TIDMFNK
RNS Number : 8532B
Fenikso Limited
06 June 2023
06 June 2023
Fenikso Limited
("Fenikso" or "the Company")
Annual results for the year ended 31 December 2022
Fenikso Limited (AQSE: FNK) the Cayman Islands enterprise
company, announces its final audited results for the year ended 31
December 2022 (the "Accounts").
A copy of the Accounts will shortly be available on the
Company's website:
https://feniksoplc.com/investors/corporate-documents/
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK domestic law by virtue of the European Union (Withdrawal) Act
2018 ('MAR'). Upon the publication of this announcement via
Regulatory Information Service ('RIS'), this inside information is
now considered to be in the public domain.
For further information, please visit https://feniksoplc.com/ or
contact:
Fenikso Limited info@feniksoplc.com
Thomas Richardson Chairman
First Sentinel Corporate Finance Ltd (AQSE
Corporate Adviser)
Brian Stockbridge +44 203 989 2200
---------------------
Fenikso Limited
Financial statements
For the year ended 31 December 2022
Company information
Directors
Tom Richardson (Chairman)
Marco D'Attanasio (Non-Executive
Director)
Pade Durotoye (Non-Executive Director)
Company registration number Cayman Islands, CWK-248859
Registered office Intertrust Corporate Services (Cayman)
Limited
190 Elgin Avenue
George Town
Grand Cayman KY1-9008
Cayman Islands
Auditor Bright Grahame Murray
Emperor's Gate
114a Cromwell Road
Kensington
London
SW7 4AG
Corporate Adviser First Sentinal Corporate Finance
Limited
72 Charlotte Street
London, W1T 4QQ
Broker Tennyson Securities
65 Petty France
London
SW1H 9EU
Website feniksoplc.com
Contents
Chairman's statement 4
Strategic report
5
Report of the directors
7
Corporate governance statement 11
Audit & risk committee report 13
Remuneration report 14
Report of the independent auditor 15
Statement of comprehensive income 19
Statement of financial position 20
Statement of changes in equity 21
Statement of cash flows 22
Notes to the financial statements 23
Chairman's statement
2022 was a challenging year for Fenikso Limited (the "Company",
formerly known as Lekoil Limited). The first three quarters of the
year were spent in litigation against Lekoil Nigeria where the
Company worked on multiple fronts to try and recover the value of
the assets that its money had funded since the IPO in 2013. The
litigation was across multiple jurisdictions and extremely complex.
In Q4 of 2022 both parties agreed the basis for a settlement that
was finalised on December 31(st) 2022. The settlement resulted in
the Company changing its name to Fenikso and exchanging all
subsidiary companies and inter company loans in return for a
US$51.9 million loan from Lekoil Nigeria payable out of the
proceeds of oil sales from the Otakikpo production. The settlement
was supported by the board and the majority of shareholders in the
December EGM.
As a result of the litigation Fenikso was left with significant
financial liabilities which had impacted its position as a going
concern throughout 2022. Since the settlement the Company has
settled the majority of its current liabilities and is now looking
forward to building a positive cash position before the end of
2023. The primary focus for the board during 2022 was to try to
recover as much value for Fenikso shareholders as possible. The
board is now focused on ensuring the Company is in a stable
financial position in 2023 and can assess the best way forward to
further enhance shareholder value with the cash that it receives
from Lekoil Nigeria. The board is focused on repaying historic
creditors as soon as possible, starting to repay the loan to
Savanah Energy and keeping costs at a minimum whilst it stabilises
the Company and works on the new strategy for Fenikso. I believe
that the Company will soon be in a position to consider a number of
different options that it can discuss with shareholders on how best
to create value from the money received from the repayment of the
loan from Lekoil Nigeria.
Financial review
The Company's financial position as at the end of 2022 was very
simple. It ended the year with one major asset which the loan
outstanding to Lekoil Nigeria of US$51.9 million that is to be
repaid from the proceeds of oil sales at the Otakikpo field. In
terms of liabilities the Company had approximately US$2.6 million
owed to creditors who had provided services during the litigation
and settlement process. In addition the Company agreed to pay
Savanah Energy US$16.2 million (to be paid out of the repayment of
the loan from Lekoil Nigeria) in return for the cancellation of its
option agreement over the Mayfair Loan and the cancellation of its
25% shareholding in Fenikso Limited. The Company's only current
source of income is from the proceeds of oil sales at the Otakikpo
field in Nigeria. The oil sales take place on approximately a six
to eight week basis and so far the Company has received 3 payments
under this settlement agreement. The Company has no subsidiaries
and has no remaining liabilities in connection with any of its
historic subsidiaries. The Company has three board members and is
listed on the AQSE stock exchange in the United Kingdom.
Corporate Structure and Board and Management update
The Company has simplified its corporate structure, having sold
all its subsidiaries and restructured all its inter company loans
into one loan owed by Lekoil Oil & Gas Investments (which in
turn owns a 40% interest in the Otakikpo oil and gas field in
Nigeria). The board consists of three people Marco D'Attanasio, Tom
Richardson and Pade Durotoye. Pade is a representative of Savanah
Energy and sits on the board to ensure Savanah's rights under their
loan are upheld. Tom Richardson carries out the executive functions
required in the Company as it pays down its creditors. The Board
does not intend to hire any management until such a point where its
strategy would require a management team. The Board is able to
carry out the day to day activities of the Company to keep it
listed and stabilise the financial position of the business.
Outlook
The Board is optimistic we can stabilise the financial position
of Fenikso over 2023 and be in a position to grow shareholder value
from the cash received under the Lekoil Nigeria loan agreement. We
thank our shareholders for their support during this period whilst
we work on a new strategy for the Company.
Tom Richardson
Chairman 6 June 2023
Strategic Report
PRINCIPAL ACTIVITY, FINANCIAL REVIEW, OPERATIONS REPORT AND
ASSET SUMMARY
PRINCIPAL ACTIVITY
The Company is an exempted limited liability company
incorporated and registered in the Cayman Islands on 3 December
2010.
Fenikso is the restructured holding company that used to be
called Lekoil Limited. The Company holds one main asset which is a
US$51.9 million loan made to Lekoil Oil & Gas Investments
("LOGI"), a wholly owned subsidiary of Lekoil Nigeria. The Company
is an AQSE listed enterprise company. These accounts are for the
Company only on the basis of the principal accounting policy for
'Consolidation' included in Note 1.
FINANCIAL REVIEW
Financial overview and performance
The Company reported a loss of $15,397,000 for the year ended 31
December 2022. (restated 2021: $326,417,000) The loss was primarily
as a consequence of the impairment of the Company's intercompany
receivables (Note 12) following a restructure and settlement
agreement.
Net assets of the Company at the year end were $19,518,000
(restated 2021: $34,187,000). Cash balances as at the year end were
$208,000. (2021: $50,000).
OPERATIONS REPORT AND ASSET SUMMARY
The Company no longer operates or oversees operations of any Oil
& Gas assets in Nigeria. The principal business of the Company
is to manage and ensure the full recovery of the LOGI Loan. The
Company has received three payments under the LOGI Loan as at the
end of May 2023 and the Board will continue to monitor the
compliance with the terms and conditions of the LOGI Loan. As at
the end of May 2023 LOGI had complied with all conditions of the
settlement agreement save for the cancellation of certain shares in
the Company owned by Lekoil Nigeria, Lekan Akinyami and Samuel
Olutu. The total shares that should have been cancelled are
107,658,847 ordinary shares and the Company is working with such
parties to cancel such shares as soon as practicably possible. In
the interim, the relevant holders have agreed to not vote such
shares in any general meeting. All other conditions under the loan
have been satisfied to date.
Principal risks and uncertainties
The principal risk of the business is the non-payment of the
LOGI Loan, which leads to the Company having no income to cover
costs and build shareholder value. This is the Company's only
current source of income. The possible risks to non payment
are:
1. LOGI fails to pass on the proceeds from the sale of oil at the Otakikpo field
2. The Otakikpo field has to shut in all production and has no sales of oil
3. The Oil price falls to such an extent that the value of the
oil sales is insufficient to cover the running costs of the
Company
4. The crude oil sales are from oil sales in Nigeria. This means
the income of the company is exposed to changes in the political
and economic environment in Nigeria that could prevent the
repayment of the loan.
Going concern
The assessment of the going concern risk has been detailed in
the Directors' Report.
