TIDMRRE
RNS Number : 2330B
RockRose Energy plc
31 March 2017
ROCKROSE ENERGY PLC
ANNUAL REPORT
FOR THE PERIODED 31 DECEMBER 2016
ROCKROSE ENERGY PLC
COMPANY INFORMATION
Directors A P Austin
R A Benmore
J A Morrow
Company secretary Cooley Services Limited
Company number 09665181
Registered office C/O Cooley (UK) LLP
Dashwood House
69 Old Broad Street
London
EC2M 1QS
Accountant Price Bailey LLP
7(th) Floor Dashwood House
69 Old Broad Street
London
EC2M 1QS
Auditors PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Bankers Metro Bank
One Southampton Row
London
WC1B 5HA
ROCKROSE ENERGY PLC
CONTENTS
Page
Strategic Report and Remuneration Report 2-8
Directors' Report 9-11
Independent auditors' report 12-13
Consolidated income statement and statement of comprehensive income 14
Consolidated statement of financial position 15
Company statement of financial position 16
Consolidated statement of changes in equity 17
Company statement of changes in equity 18
Consolidated statement of cash flows 19
Company statement of cash flows 20
Notes to the financial statements 21-34
ROCKROSE ENERGY PLC
STRATEGIC REPORT
Strategic report
A RockRose is a plant that grows in harsh environments with
minimal external support. Creating an energy company that is
equipped to do business in the harsh environment of sub $50 oil
with a minimal cost base was the strategy behind the establishment
of RockRose Energy Plc ('the Company') in 2015.
After listing as an acquisition vehicle on the London Stock
Exchange in January 2016, the Company has evaluated more than 35
opportunities. These have ranged from onshore production assets to
pipelines and electricity generating assets. The focus is on mature
cash producing assets in politically stable geographies,
particularly the UK.
In September 2016 the Company announced that it had agreed a
heads of terms with Maersk Oil North Sea UK Ltd for a package of UK
based production assets and subsequently signed a sales and
purchase agreement in December 2016. Following partner pre-emption
and approval RockRose is now acquiring a 5.16% interest in the
Scott field and a 2.36% interest in the Telford field. Both Fields
are operated by Nexen Petroleum. Following extensive due diligence
and rising oil prices since the commercial terms of the deal were
struck, the Company sees the potential for significant upside
through improving production following recent drilling activity and
extending the field life.
Subsequent to 31 December 2016, RockRose has also agreed to
acquire the entire share capital of Egerton Ventures Ltd, which
holds a 8.33% interest in the Mordred field and a 27.8% interest in
the Galahad field. Both assets are operated by Perenco and are near
cessation in production. However again, the Company sees upside in
the potential delay in decommissioning from enhanced production and
hydrocarbon prices.
Rockrose is committed to minimising the overheads and
administrative costs of running the assets, using a small executive
team and purchasing other services as required.
Looking forward, RockRose continues to evaluate other
complementary acquisitions, with the aim of building a material
energy business that is equipped to flourish in the prevailing
harsh hydrocarbon price environment. In short, Opportunities...
Enhanced.
Financial Review
At 31 December 2016 the Group had net assets of GBP2.2 million.
The main costs incurred in the 18 month period since incorporation
of the Company in July 2015 have been the costs of listing. Since
listing on the London Stock Exchange there have also been costs in
evaluating various acquisition opportunities. The costs of
operating the business have been as anticipated at the time of
listing in January 2016. During the period, minimising
Administrative Expenses was the key KPI for the Company.
Risks and uncertainties
During the period while the Company was sourcing acquisition
opportunities risks and uncertainties were limited. Now that an
acquisition has been agreed a wider range of risks and
uncertainties exist. These include (but are not limited to) changes
in exchange rates, commodity prices, government legislative
changes, environmental regulation and operator performance. The
timing of cessation of production on the assets to be acquired and
the subsequent costs of decommissioning may also have a significant
impact on the Company.
The board of directors is committed to monitoring and managing
these risks on behalf of shareholders.
A. P. Austin
On behalf of the Board
31 March 2017
ROCKROSE ENERGY PLC
DIRECTORS' REMUNERATION REPORT
Directors' remuneration policy.
In 2017, the Company intends to form a Remuneration Committee to
set clear objectives for each individual Director relating to
Company KPIs plus individual and strategic targets taking into
account where an individual has particular influence and
responsibility.
The Company's policy is to maintain levels of remuneration
sufficient to attract, motivate and retain senior executives of the
highest calibre who can deliver growth in shareholder value.
Executive Director remuneration currently consists of basic salary
and benefits. It is envisaged that an annual bonus, and long term
incentives will be introduced in line with the Company's expansion.
The Company will seek to strike an appropriate balance between
fixed and performance-related reward so that the total remuneration
package is structured to align a significant proportion to the
achievement of performance targets, reinforcing a clear link
between pay and performance. The performance targets for staff,
senior executives and the Executive Directors will be each aligned
to the key drivers of the business strategy, thereby creating a
strong alignment of interest between staff, Executive Directors and
shareholders.
The Board will continue to review the Company's remuneration
policy and make amendments, as and when necessary, to ensure it
remains fit for purpose and continues to drive high levels of
executive performance and remains both affordable and competitive
in the market.
Future Policy Table
As mentioned above it is the Company's intention to form a
Remuneration Committee. Where the term "Board" is mentioned in the
following table the responsibility will be assumed by the
Remuneration Committee once formed.
Element of reward -Base Salary
Purpose and To provide fixed remuneration to
Link to Strategy * help recruit and retain key individuals;
* reflect the individual's experience, role and
contribution within the Company.
-------------------- -----------------------------------------------------------
Operation The Board takes into account a number
of factors when setting salaries,
including:
* scope and complexity of the role
* the skills and experience of the individual
* salary levels for similar roles within the industry
* pay elsewhere in the Company
Salaries are reviewed, but not necessarily
increased, annually with any increase
usually taking effect in January.
-------------------- -----------------------------------------------------------
Performance None
conditions
-------------------- -----------------------------------------------------------
Maximum opportunity The current base salary of the Directors
can be found in the Directors' Remuneration
section.
Salary increases are normally made
with reference to the average increase
for the Company's wider employee population.
The Board retains discretion to make
higher increases in certain circumstances,
for example, following an increase
in the scope and/or responsibility
of the role or the development of
the individual in the role or by benchmarking.
-------------------- -----------------------------------------------------------
ROCKROSE ENERGY PLC
DIRECTORS' REMUNERATION REPORT
Element of reward - Other benefits
Purpose and To provide a basic benefits package
Link to Strategy
-------------------- -----------------------------------------
Operation The Company provides Executive Directors
with medical insurance for themselves
and their family
-------------------- -----------------------------------------
Performance None
conditions
-------------------- -----------------------------------------
Maximum opportunity Maximum opportunity will be whatever
it costs to provide the benefit.
-------------------- -----------------------------------------
Element of reward - Annual Bonus
Purpose and To incentivise and reward the achievement
Link to Strategy of annual financial, operational and
individual objectives which are key
to the delivery of the Company's short-term
strategy.
-------------------- -------------------------------------------------------------
Operation Executive Directors and staff are
eligible to participate in a discretionary
bonus plan.
* The Board will determine on an annual basis the level
of deferral, if any, of the bonus payment into
Company shares.
* Maximum bonus levels and the proportion payable for
on target performance are considered in the light of
market bonus levels for similar roles among the
industry sector.
