Equity and the Consolidated Statement of Cashflows
have been presented to show the group as if it were in existence
since the beginning of the comparative period.
4. Group reorganisation under common control
The acquisition met the definition of a group reorganisation due
to the Company and the subsidiary being under common control at the
date of acquisition. As a result, and since Orcadian Energy Plc did
not meet the definition of a business per IFRS 3, the acquisition
fell outside of the scope of IFRS 3 and the predecessor value
method was used to account for the acquisition.
These consolidated financial statements represent a continuation
of the consolidated financial statements of Orcadian Energy (CNS)
Ltd and include:
a. The assets and liabilities of Orcadian Energy (CNS) Ltd at
their pre-acquisition carrying amounts and the results for both
periods; and
b. The assets and liabilities of the Company as at 11 May 2021
and it's results from 11 May to 30 June 2021.
On 11 May 2021, the Company issued 52,201,601 shares entire
issued share capital of Orcadian Energy (CNS) Ltd.
The net assets of Orcadian Energy (CNS) Ltd at the date of
acquisition was as follows:
GBP
Property Plant & Equipment 1,357
Intangible Assets 1,719,292
Current Assets 447,425
Current Liabilities (284,745)
Non-Current Liabilities (1,869,975)
---------------------------- ------------
Net assets 13,354
---------------------------- ------------
The reserve that arose from the acquisition is made up as
follows:
Year ended
30 June 2021
GBP
------------------------------------------------- --------------
As at start of year -
Cost of the investment in Orcadian Energy (CNS)
Ltd 52,202
Less: net assets of Orcadian Energy (CNS) Ltd
at acquisition (13,354)
As at end of year 38,848
------------------------------------------------- --------------
5. Administrative expenses
2021 2020
GBP GBP
Office costs, rates and services 18,672 18,649
Wages and salaries 128,125 60,000
Consultants and advisers 56,113 11,335
Audit fees (note 18) 38,090 8,000
Pre-award licence costs - 17,821
Insurance 44,466 4,603
Other expenses 65,234 28,991
National Insurance 35,594 16,310
Foreign Exchange (127,603) 33,822
Depreciation 217 694
258,909 200,225
--------- -------
6. Auditor's Remuneration
During the year, the Company obtained the following services
from the Company's auditors and its associates:
2021 2020
GBP GBP
Audit of the financial statements 25,000 8,000
Transaction services 5,000 -
------ -----
30,000 8,000
------ -----
7. Other Income
2021 2020
GBP GBP
Consulting fees 3,000 -
Coronavirus support grant - 10,000
Other Income 3,000 10,000
----- ------
The Company undertook a minor consulting role during the year
for which it billed GBP3,000.
As part of the Government's support for small businesses during
the Coronavirus crisis a non-repayable Coronavirus support grant of
GBP10,000 was provided to any business whose premises were eligible
for Small Business Rate Relief as of 11 March 2020, having a
rateable value up to GBP15,000. The Company qualified for this
support and applied for and received the grant.
8. Staff numbers and costs
Group Group
2021 2020
Staff costs (including directors) GBP GBP
------- -------
Wages and salaries 128,125 138,133
Social security costs 35,594 16,309
------- -------
163,719 154,442
------- -------
No pension benefits are provided for any Directors (2020:
GBPnil).
The average number of persons (including directors) employed by
the Company during the year was:
Group and Company 2021 2020
Management and Administration 5 6
5 6
---- ----
9. Finance costs
2021 2020
GBP GBP
Interest paid 44,349 40,293
44,349 40,293
10. Taxation
Analysis of charge for the year:
2021 2020
GBP GBP
Current income tax charge - -
R&D tax credits 80,420 -
Deferred tax charge - -
------ ----
Total taxation credit/(charge) 80,420 -
------ ----
Taxation reconciliation
The below table reconciles the tax charge for the year to the
theoretical charge based on the result for the year and the
corporation tax rate.
