Cadogan Energy Solutions Plc - Annual Results for the year ended 31 December 2023
Annual Results for the year ended
The Board of
Key Financial Highlights of 2023:
# Profit for the year:$1.3 million (2022: loss of$1.6 million ) # Average realised price[1]:$59.32 /boe (2022:$73.4 /boe) # Gross revenues[2]:$7.6 million (2022:$8.5 million ) # G&A[3]:$3.6 million (2022:$3.4 million ) # Profit per share:0.5 cents (2022: loss of0.6 cents ) # Cash at year end:$14.2 million (2022:$13.9 million )
Key Operational Highlights of 2023:
# Production: 119,057 bbl (2022: 117,793 bbl), a 1% increase year-on-year; # No LTI/TRI[4]; # ISO 14001 and 45001 certifications were re-validated by respective authority for one year; # Extension of Blazhiv-3 and Blazhiv-Monastyrets-3 wells' lease contracts for a 5-year period; # Qualification of Exploenergy as gas operator inItaly by theMinistry of Environment andEnergy Transition ; and # Launch of the gas-to-power investment inUkraine with the aim of being an electricity producer in 2025.
Group overview
In 2023, the Group continued to maintain exploration and production assets, and to operate an oil services business in
Our business model
We aim to increase value through:
# Maintaining a robust balance sheet, monetising the remaining value of our Ukrainian assets and supplementing E&P cash flow with revenues from gas trading and oil services # Developing new activities along the energy value chain with a lower impact on environment # Diversifying Cadogan's portfolio, both geographically and operationally
2023 remained a highly challenging year for Cadogan due to the ongoing invasion of
The Group continued to produce oil from its production Blazhiv license located in the West of
Cadogan has signed with PJSC Ukrnafta the extension of the wells Blazhiv-3 and Blazhiv-Monastyrets-3 lease contracts for a 5-year period (previous contracts were for a 3-year period) ahead the expiry period which allowed to avoid production stoppage and secure cash flows.
In 2023, the Company continued focusing on the subsoil study of Blazhiv field. Cadogan conducted and completed full hydrodynamic surveys of Blazhiv-1, Blazhiv-3, Blazhiv-Monastyrets-3 and Blazhiv-10 wells. The hydrodynamic model as well as the production forecast were updated. In the second half 2023, the Company launched a new assessment of hydrocarbon reserves, by an independent expert, according to PRMS standards. The assessment was completed at the end of
Cadogan is expanding into the electricity generation business by using the gas emissions related to oil production. This will allow to significantly reduce atmospheric emissions and ensure additional cash-flow. The Company launched the project to capture non-commercial associated gas during oil production at the Blazhiv field, which will then be used to generate electricity for sale on the grid. This project is anticipated to result in a substantial decrease in Cadogan's annual gas emissions, with the intensity ratio estimated to drop from 126 to approximately 33 tons of CO2 e/Kboe. The project is scheduled to be operational in Q1 2025.
The Company completed the acquisition of the 5% of the share interest in
Subsidiary businesses
Due to high market volatility caused by military escalation in
The Group owns a 90% interest in Exploenergy s.r.l., an Italian company, which controls two exploration areas (Reno Centese and Corzano), located in the
In
In
Cadogan did not exercise the Call Option. In
The Arbitration proceeding ended in
The Arbitral Committee:
- Rejected Proger's principal claim, and declared that the Loan Agreement is valid and effective,
- Deemed to qualify the Call Option as a preliminary contract under condition, but
- Rejected Proger's claim ex art. 2932 Italian Civil Code, stating that it is impossible to give an award producing the same effects of a final contract ex art. 2932 Italian Civil Code,
-
This is because of the duties established by the rules of the
- Subordinated the stipulation of the final contract to the precedent completion of the proceeding and bureaucratic process as per the British rules, stating that, otherwise,
- There is the obligation on Proger Ingegneria to return the money received under the Loan Agreement.
Cadogan introduced an appeal, still pending with a next hearing on
According to the provisions of the aforementioned Award, the right to reimbursement of the amount covered by the Loan Agreement has arisen in favour of Cadogan, plus interest accrued, and of which Cadogan then demanded immediate payment.
Last
Strategic Report
The Strategic Report has been prepared in accordance with Section 414A of the Companies Act 2006 (the "Act") and presented hereunder. Its purpose is to inform stakeholders and help them assess how the Directors have performed their legal duty under Section 172 of the Act to promote the success of the Company.
Section 172 Statement
The Company's section 172 statement is presented on page 36 and 37 and forms part of this strategic report.
Principal activity and status of the Company
The Company is registered as a public limited company (registration number 05718406) in
The Company's shares have a standard listing on the Official List of the
Key performance indicators
The Group monitors its performance through five key performance indicators ("KPIs"):
- to increase oil, gas and condensate production measured on the number of barrels of oil equivalent produced per day ("boepd");
- to decrease administrative expenses;
- to increase the Group's basic earnings per share;
- to maintain no lost time incidents; and
- to grow geographically and operationally diversify the portfolio.
The Group's performance in 2023 against these KPI's is set out in the table below, together with the prior year performance data.
Unit 2023 2022 2023 vs 2022
Average production (working interest basis) boepd 326 323 +1%
1
Overhead (G&A) $ million (3.6) (3.4) +6%
Basic profit/(loss) per share 2 cents 0.5 (0.6) +183%
Lost time incidents 3 incidents - - -
Geographic diversification new assets - - -
1. Average production is calculated as the average daily production during the
year
2. Basic profit/(loss) per ordinary share is calculated by dividing the net
profit/(loss) for the year attributable to equity holders of the parent
company by the weighted average number of ordinary shares during the year
3. Lost time incidents relate to the number of injuries where an
employee/contractor is injured and has time off work (IOGP classification)
Chairman's Statement
2023 was another year of unprecedented challenges for
Despite these challenges, Cadogan remained steadfast in its commitment to operational excellence, safety, and sustainability. We continued implementing rigorous risk management to safeguard our operations and ensure the well-being of our workforce. The safety of our people is our highest priority. The Group is taking all possible actions to preserve the safety of its employees and meet their needs.
As for existing operations in
In 2023, despite the volatility in the oil and gas markets, Cadogan has adapted its strategies to manage these uncertainties. By implementing agile measures, the Group has effectively mitigated the impact of market volatilities, ensuring continuity of its oil production and sales which allowed to minimize the temporary shutdowns of its production activities.
Looking ahead, we recognise that the geopolitical uncertainties and security risks will continue to be high challenges. However, we remain committed to advance through these challenges with resilience, integrity, and determination. This is possible thanks to the commitment of all with a competent and strong management. The Board remains focused on maximizing value from our assets and on our strategy based on the future diversification of our activities towards sectors providing lower impacts on environment along the energy value chain.
Michel Meeùs
Non-Independent Non-Executive Chairman
Chief Executive's Review
With the ongoing war resulting from the Russian invasion of
The ongoing war and the unpredictable air strikes continue to impact the sector of oil and gas in
Cadogan employees in
The imposition of legislative restrictions on oil and gas exports due to war time has significantly impacted the operations of the industry. This restriction has created challenges for companies operating in the country, limiting their ability to access international markets.
The government pursued the efforts for the modernization of its oil and gas regulatory framework, in particular, by enforcing law #4187 which deregulates the subsoil sector, introduces a free market of licenses and simplifies access to the land.
Against this challenging background, Cadogan's operational activities performed as following:
-- a 1% increase in production, from 117,793 bbl in 2022 to 119,057 bbl in
2023;
-- a robust balance sheet, with $14.2 million of net cash;
-- a significant diversification in electricity generation business by
developing a new project in Ukraine ;
-- the extension of Blazhiv-3 and Blazhiv-Monastyrets-3 wells' lease
contracts for a 5-year period; and
-- another year without LTIs'.
Core operations
Cadogan has continued to safely produce from its Blazhiv field in the West of
In 2023 Cadogan extended lease contracts with PJSC Ukrnafta for the Blazhiv-3 and Blazhiv-Monastyrets-3 wells, prolonging the agreement from 3 to 5 years ahead of the expiry period. This important move ensured uninterrupted production and allowed securing cash flows. By proactively extending these contracts, the company demonstrates its commitment to stability and long-term sustainability in operations.
In 2023, the company maintained its focus on studying the subsoil of the Blazhiv field. Full hydrodynamic surveys of Blazhiv-1, Blazhiv-3, Blazhiv-Monastyrets-3, and Blazhiv-10 wells were conducted and completed, leading to updates of the hydrodynamic model and production indicators. Additionally, in the latter half of 2023, the company initiated a new reserves assessment conducted by an independent expert, in accordance with PRMS standards. This assessment was successfully completed in
Cadogan is expanding its operations into electricity generation activities. The Company has initiated a project focused on capturing non-commercial associated gas during oil production at the Blazhiv field and converting it into electricity for sale on the grid. Expected to be operational in Q1 2025, this project is anticipated to significantly decrease Cadogan's annual gas emissions, with the intensity ratio projected to drop from 126 to approximately 33 tons of CO2 e/Kboe. This project holds significant importance for
High operational standards of the Group have been confirmed again by zero LTI or TRI, with a total over 1,720,000 manhours since the last incident, and re-validation off ISO 14001 & 45001 certifications by respective authority for the one year.
Exploenergy srl was notified, in
Non E&P operations
Due to the high market volatility resulting from military escalation in
Proger
In
As at
The Arbitral Committee:
- Rejected Proger's principal claim, and declared that the Loan Agreement is valid and effective,
- Deemed to qualify the Call Option as a preliminary contract under condition, but
- Rejected Proger's claim ex art. 2932 Italian Civil Code, stating that it is impossible to give an award producing the same effects of a final contract ex art. 2932 Italian Civil Code,
-
This because of the duties established by the rules of the
- Subordinated the stipulation of the final contract to the precedent completion of the proceeding and bureaucratic process as per the British rules, stating that, otherwise,
- There is the obligation on Proger Ingegneria to return the money received under the Loan Agreement.
Cadogan introduced an appeal, still pending with a next hearing on
Meanwhile, having taken note of the content of the Award of
According to the provisions of the aforementioned Award, the right to reimbursement of the amount covered by the Loan Agreement has arisen in favour of Cadogan, plus interest accrued, and of which Cadogan then demanded immediate payment.
Last
Outlook
Despite the continuous difficulties and tremendous challenges imposed by the war in
Regarding the Loan provided to Proger in
The Group is expecting another challenging year and is seeking to mitigate these constraints through several options and solutions. The diversification along the energy value chain will be pursued and accelerated in 2024 with new sustainable initiatives.
This strategy is totally aligned with the Climate Change requirements for sustainability of Cadogan's activities.
Chief Executive Officer
Operations Review
Overview
At
Summary of the Group's licenses (as at31 December 2023 ) Working License Expiry License type interest (%) 100 BlazhivNovember 2039 Exploration and Production
E&P activity remained focused on maintaining its license and safely and efficiently producing from the existing wells as well as implementing non-invasive production enhancement scenarios within the Blazhiv oil field.
Blazhivska license
In 2023, the daily average net oil production reached 326 barrels per day, indicating a 1% increase compared to 2022's production of 323 barrels per day. Due to the ongoing war and its impacts on the energy infrastructures and market the company could not avoid temporary production shutdowns.
In 2023, the Company maintained its focus on the subsoil study of the Blazhiv field, building upon the laid in 2022 with the processing and reinterpretation of old 2D seismic data. In 2023, Cadogan completed comprehensive hydrodynamic surveys of Blazhiv-1, Blazhiv-3, Blazhiv-Monastyrets-3, and Blazhiv-10, leading to updates of the hydrodynamic model and production indicators. Furthermore, the Company initiated a new assessment of hydrocarbon reserves conducted by an independent expert, as per to PRMS standards. This assessment was calculated as at
Cadogan has signed agreements with PJSC Ukrnafta to extend the lease for wells Blazhiv-3 and Blazhiv-Monastyrets-3, extending the duration from three to five years. These extensions were secured before the contracts expired, ensuring uninterrupted production and steady cash flows for the company. Additionally, the extended lease period, five years instead of three previously, will facilitate more secure planning and assessment for potential interventions on the wells.
Gas trading
Due to the significant market volatility resulting from the ongoing in
Service
The Group continued to provide services through its wholly owned subsidiary
Other events
The Company completed the acquisition of the 5% of the share interest in
Financial Review
Overview
In 2023, the Group had few trading operations and its oil production increased by 1%.
The Group's operating divisions delivered a positive contribution of
The average realised oil price decreased by 19% from
The cash position increased to
The trading business company bought and sold gas throughout the year, resulting in a negative
Income statement
The Revenues from production decreased from
The gas trading business contributed with a slightly gross margin of
Administrative expenses ("G&A") remained contained with an increase of 6% compared to year 2022, note 8 .
Balance sheet
The Property Plant & Equipment (PP&E) balance was
Trade and other receivables of
Inventories slightly increased from
The Proger loan was held at amortised cost at
The
Provisions include
Net cash slightly increased to
Cash flow statement
The Consolidated Cash Flow Statement on page 78 shows operating cash outflow before movements in working capital of
Related party transactions
Related party transactions are set out in note 30 to the Consolidated Financial Statements.
The Group continually monitors its exposure to currency risk. It maintains a portfolio of cash mainly in US dollars ("USD") and Euro held primarily in the
Risks and uncertainties
There are several potential risks and uncertainties that could have a material impact on the Group's long-term performance and could cause the results to differ materially from expected and historical results. Executive management review the potential risks and then classify them as having a high impact if above
The Group has analysed the following categories as key risks:
______________________________________________________________________________ |Risk |Mitigation | |______________________________________|_______________________________________| |War risks | | |______________________________________|_______________________________________| | |Anticipating the beginning of the war, | |Since Spring 2021, Russia has |the Group put in place, since the | |gradually increased the concentration |beginning ofFebruary 2022 , emergency | |of military equipment, weapons and |procedures communicated to all | |troops near the Ukrainian borders. On |employees on the different sites in | |24 February 2022, the Russian troops |Ukraine with an Emergency Committee | |attacked Ukraine and invaded its |communicating every day. Safety | |territory. Severe fights have been |measures have been dispatched with a | |engaged in Kyiv, and several other |remote working organization. Specific | |main cities like Kharkiv, Mariupol, |measures have been put in place for the| |Kherson, Sumy and Chernihiv. |operations on site. In case of need, | | |specific measures were put in place to | |Missile attacks and bombing are used |suspend the operations of the Blazhiv | |by the Russian troops to destroy |field wells, with technical measures | |infrastructures and facilities even in|for decommissioning and temporary | |the western cities, like Lviv. |conservation of the wells. The | |Cyber-attacks have increased. Given |transmission and internet connection | |the unpredictability of the issue of |systems have been secured with a | |this war, a full-scale invasion of |satellite connection. IT security has | |Ukraine or a much longer duration of |been reinforced. The Group is | |this war could have material impacts |monitoring the situation daily and | |on the Group's operations and on its |taking appropriate action to ensure the| |human, industrial and financial |safety and the essential needs of its | |resources. In 2023, the situation |employees. In 2023, Cadogan employees | |remained highly challenging and |in Ukraine continued operating in the | |complicated with the possibility for |combined (remote/ office) work mode | |further escalation. |with the key focus on the safety | | |measures. | |______________________________________|_______________________________________| |Operational risks | | |______________________________________|_______________________________________| |Health, Safety and Environment ("HSE")| | |______________________________________|_______________________________________| | |The Group maintains a HSE management | | |system in place and demands that | |The oil and gas industry by its nature|management, staff and contractors | |conducts activities, which can cause |adhere to it. The system ensures that | |health, safety and environmental |the Group meets Ukrainian legislative | |incidents. Serious incidents can have |standards and for the CO2 emissions the| |not only a financial impact but can |British standards and achieves | |also damage the Group's reputation and|international standards to the maximum | |the opportunity to undertake further |extent possible. | |projects. | | | |Management systems and processes have | | |been certified as ISO 14001 and ISO | | |45001 compliant. | |______________________________________|_______________________________________| |Climate change | | |______________________________________|_______________________________________| | |A moratorium on domestic production is | | |deemed highly unlikely in Ukraine given| | |the country's need for affordable | | |energy. Such risks exist in Italy, but | | |the Group's exposure there is limited. | | | | | |Management strives to reduce emissions | | |in everything the Group does and has | | |started implementing alternatives to | | |offset and/or mitigate emissions. In | |After the Paris Agreement (COP 21 ) the|2023, the Group has reviewed its | |international community is committed |administrative and operational process | |to reduce greenhouse gas emissions to |to identify the areas of further | |slow down the climate change and |improvement in the limitation of its | |contain its effects. Countries may |environmental impact. The Group has | |impose moratorium on E&P activities or|launched its gas-to-power project on | |enact tight limits to emissions level,|its Blazhiv oil field inUkraine . The | |which may curtail production. |aim of this project is to capture the | |Shareholders may also request that the|gas emissions during oil production and| |Company adopt stringent targets in |use them to generate electricity to be | |terms of emissions reduction. |sold on the grid. This project will | | |allow to decrease significantly | | |Cadogan's annual emissions with the | | |intensity ratio emission to drop from | | |126 to 32 tons of CO2 e/Kboe. The | | |project will be operational in Q1 2025.| | | | | |For the future, Cadogan will continue | | |to diversify its activities by | | |investing in new activities with a | | |lower impact on environment. | |______________________________________|_______________________________________| |Drilling and Work-Over operations | | |______________________________________|_______________________________________| | |The incorporation of detailed | | |sub-surface analysis into a robustly | | |engineered well design and work | | |programme, with appropriate procurement| |The technical difficulty of drilling |procedures and competent on-site | |or re-entering wells in the Group's |management, aims to minimise risk. Only| |locations and equipment limitations |certified personnel are hired to | |can result in the unsuccessful |operate on the rig floor. Contractor's | |completion of the well. |access to the operational sites is | | |allowed only after control of staff | | |qualification and check-up of | | |appropriate technical condition of the | | |equipment and machinery | |______________________________________|_______________________________________| |Production and maintenance | | |______________________________________|_______________________________________| | |All plants are operated and maintained | | |at standards above the Ukrainian | | |minimum legal requirements. Operative | | |staff are experienced and receive | |There is a risk that production or |supplemental training to ensure that | |transportation facilities could fail |facilities are properly operated and | |due to non-adequate maintenance, |maintained. When not in use the | |control or poor performance of the |facilities are properly kept under | |Group's suppliers. |conservation and routinely monitored. | | | | | |Service providers are rigorously | | |reviewed at the tender stage and are | | |monitored during the contract period. | |______________________________________|_______________________________________| |Sub-surface risks | | |______________________________________|_______________________________________| | |All externally provided and historic | | |data is rigorously examined and | |The success of the business relies on |discarded when appropriate. New data | |accurate and detailed analysis of the |acquisition is considered, and | |sub-surface. This can be impacted by |appropriate programmes implemented, but| |poor quality data, either historic or |historic data can be reviewed and | |recently gathered, and limited |reprocessed to improve the overall | |coverage. Certain information provided|knowledge base. Agreements with | |by external sources may not be |qualified local and international | |accurate. |contractors have been entered into to | | |supplement and broaden the pool of | | |expertise available to the Company. | |______________________________________|_______________________________________| |Data can be misinterpreted leading to |All analytical outcomes are challenged | |the construction of inaccurate models |internally and peer reviewed. Analysis | |and subsequent plans. |is performed using modern geological | | |software. | |______________________________________|_______________________________________| |The area available for drilling |Bottom hole locations are always | |operations is limited due to |checked for their operational | |logistics, infrastructures and |feasibility, well trajectory, rig type,| |moratorium. This increases the risk |and verified on updated sub-surface | |for setting optimum well coordinates. |models. They are rejected if deemed to | | |be too risky. | |______________________________________|_______________________________________| | |The Group performs, on an annual basis,| |The Group may not be successful in |a review of its oil and gas assets, | |proving commercial production from its|impairs if necessary, and considers | |licenses and consequently the carrying|whether to commission a review from a | |values of the Group's oil and gas |third party or a Competent Person's | |assets may have to be impaired. |Report ("CPR") from an independent | | |qualified contractor depending on the | | |circumstances. | |______________________________________|_______________________________________| |Financial risks | | |______________________________________|_______________________________________| | |Revenues in Ukraine are received in | | |hryvnia and expenditure is made in | |The Group is at risk from changes in |Hryvnia. | |the economic environment both in | | |Ukraine and globally, which can cause |The Group continues to hold most of its| |foreign exchange movements, changes in|cash reserves in theUK mostly in USD | |the rate of inflation and interest |and Euro. Cash reserves are placed with| |rates and lead to credit risk in |leading financial institutions, which | |relation to the Group's key |are approved by the Audit Committee. | |counterparties. |Before the war in Ukraine, foreign | | |exchange risk was considered a normal | |The martial law inUkraine forbids the|and acceptable business exposure, and | |transfer of cash outside of Ukraine. |the Group did not hedge against this | |The cash held inUkraine must be held |risk for its E&P operations. The Group | |in the local currency (Hryvna). |is currently analysing different | | |options. | |The decrease of the value of the | | |Hryvna is a major risk on the cash |The terms of the agreement are clear | |held by the Group in Ukraine. Since |and include the right to repayment at | |the martial law in Ukraine, there is |maturity if the Call Option is not | |an obligation to keep the cash held by|exercised. As security for the | |Cadogan in Ukraine in Hryvna with |reimbursement of the loan, Cadogan | |period restrictions for transfers out |benefits from a pledge over the shares | |of the Country. |held by Proger Managers & Partners in | | |Proger Ingegneria. In addition to that,| |InFebruary 2019 , Cadogan entered into|Cadogan is engaging all the necessary | |a 2-year Loan Agreement (Euros 13.385 |actions in the Arbitration process and | |million) with Proger Management & |more generally the adequate legal | |Partners with a Call Option that could|actions to protect the interests of the| |be exercised by Cadogan, between |Company and all of its stakeholders. | |September 2019 andFebruary 2021 , with|The investigation is closed. On 28 July| |no obligation, allowing a 33 % equity |2022, the Arbitration Committee | |interest in Proger Ingegneria. This |delivered an award rejecting Proger's | |represented a key transaction and |request, established that the Loan | |element of the Group balance sheet. At|Agreement was valid and effective, and | |25 February 2021, being the Maturity |indicated the conditions precedent for | |Date, Cadogan did not exercise its |the completion of any transaction with | |Call Option and PMP must reimburse |Proger Ingegneria. In case of | |Euros 14,857,350. End ofMarch 2021 , |non-completion, Proger must reimburse | |PMP did not reimburse and asked for an|Cadogan according to the Loan | |arbitration to get the Loan Agreement |Agreement. | |recognized as an equity investment | | |contract. |Refer to note 28 to the Consolidated | | |Financial Statements for detail on | | |financial risks. | |______________________________________|_______________________________________| | |Procedures are in place to scrutinize | | |new counterparties via a Know Your | | |Customer ("KYC") process, which covers | |The Group is at risk that |their solvency. In addition, when | |counterparties will default on their |trading gas, the Group seeks to reduce | |contractual obligations resulting in a|the risk of customer non-performance by| |financial loss to the Group. |limiting the title transfer to product | | |until the payment is received, | | |prepaying only to known credible | | |suppliers. | |______________________________________|_______________________________________| | |The Group mostly enters back-to-back | | |transactions where the price is known | | |at the time of committing to purchase | |The Group is at risk that fluctuations|and sell the product. Sometimes the | |in gas prices will have a negative |Group takes exposure to open inventory | |result for the trading operations |positions when justified by the market | |resulting in a financial loss to the |conditions in Ukraine, which is | |Group. |supported by analysis of the specific | | |transactions, market trends and models | | |of the gas prices and foreign exchange | | |rate trends. | |______________________________________|_______________________________________|
______________________________________________________________________________ |Country risks | | |______________________________________|_______________________________________| | |Compliance procedures, monitoring and | |Legislative changes may bring |appropriate dialogue with the relevant | |unexpected risk and create delays in |authorities are maintained to minimise | |securing licenses or ultimately |the risk. In all cases, deployment of | |prevent licenses and license renewals |capital in Ukraine is limited and | |/conversions from being secured. |investments are kept at the level | | |required to fulfil license obligations.| |______________________________________|_______________________________________| |Other risks | | |______________________________________|_______________________________________| |The Group's success depends upon | | |skilled management as well as |The Group periodically reviews the | |technical and administrative staff. |compensation and contract terms of its | |The loss of service of critical |staff in order to remain a competitive | |members from the Group's team could |employer in the markets where it | |have an adverse effect on the |operates. | |business. | | |______________________________________|_______________________________________| | |The Group applies rigorous screening | | |criteria in order to evaluate potential| |The Group is at risk of |investment opportunities. It also seeks| |underestimating the risk and |input from independent and qualified | |complexity associated with the entry |experts when deemed necessary. | |into new countries. |Additionally, the required rate of | | |return is adjusted to the perceived | | |level of risk. | |______________________________________|_______________________________________| | |The Group maintains a transparent and | | |open dialogue with authorities and | | |stakeholders (i) to identify their | | |needs and propose solutions which | | |address them as well as (ii) to | | |illustrate the activities which it | | |intends to conduct and the measures to | | |mitigate their impact. Local needs and | |Local communities and stakeholders may|protection of the environment are | |cause delays to the project execution |always taken into consideration when | |and postpone activities. |designing mitigation measures, which | | |may go beyond the legislative minimum | | |requirement. | | | | | |The Group devotes the highest level of | | |attention and engage qualified | | |consultants to prepare the | | |Environmental Impact Assessment studies| | |and to attend public hearings, both | | |introduced in Ukraine in 2019. | |______________________________________|_______________________________________|
Statement of Reserves and Resources
In 2023, the company conducted routine rig-less production support activities at the Blazhiv-1, Blazhiv-3 and Blazhiv-Monastyrets-3 and Blazhiv-10 wells to maintain sustainable production using sucker rod pumping systems.
