TIDMRRE
RNS Number : 6090X
RockRose Energy plc
30 April 2019
ROCKROSE ENERGY PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2018
Company Registration No. 09665181
ROCKROSE ENERGY PLC
CONTENTS
STRATEGIC REPORT
3
REMUNERATION REPORT
8
DIRECTORS' REPORT 15
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS 20
INDEPENT AUDITORS' REPORT
21
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
27
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
28
COMPANY STATEMENT OF FINANCIAL POSITION
29
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 30
COMPANY STATEMENT OF CHANGES IN EQUITY
31
CONSOLIDATED STATEMENT OF CASH FLOWS 32
COMPANY STATEMENT OF CASH FLOWS 34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 35
COMPANY INFORMATION 64
ROCKROSE ENERGY PLC
STRATEGIC REPORT
The Directors present their Strategic Report on RockRose Energy
PLC ('the Company' or together with its subsidiaries, 'the Group')
for the year ended 31 December 2018.
The Group's strategy, business and future developments
2018 was a year of significant delivery for RockRose Energy PLC.
Your Company continues to make strong progress having completed two
further acquisitions, increasing current production to around
11,000 boepd on a full year pro-forma basis. We have also observed
an increase in the economic life of the portfolio with dates for
decommissioning being pushed back in line with the government's MER
strategy. The Company sees the cash cost of decommissioning
averaging around 20-25% of annual EBITDA for the next five years at
current hydrocarbon prices. The Company completed the acquisition
of Dyas BV on 1 October for a consideration of $124 million (EUR107
million) adding approximately 6,000 boepd, along with cash balances
of $90.6 million. The effective date of the acquisition was 1
January 2018. It also acquired a 30.43% stake in the Shell operated
Arran field for a nominal consideration of $1. This development
will add a further 8.6 mmboe of 2P reserves and estimated 5,200
boepd of initial net production from 2021.
Having built a significant non-operated business in the North
Sea producing 10,000 - 12,000 boepd, the Board decided to explore
the possibility of acquiring an operatorship in the North Sea.
Having analysed and rejected several opportunities the Company made
an offer for Marathon Oil Corporation's UK assets. On 25 February
2019 the Company signed a Sale & Purchase Agreement (SPA) to
acquire 100% of Marathon Oil U.K. LLC ("MOUK") and 100% of Marathon
Oil West of Shetland Limited, ("MOWOS") subsidiaries of Marathon
Oil Corporation ("Marathon Oil"). Total consideration is circa $140
million. A deposit of $10 million was paid on signing the SPA, of
which 50% is refundable if completion does not occur. Completion is
anticipated to occur early in the second half of 2019. Upon
announcement of the intention to acquire Marathon, shares in the
Company were suspended on the London Stock Exchange. The Company
will, post completion, publish a re-admission document and apply
for the shares to resume trading on the London Stock Exchange.
MOUK holds 40% operated interests in fields in the Greater Brae
Area and MOWOS holds a 28% interest in the BP plc operated Foinaven
Field unit and a 47% interest in Foinaven East. The acquisition
also includes interests in the SAGE, Brae-Forties and WOSPS
infrastructure providing additional tariff income. Upon completion,
this acquisition is anticipated to add circa 35 million boe of 2P
reserves (21 million boe on a 1P basis). This gives the Company a
net 2P position as at 1 January 2019 on completion in excess of 70
million and 2P+2C of 86 million boe. Anticipated production for the
assets being acquired is circa 10,500- 12,000 boepd in 2019, taking
the Company's total net anticipated production for 2019 to circa
21,000-24,000 boepd. The effective date of the acquisition is 1
January 2019 and upon completion the MOUK and MOWOS assets and
teams in Aberdeen, Peterhead and offshore will transfer with MOUK
and MOWOS to RockRose. This is a significant development for the
Group not only doubling its size but also allowing it to pursue
further opportunities as an operator and to utilise the experienced
teams within the Marathon entities.
On 1 March the Company made a formal offer to the board of
directors of Independent Oil and Gas plc ("IOG") with a proposal
for an all cash takeover offer for IOG (the "Proposal"). The terms
of the Proposal were that RockRose would offer 20p in cash per
ordinary share ("IOG Share") for the entire issued and to be issued
share capital of IOG (the "Possible Offer") which would value the
total share capital of IOG at GBP26.6 million. The Possible Offer,
if made, would represent a premium of 51 per cent. to the closing
price of IOG on 26 February, the day of the initial approach by
RockRose to IOG and a premium of 58 and 44 per cent to the 30 and
60 day volume-weighted average price respectively, up to the period
ended 26 February. The Proposal was rejected by the board of
directors of IOG.
During the course of 2018, we have continued to examine both the
upside opportunities presented by our existing portfolio together
with the timings and costs related to decommissioning. Overall
capital expenditure for 2019 is anticipated to be around $85
million as we continue to invest in our assets. A significant
proportion of this is related to Arran where first gas is on target
to be delivered early in 2021. Production life of the Ross &
Blake fields is being extended from 2024 to at least 2029, giving
an incremental net 2P reserves of more than 4.2MMboe. This also
requires investment and there is a 35 day "walk to work" campaign
scheduled for June this year to ensure the Bleo Holm vessel can
continue to provide a route to market for Ross & Blake
hydrocarbons. (Walk to work involves the use of a vessel that is
stationed adjacent to the production facilities, allowing more
efficient use of manpower resulting in a more cost effective
maintenance period). The evaluation of the Tain discovery is also
being progressed by the operator, Repsol, with a view to reaching a
Field Development Plan by the end of 2019. Further evaluation of
the infill opportunities in the Repsol operated Blake Channel and
Flank areas also continues.
The productive life of the Group's other assets continues to be
extended. During the year the anticipated dates for cessation of
production at B-Block have been extended from 2019 to 2021, Mordred
and Galahad have been extended from 2020 to 2023, the
decommissioning of Galley from 2021 to 2024 in addition to the
material extension of Ross & Blake from 2024 to 2029 mentioned
above. In the Netherlands, the cessation of production at Hanze has
been extended from 2025 to 2031. Active decommissioning is ongoing
in a number of areas, with the final phases of decommissioning the
Halfweg asset being completed and the heavy lift at Markham ST-1
anticipated to take place this summer in the Netherlands. RockRose
have commissioned an audit by ERC Equipoise of the various
operators estimates of timing and costing of decommissioning. The
detail of this report will be included in the readmission document
to be published following completion of the Marathon acquisition.
The main conclusion of the report is that the weighted average
timing of the net post tax decommissioning cost has been extended
from 2026 (at acquisition) to 2031 today.
ROCKROSE ENERGY PLC
STRATEGIC REPORT (CONTINUED)
Since the acquisition of the Netherlands assets a successful
development well was drilled on Block A18 adding a further 200
boepd (net). The Petrogas operated, B10 and A15 appraisal wells
(RockRose equity of 14.63% and 28.23% respectively) were
successfully drilled in Q1 2019. The logging data shows the
Pleistocene Q reservoir units are as prognosed, and in some cases
better than prognosed. The operator is currently evaluating the
well results.
The Group implemented its hedging strategy during the reporting
year, hedging 900,000 barrels at an average price of $67.82 per
barrel. These hedges had all lapsed by the end of the year. During
April 2019, the Company entered into a hedging agreement by hedging
3,000 boepd of its oil production at $69 for a period of 13 months
from May 2019.
As far as RockRose is concerned, we do not anticipate any direct
post-Brexit issues for the business as oil is an international
commodity there should be no impact on our UK operations. We are
also currently a non-operator in the Netherlands with no employees
and few EU suppliers and therefore envisage little impact on our
Dutch operations. The Company will continue to evaluate the
position as pre and post negotiations progress.
As at 31 December 2018 cash and cash equivalents and restricted
cash on the balance sheet stood at $121.3 million (details of cash
and cash equivalents are given in note 18, and details of
restricted cash are given in note 19). Please see the table below
for the breakdown:
Results Summary*
31 December 31 December
2018 2017
$'000 $'000
Revenue 153,072 7,436
-------------------------------------- ------------ ------------
Pro forma Revenue (including Dyas)** 230,965 -
-------------------------------------- ------------ ------------
Adjusted EBITDA (1) 77,192 (4,339)
-------------------------------------- ------------ ------------
Pro forma adjusted EBITDA (including
Dyas)** 111,992 -
-------------------------------------- ------------ ------------
Profit after tax 38,859 74,074
-------------------------------------- ------------ ------------
Net cash generated from/(used in)
operating activities 83,449 (27,474)
-------------------------------------- ------------ ------------
Cash and Cash equivalents 67,944 64,955
-------------------------------------- ------------ ------------
Restricted Cash (2) 53,347 55,336
-------------------------------------- ------------ ------------
Total Cash 121,291 120,291
-------------------------------------- ------------ ------------
* The results for 2018 include the post-acquisition results
(i.e. three months) of the Dyas entities.
** As effective date of the acquisition was 1 January 2018, pro
forma results include full year results as if the Dyas entities had
been included from that date.
(1) Adjusted earnings before interest, tax, depreciation and
amortisation (Adjusted EBITDA) is considered by the Company to be a
useful additional measure to help understand underlying performance
as major non-cash items are eliminated, e.g. gain on acquisition,
depreciation and amortisation.
(2) RockRose, as part of its stewardship of its interest in fields, has become party to various decommissioning security agreements, which has resulted in restricted cash balances being placed with the trustees and letter of credit providers under the terms of these agreements. The amounts placed in restricted cash will continue to vary over the time they are in place, which will depend on certain assumptions, for example the oil price and anticipated dates of cessation of production.
The goodwill arising from the business combinations was $18.7
million which has been immediately written off. We have valued
these assets using the following commodity prices: $81/bbl oil and
EUR27/MWH gas for Q3 2018, $80/bbl oil and EUR25/MWH gas for 2019
and $76/bbl oil and EUR23/MWH gas for 2020, which were the
long-term forecasts at the point of completion.
Operational and Financial Update
-- Strong revenue of $153 million with average realised oil
price of $72.95/bbl and gas price of $46.04/boe
-- Average production of 6,389 boepd of which 1,558 boepd
relates to gas production. Pro forma production of 10,755 boepd of
which 5,414 boepd relates to gas production.
-- Return to shareholders of $30.4 million (GBP23 million (GBP1.50per share)) in February 2018
-- Share buyback of just under 20% of issued share capital for
cash of $22.0 million (GBP16.4 million (GBP5.60per share)) in
November 2018
-- Cash at Bank as at the date of this announcement is $120
million, of which $40 million is restricted.
ROCKROSE ENERGY PLC
STRATEGIC REPORT (CONTINUED)
RockRose Energy PLC would like to thank our joint venture
partners and particularly the operators of our assets for their
responsible stewardship during 2018 particularly in relation to
adherence to HSE policies and minimising our environmental
impact.
Employees
The Company has a small team of highly dedicated professionals.
The table below shows the current gender breakdown of the Company
as at 31 December 2018.
Male Female Total
Directors 3 0 3
Senior Managers 2 1 3
Employees 7 3 10
Total 12 4 16
================= ===== ======= ======
With the acquisition of Marathon and becoming an operator the
number of employees will significantly increase.
Health, Safety and Environment (HSE)
The health and safety of people, the protection of the
environment and compliance with all applicable legal and internal
requirements, as well as industry best practice, are critical to
the overall success of RockRose Energy.
Currently the Company is a non-operator but aims to work with
the operators of the fields in which we are partners to ensure they
are operating in a safe and environmentally responsible way. With
the acquisition of Marathon and RockRose assuming operatorship, the
Company will endeavour to maintain and, where necessary, improve
the policies and procedures which Marathon currently has in
place.
Financial review
The Group generated revenue of $153 million during 2018 with
total sales of 2,332,164 boe realising an average oil price of
$72.95/bbl and gas price of $46.04/boe.
Adjusted EBITDA
Adjusted EBITDA is considered by the Company to be a useful
additional measure to help understand underlying performance as
major non-cash items are eliminated, eg. gain on acquisition,
depreciation and amortisation.
Adjusted EBITDA for the year was $ 77.2 million (2017: $(4.3)
million loss) and the profit after tax was $38.9 million (2017:
$74.1 million profit).
31 December 31 December
2018 2017
$'000 $'000
Operating profit (1) 24,310 73,843
------------------------------------------- ------------ ------------
Add back depreciation and amortisation(1) 34,222 1,669
------------------------------------------- ------------ ------------
Add back write-off of goodwill(1) 18,660 7,974
------------------------------------------- ------------ ------------
Deduct gain on acquisition(1) - (87,825)
------------------------------------------- ------------ ------------
Adjusted EBITDA 77,192 (4,339)
------------------------------------------- ------------ ------------
(1) Please refer to the Statement of Comprehensive Income
In summary, we have made significant progress in delivering the
stated strategy for the Group. We have acquired assets that are
generating cash, created a strong balance sheet and have
significant upside potential.
ROCKROSE ENERGY PLC
STRATEGIC REPORT (CONTINUED)
Principal risks and uncertainties
The principal risks and uncertainties of the Group relate to the
following:
a) Reserves discovery, development and project delivery -
Exploration activities in the Group's licence interests have, given
the nature of the exploration activities, inherent uncertainty with
respect to whether commercially viable and technically feasible
hydrocarbon reserves will be found or can be recovered.
b) Operational performance - The Group's production volumes (and
therefore revenue) are dependent on the performance of its
producing assets. The Group's producing assets are subject to
operational risks including no critical spare equipment or plant
availability during the required plant maintenance or shutdowns;
asset integrity and health, safety, security and environment
incidents; and low reserves recovery from the field and exposure to
natural hazards such as extreme weather events. These risks are
partially managed by the experience of the operators, which are
companies with relevant technical knowledge, skills and
resources.
c) Commodity prices - The Group's results are sensitive to crude
oil and natural gas prices which are dependent on a number of
factors including world supply and demand. See note 25 of the
financial statements for a sensitivity analysis and potential
exposure.
d) Decommissioning cost estimates and timing - The Group's
assets values in use are sensitive to changes in the
decommissioning cost estimates. Any increase in the cost estimates
would result in an increased decommissioning provision and could
trigger an enhanced cash cost exposure in the future.
e) Fluctuations in exchange rates - The Group's statement of
comprehensive income, statement of financial position and statement
of cash flows are reported in US dollars and may be affected by
fluctuations in exchange rates for British Pound Sterling and Euro.
See note 25 of the financial statements for a sensitivity analysis
and potential exposure.
f) Credit - The challenging credit environment during recent
years has highlighted the importance of governance and management
of credit risk. The Group's exposure to credit risk takes the form
of a loss that would be recognised if counterparties, who are our
customers as shown in note 25 of the financial statements, failed
to, or are unable to, meet their payment obligations. See note 25
of the financial statements for a sensitivity analysis and
potential exposure.
Going concern
The Directors have considered the application of the going
concern basis of accounting and are satisfied that for the
foreseeable future the Group will continue in operational existence
and will have adequate resources to meet its liabilities as they
fall due. The Directors continue to adopt the going concern basis
of accounting in preparing the financial statements.
Key performance indicators
The Directors are of the opinion that the following constitutes
the Company's key performance indicators:
-- Revenue
-- Lifting cost per barrel of oil
-- Barrels of oil equivalent produced per day (boepd)
-- Booked reserves
-- Date and amount of decommissioning
The Group's revenue has increased to $153.1 million in 2018
(2017: $7.4 million).
The lifting cost per barrel includes direct operating costs,
tariffs and insurances and excludes depreciation, depletion and
amortisation of oil and gas assets. The lifting cost per boe was
$35 in 2018 (2017: $38). The lifting costs per boe for oil were
$36.43 (2017:$38.0) and gas were $21.62 (2017:$nil).
The Group's profit before tax was $7.4 million (2017: profit of
$74.1 million). Included in the profit of 2018 is goodwill write
off recognised on the acquisition of RockRose CS1 NL BV (formerly
Dyas BV) on 1 October 2018 of $16.4 million. The accounting for
this acquisition is further explained in note 2 to the financial
statements.
Currently the Company only measures financial performance
indicators. With the acquisition of Marathon it is the intention to
introduce non-financial performance indicators including those in
relation to health, safety and environment.
ROCKROSE ENERGY PLC
STRATEGIC REPORT (CONTINUED)
Financial risk management
The Directors have established relevant objectives and policies
for managing financial risks to enable the Group to achieve its
long-term shareholder value growth targets within a prudent risk
management framework. These objectives and policies are regularly
reviewed.
The principal financial risks, to which the Group is exposed,
are described in note 25 of the financial statements.
Cash forecasts identifying the liquidity requirements of the
Group are produced frequently and reviewed regularly to ensure that
there is sufficient financial capacity to meet its immediate and
future needs.