2021 2020
GBP GBP
Loss before income tax (296,338) (230,519)
Tax at the applicable rate of 19%
(2020: 19%) (56,304) (43,799)
Effects of:
R&D tax credits 80,420 -
Expenses not deducted for tax purposes - 1,661
Unutilised tax losses 56,304 42,138
Total income tax credit / (expense) 80,420 -
---------- ----------
Due to the nature of the expenditure incurred by the Company on
the Offshore Steam Flood during the periods ending 30 June 2019 and
30 June 2020 claims were made under the SME R&D tax rebate
provisions which resulted in refunds totalling GBP80,420.
As at 30 June 2021, the Group had unused tax losses of
GBP139,767 (2020: GBP83,463) for which no deferred tax asset has
been recognised. This is due to uncertainty over the availability
of future taxable profits to offset these losses against.
11. Earnings per share
The calculation of the basic and diluted earnings per share is
calculated by dividing the loss for the year for continuing
operations for the Company by the weighted average number of
ordinary shares in issue during the year.
There is no difference between the basic and diluted earnings
per share as there were no securities on issue as at 30 June 2021
that would have a dilutive effect on earnings per share.
2021 2020
GBP GBP
-------------------------------------------- ----------- -----------
Loss for the purposes of basic earnings
per share being net loss attributable
to the owners (296,338) (230,519)
Weighted average number of Ordinary Shares 22,167,804 17,362,614
Loss per share (1.34p) (1.32p)
-------------------------------------------- ----------- -----------
The weighted average number of shares is adjusted for the impact
of the acquisition as follows:
- Prior to the acquisition, the number of shares is based on
Orcadian Energy (CNS) Ltd, adjusted using the share exchange ratio
arising on the acquisition; and
- From the date of the acquisition, the number of shares is
based on the Company.
12. Property, plant and equipment
IT hardware
& software Office equipment Total
GBP GBP GBP
Cost
As at 30 June 2019 2,842 202 3,044
----------- ---------------- -----
Additions - - -
As at 30 June 2020 2,842 202 3,044
----------- ---------------- -----
Additions 1,952 - 1,952
----------- ---------------- -----
As at 30 June 2021 4,794 202 4,996
----------- ---------------- -----
IT hardware
& software Office equipment Total
GBP GBP GBP
Depreciation
As at 30 June 2019 2,092 151 2,243
----------- ---------------- -----
Charged in the year 643 51 694
As at 30 June 2020 2,735 202 2,937
----------- ---------------- -----
Charged in the year 217 - 217
As at 30 June 2021 2,952 202 3,154
----------- ---------------- -----
Net book value as at 30 June 2021 1,842 - 1,842
----------- ---------------- -----
Net book value as at 30 June 2020 107 - 107
----------- ---------------- -----
The depreciation expense is recognised in administrative
expenses as set out in note 6.
13. Intangible assets
Oil and gas
exploration
assets
GBP
Cost
------------
As at 30 June 2019 532,998
------------
Additions 750,799
------------
As at 30 June 2020 1,283,797
------------
Additions 530,818
------------
As at 30 June 2021 1,814,615
------------
No general office expenses incurred during the year were
capitalised (2020: GBPnil).
The carrying value of the prospecting and exploration rights is
supported by the estimated resource and current market values as
contained in the Competent Person's Report date 1 April 2021 which
was prepared by Sproule B.V.
14. Trade and other receivables
Group 2021 2020
GBP GBP
VAT receivable 50,925 5,914
Prepayments relating to the issue of
equity 13,500 -
Prepayments other 24,123 -
Amounts due from related parties - 72,224
88,548 78,138
------ ------
Amounts due from related parties were unsecured, interest free
and had no fixed repayment date.
The fair value of other receivables is the same as their
carrying values as stated above.
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivable mentioned above. The
Company does not hold any collateral as security.
15. Cash and cash equivalents
Group 2021 2020
GBP GBP
Cash at bank and in hand 179,556 31,318
179,556 31,318
------- ------
There is no material difference between the fair value of cash
and cash equivalents and their book value.
