Gasol plc
Annual Report and Accounts
:e Africa-focused gas independent
...bringing African energy to the world :rough 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). :e Group’s primary focus is to develop projects
to monetise stranded gas reserves in the Gulf of Guinea. :is is
to be achieved either by aggregation, liquefaction and shipment
of such gas reserves as LNG to high-value markets world-wide,
or for use regionally in power generation or other industrial
processes. We will work closely with host governments and
communities and align our business to local priorities.
Gasol plc Annual Report and Accounts 2010
Gasol plc
Business Review
01 Highlights 2009/10
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
27 Consolidated Statement of Financial Position
28 Company Statement of Financial Position
29 Consolidated Statement of Cash Flows
30 Company Statement of Cash Flows
31 Notes to the Consolidated Financial Statements
55 Notes to the Company Financial Statements
Shareholder Information
61 Officers and Professional Partners Highlights
01 Gasol plc Annual Report and Accounts 2010
 :e Group has completed a comprehensive strategic review,
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 and shipment of LNG to worldwide markets;
 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-<red power stations.
 Successfully secured <nancing - £2 million through the issuance
of ordinary shares and £1 million through the issuance of a
convertible loan note. :e Group continues to pursue sources of
further funding required for both the short and the longer term.
 Board and management team changes including the appointment
of Haresh Kanabar as non-executive Chairman and Ewen Wigley
as Chief Operating Oﬃcer.
 Continued development of existing LNG projects in Nigeria and
Equatorial Guinea. Strategic Review
During the year Gasol conducted a strategic review
which concluded that as well as continuing to
pursue the gas monetisation projects that are
currently underway, the Group should also develop
business opportunities, with partners, involving the
use of gas to generate electricity within the West
African region.The review considered that the latter
business stream could be developed in a more
timely fashion and would add incremental value to
the gas being produced by the former.Whilst the
two activities are complimentary, each can be
developed separately from the other.
Identifying the opportunities
West Africa becoming a critical gas hub
02 Gasol plc Annual Report and Accounts 2010
Gasol is focused on developing projects to aggregate and
monetise stranded gas in the Gulf of Guinea region of
West Africa, primarily via Lique<ed Natural Gas (LNG)
by utilising innovative and cost eﬀective technologies.
Gasol seeks to create value by developing projects in the gas
chain and by exporting LNG from stranded West African
gas <elds to markets worldwide. Gasol also aims to add
value to its gas by developing, with partners, a gas to power
business within the West African region.
STRATEGIC REVIEW:
TWIN GOALS 03 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
Why gas?
We believe that the global gas market will continue
to provide value-enhancing opportunities over the
long-term.
Natural gas is considered by many today as the fuel
of the future.Years ago, when oil companies drilled
for oil and found gas, their efforts were deemed to
be failures as gas consuming markets were often at
great geographical distances from production and
developing projects.The gas, if found with oil, had
to be re-injected or flared: standalone gas reserves
were often left for another day. As the “hunger”for
gas grew in consuming markets, LNG projects were
evaluated and, if viable, pursued. As oil prices rose
and production costs fell, LNG became more
economically feasible. Consumers with long-term
vision were willing to pay a premium to secure
clean long-term energy supplies from diverse and
reliable producers.
Until recently the growing demand for gas and the
decline in production in the main consuming
regions, combined with technological advances
and commercial maturity made LNG an attractive
and economical option.The recent trend of lower
demand and lower prices in the LNG industry,
together with temporary oversupply, has flattened
the sentiment in the short term. However, Gasol’s
view is that in the longer term the fundamentals of
the LNG business remain robust.
Why Africa?
Due to the decline of traditional reserves of natural
gas in the US and in the North Sea, the relatively
underdeveloped and gas prolific African fields have
become increasingly attractive for monetisation.
As large consumer nations seek to diversify secure
sources of gas to avoid overdependence on limited
numbers of producers, African gas provides 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, a large number of un-contracted gas
reserves in the Gulf of Guinea do not attract the
interest of larger national and international gas
companies because these reserves are normally
too small on a stand-alone basis to launch a
profitable gas project. However, these reserves
can be aggregated to larger economic sizes to
underpin LNG and other gas monetisation projects.
Why Gasol?
There have been recent structural changes in the
gas/LNG industry: the local gas owners and the
national governments seek more stake and
involvement in the gas monetisation process for
optimum leverage from their gas ownership;
equally, the downstream gas consumers and users
(utility companies, regasification terminals, trading
houses) have realised the need to invest in the
upstream and midstream projects in the gas chain
to secure long-term access to LNG.
As an independent player, Gasol is ideally placed to
develop gas projects through:
(a) its focus on gas aggregation in Africa
(b) strategic alliances with upstream and
downstream players
(c) alignment with host governments
(d) use of innovative technology
Gasol is focused on delivering its first LNG project,
utilising small-scale liquefaction technology,
which is cost competitive with lower project
execution time.
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.
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
create value by exporting LNG to markets in
Europe, the Far East and North America.
A key goal that emerged from the Group’s strategic review was
to accelerate the creation of further income streams: Building pipelines to aggregate the gas to a
single point
Gasol intends to develop gas gathering,
transportation and processing facilities to
aggregate sufficient gas from numerous small sites
to make monetisation viable.
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.
Strategy –
monetising stranded
gas reserves
04 Gasol plc Annual Report and Accounts 2010
STRATEGY
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 and regasi<cation of LNG into high-value markets
worldwide. Gasol is also exploring a West African regional
gas to power strategy to create additional value for its gas. Liquefaction – building innovative, cost-
effective plants to export LNG
Gasol is focused on assessing and developing
opportunities for small-scale land-based and
floating plants, in collaboration with strategic
partners, as well as a conventional land-based plant,
for LNG and for alternative development
technologies.
Power generation
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
Selling to high-value export markets
Gasol’s strategy is to develop long-term LNG
sales contracts with key export markets,
access regasification capacity and seek
arbitrage opportunities.
transferred to floating storage and regasification units,
offering high efficiency and considerable flexibility,
before piping to gas fired power stations.
05 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
2
Rapid gas monetisation
technology
3
End market and LNG
offtake partners
1
Gas aggregation policy to
access low-cost reserves
Gasol is exploring innovative technologies
designed to exploit smaller gas fields. The
Near Shore Production Solution (“NSPS”) as
well as floating LNG solutions can facilitate
commercial liquefaction at a lower threshold
of proven gas reserves than current solutions.
Long-term access to the end-market is
essential, and Gasol is establishing
partnerships with downstream players,
which aside from market access bring
technical skills and financial strength.
Following the recent disintermediation
within the industry, Gasol is working with
partners such as Afren to unlock the value
in smaller deposits by aggregating their
reserves.
Revenue stream two – Liquid Natural Gas for global markets
Revenue stream one – Gas for power in West Africa Chairman’s Statement
06 Gasol plc Annual Report and Accounts 2010
Introduction
This is my first Chairman’s statement since taking
over the role in October 2009 and I am pleased to
report that, despite the challenging economic
environment in which we operate, I believe the
Group has continued to make good progress in its
operational activities.
The economic environment
Whilst the major economies around the world
appear to be broadly recovering from the
economic turmoil of the last few years, the business
environment for early-stage companies, and
particularly those seeking to develop capital
intensive projects, remains tough.
Gas prices today continue to remain relatively low
and no longer move in tandem with the price of oil,
which has risen with the more benign economic
situation. Lower energy demand and an increasing
LNG supply from new liquefaction capacity around
the world has resulted in the global supply and
demand balance of LNG remaining firmly in favour
of the buyer.Whilst this imbalance should correct
itself over time, improvements in the recovery of
shale gas will undoubtedly mean longer term the
price of gas is likely to reflect the greater supply.
However, gas remains one of the most efficient and
environmentally friendly sources of energy
available today, and the increasing demand to
cease flaring surplus gas at the wellhead means
that economic solutions are required for this
associated gas. Small, well managed companies
such as Gasol have a role to fulfill 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.The
work we have been doing in West Africa with our
partners will stand us in good stead.
:e 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.
LONG-TERM
POTENTIAL 07 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
Strategic review
In the light of the challenging economic situation,
the Board decided to undertake a strategic review
of the Group’s business during the year.The
conclusion of that review, which we announced in
June, was 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.
The developing gas-to-power sector in West Africa
has been identified as having the greatest potential
to add that incremental value, as well as producing
shareholder returns in the shorter term.Working
with our major shareholder, African Gas
Development Corporation, Gasol is developing a
detailed business plan 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.
