TIDMRKH
RNS Number : 0628Z
Rockhopper Exploration plc
19 May 2021
19 May 2021
Rockhopper Exploration plc
("Rockhopper", the "Group" or the "Company")
Full-year results for the year ended 31 December 2020
Rockhopper Exploration plc (AIM: RKH), the oil and gas
exploration and production company with key interests in the North
Falkland Basin, is pleased to announce its audited results for the
year ended 31 December 2020.
HIGHLIGHTS
Sea Lion
-- Detailed transaction terms agreed with Navitas Petroleum LP
to farm-in for a 30% interest in the Sea Lion project
-- Recently completed merger of Premier Oil plc with Chrysaor to
create Harbour Energy plc, resulting in a materially larger and
financially stronger operator of the Sea Lion project
-- Extension of the Company's North Falkland Basin Petroleum
Licences, including the Sea Lion Discovery Area, to 1 November
2022
Corporate and financial
-- Ombrina Mare arbitration Tribunal confirms "deliberations and
the drafting process have both advanced very considerably"
-- Disposal of Rockhopper Egypt Pty Limited to United Oil & Gas plc completed in February 2020
o Subsequent sale of the Group's entire shareholding in United
Oil & Gas plc in August 2020 raised proceeds of US$4.0
million
-- Initiatives implemented to further materially reduce corporate costs
-- US$222.6 million one-off non-cash impairment, based on a
decision, in line with the Sea Lion operator, to write off the
historic exploration costs associated with the resources which will
not be developed as part of the Sea Lion Phase 1 project
-- Cash resources of US$11.7 million as at 31 December 2020
Outlook
-- Targeting completion of the Navitas farm-in
-- Outcome in relation to Ombrina Mare arbitration expected in
July 2021 - seeking significant monetary damages
Keith Lough, Chairman of Rockhopper, commented:
"The Company will continue to work closely with all stakeholders
to maximise the chance of securing the Navitas farm out and project
sanction of Sea Lion. The Board believes that the opportunity to
invest in a world-scale fully appraised and engineered project with
material additional upside at this point in the cycle presents a
compelling opportunity, and one which would lead us towards
unlocking the value within the project long-awaited by all
stakeholders."
Enquiries:
Rockhopper Exploration plc
Sam Moody - Chief Executive
Stewart MacDonald - Chief Financial Officer
Tel. +44 (0) 20 7390 0234 (via Vigo Consulting)
Canaccord Genuity Limited (NOMAD and Joint Broker)
Henry Fitzgerald-O'Connor/James Asensio
Tel. +44 (0) 20 7523 8000
Peel Hunt LLP (Joint Broker)
Richard Crichton
Tel. +44 (0) 20 7418 8900
Vigo Consulting
Patrick d'Ancona/Ben Simons
Tel. +44 (0) 20 7390 0234
Note regarding Rockhopper oil and gas disclosure
This announcement has been approved by Rockhopper's geological
staff which includes Lucy Williams (Geoscience Manager) who is a
Chartered Geologist, a Fellow and member of the Council of the
Geological Society of London, with over 25 years of experience in
petroleum exploration and management and who is the qualified
person as defined in the Guidance Note for Mining, Oil and Gas
Companies issued by the London Stock Exchange in respect of AIM
companies.
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").
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT
INTRODUCTION
2020 has been a year of unprecedented uncertainty, volatility
and challenge, both from a human and economic perspective. The
COVID-19 pandemic caused a sharp economic slowdown with a resultant
collapse in oil prices during the first half of the year. Through a
combination of OPEC+ supply cuts, relaxation of restrictions
related to COVID-19 and positive news related to vaccines, oil
prices recovered strongly through the second half of the year and
into 2021. With the global balance of oil supply and demand now
converging, the outlook is more positive.
Notwithstanding increasing concerns over climate change and the
energy transition, absent material advances in technology or
radical changes in lifestyle, most external forecasters predict
significant oil demand continuing for decades. It is highly
unlikely existing oil fields will be able to satisfy such demand
and therefore new oil and gas developments, such as Sea Lion, will
be required. Against that backdrop, it is our belief that new
projects will need to demonstrate not only superior economic and
financial returns but also outline how they support the energy
transition and support their stakeholders' commitments to achieve
net zero.
It is in this context that Environmental, Social and Governance
("ESG") continues to be a key focus for Rockhopper which is
committed to developing Sea Lion on an environmentally sensitive
basis. Such a commitment is expected to be achieved through a
combination of reduced emissions from the use of best-in-class
technologies and the offsetting of emissions through investment in
nature-based carbon-offsetting projects both in the Falklands and
elsewhere.
SEA LION PHASE 1 DEVELOPMENT
Rockhopper has been operating offshore the Falkland Islands
since 2004. We are a long-term partner of the Falklands and our aim
has always been to support the rights of the Falkland Islanders to
develop their natural resources for their own economic benefit.
Having completed the technical definition of the Sea Lion
project, at the outset of 2020 the priorities for the year ahead
included securing senior debt financing for the project, completing
the farm down to Navitas Petroleum LP ("Navitas") and submitting a
Field Development Plan for the Sea Lion project to the Falkland
Islands Government ("FIG").
However, in response to the unprecedented fall in the oil price
experienced in March 2020, a decision was made in early April 2020
to reduce costs and scale-back headcount and activity on the
project. Through the rest of the year, a reduced team continued to
progress a number of regulatory and commercial workstreams,
including the development of Sea Lion's net zero emissions plan and
finalising the terms of the Navitas farm-in.
The recently completed merger of Premier Oil plc ("Premier") and
Chrysaor Holdings Limited ("Chrysaor") to create Harbour Energy plc
("Harbour") results in a materially larger and financially stronger
operator of the Sea Lion project. Navitas has confirmed that it
remains committed to the proposed farm-in. However, in order to
enable the new management of Harbour to make a firm decision on the
Sea Lion project, Rockhopper, Premier and Navitas agreed to extend
the exclusivity period for the farm-in to 30 September 2021. While
there can be no guarantee around Harbour's future intentions for
Sea Lion, Harbour has publicly stated a desire to pursue
international growth with a preference for material operated
positions and with capital allocated to those projects which best
fit its investment strategy.
Rockhopper's Board remain confident the Sea Lion project
benefits from robust economics (at $65/bbl Brent - NPV10@FID
$1.8bn; break-even $42/bbl; life of project free cash flow $4.2bn
with material upside at higher oil prices) and that it compares
favourably to other investment opportunities which may be available
in the current environment.
In March 2021, the Company was pleased to announce that,
following discussions between the joint venture partners, Harbour
and FIG, FIG has agreed to extend each of the Group's North
Falkland Basin Petroleum Licences, including the Sea Lion Discovery
Area, until 1 November 2022, with no additional licence
commitments.
OMBRINA MARE ARBITRATION
Rockhopper commenced international arbitration proceedings
against the Republic of Italy in relation to the Ombrina Mare field
in March 2017. The hearing took place in early February 2019 in
Paris. In June 2019, the Tribunal rejected Italy's request for the
suspension of the arbitration and Italy's related intra-EU
jurisdictional objections.
Post-hearing briefings were submitted in October and November
2019. The Tribunal confirmed in May 2021 that it anticipates being
in a position to render its award in the course of July 2021.
Rockhopper continues to believe it has strong prospects of
recovering very significant monetary damages - on the basis of lost
profits - as a result of the Republic of Italy's breaches of the
Energy Charter Treaty. All costs associated with the arbitration
are funded on a non-recourse ("no win - no fee") basis from a
specialist arbitration funder.
CORPORATE MATTERS
The Group continues to actively manage its corporate costs and
has reduced G&A by circa 50% over the last five years. In light
of the sharp reduction in oil prices experienced in the first half
of 2020, initiatives to further reduce corporate costs commenced in
May 2020 with a target to reduce costs by a further 30%. These
measures include, but are not limited to: permanent reduction to
executive director base remuneration; employee headcount reductions
including certain roles transitioning to part-time; reductions to
adviser and contractor costs; and a decrease in head office costs
through the relocation to premises outside of London.
The disposal of our Egyptian business, including the subsequent
sale of our shareholding in United Oil & Gas plc ("United"),
generated a healthy return on investment with sale proceeds of
US$15.5 million and free cash flow during our period of ownership
of circa US$4.0 million, against an original investment of US$11.9
million in 2016.
ESG
As outlined above, ESG, and Corporate Responsibility more
generally, continues to be a key focus for Rockhopper.
As an oil and gas exploration and production business our role
is to produce hydrocarbons in an environmentally responsible
manner.
As part of this strategy, FIG has recently established an
independent environment trust to receive and administer future
off-setting payments from the Sea Lion project and distribute those
funds for activities aimed at ensuring a positive environmental
legacy in the Islands.
Once FID on Sea Lion has been achieved, the Company commits to
define measures, report transparently, and mitigate our own
emissions as far as practicable.
In addition, the Company will in 2021 be undertaking a review of
its broader ESG framework to ensure it remains appropriate to its
business and increasing stakeholder interest in this area.
COVID-19
The human and economic impact of COVID-19 has been very
significant. The health and wellbeing of our staff remains a
priority. We have adapted our working practices to ensure business
continuity. We thank our staff and wider stakeholders for their
continued support.
OUTLOOK
At 530 million barrels of 2C recoverable resources, Sea Lion is
a world-class oil field with the scale and potential to create huge
value for Rockhopper, its partners and the Falkland Islands as a
whole.
The merger of Premier and Chrysaor to create Harbour results in
a financially stronger operator of the project. This, combined with
the proposed entry of Navitas to the Sea Lion joint venture,
creates a solid operational and financial foundation giving the
project the strongest possible chance of progressing.
Based on recent guidance from the Tribunal, an outcome in
relation to the Ombrina Mare arbitration is now expected in July
2021. The Company remains of the view it has strong prospects of
recovering very significant monetary damages.
Finally, we thank the Falkland Islands Government for its
continuing support and will continue to work closely with all
stakeholders to maximise the chance of securing the Navitas farm
out and project sanction of Sea Lion. The Board believes that the
opportunity to invest in a world-scale fully appraised and
engineered project with material additional upside at this point in
the cycle presents a compelling opportunity, and one which would
lead us towards unlocking the value within the project long-awaited
by all stakeholders.