16. Investment in subsidiary
Name Address of the Nature of business Proportion
registered office of ordinary
shares held
directly by
parent (%)
----------------- -------------------- -------------------- -------------
6(th) floor,
60 Gracechurch
Orcadian Energy Street, London, Managing oil and
(CNS) Ltd EC3V 0HR gas assets 100
The acquisition of Orcadian Energy (CNS) Ltd took place on 11
May 2021. Refer to note 4 for further details.
17. Borrowings
2021
------------------------------------------------------
Convertible Convertible
loan note STASCO Loan loan note
2020 GBP 2021 Total
GBP GBP GBP
As at 30 June 2020 100,000 853,152 - 953,152
Convertible loan note
issues 380,000 - 720,000 1,100,000
Convertible loan note
repayments (100,000) - - (100,000)
Interest accrued - 39,045 - 39,045
Effect of foreign exchange - (129,511) - (129,511)
---------------------------- ------------ -------------- ------------ ----------
As at 30 June 2021 380,000 762,686 720,000 1,862,686
---------------------------- ------------ -------------- ------------ ----------
Between July and December 2020 the Company issued GBP380,000 of
convertible loan notes. In January 2021 GBP100,000 of convertible
loan notes were repaid in cash and a further CLN for GBP100,000 was
issued to a further lender. The term for these CLN's was three
years with an interest rate of 12% per annum if they were redeemed.
If conversion to Ordinary Shares no interest is applied.
In March 2021 the Company issued GBP705,000 of convertible loan
notes, and in June 2021 the Company issued GBP15,000 of convertible
loan notes. These CLN's had a term of one year and a zero interest
rate.
Subsequent to reporting date on 15 July 2021, all CLNs were
converted in to ordinary shares at a price of 28 pence each, which
was a 30% discount to the fundraise price. In total 3,928,572
ordinary shares were issued in full discharge of the CLNs. No
interest was paid on the CLNs as they were converted in to ordinary
shares.
2020
--------------------------------------------------
Convertible Convertible
loan note STASCO loan note Total
2018 Loan 2020 GBP
GBP GBP GBP
As at 30 June 2019 70,000 - - 70,000
Convertible loan note issues - - 100,000 100,000
Convertible loan notes redeemed
for shares (70,000) - - (70,000)
Loan drawdowns - 814,260 814,260
Interest accrued - 38,892 - 38,892
--------------------------------- ------------ --------- ------------ -----------
As at 30 June 2020 - 853,152 100,000 953,152
--------------------------------- ------------ --------- ------------ -----------
Convertible loan notes were exercised in the year leading to
shares being issued for a total value of GBP71,400. No cash was
received in consideration for these shares.
The STASCO loan was drawn down on 23 August 2019. The loan is
repayable by 23 August 2023 and is subject to an interest rate at
LIBOR plus 5% with interest accruing on a compounding basis.
On 20 March 2020 and 28 May 2020 the Company issued GBP50,000 of
convertible loan notes on each of those dates.
18. Trade and other payables - due within one year
2021 2020
GBP GBP
Trade payables 35,443 8,003
Accruals 276,133 242,593
Other creditor 17,025 -
------- -------
328,601 250,596
------- -------
The carrying values of trade and other payables are considered
to be a reasonable approximation of the fair value and are
considered by the Directors as payable within one year.
19. Ordinary share capital and share premium
Group
Number of Ordinary Share
shares share capital premium
Issued GBP GBP
As at 30 June 2019 17,345,610 17,346 492,215
--------------- -------------- ------------
Issue of shares 54,924 55 71,346
--------------- -------------- ------------
As at 30 June 2020 17,400,534 17,401 563,561
Transfer between reserves - 34,801 (34,801)
Issued capital of Company at acquisition 1 - -
Issue of shares upon acquisition
of subsidiary 52,201,601 52,202 -
Transfer of Ltd paid up capital
to reverse acquisition reserve (17,400,534) (52,202) (528,760)
--------------- -------------- ------------
As at 30 June 2021 52,201,601 52,202 -
The issued capital of the Group for the period 1 July 2020 to 11
May 2021 is that of Orcadian Energy (CNS) Ltd. Upon completion of
the acquisition the share capital of Orcadian Energy (CNS) Ltd was
transferred to the Acquisition reserve (Refer to note 4) and the
share capital of Orcadian Energy PLC was brought to account.