West African Potential
Gasol’s gas monetisation activities remain focused
in the West Africa region, where there are
significant numbers of stranded gas fields of a
suitable size for the types of project that Gasol
wishes to pursue. Gas reserves of this size, on their
own or in aggregation, lend themselves to the kind
of small-scale LNG projects that Gasol is focused on.
Despite the significant reserves of gas in the area,
the West African region has a significant shortage
of electricity generating capacity, and the regular
supply of electricity to the populace of these
countries remains a luxury that few receive. Both
governments and supranational organisations are
committed to increase the supply of electricity and
this represents the underlying opportunity for Gasol.
Funding:
Gasol remains a development Group without any
income today.The rate of cash expenditure is
monitored closely and the Board has focused hard
on reducing costs and minimising our outgoings,
whilst at the same time maintaining the
momentum on our gas projects. Funding during
the period has been through a share placing,
convertible bond issuance and debt funding,
primarily with our major shareholders and Gasol
remains very grateful for their continued support.
We continue to explore various potential sources of
funding for the short to medium term, but we
cannot at this stage guarantee the success of these
efforts as, we believe, raising substantial funding for
our projects will continue to be challenging.
However we are reasonably confident that with our
projects correctly structured, our efforts will
ultimately be successful. Gasol believes that the key
to the successful conclusion of the projects will be
the selection of the appropriate partners.
Board Changes
I took over as Chairman following the unfortunate
departure of Theo Oerlemans for health reasons
and we all wish Theo a long and happy retirement.
During the year, Charles Osezua and Soumo Bose
also stepped down from the Board to concentrate
on other opportunities and I would like to thank
them all for their contributions to the development
of Gasol.
We are delighted to welcome Ewen Wigley to the
Board in the role of Chief Operating Officer and to
run the Group in an executive capacity. Ewen joins
us from our major shareholder and has provided a
continued close link, particularly during the
strategic review.
Following the strategic review and the
confirmation of the business of the Group,
the Board is now seeking to strengthen the
management of the Group with experienced
industry professionals.
Outlook
Gasol is confident that it has the right business
strategy for the future.We have continued to make
progress, despite the challenging economic
climate, and believe that the fundamentals for our
business remain sound. I would like to thank our
staff and partners for their continued hard work
and look forward to their continued support as we
continue to implement our projects.
Haresh Kanabar
Chairman
7 September 2010
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. Chief Operating Oﬃcer’s Statement
Operating and Financial Review
08 Gasol plc Annual Report and Accounts 2010
Our unique and distinctive strategy has enabled us to
secure our <rst 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 re<ned and developed that strategy.
ACTIVITY AND
OBJECTIVES 09 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
Overview:
I am pleased to report that during the year Gasol
has continued to develop its strategy of seeking to
aggregate and monetise stranded gas assets in the
Gulf of Guinea, through the liquefaction of gas and
shipment of LNG to worldwide markets. Gasol has
carried on working on developing all elements of
the business model from access to gas, through
technology for liquefaction to forging relationships
with off-takers in order to develop its projects further.
Gasol believes that natural gas will remain one of
the world’s important energy sources, not least
because of its relatively environmentally friendly
credentials.The liquefaction of natural gas in order
to transport it from the gas field to the consumer’s
market is a growing trend. Moreover due to
technological developments markets around the
world are recognising that LNG can be produced,
transported and used in smaller quantities as well
as the established world scale facilities that
currently exist.
Whilst the indications are that the worst of the
economic upheaval from that last few years appear
to be past us and the financial markets have re-
opened to the financing of new projects of the
type that Gasol is developing, the threshold for
achieving successful funding remains challenging.
Nonetheless we believe that with a robust business
model and working with strong partners along the
value chain, the business model we are pursuing
will secure the necessary finance which will lead to
the successful development of gas projects.
Strategic Review
Your Board decided to undertake a Strategic
Review during the year with the purpose of
reassessing all of the opportunities available for
monetisation of stranded gas assets in the Gulf of
Guinea, taking into account the speed with which
projects could be developed and the desire to
achieve early shareholder returns.The Review
considered the various options available for the use
of the gas, both regionally and internationally, and
how it could be transported to the market.The
Review also considered the global supply and
demand economics for natural gas and it became
apparent that whilst the current low market price
on LNG will over time undoubtedly recover, Gasol
should try to seek further benefit from the gas by
moving along the value chain.
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 liquify stranded gas assets, whilst (b)
pursuing opportunities to develop a business in
the gas-to-power sector in West Africa.The Group
is now working, in conjunction with our major
shareholder, on a detailed business plan that is
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. At the same time,
Gasol has continued to work on the existing
projects based on securing access to enable the
liquefaction of stranded gas assets.Whilst the
successful delivery of our strategy will enable each
of these two areas to be a business in their own
right, they are also complimentary and can be
integrated in due course.
Business
During the year the Group has continued to focus
on all the elements of the gas monetisation strategy.
Access to gas will be achieved by working with
upstream partners such as Afren Plc and SONAGAS,
who have gas reserves in sufficient quantities to
develop economic gas projects. Gasol intends to
leave the gas field development to its upstream
partners and purchase gas at the well-head at a
competitive price. Nonetheless it is working closely
with its partners to identify gas assets that can be
used for the Gasol model.
Gasol together with partners has developed
the concept of a near shore barge-mounted
liquefaction production system as one technology
to produce the LNG close to the wellhead.
The Group is also considering other suppliers of
technologies, including other floating options, with
the ultimate choice being based on the volumes of
gas available, project economics and the time to
delivery for the technology.
The current low price of LNG traded in international
markets, arising from the short-term oversupply
position, has created challenges in securing long-
term contracts for buyers of LNG. Gasol is exploring
a number of options with potential strategic
partners with a view to completing the value chain.
One of the alternatives will be to supply LNG into
the gas-to-power business that has been identified
from the Strategic Review.
2010-2011 Key Objectives
• Raise sufficient funding to meet our short
and longer term project and corporate
expense requirements
• Crystallise gas to power strategy into a
business plan
• Acquire gas assets in the Gulf of Guinea
• Continue project development work
in Nigeria and Equatorial Guinea
2009-2010 Key Activities
• The Group has completed a comprehensive
strategic review, 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 and shipment of LNG to worldwide markets;
• 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.
• Successfully secured financing - £2 million
through the issuance of ordinary shares
and £1 million through the issuance of a
convertible loan note.
• Board and management team changes
including the appointment of Haresh Kanabar
as non-executive Chairman and Ewen Wigley
as Chief Operating Officer.
• Continued development of existing LNG
projects in Nigeria and Equatorial Guinea. Chief Operating Oﬃcer’s Statement
Operating and Financial Review
10 Gasol plc Annual Report and Accounts 2010
To accelerate the creation of multiple income streams
Gasol’s board and management team are key in successfully
executing Gasol’s business strategy. :e Group has brought
together a team with substantial experience in the gas sector,
particularly in LNG in Africa, applying particular focus to
recently identi<ed opportunities to create value through the
supply of gas for power generation.
Whilst the economic environment and the energy/LNG
sector have been challenging over the last year and the
short-term gas economics are relatively weak, the longer
term gas fundamentals are robust and Gasol expects to show
further progress in the coming year.
FOCUS AND
VALUE Business Review
Corporate Governance
Financial Statements
11 Gasol plc Annual Report and Accounts 2010
Financial Results:
The financial statements reflect the fact that Gasol
is in its development stage which is investing time
and money in accessing gas monetisation projects.
At present the Group has no income from trading
activities.The loss after tax for the financial year is
£5.08 million (2009 loss of £7.18 million), equating
to a loss of 0.47 pence per share (2009: loss of 1.08
pence), principally represents the administrative
costs of undertaking the project development.
Cash expenditure on operating activities during
the year was £3.84 million (2009: £5.57 million).
Careful attention has been paid during the year to
managing costs and cutting out unnecessary
expenditure, whilst ensuring that business
development remains unaffected.The full benefit of
this cost cutting will be felt in the next financial year.
During the year, the Group has raised £3 million
through capital instruments. £2 million was raised
through equity placings in May and August 2009
with our major shareholders African Gas
Development Corporation and Afren Plc, whilst a
further £1 million was raised through the issuance
of a convertible loan note. In June 2009 a £10
million equity line of credit with GEM Global Yield
Fund has been put in place.The ability to draw
funds depends, among other factors, on the share
price and trading volumes, both of which are
outside the Group’s control. Since the year end,
Gasol has entered into a £1 million loan facility, also
with African Gas Development Corporation.
As outlined within note 1, the Group has reassessed
the accounting approach that was adopted for the
acquisition by Gasol of African LNG Holdings
Limited following discussions with the Financial
Reporting Review Panel. In consequence, the
comparative financial statements have been
restated with an additional second year of
comparative Statement of Financial Position also
being included.
