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Annual Report and Notice of General Meeting

Date : 04/26/2012 @ 2:00AM
Source : UK Regulatory (RNS & others)
Stock : Afren (AFR)
Quote : 141.8  1.8 (1.29%) @ 8:15AM
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Annual Report and Notice of General Meeting

TIDMAFR

RNS Number : 0828C

Afren PLC

26 April 2012

Afren plc (AFR LN)

Annual Financial Report and Notice of General Meeting

London 26 April 2012 Following the release on 27 March 2012 of Afren plc's ("Afren" or the "Company") preliminary full year results for the year ended 31 December 2011 (the "Preliminary Announcement"), the Company announces it has published its Annual Report and Accounts for 2011 (the "Annual Report and Accounts").

The Company's 2012 Annual General Meeting will be held at the offices of White & Case LLP, 5 Old Broad Street, London, EC2N 1DW on Wednesday 6 June 2012 at 11.00 am. Copies of the Annual Report and Accounts and the Notice of the Annual General Meeting 2012 are available to view on the Company's website at www.afren.com.

In accordance with Disclosure and Transparency Rule 6.3.5(2) (b) additional information is set out in the appendices to this announcement. The Preliminary Announcement included a set of condensed financial statements and a fair review of the development and performance of the business and the position of the Company and the group.

Pursuant to Listing Rule 9.6.1, copies of each of the Annual Report and Accounts, the Notice of the Company's 2012 Annual General Meeting and the form of proxy in relation to the 2012 Annual General Meeting will shortly be available for inspection on the National Storage Mechanism which can be accessed at http://www.morningstar.co.uk/uk/NSM.

For further information contact:

 
 Afren plc (+44 20 7864   Pelham Bell Pottinger (+44 20 7861 3232) 
  3700) 
 Andrew Dymond            James Henderson 
  Investor Relations       Mark Antelme 
=======================  ========================================= 
 

Notes to Editors

Afren is an independent upstream oil and gas exploration and production company listed on the main market of the London Stock Exchange and constituent of the Financial Times Stock Exchange Index of the leading 250 UK listed companies. Afren has a portfolio of 29 assets across 12 countries spanning the full cycle E&P value chain. Afren is currently producing from its assets offshore Nigeria and Cote d'Ivoire and holds further interests in the Kurdistan region of Iraq, Ghana, Nigeria, Cote d'Ivoire, Congo Brazzaville, the Joint Development Zone of Nigeria - Sao Tome & Principe, Kenya, Ethiopia, Madagascar, Seychelles, Tanzania and South Africa.

For more information please refer to www.afren.com. Appendix A: Directors' Responsibility Statement

The following Directors' Responsibility Statement is extracted from page 82 of the Annual Report and Accounts.

Directors' Responsibility Statement

I confirm to the best of my knowledge:

1. The financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

2. The management report, which is incorporated into the Directors' 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.

By order of the Board

Osman Shahenshah

Chief Executive

27 March 2012

Appendix B: Principal Risks and Uncertainties

The following description of principal risks and uncertainties is extracted from pages 22 and 24 of the Annual Report and Accounts.

Principal Risks and Uncertainties

We have identified the following principal risks and uncertainties in relation to the Group's financial and operational performance in 2011.

 
 Key risk        Description and impact                                        How do we manage it? 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 OPERATIONAL RISK 
------------------------------------------------------------------------------------------------------------------------------------------ 
 Field 
 delivery         *    Field delivery risk applies to all phases of the E&P     *    All operations are subject to risk reviews to 
 risk                  cycle from seismic acquisition through to production          identify as early as possible potential risks to 
                       operations. At each phase the mitigating measures             delivery. 
                       will be different, however failure to control risks 
                       will manifest itself as project delays, cost overruns 
                       high production costs, early field decommissioning       *    Our engineers analyse results from appraisal and 
                       and ultimately lower than expected reserves.                  development wells and determine the appropriate 
                                                                                     course of action in terms of drilling programme and 
                                                                                     facility design. 
 