Andrew Austin
On behalf of the Board
30 April 2019
ROCKROSE ENERGY PLC
REMUNERATION REPORT
Chairman's Statement
The Directors are pleased to present their Annual Report on
remuneration for 2018. The aim of the Remuneration Committee is to
set clear objectives for each individual Executive Director and
Executive team member relating to Company KPIs plus individual and
strategic targets taking into account where an individual has
particular influence and responsibility. The Remuneration Committee
is comprised of John Morrow and Richard Benmore. During the year
the Executive Chairman's and the non-executive directors' salaries
remained at GBP385,000 (2017: GBP385,000) and GBP50,000 (2017:
GBP50,000) respectively. The Committee decided that it was not
appropriate to set specific targets for 2018 as the Company is
still in an active acquisition mode and wished the Executive team
to evaluate and pursue further opportunities throughout the year.
Due to the nature and complexity of acquisition negotiations, the
Committee has decided that it is not appropriate to set specific
targets for 2019. The three directors are also shareholders of the
company and during the year Andrew Austin exercised all his share
options as the specific performance target of share price increase
of 500% was met.
Directors' remuneration policy
The Company's policy is to maintain levels of remuneration
sufficient to attract, motivate and retain senior executives of the
highest calibre who can deliver growth in shareholder value. The
Executive Director's remuneration currently consists of basic
salary and benefits. An annual bonus, and long-term incentives will
be introduced in line with the Company's expansion. The Company
will seek to strike an appropriate balance between fixed and
performance-related reward so that the total remuneration package
is structured to align a significant proportion to the achievement
of performance targets, reinforcing a clear link between pay and
performance. The performance targets for staff, senior executives
and the Executive Directors will be aligned to the key drivers of
the business strategy, thereby creating a strong alignment of
interest between staff, Executive Directors and shareholders.
The Remuneration Committee will continue to review the Company's
remuneration policy and make amendments, as and when necessary, to
ensure it remains fit for purpose and continues to drive high
levels of executive performance and remains both affordable and
competitive in the market.
The policy, as outlined below, obtained 100% shareholder
approval of the votes cast at the AGM held on 27 June 2018. There
were no abstentions.
Policy Table
Element of reward -Base Salary
Purpose and To provide fixed remuneration to
Link to Strategy * help recruit and retain key individuals;
* reflect the individual's experience, role and
contribution within the Company.
Operation The Remuneration Committee takes into account a
number of factors when setting salaries, including:
* scope and complexity of the role
* the skills and experience of the individual
* salary levels for similar roles within the industry
* pay elsewhere in the Company
Salaries are reviewed, but not necessarily increased,
annually with any increase usually taking effect
in January.
-----------------------------------------------------------
Performance None.
conditions
-----------------------------------------------------------
Maximum opportunity The current base salary of the Directors can be
found in the Directors' Remuneration section.
Salary increases are normally made with reference
to the average increase for the wider Company.
The Board retains discretion to make higher increases
in certain circumstances, for example, following
an increase in the scope and/or responsibility
of the role or the development of the individual
in the role or by benchmarking.
-----------------------------------------------------------
ROCKROSE ENERGY PLC
REMUNERATION REPORT (CONTINUED)
Element of reward - Other benefits
Purpose and To provide a basic benefits package.
Link to Strategy
Operation The Company provides Executive Directors with
medical insurance for themselves and their family.
----------------------------------------------------
Performance None.
conditions
----------------------------------------------------
Maximum opportunity Maximum opportunity will be whatever it costs
to provide the benefit.
----------------------------------------------------
Element of reward - Annual Bonus
Purpose and To incentivise and reward the achievement of annual
Link to Strategy financial, operational and individual objectives
which are key to the delivery of the Company's
short-term strategy.
Operation
* Executive Directors and staff are eligible to
participate in a discretionary bonus plan.
* The Remuneration Committee will determine on an
annual basis the level of deferral, if any, of the
bonus payment into Company shares.
* Maximum bonus levels and the proportion payable for
on target performance are considered in the light of
market bonus levels for similar roles among the
industry sector.
* Bonuses are not pensionable.
* From 2020 objectives will be set annually to ensure
that they remain targeted and focused on the delivery
of the Company's short-term goals which will usually
be based on the annual budget.
* The Remuneration Committee sets targets which require
appropriate levels of performance, taking into
account internal and external expectations of
performance.
* As soon as practicable after the year-end, the
Remuneration Committee meets to review performance
against objectives and determines payout levels.
* From 2020 in terms of bonus targets a balanced
scorecard approach will be operated which focuses on
a mixture of strategic, operational, financial and
non-financial metrics. Examples of financial measures
will include net sales and net profit targets.
Financial measures will typically represent the
majority of the bonus with other, non-financial
measures representing the balance.
------------------------------------------------------------------
Performance
conditions * At least 50% of the award will be assessed against
Company metrics including operational, financial and
non-financial performance. The remainder of the award
will be based on performance against individual
objectives.
* A sliding scale of between 0% and 100% of the maximum
award is paid dependent on the level of performance.
------------------------------------------------------------------
Maximum opportunity The maximum potential bonus entitlement for Executive
Directors under the plan is up to 150% of base
salary.
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ROCKROSE ENERGY PLC
REMUNERATION REPORT (CONTINUED)
Element of reward - Long Term Incentive Plan (LTIP)
Purpose and Link
to Strategy * To incentivise and reward the creation of long-term
shareholder value.
* To align the interests of the Executive Directors
with those of shareholders.
Operation Under the terms of the non-tax advantaged share
option plan (the "Share Option Plan"), the Remuneration
Committee may issue options over shares up to 15%
of the issued share capital of the Company from
time to time. Directors and employees are eligible
for awards.
* The exercise of options may be subject to the
satisfaction of such performance conditions, if any,
as may be specified and subsequently varied and/or
waived by the Remuneration Committee.
* The Remuneration Committee determines on an annual
basis, and from time to time as needed (i.e., new
employee or promotion), the type of awards to be
granted to executives and other employees under the
plan.
-----------------------------------------------------------------
Performance conditions Vesting of the awards is dependent on financial,
operational and/or share price measures, as set
by the Remuneration Committee, which are aligned
with the long-term strategic objectives of the Company.
The relevant performance conditions will be set
by the Remuneration Committee on the award of each
grant but will include a mixture of strategic, operational,
financial and non-financial metrics.
-----------------------------------------------------------------
The options granted to Andrew Austin were exercised on 14
February 2018, with the approval of the Remuneration Committee to
recognise the 690% increase in the initial 50p share price on
readmission to the main list of the London Stock Exchange. This was
above the targeted 500% increase in share price set at the initial
equity raise when the options were granted. Following the exercise
the option agreement will lapse in respect of any future
entitlement to additional options (the option was due to extend to
such number of Ordinary Shares as represent 10 per cent of the
issued share capital of the Company from time to time until certain
thresholds were met) and Mr Austin at that time waived any
contractual right to future share based compensation.
The expense to the income statement for the year was $175,000
(2017: $242,000).
Notes on Table
The Remuneration Committee may make minor amendments to the
Policy set out above for regulatory, exchange control, tax or
administrative purposes or to take account of a change in
legislation without obtaining shareholder approval for that
amendment. Any major changes will be put to a shareholder vote at
the next AGM or an EGM.
Share Investment Plan (SIP)
Purpose and Link
to Strategy * To incentivise and reward the creation of long-term
shareholder value.
* To align the interests of the eligible employees with
those of shareholders.
Operation The Company has adopted an HMRC approved SIP for
all employees of the Group. The scheme is a tax
efficient incentive plan pursuant to which all employees
are eligible to subscribe for up to GBP150 (or 10%
of salary, if less) worth of RockRose ordinary shares
per month. Shares are acquired on a quarterly basis
and the Company automatically matches the employee
contribution, acquiring matching 'Partnership' shares
on a 2-to-1 basis.
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Performance conditions In order to receive their allocation of Company
Partnership shares, employees must ordinarily remain
employed by the Company for a period of 3 years
from the date of grant of the matching award.
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ROCKROSE ENERGY PLC
REMUNERATION REPORT (CONTINUED)
Policy on payment for loss of office
In the event that the employment of an Executive Director is
terminated, any compensation payable will be determined in
accordance with the terms of the service contract between the
Company and the employee, as well as the rules of any incentive
plans. Notice periods are set at up to a maximum of twelve months
by either party.
The Company considers a variety of factors when considering
leaving arrangements for an Executive Director, including
individual and business performance, the obligation for the
Director to mitigate loss (for example by gaining new employment)
and other relevant circumstances (e.g. ill health).
If the Executive Director's employment is terminated by the
Company, the Executive Director may receive a time pro-rated bonus
to the period worked subject to performance in that period, subject
to the Remuneration Committee's discretion.
The treatment of outstanding share awards is governed by the
relevant share plan rules. The following table summarises the
leaver provisions of share plans under which Executive Directors
may currently hold awards.
Leaving Event Time period Conditions
Injury, disability, Option may be exercised Exercise and time vesting
ill-health, redundancy within 6 months of provisions per the option
leaving. certificate.
Board can waive if satisfied
that such waiver is not
rewarding failure.
----------------------------- ------------------------------
Death Option may be exercised Exercise and time vesting
by personal representatives provisions per the option
within 6 months of certificate.
death. Board can waive if satisfied
that such waiver is not
rewarding failure.
----------------------------- ------------------------------
Employing company Option may be exercised Exercise and time vesting
transferred out within 6 months of provisions per the option
of group. transfer. certificate.
Board can waive if satisfied
that such waiver is not
rewarding failure.
----------------------------- ------------------------------
Resignation or Lapse of option unless If allowed to exercise;
any other reason Board exercises discretion Exercise and time vesting
not mentioned above. to allow exercise provisions per the option
of option in which certificate.
case within 6 months Board can waive if satisfied
of leaving/notice. that such waiver is not
rewarding failure.
----------------------------- ------------------------------
Recruitment policy
In determining remuneration for new appointments to the Board,
the Board will consider all relevant factors including, but not
limited to, the calibre of the individual and their existing
package, the external market and the existing arrangements for the
Company's current Executive Directors, with a view that any
arrangements offered are in the best interests of the Company and
shareholders and without paying any more than is necessary.
Where the new appointment is replacing a previous Executive
Director, salaries and total remuneration opportunity may be higher
or lower than the previous incumbent. If the appointee is expected
to develop into the role, the Board may decide to appoint the new
Executive Director to the Board at a lower than typical salary.
Larger increases (above those of the wider company) may be awarded
over a period of time to move closer to the market level as their
experience develops.
Benefits and other elements of remuneration will normally be
limited to those outlined in the remuneration policy table above.
However, additional benefits may be provided by the Company where
the Board considers it reasonable and necessary to do so.
It is expected that the structure and quantum of the variable
pay elements would reflect those set out in the policy table above.
However, the Board recognises that, as an independent oil and gas
company, it is competing with global firms for its talent. As a
result, the Board considers it important that the recruitment
policy has sufficient flexibility in order to attract the calibre
of individual that the Company requires to grow a successful
business. The Company recognises that in many cases, an external
appointee may forfeit significant cash bonuses and/or share awards
from a prior employer. The Board believes that it needs the ability
to compensate new hires for bonuses and/ or incentive awards lost
on joining the Company. The Board will use its discretion in
settling any such compensation, which will be decided on a
case-by-case basis, provided that in no event shall such
compensation exceed the value of compensation forfeited by the
external appointee, as confirmed by the appointee in a written
agreement with the Company.
ROCKROSE ENERGY PLC
REMUNERATION REPORT (CONTINUED)
Annual report on Directors' Remuneration (audited)
Andrew Austin is currently the only Executive Director and is
employed under a service agreement, which is capable of
termination, by either party giving twelve months notice in
writing. The Non-executive Directors are employed under rolling
contracts with notice periods of six months, under which they are
not entitled to any pension, benefits or bonuses.
Directors' emoluments for the year were as follows:
12 months ended 31 December 2018
Salary/Fees Taxable Benefits Bonus In Lieu of Total
Pension
---------------------- ------------------- ---------------------- ----------------- ------------------------
2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
---------- ---------- --------- -------- ---------- ---------- -------- ------- ------------ ----------
Andrew
Austin $ 515,900 $ 496,201 $ 12,912 $ 7,391 $ 804,000 $ 496,201 $34,000 Nil $ 1,366,812 $ 999,793
---------- ---------- --------- -------- ---------- ---------- -------- ------- ------------ ----------
Richard
Benmore $ 67,000 $ 64,442 $ 10,022 $ 4,282 Nil Nil Nil Nil $ 77,022 $ 68,723
---------- ---------- --------- -------- ---------- ---------- -------- ------- ------------ ----------
John
Morrow $ 67,000 $ 64,442 Nil Nil Nil Nil Nil Nil $ 67,000 $ 64,442
---------- ---------- --------- -------- ---------- ---------- -------- ------- ------------ ----------
The above amounts have been calculated by translating the GBP
amounts to USD at the average rate for the year of $1.34 (2017:
$1.29).
At the discretion of the Remuneration Committee, Andrew Austin
was paid a bonus of $804,000 in recognition of progress made by the
Group during 2018 and the fact that no bonus had been paid for 18
months, representing a bonus of 156% of base salary and 104% of
bonus entitlement.
None of the directors have a prospective right to a defined
benefit pension.
Benefits provided to Andrew Austin are the provision of medical
insurance for himself and his family and benefits provided to
Richard Benmore are the provision of medical insurance for himself
and his wife.
Unapproved Share Option Plan
Date Granted Basis Face Exercise Exercised Waived/ Earliest Lapse Performance
of Grant of grant Value Price Lapsed Vesting Date Criteria
Date
10% of
issued Time &
shares Vested performance
Andrew of GBP500,000 and based
Austin 22/12/15 1,000,000 10,000,000 (1) 50p 1,000,000 Nil exercised N/A Vesting
---------- ---------- ------------ ----------- --------- ---------- -------- ---------- --------- ------------
10% of
issued Time &
shares Vested performance
Andrew of GBP799,999 and based
Austin 04/07/17 533,333 5,333,334 (2) 44.625p 533,333 Nil exercised N/A Vesting
---------- ---------- ------------ ----------- --------- ---------- -------- ---------- --------- ------------
Calculated
on
GBP400,000
for
completion
Richard of Idemitsu GBP400,000 Time
Benmore 23/05/18 107,817 Acquisition (3) .000001p Nil Nil 23/05/19 23/05/28 Vesting
---------- ---------- ------------ ----------- --------- ---------- -------- ---------- --------- ------------
1. The share price on date of the initial grant was 50p based on the admission price of 50p.
2. The share price on date of the second grant was GBP1.50 based
on the placing price on the issue of new shares.
3. The share price on the date of exercise was GBP3.71
Mr Austin's option was to acquire up to 10% of the issued share
capital. As at the initial date of the grant this was 1,000,000
shares and increased by a further 533,333 shares with the
additional placement in July 2017 but it was structured to increase
to include any further issue of shares after the date of grant
subject to the earlier of;
-- the date falling on the third anniversary of admission
-- the market capitalisation of the Company first becomes or
exceeds GBP100 million.
The options were exercised on 14 February 2018.
There are no performance measures associated with Mr. Benmore's
options.
ROCKROSE ENERGY PLC
REMUNERATION REPORT (CONTINUED)
The Directors' interests for disclosure purposes are as follows
(audited):
Number Number Total Total Total Total % shares
of Shares of Options Beneficial options Options shares and options
held held interest exercised held held including held of
as at as at as at 14/02/18 as at exercised total
31/12/17 31/12/17 31/12/17 31/12/2018 options shares
as at in issue
31/12/2018 as at
31/12/18
Andrew
Austin 2,015,002 1,533,333 3,548,335 1,533,333 Nil 3,562,784 28.29
----------- ------------ ------------ ----------- ------------ ---------------- -------------
Richard
Benmore 186,667 - 186,667 Nil 107,817 212,912 1.69
----------- ------------ ------------ ----------- ------------ ---------------- -------------
John Morrow 210,000 - 210,000 Nil Nil 212,358 1.69
----------- ------------ ------------ ----------- ------------ ---------------- -------------
Executive Chairman's pay versus Shareholder Return
Below is a graph comparing total shareholder return of the
Company compared to the FTSE Oil and Gas Producers index from
January 2016 (when the Company was admitted to the London Stock
Exchange) to the point of suspension (25 February 2019). The
Executive Chairman's remuneration is shown below:
Executive Chairman's 2018 2017
Pay
'000 '000
------- -------
Total Remuneration $1,542 $1,242
------- -------
Bonus as % of maximum
entitlement 104% 67%
------- -------
Vesting of share options $5,290 Nil
------- -------
The total remuneration above includes an expense to the income
statement of $175,000 (2017: $242,000) relating to the valuation of
the share options.
ROCKROSE ENERGY PLC
REMUNERATION REPORT (CONTINUED)
Payments to past directors (audited)
In the year there were no payments to past directors.
Payments for loss of office (audited)
No payments were made to directors for loss of office in the
year.
In 2018 the Executive Chairman's pay increase was 0% versus an
average pay increase of 12%. No comparative is available as the
Company only had one employee at the beginning of the year and
although additional employees were added during the second half of
the year a comparison would be misleading.
