1.    General Information

Orcadian Energy PLC (the "company") is a public limited company which is domiciled and incorporated in England and Wales under the Companies Act 2006 with the registered number 13298968. The Company's registered office is 6^th floor, 60 Gracechurch Street, London, EC3V 0HR, and its ordinary shares are admitted to trading on AIM, a market of the London Stock Exchange.

The principal activity of the Group is managing oil and gas assets and it holds a 100% interest in, and is administrator for, UKCS Seaward Licences P2244, which contains the Pilot and Harbour heavy oil discoveries, and P2320, which contains the Blakeney, Feugh, Dandy & Crinan discoveries.

The financial statements presented for Group are for the year ended 30 June 2021 and these have are shown alongside figures for the year ended 30 June 2020 for comparative purposes.

2.    Summary of significant accounting policies

The principal accounting principles applied in the preparation of these financial statements are set out below. These principles have been consistently applied to all years presented, unless otherwise stated.

2.1.   Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRIC) and the Companies Act 2006 applicable to companies reporting under IFRS.

The financial statements have been prepared under the historical cost convention.

2.2.   Consolidation and acquisitions

The financial statements consolidate the financial information of the Group and companies controlled by the Group (its subsidiaries) at each reporting date. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity, has the rights to variable returns from its involvement with the investee and has the ability to use its power to affect its returns. The results of subsidiaries acquired or sold are included in the financial information from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the results of acquired subsidiaries to bring their accounting policies into line with those used by the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation. The financial statements of all Group companies are adjusted, where necessary, to ensure the use of consistent accounting policies.

The Company's shares were admitted to trading on AIM, a market operated by the London Stock Exchange, on 15 July 2021. These financial statements are the Company's first subsequent to its admission to AIM. In connection with the admission to AIM, the Group undertook a Group reorganisation of its corporate structure which resulted in the Company becoming the ultimate holding company of the Group. Prior to the reorganisation there was no ultimate holding company as Orcadian Energy (CNS) Ltd ("CNS") was a standalone entity. The transaction was accounted for as a capital reorganisation rather than a reverse acquisition since it did not meet the definition of a business combination under IFRS 3. In a capital reorganisation, the consolidated financial statements of the Group reflect the predecessor carrying amounts of CNS with comparative information of CNS presented for all periods since no substantive economic changes have occurred. The difference arising on acquisition has been accounted for with the recognition of a merger reserve on the balance sheet following the reorganisation of the share capital of the Group at the point of completion of the transaction.

2.3.   Going concern

The financial statements have been prepared on a going concern basis. The Group is not yet revenue generating and an operating loss has been reported. The Directors have reviewed a detailed forecast based on the funds raised, and including all required spend to meet licence requirements. This forecast has been stress tested by management in reaching their going concern conclusion. Having made due and careful enquiry, the Directors are of the opinion that the Group has adequate working capital to execute its operations over the next 12 months. The Directors, therefore, have made an informed judgement, at the time of approving financial statements, that there is a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.

The Directors acknowledge that COVID-19 has had and may continue to have significant adverse  impacts on the global economy and capital markets. However, the Company has been able to raise funds during this time and are of the opinion that COVID-19 does not pose a risk sufficient to call in to question the Group's ability to operate as a Going Concern. The Directors are of the opinion that the Group has adequate working capital to be able to meet its obligations as they fall due over the next 12 months

As a result, the Directors have continued to adopt the going concern basis of accounting in preparing the annual financial statements for the year ended 30 June 2021.

2.4.   Changes in accounting policies

2.4.1. New standards, amendments to standards and interpretations

i)              New and amended standards adopted by the Group

During the financial year, the Group has adopted the following new IFRSs (including amendments thereto) and IFRIC interpretations that became effective for the first time.

None of the standards or interpretations that came into effect for the first time for the financial year beginning 1 July 2020 had a material impact on the Group.

2.4.2. New standards and amended standards and interpretations issued but not yet effective for the financial year beginning 1 July 2021

At the date of approval of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not been adopted by the UK):

The new and amended Standards and Interpretations which are in issue but not yet mandatorily effective is not expected to be material.

2.5.   Foreign currency

2.5.1. Functional and presentation currency

Items in the company's financial statements are measured in the currency of the primary economic environment in which the entity operates (functional currency). Τhe functional currency of the Company is Pounds sterling (£).

Monetary amounts in these financial statements are rounded to the nearest £.

2.4.2.Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. 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 recognised in the income statement, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within 'finance income or costs.' All other foreign exchange gains and losses are presented in the income statement within 'Other (losses)/gains.'

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets measure at fair value are included in other comprehensive income.