Summary of Reserves 1
at
__________________________________________________________________ | |||Mmboe| |__________________________________________________________|||_____| |Proved, Probable and Possible Reserves at1 January 2023 |||3.94 | |__________________________________________________________|||_____| |Production |||0.12 | |__________________________________________________________|||_____| |Revisions |||0.77 | |__________________________________________________________|||_____| |Proved, Probable and Possible Reserves at 31 December 2023|||3.051| |__________________________________________________________|||_____|
1 The new study was completed end of
In addition to the tabled reserves, Cadogan has 0.64 million boe of 2C contingent resources associated with the Blazhiv license.
Corporate Responsibility
Under Section 414C of the Companies Act 2006 (the "Act"), the Board is required to disclose information about environmental matters, employees, human rights and community issues, including information about any policies it has in relation to these matters and the effectiveness of these policies.
Being sustainable in our activities means conducting our business with respect for the environment and for the communities hosting us, with the aim of increasing the benefit and value to our stakeholders. We recognize that this is a key element to be competitive and to maintain our license to operate.
The Board recognises that the protection of the health and safety of its employees, the communities, and the environment in which it operates is not just an obligation but is part of the personal ethics and beliefs of management and staff. These are the key drivers for a sustainable development of the Company's activity.
Our activities are carried out in accordance with a policy manual, endorsed by the Board, which has been disseminated to all staff. The manual includes a Working with Integrity policy and policies on business conduct and ethics, anti-bribery, the acceptance of gifts and hospitality and whistleblowing. Such policies are subject to regular review.
In
The Board believes that health and safety procedures, and training across the Group should be in line with best practice in the oil and gas sector. Accordingly, it has set up a committee to review and agree on the health and safety initiatives for the Company and to report back to the Board on the progress of these initiatives. Management regularly reports to the Board on HSE and key safety and environmental issues, which are discussed at the Executive Management level. The report of the
The General Director of Cadogan Ukraine is the acting Chairman of the HSE Committee and is supported in his role by Cadogan Ukraine's HSE Manager. In accordance with the ISO 14001 and ISO 45001, his role is to ensure that the Group continuously develops suitable procedures, that operational management and their teams incorporate them into daily operations and that the HSE management has the necessary level of autonomy and authority to discharge their duties effectively and efficiently.
Health, safety and environment
2023 remained extremely challenging due to the Russian invasion of
Also, the HSE management daily monitors health status of the personnel in terms of covid-19.
The Group has implemented an integrated HSE management system in accordance with the ISO requirements. The system aims to ensure that a safe and environmentally friendly/protection culture is embedded in the organization with a focus on the local community involvement. The HSE management system ensures that both Ukrainian and international standards are met, with the Ukrainian HSE legislation requirements taken as an absolute minimum. All the Group's local operating companies actively participate in the process. ISO 14001 and ISO 45001 certification were re-validated by the respective authority in
A proactive approach based on a detailed induction process and near miss reporting has been in place throughout 2023 to prevent incidents. Staff training on HSE matters and discussions on near miss reporting are recognised as the key factors to continuously improve. In-house training is provided to help staff meet international standards and follow best practice. The process enacted by the certification, enhances attention to training on risk assessments, emergency response, incident prevention, reporting and investigation, as well as emergency drills regularly run-on operations' sites and offices. This process is essential to ensure that international best practices and standards are maintained to comply with, or exceed, those required by Ukrainian legislation, and to promote continuous improvement.
The Board monitors the main Key Performance Indicators (lost time incidents, mileage driven, training received, CO2 emissions) as business parameters. The Board has benchmarked safety performance against the HSE performance index measured and published annually by the
During 2023 the Group continued to monitor its greenhouse gas emissions and collect statistical data relating to the consumption of electricity, industrial water and fuel consumption by cars, plants, and other work sites, recording a continuous improvement in the efficient use of resources.
Employees
Wellness and professional development are part of the Company's sustainable development policy and wherever possible, local staff are recruited. The Group's activity in
Procedures are in place to ensure that recruitment is undertaken on an open, transparent, and fair basis with no discrimination against applicants. Each operating company has its own Human Resources function to ensure that the Group's employment policies are properly implemented and followed. The Group's Human Resources policy covers key areas such as equal opportunities, wages, overtime and non-discrimination. As required by Ukrainian legislation, Collective Agreements are in place with the Group's Ukrainian subsidiary companies, which outline agreed level of staff benefits and other safeguards for employees.
All staff are aware of the Group's grievance procedures. All employees have access to health insurance provided by the Group to ensure that all employees have access to adequate medical facilities.
Each employee's training needs are assessed on an individual basis to ensure that their skills are adequate to support the Group's operations, and to help them to develop.
Diversity
The Board recognises the benefits and importance of diversity (gender, ethnic, age, sex, disability, educational and professional backgrounds, etc.) and strives to apply diversity values across the business. We endeavour to employ a skilled workforce that reflects the demographic of the jurisdictions in which we operate. The board will review the existing policies and intends to develop a diversity policy.
The Board of Directors acknowledges the significance of diversity in decision-making and the overall success of the company. As such, the company actively collects data on the various dimensions of diversity mentioned, including but not limited to gender, ethnicity, age, and professional backgrounds. This data is gathered through internal surveys, recruitment processes, and employee feedback mechanisms to ensure a diverse and inclusive workplace.
Board diversity
The Board consisted of four male and one female director of three different nationalities and resident in four different jurisdictions.
The Board recognises that gender is only one aspect of diversity, and there are many other attributes and experiences that can improve the Board's ability to act effectively. Our policy is to search for the highest quality people with the most appropriate experience for the requirements of the business, be they men or women.
Gender diversity
The Board of Directors of the Company comprised of five Directors as of
As at
Male Female
Non-executive directors 3 1
Executive directors 1 -
Management, other than Executive directors 6 3
Other employees 43 17
Total 53 21
Human rights
Cadogan's commitment to the fundamental principles of human rights is embedded in our HSE policies and throughout our business processes. We promote the core principles of human rights pronounced in the
Community
The Group's activities are carried out in rural areas of
The Group's companies in the
The enactment in 2018 of a new legislation which introduces Environmental Impact Assessment studies and public hearings as part of the license's award/renewal processes was anticipated effectively by the Group. The Group is complying with these requirements, building on the recognized competence of its people and advisors as well as on the good communication and relations established with local communities.
Cadogan is committed to the territory and the communities where it operates and has fully financed social programs commitment for 2023 as per signed Memorandum between the Company,
Approval
The Strategic Report was approved by the Board of Directors on
Company Secretary
07 May 2024
Board of Directors
Chief Executive Officer
Michel Meeùs, 71, Belgian
Non-Independent Non-Executive Interim Chairman
Michel Meeùs was appointed as a Non-executive Director on
Mr Meeùs is currently Chairman of the Remuneration and Nomination Committees.
Independent Non-Executive Director
Lilia is currently Chairman of the Company's Audit Committee and a member of the Remuneration and Nomination Committees.
Senior Independent Non-Executive Director
Report of the Directors
The Directors in office during the year and to the date of this report are as shown below:
Non-Executive Directors Executive Director
Michel Meeùs (Interim Chairman)
Directors' re-election
The Board has decided previously that all Directors are subject to annual election by shareholders, in accordance with industry best practice and as such, all Directors will be seeking re-election at the Annual General Meeting to be held on
The biographies of the Directors in office at the date of this report are shown on page 23.
Appointment and replacement of Directors
The Company's Articles of Association allow the Board to appoint any individual willing to act as a director either to fill a vacancy or act as an additional Director. The appointee may hold office only until the next annual general meeting of the Company whereupon his or her election will be proposed to the shareholders.
The Company's Articles of Association prescribe that there shall be no fewer than three Directors and no more than fifteen.
Directors' interests in shares
The beneficial interests of the Directors in office at
Director Number of Shares Michel Meeùs 10,200,000Fady Khallouf 10,875,455Gilbert Lehmann -Lilia Jolibois -Jacques Mahaux -
Conflicts of Interest
The Company has procedures in place for managing conflicts of interest. Should a director become aware that they, or any of their connected parties, have an interest in an existing or proposed transaction with the Company, its subsidiaries or any matters to be discussed at meetings, they are required to formally notify the Board in writing or at the next Board meeting. In accordance with the Companies Act 2006 and the Company's Articles of Association, the Board may authorize any potential or actual conflict of interest that may otherwise involve any of the directors breaching his or her duty to avoid conflicts of interest. All potential and actual conflicts approved by the Board are recorded in register of conflicts, which is reviewed by the Board at each Board meeting.
Directors' indemnities and insurance
The Company's Articles of Association provide that, subject to the provisions of the Companies Act 2006, all Directors of the Company are indemnified by the Company in respect of any liability incurred in connection with their duties, powers or office. Save for such indemnity provisions, there are no qualifying third-party indemnity provisions. In addition, the Company continues to maintain
Powers of Directors
The Directors are responsible for the management of the business and may exercise all powers of the Company subject to
Dividends
The Directors do not recommend payment of a dividend for the year ended
Principal activity and status
The Company is registered as a public limited company (registration number 05718406) in
Subsequent events
In 2023 Cadogan initiated a new reserves assessment conducted by an independent expert, in accordance with PRMS standards. This assessment was successfully completed at end of
Structure of share capital
The authorised share capital of the Company is currently £30,000,000 divided into 1,000,000,000 Ordinary shares of
Rights and obligations of Ordinary shares
In accordance with applicable laws and the Company's Articles of Association, holders of Ordinary shares are entitled to:
-- receive shareholder documentation including the notice of any general
meeting;
-- attend, speak and exercise voting rights at general meetings, either in
person or by proxy; and
-- a dividend where declared and paid out of profits available for such
purposes. On a return of capital on a winding up, holders of Ordinary
shares are entitled to participate in such a return.
Exercise of rights of shares in employee share schemes
None of the share awards under the Company's incentive arrangements are held in trust on behalf of the beneficiaries.
Agreements between shareholders
The Board is unaware of any agreements between shareholders, which may restrict the transfer of securities or voting rights.
Restrictions on voting deadlines
The notice of any general meeting of the Company shall specify the deadline for exercising voting rights and appointing a proxy or proxies to vote at a general meeting. To accurately reflect the views of shareholders, where applicable it is the Company's policy at present to take all resolutions at any general meeting on a poll. Following the meeting, the results of the poll are released to the market via a regulatory news service and published on the Company's website.
Substantial shareholdings
As at
31 December 2023 19 April 2024
Major Number of shares % of total Number of shares % of total
shareholder held voting rights held voting rights
SPQR Capital 67,298,498 27.57 67,298,498 27.57
Holdings SA
Mrs Veronique 51,368,000 21.04 51,368,000 21.04
Salik
CA Indosuez
Wealth 15,966,620 6.54 15,433,651 6.32
Management
Kellet Overseas 14,002,696 5.74 14,002,696 5.74
Inc.
Mr Fady Khallouf 10,875,000 4.45 17,454,105 7.15
Mr Michel Meeùs 10,200,000 4.18 10,200,000 4.18
Mr Pierre Salik 8,120,000 3.32 8,120,000 3.32
Cynderella 7,657,886 3.14 7,657,886 3.14
International SA
Amendment of the Company's Articles of Association
The Company's Articles of Association may only be amended by way of a special resolution of shareholders.
Disclosure of information to auditor
As required by section 418 of the Companies Act 2006, each of the Directors as at
(a) so far as the Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
(b) the Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance, and position, are set out on pages 14 to 18.
Having considered the Group's financial position and its principal risks and uncertainties, including uncertainties regarding the war in
Reporting year
The reporting year coincides with the Company's fiscal year, which is
Financial risk management objectives and policies
The Company's financial risk management objectives and policies including its policy for managing its exposure of the Company to price risk, credit risk, liquidity risk and cash flow risk.
Management co-ordinates access to domestic and international financial markets and monitors and manages the financial risks relating to the operations of the Group in
Outlook
Future developments in the business of the Company are presented on pages 5 to 10.
Change of control - significant agreements
The Company has no significant agreements containing provisions, which allow a counterparty to alter and amend the terms of the agreement following a change of control of the Company.
Should a change in control occur then certain Executive directors are entitled, within a period of six months following the change of control, to a payment of salary and benefits equal to 24 months' base salary plus benefits plus bonus (if any).
Streamlined energy and carbon reporting
This section contains information on greenhouse gas ("GHG") emissions required by the Companies Act 2006 (Strategic Report and Directors' Report).
Methodology
The principal methodology used to calculate the emissions is drawn from the `Environmental Reporting Guidelines: including mandatory greenhouse gas emissions reporting guidance (
The Company has reported on all the emission sources required under the Regulations.
The Company does not have responsibility for any emission sources that are not included in its consolidated statement.
Consolidation approach and organisation boundary
An operational control approach was used to define the Company's organisational boundary and responsibility for GHG emissions. All material emission sources within this boundary have been reported upon, in line with the requirements of the Regulations.
Scope of reported emissions
Emissions data from the sources within Scope 1 and Scope 2 of the Company's operational boundaries is detailed below. This includes direct emissions from assets that fall within the Company's organisational boundaries (Scope 1 emissions), as well as indirect emissions from energy consumption, such as purchased electricity and heating (Scope 2 emissions).
Scope 1 emissions in 2023 has insignificantly increased compared to the previous year (14,933 tons in 2023 vs 14,631 tons in 2022). This was caused by the increase of the annual oil production.
Conversely, Scope 2 emissions decreased in 2023 (111 tons in 2023 vs 124 tons in 2022), as a result of the processes started in 2016 to improve the efficiency of the structure, logistic and facilities. Total emissions in 2023 were 15,044 tons versus the 14,755 tons of 2022.
Intensity ratio
In order to express the GHG emissions in relation to a quantifiable factor associated with the Company's activities, wellhead production of crude oil and natural gas has been chosen as the normalisation factor for calculating the intensity ratio. This will allow comparison of the Company's performance over time, as well as with other companies in the Company's peer group.
The intensity ratio for E&P operations (same reporting perimeter) has insignificantly increased to 126,36tons CO 2 e/Kboe in 2023 vs 125,26 tons CO 2 e/Kboe in 2022.
Total greenhouse gas emissions data for the year from 1 January to 31 December.
The company conducted a planned repetition of bottomhole oil sampling and analyses during 2023 hydrodynamic surveys of Blazhiv wells to reconcile the associated gas composition data. The repetitive analyses confirmed an increase in methane levels in the gas composition causing an increase in the reported emissions level last year. As previously mentioned in the report, the implementation of the electricity generation project utilising associated gas will lead to a substantial reduction in the CO2 emissions into the atmosphere starting from 2025.
E&P
Greenhouse gas emissions source
2023 2022
Scope 1
Direct emissions, including combustion of fuel and operation of
facilities 14,933 14,631
(tonnes of CO2 equivalent)
Scope 2
Indirect emissions from energy consumption, such as electricity 111 124
and heating purchased for own use (tonnes of CO2 equivalent)
Total (Scope 1 & 2) 15,044 14,755
Normalisation factor
Barrels of oil equivalent, net 119,057 117,793
Intensity ratio
Emissions reported above normalised to tonnes of CO2- per total
wellhead production of crude oil, condensates, and natural gas, 126,36 125,26
in thousands of Barrels of Oil Equivalent, net
Energy consumption
The Company started in 2020 to monitor energy consumption in KwH.
2023 2022 % change
KwH KwH 2023 - 2022
Ukraine 557,631 575,876 -3%
Energy consumption in the
Task force on climate-related financial disclosures (`TCFD')
Climate change remains one of the Group's principal risks with governance over climate-related transition and physical risks provided at the Board and operational levels. The Board has ultimate accountability for ensuring Cadogan maintains sound climate risk management and internal control systems. The Board is ultimately accountable for Cadogan's strategic response to climate change and the energy transition. Directors are responsible for ensuring they remain sufficiently informed of climate related risks to Cadogan and the broader energy sector. In 2023, the Group has reviewed its administrative and operational process to identify the areas of further improvement in the limitation of its environmental impact. The Group has launched its gas-to-power project on its Blazhiv oil field in
TCFD related disclosures
Governance Describe the Board's oversight of climate-related p.14-17
risks and opportunities.
Describe Management's role in assessing and managing
climate-related risks and opportunities.
Describe the climate-related risks and opportunities
Strategy the organisation has identified over the short, p.5-10
medium, and long term.
Describe the impact of climate-related risks and
opportunities on the organisation's businesses,
strategy, and financial planning
Risk Describe the organisation's processes for
identifying and assessing climate-related risks. p.14-17
management
Describe the organisation's processes for managing
climate-related risks.
Describe how processes for identifying, assessing,
and managing climate-related risks are integrated
into the organisation's overall risk management.
Disclose the metrics used by the organisation to
Metrics and targets assess climate-related risks and opportunities, in p.27
line with its strategy and risk management process
Disclose Scope 1 and Scope 2greenhouse gas (GHG) p.27-28
emissions.
Describe the targets used by the organisation to
manage climate-related risks, opportunities, and
performances against targets.
As a company, we acknowledge the increasing significance of comprehending the effects of climate change on our operating environment and its potential implications for our business.
We view this as a chance to expand upon our existing efforts in this area, enhance the quality of our disclosures, and offer clear transparency, while continuing our TCFD reporting roadmap.
The company is actively considering projects to reduce emissions into the atmosphere. In the short term, the company plans to implement a project for electricity generation.
2024 Annual General Meeting
The 2024 Annual General Meeting ("AGM") of the Company provides an opportunity to communicate with shareholders and the Board welcomes their participation. Board members constantly strive to engage with shareholders on strategy, governance, and a number of other issues.
The Board looks forward to welcoming shareholders to the AGM. The AGM notice will be issued to shareholders well in advance of the meeting with notes to provide an explanation of all resolutions to be put to the AGM.
In addition, shareholder information will be enclosed as usual with the AGM notice to facilitate voting and feedback in the usual way.
The Chairman of the Board and the members of its committees will be available to answer shareholder questions at the AGM. All relevant shareholder information including the annual report for 2023 and any other announcements will be published on our website - www.cadoganenergysolutions.com .
This Report of Directors comprising pages 25 to 31 has been approved by the Board and signed by the order of the Board by:
Company Secretary
Corporate Governance Statement
As a Company listed on the standard segment of the
This Statement outlines how
During the year under review, the Company complied with all the provisions of the Code, other than the exceptions noted below or elsewhere in this statement:
-- Provision 5 (Workforce Engagement): Given the size of the business, the
Board does not consider it appropriate to adopt the suggested methods
outlined within the UK Corporate Governance Code 2018 to engage with its
employees given the size of the Company. Employee engagement continues
to be undertaken by senior management and any issues are escalated to
the Board through the Chief Executive Officer. The Board believes that
the arrangements in place are effective but will continue to keep this
under review.
-- Provision 9 (regarding the independence criteria of the Chair on
appointment): Under the 2018 Corporate Governance Code, the Company's
Chair during the year, Mr Michel Meeùs, was not considered to be
independent given the size of his shareholding in the Company. Despite
this, the Board considered Mr Meeùs to be independent in character,
mindset and judgement.
-- Provision 21 (Board Evaluation): Given the size of the Board it was felt
that a board evaluation would not provide added value however the Board
will continue to assess this provision periodically.
-- Provision 24 (Audit Committee Composition): Given the size and
composition of the Board, the Audit Committee does not totally consist
of independent non-executive directors. Ms Lilia Jolibois , Independent
non-executive director, chaired the Audit Committee whilst Mr Jacques
Mahaux, non-independent non-executive director, was a member of the
Audit Committee during the year.