Keith Lough Sam Moody
Chairman CEO
FINANCIAL REVIEW
OVERVIEW
From a finance perspective, the most significant events in the
year include:
-- Detailed transaction terms agreed with Premier/Harbour and
Navitas in relation to the Sea Lion project
-- Disposal of Rockhopper Egypt Pty Limited to United -
completed in February 2020 - and subsequent sale of the Group's
entire shareholding in United - completed in August 2020
-- In response to the COVID-19 pandemic, and the dramatic fall
in oil and gas prices experienced through 2020, significant cost
reduction programmes implemented both at the Sea Lion project level
and corporately at Rockhopper
The revised funding arrangements with Premier/Harbour ensure
that Rockhopper is funded for all pre-sanction costs related to Sea
Lion (other than licence fees, taxes and project wind down costs).
As such, the Company believes the above events materially
strengthen the Company's financial position in the short and medium
term and significantly enhance the prospects for a successful
project financing for Sea Lion once markets recover.
RESULTS FOR THE YEAR
For the year ended 31 December 2020, the Group reported revenues
of US$2.8 million and loss after tax of US$236.5 million. The loss
after tax primarily arose as a result of non-recurring non-cash
impairments associated with previously incurred exploration costs
in the North Falkland Basin. The decision was made, in line with
the operator, to write off historic exploration costs associated
with the resources which will not be developed as part of the Sea
Lion Phase 1 project.
REVENUE
The Group's revenues of US$2.8 million (2019: US$10.3 million)
during the year relate entirely to the sale of oil and natural gas
in the Greater Mediterranean (Egypt and Italy) region. The
reduction in revenues from the comparable period reflects the
completion of the disposal of the Group's Egypt portfolio in
February 2020 as well as a decline in production and gas prices in
Italy.
Working interest production averaged approximately 316 boepd
during 2020, a reduction over the comparable period (2019: 1,284
boepd), again related to the disposal of the Group's Egyptian
portfolio during the period.
During the period, the Group's gas production in Italy was sold
under short-term contract with an average realised price of EUR0.10
per scm (2019: EUR0.17 per scm). Gas was sold at a price linked to
the Italian "PSV" (Virtual Exchange Point) gas marker price.
In Egypt, all of the Group's oil and gas production was sold to
Egypt General Petroleum Company ("EGPC").
OPERATING COSTS
Cash operating costs, excluding depreciation and impairment
charges, amounted to US$2.1 million (2019: US$4.6 million). Again,
the reduction in operating costs reflects the disposal of the
Group's Egypt portfolio during the period.
The Group continues to manage corporate costs, having achieved
an approximate 50% reduction in general and administrative
("G&A") cost, excluding non-recurring expenses related to
restructuring and acquisitions, over the last five years. In light
of the sharp reduction in oil prices experienced in the first half
of 2020, initiatives to further reduce corporate costs commenced in
May 2020 with a target to reduce costs by a further 30%. G&A
costs decreased to US$4.0 million in 2020 (2019: US$5.3 million),
excluding non-recurring expenses related to restructuring and
acquisitions and divestments. During the year approximately $2.0
million of recurring annual corporate costs were identified and
removed permanently from the business. The full impact of such cost
reduction initiatives is expected in 2021.
Following the decision in February 2016 by the Italian Ministry
of Economic Development not to award the Group a Production
Concession covering the Ombrina Mare field, in March 2017 the Group
commenced international arbitration proceedings against the
Republic of Italy. All costs associated with the arbitration are
funded on a non-recourse ("no win - no fee") basis from a
specialist arbitration funder.
CASH MOVEMENTS AND CAPITAL EXPITURE
At 31 December 2020, the Group had cash and term deposits of
US$11.7 million (31 December 2019: US$17.2 million).
Cash and term deposit movements during the period:
US$m
---------------------------------------------------------------- -------
Opening cash balance (31 December 2019) 17.2
Revenues 2.8
Cost of sales (2.1)
Falkland Islands - (relating to current
year) (1.5)
- (relating to pre 1 January 2020) (12.9)
Greater Mediterranean (0.2)
Egyptian disposal proceeds 14.8
Administrative expenses (4.0)
Miscellaneous (2.4)
Closing cash balance (31 December 2020) 11.7
---------------------------------------------------------------- -------
Following signature of a Heads of Terms in January 2020,
Rockhopper's share of pre-sanction costs from 1 January 2020 (other
than licence fees, taxes and project wind down costs) are funded by
Premier/Harbour and/or Navitas. During 2020, the Group paid US$12.9
million of Sea Lion costs related to the period prior to 1 January
2020. Post period end, the Company received and subsequently paid a
significantly larger than expected tax liability of US$1.4 million
associated with the 2015/16 Falklands drilling campaign. The amount
was fully accrued for as at the year-end and, going forward,
limited further costs related to the period prior to 1 January 2020
are expected.
Miscellaneous includes non-recurring restructuring costs,
foreign exchange and movements in working capital during the
period.
Impairment of oil and gas assets
Rockhopper has tested the carrying value of its assets for
impairment. Carrying values are compared to the value in use of the
assets based on discounted cash flow models. Future cash flows were
estimated using a long-term Brent oil price assumption of
US$62.5/bbl (in "real" terms) (2019: US$70/bbl real). A post-tax
nominal discount rate of 10% and 12.5% was used for the Group's
Greater Mediterranean and Falkland Islands assets respectively.
Despite the reduction in the long-term oil price assumption, no
impairment arose on the Sea Lion Phase 1 project. A range of
sensitivities have been considered as part of the impairment
testing process. In the event of a US$2.5/bbl reduction in the
Group's long--term oil price assumption, an impairment of $5
million on Sea Lion Phase 1 arises. No impairment would arise if
the Group assumed project sanction was delayed by a further
year.
A decision was made, in line with the operator, to write off
historic exploration costs associated with the resources which will
not be developed as part of the Sea Lion Phase 1 project. This
impairment has no impact on the Group's long-term strategy for
multiple phases of development in the North Falkland Basin but
instead reflects the limited capital which will be invested outside
of the Phase 1 project in the near-term. A reversal of the
impairment is expected once the Phase 1 project has been sanctioned
and investment resumes on the Phase 2 project.
MERGERS, ACQUISITIONS AND DISPOSALS
On 23 July 2019, Rockhopper announced the disposal of Rockhopper
Egypt Pty Limited which holds a 22% working interest in the Abu
Sennan concession to United.
The consideration payable to Rockhopper under the transaction
comprised:
-- cash of US $11.5 million; and
-- the issue of 114,503,817 Consideration Shares representing
approximately 18.5% of United's enlarged ordinary share
capital.
The transaction was subject to satisfaction of customary
conditions precedent including United shareholder approval,
completion of the readmission of United to trading on AIM and
receipt of Egyptian government
approvals. The transaction completed on 28 February 2020.
In August 2020, the Group disposed of its entire shareholding in
United, realising a further US$4.0 million of cash proceeds.
TAXATION
On 8 April 2015, the Group agreed binding documentation ("Tax
Settlement Deed") with FIG in relation to the tax arising from the
Group's farm-out to Premier.
The Tax Settlement Deed confirms the quantum and deferment of
the outstanding tax liability and is made under Extra Statutory
Concession 16.
As a result of the Tax Settlement Deed, the outstanding tax
liability was confirmed at GBP64.4 million and is payable on the
earlier of: (i) the first royalty payment date on Sea Lion; (ii)
the date of which Rockhopper disposes of all or a substantial part
of the Group's remaining licence interests in the North Falkland
Basin; or (iii) a change of control of Rockhopper Exploration
plc.
During the first half of 2017, as a result of the Group
receiving the full Exploration Carry from Premier during the
2015/16 drilling campaign, the Falkland Islands Commissioner of
Taxation agreed to reduce the tax liability in line with the terms
of the Tax Settlement Deed. As such, the tax liability has been
revised downwards to GBP59.6 million. The outstanding tax liability
is classified as non-current and is discounted to a period-end
value of US$40.7 million.
Full details of the provisions and undertakings of the Tax
Settlement Deed are disclosed in note 20 of these consolidated
financial statements and these include "creditor protection"
provisions including undertakings not to declare dividends or make
distributions while the tax liability remains outstanding (in whole
or in part).
LIQUIDITY, COUNTERPARTY RISK AND GOING CONCERN
The Group monitors its cash position, cash forecasts and
liquidity on a regular basis and takes a conservative approach to
cash management, with surplus cash held on term deposits with a
number of major financial institutions.
At 31 December 2020, the Group had cash resources of US$11.7
million and $10.0 million as at the end of Q1 2021 (unaudited).
Following the sale of Rockhopper Egypt Pty Limited in 2020, the
Group generates limited revenue and cash flow from the sale of oil
or gas.
Historically, the Group's largest annual expenditure has related
to pre-sanction costs associated with the Sea Lion development.
However, following signature of Heads of Terms in January 2020,
Premier/Harbour and/or Navitas have a legally binding obligation to
fund Rockhopper's share of all Sea Lion pre-sanction costs from 1
January 2020 (other than licence fees, taxes and project wind down
costs).
With the recently completed acquisition of Premier (operator of
the Sea Lion project) by Chrysaor to create Harbour, management's
base case forecast assumes a final investment decision on the Sea
Lion development during 2022, with the Group's costs funded by
Premier/Harbour and/or Navitas during this period.
Management has also considered a number of downside scenarios
including (1) the farm-out to Navitas does not proceed and the
Heads of Terms lapses; (2) the Sea Lion project does not achieve
sanction (which could be due to a number of factors including
funding not being achieved or; (3) Premier deciding to withdraw
from the Sea Lion Development) which could ultimately result in
relinquishment of the acreage. In this scenario the Sea Lion
project would need to be wound down including the decommissioning
of assets in the Falklands and the Group would be liable for its
share of these project wind down costs with no funding support from
Premier and/or Navitas.
Under the base case forecast, the Group will have sufficient
financial headroom to meet forecast cash requirements for the 12
months from the date of approval of these consolidated financial
statements. However, in the downside scenarios, in the absence of
any mitigating actions, the Group may have insufficient funds to
meet its forecast cash requirements. Potential mitigating actions,
some of which are outside the Group's control, could include
collection of arbitration award proceeds, deferral of expenditure
or raising additional equity.
