ANGUS ENERGY PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

For the period ended 31 March 2025

NOTES TO THE FINANCIAL INFORMATION

1.                GENERAL INFORMATION AND PRINCIPAL ACTIVITIES

Angus Energy Plc (the "Company") was incorporated in United Kingdom as a limited company with company number 09616076.  The registered office of the Company is Building 3, Chiswick Park, 566 Chiswick High Road, London, W4 5YA, UK.

This financial information is for the Company and its subsidiaries undertakings (together, the "Group").

The principal activities of the entities of the Group are as follows:

The principal place of business of the Group is in United Kingdom.

The interim consolidated financial information is presented in the nearest thousands of Pound Sterling (£'000), which is the presentation currency of the group. The functional currency of each of the individual entity is the local currency of each individual entity.

2.            BASIS OF PREPARATION

The interim consolidated financial information for the six months ended 31 March 2025 and 31 March 2024 have been prepared in accordance with IAS 34, Interim Financial Reporting which are unaudited and do not constitute a set of statutory financial statements.

The principal accounting policies used in preparing the interim results are the same as those applied in the Group's financial statements as at and for the year ended 30 September 2024, which have been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006. The auditors' report on those accounts was unqualified and did not draw attention to any matters by way of emphasis.

A copy of the audited consolidated financial statements for the year ended 30 September 2024 is available on the Company's website.

The interim report for the six months ended 31 March 2025 was approved by the Directors on 28 June 2025.

Going Concern

The Group recorded a profit of £0.757m (2024: £5.775m), which included an operating profit of £3.367m (2024: £2.151m). EBITDA for the period was £6.943m (2024: £6.937m). The Group recorded net cash inflows from operating activities of £1.511 million (2024: outflow of £0.9 million). The Group meets its day to day working capital requirements through revenue from oil and gas sales and existing cash reserves. As at 31 March 2025, the Group had £0.785m (2024: £5.438m) of available cash.

The Directors have assessed the Group's working capital forecasts for a minimum of 12 months from the date of the approval of these financial statements. In undertaking this assessment, the Directors have reviewed the underlying business risks, and the potential implications these risks would have on the Group's liquidity and its business model over the assessment period. This assessment included a detailed cash flow analysis prepared by the management, and they also considered several reasonably plausible downside scenarios. The scenarios included potential delays to expected future revenues. In making their overall assessment the Directors took into account current production and the advanced stage of the development of the Saltfleetby gas field and the impact of the derivative instrument if there were delays in gas production. As outlined in note 11, the Group has committed to future cash flows as a result of the derivatives in place which are due even if gas production is delayed.

Forecast cashflows place reliance on there not being a suspension of gas production for an unforeseen significant period, completion of the in-wellbore production enhancement opportunities and the restructuring of the Trafigura Debt. Current production levels are in excess of derivative requirements. There are no present operational concerns and whilst there are mitigating steps that could be taken, the contracted derivative will need to be settled at a fixed point in time. In the event of any significant delays to the cashflow assumptions, this would be subject to further negotiation with the derivative holder and lender or further funding may be required. The Directors have therefore identified a material uncertainty which may cast doubt over the Group's ability to continue as a going concern.

Based on the management's current plan, the Directors consider that it is appropriate to adopt the going concern basis of preparation, notwithstanding the material uncertainty as outlined above. The Directors have assessed the company's ability to continue as a going concern and have reasonable expectation that the company has adequate resources to continue operations for a period of at least 12 months from the date of approval of these financial statements.

These financial statements do not include any adjustment that may result from any significant changes in the assumption used.

3.            CRITICAL ACCOUNTING ESTIMATES AND SOURCES OF ESTIMATION UNCERTAINTY

In applying the accounting policies, the directors may at times require to make critical accounting judgements and estimates about the carrying amount of assets and liabilities. These estimates and assumptions, when made, are based on historical experience and other factors that the directors consider are relevant.

The key estimates and assumptions concerning the future and other key sources of estimation uncertainty at the end of the financial year, that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are reviewed are as stated below.

Key accounting judgements

(a)   Impairment of non-current asset

The group's non-current assets represent its most significant assets, comprising of oil production assets, exploration and evaluation (E&E) assets on its onshore site.

Management is required to assess exploration and evaluation (E&E) assets for indicators of impairment and has considered the economic value of individual E&E assets. The carrying amount of the E&E asset are subject to a separate review for indicators of impairment, by reference of the impairment indicators set out in IFRS 6, which is inherently judgemental.