-- Provision 32 (Remuneration Committee Composition): Given the size and
composition of the Board, the Remuneration Committee does not totally
consist of independent non-executive directors. The Remuneration
Committee consisted of Mr Michel Meeùs, Ms. Lilia Jolibois , Mr Jacques
Mahaux and Mr Gilbert Lehmann during the year.
Board Leadership and Company Purpose
The Board provides leadership and oversight, and its role is to ensure the long-term success of the Company by implementing the Company's strategy and business plan, overseeing its affairs, and providing constructive challenge to management as they do this. In addition to this, the Board oversees financial matters, governance, internal controls, and risk management.
The purpose of the Board is to:
-- monitor Group activities to see that sustainable value is being created;
-- evaluate business strategies and monitor their implementation;
-- monitor and review the performance of management;
-- provide accountability to shareholders through appropriate reporting and
regulatory compliance;
-- understand and ensure the management of operational business and
financial risks to which the Group is exposed; and
-- ensure that the financial controls and systems of risk management are
robust and defensible.
The Board comprises a Non-Independent non-executive Chairman, Chief Executive Officer, one Independent Non-Executive Director and one Non-Executive Director. The Board has appointed
The biographical details for each of the Directors and their membership of Committees are incorporated into this report by reference and appear on page 24.
The formal schedule of matters reserved for the Board's decision is available on the Company's website.
The Board recognises the importance of building strong relationships with stakeholders and understanding their views in order to help the Company deliver its strategy and promote the development of the business over the long-term. The Board is committed to having effective engagement with its stakeholders. Our section 172 statement can be found on pages 36 to 37 which summarises the Board's engagement with the Company's main stakeholders and some examples of how their views have been taken into account in the Board's decision-making.
The Company seeks to ensure that it always acts lawfully, ethically and with integrity. The company has in place the following policies which the Board reviews periodically:
-- Code of Business Conduct and Ethics
-- Anti-Bribery Policy
-- Share Dealing Code
-- Disclosure Policy
-- Health, Safety and Environmental policies.
The Company has procedures in place for managing conflicts of interest. Should a director become aware that they, or any of their connected parties, have an interest in an existing or proposed transaction with the Company, its subsidiaries or any matters to be discussed at meetings, they are required to formally notify the Board in writing or at the next Board meeting. In accordance with the Companies Act 2006 and the Company's Articles of Association, the Board may authorize any potential or actual conflict of interest that may otherwise involve any of the directors breaching his or her duty to avoid conflicts of interest. All potential and actual conflicts approved by the Board are recorded in register of conflicts, which is reviewed by the Board at each Board meeting.
Directors' declarations of interests is a regular Board agenda item. A register of directors' interests (including any actual or potential conflicts of interest) is maintained and reviewed regularly to ensure all details are kept up to date. Authorisation is sought prior to a director taking on a new appointment or if any new conflicts or potential conflicts arise. New Directors are required to declare any conflicts, or potential conflicts, of interest to the Board at the first Board meeting after his or her appointment. The Board believes that the procedures established to deal with conflicts of interest are operating effectively.
The Directors possess a wide range of skills, knowledge and experience relevant to the strategy of the Company, including financial, legal, governance, regulatory and industry experience as well as the ability to provide constructive challenge to the views and actions of executive management in meeting agreed strategic goals and objectives.
The roles and responsibilities of the Chairman and Chief Executive Officer are separate with a clear and formal division of each individual's responsibilities, which has been agreed and documented by the Board.
The Non-Executive Directors bring an independent view to the Board's discussions and the development of its strategy. Their range of experience ensures that management's performance in achieving the business goals is challenged appropriately. Ms
Mr
Mr Michel Meeùs, who is a significant shareholder is not considered independent as defined within the
The Board has access to the advice of the company secretary.
Composition, Succession and Evaluation
The Company has established a nomination committee which leads the process for Board appointments by identifying and nominating candidates for the approval of the Board to fill Board vacancies and making recommendations to the Board on Board's composition and balance. The Company's Nomination Committee Report can be found on page 42.
Under the Company's Articles of Association, all Directors must seek re-election by members at least once every three years. However, the Board has agreed that all Directors will be subject to annual election by shareholders in line with Corporate Governance best practice. Accordingly, all members of the Board will be standing for re-election at the 2023 Annual General Meeting due to be held on
All Directors continue to be effective and have sufficient time available to perform their duties. The letters of appointment for the Non-Executive Directors are available for review at the Registered Office and prior to the Annual General Meeting. Each of the Non-Executive Directors independently ensures that they update their skills and knowledge sufficiently to enable them to fulfil their duties appropriately.
The Chairman, in conjunction with the Company Secretary, plans the programme for the Board during the year. While no formal structured continuing professional development program has been established for the non-executive Directors, every effort is made to ensure that they are fully briefed before Board meetings on the Company's business. The agenda for Board and Committee meetings are considered by the relevant Chairman and issued with supporting papers during the week preceding the meeting. For each Board meeting, the Directors receive a Board pack including management accounts, briefing papers on commercial and operational matters and major capital projects including acquisitions. The Board also receives briefings from key management on specific issues.
Audit, Risk and Internal Control
The Board has delegated certain responsibilities to its committees including its Audit Committee. The Company's Audit Committee Report can be found on pages 37 to 38.
The role of the Audit Committee is to monitor the integrity of the Company's financial reporting, to review the Company's internal control and risk management systems and to oversee the relationship with the Group's external auditors. The Audit Committee focuses particularly on compliance with legal requirements, accounting standards and the rules of the
The Directors are responsible for the Group's system of internal control and for maintaining and reviewing its effectiveness. The Group's systems and controls are designed to safeguard the Group's assets and to ensure the reliability of information used both within the business and for publication. The Board has delegated responsibility for the monitoring and review of the Group's internal controls to the Audit Committee.
Systems are designed to manage, rather than eliminate the risk of failure to achieve business objectives and can provide only reasonable, and not absolute assurance against material misstatement or loss.
The key features of the Group's internal control and risk management systems that ensure the accuracy and reliability of financial reporting include clearly defined lines of accountability and delegation of authority, policies and procedures that cover financial planning and reporting, preparing consolidated financial statements, capital expenditure, project governance and information security.
The key features of the internal control systems, which operated during 2023 and up to the date of signing the Financial Statements are documented in the Group's Corporate Governance Policy Manual and Finance Manual. These manuals and policies have been circulated and adopted throughout the Group throughout the period.
Day-to-day responsibility for the management and operations of the business has been delegated to the Chief Executive Officer and senior management. Certain specific administrative functions are controlled centrally. Taxation and treasury functions report to the Group Director of Finance who reports directly to the Chief Executive Officer.
The legal function for
The Board has reviewed internal controls and risk management processes, in place from the start of the year to the date of approval of this report. During its review the Board did not identify nor were advised of any failings or weaknesses which it has deemed to be significant.
A summary of the principal risks facing the Company and the mitigating actions in place are contained on pages 14 to 18 of the annual report.
The Company's going concern is contained on page 26 of the annual report.
Further information on the work undertaken by the Committee during the year can be found on pages 38 to 39 of the annual report.
Remuneration
The Board has established a Remuneration Committee and the Company's Remuneration Committee Report can be found on pages 44 to 64 of the annual report.
The role of the Remuneration Committee is to determine and agree with the Board the broad policy for the remuneration of executives and Senior Managers as designated, as well as for setting the specific remuneration packages, including pension rights and any compensation payments of all executive Directors and the Chairman. The Company's remuneration policies and practices are designed to support its long-term strategy and promote the long-term sustainable success of the Company.
Attendance at Meetings
Six Board meetings took place during 2023. The attendance of those Directors in place at the year end at Board and Committee meetings during the year was as follows:
Audit
Board Nomination Committee Remuneration Committee
Committee
No. Held 6 2 0 * 1
No. Attended:
M Meeùs 6 n/a 0 1
F Khallouf 6 n/a n/a n/a
L Jolibois 5 2 0 1
G Lehmann 6 n/a 0 1
J Mahaux 6 2 0 1
*There was no meetings of the Nomination Committee held during 2023.
Responsibilities and membership of Board Committees
The Board has agreed written terms of reference for the
Relations with shareholders
The Chairman and Executive Directors of the Company have a regular dialogue with analysts and substantial shareholders. The outcome of these discussions is reported to the Board at quarterly meetings and discussed in detail.
The Annual General Meeting is used as an opportunity to communicate with all shareholders. In addition, financial results are posted on the Company's website, www.cadoganenergysolutions.com , as soon as they are announced. The Notice of the Annual General Meeting is also contained on the Company's website, www.cadoganenergysolutions.com . It is intended that the Chairmen of the Nomination, Audit and Remuneration Committees will be present at the Annual General Meeting. The results of all resolutions will be published on the Company's website, www.cadoganenergysolutions.com .
Directors' section 172 statement
The disclosure describes how the Directors have regard to the matters set out in section 172(1)(a) to (f) and forms the Directors' statement required under section 414CZA of The Companies Act 2006.
The matters set out in section 172(1) (a) to (f) are that a Director must act in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:
(a) the likely consequences of any decision in the long term;
(b) the interests of the Company's employees;
(c) the need to foster the Company's business relationships with suppliers, customers and others;
(d) the impact of the Company's operations on the community and the environment;
(e) the desirability of the Company maintaining a reputation for high standards of business conduct; and
(f) the need to act fairly between members of the Company.
Being sustainable in our activities means conducting our business with respect for the environment and for the communities hosting us, with the aim of increasing the benefit and value to our stakeholders. We recognize that this is a key element to be competitive and to maintain our licence to operate.
Further details of how the Directors have regard to the issues, factors and stakeholders considered relevant in complying with S 172 (1) (a)-(f), the methods used to engage with stakeholders and the effect on the Group's decision making can be found throughout the annual report and in particular pages 34 (which outlines how the Company engages with its stakeholders), pages 20 to 23 (which contains Cadogan's corporate responsibility statement) pages 28 to 30 (which contains the Company's report on greenhouse gas emissions) and page 35 (which outlines the ways in which the Company engages with its shareholders).
The Group has implemented an integrated HSE management system aiming to ensure a safe and environmentally friendly culture in the organization (pages 20 to 22). However, regarding the environmental sustainability of the Group's activities, the Directors are fully aware of the need to direct future development in new activities with a lower impact on environment (CEO outlook page 9, 28).
When assessing the Proger Loan, the Directors carefully considered the issues and decisions with their impact on the Group and all its stakeholders (pages 8, 9, 16, 17).
The Board has a formal schedule of matters specifically reserved for its decision, including approval of acquisitions and disposals, major capital projects, financial results, Board appointments, dividend recommendations, material contracts and Group strategy. For each Board meeting, the Directors receive a Board pack including management accounts, briefing papers on commercial and operational matters and major capital projects including acquisitions. The Board also receives briefings from key management on specific issues.
In particular, as a consequence of the invasion of
Board Committee Reports
Audit Committee Report
The Audit Committee is appointed by the Board, on the recommendation of the Nomination Committee, from the Non-Executive Directors of the Group. The Audit Committee's terms of reference are reviewed annually by the Audit Committee and any changes are then referred to the
Responsibilities
# To monitor the integrity of the annual and interim financial statements, the accompanying reports to shareholders, and announcements regarding the Group's results; # To review and monitor the effectiveness and integrity of the Group's financial reporting and internal financial controls; # To review the effectiveness of the process for identifying, assessing and reporting all significant business risks and the management of those risks by the Group; # To oversee the Group's relations with the external auditor and to make recommendations to the Board, for approval by shareholders, on the appointment and removal of the external auditor; # To consider whether an internal audit function is appropriate to enable the Audit Committee to meet its objectives; and # To review the Group's arrangements by which staff of the Group may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters.
Governance
At the invitation of the Audit Committee, the Group Director of Finance and external auditor regularly attend meetings. The Company Secretary attends all meetings of the Audit Committee.
The Audit Committee also meets the external auditor without management being present.
Activities of the Audit Committee
During the year, the Audit Committee discharged its responsibilities as follows:
Assessment of the effectiveness of the external auditor
The Committee has assessed the effectiveness of the external audit process. They did this by:
# Reviewing the 2023 external audit plan; # Discussing the results of the audit including the auditor's views on material accounting issues and key judgements and estimates, and their audit report; # Considering the robustness of the audit process; # Reviewing the quality of the service and people provided to undertake the audit; and # Considering their independence and objectivity.
Financial statements
The Audit Committee examined the Group's consolidated and Company's financial statements and, prior to recommending them to the Board, considered:
-- the appropriateness of the accounting policies adopted;
-- reviewed critical judgements, estimates and underlying assumptions; and
-- assessed whether the financial statements are fair, balanced and
understandable.
Going concern
After making enquiries and considering the uncertainties described on pages 14 to 18, the Committee has a reasonable expectation that the Company and the Group has adequate resources to continue in operational existence for the foreseeable future and consider the going concern basis of accounting to be appropriate. For further detail including the basis for the conclusion, please refer to the detailed discussion of the assumptions outlined in note 3 (b) to the Consolidated Financial Statements.
Internal controls and risk management
The Audit Committee reviews and monitors financial and control issues throughout the Group including the Group's key risks and the approach for dealing with them. Further information on the risks and uncertainties facing the Group are detailed on pages 104 to 106 and in note 28 to the financial statements.
External auditor
The Audit Committee is responsible for recommending to the Board, for approval by the shareholders, the appointment of the external auditor.
The Audit Committee considers the scope and materiality for the audit work, approves the audit fee, and reviews the results of the external auditor's work. Following the conclusion of each year's audit, it considers the effectiveness of the external auditor during the process. An assessment of the effectiveness of the audit process was made, considering reports from the auditor on its internal quality procedures. The Committee reviewed and approved the terms and scope of the audit engagement, the audit plan and the results of the audit with the external auditor, including the scope of services associated with audit-related regulatory reporting services. Additionally, auditor independence and objectivity were assessed, considering the auditor's confirmation that its independence is not impaired, the overall extent of non-audit services provided by the external auditor and the past service of the auditor.
A breakdown of the non-audit fees is disclosed in note 11 to the Consolidated Financial Statements. The Audit Committee has reviewed the nature, level and timing of these services in the course of the year and is confident that the objectivity and independence of the auditor are not impaired by the reason of such non-audit work.
Internal audit
The Audit Committee considers annually the need for an internal audit function and believes that, due to the size of the Group and its current stage of development, an internal audit function will be of little benefit to the Group.
Whistleblowing
The Group's whistleblowing policy encourages employees to report suspected wrongdoing and sets out the procedures employees must follow when raising concerns. The policy, which was implemented during 2008 is reviewed periodically. The Group's policies on anti-bribery, the acceptance of gifts and hospitality, and business conduct and ethics are circulated to staff as part of a combined manual on induction with changes regularly communicated.
Overview
As a result of its work during the year, the Audit Committee has concluded that it has acted in accordance with its terms of reference and has ensured the independence and objectivity of the external auditor.
The Chairman of the Audit Committee will be available at the Annual General Meeting to answer any questions about the work of the Audit Committee.
Chairman of the Audit Committee
Health, Safety and Environment Committee Report
The Health, Safety and Environment Committee (the "HSE Committee") is appointed by the Board, on the recommendation of the Nomination Committee. The HSE Committee's terms of reference are reviewed annually by the Committee and any changes are then referred to the
Governance
The Committee is chaired by Mr Andrey Bilyi (Cadogan Ukraine General Director) as acting Head of the HSE Committee and its other member is Ms Snizhana Buryak (HSE Manager). The CEO attends meetings of the HSE Committee as necessary. During 2023, the HSE Committee held four meetings to monitor the HSE risks and activities across the business, following which actions were identified for the continuous improvement of the various processes and the mitigation of risk.
Responsibilities
-- To regularly maintain and implement the continuous improvement of the
HSE Management System with the aim of improving the Company's
performances;
-- To manage and mitigate the risks of personnel infection with Covid-19
virus. Work-out respective administrative and healthcare measures to
provide safe working conditions for the employees. Prevent the spread of
Covid-19 as well as ensuring staff reasonable vaccination level.
-- Assessments of the risks to employees, contractors, customers,
partners, and any other people who could be affected by the
Company's activities with the aim of reducing the global risk of
the Company and increasing its level of acceptability;
-- Evaluate the effectiveness of the Group's policies and systems
for identifying and managing health, safety and environmental
risks within the Group's operation;
-- Assess the policies and systems within the Group for ensuring
compliance with health, safety and environmental regulatory
requirements;
-- Assess the performance of the Group with regard to the impact of
health, safety, environmental and community relations decisions
and actions upon employees, communities and other third parties
and also assess the impact of such decisions and actions on the
reputation of the Group and make recommendations to the Board on
areas for improvement;
-- On behalf of the Board, receive reports from management
concerning any fatalities and serious accidents within the Group
and actions taken by management as a result of such fatalities
or serious accidents;
-- Evaluate and oversee, on behalf of the Board, the quality and
integrity of any reporting to external stakeholders concerning
health, safety, environmental and community relations issues;
and
-- Where it deems it appropriate to do so, appoint an independent
auditor to review performance with regard to health, safety,
environmental and community relations matters and review any
strategies and action plans developed by management in response
to issues raised and, where appropriate, make recommendations to
the Board concerning the same.
Activities of the
The HSE Committee in discharging its duties reviewed and considered the following:
-- Company activities execution and control over contractors services
execution in line with company policies and HSE procedures;
-- Monthly statistics and reports on the activity were regularly
distributed to the CEO, Management and to the members of the committee;
-- Ensured that the implementation of new legislation and requirements were
punctually followed-up and promptly updated;
-- Compliance with HSE regulatory requirements was ensured through
discussion of the results of inspections, both internal inspections and
those carried out by the Authorities. The results of the inspections and
drills were analysed and commented to assess the need for corrective
actions and/or training initiatives;
-- A standing item was included on the agenda at every meeting to monitor
monthly HSE performance, key indicators and statistics allowing the HSE
Committee to assess the Company's performance by analysing any lost-time
incidents, near misses, HSE training and other indicators;
-- Interaction with contractors, Authorities, local communities and other
stakeholders were discussed among other HSE activities;
-- Compliance to ISO 14001 and ISO 45001 has been proved by the authorized
third party auditor. Also, the Company had its entire data calculation
process as well as emissions measurement system re-validated by a
different independent third party; and
-- Ensuring all the Observation and Actions requested by the Certification
Body have been implemented.
Overview
The Company's HSE Management System and the Guidelines and Procedures have been updated to fit with the ISO requirements and are adequate for the proper execution of the Company's operations.
As a result of its work during the year, the HSE Committee has concluded that it has acted in accordance with its terms of reference.
Nomination Committee Report
The Board delegates some of its duties to the Nomination Committee and appoints the members of the Nomination Committee which are non-executive Directors of the Group. The membership of the Committee is reviewed from time to time and any changes to its composition are referred to the
Governance
Mr. Michel Meeùs (
Responsibilities
-- To regularly review the structure, size and composition (including the
skills, knowledge and experience) required of the Board compared to its
current position and make recommendations to the Board with regard to
any changes;
-- Be responsible for identifying and nominating candidates to fill Board
vacancies as and when they arise, for the Board's approval;
-- Before appointments are made by the Board, evaluate the balance of
skills, knowledge, experience and diversity (gender, ethnic, age, sex,
disability, educational and professional backgrounds, etc.) on the Board
and, in the light of this evaluation, prepare a description of the role
and capabilities required for a particular appointment; and
-- In identifying suitable candidates, the Nomination Committee shall use
open advertising or the services of external advisers to facilitate the
search and consider candidates from a wide range of backgrounds on
merit, ensuring that appointees have enough time available to devote to
the position.
The Nomination Committee shall also make recommendations to the Board concerning:
-- Formulating plans for succession for both executive and non-executive
Directors and in particular for the key roles of Chairman and Chief
Executive Officer;
-- Membership of the Audit and Remuneration Committees, in consultation
with the Chairmen of those committees;
-- The reappointment of any non-executive Director at the conclusion of
their specified term of office, having given due regard to their
performance and ability to continue to contribute to the Board in the
light of the knowledge, skills and experience required; and
-- The re-election by shareholders of any Director having due regard to
their performance and ability to continue to contribute to the Board in
the light of the knowledge, skills and experience required.
Any matters relating to the continuation in office of any Director at any time including the suspension or termination of service of an executive Director as an employee of the Company subject to the provisions of the law and their service contract.
Michel Meeùs
Nomination Committee Chairman
Remuneration Committee
Statement from the Chairman
I am pleased to present the Annual Report on Remuneration for the year ended
Cadogan's Remuneration Policy was approved as proposed by the shareholders at the Annual General Meeting of
The key elements of the Remuneration Policy are:
-- A better long-term alignment of the executives' remuneration with the
interests of the shareholders;
-- A material reduction in the maximum remuneration level for the Executive
Directors, both in terms of annual bonus and of long-term incentive
(performance share plan);
-- The payment of at least 50% of the Annual Bonus in shares with the
remaining 50% to be paid in cash or shares at the discretion of the
Remuneration Committee. Shares will be priced for this award based on
their market value at closing on the Business Day prior to the
Subscription Date;
-- The introduction of claw-backand malus provisions on both bonuses and
share awards; and
-- The expectation that the Executive Directors build a substantial
shareholding position in the Company through their mandate.
Michel Meeùs
Chairman of the Remuneration Committee
ANNUAL REPORT ON REMUNERATION 2023
Remuneration Committee Report
The Remuneration Committee is committed to principles of accountability and transparency to ensure that remuneration arrangements demonstrate a clear link between reward and performance.
Governance
The Remuneration Committee is appointed by the Board from the non-executive Directors of the Company. The Remuneration Committee's terms of reference are reviewed annually by the Remuneration Committee and any changes are then referred to the
The Remuneration Committee consists of Mr. Michel Meeùs, Ms.
Responsibilities
In summary, the Remuneration Committee's responsibilities, as set out in its terms of reference, are as follows:
# To determine and agree with the Board the policy for the remuneration of the executive Directors, the Company Secretary and other members of executive management as appropriate; # To consider the design, award levels, performance measures and targets for any annual or long-term incentives and approve any payments made and awards vesting under such schemes; # Within the terms of the agreed remuneration policy, to determine the total individual remuneration package of each executive Director and other senior executives including bonuses, incentive payments and share options or other share awards; and # To ensure that contractual terms on termination, and any payments made, are fair to the individual and the Company, that failure is not rewarded and that the duty to mitigate loss is fully recognised.
Overview
The Chairman and Executive Directors of the Company have a regular dialogue with analysts and substantial shareholders, which includes the subject of Directors' Remuneration. The outcome of these discussions is reported to the Board and discussed in detail both there and during meetings of the Remuneration Committee.