Accordingly, after making enquiries and considering the risks
described above, the Directors have assessed that the cash balance
held provides the Group with adequate headroom over forecasted
expenditure for the following 12 months - as a result, the
Directors have adopted the going concern basis of accounting in
preparing these consolidated financial statements.
Nonetheless, these conditions indicate the existence of a
material uncertainty which may cast significant doubt on the
Group's and Company's ability to continue as a going concern. The
financial statements do not include the adjustments that would be
required if the Group and Company were unable to continue as a
going concern.
PRINCIPAL RISK AND UNCERTAINTIES
A detailed review of the potential risks and uncertainties which
could impact the Company are outlined elsewhere in this Strategic
Report. The Company identified its key risks at the end of 2020 as
being:
-- oil price volatility;
-- access to capital;
-- joint venture partner alignment; and
-- failure of joint venture partners to secure the requisite
funding to allow a Sea Lion Final Investment Decision.
In 2020, the environmental impact of oil and gas extraction
(e.g. climate change) was added to the risk register, reflecting
the increased focus on ESG issues which could have an adverse
impact on investor and lender sentiment towards the Company and the
Sea Lion project.
Stewart MacDonald
Chief Financial
Officer
CONSOLIDATED income statement
for the YEAR ended 31 DeCEMBER 2020
Year Year
ended ended
31 Dec 20 31 Dec 19
Notes $'000 $'000
---------------------------------------------------- ------ ------------ ------------
Revenue 3 2,754 10,328
---------------------------------------------------- ------ ------------ ------------
Other cost of sales (2,109) (4,647)
Depreciation and impairment of oil and gas assets (2,692) (5,738)
---------------------------------------------------- ------ ------------ ------------
Total cost of sales 4 (4,801) (10,385)
---------------------------------------------------- ------ ------------ ------------
Gross loss (2,047) (57)
---------------------------------------------------- ------ ------------ ------------
Other exploration and evaluation expenses (2,431) (1,624)
Impairment of exploration and evaluation assets (223,280) (350)
---------------------------------------------------- ------ ------------ ------------
Total exploration and evaluation expenses 5 (225,711) (1,974)
Impairment of goodwill 6 - (10,057)
---------------------------------------------------- ------ ------------ ------------
Costs in relation to acquisition and disposals - (649)
Non recurring restructuring costs (614) -
Recurring administrative costs (4,010) (5,293)
---------------------------------------------------- ------ ------------ ------------
Total administrative expenses 7 (4,624) (5,942)
Charge for share based payments 10 (1,840) (1,307)
Foreign exchange movement 11 (1,438) (1,627)
Results from operating activities and other income (235,660) (20,964)
Finance income 12 44 624
Finance expense 12 (819) (291)
---------------------------------------------------- ------ ------------ ------------
Loss before tax (236,435) (20,631)
Tax 13 (69) -
---------------------------------------------------- ------ ------------ ------------
LOSS FOR THE YEAR ATTRIBUTABLE TO THE
EQUITY SHAREHOLDERS OF THE PARENT COMPANY (236,504) (20,631)
---------------------------------------------------- ------ ------------ ------------
Loss per share: cents
Basic 14 (51.73) (4.54)
Diluted 14 (51.73) (4.54)
---------------------------------------------------- ------ ------------ ------------
All operating income and operating gains and losses relate to
continuing activities.
CONSOLIDATED statement of comprehensive income
for the YEAR ended 31 DECEMBER 2020
Year Year
ended ended
31 Dec 31 Dec
20 19
$'000 $'000
-------------------------------------------------- ---------- ---------
Loss for the year (236,504) (20,631)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign
operations (893) 70
-------------------------------------------------- ---------- ---------
(237,397
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ) (20,561)
-------------------------------------------------- ---------- ---------
The notes on pages 55 to 72 form an integral part of these
consolidated financial statements.
CONSOLIDATED balance sheet
as at 31 DECEMBER 2020
31 Dec 31 Dec
2020 2019
Notes $'000 $'000
--------------------------------------------- ------ ---------- ----------
NON CURRENT ASSETS
Exploration and evaluation assets 15 244,349 465,820
Property, plant and equipment 16 1,420 3,069
Finance lease receivable 462 628
CURRENT ASSETS
Inventories 310 1,463
Other receivables 17 2,464 3,501
Finance lease receivable 187 146
Restricted cash 486 467
Cash and cash equivalents 11,680 17,223
Assets held for sale 18 - 17,925
--------------------------------------------- ------ ---------- ----------
TOTAL ASSETS 261,358 510,242
--------------------------------------------- ------ ---------- ----------
CURRENT LIABILITIES
Other payables 19 3,790 17,943
Lease liability 567 426
Liabilities directly associated with assets
held for sale 18 - 2,000
NON-CURRENT LIABILITIES
Lease liability 1,273 1,735
Tax payable 20 40,703 39,167
Provisions 21 15,158 13,636
Deferred tax liability 22 39,300 39,221
TOTAL LIABILITIES 100,791 114,128
--------------------------------------------- ------ ---------- ----------
EQUITY
Share capital 23 7,218 7,212
Share premium 24 3,622 3,547
Share based remuneration 24 5,973 4,871
Own shares held in trust 24 (3,342) (3,371)
Merger reserve 24 74,332 74,332
Foreign currency translation reserve 24 (10,571) (9,678)
Special reserve 24 188,028 433,766
(114 ,565
Retained losses 24 (104,693) )
--------------------------------------------- ------ ---------- ----------
ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS OF
THE COMPANY 160,567 396,114
--------------------------------------------- ------ ---------- ----------
TOTAL LIABILITIES AND EQUITY 261,358 510,242
--------------------------------------------- ------ ---------- ----------
These financial statements on pages 51 to 72 were approved by
the directors and authorised for issue on 19 May 2021 and are
signed on their behalf by:
STEWART MACDONALD
CHIEF FINANCIAL OFFICER
Rockhopper Exploration plc Registered Company number:
05250250
The notes on pages 55 to 72 form an integral part of these
consolidated financial statements.
CONSOLIDATED statement of changes in equity
for the YEAR ended 31 DECEMBER 2020
Foreign
Shares currency
Share Share Share based held Merger translation Special Retained Total
capital Premium remuneration in reserve reserve reserve losses Equity
trust
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- -------- -------- ------------- -------- -------- ------------ ---------- ------------ ------------
Balance
at 31
December
2018 7,205 3,422 5,103 (3,369) 74,332 (9,748) 456,680 (118,282) 415,343
Total
comprehensive
loss for
the year - - - - - 70 - (20,631) (20,561)
Share based
payments
(see note
10) - - 1,307 - - - - - 1,307
Share issues
in relation
to SIP 7 125 (105) (2) - - - - 25
Other
transfers - - (1,434) - - - (22,914) 24,348 -
Balance
at 31
December
2019 7,212 3,547 4,871 (3,371) 74,332 (9,678) 433,766 (114,565) 396,114
--------------- -------- -------- ------------- -------- -------- ------------ ---------- ------------ ------------
Total
comprehensive
loss for
the year - - - - - (893) - (236,504) (237,397)
Share based
payments
(see note
10) - - 1,840 - - - - - 1,840
Share issues
in relation
to SIP 6 75 - (71) - - - - 10
Other
transfers - - (738) 100 - - (245,738) 246,376 -
Balance
at 31
December
2020 7,218 3,622 5,973 (3,342) 74,332 (10,571) 188,028 (104,693) 160,567
--------------- -------- -------- ------------- -------- -------- ------------ ---------- ------------ ------------
See note 24 for a description of each of the reserves of the
Group.
CONSOLIDATED STATEMENT OF CASHFLOWS
for the YEAR ended 31 DECEMBER 2020
Year Year
ended ended
31 Dec 31 Dec
20 19
Notes $'000 $'000
------------------------------------------------------ ------ ---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax (236,435) (20,631)
Adjustments to reconcile net losses to cash:
Depreciation 16 808 4,544
Share based payment charge 10 1,840 1,307
Impairment of oil and gas assets 16 1,114 1,600
Impairment of exploration and evaluation assets 15 223,280 350
Impairment of goodwill - 10,057
Loss on disposal of property, plant and equipment 4 -
Finance expense 816 291
Finance income - (624)
Foreign exchange 1,315 1,221
------------------------------------------------------ ------ ---------- ---------
Operating cash flows before movements in working
capital (7,258) (1,885)
Changes in:
Inventories 1,289 214
Other receivables 1,904 3,259
Payables (1,320) (1,623)
Movement on other provisions (54) (189)
------------------------------------------------------ ------ ---------- ---------
Cash utilised by operating activities (5,439) (224)
------------------------------------------------------ ------ ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalised expenditure on exploration and
evaluation assets (14,570) (20,152)
Purchase of property, plant and equipment (85) (3,743)
Net proceeds from disposal of assets held for 14,763 -
sale
Interest - 1,020
Investing cash flows before movements in capital
balances 108 (22,875)
Changes in:
Restricted cash - 101
Term deposits - 30,000
Cash flow from investing activities 108 7,226
------------------------------------------------------ ------ ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Share incentive plan 10 25
Lease liability payments (382) (259)
Finance expense (19) (13)
------------------------------------------------------ ------ ---------- ---------
Cash flow from financing activities (391) (247)
------------------------------------------------------ ------ ---------- ---------
Currency translation differences relating to
cash and cash equivalents 179 42
Net cash flow (5,722) 6,755
Cash and cash equivalents brought forward 17,223 10,426
------------------------------------------------------ ------ ---------- ---------
CASH AND CASH EQUIVALENTS CARRIED FORWARD 11,680 17,223
------------------------------------------------------ ------ ---------- ---------
Notes to the CONSOLIDATED financial statements
for the Year ended 31 DECEMBER 2020
1 Accounting policies
1.1 GROUP AND ITS OPERATIONS
Rockhopper Exploration plc, the 'Company', a public limited
company quoted on AIM, incorporated and domiciled in the United
Kingdom ('UK'), together with its subsidiaries, collectively 'the
'Group' holds certain exploration licences for the exploration and
exploitation of oil and gas in the Falkland Islands. In addition it
has operations in the Greater Mediterranean based in Italy and
Egypt. During 2020 the Group divested its exploration and
production assets in Egypt. The registered office of the Company is
Warner House, 123 Castle Street, Salisbury, Wiltshire, SP1 3TB.