* Bonuses are not pensionable.
* Objectives are set annually to ensure that they
remain targeted and focused on the delivery of the
Company's short-term goals which will usually be
based on the annual budget
* The Board sets targets which require appropriate
levels of performance, taking into account internal
and external expectations of performance
* As soon as practicable after the year-end, the Board
meets to review performance against objectives and
determines payout levels.
* In terms of bonus targets a balanced scorecard
approach is operated which focuses on a mixture of
strategic, operational, financial and non-financial
metrics. Examples of financial measures will include
net sales and net profit targets. Financial measures
will typically represent the majority of the bonus
with other, non-financial measures representing the
balance.
-------------------- -------------------------------------------------------------
Performance
conditions * At least 50% of the award will be assessed against
Company metrics including operational, financial and
non-financial performance. The remainder of the award
will be based on performance against individual
objectives.
* A sliding scale of between 0% and 100% of the maximum
award is paid dependent on the level of performance.
-------------------- -------------------------------------------------------------
Maximum opportunity The maximum potential bonus entitlement
for Executive Directors under the
plan is up to 150% of base salary.
-------------------- -------------------------------------------------------------
ROCKROSE ENERGY PLC
DIRECTORS' REMUNERATION REPORT
Element of reward - Long Term Incentive Plan (LTIP)
Purpose and
Link to Strategy * To incentivise and reward the creation of long-term
shareholder value.
* To align the interests of the Executive Directors
with those of Shareholders.
-------------------- -----------------------------------------------------------------
Operation Under the terms of the non-tax advantaged
share option pan (the "Share Option
Plan"), the Board may issue options
over shares up to 15% of the issued
share capital of the Company from
time to time. Directors and employees
are eligible for awards.
* The exercise of options may be subject to the
satisfaction of such performance conditions, if any,
as may be specified and subsequently varied and/or
waived by the Board.
* The Board determines on an annual basis, and from
time to time as needed (i.e., new employee or
promotion), the type of awards to be granted to
executives and other employees under the plan.
-------------------- -----------------------------------------------------------------
Performance Vesting of the awards is dependent
conditions on financial, operational and/or share
price measures, as set by the Board,
which are aligned with the long-term
strategic objectives of the Company.
The relevant performance conditions
will be set by the Board on the award
of each grant but will include a mixture
of strategic, operational, financial
and non-financial metrics.
In respect of the option granted to
Andrew Austin (details of which are
set out in the Remuneration Report)
the following performance conditions
must also be satisfied before his
option may be exercised:
* the Company must have completed at least one
acquisition resulting in the market capitalisation of
the Company increasing by at least 500 per cent from
Initial Admission based on a starting price of 50p
per Ordinary Share;
* the option may not be exercised at a time when, in
the opinion of the remuneration committee there has
been public criticism by any appropriate regulatory
authority of the Company's operations or those of any
of its subsidiaries which results in a material
negative impact on the business of the Company
-------------------- -----------------------------------------------------------------
Maximum opportunity No one eligible person (individually
or deemed to be acting in concert
with other persons for the purposes
of the City code including shares
already held) can exceed 29.9% of
the Company's issued share capital.
-------------------- -----------------------------------------------------------------
Notes on Table
The Board may make minor amendments to the Policy set out above
for regulatory, exchange control, tax or administrative purposes or
to take account of a change in legislation without obtaining
Shareholder approval for that amendment. Any major changes will be
put to a shareholder vote at the next AGM or an EGM.
Policy on payment for loss of office
In the event that the employment of an Executive Director is
terminated, any compensation payable will be determined in
accordance with the terms of the service contract between the
Company and the employee, as well as the rules of any incentive
plans. Notice periods are set at up to a maximum of twelve months
by either party.
ROCKROSE ENERGY PLC
DIRECTORS' REMUNERATION REPORT
The Company considers a variety of factors when considering
leaving arrangements for an Executive Director, including
individual and business performance, the obligation for the
Director to mitigate loss (for example by gaining new employment)
and other relevant circumstances (e.g. ill health).
If the Executive Director's employment is terminated by the
Company, the Executive Director may receive a time pro-rated bonus
to the period worked subject to performance in that period, subject
to Board discretion.
The treatment of outstanding share awards is governed by the
relevant share plan rules. The following table summarises the
leaver provisions of share plans under which Executive Directors
may currently hold awards.
Leaving Event Time period Conditions
------------------------ --------------------------- -------------------------
Injury, disability, Option may be Exercise and
ill-health, redundancy exercised within time vesting
6 months of leaving. provisions per
the option certificate.
Board can waive
if satisfied
that such waiver
is not rewarding
failure.
------------------------ --------------------------- -------------------------
Death Option may be Exercise and
exercised by time vesting
personal representatives provisions per
within 6 months the option certificate.
of death. Board can waive
if satisfied
that such waiver
is not rewarding
failure.
------------------------ --------------------------- -------------------------
Employing company Option may be Exercise and
transferred out exercised within time vesting
of group. 6 months of transfer. provisions per
the option certificate.
Board can waive
if satisfied
that such waiver
is not rewarding
failure.
------------------------ --------------------------- -------------------------
Resignation or Lapse of option If allowed to
any other reason unless exercise;
not mentioned Board exercises Exercise and
above. discretion to time vesting
allow exercise provisions per
of option in the option certificate.
which case 6 Board can waive
months of leaving/notice. if satisfied
that such waiver
is not rewarding
failure.
------------------------ --------------------------- -------------------------
Recruitment policy
In determining remuneration for new appointments to the Board,
the Board will consider all relevant factors including, but not
limited to, the calibre of the individual and their existing
package, the external market and the existing arrangements for the
Company's current Executive Directors, with a view that any
arrangements offered are in the best interests of the Company and
shareholders and without paying any more than is necessary.
Where the new appointment is replacing a previous Executive
Director, salaries and total remuneration opportunity may be higher
or lower than the previous incumbent. If the appointee is expected
to develop
into the role, the Board may decide to appoint the new Executive
Director to the Board at a lower than typical salary. Larger
increases (above those of the wider employee population) may be
awarded over a period of time to move closer to market level as
their experience develops.
ROCKROSE ENERGY PLC
DIRECTORS' REMUNERATION REPORT
Benefits and other elements of remuneration will normally be
limited to those outlined in the remuneration policy table above.
However, additional benefits may be provided by the Company where
the Board considers it reasonable and necessary to do so.
It is expected that the structure and quantum of the variable
pay elements would reflect those set out in the policy table above.
However, the Board recognises that, as an independent oil and gas
company, it is competing with global firms for its talent. As a
result, the Board considers it important that the recruitment
policy has sufficient flexibility in order to attract the calibre
of individual that the Company requires to grow a successful
business. The Company recognises that in many cases, an external
appointee may forfeit significant cash bonuses and/or share awards
from a prior employer. The Board believes that it needs the ability
to compensate new hires for bonuses and/ or incentive awards lost
on joining the Company. The Board will use its discretion in
settling any such compensation, which will be decided on a
case-by-case basis, provided that in no event shall such
compensation exceed the value of compensation forfeited by the
external appointee, as confirmed by the appointee in a written
agreement with the Company.
Directors' Remuneration (audited)
Andrew Austin is currently the only Executive Director and is
employed under a service agreement which was initially capable of
termination by either party giving three months' notice in writing.
This period automatically extends to 12 months on completion of an
Acquisition.