As a result of its work during the year, the Remuneration Committee has concluded that it has acted in accordance with its terms of reference. The chairman of the Remuneration Committee will be available at the Annual General Meeting to answer any questions about the work of the Committee.
Remuneration consultants
The Remuneration Committee did not take any advice from external remuneration consultants.
Single total figure of remuneration for executive and non-executive directors (audited)
Taxable Contributions Annual
Salary and fees benefit[5] to pension bonus Total
schemes
$ $ $ $ $
Executive Director
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
F Khallouf 493,136 479,720 27,037 29,486 78,258 75,035 - - 598,431 584,241
Non-executive Directors
M Meeùs 89,000 89,000 - - - - - - 89,000 89,000
L Jolibois 48,000 48,000 - - - - - - 48,000 48,000
J Mahaux 43,000 43,000 - - - - - - 43,000 43,000
G Lehmann 38,000 38,000 - - - - - - 38,000 38,000
Total
Variab
Total Fixed Remuneration le
Remune
ration
$ $
2023 2022 2023 2022
Executive Director 598,431 584,241 - -
Non-executive Directors 218,000 218,000 - -
Notes to the table
Mr
KPIs
The CEO is subject to a performance-related, bonus scheme built around a scorecard with a set of challenging KPI's aligned with the company strategy. Given the current situation in
Benefits
Benefits may be provided to the executive director, in the form of private medical insurance and life assurance.
The Chairman and Non-Executive Directors
As mentioned above, fees for non-Executive Directors were reduced by 20% on 15
Scheme interests awarded during the financial year (audited)
There were no scheme interests awarded during the year.
Payments to past directors (audited)
In 2023 there were no payments to past directors.
Payments for loss of office (audited)
No notice period was either worked or paid.
Directors' interests in shares (audited)
The beneficial interests of the Directors in office as at
Shares as at 31 December 2023 2022 Michel Meeùs 10,200,000 26,000,000 Fady Khallouf 10,875,455 10,425,455 Gilbert Lehmann - - Lilia Jolibois - - Jacques Mahaux - -
The Company does not currently operate formal shareholding guidelines. Whilst there is no specified level, the Company expects that under the new Remuneration Policy, the Executive Director will continue to build up a significant shareholding position in the Company during his mandate.
The Company's performance
The graph below highlights the Company's total shareholder return ("TSR") performance for the last fourteen years compared to the FTSE All Share Oil & Gas Producers index. This index has been selected on the basis that it represents a sector specific group, which is an appropriate group for the Company to compare itself against, and has been retained ever since, primarily for continuity purposes TSR is the return from a share or index based on share price movements and notional reinvestment of declared dividends.
Historic Remuneration of Chief Executive
Salary Taxable Annual bonus Long-term Pension Loss of Total
benefits incentives office
$ $ $ $ $ $ $
2009 422,533 - 284,552 - - - 707,085
2010 547,067 - - - - - 547,067
2011 669,185 - - - - - 669,185
2012 511,459 - - - 31,966 126,808 670,233
2013 384,941 - - - - - 384,941
2014 405,433 20,734 - - - - 426,167
2015 432,409[6] 15,987 243,132 - - - 691,528
2016 487,080 15,353 210,504[7] - - - 712,937
2017 497,288 27,273 126,992 - - - 651,553
2018 521,664 39,838 201,872 - - - 763,374
2019 492,581 45,453 495,109[8] - - - 1,033,143
2020 517,389 59,294 - - 58,300 - 634,983
2021 535,999 30,173 - - 78,619 - 644,791
2022 479,720 29,486 - - 75,035 - 584,241
2023 493,136 27,037 - - 78,258 - 598,431
In 2023, the Remuneration Committee, after consultation with the CEO, have decided to postpone any variable performance related bonus for the year ended
The annual bonus received by the CEO as a percentage of the maximum opportunity is presented in the following table.
CEO single figure of total Annual bonus pay-out
Year CEO remuneration $ against maximum
opportunity %
2023 Mr. Khallouf 598,431 -
2022 Mr. Khallouf 584,241 -
2021 Mr. Khallouf 644,791 -
2020 Mr. Khallouf 634,983 -
2019 Mr. Khallouf[9] 444,465 -
Mr. Michelotti 588,678 10
2018 Mr. Michelotti 763,374 32
2017 Mr. Michelotti 651,553 12
2016 Mr. Michelotti 712,937 22[10]
Mr. Michelotti 502,021 27[11]
2015
Mr. des Pallieres 189,507 -
2014 Mr. des Pallieres 426,167 -
2013 Mr. des Pallieres 384,941 -
Mr. des Pallieres 389,935 -
2012
Mr. Barron 280,298[12] -
Mr. des Pallieres[13] 273,201 -
2011
Mr. Barron 395,984 -
2010 Mr. Barron 547,067 -
2009 Mr. Barron[14] 707,085 67
Percentage change in the remuneration of the Chief Executive
The following table shows the percentage change in the remuneration of the Chief Executive in 2023 and 2022 compared to that of all employees within the Group.
2023 2022 Average
$'000 $'000 change, %
Base salary CEO 493 480 3%
All employees[15] 1,805 1,897 -5%
Taxable benefits CEO 105 104 1%
All employees 119 125 -5%
Annual Bonus CEO - - -
All employees - - -
Total CEO 598 584 2%
All employees 1,924 2,022 -5%
In 2023 none of the directors participated in long-term incentive schemes.
In 2023 there was no increase in executive and non-executive directors' salary in base currency. The difference in pay represents the change in exchange rate between the base currency and USD as a reporting currency.
Percentage change in Non-Executive director remuneration
Michel Meeùs All employees
2023 2022 % change % change
$'000 $'000 2023 - 2022 2023 - 2022
Base salary/fees 89,000 89,000 - -5%
Taxable benefits (including pensions) - - - -5%
Annual bonus - - - 0%
Total 89,000 89,000 - -4.8%
Lilia Jolibois All employees
2023 2022 % change % change
$'000 $'000 2023 - 2022 2023 - 2022
Base salary/fees 48,000 48,000 - -5%
Taxable benefits (including pensions) - - - -5%
Annual bonus - - - 0%
Total 48,000 48,000 - -4.8%
Jacques Mahaux All employees
2023 2022 % change % change
$'000 $'000 2023 - 2022 2023 - 2022
Base salary/fees 43,000 43,000 - -5%
Taxable benefits (including pensions) - - - -5%
Annual bonus - - - 0%
Total 43,000 43,000 - -4.8%
Gilbert Lehmann All employees
2023 2022 % change % change
$'000 $'000 2023 - 2022 2023 - 2022
Base salary/fees 38,000 38,000 - -5%
Taxable benefits (including pensions) - - - -5%
Annual bonus - - - 0%
Total 38,000 38,000 - -4.8%
Relative importance of spend on pay
The table below compares shareholder distributions (i.e. dividends and share buybacks) and total employee pay expenditure of the Group for the financial years ended
2023 2022
Year-on-year change, %
$'000 $'000
All-employee remuneration 1,924 2,022 -5%
Distributions to shareholders - - -
Shareholder voting at the Annual General Meeting
The Directors' Remuneration Policy was approved by shareholders at the Annual General Meeting held on
Directors' Remuneration Policy Number of votes % of votes cast For 100,135,172 82.19 Against 21,693,116 17.81 Total votes cast 121,828,288 100.00 Number of votes withheld 0
The Directors' Annual Report on Remuneration is approved by shareholders at each Annual General Meeting. A summary of the votes cast by proxy in 2023 and 2022 were as follows:
2023 2022
Director's
Annual Report Number of votes % of votes cast Number of votes % of votes cast
on Remuneration
For 105,995,725 99.97 83,255,878 91.89
Against 26,984 0.03 7,348,465 8.11
Total votes 106,022,709 90,604,343 100.00
cast
Number of votes 0 5,234
withheld
Implementation of Remuneration Policy in 2023
The performance related elements of remuneration remain unchanged and will be built around a scorecard with a set of KPI's aligned with the Group strategy. The Remuneration Policy can be found on the Group's website and at pages 50 to 63 of this Annual Report on Remuneration.
Approval
The Directors' Annual Report on Remuneration was approved by the Board on
Michel Meeùs
Chairman
Director's Remuneration Policy
-- Introduction
This Directors' Remuneration Policy (the "Policy") contains the information required to be set out as the directors' remuneration policy for the purposes of The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013.
The Policy was approved by shareholders at the 2021 AGM of the Company. The Remuneration Committee is not proposing to make any changes to the existing Policy however in line with industry best practice and the three-year Policy cycle the Company will be seeking shareholder approval at this year's AGM. The effective date of this Policy is the date on which the Policy is approved by shareholders.
The Policy applies in respect of all executive officers appointed to the Board of Directors ("executive directors") and non-executive directors. Other senior executives may be subject to the Policy, including in relation to annual bonus and shares incentive arrangements in particular if and to the extent that the Remuneration Committee determines it is appropriate.
The Remuneration Committee will keep the Policy under review to ensure that it continues to promote the long-term success of the Company by giving the Company its best opportunity of delivering on the business strategy. It is the Remuneration Committee's intention that the Policy be put to shareholders for approval every three years unless there is a need for the Policy to be approved at an earlier date.
The Company aims to provide sufficient flexibility in the Policy for unanticipated changes in compensation practices and business conditions to ensure the Remuneration Committee has appropriate discretion to retain its top executives who perform. The Remuneration Committee reserves the right to approve any payments that may be outside the terms of this Policy, where the terms of that payment were agreed before the Policy came into effect, or before the individual became a director of the Company.
Maximum caps are provided to comply with the required legislation and should not be taken to indicate an intent to make payments at that level. The maximum caps are valid at the time that the relevant employment agreement or appointment letter is entered into and the caps may be adjusted to take into account fluctuations in exchange rates.
-- Remuneration policy table: executive directors
Component Purpose and link to Maximum opportunity Operation and
strategy performance measures
Salary is paid on a
monthly basis.
The Remuneration
Committee takes into
account a number of
factors when setting
The maximum annual salaries including:
base combined salary
and fees for # scope and
executive directors difficulty of the
To provide fixed is €440,000[16]. role;
remuneration at an # skills and
appropriate level, The Remuneration experience of the
Salary and Fees to attract and Committee will individual;
retain directors as consider the factors # salary levels for
part of the overall set out under the similar roles
compensation "Operation" column within the
package. when determining the international
appropriate level of industry; and
base salary within # pay and conditions
the formal Policy elsewhere in the
maximum. Group. Salaries are
reviewed on an
annual basis, but
are not necessarily
increased at each
review.
No performance
measures.
The payment of any
bonus is at the
discretion of the
Board with reference
to the performance
year.
# The Remuneration
Committee sets, in
advance, a
scorecard with a
set of Key
Performance
Indicators ("KPIs")
aligned with the
Company's strategy.
The measures and
the relative
weightings are
substantiated by
the Remuneration
Committee and aim
to be stretching
and to support the
Company's business
strategy. Measures
are related to
Company financial
performance,
operational
performance and the
Company's health
and safety record.
In general,
relative weightings
of each KPI are
expected not to
exceed 50% and not
to be less than
10%.
# The Remuneration
Committee retains
the flexibility to
determine and, if
it considers
appropriate, change
the KPIs and
weightings of the
KPIs based on the
outcome of its
annual review. The
Remuneration
Committee may also
adjust KPIs during
the year to take
account of material
events, such as
(without
limitation)
material corporate
events, changes in
responsibilities of
an individual and/
or currency
exchange rates. Any
such changes will
be within the
overall target and
maximum payouts
approved in the
policy.
# The KPI targets and
specific weightings
in the scorecard
are defined
annually early in
the year, once the
budget has been
approved. A summary
of the KPI targets,
weightings for the
KPIs and how far
the KPIs are met
will be included
retrospectively
each year in the
Implementation
Report for the
year.
# All bonuses that
may become payable
To incentivise and are subject to
reward the malus and clawback
achievement of provisions in the
individual and The maximum award is event of material
Annual Bonus business objectives 125% of combined base financial
which are key to the salary and fees. misstatement of the
delivery of the Company or fraud or
Company's business material misconduct
strategy. on the part of the
executive, as
explained further
below.
# 50% of the bonuses
that may become
payable must be
applied to
subscribe for or
acquire shares in
the Company (after
the deduction of
any income tax and/
or employee social
security
contributions
payable). The
Company is
proposing to adopt
and operate a
Deferred Bonus Plan
as a framework plan
for the delivery of
shares to
executives, which
may be satisfied by
the issue of new
shares or transfer
of existing or
treasury shares.
# The Remuneration
Committee will
determine whether
the remainder of
the bonus shall be
paid in cash or
must be applied to
subscribe for or
acquire shares
(after the
deduction of any
income tax and/ or
employee social
security
contributions
payable). In making
its determination
as to how the
remainder of the
bonus shall be
paid, the
Remuneration
Committee may take
into account:
profitability of
the Company; the
executive's
shareholding as
measured against
any Company
shareholding
guidelines;
potential
liabilities of the
recipients to
income tax and
social security
contributions,
among other things.
Additional shares
representing the
value of dividends
payable on the
deferred shares may
be paid.
# The Remuneration
Committee may
impose holding
periods of up to
three years on any
of the shares
delivered pursuant
to the annual bonus
plan.
# There are no
prescribed minimum
levels of
performance in the
annual bonus
structure and so it
is possible that no
bonus award would
be made.
The Company has
adopted and operates
the 2018 Performance
Share Plan ("PSP") to
replace the 2008
Performance Share
Plan. The PSP offers
the opportunity to
earn shares in the
Company subject to
the achievement of
stretching but
realistic performance
conditions.
Performance
conditions will be a
main feature of the
PSP.
The PSP will be
administered by the
Remuneration
Committee.
# Awards can be made
under the PSP at
the direction of
the Remuneration
Committee within
the policy maximum
in the form of
contingent share
awards.
# PSP awards will
have a minimum
vesting period of 3
years and, for
directors, the PSP
awards have a
further holding
period of 2 years
following the end
of the vesting
period (subject to
any number of
shares that may
need to be sold to
meet any income tax
and employee social
security
contributions due
on vesting).
# The Remuneration
Committee will
develop clear KPIs
that aim to align
directors with
Company strategy
over time periods
in excess of one
financial year. Any
performance
measures and
targets used for
share incentive
awards during 2019
will be relevant
and stretching in
line with the
overall strategy of
the Company.
# The Remuneration
Committee may
adjust or change
the PSP measures,
targets and
weightings for new
awards under the
PSP to ensure
continued alignment
with Company
strategy.
# PSP awards are
subject to malus
and clawback in the
event of material
Awards can be made financial
To incentivise, under the PSP with a misstatement of the
retain and reward value of up to a Company or fraud or
Share Incentive eligible employees maximum of 200% of material misconduct
Arrangements and align their base salary and fees on the part of the
interests with those or 300% in executive.
of the shareholders exceptional # Upon vesting of an
of the Company. circumstances. award, the award
holder must pay the
nominal value in
respect of each
share that vests.
# PSP Awards will
normally lapse
where the award
holder ceases
employment with the
Company before
vesting. PSP Awards
will not lapse and
will vest
immediately if the
award holder is
considered to be a
Good Leaver (leaves
due to death or
disability) subject
to the Remuneration
Committee being
satisfied that
performance
conditions have
been satisfied or
are likely to be
satisfied as at the
end of the relevant
performance period.
In other
circumstances, the
Remuneration
Committee may
determine that
awards will not
lapse and will
continue to vest at
their normal
vesting date,
subject to
pro-ration to
reflect the period
of service during
the performance
period and
performance
conditions. The
Remuneration
Committee has
residuary
discretions to
disapply pro ration
and bring forward
the date of
vesting.
# In the event of a
change of control
of the Company, if
the acquiring
company agrees,
awards will be
exchanged for
equivalent awards
over shares in the
acquiring company
and continue to
vest according to
the original
vesting schedule.
If the acquiring
company does not
agree to exchange
the awards, the
awards will vest at
the Committee's
absolute
discretion. Awards
that vest will be
subject to time
pro-ration and
performance
conditions.
# Benefits under the
PSP will not be
pensionable.
# The PSP Plan Limits
are set out at Note
2.4 below.
Any pension benefits
will be set at an
To provide a appropriate level in
retirement benefit line with market
Pension that will foster practice, and in no No performance
loyalty and retain event will the measures.
experienced contributions paid by
executive directors. the Company exceed
15% of combined base
salary and fees.
# The executive
directors are
entitled to private
medical insurance
and life assurance
cover (of four
times the combined
salary and fee) and
directors' and
officers' liability
insurance.
# The Remuneration
Committee may
decide to provide
other benefits
commensurate with
the market. Such
benefits may
include (for
instance) company
car or allowance,
physical
examinations and
Any benefits will be medical support,
set at an appropriate professional
level in line with advice, assistance
To provide a market market practice, and with filling out
Benefits competitive level of in no event will the tax returns and
benefits to value of the benefits occasional minor
executive directors. exceed 15% of benefits. A tax
combined base salary equalisation
and fees. payment may be paid
to an executive
director if any
part of the
remuneration of the
executive director
becomes subject to
double taxation.
Tax gross ups may
be paid, where
appropriate. The
Company does not,
at present, provide
other taxable
benefits to the
executive
directors.
# Executive directors
are reimbursed for
reasonable business
expenses incurred
in the course of
carrying out their
duties.
# No performance
measures.
Notes to the executive directors' remuneration policy table
The Remuneration Committee's philosophy is that remuneration arrangements should be appropriately positioned to support the Group's business strategy over the longer term and the creation of value for shareholders. In this context the following key principles are considered to be important:
- remuneration arrangements should align executive and employee interests with those of shareholders;
- remuneration arrangements should help retain key executives and employees; and
- remuneration arrangements should incentivise executives to achieve short, medium and long-term business targets which represent value creation for shareholders. Targets should relate to the Group's performance in terms of overall revenue and profit and the executive's own performance. Exceptional rewards should only be delivered if there are exceptional returns.
The Remuneration Committee reserves the right to make any remuneration payments (including satisfying awards of variable remuneration) and payments for loss of office notwithstanding that they are not in line with the Policy set out above, where the terms of that payment were agreed before the Policy came into effect, or before the individual became a director of the Company (provided the payment was not in consideration for the individual becoming a director).
-- Performance measures and targets
(a) Annual Bonus
The performance measures for executive directors comprise of financial measures and business goals linked to the Company's strategy, which could include financial and non-financial measures. The business goals are tailored to reflect each executive director's role and responsibilities during the year. The performance measures are chosen to enable the Remuneration Committee to review the Company's and the individual's performance against the Company's business strategy and appropriately incentivise and reward the executive directors.
Annual bonus targets are set by the Remuneration Committee each year. They are stretching but realistic targets which reflect the most important areas of strategic focus for the Company. The factors taken into consideration when setting targets include the Company's Key Performance Indicators (which are determined annually by the Remuneration Committee), and the extent to which they are under the control or influence of the executive whose remuneration is being determined.
Performance is measured over the financial year against the measures and targets set according to the scorecard. The Remuneration Committee retains the right to exercise its judgement to adjust the bonus outcome for an individual to ensure the outcome reflects any other aspects of the Company's performance that become relevant during the financial year.
The Remuneration Committee used Company operational and financial performances and safety as performance measures for the 2020 scorecard. For years following 2020, the structure of the annual bonus scorecard will be reviewed by the Remuneration Committee.
2023 Annual bonus scorecard measures for executive director
40% weighting 50% weighting
Operational performance, such as
production, sales, geographical
diversification, and starting new
projects.
Company financial performance, including
10% weighting cash targets and profit targets.
Indicators of health and safety to
promote the effective risk management
of the Company.
(b) Share Plans
The Remuneration Committee will make the vesting of a Plan award conditional upon the satisfaction of stretching but realistic performance conditions. These conditions are meant to achieve a long-term alignment of the executives' remuneration with the interest of the shareholders.
EBITDA growth, increase of P1 reserves (in millions boe), and changes to the free cash-flow are the key KPIs to be used by the Remuneration Committee and will be measured over time periods of three financial years. The performance measures are chosen to align the performance of participants with the attainment of financial performance targets over the vesting period of the award. The targets are set by the Remuneration Committee by reference to the Company's strategy and business plan and the results achieved at the time of the vest are determined by the Remuneration Committee.
Under the PSP plan rules, the Board may vary a performance target where it considers that any performance target to which an award is subject is no longer a true or fair measure of the participant's performance, provided that the Board must act fairly and reasonably and that the new performance target is materially no more difficult and no less difficult to satisfy than the original performance target.
-- Malus and clawback (applicable to bonuese and share awards)
The Remuneration Committee has the discretion to reduce the bonus before payment or require the executive director to pay back shares or a cash amount in the event of material financial misstatement of the Company or fraud or material misconduct on the part of the executive. The amount that may be clawed back on any such event is limited to the value of the bonus, taking into account the cash paid and the shares delivered to the executive, taking the value of the shares at the time of the clawback, less any income tax or employee social security contributions paid on the bonuses.
-- Share ownership guidelines for executives
The Remuneration Committee is planning to implement share ownership guidelines for executive directors to further align the interests of the executive directors with those of shareholders. The share ownership guidelines will include an expectation that executive directors build up their shareholding to 200% of base salary over a period of five years from the later of: the date of adoption of this policy and the date of appointment.
Once the shareholding guideline is reached, executive directors would be expected to maintain it. The intention would be for the shareholding guideline to be reached through the retention of vested shares from share plans (e.g. the deferred share element of the annual bonus and shares vested under the PSP). As such, the Remuneration Committee's discretion may be used to increase the proportion of an annual bonus to be delivered in shares to assist the executive director in meeting this guideline. The deferred share mechanism in the annual bonus and the design of the PSP will assist executive directors in reaching the guidelines. Executive directors will not be expected to top up their shareholding with personal acquisitions of Company shares outside the usual share plans described in the Policy. The Remuneration Committee will monitor the executive directors' shareholdings and may adjust the guideline in special individual and Company circumstances, for example in the case of a share price fall.
-- PSP Plan Limits
The PSP may operate over new issue shares, treasury shares or shares purchased in the market. In any ten-calendar year period, the Company may not issue (or grant rights to issue) more than:
(a) 10% of the issued ordinary share capital of the Company under the Plan and any other employee share plan adopted by the Company; and
(b) 5% of the issued ordinary share capital of the Company under the Plan and any other executive share plan adopted by the Company.
-- Remuneration throughout the Group
Differences in the Company's pay policy for executive directors from that applying to employees within the Group generally reflect the appropriate market rate for the individual executive roles.