Management & Staff
The past year has seen changes both on the
Board and within the management at Gasol. The
challenges for a Group like Gasol in developing
projects are considerable in this current economic
climate and I would like to take the opportunity to
thank all staff who have continued to work hard
throughout the year in turning the Gasol vision into
a reality.
Outlook and Challenges
Gasol needs, and continues to seek, sources of short
term funding in order to progress the development
of its projects and bring them to the position of
final investment decision, and beyond. 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.
Gasol is developing a number of strategies to meet
these funding costs including working with
strategic commercial and financial partners. It is
likely that some of the risk and reward of the
projects will be shared with other parties.
The Group believes that the business model is
sound and that, despite the current low price of
gas, the future prospects of the gas market are
positive. Moreover the opportunities that are
available in the gas-to-power sector within
West Africa will also provide good attractive
opportunities for Gasol.The future of Gasol
depends on its ability to successfully raise funding
for project development and execution, together
with its ability to manage the risks that are normal
in such gas projects.
Ewen Wigley
Chief Operating Officer
7 September 2010
We are actively developing key relationships
and alliances with companies along the value
chain in order to progress our business
development activities.
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.
Being a project developer, Gasol provides
monetisation solutions to gas assets owners
by developing projects which provide a route
to domestic and export markets. Board of Directors
and Strategic Advisor
Ewen Wigley Chief Operating Officer Haresh Kanabar Chairman
12 Gasol plc Annual Report and Accounts 2010
Haresh Kanabar (52) 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, India Star Energy 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 (49) 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 the Non-executive Chairman of Leeds
Group Plc and a Fellow of the Association of
Corporate Treasurers. Paul Biggs Non-Executive Director Osman Shahenshah Non-Executive Director
Business Review
Corporate Governance
Financial Statements
13 Gasol plc Annual Report and Accounts 2010
Osman Shahenshah (48) 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 (44) 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 (56)
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. 14 Gasol plc Annual Report and Accounts 2010
Directors’ Report
for the year ended 31 March 2010
The Directors present their report on the Company and the Group, together with the audited financial statements for the year ended 31 March 2010.
The comparative period is for the 13 months ended 31 March 2009.
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 domestic 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 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.
Going concern
The directors have prepared these financial statements on a going concern basis as Gasol have progressed in negotiations with investors and advisors
regarding securing funding and are reasonably confident of a successful conclusion to these negotiations.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 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. 15 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
Result and dividend
The results of the Group for the year ended 31 March 2010 are set out on page 23.
The Directors do not recommend payment of a dividend for the period (2009: £nil).
Directors
The names of individuals who served as directors of the Company from the beginning of the year are as follows:
Name of Director
Haresh Kanabar
Osman Shahenshah
Ewen Wigley Appointed 11 December 2009
Paul Biggs
Charles Osezua Resigned 25 June 2009
Soumo Bose Resigned 11 December 2009
Theo Oerlemans Resigned 31 October 2009
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 25 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 23 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 53 days (period ended 31 March 2009: 31 days).
Share capital
On 27 May 2009, as part of its funding initiative, Gasol issued 7,042,254 ordinary shares to each of African Gas Development Corporation (“AfGas”) and
Afren plc for £500,000 consideration being 14,084,508 shares in total.
On 16 June 2009, 2,212,390 shares were issued to Jefferies arising from financial advice and NOMAD services for the period January to June 2009 as
settlement of fees payable of £50,843.
On 26 June 2009, 2,315,083 shares were issued to Charles Osezua as settlement for $50,000 (£30,546) fees payable for advice and support to the Zafiro
project in Equatorial Guinea.
On 26 June 2009, 530,973 shares were issued to Emmanuel Quartey as a result of advice and support on project development in Ghana as settlement of
fees payable of £15,000.
On 30 June 2009, as part of its funding initiative, Gasol issued 7,042,254 ordinary shares to AfGas for £250,000 consideration.
On 22 July 2009, as part of its funding initiative, Gasol issued 7,042,254 ordinary shares to AfGas for £250,000 consideration.
On 20 August 2009, as part of its funding initiative, Gasol issued 21,164,021 ordinary shares to AfGas for £500,000 consideration.
On 19 October 2009, as part of its funding initiative, Gasol issued 21,164,021 ordinary shares to AfGas for £500,000 consideration. Directors’ Report
for the year ended 31 March 2010continued
16 Gasol plc Annual Report and Accounts 2010
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
Gasol Employee Benefit Trust 46,624,198 4.22
Charitable and political donations
No charitable or political donations were made during the year (period ended 31 March 2009: £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
7 September 2010 17 Gasol plc Annual Report and Accounts 2010 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. As of 25 June 2009, Charles Osezua resigned and is no longer a board
member of the Investment Committee.
Corporate Governance Statement
for the year ended 31 March 2010 18 Gasol plc Annual Report and Accounts 2010
Corporate Governance Statement
for the year ended 31 March 2010continued
Attendance at Board Meetings
Full
Gasol Plc Board Audit EGM AGM
No. of Meetings 12 21 1
Haresh Kanabar 11 2– –
Ewen Wigley 1– ––
Osman Shahenshah 10 –– 1
Paul Biggs 82 1 –
Charles Osezua 1– ––
Soumo Bose 9– – 1
Theo Oerlemans 4– 1 1
As a result of changes to the board no remuneration, nomination or investment committee meetings were held in the year.
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.
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. 19 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
Report of the Remuneration Committee
for the year ended 31 March 2010
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 2010 is shown below:
Termination Share-based
Salary payments Sub-total payment Pension Total
££ ££ ££
Haresh Kanabar 18,750 – 18,750 –– 18,750
Ewen Wigley 36,000 – 36,000 –– 36,000
Theo Oerlemans 44,739 20,476 65,215 –– 65,215
Soumo Bose 173,918 544,545 718,463 408,458 7,500 1,134,421
Paul Biggs 17,500 – 17,500 –– 17,500
Osman Shahenshah 18,750 – 18,750 –– 18,750
Charles Osezua 46,250 – 46,250 –– 46,250
355,907 565,021 920,928 408,458 7,500 1,336,886
Included within termination payments is a share-based payment charge of £4,546.
A summary of remuneration is as follows:
Year ended Period ended
31 March 31 March
2010 2009
££
Aggregate emoluments of Executive Directors 663,115 594,786
Payments to Non-Executive Directors 101,250 183,239
Director’s termination payment for loss of office 565,021 120,150
Pension 7,500 30,000
Total Directors’ remuneration 1,336,886 928,175 20 Gasol plc Annual Report and Accounts 2010
Report of the Remuneration Committee
for the year ended 31 March 2010continued
There were no pension benefits accruing to Directors under defined benefit schemes in the year (period ended 31 March 2009: £nil).The aggregate
emoluments for Executive Directors include £7,500 (2009: £30,000) of contributions to a personal pension plan for Soumo Bose.
The key management personnel of the Group are the Directors of Gasol.
No Director exercised any share options during the year (period ended 31 March 2009: nil). Details of Directors’ shareholdings can be found below.
Of the aggregate remuneration paid to Executive Directors, £413,004 (period ended 31 March 2009: £374,786) was in the form of share-based payments.
Of the aggregate remuneration paid to Non-Executive Directors, £nil (period ended 31 March 2009: £nil) was in the form of share-based payments.
The highest paid Director received total emoluments in the year in respect of service of £582,376 (period ended 31 March 2009: £390,353) and £544,545 in
respect of termination payments for loss of office. At the year end £180,000 remained outstanding and included as a liability.
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 2010, the cost of this insurance was £19,309 (period ended 31 March 2009: £38,853) and was
borne entirely by Gasol.
Directors’ interests
The beneficial interests of the Directors in the ordinary shares of the Company at 31 March 2010 are as follows:
Ordinary shares of 0.5p each
At 31 March At 31 March
2010 2009
Haresh Kanabar Nil Nil
Ewen Wigley 250,000 250,000*
Osman Shahenshah Nil Nil
Paul Biggs 413,776 413,776
*On date of appointment
The Directors’ interests in options over the equity share capital of the Company at 31 March 2010 are as follows:
At 31 March Exercised/ At 31 March Exercise
Exercisable
2009 Granted Lapsed 2010 Price From To
Haresh Kanabar 500,000 – (500,000) –– ––
Osman Shahenshah 500,000 – (500,000) –– ––
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 2010 was 2.1 pence (31 March 2009: 1.5 pence) and the range during the period was
1.6 pence to 4.9 pence (period ended 31 March 2009: 0.22 pence to 13.50 pence).