The Non-executive Directors are employed under rolling contracts
with notice periods of three months, under which they are not
entitled to any pension, benefits or bonuses.
Directors' emoluments for the period were as follows:
18 months ended 31 December 2016
Salary Taxable Bonus Pension Total
Benefits
------------ ----------- ---------- ------ -------- -----------
A P Austin GBP145,000 GBP4,926 Nil Nil GBP149,926
------------ ----------- ---------- ------ -------- -----------
R A Benmore GBP35,000 Nil Nil Nil GBP35,000
------------ ----------- ---------- ------ -------- -----------
J A C GBP35,000 Nil Nil Nil GBP35,000
Morrow
------------ ----------- ---------- ------ -------- -----------
Benefits provided to Mr. Austin are the provision of medical
insurance for himself and his family.
Scheme interests awarded during the period (audited)
Unapproved Share Option Plan
Date Granted Face Exercise Exercised Waived/ Earliest Lapse Performance
of Grant Value Price Lapsed Vesting Date Criteria
(1) Date
-------- ------------- ------------ ------------ --------- ---------- -------- -------------- ------------- ------------
A
P Time based
Austin 22/12/2015 1,000,000 GBP500,000 50p Nil Nil 22/12/2018* 13/01/2022 Vesting
-------- ------------- ------------ ------------ --------- ---------- -------- -------------- ------------- ------------
1. The share price on date of grant was 50p based on the
admission price of 50p.
The option is to acquire up to 10% of the issued share capital.
As at the date of the grant this was 1,000,000 shares but it may
increase to include any issue of shares after the date of grant
subject to the earlier of;
-- the date falling on the third anniversary of admission.
-- the market capitalisation of the Company first becomes or exceeds GBP100 million.
ROCKROSE ENERGY PLC
DIRECTORS' REMUNERATION REPORT
*The shares shall vest in three tranches of 33% on the third
anniversary of grant, 33% on the fourth anniversary of grant and
34% on the fifth anniversary of grant, subject to a completion of
at least one acquisition resulting in the market capitalisation of
the Company increasing by at least 500% (the starting measure being
the price at admission of 50p per share), save as to they may
become 100% exercisable in the event of a takeover or liquidation
(Rule 11 of the plan).
The expense to the income statement for the period was
GBP76,895.
The Directors' interests for disclosure purposes in the voting
rights attaching to the Company's shares at 31 December 2016 were
as follows (audited):
31 December 2016, Ordinary 20p Shares
Number %
------------- ---------- ------
A P Austin 1,995,002 19.95
------------- ---------- ------
R A Benmore 150,000 1.5
------------- ---------- ------
J A C
Morrow 160,000 1.6
------------- ---------- ------
A P Austin also holds certain options as disclosed above.
Payments to past directors (audited)
In the period there were no payments to past directors.
Payments for loss of office (audited)
No payments were made to directors for loss of office in the
period.
It is envisaged that a Remuneration Committee will be formed
prior to the AGM to implement the Remuneration Policy.
A. P. Austin
On behalf of the Board
31 March 2017
ROCKROSE ENERGY PLC
DIRECTORS' REPORT
The directors present the audited consolidated financial
statements of the Group for the period ended 31 December 2016.
Principal activity and status.
The Group's principal area of activity is the acquisition of
companies or businesses in the upstream oil and gas and power
sector.
A review of the business and the future developments of the
Group are presented within the Strategic Report.
Dividends
No dividends have been declared or paid.
Political donations.
The Group made no political donations during the period.
Directors.
The Directors who served during the period were as follows:
A P Austin Executive chairman appointed 1 July 2015
E J Lukins Non-executive appointed 1 July 2015, resigned 18 December 2015
R A Benmore Non-executive appointed 18 December 2015
J A C Morrow Non-executive appointed 18 December 2015
Directors' indemnities and insurance.
Subject to the conditions set out in the Companies Act 2006, the
Company has arranged appropriate Directors and Officers insurance
to indemnify the Directors and officers against liability in
respect of proceedings brought by third parties. Such provision
remains in force at the date of this report.
The Company indemnifies the Directors against actions they
undertake or fail to undertake as Directors or officers of any
Group company, to the extent permissible for such indemnities to
meet the test of a qualifying third party indemnity provision as
provided for by the Companies Act 2006. The nature and extent of
the indemnities is as described in Section 143 of the Company's
Articles of Association as adopted on 15 November 2015. These
provisions remained in force throughout the period and remain in
place at the date of this report.
Substantial shareholdings
As at 31 March 2017, in addition to the Directors' interests as
set out in the Remuneration Report, the Company had received
notification from the following institutions of interests in excess
of 3 per cent of the Company's issued Ordinary Shares with voting
rights:
Number %
---------------- ---------- ------
City Financial 2,000,000 20.00
---------------- ---------- ------
Legal &
General 1,000,000 10.00
---------------- ---------- ------
The Company is not a close company as defined in the Income and
Corporation Taxes Act 1988. The Company is domiciled in the UK and
incorporated and registered in England.
ROCKROSE ENERGY PLC
DIRECTORS' REPORT
Corporate governance
In order to implement its business strategy, the Company has
adopted a corporate governance structure which is fit for purpose
for this stage of the Company's life cycle. This includes a
three-member board, with two independent non-executive
Directors.
Until a major asset acquisition is made the Company will not
have nomination, remuneration, audit or risk committees. The Board
as a whole reviews its size, structure and composition, the scale
and structure of Directors' fees (taking into account the interests
of shareholders and the performance of the Company) takes
responsibility for the appointment of auditors and payment of their
audit fee, monitors and reviews the integrity of the Company's
financial statements and takes responsibility for any formal
announcements on the Company's financial performance. Following a
major asset acquisition the Board intends to put in place
nomination, remuneration, audit and risk committees.
The Board has established the corporate governance values of the
Company and has overall responsibility for setting the Company's
strategic aims, defining the business plan and strategy and
managing the financial and operational resources of the Company.
Overall supervision, acquisition, divestment and other strategic
decisions are considered and determined by the Board. The Board
held four meetings in the period to 31 December 2016.
Mr Austin, in addition to acting as Chairman, is the Director
charged with day-to-day responsibility for the implementation of
the Company's acquisition strategy. Mr Austin is supported by
service providers as required.
The Board intends to comply, so far as it is practicable, with
certain Main Principles of the UK Corporate Governance Code. Since
incorporation compliance with the provisions of the Model Code is
being undertaken on a voluntary basis, as the Company does not have
a premium listing on the London Stock Exchange.
As at the date of this document, the Board has voluntarily
adopted the Model Code for Directors' dealings contained in the
Listing Rules of the UK Listing Authority. The Board will be
responsible for taking all proper and reasonable steps to ensure
compliance with the Model Code by the Directors. The FCA will not
have the authority to (and will not) monitor the Company's
voluntary compliance with the Model Code, nor to impose sanctions
in respect of any failure by the Company to so comply.
Statement of directors' responsibilities in respect of the
financial statements
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulation.
Company law requires the directors to prepare financial
statements for each financial period. Under that law the directors
have prepared the Group financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union and Company financial statements in accordance
with International Financial Reporting Standards (IFRSs) as adopted
by the European Union. Under company law the directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group
and Company and of the profit or loss of the Group and Company for
that period. In preparing the financial statements, the directors
are required to:
-- select suitable accounting policies and then apply them consistently;
-- state whether applicable IFRSs as adopted by the European
Union have been followed for the Group financial statements and
IFRSs as adopted by the European Union have been followed for the
company financial statements, subject to any material departures
disclosed and explained in the financial statements;
-- make judgements and accounting estimates that are reasonable and prudent; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company
will continue in business.