The ordinary shares confer the right to vote at general meetings
of the Company, to a repayment of capital in the event of
liquidation or winding up and certain other rights as set out in
the Company's articles of association.
Company
Number of Share
shares Share capital premium
Issued GBP GBP
Balance as at Incorporation 29 March
2021 1 - -
Issue of shares upon acquisition
of subsidiary 52,201,601 52,202 -
As at 30 June 2021 52,202,602 52,202 -
On 29 March 2021, the Company issued one new ordinary shares of
GBP0.001 upon incorporation.
On 11 May 2021, the Company issued 52,202,601 new ordinary
shares of GBP0.001 each at nominal value for the acquisition of
100% of the issued capital of Orcadian Energy (CNS) Ltd pursuant to
a share swap arrangement (Refer to Note 4).
20. Related parties
21.1 Transactions with related parties
The Company had the following related party transactions:
(1) The Company makes use of an office at 70 Claremont Road
which is currently provided to the Company by Mrs Julia
Cane-Honeysett and Mr Stephen Brown at a rental of GBP1,000 per
calendar month. The company pays for the services and business
rates associated with the property.
21.2 Loans to/from related parties
During the year, several Directors and shareholders provided
funds to the Company as a working capital injection.
The following balances are outstanding at the end of the
reporting period in relation to these transactions:
Amount due (to)/from
related parties
GBP
As at 30 June 2020 72,224
Funds advanced to the Company (135,000)
Loan amounts settlement by the Related Party 72,224
--------------------
As at 30 June 2021 (135,000)
As at 30 June 2021 the Company had issued convertible loan notes
(CLNs") from Company Directors Alan Hume totalling GBP135,000.
These CLNs were converted in to 482,142 ordinary shares post year
end on 15 July 2021 at 28 pence per share.
21.3. Key management personnel
Directors of the Company are considered to be key management
personnel. The remuneration of the Directors has been set out in
note 8.
21. Ultimate controlling party
The Directors consider Stephen Brown and Julia Cane-Honeysett to
be the ultimate controlling parties given their combined holding of
55.87% of the issued capital of the Company.
22. Financial instruments
The Company holds the following financial instruments:
Financial assets
2021 2020
Financial assets at amortised cost: GBP GBP
Trade receivables
Other financial assets at amortised
cost - 72,224
Cash and cash equivalents 179,556 31,318
------- -------
179,556 103,542
------- -------
The maximum exposure to credit risk at the end of the reporting
period is the carrying amount of each class of financial assets
mentioned above.
Financial liabilities
2021 2020
Financial liabilities at amortised GBP GBP
cost:
Trade payables 35,443 8,003
Borrowings 762,686 853,152
------- -------
798,129 861,155
------- -------
2021 2020
Financial liabilities at fair value
through profit and loss GBP GBP
Borrowings 1,100,000 100,000
--------- -------
1,100,000 100,000
--------- -------
23. Financial risk management
23.1. Financial risk factors
The Company's activities expose it to a variety of financial
risks: market risk, credit risk and liquidity risk. The Company's
overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse
effects on the Company's financial performance.
Risk management is carried out by the executive management
team.
a) Market risk
The Company is exposed to market risk, primarily relating to
interest rate, foreign exchange and commodity prices. The Company
does not hedge against market risks as the exposure is not deemed
sufficient to enter into forward contracts. The Company has not
sensitised the figures for fluctuations in interest rates, foreign
exchange or commodity prices as the Directors are of the opinion
that these fluctuations would not have a significant impact on the
Financial Statements at the present time. The Directors will
continue to assess the effect of movements in market risks on the
Company's financial operations and initiate suitable risk
management measures where necessary.
b) Credit risk
Credit risk arises from cash and cash equivalents as well as
outstanding receivables. To manage this risk, the Company
periodically assesses the financial reliability of customers and
counterparties.
The amount of exposure to any individual counter party is
subject to a limit, which is assessed by the Board.
