Andalas Energy and Power Plc, the AIM listed Indonesian focused energy company (AIM: ADL), is pleased to announce its results for the year ending 30 April 2017. The Annual Report and Accounts will be posted to shareholders and will be made available on the Company’s website: http://www.andalasenergy.co.uk.
- Two agreements secured for the development of wellhead IPP projects with major partners:
- October 2017 entered into a memorandum of understanding with PT Pertamina Power Indonesia and Siemens AG for the development of a further wellhead IPP project at the Puspa gas field in Sumatra
- August 2017 entered into consortium agreement with PT PP Energi for the development of a wellhead IPP in Sumatra known as Jambi-1
- Pipeline of further potential projects identified with both Pertamina and third-parties across Indonesia that is expected to be suitable for development as a wellhead IPP.
- Board changes announced today reflecting the change from business development to operational delivery.
Andalas’ vision is to be the leading developer of wellhead located, independent power producers (“wellhead IPPs”) in our target market of Indonesia. We aim to secure low cost, reliable and sustainable gas supplies and to deliver low-cost, reliable and sustainable power from wellhead IPPs in a way that adds value to all stakeholders.
Our strategy is to:
• identify and secure gas resources suitable for supplying gas to a wellhead IPP;
• create a buyer for those gas resources by developing wellhead IPPs;
• acquire and develop gas resources as part of an integrated upstream and IPP project if it enables the IPP project to proceed, or de-risks delivery of the gas to the IPP or enhances returns to Andalas; and
• sell interests in the IPPs and the upstream developments.
Andalas is making material progress in delivering this strategy.
In August 2017, Andalas announced that it had executed a consortium agreement with PT PP Energi (“PPE”), a subsidiary of the state-owned enterprise, PT PP (Persero) Tbk, for the development of a wellhead IPP in Sumatra known as Jambi-1 and in October 2017 announced it had entered a memorandum of understanding with PT Pertamina Power Indonesia (“PPI”), a wholly owned subsidiary of the state-owned oil company, PT Pertamina (Persero) (“Pertamina”), and Siemens AG for the development of a further wellhead IPP at the Puspa field also in Sumatra.
These agreements are the culmination of a considerable amount of work undertaken by Andalas to identify gas resources suitable for development as wellhead IPPs. This work has been undertaken more recently in conjunction with PT Pertamina EP, another wholly owned subsidiary of Pertamina, and will continue as we seek to identify further IPP projects. These agreements are expected to enable the project partners to undertake the further work required to bring the projects to first power.
In addition, the Company is continuing to progress wellhead IPP and associated upstream opportunities operated by non-Pertamina third parties.
The board believes that Indonesia presents an excellent opportunity for Andalas. Indonesia’s power generation infrastructure will need substantial investment if it is not to inhibit Indonesia’s economic growth. The current generation capacity of approximately 55.5 GW is insufficient to meet the demand for electricity from all sectors of Indonesia’s growing population and its buoyant manufacturing industries.
The Government has announced ambitious electrification targets. To achieve these targets, the national electricity company, PT Perusahaan Listrik Negara (“PLN”) and the independent power producers will need to construct material additional generating capacity. PwC estimates in its “Power in Indonesia” guide that this will require further investment of US$110 billion and that, over the next 10 years, the private sector will play a significant in the Indonesian power sector.
The Government’s legislative initiatives continue to promote investment in the sector. In July 2017 the Minister of Energy and Mineral Resources issued regulation number 45 of 2017 which promotes the development of generating capacity situated at the wellhead by defining the conditions which a project must meet in order to permit PLN to procure the generating capacity by direct appointment rather than public tender.
Overview of the year and financial review
The Group made a loss for the year US$4,601,000 (2016: US$4,673,000), including significant expenditure incurred in pursuing the Group’s strategy in Indonesia that has been categorised as business development costs totalling US$2,481,000 (2016: US$3,195,000).
This work included the completion of a comprehensive analysis of potential gas fields that could be suitable for an integrated gas to power development. The due diligence work delivered the Pertamina
cooperation agreement in September 2016 and furthermore the work undertaken on the potential gas supplies in Indonesia culminated in the identification of the first potential project, that envisaged sourcing gas from fields included within the Pertamina owned MJ Cluster.
