Gasol plc
Annual Report and Accounts
2011
The Africa-focused gas independent
...African energy for the world Through a carefully considered programme of acquisitions,
investments and strategic alliances, Gasol aims to become the
industry’s premier Africa-focused gas independent, delivering
value by commercialising stranded gas.
Gasol plc is an Africa-focused gas independent listed on AIM
(AIM: GAS).The Group’s primary focus is to develop projects to
monetise stranded gas reserves in the Gulf of Guinea.This is to be
achieved by aggregation, liquefaction and shipment of such gas
reserves as LNG and, where possible, to use this LNG primarily for
regional power generation. We will work closely with host
governments and communities and align our business to local
priorities.
Business Review
01 Highlights 2010/11
02 Identifying the opportunities
04 Strategy
06 Chairman’s Statement
08 Chief Operating Officer’s Statement
12 Board of Directors
and Strategic Advisor
Corporate Governance
14 Directors’ Report
17 Corporate Governance Statement
19 Report of the Remuneration Committee
21 Statement of Directors’ Responsibilities
22 Independent Auditors’ Report
Financial Statements
23 Consolidated Statement of Comprehensive Income
24 Consolidated Statement of Changes in Equity
26 Company Statement of Changes in Equity
28 Consolidated Statement of Financial Position
29 Company Statement of Financial Position
30 Consolidated Statement of Cash Flows
31 Company Statement of Cash Flows
32 Notes to the Consolidated Financial Statements
52 Notes to the Company Financial Statements
Shareholder Information
57 Officers and Professional Partners
Gasol plc
Gasol plc Annual Report and Accounts 2011
AIM:
GAS Highlights
01 Gasol plc Annual Report and Accounts 2011
 The Group announced the completion of the strategic review
commenced in the previous year, with a commitment to:
 continue with its existing strategy of seeking to aggregate and
monetise stranded gas assets in the Gulf of Guinea, through the
liquefaction of gas;
 develop a gas to power strategy in West Africa based, in part,
on a small scale LNG solution to provide gas for new electricity
generating capacity and, where possible, as an alternative fuel
supply for existing oil-fired power stations.
 After the year end Gasol entered into an exclusive agreement to
negotiate the terms to acquire all of the gas in the Nigerian
Offshore Licence area OML 114.This gas field has proven reserves
which, early reports indicate, would support an LNG monetisation
solution of an appropriate size for our strategy.
 After the year end the Group negotiated a revised agreement
on its gas project in Equatorial Guinea, and as part of the revised
terms Gasol, through its SONAF joint venture partnership with
SONAGAS, has been appointed as an agent for the purpose of
developing a market in West and Central Africa for purchasers
of liquefied natural gas produced by the Equatorial Guinea
LNG project.
 Successfully secured £4 million of financing in the financial year,
which was used to refinance approximately £2.2 million of existing
debt plus interest and to provide new working capital. A further
£1 million loan facility was raised shortly after the financial
year end.
Business Review
Corporate Governance
Financial Statements Strategic focus:
Clear goals
Identifying the opportunities
West Africa becoming a critical gas hub
02 Gasol plc Annual Report and Accounts 2011
Gasol is focused on developing projects to
aggregate and monetise stranded gas in the
Gulf of Guinea region of West Africa, primarily
via Liquefied Natural Gas (LNG).
Gasol seeks to create added value by using
LNG to develop, with partners, a gas to power
business within the West African region. Why gas?
We believe that the global gas market will continue
to provide value-enhancing opportunities for the
foreseeable future.
Natural gas is widely recognised as one of the most
environmentally friendly and efficient means of
providing power in the world today.The problem
for gas asset owners has traditionally been how to
deliver the gas from the gas field to the consuming
market place.Where possible, pipelines are the
preferred delivery method but they usually require
large gas reserves and significant capital
investment to justify construction at an
international level.Technological developments
and a growing demand from gas has led to the
development of the LNG Market, allowing those
gas reserves further afield from centres of gas
demand to be developed. Most recently the
unfortunate natural disaster in Japan that resulted
in the loss of a nuclear power station could
potentially lead to even greater gas demand in the
future as national reassessment of environmental
risks takes place.
LNG projects have traditionally been focussed on
large scale units producing millions of tons of LNG
per annum. Over the last few years, there has been
a growth in smaller scale use of LNG.Technology
now exists to produce, transport store and regasify
LNG in quantities of hundreds of thousands of tons
per annum and below. As a result it is now possible
to consider the monetization of smaller gas fields in
areas where this has previously been impractical or
uneconomic.
Why Africa?
A combination of the decline of traditional reserves
of natural gas in the US and in the North Sea, and a
growing awareness by African countries of the
value of their gas has led to the relatively
underdeveloped and gas prolific West African fields
becoming increasingly attractive for monetisation.
The desire by large consumer nations to avoid
overdependence on limited numbers of producers
has also led to demand for alternative secure
sources of gas.West African gas can provide a
viable, secure and strategic alternative source of
supply.
The Gulf of Guinea region of Africa, with over 200
trillion cubic feet of reserves, is particularly well
positioned to supply to US and European
consumers and the rapidly-growing Far Eastern
markets. Nigeria alone houses 90% of these
reserves.
In addition, the Gulf of Guinea has a large number
of gas reserves that have not attracted the interest
of larger national and international gas companies
because these reserves have traditionally been
considered too small on a stand-alone basis to
launch a profitable gas project. However, the
development of smaller scale LNG technology is
allowing some of these smaller fields to become
economically viable as a gas monetisation project.
Why Gasol?
There have been structural changes in the gas/LNG
industry as gas asset owners and the national
governments have a greater awareness of the
potential value of their gas assets and seek a
greater involvement in the gas monetisation
process for optimum leverage from their gas
ownership. Moreover an urgent demand in most
West African countries for more electricity
generation capacity to satisfy industrial and
domestic demand has led these countries to focus
on regionally available fuel resources.
As an independent player, Gasol is ideally placed to
develop gas projects through:
(a) its focus on gas monetisation in West Africa
(b) strategic alliances with upstream players
(c) alignment with host governments
(d) development of gas-to-power for use of gas
and added value
Gasol is focused on delivering its first LNG project,
utilising small-scale liquefaction technology,
which is cost competitive with lower project
execution time.
create value by developing LNG projects as a
gas monetisation solution.
In the long term the global gas market will
continue to provide value-enhancing
opportunities. The stranded West African gas
fields provide an attractive opportunity to
03 Gasol plc Annual Report and Accounts 2011
There exists a significant opportunity in
West Africa for supplying gas to generate
electricity. The region suffers from a
chronic shortage of power which we
believe is most efficiently and swiftly
addressed by gas fired power stations.
Gasol believes that the opportunities here
will lead to the creation of a second
revenue stream in a shorter timescale.
Business Review
Corporate Governance
Financial Statements
A key goal that emerged from the Group’s strategic review was
to accelerate the creation of further income streams: Developing our Strategy
Strategy –
monetising stranded gas reserves
04 Gasol plc Annual Report and Accounts 2011
Liquefaction – building innovative, cost-
effective plants to export LNG
Gasol is focused on assessing and developing
opportunities for small-scale land-based LNG,
potentially in collaboration with strategic partners,
using technology that has been developed and is
in use elsewhere in the world.
Securing access to low-cost stranded gas
reserves with no monetisation route
Gasol seeks preferential access to gas through
partnerships with upstream players such as Afren,
with whom we have exclusive right of first refusal
to purchase and market its natural gas. Gasol will
focus of the development of gas fields that are
smaller than those traditionally used for LNG
projects. Gasol’s strategy is to identify and develop commercially attractive opportunities in the gas sector,
with initial focus on LNG, sourced from Africa’s Gulf of Guinea region. Our objective is to create a
substantial value chain through a series of partnerships involving gas gathering, liquefaction and the
shipment of LNG. Gasol is also exploring a West African regional gas to power strategy to create
additional value for its gas.
Revenue stream two – Liquid Natural Gas
for global markets
Where not used regionally Gasol’s strategy is to
sell LNG into the international export markets,
and to seek arbitrage opportunities.
Revenue streams
05 Gasol plc Annual Report and Accounts 2011
Following the recent disintermediation
within the industry, Gasol is working with
partners such as Afren to unlock the value in
smaller deposits.
Gasol is exploring existing technologies
designed to exploit smaller gas fields, which
are already in use in other land-based
locations around the world, and which can
facilitate commercial liquefaction at a lower
threshold of proven gas reserves.
Long-term access to the end-market is
essential, and Gasol is establishing
partnerships with downstream players,
both in the regional power market and
internationally.
Revenue stream one – Power generation
in West Africa
A chronic shortage of power in the region has given
rise to a significant opportunity for Gasol to supply
gas to generate electricity.Locally shipped LNG can
be transferred to local storage and regasification
units,offering high efficiency and considerable
flexibility,before piping to gas fired power stations.
12 3
Gas aggregation policy to
access low-cost reserves
Rapid gas monetisation
technology
End market and LNG
offtake partners
Business Review
Corporate Governance
Financial Statements Long-term Potential
Chairman’s Statement
06 Gasol plc Annual Report and Accounts 2011
This is my second Chairman’s statement, but the first for which I have been in
the role for a full financial year.Whilst my previous statement covered a year
of change, both in terms of management and development of a new strategy,
the financial year covered by these report and accounts has seen the beginning
of the implementation of this new strategy and the building of the key
foundations necessary to support the business. I am pleased to report that,
although the global economic environment in which we all operate continues
to provide challenges, I believe the Group has made good progress in the
development of its operational activities.
The Economic Environment
The world’s major economies continue to show erratic levels of growth with an
uncertain future, and the financial markets continue to reflect considerable
uncertainty in the light of both growth and the levels of debt.The unbalanced
supply and demand picture for LNG that I wrote about last year continues to
persist.The tragic earthquake in Japan in March of this year, and the consequent
closure of the Fukushima nuclear power station, has increased Japanese demand
for LNG in the short term, but the longer term effect that this will have on the
LNG supply and demand situation remains unclear. Internationally there are still
some major LNG liquefaction projects under development or consideration,
whilst improvements in the recovery of shale gas will undoubtedly mean longer
term the price of gas is likely to reflect the greater supply.
The longer-term need for gas in developed
countries and the potential of West Africa to
supply gas for exports and to develop local gas
projects have opened doors for small companies
such as Gasol. 07 Gasol plc Annual Report and Accounts 2011
We believe that Gasol can still develop a significant
gas business in the West African region. Gas
remains one of the most efficient and
environmentally friendly sources of energy
available today, and there are significant reserves
throughout West Africa, and particularly in Nigeria.
Governments are increasing the pressure to cease
flaring surplus gas at the wellhead, whilst gas asset
owners are seeking economic solutions to
monetise their gas. Independent non majors such
as Gasol have a role to fulfil in providing this
solution.We remain of the view that in the longer
term, growth in gas demand will continue
particularly from the developing countries, and that
our focus on the West African region will stand us
in good stead.
The Gas Strategy
Early in the financial year, the Company announced
the result of its strategic review, with the conclusion
that Gasol should continue its existing activity of
looking to monetise stranded gas reserves in the
Gulf of Guinea through smaller scale LNG projects,
but in addition, the Group should seek to add
incremental value to that gas. In particular we
identified the developing gas-to-power sector in
West Africa as having the greatest potential to add
that incremental value, as well as producing
shareholder returns in the shorter term.
Since that announcement the Company has
focussed on the development of LNG projects that
best suit this revised strategy. In May of this year, we
announced that we had entered into an agreement
with exclusivity to negotiate the terms to acquire all
of the gas in the Nigerian Offshore Licence area
OML 114. Our early reports indicate that this gas
field would support a LNG monetisation solution
of an appropriate size for our overall strategy.
At the end of May 2011, we also announced that
we had negotiated a revised agreement with
Sociedad Nacional de Gas, GE (“SONAGAS”), the
national gas company of Equatorial Guinea, in
respect of the associated gas from the Zafiro field.
As part of the revised terms Gasol, through its
SONAF joint venture partnership with SONAGAS,
has been appointed as an agent for the purpose of
developing a market in West and Central Africa for
purchasers of liquefied natural gas produced by the
EG LNG project.
We continued to work closely with our major
shareholder, African Gas Development Corporation
Ltd, to develop a detailed business plan based,
in part, on using LNG as a source of gas to fuel new
electricity generating capacity and, where possible,
as an alternative fuel supply for existing oil-fired
power stations.The transportation and
regasification of LNG on a small scale is already
used elsewhere in the world today, and our
challenge is to apply that existing technology in
the West African environment.
Financial Results and Funding
The financial results for the year reflect the hard
focus on cost cutting that took place following the
change of management in 2009.The loss after tax
for the financial year is £2.38 million (2010: loss of
£5.08 million) equating to a loss of 0.22 pence per
share (2010: loss of 0.47 pence).
Cash expenditure on operating activities during the
year was £1.73 million (2010: £3.84 million).Whilst
cash outgoings continue to be monitored closely
to ensure maximum value, the Company is now
investing to maintain the momentum on our gas
projects.