Processing operations are large, scarce assets requiring significant technical and financial resources to operate. Their value may be sensitive to a range of characteristics unique to each asset and key sources of estimation uncertainty include proved reserve estimates, future cash flow expected to arise from the cash-generating unit and a suitable discount rate.

In performing impairment reviews, the Group assesses the recoverable amount of its operating assets principally with reference to the Group's independent competent person's report, estimates of future oil prices, operating costs, capital expenditure necessary to extract those reserves and the discount rate to be applied to such revenues and costs for the purpose of deriving a recoverable value.

As detailed in note 6 and 7, the carrying value amount of the Group's E&E assets and Oil production assets at 31 March 2025 were approximately £5.457m and £69.048m respectively. No impairments were made during the interim period.

4.            OPERATING SEGMENTS

Operating segments are prepared in a manner consistent with the internal reporting provided to the management as its chief operating decision maker in order to allocate resources to segments and to assess their performance. 

Currently, the Group's principal revenue is derived from the sale of natural gas and condensate and crude oil. All revenue arose from continuing operations within the United Kingdom. Therefore, management considers no detail of operating and geographical segments information is to be reported. Nonetheless, the Group's revenue can be classified into the following streams:

All the non-current assets of the Group are located in the United Kingdom.  All revenue arising from the sale of natural gas is derived from sales to Shell plc and represents over 93% of the Company's revenue.

5.            PROPERTY, PLANT AND Equipment

During the period, the Group incurred £40,000 in additions to property, plant and equipment (2024: £nil). The depreciation charge for the period on the Group's property, plant and equipment was £4,368 (2024: £4,819).

6.            EXPLORATion ANd evALUaTion ASSETS

As of 31 March 2025, the Group retained a 25% interest in the Balcombe Field and is still the operator of the field.

7.            OIL AND GAS PRODUCTION ASSETS

As of 31 March 2025, the Group retained a 100% interest in the Saltfleetby Field, an 80% interest in the Lidsey field and an 80% in the Brockham field and is still the operator of all the fields.

8.            TRADE AND OTHER RECEIVABLES

The carrying amount of trade and other receivables approximates to their fair value.

9.            TRADE AND OTHER PAYABLES

10.         LOAN PAYABLE

On 22 February 2024, the Company announced that terms had been agreed with a subsidiary of Trafigura Group PTE Ltd ("Trafigura") for a refinancing of its existing debt. The Company signed definitive loan documentation which allows it to draw down in full on the £20 million loan facility (the "Facility") with Trafigura. The existing senior debt of £4.56 million was transferred to Trafigura and the proceeds of the Facility were applied to repay the bridge facility of £6 million, and £1.75 million of Forum Energy's deferred consideration from the sale of Saltfleetby Energy Limited's 49% interest in the Saltfleetby Field to Angus in 2022.

The balance of funds from the Facility was used to pay legacy creditors and invest in wells and equipment to increase gas production from Saltfleetby and restart oil production from the Brockham Field in Southern England. The existing security package encompassing first fixed and floating charges over all the Group's leases, licences and equipment has been novated to Trafigura as has the Gas Sales Agreement with Shell Trading Europe Limited. The existing hedge contract was replaced with a gas offtake, with embedded price protection.

The Group incurred transaction costs of £1.85m, which have been capitalised against the loan proceeds and will be amortised over the life of the loan facility. £0.548m of the cost was paid in cash, £0.550m was offset against the loan proceeds drawn down, and £0.750m was settled by the issue of shares. At 31 March 2025, the remaining unamortised amount was £1.448m.

Production variability during Q1 2025, before the booster compressor was commissioned, has resulted in the first principal repayment of £1.25 million, being deferred as part of ongoing discussions with Trafigura about rescheduling the principal repayments.

11. DERIVATIVES LIABILITY

On 01 June 2021, Angus Energy Weald Basin no. 3 Limited (AWB3) entered into a derivative agreement with Mercuria Energy Trading SA (METS) under a Swap contract as part of the condition of the £12 million Loan Facility. The derivative instrument was used to mitigate price risk on the expected future cash flow from the production of Saltfleetby Gas Field. Under the Swap contract, AWB3 will pay METS the floating price while METS will pay AWB3 the fixed price on the sale of gas from the field.

The Company's hedge counterparty agreed to allow the Company to crystallise (i.e. unwind) 50% of its forward hedge liability from Q3 2024 to the end of the hedge profile in June 2025.  Settlement for each unwind is deferred until the periods in question and no interest is charged.

After the refinancing with Trafigura, the existing Mercuria hedges were novated and restructured with Trafigura, incurring a credit charge of 6 pence per therm.