John Morrow
By order of the Board
30 April 2019
ROCKROSE ENERGY PLC
DIRECTORS' REPORT
The Directors present the audited consolidated financial
statements of the Group for the year ended 31 December 2018.
Principal activities and status
The Group's principal area of activity is the acquisition of
companies or businesses in the upstream oil and gas and power
sector.
A review of the business and the future developments of the
Group are presented within the Strategic Report.
Shareholder distribution
In February 2018 the Company made a shareholder distribution of
GBP1.50 per share via a "B" share scheme following the approval at
an Extraordinary General Meeting on 14 February 2018. Additionally,
the Company made a share buyback of just under 20% of issue shared
capital for cash of $22.0 million (GBP16.4 million (GBP5.60per
share)) in November 2018.
The Directors do not recommend the payment of a dividend.
Political donations
The Group made no political donations during the year.
Post balance sheet events
Events after the year are outlined in note 29 to the financial
statements.
Directors
The Directors of the Company who were in office during the year
and up to the date of signing the financial statements were:
Andrew Austin
Richard Benmore
John Morrow
Directors' indemnities and insurance
Subject to the conditions set out in the Companies Act 2006, the
Company has arranged appropriate Directors and officers insurance
to indemnify the Directors and officers against liability in
respect of proceedings brought by third parties. Such provision
remains in force at the date of this report.
The Company indemnifies the Directors against actions they
undertake or fail to undertake as Directors or officers of any
group company, to the extent permissible for such indemnities to
meet the test of a qualifying third-party indemnity provision as
provided for by the Companies Act 2006. The nature and extent of
the indemnities is as described in Section 143 of the Company's
Articles of Association as adopted on 15 November 2017. These
provisions remained in force throughout the year and remain in
place at the date of this report.
Acquisitions
Two acquisitions were completed during 2018 as described in the
Strategic Report and notes 2 and 3 of the financial statements.
Principal risks and uncertainties
The principal risks and uncertainties associated with the
Group's business are described in the Strategic Report on page
6.
Financial risk management objectives and policies
The Group's financial risk management objectives and policies
are described in note 25 of the financial statements.
ROCKROSE ENERGY PLC
DIRECTORS' REPORT (CONTINUED)
Substantial shareholdings
As at 30 April 2019, in addition to the Directors' interests as
set out in the Remuneration Report, the Company had received
notification from the following institutions and individuals of
interests in excess of 3 per cent of the Company's issued Ordinary
Shares with voting rights:
Number %
Cavendish Asset Management 1,816,800 14.43
---------- ------
Macquarie Capital (Europe) Limited 785,252 6.23
---------- ------
The Company is not a close company as defined in the Income and
Corporation Taxes Act 1988. The Company is incorporated, domiciled
and registered in the United Kingdom.
AGM Notice
Notice of the forthcoming Annual General Meeting will be advised
separately.
Corporate governance
In order to implement its business strategy, the Company has
adopted a corporate governance structure which is fit for purpose
for this stage of the Company's life cycle. This includes a
three-member board, with two independent Non-executive Directors
and an Executive team of Managing Director and Finance Director.
The Company has Remuneration, Nomination, Audit and Risk and
Health, Safety and Environmental Committees. The Board has
established the corporate governance values of the Company and has
overall responsibility for setting the Company's strategic aims,
defining the business plan and strategy and managing the financial
and operational resources of the Company. Overall supervision,
acquisition, divestment and other strategic decisions are
considered and determined by the Board. The Board held eight
meetings in the year to 31 December 2018. Andrew Austin, in
addition to acting as Chairman, in conjunction with the Executive
team is charged with day-to-day responsibility for the
implementation of the Company's strategy. The Executive team is
supported by the wider team and external service providers as
required. The Board intends to comply, so far as it is practicable,
with certain Main Principles of the UK Corporate Governance Code.
Since incorporation compliance with the provisions of the Model
Code is being undertaken on a voluntary basis, as the Company does
not have a premium listing on the London Stock Exchange. As at the
date of this document, the Board has voluntarily adopted the Model
Code for Directors' dealings contained in the Listing Rules of the
UK Listing Authority.
The Board will be responsible for taking all proper and
reasonable steps to ensure compliance with the Model Code by the
Directors. The FCA will not have the authority to (and will not)
monitor the Company's voluntary compliance with the Model Code, nor
to impose sanctions in respect of any failure by the Company to
comply.
The Board has four separate Committees each chaired by a
Director as follows:
Audit and Risk Committee
The Committee comprises only Non-executive Directors; being
chaired by Richard Benmore and having as its other member John
Morrow. Meetings are aligned with the Group's financial reporting
calendar and the committee met three times in the year ended 31
December 2018. The Executive Chairman, Finance Director and
Managing Director are invited to attend each meeting of the
Committee and participated in all of the meetings during the year.
The external auditors are also invited to attend meetings of the
Committee as appropriate and also meet the Committee without the
presence of management at least annually.
The Risk and Disclosure Committee operates as part of the Audit
Committee and reviews the operational risks that face the business
and monitor and report upon the Company's obligations under the
Disclosure Guidance and Transparency Rules.
Audit Committee membership
Meetings attended
Committee member (out of a total possible)
Richard Benmore (Chairman) 3/3
John Morrow 3/3
ROCKROSE ENERGY PLC
DIRECTORS' REPORT (CONTINUED)
Summary of the Committee's responsibilities
The Committee's responsibilities include the following:
-- The Committee reviews reports from management and the Group's
auditors relating to the Group's Annual Report and Accounts and the
interim results announcement. The Committee advises the Board on
whether the Annual Report and interim announcement are fair,
balanced and understandable and provide the information necessary
for RockRose stakeholders to assess performance against the Group's
strategy;
-- The Committee reviews compliance with legal requirements,
accounting standards and the Listing Rules and on ensuring that
effective systems of internal financial and non-financial controls
(including for the management of risk and whistle-blowing) are
maintained. However, the ultimate responsibility for reviewing and
approving the annual report and accounts remains with the Board of
Directors;
-- The Committee keeps under review the external auditors'
independence and considers the nature, scope, and results of the
auditors' work and develops policy on and reviews (reserving the
right to approve) any non-audit services that are provided by the
external auditors. The Committee is responsible for making
recommendations to the Board of Directors on their appointment and
remuneration.
Remuneration Committee
The Committee comprises only Non-executive Directors, being
chaired by John Morrow and having as its other member Richard
Benmore. The Committee met twice in the year ended 31 December
2018. The Executive Chairman is invited to attend meetings. In
accordance with the Committee's terms of reference, no Director may
participate in discussions relating to their own terms and
conditions of service or remuneration.
Remuneration Committee membership
Meetings attended
Committee member (out of a total possible)
John Morrow (Chairman) 2/2
Richard Benmore 2/2
Summary of the Committee's responsibilities
The Committee's responsibilities include the following:
-- Making recommendations to the Board of Directors on the
Company's policy on the remuneration of the Executive Chairman,
Executive Directors and other Senior Executives (as are delegated
to the Committee to consider);
-- Determining, within agreed terms of reference, the remainder
of the remuneration packages for each of them, including pension
rights, bonus arrangements, any compensation payments and the
implementation of executive incentive schemes;
-- Monitoring the level and structure of remuneration for Senior Management;
-- Reviewing the design of share incentive plans for approval by
the Board and determining the policy on annual awards to Executive
Directors and Senior Executives;
-- Reviewing progress made against performance targets and agreeing incentive awards; and
-- Setting clear objectives for each individual Director
relating to Company KPIs including individual and strategic
targets.
Key areas of focus in the year ended 31 December 2018
The Committee's particular areas of focus during the year were
as follows:
-- Decide on the level of remuneration for the Directors' and Executive Chairman's bonus;
-- Review of remuneration of the Managing Director and Finance Director.
Nomination Committee
The Nomination Committee is chaired by the Executive Chairman,
Andrew Austin, and its other member is Richard Benmore. The
Committee meets as required during the year.
Nomination Committee membership
Meetings attended
Committee member (out of a total possible)
Andrew Austin (Chairman) 1/1
Richard Benmore 1/1
ROCKROSE ENERGY PLC
DIRECTORS' REPORT (CONTINUED)
Summary of the Committee's responsibilities
The Committee's responsibilities include the following:
-- Considering the size, structure and composition of the Board
of Directors, retirements and appointments of additional and
replacement Directors and making appropriate recommendations to the
Board of Directors;
-- Making recommendations to the Board regarding membership of
the Audit and Risk and Remuneration Committees; and
-- Ensuring that plans are in place for orderly succession to
the Board of Directors and senior management positions, so as to
maintain an appropriate balance of skills and experience within the
Group and the Board of Directors.
Key areas of focus in the year ended 31 December 2018
The principal activities of the Committee during the year were
as follows:
-- Succession planning was reviewed in the year and work in this area will continue in 2019.
Health, Safety, Security and Environmental Committee
The Health, Safety, Security and Environmental Committee is
chaired by John Morrow and its other members are Andrew Austin and
Richard Benmore. The Committee meets as required during the
year.
Health, Safety, Security and Environmental Committee
membership
Meetings attended
Committee member (out of a total possible)
John Morrow (Chairman) 3/3
Andrew Austin 3/3
Richard Benmore 3/3
Summary of the Committee's responsibilities
The Committee's responsibilities include the following:
-- Ensuring that employees are provided with a safe and secure place to work;
-- Ensuring that the Group is complying with the latest statutory requirements;
-- Ensuring that operators are complying with latest health,
safety and environmental directives; and
-- Ensuring that the Company's IT systems are secure and protected from cyber-attack.
Internal control
The Board acknowledges that it is responsible for establishing
and maintaining the Group's system of internal controls and
reviewing its effectiveness. The procedures that include, inter
alia, financial, operational, health & safety, compliance
matters and risk management (as detailed in the Strategic Report)
are reviewed on an ongoing basis.
The Group's internal control procedures include the
following:
-- Board approval for all significant projects, including
corporate transactions and major capital projects;
-- The Board receives and reviews regular reports covering both
the technical progress of projects and the Group's financial
affairs to facilitate its control;
-- There is a budgeting and planning system for all items of
expenditure with an annual budget approved by the Board. Risk
assessment and evaluation is an integral part of the annual
planning cycle;
-- The Group has in place internal control and risk management
systems in relation to the Group's financial reporting process and
the Group's process for preparing consolidated financial
statements. These systems include policies and procedures to ensure
that adequate accounting records are maintained, and transactions
are recorded accurately and fairly to permit the preparation of
consolidated financial statements in accordance with IFRS; and
-- The Audit and Risk Committee reviews draft annual and interim
reports before recommending their publication to the Board. The
Audit and Risk Committee discusses with the Executive team and the
external auditors the significant accounting policies, estimates
and judgements applied in preparing these reports.
The internal control system can only provide reasonable and not
absolute assurance against material misstatement or loss. The Board
has considered the need for a separate internal audit function but,
bearing in mind the present size and composition of the Group, does
not consider it necessary at the current time.
ROCKROSE ENERGY PLC
DIRECTORS' REPORT (CONTINUED)
UK Bribery Act
RockRose has reviewed the appropriate policies and procedures to
ensure compliance with the UK Bribery Act. The Company continues
actively to promote good practice throughout the Group and has
initiated a rolling programme of anti-bribery and corruption
training for all relevant employees.
Relations with shareholders
Communications with shareholders and bondholders are considered
important by the Directors. The primary contact with shareholders,
investors and analysts is the Executive Chairman. Company circulars
and press releases have also been issued throughout the year for
the purpose of keeping investors informed about the Group's
progress.
The Company also maintains a website (www.rockroseenergy.com)
that is regularly updated and contains a wide range of information
about the Group.
Employment policy
It is the policy of the Group to operate a fair employment
policy. No employee or job applicant is less favourably treated
than another on the grounds of their sex, sexual orientation, age,
marital status, religion, race, nationality, ethnic or national
origin, colour or disability and all appointments and promotions
are determined solely on merit. The Directors encourage employees
to be aware of all issues affecting the Group and place
considerable emphasis on employees sharing in its success.
This report was approved by the Board of Directors on 30 April
2019 and signed on its behalf by
Andrew Austin
30 April 2019
ROCKROSE ENERGY PLC
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE
FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the Group and Company financial statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. Under company law the Directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Group and Company and of the profit or loss of the Group and
Company for that year. In preparing the financial statements, the
directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- state whether applicable IFRSs as adopted by the European
Union have been followed for the Group financial statements and
IFRSs as adopted by the European Union have been followed for the
company financial statements, subject to any material departures
disclosed and explained in the financial statements;
-- make judgements and accounting estimates that are reasonable and prudent; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company
will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable
them to ensure that the financial statements and the Directors'
Remuneration Report comply with the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation.
The Directors are also responsible for safeguarding the assets
of the Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the Group and Company's website. Legislation in the United
Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The Directors consider that the annual report and accounts,
taken as a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Group and
Company's performance, business model and strategy.
Each of the Directors, whose names and functions are listed in
the Directors' Report confirm that, to the best of their
knowledge:
-- the Parent Company financial statements, which have been
prepared in accordance with IFRSs as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial
position and loss of the Company;
-- the Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
loss of the Group; and
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Group and Company, together with a description of the principal
risks and uncertainties that it faces.
In the case of each director in office at the date the
Directors' Report is approved:
-- so far as the Director is aware, there is no relevant audit
information of which the Group and Company's auditors are unaware;
and
-- they have taken all the steps that they ought to have taken
as a director in order to make themselves aware of any relevant
audit information and to establish that the Group and Company's
auditors are aware of that information.
By order of the Board,
____________________
Andrew Austin
By order of the Board
30 April 2019
Independent auditors' report to the members of Rockrose Energy
PLC (Company Registration No. 02552901)
Report on the audit of the financial statements
Opinion
In our opinion, Rockrose Energy plc's group financial statements
and company financial statements (the "financial statements"):
-- give a true and fair view of the state of the group's and of
the company's affairs as at 31 December 2018 and of the group's
profit and the group's and the company's cash flows for the year
then ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union and, as regards the company's financial statements, as
applied in accordance with the provisions of the Companies Act
2006; and
-- have been prepared in accordance with the requirements of the
Companies Act 2006 and, as regards the group financial statements,
Article 4 of the IAS Regulation.
We have audited the financial statements, included within the
Annual Report and Financial Statements for the year ended 31
December 2018 (the "Annual Report"), which comprise: the
consolidated and company statements of financial position as at 31
December 2018; the consolidated statement of comprehensive income,
the consolidated and company statements of cash flows, and the
consolidated and company statements of changes in equity for the
year then ended; the accounting policies; and the notes to the
financial statements.
Our opinion is consistent with our reporting to the Audit
Committee.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our
responsibilities under ISAs (UK) are further described in the
Auditors' responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We remained independent of the group in accordance with the
ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC's Ethical
Standard, as applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.
To the best of our knowledge and belief, we declare that
non-audit services prohibited by the FRC's Ethical Standard were
not provided to the group or the company.
We have provided no non-audit services to the group or the
company in the period from 1 January 2018 to 31 December 2018.
Our audit approach
Overview
* Overall group materiality: $3,458,000 (2017:
$1,700,000), based on 0.5% of total assets.
* Overall company materiality: $452,400 (2017:
$400,000), based on 0.5% of total assets.
================================================================
* We audited the company's financial information to
statutory materiality.
* We audited the balance sheets and income statements
of all four UK entities.
* We audited the balance sheets of the acquired
Netherlands entities and three months of the income
statement as these entities were acquired with an
acquisition date of 1 October 2018.
================================================================
* Accounting for the business combination.
* Decommissioning provisions and recognition of
decommissioning assets.
=================================================================
Independent auditors' report to the members of Rockrose Energy
PLC (Company Registration No. 02552901)
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements.
Capability of the audit in detecting irregularities, including
fraud
Based on our understanding of the group and industry, we
identified that the principal risks of non-compliance with laws and
regulations related to the Listing Rules and UK and Netherlands tax
legislation, and we considered the extent to which non-compliance
might have a material effect on the financial statements. We also
considered those laws and regulations that have a direct impact on
the preparation of the financial statements such as the Companies
Act 2006. We evaluated management's incentives and opportunities
for fraudulent manipulation of the financial statements (including
the risk of override of controls), and determined that the
principal risks were related to management bias in accounting
estimates, and acquisition accounting. Audit procedures performed
by the group engagement team auditors included:
-- Enquiries of management and review of minutes of meetings of the Board of Directors.
-- Challenging assumptions and judgements made by management in
their significant accounting estimates, in particular in relation
to the Fair Value of the acquired Dyas assets.
-- Identifying and testing journal entries, in particular any
journal entries posted with unusual account combinations.
There are inherent limitations in the audit procedures described
above and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the
financial statements, the less likely we would become aware of it.
Also, the risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting from
error, as fraud may involve deliberate concealment by, for example,
forgery or intentional misrepresentations, or through
collusion.
Key audit matters
Key audit matters are those matters that, in the auditors'
professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditors, including those which had
the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters, and any comments we make on the
results of our procedures thereon, were addressed in the context of
our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on
these matters. This is not a complete list of all risks identified
by our audit.