ROCKROSE ENERGY PLC
DIRECTORS' REPORT
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable
them to ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation.
The directors are also responsible for safeguarding the assets
of the Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the Group and Company's website. Legislation in the United
Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The directors consider that the annual report and accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group and
Company's performance, business model and strategy.
Each of the directors, whose names and functions are listed in
the Directors' Report confirm that, to the best of their
knowledge:
-- the Company financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
loss of the Company;
-- the Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
loss of the Group; and
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Group and Company, together with a description of the principal
risks and uncertainties that it faces.
In the case of each director in office at the date the
Directors' Report is approved:
-- so far as the director is aware, there is no relevant audit
information of which the Group and Company's auditors are unaware;
and
-- they have taken all the steps that they ought to have taken
as a director in order to make themselves aware of any relevant
audit information and to establish that the Group and Company's
auditors are aware of that information.
..........................................
Andrew Austin
Executive Chairman
31 March 2017
ROCKROSE ENERGY PLC
Independent auditors' report to the members of Rockrose Energy
plc
Our opinion
In our opinion:
-- Rockrose Energy plc's Group financial statements and Company
financial statements (the "financial statements") give a true and
fair view of the state of the Group's and of the Company's affairs
as at 31 December 2016 and of the Group's loss and the Group's and
the Company's cash flows for the 18 month period (the "period")
then ended;
-- the Group financial statements have been properly prepared in
accordance with International Financial Reporting Standards
("IFRSs") as adopted by the European Union;
-- the Company financial statements have been properly prepared
in accordance with IFRSs as adopted by the European Union and as
applied in accordance with the provisions of the Companies Act
2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006 and, as regards the
Group financial statements, Article 4 of the IAS Regulation.
What we have audited
The financial statements, included within the Annual Report,
comprise:
-- the Consolidated statement of financial position and Company
statement of financial position as at 31 December 2016;
-- the Consolidated income statement and Consolidated statement
of comprehensive income for the period then ended;
-- the Consolidated statement of cash flows and Company
statement of cash flows for the period then ended;
-- the Consolidated statement of changes in equity and Company
statement of changes in equity for the period then ended; and
-- the notes to the financial statements, which include a
summary of significant accounting policies and other explanatory
information.
The financial reporting framework that has been applied in the
preparation of the financial statements is IFRSs as adopted by the
European Union and, as regards the Company financial statements, as
applied in accordance with the provisions of the Companies Act
2006, and applicable law.
In applying the financial reporting framework, the directors
have made a number of subjective judgements, for example in respect
of significant accounting estimates. In making such estimates, they
have made assumptions and considered future events.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion:
-- the information given in the Strategic Report and the
Directors' Report for the financial period for which the financial
statements are prepared is consistent with the financial
statements.
In our opinion:
-- the part of the Directors' Remuneration Report to be audited
has been properly prepared in accordance with the Companies Act
2006.
Other matters on which we are required to report by
exception
Adequacy of accounting records and information and explanations
received
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- we have not received all the information and explanations we require for our audit; or
-- adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the Company financial statements and the part of the
Directors' Remuneration Report to be audited are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
ROCKROSE ENERGY PLC
Directors' remuneration
Under the Companies Act 2006 we are required to report to you
if, in our opinion, certain disclosures of directors' remuneration
specified by law are not made. We have no exceptions to report
arising from this responsibility.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Statement of Directors'
Responsibilities set out on pages 10 and 11, the directors are
responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland) ("ISAs (UK
& Ireland)"). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and
only for the Company's members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We
do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK &
Ireland). An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of:
-- whether the accounting policies are appropriate to the
Group's and the Company's circumstances and have been consistently
applied and adequately disclosed;
-- the reasonableness of significant accounting estimates made by the directors; and
-- the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the
directors' judgements against available evidence, forming our own
judgements, and evaluating the disclosures in the financial
statements.
We test and examine information, using sampling and other
auditing techniques, to the extent we consider necessary to provide
a reasonable basis for us to draw conclusions. We obtain audit
evidence through testing the effectiveness of controls, substantive
procedures or a combination of both.
In addition, we read all the financial and non-financial
information in the Annual Report to identify material
inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider
the implications for our report.
Richard Spilsbury (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
31 March 2017
ROCKROSE ENERGY PLC
CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME FOR THE PERIODED 31 DECEMBER 2016
Eighteen months
ended
Notes 31 December
2016
GBP
Administrative expenses (1,292,584)
Exceptional items: initial public offering costs (48,164)
------------------
Operating loss 5 (1,340,748)
Finance income 3,893
Finance costs (2)
------------------
Loss before tax (1,336,857)
Tax 8 -
------------------
Loss for the period and total comprehensive expense
(1,336,857)
Basic and diluted loss per share 19 (0.2326)
The notes on pages 21 to 34 are an integral part of these
financial statements.
ROCKROSE ENERGY PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
(Registered number: 09665181)
Notes 31 December
2016 GBP
Assets
Current assets
Trade and other receivables 12 244,428
Cash and cash equivalents 13 2,387,968
----------------
Total assets 2,632,396
Current liabilities
Trade and other payables 14 441,042
----------------
Total liabilities
441,042
----------------
Equity and liabilities
Share capital and reserves
Share capital 18 2,000,000
Share option reserve 76,895
Share premium 18 2,224,816
Accumulated losses (2,110,357)
----------------
Total equity 2,191,354
----------------
Total equity and liabilities 2,632,396
These financial statements were approved by the Board of
Directors on 31 March 2017 and were signed on its behalf by:
..........................................
A. P. Austin
Director
The notes on pages 21 to 34 are an integral part of these
financial statements.
ROCKROSE ENERGY PLC
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
(Registered number: 09665181)
Notes 31 December
2016 GBP
Assets
Non current assets
Investments in subsidiaries 10 100 --------------
Total fixed assets 100
Current assets
Trade and other receivables 12 934,854
Cash and cash equivalents 13
2,387,968
----------------
Total current assets
3,322,822
----------------
Total assets
3,322,922
Current liabilities
Trade and other payables 14 441,142
----------------
Total liabilities 441,142
----------------
Equity and liabilities
Share capital and reserves
Share capital 18 2,000,000
Share option reserve 76,895
Share premium 18 2,224,816
Accumulated losses
(1,419,931)
----------------
Total Equity 2,881,780
----------------
Total equity and liabilities 3,322,922
These financial statements were approved by the Board of
Directors on 31 March 2017 and were signed on its behalf by:
..........................................
A. P. Austin
Director
The notes on pages 21 to 34 are an integral part of these
financial statements.
ROCKROSE ENERGY PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 31 DECEMBER 2016
Share
Share Share Accumulated Option
capital premium Losses Reserve Total
GBP GBP GBP GBP GBP
Cumulative
loss for the
period - - (1,336,857) - (1,336,857)
------------------ ------------------- -------------------------- ------------------- -------------
Total
comprehensive
loss - - (1,336,857) - (1,336,857)
------------------ ------------------- -------------------------- ------------------- -------------
Purchase of
treasury
shares (773,500) (773,500)
Shares issued
during the
period 2,000,000 2,224,816 - 76,895 4,301,711
------------------ ------------------- -------------------------- ------------------- -------------
Total
transactions
with owners 2,000,000 2,224,816 (773,500) 76,895 3,528,211
------------------ ------------------- -------------------------- ------------------- -------------
Balance at
31 December
2016 2,000,000 2,224,816 (2,110,357) 76,895 2,191,354
================== =================== ========================== =================== =============
The notes on pages 21 to 34 are an integral part of these
financial statements.