1.2 Statement of compliance
The consolidated financial statements are prepared in accordance
with international accounting standards in conformity with the
requirements of the Companies Act 2006. The consolidated financial
statements were approved for issue by the board of directors on 19
May 2021 and are subject to approval at the Annual General Meeting
of shareholders on 29 June 2021.
1.3 Basis of preparation
The results upon which these financial statements have been
based were prepared using the accounting policies set out below.
These policies have been consistently applied unless otherwise
stated.
These consolidated financial statements have been prepared under
the historical cost convention, except for assets held for sale,
which are held at fair value, as set out in the accounting policies
below.
Items included in the results of each of the Group's entities
are measured in the currency of the primary economic environment in
which that entity operates (the "functional currency"). The
consolidated financial statements are presented in US Dollars ($),
which is Rockhopper Exploration plc's presentation currency.
All values are rounded to the nearest thousand dollars ($'000)
or thousand pounds (GBP'000), except when otherwise indicated.
1.4 change in accounting policy
Changes in accounting standards
In the current year the following new and revised Standards and
Interpretations have been adopted. None of these have a material
impact on the Group's annual results.
-- Amendments to IFRS 3: Definition of a Business;
-- Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate
Benchmark Reform;
-- Amendments to IAS 1 and IAS 8 Definition of Material; and
-- Revised Conceptual Framework for Financial Reporting.
No Standards and Interpretations have been adopted early.
1.5 Going concern
The Group monitors its cash position, cash forecasts and
liquidity on a regular basis and takes a conservative approach to
cash management, with surplus cash held on term deposits with a
number of major financial institutions.
At 31 December 2020, the Group had cash resources of US$11.7
million. Following the sale of Rockhopper Egypt Pty Limited in
2020, the Group generates limited revenue and cash flow from the
sale of oil or gas.
Historically, the Group's largest annual expenditure has related
to pre-sanction costs associated with the Sea Lion development.
However, following signature of a legally binding Heads of Terms in
January 2020, Rockhopper's share of all Sea Lion pre-sanction costs
from 1 January 2020 (other than licence fees, taxes and project
wind down costs) are funded by Premier/Harbour and/or Navitas.
With the recently completed acquisition of Premier (operator of
the Sea Lion project) by Chrysaor to create Harbour, management's
base case forecast assumes a final investment decision on the Sea
Lion development during 2022, with the Group's costs funded by
Premier/Harbour and/or Navitas during this period.
Management has also considered a number of downside scenarios
including (1) the farm-out to Navitas does not proceed and the
Heads of Terms lapses; (2) the Sea Lion project does not achieve
sanction (which could be due to a number of factors including
funding not being achieved or; (3) Premier deciding to withdraw
from the Sea Lion Development) which could ultimately result in
relinquishment of the acreage. In this scenario the Sea Lion
project would need to be wound down including the decommissioning
of assets in the Falklands and the Group would be liable for its
share of these project wind down costs with no funding support from
Premier and/or Navitas.
Under the base case forecast, the Group will have sufficient
financial headroom to meet forecast cash requirements for the 12
months from the date of approval of these consolidated financial
statements. However, in the downside scenarios, in the absence of
any mitigating actions, the Group may have insufficient funds to
meet its forecast cash requirements. Potential mitigating actions,
some of which are outside the Group's control, could include
collection of arbitration award proceeds, deferral of expenditure
or raising additional equity.
Accordingly, after making enquiries and considering the risks
described above, the Directors have assessed that the cash balance
held provides the Group with adequate headroom over forecasted
expenditure for the following 12 months - as a result, the
Directors have adopted the going concern basis of accounting in
preparing these consolidated financial statements.
Nonetheless, these conditions indicate the existence of a
material uncertainty which may cast significant doubt on the
Group's and Company's ability to continue as a going concern. The
financial statements do not include the adjustments that would be
required if the Group and Company were unable to continue as a
going concern.
(a) Basis of accounting
The Group has identified the accounting policies that are most
significant to its business operations and the understanding of its
results. These accounting policies are those which involve the most
complex or subjective decisions or assessments, and relate to the
capitalisation of exploration expenditure. The determination of
this is fundamental to the financial results and position and
requires management to make a complex judgment based on information
and data that may change in future periods.
Since these policies involve the use of assumptions and
subjective judgments as to future events and are subject to change,
the use of different assumptions or data could produce materially
different results. The measurement basis that has been applied in
preparing the results is historical cost with the exception of
assets held for sale, which are held at fair value.
The significant accounting policies adopted in the preparation
of the results are set out below.
(b) Basis of consolidation
The consolidated financial statements include the results of
Rockhopper Exploration plc and its subsidiary undertakings to the
balance sheet date. Where subsidiaries follow differing accounting
policies from those of the Group, those accounting policies have
been adjusted to align with those of the Group. Inter-company
balances and transactions between Group companies are eliminated on
consolidation, though foreign exchange differences arising on
inter-company balances between subsidiaries with differing
functional currencies are not offset.
(c) Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker
as required by IFRS8 Operating Segments. The chief operating
decision maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been
identified as the board of directors.
The Group's operations are made up of three segments, the oil
and gas exploration and production activities in the geographical
regions of the Falkland Islands and the Greater Mediterranean
region as well as its corporate activities centered in the UK.
(d) Oil and Gas Assets
The Group applies the successful efforts method of accounting
for exploration and evaluation ("E&E") costs, having regard to
the requirements of IFRS6 - 'Exploration for and evaluation of
mineral resources'.
Exploration and evaluation ("E&E") expenditure
Expensed exploration & evaluation costs
Expenditure on costs incurred prior to obtaining the legal
rights to explore an area, geological and geophysical costs are
expensed immediately to the income statement.
Capitalised intangible exploration and evaluation assets
All directly attributable E&E costs are initially
capitalised in well, field, prospect, or other specific, cost pools
as appropriate, pending determination.
Treatment of intangible E&E assets at conclusion of
appraisal activities
Intangible E&E assets related to each cost pool are carried
forward until the existence, or otherwise, of commercial reserves
have been determined, subject to certain limitations including
review for indicators of impairment. If commercial reserves have
been discovered, the carrying value, after any impairment loss, of
the relevant E&E assets, are then reclassified as development
and production assets within property plant and equipment. However,
if commercial reserves have not been found, the capitalised costs
are charged to expense.
Development and production assets
Development and production assets, classified within property,
plant and equipment, are accumulated generally on a field-by-field
basis and represent the costs of developing the commercial reserves
discovered and bringing them into production, together with the
E&E expenditures incurred in finding commercial reserves
transferred from intangible E&E assets.
Depreciation of producing assets
The net book values of producing assets are depreciated
generally on a field-by-field basis using the unit-of-production
method by reference to the ratio of production in the year and the
related commercial reserves of the field, taking into account the
future development expenditure necessary to bring those reserves
into production.
Disposals
Net cash proceeds from any disposal of an intangible E&E
asset are initially credited against the previously capitalised
costs. Any surplus proceeds are credited to the income
statement.
Decommissioning
Provision for decommissioning is recognised in full when the
related facilities are installed. The amount recognised is the
present value of the estimated future expenditure. A corresponding
amount equivalent to the provision is also recognised as part of
the cost of the related oil and gas property. This is subsequently
depreciated as part of the capital costs of the production
facilities. Any change in the present value of the estimated
expenditure is dealt with prospectively as an adjustment to the
provision and the oil and gas property. The unwinding of the
discount is included in finance cost.
(E) Right OF USE Assets
Leases are recognised as a right-of-use asset and a
corresponding liability and receivable at the date at which the
leased asset is available for use by the Group. Each lease payment
is allocated between the liability and finance cost, while the
corresponding receipt associated with the sub-lease are allocated
between the receivable and finance income. The finance cost and
income are charged to profit and loss over the lease period. The
right-of-use asset is depreciated over the lease term on a
straight-line basis.
Payment associated with short term leases and leases of low
value assets are recognised on a straight-line basis as an expense
in profit or loss. Short term leases are leases with a lease term
of 12 months or less. Low-value assets comprise IT-equipment and
small items of office furniture.
(F) Capital commitments
Capital commitments include all projects for which specific
board approval has been obtained up to the reporting date. Projects
still under investigation for which specific board approvals have
not yet been obtained are excluded.
(G) Foreign currency translation
Functional and presentation currency:
Items included in the results of each of the Group's entities
are measured using the currency of the primary economic environment
in which the entity operates, the functional currency. The
consolidated financial statements are presented in US$ as this best
reflects the economic environment of the oil exploration sector in
which the Group operates. The Group maintains the financial
statements of the parent and subsidiary undertakings in their
functional currency. Where applicable, the Group translates
subsidiary financial statements into the presentation currency,
US$, using the closing rate method for assets and liabilities which
are translated at the rate of exchange prevailing at the balance
sheet date and rates at the date of transactions for income
statement accounts. Differences are taken directly to reserves.
Transactions and balances:
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are capitalised in the income statement,
except when deferred in equity as qualifying cash flow hedges and
qualifying net investment hedges.
The year end rates of exchange actually used were:
31 Dec 2020 31 Dec 2019
----------- ------------ ------------
GBP : US$ 1.36 1.32
EUR : US$ 1.23 1.12
----------- ------------ ------------
(H) Revenue and income
(i) Revenue
Revenue arising from the sale of goods is recognised when a
performance obligation is satisfied by transferring control over a
product or service to a customer, which is typically at the point
that title passes, and the revenue can be reliably measured.
Revenue is measured at the fair value of the consideration received
or receivable and represents amounts receivable for goods provided
in the normal course of business, net of discounts, customs duties
and sales taxes.
(ii) Investment income
Investment income consists of interest receivable for the
period. Interest income is recognised as it accrues, taking into
account the effective yield on the investment.
(I) NON-DERIVATIVE Financial instruments
Financial assets and financial liabilities are recognised on the
Group's balance sheet when the Group has become a party to the
contractual provisions of the instrument.