Funding during the period has been through
convertible debt instruments, primarily with our
major shareholder. Gasol today is still a
development company without any income, and
we remain very grateful for the continued support
of our funders.
Gasol is reasonably confident that the projects we
are working on will ultimately be successful, and
that as the level of certainty increases, other sources
of funding are likely to become available.
Management & Staff
Following on from the changes of 2009, I would like
to thank all of the staff for their continued hard
work during what has been a difficult time.We now
have greater clarity on the projects we are working
on, and we have identified people that we believe
can take both the business and the Company
forward.We hope to be making some formal
announcements on this matter shortly.
Outlook
Gasol is confident that it has defined the right
business strategy and is developing the right
projects for the future.We believe that our revised
projects are more likely to succeed and that the
Company is well placed to go forward. I would like
to thank our partners for their continued hard work
and look forward to their ongoing support as we
continue to implement our projects.
Haresh Kanabar
Chairman
6 September 2011
Nigerian and Equatorial Guinean
governments have been amongst the first
to aim to eliminate unnecessary gas flaring.
Gas flaring is the burning of unwanted gas
or flammable gas. Gas flaring not only wastes
a valuable resource, but is also a major cause
of environmental pollution.
Business Review
Corporate Governance
Financial Statements Activity and Objectives
Chief Operating Officer’s Statement
Operating and Financial Review
08 Gasol plc Annual Report and Accounts 2011
Our unique and distinctive strategy has enabled
us to secure our first access to gas, to develop an
innovative, cost efficient technology solution
and to work closely with major upstream and
downstream partners as well as national gas
companies. Our comprehensive strategic review
has further refined and developed that strategy. 09 Gasol plc Annual Report and Accounts 2011
Overview:
I am pleased to report that, following the
announcement of the results of the strategic
review in May 2010, Gasol has continued to focus
on the development of gas projects that will clearly
meet the new strategy.Whilst the overall strategy
remains, seeking to aggregate and monetise
stranded gas assets in the Gulf of Guinea through
the liquefaction of gas, the company’s aim is now
to use that LNG within a regional gas-to-power
program. Gasol is continuing to work on the various
elements of the business model, although always
aware that LNG may be bought or sold in the
international markets and therefore recognising all
of the elements do not need to be concluded at
the same time.
The liquefaction of natural gas in order to transport
it from the gas field to the consumer’s market has
taken place for many years at an international level
and on a large scale, and it recognised as providing
a cost effective method of transporting the gas
where pipelines are not available.There has also
been a more recent move to utilise LNG at a much
smaller scale moving it by rail or road tanker and
small ship before regasification at a local level.
This technology is now used in a number of
situations around the world, providing a fuel to gas
constrained environments where demand cannot
justify the expense of construction of a pipeline
distribution network. Gasol is seeking to utilise this
technology in the West African region.
The financial markets remain challenging with
uncertainty over both economic growth and the
debt levels, and as a result financing capital projects
remains difficult. However, Gasol believes that with
its more focussed strategy, developing robust
projects, and working with strong partners, will
allow the company to secure the necessary finance
that will lead to the successful development of our
gas business.
Strategic Review
The Board completed the Strategic Review and
announced the results at the beginning of the
financial year.The underlying message from that
review was that proposed business of Gasol should
move further downstream in the value chain.
More specifically the Review’s conclusion was
two-fold:
a) that the Group should continue with the gas
monetisation policy that has been pursued to date
based on seeking to monetise stranded gas assets,
primarily through liquefaction of the gas; whilst also
b) pursuing opportunities to develop a business
in the gas-to-power sector in West Africa.
Business
Nigeria
In May 2011, Gasol announced that had entered
into an exclusive Project Option Agreement with
Moni Pulo (Petroleum Development) Limited in
respect of all of the gas in Nigerian offshore licence
area, OML 114. Under the terms of the option
agreement, there is an exclusivity period during
which Gasol has an opportunity to make a proposal
to Moni Pulo regarding the development of OML
114, including exploration, development and
offtake. If Moni Pulo accepts the proposal from
Gasol, it is then the intention of the parties to work
together to conclude definitive gas purchase
agreements for development and sale of all of the
gas in OML 114 to Gasol.
OML114 is situated in shallow waters on the coast
of South East Nigeria at the mouth of the Calabar
River, and there are a number of other known gas
reserves in the locality.The licence area has been
drilled and surveyed since the 1990s and has gas
reserves of approximately 750 billion cubic feet
(approximately 107 million barrels of oil equivalent).
Gasol has commissioned initial pre-feasibility
reports which indicate that the available gas from
OML 114 could support LNG production of over
800,000 tons per annum for 10 years. Gasol is
currently working up a business plan, in
conjunction with its upstream partner Afren Plc,
to support a gas acquisition price proposal.
Whilst all monetisation routes for the gas are
being considered, we are considering most closely
technology that has a existing track record, in order
to minimise the risks in delivery of the project.
• The Group announced the completion of the
strategic review commenced in the previous
year, with a commitment to:
continue with its existing strategy of seeking
to aggregate and monetise stranded gas assets
in the Gulf of Guinea, through the liquefaction
of gas;
develop a gas to power strategy in West Africa
based, in part, on a small scale LNG solution to
provide gas for new electricity generating
capacity and, where possible, as an alternative
fuel supply for existing oil-fired power stations.
• Gasol has entered into an exclusive
agreement to negotiate the terms to acquire
all of the gas in the Nigerian Offshore
Licence area OML 114.
• The Group negotiated a revised agreement
on its gas project in Equatorial Guinea.
• Successfully secured £4 million of financing
in the financial year, which was used to
refinance approximately £2.2 million of
existing debt plus interest and to provide
new working capital.
• Continue negotiations to secure OML 114
gas in Nigeria
• Build on the revised agreement in
Equatorial Guinea
• Continue development of gas to power
business plan
• Raise sufficient funding to continue to
meet our project and corporate expense
needs
• Acquire further gas assets in the Gulf
of Guinea
2010-2011 Key Activities 2011-2012 Key Objectives
Business Review
Corporate Governance
Financial Statements Focus and value
Chief Operating Officer’s Statement
Operating and Financial Review
10 Gasol plc Annual Report and Accounts 2011
Whilst the economic environment and the
energy/LNG sector have been challenging
over the last few years and the short-term gas
economics are relatively weak, Gasol believes
that the longer term gas fundamentals are
robust. Gasol expects to show further progress
in the development of its business the
coming year. Equatorial Guinea
At the end of May 2011, Gasol also announced that
it had negotiated a revised agreement with
Sociedad Nacional de Gas, GE (“SONAGAS”),
the national gas company of Equatorial Guinea,
in respect of the associated gas from the Zafiro field
which was being developed by SONAF , a joint
venture between Gasol and SONAGAS.The Zafiro
gas will now be utilised by a new entity in which
Gasol will have a small equity investment, whilst
under the terms of the amended agreement Gasol,
through SONAF , has, inter alia, been appointed as an
agent for the purpose of developing a market in
West and Central Africa for purchasers of liquefied
natural gas produced by the EG LNG project.
This revised agreement complements Gasol’s new
strategy, in particular the Company’s aim to see, and
be involved in, the development of a West African
focussed LNG market, whilst also ensuring greater
likelihood of a successful gas project based on the
Zafiro gas.
Financial Results:
The financial statements reflect the fact that Gasol
remains a development company and whilst it is
investing time and money in accessing gas
monetisation projects, it has no material source of
income. As noted last year, following the change
of management in 2009 much attention has been
paid to managing costs and reducing expenditure,
and the full benefit of this has only now been felt in
the current year.The loss after tax for the financial
year is £2.38 million (2010: loss of £5.08 million),
equating to a loss of 0.22 pence per share
(2010: loss of 0.47 pence), which principally
represents the administrative costs of undertaking
the project development.
Net cash expenditure on operating activities during
the year was £1.73 million (2010: £3.84 million).
Whilst management continues to monitor all costs
closely, we are also now investing in resources to
move our projects forward and these costs will be
reflected in the 2012 financial accounts.
During the year the Group has raised
approximately £1.75 million of new funds through
debt instruments, and a further £1 million shortly
after the financial year had ended. In April 2010,
£1 million was raised through a loan from our
major shareholder African Gas Development
Corporation. In December 2010, the Company
entered into a £3 million convertible loan facility
that was used to repay approximate £2.18 million
of existing debts together with accrued interest,
and the balance was used for new working capital.
This facility was provided by African Gas
Development Corporation Ltd and Banque
Benedict Hentsch et Cie. Since the year end, Gasol
has entered into a new £1 million convertible loan
facility, also with African Gas Development
Corporation.The £10 million equity line of credit
with GEM Global Yield Fund remains in place
but the illiquidity in the trading of the Company’s
shares makes the ability to use this facility
very difficult.
Investments
The Directors reviewed the value of the
investments of the Company at 31 March 2011 and
came to a valuation of £3,000,000. In forming this
valuation, the directors have considered both the
price at which an independent unsolicited bid for
the project rights would be rejected by the Board
and assessed the net present value of the project
future cash flows, which have been risk adjusted to
reflect the probabilities of success at each stage
of the project.This led to an impairment write
down of £285,488 in the Group and £31,948,633 in
the Company during the year.
Management & Staff
After the changes of both Board members and
Management in 2009, staffing in 2010 has been
constant. I would like to thank everyone who has
continued to work hard throughout the year,
turning the Gasol strategy into a reality. As our
projects progress we are recruiting to expand our
management and project development
capabilities.
Outlook and Challenges
Whilst Gasol remains in its development phase it
needs, and continues to seek, sources of funding in
order to progress the development of its projects
and bring them to the position of final investment
decision, and beyond. As the projects achieve
greater certainty, we expect to be able to access
alternatives sources of funds. Gas projects, of the
type that Gasol is developing, are large scale and
capital intensive.Whilst much of the project cost
will be met by bank finance, Gasol will need to find
finance for the remaining funding requirements
and it is likely that some of the risk and reward of
the projects will be shared with other parties.
As Gasol sets about developing its projects in line
with the new strategy, the management believes
that the business model is sound and that the
future prospects of the gas market are positive,
particularly those available in the gas-to-power
sector within West Africa. Much will depend on the
ability of Gasol to successfully raise funding for
project development and execution, but we are
confident that by developing robust projects
within the chosen strategy we will have a good
opportunity of doing so.
Ewen Wigley
Chief Operating Officer
6 September 2011
11 Gasol plc Annual Report and Accounts 2011
We have a focused strategy and a strong team
- these will stand us in good stead to face
current challenges and to deliver long term
value to our shareholders.
We are actively developing key relationships
and alliances with companies along the value
chain in order to progress our business
development activities.
Being a project developer, Gasol provides
monetisation solutions to gas assets
owners by developing projects which
provide a route to domestic and export
markets.
Business Review
Corporate Governance
Financial Statements Board of Directors
and Strategic Advisor
12 Gasol plc Annual Report and Accounts 2011
Haresh Kanabar (53) Non-Executive Director
Haresh Kanabar has 20 years’ experience in senior
management of various companies and industries,
including many AIM – listed companies. He is
currently a director of Aurum Mining plc, Indian
Restaurants Group plc, Silentpoint plc, Silentpoint
Property Limited, International Mining and
Infrastructure Corporation plc and Venteco plc. Prior
to this Mr. Kanabar held a number of management
and senior finance positions in five companies
since 1997.
Ewen Wigley (50) Chief Operating Officer
Ewen Wigley is currently Head of Corporate
Development for African Gas Development
Corporation, which is the largest shareholder in
Gasol Plc. He has more than 20 years experience
in the City of London.
Prior to his recent work with both private and AIM
listed companies, Ewen spent 5 years as a director
of a corporate finance boutique that specialised in
advising small cap companies on mergers,
acquisitions and restructuring. Before that, he was
at Union Plc for 15 years, latterly as Chief Operating
Officer, where he gained broad experience in
banking, leasing and financing.
Ewen is a Fellow of the Association of Corporate
Treasurers.
Ewen Wigley Chief Operating Officer Haresh Kanabar Chairman 13 Gasol plc Annual Report and Accounts 2011
Osman Shahenshah (49) Non-Executive
Director
Osman Shahenshah has 20 years’ experience in oil
and gas finance, developing and implementing
projects worldwide, working with the Major and
National Oil Companies.
He is the Chief Executive Officer of Afren plc, the
Africa-focused oil independent. His career has
included senior positions at the International
Finance Corporation, Dresdner Kleinwort
Wasserstein and Medicredito Centrale.
Paul Biggs (45) Non-Executive Director
Paul Biggs, a project finance specialist with a focus
on emerging markets, is a Senior Partner of the
specialised law firm Trinity International LLP .
Prior to joining Trinity, Mr Biggs was head of the
Project Finance Group at Cadwalader,Wickersham
& Taft LLP , and before that a partner at CMS
Cameron McKenna. Mr Biggs also spent five years at
the Commonwealth Development Corporation.
Ethelbert J L Cooper (57)
Strategic Advisor to the Board
Mr Cooper has been active in the African natural
resources sector for over 25 years.