During the period the Group incurred US$173,000 (2016: US$Nil) (included within the business development cost in the period) in respect of the Tuba Obi East (“TOE”) planned workover programme. In April 2017 the project was returned to Pertamina by the operator upon expiry of the KSO licence. TOE now comprises part of the MJ Cluster and is under consideration for further development. Andalas believes that developing TOE as part of the MJ Cluster is likely to lead to a better outcome for the Company because it enables a larger integrated project and puts the development of the upstream element in the hands of Pertamina, which has the resources and technical capability to fully develop it.
During the period and principally in conjunction with the readmission to AIM on 13 May 2016, the Company issued a total of 1,775,020,674 shares at a price of 0.2 pence in settlement of the convertible loan note (£600,000 (US$856,000)), settlement of certain share issue costs and corporate finance fees and a further placing to raise cash of £1.72million (US$2.513million).
The period under review also included a number of one-off expenses relating to the readmission of the Company to AIM that completed in May 2016. The loss, thereby, included a share based payment charge totalling US$464,000 (30 April 2016: US$347,000) in respect of consideration payable (included in business development costs) and US$446,000 (30 April 2016: US$Nil) relating to IPO costs expensed following the completion of the Company’s readmission to AIM in May 2016. Adjusting for these one-off costs the Group generated a loss in the period of US$3,691,000 (2016: US$4,326,000), including all charges the loss for the period was US$4,601,000 (30 April 2016: US$4,673,000).
The Group held a cash balance of US$8,000 at 30 April 2017 (US$290,000 at 30 April 2016). In addition the Company had trade and other payables of US$1,546,000 at 30 April 2017 (US$1,799,000 at 30 April 2016), included in this amount is a total of US$1,261,000, (2016: US$Nil) of payables totalling US$461,000 (2016: $Nil) to Directors, US$395,000 (2016: US$Nil) due to key consultants and US$405,000 (2016: US$Nil) due to third parties, where each party has either agreed to either receive equity settlement or cash at such time as the Company has greater cash resources at its disposal.
Since the year end the Company has strengthened its balance sheet having raised a total of US$2.2m (£1.65m) and it has now fully settled the loan note liability (yearend balance $649,000). The key stakeholders believe in the future of the Company and the opportunities that the Company is developing, accordingly they recognise that preserving its cash whilst continuing to make operational progress is the best way to secure the long term supportive capital that the Company will require to fully realise its strategy.
The Company’s principal cost is its people, therefore to preserve cash the Company’s Directors and key consultants (“key stakeholders”) continued post year end to receive no or partial remuneration. The agreement of the key stakeholders to defer all or part of their remuneration alongside the support of existing shareholder has been vital whilst Andalas worked to secure the recently announced operational achievements; this support is expected to continue as the Company progresses its project offering. Eventually the outstanding remuneration to key stakeholders will either be settled in part or in full in exchange for equity and/or it will be deferred until such time as the Company is generating cash flow or has sufficient resources to afford settlement in part or in full.
The Directors believe that the establishment of the two project development agreements, the first with PPE and the second with PPI and Siemens, alongside the deep inventory of project opportunities that the Group has developed with Pertamina and third parties, has created a platform to make Andalas successful.
The Group actively explores financing and funding opportunities at both the project and corporate level to support its ongoing operational and project requirements. Naturally we are disappointed that we have to date been unable to secure sufficient equity to meet the Company’s investment objectives over a longer time horizon. However, notwithstanding the capital raising challenges of the past year, the Directors remain confident that the significance of the opportunity being pursued, together with the current and expected material progress in creating two project consortiums with strong partners, will enable the Group to raise the financing required for it to be able to finance its future working capital and development cost requirements beyond the period of twelve months from the date of this report.
In securing agreements with credible partners in Indonesia, we believe we are transitioning from a Company that has been focussed on business development to a Company focussed on project execution. Today we therefore announce changes to our board. Having now secured PPE, PPI and Siemens as partners, I intend to step down as Chairman with immediate effect to be replaced by David Whitby, who will lead the Company’s efforts in maintaining and strengthening its relationships with our core partners. Alongside this Dr Robert Arnott will assume the role of senior non-executive Director.
We also announce that Simon Gorringe, formerly COO, has been appointed CEO, Simon’s experience and track record of delivering international energy projects makes him the ideal candidate to lead the next phase of the Company’s journey.
We believe that we have a business that is now entering an exciting period as we seek to execute the work necessary for each of the Company’s projects to reach final investment decision (“FID”), a process against which we continue to announce progress. Furthermore the Company anticipates growing the number of projects under development steadily as it converts its opportunity pipeline into live projects.