ROCKROSE ENERGY PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 31 DECEMBER 2016
Share
Share Accumulated Option
Share capital premium Losses Reserve Total
GBP GBP GBP GBP GBP
Cumulative
loss for the
period - - (1,419,931) - (1,419,931)
-------------------------------- ------------------------ ------------------------ ------------------- --------------------
Total
comprehensive
loss - - (1,419,931) - (1,419,931)
-------------------------------- ------------------------ ------------------------ ------------------- --------------------
Shares issued
during the
period 2,000,000 2,224,816 - 76,895 4,301,711
-------------------------------- ------------------------ ------------------------ ------------------- --------------------
-
Total
transactions
with owners 2,000,000 2,224,816 - 76,895 4,301,711
-------------------------------- ------------------------ ------------------------ ------------------- --------------------
-
Balance at
31 December
2016 2,000,000 2,224,816 (1,419,931) 76,895 2,881,780
================================ ======================== ======================== =================== ====================
The notes on pages 21 to 34 are an integral part of these
financial statements.
ROCKROSE ENERGY PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIODED 31 DECEMBER 2016
Eighteen months
Notes ended
31 December
2016
GBP
Cash flows from operating activities
Loss for the period (1,336,857)
Share based payments 76,895
Finance cost 2
Finance income (3,893)
Increase in trade and other receivables (244,428)
Increase in other trade and payables
441,040
----------------
Net cash used in operating activities (1,067,241)
----------------
Cash flows from investing activities
Interest received 3,893
----------------
Net cash generated from investing activities 3,893
----------------
Cash flows from financing activities
Proceeds from issue of shares net of treasury shares
4,226,500
Initial public offering costs (775,184)
----------------
Net cash generated from financing activities
3,451,316
----------------
Net increase in cash and cash equivalents
2,387,968
Cash and cash equivalents at beginning of period -
----------------
Cash and cash equivalents at end of period 13
2,387,968
The notes on pages 21 to 34 are an integral part of these
financial statements.
ROCKROSE ENERGY PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE PERIODED 31 DECEMBER 2016
Eighteen months
Notes ended
31 December
2016
GBP
Cash flows from operating activities
Loss for the period (1,419,931)
Share based payments 76,895
Finance cost 2
Finance income (3,893)
Increase in trade and other receivables (934,854)
Increase in other trade and payables
441,140
----------------
Net cash used in operating activities (1,840,641)
----------------
Cash flows from investing activities
Interest received
3,893
Acquisition of investment in subsidiary (100)
----------------
Net cash generated from investing activities
3,793
----------------
Cash flows from financing activities
Proceeds from issue of shares 5,000,000
Initial public offering costs (775,184)
----------------
Net cash generated from financing activities
4,224,816
----------------
Net increase in cash and cash equivalents
2,387,968
Cash and cash equivalents at beginning of period -
----------------
Cash and cash equivalents at end of period 13
2,387,968
The notes on pages 21 to 34 are an integral part of these
financial statements.
ROCKROSE ENERGY PLC
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2016
1 General information
Rockrose Energy Plc ('the Company' or together with its
subsidiaries, 'the Group') has been formed to make acquisitions of
companies or businesses in the upstream oil and gas and power
sector.
The Company is a public limited company incorporated on 1 July
2015, which is listed on the London Stock Exchange and incorporated
and domiciled in the UK. The address of its registered office is
Dashwood House, 69 Old Broad Street, London.
The financial statements have been prepared for an eighteen
month period from incorporation date on 1 July 2015 to 31 December
2016. The Company changed its financial year-end date to 31
December to align with industry peers. As this is the first period
of account no financial statements are presented for a prior
period.
The financial statements have been prepared in pound sterling
('GBP') and have been rounded to the nearest pound (GBP).
2 Accounting policies
2.1 Basis of preparation of the Financial Statements
The financial statements have been prepared in accordance with
the International Financial Reporting Standards as adopted by the
European Union and the Companies Act 2006. They have been prepared
using the historical cost convention.
The preparation of the financial statements requires management
to make estimates and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities, and the disclosure
of contingent liabilities at the date of the financial statements.
If in the future such estimates and assumptions which are based on
management's best judgement at the date of the financial
statements, deviate from the actual circumstances, the original
estimates and assumptions will be modified as appropriate in the
period in which the circumstances change.
2.2 Consolidation
The consolidated financial statements include the financial
statements of the Company and its subsidiaries for the period ended
31 December 2016. Subsidiaries are all entities over which the
Company has control. The Company controls an entity when the
Company is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Company.
Investments in subsidiaries are accounted for at cost less
impairment in the Company Statement of Financial Position.
2.3 Going concern
These consolidated financial statements have been prepared on a
going concern basis. The directors are satisfied that the Group and
Company have sufficient resources to continue in operation for the
foreseeable future, a period of not less than twelve months from
the date of this report. Accordingly they continue to adopt the
going concern basis in preparing the financial statements.
ROCKROSE ENERGY PLC
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2016
2.4 Segment reporting
In the opinion of the directors the operations of the Group
represents one segment, and are treated as such, when evaluating
its performance. The chief operating decision maker is the Board of
Directors. The Board of Directors reviews management accounts
prepared for the Group when assessing performance.
2.5 Standards and amendments effective and relevant to the Company
The financial statements have been prepared in accordance with
IFRSs adopted by the European Union which are effective as at 31
December 2016.