The Company also struck 7.3 million therms of new hedges to price protect the Mercuria hedges crystallised in July 2023. The Company has received further flexibility under its financing facility with Trafigura to manage these commitments ahead of the installation of the booster compressor and the expiry of the legacy hedges by deferring the settlement date up to 11 months at its discretion. The total deferred amount is £4,062m will bear interest at SONIA plus 10%.

The Trafigura Facility requires a rolling gas price protection policy to be put in place which stipulates a minimum protected amount equal to 45% of gas produced for the 12 months immediately ahead, and 33% for the following 6 months and 0% thereafter. As such, on 25 February 2025, the Company struck an additional 6.38 million therms at an average price of 87 pence per therm. 

The resulting revised hedge profile as at 31 March 2025 as shown below:

As of the reporting date, the expected net cash flow on the sale of natural gas amounted to £17.746m (2024: £14.901m) resulting in a derivative liability of £6.481m (2024: £12.733m), including £4,062m of deferred crystalised hedges, of which the Group has now recorded 100% share on its new working interest due to the acquisition of Saltfleetby Energy Limited.

Specific valuation technique used to value the financial instruments includes fair value measurement derived from inputs other than quoted prices included within Level 1 of fair value hierarchy valuation, that are observable for the instrument either directly or indirectly.

The carrying value of the financial instrument approximates their fair value and was valued using Level 2 fair value hierarchy valuation. The fair value has been determined with reference to commodity yield curves, as adjusted for liquidity and trading volumes as at the reporting date supplied by the Group's derivative partner, Trafigura. Management considered that the value provided by Trafigura best represented the fair value of these arrangements as the forward pricing curves did not take into account other market conditions. 

The nature of these arrangements in the present environment is such that material fluctuations in the value of the derivatives are occurring on a daily basis.  Wholesale gas prices have decreased substantially since March 2023, but remain highly volatile.

The adjusted loss on these hedging contracts as of 31 March 2025 represents the forecasted spot-price value of the gas to be extracted against the value fixed provided to the Group. Under projected gas production volumes, these arrangements will fix the amount payable to the group for the contracted volumes, with any excess volume being able to be sold at the available spot price.

The valuation of financial instruments as of the period resulted in a gain of £4.412m (2024: £8.981m) as a result of a decrease in forward pricing as at 31 March 2025.  An amount of £5.437m was realised in the period and paid to Trafigura.

In the event that the Group does not meet its production timetable, the swaps will crystallise as a liability at the dates at the proposed periods of gas production in the swap agreements.

12.          EARNINGS PER SHARE

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Group by the weighted average number of ordinary shares outstanding during the period.

Diluted EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Group by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

                The following reflects the income and share data used in the basic and diluted EPS computations:

The diluted profit per share is the same as the basic profit per share as there were no dilutive potential ordinary shares outstanding at the end of the reporting period.

13.          SEASONALITY OF GROUP BUSINESS

There are no seasonal factors that materially affect the operations of any company in the Group.

14.          PROVISIONS FOR OTHER LIABILITIES AND CHARGES

The Group makes full provision for the future costs of decommissioning of oil and gas production facilities and pipelines on the installation of those facilities. The amount of the provision is expected to be incurred up to 2029 when the producing oil and gas properties are expected to cease operations.

These provisions have been created based on the Group's internal estimates and expectation of the decommissioning costs likely to incur in the future. For the period under review, the directors have assessed that the discount rate and inflation rate to be applied to the current cost of decommissioning to be similar. On this basis, the current cost is considered to be similar to the discounted net present value.

15.          SUBSEQUENT EVENTS

On 7 May 2025, the Company announced that due to production variability during the first quarter of 2025, before the booster compressor was commissioned, has resulted in the first principal repayment of £1.25 million, being deferred as part of ongoing discussions with Trafigura about resculpting the repayment schedule.

On 19 May 2025, and following market speculation, the Company announced it has entered into a non-binding agreement to purchase a group of producing assets located in the Gulf of America ("Potential Transaction"). Given the nature of the Potential Transaction, this would constitute a reverse takeover under Rule 14 of the AIM Rules for Companies and accordingly, the Company's shares have been suspended from trading.

On 6 June 2025, and Further to the announcement of 7 May 2025, Angus Energy confirms that positive discussions with Trafigura regarding the resculpting of the original payment schedule and the potential transaction are ongoing. The Company will inform the market once an agreement has been reached.

On 19 June 2025, the Company announced that Richard Herbert had tendered his resignation as CEO and a director of the Company with immediate effect.