Liquidity risk
The Company manages its liquidity through the repayment of the
LOGI Loan by LOGI. The Company's liquidity position could be at
risk should the repayments stop for any reason.
Credit risk
The Company's principal financial asset is the LOGI Loan. This
is secured against the proceeds from oil sales at the Otakikpo
field. There is always a risk with Oil & Gas that production
may have to be shut in or that the Oil price could fall
substantially both of which would impact the value of the Company's
assets.
This strategic report was approved by the Board on 6 June 2023
and signed on its behalf.
Tom Richardson 6 June 2023
Chairman
Report of the Directors
The Directors present their report and the audited financial
statements of the Company for the year ended 31 December 2022.
RESULTS FOR THE YEAR
The Company has made a loss of $15.4 million (restated 2021:
loss of US$326.4 million).
DIVIDS
The Directors are unable to recommend the payment of a dividend
(2021: Nil).
ACCOUNTING POLICIES
The Company's accounting policies and details of the significant
judgments and critical accounting estimates are disclosed within
the notes to the financial statements.
DIRECTORS AND THEIR INTERESTS
The Directors who served during the year are listed below.
Name Period as a Director of the
Company
Anthony Hawkins 1 January 2022 to 30 June 2022
--------------------------------
Tom Richardson 8 January 2022 to 31 December
2022
--------------------------------
Marco D'Attanasio 21 April 2022 to 31 December
2022
--------------------------------
Al Tindall 1 January 2022 2021 to 30 June
2022
--------------------------------
Olapade Durotoye 1 January 2022 to 31 December
2022
--------------------------------
Adeoye Adefulu 1 January 2022 to 31 December
2022
--------------------------------
Guy Oxnard 9 June 2022 to 31 December 2022
--------------------------------
Dipo Sofola 9 June to 31 December 2022
--------------------------------
As at 31 December 2022, none of the then current Directors of
the Company had any legal or bene cial interest in the share
capital of the Company other than as follows:
Director's Beneficial Number of ordinary Percentage of
Name Interest held shares held by Company's issued
via legal or beneficial share capital held
owner at 31 December by legal or beneficial
2022 owner at 31 December
2022
Tom Richardson TDR Enterprises 21,807,151 3.6%
----------------- ---------------------- ------------------------
Hadron Master
Marco D'Attanasio Fund 25,025,000 4.2%
----------------- ---------------------- ------------------------
DIRECTORS' RESPONSIBILITIES STATEMENT
The directors are responsible for preparing the Strategic
Report, the Directors' Report and the financial statements in
accordance with applicable law and regulations.
Company law and the Company's Articles of Association require
the directors to prepare financial statements for each financial
year using International Financial Reporting Standards (as adopted
by the European Union (IFRSs)). Under company law the directors
must not approve the financial statements unless they are
satisfied
that they give a true and fair view of the state of affairs and
profit or loss of the Company for that period. In preparing these
financial statements, the directors are required to:
-- select suitable accounting policies and then apply them
consistently;
-- make judgements and accounting estimates that are reasonable
and prudent;
-- state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the financial
statements;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company. 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.
The directors confirm that:
-- in so far as each of the directors is aware, there is no
relevant audit information of which the company's auditor is
unaware; and
-- the directors individually have taken all steps that they
ought to have taken to make themselves aware of any relevant audit
information and to establish that the auditor is aware of that
information.
GOING CONCERN
The Directors have assessed the ability of the Company to
continue as a going concern having prepared detailed cash, funding
and liquidity forecast through to June 2024. The Directors, having
made due and careful enquiry, are of the opinion that the Company
will have access to adequate working capital to meet its
obligations over the next 12 months from the date of approval of
these financial statements. The Directors therefore have made an
informed judgement, at the time of approving the financial
statements, that there is a reasonable expectation that the Company
has adequate resources to continue in operational existence for the
foreseeable future. As a result, the Directors have adopted the
going concern basis of accounting in the preparation of the annual
financial statements.
CORPORATE ADVISORS
The Company's AQSE corporate adviser during 2022 was First
Sentinel Corporate Finance Limited. Bright Grahame Murray act as
auditors to the Company.
DIRECTORS' INDEMNITY AND INSURANCE
The Company provides indemnity to Directors in respect of
liabilities incurred as a result of their office. However, neither
the indemnity nor the insurance provides cover if the Director is
proven to have acted dishonestly or fraudulently. The Company
provided directors and officers insurance for its directors for the
financial year ended 31 December 2022.
POST-REPORTING DATE EVENTS
All events that have occurred since the year end which require
reporting have been disclosed in the financial statements and/or
the Chairman's Statement.
HEALTH, SAFETY AND ENVIRONMENT
The Company is committed to fulfil its health, safety, and
environmental responsibility. The Company has limited operational
activities outside of office based activities. There have been no
known breaches of HSE or environmental laws during the reporting
period.
FINANCIAL INSTRUMENTS
Details of the use of any nancial instruments by the Company are
contained in the nancial statements.
INDICATION OF FUTURE DEVELOPMENTS
The details of the future developments of the Company are given
in the Strategic Report.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The details of financial risk management are given in the
Strategic Report.
BOARD MEMBERS
The current Board is constituted by the following members:
Mr. Tom Richardson, Chairman
Mr. Richardson has over 20 years of experience across banking
and oil & gas. Mr Richardson served as CFO of Nostrum Oil &
Gas Plc a UK premium listed company. Prior to joining Nostrum in
2011, Mr Richardson has worked for ING, JP Morgan and NM Rothschild
covering investment banking, capital markets and credit.
Mr. Olapade Durotoye, Non-Executive Director
Pade Durotoye is the Chief Executive Of cer and Founder of West
Titan Energy. He has over 32 years of management experience across
the value chain of the oil and gas Industry internationally.
He began his career with Schlumberger Oil eld Services where he
worked in various Management capacities in Field Operations,
Operations Management, Line (Country) Management, Human Resources
Management and Business Development for close to 20 years in 8
countries in Africa, Europe and Asia.
He served as the MD/CEO of Ocean and Oil Holdings Group, a
principal investment and advisory services group, where advised on
and in some cases led the company's Management and Technical
Services advisory contract with Oando. He was a core member of
Oando's Group Leadership Council and a key part of the company's
Upstream Diversi cation Strategy & Execution Team that acquired
oil eld assets and drilling rigs.
Pade served as Managing Director/CEO of Oando Energy Resources
(OER), a position he held for over 8 years. In his capacity as
MD/CEO, he led the team that delivered on the acquisition of the
Nigerian upstream
oil and gas business of ConocoPhillips in 2014, making OER
Nigeria's leading Indigenous Independent Oil Company by production
with over 40,000boepd of oil and gas and 16 participating Licenses
in Nigeria and the Gulf of Guinea. He proceeded to join Nigerdock
FZE as Managing Director/CEO, where he served for a year to
strategically direct the organization.
Pade has a deep knowledge of the oil and gas sector and is
passionate about resolving value traps in in the industry. He holds
a BSc. Electronics and Engineering from the University of Ife (now
Obafemi Awolowo University) and is a member of several professional
bodies and associations which include the Society of Petroleum
Engineers, the Nigeria Society of Engineers, and the Institute of
Directors.
Mr. Marco D'Attanasio, Non-Executive Director
Mr D'Attanasio is a senior banker and investment manager with
over 23 years of experience in banking, finance, technology and oil
& gas. He is the Founder and Portfolio Manager for Hadron
Capital LLP and Hadron Capital (Cayman) Limited, each company
managing numerous Alternative Investment Funds and being FCA and
CIMA regulated, respectively. With Hadron Capital LLP he is the
winner of multiple performance-based awards. He is the co-founder
of Cricklo Ltd, an online community of professionals active in
transforming their enterprises into sustainable businesses and a
NED with Argo Blockchain plc. Mr D'Attanasio has a degree in
physics ("Laurea") from Pisa University and a PhD in Theoretical
Physics from Parma University.
BOARD COMMITTEES
As at 31 December 2022, the Audit& Risk and Remuneration
Committees of the Board of Directors have the following directors
as members:
Audit & Risk Committee
Name Position
Tom Richardson Member
---------
Marco D'Attanasio Member
---------
Remuneration Committee
Name Position
Tom Richardson Member
---------
Marco D'Attanasio Member
---------
This report was approved by the board on 6 June 2023 and signed
on its behalf.