 
                                                                                *    All projects are closely monitored to ensure the 
                                                                                     project delivers against plan and to enable actions 
                                                                                     to be taken to maintain progress. 
 
 
                                                                                *    Project finances are monitored against budget to 
                                                                                     minimise overruns. 
 
 
                                                                                *    Production operations are closely monitored to ensure 
                                                                                     that unplanned downtime is minimised and that 
                                                                                     operating costs are tightly controlled. 
 
 
                                                                                *    Actual production is regularly checked against the 
                                                                                     annual production forecast. 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 Exploration 
  failure         *    Exploration activities can be capital intensive and       *    A dedicated team has been established under the 
                       may involve a high degree of risk. Sustained                   leadership of the new Exploration Director, to 
                       exploration failure will impact the growth and upside          exploit the exploration portfolio. 
                       potential of the Company. 
 
                                                                                 *    Exploration assets are subject to a rigorous peer 
                                                                                      review process. 
 
 
                                                                                 *    Exploration risk is evaluated for each prospect by 
                                                                                      looking in detail at how to de-risk the key elements 
                                                                                      of the subsurface data, source rock, reservoir, 
                                                                                      trapping and seal mechanisms, etc. Prospects are 
                                                                                      subsequently ranked and budgets approved. 
 
 
                                                                                 *    Exploration costs are funded by planned operational 
                                                                                      cash flows in 2012. 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 Environmental 
 /                *    As Afren's activities expand there is a continuing       *    Afren has a comprehensive EHSS management system with 
 safety                focus on preventing major pollution and/or                    an annual independent audit programme to ensure 
 incidents             significant loss of life due to systems or equipment          effective implementation. 
                       failure. We have implemented EHSS management systems 
                       based on best industry practice at both the corporate 
                       and country level.                                       *    Dedicated EHSS teams in each area of operation. 
 
 
                                                                                *    Contingency plans in place. 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 Unfulfilled 
 work/PSC          *    Loss of production interest or exploration licence       *    The operations, finance and legal functions jointly 
 obligations            due to incomplete fulfilment of PSC obligations.              monitor compliance with licence obligations. 
 
 
                                                                                 *    Maintenance of good open working relationships with 
                                                                                      local governments in the countries of operation. 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 
  EXTERNAL RISK 
------------------------------------------------------------------------------------------------------------------------------------------ 
 Geo-political 
  risk            *    The countries in which Afren operates face political,    *    Ongoing monitoring and close liaison on the ground to 
                       socio-economic and legal uncertainties.                       monitor the situation from an Afren safety and 
                                                                                     security perspective. 
 
                  *    2011 has seen some ethnic tension and public protests 
                       in Nigeria. These events have not impacted Afren         *    Contingency plans in place. 
                       operations. 
 
 
                  *    In Cote d'Ivoire there was civil disruption 
                       throughout 2010 and 2011 following the disputed 
                       election. The situation ultimately ended with the 
                       change in government in mid 2011. The country is 
                       gradually returning to a state of peace and 
                       stability. 
 
 
                  *    In the Kurdistan region of Iraq there are 
                       geopolitical and legal uncertainties, particularly 
                       associated with the licensing framework and ability 
                       to export. 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 Security 
 incidents        *    Afren continues to operate in regions where               *    Dedicated security teams in each area of operation. 
                       kidnapping, piracy and criminal attacks are 
                       commonplace. 
                                                                                 *    Robust security management programme. 
 
                  *    As we move into exploration activities in East Africa 
                       and development in the Kurdistan region of Iraq,          *    Security risk assessments for each asset and 
                       management of security risks will continue to be a             operation. 
                       major strand in our risk management programme. 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 Host 
 community        *    Our operations both on and offshore have the             *    Afren has a tried and tested system for managing 
 action                potential for interruption by our host communities if         community affairs which is applied to all operations. 
                       relationships are not well established. 
 