During the 1980s he devised and led an initiative to
restructure what, at the time, was Liberia’s biggest
industrial project – an iron ore mining company
with capital investment of over $600m. Mr Cooper
also formed Liberia’s mining parastatal, whose
management, marketing and financing
requirements were contracted to Mr Cooper’s
companies.
Mr Cooper is a founding member and Chairman of
the Liberian International Development Foundation
and a Founder and Director of the African’s African
American Foundation. Mr Cooper is also a member
of the National Advisory Board of WEB Du Bois
Institute of African Studies at Harvard University.
Paul Biggs Non-Executive Director Osman Shahenshah Non-Executive Director
Business Review
Corporate Governance
Financial Statements 14 Gasol plc Annual Report and Accounts 2011
Directors’ Report
for the year ended 31 March 2011
The Directors’ present their annual report on the affairs of the Group, together with the financial statements and auditor’s report for the year ended
31 March 2011.
Principal activities of the business
The principal activity of the Group is to seek, evaluate and capitalise on acquisition and investment opportunities in the gas sector.
Business review and future developments
A review of the Group’s operations and future developments is set out in the Chief Operating Officer’s report.
Key performance indicators
Key performance indicators include:
• Meeting articulated milestones on existing project opportunities
• Control of costs to budgets
• Identifying and securing gas assets
• Delivery of binding strategic alliances and project development agreements
• Securing finance to support business development activities
• Exploration of regional gas monetisation projects with shorter lead times
The above key performance indicators are monitored by the board to ensure that they are progressing as planned in a timely manner. At this stage the
board is confident that these targets are being met.
As discussed in the Chairman and COO statements, Gasol continues to develop its strategy of seeking to aggregate and monetise stranded gas assets in the
Gulf of Guinea.The principal risks and uncertainties associated with the Group and its funding requirements for the foreseeable future are discussed below.
Principal risks and uncertainties
The activities of the Group are subject to a number of risks; if any of these risks were to materialise the Group’s business, financial condition and results of
future operations could be materially adversely affected.The principal risks are as follows:
• Insufficient gas: whilst the gas reserve potential of the Gulf of Guinea is well known, it may not be possible for the Group to gain access to suitable fields
or economically viable to exploit them if the costs of extraction are too high or reserve levels are too low to justify investment in gas transportation or
processing facilities.
• Upstream partners: the Group is reliant on upstream partners to secure sufficient gas reserves on acceptable terms, but there can be no assurance that
such arrangements will be secured or on terms satisfactory to the Group.
• Cost of project: the cost of projects varies widely according to demand and geographic location. Project costs such as pipelines, LNG plants,
regasification facilities, ships, exploration rigs, contractors and drilling staff may be difficult to predict, all of which if increased will have a negative
impact on the economics of a project.
• Funding: the business of the Group currently represents early stage opportunities rather than defined projects and these opportunities may lead to
large capital intensive long-term projects which it is anticipated will not generate revenue for several years. As a result, the Group is likely to be required
to raise significant capital in the future.There is no assurance that it will be able to raise such capital when it is required or that the terms associated
with providing such capital will be satisfactory to the Group. In addition, further short-term financing is required to meet operating needs.
• Political, regulatory and economic instability: the Group will be exposed to various levels of political risk and regulatory uncertainties including
government regulations, policies or directives relating to exploration, foreign investors, restrictions on production, price controls, export controls,
income and other taxes, nationalisation or expropriation of property, partner carry, repatriation of income, royalties and environmental legislation.
• Other risks arise from changes in demand for LNG, fluctuating LNG prices, ability to secure customers, timely project delivery and the ability to maintain
Gasol’s desired level of equity in the projects. 15 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
Going concern
The Directors have prepared these financial statements on a going concern basis.The Board is also confident that it retains the continuing support from its
major shareholders to provide additional funding should other sources not be forthcoming.
During the prior year, the Group secured a £10 million credit facility although the ability to draw upon this is dependent upon certain share trading
volumes and prices and this facility therefore cannot be relied upon on its own to provide sufficient working capital for at least the next 12 months.
The Board acknowledges that the ability of Gasol and its subsidiary companies to continue as a going concern is inextricably linked to the success of its
efforts to raise finance both to meet day to day operating needs and to fund Gasol’s participation in gas monetisation projects.This situation represents a
material uncertainty regarding Gasol’s ability to continue as a going concern.
Whilst these financial statements are prepared on a going concern basis, the Board also acknowledges that the valuation of certain assets on the
Consolidated and Company Statement of Financial Position would differ under a break-up valuation. Notably, goodwill at both Company and Group level
would be likely to carry a £nil value under a break-up valuation.
Further information regarding going concern is provided in note 1 to these financial statements.
Result and dividend
The results of the Group for the year ended 31 March 2011 are set out on page 23.
The Directors do not recommend payment of a dividend for the year (2010: £nil).
Directors
The names of individuals who served as directors of the Company from 1 April 2010 are as follows:
Name of Director
Haresh Kanabar
Osman Shahenshah
Ewen Wigley
Paul Biggs
Directors’ remuneration and Directors’ interests
Details of the Directors’ remuneration and their interests in the equity share capital of Gasol are set out in the Report of the Remuneration Committee on
pages 19 to 20.
Related Party transactions
Details of related party transactions are contained in note 24 to the consolidated financial statements.
Financial instruments and treasury policy
Information on the Group’s use of financial instruments and management of financial risks is discussed in note 22 to the consolidated financial statements.
Creditor payment policy
The Group has no formal code or standard which deals specifically with the payment of suppliers. However, the Group’s policy on the payment of all
creditors is to ensure that the terms of payment, as specified and agreed with the supplier, are not exceeded.The average credit period taken for trade
purchases is 23 days (2010: 53 days).
Share capital
No ordinary shares were issued during the year ended 31 March 2011 (2010: 75,555,504 ordinary shares).Warrants issued as part of the loan financing
received in April 2010 are further disclosed in note 19. Directors’ Report
for the year ended 31 March 2011continued
16 Gasol plc Annual Report and Accounts 2011
Substantial shareholdings
As at the date of this report, so far as the Directors are aware, the only persons who are directly or indirectly interested in 3% or more of the nominal value
of the Company’s ordinary share capital are as follows:
Number Ordinary shares
of ordinary as % of issued
shares held share capital
African Gas Development Corporation Limited 564,733,649 52.11
Afren Plc 226,421,354 20.89
Synergy Asset Management Limited 75,000,000 6.92
Charitable and political donations
No charitable or political donations were made during the year (2010: £nil).
Disclosure of information to auditors
So far as each Director at the date of approval of this report is aware, there is no relevant audit information of which the Company’s auditors are unaware
and each Director has taken all steps that he or she ought to have taken to make himself or herself aware of any relevant audit information and to
establish that the auditors are aware of that information.
Auditor
BDO LLP have expressed their willingness to continue in office as auditor and a resolution to reappoint them will be proposed at the forthcoming Annual
General Meeting.
Recommendation
The Board considers that the resolutions to be proposed at the Annual General Meeting are in the best interests of the Company and it is their unanimous
recommendation that shareholders support them.
On behalf of the Board of Directors:
Ewen Wigley
Chief Operating Officer
6 September 2011 17 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
The Directors are committed to maintaining high standards of corporate governance.Whilst AIM companies are not obliged to comply with the
Combined Code, the Board intend, so far as is practicable given the Group’s size and nature, to comply with the Combined Code.The Group also intends to
comply with the principles of the Corporate Governance Guidelines for AIM Companies published by the Quoted Companies Alliance in 2005, so far as it is
practical for a Group of Gasol’s size.
Risk Management and Corporate Governance
The Directors have established an Audit Committee, Remuneration Committee, Investment Committee and Nominations Committee, each with formally
delegated rules and responsibilities.
The Group has adopted a model code for Directors’ and certain employee share dealings which the Directors believe is appropriate for an AIM quoted
company.The Directors will comply with Rule 21 of the AIM Rules relating to Directors’ dealings and in addition will take all reasonable steps to ensure
compliance by the Group’s applicable employees (as defined in the AIM Rules).
The Board of Directors
The Board of Directors is responsible for formulating, reviewing and approving the Group’s strategy, budgets, major items of capital expenditure and
acquisitions, and reporting to the shareholders.
All Non-Executive Directors are independent of management and free from any business or other relationship which could materially interfere with the
exercise of their independent judgement.
The Company intends to hold at least four Board meetings throughout each year.
The Audit Committee ensures that financial reporting procedures, internal controls, corporate governance practices and risk management systems are
thoroughly reviewed and adhered to, and reviews the Group’s external audits.The committee comprises Paul Biggs (Chairman) and Haresh Kanabar. It will
meet as appropriate and when required.The Company’s external auditors are invited to attend these meetings.
The Nominations Committee is responsible for reviewing the structure, size and composition of the Board, arranges succession planning for directors and
senior executives, and nominates potential candidates to the Board. It aims to meet at least once each year and comprises Paul Biggs (Chairman) and
Haresh Kanabar.
The Remuneration Committee is responsible for determining and agreeing with the Board the remuneration of the Executive, and ensuring that the Group’s
management team are appropriately incentivised to encourage enhanced performance. It aims to meet twice a year and comprises Osman Shahenshah
(Chairman) and Paul Biggs. Further details on the Remuneration Committee are detailed in the Report of the Remuneration Committee on pages 19 to 20.
The Investment Committee is responsible for reviewing capital expenditure, project appraisals and final investment decisions. It aims to meet twice a year
and comprises of Haresh Kanabar (Chairman), Paul Biggs and Osman Shahenshah.
Attendance at Board Meetings
Full
Gasol Plc Board Audit EGM AGM
No. of Meetings 41 –1
Haresh Kanabar 41 –1
Ewen Wigley 41 –1
Osman Shahenshah 41 –1
Paul Biggs 31 – –
Internal financial control and reporting
The Board is responsible for establishing and maintaining the Group’s system of internal controls and reviewing its effectiveness.The procedures, which
include financial, compliance and risk management, are reviewed on an on-going basis.The Board approves the annual budget and performance against
budget is monitored and reported by the Board.The internal control system can only provide reasonable and not absolute assurance against material
misstatement or loss.The Board has considered the need for an internal audit function but does not consider it necessary at the current time with the
current controls in place and external accountant monitoring of processes. Gasol’s financial management team is currently reviewed and approved by
Ewen Wigley, COO.
Corporate Governance Statement
for the year ended 31 March 2011 18 Gasol plc Annual Report and Accounts 2011
Corporate Governance Statement
for the year ended 31 March 2011continued
Relations with shareholders
The Company reports to shareholders twice a year.The Company dispatches the notice of its Annual General Meeting, together with a description of the
items of special business, at least 21 days before the meeting. Each substantially separate issue is the subject of a separate resolution and all shareholders
have the opportunity to put questions to the Board at the Annual General Meeting.The chairmen of the Audit and Remuneration Committees normally
attend the Annual General Meeting and will answer questions which may be relevant to their responsibilities.
Compliance with the Bribery Act
At Gasol we uphold all laws relevant to countering bribery and corruption in all jurisdictions in which we operate, including the Bribery Act 2010 which
came into force on 1 July 2011. In order to comply with the Bribery Act 2010, the Company engaged external professionals to advise on implementing
adequate procedures, including training its staff at all levels on anti-bribery policies and communicating internally and externally its zero-tolerance
approach to bribery and corruption within our business and indeed within the businesses of those we work with. 19 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
Report of the Remuneration Committee
for the year ended 31 March 2011
Statement of compliance
This report does not constitute a Directors’ Remuneration Report in accordance with the Directors’ Remuneration Report Regulations 2002, which do not
apply to AIM-listed companies.
The Group has applied the principles relating to Directors’ remuneration as set out below.
Remuneration Committee
The Remuneration Committee reviews the performance of the Executive Directors and sets and reviews the scale and structure of their remuneration and
the terms of their service agreements with due regard to the interests of shareholders. In determining the remuneration of executive Directors, the
Remuneration Committee seeks to attract and retain executives of the highest calibre.The Remuneration Committee also makes recommendations to the
Board concerning the allocation of share options to employees. No Director is permitted to participate in discussions or decisions concerning his own
remuneration. At the date of this document, the Remuneration Committee comprises two Non-Executive Directors and is chaired by Mr Osman
Shahenshah.The Remuneration Committee has formal terms of reference.
At the invitation of the committee chairman, Executive Directors may attend the proceedings.
None of the committee members has any personal financial interests (other than as shareholders) or conflicts of interest arising from cross-directorships
that are not disclosed.The committee has access to professional advice from internal and external advisors where relevant.
The Remuneration Committee is responsible for determining the remuneration of the Executive Directors, and the grant of share options.
Policy on Executive Directors’ remuneration
Remuneration packages are designed to motivate and retain Executive Directors to ensure the continued development of the Group and to reward them
for enhancing value to shareholders.The main elements of the remuneration package for Executive Directors are basic salary or fees, benefits and share
option incentives.