Key audit matter How our audit addressed the key audit matter
--------------------------------------------------- =================================================================
Accounting for the business combination We reviewed management's assessment of the acquisition and
Refer to page 3 (Strategic Report), Note 1 concur that the acquired entities
(Significant accounting judgements and key sources meet the definition of a "business" under IFRS 3 and should
of estimation uncertainty), Note 2 (Business be accounted for under that standard.
combinations). In obtaining comfort over the fair value of consideration
In 2018, the group completed the acquisitions of paid for the acquisition we reviewed
the entire issued capital of Dyas B.V. and the relevant sale and purchase agreements and reviewed
its subsidiary Dyas Infrastructure B.V. other supporting documentation including
(collectively referred to as "Dyas"). This bank statements and completion statements.
acquisition The fair value of PPE was a key estimate management's IFRS
has been accounted for under IFRS 3 Business 3 assessment. The fair value was
combinations. calculated by management using a discounted cash flow
We focused on this area due to the judgement analysis ("DCF"). We performed the following
involved in applying the acquisition method of procedures to obtain comfort over the valuation of PPE:
accounting under IFRS 3. The acquisition method * Obtained the DCF models and checked model
requires the group to fair value consideration functionality and confirmed model integrity;
paid for the acquisitions, and to record acquired
assets and liabilities at their fair value.
The key area of judgement for the acquired business * Compared management's forecast oil and gas prices to
was the valuation of property, plant & consensus forecasts obtained from a collection of
equipment ('PPE'). brokers and independent consultants. We found that
The result of management's assessment was goodwill management's forecasts were within a reasonable
totalling $16.4m. This goodwill was immediately range;
impaired as it was not deemed recoverable.
* Reconciled production assumptions to the group's most
recent Competent Person's Report ("CPR"), for those
assets subject to the reserves audit process.
=================================================== =================================================================
Independent auditors' report to the members of Rockrose Energy
PLC (Company Registration No. 02552901)
Key audit matter How our audit addressed the key audit matter
--------------------------------------------------- =================================================================
* Agreed cost assumptions, including opex, and capex,
to the CPR or operator support as applicable;
* Benchmarked the key inputs into management's post-tax
discount rate used of 12 % to arrive at a range we
considered reasonable. Management's discount rates
for each asset were within this range.
Based on procedures performed we found management's
assumptions to be balanced and the fair
value of PPE is supportable.
=================================================== =================================================================
Decommissioning provisions and recognition of The key inputs into the valuation of decommissioning
decommissioning assets provisions were checked as follows:
Refer to page 3 (Strategic Report), Note 1 * Future cost estimates were compared to latest
(Significant accounting judgements and key sources operator forecasts where applicable. The timing of
of estimation uncertainty), Note 13 (Property, decommissioning cash flows were also checked for
plant & equipment) and Note 21 (Provisions consistency with the PPE valuation models.
for liabilities and other charges).
In 2018, the group completed the acquisition of
Dyas. The acquisition included a significant * Future cost estimates are expected to be denominated
portfolio of oil & gas assets and a corresponding in GBP for the UK assets and in EUR for the
decommissioning liability. Additionally, Netherlands assets. We reviewed the foreign exchange
under Dutch GAAP, a decommissioning asset is not rates adopted by management in converting GBP costs
recognised on the decommissioning liability. into USD and EUR costs into USD. These rates were
As such, the translation from Dutch GAAP to IFRS based on a forward curve for the years up to 2024
for the purposes of group consolidated accounts before settling on the long term historical average
was a key area of judgement based on historic in 2028. We compared these assumptions to a range of
production models on an asset basis. economic forecasts and found them to be reasonable.
The Dyas acquisition has led to a significant
increase in the overall decommissioning liability
to $16.5m. The assumptions used to evaluate the * Cost estimates were expressed in nominal terms.
decommissioning liability are also a key area Management inflated costs at a rate of 3% per year up
of judgement as they are based on a number of to the expected year of decommissioning spend and
inputs including; future cost estimates, inflation then discounted these inflated estimates using rates
rates, discount rates and foreign exchange forward between 3.8% to 4.6%. We independently benchmarked
curves. management's assumptions, considering a range of
economic data. We performed sensitivity analysis to
consider the impact of variations to these
assumptions on the valuation of the provisions. By
reducing the inflation rate and discount rate
simultaneously to within our reasonable range, we did
not note a material difference to management's
calculated figures.
For the recognition of a decommissioning asset on the
acquired Dyas assets we have performed
the following procedures:
* Reviewed the model provided by management's external
expert and the approach taken to calculating the
asset. Historic production data has been obtained
where possible and referenced against publicly
available information. We have verified the
reasonableness of the assumptions taken in
determining historic production and concluded that
the calculation is reasonable.
* The historic production data has been used in
reference to each asset's current 2P reserves as
detailed in the CPR report. We have verified that the
reserves used are reasonable. This has then been
applied to the corresponding decommissioning
liability to estimate the decommissioning asset had
it been accounted for historically under IFRS.
Based on the procedures performed, we found management's
assumptions to be balanced and the
value of the decommissioning liability to be supportable.
=================================================== =================================================================
We determined that there were no key audit matters applicable to
the company to communicate in our report.
Independent auditors' report to the members of Rockrose Energy
PLC (Company Registration No. 02552901)
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
group and the company, the accounting processes and controls, and
the industry in which they operate.
As discussed in the Key Audit Matters section above, in 2018 the
group completed the acquisition of Dyas B.V. and its subsidiary
Dyas Infrastructure B.V. This acquisition has contributed
materially to the group's balance sheet in the 2018 financial
statements, with the assets and liabilities acquired in these
business combinations accounted for at fair value. We performed
full scope audit procedures over the financial information of Dyas,
which had an effective date of acquisition of 1 October 2018.
Separately, we audited the fair value adjustments to the book
values of the acquired entities. We have also performed a full
scope audit of the existing entities of Rockrose (UKCS2) Limited,
Rockrose (UKCS3) Limited, Rockrose(UKCS4) Limited and Rockrose
Energy PLC's company only financial information. Together this
ensured 100% of assets and 100% of revenues were in scope for
testing. All audit procedures were performed by the UK engagement
team.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Group financial statements Company financial statements
=========================================
Overall materiality $3,458,000 (2017: $1,700,000). $452,400 (2017: $400,000).
================================ ========================================= =========================================
How we determined it 0.5% of total assets. 0.5% of total assets.
================================ ========================================= =========================================
Rationale for benchmark applied The group made a significant acquisition Following the acquisition made in the
of oil and gas assets during the year. year, the company is an asset based
Following entity, recording
these acquisitions a significant portion a large investments in subsidiaries
of the group's value is captured in oil balance. As such assets is an appropriate
and gas assets, benchmark on
so we believe an asset measure is the which to base materiality.
most relevant.
================================ ========================================= =========================================
For each component in the scope of our group audit, we allocated
a materiality that is less than our overall group materiality. The
range of materiality allocated across components was between
$244,500 and $2,955,000. Certain components were audited to a local
statutory audit materiality that was also less than our overall
group materiality.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above $172,900 (Group
audit) (2017: $85,000) and $22,625 (Company audit) (2017: $20,000)
as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
Conclusions relating to going concern
ISAs (UK) require us to report to you when:
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the group's and company's ability to continue to adopt
the going concern basis of accounting for a period of at least
twelve months from the date when the financial statements are
authorised for issue.
We have nothing to report in respect of the above matters.
However, because not all future events or conditions can be
predicted, this statement is not a guarantee as to the group's and
company's ability to continue as a going concern. For example, the
terms on which the United Kingdom may withdraw from the European
Union are not clear, and it is difficult to evaluate all of the
potential implications on the group's trade, customers, suppliers
and the wider economy.
Independent auditors' report to the members of Rockrose Energy
PLC (Company Registration No. 02552901)
Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our auditors'
report thereon. The directors are responsible for the other
information. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit
opinion or, except to the extent otherwise explicitly stated in
this report, any form of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If we
identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude
whether there is a material misstatement of the financial
statements or a material misstatement of the other information. 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 based on these
responsibilities.
With respect to the Strategic Report and Directors' Report, we
also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on the responsibilities described above and our work
undertaken in the course of the audit, the Companies Act 2006 and
ISAs (UK) require us also to report certain opinions and matters as
described below.
Strategic Report and Directors' Report
In our opinion, based on the work undertaken in the course of the audit, the information given
in the Strategic Report and Directors' Report for the year ended 31 December 2018 is consistent
with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment
obtained in the course of the audit, we did not identify any material misstatements in the
Strategic Report and Directors' Report.
Directors' Remuneration
In our opinion, the part of the Directors' Remuneration Report to be audited has been properly
prepared in accordance with the Companies Act 2006.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial
statements
As explained more fully in the Statement of Directors'
Responsibilities set out on page 20, the directors are responsible
for the preparation of the financial statements in accordance with
the applicable framework and for being satisfied that they give a
true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and the company's ability to
continue as a going concern, disclosing as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or the company or to cease operations, or have no realistic
alternative but to do so.
Auditors' 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
auditors' 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.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditors' report.
Use of this report
This report, including the opinions, has been prepared for and
only for the company's members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We
do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Independent auditors' report to the members of Rockrose Energy
PLC (Company Registration No. 02552901)
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- we have not received all the information and explanations we require for our audit; or
-- adequate accounting records have not been kept by the
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- the company financial statements and the part of the
Directors' Remuneration Report to be audited are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Appointment
Following the recommendation of the audit committee, we were
appointed by the directors on 25 November 2015 to audit the
financial statements for the year ended 31 December 2016 and
subsequent financial periods. The period of total uninterrupted
engagement is 3 years, covering the years ended 31 December 2016 to
31 December 2018.
Richard Spilsbury (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
30 April 2019
ROCKROSE ENERGY PLC
Company Registration No. 09665181
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 31
DECEMBER 2018
Note 2018 2017
$'000 $'000
----------------------------------------------- ----- ---------- --------
Revenue 5 153,072 7,436
Cost of sales (105,356) (7,604)
Gross profit/(loss) 47,716 (168)
Change in estimate of decommissioning 14,302 -
provisions
Foreign exchange movements on decommissioning
provision - (223)
Administrative costs (12,649) (5,617)
Loss on derivatives (6,399) -
Gain on acquisition - 87,825
Impairment of goodwill 12 (18,660) (7,974)
Operating profit 6 24,310 73,843
Finance income 8 51 9
Finance costs 9 (14,996) (915)
Foreign exchange (loss)/gain (1,987) 1,137
Profit before income tax 7,378 74,074
Income tax credit 10 31,481 -
Profit for the year attributable
to shareholders 38,859 74,074
----------------------------------------------- ----- ---------- --------
Comprehensive income to be reclassified to profit or loss in
subsequent years when specific conditions are met:
Foreign currency translation loss - 140
----------------------------------------------- ----- ---------- --------
Total comprehensive income for
the year 38,859 74,214
Unadjusted basic earnings per share
(cents) 11 261 651
----------------------------------------------- ----- ---------- --------
Unadjusted diluted earnings per
share (cents) 11 242 580
----------------------------------------------- ----- ---------- --------
All results have been derived from continuing operations.
The notes on pages 35 to 63 form an integral part of these
financial statements.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
Note 2018 2017
$'000 $'000
-------------------------------------- ----- -------- --------
Assets
Intangible assets 12 32,287 1,723
Property, plant and equipment 13 359,293 180,325
Deferred tax 15 - 36,472
-------------------------------------- ----- -------- --------
Total non-current assets 391,580 218,520
Inventory 16 5,090 6,005
Trade and other receivables 17 28,147 14,997
Cash and cash equivalents 18 67,944 64,955
Restricted cash 19 53,347 55,336
Total current assets 154,528 141,293
-------------------------------------- ----- -------- --------
Total assets 546,108 359,813
-------------------------------------- ----- -------- --------
Equity
Share capital 22 3,549 4,269
Share premium 22 129 9,902
Other reserves 11,772 (75)
Retained earnings 58,007 71,228
-------------------------------------- ----- -------- --------
Total equity 73,457 85,324
-------------------------------------- ----- -------- --------
Liabilities
Provisions for liabilities and other
charges 21 364,717 247,048
Deferred tax liability 15 22,788 -
Total non-current liabilities 387,505 247,048
-------------------------------------- ----- -------- --------
Trade and other payables 20 57,015 21,882
Tax payable 20 23,012 -
Provisions for liabilities and other
charges 21 5,119 5,559
Total current liabilities 85,146 27,441
-------------------------------------- ----- -------- --------
Total liabilities 472,651 274,489
-------------------------------------- ----- -------- --------
Total equity and liabilities 546,108 359,813
-------------------------------------- ----- -------- --------
The notes on pages 35 to 63 form part of these financial
statements.
These financial statements on pages 27 to 63 were approved by
the Board of Directors on 30 April 2019 and were signed on its
behalf by:
Andrew Austin
ROCKROSE ENERGY PLC
Company Registration No. 09665181
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
Note 2018 2017
$'000 $'000
Assets
Investments in subsidiaries 14 51,323 30,396
---------------------------------------- ----- -------
Total non-current assets 51,323 30,396
Trade and other receivables 17 1,256 2,941
Cash and cash equivalents 18 824 64,863
---------------------------------------- ----- ------- ---------
Total current assets 2,080 67,804
---------------------------------------- ----- -------
Total assets 53,403 98,200
---------------------------------------- ----- ------- ---------
Equity
Share capital 22 3,549 4,269
Share premium 22 129 9,902
Other reserves 32,718 (75)
Retained earnings/(accumulated losses) 1,686 (14,172)
Total equity 38,082 (76)
---------------------------------------- ----- ------- ---------
Liabilities
Provisions for liabilities and other
charges 21 7,278 7,173
---------------------------------------- ----- ------- ---------
Total non-current liabilities 7,278 7,173
Trade and other payables 20 574 508
Amount owed to subsidiaries 20 7,469 90,595
---------------------------------------- ----- -------
Total current liabilities 8,043 91,103
---------------------------------------- ----- ------- ---------
Total liabilities 15,321 98,276
---------------------------------------- ----- ------- ---------
Total equity and liabilities 53,403 98,200
---------------------------------------- ----- ------- ---------
The notes on pages 35 to 63 form part of these financial
statements.
The company loss for the year was $14,243,000 (2017:
$12,163,000).