2.6.   Government grants

The Group recognises an unconditional government grant in profit or loss as other income when the grant becomes receivable.

2.7.   Taxation

Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity respectively.

R&D tax credits are recognised through the Consolidated Statement of Comprehensive Loss upon receipt of funds.

2.8.   Leases

The Group assesses whether a contract is or contains a lease at the inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Group recognises the lease payments as an administrative expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

2.9.   Intangible assets

Exploration and evaluation expenditures (E&E)

The Group applies the successful efforts method of accounting for oil and gas assets, having regard to the requirements of IFRS 6 'Exploration for and Evaluation of Mineral Resources'. Costs incurred prior to obtaining the legal rights to explore an area are expensed immediately to the Statement of Comprehensive Income.

All licence acquisitions, exploration and evaluation costs are capitalised, a share of administration costs is capitalised insofar as they relate to exploration, evaluation and development activities. These costs are written off unless commercial reserves have been established or the determination process has not been completed and there are no indications of impairment. If a project is deemed commercial all of the attributable costs are transferred into Property, Plant and Equipment. These costs are then depreciated from the commencement of production on a unit of production basis.

2.10. Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. This includes consideration of the IFRS 6 impairment indicators for any intangible exploration and evaluation assets capitalised as intangible costs. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount.

An asset's recoverable amount is the higher of its fair value less costs to sell and its value in use. This is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or Groups of assets, and the asset's value in use cannot be estimated to be close to its fair value. In such cases, the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, it is considered impaired and is written down to its recoverable amount.

In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset, unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated.

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the Statement of Comprehensive Income unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

2.11. Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates:

·      Property, plant and equipment - 3 years straight line.

All assets are subject to annual impairment reviews.

2.12. Financial Instruments

2.11.1 Initial recognition

A financial asset or financial liability is recognised in the statement of financial position of the Group when it arises or when the Group becomes part of the contractual terms of the financial instrument.

2.11.2 Classification

Financial assets at amortised cost

The Group measures financial assets at amortised cost if both of the following conditions are met:

(1)   the asset is held within a business model whose objective is to collect contractual cash flows; and

(2)   the contractual terms of the financial asset generating cash flows at specified dates only pertain to capital and interest payments on the balance of the initial capital.

Financial assets which are measured at amortised cost, are measured using the Effective Interest Rate Method (EIR) and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

Financial liabilities at amortised cost

Financial liabilities measured at amortised cost using the effective interest rate method include current borrowings and trade and other payables that are short term in nature. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate ("EIR"). The EIR amortisation is included as finance costs in profit or loss. Trade payables other payables are non-interest bearing and are stated at amortised cost using the effective interest method.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss and other comprehensive income.

2.11.3. Derecognition

A financial asset is derecognised when:

(1)  the rights to receive cash flows from the asset have expired, or

(2)  the Group has transferred its rights to receive cash flows from the asset or has undertaken the commitment to fully pay the cash flows received without significant delay to a third party under an arrangement and has either (a) transferred substantially all the risks and the assets of the asset or (b) has neither transferred nor held substantially all the risks and estimates of the asset but has transferred the control of the asset.

2.11.4 Impairment

The Group recognises a provision for impairment for expected credit losses regarding all financial assets. Expected credit losses are based on the balance between all the payable contractual cash flows and all discounted cash flows that the Group expects to receive. Regarding trade receivables, the Group applies the IFRS 9 simplified approach in order to calculate expected credit losses. Therefore, at every reporting date, provision for losses regarding a financial instrument is measured at an amount equal to the expected credit losses over its lifetime without monitoring changes in credit risk. To measure expected credit losses, trade receivables and contract assets have been Grouped based on shared risk characteristics.

2.13. Trade and other receivables

Trade and other receivables are initially recognised at fair value when related amounts are invoiced then carried at this amount less any allowances for doubtful debts or provision made for impairment of these receivables.

2.14. Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and are subject to an insignificant risk of changes in value.

2.15. Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

2.16. Share premium

Share premium account represents the excess of the issue price over the par value on shares issued. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

2.17. Trade payables

These financial liabilities are all non-interest bearing and are initially recognised at the fair value of the consideration payable.

2.18. Convertible loan notes and borrowings

Convertible loan notes classified as financial liabilities and borrowings are recognised initially at fair value, net of transaction costs incurred. After initial recognition, loans are measured at the amortised cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest rate method.

2.19        Finance income and finance costs

Finance income comprises interest income on bank funds.  Interest income is recognised as it accrues in profit or loss, using the effective interest method. Finance costs comprise interest expense on borrowings. Borrowing costs are recognised in profit or loss in the period in which they are incurred.