Share incentives
The Directors believe that attracting, motivating and retaining employees of appropriate calibre is vital to the continued success of the Group.The
continued incentivisation of key employees is very important, as their skills and experience, and their supplier and customer relationships, are key to the
continued success of the Group.
Directors’ remuneration
The remuneration of the Directors for the year ended 31 March 2011 is shown below:
2011 2010
££
Haresh Kanabar 30,000 30,000
Ewen Wigley 144,000 36,000
Paul Biggs 30,000 30,000
Osman Shahenshah 30,000 30,000
Theo Oerlemans – 65,215
Soumo Bose – 1,134,421
Charles Osezua – 46,250
234,000 1,371,886
A summary of remuneration is as follows:
Year ended Year ended
31 March 31 March
2011 2010
££
Aggregate emoluments of Executive Directors 144,000 663,115
Payments to Non-Executive Directors 90,000 136,250
Director’s termination payment for loss of office – 565,021
Pension – 7,500
Total Directors’ remuneration 234,000 1,371,886 20 Gasol plc Annual Report and Accounts 2011
Report of the Remuneration Committee
for the year ended 31 March 2011continued
There were no pension benefits accruing to Directors under defined benefit schemes in the year (2010: £nil).The aggregate emoluments for Executive
Directors include £nil (2010: £7,500) of contributions to a personal pension plan.
The key management personnel of the Group are the Directors of Gasol.
No Director exercised any share options during the year (2010: £nil). Details of Directors’ shareholdings can be found below.
Share-based payments as remuneration totalled £nil for Executive Directors (2010: £413,004) and totalled £nil for Non-Executive Directors (2010: £nil).
The highest paid Director received total emoluments in the year in respect of service of £144,000 (2010: £582,376). £nil termination payments for loss of
office were paid during the year (2010: £544,545). During the year Directors salaries deferred and due at the year end totalled £59,400 (2010: £37,500).
The comparative figures for directors salaries have been amended to reflect the deferred salaries that were owed to the directors to ensure directors
remuneration is disclosed on an accruals basis.
Gasol has purchased an insurance policy to protect Directors and Officers of Gasol in the event of any legal action being taken against them relating to
the period that they hold office. In the year ended 31 March 2011, the cost of this insurance was £21,077 (2010: £19,309) and was borne entirely by Gasol.
Directors’ interests
The beneficial interests of the Directors in the ordinary shares of the Company at 31 March 2011 are as follows:
Ordinary shares of 0.5p each
At 31 March At 31 March
2011 2010
Haresh Kanabar Nil Nil
Ewen Wigley 250,000 250,000
Osman Shahenshah Nil Nil
Paul Biggs 413,776 413,776
The Directors’ interests in options over the equity share capital of the Company at 31 March 2011 are as follows:
At 31 March At 31 March Exercise
Exercisable
2010 Granted Lapsed 2011 Price From To
Paul Biggs 500,000 – (500,000) – 15p 27/06/2007 05/06/2010
The market price of the ordinary shares of the Company at 31 March 2011 was 0.8 pence (2010: 2.1 pence) and the range during the year was 0.7 pence to
2.2 pence (2010: 1.6 pence to 4.9 pence).
This report was approved by the Board of Directors and signed on its behalf by:
Osman Shahenshah
Chairman, Remuneration Committee
6 September 2011 21 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the directors’ report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the group
and company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under
company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of
the group and company and of the profit or loss of the group for that year.The directors are also required to prepare financial statements in accordance
with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.
In preparing these financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and
explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose
with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the
requirements of the Companies Act 2006.They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are
published on the company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions.The maintenance and integrity of the company's website is the responsibility of the
directors.The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein. 22 Gasol plc Annual Report and Accounts 2011
Independent Auditors’ Report
for the year ended 31 March 2011
Independent auditors’ report to the members of Gasol plc
We have audited the financial statements of Gasol Plc for the year ended 31 March 2011 which comprise the group and company statement of financial
position, the group statement of comprehensive income, the group and company statement of cash flows, the group and company statement of changes
in equity and the related notes.The financial reporting framework that has been applied in their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has
been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other
purpose.To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland).Those standards require us to comply with the Auditing Practices Board’s (APB’s)
Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and the parent company’s affairs as at 31 March 2011 and of the group’s loss
for the year then ended;
• the financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Emphasis of matter – going concern
In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosures made in note 1 to the
financial statements concerning the Group’s and the Company’s ability to continue as a going concern.The Group and Company are dependent on
successfully securing further financing. Although access to a £10million line of credit obtained in June 2009 remains in place, the ability to draw on the
facility is dependent on certain conditions outside the control of the Group, including share price and share trading volumes. Although the Directors are
confident of being able to obtain further sources of funding to enable the Group to progress projects to positive cash generation, this cannot be
guaranteed and indicates the existence of a material uncertainty, which may cast significant doubt on the Group’s and the Company’s ability to continue
as a going concern.The financial statements do not include the adjustments that would result if the Group and Company were unable to continue as a
going concern.
We also draw your attention to notes 1 and 27.The realisation of these assets is dependent upon the successful ability to generate adequate cash inflows
from a gas project including the ability of the Group to raise sufficient finance as noted above.The financial statements do not include any adjustments
relating to these uncertainties.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors’ report for the financial year for which the financial statements are prepared is consistent with the
financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not
visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Scott Knight (senior statutory auditor)
For and on behalf of BDO LLP , statutory auditor
London
United Kingdom
6 September 2011
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). 23 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2011
Y ear ended Year ended
31 March 31 March
2011 2010
Note £ £
Other operating income 68,000 68,000
Administrative expenses 5 (1,798,055) (4,622,768)
Intangible asset impairment 10 (285,488) –
Loss from operations (2,015,543) (4,554,768)
Finance income 7 35 3,673
Finance costs 8 (363,986) (532,147)
Loss before tax (2,379,494) (5,083,242)
Income tax expense 9 – –
Loss for the year (2,379,494) (5,083,242)
Other comprehensive income:
Currency translation differences (890) 25,826
Total comprehensive income for the year (2,380,384) (5,057,416)
Loss per ordinary share
Basic and diluted loss per share 11 (0.22p) (0.47p)
All results relate to continuing activities.
All losses and other comprehensive income for the year are attributable to equity shareholders of the parent.
The notes on pages 32 to 56 form part of these financial statements. Consolidated Statement of Changes in Equity
for the year ended 31 March 2011
Reverse Convertible Capital
Share Share acquisition loan contribution Translation Warrant Retained Total
capital premium reserve reserve reserve reserve reserve losses equity
££ ££££ £££
At 1 April 2010 5,524,445 72,574,560 (63,104,556) – 83,787 13,157 1,473,719 (14,460,973) 2,104,139
Comprehensive income
Loss for the year – – – – – – – (2,379,494) (2,379,494)
Other comprehensive income
Currency translation differences – – – – – (890) – – (890)
Total comprehensive income
for the year ended 31 March 2011 – – – – – (890) – (2,379,494) (2,380,384)
Warrants issued on lines of funding – – – – – – 152,086 – 152,086
Credit to equity due to the
convertible loan – – – 260,870 – – – – 260,870
At 31 March 2011 5,524,445 72,574,560 (63,104,556) 260,870 83,787 12,267 1,625,805 (16,840,467) 136,711
Share capital account
Share capital records the nominal value of shares in issue.
Share premium account
Share premium records the receipts from issue of share capital above the nominal value of the shares. Share premium is stated net of direct issue costs.
Capital contribution reserve
Contributions provided to entities by shareholders that are not intended by either party to be repaid are accounted for as capital contributions.
Translation reserve
Translation gains and losses arising on the retranslation of net assets of subsidiaries whose presentational currency is not sterling are recognised directly
in equity in the translation reserve.
Reverse acquisition reserve
A reverse acquisition reserve is established to take account of acquisitions that are deemed to be reverse acquisitions under International Financial
Reporting Standards.
Retained earnings
The accumulated loss reserve records the cumulative profits less losses recognised in the Statement of Comprehensive Income, net of any distributions
and share-based payments made.
Warrant reserve
The warrant reserve records the fair value charge of warrants issued by the Group.
Convertible loan reserve
The convertible loan reserve records the equity component of the convertible loan instrument.
The notes on pages 32 to 56 form part of these financial statements.
Gasol plc Annual Report and Accounts 2011 24 25 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
Consolidated Statement of Changes in Equity
for the year ended 31 March 2010
Reverse Capital
Share Share acquisition contribution Translation Warrant Retained Total
capital premium reserve reserve reserve reserve losses equity
££ ££££ ££
At 1 April 2009 5,146,668 71,695,196 (63,104,556) 74,156 (12,669) – (9,800,154) 3,998,641
Comprehensive income
Loss for the year –– –––– (5,083,242) (5,083,242)
Other comprehensive income
Currency translation differences –– –– 25,826 –– 25,826
Total comprehensive income
for the year ended 31 March 2010 –– –– 25,826 – (5,083,242) (5,057,416)
Issue of share capital 377,777 879,364 –– ––– 1,257,141
Capital contribution received –– – 9,631 –– – 9,631
Warrants – on share issues –– ––– 839,248 – 839,248
Warrants – on lines of funding –– ––– 634,471 – 634,471
Share-based payments –– –––– 422,423 422,423
377,777 879,364 – 9,631 – 1,473,719 422,423 3,162,914
At 31 March 2010 5,524,445 72,574,560 (63,104,556) 83,787 13,157 1,473,719 (14,460,973) 2,104,139 26 Gasol plc Annual Report and Accounts 2011
Company Statement of Changes in Equity
for the year ended 31 March 2011
Share Share Shares to be Warrant Retained Total
capital premium issued reserve reserve losses equity
££££££
At 1 April 2010 5,524,445 72,574,560 – 1,473,719 (45,851,536) 33,721,188
Other comprehensive income
Loss for the year –––– (34,050,937) (34,050,937)
Other comprehensive income
Currency translation differences –––– (890) (890)
Total comprehensive income
for the year ended 31 March 2011 –––– (34,051,827) (34,051,827)
Warrants issued on lines of funding ––– 152,086 – 152,086
Credit to equity due to the convertible loan –– 260,870 –– 260,870
At 31 March 2011 5,524,445 72,574,560 260,870 1,625,805 (79,903,363) 82,317
Share capital account
Share capital records the nominal value of shares in issue.
Share premium account
Share premium records the receipts from issue of share capital above the nominal value of the shares. Share premium is stated net of direct issue costs.
Retained earnings
Retained earnings records the cumulative profits less losses recognised in the Statement of Comprehensive Income, net of any distributions and share-
based payments made.
Warrant reserve
The warrant reserve records the fair value charge of warrants issued by the Company.
Deferred consideration reserve
The deferred consideration reserve records the fair value charge of shares expected to be issued in relation to the reverse acquisition of African LNG
Holdings Limited.
The notes on pages 32 to 56 form part of these financial statements. Company Statement of Changes in Equity
for the year ended 31 March 2010
Share Share Warrant Retained Total
capital premium reserve earnings equity
£££££
At 1 April 2009 5,146,668 71,695,196 – (41,723,510) 35,118,354
Comprehensive income
Loss for the year ––– (4,550,449) (4,550,449)
Total comprehensive income
for the year ended 31 March 2010 ––– (4,550,449) (4,550,449)
Issue of share capital 377,777 879,364 –– 1,257,141
Warrants – on share issues –– 839,248 – 839,248
Warrants issued on lines of funding –– 634,471 – 634,471
Share-based payments ––– 422,423 422,423
377,777 879,364 1,473,719 422,423 3,153,283
At 31 March 2010 5,524,445 72,574,560 1,473,719 (45,851,536) 33,721,188
27 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements 28 Gasol plc Annual Report and Accounts 2011
Consolidated Statement of Financial Position
as at 31 March 2011
31 March 31 March
2011 2010
Note £ £
Assets
Non-current assets
Goodwill 12 3,000,000 3,285,488
Property, plant and equipment 13 7,595 134,729
Total non-current assets 3,007,595 3,420,217
Current assets
Trade and other receivables 14 143,929 242,099
Cash and cash equivalents 21 174,795 245,189
Total current assets 318,724 487,288
Total assets 3,326,319 3,907,505
Liabilities
Current liabilities
Trade and other payables 15 426,425 605,690
Borrowings 16 2,763,183 1,197,676
Total current liabilities 3,189,608 1,803,366
Net assets 136,711 2,104,139
Equity
Share capital 18 5,524,445 5,524,445
Share premium account 72,574,560 72,574,560
Reverse acquisition reserve (63,104,556) (63,104,556)
Total issued equity 14,994,449 14,994,449
Convertible loan reserve 260,870 –
Capital contribution reserve 83,787 83,787
Translation reserve 12,267 13,157
Warrant reserve 1,625,805 1,473,719
Retained losses (16,840,467) (14,460,973)
Total equity attributable to equity holders of the parent 136,711 2,104,139
The notes on pages 32 to 56 form part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 6 September 2011.