T Richardson
Chairman 6 June 2023
Corporate Governance Statement
The Company has formally adopted the Quoted Companies Alliance
Corporate Governance Code for Small and Mid-Size Quoted Companies
("QCA Code") and its replacement, the QCA Corporate Governance Code
that was published in April 2018. The Company's application of the
QCA Code is set out on its website ( feniksoplc.com ) and is
updated from time to time.
The Company recognises the importance of sound corporate
governance commensurate with the size, corporate structure and
nature of the Company, even though there is no applicable regime of
corporate governance to which Directors of a Cayman Islands company
must adhere to over and above the general fiduciary duties of care,
diligence and skill imposed on such Directors under Cayman Islands
law.
The Company updated its policies in line with the EU Market
Abuse Regulation ("MAR") with effect from 3 July 2016 (and as
applied in the United Kingdom pursuant to applicable English
law).
The Company will continue to implement internal policies as
necessary to provide guidance on Corporate Governance issues. These
policies are the same as those summarised in the Company's Annual
Report for the year ended 31 December 2021. These policies are
reviewed periodically to ensure continued relevance:
-- Related Party Transactions Policy
-- Disclosure and Insider Trading Policy
-- Share Dealing Code
-- Whistleblowing Policy
-- Anti-Bribery Policy
-- Risk Management Policy
-- Gifts and Hospitality Policy
-- Code of Ethics
-- Safety, Health, Environment and Security Policy
The Company implements these policies in a manner commensurate
with the size and available resources. In the course of preparing
this Annual Report and Accounts, the Board has noted the need to
review the Corporate Governance framework and its practical
implementation.
Website publication
The Company's Corporate Governance statement is published on its
website. The Directors are responsible for ensuring the annual
report and the nancial statements are made available on a website.
Financial statements are published on the Company's website in
accordance with legislation in the United Kingdom governing the
preparation and dissemination of nancial statements, which may vary
from legislation in other jurisdictions. The maintenance and
integrity of the Company's website is the responsibility of the
Directors.
Auditor
All of the current Directors have taken all the steps that they
ought to have taken to make themselves aware of any information
needed by the Company's auditor for the purposes of their audit and
to establish that the auditor is aware of that information. The
Directors are not aware of any relevant audit information of which
the auditor is unaware.
Business model and strategy
Information on our strategy is included in the Strategic Report
set out above.
Obligations to our stakeholders
We are committed to communicating openly with our shareholders
and stakeholders to ensure that our strategy, our financial
position and the effects of those on our stakeholder is clearly
understood.
Review of risks
The Board is responsible for setting the Company's risk
philosophy and appetite and approving the overall risk management
policy. It is responsible for maintaining a sound system of
internal control that supports the achievement of its goals and
objectives.
The Board is also responsible for overseeing the establishment,
implementation and review of the Company's risk management systems
and, to this end, has delegated certain functions relating to risk
to the Audit and Risk Committee and to management.
The Company has adopted a Risk Management Policy appropriate for
a company of its size and resources.
Management framework
As at 31 December 2022, the Board comprised of an Executive
Chairman and two Non-Executive Directors. The Company believes that
its current composition is appropriate for the Company given its
current corporate structure and financial resources. Each Board
member brings a wealth of business leadership experience to foster
the collective strength of the Board in setting the strategic goals
of the Company and overseeing the effective performance of
management in achieving these goals.
Under their appointment letters, the Company may call on the
Directors to spend at least 20 days per year on Company
business.
Directors
We believe that our Board has the appropriate balance of skills,
experience and capabilities required to direct the management of
the Company. These include sector-specific experience in the oil
and gas industry, as well as more general finance, accounting and
business management skills.
The Board is supported by the Audit & Risk and Remuneration
Committees, the terms of reference of which can be found on our
website.
Succession planning is managed through regular reviews and
management discussions. The composition of the Board will reflect
the size of the Company and the resources available to it.
Reward
The Company manages its activities via the Board of Directors
and one executive director. Of the Company's two non-executive
directors, one is rewarded in cash, while the other receives no
fee.
Further information
The Corporate Governance section of our website sets out our
approach to corporate governance, and the roles and
responsibilities of the Chairman and any other Directors who have
specific individual responsibilities or remits (e.g. for engagement
with shareholders or other stakeholder groups) are shown.
The roles and terms of reference of the Audit & Risk
Committee and Remuneration Committee, and a formal written schedule
of matters reserved for the Board are also shown on the Company's
website https://feniksoplc.com/ .
Previous annual reports and other corporate documents, including
notices of all general meetings held in the last five years, are
also available on the Company's website https://feniksoplc.com/
.
Audit & Risk Committee Report
Composition
As at 31 December 2022, the Committee was composed of Tom
Richardson and Marco D'Attanasio, each of whom have relevant
financial experience.
Role and Responsibilities
The Audit & Risk Committee's terms of reference designate
the role and responsibilities of the audit committee
These are available on the Company's website
https://feniksoplc.com/
2022 Financial reporting
The following are the main key judgements and new accounting
standards that were considered by the Committee in its review of
the 2022 full year Financial Statements:
-- Going Concern basis of accounting;
-- Assessment of impairment;
-- Assessment of impairment of inter-company receivables; and
-- the impact of new accounting standards.
Internal Controls
The internal control framework is based on the Company's
assessment of the risks it faces. The effectiveness of the internal
control system is monitored by the Board, and material exceptions
are reported to the Committee. The Company does not consider it
appropriate, given its size and complexity, to have an internal
audit function.
External auditor
Bright Grahame Murray were first appointed auditors of the
Company in May 2022. The Committee has recommended to the Board
that the auditors are reappointed for the year ending 31 December
2023. Bright Grahame Murray has expressed a willingness to continue
in office as auditor and a resolution to re-appoint them will be
proposed at the next Annual General Meeting of the Company.
Remuneration report
Composition and Role
As at 31 December 2022, the remuneration committee (the
"Remuneration Committee") was composed of Thomas Richardson and
Marco D'Attanasio.
The Remuneration Committee is responsible for determining and
reviewing the terms and conditions of service (including
remuneration) and termination of employment of Executive
Director(s), and the administration of the Company's share option
and share award schemes. It is responsible for determining
individual remuneration packages including, where appropriate,
bonuses, incentives and share options.
Remuneration Policy
The Remuneration Committee, in forming its policy on
remuneration has given due consideration to the needs of the
Company, Shareholders and best practice provisions set out in the
QCA Code.
There is no pension scheme for Non-Executive Directors.
Performance Share Plan
There were no share awards in 2022.
Options
There were no share awards in 2022.
Independent auditor's report to the members of Fenikso
Limited
Opinion
We have audited the financial statements of Fenikso Limited (the
'company') for the year ended 31 December 2022 which comprise the
statement of comprehensive income, the statement of financial
position, the statement of changes in equity, the statement of cash
flows and notes to the financial statements, including significant
accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and United
Kingdom adopted International Accounting Standards.
In our opinion the financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 December 2022 and of its loss for the year then
ended;
-- have been properly prepared in accordance with United Kingdom
adopted International Accounting Standards.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Emphasis of matter - LOGI Loan
The directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the company
or to cease its operations, and as they have concluded that the
company's financial position means that this is realistic. They
have also concluded that there are no material uncertainties that
could have cast significant doubt over its ability to continue as a
going concern for at least a year from the date of approval of the
financial statements ("the going concern period").
We are required to report to you if we have concluded that the
use of the going concern basis of accounting is inappropriate or
there is an undisclosed material uncertainty that may cast
significant doubt over the use of that basis for a period of at
least a year from the date of approval of the financial statements.
In our evaluation of the director's conclusions, we considered the
inherent risks to the company's business model and analyzed how
those risks might affect the company's financial resources or
ability to continue operations over the going concern period. We
have nothing to report in these respects.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgments that were reasonable at the time they
were made, the absence of reference to a material uncertainty in
this auditor's report is not a guarantee that the company will
continue in operation.
We specifically draw attention to the principal risks and
uncertainties surrounding the LOGI loan as set out in the Strategic
Report. This loan is the company's sole source of income and any
issues with the recoverability of this loan will have a
consequential impact on the company's income and its ability to
build shareholder value. These risks include:
-- LOGI not adhering to the terms of the settlement agreement by
failing to pass on the proceeds from the sale of oil at Otakikpo
field.
-- Production being shut with no consequential sale of oil.
-- Fall in oil prices to such an extent that the overhead costs cannot be covered.