30 October 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 30 APRIL 2017
|Impairment of financial assets||10||–||(179)|
|Asset evaluation and gas to power expenses||4||(2,481)||(3,195)|
|Other administrative expenses||4||(1,390)||(970)|
|Total administrative expenses||4||(4,317)||(4,344)|
|Loss before tax||(4,601)||(4,673)|
|Loss after tax attributable to owners of the parent||(4,601)||(4,673)|
|Total comprehensive loss for the year attributable to owners of the parent||(4,601)||(4,673)|
|Basic and diluted loss per share attributable to owners of the parent during the year (expressed in US cents per share)||
The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 APRIL 2017
|Financial assets at fair value through profit or loss||10||–||–|
|Total non-current assets||–||–|
|Cash and cash equivalents||8||290|
|Total current assets||166||1,175|
|Trade and other payables||12||(1,546)||(1,799)|
|Equity attributable to the owners of the parent|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|YEAR ENDED 30 APRIL 2017|
|Balance at 1 May 2015||3,616||(3,104)||512|
|Loss for the year||–||(4,673)||(4,673)|
|Total comprehensive income||–||(4,673)||(4,673)|
|Transactions with equity shareholders of the parent|
|Proceeds from shares issued||2,681||–||2,681|
|Cost of share issue||(173)||–||(173)|
|Share warrants issued||–||153||153|
|Balance at 30 April 2016||6,124||(7,624)||(1,500)|
|Loss for the year||–||(4,601)||(4,601)|
|Total comprehensive income||–||(4,601)||(4,601)|
|Transactions with equity shareholders of the parent|
|Proceeds from shares issued||2,513||–||2,513|
|Share based payments and other share issues||1,749||–||1,749|
|Settlement of loan note||856||–||856|
|Cost of share issues||(1,158)||–||(1,158)|
|Share warrants issued||–||112||112|
|Balance at 30 April 2017||10,084||(12,113)||(2,029)|
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 30 APRIL 2017
|Cash flows from operating activities:|
|Net loss for the year||(4,601)||(4,673)|
|Unrealised loss/ (gain) from financial assets at fair value through profit or loss||–||179|
|Change in working capital items:|
|Decrease/(Increase) in other receivables||11||619||(863)|
|Increase in trade and other payables||12||294||1,576|
|Net cash used in operations||(2,710)||(2,925)|
|Cash flows from investing activities|
|Net cash from investing activities||–||4|
|Cash flows from financing activities|
|Proceeds from issue of share capital||14||2,513||2,487|
|Share issue costs||14||(495)||(173)|
|Proceeds from borrowings||15||502||704|
|Cost of borrowings||15||(37)||(87)|
|Net cash generated by financing activities||2,476||2,921|
|Net decrease in cash and cash equivalents||(234)||–|
|Cash and cash equivalents, at beginning of the year||290||354|
|Effect of foreign exchange rate changes||3||(48)||(64)|
|Cash and cash equivalents, at end of the year||8||290|
Major Non Cash Transactions
Details of major non-cash transactions are described in note 13 share based payments, in note 14 share capital and note 15 borrowings.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED 30 APRIL 2017
1. General information
The principal activity of Andalas Energy and Power PLC (‘the Company’) during the year was as an energy business focussed on the Republic of Indonesia. As at the year end, the Company was domiciled in the Isle of Man and listed on the AIM market of the London Stock Exchange.
2. Summary of significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. The Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards IFRSs and IFRIC interpretations, issued by the International Accounting Standards Board (IASB) as endorsed for use in the EU (‘IFRSs’) and those parts of the Isle of Man company law that are applicable to companies that prepare their financial statements under IFRS.
The financial information for the years ended 30 April 2017 and 30 April 2016 does not constitute statutory accounts but is extracted from the audited accounts for those years. The auditor’s report on the 30 June 2016 financial statements was unqualified. The auditor’s report on the 30 June 2017 financial statements was unqualified although an emphasis of matter was included in the accounts to draw attention to going concern.
The financial statements have been prepared on a going concern basis. The Company raises money to support its corporate overheard, its operations and capital projects as and when required. The Group requires additional funding to meet its daily working capital needs, to settle its outstanding liabilities and in order to fund the development of its projects. As additional funding is required in order to settle outstanding liabilities, to meet on going working capital needs and to raise finance to fund project development there can be no assurance that the Group’s projects will be developed in accordance with current plans or completed on time or to budget. Therefore future work on the development of the Group’s projects and financial returns arising therefrom may be adversely affected by factors outside the control of the Group which are inherently linked to the availability of funding for the Group.