Ewen Wigley
Chief Operating Officer
Registered Number 5350159 29 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
Company Statement of Financial Position
as at 31 March 2011
31 March 31 March
2011 2010
Note £ £
Assets
Non-current assets
Goodwill 27 3,000,000 34,948,633
Property, plant and equipment 28 7,595 134,729
Total non-current assets 3,007,595 35,083,362
Current assets
Trade and other receivables 29 112,477 196,187
Cash and cash equivalents 32 148,908 235,506
Total current assets 261,385 431,693
Total assets 3,268,980 35,515,055
Liabilities
Current liabilities
Trade and other payables 30 423,480 596,191
Borrowings 31 2,763,183 1,197,676
Total current liabilities 3,186,663 1,793,867
Net assets 82,317 33,721,188
Equity
Share capital 18 5,524,445 5,524,445
Share premium account 72,574,560 72,574,560
Convertible loan reserve 260,870 –
Warrant reserve 1,625,805 1,473,719
Retained losses (79,903,363) (45,851,536)
Total equity attributable to equity holders of the parent 82,317 33,721,188
The notes on pages 32 to 56 form part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 6 September 2011.
Ewen Wigley
Chief Operating Officer
Registered Number 5350159 30 Gasol plc Annual Report and Accounts 2011
Consolidated Statement of Cash Flows
for the year ended 31 March 2011
Y ear ended Year ended
31 March 31 March
2011 2010
Note £ £
Loss before taxation (2,379,494) (5,083,242)
Adjustments for:
Finance income 7 (35) (3,673)
Finance costs 8 363,986 532,147
Depreciation charges 13 84,360 114,885
Impairment of goodwill 10 285,488 –
Equity settled expense – 96,389
Loss on disposal of property, plant and equipment 427 11,239
Share-based payment charge – 422,423
Operating cash flows before movements in working capital (1,645,268) (3,909,832)
Decrease in receivables 14 98,170 26,503
(Decrease)/increase in payables 15 (179,265) 42,559
Net cash absorbed by operating activities (1,726,363) (3,840,770)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 42,347 –
Interest received 35 3,673
Net cash received from investing activities 42,382 3,673
Cash flows from financing activities
Interest paid (19,701) –
Repayment of loan (100,807) –
Proceeds from issue of share capital net of issue costs – 2,000,000
Proceeds from issue of unsecured loan – 300,000
Proceeds from issue of convertible loan note 1,734,985 1,000,000
Net cash generated from financing activities 1,614,477 3,300,000
Net decrease in cash and cash equivalents (69,504) (537,097)
Cash and cash equivalents at beginning of year 245,189 782,286
Effect of foreign exchange rates (890) –
Cash and cash equivalents at end of year 21 174,795 245,189
The notes on pages 32 to 56 form part of these financial statements. 31 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
Company Statement of Cash Flows
for the year ended 31 March 2011
Y ear ended Year ended
31 March 31 March
2011 2010
Note £ £
Loss before taxation (34,050,937) (4,550,449)
Adjustments for:
Finance income (35) (108)
Finance costs 363,096 521,476
Depreciation of property, plant and equipment 28 96,122 114,885
Impairment of goodwill 26 31,948,633 –
Equity settled expenses – 96,389
Loss on disposal of property, plant and equipment 1,465 –
Share-based payment charge – 422,423
Operating cash flows before movements in working capital (1,641,656) (3,395,384)
Decrease in receivables 29 83,710 5,364
Decrease in payables 30 (172,711) (421,418)
Net cash absorbed by operating activities (1,730,657) (3,811,438)
Cash flows from investing activities
Interest received 35 108
Proceeds from sale of property, plant and equipment 29,547 –
Net cash generated from investing activities 29,582 108
Cash flows from financing activities
Interest paid (19,701) –
Repayment of loan (100,807) –
Proceeds from issue of share capital net of issue costs – 2,000,000
Proceeds from issue of unsecured loan – 300,000
Proceeds from issue of convertible loan note 1,734,985 1,000,000
Net cash generated from financing activities 1,614,477 3,300,000
Net decrease in cash and cash equivalents (86,598) (511,330)
Cash and cash equivalents at start of year 235,506 746,836
Cash and cash equivalents at end of year 32 148,908 235,506
The notes on pages 32 to 56 form part of these financial statements. 32 Gasol plc Annual Report and Accounts 2011
Notes to the Consolidated Financial Statements
for the year ended 31 March 2011
1. Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and
Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union (“adopted IFRSs”), and
are in accordance with IFRS as issued by the IASB.
The consolidated financial statements have been prepared under the historical cost basis, except for the revaluation of financial instruments. Historical
cost is generally based on the fair value of the consideration given in exchange for the assets.The principal accounting policies are set out in note 2.
The preparation of financial statements in compliance with IFRS requires the use of certain critical accounting estimates. It also requires the Group’s
management to exercise judgment in the most appropriate application in applying the Group’s accounting policies.The areas where significant
judgments and estimates have been made in preparing the financial statements and their effect are disclosed in note 3.
Going concern
Gasol does not currently hold sufficient cash or liquid assets in order to meet its commitments as they fall due for the next 12 months or to fund the
expenditure required to progress the gas projects to cash generation. Access to a £10 million line of credit was secured in June 2009 but the ability to
draw down on the facility is dependent upon certain conditions outside of the control of the Group including share prices and volumes. Gasol is currently
involved in discussions with external investors and advisors to secure future financing arrangements.The Board is also confident that it retains the
continuing support from its major shareholders to provide additional funding should other sources not be forthcoming.The directors believe that based
on the preliminary discussions the outcome will be positive.The directors appreciate that this lack of formally negotiated funding may cast significant
doubt on the Group’s ability to continue as a going concern. Nevertheless, with the expectation of Gasol formally agreeing new funding from its major
shareholders and other financial investors, the directors have a reasonable expectation that the Group has adequate resources to continue trading for the
foreseeable future and have therefore concluded that it is appropriate to prepare the financial statements on a going concern basis.
These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group’s ability to continue as a going
concern.The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern. Certain assets
on the Consolidated and Company Statement of Financial Position would differ under a break up valuation. Notably, goodwill at both Company and
Group level would be likely to carry a £nil value under a break up valuation.
Adoption of new and revised standards
The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 April 2010, but are not
currently relevant to the Group.
• IFRS 3 (revised) – business combinations and consequential amendments to IAS 27, Consolidated and separate financial statements, IAS 28 Investments
in associates and IAS 31 Interests in joint ventures.
The following standards and amendments to existing standards have been published and are mandatory for the first time for the financial year beginning
1 April 2010 but are not currently relevant to the Group (although they may affect the accounting for future transactions and events).
• IFRS 2 – Group settled share-based payment transactions – The amendments expand on the guidance in IFRIC 11 to address the classification of group
arrangements that were not covered by that interpretation.
• IFRS 5 – Non-current assets held for sale and discontinued operations – The amendment clarifies that IFRS 5 specifies the disclosures required in respect
of non-current assets held for sale or discontinued operations.
• IAS 1 – Presentation of financial statements – The amendment that the potential settlement of a liability by the issue of equity is not relevant to its
classification as current or non-current.
• IAS 36 – Impairment of Assets — The amendment clarifies that the largest cash-generating unit to which goodwill should be allocated for the purposes
of impairment testing is an operating segment as defined by IFRS 8.
• IFRIC 9 – Reassessment of embedded derivatives – The amendment requires an entity to assess whether an embedded derivative should be separated
from a host contract when the entity reclassifies a hybrid financial asset out of the ‘fair value through profit or loss’ category.
• IFRIC 16 – Hedges of a net investment in a foreign operation.
• IFRIC 17 – Distribution of non cash assets to owners – The interpretation provides guidance on accounting for arrangements whereby an entity
distributes non cash assets to shareholders either as a distribution of reserves or as dividends.
• IFRIC 18 – Transfers of assets from customers. 33 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
1. Basis of preparation continued
Standards issued but not yet effective
The International Accounting Standards Board and the International Financial Reporting Interpretations Committee (IFRIC) have issued the following
standards and interpretations with effective dates as noted below:
• IFRS 1 – amendments relating to (a) accounting policy changes in year of adoption fall outside the scope of IAS 8, (b) permits the use of revaluation
carried out after the date of transition as a basis for deemed cost (c) carrying amount under previous GAAP as deemed cost for operations subject to
rate regulation, (d) additional exemptions for first time adopters, and (e) limited exemption from comparative IFRS 7 disclosure for first-time adopters.
The amendments apply for financial periods beginning on or after 1 January 2011.
• IFRS 3 – amendments relating to (a) transition for contingent consideration from business combination that occurred before the effective date of
the revised IFRS 3 (2004), (b) measurement of Non-Controlling Interests, and (c) un-replaced and voluntarily replaced Share-based Payment awards.
The amendments apply for financial periods beginning on or after 1 January 2011.
• IFRS 7 – clarification of disclosures.The amendments are applicable for periods beginning on or after 1 January 2011 and emphasise the interaction
between quantative and qualitative disclosures about the nature and extent of risks associate with financial instruments. For accounts beginning on or
after 1 July 2011 amendments require additional disclosure on transfer transactions of financial assets, including the possible effects of any residual
risks that the transferring entity retains.The amendments also require additional disclosures if a disproportionate amount of transfer transactions are
undertaken around the end of a reporting period.
• IFRS 9 – Financial Instruments – Classification and Measurement.The standard is applicable for periods beginning on or after 1 January 2013 and
introduces new requirements for classifying and measuring financial assets.
• IAS 1 – clarification of the Statement of Changes in Equity (‘SOCE’).The amendments are applicable for periods beginning on or after 1 January 2011
and clarify that an entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in
equity or in the notes to the financial statements.
• IAS 21 – consequential amendments from changes to IAS 27 Consolidated and separate financial statements clarifying the transition rules in respect
of the disposal or partial disposal of an interest in a foreign operation.The standard is applicable for period beginning on or after 1 July 2010.
• IAS 24 – revised definition of related parties.The IAS is applicable for periods beginning on or after 1 January 2011. It clarifies and simplifies the
definition of a related party.
• IAS 27 – describing the transition for amendments resulting from IAS 27 (2008).The amendments are applicable for periods beginning on or after
1 July 2010.
• IAS 28 – consequential amendments from changes to IAS 27 Consolidated and separate financial statements clarifying the transition rules in respect
of disposal or partial disposal of an interest of a foreign operation.The standard is applicable for period beginning on or after 1 July 2010.
• IAS 34 – the amendments are applicable for periods beginning on or after 1 January 2011 and clarify disclosure requirements around significant events
and transactions including financial instruments.
• IFRIC 13 – customer loyalty programmes – The amendments are applicable for periods beginning on or after 1 January 2011 and clarify the meaning
of fair value on award credits.
• IFRIC 14 – prepayments of a minimum funding requirement.The amendments are effective for periods beginning on or after 1 January 2011.
• IFRIC 19 – Extinguishing liabilities with equity instruments.The IFRIC is applicable for periods beginning on or after 1 July 2010.The interpretation
clarifies the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a
creditor of the entity to extinguish all or part of the financial liability.
The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial
statements of the Company when the relevant standards and interpretations come into effect. Notes to the Consolidated Financial Statements
for the year ended 31 March 2011continued
34 Gasol plc Annual Report and Accounts 2011
2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below.The policies have been consistently applied to
all the years presented, unless otherwise stated.
Basis of consolidation
The consolidated financial statements consist of the financial statements of the Company and entities controlled by the Company (the subsidiaries) made
up to 31 March 2011. Control is achieved where the Company has the power to govern the financial and operational policies of an entity so as to gain
benefit from its activities. All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
As at 31 March 2011, the Company’s subsidiary undertakings included in the consolidated Group financial information were:
• African LNG Holdings Limited
• African LNG Services Limited
• Afgas Infrastructure Limited
• Afgas Nigeria Limited; and
• SONAF G.E.S.A. (a joint venture incorporated using the proportional consolidation method).
Non-controlling interests in the net assets or liabilities of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling
interests consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the
date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of
the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses. For this reason,
no non-controlling interests are recognised in these financial statements.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
The Company has taken advantage of the exemption under section 408 (3) of the Companies Act 2006 and has not presented its Statement of
Comprehensive Income in these financial statements.The Company’s Statement of Comprehensive Income for the year ended 31 March 2011 includes a
loss after tax of £34,050,937 (2010: £4,550,449).
Joint ventures
Joint ventures are entities in which the Group holds an interest on a long-term basis and which are jointly controlled by the Group and other venturers
under a contractual agreement.The Group’s share is accounted for using the proportionate consolidation method.The consolidated Statement of
Comprehensive Income and Statement of Financial Position include the Group’s share of the income, expenses, assets and liabilities.
Investments
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Goodwill
All business combinations are accounted for by applying the purchase method. Goodwill arising on consolidation represents the excess of the
consideration paid on acquisition over the Group’s interest in the fair value of the identifiable assets (including any intangible assets), liabilities and
contingent liabilities acquired. Goodwill is not amortised but is initially recognised as an asset at cost and is subsequently measured at cost less any
accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised
immediately in profit or loss and is not subsequently reversed.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the
combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an
indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on
the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss
on disposal.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other
leases are classified as operating leases.