This report was approved by the Board of Directors and signed on its behalf by:
Osman Shahenshah
Chairman, Remuneration Committee
7 September 2010 21 Gasol plc Annual Report and Accounts 2010 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 period.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;
• 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 2010
Independent Auditors’ Report
for the year ended 31 March 2010
Independent auditors’ report to the shareholders of Gasol plc
We have audited the financial statements of Gasol plc for the year ended 31 March 2010 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 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
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting
policies are appropriate to the group’s and the parent company’s circumstances and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements.
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 2010 and of the group’s loss
for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
• the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
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.
Emphasis of matter – going concern and carrying value of company and consolidated goodwill
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 was obtained in June 2009, the ability to draw on the facility is
dependent upon certain conditions outside of the control of the Group, including share price and share trading volumes. Although the directors are
confident of being able to draw on the £10million facility and 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 3 and 26.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.
Eric Solomons (senior statutory auditor)
For and on behalf of BDO LLP , statutory auditor
Manchester
United Kingdom
7 September 2010
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). 23 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2010
Y ear ended Period ended
31 March 31 March
2010 2009
Restated
Note £ £
Other operating income 11 68,000 237,601
Administrative expenses 4 (4,622,768) (6,758,127)
Intangible asset impairment 9 – (742,904)
Loss from operations (4,554,768) (7,263,430)
Finance income 6 3,673 101,699
Finance costs 7 (532,147) (20,655)
Loss before tax (5,083,242) (7,182,386)
Income tax expense 8 – –
Loss for the year/period (5,083,242) (7,182,386)
Other comprehensive income/(expense):
Currency translation differences 25,826 (10,366)
Total comprehensive expense for the year/period (5,057,416) (7,192,752)
Loss per ordinary share
Basic and diluted loss per share 10 (0.47p) (1.08p)
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 31 to 60 form part of these financial statements. Consolidated Statement of Changes in Equity
for the year ended 31 March 2010
Reverse Capital Deferred
Share Share acquisition contribution Translation consideration Retained Total
capital premium reserve reserve reserve reserve earnings equity
££ ££ £££ £
At 1 March 2008 as originally stated 50 –– 900,000 –– (848,781) 51,269
Prior year adjustment 778,783 10,263,993 (63,104,556) (900,000) (2,303) 60,749,039 (2,149,026) 5,635,930
At 1 March 2008 restated 778,833 10,263,993 (63,104,556) – (2,303) 60,749,039 (2,997,807) 5,687,199
Comprehensive income
Loss for the period –– –– –– (7,182,386) (7,182,386)
Other comprehensive income
Currency translation differences –– –– (10,366) –– (10,366)
Total comprehensive income
for the period ended 31 March 2009 restated–– –– (10,366) – (7,182,386) (7,192,752)
Capital contributions received –– – 74,156 –– – 74,156
Issue of share capital 4,367,835 61,431,203 –– – (60,749,039) – 5,049,999
Share-based payments –– –– –– 380,039 380,039
4,367,835 61,431,203 – 74,156 – (60,749,039) 380,039 5,504,194
At 31 March 2009 restated 5,146,668 71,695,196 (63,104,556) 74,156 (12,669) – (9,800,154) 3,998,641
Gasol plc Annual Report and Accounts 2010 24 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 earnings equity
££ ££ £££ £
At 1 April 2009 Restated 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
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.
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.
Details of the prior year adjustment are included within note 1.
The notes on pages 31 to 60 form part of these financial statements.
Business Review
Corporate Governance
Financial Statements
Gasol plc Annual Report and Accounts 2010 25 Company Statement of Changes in Equity
for the year ended 31 March 2010
Deferred
Share Share Warrant consideration Retained Total
capital premium reserve reserve earnings equity
££££££
At 1 March 2008 as originally stated 778,833 10,263,993 –– (1,685,628) 9,357,198
Prior year adjustment ––– 60,749,039 – 60,749,039
At 1 March 2008 restated 778,833 10,263,993 – 60,749,039 (1,685,628) 70,106,237
Comprehensive income
Loss for the period as originally stated –––– (39,937,769) (39,937,769)
Total comprehensive income for the period
ended 31 March 2009 as originally stated –––– (39,937,769) (39,937,769)
Prior year adjustment –––– (480,152) (480,152)
Restated total comprehensive income for the
period ended 31 March 2009 –––– (40,417,921) (40,417,921)
Issue of share capital 4,367,835 61,431,203 – (60,749,039) – 5,049,999
Share-based payments –––– 380,039 380,039
4,367,835 61,431,203 – (60,749,039) 380,039 5,430,038
At 31 March 2009 5,146,668 71,695,196 –– (41,723,510) 35,118,354
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 – 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
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.
Details of the prior year adjustment are included within note 1.
The notes on pages 31 to 60 form part of these financial statements.
Gasol plc Annual Report and Accounts 2010 26 Consolidated Statement of Financial Position
as at 31 March 2010
31 March 31 March 29 February
2010 2009 2008
Restated Restated
Note £ ££
Assets
Non-current assets
Goodwill 12 3,285,488 3,285,488 3,394,911
Intangible assets 12 – – 506,200
Property, plant and equipment 14 134,729 260,853 370,843
Total non-current assets 3,420,217 3,546,341 4,271,954
Current assets
Trade and other receivables 15 242,099 268,602 410,748
Cash and cash equivalents 22 245,189 782,286 1,446,955
Total current assets 487,288 1,050,888 1,857,703
Total assets 3,907,505 4,597,229 6,129,657
Liabilities
Current liabilities
Trade and other payables 16 605,690 598,588 368,302
Borrowings 17 1,197,676 – 74,156
Total current liabilities 1,803,366 598,588 442,458
Total liabilities 1,803,366 598,588 442,458
Net assets 2,104,139 3,998,641 5,687,199
Equity
Share capital 19 5,524,445 5,146,668 778,833
Share premium account 72,574,560 71,695,196 10,263,993
Reverse acquisition reserve (63,104,556) (63,104,556) (63,104,556)
Total issued equity 14,994,449 13,737,308 (52,061,730)
Capital contribution reserve 83,787 74,156 –
Translation reserve 13,157 (12,669) (2,303)
Warrant reserve 1,473,719 ––
Deferred consideration reserve – – 60,749,039
Retained losses (14,460,973) (9,800,154) (2,997,807)
Total equity attributable to equity holders of the parent 2,104,139 3,998,641 5,687,199
The notes on pages 31 to 60 form part of these financial statements
The financial statements were approved by the Board of Directors and authorised for issue on 7 September 2010.
Ewen Wigley
Chief Operating Officer
Business Review
Corporate Governance
Financial Statements
Gasol plc Annual Report and Accounts 2010 27 Company Statement of Financial Position
as at 31 March 2010
31 March 31 March 29 February
2010 2009 2008
Restated Restated
Note £ ££
Assets
Non-current assets
Goodwill 26 34,948,633 34,948,633 –
Investment in subsidiary undertakings 26 – – 67,539,439
Property, plant and equipment 27 134,729 249,614 310,498
Total non-current assets 35,083,362 35,198,247 67,849,937
Current assets
Trade and other receivables 28 196,187 201,551 1,294,779
Cash and cash equivalents 30 235,506 746,836 1,312,130
Total current assets 431,693 948,387 2,606,909
Total assets 35,515,055 36,146,634 70,456,846
Liabilities
Current liabilities
Trade and other payables 29 596,191 1,028,280 350,609
Borrowings 17 1,197,676 ––
Total current liabilities 1,793,867 1,028,280 350,609
Total liabilities 1,793,867 1,028,280 350,609
Net assets 33,721,188 35,118,354 70,106,237
Equity
Share capital 19 5,524,445 5,146,668 778,833
Share premium account 72,574,560 71,695,196 10,263,993
Warrant reserve 1,473,719 ––
Deferred consideration reserve – – 60,749,039
Retained losses (45,851,536) (41,723,510) (1,685,628)
Total equity attributable to equity holders of the parent 33,721,188 35,118,354 70,106,237
The notes on pages 31 to 60 form part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 7 September 2010.