The Directors remain confident that the potential income stream from the development of its independent power projects and its agreements to develop projects under two consortiums, the continued deferral of remuneration by the Directors and senior consultants, together with the Directors historic ability to raise additional funds will enable the Group to settle its outstanding liabilities, finance its future working capital and fund the development cost requirements of its projects beyond the period of twelve months from the date of approval of this report. However, there are no confirmed funding arrangements in place at present; as such there can be no guarantee that the required funds to settle current liabilities, meet future working capital requirements and fund future development costs will be available to the Group within the necessary timeframe. Consequently a material uncertainty exists that may cast significant doubt on the Group’s ability to fund this cash shortfall and therefore be able to meet its commitments and discharge its liabilities in the normal course of business for a period not less than twelve months from the date of approval of these financial statements. The financial statements do not include the adjustments that would result if the Group were unable to continue in operation.
3. Finance income and Finance costs
|Year ended 30 April 2017||Year ended 30 April 2016|
|Income on cash and cash equivalents||–||4|
|Bank charges and finance expense on borrowings||173||236|
|Foreign exchange loss||111||97|
4. Administration expenses
Administration fees and expenses consist of the following:
|Share based payment expense (Note 7)||–||180|
|Directors’ fees (Note 7)||928||370|
|Total corporate overhead||1,390||970|
|Travel and accommodation||447||645|
|Share based payment expense (Note 13 and 14)||464||347|
|Asset evaluation and gas to power business expenses||2,481||3,195|
|Impairment – Peelwood (Note 10)||–||179|
Share based payment expense includes $112,457 (2016: Nil) relating to options granted to advisors as described in note 13 and $351,040 (2016: Nil ) relating to the issue of shares in settlement of Corsair carried interest as described in note 14 and $Nil (2016: $347,000) relating to option charge and shares granted under Corsair assignment agreement as disclosed in the prior year notes 13 and 14.
5. Segmental analysis
In the opinion of the Directors, the operations of the Group comprise one single operating segment comprising that of developer of gas to power projects in the Republic of Indonesia. The Group only has one reportable segment and the Directors consider that the primary financial statements presented substantially reflect all the activities of this single operating segment.
6. Loss per Share
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.
|Loss attributable to owners of the Group||(4,601)||(4,673)|
|Weighted average number of ordinary shares in issue (thousands)||2,420,989||678,188|
|Loss per share (US cents)||($0.19)||($0.69)|
In accordance with International Accounting Standard 33 ‘Earnings per share’, no diluted earnings per share is presented as the Group is loss making. Details of potentially dilutive share instruments are detailed in notes 13, 14 and 15. Details of shares issued post year end are disclosed in note 19.
7. Staff Costs (including Directors)
The group employed an average of 6 individuals during the year, including the directors (2016: 3).
|Share based payments||–||180|
Key management of the Group are considered to be the Directors and the remuneration of those in office during the year was as follows:
|Short term employee benefits||Social security payments||
|Short term employee benefits||Share based payments||
|David Whitby (2)||240||–||240||263||74||337|
|Paul Warwick (1)||60||8||68||–||24||24|
|Daniel Jorgensen (1)||180||25||205||–||82||82|
|Ross Warner (2)||180||–||180||–||–||–|
|Simon Gorringe (2)||180||–||180||–||–||–|
|Graham Smith (1)||13||–||13||–||–||–|
|Robert Arnott (1)||37||5||42||–||–||–|
|Cameron Pearce (3)||–||–||–||89||–||89|
|Jeremy King (3)||–||–||–||18||–||18|
|Total Key Management||890||38||928||370||180||550|
|Analysis of contractual entitlement:|
|Cash settled in period||459||–||459||370||–||370|
|Outstanding at year end||431||38||469||–||180||180|
|Total Key Management||890||38||928||370||180||550|
(1) Certain Directors elected to defer settlement of 100% of their 2017 salary during the year.
(2) Certain Directors elected to defer settlement of 25% of their 2017 salary during the year.
(3) Resigned 8 December 2015
As at the 30 April 2016 the Company had agreed, that subject to shareholder approval, it would issue shares equivalent to the share based payments disclosed above, at a price of 0.2pence per share. On 13 May 2016 the resolutions were passed and the shares were issued as disclosed in note 14.