Rentals payable under operating leases are charged to income on a straight line basis over the term of the relevant lease. 35 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
2. Significant accounting policies continued
Foreign currencies
The individual financial records of each group company are recorded in the currency of the primary economic environment in which it operates (its
functional currency). For the purposes of producing consolidated financial statements, the results and financial position of each group company are
expressed in pounds sterling (£), which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.
In maintaining the financial records of the individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies)
are recorded at the rates of exchange prevailing on the dates of the transactions.When consolidated results are produced, monetary assets and liabilities
that are denominated in foreign currencies are retranslated at the rates prevailing on the date of the Statement of Financial Positions. Non-monetary items
carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-
monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss. Exchange
differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss except for differences arising on the
retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange
component of that gain or loss is also recognised directly in equity.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated at exchange
rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are
classified as equity and transferred to the Group’s translation reserve. Such translation differences are recognised as income or as expenses in the period in
which the operation is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at
the closing rate.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.The tax is based on taxable profit for the year.Taxable profit differs from
net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible.The Company’s liability for current tax is calculated by using tax rates that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates
that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the income statement, except when it
relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences, including those arising on investments in subsidiaries and associates
and interest in joint ventures, and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the
initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the
accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is measured using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the
related deferred tax asset or liability is realised or settled.
Property, plant and equipment
Office equipment and fixtures and fittings are stated at cost of acquisition less accumulated depreciation and any recognised impairment loss.
Depreciation of these assets is calculated on a straight line basis as follows:
Office equipment 2 years
Fixtures and fittings 4 years
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount
of the asset and is recognised in income. Notes to the Consolidated Financial Statements
for the year ended 31 March 2011continued
36 Gasol plc Annual Report and Accounts 2011
2. Significant accounting policies continued
Impairment of non-financial assets
The Group reviews the carrying amounts of its non-financial assets at each year end to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any).Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Where there has been a change in economic conditions that indicate a possible impairment in a cash generating unit, the recoverability of the net book
value relating to that field is assessed by comparison with the estimated discounted cash flows based on management’s expectations.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the 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
for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-
generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where conditions giving rise to impairment subsequently reverse, the effect of the impairment charge is also reversed as a credit to the income statement,
net of any depreciation that would have been charged since the impairment.
Financial instruments
Financial assets and financial liabilities are recognised at fair value in the Group’s Statement of Financial Position when the Group becomes a party to the
contractual provisions of the instrument.
Trade receivables
Trade receivables are generally carried at original invoice amount less a provision for bad and doubtful debts (if any) and do not bear interest.They are
initially recognised at fair value, and are subsequently measured at amortised cost.
Trade payables
Trade payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method.
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Cash and cash equivalents
Cash includes cash on hand and cash with banks. Cash equivalents are short-term, highly-liquid investments that are readily convertible to known
amounts of cash with three months or less remaining to maturity from the date of acquisition and that are subject to an insignificant risk of change in
value.
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. 37 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
2. Significant accounting policies continued
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference
between the proceeds and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest
method.
Loans from other group companies are provided at zero interest. Gasol has the option to repay these loans at any time. Gasol can only be required to
repay the loans on the receipt of 12 months notice.Therefore these loans are classified as non-current liabilities.They are initially measured at fair value
and subsequently at amortised cost.
Compound Financial Instruments
Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of the holder.The
number of shares to be issued does not vary with changes in their fair value.
The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity
conversion option.The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole
and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion
to their initial carrying amounts.
Subsequent to their initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective
interest method.The equity component of a compound financial instrument is not remeasured subsequent to initial recognition, except on conversion
or expiry.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle
that obligation. Provisions are measured at managements’ best estimate of the expenditure required to settle the obligation at the year end date,
discounted to present value where the effect is material.
Share-based payments and warrants
The Group issues equity-settled share-based payments to certain employees and warrants to institutional investors as part of funding activities. Equity-
settled share-based payments and warrants 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 the effect of non market-based vesting conditions.
Fair value is measured by use of the Black Scholes model.The expected life used in the model has been adjusted, based on management’s best estimate,
for the effects of non-transferability, exercise restrictions, and behavioural considerations.
3. Critical accounting judgements and key sources of estimation uncertainty
The preparation of the Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the end of the reporting period. Actual results may vary from the estimates used to produce
these Financial Statements.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that
are believed to be reasonable under the circumstances.
Significant items subject to such estimates and assumptions include, but are not limited to: Notes to the Consolidated Financial Statements
for the year ended 31 March 2011continued
38 Gasol plc Annual Report and Accounts 2011
3. Critical accounting judgements and key sources of estimation uncertainty continued
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated.
The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount
rate in order to calculate present value.
The goodwill represents project negotiation rights and the value is underpinned by the expected future cash flows generated through the development
of the early stage gas monetisation opportunity in West Africa.
The targeted commercial start of the project is 2012 and cash flows have been projected to 2025 as this is the expected life of the project. Gas projects
generally by their nature require a period greater than 5 years to recover the significant upfront capital investment.
The main risks and sensitivities impacting the valuation of the goodwill relate to the following:
• Ability of upstream partners to secure the gas assets;
• Obtaining government approvals;
• Reaching a binding Project Development Agreement between the parties;
• Securing sufficient funding to meet expected project development costs; and
• Delivering production within the projected timeframe.
For discounting purposes, a rate of 15% has been used, to reflect the cost of capital associated with this type of development. Discounting back to a
present value, the carrying value of goodwill is supported entirely.
The directors’ economic assessment of the project at 31 March 2011 is £3,000,000. In forming this valuation, the directors have considered the price at
which an independent unsolicited bid for the project rights would be rejected by the Board. In addition and in determining the supporting net present
value of the project future cash flows, the relevant probabilities of success at each stage of the project and have been assessed and the risk factored in to
the valuation.
The directors acknowledge that the use of estimates is inherently judgemental but believe they have been relatively prudent in forming their views and
utilised the significant experience of the Board and Management in determining the values used.Whilst there is the possibility that the projects will yield a
lower than expected value, there remains significant up-side potential.
The directors will continue to monitor the valuation of the cash generating units that support the goodwill.
Other areas
Other estimates include but are not limited to the allowance for doubtful accounts; future cash flows associated with assets; useful lives for depreciation,
depletion and amortisation and fair value of financial instruments.
4. Segment information
The Group complies with IFRS 8 Operating Segments, which requires operating segments to be identified on the basis of internal reports about
components of the Group that are regularly reviewed by the chief executive to allocate resources to the segments and to assess their performance.
In the opinion of the directors, the operations of the Group comprise one class of business, being the exploration for opportunities to aggregate and
monitise stranded gas assets in West Africa. 39 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
5. Expenses by nature and auditor’s remuneration
Y ear ended Year ended
31 March 31 March
2011 2010
£ £
Staff costs 553,670 1,870,440
Depreciation of property, plant and equipment 84,360 114,885
Operating lease payments 246,686 246,686
Share-based payments – 422,423
Provision against joint venture receivable 43,069 116,910
Other expenses 870,270 1,851,424
Total administrative expenses 1,798,055 4,622,768
Audit fees
– As auditors (parent and consolidation) 23,100 22,000
– As auditors (subsidiaries) 3,500 3,500
Other services
– other – 3,500
6. Staff costs
Y ear ended Year ended
31 March 31 March
2011 2010
£ £
Directors’ fees and emoluments 234,000 764,365
Director’s termination payment for loss of office – 565,021
Wages, salaries and pension payments 268,192 811,770
Social security costs 51,478 129,493
553,670 2,270,649
The average number of employees (including executive directors) employed by the Group during the year was:
Number Number
Management and finance 4 12
Administrative and support 3 1
7 13
In the year ended 31 March 2011, employee remuneration included £20,666 defined contribution pension schemes payments (2010: £22,214).
Further information regarding the remuneration of directors is included in the Report of the Remuneration Committee on pages 19 to 20. Notes to the Consolidated Financial Statements
for the year ended 31 March 2011continued
40 Gasol plc Annual Report and Accounts 2011
7. Finance income
Y ear ended Year ended
31 March 31 March
2011 2010
£ £
Interest received on bank deposits 35 3,673
8. Finance costs
Y ear ended Year ended
31 March 31 March
2011 2010
£ £
Convertible loan note interest 133,089 12,466
Cost of borrowing – warrant award 230,897 519,681
363,986 532,147
9. Taxation
Y ear ended Year ended
31 March 31 March
2011 2010
£ £
Loss before taxation (2,379,494) (5,083,242)
Loss before taxation at the standard rate of corporation tax in the UK of 28% (2010: 28%) (666,258) (1,423,308)
Effects of:
Expenses not deductible for tax purposes 38,981 327,724
Unutilised tax losses 627,277 1,095,584
Current tax charge – –
The Group has incurred tax losses for the period and a corporation tax charge is not anticipated.The amount of the unutilised tax losses has not been
recognised in the financial statements as the recovery of this benefit is dependent on the future profitability of certain subsidiaries, the timing of which
cannot be reasonable foreseen.
If the Group makes profits in the future, unrecognised timing differences of approximately £15.99m at 31 March 2011 (2010: £13.91m) would be
recognised at a rate of 28%. 41 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
10. Intangible asset impairment
Y ear ended Year ended
31 March 31 March
2011 2010
£ £
Impairment of goodwill 285,488 –
The directors’ economic assessment of the project at 31 March 2011 is £3,000,000.
In forming this valuation, the directors have considered the price at which an independent unsolicited bid for the project rights would be rejected by the
Board. In addition and in determining the supporting net present value of the project future cash flows, the relevant probabilities of success at each stage
of the project and have been assessed and the risk factored in to the valuation.
The directors acknowledge that the use of estimates is inherently judgemental but believe they have been sufficiently prudent in forming their views and
utilised the significant experience of the Board and Management in determining the values used.Whilst there is the possibility that the projects will yield
a lower than expected value, there remains significant up-side potential.
11. Loss per ordinary share
The calculation of a basic loss per share of 0.22 pence for the year (2010: 0.47 pence) is based on the loss for the period attributable to equity holders of
Gasol Plc of £2,379,494 (2010: £5,083,242) and on the weighted average number of shares in issue during the period of 1,104,889,234 (2010: 1,074,900,117).
The options are considered antidilutive as inclusion would reduce the loss per share. As such, no diluted loss per share is reported.
At 31 March 2011, there were 131,866,667 potentially dilutive shares (2010: 114,394,667) as part of a share-based payment scheme and outstanding warrants.
12. Goodwill
£
Cost
At 1 April 2009 and 1 April 2010 3,394,911
Additions –
At 31 March 2010 and 31 March 2011 3,394,911
Accumulated impairment losses
At 1 April 2009 and 1 April 2010 109,423
Impairment for the year 285,488
At 31 March 2010 and 31 March 2011 394,911
Carrying amount
At 31 March 2011 3,000,000
At 31 March 2010 3,285,488
The value of the majority of the goodwill is underpinned by the future cash flows expected to be generated through the development of early stage gas
monetisation opportunities (note 3).
The impairment is disclosed in note 10. Notes to the Consolidated Financial Statements
for the year ended 31 March 2011continued
42 Gasol plc Annual Report and Accounts 2011
12. Goodwill continued
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to benefit from that
business combination.The carrying amount of goodwill has been allocated as follows:
Y ear ended Year ended
31 March 31 March
2011 2010
£ £
Purchase of subsidiary through reverse acquisition 3,000,000 3,285,488
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated.
Details of key assumptions and variables used are outlined in note 3.
13. Property, plant and equipment
Office Fixtures and
equipment fittings Total
££ £
Cost
At 1 April 2009 112,840 436,879 549,719
Disposals (634) (17,879) (18,513)
At 31 March 2010 112,206 419,000 531,206
Disposal – (75,694) (75,694)
At 31 March 2011 112,206 343,306 455,512
Depreciation
At 1 April 2009 100,803 188,063 288,866
Charge for the year 11,075 103,810 114,885
Disposal (525) (6,749) (7,274)
At 31 March 2010 111,353 285,124 396,477
Charge for the year 853 83,507 84,360
Disposal – (32,920) (32,920)
At 31 March 2011 112,206 335,711 447,917
Carrying amount
At 31 March 2011 – 7,595 7,595
At 31 March 2010 853 133,876 134,729
No impairment losses have been realised on any property, plant and equipment during the year (2010: £nil). 43 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
14. Trade and other receivables
31 March 31 March
2011 2010
£ £
VAT recoverable 31,812 25,853
Prepayments and accrued income 74,214 158,368
Other receivables 31,470 51,445
Amounts owed by related parties 6,433 6,433
143,929 242,099
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
15. Trade and other payables
31 March 31 March
2011 2010
£ £
Other taxes and social security 30,248 22,049
Accruals 315,750 138,619
Trade payables 74,761 259,355
Other payables 5,666 185,667
426,425 605,690
Trade and other payables comprise amounts outstanding for trade purchases and ongoing costs.The average credit period taken for trade purchases is
23 days (2010: 53 days)
The Group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe and no interest has been
charged by any suppliers as a result of late payment of invoices during the period.