-- Remuneration policy table: non-executive directors
______________________________________________________________________________ |Component|Purpose and link to |Maximum opportunity |Operation and | | |strategy | |performance measures | |_________|______________________|______________________|______________________| | | | |Non-executive | | | | |directors receive a | | | | |standard annual fee, | | | | |which is paid on a | | | | |quarterly basis in | | | | |arrears. | | | | | | | | | |Additional fees may | | | | |also be paid to | | | | |recognise the | | | | |additional work | | | | |performed by members | | | | |of any committees set | | | | |up by the Board, and | | | | |for the role of chair | | | | |of a committee. | | | | | | | | | |Fees are reviewed on | | | | |an annual basis, but | | | |# The maximum annual |are not necessarily | | |To provide an | fees paid to |increased at each | | |appropriate reward to | non-executive |review. Fees are set | | |attract and retain | directors is £50,000|at a rate that takes | | |high-calibre | for a non-executive |into account: | |Fees |individuals with the | director role, and | | | |relevant | £100,000 for the |# market practice for | | | | role of Chairman. An| comparative roles; | | |skills, knowledge and | additional £10,000 |# the financial | | |experience to progress| will be paid to the | results of the | | |the Company strategy. | individual acting as| Company; | | | | Chairman of the |# the time commitment | | | | Audit Committee. | and duties involved;| | | | | and | | | | |# the requirement to | | | | | attract and retain | | | | | the quality of | | | | | individuals required| | | | | by the Company. | | | | |The remuneration of | | | | |the non-executive | | | | |directors is a matter | | | | |for the Board to | | | | |consider and decide | | | | |upon. | | | | | | | | | |There are no | | | | |performance measures | | | | |related to | | | | |non-executive | | | | |directors' fees. | |_________|______________________|______________________|______________________|
Notes to the Policy Table
The payment policy for non-executive directors is to pay a rate which will secure persons of a suitable calibre. The remuneration of the non-executive directors is determined by the Board. External benchmarking data and specialist advisers are used when setting fees, which will be reviewed at appropriate intervals. The maximum caps are valid at the time that the relevant appointment letter is entered into and the caps may be adjusted to take into account fluctuations in exchange rates.
Expenses reasonably and wholly incurred in the performance of the role of non-executive director of the Company may be reimbursed or paid for directly by the Company, as appropriate, and may include any tax due on the expense.
The non-executive directors' fees are non-pensionable. The non-executive directors have not to date been eligible to participate in any incentive plans (such as bonuses or share plans); however, the Board considers that it may be appropriate in the future to enable such participation, subject to suitably stretching performance thresholds.
Non-executive directors may receive professional advice in respect of their duties with the Company which will be paid for by the Company. They will be covered by the Company's insurance policy for directors.
-- Recruitment
The Company's policy on the recruitment of directors is to pay a fair remuneration package for the role being undertaken and the experience of the individual being recruited. The Remuneration Committee will consider all relevant factors, which include the abilities of the individual, their existing remuneration package, market practice, and the existing arrangements for the Company's current directors.
The Remuneration Committee will determine that any arrangements offered are in the best interests of the Company and shareholders and will endeavour to pay no more than is necessary.
The Remuneration Committee intends that the components of remuneration set out in the policy tables, and the approach to the components as set out in the policy tables, will be equally applicable to new recruits, i.e. salary, annual bonus, share plan awards, pension and benefits for executive directors, and fees for non-executive directors. However, the Company acknowledges that additional flexibility may be required to ensure the Company is in the best position to recruit the best candidate for any vacant roles and, as such, a buy-out arrangement may be required.
-- Flexibility
The salary and compensation package designed for a new recruit may be higher or lower than that applying for existing directors. The Remuneration Committee may decide to appoint a new executive director to the Board at a lower than typical salary, such that larger and more frequent salary increases may then be awarded over a period of time to reflect the individual's growth in experience within the role.
Remuneration will normally not exceed those set out in the policy table above. However, to ensure that the Company can sufficiently compete with its competitors, the Remuneration Committee considers it important that the recruitment policy has sufficient flexibility in order to attract and appropriately remunerate the high-performing individuals that the Company requires to achieve its strategy. As such, the Remuneration Committee reserves discretion to provide a buy-out arrangement and benefits (such as a sign-on bonus and additional share awards) in addition to those set out in the policy table (or mentioned in this section) where the Remuneration Committee considers it reasonable and necessary to do so in order to secure an external appointment (see below for more detail in relation to buy-out arrangements).
-- Buy-out arrangements
The Remuneration Committee retains the discretion to enter into buy-out arrangements to compensate new hires for incentive awards forfeited in joining the Company. The Remuneration Committee will use its discretion in awarding and setting any such compensation, which will be decided on a case-by-case basis and likely on an estimated like-for-like basis. In deciding the appropriate type and quantum of compensation to replace existing awards, the Remuneration Committee will take into account all relevant factors, including the type of award being forfeited, the likelihood of any performance measures attached to the forfeited award being met, and the proportion of the vesting period remaining. The Remuneration Committee will appropriately discount the compensation payable to take account of any uncertainties over the likely vesting of the forfeited award to ensure that the Company does not, in the view of the Remuneration Committee, pay in excess of what is reasonable or necessary.
Compensation for awards forfeited may take the form of a bonus payment or a share award. For the avoidance of doubt, the maximum amounts of compensation contained in the policy table will not apply to such buy-out arrangements. The Company has not placed a maximum value on the compensation that can be paid under this section, as it does not believe it would be in shareholders' interests to set any expectations for prospective candidates regarding such awards.
-- Payments for loss of office
Any compensation payable in the event that the employment of an executive director is terminated will be determined in accordance the terms of the employment contract between the Company and the executive, as well as the relevant rules of any share plan and this Policy, and in accordance with the prevailing best practice.
The Remuneration Committee will consider a variety of factors when considering leaving arrangements for an executive director and exercising any discretions it has in this regard, including (but not limited to) individual and business performance during office, the reason for leaving, and any other relevant circumstances (for example, ill health).
In addition to any payment that the Remuneration Committee may decide to make, the Remuneration Committee reserves discretion as it considers appropriate to:
(a) pay an annual bonus for the year of departure;
(b) continue providing any benefits for a period of time; and
(c) provide outplacement services.
Non-executive directors are subject to one month notice periods prior to termination of service and are not entitled to any compensation on termination save for accrued fees as at the date of termination and reimbursement of any expenses properly incurred prior to that date.
-- Share plan awards
The treatment of any share award on termination will be governed by the PSP rules.
Under the PSP, outstanding share awards held by an individual who ceases to be a director or employee of the Company will lapse, unless the cessation is due to death, illness, injury or disability, redundancy, retirement, the Company ceasing to be a member of the Group or the transfer of an undertaking or part of an undertaking to a person who is not a member of the Group, or the Board exercises its discretion otherwise.
Under the PSP, the Board has discretion to decide the period of time for which the award will continue, and whether any unvested award shall be treated as vesting on the date of cessation of employment or in accordance with the original vesting schedule, in both cases have regard to the extent to which the performance targets have been satisfied prior to the date of cessation.
For executive directors, the vesting period will be set by the Remuneration Committee with a minimum three-year period. The Remuneration Committee will (unless the vesting period is set as a period equal to or longer than five years) impose a holding period on shares (or awards) so that the executive is not able to sell the shares that the executive director acquires through the PSP until the fifth anniversary of the date of the award. The holding period will not apply to the number of shares equivalent in value to the amount required by the Company or the executive director to fund any income tax and employee social security contributions due on the vesting of the awards or otherwise in connection with the awards.
-- Executive director employment agreements
This section contains the key employment terms and conditions of the executive directors that could impact on their remuneration or loss of office payments.
The Company's policy on employment agreements is that executive directors' agreements should be terminable by either the Company or the director on not more than six months' notice. The employment agreements contain provision for early termination, among other things, in the event of a breach by the executive but make no provision for any termination benefits except in the event of a change of control of the Company, where the executive becomes entitled to a lump sum equal to 24 months' base salary plus benefits plus (if any), bonus received on termination by the Company. The employment agreements contain restrictive covenants for a period of 12 months following termination of the agreement. Details of employment agreements in place as at the date of this report are set out below:
_____________________________________________________ |Director |Current agreement start date|Notice period| |__________|____________________________|_____________| |F Khallouf|15 November 2019 |Six months | |__________|____________________________|_____________|
Directors' employment agreements are available for inspection at the Company's registered office in
-- Non-executive directors' letters of appointment
This section contains the key terms of the appointments of non-executive directors that could impact on their remuneration.
Typically, the non-executive directors are appointed by letter of appointment for an initial term of three years which may be extended. All non-executive directors are subject to annual re-election by the Company's shareholders and their appointments may be terminated earlier with one month's prior written notice (or with immediate effect, in the case of specific serious circumstances such as fraud or dishonesty). On termination of appointment, non-executive directors are usually only entitled to accrued fees as at the date of termination together with reimbursement of any expenses properly incurred prior to that date and the company has no obligation to pay further compensation when the appointment terminates. Non-executive directors' letters of appointment are available for inspection at the Company's registered office in
_____________________________________________________________ |Non-executive Director|Current agreement start date|Term | |______________________|____________________________|_________| |Michel Meeùs |23 June 2023 |Two years| |______________________|____________________________|_________| |Lilia Jolibois |24 June 2022 |Two years| |______________________|____________________________|_________| |Gilbert Lehmann |23 June 2023 |Two years| |______________________|____________________________|_________|
-- Illustration of the Remuneration Policy
The bar charts below show the levels of remuneration that the CEO could earn over the coming year under the Policy.
CEO: minimum and maximum remuneration
The bar chart shows future possible maximum remuneration.
Pension entitlements were provided in 2023.
-- Consideration of shareholder views
The Chairman and executive directors of the Company have a regular dialogue with analysts and substantial shareholders, which includes the subject of directors' remuneration. The outcome of these discussions is reported to the Board and discussed in detail both there and during meetings of the Remuneration Committee.
The Remuneration Committee will take into account the results of the shareholder vote on remuneration matters when making future remuneration decisions. The Remuneration Committee remains mindful of shareholder views when evaluating and setting ongoing remuneration strategy.
-- Consideration of employment conditions within the Group
When determining remuneration levels for its executive directors, the Board considers the pay and employment conditions of employees across the Group. The Remuneration Committee will be mindful of average salary increases awarded across the Group when reviewing the remuneration packages of the executive directors.
-- Minor changes
The Remuneration Committee may make, without the need for shareholder approval, minor amendments to the Policy for regulatory, exchange control, tax or administrative purposes or to take account of changes in legislation.
Michel Meeùs
Chairman
Statement of Directors' Responsibilities in respect of the Annual Report and 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 year. Under that law the directors have prepared the group and company financial statements in accordance with
# properly select and apply accounting policies; # make judgements and accounting estimates that are reasonable and prudent; # present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; # state whether applicableUK -adopted International Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; # provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company's and Group's financial position and financial performance; and # make an assessment of the Company's and Group's ability to continue as a going concern, prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company and Group's transactions and disclose with reasonable accuracy at any time the financial position of the Company and Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Report of the Directors, Annual Report on Remuneration, Directors' Remuneration Policy and Corporate Governance Statement that comply with that law and those regulations. The Directors are responsible for the maintenance and integrity of the corporate and financial information and statements included on the Company's website, www.cadoganenergysolutions.com. Legislation in the
Responsibility Statement of the Directors in respect of the Annual Report
We confirm to the best of our knowledge:
(1)
the financial statements, prepared in accordance with
(2) the Annual Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and
(3) the annual report and the financial statements, taken as a whole, are fair, balanced and understandable, and provide the information necessary for the shareholders to assess the Group's position, performance, business model and strategy.
On behalf of the Board
Michel Meeùs
Chairman
INDEPENDENT AUDITOR'S
Qualified Opinion
We have audited the financial statements of
In our opinion, except for the effect of the matter described in the Basis for qualified opinion paragraph below:
-- the financial statements give a true and fair view of the state of the
Group's and of the Parent company's affairs as at 31 December 2023 and
of the group's profit for the year then ended;
-- the Group financial statements have been properly prepared in accordance
with UK adopted international accounting standards;
-- the Parent Company financial statements have been properly prepared in
accordance with UK adopted international accounting standards 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.
Basis for qualified opinion
In
The loan carries an entitlement to interest at a rate of 5.5% per year, payable at maturity (which is 24 months after the execution date of
Through the Agreement, the Group was granted a call option to acquire, at its sole discretion, a 33% participating interest in Proger Ingegneria; the exercise of the option would have given Cadogan, through
The call option was not exercised within the relevant timeframe (
In
In
As part of our risk assessment we considered the recoverability of the loan note instrument to be a key audit matter, and in respect of this matter we:
-- made enquiries of management and the Audit Committee regarding the
structure of the transaction and the latest status of legal proceedings;
-- obtained and reviewed the original loan documents including the call
option agreement;
-- obtained loan workings papers and reviewed the accounting entries;
-- met with management to obtain an understanding of their assessment of
the recoverable amount of the loan and why management believes no
impairment of the carrying value of the loan note is required;
-- discussed with management their understanding of the process of
assessing recoverability of the loan note;
-- requested and received information from Cadogan legal advisors on the
current legal status and legal proceedings;
-- based on available information to us we critically assessed the ability
of the counterparty to repay the amounts due; and
-- reviewed the disclosures in relation to financial instruments including
the accounting policy, critical judgments and estimates and financial
instrument disclosures.
Based on the procedures performed above we were unable to obtain sufficient, appropriate audit evidence regarding the recoverability of the loan note, and accordingly we were also unable to obtain sufficient appropriate audit evidence to enable us to conclude whether the carrying value of the loan note is materially accurate.
In 2022, we were not able to obtain sufficient, appropriate audit evidence as to whether the carrying value of the loan note was materially recoverable as at
We conducted our audit in accordance with International Standards on Auditing (
Our approach to the audit
We tailored the scope of our audit to ensure we performed sufficient work to be able to express an opinion on the financial statements as a whole, taking into account the structure of the Group and the Company, its environment, including the group's system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the directors that may have represented a risk of material misstatement.
The significant majority of the Group's operations are located in the
Our involvement with the component auditors
As part of our supervision and direction of the component audit team, we determined the level of involvement needed in order to be able to conclude whether sufficient appropriate audit evidence has been obtained in respect of the
-- We issued detailed Group reporting instructions to the component
auditor, which included the significant areas to be covered by the audit
(including areas that were considered to be key audit matters as
detailed below) and set out the information required to be reported to
the Group audit team.
-- Due to the travel restrictions resulting from the ongoing war in the
Ukraine , the Group audit engagement partner and senior members of the
Group audit engagement team were unable to visit the Ukraine to meet
with component management and the component audit team during the audit.
Accordingly, we performed a remote review of the component audit files
in the Ukraine using appropriate technologies and held regular calls and
videoconferences with component management and component audit team
during the audit.
-- The Group audit team performed reviews of relevant working papers and
undertook additional procedures where necessary in respect of the
significant risk areas that represented Key Audit Matters for the group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the basis for qualified opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report.
______________________________________________________________________________ |Key Audit Matters |How our scope addressed this matter | |______________________________________|_______________________________________| | |· We critically assessed management's | | |impairment assessment which was based | | |on the value in use model (ViU). | | | | | |· We challenged the key judgements and | | |estimates made by management, including| |Valuation of development and |forecast oil prices and the production | |production assets |output levels. | | | | |Refer to page 85 (Accounting policy) |· We critically assessed management's | |and 97 (note 17 Property, plant and |assumptions in estimating the discount | |equipment). |rate used. | | | | |As at31 December 2023 the Group held |· We compared the forecast production | |development and production assets with|included in the model to the most | |a carrying value of$5.6m (2022: |recent reserves geological and economic| |$6.4m). |evaluation report produced by the | | |management's external expert. | |Management has performed an impairment| | |review of development and production |· We held calls with the management's | |assets and concluded that no |external expert to discuss the reserves| |impairment is required. |report and assessed their independence | | |and competence. | |The assessment of the recoverable | | |value of the development and |· We held discussions with operational | |production assets |management to evaluate the basis | | |production forecasts associated with | |required judgments and estimates by |wells, considered the historical impact| |management regarding the inputs |of such activities and evaluated the | |applied in the models including future|extent to which appropriate costs were | |oil and gas prices, production and |included in the forecasts. | |reserves, operating and development | | |costs and discount rates. |· We performed sensitivity analysis on | | |the impairment model to establish the | |The carrying value of the Group's |impact of possible changes of the key | |development and production assets were|assumptions. | |therefore considered to be a key audit| | |matter. |· We reviewed the adequacy of the | | |disclosures in the financial | | |statements. | | | | | |Based on our work performed we consider| | |there is no material difference between| | |the carrying value of these assets and | | |their recoverable amounts. | |______________________________________|_______________________________________|
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit, the nature, timing and extent of our audit procedures, both individually and in aggregate on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as follows:
______________________________________________________________________________ | |The Group |The Parent Company | |_________________________|_________________________|__________________________| |Overall group materiality|$570,000 (2022:$725,000 )|$350,000 (2022:$400,000 ) | |_________________________|_________________________|__________________________| | |1.5% of total assets |1.5% of total assets | |Basis of determining |(2022: 2% of total |restricted to$350,000 | |materiality |assets) |(2022: 2% of total assets | | | |restricted to$400,000 ) | |_________________________|_________________________|__________________________| | |When determining materiality, we determine an | | |appropriate percentage of our chosen benchmark, with| | |the choice of an appropriate benchmark as our | | |starting point. We determined that an asset based | |Rationale for the |measure of materiality is appropriate as the Group | |benchmark applied |and the Company holds significant cash and loan | | |balances and its principal activity is the | | |exploration and development of oil and gas assets. | | |As a result we concluded that the asset base is a | | |key financial metric for users of financial | | |statements. | |_________________________|____________________________________________________| |Performance materiality |$285,000 (2022:$362,500 )|$175,000 (2022:$200,000 ) | |_________________________|_________________________|__________________________| | |We use performance materiality to reduce to an | | |appropriately low level the probability that the | | |aggregate of uncorrected and undetected | | |misstatements exceeds overall materiality. | | |Specifically, we use performance materiality in | | |determining the scope of our audit and the nature | | |and extent of our testing of | | | | | |account balances, classes of transactions and | | |disclosures, for example in determining sample | |Basis for performance |sizes. | |materiality | | | |Our performance materiality was 50% of overall | | |materiality, amounting to £285,000 for the Group | | |financial statements and$175,000 for the Company | | | | | |financial statements. | | | | | |When considering the level at which to set | | |performance materiality, we considered a number of | | |factors, including the risk assessment and | | |aggregation risk, the effectiveness of controls and | | |our knowledge of the business. | |_________________________|____________________________________________________|
We agreed with the
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors' assessment of the Group's and the Parent Company's ability to continue to adopt the going concern basis of accounting included:
-- Review of management's going concern assessment paper and the cash flow
forecast prepared by management and approved by the Board.
-- We critically assessed the going concern paper and the forecast taking
into account key assumptions and various scenarios prepared by
management and the impact they would have on the Group's ability to
continue operating on going concern basis.
-- We performed sensitivity assessments over the key assumptions in the
forecast including the impact of severe but plausible scenario and
severe but unlikely downside scenario, and extending these beyond the 12
months from the date of approval these financial statements to assess
the Group's ability to continue as a going concern.
-- As part of our sensitivity assessment of these forecast and scenarios we
critically assessed the level of headroom available and the assumptions
including, including mitigating actions available to management,
potential geopolitical impacts, oil production, oil prices, operating
expenditure and capital expenditure.
-- We compared production forecasts to historical trends and considered the
oil price assumptions against consensus market prices and historical
discount levels between Brent oil prices and the local market. We
compared forecast costs with historical expenditure.
-- We reviewed the adequacy of the disclosures in the financial statements
in respect of going concern against the requirements of UK -adopted
international accounting standards.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's and Parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Emphasis of Matter
We draw attention to Note 3 (b) on page 80 to the financial statements which describes the uncertainty related to the outcome of the ongoing war in
Other information
The other information comprises all of the information in the Annual Report, other than the financial statements and our auditors' report thereon. The Directors are responsible for the other information, which includes reporting based on the Task Force on Climate-related Financial Disclosures (`TCFD') recommendations. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
As described in the basis for qualified opinion section of our report, our audit opinion is qualified because we were unable to obtain sufficient appropriate audit evidence in respect of certain loan receivables. We have concluded that where the other information refers to these receivables or to related balances or classes of transactions it may also be materially misstated for the same reason.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
Except for the possible effect of the matter described in the basis for the qualified opinion section of our report, in our opinion, based on the work undertaken in the course of the audit:
-- the information given in the Strategic report and the Directors' report
for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
-- the Strategic report and the Directors' report have been prepared in
accordance with applicable legal requirements;
Matters on which we are required to report by exception
Except for the possible effect of the matter described in the basis for the qualified opinion section of our report, in the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.
In respect solely of the limitation on our work relating to certain loan receivables, described above:
-- we have not received all the information and explanations we require for
our audit; and
-- we were unable to determine whether adequate accounting records have
been kept by the Parent Company
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-- returns adequate for our audit have not been received from branches not
visited by us; or
-- the Parent Company financial statements and the part of the Directors'
remuneration report to be audited are not in agreement with the
accounting records and returns; or
-- certain disclosures of Directors' remuneration specified by law are not
made; or
-- a corporate governance statement has not been prepared by the Parent
Company.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out on page 64, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group's and the Parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (
A further description of our responsibilities is available on the FRC's website at https://wwww.frc.org.uk/auditors/auditor-assurance/auditor-s-responsibilities-for-the-audit-of-the-fi/description-of-the-auditor's-responsibilities-for
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Based on our understanding of the Group and its operations, we identified the principal risks of non-compliance with laws and regulations related to the
-- We obtained an understanding of how the Group and the Parent Company
complies with these requirements by discussions with management and
those charged with governance;
-- Based on this understanding, we designed specific appropriate audit
procedures to identify instances of non-compliance with laws and
regulations. This included making enquiries of management and those
charged with governance and obtaining additional corroborative evidence
as required.
-- We inquired of management and those charged with governance as to any
known instances of non-compliance or suspected non-compliance with laws
and regulations.
-- We communicated with external legal advisers representing the Group and
held calls with management to enquire about known non-compliance with
laws and regulations;
-- We performed a review of external press releases;
-- We assessed the risk of material misstatement of the financial
statements, including the risk of material misstatement due to fraud and
how it might occur, by holding discussions with management and those
charged with governance.
-- We challenged assumptions and judgements made by management in relation
to the estimates made in respect of development and production assets.