8. Financial Risk Management
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency exchange risk, price risk and interest rate risk), credit risk and liquidity risk. The Board of Directors seek to identify and evaluate financial risks.
(a) Foreign currency exchange risk
Foreign exchange risk arises because the Group entities enter into transactions in currencies that are not the same as their functional currencies, resulting in gains and losses on retranslation into US Dollars. It is the Group’s policy to ensure that individual Group entities enter into local transactions in their functional currency wherever possible and that only surplus funds over and above working capital requirements should be transferred to the treasury of the Parent Company. The Group and Company considers this policy minimises any unnecessary foreign exchange exposure. Despite this policy the Group cannot avoid being exposed to gains or losses resulting from foreign exchange movements, at the reporting date a 10% increase (decrease) in the strength of the US Dollar would result in a corresponding reduction of $160,000 (2016: $179,000) in the net liabilities of the Group.
(b) Cash flow interest rate risk
The Group’s cash and cash equivalents are invested at short term market interest rates. As market rates are low the Group is not subject to significant cash flow interest rate risk and no sensitivity analysis is provided. The Group is also not subject to significant fair value interest rate risk. No interest rate sensitivity has been presented in respect of the outstanding convertible loan note as it is considered not material.
- Financial Risk Management (continued)
|Cash & Cash Equivalents|
|Total Financial Assets||8||290|
|Trade & other payables|
|Total Financial Liabilities||2,195||2,675|
(c) Credit risk
Credit risk arises on investments, cash balances and receivable balances. The amount of credit risk is equal to the amounts stated in the Statement of Financial Position for each of these assets. Cash balances and transactions are limited to high-credit-quality financial institutions. There are no impairment provisions as at 30 April 2017 (2016: nil).
Credit risk also arises from cash and cash equivalents. The Group considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk. The Group will only keep its holdings of cash and cash equivalents with institutions which have a minimum credit rating of ‘B’.
(d) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group has adopted a policy of maintaining surplus funds with approved financial institutions.
Management of liquidity risk is achieved by monitoring budgets and forecasts against actual cash flows. Where the Group entered into borrowings during the year management monitor the repayment and servicing of these arrangements against the contractual terms and reviewed cash flows to ensure that sufficient cash reserves were maintained. Further detail on liquidity risk is set out in note 2.7
Residual undiscounted contractual maturities of financial liabilities:
|0-3 months||No stated maturity|
|30 April 2017|
|Trade and other payables||1,546||–|
|30 April 2016|
|Trade and other payables||1,799||–|
Capital Risk Management
The Directors determine the appropriate capital structure of the Group, specifically, how much is raised from shareholders (equity) and how much is borrowed from financial institutions (debt), in order to finance the Group’s business strategy.
The Group’s policy in the long term is to seek to maintain the level of equity capital and reserves is to maintain an optimal financial position and gearing ratio which provides financial flexibility to continue as a going concern and to maximise shareholder value. The capital structure of the Group consists of shareholders’ equity together with net debt (where relevant). The Group’s funding requirements are met through a combination of debt, equity and operational cash flow. As at 30 April 2017 the Group was in a net liability position, since the year end the Group settled the outstanding loan note and raised further equity as described in note 19.
The Company is resident for tax purposes in the Isle of Man and is subject to Isle of Man tax at the current rate of 0% (2016: 0%). The Company has a subsidiary in Singapore and also has an investment in Peelwood Pty Ltd (a company resident in Australia) will be subject to tax on distributions and gains levied by those jurisdictions.
|Current tax charge||–||–|
|Deferred tax charge||–||–|
|Total taxation charge||–||–|
The charge for the year can be reconciled to the loss per the consolidated statement of comprehensive income as follows:
|Loss before income tax||(4,601)||(4,673)|
|Tax on loss at the weighted average Corporate tax rate of 0% (2016: 0%)||–||–|
|Total income tax expense||–||–|
The deferred tax asset has not been recognised for in accordance with IAS 12. The Group does not have a material deferred tax liability at the year end.
- Financial assets at fair value through profit or loss
|30 April 2016|
|Fair value at beginning of year||–||179|
|Fair value at year end||–||–|
On 18 December 2013 the Company entered an Option Agreement with ASX-listed Company Balamara Resources to farm into its Peelwood concession located in NSW, Australia. Under the agreement the Company, could earn into 49% of Peelwood. This option was partly exercised on 28 January 2014 earning the Company 20% of the concession at a cost of AUD 200,000 or US$179,000. Further rights to exercise options have now lapsed. The investment was provided for in full during the prior year.
a) Fair value estimation
Financial instruments held by the Group carried at fair value comprise one unquoted investment, valued in accordance with the accounting policy set out in Note 2.9.