The following IFRSs became effective during the period:
IAS 1 Presentation of Financial Statements - Amendments
resulting from the disclosure initiative
IAS 16 Property, Plant and Equipment - Amendments regarding the
clarification of acceptable methods of depreciation and
amortisation
IAS 16 Property, Plant and Equipment - Amendments bringing
bearer plants into the scope of IAS 16
IAS 19 Employee Benefits - Amendments resulting from September
2014 Annual Improvements to IFRSs
IAS 27 Separate Financial Statements - Amendments reinstating
the equity method as an accounting option for investments in in
subsidiaries, joint ventures and associates in an entity's separate
financial statements
IAS 28 Investments in Associates and Joint Ventures - Amendments
regarding the application of the consolidation exception
IAS 34 Interim Financial Reporting - Amendments resulting from
September 2014 Annual Improvements to IFRSs
IAS 38 Intangible Assets - Amendments regarding the
clarification of acceptable methods of depreciation and
amortisation
IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations - Amendments resulting from September 2014 Annual
Improvements to IFRSs
IFRS 7 Financial Instruments: Disclosures - Amendments resulting
from September 2014 Annual Improvements to IFRSs
IFRS 10 Consolidated Financial Statements - Amendments regarding
the application of the consolidation exception
IFRS 11 Joint Arrangements - Amendments regarding the accounting
for acquisitions of an interest in a joint operation
IFRS 12 Disclosure of Interests in Other Entities - Amendments
regarding the application of the consolidation exception
IFRS 14 Regulatory Deferral Accounts
At the date of authorisation the following Standards and
Interpretations, which have not yet been applied in these financial
statements, were in issue but not yet effective:
IAS 7 Statement of Cash Flows - Amendments as result of the Disclosure initiative
IAS 12 Income Taxes - Amendments regarding the recognition of
deferred tax assets for unrealised losses
IAS 28 Investments in Associates and Joint Ventures - Amendments
resulting from Annual Improvements 2014-2016 Cycle (clarifying
certain fair value measurements)
ROCKROSE ENERGY PLC
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2016
2.5 Standards and amendments effective and relevant to the Company (continued)
IAS 39 Financial Instruments: Recognition and Measurement -
Amendments to permit an entity to elect to continue to apply the
hedge accounting requirements in IAS 39 for a fair value hedge of
the interest rate exposure of a portion of a portfolio of
financial
assets or financial liabilities when IFRS 9 is applied, and to
extend the fair value option to certain contracts that meet the
'own use' scope exception
IFRS 1 First-time Adoption of International Financial Reporting
Standards - Amendments resulting from Annual Improvements 2014-2016
Cycle (removing short-term exemptions)
IFRS 2 Share-based Payment - Amendments to clarify the
classification and measurement of payment transactions
IFRS 4 Insurance Contracts - Amendments regarding the
interaction of IFRS 4 and IFRS 9
IFRS 7 Financial Instruments: Disclosures - Additional hedge
accounting disclosures (and consequential amendments) resulting
from the introduction of the hedge accounting chapter in IFRS 9
IFRS 9 Financial Instruments - Finalised version, incorporating
requirements for classification and measurement, impairment,
general hedge accounting and derecognition
IFRS 12 Disclosure of Interests in Other Entities - Amendments
resulting from Annual Improvements 2014-2016 Cycle (clarifying
scope)
IFRS 15 Revenue from Contracts with Customers - Original issue
IFRS 15 Revenue from Contracts with Customers - Clarifications to IFRS 15
IFRS 16 Leases
The adoption of these standards and Interpretations are not
expected to have a significant impact on the Group's financial
statements.
2.6 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and bank
balances. Cash equivalents are short- term, highly liquid
investments that are readily convertible to known amounts of cash,
which are subject to an insignificant risk of changes in value and
have a maturity of three months or less at the date of
acquisition.
2.7 Financial Instruments
Financial Instruments are classified on initial recognition as
financial assets, financial liabilities or equity instruments in
accordance with the substance of the contractual arrangement.
Financial instruments are recognised on the Statement of Financial
Position at fair value when the Company becomes party to the
contractual provisions of the instrument. Financial assets are
reduced by appropriate allowances for estimated irrecoverable
amounts. Interest earned from financial assets and interest paid on
financial liabilities is recognised in the income statement on an
accruals basis over the term of the financial asset or liability
using the effective rate of interest.
Trade and other receivables are stated at their nominal value,
as the interest that would be recognised from discounting future
cash receipts over the short credit period is not considered to be
material.
Trade and other payables are stated at their original invoiced
value, as the interest that would be recognised from discounting
future cash payments over the short term payment period is not
considered material.
ROCKROSE ENERGY PLC
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2016
2.8 Share capital
Ordinary shares are classified as equity. The Company's share
capital currently consists of ordinary shares. Any transaction
costs associated with the issuing of shares are deducted from
equity to the extent they are incremental costs directly
attributable to the equity transaction.
2.9 Taxes
Current income tax: The current income tax charge is calculated
on the basis of tax rates and laws that have been enacted or
substantively enacted by the reporting date in the countries where
the Company operates and generates income.
Deferred tax: Deferred balances are recognised in respect of all
timing differences that have originated but not reversed by the
Statement of Financial Position date, except that:
-- The recognition of deferred tax assets is limited to the
extent that it is probable that they will be recovered against the
reversal of deferred tax liabilities or other future taxable
profits; and
-- Any deferred tax balances are reversed if and when all
conditions for retaining associated tax allowances have been
met.
Deferred tax balances are not recognised in respect of permanent
differences. Deferred income tax is determined using tax rates and
laws that have been enacted or substantively enacted by the
reporting date.
2.10 Exceptional Items
Exceptional items relate to the IPO costs on issuing the share
capital in the Company that did not meet the criteria for
recognition directly in equity.
2.11 Employee Benefit Trust
The assets and liabilities of the Employee Benefit Trust are
consolidated by the Group, as the Group exercises control over the
Trust as defined in IFRS 10. Shares in the Company held by the
trust are consolidated as a deduction from equity and treated as
treasury shares.
2.12 Share based payments
Under the Share Option Plan, the Employee Benefit Trust
subscribes for ordinary shares in the Company. The EBT owns a
portion of the share equivalent to the subscription price. Any
employee who received an award under the plan owns any value in the
share in excess of the subscription price. Awards vest over three
years to five years and are subject to performance criteria. The
fair value of awards granted is recognised as an employee expense
with a corresponding increase in equity.
The fair value is measured at grant date, using an appropriate
pricing model taking into account the terms and conditions upon
which the award was granted, and is spread over the period during
which the awards vest. The amount recognised as an expense is
adjusted to reflect the actual number of share awards that vest in
the same period. At each balance sheet date, the Company revises
its estimates of the number of options that are expected to vest.
The Company recognises the impact of the revision to original
estimates, if any, in the income statement, with a corresponding
adjustment to equity.
ROCKROSE ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2016
3 Estimates
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets and liabilities, income and expenses. Actual results may
differ from these estimates.
In preparing these financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key accounting estimates are accruals and the
non-recognition of a deferred tax asset. The deferred tax asset has
not been recognised as the directors do not expect profits to be
made for up to three years hence.
In the Company's financial statements the key accounting
estimate is valuation of the loan made to the EBT. The loan to the
EBT has been impaired to reflect the market value of the Company's
shares at 31 December 2016, as disclosed in Note 12.
4 Financial risk management
As at 31 December 2016 the Company's financial instruments
consisted of cash and cash equivalents, trade and other receivables
and trade and other payables including accrued liabilities. With
respect to all of these financial instruments, the Company
estimates that their fair values approximate their carrying values
at 31 December 2016 based on the nature of those instruments.
The Company's risk exposures and impact on the Company's
financial instruments are summarised below:
Credit risk
The Company's credit risk is primarily attributable to cash,
which is held in Metro Bank which is domiciled in the UK and
regulated by the FCA.
Credit risk in relation to the EBT loan has been discussed in
note 12.
Market risk
(a) Interest rate risk
Cash balances do not generate material amounts of interest.
There are no other interest bearing financial instruments and
therefore the Company is not exposed to interest rate risk.
(b) Foreign currency risk
All the balances as of 31 December 2016 and the transactions for
the eighteen month period then ended were denominated in UK
sterling which is the Company's functional and presentation
currency. The Company is therefore not exposed to foreign currency
risk.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to
meet its financial obligations as they fall due. The Company
monitors the risk of cash shortfalls by means of current liquidity
planning. The Company's approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or
risking damage to the Group's reputation. The approach is used to
analyse payment dates associated with financial assets and also to
forecast cash flows from operating activities. The table below sets
out the contractual maturities of financial liabilities
present.