2.20        Earnings per share

Basic Earnings per share is calculated as profit attributable to equity holders of the parent for the period, adjusted to exclude any costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element.

2.21        Operating segments

The Chief Operating Decision Maker (CODM) is considered to be the Board of Directors. They consider that the Group operates in a single segment, that of oil and gas exploration, appraisal and development, in a single geographical location, the North Sea of the United Kingdom. As a result, the financial information of the single segment is the same as set out in the statement of comprehensive income, statement of financial position, statement of Changes in Equity and Statement of Cashflows.

2.22        Investment in Subsidiaries

The consolidated financial statements incorporate the financial statements of the company and entities controlled by the Group (its subsidiaries).  Control is achieved where the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in total comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate using accounting policies consistent with those of the parent.  All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Investments in subsidiaries are accounted for at cost less impairment in the individual financial statements.

2.23        Research and development

Research and development expenditure is charged to the Consolidate Statement of Comprehensive Income in the year in which the claim is submitted and recovered as prior to this the recovery of the income is not deemed to be probable.

3.    Significant accounting estimates and judgements, estimates and assumptions

The preparation of financial statements using accounting policies consistent with IFRS requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of income and expenses. The preparation of financial statements also requires the Directors to exercise judgement in the process of applying the accounting policies. Changes in estimates, assumptions and judgements can have a significant impact on the financial statements.

Recoverable value of intangible assets

As at 30 June 2021, the Group held oil and gas exploration and evaluation intangible assets of £1,814,615 (2020: £1,283,797). The carrying values of intangible assets are assessed for indications of impairment, as set out in IFRS 6, on an annual basis. As part of this impairment assessment, the recoverable value of the intangible assets is required to be estimated.

When estimating the recoverable value of the intangibles Management consider the proved, probably and potential resources per the latest CPR, likely production costs and the forecasted oil prices.

As a result of the budget exploration costs, the licenses being valid and the assessed recoverable value of the intangibles being in excess of the carrying value, Management do not consider that any intangible assets are impaired as at 30 June 2021.

These estimates and assumptions are subject to risk and uncertainty and therefore a possibility that changes in circumstances will impact the assessment of impairment indicators.

There was only one critical judgement identified, apart from those involving estimations (which are dealt with separately above) that the Directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

Approach to account for the acquisition of Orcadian Energy (CNS) Ltd

The acquisition of Orcadian Energy (CNS) Ltd during the year via a share for share agreement, as detailed in note 4, falls outside of the scope of IFRS 3 as Orcadian Energy Plc at the time of the transaction did not meet the definition of a business.  The acquisition constituted a group reorganisation since the two entities were under common control at the date of acquisition.

As such, the Directors were required to apply judgement in deciding the most appropriate way to account for this acquisition. The Directors decided to adopt the predecessor value approach which requires the assets and liabilities acquired being accounted for using their carrying values at the date of acquisition and the difference between the cost of the acquisition and the net assets of the legal subsidiary at the date of acquisition being taken to the merger reserve.

Furthermore, the Consolidated Statement of Comprehensive Loss, Consolidated Statement of Financial Position, Consolidate Statement of Changes in Equity and the Consolidated Statement of Cashflows have been presented to show the group as if it were in existence since the beginning of the comparative period.

4.    Group reorganisation under common control

The acquisition met the definition of a group reorganisation due to the Company and the subsidiary being under common control at the date of acquisition. As a result, and since Orcadian Energy Plc did not meet the definition of a business per IFRS 3, the acquisition fell outside of the scope of IFRS 3 and the predecessor value method was used to account for the acquisition.

These consolidated financial statements represent a continuation of the consolidated financial statements of Orcadian Energy (CNS) Ltd and include:

a.     The assets and liabilities of Orcadian Energy (CNS) Ltd at their pre-acquisition carrying amounts and the results for both periods; and

b.     The assets and liabilities of the Company as at 11 May 2021 and it's results from 11 May to 30 June 2021.

On 11 May 2021, the Company issued 52,201,601 shares entire issued share capital of Orcadian Energy (CNS) Ltd.

The net assets of Orcadian Energy (CNS) Ltd at the date of acquisition was as follows:

The reserve that arose from the acquisition is made up as follows:

5.    Administrative expenses

6.    Auditor's Remuneration

During the year, the Company obtained the following services from the Company's auditors and its associates:

7.    Other Income

The Company undertook a minor consulting role during the year for which it billed £3,000.

As part of the Government's support for small businesses during the Coronavirus crisis a non-repayable Coronavirus support  grant of £10,000 was provided to any business whose premises were eligible for Small Business Rate Relief as of 11 March 2020, having a rateable value up to £15,000. The Company qualified for this support and applied for and received the grant.