The Group measures fair value by using the following fair value hierarchy:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability either directly (that is, as prices) or indirectly (that is, derived from prices); and
Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. Where investments have recently been made the cost of the transaction is deemed the best evidence of market value in the absence of any significant changes. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2; otherwise they are classified as level 3.
All the Group’s investments are included within level 3 and are designated financial assets at fair value through profit or loss:
Level 3 inputs
The following table gives information about how the fair values of Group’s investments are determined (in particular, the valuation techniques and inputs used).
|Assets and liabilities||Nature of investment||Fair value as at 30 April 2017||Fair value as at 30 April 2016||Valuation techniques and key inputs||Significant unobservable input|
|Financial assets at fair value through profit or loss||20% of equity investment in Peelwood Pty Ltd||USD Nil||USD Nil||Purchase price and market knowledge||Expected realisable value from sale|
The Directors have considered the carrying value of the Peelwood interest and have decided to provide against it in full being their estimated realisable value from sale.
11. Other receivables
|Other receivables and prepayments||158||885|
The fair values are as stated above equate to their carrying values as at the year end. The financial assets were not past due and were not impaired and were all denominated in US$. Included in other receivables and prepayments is an amount of $Nil (2016: $698,760) in connection with prepaid expenses relating to the publication of the AIM re-admission document.
12. Trade and other payables
|Accruals and other payables||534||597|
|Trade payables and accruals||1,546||1,799|
13. Share based payments
The following is a summary of the share options and warrants outstanding and exercisable as at 30 April 2017 and 30 April 2016 and the changes during each year:
|Number of options and warrants||Weighted average exercise price (Pence)|
|Outstanding and exercisable at 1 May 2015||68,250,464||0.945|
|Options granted as consideration||34,344,865||0.400|
|Outstanding and exercisable at 30 April 2016||102,595,329||0.762|
|Options granted as consideration||66,666,666||0.220|
|Outstanding and exercisable at 30 April 2017||144,261,995||0.612|
The above weighted average exercise prices have been expressed in pence and not cents due to the terms of the options and warrants. The following share options or warrants were outstanding and exercisable in respect of the ordinary shares:
|Grant Date||Expiry Date||1 May
|Issued||30 April 2016||Issued||Expired||30 April
The new options and warrants have been valued using the Black-Scholes valuation method and the assumptions used are detailed below. The expected future volatility has been determined by reference to the historical volatility:
|Grant date||Share price at grant||Exercise price||Volatility||Option life||Dividend yield||Risk-free investment rate||Fair value per option|
|13.05.16||0.2p||0.2p||124%||5 years||0%||3%||0.241 cents|
|31.01.17||0.14p||0.2p||40%||5 years||0%||3%||0.049 cents|
|31.01.17||0.14p||0.25p||40%||5 years||0%||3%||0.037 cents|
|31.01.17||0.14p||0.30p||40%||5 years||0%||3%||0.030 cents|
|04.02.15||0.175p||0.175p||119%||2 years||0%||2.5%||0.162 cents|
|05.06.15||0.4p||0.4p||124%||3 years||0%||3%||0.244 cents|
The Group recognised $112,457 (30 April 2016: $153,000) relating to equity-settled share based payment transactions during the year arising from Option or Warrant grants, of which $Nil (30 April 2016: $153,000) was expensed as a pre-licence acquisition cost in connection with the Corsair assignment agreement and with $Nil being expensed in relation to Directors and consultants services (30 April 2016: $Nil). There are 103,034,596 of unvested options at the year end, that are held by certain Directors and consultants, which vest in three equal tranches relating to acquiring an economic interest in a first concession, an interest in a second concession and gross production from its interest in projects exceeding 400BOPED. As the triggers for the grant of the tranches have not occurred at the reporting date no share based payment charge arises. Note 14 includes details of additional share consideration paid in the year.
For the share options and warrants outstanding as at 30 April 2017, the weighted average remaining contractual life is 2.75 years (30 April 2016: 2.02 years).