(i) Other receivables
Other receivables are are recognised initially at the amount of
consideration that is unconditional, unless they contain
significant financing components when they are recognised at fair
value. They are subsequently measured at amortised cost using the
effective interest method, less loss allowance. A provision for
impairment is made where there is objective evidence that amounts
will not be recovered in accordance with original terms of the
agreement The Group recognises an allowance for expected credit
losses for all debt instruments not held at fair value through
profit or loss. Expected credit losses are based on the difference
between the contractual cash flows due in accordance with the
contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest
rate.
(ii) Restricted cash
Restricted cash is disclosed separately on the face of the
balance sheet and denoted as restricted when it is not under the
exclusive control of the Group.
(iii) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and at bank and
other short-term deposits held by the Group including breakable and
unbreakable deposits with terms of less than three months and
breakable term deposits of greater terms than three months where
amounts can be accessed within three months without material loss.
They are stated at carrying value which is deemed to be fair
value.
(iv) Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of
its liabilities.
(v) Account and other payables
Account payables are initially recognised at fair value and
subsequently at amortised cost using the effective interest
method.
(vii) Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received, net of direct issue costs.
(J) INCOME TAXES AND DEFERRED TAXATION
The current tax expense is based on the taxable profits for the
year, after any adjustments in respect of prior years. Tax,
including tax relief for losses if applicable, is allocated over
profits before tax and amounts charged or credited to reserves as
appropriate.
Deferred taxation is recognised in respect of all taxable
temporary differences that have originated but not reversed at the
balance sheet date where a transaction or events have occurred at
that date that will result in an obligation to pay more, or a right
to pay less or to receive more, tax, with the exception that
deferred tax assets are recognised only to the extent that the
directors consider that it is probable that there will be suitable
taxable profits from which the future reversal of the underlying
temporary differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax
rates that are expected to apply in the periods in which temporary
differences reverse, based on tax rates and laws enacted or
substantively enacted at the balance sheet date.
(K) Share based remuneration
The Group issues equity settled share based payments to certain
employees. Equity settled share based payments are measured at fair
value (excluding the effect of non market based vesting conditions)
at the date of grant. The fair value determined at the grant date
of the equity settled share based payments is expensed on a
straight line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest and adjusted for non
market based vesting conditions.
Fair value is measured by use of either Binomial or Monte-Carlo
simulation. The main assumptions are disclosed in note 10.
Cash settled share based payment transactions result in a
liability. Services received and liability incurred are measured
initially at fair value of the liability at grant date, and the
liability is remeasured each reporting period until settlement. The
liability is recognised on a straight line basis over the period
that services are rendered.
2 Use of estimates, assumptions and judgements
The Group makes estimates, assumptions and judgements that
affect the reported amounts of assets and liabilities. Estimates,
assumptions and judgements are continually evaluated and based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances.
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below. Sensitivity analysis is disclosed in the
related note as required.
Carrying value of intangible exploration and evaluation assets
(note 15)
The amounts for intangible exploration and evaluation assets
represent active exploration and evaluation projects. These amounts
will be written off to the income statement as exploration costs
unless commercial reserves are established or the determination
process is not completed and there are indications of impairment in
accordance with the Group's accounting policy.
In addition for assets under evaluation where discoveries have
been made, such as Sea Lion, their carrying value is checked by
reference to the net present value of future cashflows which
requires key assumptions and estimates in relation to: commodity
prices that are based on forward curves for a number of years and
the long-term corporate economic assumptions thereafter, discount
rates that are adjusted to reflect risks specific to individual
assets, the quantum of commercial reserves and the associated
production and cost profiles. Future development costs are
estimated taking into account the level of development required to
produce the reserves by reference to operators, where applicable,
and internal engineers.
Decommissioning costs (note 21)
Decommissioning costs are uncertain and cost estimates can vary
in response to many factors, including changes to the relevant
legal requirements, the emergence of new technology or experience
at other assets. The expected timing, work scope and amount of
expenditure may also change. Therefore significant estimates and
assumptions are made in determining the provision for
decommissioning. The estimated decommissioning costs are reviewed
annually and the results of the most recent available review used
as a basis for the amounts in the Consolidated Financial
Statements. Provision for environmental clean-up and remediation
costs is based on current legal and contractual requirements,
technology and price levels.
3 REVENUE AND SEGMENTAL INFORMATION
The Group's operations are located and managed in three
geographically distinct business units; namely the Falkland
Islands, the Greater Mediterranean, and Corporate (or UK). Some of
the business units currently do not generate any revenue or have
any material operating income. The business is only engaged in one
business of upstream oil and gas exploration and production.
YEARED 31 DECEMBER 2020
Falkland Greater
Islands Mediterranean Corporate Total
$'000 $'000 $'000 $'000
------------------------------------- ---------- -------------- ---------- ----------
Revenue - 2,754 - 2,754
Cost of sales - (4,801) - (4,801)
------------------------------------- ---------- -------------- ---------- ----------
Gross loss - (2,047) - (2,047)
Exploration and evaluation
expenses (222,593) (2,312) (806) (225,711)
Restructuring costs - - (614) (614)
Recurring administrative costs - (1,096) (2,914) (4,010)
------------------------------------- ---------- -------------- ---------- ----------
Total administrative expenses - (1,096) (3,528) (4,624)
Charge for share based payments - - (1,840) (1,840)
Foreign exchange (loss)/gain (1,537) 78 21 (1,438)
------------------------------------- ---------- -------------- ---------- ----------
Results from operating activities
and other income (224,130) (5,377) (6,153) (235,660)
Finance income - 6 38 44
Finance expense - (305) (514) (819)
------------------------------------- ---------- -------------- ---------- ----------
Loss before tax (224,130) (5,676) (6,629) (236,435)
Tax - (69) - (69)
------------------------------------- ---------- -------------- ---------- ----------
Loss for year (224,130) (5,745) (6,629) (236,504)
------------------------------------- ---------- -------------- ---------- ----------
Reporting segments assets 243,647 4,643 13,068 261,358
Reporting segments liabilities 79,840 16,301 4,650 100,791
Depreciation and impairments 222,584 1,429 493 224,506
YEARED 31 DECEMBER 2019
Falkland Greater
Islands Mediterranean Corporate Total
$'000 $'000 $'000 $'000
--------------------------------------- --------- -------------- ---------- ---------
Revenue - 10,328 - 10,328
Cost of sales - (10,385) - (10,385)
--------------------------------------- --------- -------------- ---------- ---------
Gross loss - (57) - (57)
Exploration and evaluation
expenses (315) (560) (1,099) (1,974)
Impairment of goodwill - (10,057) - (10,057)
--------------------------------------- --------- -------------- ---------- ---------
Costs in relation to acquisition
and group restructuring - (649) - (649)
Recurring administrative costs - (1,603) (3,690) (5,293)
--------------------------------------- --------- -------------- ---------- ---------
Total administrative expenses - (2,252) (3,690) (5,942)
Charge for share based payments - - (1,307) (1,307)
Foreign exchange loss (1,307) (142) (178) (1,627)
--------------------------------------- --------- -------------- ---------- ---------
Results from operating activities
and other income (1,622) (13,068) (6,274) (20,964)
Finance income - 29 595 624
Finance expense - (214) (77) (291)
--------------------------------------- --------- -------------- ---------- ---------
Loss before tax (1,622) (13,253) (5,756) (20,631)
Tax - - - -
--------------------------------------- --------- -------------- ---------- ---------
Loss for year (1,622) (13,253) (5,756) (20,631)
--------------------------------------- --------- -------------- ---------- ---------
Reporting segments assets 464,638 27,230 18,374 510,242
Reporting segments liabilities 78,304 16,621 19,203 114,128
Depreciation - 4,249 295 4,544
All of the Group's worldwide sales revenues of oil and gas
$2,754 thousand (2019: $10,328 thousand) arose from contracts to
customers. Total revenue relates to revenue from two customers
(2019: two customers) each exceeding 10 per cent of the Group's
consolidated revenue.
4 Cost of sales
Year Year
ended ended
31 Dec 31 Dec
20 19
$'000 $'000
-------------------------------------------------- --------- ---------
Cost of sales 2,109 4,647
Impairment of oil and gas assets (see note 16) 1,114 1,600
Depreciation of oil and gas assets (see note 16) 232 4,138
Depreciation and impairment on assets held for 1,346 -
sale
4,801 10,385
-------------------------------------------------- --------- ---------
5 exploration and evaluation expenses
Year Year
ended ended
31 Dec 31 Dec
20 19
$'000 $'000
-------------------------------------------------- -------- --------
Allocated from administrative expenses (see note
7) 799 790
Capitalised exploration costs impaired (see note
15) 223,280 350
Impairment on assets held for sale 314 -
Other exploration and evaluation expenses 1,318 834
225,711 1,974
-------------------------------------------------- -------- --------
6 IMPAIRMENT OF GOODWILL
As a result of the acquisition of Mediterranean Oil & Gas
plc in 2014, goodwill of EUR9 million arose relating to the
portfolio of intangible exploration and appraisal assets and the
strategic premium associated with a significant presence in a new
region. However, following the decision to dispose of Rockhopper
Egypt Pty Limited and with Italian portfolio now deemed largely
non-core, a decision was made in the prior year to impair the
goodwill associated with that acquisition.
7 Administrative expenses
Year Year
ended ended
31 Dec 31 Dec
20 19
$'000 $'000
-------------------------------------------------- -------- --------
Directors' salaries and fees, including bonuses
(see note 8) 1,090 1,563
Other employees' salaries 1,806 2,475
National insurance costs 483 541
Pension costs 325 148
Employee benefit costs 82 96
Total staff costs (including group restructuring
costs) 3,786 4,823
Amounts reallocated (937) (1,518)
-------------------------------------------------- -------- --------
Total staff costs charged to administrative
expenses 2,849 3,305
Auditors' remuneration (see note 9) 244 232
Other professional fees 588 1,444
Other 1,222 1,527
Depreciation 162 106
Amounts reallocated (441) (672)
-------------------------------------------------- -------- --------
4,624 5,942
-------------------------------------------------- -------- --------
The average number of full time equivalent staff employed during
the year was 13 (2019: 18). As at the year end the Group employed
12 staff, mainly part time, 8 of which were in the UK and 4 in
Italy
Amounts reallocated relate to the costs of staff and associated
overhead in relation to non administrative tasks. These costs are
allocated to exploration and evaluation expenses or capitalised as
part of the intangible exploration and evaluation assets as
appropriate.