Ewen Wigley
Chief Operating Officer
Gasol plc Annual Report and Accounts 2010 28 Consolidated Statement of Cash Flows
as at 31 March 2010
Y ear ended Period ended
31 March 31 March
2010 2009
Restated
Note £ £
Loss before taxation (5,083,242) (7,182,386)
Adjustments for:
Finance income (3,673) (101,699)
Finance costs 532,147 20,655
Depreciation charges 114,815 155,069
Impairment of intangible asset – 633,481
Impairment of goodwill – 109,423
Equity settled expense 96,389 50,000
Loss on disposal of property, plant and equipment 11,239 –
Share-based payment charge 422,423 380,039
Operating cash flows before movements in working capital (3,909,832) (5,935,418)
Decrease in receivables 26,503 142,146
Increase in payables 42,559 219,919
Net cash absorbed by operating activities (3,840,770) (5,573,353)
Cash flows from investing activities
Interest received 3,673 101,699
Expenditure on development of intangible assets – (127,281)
Purchases of property, plant and equipment – (45,079)
Net cash received from/(absorbed by) investing activities 3,673 (70,661)
Cash flows from financing activities
Interest paid – (20,655)
Proceeds from issue of share capital net of issue costs 2,000,000 5,000,000
Proceeds from issue of unsecured loan 300,000 –
Proceeds from issue of convertible loan note 1,000,000 –
Net cash generated from financing activities 3,300,000 4,979,345
Net decrease in cash and cash equivalents (537,097) 664,669
Cash and cash equivalents at beginning of year/period 782,286 1,446,955
Cash and cash equivalents at end of year/period 22 245,189 782,286
The notes on pages 31 to 60 form part of these financial statements.
Business Review
Corporate Governance
Financial Statements
Gasol plc Annual Report and Accounts 2010 29 Company Statement of Cash Flows
for the year ended 31 March 2010
Y ear ended Period ended
31 March 31 March
2010 2009
Restated
Note £ £
Loss before taxation (4,550,449) (40,417,921)
Adjustments for:
Finance income (108) (100,113)
Finance costs 521,476 20,655
Depreciation of property, plant and equipment 114,885 150,493
Impairment to investment in subsidiary – 32,590,806
Equity settled expenses 96,389 50,000
Share-based payment charge 422,423 380,039
Operating cash flows before movements in working capital (3,395,384) (7,326,041)
Decrease in receivables 5,364 1,093,227
(Decrease)/increase in payables (421,418) 677,671
Net cash absorbed by operating activities (3,811,438) (5,555,143)
Cash flows from investing activities
Interest received 108 100,113
Purchases of property, plant and equipment – (89,609)
Net cash generated from investing activities 108 10,504
Cash flows from financing activities
Proceeds from issue of share capital net of issue costs 2,000,000 5,000,000
Proceeds from issue of unsecured loan 300,000 –
Proceeds from issue of convertible loan note 1,000,000 –
Interest paid – (20,655)
Net cash generated from financing activities 3,300,000 4,979,345
Net decrease in cash and cash equivalents (511,330) (565,294)
Cash and cash equivalents at start of year/ period 746,836 1,312,130
Cash and cash equivalents at end of year/period 30 235,506 746,836
The notes on pages 31 to 60 form part of these financial statements.
Gasol plc Annual Report and Accounts 2010 30 Notes to the Consolidated Financial Statements
for the year ended 31 March 2010
1. Basis of preparation
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.
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 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.
The comparatives are for the 13 months ended 31 March 2009 and the 12 months ended 29 February 2008.
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 negotiations to date 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.
Restatement of prior period comparatives for 2008 and 2009 – consolidation of African LNG Holdings Limited
The Group has recently concluded discussions with the Financial Reporting Review Panel (FRRP) about the accounting approach that was adopted for the
acquisition by Gasol of African LNG Holdings Limited (“African LNG”).This acquisition had been accounted for in two stages, with acquisition accounting
having been applied for the original transaction in August 2006 which involved the acquisition of a 20% interest and an option, exercisable at any time, to
acquire the remaining 80% of African LNG, and reverse acquisition accounting then having been applied on the subsequent exercise of the 80% option. As
a result of the discussions with the FRRP , the Board has given further consideration as to whether the application of acquisition accounting in the financial
statements for the year ended 28 February 2007 was the appropriate approach. Following careful consideration, the Board has concluded that it should
have applied reverse acquisition accounting to the transaction when it was first recorded and so the 2008 and 2009 accounts require restatement.
In consequence, the comparative financial statements have been corrected to adopt reverse acquisition accounting with effect from August 2006, with an
additional second year of comparative Statement of Financial Position being included in these financial statements.The effect of the change in approach
is set out below:
It should be noted that the as reported figures, within note 1, are the comparative numbers disclosed in the financial statements for the 13 months ended
31 March 2009.
Business Review
Corporate Governance
Financial Statements
Gasol plc Annual Report and Accounts 2010 31 1. Basis of preparation continued
31 March 31 March
2009 Effect of 2009
Statement of Financial Position Restated restatement As reported
Prior period restatement 2009 ££ £
Assets
Non-current assets
Goodwill 3,285,488 306,788 2,978,700
Intangible assets –– –
Property, plant and equipment 260,853 – 260,853
Total non-current assets 3,546,341 306,788 3,239,553
Total current assets 1,050,888 – 1,050,888
Total assets 4,597,229 306,788 4,290,441
Liabilities
Current liabilities
Trade and other payables 598,588 – 598,588
Borrowings –– –
Deferred consideration –– –
Total liabilities 598,588 – 598,588
Net assets 3,998,641 306,788 3,691,853
Equity
Share capital 5,146,668 – 5,146,668
Share premium account 71,695,196 – 71,695,196
Reverse acquisition reserve (63,104,556) (4,589,810) (67,694,366)
Total issued equity 13,737,308 (4,589,810) 9,147,498
Capital contribution reserve 74,156 – 74,156
Translation reserve (12,669) – (12,669)
Retained losses (9,800,154) 4,283,022 (5,517,132)
Total equity attributable to equity holders of the parent 3,998,641 (306,788) 3,691,853
Effect of restatement – 2009
The above changes to goodwill, reverse acquisition reserve and retained losses have predominantly resulted from changing the effective date of the
reverse takeover from June 2008 to August 2006, which has the impact of changing the opening pre-acquisition reserves.
The £306,788 increase in goodwill represents the net of a £416,211 increase, as a result of the change in the effective date of the reverse takeover, and a
£109,423 impairment charge against Afgas Infrastructure Limited and Afgas Nigeria Limited goodwill which was also consolidated following the revised
effective date of the reverse takeover.The £109,423 also increased administrative expenses for the year with no taxation impact.
Gasol plc Annual Report and Accounts 2010 32
Notes to the Consolidated Financial Statements
for the year ended 31 March 2010continued 1. Basis of preparation continued
29 February 29 February
2008 Effect of 2008
Statement of Financial Position Restated restatement As reported
Prior period restatement 2008 ££ £
Assets
Non-current assets
Goodwill 3,394,911 3,394,911 –
Intangible assets 506,200 506,200 –
Property, plant and equipment 370,843 370,843 –
Total non-current assets 4,271,954 4,271,954 –
Total current assets 1,857,703 1,732,278 125,425
Total assets 6,129,657 6,004,232 125,425
Liabilities
Current liabilities
Trade and other payables 368,302 368,302 –
Borrowings 74,156 – 74,156
Total liabilities 442,458 368,302 74,156
Net assets 5,687,199 5,635,930 51,269
Equity
Share capital 778,833 778,783 50
Share premium account 10,263,993 10,263,993 –
Reverse acquisition reserve (63,104,556) (63,104,556) –
Total issued equity (52,061,730) (52,061,780) 50
Capital contribution reserve – (900,000) 900,000
Translation reserve (2,303) (2,303) –
Deferred consideration reserve 60,749,039 60,749,039 –
Retained losses (2,997,807) (2,149,026) (848,781)
Total equity attributable to equity holders of the parent 5,687,199 5,635,930 51,269
Effect of restatement – 2008
The above changes represent a full consolidated period for the Group after changing the effective date of the reverse takeover from June 2008 to August
2006.The previously reported figures represent the assets and liabilities of African LNG Holdings Limited, the accounting acquirer, rather than the
consolidated Group as now disclosed.
The deferred consideration reserve represents shares to be issued by Gasol plc in consideration for the remaining 80% of the share capital of African LNG
Holdings Limited. These were issued during the year ended 31 March 2009 when the option was exercised.