On 13 May 2016 the Company issued one warrant for every four shares in issue at 11 May 2016. Accordingly the Company issued 179,536,826 warrants on 13 May 2016 that were exercisable at 0.2pence per share on or before 31 May 2016. Prior to maturity 12,007,661 warrants were exercised and issued on 31 May 2016 as disclosed in note 14. The remainder lapsed.
Please refer to the Directors’ Report for details of shares, options and warrants held by the Directors at 30 April 2016 and 2017. Details of warrants and options issued post year end are included in note 19.
14. Share capital
All shares are Nil Coupon fully paid and each ordinary share carries one vote. No warrants have been exercised at the reporting date.
|Allotted, called-up and fully paid:||Number||Pence per share||Share premium
|Balance at 30 April 2015||261,897,302||3,616|
|06/05/2015 – equity placing for cash||50,000,000||0.200||152|
|Cost of issue||–||–||(9)|
|05/06/2015 – equity placing for cash||375,000,000||0.400||2,335|
|Cost of issue||–||–||(164)|
|11/06/2015 – consideration shares*||31,250,000||0.400||194|
|Balance at 30 April 2016||718,147,302||6,124|
|13/05/2016 – equity placing for cash||825,000,000||0.200||2,405|
|13/05/2016 – equity placing with directors||25,000,000||0.200||73|
|Cost of issue||–||–||(1,158)|
|13/05/2016 – loan note settlement*||300,000,000||0.200||856|
|13/05/2016 – share based payments*(2)||314,750,000||0.200||898|
|13/05/2016 – settlement of Director payables (1)||142,834,558||0.200||408|
|13/05/2016 – issue of shares in respect of Corsair settlement (2)||122,406,940||0.200||349|
|31/05/2016 – equity placing||12,007,661||0.200||34|
|07/07/2016 – share based payments*(3)||32,389,530||0.200||93|
|07/07/2016 – issue of Corsair settlement (4)||631,984||0.200||2|
|Balance at 30 April 2017||2,493,167,975||10,084|
* Non-cash item per the consolidated cash flow statement.
- Issue of shares in settlement of brought forward amounts payable to Directors detailed in note 18.
- Issue of shares to advisors in relation to fees related to the equity placing and the readmission.
- Issue of shares in relation in relation to settlement of third party liabilities with shares in the company.
- Issue of shares in respect of the settlement of the Corsair carried interest as disclosed in the Companies admission document of 27 April 2016.
On 4 June 2015, the Company entered into an agreement (“the agreement”) with Corsair Petroleum (Singapore) Pte Ltd, (“Corsair”), which was a company in which each of David Whitby, Ross Warner and Simon Gorringe had a 25 per cent. beneficial interest. Following the agreement, David Whitby, previously unconnected to the Company joined the board as Chief executive officer. This arrangement established that Corsair would introduce oil and gas concessions in Indonesia to the Company and also set out the means by which Corsair was to be remunerated for this, which was as follows:
- 31,250,000 Ordinary Shares to be issued on closing of the Assignment Agreement and 34,344,865 Corsair Options which vest on closing of the Assignment Agreement (issued on 06/05/2015)
- up to an additional 93,750,000 Corsair Contingent Consideration Shares in three equal tranches (of 31,250,000 Ordinary Shares) on the occurrence of each of the following three milestones: (i) the acquisition by the Company of one concession in Indonesia; (ii) the acquisition by the Company of a second concession in Indonesia; and (iii) gross production from projects in which the Company has an economic interest exceeding 400 bopd for a period of 30 days (together “the Milestones”); and
- up to an additional 103,034,596 Corsair Options which vest in three equal tranches of 34,344,865 upon the occurrence of each of the milestones.
- The Agreement also contains provisions whereby Corsair will have a carried interest in oil and gas concessions introduced by it and a share of future revenues from these concessions. (“carried right”)
On 27 April 2017 it was agreed with Corsair that the carried right arrangement was to be replaced by equity and subsequently on 13 May 2017 and 30 June 2017 the Company issued 123,038,924 (split 122,406,940 and 631,984). Further details of these transactions can be found in the Company’s admission document dated 27 April 2016.
At the period end the Company continues to have the obligation under the original Corsair assignment agreement to issue a further 93,750,000 shares subject to the Milestones described above being achieved but as at the reporting date the Company had not recorded these as a liability. Other than the Corsair consideration options (note 13) and the Corsair consideration shares there were no other obligations to Corsair at 30 April 2017.