-- Political and economic risks prevalent in Nigeria.
Our opinion is not modified in this regard.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
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
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.
Other information
The other information comprises the information included in the
annual report other than the financial statements and our auditor's
report thereon. The directors are responsible for the other
information contained within the annual report. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. 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 this
gives rise to 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.
We have nothing to report in this regard.
Responsibilities of directors
As explained more fully in the director's responsibilities
statement, 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
determines are 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 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
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 (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Extent to which the audit was considered capable of detecting
irregularities, including fraud
We identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, and then
design and perform audit procedures responsive to those risks,
including obtaining audit evidence that is sufficient and
appropriate to provide a basis for our opinion.
In identifying and addressing risks of material misstatement in
respect of irregularities, including fraud and non- compliance with
laws and regulations, our procedures included the following:
-- We obtained an understanding of laws and regulations that
affect the company, focusing on those that had a direct effect on
the financial statements such as or that had a fundamental effect
on its operations such as AQSE Growth Market regulations .
-- We enquired of the directors and reviewed directors meeting
minutes for evidence of non-compliance with relevant laws and
regulations. We also reviewed controls the directors have in place
to ensure compliance.
-- We gained an understanding of the controls that the directors
have in place to prevent and detect fraud. We enquired of the
directors about any incidences of fraud that had taken place during
the accounting period.
-- The risk of fraud and non-compliance with laws and
regulations and fraud was discussed within the audit team and tests
were planned and performed to address these risks. We identified
the potential for fraud in the following areas: related parties
outside normal course of business, management override,
misappropriation of cash and other assets and compliance with
specific legal frameworks that are applicable to the client, as
detailed above.
-- We reviewed financial statements disclosures and tested to
supporting documentation to assess compliance with relevant laws
and regulations discussed above.
-- We enquired of the directors about actual and potential litigation and claims.
-- We performed analytical procedures to identify any unusual or
unexpected relationships that might indicate risks of material
misstatement due to fraud.
-- In addressing the risk of fraud due to management override of internal controls we tested the appropriateness of journal entries and assessed whether the judgements made in making accounting estimates were indicative of a potential bias.
Due to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, as with any audit, there remained
a higher risk of non-detection of irregularities, as these may
involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. We are
not responsible for preventing fraud or non-compliance with laws
and regulations and cannot be expected to detect all fraud and
non-compliance with laws and regulations.
A further description of our responsibilities is available on
the Financial Reporting Council's website at: https://
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor's report.
Use of our report
This report is made solely to the company's members as a body.
Our audit work has been undertaken so that we might state to the
company's member those matters we are required to state to the
member in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's
member for our audit work, for this report, or for the opinions we
have formed.
Ahsan Miraj
Senior Statutory Auditor
For and on behalf of Bright Grahame Murray
Emperor's Gate
114a Cromwell Road
Kensington
London
SW7 4AG
Date: 6 June 2023
Statement of comprehensive income
2022 2022 2021 2021
Restated Restated
Note $000 $000 $000 $000
Continuing Continuing
Operations Total Operations Total
OTHER OPERATING INCOME
Cost of sales - - - -
----------- ---------- ----------- -----------
Gross (loss) - - - -
----------- ---------- ----------- -----------
Impairment of investments 11 - - (7,396) (7,396)
Cancellation of share
based payment reserve 16 - - (10,259) (10,259)
Impairment of intercompany
receivables 12 - - (306,697) (306,697)
Fair value adjustment
of receivables 12 (20,710) (20,710) - -
Impairment of loan receivable 12 - - (1,647) (1,647)
Fair value adjustment
borrowings 14 6,839 6,839 - -
Recurring administrative
costs (1,526) (1,526) (418) (418)
OPERATING LOSS 3 (15,397) (15,397) (326,417) (326,417)
----------- ---------- ----------- -----------
Finance income 6 - - - -
Finance cost 7 - - - -
----------- ---------- ----------- -----------
PROFIT/(LOSS) FROM CONTINUING
ACTIVITIES BEFORE TAXATION (15,397) (15,397) (326,417) (326,417)
Tax expense 8 - - - -
----------- ---------- ----------- -----------
LOSS FOR THE YEAR ATTRIBUTABLE
TO THE EQUITY HOLDERS (15,397) (15,397) (326,417) (326,417)
=========== ========== =========== ===========
TOTAL COMPREHENSIVE LOSS
ATTRIBUTABLE TO THE EQUITY
HOLDERS (15,397) (15,397) (326,417) (326,417)
=========== ========== =========== ===========
Loss per share - basic 9 (0.02) (0.02) (0.61) (0.61)
Loss per share - diluted 9 (0.02) (0.02) (0.61) (0.61)
=========== ========== =========== ===========
Statement of financial position
2022 2021
Restated
Note $000 $000
CURRENT ASSETS
Trade and other receivables
falling due within one
year 12 2,114 -
Cash and cash equivalents 208 50
---------- -----------
TOTAL CURRENT ASSETS 2,322 50
Trade and other receivables
falling after one year 12 29,095 51,919
TOTAL ASSETS 31,417 51,969
========== ===========
EQUITY
Share capital 15 30 27
Share premium account 264,729 264,004
Share based payment reserve - -
Retained earnings (245,241) (229,844)
---------- -----------
TOTAL EQUITY 19,518 34,187
---------- -----------
CURRENT LIABILITIES
Trade and other payables
falling due within one
year 13 4,501 1,526
---------- -----------
TOTAL CURRENT LIABILITIES 4,501 1,526
Trade and other payables
falling due after one year 13 7,398 16,256
TOTAL LIABILITIES 11,899 17,782
---------- -----------
TOTAL EQUITY AND LIABILITIES 31,417 51,969
========== ===========
These financial statements were approved by the directors on 6
June 2023 and are signed on their behalf by:
T Richardson
Chairman 6 June 2023
Statement of changes in equity
Share capital Share Share based Retained Total
premium payment reserve earnings equity
account
$000 $000 $000 $000 $000
At 1 January 2022 27 264,004 - (229,844) 34,187
Loss for the year - - - (15,397) (15,397)
Total comprehensive
income 27 264,004 - (245,241) 18,790
Transactions with
owners:
Shares issued 13 1,863 - - 1,876
Shares cancelled (10) (1,138) - - (1,148)
Total transactions
with owners 3 725 - - 728
At 31 December
2022 30 264,729 - (245,241) 19,518
============= ======== ================ =========== ========
Share capital Share Share based Retained Total
premium payment reserve earnings equity
account
Restated Restated Restated
$000 $000 $000 $000 $000
At 1 January 2021 27 264,004 10,173 96,573 370,777
Loss for the year - - (10,259) (326,417) (336,676)
Total comprehensive
income 27 264,004 (86) (229,844) 34,101
Transactions with
owners: - - 86 - 86
Total transactions
with owners - - 86 - -
At 31 December
2021 27 264,004 - (229,844) 34,187
============= ======== ================ =========== =========
Statement of cash flows
Note 2022 2021
$000 $000
CASH FLOWS USED IN OPERATING ACTIVITIES 17 158 (187)
INVESTING ACTIVITIES
Loans received - 237
CASH FLOWS FROM INVESTING ACTIVITIES 237
NET INCREASE IN CASH AND CASH EQUIVALENTS 158 50
Cash and cash equivalents brought
forward 50 -
CASH AND CASH EQUIVALENTS CARRIED
FORWARD 18 208 50
====== =====
Notes to the financial statements
1. ACCOUNTING POLICIES
a. General Information
Fenikso Limited ("the Company") is a company incorporated and
domiciled in the Cayman Islands. The address of the registered
office is 190 Elgin Avenue, George Town,Grand Cayman
KY1-9008,Cayman Islands. These financial statements are prepared in
US dollars, because that is the currency of the primary economic
environment in which the Company operates. The review of the
business is contained within the Strategic Report on page 5.
b. Basis of preparation of financial statements
The financial statements have been prepared in accordance with
EU-endorsed International Financial Reporting Standards ('IFRSs'),
IFRIC interpretations as adopted by the EU.
The financial statements have been prepared under the historical
cost convention except for financial instruments and share based
payments which are measured at fair value. Monetary amounts in
these financial statements are rounded to the nearest $000.