Business Review
Corporate Governance
Financial Statements
Gasol plc Annual Report and Accounts 2010 33 Notes to the Consolidated Financial Statements
for the year ended 31 March 2010continued
1. Basis of preparation continued
13 month 13 month
period ended period ended
31 March 31 March
2009 Effect of 2009
Statement of Comprehensive Income Restated restatement As reported
Prior period restatement 2009 ££ £
Other operating income 237,601 (12,096) 249,697
Administrative expenses (6,758,127) (1,430,780) (5,327,347)
Loss from operations (6,520,526) (1,442,876) (5,077,650)
Finance income 101,699 56,862 44,837
Finance costs (20,655) (2,430) (18,225)
Intangible asset impairment (742,904) (742,904) –
Loss before taxation (7,182,386) (2,131,348) (5,051,038)
Income tax expense –– –
Loss for the period (7,182,386) (2,131,348) (5,051,038)
Other comprehensive income/(expense)
Currency translation differences (10,366) 2,303 (12,669)
Total comprehensive expense for the period (7,192,752) (2,129,045) (5,063,707)
Loss per ordinary share
Basic and diluted loss per share (1.08p) (0.41p) (0.67p)
Effect of restatement – 2009
The above changes represent a full consolidated period for the Group after changing the effective date of the reverse takeover from June 2008 to August
2006 and £109,423 goodwill impairment in relation to Afgas Infrastructure Limited and Afgas Nigeria Limited.
Prior period adjustment – Company administrative expenses
Following the finalisation of the 31 March 2009 subsidiary financial statements after the Group financial statements had been released it was determined
that expenses had been incorrectly allocated to a subsidiary when they should have been recorded as an expense of Gasol plc. A prior period adjustment
has been recorded to correct the Company results; with no impact on the Group results.The adjustment has resulted in an increase of £480,152 in 2009 to
administrative expenses and retained losses.There is no taxation impact of this adjustment.
Opening retained losses of the Company as at 1 April 2009 have been restated from £41,243,358 to £41,723,510.
Prior year adjustment – Company investment in subsidiaries and goodwill
Following the finalisation of the 31 March 2009 subsidiary financial statements after the Group financial statements had been released it was determined
that the trade of African LNG Holdings Limited and its subsidiary African LNG Services Limited had been transferred to the parent company Gasol plc. A
prior period adjustment has been made to record this accounting hive up with £34,948,633 being reallocated from investment in subsidiaries to goodwill.
There is no impact on the consolidated Statement of Financial Position or the Statement of Comprehensive Income.
Treatment of SONAF G.E.S.A. (“SONAF”)
In the half year results to 31 August 2009, SONAF was disclosed and accounted for as a subsidiary. Subsequently the Directors have reconsidered the
applicable facts and circumstances, including but not limited to board composition and voting rights, and concluded that treatment as a joint venture is
more appropriate.The reported loss and net assets at the half year would not have changed significantly.
34 Gasol plc Annual Report and Accounts 2010 1. Basis of preparation continued
Standards and Interpretations effective in the current year
The following new and amended financial reporting standards have been adopted in the financial statements during the year:
IFRS 2 Share-based Payment (Amendment)
IFRS 7 Financial Instruments: Disclosures (Amendment)
IFRS 8 Operating Segments
IAS 1 Presentation of Financial Statements (Amendment)
IAS 23 Borrowing Costs (Revised)
IAS 27 Consolidated and Separate Financial Statements (Amendment)
IAS 32 Financial Instruments: Presentation (Amendment)
IAS 39 Financial Instruments: Recognition and Measurement (Amendment)
IFRIC 9 Reassessment of Embedded Derivatives (Amendment)
IFRIC 13 Customer Loyalty Programmes
IFRIC 15 Agreements for the Construction of Real Estate
IFRIC 16 Hedges of Net Investment in a Foreign Operation
The adoption of these standards has resulted in amended presentation of certain of the primary financial statements and additional disclosures in relation
to operating segments and financial instruments.
Standards issued but not yet effective
The International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) have issued the
following standards and interpretations to be applied to the financial statements with periods commencing after the date of these financial statements.
They have not been adopted early by the Group and the Directors do not expect these standards and interpretations to have a material impact on the
financial statements.
International Financial Reporting Standards (IFRS/IAS) Effective date
(periods beginning on or after)
IFRS 2* Share based Payment (Amendment) 1 July 2009
IFRS 3* Business Combinations (Amendment) 1 July 2009
IFRS 5* Non-current Assets Held for Sale and Discontinued Operations (Amendment) 1 July 2009
IFRS 8* Operating Segments (Amendment) 1 Jan 2010
IFRS 9* Financial Instruments 1 Jan 2013
IAS 1* Presentation of Financial Statements (Amendment) 1 Jan 2010
IAS 7* Statement of Cash Flows (Amendment) 1 Jan 2010
IAS 17* Leases (Amendment) 1 Jan 2010
IAS 18* Revenue (Amendment) Once endorsed
IAS 24* Related Party Disclosures (Revised) 1 Jan 2011
IAS 27 Consolidated and Separate Financial Statements (Amendment) 1 July 2009
IAS 28 Investments in Associates (Amendment) 1 July 2009
IAS 31 Interests in Joint Ventures (Amendment) 1 July 2009
IAS 32 Financial Instruments: Presentation (Amendment) 1 Feb 2010
IAS 36* Impairment of Assets (Amendment) 1 Jan 2010
IAS 38* Intangible Assets (Amendment) 1 July 2009
IAS 39 Financial Instruments: Recognition and Measurement (Amendment) 1 July 2009
International Financial Reporting Interpretations (IFRIC) Effective date
IFRIC 9* Reassessment of Embedded Derivatives (Amendment) 1 July 2009
IFRIC 14* Amendments – Prepayments of a Minimum Funding Requirement 1 Jan 2011
IFRIC 16* Hedges of a Net Investment in a Foreign Operation (Amendment) 1 July 2009
IFRIC 17 Distribution of Non-Cash Assets to Owners 1 July 2009
IFRIC 18 Transfer of Assets from customers 1 July 2009
IFRIC 19* Extinguishing Financial Liabilities with Equity Instruments 1 July 2010
*Still to be endorsed by the EU as at the date of the approval of these financial statements.
35 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements 2. Significant accounting policies
Basis of consolidation
The consolidated financial statements present the results of Gasol and all its subsidiaries and joint ventures.
These consolidated financial statements incorporate the financial statements of Gasol, African LNG Holdings Limited, African LNG Services Limited, Afgas
Infrastructure Limited, Afgas Nigeria Limited and the joint venture SONAF G.E.S.A. (incorporated using the proportional consolidation method).
Minority interests in the net assets or liabilities of consolidated subsidiaries are identified separately from the Group’s equity therein. Minority 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 minority
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 2010 includes a loss after tax of
£4,550,448 (13 months ended 31 March 2009: £40,420,569 restated).
Reverse acquisition accounting
As outlined in note 1 the reverse acquisition of African LNG Holdings Limited has been restated to take account of changing the effective date of the
transaction from June 2008 to August 2006.
This business combination has been accounted for under the principles of reverse acquisition accounting as required by IFRS 3. Although the consolidated
financial statements have been prepared in the name of the legal parent, Gasol plc, they are in substance a continuation of the consolidated financial
statements of the legal subsidiary, African LNG Holdings Limited.
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.
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.
Gasol plc Annual Report and Accounts 2010 36
Notes to the Consolidated Financial Statements
for the year ended 31 March 2010continued 2. Significant accounting policies continued
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 currently payable is based on taxable profit for the period.Taxable profit differs from net profit as reported in the income statements because it
excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible.The
Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the Statement of Financial Position date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities on an accounting basis
and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the Statement of Financial Position liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences 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 the initial recognition of 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.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
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 less accumulated depreciation and any recognised impairment loss.The cost is its purchase
cost together with any incidental costs of acquisition.
Depreciation is charged so as to write off the cost or valuation of assets, other than land and properties under construction, over their estimated useful
lives, using the straight-line method over the following periods:
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.
Impairment of non-financial assets
At each Statement of Financial Position date, the Group reviews the carrying amounts of its non-financial assets 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.
Business Review
Corporate Governance
Financial Statements
Gasol plc Annual Report and Accounts 2010 37 2. Significant accounting policies continued
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 (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset (or cash-generating unit) in prior periods. A reversal of an impairment loss is recognised as income immediately.
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 do not carry interest.They are initially recognised at fair value, and are subsequently measured at amortised cost.Where amortisation is
insignificant, receivables are stated at their nominal value unadjusted to reflect discounting for the time value of cash flows recoverable and are reduced
by appropriate allowances for estimated irrecoverable amounts.
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.
Trade payables
Trade payables are not interest bearing.They are initially recognised at fair value, and subsequently measured at amortised cost.Where amortisation is
insignificant, payables are stated at their nominal value.
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a
known amount of cash and are subject to an insignificant risk of changes in value.The Group considers all highly liquid investments with original maturity
dates of three months or less to be cash equivalents.
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.
Convertible loan notes that can be converted into a variable number of shares at the option of the holder and Company are recognised as liabilities.
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.
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 the directors’ best estimate of the expenditure required to settle the obligation at the Statement of Financial
Position date, and are 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.