Subsequent to the year end the Company issued further equity as described in note 19.
|Loan note||Convertible Loan|
|Converted into equity||–||–||(856)||–|
|Costs of issue||(37)||–||–||(87)|
|Imputed interest charge||166||–||–||229|
|Foreign currency effect||18||–||(20)||30|
The principal terms and the debt repayment schedule of the Group’s unsecured loans and borrowings during the year were as follows:
|Currency||Interest rate||Effective interest rate||Date of maturity|
|Loan note||GBP||Nil coupon||89.06%||28.07.2017|
|Convertible loan notes||GBP||Nil coupon||n/a||No fixed maturity|
16. Capital Commitments
There were no capital commitments authorised by the Directors or contracted other than those provided for in these financial statements as at 30 April 2017 (30 April 2016: None).
17. Ultimate Controlling party
As at the reporting date, the Directors have not identified an ultimate controlling party.
18. Related party transactions
Details of Directors remuneration are disclosed in Note 7 Directors Remuneration. For details of any related party transactions entered into after the year-end please refer to Note 19 Subsequent Events.
As at 30 April 2017 the following balances were included in trade payables and were outstanding in respect of Directors remuneration or remuneration incurred prior to their appointment as a Director at the year end.
|Outstanding at 30 April
|Outstanding at 30 April 2016|
|Ross Warner (1)||45||–|
|Simon Gorringe (1)||45||–|
|Graham Smith (1)||4||–|
|Robert Arnott (1)||37||–|
|Total Key Management||431||180|
- Not a Director in the prior year
During the period to 30 April 2017 Paul Warwick, Robert Arnott and Daniel Jorgensen did not receive any cash remuneration in the period. The balances due to Daniel Jorgensen, Paul Warwick, Robert Arnott were accrued in accordance with their contracts pending full or partial conversion into equity at a future juncture.
The brought forward payable of $180,000 was in respect of remuneration earned whilst Directors. On 13 May 2016, these brought forward payables were settled in full alongside $228,000 of services that were performed by the current Directors prior to their appointment to the board. The total $408,000 was settled in full for shares issued at 0.2pence per share on completion of the readmission to AIM dated 13 May 2016.
Prior year disclosure
On 5 June 2015, Andalas and Corsair entered into an agreement (“Assignment”) pursuant to which Andalas agreed, amongst other things, to undertake and fund due diligence in respect of certain oil and gas concessions in Indonesia with a view to making an investment. Initially, for administrative convenience, Andalas and Corsair agreed to structure the funding of the due diligence expenditures as loans (“Loans”) to Corsair and, accordingly, advances pursuant to that arrangement were made on 8 May (US$25,000), 10 June (US$250,000) and 15 July 2015 (US$225,000).
On 19 August 2015, Andalas incorporated a subsidiary, Corvette Energy (Singapore) Pte Ltd (“Corvette”). On 26 January 2016, Andalas, Corsair and Corvette entered into a novation agreement pursuant to which the Loans were extinguished and the benefit of the loaned moneys was transferred to Corvette with effect from 30 October 2015.
19. Events after the reporting date
On 23 May 2017, the Company announced a placing of 600,000,000 shares at a price of 0.1pence per share raising a total of £600,000, of which the Directors subscribed for 168,000,000 shares equating to £168,000.
On 31 July 2017, the Company agreed to extend the term of the loan note for a period of 31 days for a fee of £50,000 alongside the issue of 150,000,000 3 year warrants at a strike price of 0.1pence per share, which was repaid in cash alongside the £550,000 loan on 31 August 2017.
On 14 August 2017, the Company announced that it had conditionally raised £1,050,000 for a total of 1,615,384,615 shares at a price of 0.065pence per share; the first tranche (£585,000) was issued on 17 August 2017.
On 31 August 2017 the company issued the second tranche of 715,384,615 (£465,000) shares was issued and the Company settled the outstanding loan note of £600,000 as above. Furthermore following the passing of the EMG resolutions the Company issued 161,538,462 5 year warrants to third parties in connection with the 14 August 2017 placing.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (‘MAR’). Upon the publication of this announcement via a Regulatory Information Service (‘RIS’), this inside information is now considered to be in the public domain.
For further information, please contact:
|David Whitby||Andalas Energy and Power Plc||Tel: +62 21 2783 2316|
|Sarah Wharry||Cantor Fitzgerald Europe
(Nominated Adviser and Joint Broker)
|Tel: +44 20 7894 7000|
|Jon Belliss||Beaufort Securities Limited
|Tel: +44 20 7382 8415|