The Directors consider that the carrying amount of trade and other payables approximates to their fair value. Notes to the Consolidated Financial Statements
for the year ended 31 March 2011continued
44 Gasol plc Annual Report and Accounts 2011
16. Borrowings
Borrowings
31 March 31 March
2011 2010
Group £ £
Other unsecured borrowing – 300,000
Convertible loan note 2,798,980 1,012,466
Loan fees – warrant charge (note 19) (35,797) (114,790)
2,763,183 1,197,676
On 30 December 2010, a new loan agreement was entered into.The proceeds from the issue was used to repay the borrowings from the previous year.
The repayment date is 30 December 2011, interest accrues at 5% compounded annually and is payable in full on conversion or repayment.
Subject to prior conversion or prepayment, repayment of the loan at the Company’s option can be:
• In cash; or
• In shares – calculated as the aggregate loan plus accrued interest divided by the mid-market closing price at the repayment date less a 10% discount.
Conversion, at the option of the loan note holder, can occur at any time prior to the repayment date.The number of conversion shares is determined by
dividing the aggregate of the loan to be converted plus any accrued interest by a price which is the lower of:
• £0.01; or
• The price per share applicable to any capital raising after the date of issue of the convertible loan note.
Included within the terms of borrowing is a change to the strike price of the warrants issued as part of the 2009 convertible loan.The strike price has
changed from 2.96875 pence to 1.25 pence.This amendment has increased the incremental fair value at the modification date and has resulted in an
incremental increase of £47,972. 45 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
17. Operating lease arrangements
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which
fall due as follows:
31 March 31 March
2011 2010
Group and company £ £
Within one year 246,686 246,686
In the second to fifth years 226,129 226,129
472,815 472,815
At the balance sheet date, the Group had no outstanding commitment for future minimum operating lease payments after the next five years.
A sub-lease is in place with IMIC plc who paid £63,248 in rent and service charges during the year ended 31 March 2011.
The operating leases relate to the lease of office premises at 40 New Bond Street, London. Under the terms of the lease agreement Gasol, as tenant, have
an option to give 6 months notice and terminate the lease in February 2012. Should this option be exercised, the lease payments falling due in the second
to fifth years may differ from those stated above.
18. Share capital
31 March 31 March 31 March 31 March
2011 2010 2011 2010
Number Number £ £
Authorised:
Ordinary shares of 0.5p each 2,000,000,000 2,000,000,000 10,000,000 10,000,000
Issued and fully paid:
Ordinary shares of 0.5p each 1,104,889,234 1,104,889,234 5,524,445 5,524,445
The Company has one class of ordinary share which carries no right to fixed income.
There were no shares issued during the year ended 31 March 2011.
Shares reserved under warrants and employee share schemes are disclosed in note 19. Notes to the Consolidated Financial Statements
for the year ended 31 March 2011continued
46 Gasol plc Annual Report and Accounts 2011
19. Share options and other share based payments
In April 2010, an additional 20,000,000 warrants were issued as part of the £1,000,000 loan facility.
In December 2010, the exercise price of the 20,000,000 warrants issued in December 2009 was amended from 2.96875 pence to 1.25 pence.
Ordinary shares resulting from the exercise of any such rights will rank pari passu in all respects with the Gasol ordinary shares in issue at the time of such
exercise.
The following illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options and warrants during the period.
Number of Number of
share options share options
and warrants and warrants
year ended WAEP year ended WAEP
31 March pence 31 March pence
2011 2011 2010 2010
Outstanding at beginning of the year 114,394,667 5.45 48,344,667 24.01
Granted during the period 20,000,000 2.47 110,500,000 4.34
Exercised during the period – n/a – n/a
Lapsed during the period (2,528,000) 46.34 (44,450,000) 22.83
Outstanding at end of the year 131,866,667 4.22 114,394,667 5.45
Exercisable at end of the year 131,713,332 4.19 112,754,929 4.72
The weighted average remaining contractual life of the options and warrants outstanding at the balance sheet date was 0.95 years (2010: 2 years)
The following table lists the inputs to the model used to determine the fair value of options and warrants granted:
Y ear ended Year ended
31 March 31 March
2011 2010
Pricing model used Black-Scholes Black-Scholes
Weighted average share price at grant date (pence) 3.11 3.31
Weighted average exercise price (pence) 2.47 4.34
Weighted average contractual life (years) 2.74 2.74
Share price volatility (%) 71.6% 76%
Dividend yield 0% 0%
Risk-free interest rate (%) 4.0% 4.0%
In forming the volatility assumptions the directors have considered the volatility of the share price since the date of listing.The volatility of companies
operating in the same sector has also been reviewed.
The range of share options and warrants in issue is from 2.6p to 40.0p.
The total share based payment expense for the year ended 31 March 2011 was £230,897 (2010: £1,896,142) in relation to share options and warrants.
Of the total share based payment expense, £nil (2010: £422,423) related to share options and £230,897 (2010: £519,681) related to the warrants issued.
Warrants costs are held as a debit balance against the loan issued and released to the income statement over the term of the loan. As at 31 March 2011
£35,797 (2010: £114,790) is deferred against the loan to match the life of the borrowings (note 16).
All share based payments are equity settled. 47 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
20. Subsidiaries and joint ventures
Details of the Company’s subsidiaries and joint ventures at 31 March 2011 are as follows:
Place of Proportion of Proportion of
incorporation ownership voting power
(or registration) interest held
Name and operation Activity % %
African LNG Holdings Limited The Republic of Seychelles LNG operations 100% 100%
African LNG Services Limited United Kingdom Services company 100% 100%
Afgas Infrastructure Limited The Republic of Seychelles Infrastructure development 75% 75%
Afgas Nigeria Limited Nigeria Energy research 75% 75%
SONAF G.E.S.A Equatorial Guinea Energy research 50% 50%
The investment in the 50% of SONAF has been consolidated using the proportional consolidation method. During the year a provision has been made
against amounts due from the joint venture.This amount totalled £43,069 and is included within administrative expenses.
Acquisition of joint venture
On 26 June 2009, African Gas Development Corporation, the majority shareholder in Gasol, novated its 50% holding in SONAF G.E.S.A. (“SONAF”) to Gasol
for £nil consideration.The assets recognised at fair value upon transfer were as follows:
£
Cash and cash equivalents 1,687
Trade and other receivables 7,944
9,631
No liabilities existed on transfer and there were no identifiable intangible assets or goodwill as the joint venture is currently in its very early stages of
operation, has not secured access to gas fields and it is believed the market to dispose of the 50% interest would be very limited. As these assets were
received for £nil consideration from a shareholder, the credit of £9,631 has been treated as a capital contribution.
For the year ended 31 March 2011, the results and assets/(liabilities) of SONAF consolidated into these Group financial statements are as follows:
£
Statement of financial position
Current assets 32,077
Current liabilities (169,442)
Net liabilities (137,365)
Statement of comprehensive income
Income 14,906
Expense (46,272)
Loss for the year ended 31 March 2011 (31,366)
Income for the year included profit on disposal of fixed assets.
The numbers in the Statement of Comprehensive Income represents only activity following the 26 June 2009 transfer of interest to Gasol.
There were no capital commitments with respect to the joint venture at the year end. SONAF has the same year end as the parent company being 31
March 2011. Joint management is based on a signed joint venture agreement in place.
The SONAF funding has been impaired in full. Notes to the Consolidated Financial Statements
for the year ended 31 March 2011continued
48 Gasol plc Annual Report and Accounts 2011
21. Cash and cash equivalents
31 March 31 March
2011 2010
£ £
Cash at hand and in bank 174,795 245,189
Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term
highly liquid investments with an original maturity of three months or less.
The majority of the cash balances are held at banks with a Standard and Poor’s credit rating of at least AA- and registered in the United Kingdom. Balances
held with foreign banks are insignificant.
There is no significant difference between the carrying value and fair value of cash and cash equivalents.
22. Financial instrument risk exposure and management
The Group is exposed to risks that arise from its use of financial instruments.This note describes the Group’s objectives, policies and processes for
managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these
financial statements.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
• trade receivables
• cash at bank
• trade and other payables
• borrowings
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies.The Board receives monthly reports
from the Group Financial Controller through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and
policies it sets.
The overall objective of the Board is to set polices that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and
flexibility. Further details regarding these policies are set out below:
Credit risk
The Group’s principal financial assets are bank balances and trade and other receivables.
Credit risk arises principally from the Group’s cash balances with further risk arising due to its trade receivables. Credit risk is the risk that the counterparty
fails to repay its obligation in respect of the amounts owed.
The concentration of the Group’s credit risk is considered by counterparty, geography and by currency.The Group has a significant concentrations of cash
held on deposit with large banks in the United Kingdom with A ratings and above (Standard and Poor). At 31 March 2011 the concentration of credit risk
was as follows:
31 March 31 March
2011 2010
Counterparty £ £
HSBC Bank Plc 686 –
Barclays Bank Plc 114,902 227,354
Other banks 59,207 17,835
174,795 245,189
There are no other significant concentrations of credit risk at the balance sheet date. 49 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
22. Financial instrument risk exposure and management continued
Trade receivables
The exposure to trade receivables is not currently extensive and no formal procedure is in place for monitoring and collecting amounts owed to Gasol. A
risk management framework will be developed over time, as appropriate to the size and complexity of the business.
No trade and other receivables are past their due settlement date.The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value and no impairment has been deemed necessary in the year (2010: £nil).
The total estimated credit risk of the Group at 31 March 2011 was £212,692 (2010: £303,067).
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on its debt instruments. It is the
risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due.
The Group monitors its cash balance on a daily basis and produces forecasts of its required expenditure over the coming year for review by management.
Management can then take action to secure the right amount of funding at the appropriate time. At the period end the projections indicate that the
Group expects to have sufficient access to liquid resources to meet its obligations.
There is no significant difference between the carrying value and fair value of the current and non-current financial liabilities recorded in the Group’s
balance sheet.
Due between
Due within 30 days and Due after
30 days one year one year
Maturity of financial liabilities ££ £
At 31 March 2011
Accruals 315,750 ––
Trade and other payables 80,427 ––
Borrowings – 2,763,183 –
Total financial liabilities 396,177 2,763,183 –
At 31 March 2010
Accruals 138,619 ––
Trade and other payables 445,022 ––
Borrowings – 1,197,676 –
Total financial liabilities 583,641 1,197,676 – Notes to the Consolidated Financial Statements
for the year ended 31 March 2011continued
50 Gasol plc Annual Report and Accounts 2011
22. Financial instrument risk exposure and management continued
Market risk
With the exception of cash and cash equivalents and borrowings, the Group has no interest bearing assets or liabilities or significant amounts held in
foreign currencies.The Group therefore has no sensitivity to foreign exchange rates at either period end.
A 1% increase in interest rates across the period would have led to an insignificant increase in net interest income (2010: £3,900).
A 1% increase in interest rates across the period would have led to an insignificant increase in net interest payable (2010: £2,493).
Loans and Receivables
31 March 31 March
2011 2010
Financial instruments by class and by category £ £
Current financial assets
Trade and other receivables 37,903 57,878
Cash and cash equivalents 174,795 245,189
Total current financial assets 212,698 303,067
Financial liabilities measured
at amortised cost
31 March 31 March
2011 2010
£ £
Current financial liabilities
Borrowings 2,763,183 1,197,676
Accruals 315,750 138,619
Trade and other payables 80,427 445,022
Total financial liabilities 3,159,360 1,781,317
23. Capital management
The Group’s objective when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets to reduce debt.The Group monitors capital on the basis
of the gearing ratio, being net debt (borrowings less cash and cash equivalents) divided by total capital (equity plus net debt). In previous periods the
Group funded itself primarily through equity funding on the AIM market.
31 March 31 March
2011 2010
£ £
Total borrowings (note 16) 2,763,183 1,197,676
Less: cash and cash equivalents (174,795) (245,189)
Net debt 2,588,388 952,487
Total equity 262,969 2,104,139
Total capital 2,851,357 3,056,626
Gearing ratio 91% 31%
The increase in borrowing and therefore gearing ratio is to ensure the Group has sufficient resources to continue exploring commercial opportunities. 51 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
24. Related party transactions
In addition to the transactions detailed in the Directors’ Report, the Group entered into the following related party transactions.
Mr Ethelbert Cooper, a director and shareholder (through an intermediary company) in African Gas Development Corporation Limited (‘AfGas’) is a special
advisor to the Gasol Board of Directors. He has received £120,000 (2010: £120,000) in respect of his services to Gasol in the year to 31 March 2011, of which
£70,597 was due at the year end.
Amounts due to Directors relating to deferred salaries totalled £59,000 (2010: £37,500) and the related national insurance contribution totalled £7,603
(2010: £4,320).