These financial statements on pages 27 to 63 were approved by
the board of Directors on 30 April 2019 and were signed on its
behalf by:
Andrew Austin
ROCKROSE ENERGY PLC
Company Registration No. 09665181
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31
DECEMBER 2018
Share Share Other reserves Retained Total
capital premium earnings
$'000 $'000 $'000 $'000 $'000
Balance as at 1
January 2017 2,890 3,222 (558) (2,846) 2,708
Profit for the year - - - 74,074 74,074
Currency translation
differences - - 140 - 140
Total comprehensive
income - - 140 74,074 74,214
Shares issued during
the year 1,379 6,680 101 - 8,160
Share based payments - - 242 - 242
--------------------------- --------- --------- --------------- ---------- ---------
Total transactions
with owners 1,379 6,680 343 - 8,402
Balance as at 31
December 2017 4,269 9,902 (75) 71,228 85,324
--------------------------- --------- --------- --------------- ---------- ---------
Profit for the year - - - 38,859 38,859
Total comprehensive
income 38,859 38,859
Shares issued during
the year 40 129 - - 169
Share based payments - - 291 - 291
Shareholder distribution - - 30,360 (30,360) -
Share buy-back (760) - 22,041 (21,281) -
Transfer of reserves - (9,902) (40,845) (439) (51,186)
--------------------------- --------- --------- --------------- ---------- ---------
Total transactions
with owners (720) (9,773) 11,847 (52,080) (50,726)
Balance as at 31
December 2018 3,549 129 11,772 58,007 73,457
--------------------------- --------- --------- --------------- ---------- ---------
The notes on pages 35 to 63 form part of these financial
statements.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31
DECEMBER 2018
Share Share Other (Accumulated Total
capital premium reserves losses)/Retained
earnings
$'000 $'000 $'000 $'000 $'000
Balance as at
1 January 2017 2,890 3,222 (558) (2,009) 3,545
Loss for the year - - - (12,163) (12,163)
Currency translation
differences - - 140 - 140
Total comprehensive
loss - - 140 (12,163) (12,023)
Shares issued
during the year 1,379 6,680 101 - 8,160
Share based payment - - 242 - 242
--------------------------- --- --------- --------- ---------- ------------------ ---------
Total transactions
with owners 1,379 6,680 343 - 8,402
Balance as at
31 December 2017 4,269 9,902 (75) (14,172) (76)
--------------------------- --- --------- --------- ---------- ------------------ ---------
Loss for the year - - - (14,243) (14,243)
Total comprehensive
loss (14,243) (14,243)
Shares issued
during the year 40 129 - - 169
Share based payments - - 291 - 291
Shareholder distribution - - 30,360 (30,360) -
Share buy-back (760) - 22,041 (21,281) -
Transfer of reserves - (9,902) (19,899) 81,742 51,941
-------------------------------- --------- --------- ---------- ------------------ ---------
Total transactions
with owners (720) (9,773) 32,793 30,101 52,401
Balance as at
31 December 2018 3,549 129 32,718 1,686 38,082
-------------------------------- --------- --------- ---------- ------------------ ---------
The notes on pages 35 to 63 form part of these financial
statements.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2018
2018 2017
$'000 $'000
------------------------------------------------- --------- ---------
Cash flows from operating activities
Profit before income tax 7,378 74,074
Non-cash adjustments to reconcile (loss)/profit
before tax to net cash flows:
Foreign exchange loss/(gains) on operating
activities 1,987 (1,136)
Finance income (51) (9)
Finance costs 14,996 915
Share based payments 291 242
Impairment of goodwill 18,660 7,974
Gain on acquisitions - (87,825)
Depreciation and amortisation 34,222 1,669
Change in estimate of decommissioning provision (14,302) -
Foreign exchange movement on decommissioning
provision - 223
Increase in provisions - 749
------------------------------------------------- --------- ---------
Operating cash flows before movements in
working capital 63,181 (3,124)
Decrease in inventory 915 895
(Increase)/decrease in trade and other
receivables (13,149) 28,381
Decrease/(increase) in restricted cash 1,988 (55,336)
Increase in trade and other payables 35,048 1,710
Income tax paid (4,534) -
------------------------------------------------- --------- ---------
Net cash generated from/(used in) operating
activities 83,449 (27,474)
Cash flows from investing activities
Acquisition of subsidiaries net of cash
acquired (11,773) 82,311
Utilisation of decommissioning liabilities (2,402) -
Additions of intangible assets (215) -
Additions of property, plant and equipment (10,414) (895)
------------------------------------------------- --------- ---------
Net cash (used in)/generated from investing
activities (24,804) 81,416
Cash flows from financing activities
Finance income 51 9
Finance costs (3,711) -
Share issue costs - (2,183)
Shareholders distribution (30,360) -
Share buy-back (22,041) -
Proceeds from share issue 169 10,343
------------------------------------------------- --------- ---------
Net cash (used in)/generated from financing
activities (55,892) 8,169
ROCKROSE ENERGY PLC
Company Registration No. 09665181
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2018 (continued)
Net increase in cash and cash equivalents 2,753 62,111
Cash and cash equivalents at 1 January 64,955 2,938
Effect of foreign exchange 236 (94)
Cash and cash equivalents at 31 December 67,944 64,955
------------------------------------------------- --------- ---------
The notes on pages 35 to 63 form part of these financial
statements.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2018
2018 2017
$'000 $'000
---------------------------------------------- --------- ---------
Cash flows from operating activities
Loss before income tax (14,243) (12,164)
Non-cash adjustments to reconcile loss
before tax to net cash flows:
Foreign exchange movement 2,049 -
Finance income (963) (2)
Finance expense 1,626 -
Share based payments 291 242
Impairment of investments in subsidiaries - 2,498
Movement in provisions 105 7,173
Operating cash flows before movements
in working capital (11,135) (2,253)
Increase/(decrease) in trade and other
receivables 1,686 (1,791)
(Decrease)/increase in trade and other
payables (83,058) 90,560
---------------------------------------------- --------- ---------
Net cash (used in)/generated from operating
activities (92,507) 86,516
Cash flows from investing activities
Acquisition of subsidiaries - (32,873)
---------------------------------------------- --------- ---------
Net cash used in investing activities - (32,873)
Cash flows from financing activities
Finance income 963 2
Finance expense (1,626) -
Share issue costs - (2,183)
Proceeds from share issue 169 10,343
Shareholders distribution (30,360) -
Share buy-back (22,041) -
Dividend income from subsidiary 82,180 -
---------------------------------------------- --------- ---------
Net cash generated from financing activities 29,285 8,162
Net (decrease)/increase in cash and cash
equivalents (63,222) 61,805
Cash and cash equivalents at 1 January 64,863 2,938
Effect of foreign exchange (817) 120
Cash and cash equivalents at 31 December 824 64,863
---------------------------------------------- --------- ---------
The Company prepares its statement of cash flows using the
indirect method. The notes on pages 35 to 63 form part of these
financial statements.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2018
1. Principal accounting policies
General information
RockRose Energy PLC ('the Company' or together with its
subsidiaries, 'the Group') has been formed to make acquisitions of
companies or businesses in the upstream oil and gas and power
sector.
The Company is a public limited company incorporated on 1 July
2015, which is listed on the London Stock Exchange and incorporated
and domiciled in the United Kingdom.
The address of its registered office is Dashwood House, 69 Old
Broad Street, London, EC2M 1QS.
Basis of preparation
The consolidated and company financial statements are for the
year ended 31 December 2018. These financial statements have been
prepared in accordance with International Financial Reporting
Standards ('IFRS') and IFRS Interpretations Committee (IFRS IC)
interpretations endorsed by the European Union ('EU') and with
those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. The financial statements have been prepared
on the historical cost basis. Historical cost is generally based on
fair value of the consideration given in exchange of goods and
services. These consolidated financial statements (the 'financial
statements') have been prepared and approved by the Directors on 30
April 2019 and signed on their behalf by Andrew Austin.
The accounting policies have been applied consistently
throughout the preparation of these financial statements. All
activities of the Company are carried out in the European
Continental Shelf. These financial statements are presented in
United States Dollars (US$'s) and the values in the financial
statements are rounded to thousands (US$'000).
Adoption of new standards and interpretations
New standards, amendments and interpretations
The following new standards, amendments or interpretations,
effective for the first time for the financial year beginning on or
after 1 January 2018, have had no material impact on the Group or
parent company.
Standards Effective Description
date
---------- ---------- ----------------------------------------------
IFRS 2 1 January Classification and measurement of share-based
2018 payment transactions - Amendment to
IFRS 2
IFRS 9 1 January Financial instruments
2018
IFRS 15 1 January Revenue from Contracts with Customers
2018
IFRS 9 sets out the requirements for recognising and measuring
financial assets, financial liabilities and certain contracts to
buy or sell non-financial items. Furthermore, on a prospective
basis the standard facilitates use of hedge accounting and results
in different income recognition upon the sale of certain
investments in securities. The adoption of IFRS 9 did not result in
a change in equity at January 1, 2018, nor in changes in the
measurement of financial assets and liabilities.
IFRS 15 provides a single model of accounting for revenue
arising from contracts with customers based on the identification
and satisfaction of performance obligations, and revenue from
contracts with customers that is distinguished from other
resources. For the adoption of IFRS 15 the modified retrospective
transition approach was applied. Although the accounting for
certain contracts, such as those with provisional pricing or
take-or pay arrangements, and underlifts and overlifts, did change,
no transition adjustment is presented as the adoption did not have
a significant effect on the Group's accounting or disclosures.
New standards, amendments and interpretations not yet
adopted
The following new and revised Standards and Interpretations have
been published that are not mandatory for 31 December 2018
reporting periods and have not been early adopted by the group.
Standards Effective Description
date
--------------------- ---------- ---------------------------------------
IFRS 16 1 January Leases
2019
IFRIC Interpretation 1 January Uncertainty over Income Tax Treatments
23 2019
Amendments to 1 January Long-term interest in Associates and
IAS 28 2019 Joint Ventures
Other than IFRS 16, there are no other standards that are not
yet effective and that would be expected to have a material impact
on the entity in the current or future reporting periods. The
Group's assessment of the impact of IFRS 16 is set out below:
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
1. Principal accounting policies (continued)
IFRS 16 Leases was issued in 2016 to replace IAS 17 Leases and
is required to be adopted by 2019. Under the new standard all lease
contracts, with limited exceptions, are recognised in financial
statements by way of right-of-use assets and corresponding lease
liabilities. The Group will apply the modified retrospective
approach, which means that the cumulative effect of initially
applying the standard is recognised at the date of initial
application and there is no restatement of comparative information.
Compared with the existing accounting for operating leases,
application of the standard will have a significant impact on the
classification of expenditures and consequently the classification
of cash flow from operating activities, cash flow from investing
activities and cash flow from financing activities. It will also
impact the timing of expenses recognised in the statement of
income. No impact is expected in relation to lease contracts
previously classified as finance leases. The adoption of the new
standard at January 1, 2019, is expected to have a negligible
impact on equity following the recognition of lease liabilities and
right of use assets of approximately $0.6 million.
Basis of consolidation
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated
from the date on which that control ceases.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair value of the assets transferred, the
liabilities incurred to the former owners of the acquiree, and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair value at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of the acquiree's identifiable net
assets.
Acquisition related costs are expensed as incurred.
If the business combination is achieved in stages, the
acquisition date carrying value of the acquirer's previously held
equity interest in the acquiree is remeasured to fair value at the
acquisition date; any gains or losses arising from such
remeasurement are recognised in profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IFRS 9, either in profit or loss or as a change to other
comprehensive income.
Contingent consideration that is classified as equity is not
remeasured, and its subsequent settlement is accounted for within
equity.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are also eliminated. Where necessary, amounts reported by
subsidiaries have been adjusted to conform to the Group's
accounting policies.
The Group applies IFRS 11 to all joint arrangements. Under IFRS
11, investments in joint arrangements are classified as either
joint operations or joint ventures, depending on the contractual
rights and obligations of each investor. The Group has assessed the
nature of its joint arrangements and determined them to be joint
ventures. Joint ventures are accounted for using the equity
method.
Segmental reporting
The Group has two geographical operating segments: United
Kingdom and Netherlands. Both segments produce oil and gas. The
geographical segments have been chosen as the Netherlands has a
separate gas market and tax regime from the UK.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
1. Principal accounting policies (continued)
Revenue and other income (from 1 January 2018)
Revenue from sales of oil, natural gas, and other products is
recognised at the transaction price which the Company expects to be
entitled to, after deducting sales taxes, excise duties and similar
levies. For contracts that contain separate performance obligations
the transaction price is allocated to those separate performance
obligations by reference to their relative standalone selling
prices.
Revenue is recognised when control of the products has been
transferred to the customer. For sales by Integrated Gas and
Upstream operations, this generally occurs when the product is
physically transferred into a vessel, pipe or other delivery
mechanism; and for sales of oil products, it is either at the point
of delivery or the point of receipt, depending on contractual
conditions.
Revenue resulting from hydrocarbon production from properties in
which the Company has an interest with partners in joint
arrangements is recognised on the basis of the Company's volumes
lifted and sold.
Revenue resulting from arrangements that are not considered
contracts with customers is presented as revenue from other
sources.
Revenue and other income (prior to 1 January 2018)
Revenue excludes value added tax and represents the sales value
of the Company's share of oil and gas production lifted during the
year and includes tariff income. The Company recognises revenue
when the amount can be reliably measured and it is probable that
future economic benefits will flow to the entity. Revenue
associated with sales of crude oil and petroleum products including
natural gas is recorded when title passes to the customer. Revenue
from production of natural gas and oil in which the Company has
interest with other joint venture parties is recognised based on
the Company's working interest and the terms of the relevant
petroleum production licences. In all cases, this is deemed to be
on a lifting basis. All other revenue is recognised when title
passes to the customers.
Financing income and costs
Financing costs comprise interest payable, finance charges on
shares classified as liabilities and finance leases, unwinding of
the discount on decommissioning provisions, and net foreign
exchange losses that are recognised in the statement of
comprehensive income (see foreign currency accounting policy).
Financing income comprises interest receivable on funds invested,
dividend income, and net foreign exchange gains.
Interest income and interest payable are recognised in profit or
loss as they accrue, using the effective interest method. Dividend
income is recognised in the statement of comprehensive income on
the date the entity's right to receive payments is established.
Leases
Rentals under operating leases are charged to the statement of
comprehensive income on a straight-line basis over the lease
term.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
1. Principal accounting policies (continued)
Foreign currencies
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which each entity operates ('the functional
currency'). Transactions in foreign currencies are translated to
the entity's functional currency at the foreign exchange rates at
the date of the transactions. Foreign exchange gains and losses
resulting from the settlement of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement, except when deferred in other comprehensive income as
qualifying cash flow hedges and qualifying net investment hedges.
All UK entities in the Group have a functional currency of USD
apart from RockRose Energy PLC which continues to have a GBP
functional currency. All Dutch entities have a functional currency
of EUR. The presentation currency for the financial statements is
USD.
The results and financial position of all of the Group entities
(none of which has the currency of a hyper-inflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
a) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
b) income and expenses for each income statement are translated
at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the rate on the dates of each transaction); and
c) all resulting exchange differences are recognised in other comprehensive income.
Taxation
Tax on the profit/ (loss) for the year comprises current and
deferred tax. Tax is recognised in the statement of comprehensive
income except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the statement of financial position date, and any adjustment to tax
payable in respect of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of assets or liabilities that affect neither accounting nor taxable
profit other than in a business combination, and differences
relating to investments in subsidiaries to the extent that they
will probably not reverse in the foreseeable future. The amount of
deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at
the statement of financial position date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised.
Investments in subsidiaries
Investments in subsidiaries in the Company statement of
financial position are accounted for at cost less accumulated
impairment losses. Investments are reviewed for indicators of
impairment at least annually.
Joint arrangements
The Group's licence interests are held jointly with others under
arrangements whereby unincorporated and jointly controlled ventures
are used to explore, evaluate and ultimately develop and produce
from its oil and gas interests. Accordingly, the Group accounts for
its share of assets, liabilities, income and expenditure of these
joint operations, classified in the appropriate balance sheet and
income statement headings.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
1. Principal accounting policies (continued)
Exploration, evaluation and producing assets
Pre-licence acquisition costs are recognised in the statement of
comprehensive income when incurred. Costs incurred after licences
have been obtained, such as geological and geophysical surveys,
drilling and commercial appraisal costs are capitalised as
exploration and evaluation (E&E) assets as tangible or
intangible depending on the nature of the asset. E&E assets
within intangible assets are not amortised.
The Company applies the successful efforts method of accounting
for exploration expenditure. E&E assets shall no longer be
classified as such when the technical feasibility and commercial
viability of extracting oil and gas resources are demonstrable.
Once the technical feasibility and commercial viability has been
demonstrated, then the carrying value of the E&E assets is
reclassified as a development and production (D&P) asset and
classified as 'oil and gas' assets within property, plant and
equipment. The E&E assets shall be assessed annually for
impairment using indicators in accordance with IFRS 6 'Exploration
for and Evaluation of Mineral Resources'. If technically feasible
or commercially viable reserves are not discovered, the impairment
is recognised on E&E assets in the statement of comprehensive
income.
The assets transferred to D&P assets are depreciated once
the asset commences production. D&P assets are depreciated
using the unit of production method based on the proved and
probable reserves of those fields. Changes in these estimates are
dealt with prospectively.
General and administration costs are expensed as incurred.
Other intangible assets
Other intangible assets that are acquired by the Company are
stated at cost less accumulated amortisation and impairment losses.
Amortisation is charged to the statement of comprehensive income on
a straight-line basis over the estimated useful lives of intangible
assets.. Intangible assets are systematically tested for impairment
at each statement of financial position date. Other intangible
assets are amortised from the date they are available for use.
Depletion and Amortisation on producing oil and gas assets
All expenditure carried within each O&G asset is amortised
from the commencement of production on a unit of production basis,
which is the ratio of oil and gas production in the year to the
estimated quantities of commercial reserves at the end of the year
plus the production in the year, generally on a field-by-field
basis. Costs used in the unit of production calculation comprise
the net book value of capitalised costs plus the estimated future
field development costs, audited in the annual reserves report by
ERC Equipoise.
Changes in the estimates of commercial reserves or future field
development costs are dealt with prospectively.
Administrative assets
The Company acquired various administrative assets including
fixtures and fittings, computer equipment and leasehold
improvements. These assets are recorded in the statement of the
financial position at cost less accumulated depreciation.
Depreciation is provided to write off the cost less the estimated
residual value of the tangible fixed asset.
Depreciation is provided at the following annual rates on a
straight-line basis:
Fixtures and fittings 20%
Computer equipment 33%
Leasehold improvements 20%
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
1. Principal accounting policies (continued)
Impairments of Producing and Development assets
The carrying amounts of the Company's assets are reviewed at
each statement of financial position date to determine whether
there is any indication of impairment; an asset is considered to be
impaired if objective evidence indicates that one or more events
have had a negative effect on the estimated future cash flows of
that asset. If any such indication exists, the asset's recoverable
amount is estimated. An impairment loss is recognised whenever the
carrying amounts of an asset or its cash generating unit exceed its
recoverable amount. Impairment losses are recognised in the
statement of comprehensive income. The recoverable amount of assets
is the higher of fair value less cost to sell and value in use.