ROCKROSE ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2016
4 Financial risk management (continued)
Contractual Due in less
Amount than 1 year
GBP GBP
Group
At 31 December 2016
Trade and other payables 441,042 441,042 ------------------
----------------
441,042 441,042
------------------ ------------------
Company
At 31 December 2016
Trade and other payables 441,142 441,142 ------------------
------------------
441,142 441,142
------------------ ------------------
Capital management
The capital of the Company is represented by the net assets
attributable to holders of ordinary shares. The Company's objective
when managing capital is to safeguard the Company's ability to
continue as a going concern and fund development, in order to
provide returns for shareholders and benefits for other
stakeholders. The Company has not paid dividends, nor returned
capital to the shareholders to date. The Company is not subject to
externally imposed capital requirements.
5 Operating Loss
Operating loss is stated after charging:
Eighteen
Months ended
31 December
2016
GBP
Director's fees, salaries, share options and other benefits
296,821
Fees payable to the Company's auditors for:
- Audit of the parent company and the consolidated
financial statements 35,000
- Interim review of the parent companies' financial statements
and; 24,000
- Other non audit services: Transaction services (diligence)
Accountancy, consulting, legal & other advisory fees
330,000
Operating lease costs 48,000
The Company's auditors provided GBP80,000 of services connected
with the Company's initial public offering of shares which has been
treated as share issue costs and deducted from equity.
ROCKROSE ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2016
6 Employee benefit expenses (including Director's remuneration)
Eighteen
Months ended
31 December
2016
GBP
Salaries, allowances and benefits in kind (short term)
253,654
Social security costs 27,139
Share based payments 76,895
------------------
357,688
In addition to the Directors, the monthly average number of
employees during the period was 1.
The highest paid director received remuneration of
GBP226,821.
Total key management compensation for the period was
GBP296,821.
7 Financial income
Eighteen
Months ended
31 December
2016
GBP
Bank interest received 3,893
------------------
3,893
8 Taxation and deferred tax
No UK corporation tax charge arises in the period ended 31
December 2016. A reconciliation of the expected tax benefit
computed by applying the tax rate applicable in the primary
jurisdiction to the loss before tax to the actual tax
(credit)/expense is as follows:-
Tax on loss on ordinary activities
2016
GBP
Loss before tax on continuing operations
(1,336,857)
Corporation tax at the statutory income tax rate of 20%
(267,371)
Effects of:
Expenses not deductible for tax purposes 19,162
Tax losses not utilised 248,209
__________
Total tax charge on loss before tax -
ROCKROSE ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2016
8 Taxation and deferred tax (continued)
Factors that may affect future tax charges
The Group has estimated losses of GBP1,241,045 available to
carry forward against future profits. The Company has a potential
deferred tax asset of GBP248,209 which has not been recognised on
losses in the financial statements. This is due to uncertainty
regarding when such losses will be utilised.
9 Income statement - company
The Company has elected to take exemption under section 408 of
the Companies Act 2006, to not present the parent company profit
and loss account. The Company's loss for the period was
GBP1,419,931.
10 Fixed asset investments
Company
Investment in
subsidiary
companies
Cost or valuation
Additions
100
------------------
At 31 December 2016 100
Net book value
------------------
At 31 December 2016 100
Subsidiary undertakings:
The following were subsidiary undertakings of the Company:
Name Country Class Holding Principal activity
of incorporation of shares
Rockrose (UKCS1) United Ordinary 100% Extraction of
Ltd Kingdom crude petroleum
Rockrose Energy States N/A N/A Employee Benefit
Employee Benefit of Jersey Trust
Trust
On 27 October 2016, Rockrose Energy Plc acquired 100% of the
share capital of Rockrose (UKCS1) Limited.
Rockrose Energy Employee Benefit Trust is an employee benefit
trust for the purpose of making awards under the Group's employee
share schemes. These shares have been classified as treasury shares
within equity.
ROCKROSE ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2016
11 Audit exemptions for subsidiary companies
The Group has elected to take advantage of the full extent of
the exemptions available under Section 479A of the Companies Act
2006. As a result, statutory financial statements will not be
audited for the following UK entity: Rockrose (UKCS1) Ltd.
12 Trade and other receivables
Group Company
31 December 31 December
2016 2016
GBP GBP
VAT receivable 156,977 156,977
Prepayments 87,451 87,541
Loan to Appleby Trust (Jersey) Limited "EBT Trustee" -
690,426
------------------ ------------------
244,428 934,854
Appleby Trust (Jersey) Limited (the "EBT Trustee") has
subscribed for 1,200,000 Ordinary Shares (1,200,000 @ GBP0.50 =
GBP600,000) on behalf of the EBT. At Admission, these shares
comprised 12 per cent of the issued share capital of the
Company.
The EBT Trustee funded its subscription by way of a loan from
the Company amounting to GBP600,000. The Company has no recourse
under the loan to the assets of the EBT Trustee other than the
proceeds of the sales of the shares. The proceeds of sale may not
be sufficient for the EBT Trustee to repay the loan in full.
If the proceeds of the sale of its beneficial interest are
greater than the amount the EBT Trustee is required to repay under
the loan, the EBT Trustee may apply any surplus for future employee
incentivisation arrangements.
The EBT Trustee will not normally exercise the voting rights of
unvested Ordinary Shares held under the EBT but may exercise such
rights on vested Ordinary Shares at the request of the relevant
participants. Similarly, Ordinary Shares held under the EBT will
not receive any dividends paid.
In addition, on 16 August 2016, A. P. Austin transferred 347,000
of his own shares to EBT at a value of GBP0.50 per share, which
increased this loan balance by a further GBP173,500.
The loan receivable has been impaired in line with the
conditions of the loan agreement due to the value of the shares
held by EBT being less than the loan balance owing.
ROCKROSE ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2016
13 Cash and cash equivalents
Group Company
2016 2016
GBP GBP
Cash at bank 529,560 529,560
Short term deposit 1,858,408 1,858,408
------------------ ------------------
2,387,968 2,387,968
14 Trade and other payables
Group Company
2016 2016 GBP GBP
Trade payables 18,261 18,261
Accruals 396,615 396,615
Amounts due to group companies - 100
Other payables 26,166 26,166
------------------ ------------------
441,042 441,142
Other payables relate to amounts due to A. P. Austin, a director
of the Company.
15 Financial instruments
Group Company
2016 2016
GBP GBP
Financial assets:
Financial assets that are debt instruments measured
at amortised cost - 690,426
------------------ ------------------
- 690,526
Financial liabilities:
Financial liabilities that are debt instruments measured at
amortised cost (441,042) (441,142)
------------------ ------------------
(441,042) (441,142)
Financial assets that are debt instruments measured at amortised
cost comprise the loan to Appleby Trust.
The loan to the EBT has been impaired to reflect the market
value of the shares at the year end date.
Financial liabilities that are debt instruments measured at
amortised cost comprise trade payables, accruals and amounts due to
group companies.
ROCKROSE ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2016
16 Share based payments
The Company commenced the operation of a Share Option Plan ("the
plan") during December 2015. The plan is an equity incentive
scheme.
The board of directors oversees the plan, approves the
subscription price of awards under the plan and any criteria to be
satisfied before exercise is permitted, and monitors the
effectiveness of the plan as an incentive.
Under the plan, the options outstanding to Directors are as
follows:
Share
Grant Vesting Exercise price Fair
Name date date Number price Expiry at grant value
A Austin 22/12/2015 22/12/2018 330,000 0.5000 13/01/2022 0.5000 0.2896
A Austin 22/12/2015 22/12/2019 330,000 0.5000 13/01/2022 0.5000 0.2918
A Austin 22/12/2015 22/12/2020 340,000 0.5000 13/01/2022 0.5000 0.2785
-----------
1,000,000
There were no options vested during the year and no options were
exercisable at the year end.