As at 31 December 2022 the Company had cash balances of $208,000
(2021: $50,000). The Directors have prepared a cash flow forecast
for the coming 12 months which demonstrates the ability for the
Company to actively pursue its stated strategy. Accordingly, the
Directors consider it appropriate to continue to prepare the
financial statements of the Company on a going concern basis.
c. Basis of consolidation
The financial statements incorporate the financial statements of
the Company made up to 31 December each year. Control is achieved
where the company has the power to govern the financial statements
and operating policies of an investee entity so as to obtain
benefits from its activities.
There are no subsidiaries where control was exercised
accordingly these financial statements show only the result of the
Company.
d. Segment reporting
In identifying its operating segments management generally
follows the Company's service lines, which represent the main
products and services provided by the Company.
Management considers that all activities undertaken by the
Company are from one operating segment. The on-going sole activity
of the Company, being the pursuit of acquisition opportunities have
been allocated to one continuing operating segment.
The measurement policies the Company uses for segment reporting
under IFRS 8 are the same as those used in its financial
statements.
e. Taxation
Under current laws of the Cayman Islands, there is no income,
estate, transfer, sales or other Cayman Islands taxes payable by
the Company and management believes the Company is not liable for
tax in any other jurisdiction. Accordingly no tax charges or tax
liabilities are reflected in the financial statements.
f. Investments
Subsidiary Undertakings
Investments in subsidiaries are valued at cost less provision
for impairment.
Notes to the financial statements
1. ACCOUNTING POLICIES (continued)
g. Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial
assets that are either designated to this category or do not
qualify for inclusion in any of the other categories of financial
assets.
The equity investment is measured at fair value with gains and
losses recognised in other comprehensive income and reported within
the available for sale financial asset reserve within equity,
except for impairment losses, which are recognised in profit or
loss, An assessment for impairment is undertaken at least at each
balance sheet date. Reversals of impairment losses are not
recognised in profit or loss and any subsequent increase in fair
value is recognised in other comprehensive income.
When the asset is disposed of or determined to be impaired, the
cumulative gain or loss recognised in other comprehensive income is
reclassified from the equity reserve to profit or loss.
h. Impairment
An impairment test of assets is performed whenever events and
circumstances indicate that the carrying value of the asset may
exceed its recoverable amount. The carrying amounts of the
Company's assets, are reviewed at each reporting date to determine
whether there is any indication of impairment. If such indication
exists, the asset's recoverable amount is estimated. An impairment
loss is recognised whenever the carrying amount of an asset exceeds
its recoverable amount. Impairment losses are recognised in the
income statement.
i. Financial assets and liabilities
Financial assets and liabilities are recognised on the Company's
balance sheet when the Company
becomes a party to the contractual provisions of the
instrument.
(i) Trade and other receivables
Trade and other receivables are measured at initial recognition
at fair value plus transaction costs, and are subsequently measured
at amortised cost using the effective interest rate method, less
provision for impairment. Any change in their value through
impairment or reversal of impairment is recognised in the income
statement.
Provision against trade and other receivables is made when there
is objective evidence that the Company will not be able to collect
all amounts due to it in accordance with the original terms of
those receivables. The amount of the write-down is determined as
the difference between the asset's carrying amount and the present
value of estimated future cash flows.
(ii) Cash and cash equivalents
Cash and cash equivalents comprises cash on hand and demand
deposits, and other short term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
(iii) Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Company after deducting all
of its liabilities. A financial liability is any liability which
gives rise to a contractual obligation to deliver cash or another
financial asset to another entity.
Notes to the financial statements
1. ACCOUNTING POLICIES (continued)
(iv) Bank borrowings
Interest-bearing bank loans and overdrafts are initially
recorded at fair value, net of direct issue costs and subsequently
at amortised cost using the effective interest rate method. Finance
charges, including premiums payable on settlement or redemption and
direct issue costs, are accounted for on an accruals basis in the
income statement using the effective interest rate method.
(v) Convertible loan notes containing embedded derivatives
The Company may issue convertible loan notes which carry an
option for the issuer to convert the liability into a variable
number of equity shares.
Contracts which result in the entity delivering a variable
number of its own equity instruments are classed as financial
liabilities.
The conversion option is an embedded derivative and is carried
at fair value through profit and loss.
The convertible loan is also classified as a financial
liability. It is recorded initially at fair value and subsequently
measured at amortised cost using the effective interest rate
method.
When shares are issued in consideration for extinguishment of
debt any difference between the face value of the loan notes and
the fair value of shares issued is recognised in profit and
loss.
(vi) Convertible loan notes accounted for as compound
instruments
The Company may issue convertible loan notes which carry an
option for the issuer to convert the liability into a fixed number
of equity shares.
Contracts which result in the entity delivering a fixed number
of its own equity instruments are classed as compound instruments,
containing both a financial liability and an equity instrument.
Equity instruments are instruments that evidence a residual
interest in the assets of an entity after deducting all of its
liabilities. Therefore, when the initial carrying amount of the
compound financial instrument is allocated to its equity and
liability components, the equity component is assigned the residual
amount after deducting from the fair value of the instrument as a
whole the amount separately determined for the liability
component.
No gain or loss arises from initially recognising the components
of the instrument separately.
(vii) Trade and other payables
Trade payables are initially measured at fair value, and are
subsequently measured at amortised cost, using the effective
interest rate method.
(viii) Equity instruments
Equity instruments issued by the Company or company are recorded
at the proceeds received, net of direct issue costs.
Share warrants
The Company has issued share warrants which have been accounted
for as equity instruments as the substance of the contractual
arrangement is such that the warrants evidence a residual interest
in the assets of the Company after deducting all liabilities.
Notes to the financial statements
1. ACCOUNTING POLICIES (continued)
(ix) Held for trading financial assets
Assets held in this category are measured at fair value with
gains or losses recognised in profit or loss. The fair value of
financial assets in this category are determined with reference to
active market transactions.
j. Equity and reserves
(i) Share capital
Share capital represents the nominal value of shares that have
been issued.
(ii) Share premium
Share premium includes any premiums received on issue of share
capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, to the extent there is a
premium on that issue, net of any related income tax benefits.
(iii) Equity-settled share based payment
All goods and services received in exchange for the grant of any
share-based payment are measured at their fair values. Where
employees are rewarded using share-based payments, the fair values
of employees' services are determined indirectly by reference to
the fair value of the instrument granted to the employee. This fair
value is appraised at the grant date and excludes the impact of
non-market vesting conditions (for example, profitability and sales
growth targets).
All equity-settled share-based payments are ultimately
recognised as an expense in profit and loss with a corresponding
credit to equity reserve.
If vesting periods or other non-market vesting conditions apply,
the expense is allocated over the vesting period, based on the best
available estimate of the number of share options expected to vest.
Estimates are revised subsequently if there is any indication that
the number of share options expected to vest differs from previous
estimates. Any cumulative adjustment prior to vesting is recognized
in the current period. No adjustment is made to any expense
recognised in prior periods if share options that have vested are
not exercised.
Upon exercise of share options, the proceeds received net of
attributable transaction costs are credited to share capital, and
where appropriate share premium.
k. Exceptional items
The Company identified and reports material, non-recurring costs
and income as exceptional items separately from underlying
operating expenses and income. Exceptional items may include
impairment charges and acquisition costs.
l. Key estimates and judgements
The directors have identified the following as key judgements in
the preparation of the Company accounts:
-- assessment of recoverability of intercompany receivables (Note 12 )
-- assessment of going concern (Note 2)
m. New standards, interpretations and amendments adopted from 1 January 2022
The following amendments are effective for the period beginning
1 January 2022:
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments
to IAS 37);
-- Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16);
-- Annual Improvements to IFRS Standards 2018-2020 (Amendments
to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
Notes to the financial statements
1. ACCOUNTING POLICIES (continued)
-- References to Conceptual Framework (Amendments to IFRS 3).
These amendments to various IFRS standards are mandatorily
effective for reporting periods beginning on or after 1 January
2022.
These standards have not had any material impact on the amounts
reported for the current and prior years.