Gasol plc Annual Report and Accounts 2010 38
Notes to the Consolidated Financial Statements
for the year ended 31 March 2010continued 2. Significant accounting policies continued
Investment income
Investment income relates to interest income,which is accrued on a time basis,by reference to the principal outstanding and at the effective interest rate applicable.
Loss from operations
Loss from operations is stated after crediting all operating income and charging all operating expenses (including impairments of intangible assets), but
before crediting or charging finance income or expense.
Segmental reporting
Gasol currently operates only one class of business, being the exploration for opportunities to aggregate and monetise stranded gas assets in West Africa.
As such, no separate analysis of the performance and position of business segments has been disclosed in the financial statements. All property, plant and
equipment is located in the UK.
3. Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the Group’s accounting policies, which are described in note 2, management has made the following judgements that have the
most significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below).
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the Statement of Financial Position date, that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
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 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.
The Group has continued with extensive negotiations, with the aim of getting first right of refusal over certain gas reserves that will be acquired by an
upstream partner in Nigeria.The business model intends to take advantage of opportunities presented by the increase in availability of marginal fields and
the associated gas. As the downstream partner, the Group will earn revenues through the liquefaction and distribution of gas from the marginal fields.
The targeted commercial start of the project is 2014 and cash flows have been projected to at least 2026 as this is the expected minimum 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. If a higher discount rate was
to be used this would lead to an impairment charge.
Discounting back to a present value, the carrying value of goodwill is supported entirely.The directors’valuation of the Group’s share of the project at 31 March
2010 is £34,948,633.In forming this valuation, the directors have considered the relevant probabilities of success at each stage of the project and have weighted
the results accordingly.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.
Business Review
Corporate Governance
Financial Statements
Gasol plc Annual Report and Accounts 2010 39 Notes to the Consolidated Financial Statements
for the year ended 31 March 2010continued
40 Gasol plc Annual Report and Accounts 2010
4. Expenses by nature and auditor’s remuneration
Y ear ended Period ended
31 March 31 March
2010 2009
Restated
£ £
Staff costs 1,870,440 2,085,389
Depreciation of property, plant and equipment 114,885 155,069
Operating lease payments 248,540 251,309
Share-based payments 422,423 380,039
Provision against joint ventures receivable 116,910 –
Other expenses 1,849,570 3,886,321
Total administrative expenses 4,622,768 6,758,127
During the year/period the Group obtained the following services from the Company’s auditor:
Audit fees
– As auditors (parent and consolidation) 22,000 21,500
– As auditors (subsidiaries) 3,500 5,500
Other services
– corporate finance services – 50,000
– other 3,500 14,000
5. Staff costs
Y ear ended Period ended
31 March 31 March
2010 2009
Restated
£ £
Directors’ fees and emoluments 764,365 778,025
Director’s termination payment for loss of office 565,021 120,150
Wages and salaries 811,770 987,140
Social security costs 129,493 164,020
2,270,649 2,049,335
The average number of employees (including executive directors) employed by the Group during the year/period was:
Number Number
Management and finance 12 11
Administrative and support 1 3
13 14
In the year ended 31 March 2010, £22,214 was paid by Gasol into defined contribution pension schemes as part of staff remuneration (period ended
31 March 2009: £36,054).
Further information regarding the remuneration of directors is included in the Report of the Remuneration Committee on pages 19 to 20. 41 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
6. Finance income
Y ear ended Period ended
31 March 31 March
2010 2009
Restated
£ £
Interest received on bank deposits 3,673 101,699
7. Finance costs
Y ear ended Period ended
31 March 31 March
2010 2009
Restated
£ £
Bank interest paid – 20,655
Convertible loan note interest 12,466 –
Amounts recognised on warrants 519,681 –
532,147 20,655
The amount expensed relating to warrants is comprised of £489,276 in relation to warrants issued to secure a future line of funding. £30,405 represents the
accretion of warrants issued with convertible debt (note 17).
8. Taxation
Y ear ended Period ended
31 March 31 March
2010 2009
Restated
£ £
Loss before taxation (5,083,242) (7,182,386)
Loss before taxation at the standard rate of corporation tax in the UK of 28% (2009: 28%) (1,423,308) (2,011,069)
Effects of:
Expenses not deductible for tax purposes 327,724 183,268
Unutilised tax losses 1,095,584 1,827,800
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 £13.91m at 31 March 2010 (31 March 2009: of £10.05m) would
be recognised at a rate of 28%. Notes to the Consolidated Financial Statements
for the year ended 31 March 2010continued
42 Gasol plc Annual Report and Accounts 2010
9. Intangible asset impairment
Y ear ended Period ended
31 March 31 March
2010 2009
Restated
£ £
Impairment of goodwill (note 12) – (109,423)
Impairment of intangible assets (note 13) – (633,481)
– (742,904)
10. Loss per ordinary share
The calculation of a basic loss per share of 0.47 pence for the year (period ended 31 March 2009: 0.67 pence) is based on the loss for the period
attributable to equity holders of Gasol Plc of £5,083,242 (period ended 31 March 2009: £7,182,386) and on the weighted average number of shares in issue
during the period of 1,074,900,117 (period ended 31 March 2009: 665,197,580).
Due to the loss incurred during the period, a diluted loss per share has not been reported as this would serve to reduce the basic loss per share.
At 31 March 2010, there were 114,394,667 potentially dilutive shares (31 March 2009: 48,344,667) as part of a share-based payment scheme and outstanding
warrants.
11. Other operating income
Other operating income relates to rental income received on the sub-letting of surplus office space.
12. Goodwill
£
Cost
At 29 February 2008 as originally stated 2,978,700
Prior year adjustment (note 1) 416,211
At 29 February 2008 as restated 3,394,911
Additions –
At 31 March 2009 and 31 March 2010 3,394,911
Accumulated impairment losses
At 29 February 2008 –
Impairment –
At 31 March 2009 as originally reported –
Prior year adjustment (note 1) 109,423
At 31 March 2009 as restated 109,423
At 31 March 2010 109,423
Carrying amount
At 31 March 2009 and 31 March 2010 3,285,488
At 29 February 2008 3,394,911
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). 43 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
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 Period ended Year ended
31 March 31 March 29 February
2010 2009 2008
Restated Restated
£ ££
Afgas Nigeria Limited –– 51,568
Afgas Infrastructure Limited –– 57,855
Purchase of subsidiary through reverse acquisition 3,285,488 3,285,488 3,285,488
3,285,488 3,285,488 3,394,911
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. Other intangible assets
£
Cost
At 29 February 2008 as originally stated –
Prior year adjustment (note 1) 506,200
At 29 February 2008 as restated 506,200
Additions in the period 127,281
Impairment of intangible assets (633,481)
At 31 March 2009 and 31 March 2010 –
Amortisation
At 28 February 2006, At 29 February 2008 Restated, at 31 March 2009 Restated and at 31 March 2010 –
Carrying amount
At 31 March 2010 –
At 31 March 2009 as restated –
At 29 February 2008 as restated 506,200
During the period ended 31 March 2009, management assessed progress on the project, developments during the period and recoverability of the
capitalised costs. As a result of uncertainties surrounding this, the amounts were written off.This led to a charge in the Statement of Comprehensive
Income for the period ended 31 March 2009 of £633,481, recorded within administrative expenses, of which expenditure of £127,281 was incurred during
the period. 14. Property, plant and equipment
Office Fixtures and
equipment fittings Total
££ £
Cost
At 29 February 2008 as originally stated –– –
Prior year adjustment (note 1) 88,197 416,443 504,640
At 29 February 2008 as restated 88,197 416,443 504,640
Additions 24,643 20,436 45,079
At 31 March 2009 Restated 112,840 436,879 549,719
Additions –– –
Disposal (634) (17,879) (18,513)
At 31 March 2010 112,206 419,000 531,206
Depreciation
At 29 February 2008 as originally stated –– –
Prior year adjustment (note 1) 45,219 88,578 133,797
At 29 February 2008 as restated 45,219 88,578 133,797
Charge for the period 55,584 99,485 155,069
At 31 March 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
Carrying amount
At 31 March 2010 853 133,876 134,729
At 31 March 2009 12,037 248,816 260,853
At 29 February 2008 Restated 42,978 327,865 370,843
No impairment losses have been realised on any property, plant and equipment during the year (period ended 31 March 2009: £nil, year ended 2008: nil).