8 directors' remuneration
Year Year
ended ended
31 Dec 31 Dec
20 19
$'000 $'000
------------------------------------------------- -------- --------
Executive salaries 812 887
Executive bonuses - 178
Company pension contributions to money purchase
schemes & pension cash allowance 120 133
Benefits 21 27
Non-executive fees 278 338
1,231 1,563
------------------------------------------------- -------- --------
The total remuneration of the highest paid director was:
Year Year
ended ended
31 Dec 31 Dec
20 19
GBP GBP
-------------------------------- -------- --------
Annual salary 341,000 380,400
Bonuses - 76,000
Money purchase pension schemes 51,100 57,100
Benefits 7,200 11,400
399,300 524,900
-------------------------------- -------- --------
Interest in outstanding share options and SARs, by director, are
separately disclosed in the directors' remuneration report.
9 Auditors' remuneration
Year Year
ended ended
31 Dec 31 Dec
20 19*
$'000 $'000
----------------------------------------------------- -------- --------
Fees payable to the Company's auditors for the
audit of the Company's annual financial statements 135 119
Fees payable to the Company's auditors and its
associates for other services:
Audit of the accounts of subsidiaries 58 99
Half year review 33 32
226 250
----------------------------------------------------- -------- --------
After the completion of the 2019 consolidated financial
statements additional audit fees for subsidiaries amounting to
$18,000 were incurred. These additional fees are included in the
2019 fee analysis above.
10 Share based Payments
The charge for share based payments relate to options granted to
employees of the Group.
Year Year
ended ended
31 Dec 31 Dec
20 19
$'000 $'000
------------------------------------------------- -------- --------
Charge for option scheme 530 -
Charge for the long term incentive plan options 1,112 1,202
Charge for shares issued under the SIP 198 105
------------------------------------------------- -------- --------
1,840 1,307
------------------------------------------------- -------- --------
The models and key assumptions used to value each of the grants
and hence calculate the above charges are set out below:
Option scheme
A one-off equity option package has been implemented during the
year (the "Option Scheme") to replace the existing long term
incentive plan. In place of the LTIP scheme, executive directors
and senior staff received options to subscribe for Ordinary Shares,
exercisable at a price of 6.25 pence per new Ordinary Share (the
"Market Price Options). The Market Price Options will vest in equal
tranches after three, four and five years' further continuous
employment.
Executive directors and staff in lieu of their contractual
notice periods also received options to subscribe for an aggregate
new ordinary shares in the capital of the Company ("Ordinary
Shares"), exercisable at a price of 1 pence per new Ordinary Share
(the "1p Options"). These options will vest after continuous
employment equivalent to their notice period being six months or
one year as applicable.
The options have been valued using a binomial model the key
inputs of which are summarised below
Grant date: 18 May 18 May 18 May 18 May 18 May
2020 2020 2020 2020 2020
Vesting date 19 Nov 19 May 19 May 19 May 19 May
2020 2021 2023 2024 2025
Closing share price
(pence) 6.25 6.25 6.25 6.25 6.25
Number granted 1,986,972 6,357,616 7,949,997 7,950,000 7,950,003
Weighted average volatility 50.0% 50.0% 50.0% 50.0% 50.0%
Weighted average risk
free rate 0.08% 0.07% 0.10% 0.12% 0.14%
Exercise price (pence) 1.00 1.00 6.25 6.25 6.25
Dividend yield 0% 0% 0% 0% 0%
----------------------------- ---------- ---------- ---------- ---------- ----------
The following movements occurred during the year:
At 31 December
Issue date Vesting Expiry date Issued Lapsed 2020
date
------------- ------------- ------------- ----------- ------- ---------------
18 May 2020 19 Nov 2020 18 Nov 2030 1,986,972 - 1,986,972
18 May 2020 19 May 2021 18 Nov 2030 6,357,616 - 6,357,616
18 May 2020 19 May 2023 18 Nov 2030 7,949,997 - 7,949,997
18 May 2020 19 May 2024 18 Nov 2030 7,950,000 - 7,950,000
18 May 2020 19 May 2025 18 Nov 2030 7,950,003 - 7,950,003
------------- ------------- ------------- ----------- ------- ---------------
32,194,588 - 32,194,588
----------------------------------------- ----------- ------- ---------------
Long term incentive plan
LTIP awards vest or become exercisable subject to the
satisfaction of a performance condition measured over a three year
period ("Performance Period") determined by the Remuneration
Committee at the time of grant. The performance condition used is
based on Total Shareholder Return ("TSR") measured over a
three-year period against the TSR of a peer group of at least 9
other oil and gas companies comprising both FTSE 250, larger AIM
oil and gas companies and Falkland Islands focused companies ("Peer
Group"). The Peer Group for the Awards may be amended by the
Remuneration Committee at their sole discretion as appropriate.
Performance measurement for the Awards are based on the average
price over the relevant 90 day dealing period measured against the
90 dealing day period three years later. Awards vest on a sliding
scale from 35% to 100% for performance in the top two quartiles of
the Peer Group. No awards vest for performance in the bottom two
quartiles.
The Awards granted on 8 October 2013 and 10 March 2014 have an
additional performance condition so that no awards will be
exercisable unless the Company's share price exceeds GBP1.80 based
on an average price over any 90 day dealing period up to 31 March
2023.
The LTIP has been valued using a Monte Carlo model the key
inputs of which are summarised below
Grant date: 31 July 23 April 16 June 22 Apr
2019 2018 2017 2016
Closing share price 20.75 25.7p 21.25p 31.5p
Number granted 7,200,000 7,000,000 6,700,000 10,047,885
Weighted average volatility 50.0% 44.4% 53.3% 60.4%
Weighted average volatility
of index 70.0% 64.0% 71.4% 71.2%
Weighted average risk free
rate 0.35% 0.90% 0.18% 0.58%
Correlation in share price
movement with comparator
group 5% 13.0% 15.3% 27.5%
Exercise price 0p 0p 0p 0p
Dividend yield 0% 0% 0% 0%
----------------------------- ---------- ---------- ---------- -----------
The following movements occurred during the year:
At 31 December At 31 December
Issue date Expiry date 2019 Issued Lapsed 2020
---------------- ------------- --------------- ------- ------------ ---------------
8 October
8 October 2013 2023 546,145 - - 546,145
10 March
10 March 2014 2024 70,391 - - 70,391
16 June
16 June 2017 2027 6,700,000 - (3,484,000) 3,216,000
23 April
23 April 2018* 2028 7,000,000 - - 7,000,000
31 July
31 July 2019* 2029 7,200,000 - - 7,200,000
---------------- ------------- --------------- ------- ------------ ---------------
21,516,536 18,032,536
------------------------------ --------------- ------- ------------ ---------------
* Denotes LTIPs that had not completed the Performance Period
and as such were unvested at the year end
Share incentive plan
The Group has in place an HMRC approved Share Incentive Plan
("SIP"). The SIP allows the Group to award Free Shares to UK
employees (including directors) and to award shares to match
Partnership Shares purchased by employees, subject to HMRC
limits.
Throughout this and the prior year the Group issued two Matching
Shares for every Partnership Share purchased.
In the year the Group made a free award of GBP35,999 (year ended
31 December 2019 GBP38,999) worth of Free Shares to eligible
employees.
This resulted in the issue of 195,756 (year ended 31 December
2019: 173,329) Free Shares and 306,606 (year ended 31 December
2019: 310,527) SIP scheme matching and partnership shares in the
year.
31 Dec 31 Dec
2020 2019
------------------------------------------------------ ------- -------
The average fair value of the shares awarded (pence) 12 21
Vesting 100% 100%
Dividend yield Nil Nil
Lapse due to withdrawals Nil Nil
------------------------------------------------------ ------- -------
The scheme was closed during the year and the fair value of the
shares awarded recognised in full.
Share appreciation rights
A share appreciation right ("SAR") is effectively a share option
that is structured from the outset to deliver, on exercise, only
the net gain in the form of new ordinary shares that would have
been made on the exercise of a market value share option.
On exercise, an option price of 1 pence per ordinary share,
being the nominal value of the Company's ordinary shares, is paid
and the relevant awardee will be issued with ordinary shares with a
market value at the date of exercise equivalent to the notional
gain that the awardee would have made, being the amount by which
the aggregate market value of the number of ordinary shares in
respect of which the SAR is exercised, exceeds a notional exercise
price, equal to the market value of the shares at the time of grant
(the "base price"). All SARs have vested and the remuneration
committee has discretion to settle the exercise of SARs in
cash.