New standards, interpretations and amendments not yet
effective
There are a number of standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods that the company has decided
not to adopt early. The following amendments are effective for the
period beginning 1 January 2023:
-- Disclosure of Accounting Policies (Amendments to IAS 1 and
IFRS Practice Statement 2);
-- Definition of Accounting Estimates (Amendments to IAS 8);
and
-- Deferred Tax Related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
The company is currently assessing the impact of these new
accounting standards and amendments and expects there will be no
material impact on the financial statements of the company.
m. Prior year adjustment
The prior year comparatives have been adjusted to reflect the
true economic value of the Company following the Settlement
Agreement, which was finalised on 31 December 2022. The adjustments
better and more accurately represent the true financial position of
the Company. The corrections and adjustments are noted below,
further detail is included in the relevant notes to the financial
statements. The following line items within the financial
statements were affected:
Movement
31 December for the 31 December
Ref 2020 year 2021
As previously Prior
As reported reported year adjustment As restated
$'000 $'000 $'000 $'000
STATEMENT OF COMPREHENSIVE
INCOME
Loss for the year 1 - (237,164) (89,253) (326,417)
------------ -------------- ----------------- ------------
STATEMENT OF FINANCIAL POSITION
Trade and other receivables 2 382,115 (246,941) (83,255) 51,919
Trade and other payables 3 18,734 (17,209) 10,374 11,899
STATEMENT OF CHANGES IN EQUITY
Share based payment reserve 4 10,173 86 (10,259) -
Retained earnings 5 96,573 (237,164) (89,253) (229,844)
--------------------------------- ------ ------------ -------------- ----------------- ------------
Total 106,746 (237,078) (99,512) (229,844)
--------------------------------- ------ ------------ -------------- ----------------- ------------
1 Adjustment represents net effect on the income statement of
the 2021 adjustments noted below.
2 Adjustment reflects the final agreed position on intercompany
receivables and former director's loan as reached under the
Settlement Agreement (Note 12)
3 Adjustment reflects the final agreed position on the Savannah
Energy loan (Note 14).
4 Adjustment represents the effect of the cancellation of all
share based schemes following the Settlement Agreement (Note
16).
5. Adjustment represents the net effect on retained deficit.
There was a negative impact of 0.17 on loss per share in respect
of the comparative year as a result of the prior year adjustments.
There is no impact on the cash flow statement as a result of the
adjustments.
2. GOING CONCERN
The Directors have assessed the ability of the Company to
continue as a going concern having prepared detailed cash, funding
and liquidity forecast through to June 2024. The Directors, having
made due and careful enquiry, are of the opinion that the Company
will have access to adequate working capital to meet its
obligations over the next 12 months from the date of approval of
these financial statements. The Directors therefore have made an
informed judgement, at the time of approving the financial
statements, that there is a reasonable expectation that the Company
has adequate resources to continue in operational existence for the
foreseeable future. As a result, the Directors have adopted the
going concern basis of accounting in the preparation of the annual
financial statements.
3. OPERATING LOSS
Operating loss is stated after charging:
2022 2021
Restated
$000 $000
Impairment of investments 7,396
Cancellation of share option reserve - 10,259
Loan write off - 1,647
Impairment of intercompany receivables - 306,697
Fair value adjustment on receivable 20,710 -
Fair value adjustment on borrowings (6,839) -
Fees payable to the company's auditor
:
- for the audit of the financial statements 43 51
4. STAFF COSTS
Staff costs, being amounts payable to key management personnel,
were as follows:
2022 2021
$000 $000
Wages and salaries 220 295
220 295
====== ======
The average monthly number of employees during the year,
including directors was as follows:
No. No.
Directors 6 6
==== ====
5. DIRECTORS' REMUNERATION
Directors' emoluments were as follows:
2022 2021
Salary and Salary and
Director total emoluments total emoluments
$000 $000
T Hawkins (resigned 30 June 2022) 20 144
A Tindall (resigned 30 June 2022) 20 63
T Richardson 40 26
A Adefulu 40 4
M D'Attanasio 40 19
P Durotoye 40 4
A Oyebode* (resigned 18/6/21) - 35
D Sofola 20 -
----------------- -----------------
Total 220 295
================= =================
No retirement benefits were accruing to directors at 31 December
2022 (2021: GBPnil).The directors received GBPnil (2021: GBPnil) in
respect of share based payments.
6. FINANCE INCOME
2022 2021
Restated
$000 $000
Interest on intercompany loan - -
- -
====== =========
7. FINANCE COST
2022 2021
$000 $000
Total interest expense for financial liabilities - -
----- ------
- -
===== ======
8. TAX EXPENSE
As per accounting policy 1 (e) under current laws of the Cayman
Islands, there is no income, estate, transfer, sales or other
Cayman Islands taxes payable by the Company and management believes
the Company is not liable for tax in any other jurisdiction.
Accordingly, no tax charges or tax liabilities are reflected in the
financial statements.
9. (LOSS)/EARNINGS PER SHARE
Basic earnings per ordinary share for the year is based on the
loss of $15,397,000 (restated 2021: loss:$326,417,000) and a
weighted average of 736,566,685 (2021: 536,779,983) ordinary
shares.
For diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
potential dilutive ordinary shares. Items included in the
calculation are options and warrants for ordinary shares.
The effect of conversion of all potential dilutive ordinary
shares would have an anti-dilutive effect on earnings per share and
therefore they have not been incorporated in the diluted earnings
per share calculation. Potential ordinary shares are only treated
as dilutive when their conversion to ordinary shares would decrease
profit per share or increase loss per share.
10. SEGMENT REPORTING
Management currently considers that the Company has one
operating segment as described in accounting policy 1(c). Segment
information can be analysed as follows for the reporting periods
under review.
Investment Investment
strategy strategy
2022 Total 2022 2021 Total 2021
Continuing Continuing
operations operations
Restated Restated
$000 $000 $000 $000
Segment
operating
profit/(loss) (15,397) (15,397) (326,417) (326,417)
------------ ------------- ------------ -------------
Segment
assets 31,417 31,417 51,969 51,969
------------ ------------- ------------ -------------
11. INVESTMENTS
Company investment in subsidiaries - Shares in Company
undertakings
2022 2021
Non-current $000 $000
At 1 January - 7,396
Impairment - (7,396)
---- -------
At 31 December - -
==== =======
The Directors assessed the carrying value of its investments in
its subsidiaries as part of its formal review of its various
intercompany and related party loan positions in 2021 and wrote
down the value of the shares in Company undertakings to nil at that
point. The Company no longer has subsidiaries (Note 21).
12. TRADE AND OTHER RECEIVABLES
2022 2021
Restated
$000 $000
Current - falling due within
one year
Other receivables - -
Intercompany receivable 2,114 -
2,114 -
------ --------
Non current - falling due
after one year
Intercompany receivable 29,095 51,919
------ --------
Total 31,209 51,919
------ --------
An unsecured loan of US$1,500,000 was granted to a Director on 9
December 2014. The loan had a three-year term and bore interest at
a rate of four per cent per annum. In September 2017, the loan's
maturity date was extended by 3 years to 9 December 2020 under the
same terms and conditions. On 9 December 2020, at the expiration of
the extension, the Board approved a final extension to loan for 12
months conditional on the adherence to the following repayment
terms: immediate payment of US$0.4 million, while the balance on
the loan is settled by quarterly payments of interest and principal
at a revised interest rate of 10% plus 3-month LIBOR. The initial
US$0.4 million was settled by the Director although no other
settlements were made and the loan is in default and accruing
interest at a rate of LIBOR plus 14 per cent on the default amount.
At 31 December 2021, the balance outstanding was US$1,646,696.
During 2022, the Company sought litigation proceedings to recover
the amounts owing. Under a settlement deed on 7 December 2022, the
Company agreed with the party, with no admission of liability, to
agree to, among other things, the release and discharge of all
relevant claims, the withdrawal of legal proceedings, surrenders of
certain shares and other transactions, a new framework for their
future relationship and fully and finally to resolve their
differences, dispose of ongoing litigation and agree certain
ancillary matters. Accordingly, the Company waived all rights to
repayment in respect of any and all existing indebtedness. The
amount outstanding at the end of 31 December 2021 of $1,646,696 has
therefore been written off to reserves as at 31 December 2022, the
balance being reduced to nil.