Gasol have an agreement with Aftrade SA (‘Aftrade’ formally African Gas Trading & Services SA), a wholly-owned subsidiary of AfGas to provide office space
and general admin and support services. Gasol have a licence agreement with Aftrade for which £68,000 (2010: £68,000) was paid during the year ended
31 March 2011. Amounts receivable at the year end were offset against amounts due to Mr Ethelbert Cooper.
Payments totalling £26,490 were made to Aftrade for administration services provided to the Group (2010: £2,720). £4,415 was due at the year end
(2010: £6,433).
Rent and service charges receivable in respect of the sub-lease to IMIC plc, of which Mr Haresh Kanabar is non-executive chairman, amounted to £63,248
(2010: £nil).This is netted against the rental expense in administration expenses.
Assets with a net book value of £21,466 were sold to IMIC plc for a cash consideration of £20,000.
Rent deposits held at 31 March 2011 are:
• Aftrade SA £5,667; and
• IMIC plc £23,267.
On 19 February 2009, Gasol entered into an agreement with Trinity International LLP (“Trinity”), a law firm in which, Paul Biggs is partner. Under the
agreement,Trinity have undertaken to advise Gasol with regard to future funding arrangements.Trinity will incur costs on an “at risk” basis, whereby they
will only be reimbursed for these costs if their work leads to securing direct funding for Gasol. If Trinity help Gasol to secure finance, they will also be
entitled to 3% of any of the funds raised upon completion of the financing.This contract remains unchanged.
Gasol have loan facilities from African Gas Development Corporation Limited, a majority shareholder.The terms of the facility are summarised in note 16,
£3,011,924 was utilised and is outstanding at the year end.
Substantial shareholdings
Gasol is a public limited company listed on AIM and has a diverse shareholder base.That said, due to owning a holding of greater than 50% in Gasol, AfGas
is deemed to be the ultimate controlling party.
25. Subsequent events
In April 2011, Gasol secured an additional £1,000,000 in funding from AfGas through a convertible loan facility.The terms of the loan are the same as those
disclosed in note 16 to the accounts. As part of the funding cost, Gasol has undertaken to issue AfGas 20,000,000 warrants with a strike price of 1.25p.
In May 2011, Gasol entered into an exclusive Project Option Agreement with Moni Pulo (Petroleum Development) Limited (‘Moni Pulo’) in respect of all
gas in Nigerian offshore licence area OML 114. During the exclusivity, Gasol has the opportunity to make a proposal to Moni Pulo regarding the
development of OML 114.
In May 2011, Gasol negotiated a revised agreement with Sociedad Nacional de Gas, GE ("SONAGAS"), the national gas company of Equatorial Guinea,
in respect of the associated gas from the Zafiro field ("Zafiro gas").
Under the terms of the amended agreement, the Zafiro gas will now be used by SONAGAS in a newly structured entity for the production of
ammonia/urea based fertilizer and/or other similar gas derived products, which is being developed with international investors.
Gasol and SONAGAS have agreed that, as compensation for giving up the rights to the original gas project, Gasol will receive some benefits including the
appointment of Gasol, through SONAF , has been appointed as an agent for the purpose of developing a market in West and Central Africa. 52 Gasol plc Annual Report and Accounts 2011
Notes to the Company Financial Statements
for the year ended 31 March 2011
The following notes are in respect of the Gasol plc company only financial statements.
26. Impairment of goodwill
Y ear ended Year ended
31 March 31 March
2011 2010
£ £
Impairment of goodwill (note 27) 31,948,633 –
The directors’ economic assessment of the project at 31 March 2011 is £3,000,000.
In forming this valuation, the directors have considered the price at which an independent unsolicited bid for the project rights would be rejected by the
Board. In addition and in determining the supporting net present value of the project future cash flows, the relevant probabilities of success at each stage
of the project and have been assessed and the risk factored in to the valuation.
The directors acknowledge that the use of estimates is inherently judgemental but believe they have been sufficiently prudent in forming their views and
utilised the significant experience of the Board and Management in determining the values used.Whilst there is the possibility that the projects will yield a
lower than expected value, there remains significant up-side potential.
27. Investments in subsidiary undertakings and goodwill
The value of the subsidiaries owned by the Company at 31 March 2011 is as follows:
Investments
£
Cost
At 31 March 2010 and 31 March 2011 400,000
Impairment
At 31 March 2010 and 31 March 2011 400,000
Carrying amount
At 31 March 2010 and 31 March 2011 –
The investment in the SONAF joint venture has been fully provided for. Receivables from the joint venture totalling £43,069 were provided for during the year.
The value of the goodwill owned by the Company at 31 March 2011 is as follows:
Goodwill
£
Cost
At 1 April 2010 34,948,633
Additions –
At 31 March 2011 34,948,633
Accumulated impairment losses
At 1 April 2009 and 1 April 2010 –
Impairment for the year (note 26) 31,948,633
At 31 March 2010 and 31 March 2011 31,948,633
Carrying amount
At 31 March 2011 3,000,000
At 31 March 2010 34,948,633
This goodwill was transferred from investments during the period ended 31 March 2009 due to the hive up of the trade of African LNG Holdings to Gasol
and represents the Company’s project negotiation rights. 53 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
28. Property, plant and equipment
Office Fixtures
equipment and fittings Total
££ £
Cost
At 1 April 2009 and 31 March 2010 112,206 407,238 519,444
Disposals – (63,932) (63,932)
At 31 March 2011 112,206 343,306 455,512
Depreciation
At 1 April 2009 93,528 176,302 269,830
Charge for the period 13,075 101,810 114,885
At 31 March 2010 106,603 278,112 384,715
Charge for the year 5,603 90,519 96,122
Disposals – (32,920) (32,920)
At 31 March 2011 112,206 335,711 447,917
Carrying amount
At 31 March 2011 – 7,595 7,595
At 31 March 2010 5,603 129,126 134,729
No impairment losses have been realised on any property, plant and equipment during the year (2010: nil).
29. Trade and other receivables
31 March 31 March
2011 2010
£ £
VAT recoverable 31,811 25,853
Other receivables 19 5,533
Prepayments and accrued income 74,214 158,368
Amounts owed by related parties 6,433 6,433
112,477 196,187
Due to the uncertainty within projects the amounts owed by subsidiaries have been fully provided for. A total provision of £2,696,660 has been made
(2010: £2,609,908) against outstanding receivables from subsidiaries.The directors will continue to assess the recoverability of these receivables.
The directors consider that the carrying amount of the remaining trade and other receivables approximates to their fair value. Notes to the Company Financial Statements
for the year ended 31 March 2011continued
54 Gasol plc Annual Report and Accounts 2011
30. Trade and other payables
31 March 31 March
2011 2010
£ £
Other taxes and social security 30,248 21,787
Amounts owed to subsidiary undertakings – –
Accruals 312,806 129,120
Trade payables 73,424 258,332
Other payables 7,002 186,952
423,480 596,191
Trade and other payables comprise amounts outstanding for trade purchases and ongoing costs.The average credit period taken for trade purchases is
23 days (2010: 52 days).
The accruals balance includes amounts relating to Directors salaries deferred totalling £59,000 (2010: £37,500), the related national insurance contribution
of £7,603 (2010: £4,320) and deferred employee pension contribution totalling £19,167 (2010: £nil).
The Company has financial risk management policies in place to ensure that all payables are paid within the credit timeframe. No interest has been
charged by any suppliers as a result of late payment of invoices during the period.
The directors consider that the carrying amount of trade and other payables approximates to their fair value.
31. Borrowings
Borrowings
31 March 31 March
2011 2010
£ £
Other unsecured borrowing – 300,000
Convertible loan note 2,798,980 1,012,466
Loan fees – warrant charge (note 19) (35,797) (114,790)
2,763,183 1,197,676
32. Cash and cash equivalents
31 March 31 March
2011 2010
£ £
Cash at hand and in bank 148,908 235,506
Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term
highly liquid investments with an original maturity of three months or less.
The majority of the cash balances are held at banks with a Standard and Poor’s credit rating of at least AA- and registered in the United Kingdom. 55 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
33. Financial instrument risk exposure and management
The Company is exposed to risks that arise from its use of financial instruments.This note describes the Company’s objectives, policies and processes for
managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these
financial statements.
Principal financial instruments
The principal financial instruments used by the Company, from which financial instrument risk arises, are as follows:
• trade receivables
• amounts owed by subsidiaries
• cash at bank
• trade and other payables
• borrowings
General objectives, policies and processes
The Company’s risk management objectives and policies are aligned with those of the Group and are outlined in note 22 to the consolidated financial
statements.
Further details regarding the Company’s exposure to risks from the use of financial instruments are set out below:
Credit risk
Credit risk arises principally from the Company’s cash balances and amounts owed from subsidiaries. Credit risk is the risk that the counterparty fails to
repay its obligation in respect of the amounts owed.
Cash and cash equivalents
The exposure to credit risk arising from cash and cash equivalents is discussed in note 23.
There is no significant difference between the carrying value and fair value of cash and cash equivalents.
Trade receivables
The exposure to trade receivables is not currently extensive and no formal procedure is in place for monitoring and collecting amounts owed to Gasol. A
risk management framework will be developed over time, as appropriate to the size and complexity of the business.
Following provisions for impairment of £2,696,660 (2010: £2,609,908) being made against receivables from subsidiaries, there is no significant difference
between the carrying value and fair value of trade receivables.
Amounts owed by subsidiaries
Gasol lends money to subsidiaries to fund their working capital requirements.These amounts are repayable on demand at the request of Gasol, although
due to the long term nature of the projects being funded, it is intended that repayment will not be requested until the subsidiaries generate sufficient
revenues.
Liquidity risk
Liquidity risk arises from the Company’s management of working capital and the finance charges and principal repayments on its debt instruments. It is
the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due.
The Company’s policy in relation to liquidity risk is aligned with that of the Group and is outlined in note 22 to the consolidated financial statements.
There is no significant difference between the carrying value and fair value of the current and non-current financial liabilities recorded in the Company’s
balance sheet. Notes to the Company Financial Statements
for the year ended 31 March 2011continued
56 Gasol plc Annual Report and Accounts 2011
33. Financial instrument risk exposure and management continued
Due between
Due within 30 days and Due after
30 days one year one year
Maturity of financial liabilities ££ £
At 31 March 2011
Borrowings – 2,763,183 –
Accruals 312,806 ––
Trade and other payables 80,426 ––
Total financial liabilities 393,232 2,763,183 –
At 31 March 2010
Borrowings – 1,197,676 –
Accruals 129,120 ––
Trade and other payables 445,284 ––
Total financial liabilities 574,404 1,197,676 –
Market risk
With the exception of cash and cash equivalents, the Company has no interest bearing assets or liabilities or significant amounts held in foreign currencies.
The Company therefore has no sensitivity to foreign exchange rates at either period end.
A 1% increase in interest rates across the period would have led to an insignificant increase in net interest income (2010: £3,900).
A 1% increase in interest rates across the period would have led to an insignificant increase in net interest payable (2010: £2,493).
Loans and Receivables
31 March 31 March
2011 2010
Financial instruments by class and by category £ £
Current financial assets
Trade and other receivables 6,452 11,966
Cash and cash equivalents 148,908 235,506
Total current financial assets 155,360 247,472
Trade and other receivables are stated inclusive of amounts owed by subsidiaries and other related parties of £2,703,093 (2010: £2,616,341). A provision
for non-recoverability of £2,696,660 (2010: £2,609,908) has been made against the amounts owed by subsidiaries and other related parties and is included
in trade and other receivables.
Financial liabilities measured
at amortised cost
31 March 31 March
2011 2010
£ £
Current financial liabilities
Borrowings 2,763,183 1,197,676
Accruals 312,806 129,120
Trade and other payables 80,426 445,284
Total financial liabilities 3,156,415 1,772,080
34. Capital management
The Company’s capital management objectives and policies are aligned with those of the Group and are outlined in note 23 to the consolidated financial
statements. 57 Gasol plc Annual Report and Accounts 2011 Business Review
Corporate Governance
Financial Statements
Officers and Professional Partners
as at 6 September 2011
Country of incorporation and domicile United Kingdom
Legal form Public Limited Company
Directors Haresh Kanabar Non-Executive Chairman
Ewen Wigley Chief Operating Officer
Paul Biggs Non-Executive Director
Osman Shahenshah Non-Executive Director
Company Secretary Miles Thomas
& Registered Office 40 New Bond Street
London W1S 2RX
Company Number 05350159
Nominated Advisor and Broker Panmure Gordon (UK) Limited
155 Moorgate
London EC2M 6XB
Accountants Whale Rock Accounting Limited
15 Basinghall Street
London EC2V 5BR
Auditor BDO LLP
55 Baker Street
London W1U 7EU
Solicitors K & L Gates LLP
One New Change
London EC4M 9AF
Registrars Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands B63 3DA
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40 New Bond Street
London
W1S 2RX
United Kingdom
tel: +44 (0)20 7290 3300
fax: +44 (0)20 7290 3330
email: info@gasolplc.com
Gasol plc
Annual Report and Accounts