-- Identifying and testing journal entries, in particular any journal
entries posted with unusual account combinations, and unusual users.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Other matters which we are required to address
We were appointed by the Board of Directors on 17 February 2023 to audit the financial statements for the period ended 31 December 2022. Our total uninterrupted period of engagement is two years, covering the period ended 31 December 2022 and 31 December 2023.
The non-audit services prohibited by the FRC's Ethical Standard were not provided to the Group or the Parent Company and we remain independent of the Group and the Parent Company in conducting our audit.
Our audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken for no purpose other than to draw to the attention of the company's members those matters which we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the company and company's members as a body, for our work, for this report, or for the opinions we have formed.
for and on behalf of
9 Appold Street
London
EC2A 2AP
07 May 2024
Consolidated Income Statement
For the year ended 31 December 2023
2023 2022
Notes
$'000 $'000
CONTINUING OPERATIONS
Revenues 6 7,550 8,472
Cost of sales 7 (5,391) (5,553)
Gross profit 2,159 2,919
Administrative expenses 8 (3,574) (3,441)
Adjustments of end of concession obligations for E&E 16 218 (269)
assets
Reversal of impairment of other assets 9 56 20
Impairment of other assets 9 (49) (27)
Other operating income/(expenses), net 10 25 (3)
Net foreign exchange gain/(losses) 538 (1,131)
Operating loss (627) (1,932)
Finance income, net 13 1,885 372
Profit/(Loss) before tax 1,258 (1,560)
Taxation 14 - -
Profit/(Loss) for the year 1,258 (1,560)
Attributable to:
Owners of the Company 1,259 (1,562)
Non-controlling interest (1) 2
1,258 (1,560)
Earnings/(Loss) per Ordinary share Cents Cents
Basic and diluted 15 0.5 (0.6)
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
2023 2022
$'000 $'000
Profit/(Loss) for the year 1,258 (1,560)
Other comprehensive loss
Items that may be reclassified subsequently to profit or loss:
Unrealised currency translation differences (321) (3,287)
Other comprehensive loss (321) (3,287)
Total comprehensive profit/ (loss) for the year 937 (4,847)
Attributable to:
Owners of the Company 938 (4,849)
Non-controlling interest (1) 2
937 (4,847)
Consolidated Balance Sheet
As at 31 December 2023
2023 2022
Notes
$'000 $'000
ASSETS
Non-current assets
Intangible exploration and evaluation assets 16 - -
Property, plant and equipment 17 5,768 6,633
Right-of-use assets 23 246 108
Deferred tax asset 22 370 319
6,384 7,060
Current assets
Inventories 19 364 295
Trade and other receivables 20 310 318
Loan receivable at amortised cost 28 17,074 15,825
Cash 21 14,155 13,934
31,903 30,372
Total assets 38,287 37,432
LIABILITIES
Non-current liabilities
Long-term lease liability 23 (148) (28)
Provisions 25 (114) (261)
(262) (289)
Current liabilities
Trade and other payables 24 (1,366) (1,401)
Short-term lease liability 23 (87) (79)
Current provisions 25 (131) (136)
(1,584) (1,616)
Total liabilities (1,846) (1,905)
NET ASSETS 36,441 35,527
EQUITY
Share capital 26 13,832 13,832
Share premium 514 514
Retained earnings 185,803 184,331
Cumulative translation reserves (165,297) (164,976)
Other reserves 27 1,589 1,589
Equity attributable to owners of the Company 36,441 35,290
Non-controlling interest - 237
TOTAL EQUITY 36,441 35,527
The consolidated financial statements of Cadogan Energy Solutions plc, registered in
Chief Executive Officer
07 May 2024
The notes on pages 79 to 108 form an integral part of
these financial statements.
Consolidated Cash Flow Statement
For the year ended 31 December 2023
2023 2022
Note
$'000 $'000
Operating loss (627) (1,932)
Adjustments for:
Depreciation and depletion of property, plant and 17,23 821 764
equipment, and right-of-use assets
Changes in provision of oil and gas assets 16 (218) 269
Loss on disposal of property, plant and equipment 17 19 -
Impairment/(Reversal of impairment) of inventories 9 44 (20)
Impairment of receivables 9 3 16
Reversal of impairment/(impairment) of VAT recoverable 9,20 (54) 11
Effect of foreign exchange rate changes (538) 1,131
Operating cash outflow/(inflow) before movements in (550) 239
working capital
Increase in inventories (131) (155)
Increase in receivables (127) (946)
Decrease/(increase) in payables 238 (197)
Cash used by operations (570) (1,059)
Interest received - 185
Net cash outflow from operating activities (570) (874)
Investing activities
Purchases of property, plant and equipment (58) (93)
Purchases of intangible exploration and - -
evaluation assets
Interest received 796 97
Net cash generated in investing activities 738 4
Net increase/(decrease) in cash 168 (870)
Effect of foreign exchange rate changes 53 (207)
Cash at beginning of year 13,934 15,011
Cash at end of year 14,155 13,934
Consolidated Statement of
Changes in Equity
For the year ended 31 December
2023
Cumulative
Share Share Retained Other Equity Non-controlling
premium earnings translation reserves attributable Total
capital account to owners of interest
$'000 reserves $'000 the Company $'000
$'000 $'000 $'000
$'000
As at 1 January 13,832 514 185,893 (161,689) 1,589 40,139 235 40,374
2022
Net loss for - - (1,562) - - (1,562) 2 (1,560)
the year
Other
comprehensive - - - (3,287) - (3,287) - (3,287)
profit/loss
Total
comprehensive - - (1,562) (3,287) - (4,849) 2 (4,847)
profit/loss for
the year
As at 1 January 13,832 514 184,331 (164,976) 1,589 35,290 237 35,527
2023
Net income for - - 1,259 - - 1,259 (1) 1,258
the year
Other
comprehensive - - - (321) - (321) - (321)
profit/loss
Total
comprehensive - - 1,259 (321) - 938 (1) 937
profit/ (loss)
for the year
Acquisition of
non-controlling - - 213 - - 213 (236) (23)
interests
As at 31
December 2023 13,832 514 185,803 (165,297) 1,589 36,441 - 36,441
Notes to the Consolidated Financial Statements
For the year ended 31 December 2023
1. General information
Cadogan Energy Solutions plc (the "Company", together with its subsidiaries the "Group"), is registered in
The Group principal activity has been up to now oil and gas exploration, development and production; the Group also conducts gas trading and provides services to other E&P operators. The strategy of the Group is to expand its activities along the energy value chain, beyond current activities to new forms of energy with a reduced impact on the environment.
The Company's shares have a standard listing on the Official List of the
2. Adoption of new and revised Standards
New IFRS accounting standards, amendments and interpretations effective from 1 January 2023
The disclosed policies have been applied consistently by the Group for both the current and previous financial year with the exception of the new standards adopted.
The IFRS financial information has been drawn up on the basis of accounting policies consistent with those applied in the financial statements for the year to 31 December 2022, except for the following:
(a) IFRS 17 Insurance Contracts;
(b) Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 - Comparative Information;
(c) Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies;
(d) Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates;
(e) Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction; and
(f) Amendments to IAS 12 Income taxes: International Tax Reform - Pillar Two Model Rules (effective immediately- disclosures are required for annual periods beginning on or after 1 January 2023).
The application of the above standards has had no impact on the disclosures or the amounts recognised in the Group's consolidated financial statements.
New IFRS accounting standards, amendments and interpretations not yet effective
Below is a list of new and revised IFRSs that are not yet mandatorily effective (but allow early application) for the year ended 31 December 2023 and have not been early adopted by the Group. These standards are not expected to have a material impact on the Group in the future reporting periods and on foreseeable future transactions.
IFRS accounting standards Effective periods beginning on or after Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current 01 January 2024 and Non-current Liabilities with Covenants Amendments to IFRS 16 Leases: Lease 01 January 2024 Liability in a Sale and Leaseback Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: 01 January 2024 Disclosures: Supplier Finance Arrangements Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack 01 January 2025 of Exchangeability
3. Significant accounting policies
(a) Basis of accounting
The financial statements have been prepared in accordance with
The financial statements have been prepared on the historical cost convention basis.
The principal accounting policies adopted are set out below:
(b) Going concern
The Group's cash balance at 31 December 2023 was $14.2million (2022: $13.9 million) . The Directors consider that the funds available at the date of the issue of these financial statements are sufficient for the Group to manage its business risks and planned investments successfully and meet its ongoing liabilities as they full due for at least twelve months from the date of signing of these financial statements.
The Directors' have carried out a robust assessment of the principal risks facing the Group .
The Group's forecasts and projections, taking into account reasonably possible changes in trading activities, operational performance, flow rates for commercial production and the price of hydrocarbons sold to Ukrainian customers, show that there are reasonable expectations that the Group will be able to operate on funds currently held and those generated internally, for the foreseeable future.
Notwithstanding the Group's current financial performance and position, the Board are cognisant of the actual risks related to the war situation in
In addition to sensitivities that reflect future expectations regarding country, commodity price and currency risks that the Group may encounter reverse stress tests have been run to reflect possible negative effects of
the war in
After making enquiries and considering the uncertainties described above, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and consider the going concern basis of accounting to be appropriate and, thus, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
(c) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. IFRS 10 defines control to be investor control over an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to control those returns through its power over the investee. The results of subsidiaries disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
3. Significant accounting policies (continued)
(c) Basis of consolidation (continued)
Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. Those interests of non-controlling shareholders that are present ownership interests entitling their holders to a proportionate share of net assets upon liquidation may be initially measured at fair value or at the non-controlling interests' proportionate share of the fair value of the acquiree's identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Other non-controlling interests are initially measured at fair value.
Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company.
(d) Investments in joint ventures
Financial statements of equity-accounted entities are prepared for the same reporting year as the Group. The Group assesses investments in equity-accounted entities for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In doing so, the Group applies the criteria of IFRS 6 `Exploration for and evaluation of mineral resources' as the joint venture holds exploration phase assets. If any such indication of impairment exists, the carrying amount of the investment is compared with its recoverable amount, being the higher of its fair value less costs of disposal and value in use. If the carrying amount exceeds the recoverable amount, the investment is written down to its recoverable amount.
The Group ceases to use the equity method of accounting from the date on which it no longer has joint control over the joint venture or significant influence over the associate, or when the interest becomes classified as an asset held for sale.
(e) Revenue recognition
Revenue from contracts with customers is recognized when or as the Group satisfies a performance obligation by transferring a promised good or service to a customer. A good or service is transferred when the customer obtains control of that good or service. Revenue is measured based on measurement principles of IFRS 15 and represents amounts receivable for hydrocarbon products and services provided in the normal course of business, net of value added tax (`VAT') and other sales-related taxes, excluding royalties on production. Royalties on production are recorded within cost of sales.
The crude oil produced by the upstream operations is sold to external customers. Revenue from the sale of crude oil is recognised at the point in time when control of the product is transferred to the customer, which is typically when goods are despatched, and title has passed. The Group despatches oil at the production point (EXW incoterms) therefore the Group has no transportation and shipping costs associated with the transfer of the product to the customer.
The Group's sales of crude oil are priced based on the consideration specified in contracts with customers based on a conducted tender result on the opened tender platform. Invoices are typically paid at the day of product despatch.
3. Significant accounting policies (continued)
E&P and Trading business segments
The transfer of control of hydrocarbons usually coincides with title passing to the customer and the customer taking physical possession as the product passes a physical point such as a designated point in the pipeline for the sale of gas or loading point in the case of oil. The Group principally satisfies its performance obligations at a point in time.
To the extent that revenue arises from test production during an evaluation programme, an amount is credited to evaluation costs and charged to cost of sales, to reflect a zero-net margin.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.
(f) Foreign currencies
The functional currency of the Group's Ukrainian operations is Ukrainian Hryvnia.
The functional currency of the Group's
In preparing the financial statements of the individual companies, transactions in currencies other than the functional currency of each Group company (`foreign currencies') are recorded in the functional currency at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated into the functional currency at the rates prevailing on the balance sheet date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Foreign exchange differences on cash are recognized in operating profit or loss in the period in which they arise.
Exchange differences are recognized in the profit or loss in the period in which they arise except for exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur. This forms part of the net investment in a foreign operation, which is recognized in the foreign currency translation reserve and in profit or loss on disposal of the net investment.
For the purpose of presenting consolidated financial statements, the results and financial position of each entity of the Group, where the functional currency is not the US dollar, are translated into US dollars as follows:
i. assets and liabilities of the Group's foreign operations are translated at
the closing rate on the balance sheet date;
ii. income and expenses are translated at the average exchange rates for the
period, where it approximates to actual rates. In other cases, if exchange
rates fluctuate significantly during that period, the exchange rates at the
date of the transactions are used; and
iii. all resulting exchange differences arising, if any, are recognised in other
comprehensive income and accumulated equity (attributed to non-controlling
interests as appropriate), transferred to the Group's translation reserve.
Such translation differences are recognised as income or as expenses in the
period in which the operation is disposed of.
The relevant exchange rates used were as
follows:
Year ended 31 December Year ended 31 December
2023 2022
GBP/USD EURO/USD USD/UAH GBP/USD EURO/USD USD/UAH
Closing rate 1.2732 1.1038 38.3480 1.2104 1.0708 37.0663
Average rate 1.2440 1.0817 37.0867 1.2372 1.0539 32.4569
3. Significant accounting policies (continued)
(g) Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. This is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
In case of the uncertainty of the tax treatment, the Group assess, whether it is probable or not, that the tax treatment will be accepted, and to determine the value, the Group use the most likely amount or the expected value in determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.
(h) Other property, plant and equipment
Property, plant and equipment (`PP&E') are carried at cost less accumulated depreciation and any recognized impairment loss. Depreciation and amortisation is charged so as to write-off the cost or valuation of assets, other than land, over their estimated useful lives, using the straight-line method, on the following bases:
Other PP&E 10% to 30%
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income.
(i) Right-of-use assets
The Group leases various offices, equipment, wells, and land. Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.
Assets arising from a lease are initially measured on a present value basis.
3. Significant accounting policies (continued)
Right-of-use assets are measured at cost comprising the following:
· the amount of the initial measurement of lease liability,
· any lease payments made at or before the commencement date less any lease incentives received,
· any initial direct costs, and
· costs to restore the asset to the conditions required by lease agreements.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.
(j) Intangible exploration and evaluation assets
The Group applies the modified full cost method of accounting for intangible exploration and evaluation (`E&E') expenditure, which complies with requirements set out in IFRS 6 Exploration for and Evaluation of Mineral Resources . Under the modified full cost method of accounting, expenditure made on exploring for and evaluating oil and gas properties is accumulated and initially capitalized as an intangible asset, by reference to appropriate cost centres being the appropriate oil or gas property. E&E assets are then assessed for impairment on a geographical cost pool basis, which are assessed at the level of individual licences.
E&E assets comprise costs of (i) E&E activities which are in progress at the balance sheet date, but where the existence of commercial reserves has yet to be determined (ii) E&E expenditure which, whilst representing part of the E&E activities associated with adding to the commercial reserves of an established cost pool, did not result in the discovery of commercial reserves.
Costs incurred prior to having obtained the legal rights to explore an area are expensed directly to the income statement as incurred.
Exploration and Evaluation costs
E&E expenditure is initially capitalised as an E&E asset. Payments to acquire the legal right to explore, costs of technical services and studies, seismic acquisition, exploratory drilling, and testing are also capitalised as intangible E&E assets.
Tangible assets used in E&E activities (such as the Group's vehicles, drilling rigs, seismic equipment and other property, plant and equipment) are normally classified as PP&E. However, to the extent that such assets are consumed in developing an intangible E&E asset, the amount reflecting that consumption is recorded as part of the cost of the intangible asset. Such intangible costs include directly attributable overheads, including the depreciation of PP&E items utilised in E&E activities, together with the cost of other materials consumed during the exploration and evaluation phases.
E&E assets are not amortised prior to the conclusion of appraisal activities.
Treatment of E&E assets at conclusion of appraisal activities
Intangible E&E assets related to each exploration property are carried forward, until the existence (or otherwise) of commercial reserves has been determined. If commercial reserves have been discovered, the related E&E assets are assessed for impairment on individual assets basis as set out below and any impairment loss is recognized in the income statement. Upon approval of a development programme, the carrying value, after any impairment loss, of the relevant E&E assets is reclassified to the development and production assets within PP&E.
Intangible E&E assets which relate to E&E activities that are determined not to have resulted in the discovery of commercial reserves remain capitalised as intangible E&E assets at cost less accumulated amortization, subject to meeting a pool-wide impairment test in accordance with the accounting policy for impairment of E&E assets set out below.
3. Significant accounting policies (continued)
Impairment of E&E assets
E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable amount. Such indicators include, but are not limited to those situations outlined in paragraph 20 of IFRS 6 Exploration for and Evaluation of Mineral Resources such as, a) license expiry during year or in the near future and will not likely to be renewed; b) expenditure on E&E activity neither budgeted nor planned; c) commercial quantities of mineral resources have been discovered; and d) sufficient data exist to indicate that carrying amount of E&E asset is unlikely to be recovered in full from successful development or sale.
Where there are indications of impairment, the E&E assets concerned are tested for impairment. Where the E&E assets concerned fall within the scope of an established full cost pool, which are not larger than an operating segment, they are tested for impairment together with all development and production assets associated with that cost pool, as a single cash generating unit.
The aggregate carrying value of the relevant assets is compared against the expected recoverable amount of the pool, generally by reference to the present value of the future net cash flows expected to be derived from production of commercial reserves from that pool. Where the assets fall into an area that does not have an established pool or if there are no producing assets to cover the unsuccessful exploration and evaluation costs, those assets would fail the impairment test and be written off to the income statement in full.
Impairment losses are recognized in the income statement and are separately disclosed.
(k) Development and production assets
Development and production assets are accumulated on a field-by-field basis and represent the cost of developing the commercial Reserves discovered and bringing them into production, together with E&E expenditures incurred in finding commercial Reserves transferred from intangible E&E assets.
The cost of development and production assets comprises the cost of acquisitions and purchases of such assets, directly attributable overheads, finance costs capitalised, and the cost of recognising provisions for future restoration and decommissioning.
Depreciation of producing assets
Depreciation is calculated on the net book values of producing assets on a field-by-field basis using the unit of production method. The unit of production method refers to the ratio of production in the reporting year as a proportion of the Proved and Probable Reserves of the relevant field based on assessments of internal geologists utilising the most recent Competent Person Report and subsequent drilling and exploration, taking into account future development expenditures necessary to bring those Reserves into production.
Producing assets are generally grouped with other assets that are dedicated to serving the same Reserves for depreciation purposes, but are depreciated separately from producing assets that serve other Reserves.
(l) Impairment of development and production assets and other property, plant and equipment
At each balance sheet date, the Group reviews the carrying amounts of its PP&E to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
3. Significant accounting policies (continued)
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. In determining fair value less cost to sell, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. Such cash flows include relevant development expenditure that a market participant would reasonably be expected to undertake.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognized as income immediately.
(m) Inventories
Oil and gas stock and spare parts are stated at the lower of cost and net realisable value. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is allocated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
(n) Financial instruments
Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the Group becomes party to the contractual provisions of the instrument.
Loan classified at amortised cost
Loan is measured at the amount recognised at initial recognition minus principal repayments, plus or minus the cumulative amortisation of any difference between that initial amount and the maturity amount, and any loss allowance. Interest income is calculated using the effective interest method and is recognised in profit and loss. Changes in fair value are recognised in profit and loss when the asset is derecognised or reclassified. In accordance with IFRS 9, the loan is measured at amortised cost. The Group applies the simplified approach to providing for expected credit losses (ECL) prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for the loan. Expected credit losses are assessed on a forward-looking basis. The loss allowance is measured at initial recognition and throughout its life at an amount equal to lifetime ECL. Any impairment is recognized in the income statement.
Trade and other payables
Payables are initially measured at fair value, net of transaction costs and are subsequently measured at amortized cost using the effective interest method.
3. Significant accounting policies (continued)
Trade and other receivables
Trade and other receivables are recognised initially at their transaction price in accordance with IFRS 9 and are subsequently measured at amortised cost. The Group applies the simplified approach to providing for expected credit losses (ECL) prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. Expected credit losses are assessed on a forward-looking basis. The loss allowance is measured at initial recognition and throughout its life at an amount equal to lifetime ECL. Any impairment is recognised in the income statement.
Cash
Cash comprise cash on hand and on-demand deposits. Deposits are recorded as cash and cash equivalents when they have a maturity of less than 90 days at inception.
(o) Equity instruments
Ordinary shares are classified as equity. Equity instruments issued by the Company and the Group are recorded at the proceeds received, net of direct issue costs. Any excess of the fair value of consideration received over the par value of shares issued is recorded as share premium in equity.
(p) Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
(q) Decommissioning
A provision for decommissioning is recognized in full when the related facilities are installed. The decommissioning provision is calculated as the net present value of the Group's share of the expenditure expected to be incurred at the end of the producing life of each field in the removal and decommissioning of the production, storage and transportation facilities currently in place. The cost of recognising the decommissioning provision is included as part of the cost of the relevant asset and is thus charged to the income statement on a unit of production basis in accordance with the Group's policy for depletion and depreciation of tangible non-current assets. Period charges for changes in the net present value of the decommissioning provision arising from discounting are included within finance costs.
(r) Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Service agreements for equipment on the working sites are not considered leases as, based upon an assessment of the terms and nature of their contractual arrangements, the contracts do not convey the right to control the use of an identified asset.
The right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
3. Significant accounting policies (continued)
The asset is depreciated to the earlier of the end of the useful life of the right-of-use asset or the lease term using the straight-line method as this most closely reflects the expected pattern of consumption of the future economic benefits. The lease term includes periods covered by an option to extend if the Group is reasonably certain to exercise that option. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental borrowing rate. The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or the effect is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group elected to apply the practical expedient not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group also made use of the practical expedient to not recognise a right-of-use asset or a lease liability for leases for which the lease term ends within 12 months of the date of initial application.
The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term.
1. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are described in note 3, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of the assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both the current and future periods.
The following are the critical judgements and estimates 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.
Critical judgements and estimates
(a) Impairment indicator assessment for E&E assets
Cadogan had fully complied with legislative requirements and submitted its application for a 20-year exploration and production license 5 months before its expiry on 23 December 2019. A decision on the award was expected to be provided by State Geological Service of
In 2022, the claims of Usenco Nadra have been rejected by the Court of 1st Instance, the Court of Appeal and the Supreme Court.
Considering the current circumstances, the Bitlyanska license were fully impaired in 2021.
4. Critical accounting judgements and key sources of estimation uncertainty (continued)
(b) Impairment of PP&E
Management assesses its development and production assets for impairment indicators and if indicators of impairment are identified performs an impairment test. Management performed an impairment assessment using a discounted cash flow model which required estimates including forecast oil prices, reserves and production, costs and discount rates (note 17).