The assessed fair value at the grant date is determined using
the binomial model. The vesting conditions are that the share price
is at least GBP0.3000; that there is continuous employment to the
date of exercise; that there has been an acquisition resulting in a
500% increase in the market capitalisation of the Company; that
there are no negative regulatory findings and that the options
holder' and those acting in concert with him do not own more than
29.99% of the Company's issued capital after exercise. The binomial
model valuation does not incorporate non-market based vesting
conditions.
33% of the total share options are exercisable three years from
the grant date ("three year options"); 33% of the total share
options are exercisable four years from the grant date ("four year
options"), and 34% of the total share options are exercisable five
years from the grant date ("five year options").
The cost of awards under the plan is recognised over the vesting
period of the award. The expense for share options granted in 2016
was GBP76,895.
ROCKROSE ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2016
17 Reserves
Share premium
The share premium account represents the premium arising on the
issue of shares net of issue costs.
Accumulated losses
Accumulated losses represents cumulative profits and losses net
of dividends and other adjustments.
Treasury shares
Under the terms of the Company's share option plan outlined in
note 16, an Employee Benefit Trust (EBT) subscribed for ordinary
shares in the Company. The Trust is administered by Appleby Trust
(Jersey) Limited. The trustee can distribute shares at its
discretion directly to beneficiaries upon the recommendation of the
board. All administrative costs associated with the EBT are met by
the Company. The EBT owns the shares to be distributed at the
discretion of the trustees and the employee owns any value in the
shares in excess of the subscription price.
On 22 December 2015, the Company placed 1,200,000 shares into
the EBT. The market price of the shares was GBP0.125 each, and the
market value was GBP150,000. The shares were placed pre-IPO.
On 16 August 2016, the EBT acquired a further 347,000 shares.
The market price of the shares was GBP0.45 each, and the market
value was GBP156,150.
At 31 December 2016, the EBT jointly owned 1,547,000, with a
nominal value of GBP309,400, representing 15.47% of the allotted
share capital of the Company. None of the shares held were under
option or conditionally gifted.
18 Share capital and share premium
Number of Share Share
Shares capital premium
GBP GBP
Proceeds from issue of shares 10,000,000 2,000,000 3,000,000
Initial public offering costs - - (775,184)
------------------ ------------------ ------------------
Balance at 31 December 2016 10,000,000 2,000,000 2,224,816
On incorporation, 1 July 2015, 1,200,000 ordinary shares of 5p
at a price of 12.5p each were issued (equivalent to 300,000 shares
at a price of 50p - GBP150,000). The payment for the ordinary
shares of GBP150,000 was not made on incorporation but was made on
18 December 2015.
On 5 August 2015, a special resolution was passed to consolidate
every four ordinary shares of 5p each into one ordinary share of
20p.
18 December 2015, a further 900,000 ordinary shares of 20p each
were issued at a price of 50p per share.
ROCKROSE ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIODED 31 DECEMBER 2016
18 Share capital and share premium
On 22 December 2015 the Company entered into a loan agreement
with Appleby Trust (Jersey) Limited pursuant to which the Company
agreed to lend GBP600,000 to the EBT for the purpose of subscribing
for the 1,200,000 Placing Shares already issued.
On 12 January 2016 the Company issued 8,800,000 new ordinary
shares at a price of 50p per share amounting to gross proceeds of
GBP4,400,000.
19 Loss per share
Basic loss per share amounts are calculated by dividing the loss
for the period by the weighted average of shares outstanding during
the period. Weighted average number of shares excludes those shares
held as treasury shares.
The basic and diluted loss per share are the same as there are
no instruments that have a dilutive effect on earnings.
There have been no transactions involving ordinary shares or
potential ordinary shares between the reporting date and the date
of authorisation of these financial statements.
Eighteen months
ended
31 December
2016
GBP
Loss for the period attributable to the shareholders
(1,336,857)
Weighted average number of shares 5,746,741
------------------
Basic and diluted loss per share (0.2326)
20 Related party transactions
The transactions between the Company and its subsidiaries, which
are related parties, have been eliminated on consolidation.
The balances which are receivable from, or payable to,
subsidiary undertakings at 31 December 2016 are disclosed at note
12 and 14.
Key management compensation has been detailed at note 6.
The following transactions relate to related party transactions
with A. P. Austin, a director of the Company:
Share issues
A. P. Austin subscribed for 2,342,002 ordinary shares of 20p
each in the capital of the Company at a price of 50p per share. On
16 August 2016, A. P. Austin then transferred 347,000 of his own
shares to the EBT at a price of 50p per share, see note 12 for more
information. The effect of this was to take his beneficial holding
from 23.42% to 19.95%.
ROCKROSE ENERGY PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2016
20 Related party transactions
Period end balance
GBP173,500 was owed to A.P. Austin for the transfer of shares to
the EBT mentioned above and as at the period end a total of
GBP26,166 is outstanding to the director. Offset within the amount
owing to A. P. Austin is unpaid share capital of GBP21,001 and
various personal expenses paid by the Company.
Rent of GBP48,000 was paid to Brandon Toor, the step son of A.
P. Austin who is a director of the Company, during the period.
R.A. Benmore (through his wife Judith Helen Benmore) and J. A.
C. Morrow subscribed for 150,000 and 160,000 ordinary shares of 20p
each in the capital of the Company at a price of 50p per share.
21 Operating Lease Commitments
Group Company
31 December 31 December
2016 2016
GBP GBP
Not later than 1 year 48,000 48,000
Later than 1 year and not later than 5 years - -
Later than 5 years - -
------------------ ------------------
48,000 48,000
22 Post Balance Sheet/Subsequent Events
On 22nd March RockRose announced that it is progressing towards
completion of the acquisition of Maersk's interests in the Scott
(5.16%) and Telford (2.36%) elds. The consideration for the
interests in Scott and Telford consists of a payment from Maersk to
the Company. Separately, Rockrose has signed a conditional sale and
purchase agreement to acquire the entire issued and to be issued
share capital of Egerton Energy Ventures Limited ("Egerton")
including non-operated interests in the Galahad (27.80%) and
Mordred (8.33%) gas fields located in the Southern North Sea. Both
transactions are subject to OGA approval and customary conditions
precedent. The Company has also signed a non-binding heads of terms
to acquire a subsidiary of a major trading company which holds
small non-operated interests in gas elds located in the Southern
North Sea. This proposed acquisition also includes significant tax
assets. On completion of the acquisitions of the Scott and Telford
assets, Egerton, and the other potential acquisition, the Company
estimates current aggregate current production of around 1,400
barrels of oil equivalent per day. It is anticipated that the
acquisitions/proposed acquisitions will be treated as business
combinations but management are still evaluating the fair value of
assets/liabilities acquired and fair value of the various
considerations.
The Company has also led a draft prospectus with the UK Listing
Authority and is proceeding with the documentation and application
process to re-list. Concurrently, and in order to accelerate the
implementation of its stated strategy, the Company is consulting
with both existing shareholders and potential investors to allow
the Board to consider a fundraising by way of a private
placement.
23 Date of approval of financial statements
The financial statements were approved by the board of Directors
on 31 March 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKDDBQBKDPNN
(END) Dow Jones Newswires
March 31, 2017 10:34 ET (14:34 GMT)
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