In 2021, the Company commenced a formal review of all the
various intercompany and related party loan positions and impaired
certain intercompany balances, resulting in a balance owed at 31
December 2021 of $133,527,153. Under the settlement deed of 7
December 2022, the Company granted a new loan of approximately
$51,919,467 to Lekoil Oil and Gas Investments Limited ("LOGI") (the
"LOGI Loan") in consideration for the transfer of certain loans
granted to Lekoil Nigeria and its related entities to LOGI, the
release of security related to such loans and the waiver of any
repayment of amounts due under such loans. Accordingly the balance
of intercompany receivable at 31 December 2022 is $51,919,467 with
residual balances written off to reserves. The loan is to be repaid
by 8.653% of the aggregate proceeds of the sales received from
Shell Western in respect of each lifting of crude oil by LOGI. Thus
far, in 2023, the Company has announced it has received a total of
$1,305,970 as partial repayment of the loan of US$51,919,467. The
amount received equates to 8.65% of the value of the crude oil
sales by LOGI. The proceeds will go towards reducing the Company's
creditor balances. The Company has carried out an assessment of the
value of the amounts due at 31 December 2022 on a discounted basis
using a rate of 16.821% to effect a current market value of the
loan of $31,209,408. The difference of $20,710,059 has been
recognised in the statement of comprehensive income.
Intercompany receivable: 2022
$000
Book value 51,919
Fair value adjustment (20,710)
--------
At 31 December 31,209
13. TRADE AND OTHER PAYABLES
2022 2021
Restated
$000 $000
Current - falling due within
one year
Trade payables 1,494 1,019
Other payables (Note14) 2,020 237
Accruals 987 270
------ --------
4,501 1,526
------ --------
Non current - falling due after
one year
Other payables (Note 14) 7,398 16,256
------ --------
Total 11,899 17,782
------ --------
The carrying values are considered to be a reasonable
approximation to fair value.
14. BORROWINGS
2022 2021
Restated
$000 $000
Current
Short term loans - falling
due within one year 2,020 237
----- --------
Non current - falling due
after one year 7,398 16,256
----- --------
Total 9,418 16,493
----- --------
In 2021, the Company entered into a Convertible Facility
Agreement ("CFA") with Hadron Master Fund, TDR Enterprises Ltd (a
company controlled by Tom Richardson) and a non-related third party
(together "the Lenders") to allow it access GBP200,000 for working
capital purposes for a 6-month period. Hadron
would provide GBP100,000 while TDR Enterprises Ltd and the third
party will provide up to GBP50,000 each. The purpose of the
facility was for the payment of corporate costs (regulatory and
compliance and legal fees) and for general corporate purposes as
approved by the Board of Directors. There was an option to convert
the facility in the event of non-payment and expiration of term to
ordinary shares of the Group at the conservation price of 0.5
pence. Interest rate as at 10% per annum.
On 28 February 2022, the Company announced that Savannah Energy
had entered into a convertible facility agreement (the "CFA2") and
option agreement (the "Option Agreement") with the Company,
together with the grant of certain related security by the Company
over the loans owed by the Lekoil Nigeria group, in order to
support the Company's restructuring. Lekoil Nigeria brought legal
proceedings
against the Company seeking (among other remedies) orders to set
aside CFA1, CFA2 and the Option Agreement with Savannah Energy and
to set aside the issue of shares to the CFA1 Parties and Savannah
Energy pursuant to those agreements.
The Company entered into the Option Agreement with Savannah
Energy granting it an option to be assigned the intercompany debt
owed to the Company by Mayfair, its associated security related to
OPL 310 and all rights and benefits of the Company with respect to
the Mayfair Loan. A US$1 million payment is payable by Savannah
Energy to the Company upon such exercise and assignment (which has
not currently been exercised). Pursuant to the Option Agreement,
the Company would be paid deferred consideration in the event that
Savannah Energy obtains a working interest in OPL 310 (for example,
upon enforcement of security for repayment of the Mayfair Loan) and
OPL 310 is
14. BORROWINGS (cont)
developed. Such deferred consideration (capped at US$50 million)
is structured as a royalty of 0.5% on crude oil sales attributable
to Mayfair's actual participating interest in OPL 310 (being a
17.14% participating interest).
Pursuant to the Settlement Deed, the Company has agreed to
terminate the Option Agreement (and the associated security related
to OPL 310).
Under the terms of a separate agreement with Savannah Energy,
Savannah Energy shall surrender all of its shares in the Company
(the "SEIL Shares"). Savannah Energy currently holds 179,997,756
Ordinary Shares. Savannah Energy has converted GBP100,000 of the
outstanding amount due under the CFA2 into Ordinary Shares,
resulting in the issue of 20,000,000 Ordinary Shares to Savannah
Energy in respect of such repayment and conversion.
In consideration for the surrender of Savannah Energy's
interests, the termination of the Option Agreement, the release by
Savannah Energy of any security interests in favour of it in
respect of the Mayfair Loan and the release of all remaining
amounts due under the CFA2, the Company has entered into a loan
agreement with Savannah Energy pursuant to which the Company shall
agree to pay Savannah Energy certain upfront payments together with
25% of all amounts received by the Company from LOGI pursuant to
the LOGI Loan, subject to a maximum total payment of approximately
$16,256,159. The Company has assessed the value of the loan amount
at 31 December 2022 on a discounted basis using a rate of 16.821%
to effect a current market value of $9,417,555. The difference of
$6,838,604 has been recognised in the statement of comprehensive
income.
Borrowings: 2022
$000
Book value 16,256
Fair value adjustment (6,838)
-------
At 31 December 9,418
15. SHARE CAPITAL
2022 2021
$ $
Authorised, Allotted, called up and
fully paid
Ordinary shares
Beginning of the year 26,839 26,839
New Shares issued (262,614,194 ordinary
shares) 13,131 -
Shares cancelled (199,997,756 ordinary
shares) (10,000) -
--------- -------
As at 31 December: 599,396,421 ordinary
shares of $0.00005 (2021: 536,779,583
ordinary shares of $0.00005 each) 29,970 26,839
The authorised share capital is 1,000,000,000 shares at par
value of $0.00005 each
Following the Settlement Arrangements agreed at the Company's
EGM on 29 December 2022, it was agreed that between the Company and
Savannah Energy that it would surrender all of its shares in the
Company comprising 199,997,756 Ordinary Shares.
As at the end of May 2023 LOGI had complied with all conditions
of the settlement agreement save for the cancellation of certain
shares in the Company owned by Lekoil Nigeria, Lekan Akinyami and
Samuel Olutu. The total shares that should have been cancelled are
107,658,847 ordinary shares. The Company is working with such
parties to cancel such shares as soon as practicably possible.
16. SHARE-BASED PAYMENTS
Following the Settlement Agreement in December 2022 the Company
has transferred or cancelled all previous share arrangements. The
balance on the reserve account at 31 December 2022 of $10,258,792
has been written off to the Statement of Comprehensive Income.
Long Term Incentive Plan scheme (equity-settled)
The long-term incentive plan ("LTIP") was approved on 19
November 2014 and amended on 21 December 2015. The Company awarded
no share options under the plan in the year (2021: nil). The
existing options have all been transferred as part of the
Settlement Agreement. Accordingly no share based payment
arrangements exist at 31 December 2022.
Weighted Weighted
average average
exercise exercise
price price
US$ Number of options US$ Number of options
---------- ------------------ ---------- ------------------
2022 2021
------------------------------ ------------------------------
Outstanding at
1 January 0.32 20,106,500 0.33 30,099,000
Granted during
the year - - 0.03 -
Transferred during
the year 0.33 (20,106,500) 0.33 (9,992,500)
---------- ------------------ ---------- ------------------
Outstanding at
31 December 0.32 - 0.32 20,106,500
---------- ------------------ ---------- ------------------
Share option scheme (equity-settled)
The Group established a share option scheme available to
Directors, key management personnel, employees and consultants
providing employment-type services, which provides the opportunity
to purchase shares in the Group. In accordance with the scheme,
holders of vested options are entitled to purchase shares at prices
of the shares established at the date of grant, during a period
expiring on the tenth anniversary of the effective date i.e. grant
date. The grant dates for awards were 3 December 2010, 1 June 2011,
1 November 2011, 4 June 2012, 19 February 2013, 7 April 2013, 17
May 2013 and 26 March 2014 based upon a shared understanding of the
terms of the awards at that time. This share option scheme has been
replaced by the LTIP scheme described above. No new options were
granted in 2022 under this scheme and all options expired in the
year to 31 December 2022.
The number and weighted average exercise prices of share options
are as follows:
Weighted
average Weighted
exercise Number of average exercise Number of
price US$ options price US$ options
----------- ------------- ------------------ -----------
2022 2021
-------------------------- -------------------------------
Outstanding at 1 January 0.46 16,358,125 0.46 16,358,125
Granted during the year - - - -
Expired during the year - (16,358,125) 0.46 -
Exercised during the year - - - -
----------- ------------- ------------------ -----------
Outstanding at 31 December - - 0.46 16,358,125
----------- ------------- ------------------ -----------
Exercisable at 31 December - - 0.46 16,358,125
----------- ------------- ------------------ -----------
16. SHARE-BASED PAYMENTS (cont)
Non-Executive Director Share Plan (equity-settled)
The Board established the Non-Executive Director share plan on
21 December 2015. Following the Settlement Agreement in December
2022, the plan has ceased.