This test compares the carrying value of the assets at the reporting date with the expected discounted cash flows from each project prepared under the fair value less cost of disposal approach. For the discounted cash flows to be calculated, management has used a production profile based on its best estimate of proven and probable reserves of the assets and a range of assumptions, including an internal oil and gas price profile benchmarked to mean analysts' consensus and third party estimates and a discount rate which, taking into account other assumptions used in the calculation, management considers to be reflective of the risks.
This assessment involves judgement as to (i) the likely commerciality of the asset, (ii) proven (`1P') reserves which are estimated using standard recognised evaluation techniques (iii) future revenues and estimated development costs pertaining to the asset, (iv) the discount rate to be applied for the purposes of deriving a recoverable value including estimates of the relevant levels of risk premiums applied to the assets.
The carrying amount of PP&E assets at 31 December 2023 was $6.1 million. The impairment assessment was identified at the level of $8.8 million, Thus, no other impairment was identified.
(c) Recoverability and measurement of VAT
Judgment is required in assessing the recoverability of VAT assets and the extent to which historical impairment provisions remain appropriate, particularly noting the recent recoveries against historically impaired VAT. In forming this assessment, the Group considers the nature and age of the VAT, the likelihood of eligible future supplies to VAT, the pattern of recoveries and risks and uncertainties associated with the operating environment (note 9).
Historically, the general volume of accumulated VAT credit was fully reserved as there were no permanent sources of its utilisation yet (at 31 December 2023: $0.9 million). However, over the course of the year, the Group managed to realise $0.1 million, and the reserve was accordingly reversed (note 9).
(d) Proger Loan recoverability
The recoverability of the carrying value of the loan to PMP represents a significant accounting judgment. In making their assessment over estimated recoverability of the loan, management considered the projected outcome of arbitration, assessment of the security provided by the pledge over shares, and the delay in the recovery of the expected amount. As a result, management concluded that $17.1 million represents its best estimate of recoverable amount as at 31 December 2023 (2022: $15.8 million). For further detail please refer to note 28.
(e) Well services and rental agreements
The Group's well rental arrangements in
(f) Deferred tax assets
Deferred tax assets and liabilities require management judgement in determining the amounts to be recognised. In particular, significant judgement is used when assessing the extent to which deferred tax assets should be recognised, with consideration given to the timing and level of future taxable income in the relevant tax jurisdiction.
4. Critical accounting judgements and key sources of estimation uncertainty (continued)
Deferred tax assets are recognised only to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when those deferred tax assets are likely to reverse, and a judgement as to whether or not there will be sufficient taxable profits available to offset the tax assets when they do reverse. This requires assumptions regarding future profitability and is therefore inherently uncertain. To the extent assumptions regarding future profitability change, there can be an increase or decrease in the level of deferred tax assets recognised that can result in a charge or credit in the period in which the change occurs.
(g) Determination of oil and gas reserves
Proven oil and gas reserves is the expected quantity of crude oil, natural gas and gas condensate liquids, the geological and engineering features of which reliably indicate that such reserves can be produced from known deposits within future years under existing economic and operating conditions. Proven developed reserves are reserves that are expected to be produced through the use of existing wells using existing equipment and operating methods. The determination of the level of oil and gas reserves is inherently characterised by uncertainty and requires the use of professional judgment and periodic revisions in the future. All proven reserves are subject to revision in accordance with new information regarding exploration drilling, production activity or changes in economic factors, including commodity prices, contract terms and exploration plans. Accordingly, financial and accounting estimates based on proven reserves are also subject to changes.
Changes in the level of proven developed reserves, affect the depreciation charges recognised in the financial statements in the property, plant and equipment item related to development and production assets. Such changes, for example, can be both the result of production and revision of estimates. A reduction in proven developed reserves will increase depreciation charges (provided constant production) and will also increase costs.
The last independent valuation of the Group's oil and gas reserves was carried out as at 31 December 2023.
(h) Depreciation of wells related to hydrocarbon production
Wells related to the production of hydrocarbons (hereinafter referred to as "Wells") are depreciated using the unit of production method. The cost of Wells is depreciated based on the available reserves of the relevant hydrocarbons categories (proven developed produced), estimated in accordance with the standards of the Petroleum Resources Management System (PRMS), prepared by the Oil and Gas Reserves Committee of the
(i) Depreciation of special subsoil use permits related to hydrocarbon extraction
Special permits for the subsoil use, which grant the right to extract hydrocarbons (hereinafter referred to as the "Permit"), are depreciated using the unit of production method. The cost of the Permit is depreciated based on the volumes of available reserves of the relevant hydrocarbons of the proved, probable and possible categories assessed in accordance with SPE-PRMS.
(j) Decommissioning costs
The provision for asset decommissioning represents the present value of costs of decommissioning oil and gas facilities that are expected to be incurred in the future (Note 25). These provisions were recognised based on the Company's internal estimates. The underlying estimates include future market prices for the required decommissioning costs and are based on market conditions and factors, as well as a discount rate. An additional uncertainty relates to the deadline of decommissioning costs, which depend on the field depletion, future oil and gas prices and, as a result, the expected point in time when future economic benefits from production are not expected to be realised. Changes in these estimates may result in changes in the provisions recognised in the Statement of financial position.
5. Segment information
Segment information is presented on the basis of management's perspective and relates to the parts of the Group that are defined as operating segments. Operating segments are identified on the basis of internal reports provided to the Group's chief operating decision maker ("CODM"). The Group has identified its senior management team as its CODM and the internal reports used by the senior management team to oversee operations and make decisions on allocating resources serve as the basis of information presented. These internal reports are prepared on the same basis as these consolidated financial statements.
Segment information is analysed on the basis of the type of activity, products sold, or services provided. The majority of the Group's operations and all Group's revenues are located within
Exploration and Production
# E&P activities on the exploration and production licences for natural gas, oil and condensate.
Trading
# Import of natural gas from European countries; and # Local purchase and sales of natural gas operations with physical delivery of natural gas.
The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 3. Sales between segments are carried out at rates considered to approximate market prices. The segment result represents operating profit under IFRS before unallocated corporate expenses. Unallocated corporate expenses include management remuneration, representative expenses and expenses incurred in respect of the maintenance of office premises. This is the measure reported to the CODM for the purposes of resource allocation and assessment of segment performance. The Group does not present information on segment assets and liabilities as the CODM does not review such information for decision-making purposes.
As at 31 December 2023 and for the year then ended the Group's segmental information was as follows:
Exploration and Production Trading Consolidated
$'000 $'000 $'000
Sales of hydrocarbons 7,141 403 7,544
Other revenue 6 - 6
Sales between segments - - -
Total revenue 7,147 403 7,550
Cost of sales (4,991) (400) (5,391)
Administrative expenses (497) (118) (615)
Impairment of other assets (49) - (49)
Adjustments of end of concession 218 - 218
obligations for E&E assets
Other operating income, net 25 - 25
Reversal of impairment of other 2 54 56
assets
Finance income (1) 431 - 431
Segment results 2,286 (61) 2,225
Unallocated administrative - - (2,959)
expenses
Finance income/costs, net - - 1,454
Net foreign exchange gain - - 538
Profit before tax 1,258
(1)
Net finance income includes $431,000 of interest on cash deposits in
5.Segment information (continued)
As at 31 December 2022 and for the year then ended the Group's segmental information was as follows:
Exploration and Production Trading Consolidated
$'000 $'000 $'000
Sales of hydrocarbons 8,465 - 8,465
Other revenue 7 - 7
Sales between segments - - -
Total revenue 8,472 - 8,472
Cost of sales (5,553) - (5,553)
Administrative expenses (450) (125) (575)
Impairment of oil and gas assets (269) - (269)
Other operating expenses, net (3) - (3)
Impairment of other assets (16) (11) (27)
Reversal of impairment of other 20 - 20
assets
Finance income (2) 185 - 185
Segment results 2,386 (136) 2,250
Unallocated administrative - - (2,866)
expenses
Other income, net(3) - - 187
Net foreign exchange loss - - (1,131)
Loss before tax (1,560)
(2) Net finance income includes $185,000 of interest on cash deposits used for operations.
.
Fixed assets related to Exploration and Production segment are disclosed in the note 17.
1. Revenue
2023 2022
$'000 $'000
Sale of oil (production) - point in time 7,147 8,472
Sale of gas(trading) - point in time 403 -
Total 7,550 8,472
Revenue is generated in
Information about major customers
81% of production business segment revenue arose from sales to five largest customers. Three of them contributed for more than 10% of the total revenue of the production business segment revenue for the year ended 31 December 2023.
80% of prior year production business segment revenue arose from sales to five largest customers. Each of them contributed for more than 10% of the total revenue of the production business segment revenue for the year ended 31 December 2022.
Trading segment revenue for the year ended 31 December 2023 of $0.4 million arose from sales transactions with one customer (2022: no activities).
1. Cost of sales
2023 2022
$'000 $'000
Subsoil tax 2,668 3,522
Natural Gas cost 400 -
Well rent 699 789
Depreciation 713 536
Staff cost 237 245
Insurance 204 34
Materials cost 126 143
Machinery services 115 111
Electricity 80 67
Security services 68 65
Other expenses 81 41
Total 5,391 5,553
1. Administrative expenses
2023 2022
$'000 $'000
Staff 1,805 1,774
Professional fees 1,051 872
Insurance 188 215
Depreciation 169 217
Office costs including utilities and maintenance 57 51
IT and communication 43 62
Cars and travel 43 61
Bank charges 23 34
Travelling 23 9
Other 172 146
Total 3,574 3,441
1. Reversal of impairment/(impairment) of other assets
2023 2022
$'000 $'000
Inventory - 20
VAT recoverable 54 -
Other receivables 2 -
Reversal of impairment of other assets 56 20
$0.9 million (2022: $1.0 million) of historical VAT receivables remain impaired. Refer to Note 4 and 20.
2023 2022
$'000 $'000
Inventories (44) -
Other assets (5) (16)
VAT recoverable - (11)
Impairment of other assets (49) (27)
1. Other operating income/(expenses), net
2023 2022
$'000 $'000
Other income/(expenses) 25 (3)
Total 25 (3)
1. Auditor's remuneration
The analysis of auditor's remuneration is as follows:
2023 2022
$'000 $'000
Audit fees
Fees payable to the Company's auditor and the component auditor for 192 192
the audit of the Company's annual accounts
Fees payable to the Company's auditor and the component auditor for
other services to the Group:
- The audit of the Company's subsidiaries 8 8
Total audit fees 200 200
12. Staff costs
The average monthly number of employees (including Executive Directors) was:
2023 2022
Number Number
Executive Director 1 1
Other employees 73 74
Total 74 75
Total number of employees at 31 December 74 75
$'000 $'000
Their aggregate remuneration comprised:
Wages and salaries 1,520 1,596
Social security costs 207 227
Pension costs 78 74
Total 1,805 1,897
13. Finance income/(costs), net
2023 2022
$'000 $'000
Interest on loan (note 28) 757 38
Reversal of liability accrual 395 -
Interest income on cash deposits in United Kingdom 367 97
Interest income on cash deposits in Ukraine 431 185
Change in provision (note 25) - 93
Total interest income on financial assets 1,950 413
Interest on lease (10) (18)
Unwinding of discount on decommissioning provision (note 25) (55) (23)
Total 1,885 372
14. Tax
2023 2022
$'000 $'000
Current tax - -
Deferred tax - -
Total - -
The Group's operations are conducted primarily outside the
The taxation charge for the year can be reconciled to the profit/(loss) per the income statement as follows:
2023 2022
$'000 $'000
Profit/(loss) before tax 1,258 (1,560)
Tax charge/(credit) at Ukraine corporation tax rate of 18% (2022: 226 (281)
18%)
Permanent differences (583) (1,361)
Unrecognised tax losses generated in the year 47 1,682
Recognition of previously unrecognised deferred tax assets 318 -
Effect of different tax rates (8) (40)
- -
Adjustments recognised in the current year in relation
- -
with the current tax of prior years
Income tax (benefit)/expense recognised in profit or loss - -
Permanent differences mostly represent items, including provisions, accruals and impairments related to taxation in
15. Earnings/(Loss) per Ordinary share
2023 2022
Earnings/(Loss) attributable to owners of the Company
$'000 $'000
Earnings/(Loss) for the purposes of basic loss per share being 1,259 (1,562)
net loss attributable to owners of the Company
Number Number
Number of shares
`000 `000
Weighted average number of Ordinary shares used in calculation
of earnings per share:
Basic 244,128 244,128
Diluted 244,128 244,128
Cent Cent
Earnings/(Loss) per Ordinary share
Basic and diluted 0.5 (0.6)
Basic earnings/(loss) per Ordinary share is calculated by dividing the net profit/(loss) for the year attributable to owners of the Company by the weighted average number of Ordinary shares outstanding during the year. In 2022 the Group generated a loss and therefore there is no difference between basic and diluted EPS.
16. Intangible exploration and evaluation assets
Cost $'000 At 1 January 2022 16,701 Additions - Disposals (5,878) Change in estimate of decommissioning assets (note 25) 269 Exchange differences (3,577) At 1 January 2023 7,515 Additions 1 Disposals (615) Change in estimate of decommissioning assets (note 25) (218) Exchange differences (224) At 31 December 2023 6,459 Impairment At 1 January 2022 16,701 Disposals (5,878) Change in estimate of decommissioning assets (note 25) 269 Exchange differences (3,577) At 1 January 2023 7,515 Addition 1 Disposals (615) Change in estimate of decommissioning assets (note 25) (218) Exchange differences (224) At 31 December 2023 6,459 Carrying amount At 31 December 2023 - At 31 December 2022 -
Disposals of $0.6 million relates to E&E assets impaired in previous years. The Company analysed the possibilities to realise any benefit from those assets. In 2023, based on the conducted analysis, management decided to write-off of those assets.
The carrying amount of E&E assets at 31 December 2023 relates to the Bitlyanska license.
Usenco Nadra has fully complied with legislative requirements and submitted its application for a 20-year exploration and production license 5 months before its expiry on 23 December 2019. A decision on the award was expected to be provided by State Geological Service of
After the rejection of its claims, in February 2022, the Company exercised its right for appeal. The Appeal Court and further on the Supreme Court rejected all the Company's claims.
The Company fully impaired the Bitlyanska license in 2022.
17. Property, plant and equipment
Development
and Other Total
Cost
production assets $'000 $'000
$'000
At 1 January 2022 14,567 2,930 17,497
Additions 71 30 101
Disposal (701) (7) (708)
Exchange differences (3,651) (753) (4,404)
At 1 January 2023 10,286 2,200 12,486
Additions 43 15 58
Change in estimate of decommissioning assets 20 - 20
(note 25)
Disposal (1,734) (1,160) (2,894)
Exchange differences (288) (35) (323)
At 31 December 2023 8,327 1,020 9,347
Accumulated depreciation and impairment
At 1 January 2022 5,273 2,626 7,899
Charge for the year 604 68 672
Disposals (693) (7) (700)
Exchange differences (1,338) (680) (2,018)
At 1 January 2023 3,846 2,007 5,853
Charge for the year 692 37 729
Disposals (1,711) (1,167) (2,878)
Exchange differences (95) (30) (125)
At 31 December 2023 2,732 847 3,579
Carrying amount
At 31 December 2023 5,595 173 5,768
At 31 December 2022 6,440 193 6,633
Other property, plant and equipment include fixtures and fittings for the development and production activities.
Disposals of $1.2 million relate to Other PP&E assets impaired in previous years. Company analysed the possibility to realise any benefit from those assets. In 2023, based on the conducted analysis management decided to dispose of those assets.
The carrying amount of development and production assets at 31 December 2023 of $5.6 million relates to the Blazhiv license. Depreciation includes $0.7 million for the Blazhiv license.
Disposals of $1.7 million relate to D&P assets impaired in previous years. The Company was analysing the possibility to realise any benefits from those assets. In 2023, based on the conducted analysis management decided to dispose of those assets.
Management has performed an impairment review of Development and production assets based on the underlying discounted cash flow forecasts. The impairment review supported the conclusion that no impairment was applicable. Key assumptions used in the impairment assessment were: future oil prices which were assumed at a constant $467 (2022: $408), real per tonne; a production forecast with a natural decline; estimated reserves and a discount rate of 25%.
1. Property, plant and equipment (continued)
Sensitivity analysis for the Development and production assets
Any impairment is dependent on judgement used in determining the most appropriate basis for the assumptions and estimates made by management, particularly in relation to the key assumptions described above. Sensitivity analysis to potential changes in key assumptions to reach break-even has been provided below:
Change in the assumptions to be break-even Oil price (28 %) Oil production volumes (23 %) Discount rate 56 %
18. Subsidiaries
The Company had investments in the following subsidiary undertakings at 31 December 2023:
Country of Proportion
incorporation
Name of voting Activity Registered office
and operation
interest %
Directly held
6th Floor 60
Cadogan Petroleum UK 100 Holding company Gracechurch Street,
Holdings Ltd London, United
Kingdom, EC3V 0HR
Indirectly held
Cadogan Petroleum Netherlands 100 Holding company Hoogoorddreef 15,
Holdings BV 1101 BA Amsterdam
Cadogan Bitlyanske Netherlands 100 Holding company Hoogoorddreef 15,
BV 1101 BA Amsterdam
Zagoryanska Netherlands 100 Holding company Hoogoorddreef 15,
Petroleum BV 1101 BA Amsterdam
48/50a, Zhylyanska
LLC Cadogan Ukraine Ukraine 100 Holding company Street, Kyiv,
Ukraine
5a, Pogrebnyak
LLC Street, ap. 2,
Astroinvest-Energy Ukraine 100 Trading Zinkiv, Poltava
region, Ukraine,
38100
8, Mitskevycha
SE USENCO Ukraine Ukraine 100 Production sq.,Lviv,
Ukraine,79000
9a, Karpenka-Karoho
LLC USENCO Nadra Ukraine 100 Production str., Sambir, Lviv
region, Ukraine
3 Petro Kozlaniuk
LLC Astro-Service Ukraine 100 Service Company str, Kolomyia,
Ukraine
Via Adige 17, San
Exploenergy s.r.l. Italy 90 Exploration Donato Milanese_
Milano, CAP 20097,
Italy
In April 2023, SE Usenco Ukraine (a Cadogan subsidiary in
In 2023, the liquidation procedure of the company LLC Asto Gas was fully completed.
There were no other changes to the Group structure during 2023.
19. Inventories
2023 2022
$'000 $'000
Natural gas 265 45
Crude oil 105 182
Other inventories 1,116 1,184
Impairment provision (1,122) (1,116)
Carrying amount 364 295
A part of other inventories was sold to the third parties of $68,000.
2023 2022
$'000 $'000
At 1 January 1,116 1,523
Accrual of provision 52 -
Reversal of provision (8) (20)
Exchange differences (38) (387)
At 31 December 1,122 1,116
The impairment provision at 31 December 2023 and 2022 is made so as to reduce the carrying value of the inventories to the net realizable value and includes $1,070,000 provision for other inventories, and $52,000 provision for natural gas (2022: $1,116,000 provision for other inventories).
20. Trade and other receivables
2023 2022
$'000 $'000
Trade receivables 68 192
Impairment provision for bad debts (49) (52)
VAT recoverable 1,097 1,080
Impairment provision for VAT (918) (1,003)
Prepayments 81 60
Other receivables 31 41
310 318
2023 2022
VAT recoverable Trade and Other VAT recoverable Trade and Other
Receivables Receivables
$'000 $'000 $'000 $'000
At 1 January 1,003 52 1,335 53
Accrual of - - 11 16
provision
Reversal of (54) (2) - -
provision
Exchange (31) (1) (343) (17)
differences
At 31 December 918 49 1,003 52
The Group considers that the carrying value of receivables approximates their fair value.
VAT recoverable is presented net of the cumulative provision of $0.9million (2022: $1.0 million) against Ukrainian VAT receivable that has been recognised as at 31 December 2023. VAT recoverable relates to the oil production and gas trading operations and is expected to be recovered through the gas and oil sales VAT.
21. Notes supporting statement of cash flows
Cash at 31 December 2023 of $14.2 million (2022: $13.9 million) comprise cash held by the Group. Ukrainian subsidiaries of the Group hold $5.4million as at 31 December 2023 (2022: $3.6 million).
With the start of the Russian invasion into
The Directors consider that the carrying amount of these assets approximates to their fair value. There were no cash transactions from financing activities for the year 2023.
22. Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior reporting period:
Temporary differences
$'000
Asset at 1 January 2022 431
Deferred tax benefit -
Exchange differences (112)
Asset at 1 January 2023 319
Deferred tax benefit -
Exchange differences 51
Asset at 31 December 2023 370
At 31 December, the Group had the following unused tax losses available for offset against future taxable profits:
2023 2022
$'000 $'000
UK 18,197 17,541
Ukraine 42,113 43,138
60,310 60,679
Deferred tax assets have been recognised in respect of those tax losses where there is sufficient certainty that profit will be available in future periods against which they can be utilised. The Group's unused tax losses of $18.2 million (2022: $17.5 million) relating to losses incurred in the
Unused tax losses incurred by
23. Lease liabilities
The Group continued to recognise right-of-use assets and lease liabilities based on a rental contract for the rent of a
Right-of-use assets
$'000
Cost 292
Accumulated depreciation (92)
At 1 January 2022 200
Depreciation charge for the year (92)
At 1 January 2023 108
Cost 292
Accumulated depreciation (184)
At 1 January 2023 108
Additions 230
Depreciation charge for the year (92)
At 31 December 2023 246
Cost 522
Accumulated depreciation (276)
At 31 December 2023 246
The following table sets out a maturity analysis of lease liability, showing the undiscounted lease payments to be paid after the reporting date.
2023 2022
$'000 $'000
2023 - 99
2024 95 20
2025 88 -
2026 92 -
2027 8 -
Less: unearned interest (48) (12)
Lease liabilities 235 107
2023 2022
$'000 $'000
Analysed as:
Current 87 79
Non-current 148 28
Lease liabilities 235 107
24. Trade and other payables
2023 2022
$'000 $'000
Accruals 430 281
Trade payables 140 569
Prepayments received 54 32
Other payables 742 519
1,366 1,401
Trade payables and accruals principally comprise amounts outstanding for ongoing costs. The average credit period taken for trade purchases is 29 days (2022: 30 days). The Group has financial risk management policies to ensure that all payables are paid within the credit timeframe.
Other payables include unused vacation reserve provision of $0.39 million (2022: $0.37 million), subsoil tax payables of $0.22 million (2022: $0.13) and other payables of $0.13 million (2022: $0.02).