                                                                                *    Dedicated community affairs teams are in place where 
                                                                                     required. 
 
 
                                                                                *    Contingency plans in place. 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 Oil price 
 volatility        *    Oil prices can fluctuate significantly.                 *    The policy of the Group is to protect its minimum 
                                                                                     cash flow requirements in the context of a sustained 
                                                                                     downturn in oil prices. 
 
 
                                                                                *    The Group strategy to manage oil price risk is to 
                                                                                     hedge between 20-30% of the production curve by using 
                                                                                     financial instruments which allow the Group to 
                                                                                     protect the downside risk. 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 
   STRATEGIC 
   RISK 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 Bribery and 
  corruption      *    2010 saw the introduction of the UK Anti-bribery and     *    Afren has implemented a Code of Business Conduct 
                       Corruption Act. As an oil and gas operator working in         across all its operations. 
                       Africa, Afren is potentially exposed to accusations 
                       of poor practise in this important area of business. 
                                                                                *    An independent whistle-blowing hotline has been 
                                                                                     established to enable concerns about poor practise to 
                                                                                     be voiced without the fear of reprisal. 
 
 
                                                                                *    Additional policy and processes have been established 
                                                                                     to meet the stringent requirements of the UK 
                                                                                     anti-bribery and corruption legislation. 
 
 
                                                                                *    Audit and Risk Committee in place to review 
                                                                                     governance and internal controls. 
 
 
                                                                                *    Risk Management function working with key functions 
                                                                                     in the business. 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 Management 
  of growth        *    As the business continues to grow, so does the           *    All acquisitions are subject to thorough due 
                        requirement for competent personnel with the right            diligence in order to deliver an attractive 
                        skills in the right place at the right time. Failure          integration plan. 
                        to manage either organic growth or to integrate 
                        acquisitions will result in delays and other impacts 
                        on key objectives.                                       *    Remuneration policies are designed to incentivise, 
                                                                                      motivate and retain key employees as well as to 
                                                                                      attract new personnel as and when required. 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
   Loss of key 
    employees     *    Loss of knowledge and skills to the Group in              *    Succession planning is considered on a Group-wide 
                       particular in countries of operation.                          basis, taking into account the development of the 
                                                                                      executive and senior management. 
 
                  *    Intensified competition for human talent in Africa 
                       and the Middle East.                                      *    Remuneration policies are designed to incentivise, 
                                                                                      motivate and retain key employees including 
                                                                                      Directors. 
                  *    Inability to attract required quality of personnel to 
                       fill vacancies. 
                                                                                 *    Salaries and reward of senior executives, including 
                                                                                      Directors, set at competitive levels using 
                  *    Afren has continued through 2011 to minimise the               third-party benchmarks. 
                       staff turnover rate and to recruit highly talented 
                       individuals when required. 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 
   FINANCIAL 
   RISK 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 Taxation and 
 other             *    There is a risk that future changes impact our           *    Our financial and legal teams monitor current 
 legislation            profitability.                                                legislation and proposed changes and incorporate 
 changes                                                                              these into our working practices. 
 
 
                                                                                 *    Maintenance of good open working relationships with 
                                                                                      local authorities in the countries of operation. 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 Treasury 
 management       *    The availability of financing to maintain the ongoing    *    The Group has utilised a number of sources of capital 
                       operations of the business is key.                            to supplement cash generated from operations, through 
                                                                                     the bond issues in January 2011 and in February 2012 
                                                                                     and an equity placing in July 2011. The Group will 
                                                                                     continue to optimise its capital structure during 
                                                                                     2012 to provide further financial flexibility to fund 
                                                                                     the Group's operational requirements. 
 
 
                                                                                *    The Group continues to manage its expenditure and 
                                                                                     monitor cash flows to ensure that future cash 
                                                                                     requirements are appropriately controlled. 
--------------  ------------------------------------------------------------  ------------------------------------------------------------ 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

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