All SARs have vested and the following movements occurred during
the year:
Exercise At 31 Dec At 31
price Dec
Issue date Expiry date (pence) 2019 Exercised Lapsed 2020
---------------- -------------- --------- ---------- ---------- ------- --------
11 January 11 January
2011 2021 372.75 175,048 - - 175,048
14 July 2011 14 July 2021 239.75 43,587 - - 43,587
16 August
16 August 2011 2021 237.00 17,035 - - 17,035
13 December 13 December
2011 2021 240.75 29,594 - - 29,594
17 January 17 January
2012 2022 303.75 244,541 - - 244,541
30 January 30 January
2013 2023 159.00 277,162 - - 277,162
---------------- -------------- --------- ---------- ---------- ------- --------
786,967 - - 786,967
------------------------------- --------- ---------- ---------- ------- --------
11 FOREign Exchange
Year ended Year ended
31 Dec 31 Dec
20 19
$'000 $'000
--------------------------------------------------------- ----------- -----------
Foreign exchange loss on Falkland Islands tax liability
(see note 20) (1,537) (1,307)
Other foreign exchange movements 99 (320)
--------------------------------------------------------- ----------- -----------
Total net foreign exchange loss (1,438) (1,627)
--------------------------------------------------------- ----------- -----------
12 FINANCE INCOME AND EXPENSE
Year ended Year ended
31 Dec 31 Dec
20 19
$'000 $'000
----------------------------------------------------- ----------- -----------
Bank and other interest receivable 44 624
Total finance income 44 624
----------------------------------------------------- ----------- -----------
Unwinding of discount on decommissioning provisions
(see note 21) 296 204
Other 523 87
----------------------------------------------------- ----------- -----------
Total finance expense 819 291
----------------------------------------------------- ----------- -----------
13 Taxation
Year ended Year ended
31 Dec 31 Dec
20 19
$'000 $'000
-------------------------------------------------------- ----------- -----------
Current tax:
Overseas tax - -
Adjustment in respect of prior years (10) -
-------------------------------------------------------- ----------- -----------
Total current tax (10) -
-------------------------------------------------------- ----------- -----------
Deferred tax:
Overseas tax 79 -
-------------------------------------------------------- ----------- -----------
Total deferred tax - note 22 79 -
-------------------------------------------------------- ----------- -----------
Tax on profit on ordinary activities 69 -
-------------------------------------------------------- ----------- -----------
Loss on ordinary activities before tax (236,435) (20,631)
-------------------------------------------------------- ----------- -----------
Loss on ordinary activities multiplied at 26% weighted
average rate (31 December 2019: 26%) (61,473) (5,364)
Effects of:
Income and gains not subject to taxation - (1,646)
Impairment of goodwill - 1,911
Expenditure not deductible for taxation 58,812 1,631
Depreciation in excess of capital allowances 9 1,060
IFRS2 Share based remuneration cost 478 313
Losses carried forward 2,349 1,326
Effect of tax rates in foreign jurisdictions (156) 769
Other (19)
Adjustments in respect of prior years (10) -
Tax credit for the year (10) -
-------------------------------------------------------- ----------- -----------
On the 8 April 2015 the Group agreed binding documentation ("Tax
Settlement Deed") with the Falkland Islands Government ("FIG") in
relation to the tax arising from the Group's farm out to Premier.
As such the Group is able to defer this tax liability under Extra
Statutory Concession 16. As it is deferred, the liability is
classified as non-current and discounted. Additional information is
given in Note 20 Tax payable.
The total carried forward losses and carried forward pre trading
expenditures potentially available for relief are as follows:
Year ended Year ended
31 Dec 31 Dec
20 19
$'000 $'000
------------------ ----------- -----------
UK 74,762 70,429
Falkland Islands 618,444 631,203
Italy 64,086 56,156
------------------ ----------- -----------
No deferred tax asset has been recognised in respect of
temporary differences arising on losses carried forward,
outstanding share options or depreciation in excess of capital
allowances due to the uncertainty in the timing of profits and
hence future utilisation. Losses carried forward in the Falkland
Islands includes amounts held within entities where utilisation of
the losses in the future may not be possible.
14 Basic and diluted loss per share
31 Dec 31 Dec
20 19
Number Number
------------------------------------------------ ------------ ------------
Shares in issue brought forward 457,979,755 457,495,899
Shares issued
- Issued under the SIP 502,362 483,856
------------------------------------------------ ------------ ------------
Shares in issue carried forward 458,482,117 457,979,755
------------------------------------------------ ------------ ------------
Weighted average number of Ordinary Shares for
the purposes of basic earnings per share 458,289,239 454,659,988
------------------------------------------------ ------------ ------------
$'000 $'000
------------------------------------------------------ ---------- ---------
Net loss after tax for purposes of basic and diluted
earnings per share (236,504) (20,631)
------------------------------------------------------ ---------- ---------
Loss per share - cents
Basic (51.73) (4.54)
Diluted (51.73) (4.54)
------------------------------------------------------ ---------- ---------
The weighted average number of Ordinary Shares takes into
account those shares which are treated as own shares held in trust
(see note 24). As the Group is reporting a loss in the year then in
accordance with IAS33 the share options are not considered dilutive
because the exercise of the share options would have the effect of
reducing the loss per share.
15 intangible exploration and evaluation assets
Falkland Greater
Islands Mediterranean Total
$'000 $'000 $'000
---------------------------- ---------- -------------- ----------
At 1 January 2019 440,314 6,721 447,035
Additions 24,325 1,745 26,070
Written off to exploration
costs - (350) (350)
Transfer to oil
and gas assets (see
note 16) - (3,901) (3,901)
Transfer to assets
held for sale (see
note 18) - (3,012) (3,012)
Foreign exchange
movement - (22) (22)
------------------------------ ---------- -------------- ----------
At 31 December 2019 464,639 1,181 465,820
Additions 1,592 147 1,739
Written off to exploration
costs (222,584) (696) (223,280)
Foreign exchange
movement - 70 70
------------------------------ ---------- -------------- ----------
At 31 December 2020 243,647 702 244,349
------------------------------ ---------- -------------- ----------
FALKLAND ISLANDS LICENCES
The additions during the year of $1.6 million relate principally
to the Sea Lion development. Management made a judgement as to
whether there were any indicators of impairment during the year and
concluded that for Phase 1 of the Sea Lion development there were
none.
Management, as a matter of good practice, run their cashflow
model for Sea Lion phase 1 regularly. At the year end, the key
inputs to this model were a real terms Brent oil price of $62.5/bbl
(2019: $70/bbl), a post-tax discount rate of 12.5% (2019: 12.5%)
and utilising the operator's current estimates of capital and
operating costs and production profiles. The project is targeting
project sanction decision during 2022 (with such decision dependent
on securing funding) and it is expected to take three and half
years from sanction to first oil.
Despite the reduction in the long--term oil price assumption, no
impairment arose on the Sea Lion Phase 1 project. A range of
sensitivities have been considered as part of the impairment
testing process. In the event of a US$2.5/bbl reduction in the
Group's long--term oil price assumption, an impairment of $5
million on Sea Lion Phase 1 arises. No impairment would arise if
the Group assumed project sanction was delayed by a further
year.
Management made the judgement that the limited near term capital
being invested outside of the Phase 1 project was an indicator of
impairment in the subsequent phases of the project. Accordingly a
decision was made, in line with the operator, to write off historic
exploration costs associated with the resources which will not be
developed as part of the Sea Lion Phase 1 project. This impairment
has no impact on the Group's long--term strategy for multiple
phases of development in the North Falkland Basin. A reversal of
the impairment is expected once the Phase 1 project has been
sanctioned and investment resumes on the Phase 2 project.
16 property, plant and equipment
Oil and Right of Other
gas use
assets assets assets Total
$'000 $'000 $'000 $'000
----------------------------- --------- --------- ------- ---------
Cost
At 1 January 2019 37,168 1,555 878 39,601
Additions 3,757 - 40 3,797
Transfer from intangible
exploration and evaluation
assets 3,901 - - 3,901
Foreign exchange (430) - (4) (434)
Transfer to assets
held for sale (20,121) - - (20,121)
----------------------------- --------- --------- ------- ---------
At 31 January 2019 24,275 1,555 914 26,744
Additions - 138 84 222
Foreign exchange 2,006 - 14 2,020
Disposals - - (99) (99)
At 31 December 2020 26,281 1,693 913 28,887
----------------------------- --------- --------- ------- ---------
Depreciation and impairment
At 1 January 2019 25,504 - 706 26,210
Charge for the year 4,138 300 106 4,544
Impairment 1,600 - - 1,600
Foreign exchange (317) - (2) (319)
Transfer to assets
held for sale (8,360) - - (8,360)
----------------------------- --------- --------- ------- ---------
At 31 December 2019 22,565 300 810 23,675
Charge for the year 232 528 48 808
Impairment 1,114 - - 1,114
Foreign exchange 1,960 - 5 1,965
Disposals - - (95) (95)
At 31 December 2020 25,871 828 768 27,467
----------------------------- --------- --------- ------- ---------
Net book value at 31
December 2019 1,710 1,255 104 3,069
----------------------------- --------- --------- ------- ---------
Net book value at 31
December 2020 410 865 145 1,420
----------------------------- --------- --------- ------- ---------
All oil and gas assets relate to the Greater Mediterranean
region, specifically producing assets in Italy.
17 OTHER Receivables
31 Dec 31 Dec
20 19
$'000 $'000
---------------- ------- -------
Current
Receivables 619 1,059
Other 1,844 2,442
---------------- ------- -------
2,464 3,501
---------------- ------- -------
The carrying value of receivables approximates to fair
value.
18 Disposal group held for sale
On 23 July 2019, the Group announced the sale of Rockhopper
Egypt Pty Limited. The key asset of Rockhopper Egypt Pty Limited is
a 22% working interest in the Abu Sennan concession. Accordingly
the assets and associated liabilities are presented as a disposal
group and the transaction completed on the 28 February 2020.
As at 31 December 2019, following impairments to intangible
exploration and evaluation assets ($0.3 million) and property,
plant and equipment ($1.6 million) the disposal group comprised net
assets of $15.9 million, detailed as follows.
31 Dec
19
$'000
------------------------------- --------
Intangible exploration and
evaluation assets 3,012
Property, plant and equipment 11,764
Inventories 67
Other receivables 3,082
Other payables (2,000)
15,925
------------------------------- --------
19 Other payables and accrualS
31 Dec 31 Dec
20 19
$'000 $'000
------------------ ------- -------
Accounts payable 1,021 2,248
Accruals 2,553 15,272
Other creditors 216 423
------------------ ------- -------
3,790 17,943
------------------ ------- -------
All amounts are expected to be settled within twelve months of
the balance sheet date and so the book values and fair values are
considered to be the same.
20 Tax payable
31 Dec 31 Dec
20 19
$'000 $'000
------------------------- ------- -------
Non current tax payable 40,703 39,167
------------------------- ------- -------
40,703 39,167
------------------------- ------- -------
On the 8 April 2015, the Group agreed binding documentation
("Tax Settlement Deed") with the Falkland Island Government ("FIG")
in relation to the tax arising from the Group's farm out to
Premier.
The Tax Settlement Deed confirms the quantum and deferment of
the outstanding tax liability and is made under Extra Statutory
Concession 16.
As a result of the Tax Settlement Deed the outstanding tax
liability is confirmed at GBP59.6 million and payable on the first
royalty payment date on Sea Lion. Currently the first royalty
payment date is anticipated to occur within six months of first oil
production which itself is estimated to occur approximately three
and a half years after project sanction. As such the tax liability
has been reclassified as non-current and discounted at 15%. A
foreign exchange loss of US$1.5 million (2019: US$1.3 million loss)
has been recognised in the year.