Value in use is determined as the amount of estimated risk adjusted
and discounted future cash flows. For this purpose, assets are
grouped into cash generating units (CGUs) based on separately
identifiable and largely independent cash inflows. Estimates of
future cash flows used in the evaluation of impairment of assets
are made using management forecasts including assumptions for
commodity prices, market supply and demand, and in the case of oil
and gas properties, expected production volumes. The latter takes
into account assessments of field and reservoir performance and
includes expectations about proved and probable volumes, which are
risk-weighted utilising geological, production, recovery and
economic projections. Cash flow estimates are risk adjusted to
reflect local conditions as appropriate and discounted at a rate
that reflects a market return and the risks of the cash generating
units.
Crude oil under and over lift
Crude oil under/over lift is classified under debtors or
creditors as appropriate and valued at the year-end oil price.
Liabilities arising from lifting more than the Company's share of
the joint venture's petroleum production (over lifting) are valued
at the market price and booked under 'Current liabilities'. Under
lifting is valued at the market price and booked under 'Current
assets'.
Inventory
Inventories are stated at the lower of cost and net realisable
value. The net realisable value of crude oil is based on the
estimated selling price in the ordinary course of business which is
spot price on the date of statement of financial position.
Employee benefit trust
The assets and liabilities of the Employee Benefit Trust ('EBT')
are consolidated by the Group, as the Group exercises control over
the Trust as defined in IFRS 10. Shares in the Company held by the
trust are consolidated as a deduction from equity and treated as
treasury shares.
Share based payments
Under the Share Option Plan, the Employee Benefit Trust
subscribes for ordinary shares in the Company. The EBT owns a
portion of the share equivalent to the subscription price. Any
employee who received an award under the plan owns any value in the
share in excess of the subscription price. Awards vest over three
to ten years and are not subject to performance criteria. The fair
value of awards granted is recognised as an employee expense with a
corresponding increase in equity.
The fair value is measured at grant date, using an appropriate
pricing model taking into account the terms and conditions upon
which the award was granted, and is spread over the year during
which the awards vest. The amount recognised as an expense is
adjusted to reflect the actual number of share awards that vest in
the same year. At each balance sheet date, the Company revises its
estimates of the number of options that are expected to vest. The
Company recognises the impact of the revision to original
estimates, if any, in the income statement, with a corresponding
adjustment to equity.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and bank
balances. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash,
which are subject to an insignificant risk of changes in value and
have a maturity of three months or less.
Restricted cash
Restricted cash balances are amounts deposited with trustees
under the terms of various decommissioning security agreements. As
these amounts are adjusted for on an annual basis or utilised as
decommissioning occurs, they are not readily convertible and are
therefore classed as restricted.
Adjustments will depend on certain assumptions, for example the
oil price and anticipated dates of cessation of production.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
1. Principal accounting policies (continued)
Non-derivative financial instruments
Financial assets (from 1 January 2018)
Financial assets are classified at initial recognition and
subsequently measured at amortised cost, fair value through other
comprehensive income or fair value through profit or loss. The
classification of financial assets is determined by the contractual
cash flows and where applicable the business model for managing the
financial assets.
A financial asset is measured at amortised cost, if the
objective of the business model is to hold the financial asset in
order to collect contractual cash flows and the contractual terms
give rise to cash flows that are solely payments of principal and
interest. It is initially recognised at fair value plus or minus
transaction costs that are directly attributable to the acquisition
or issue of the financial asset. Subsequently the financial asset
is measured using the effective interest method less any
impairment. Gains and losses are recognised in profit or loss when
the asset is derecognised, modified or impaired.
All equity instruments and other debt instruments are recognised
at fair value. For equity instruments, on initial recognition, an
irrevocable election (on an instrument-by-instrument basis) can be
made to designate these as at fair value through other
comprehensive income instead of fair value through profit and loss.
Dividends received on equity instruments are recognised as other
income in profit or loss when the right of payment has been
established, except when the company benefits from such proceeds as
a recovery of part of the cost of the financial asset, in which
case, such gains are recorded in other comprehensive income.
The expected credit loss model is applied for recognition and
measurement of impairments in financial assets measured at
amortised cost or at fair value through other comprehensive income.
The expected credit loss model also is applied for financial
guarantee contracts to which IFRS 9 applies and are not accounted
for at fair value through profit or loss. The loss allowance for
the financial asset is measured at an amount equal to the 12-month
expected credit losses. If the credit risk on the financial asset
has increased significantly since initial recognition, the loss
allowance for the financial asset is measured at an amount equal to
the lifetime expected credit losses. Changes in loss allowances are
recognised in profit and loss. For trade receivables, a simplified
impairment approach is applied recognising expected lifetime losses
from initial recognition.
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments to manage its
exposure to fluctuations of oil prices. Derivative financial
instruments are initially recognised at fair value on the date a
derivative contract is entered into and subsequently remeasured at
their fair value at each period end. All changes in fair value are
directly taken to the income statement in the period.
Financial assets (prior to 1 January 2018)
Initial recognition
Financial assets within the scope of IAS 39 'Financial
instruments: Recognition and Measurement' are classified as
financial assets at fair value through profit or loss, loans and
receivables, held to maturity investments, available-for-sale
financial assets, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate.
Financial assets are recognised initially at fair value.
Purchases or sales of financial assets that require delivery of
assets within a time frame established by regulation or convention
in the marketplace (regular way trades) are recognised on the trade
date, i.e., the date that the Company commits to purchase or sell
the asset.
The Company's financial assets include cash and trade and other
receivables.
Subsequent measurement
The subsequent measurement of financial assets depends on their
classification as follows:
Trade and other receivables
Trade and other receivables that are created by the Company by
way of providing goods directly to a debtor are carried at the
original invoice amount. Trade and other receivables are recognised
initially at fair value less any expected credit losses.
The Company has reviewed its trade receivables at the balance
sheet date and considers there is no credit risk as all amounts are
due within 30 days.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
1. Principal accounting policies (continued)
Non-derivative financial instruments (continued)
Financial liabilities (from 1 January 2018)
Financial liabilities are measured at amortised cost, unless
they are required to be measured at fair value through profit or
loss, such as instruments held for trading, or RockRose has opted
to measure them at fair value through profit or loss. Debt and
trade payables are recognised initially at fair value based on
amounts exchanged, net of transaction costs, and subsequently at
amortised cost except for fixed rate debt subject to fair value
hedging which is remeasured for the hedged risk (see below).
Interest expense on debt is accounted for using the effective
interest method, and other than interest capitalised, is recognised
in income. For financial liabilities that are measured under the
fair value option, the change in the fair value related to own
credit risk is recognised in other comprehensive income. The
remaining fair value change is recognised to fair value through
profit and loss.
Financial liabilities (prior to 1 January 2018)
Initial recognition
Financial liabilities within the scope of IAS 39 'Financial
instruments: Recognition and Measurement' are classified as
financial liabilities at fair value through profit or loss, loans
and borrowings, or as derivatives designated as hedging instruments
in an effective hedge, as appropriate.
The Company determines the classification of its financial
liabilities at initial recognition.
The Company's financial liabilities include trade and other
payables and loans and borrowings.
Subsequent measurement
The subsequent measurement of financial liabilities depends on
their classification. Trade payables that are created by the
Company are carried at the original invoice amount.
Trade and other payables
Trade and other payables are recognised at fair value.
Loans and borrowings
Loans and borrowings are recognised initially at fair value plus
any directly attributable transaction costs. Subsequent to initial
recognition, these financial liabilities are measured at amortised
cost using the effective interest rate method.
Share capital
Ordinary shares are classified as equity. The Company's share
capital currently consists of ordinary shares. Any transaction
costs associated with the issuing of shares are deducted from
equity to the extent they are incremental costs directly
attributable to the equity transaction.
Provisions
Provisions are recognised when the Company has present
obligation (legal and constructive) as a result of a past event, it
is probable that the Company will be required to settle that
obligation and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the
statement of financial position date, taking into account the risks
and uncertainties surrounding the obligation. Where a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying values amount is the present value of
those cash flows.
Specific provisions recognition policies are listed below:
Decommissioning and restoration provision
Provisions are recognised for the future decommissioning and
restoration of hydrocarbon production facilities and pipelines at
the end of their economic lives. The estimated cost is recognised
initially as part of property, plant & equipment and
depreciated over the life of the proved and probable reserves on a
unit-of-production basis. Any changes in the estimates of costs to
be incurred on proved and probable reserves or in the rate of
production will therefore impact net income, over the remaining
economic life of the oil and gas assets.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
1. Principal accounting policies (continued)
Provisions (continued)
Estimates of the amounts of provisions recognised are based on
current legal and constructive requirements, technology and price
levels. Because actual outflows can differ from estimates due to
changes in laws, regulations, public expectations, technology,
prices and conditions, and can take place many years in the future,
the carrying amounts of provisions are regularly reviewed and
adjusted to take account of such changes.
All decommissioning and restoration provisions are denominated
in GBP or EUR which are revalued to USD based on latest FX forward
rates on a bi-annual basis. Any resulting forex exchange movements
are recognised within the related property, plant and equipment
decommissioning asset balance, unless the decommissioning assets
have previously been impaired and forex exchange movements would
therefore be recognised in the statement of comprehensive
income.
Significant accounting judgements and key sources of estimation
uncertainty
In the application of the Group's accounting policies, the
Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
annual basis. Revisions to accounting estimates are recognised in
the year in which the estimate is revised if the revision affects
only that year, or in the year of the revision and future years if
the revision affects both current and future years. The following
are the critical judgements and estimates that the Directors have
made in the process of applying the Group's accounting policies and
that have the most effect on the amounts recognised in the
financial statements.
Fair value of assets and liabilities acquired in business
combinations
Following the acquisition of Dyas B.V. and Dyas Infrastructure
B.V. the Company has been required to make estimates regarding the
fair value of assets and liabilities of the businesses acquired,
under IFRS 3 Business combinations. The fair values calculated are
provisional. The main areas of judgement taken by the Directors,
and the key sources of estimation uncertainty, concern the
valuation of property, plant and equipment ('PPE'), decommissioning
liabilities, intangible exploration assets and deferred tax
liabilities. Further information on these significant judgements
has been set out in points a) to e) below.
a) Valuation of PPE including estimation of commercial reserves quantities
Commercial reserves are proven and probable oil and gas
reserves, which are defined as the estimated quantities of crude
oil, natural gas and natural gas liquids which geological,
geophysical and engineering data demonstrate with a specified
degree of certainty to be recoverable in future years from known
reservoirs and which are considered commercial reserves.
The Company obtains annual reports on the commercial reserves
from independent reserve auditors for its largest fields. The
reserves used in the valuation of PPE have a 50 per cent
statistical probability that the actual quantity of recoverable
reserves will be more than the amounts estimated as proven and
probable reserves and a 50 per cent statistical probability that it
will be less. The fields which were covered by the reserves auditor
as at 31 December 2018 were AB Blocks, Bergen, Hanze, K4K5, P15P18
and Total PQ excl. Q1B.
The calculation of fair value, used to value the acquired PPE,
is sensitive to the following:
i) Production volumes
The estimated future production volumes are based on the Group's
evaluation of the fields which is reviewed and verified by the
third-party reserves auditor as at 31 December 2018 for certain
fields as outlined above. For other acquired assets, production
volume estimates are based on the latest available forecasts from
operators.
ii) Commodity prices
The gas price assumptions adopted by management are EUR27/MWh
for 2019, EUR25/MWh for 2020 and EUR23/MWh flat from 2021 onwards.
The oil price assumptions used are $80/bbl for 2019, $76/bbl for
2020 and $72/bbl for 2021.
iii) Discount rate
The Company estimates fair value through a discounted cash flow
model using a post-tax (nominal) discount rate of 12%. This
discount rate is derived from management's assessment of an
appropriate market rate of return and the relevant business risks
associated with specific producing fields (CGUs) and corporate
level risk exposure for the Company.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
1. Principal accounting policies (continued)
Valuation of PPE including estimation of commercial reserves
quantities (continued)
iv) Inflation rate
An assumed inflation rate of 3% has been applied to the
discounted cash flows. Management believes that this is a
reasonable estimate for the medium term and is aligned with current
uncertainty driven from Brexit.
v) Foreign exchange rate
The flat exchange rate of USD1.145 was used against Euro from
2019 until end of the life of the acquired assets. Management
believes that as the majority of operational costs incurred and gas
revenues received are in Euros, the Company has limited exposure
against exchange rate fluctuations.
vi) Operating and capital expenditures
The forecast operating costs and capital expenditures are based
on the Group's evaluation of the fields which are reviewed by the
third-party reserves auditor and outlined in the reserves audit
report as at 31 December 2018. For fields not subject to reserves
audits, costs were based on latest operator estimates.
b) Decommissioning Provision
The fair value of decommissioning provisions for each of the
acquired fields was determined based on latest operator estimates,
which management consider to be the most reliable estimates of
costs likely to be incurred. Cost estimates were inflated using a
rate of 3% consistent with the PPE valuation discussed above. The
estimated costs of decommissioning were discounted to present value
terms using rates of between 3.76% and 4.41%.
c) Exploration prospects
The exploration prospects acquired were fair valued using the
same assumptions mentioned for PPE above and risked accordingly.
Contingent resources have been used to fair value exploration
prospects at acquisition. Management estimate that the fair value
of exploration assets as at year end is equivalent to their fair
value on acquisition date.
d) Deferred tax liabilities
Deferred tax liabilities were recognised as a part of the fair
value adjustment on the Dyas acquisitions.
e) Goodwill
Upon acquisition of Dyas B.V. the goodwill is recognised as an
asset and immediately written off to the Income statement. See note
2 for details.
Carrying value of oil and gas producing and development
assets
Property, Plant and Equipment was fair valued as it was acquired
in business combinations as mentioned above. No triggers for
impairment were identified on acquired Dutch assets and existing UK
assets as at 31 December 2018.
Presumption of going concern
The Consolidated results reflects the strong financial position
of the Group following the acquisitions. The net current asset
position of $69,382,000 (2017: $113,852,000) indicates the Group
has available financial resources to meet any future obligations at
the Group level. The Directors have prepared cash flow forecasts
for the period to 30 June 2020 which indicates the Group will be
cash generative, subject to certain operational and economic
assumptions.
These factors demonstrate that the Group has sufficient cash
funds available to allow it to continue in business for a period of
at least twelve months from the date of approval of these financial
statements. Accordingly, the financial statements have been
prepared on a going concern basis.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
2. Business combinations
Acquisition of Dyas B.V. and Dyas Infrastructure B.V.
The Group completed the acquisition of 100 percent of the entire
share capital of Dyas B.V. and Dyas Infrastructure B.V. on 1
October 2018 for a cash consideration of 107 million euros. For
accounting purposes, the effective date of the transaction has been
determined as 1 October 2018. The entities were subsequently
renamed RockRose (NL) CS1 B.V. and RockRose (NL) Infrastructure
B.V. Through the business combination, the Group acquired the
license interest as shown at the end of this report, page 63.
Total fair
value
$'000
--------------------------------------- -----------
Intangible assets: Exploration
costs 30,349
Property, plant and equipment:
Oil & gas assets 190,606
Property, plant and equipment:
Decommissioning assets 19,250
Deferred tax liability (98,831)
Inventory 1,060
Trade and other receivables 33,027
Cash and cash equivalents 90,572
Trade and other payables (28,049)
Decommissioning provisions (130,329)
Net identifiable assets acquired
at fair value 107,655
Total consideration paid (124,115)
----------------------------------------- -----------
Goodwill 16,460
----------------------------------------- -----------
Total cash outflow on the acquisition
is as follows:
Cash paid (102,344)
Net cash acquired with the subsidiary 90,571
----------------------------------------- -----------
Net consolidated cash flow (11,773)
----------------------------------------- -----------
Goodwill has arisen on the acquisition and is the difference
between the fair value of the purchase consideration given and the
fair value of the net assets acquired, and liabilities assumed. It
will not be deductible for tax purposes.
The directors assessed the carrying value of the goodwill and
specifically note;
-- the acquired business operates in a single country, the Netherlands;
-- the group's operations relate in whole to exploration for and
the appraisal and development of oil and gas assets;
-- both oil and gas are commodity products that trade in an
active market that, particularly in the case of oil, is
international;
-- and oil and gas assets are valued based on the quantity of
oil or gas that it is estimated can be economically recovered.
Having taken these factors into consideration, the directors
have concluded that there is no basis for recognising goodwill
related to the difference between the fair value of the
consideration given and of the assets and liabilities acquired.
The fair value of the trade receivables is $33 million. The
gross contractual amount for trade receivables due is $33 million,
the full value is expected to be collected.
Acquisition-related expenses of $1 million are included in
administrative expenses in the profit and in the operating
cashflows in the statement of cashflows.
The acquired business contributed revenues of $23.5 million and
profit after tax of $8.9 million to the Group for the period 1
October to 31 December 2018
If the acquisition had occurred on 1 January 2018, consolidated
pro forma revenue and profit before tax for the year ended 31
December 2018 would have been $231 million and $39 million
respectively.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
3. Asset Acquisitions
Acquisition of Arran license
The Group completed the acquisition of 30.43% stake in the Shell
operated Arran field on 10 October 2018 for the nominal
consideration of one US Dollar. This is a development asset.