The Directors consider that the carrying amount of trade and other payables approximates to their fair value. No interest is generally charged on outstanding balances.
25. Provisions
The provisions at 31 December 2023 comprise $0.2 million (2022: $0.4 million) of decommissioning provision.
Decommissioning
$'000
At 1 January 2022 300
Change in estimate: exploration and evaluation assets (note 16) 269
Change in estimate: development and production assets (93)
Unwinding of discount on decommissioning provision (note 13) 23
Exchange differences (102)
At 1 January 2023 397
Change in estimate: exploration and evaluation assets (note 16) (218)
Change in estimate: development and production assets 20
Unwinding of discount on decommissioning provision (note 13) 55
Exchange differences (9)
At 31 December 2023 245
$'000
Non-current 261
Current 136
At 31 December 2022 397
Non-current 114
Current 131
At 31 December 2023 245
In accordance with the Group's environmental policy and applicable legal requirements as of 31 December 2023 the Group intends to restore the sites it is working on after completing the development activities.
Provision for the decommissioning and site restoration used by development and production assets has been increased by $20,000 due to change in discounting rate used for the provision calculation (2023: 17%; 2022: 21%). The change in the provision has been recognised as other financial income/(loss) for the year together with unwinding of discount on decommissioning provision.
25. Provision (continued)
A long-term provision of $0.11 million (2022: $0.26 million) has been made for decommissioning costs for Borynya-3 well, which is expected to be incurred in 2039, and Blazhiv-10 well, which is to be incurred at the end of Blazhiv licenses period as a result of the demobilisation of oil and gas facilities and respective site restoration. Current provision of $0.13 million (2022: $0.14 million) has been made for decommissioning costs, which are expected to be incurred in 2024 as a result of the demobilisation of oil and gas facilities and respective site restoration on Bitlyanska license.
26. Share capital
Authorised and issued equity share capital
2023 2022
Number (`000) $'000 Number (`000) $'000
Authorised
1,000,000 57,713 1,000,000 57,713
Ordinary shares of £0.03 each
Issued
244,128 13,832 244,128 13,832
Ordinary shares of £0.03 each
Authorised but unissued share capital of £30 million has been translated into US dollars at the historic exchange rate of the issued share capital. The Company has one class of Ordinary shares, which carry no right to fixed income.
Issued equity share capital
Ordinary shares
of £0.03
At 31 December 2021 244,128,487
Issued during year -
At 31 December 2022 244,128,487
Issued during year -
At 31 December 2023 244,128,487
27. Other reserves
Reorganisation
$'000
At 1 January 2023 1,589
Charge for the year -
At 31 December 2023 1,589
The accumulated amount of reserves at 31 December 2023 is made as accounting entry relating to the acquisition of CPHL by PLC by means of share exchange in 2006. This was not deemed to be a business combination as there was no change in control.
28. Financial instruments
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern, while maximising the return to shareholders.
The capital resources of the Group consist of cash arising from equity attributable to owners of the Company, comprising issued capital, reserves and retained earnings as disclosed in the Consolidated Statement of Changes in Equity.
Externally imposed capital requirement
The Group is not subject to externally imposed capital requirements.
Categories of financial instruments
2023 2022
$'000 $'000
Financial assets (includes cash)
Loan provided at amortised cost 17,074 15,825
Cash 14,155 13,934
Trade and other receivables - amortised cost 50 181
31,279 29,940
Financial liabilities - measured at amortised cost
Trade payables 140 569
Lease liabilities 235 107
Accruals 430 281
Other payables 742 519
1,547 1,476
Financial assets at fair Financial assets at
value through profit and amortised cost
loss
$'000
$'000
As at 1 January 2021 16,812 -
Reclassification from FVPL (16,812) 16,812
to AC
Addition 1,225
Exchange differences (1,313)
As at 31 December 2021 16,724
The Proger loan is recorded at management's best estimate of recoverable amount as set out in note 4 (d) although management have not been able to undertake a valuation exercise under the income method based on Proger's underlying cash flows or market-based method which would incorporate relevant recent financial information on the investee or its prospects.
The Group has previously applied a level 3 valuation under IFRS as inputs to the valuation have included assessment of the cash repayments anticipated under the loan terms at maturity, delayed by the arbitration process requested by PMP (the Borrower), historical financial information for the periods prior to 2020 and assessment of the security provided by the pledge over shares together with the impact of the Covid-19 on the activity of Proger. As a result, $ 16.8 million was determined as the best estimate of fair value as at 31 December 2020, being equal to anticipated receipts and timing thereof discounted at an estimated market rate of interest of 7.8%.
In February 2021, Cadogan notified PMP that according to the Loan Agreement, the Maturity Date occurred on 25 February 2021. As the Call Option was not exercised, PMP must fulfil the payment of EUR 14,857,350, being the reimbursement of the Loan in terms of principal and the accumulated interest. PMP is in default since 25 February 2021. In case of default payment, the terms of the agreement provide for the application of an increased interest rate on the amount of the debt.
28. Financial instruments (continued)
Since the Call Option was not exercised before the Maturity Date and the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows, the Loan provided was reclassified from `Financial assets at fair value through profit and loss' to `Financial assets at amortised cost'.
$'000 As at 1 January 2022 16,724 Movement in accrued interest 1,338 Movement in accrued provision (1,300) Exchange differences (937) As at 1 January 2023 15,825 Movement in accrued interest 1,457 Movement in accrued provision (700) Exchange differences 492 As at 31 December 2023 17,074
Financial risk management objectives
Management co-ordinates access to domestic and international financial markets and monitors and manages the financial risks relating to the operations of the Group in
The Audit Committee of the Board reviews and monitors risks faced by the Group at meetings held throughout the year.
Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect the value of the financial instruments. The Group is not exposed to interest rate risk because entities of the Group borrow funds at fixed interest rates.
Commodity price risk
The commodity price risk related to Ukrainian gas and condensate prices and prices for crude oil are the Group's most significant market risk exposures. World prices for gas and crude oil are characterised by significant fluctuations that are determined by the global balance of supply and demand and worldwide political developments, including actions taken by the Organization of Petroleum Exporting Countries.
The Group does not hedge market risk resulting from fluctuations in gas, condensate and oil prices, and holds no financial instruments, which are sensitive to commodity price risk.
Foreign exchange risk and foreign currency risk management
The Group holds a large portion of its monetary assets in the US Dollars and Euro, mitigating the exchange risk between the US Dollars and Euro and monetary liability in the US Dollars.
28. Financial instruments (continued)
Sensitivity analysis is represented below based on 10% exchange rate deviation:
Change in
As at 31 December 2023 EURO/USD
exchange rate
$'000 +10% -10%
Cash positions 14,155 178 (178)
Loan receivable at amortised cost 17,074 1,707 (1,707)
Net assets 36,411 1,885 (1,885)
Inflation risk management
Inflation in
Credit risk management
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group's credit management process includes the assessment, monitoring and reporting of counterparty exposure on a regular basis. Credit risk with respect to receivables is mitigated by active and continuous monitoring the credit quality of its counterparties through internal reviews and assessment. There was no material past due receivables as at year end.
The Group makes allowances for expected credit losses on receivables in accordance with its accounting policy.
The credit risk on liquid funds (cash) is considered to be limited because the counterparties are financial institutions with high and good credit ratings, assigned by international credit-rating agencies in the
The carrying amount of financial assets as at 31 December 2023 of $31.3 million (2022: $29.9 million) recorded in the financial statements represents the Group's maximum exposure to credit risk.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate cash reserves and by continuously monitoring forecast and actual cash flows.
The following tables sets out details of the expected contractual maturity of financial liabilities.
Within
3 months to 1 year More than 1 year Total
3 months
$'000 $'000 $'000 $'000
At 31 December 2022
Trade and other payables 1,369 - - 1,369
Lease liability - 99 20 119
At 31 December 2023
Trade and other payables 1,312 - - 1,312
Lease liability 5 90 188 283
The carrying amount of financial liabilities as at 31 December 2023 of $1.6 million (2022: $1.5 million) recorded in the financial statements demonstrates the stable financial condition of the Group.
29. Commitments and contingencies
Licence contingent liability
The Group has working interests in Blazhiv license to conduct its exploration and development activities in
Tax contingent liabilities
The Group assesses its liabilities and contingencies for all tax years open for audit by
Where management concludes that it is not probable that a particular tax treatment is accepted, a provision is recorded based on the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. The decision should be based on which method provides better predictions of the resolution of the uncertainty. Inherent uncertainties exist in estimates of tax contingencies due to complexities of interpretation and changes in tax laws.
Whilst the Group believes it has adequately provided for the outcome of these matters, certain periods are under audit by the
1. Related party transactions
All transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
In February 2019, the Group entered in a 2-year loan agreement with Proger Management & Partners Srl with an option to convert it into a direct 33% equity interest in Proger Ingegneria. At that time,
Directors' remuneration
The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures. Further information about the remuneration of individual Directors is provided in the audited part of the Annual Report on Remuneration 2023 on page 44.
Purchase of Amounts owing
services
2023 2022 2023 2022
$'000 $'000 $'000 $'000
Directors' remuneration 712 693 54 83
Social contribution on Directors' remuneration 72 72 - -
The total remuneration of the highest paid Director was $0.5 million in the year (2022: $0.5 million).
No guarantees have been given or received and no provisions have been made for doubtful debts in respect of the amounts owed by related parties.
31. Events after the balance sheet date
In April 2024, LLC AstroInvest Energy signed the agreement to purchase a power generation unit with KTS Engineering s.r.o., the official dealer of equipment of
Company Balance Sheet
As at 31 December 2023
2023 2022
Notes
$'000 $'000
ASSETS
Non-current assets
Receivables from subsidiaries 35 35,659 35,918
35,659 35,918
Current assets
Trade and other receivables 35 2 -
Cash 35 1,796 2,391
1,798 2,391
Total assets 37,457 38,309
LIABILITIES
Current liabilities
Trade and other payables 36 (350) (337)
(350) (337)
Total liabilities (350) (337)
Net assets 37,107 37,972
EQUITY
Share capital 37 13,832 13,832
Share premium 514 514
Retained earnings 131,480 132,345
Cumulative translation reserves 38 (108,719) (108,719)
Total equity 37,107 37,972
As permitted by section 408 of the Act, the Company has elected not to present its profit and loss account for the year. The loss for the financial year ended 31 December 2023 was $0.9 million (2022: loss $2.4 million).
The financial statements of Cadogan Energy Solution plc, registered in
They were signed on its behalf by:
Chief Executive Officer
07 May 2024
The notes on pages 112 to 115 form part of these financial statements.
Company Cash Flow Statement
For the year ended 31 December 2023
2023 2022
$'000 $'000
Operating activities
(865) (2,402)
(Loss) for the year
Adjustments for:
(26) (4)
Interest received
- -
Impairment of receivables from subsidiaries
(491) 1,053
Effect of foreign exchange rate changes
45 (11)
Movement in provisions
Operating cash outflows before movements in working capital (1,337) (1,364)
Decrease/(Increase) in receivables 698 2
(Decrease)/Increase in payables (37) 99
Cash used in operations (676) (1,263)
Income taxes paid - -
Net cash outflow from operating activities (676) (1,263)
Investing activities
Interest received 26 4
Net cash generated from investing activities 26 4
Net decrease in cash (650) (1,259)
Effect of foreign exchange rate changes 55 (207)
Cash at beginning of year 2,391 3,857
Cash at end of year 1,796 2,391
Company Statement of Changes in Equity
For the year ended 31 December 2023
Share Share Retained Cumulative
earnings Other Reserve translation Total
capital premium account reserves
$'000 $'000 $'000
$'000 $'000 $'000
As at 1 13,832 514 134,747 - (108,719) 40,374
January 2022
Net loss for - - (2,402) - - (2,402)
the year
Total
comprehensive - - (2,402) - - (2,402)
loss for the
year
Issue of
ordinary - - - - - -
shares
As at 1 13,832 514 132,345 - (108,719) 37,972
January 2023
Net loss for - - (865) - - (865)
the year
Total
comprehensive - - (865) - - (865)
income/loss
for the year
As at 31 13,832 514 131,480 - (108,719) 37,107
December 2023
Notes to the Company Financial Statements
For the year ended 31 December 2023
1. Significant accounting policies
The separate financial statements of the Company are presented as required by the Companies Act 2006 (the "Act"). As permitted by the Act, the separate financial statements have been prepared in accordance with
The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are the same as those set out in note 3 to the Consolidated Financial Statements except as noted below.
As permitted by section 408 of the Act, the Company has elected not to present its profit and loss account for the year. Cadogan Energy Solutions plc reported a loss for the financial year ended 31 December 2023 of $0.9million (2022: loss $2.4 million).
Investments
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Receivables from subsidiaries
Loans to subsidiary undertakings are subject to IFRS 9's new expected credit loss model. As all intercompany loans are repayable on demand, the loan is considered to be in stage 3 of the IFRS 9 ECL model on the basis the subsidiary does not have enough liquid assets in order to repay the loans if demanded. Lifetime ECLs are determined using all relevant, reasonable and supportable historical, current and forward-looking information that provides evidence about the risk that the subsidiaries will default on the loan and the amount of losses that would arise as a result of that default. Analysis indicated that the Company will fully recover the carrying value of the loans (net of historic credit loss provisions) so no additional ECL has been recognised in the current period.
Critical accounting judgements and key sources of estimation uncertainty
The Company's financial statements, and in particular its investments in and receivables from subsidiaries, are affected by certain of the critical accounting judgements and key sources of estimation uncertainty.
The critical estimates and judgments referred to application of the expected credit loss model to intercompany receivables (note 34). Management determined that the interest free on demand loans were required to be assessed on the lifetime expected credit loss approach and assessed scenarios considering risks of loss events and the amounts which could be realised on the loans. In doing so, consideration was given to factors such as the cash held by subsidiaries and the underlying forecasts of the Group's divisions and their incorporation of prospective risks and uncertainties.
1. Auditor's remuneration
The auditor's remuneration for audit and other services is disclosed in note 11 to the Consolidated Financial Statements.
1. Investments
The Company's subsidiaries are disclosed in note 18 to the Consolidated Financial Statements. The investments in subsidiaries are all stated at cost less any provision for impairment.
1. Financial assets
The Company's principal financial assets are bank balances and cash and receivables from related parties none of which are past due. The Directors consider that the carrying amount of receivables from related parties approximates to their fair value.
35. Financial assets (continued)
Receivables from subsidiaries
At the balance sheet date gross amounts receivable from the fellow Group companies were $348.7 million (2022: $349.1 million). The Company did not recognise additional expected credit loss provisions in relation to receivables from subsidiaries in 2023 (2022: nil). The accumulated provision on receivables at 31 December 2023 was $313 million (2022: $313.2 million). The carrying value of the receivables from the fellow Group companies at 31 December 2023 was $35.7 million (2022: $35.9 million). Receivables from subsidiaries are interest free and repayable on demand. There are no past due receivables. The receivables are classified as non-current based on the expected timing of receipt notwithstanding their terms.
Cash
Cash comprises cash held by the Company and short-term bank deposits with an original maturity of three months or less. The carrying value of these assets approximates to their fair value.
1. Financial liabilities
Trade and other payables
2023 2022
$'000 $'000
Accruals 166 141
Unused vacation provision 105 85
Amounts owing to Directors 54 82
Trade payables 25 29
350 337
Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 30 days (2021: 29 days).
Unused vacation provision of $105,000 accrued for CEO of the Company (2022: $85,000).
The Directors consider that the carrying amount of trade and other payables approximates to their fair value. No interest is charged on balances outstanding.
1. Share capital
The Company's share capital is disclosed in note 26 to the Consolidated Financial Statements.
1. Cumulative translation reserve
The directors decided to change the functional currency of the Company from sterling to US dollars with effect from 1 January 2016. The effect of a change in functional currency is accounted for prospectively. In other words, the Company translates all items into the US dollar using the exchange rate at the date of the change. The resulting translated amounts for non-monetary items are treated as their historical cost. Exchange differences arising from the translation of an operation previously recognised in other comprehensive income in accordance with paragraphs 32 and 39(c) IAS 21 "Foreign Currency" are not reclassified from equity to profit or loss until the disposal of the operation.
39. Financial instruments
The Company manages its capital to ensure that it is able to continue as a going concern while maximising the return to shareholders. Refer to note 28 for the Group's overall strategy and financial risk management objectives.
The capital resources of the Company consist of cash arising from equity, comprising issued capital, reserves and retained earnings.
Categories of financial instruments
2023 2022
$'000 $'000
Financial assets - measured at amortised cost
Cash 1,796 2,391
Amounts due from subsidiaries 35,659 35,918
37,455 38,309
Financial liabilities - measured at fair value
Trade creditors (184) (196)
(184) (196)
Interest rate risk
All financial liabilities held by the Company are non-interest bearing. As the Company has no committed borrowings, the Company is not exposed to any significant risks associated with fluctuations in interest rates.
Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. For cash, the Company only transacts with entities that are rated equivalent to investment grade and above. Other financial assets consist of amounts receivable from related parties.
The Company's credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies.
The carrying amount of financial assets recorded in the Company financial statements, which is net of any impairment losses, represents the Company's maximum exposure to credit risk.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Company's short, medium and long-term funding and liquidity management requirements. The Company maintains adequate reserves, by continuously monitoring forecast and actual cash flows.
The Company's financial liabilities are immaterial and therefore no maturity analysis has been presented.
Foreign exchange risk and foreign currency risk management
The Company holds a large portion of its monetary assets in the US Dollars and Euro, mitigating the exchange risk between the US Dollars and Euro and monetary liability in the US Dollars. More information on the foreign exchange risk and foreign currency risk management is disclosed in note 28 to the Consolidated Financial Statements.
40. Related parties
Amounts due from subsidiaries
The Company has entered into a number of unsecured related party transactions with its subsidiary undertakings. The most significant transactions carried out between the Company and its subsidiary undertakings are mainly for short and long-term financing. Amounts owed from these entities are detailed below:
2023 2022
$'000 $'000
Cadogan Petroleum Holdings Limited 35,659 35,918
35,659 35,918
Refer to note 34 for details on the Company's receivables due from subsidiaries.
The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures. In 2023 there were no other employees in the Company. Further information about the remuneration of individual Directors is provided in the audited part of the Annual Report on Remuneration 2023 on pages 44 to 48.
Purchase of Amounts owing
services
2023 2022 2023 2022
$'000 $'000 $'000 $'000
Directors' remuneration 712 693 54 83
Social contribution on Directors' remuneration 72 72 - -
The total remuneration of the highest paid Director was $0.5 million in the year (2022: $0.5 million).
41. Events after the balance sheet date
Events after the balance sheet date are disclosed in note 31 to the Consolidated Financial Statements.
Glossary
IFRSs International Financial Reporting Standards
JAA Joint activity agreement
UAH Ukrainian hryvnia
GBP
$
bbl Barrel
boe Barrel of oil equivalent
mmboe Million barrels of oil equivalent
mboe Thousand barrels of oil equivalent
mboepd Thousand barrels of oil equivalent per day
boepd Barrels of oil equivalent per day
bcf Billion cubic feet
mmcm Million cubic metres
mcm Thousand cubic metres
Reserves Those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves include proved, probable and possible reserve categories.
Proved Reserves Those additional Reserves which analysis of geoscience and engineering data can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from reservoirs and under defined economic conditions, operating methods and government regulations.
Probable Reserves Those additional Reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than proved Resources but more certain to be recovered than possible Reserves.
Possible Reserves Those additional Reserves which analysis of geoscience and engineering data indicate are less likely to be recoverable than probable Reserves.
Contingent Resources Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable due to one or more contingencies.
Prospective Resources Those quantities of petroleum which are estimated as of a given date to be potentially recoverable from undiscovered accumulations.
P1 Proved Reserves
P2 Probable Reserves
P3 Possible Reserves
1P Proved Reserves
2P Proved plus Probable Reserves
3P Proved plus Probable plus Possible Reserves
Workover The process of performing major maintenance or remedial treatment of an existing oil or gas well
E&E / E&P Exploration and Evaluation / Exploration and Production
LTI Lost time incidents
Shareholder Information
Enquiries relating to the following administrative matters should be addressed to the Company's registrars:
Telephone: 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the
# Loss of share certificates. # Notification of change of address. # Transfers of shares to another person. # Amalgamation of accounts: if you receive more than one copy of the Annual Financial Report, you may wish to amalgamate your accounts on the share register.
You can access your shareholding details and a range of other services at the Shareholder Portal www.signalshares.com.
Information concerning the day-to-day movement of the share price of the Company can be found on the Group's website www.cadoganpetroleum.com or that of the London Stock exchange www.prices.londonstockexchange.com.
Unsolicited mail
As the Company's share register is, by law, open to public inspection, shareholders may receive unsolicited mail from organisations that use it as a mailing list. To reduce the amount of unsolicited mail you receive, contact: The Mailing Preference Service, FREEPOST 22,
Financial calendar 2023/2024
Annual General Meeting June 2024
Half Yearly results announced September 2023
Annual results announced May 2024
Investor relations
Enquiries to: info@cadoganpetroleum.com
Registered office
6th Floor, 60 Gracechurch Street,
Registered in
48/50A Zhylyanska Street
Business center "Prime", 8th floor
01033
Email: info@cadoganpetroleum.com
Tel: +38 044 594 58 70
Fax: +38 044 594 58 71
www.cadoganenergysolutions.com
References to page numbers throughout this announcement relates to the page numbers within the Annual Report of the Company for the year ended 31st December 2023. In addition all graphs and graphics have been removed for the purposes of the announcement.
[1] Average realised price is calculated as total revenue from oil sales for the period divided by total volume of sold oil for the period
[2] Gross revenues of $7.6 million (2022: $8.5 million) included 0.4 (2022: $nil million) from trading of natural gas, $7.2 million (2022: $8.5 million) from production
[3] Administrative expenses ("G&A")
[4] LTI: Lost Time Incidents; TRI: Total Recordable Incidents
[5] Taxable benefits include insurance provided to the executive and leased car.
[6]
2015 CEO's salary is the sum of Mr. des Pallieres' salary for the period January to June and of
[7] In relation to performance in 2016 and 2015, the CEO used the entire amount of the bonus to buy at market price newly issued company shares on 22 September 2017.
[8]
2019 Annual bonus is a sum of
[9]
Includes a welcome bonus for
[10]
[11]
Year-end performance-based bonus was an alternative to an up-front sign-on bonus.
[12] $280,298 paid as fees, pension, and loss of office.
[13] From 1 August, 2011.
[14] From 19 March 2009.
[15] All employees mean all employees of the Group, including CEO and other Directors (note 12, page 94).
[16] Please note that the salary of the CEO for 2023 remains at €440,000.