8.    Staff numbers and costs

No pension benefits are provided for any Directors (2020: £nil).

The average number of persons (including directors) employed by the Company during the year was:

9.    Finance costs

10.  Taxation

Analysis of charge for the year:

Taxation reconciliation

The below table reconciles the tax charge for the year to the theoretical charge based on the result for the year and the corporation tax rate.

Due to the nature of the expenditure incurred by the Company on the Offshore Steam Flood during the periods ending 30 June 2019 and 30 June 2020 claims were made under the SME R&D tax rebate provisions which resulted in refunds totalling £80,420. 

As at 30 June 2021, the Group had unused tax losses of £139,767 (2020: £83,463) for which no deferred tax asset has been recognised. This is due to uncertainty over the availability of future taxable profits to offset these losses against.

11.  Earnings per share

The calculation of the basic and diluted earnings per share is calculated by dividing the loss for the year for continuing operations for the Company by the weighted average number of ordinary shares in issue during the year.

There is no difference between the basic and diluted earnings per share as there were no securities on issue as at 30 June 2021 that would have a dilutive effect on earnings per share.

The weighted average number of shares is adjusted for the impact of the acquisition as follows:

- Prior to the acquisition, the number of shares is based on Orcadian Energy (CNS) Ltd, adjusted using the share exchange ratio arising on the acquisition; and

- From the date of the acquisition, the number of shares is based on the Company.

12.  Property, plant and equipment

The depreciation expense is recognised in administrative expenses as set out in note 6.

13.  Intangible assets

No general office expenses incurred during the year were capitalised (2020: £nil).

The carrying value of the prospecting and exploration rights is supported by the estimated resource and current market values as contained in the Competent Person's Report date 1 April 2021 which was prepared by Sproule B.V.

14.  Trade and other receivables

Amounts due from related parties were unsecured, interest free and had no fixed repayment date.

The fair value of other receivables is the same as their carrying values as stated above.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Company does not hold any collateral as security.

15.  Cash and cash equivalents

There is no material difference between the fair value of cash and cash equivalents and their book value.

16.  Investment in subsidiary

The acquisition of Orcadian Energy (CNS) Ltd took place on 11 May 2021. Refer to note 4 for further details.

17.  Borrowings

Between July and December 2020 the Company issued £380,000 of convertible loan notes. In January 2021 £100,000 of convertible loan notes were repaid in cash and a further CLN for £100,000 was issued to a further lender. The term for these CLN's was three years with an interest rate of 12% per annum if they were redeemed. If conversion to Ordinary Shares no interest is applied.

In March 2021 the Company issued £705,000 of convertible loan notes, and in June 2021 the Company issued £15,000 of convertible loan notes. These CLN's had a term of one year and a zero interest rate.

Subsequent to reporting date on 15 July 2021, all CLNs were converted in to ordinary shares at a price of 28 pence each, which was a 30% discount to the fundraise price. In total 3,928,572 ordinary shares were issued in full discharge of the CLNs. No interest was paid on the CLNs as they were converted in to ordinary shares.

Convertible loan notes were exercised in the year leading to shares being issued for a total value of £71,400. No cash was received in consideration for these shares.

The STASCO loan was drawn down on 23 August 2019. The loan is repayable by 23 August 2023 and is subject to an interest rate at LIBOR plus 5% with interest accruing on a compounding basis.

On 20 March 2020 and 28 May 2020 the Company issued £50,000 of convertible loan notes on each of those dates.

18.  Trade and other payables - due within one year

The carrying values of trade and other payables are considered to be a reasonable approximation of the fair value and are considered by the Directors as payable within one year.

19.  Ordinary share capital and share premium

The issued capital of the Group for the period 1 July 2020 to 11 May 2021 is that of Orcadian Energy (CNS) Ltd. Upon completion of the acquisition the share capital of Orcadian Energy (CNS) Ltd was transferred to the Acquisition reserve (Refer to note 4) and the share capital of Orcadian Energy PLC was brought to account.

The ordinary shares confer the right to vote at general meetings of the Company, to a repayment of capital in the event of liquidation or winding up and certain other rights as set out in the Company's articles of association.

On 29 March 2021, the Company issued one new ordinary shares of £0.001 upon incorporation.

On 11 May 2021, the Company issued 52,202,601 new ordinary shares of £0.001 each at nominal value for the acquisition of 100% of the issued  capital of Orcadian Energy (CNS) Ltd pursuant to a share swap arrangement (Refer to Note 4).