4. Operating segments*
2018 2017
Profit and Loss $'000 $'000
---------------------------------------- -------- --------
Revenue
United Kingdom 129,528 7,436
Netherlands 23,544 -
Group Revenue 153,072 7,436
---------------------------------------- -------- --------
Operating Profit
United Kingdom 13,613 73,843
Netherlands 10,697 -
Group Operating Profit 24,310 73,843
---------------------------------------- -------- --------
Tax credit
United Kingdom 31,028 -
Netherlands 453 -
Group Tax 31,481 -
---------------------------------------- -------- --------
Profit after tax
United Kingdom 29,946 74,074
Netherlands 8,913 -
Group profit after tax 38,859 74,074
---------------------------------------- -------- --------
Balance Sheet
---------------------------------------- -------- --------
Non-Current Assets (excluding deferred
tax assets)
United Kingdom 151,171 182,049
Netherlands 240,409 -
Non-Current Assets (excluding deferred
tax assets) 391,580 182,049
---------------------------------------- -------- --------
Total Assets
United Kingdom 305,379 359,813
Netherlands 240,729 -
Group Total Assets 546,108 359,813
---------------------------------------- -------- --------
Liabilities
United Kingdom 196,372 274,489
Netherlands 276,279 -
Group Liabilities 472,651 274,489
---------------------------------------- -------- --------
*For Profit and Loss balances only 3 months of RockRose (NL) CS1
B.V. and RockRose (NL) Infrastructure B.V. Dyas data is included
due to the completion date of 1 October 2018.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
5. Revenue
The Group derives revenue from within the United Kingdom and
Netherlands from the transfer of goods to external customers which
is recognised at a point in time. The Group's product lines
are:
2018 2017
$'000 $'000
-------------------- -------- ------
Crude oil 124,866 7,373
Gas 26,633 63
Tariff Income 431 -
Gas storage income 1,142 -
Total revenues 153,072 7,436
-------------------- -------- ------
6. Operating profit
Included in the statement of comprehensive income are the
following:
Group 2018 2017
$'000 $'000
-------------------------------------------------------- --------- --------
Operating profit is stated after (charging)/crediting:
Directors' remuneration (1,686) (1,375)
Operating leases (207) (74)
Depreciation, depletion and amortisation
of oil and gas assets (33,913) (1,655)
Depreciation charge for administration assets (309) (14)
Impairment of goodwill (18,660) (7,974)
Gain on acquisitions - 87,825
Change in estimate in decommissioning provision 14,302 -
Foreign exchange movement on decommissioning
provision - (223)
Auditors' remuneration:
Audit related assurance services (500) (289)
Other compliance services - (115)
Accountancy, consulting and other advisory
fees (80) (16)
-------------------------------------------------------- --------- --------
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
7. Directors and employees
Group 2018 2017
$'000 $'000
----------------------- ------ ------
Wages and salaries 4,516 1,701
Social security costs 539 189
Other pension costs 134 6
Share based payments 291 242
----------------------- ------ ------
Total employee costs 5,480 2,138
----------------------- ------ ------
The average monthly number of employees employed by the Company,
including Directors in the year
Group 2018 2017
$'000 $'000
---------------- ------ ------
Operations 1 -
Administrative 13 6
14 6
---------------- ------ ------
Directors' remuneration
The total remuneration of $1,686,000 (2017: $1,375,000) relates
to three Directors who provided qualifying services to the Company
during the year. The highest paid Director's remuneration amounts
to $1,542,000 (2017: $1,242,000), and during the year exercised
options that were granted in prior periods. See note 27 for the
breakdown of compensation of key management personnel.
8. Finance income
Group 2018 2017
$'000 $'000
------------------------ ------ ------
Interest income - bank 51 9
Total finance income 51 9
------------------------ ------ ------
9. Finance costs
Group 2018 2017
$'000 $'000
------------------------------------------------- ------- ------
Other interest 3,711 3
Unwind of discount on decommissioning provision 11,285 912
------------------------------------------------- ------- ------
Total finance costs 14,996 915
------------------------------------------------- ------- ------
Other interest includes $2 million relating to interest on the
Dyas purchase price of $124 million from the effective date of 1
January 2018 to the completion date of 1 October 2018, plus $1.7
million interest on the bridging loan to effect the completion.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
10. Income tax
Total tax credit of $31.5 million have been recognised in the
consolidated statement of comprehensive income during the year
(2017: nil).
2018 2017
$'000 $'000
------------------------------------------ --------- ------
Current tax:
Current tax charge 6,720 -
------------------------------------------ --------- ------
Total current tax charge 6,720 -
------------------------------------------ --------- ------
Deferred tax:
Adjustment in respect of prior periods (5,600) -
Relating to the origination and reversal
of temporary differences (32,601)
Relating to the movement due to the tax - -
rate changes
------------------------------------------ --------- ------
Total deferred tax credit (38,201) -
------------------------------------------ --------- ------
Total tax credit (31,481) -
------------------------------------------ --------- ------
A reconciliation between tax income and the product of
accounting profit multiplied by the combined UK ring fence
corporation tax and supplementary charge rate of 40.0% (2017:
40.0%) for the year ended 31 December 2018 is as follows:
2018 2017
$'000 $'000
-------------------------------------------------- --------- ---------
Accounting profit before income tax 7,378 74,074
A combined UK ring fence corporation tax
and supplementary charge rate of 40.0% (2017:
40.0%) and non-ring fence tax rate of 19%
(2017:20%) 2,951 29,630
Expenses not deductible for tax purposes (3,720) 2,903
Finance cost not allowed for SCT 7 -
Small field and Investment allowances (239) -
Prior period adjustment (5,600) -
Amounts previously not recognised now recognised (54,479) -
Amounts previously recognised now not recognised 11,606 -
Petroleum Revenue Tax prior period adjustment - (479)
Petroleum Revenue Tax 8,813
Non-taxable gain on acquisition - (35,130)
Non-deductible impairment of goodwill - 3,190
Unrecognised deferred tax 3,829 -
Difference in rate of tax 3,043 -
Other differences 2,308 (114)
Total tax credit (31,481) -
-------------------------------------------------- --------- ---------
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
11. Earnings per share
Basic earnings per share amounts are calculated by dividing the
profit for the year by the weighted average number of shares
outstanding during the year. The weighted average number of shares
excludes those shares held as treasury shares. The basic and
diluted earnings per share are the same as there are no instruments
that have a dilutive effect on earnings. There have been no
transactions involving ordinary shares or potential ordinary shares
between the reporting date and the date of authorisation of these
financial statements other than those detailed in note 29.
Group 2018 2017
$'000 $'000
--------------------------------------------- ------- ---------
Earnings attributable to the shareholders 38,859 74,074
Less: Gain on purchase (non-cash item) - (87,825)
Less: Impairment of goodwill (non-cash
item) 18,660 7,974
--------------------------------------------- ------- ---------
Adjusted earnings/(loss) attributable
to the shareholders 57,519 (5,777)
Weighted average basic number of shares
(in thousands) 14,877 11,374
Weighted average diluted number of shares
(in thousands) 16,050 12,764
--------------------------------------------- ------- ---------
Unadjusted basic earnings per share (cents) 261 651
Unadjusted diluted earnings per share
(cents) 242 580
Adjusted basic earnings/(loss) per share
(cents)* 387 (51)
Adjusted diluted earnings/(loss) per share
(cents)* 358 (51)
--------------------------------------------- ------- ---------
*Adjusted basic and diluted earnings per share are calculated by
dividing the profit for the year by the weighted average number of
shares outstanding, after removing non-cash items in relation to
the acquisition of Dyas (2017: non-cash items in relation to the
acquisition of Idemitsu Petroleum UK Ltd, Sojitz Energy Project
Limited and Egerton Energy Ventures Limited).
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
12. Intangible assets
Group
$'000
Exploration asset
At 1 January 2018 1,723
Acquired through business combination 30,349
Additions 215
--------------------------------------- ---------
Cost and net book value 32,287
Movements -
--------------------------------------- ---------
At 31 December 2018 32,287
--------------------------------------- ---------
Goodwill
At 1 January 2018 -
Acquired through business combination 18,660
--------------------------------------- ---------
Cost and net book value 18,660
Impairment of goodwill (18,660)
--------------------------------------- ---------
At 31 December 2018 -
Total intangible assets
At 31 December 2018 32,287
--------------------------------------- ---------
At 31 December 2017 1,723
--------------------------------------- ---------
The amounts for intangible exploration and evaluation assets
represent active exploration projects expenditure. These
expenditure amounts are capitalised on the balance sheet unless an
impairment has arisen under IFRS 6 when expenditure is recognised
in the statement of comprehensive income. The outcome of on-going
exploration, and therefore whether the carrying value of
exploration and evaluation assets will ultimately be recovered, is
inherently uncertain. During 2018, the Tain license was extended
for a further 2 years until 2020.
Exploration assets acquired through business combination relate
to the fair value of exploration prospects acquired as a part of
Dyas acquisition.
Goodwill has been recognised as a part of the Dutch Acquisition
and has been immediately impaired. In addition to the Dutch
acquisition goodwill of $16.4 million, $2.2 million goodwill was
impaired in relation to the prior period acquisitions where the
fair value of RockRose (UKCS2) Limited and RockRose (UKCS3) Limited
differed from the original assessment. See note 2 for further
information.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
13. Property, plant and equipment
Group Oil and gas Administrative
assets assets Total
$'000 $'000 $'000
----------------------------------------- ------------ --------------- ---------
Cost
At 1 January 2018 181,353 641 181,994
Acquired through business combination 73,245 - 73,245
Additions 10,414 - 10,414
Change in estimates (note 22) (7,080) - (7,080)
Fair value adjustment 136,611 - 136,611
----------------------------------------- ------------ --------------- ---------
At 31 December 2018 394,543 641 395,184
Accumulated depreciation and impairment
At 1 January 2018 (1,655) (14) (1,669)
Depreciation charge (33,913) (309) (34,222)
At 31 December 2018 (35,568) (323) (35,891)
Net book value
----------------------------------------- ------------ --------------- ---------
At 31 December 2018 358,975 318 359,293
----------------------------------------- ------------ --------------- ---------
At 31 December 2017 179,698 627 180,325
----------------------------------------- ------------ --------------- ---------
The oil and gas assets consist of producing and development
assets and decommissioning assets in accordance with IAS 16
'Property, Plant and Equipment'. Included above are decommissioning
assets with a carrying value of $106.9 million (2017: $8.4 million)
relating to capitalized decommissioning provisions on producing
assets of which $19 million relates to Dutch assets. See note 2 for
details.
The administrative assets consist of fixtures and fittings,
computer equipment and leasehold improvements.
In assessing whether any impairment is required to the carrying
value of assets, their carrying value is compared with their
recoverable amount. The cash generating unit (CGU) assessed for
impairment is generally the field, or group of fields where these
are economically dependent. The recoverable amount is the higher of
the asset's fair value less costs to sell or value in use. See note
1 for further details of the accounting policy on impairment. No
indicators of impairment were identified for the Group's oil &
gas assets as at 31 December 2018.
Additionally, sensitivity analysis of changes in key assumptions
were performed and a 10% reduction in oil and gas price forward
curves would result in an impairment charge of $18 million in
relation to the Dutch assets. Change in exchange rate from
EUR1:$1.145 to EUR1:$1.3 would result in no impairment in relation
to the Dutch assets.
No impairment was identified for the UK assets as a result of a
sensitivity analysis as above.
.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
14. Investments in subsidiaries company only
Investments in all subsidiaries relates to the following
subsidiaries:
Country Class Ownership Investments
of incorporation or shares
2018 2017 2018 2017
US$'000 US$'000
------------------------------- ------------------- ------------ ----- ----- -------- --------
RockRose UKCS1 Limited UK Ordinary 100% 100% - -
RockRose UKCS2 Limited UK Ordinary 100% 100% - -
RockRose UKCS3 Limited UK Ordinary 100% 100% - -
RockRose UKCS4 Limited UK Ordinary 100% 100% 51,323 30,396
RockRose UKCS5 Limited* UK Ordinary 100% 100% - -
RockRose UKCS6 Limited* UK Ordinary 100% 100% - -
RockRose UKCS7 Limited* UK Ordinary 100% 100% - -
RockRose Energy Employee State of N/A N/A N/A - -
Benefit Trust Jersey
RockRose Energy (NL) NL Ordinary 100% - - -
B.V.
RockRose (NL) CS1 B.V. NL Ordinary 100% - - -
RockRose (NL) Infrastructure NL Ordinary 100% - - -
B.V.
------------------------------- ------------------- ------------ ----- ----- -------- --------
Total 51,323 30,396
------------------------------------------------------------------ ----- ----- -------- --------
*These subsidiaries are wholly owned subsidiaries of RockRose
UKCS4 Limited
The registered address for the Company and all its UK
subsidiaries is c/o Cooley Services Limited, Dashwood House, 69 Old
Broad Street, London EC2M 1QS.
The registered address for all of the Dutch subsidiaries is c/o
Zedra Netherlands BV, WTC Schiphol Airport Schiphol Boulevard 359,
Amsterdam Schiphol, Netherlands, 1118 BJ.
15. Deferred tax assets and liabilities
2018 2017
$'000 $'000
---------------------------------------------- ---------- ---------
Deferred Petroleum Revenue Tax (PRT) - 11,606
Accelerated capital allowances- Corporation
Tax (145,131) (57,844)
Decommissioning provision 94,044 45,929
Tax losses 24,862 36,781
Other temporary differences 3,437 -
Net deferred tax (liability)/asset (22,788) 36,472
---------------------------------------------- ---------- ---------
Deferred tax assets have been recognised in respect of tax
losses and other temporary differences where the Directors believe
it is probable that these assets will be recovered in the near
future. Such tax losses include $64.7 million of ring fence
corporation tax losses.
The Group has further UK tax losses of approximately $51.8
million (ring fenced) and $17.7 million (non-ring fenced), in
respect of which no deferred tax asset is recognised due to
insufficient certainty regarding the availability of appropriate
future taxable profits.
The unrecognised losses may affect future tax charges should
certain subsidiaries in the Group produce taxable trading profits
in future periods where there is currently uncertainty of the
timing of future taxable profits.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
16. Inventory
2018 2017
$'000 $'000
----------------- ------ ------
Crude oil 5,090 5,424
Material - 581
-----------------
Total inventory 5,090 6,005
----------------- ------ ------
The carrying value of the Company's inventories as stated above
is based on the net realisable value in accordance with the
accounting policy.
17. Trade and other receivables
Group Company
2018 2017 2018 2017
$'000 $'000 $'000 $'000
-------------------------- ------- ------- ------ ------
Trade receivables 23,502 13,244 1,210 -
Prepayments and accrued
income 4,323 312 46 103
Amount owed from the
group entities - - - 1,045
Crude oil under lift 204 - - -
Deposits 118 135 - -
Tax receivable - 326 - -
Other debtors - 980 - 1,793
--------------------------
Total current trade and
other receivables 28,147 14,997 1,256 2,941
-------------------------- ------- ------- ------ ------
All trade and other receivables are due within one year from the
statement of financial position date.
The carrying value of the Company's trade and other receivables
as stated above is considered to be a reasonable approximation of
the fair value. None of the above trade receivables were considered
past due or impaired as of 31 December 2018 (2017: $nil).
Amounts owed from the Group entities are unsecured, interest
free and payment terms are as mutually agreed between the Group's
companies with no expected credit loss.
18. Cash and cash equivalents
Group Company
2018 2017 2018 2017
$'000 $'000 $'000 $'000
------------------------------- ------- ------- ------ -------
Available cash at bank and in
hand 67,944 64,955 824 64,863
------------------------------- ------- ------- ------ -------
The fair values of cash and cash equivalents are the same as the
above book values.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
19. Restricted cash
Group Company
2018 2017 2018 2017
$'000 $'000 $'000 $'000
------------------ ------- ------- ------ ------
Restricted cash 53,347 55,336 - -
------------------ ------- ------- ------ ------
Restricted cash balances are amounts deposited with trustees or
banks issuing Letters of Credit, under the terms of various
decommissioning security agreements in place on certain fields in
which the Group has an interest.
The fair value of restricted cash is the same as the above book
values.