21 Provisions
Decommissioning Other
provision provisions 31 Dec 31 Dec
20 19
$'000 $'000 $'000 $'000
----------------------------- ---------------- ----------- ------- -------
Brought forward 13,561 75 13,636 13,888
Amounts utilized (54) - (54) (198)
Amounts arising in the year - 7 7 8
Unwinding of discount 296 - 296 204
Foreign exchange 1,264 9 1,273 (266)
----------------------------- ---------------- ----------- ------- -------
Carried forward at year end 15,067 91 15,158 13,636
----------------------------- ---------------- ----------- ------- -------
The decommissioning provision relates to the Group's licences in
the Greater Mediterranean region. The provision covers both the
plug and abandonment of wells drilled as well as any requisite site
restoration. Assumptions, based on the current economic environment
being an inflation rate of 2 per cent (2019: 2 per cent) and a
discount rate of 2 per cent (2019: 2 per cent), have been made
which management believe are a reasonable basis upon which to
estimate the future liability. These estimates are reviewed
regularly to take into account any material changes to the
assumptions. However, actual decommissioning costs will ultimately
depend upon future market prices for the necessary decommissioning
works required which will reflect market conditions at the relevant
time. Furthermore, the timing of decommissioning is likely to
depend on when the fields cease to produce at economically viable
rates. This in turn will depend upon future oil and gas prices,
which are inherently uncertain. Of these estimates the costs
associated with the decommissioning works are those that are likely
to have a material impact on the provision and as such a 10 per
cent change in these estimates would have a corresponding 10 per
cent impact on the provision.
Other provisions include amounts due to employees for accrued
holiday and leaving indemnity for staff in Italy, that will become
payable when they cease employment.
22 deferred tax liability
31 Dec 31 Dec
20 19
$'000 $'000
------------------------ ------- -------
At beginning of period 39,221 39,223
Movement in period 79 (2)
At end of period 39,300 39,221
------------------------ ------- -------
The deferred tax liability arises due to temporary differences
associated with the intangible exploration and evaluation
expenditure. The majority of the balance relates to historic
expenditure on licences in the Falklands, where the tax rate is
26%, being utilised to minimise the corporation tax due on the
consideration received as part of the farm out disposal during
2012.
Total carried forward losses and carried forward pre-trading
expenditures available for relief on commencement of trade at 31
December 2020 are disclosed in note 13 Taxation. No deferred tax
asset has been recognised in relation to these losses due to
uncertainty that future suitable taxable profits will be available
against which these losses can be utilised. The potential deferred
tax asset at the 31 December 2020 would be $163 million (31
December 2019: $197 million).
23 Share capital
31 December 2020 31 December 2019
$'000 Number $'000 Number
---------------------------------- ------ ------------ ------ ------------
Authorised, called up, issued
and fully paid: Ordinary shares
of GBP0.01 each 7,218 458,482,117 7,212 457,979,755
---------------------------------- ------ ------------ ------ ------------
For details of all movements during the year, see note 14.
24 reserves
Set out below is a description of each of the reserves of the
Group:
Share premium Amount subscribed for share capital in excess of
its nominal value.
Share based The share incentive plan reserve captures the equity
remuneration related element of the expenses recognised for the
issue of options, comprising the cumulative charge
to the income statement for IFRS2 charges for share
based payments less amounts released to retained
earnings upon the exercise of options.
Own shares Shares held in trust represent the issue value of
held in trust shares held on behalf of participants in the SIP
by Capita IRG Trustees Limited, the trustee of the
SIP as well as shares held by the Employee Benefit
Trust which have been purchased to settle future
exercises of options.
Merger reserve The difference between the nominal value and the
fair value of shares issued on acquisition of subsidiaries.
Foreign currency Exchange differences arising on consolidating the
translation assets and liabilities of the Group's subsidiaries
reserve are classified as equity and transferred to the
Group's translation reserve.
Special reserve The reserve is non distributable and was created
following cancellation of the share premium account
on 4 July 2013. It can be used to reduce the amount
of losses incurred by the Parent Company or distributed
or used to acquire the share capital of the Company
subject to settling all contingent and actual liabilities
as at 4 July 2013. Should not all of the contingent
and actual liabilities be settled, prior to distribution
the Parent Company must either gain permission from
the actual or contingent creditors for distribution
or set aside in escrow an amount equal to the unsettled
actual or contingent liability.
Retained losses Cumulative net gains and losses recognised in the
financial statements.
25 CAPITAL COMMITMENTS
Significant capital expenditure contracted for at the end of the
reporting period but not recognised as liabilities is US$0.4
million (2019: US$0.6 million) relating to the Group's intangible
exploration and evaluation assets.
26 Related Party Transactions
The remuneration of directors, who are the key management
personnel of the Group, is set out below in aggregate. Further
information about the remuneration of individual directors is
provided in the Directors' Remuneration Report on pages 31 to
41.
31 Dec 31 Dec
20 19
$'000 $'000
------------------------------ ------- -------
Short term employee benefits 1,111 1,430
Pension contributions 120 133
Share based payments 873 679
------------------------------ ------- -------
2,104 2,242
------------------------------ ------- -------
Directors purchased the following ordinary shares of GBP0.01
each in the Company as follows
Date Number Price (pence)
15 January
Sam Moody 2020 125,000 19.45
15 January
Keith Lough 2020 80,000 19.24
8 June 2020 148,515 8.08
15 January
Stewart MacDonald 2020 80,000 19.24
Alison Baker 8 June 2020 70,000 8.85
John Summers 8 June 2020 74,229 8.08
27 Risk management policies
Risk review
The risks and uncertainties facing the Group are set out in the
risk management report. Risks which require further quantification
are set out below.
Foreign exchange risks: The Group is exposed to foreign exchange
movements on monetary assets and liabilities denominated in
currencies other than US$, in particular the tax liability with the
Falkland Island Government which is a GBGBP denominated balance. In
addition a number of the Group's subsidiaries have a functional
currency other than US$, where this is the case the Group has an
exposure to foreign exchange differences with differences being
taken to reserves.
Asset balances include cash and cash equivalents and restricted
cash of US$12.2 million of which US$7.6 million was held in US$
denominations. The following table summarises the split of the
Group's assets and liabilities by currency:
Currency denomination of $ GBP EUR EGP GBP
balance
$'000 $'000 $'000 $'000
-------------------------- -------- ------- ------- --------
Assets
31 December 2020 253,577 3,115 4,666 -
31 December 2019 494,570 3,454 10,688 1,530
Liabilities
31 December 2020 41,338 43,152 16,301 -
31 December 2019 57,857 41,451 14,820 -
--------------------------- -------- ------- ------- --------
The following table summarises the impact on the Group's pre-tax
profit and equity of a reasonably possible change in the US$ to
GBGBP exchange rate and the US$ to euro exchange:
Pre tax profit Total equity
+10% US$ -10% US$ +10% US$ -10% US$
rate rate rate rate
increase decrease increase decrease
$'000 $'000 $'000 $'000
------------------- ---------- ---------- ---------- ----------
US$ against GBGBP
31 December 2020 (4,004) 4,004 (4,004) 4,004
31 December 2019 (3,800) 3,800 (3,800) 3,800
------------------- ---------- ---------- ---------- ----------
US$ against euro
31 December 2020 (1,164) 1,164 (1,164) 1,164
31 December 2019 (413) 413 (413) 413
------------------- ---------- ---------- ---------- ----------
Capital risk management: the Group manages capital to ensure
that it is able to continue as a going concern whilst maximising
the return to shareholders. The capital structure consists of cash
and cash equivalents and equity. The board regularly monitors the
future capital requirements of the Group, particularly in respect
of its ongoing development programme.
Credit risk; the Group recharges partners and third parties for
the provision of services and for the sale of Oil and Gas. Should
the companies holding these accounts become insolvent then these
funds may be lost or delayed in their release. The amounts
classified as receivables as at the 31 December 2020 were
$2,079,000 (31 December 2019: $2,168,000). Credit risk relating to
the Group's other financial assets which comprise principally cash
and cash equivalents, term deposits and restricted cash arises from
the potential default of counterparties. Investments of cash and
deposits are made within credit limits assigned to each
counterparty. The risk of loss through counterparty failure is
therefore mitigated by the Group splitting its funds across a
number of banks, two of which are part owned by the British
government.
Interest rate risks; the Group has no debt and so its exposure
to interest rates is limited to finance income it receives on cash
and term deposits. The Group is not dependent on its finance income
and given the current interest rates the risk is not considered to
be material.
Liquidity risks;
(i) Maturity of financial liabilities
The table below analyses the Group's financial liabilities,
which will be settled on a gross basis, into relevant maturity
groups based on the remaining period at the balance sheet to the
contractual maturity date. The amounts disclosed in the table are
the contractual undiscounted cash flows.
At 31 December Within 1 2 to 5 years More than Total contractual Carrying
2020 year 5 years cashflows amount
$'000 $'000 $'000 $'000 $'000
----------------- --------- ------------- ---------- ------------------ ---------
Other payables 3,790 - - 3,790 3,790
Lease liability 608 1,473 - 2,081 1,840
Tax payable - - 81,867 81,867 40,703
4,398 1,473 81,867 87,738 46,333
At 31 December Within 1 2 to 5 years More than Total contractual Carrying
2019 year 5 years cashflows amount
$'000 $'000 $'000 $'000 $'000
----------------- --------- ------------- ---------- ------------------ ---------
Other payables 17,943 - - 17,943 17,943
Lease liability 539 1,975 - 2,514 2,161
Tax payable - - 78,780 78,780 39,167
18,482 1,975 78,780 99,237 59,271
The financial information set out above does not constitute the
Group's statutory accounts for the year ended 31 December 2020, but
is derived from those accounts. References within the document may
refer to information in the statutory accounts and these will be
sent to shareholders and published on the Company's website
imminently.
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR DZGMKGRZGMZZ
(END) Dow Jones Newswires
May 19, 2021 02:00 ET (06:00 GMT)
Rockhopper Exploration (LSE:RKH)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Rockhopper Exploration (LSE:RKH)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