The Company considers the credit ratings of banks in which it
holds funds in order to reduce exposure to credit risk. The Company
will only keep its holdings of cash with institutions which have a
minimum credit rating of 'A'.
c) Liquidity risk
The Company's continued future operations depend on the ability
to raise sufficient working capital through the issue of equity
share capital or debt. The Directors are reasonably confident that
adequate funding will be forthcoming with which to finance
operations. Controls over expenditure are carefully managed.
The following table summarizes the Company's significant
remaining contractual maturities for financial liabilities at 30
June 2021, and 30 June 2020.
Contractual maturity analysis as at 30 June 2021
Less than
12 1 - 5 Total
Months Year GBP
GBP GBP
--------------------- ---------- ------------ ------------
Accounts payable 35,443 - 35,443
Accrued liabilities 276,133 - 293,158
Other creditor 17,025 - 17,025
STASCO Loan - 762,686 762,686
----------------------- ---------- ------------ ------------
328,601 762,686 1,091,287
--------------------- ---------- ------------ ------------
Contractual maturity analysis as at 30 June 2020
1 - 5 Longer than
Year 5 years Total
GBP GBP GBP
--------------------- ---------- ------------ ----------
Accounts payable 8,003 - 8,003
Accrued liabilities 242,593 - 242,593
STASCO Loan - 853,152 853,152
----------------------- ---------- ------------ ----------
250,596 853,152 1,103,748
--------------------- ---------- ------------ ----------
23.2. Capital risk management
The Company's objectives when managing capital are to safeguard
the Company's ability to continue as a going concern, in order to
enable the Company to continue its exploration and development of
oil and gas resources. In order to maintain or adjust the capital
structure, the Company may adjust the issue of shares or sell
assets to reduce debts.
The Company defines capital based on the total equity and
reserves of the Company. The Company monitors its level of cash
resources available against future planned operational activities
and may issue new shares in order to raise further funds from time
to time.
24. Commitments
The Company has entered into the following non-cancellable
commitments in respect of exploration licences:
2021 2020
GBP GBP
Due within one year 197,771 94,348
Later than one year but not later
than five years 112,729 298,951
------- -------
Total commitments 310,500 393,299
------- -------
25. Events after the reporting period
The Company listed on the Alternative Investment Market (AIM) on
the 15(th) July 2021. At the same time the Company placed 7,500,000
New Ordinary Shares to raise gross proceeds of GBP3,000,000.
On the 15(th) July 2021 the Company issued 125,000 new shares of
40p each to a supplier in part payment of an outstanding bill.
On 15(th) July all Convertible Loan Notes ("CLNs") were
converted in to ordinary shares at a price of 28 pence each. In
total 3,928,572 ordinary shares were issued in full discharge of
the CLNs.
On the 15(th) July the Company filed an addendum to the Pilot
field Concept Select Report ("CSR") with the Oil and Gas Authority
("OGA"). This followed the execution of an agreed work programme
which included polymer core flood tests and work to reduce the
carbon dioxide emissions from the project. The selected concept has
now been revised to include a significant improvement in process
heat management and power generation efficiency.
On the 29(th) November 2021 the Company received a "Letter of no
objection" from the Oil and Gas Authority ("OGA") in respect of the
development concept for the Pilot field. This letter signals the
finalisation of the "Assessment phase" and the entry into the
"Authorisation phase" of development planning for the Pilot
Field.
On 6(th) December 2021 the Company was awarded GBP466,667 by the
OGA to evaluate a new concept for the electrification of key
producing oil and gas fields initially focussing on Central Graben
area fields owned and operated by others. Orcadian is working with
Crondall Energy, Enertechnos, Petrofac, North Sea Midstream
Partners ("NSMP") and Wärtsilä; together the working group will
undertake an evaluation of this concept and deliver a report to the
OGA and Central Graben Operators by the end of March 2022. The
evaluation will include a commercial proposal for the delivery of
electrical power to Central Graben and Central North Sea Operators
interested in rapidly implementing electrification of their
platforms.
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END
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December 16, 2021 02:00 ET (07:00 GMT)
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