20. Trade and other payables
Group Company
2018 2017 2018 2017
$'000 $'000 $'000 $'000
----------------------------------- ------- ------- ------ -------
Trade payables 27,798 1,564 123 42
Amount owed to joint venture 9,088 - - -
partners
Accruals 15,794 13,189 451 466
Provisions for liabilities
and other charges 5,119 5,559 - -
Crude oil over lift 724 3,773 - -
Other creditors 3,611 3,356 - -
Tax payable 23,012 - - -
-----------------------------------
Total current trade and other
payables 85,146 27,441 574 508
----------------------------------- ------- ------- ------ -------
Amount owed to group undertakings - - 7,469 90,595
----------------------------------- ------- ------- ------ -------
Total current liabilities 85,146 27,441 8,043 91,103
----------------------------------- ------- ------- ------ -------
All current trade and other payables are due within one year
from the statement of financial position date including
non-interest bearing intercompany balances. The carrying value of
the trade and other payables as stated above is considered to be a
reasonable approximation of the fair value. All trade and other
payables are settled within three months of invoice date.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
21. Provisions for liabilities and other charges
Decommissioning Other
provision provision Total provisions
$'000 $'000 $'000
---------------------------- ---------------- ----------- -----------------
Group
At 1 January 2017 - - -
Acquired through business
combinations 251,943 54 251,997
Utilisation (398) - (398)
Foreign exchange movements (420) - (420)
Changes in estimates 516 - 516
Unwinding of discount 912 - 912
---------------------------- ---------------- ----------- -----------------
At 31 December 2017 252,553 54 252,607
---------------------------- ---------------- ----------- -----------------
Company
At 1 January 2017 - - -
Arising from acquisition
of subsidiaries - 7,173 7,173
---------------------------- ---------------- ----------- -----------------
At 31 December 2017 - 7,173 7,173
---------------------------- ---------------- ----------- -----------------
Group
At 1 January 2018 252,553 54 252,607
Acquired through business
combinations 128,689 - 128,689
Utilisation (2,402) - (2,402)
Changes in estimates (20,343) - (20,343)
Unwinding of discount 11,285 - 11,285
--------------------------- --------- ------ ---------
At 31 December 2018 369,782 54 369,836
--------------------------- --------- ------ ---------
Company
At 1 January 2018 - 7,173 7,173
Change in estimate - 105 105
--------------------------- --------- ------ ---------
At 31 December 2018 - 7,278 7,278
--------------------------- --------- ------ ---------
The estimated cost of decommissioning at the end of the
producing lives of the fields is reviewed annually and engineering
estimates and reports are updated periodically. Provision is made
for the estimated cost of decommissioning at the statement of
financial position date for the Company's share of the overall
costs. Cost estimates have been discounted at an average discount
rate of 4.0% (2017: 3.9%).
The timing of spend is based on the economic cut off point for
the producing assets. Provisions acquired in business combinations
have been calculated based on the latest operator cost estimates.
The payment dates are uncertain and are currently anticipated to be
between 2019 and 2040 for the relevant producing fields. It is
anticipated that the Group will obtain full tax relief on its
decommissioning liabilities in the UK. The above decommissioning
provision of $370 million includes $5.1 million classified within
current liabilities.
The other provision in the Group balance sheet relates to a
dilapidation provision for office premises. The unwind for this
provision is immaterial.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
22. Group and Company share capital
Share Total
Shares capital Share premium
Number $'000 $'000 $'000
------------------------------- ------------ --------- -------------- ---------
Issued at 31 December
2017 15,333,334 4,269 9,902 14,171
Issue of new (ordinary)
shares 181,509 40 129 169
Cancellation of shares/Share
buy-back (2,923,240) (760) (9,902) (10,662)
At 31 December 2018 12,591,603 3,549 129 3,678
------------------------------- ------------ --------- -------------- ---------
All new shares issued relate to the shares issued under the SIP
scheme to company employees and the exercise of existing 153,333
warrants.
23. Reserves
Share premium
The share premium account represents the premium arising on the
issue of shares net of issue costs.
Accumulated losses
Accumulated losses represent cumulative profits and losses net
of dividends and other adjustments.
Other reserves
Other reserves relate to the Capital redemption reserves in
relation to the issue and redemption of B shares as a part of the
return to shareholders in 2018.
Treasury shares
Under the terms of the Company's share option plan outlined in
note 1, an Employee Benefit Trust (EBT) subscribed for ordinary
shares in the Company. The Trust is administered by Appleby Trust
(Jersey) Limited. The trustee can distribute shares at its
discretion directly to beneficiaries upon the recommendation of the
board. All administrative costs associated with the EBT are met by
the Company. The EBT owns the shares to be distributed at the
discretion of the trustees and the employee owns any value in the
shares in excess of the subscription price.
On 22 December 2015, the Company placed 1,200,000 shares into
the EBT. The market price of the shares was GBP0.125 each, and the
market value was GBP150,000. The shares were placed pre-IPO.
On 16 August 2017, the EBT acquired a further 347,000 shares.
The market price of the shares was GBP0.45 each, and the market
value was GBP156,150. This resulted in the EBT jointly owning
1,547,000 shares as at 31 December 2017.
On 14 February 2018, Andrew Austin exercised 1,533,333 options
to acquire shares and the EBT was utilised to provide shares. This
resulted in the EBT jointly owning 13,667 shares as at 31 December
2018.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
24. Share based payments
Share option
The Company commenced the operation of a Share Option Plan ("the
plan") during December 2015. The plan is an equity incentive
scheme.
The Remuneration Committee oversees the plan, approves the
subscription price of awards under the plan and any criteria to be
satisfied before exercise is permitted, and monitors the
effectiveness of the plan as an incentive. Under the scheme,
participants can each be granted options up to 150% of remuneration
for an award (subject to an overall plan limit of 15% of the issued
share capital of the Company for all participants). No options may
be granted after the date which is ve years after the date the
Share Option Plan was adopted. The fair value of the awards granted
under the plan are measured at grant date using a Black-Scholes
Option Valuation Model.
During the year a total of 525,752 options were awarded under
the scheme and all were outstanding at 31 December 2018. No
performance conditions were attached to these awards.
The total charge for the year was $0.3 million (2017: Nil) which
was charged to the Income Statement. Under the plan, the options
outstanding to Directors are as follows:
Date Granted Basis Face Exercise Exercised Waived/ Earliest Lapse Performance
of Grant of grant Value Price Lapsed Vesting Date Criteria
Date
Calculated
on
GBP400,000
for
completion
Richard of Idemitsu Time
Benmore 23/05/18 107,817 Acquisition GBP400,000 .000001p Nil Nil 23/05/19 23/05/28 Vesting
--------- ---------- -------- ------------ ----------- --------- ---------- -------- --------- --------- ------------
Following approval by the Remuneration Committee on 14 February
2018, Andrew Austin exercised his option to acquire 1,533,333
ordinary shares of nominal value 20p in the capital of the Company
('Ordinary shares').
Share Incentive Plan (SIP)
During the year, the Group adopted an Inland Revenue approved
SIP for all employees of the Group. The scheme is a tax efficient
incentive plan pursuant to which all employees are eligible to
acquire up to GBP150 (or 10% of salary, if less) worth of RockRose
ordinary shares per month or GBP1,800 per year. Under the SIP
employees are invited to make contributions to buy partnership
shares. If an employee agrees to buy partnership shares the Company
currently matches the number of partnership shares bought with an
award of shares (matching shares), on a two-for-one basis.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
25. Financial instruments
The Group's financial instruments comprise trade and other
receivables, trade and other payables, and cash and cash
equivalents but excluding under and over lift.
Financial risk factors and capital risk management
The fair values of the Group's financial instruments are
materially the same as their carrying amounts.
The Group's financial instruments expose it to a variety of
financial risks: market risk, credit risk, interest risk and
liquidity risk.
a) Market risk
Commodity price risk
The Group held no financial instruments as at 31 December 2018
that are affected by commodity price, but the Group is nonetheless
exposed to movements in oil and gas prices.
The table below illustrates the impact on profit before tax of
changes of commodity prices. The impact on equity is the same.
2018 2017
Crude oil sales during the year ($'000s) 124,866 7,436
Gas sales during the year ($'000s) 26,633 -
Average crude oil price ($) per bbl 72.95 66.1
Average gas price ($) per boe 46.04 -
Impact of decrease of crude oil prices
by $1 ($'000s) (1,712) (112)
Impact of decrease of crude oil prices
by 10% ($'000s) (12,487) (744)
Impact of decrease of gas prices by $1 (579) -
($'000s)
Impact of decrease of gas prices by 10% (2,663) -
($'000s)
Foreign exchange risk
The Group is exposed to foreign exchange risk arising from
currency exposures, primarily with respect to GBP. Foreign exchange
risk arises when future commercial transactions or recognised
assets or liabilities are denominated in a currency that is not the
entity's functional currency.
The following foreign exchange rates were applied:
2018 2017
$'000 $'000
----------------------------------- ------- -------
As at 31 December (US$ to GBP) 1.28 1.35
Average for the year (US$ to GBP) 1.34 1.29
As at 31 December (US$ to EUR) 1.15 1.20
Average for the year (US$ to EUR) 1.18 1.13
----------------------------------- ------- -------
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
25. Financial instruments (continued)
a) Market risk (continued)
As at 31 December 2018, various statements of financial position
line items were denominated in foreign currencies and the impact
due to foreign exchange movement of an increase or decrease in
exchange rate is shown below:
The Group's exposure to foreign currency risk was as follows
based on the following nominal amounts:
2018 2017
GBP'000 $'000 GBP'000 $'000
-------------------------- --------- --------- -------- --------
Cash at bank 101 130 - -
Working capital accruals (7,718) (9,855) (6,657) (8,190)
Trade payables (10,172) (12,988) (1,158) (1,564)
-------------------------- --------- --------- -------- --------
EUR'000 $'000 EUR'000 $'000
-------------------------- --------- --------- -------- --------
Cash at bank 54,757 62,714 - -
Working capital accruals (5,639) (6,458) - -
Trade payables (20,866) (23,899) - -
-------------------------- --------- --------- -------- --------
Sensitivity analysis
The foreign exchange movement in Euro currency is not material
for the Group as most of the revenues and costs in the Dutch
operating segment are denominated in Euro currency. Additionally,
the movement in GBP currency against USD currency is not material
as liabilities to suppliers are considered relatively small and
payment is made within 30 days.
b) Credit risk
Credit risk arises from cash and cash equivalents, as well as
credit exposures on trade and other receivables. The credit risk of
the Company's trade and other receivables is assessed through the
credit ratings of relevant customers.
See listing below: Recoverable
2018 Credit rating Recoverable period period
0-30 days Within one
year
Customers $'000 $'000 $'000
BP 7,314 A2 7,314 -
Petrogas E&P NL 5,074 N/a 5,074 -
Suncor Energy Trading 3,764 N/a 3,764 -
Total 2,553 A2 2,553 -
Dana Petroleum 1,391 N/a 1,391 -
Arunvil Capital 851 N/a 426 425
Wintershall Noordzee
BV 711 N/a 711 -
GasTerra B.V. 560 N/a 560 -
Spirit Energy 270 N/a 270 -
Taqa 256 A 256 -
Others 758 N/a 758 -
Total 23,502 23,077 425
----------------------- ------- -------------- ------------------- ------------
The Group only trades with recognised creditworthy third
parties. The exposure risk arises from default of the counter
party, with a maximum exposure equal to the carrying amount as at
the statement of financial position date. The maximum exposure to
credit risk at the reporting date was $23.5 million (2017: $13.2
million).
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
25. Financial instruments (continued)
c) Interest rate risk
Liquidity risk is the risk that the Company will not be able to
meet its financial obligations as they fall due.
Management monitors the Company's liquidity reserve (comprising
cash and cash equivalents) through comparison to expected cash flow
and budgets.
The following are the contractual maturities of financial
liabilities including estimated interest payments for loans from
the group undertakings:
2018 2017
1 year 1 year 2 year 1 year 1 year 2 year
Total or less <2years <5years Total or less <2years <5years
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Non-derivatives financial
assets
Trade and other receivables 28,147 28,147 - - 13,244 13,244 - -
Non-derivative financial
liabilities
Trade and other payables (57,017) (57,017) - - (1,564) (1,564) - -
Net current financial
(liabilities)/ assets (28,870) (28,870) - - 11,680 11,680 - -
Capital risk management
The Group's objectives when managing capital are to safeguard
the Company's ability to continue as a going concern in order to
provide returns for shareholders as described in the Strategic
Report.
26. Commitments and contingent liabilities
Capital commitments
In respect of its interest in joint ventures, the Group is
committed to the following as at 31 December 2018:
-- Capital expenditure of $83 million (2017: $6m) on Producing
& Development assets;
-- Decommissioning costs of $5 million (2017: $7m).
Operating lease commitments
2018 2017
$'000 $'000
--------------------------------------------- ------ ------
Office equipment lease
Payments under operating leases due within
one-year period - 6
Payments under operating leases due between - -
two to five-year periods
--------------------------------------------- ------ ------
Total office equipment leases - 6
--------------------------------------------- ------ ------
Office premises lease
Payments under operating leases due within
one-year period 207 132
Payments under operating leases due between 400 -
two to five-year periods
--------------------------------------------- ------ ------
Total office premises lease 607 132
--------------------------------------------- ------ ------
Lease payments of $207,000 (2017: $74,000) were recognised in
the statement of comprehensive income during the year.
Contingent liabilities/assets
No contingent liabilities and assets exist for the current
year.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARED 31 DECEMBER 2018
27. Related parties
The transactions between the Company and its subsidiaries, which
are related parties, have been eliminated on consolidation.
The balances which are receivable from, or payable to,
subsidiary undertakings at 31 December 2018 are disclosed at note
17 and 20.
Key management personnel compensation is set out in the
following table.
Salary/Fees Taxable Benefits Bonus In Lieu of Total
Pension
---------------------- ------------------- ---------------------- --------------- ------------------------
2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
---------- ---------- --------- -------- ---------- ---------- -------- ----- ------------ ----------
Andrew
Austin $ 515,900 $ 496,201 $ 12,912 $ 7,391 $ 804,000 $ 496,201 $34,000 Nil $ 1,366,812 $ 999,793
---------- ---------- --------- -------- ---------- ---------- -------- ----- ------------ ----------
Richard
Benmore $ 67,000 $ 64,442 $ 10,022 $ 4,282 Nil Nil Nil Nil $ 77,022 $ 68,723
---------- ---------- --------- -------- ---------- ---------- -------- ----- ------------ ----------
John
Morrow $ 67,000 $ 64,442 Nil Nil Nil Nil Nil Nil $ 67,000 $ 64,442
---------- ---------- --------- -------- ---------- ---------- -------- ----- ------------ ----------
The above amounts have been calculated by translating the GBP
amounts to USD at the average rate for the year of $1.34 (2017:
$1.29).
The Directors' emoluments are disclosed in note 7.
28. Profit and loss account of the parent company
In accordance with section 408 of the Companies Act 2006, the
statement of comprehensive income of the parent company has not
been separately presented in these financial statements. The parent
company incurred a loss of $14.2 million (2017: $12.1 million) for
the year.
29. Events after the reporting year
On 25 February the Company signed a Sale & Purchase
Agreement to acquire 100% of Marathon Oil U.K. LLC and 100% of
Marathon Oil West of Shetland Limited from subsidiaries of Marathon
Oil Corporation. Total consideration is circa $140 million. A
deposit of $10 million was paid on signing the SPA.
On 1 March the Company made a formal offer to the board of
directors of Independent Oil and Gas plc ("IOG") with a proposal
for an all cash takeover offer for IOG (the "Proposal"). The terms
of the Proposal were that RockRose would offer 20p in cash per
ordinary share ("IOG Share") for the entire issued and to be issued
share capital of IOG (the "Possible Offer") which would value the
total share capital of IOG at GBP26.6 million. The Possible Offer,
if made, would represent a premium of 51 per cent. to the closing
price of IOG on 26 February, the day of the initial approach by
RockRose to IOG and a premium of 58 and 44 per cent to the 30 and
60 day volume-weighted average price respectively, up to the period
ended 26 February. The Proposal was rejected by the board of
directors of IOG.
On 21 March 2019 the Company made a formal approach to Smith
& Williamson LLP (acting as joint administrators (the
"Administrators") of London Oil and Gas ("LOG")) to acquire the
entire debt due to LOG, from IOG , with accrued interest, for the
sum of GBP40 million in cash (the "Debt Offer") after making
initial and enhanced offers to the Administrators on an informal
basis during the preceding 10 days. On the 1 April 2019 the Company
announced that it had increased this offer to GBP52.5 million. Both
offers were rejected.
On 1 April 2019 the Company announced that both the Firm IOG
Debt Offer and the Possible IOG Share Offer had been withdrawn.
On 22 April 2019, The Company entered into a hedging agreement
by hedging 3,000 boepd of its oil production at $69 for a period of
13 months from May 2019.
30. Approval of financial statements
The financial statements were approved by the board of Directors
and authorised for issue on 30 April 2019.
ROCKROSE ENERGY PLC
Company Registration No. 09665181
Summary of licences acquired as part of the Acquisition of
Dyas
ROCKROSE ENERGY PLC
COMPANY INFORMATION
Directors Andrew Austin
Richard Benmore
John Morrow
Company secretary Cooley Services Limited
Company number 09665181
Registered office C/O Cooley Services Limited
Dashwood House
69 Old Broad Street
London
EC2M 1QS
Auditors PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Bankers Metro Bank
One Southampton Row
London
WC1B 5HA
A full version of this report is available on the Company's
website: https://rockroseenergy.com/
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR KMGFDFGMGLZM
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