The number and weighted average exercise prices of share options
are as follows:
Weighted
average Weighted
exercise Number of average exercise Number of
price US$ options price US$ options
----------- ---------- ------------------ ------------
2022 2021
----------------------- --------------------------------
Outstanding at 1 January 0.20 250,000 0.20 2,600,000
Granted during the year - - - -
Transferred during the
year - (250,000) - (2,350,000)
----------- ---------- ------------------ ------------
Outstanding at 31 December 0.03 - 0.03 250,000
----------- ---------- ------------------ ------------
17. RECONCILIATION OF OPERATING LOSS TO NET CASH USED IN OPERATING ACTIVITIES
2022 2021
Restated
$000 $000
Loss for the year (15,397) (326,416)
Impairment - 7,396
Decrease/(increase) in receivables 20,710 325,668
Increase/(decrease) in payables (5,155) (6,835)
-------- ---------
Net cash used in continuing operations 158 (187)
Net cash outflow used in operations 158 (187)
======== =========
18. FINANCIAL INSTRUMENTS
The carrying amounts presented in the statement of financial
position relate to the following categories of assets and
liabilities:
2022 2021
Restated
Company $000 $000
Financial assets
Loans and receivables:
Trade and other receivables 31,209 51,919
Cash and cash equivalents 208 50
------ ---------
31,417 51,969
------ ---------
Financial liabilities
Financial liabilities measured
at amortised cost:
Current:
Loans 9,418 16,493
Trade and other payables 2,481 1,289
11,899 17,782
------ ---------
The carrying values of the Company's financial assets and
liabilities approximate to their fair values.
Financial assets comprise cash and cash equivalents, trade and
other receivables and exclude prepayments. The financial
liabilities are all short-term liabilities and due on demand or
within agreed contractual terms.
18. FINANCIAL INSTRUMENTS (cont)
Risk management
The board is charged with managing the various risk exposures,
including those which arose through holding the following financial
instruments which apply to both the Company and the Company:
(a) Capital risk management
The Company manages its capital to ensure that all the companies
within the Company will be able to continue as a going concern
while maximising the return to equity holders, through optimisation
of debt equity balance. The capital structure of the Company
includes debt, consisting of borrowings, cash and cash equivalents
and equity attributable to the equity holders of the parent. Where
necessary additional loans are provided to the Company to ensure
liquidity at critical times.
Capital for the reporting period under review is summarised as
follows:
2022 2021
Restated
$000 $000
-------------------------- ------ ---------
Total equity 19,518 34,187
-------------------------- ------ ---------
Borrowings 9,418 16,493
-------------------------- ------ ---------
Cash and cash equivalents 208 50
-------------------------- ------ ---------
Capital 29,144 50,730
-------------------------- ------ ---------
(b) Interest rate risk
The Company is exposed to interest rate risk as it has
borrowings and cash and cash equivalent balances that are subject
to variable interest rates. The Company does not enter into hedging
transactions for the purposes of minimising its exposure to
interest rate risk, but manages its exposure by monitoring the
levels of interest payable and receivable on a regular basis.
At 31 December 2022 amounts on short term deposits totalled
$208,000 (2021: $50,000). Loans receivables and loan notes are
contracted at a fixed rate of interest.
(c) Liquidity rate risk
The Company's approach to liquidity risk is to ensure that
sufficient liquidity is available to meet foreseeable requirements,
by having adequate reserves, banking and borrowing facilities and
by investing funds securely and profitably. The board further
manages its exposure to liquidity risk by ensuring that cash flow
forecasts and budgets are produced annually and monitored on a
regular basis. All trade payables and borrowings have a maturity
date of within one year.
(d) Credit rate risk
Credit risk refers to the risk that a third party will default
on its contractual obligations resulting in financial loss to the
Company. The Company manages the exposure to this risk by carrying
out credit verification procedures on all clients and monitoring
receivable balances on an ongoing basis. The Company's receivable
balance principally comprises amounts due from other Company
companies for financing purposes.
19. RELATED PARTY TRANSACTIONS
Transactions with key management personnel
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the Company, directly or indirectly. These are the
Directors.
Loans and transactions with key management personnel
An unsecured loan of US$1,500,000 granted to a Director on 9
December 2014. The loan had a three-year term and bore interest at
a rate of four per cent per annum. In September 2017, the loan's
maturity date was extended by 3 years to 9 December 2020 under the
same terms and conditions. On 9 December 2020, at the expiration of
the extension, the Board approved a final extension to loan for 12
months conditional on the adherence to the following repayment
terms: immediate payment of US$0.4 million, while the balance on
the loan is settled by quarterly payments of interest and principal
at a revised interest rate of 10% plus 3-month LIBOR. The initial
US$0.4 million was settled by the Director although no other
settlements were made and the loan is in default and accruing
interest at a rate of LIBOR plus 14 per cent on the default amount.
At 31 December 2021, the balance outstanding was US$1,646,696.
During 2022, the Company sought litigation proceedings to recover
the amounts owing. Under a settlement deed on 7 December 2022, the
Company agreed with the party, with no admission of liability, to
agree to, among other things, the release and discharge of all
relevant claims, the withdrawal of legal proceedings, surrenders of
certain shares and other transactions, a new framework for their
future relationship and fully and finally to resolve their
differences, dispose of ongoing litigation and agree certain
ancillary matters. Accordingly, the Company waived all rights to
repayment in respect of any and all existing indebtedness. The
amount outstanding at the end of 31 December 2021 has therefore
been written off to reserves as at 31 December 2022, the balance
being reduced to nil.
On 2 September 2021, the Company entered into a Convertible
Facility Agreement ("CFA") with Hadron Master Fund ("Hadron") (a
company associated with Marco D'Attanasio), TDR Enterprises Ltd (a
company controlled by Tom Richardson) and a non-related third party
(together "the Lenders") to allow it to access up to GBP200,000 for
working capital purposes. The key terms of the CFA were: (i)
Amount: an amount of up to GBP200,000 in total, with Hadron
providing up to GBP100,000 and each of TDR Enterprises Ltd and the
third party providing up to GBP50,000 each; (ii) Use of proceeds:
for payment of corporate costs (regulatory and compliance and legal
fees) and for general corporate purposes as approved by the Board
and the Lenders; (iii) Availability: GBP100,000 available
immediately, with GBP100,000 available after 1 October 2021. (iv)
Term: 6 months. (v) Repayment: Principal and interest to be repaid
from proceeds of capital raise and/or monies recovered from CEO
Loan. Repayment immediately due on a change of control of the
Company. No conversion before expiry of the Term. (vi) Conversion
right: In the event of non-payment at the expiry of the Term,
Lenders have the option to convert the outstanding amounts into
ordinary shares of the Company at the Conversion Price of 0.5
pence. (vii) Interest Rate: 10% per annum. (viii) Shareholder
approval/Security for Repayment: Approval at Company's AGM. In the
event shareholder approval was not obtained, the Lenders would have
been be entitled to an assignment by way of
security of the CEO Loan.
Anthony Hawkins, whilst the Interim Executive Chairman of the
Company, made a number of interest free loans to the Company to pay
its day to day administrative costs. Those loans have been repaid
by the Company.
20. ULTIMATE CONTROLLING PARTY
As at 31 December 2022 and 31 December 2021 there is no single
ultimate controlling party.
21. PRINCIPAL SUBSIDIARIES
As at 31 December 2022, following the Settlement Agreement,
there are no principal subsidiaries.
As at 31 December 2021 the Company had the following
subsidiaries:
Company name Country Ownership interest
Lekoil Nigeria Limited Nigeria 40%
Lekoil Exploration and
Production (Pty) Limited Namibia 80%
Lekoil Management Corporation USA 100%
Lekoil 310 Limited Cayman 100%
Princeton Assets and
Trust Pte Limited Singapore 100%
Lekoil Management Services Cayman 100%
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END
NEXEQLFBXQLXBBK
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June 06, 2023 11:41 ET (15:41 GMT)
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