20.  Related parties

21.1 Transactions with related parties

The Company had the following related party transactions:

(1)   The Company makes use of an office at 70 Claremont Road which is currently provided to the Company by Mrs Julia Cane-Honeysett and Mr Stephen Brown at a rental of £1,000 per calendar month. The company pays for the services and business rates associated with the property.

21.2 Loans to/from related parties

During the year, several Directors and shareholders provided funds to the Company as a working capital injection.

The following balances are outstanding at the end of the reporting period in relation to these transactions:

As at 30 June 2021 the Company had issued convertible loan notes (CLNs") from Company Directors Alan Hume totalling £135,000. These CLNs were converted in to 482,142 ordinary shares post year end on 15 July 2021 at 28 pence per share.

21.3. Key management personnel

Directors of the Company are considered to be key management personnel.  The remuneration of the Directors has been set out in note 8.

21.  Ultimate controlling party

The Directors consider Stephen Brown and Julia Cane-Honeysett to be the ultimate controlling parties given their combined holding of 55.87% of the issued capital of the Company.

22.  Financial instruments

The Company holds the following financial instruments:

Financial assets

The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets mentioned above.

Financial liabilities

23.  Financial risk management

23.1. Financial risk factors

The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.

Risk management is carried out by the executive management team.

a)     Market risk

The Company is exposed to market risk, primarily relating to interest rate, foreign exchange and commodity prices. The Company does not hedge against market risks as the exposure is not deemed sufficient to enter into forward contracts. The Company has not sensitised the figures for fluctuations in interest rates, foreign exchange or commodity prices as the Directors are of the opinion that these fluctuations would not have a significant impact on the Financial Statements at the present time. The Directors will continue to assess the effect of movements in market risks on the Company's financial operations and initiate suitable risk management measures where necessary.

b)    Credit risk

Credit risk arises from cash and cash equivalents as well as outstanding receivables. To manage this risk, the Company periodically assesses the financial reliability of customers and counterparties.

The amount of exposure to any individual counter party is subject to a limit, which is assessed by the Board.

The Company considers the credit ratings of banks in which it holds funds in order to reduce exposure to credit risk. The Company will only keep its holdings of cash with institutions which have a minimum credit rating of 'A'.

c)     Liquidity risk

The Company's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital or debt. The Directors are reasonably confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed.

The following table summarizes the Company's significant remaining contractual maturities for financial liabilities at 30 June 2021, and 30 June 2020.

23.2. Capital risk management

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern, in order to enable the Company to continue its exploration and development of oil and gas resources. In order to maintain or adjust the capital structure, the Company may adjust the issue of shares or sell assets to reduce debts.

The Company defines capital based on the total equity and reserves of the Company. The Company monitors its level of cash resources available against future planned operational activities and may issue new shares in order to raise further funds from time to time.

24.  Commitments

The Company has entered into the following non-cancellable commitments in respect of exploration licences:

25.  Events after the reporting period

The Company listed on the Alternative Investment Market (AIM) on the 15^th July 2021. At the same time the Company placed 7,500,000 New Ordinary Shares to raise gross proceeds of £3,000,000.

On the 15^th July 2021 the Company issued 125,000 new shares of 40p each to a supplier in part payment of an outstanding bill.

On 15^th July all Convertible Loan Notes ("CLNs") were converted in to ordinary shares at a price of 28 pence each. In total 3,928,572 ordinary shares were issued in full discharge of the CLNs.

On the 15^th July the Company filed an addendum to the Pilot field Concept Select Report ("CSR") with the Oil and Gas Authority ("OGA"). This followed the execution of an agreed work programme which included polymer core flood tests and work to reduce the carbon dioxide emissions from the project. The selected concept has now been revised to include a significant improvement in process heat management and power generation efficiency.

On the 29^th November 2021 the Company received a "Letter of no objection" from the Oil and Gas Authority ("OGA") in respect of the development concept for the Pilot field.  This letter signals the finalisation of the "Assessment phase" and the entry into the "Authorisation phase" of development planning for the Pilot Field.

On 6^th December 2021 the Company was awarded £466,667 by the OGA to evaluate a new concept for the electrification of key producing oil and gas fields initially focussing on Central Graben area fields owned and operated by others. Orcadian is working with Crondall Energy, Enertechnos, Petrofac, North Sea Midstream Partners ("NSMP") and Wärtsilä; together the working group will undertake an evaluation of this concept and deliver a report to the OGA and Central Graben Operators by the end of March 2022. The evaluation will include a commercial proposal for the delivery of electrical power to Central Graben and Central North Sea Operators interested in rapidly implementing electrification of their platforms.