Gasol plc Annual Report and Accounts 2010 44
Notes to the Consolidated Financial Statements
for the year ended 31 March 2010continued 15. Trade and other receivables
31 March 31 March 29 February
2010 2009 2008
Restated
£ ££
Trade receivables – 1,165 337,791
VAT recoverable 25,853 ––
Prepayments and accrued income 158,368 190,630 66,524
Other receivables 51,445 70,374 –
Amounts owed by related parties 6,433 6,433 6,433
242,099 268,602 410,748
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
16. Trade and other payables
31 March 31 March 29 February
2010 2009 2008
Restated
£ ££
Other taxes and social security 22,049 63,034 12,342
Accruals 138,619 182,364 292,355
Trade payables 259,355 340,132 63,605
Other payables 185,667 13,058 –
605,690 598,588 368,302
Trade and other payables comprise amounts outstanding for trade purchases and ongoing costs.The average credit period taken for trade purchases is
53 days (period ended 31 March 2009: 31 days, year ended 29 February 2008: 30 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.
Business Review
Corporate Governance
Financial Statements
Gasol plc Annual Report and Accounts 2010 45 Notes to the Consolidated Financial Statements
for the year ended 31 March 2010continued
46 Gasol plc Annual Report and Accounts 2010
17. Borrowings
Borrowings
31 March 31 March 29 February
2010 2009 2008
Group £ ££
Other loan 300,000 – 74,156
Convertible loan note 1,012,466 ––
Loan fees – warrant charge (note 20) (114,790) ––
1,197,676 – 74,156
Borrowings
31 March 31 March 29 February
2010 2009 2008
Company £ ££
Other loan 300,000 ––
Convertible loan note 1,012,466 ––
Loan fees – warrant charge (note 20) (114,790) ––
1,197,676 ––
During the year the Group issued an unsecured convertible loan note with a principal amount of £1,000,000.The loan note matures on 30 December 2010
and interest accrues at 5% compounded annually and is payable on conversion or repayment.
After the conversion date of 30 June 2010 the note-holder may elect to convert all or part of the loan into conversion shares. On conversion the shares will
be issued at a price of 2.6125 pence, being a 10% premium to the prevailing mid-market price on the date before the note was issued.
On maturity, and assuming no previous conversion by the noteholder, the loan note will be repaid, at the election of the Group, in either cash or in shares.
The number of shares will be calculated by reference to the mid-market closing price on the maturity date less 10% discount.
As part of the issuance of the convertible note 20,000,000 warrants were issued (note 20).
Other loans are unsecured.
The carrying amount of the borrowings approximate their fair value. 47 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
18. 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 29 February
2010 2009 2008
Group and company £ ££
Within one year 246,686 246,686 151,200
In the second to fifth years 226,129 472,815 453,600
472,815 719,501 604,800
At the balance sheet date, the Group had no outstanding commitment for future minimum operation lease payments after the next five years.
The operating leases relate to the lease of office premises at 40 New Bond Street, London.
19. Share capital
31 March 31 March 29 February 31 March 31 March 29 February
2010 2009 2009 2010 2009 2009
Restated Restated
Number Number Number £ ££
Authorised:
Ordinary shares of 0.5p each 2,000,000,000 2,000,000,000 400,000,000 10,000,000 10,000,000 2,000,000
Issued and fully paid:
Ordinary shares of 0.5p each 1,104,889,234 1,029,333,730 155,766,666 5,524,445 5,146,668 778,833
The Company has one class of ordinary share which carries no right to fixed income.
There were no share issues during the year ended 29 February 2008.
The following issues of shares were undertaken in the period ended 31 March 2009:
On 8 April 2008 issued 50,000,000 ordinary shares to institutional investors at a price of 8p per share.
On 25 June 2008 issued 623,067,064 ordinary shares to AfGas as consideration for the acquisition of the remaining 80% shareholding in African LNG.
On 25 June 2008 issued 500,000 ordinary shares to Jefferies as consideration for £50,000 of fees due as a result of advice on the re-listing of Gasol.
On 12 February 2009 issued 200,000,000 ordinary shares to Afren at 0.5 pence per share.
The following issues of shares were undertaken in the year ended 31 March 2010:
On 27 May 2009 issued 14,084,508 ordinary shares to AfGas and Afren for consideration of £500,000.
On 16 June 2009 issued 2,212,390 ordinary shares to Jefferies International Limited for consideration of £50,843 in respect of NOMAD services.
On 26 June 2009 issued 2,315,083 ordinary shares to Charles Osezua for consideration of $50,000 in respect of advisory services.
On 26 June 2009 issued 530,973 ordinary shares to Emmanuel Quartey for consideration of £15,000 in respect of advisory services.
On 30 June 2009, issued 7,042,254 ordinary shares to AfGas for consideration of £250,000.
On 22 July 2009, issued 7,042,254 ordinary shares to AfGas for consideration of £250,000.
On 20 August 2009 issued 21,164,021 ordinary shares to AfGas for consideration of £500,000.
On 19 October 2009 issued 21,164,021 ordinary shares to AfGas for consideration of £500,000.
In the year ended 29 February 2008, 623,067,064 ordinary shares were reserved for issue in the event of the Group exercising the 80% option over African
LNG Holdings Limited.
Shares reserved under warrants and employee share schemes are disclosed in note 20. Notes to the Consolidated Financial Statements
for the year ended 31 March 2010continued
48 Gasol plc Annual Report and Accounts 2010
20. Share options and other share based payments
During the year, all existing share options were cancelled and 500,000 new share options were granted as part of a termination payment to a Director.
In addition, 110,000,000 warrants were issued to institutional investors as part of funding activities during the year.
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 Number of
share options share options share options
and warrants and warrants and warrants
year ended WAEP period ended WAEP year ended WAEP
31 March pence 31 March pence 29 February pence
2010 2010 2009 2009 2008 2008
Outstanding at beginning of the period 48,344,667 24.01 55,650,000 14.91 51,450,000 14.91
Granted during the period 110,500,000 4.34 14,694,667 33.38 4,200,000 32.14
Exercised during the period – n/a – n/a – n/a
Lapsed during the period (44,450,000) 22.83 (22,000,000) 10.55 n/a n/a
Outstanding at end of the period 114,394,667 5.45 48,344,667 24.01 55,650,000 16.21
Exercisable at end of the period 112,754,929 4.72 34,150,000 19.67 52,850,000 14.91
The weighted average remaining contractual life of the options and warrants outstanding at the balance sheet date was 2 years (31 March 2009: 3.3 years,
29 February 2008: 1.60 years).
The following table lists the inputs to the model used to determine the fair value of options and warrants granted:
Y ear ended Period ended Year ended
31 March 31 March 29 February
2010 2009 2008
£ ££
Pricing model used Black-Scholes Black-Scholes Black-Scholes
Weighted average share price at grant date (pence) 3.31 9.13 5.80
Weighted average exercise price (pence) 4.34 33.38 32.14
Weighted average contractual life (years) 2.74 9.42 6.53
Share price volatility (%) 76% 64% to 201% 120%
Dividend yield 0% 0% 0%
Risk-free interest rate (%) 4.0% 1.93% to 5.95% 5.7%
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 100.0p.
The total share based payment expense for the period ended 31 March 2010 was £1,896,142 (period ended 31 March 2009: £380,039 year ended 29
February 2008: £179,971) in relation to share options and warrants.
Of the total share based payment expense, £422,423 (period ended 31 March 2009: £380,039, 29 February 2008: £179,971) in relation to share options has
been recognised in administrative expenses, and £519,681 (period ended 31 March 2009:£nil, year ended 29 February 2008:£nil) in relation to warrants
issued in connection with borrowings has been recognised as a finance cost. An additional £114,790 in relation to borrowings has been deferred to match
to the life of the borrowings (note 17). £839,248 (period ended 31 March 2009: £nil, year ended 29 February 2008: £nil) has been deducted from share
premium in relation to those warrants issued in connection with share issues.
All share based payments are equity settled. 49 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
21. Subsidiaries and joint ventures
Details of the Company’s subsidiaries and joint ventures at 31 March 2010 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. A provision has been made against amounts
due from the joint venture totalling £116,910 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.
The results and assets/(liabilities) of SONAF consolidated into these Group financial statements are as follows:
£
Statement of financial position
Non current assets 8,243
Current assets 9,289
Current liabilities (116,910)
Net liabilities (99,378)
Statement of comprehensive income
Income –
Expense (122,164)
Loss for the year ended 31 March 2010 (122,164)
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 2010. Joint management is based on a signed joint venture agreement in place. Notes to the Consolidated Financial Statements
for the year ended 31 March 2010continued
50 Gasol plc Annual Report and Accounts 2010
22. Cash and cash equivalents
31 March 31 March 29 February
2010 2009 2008
Restated
£ ££
Cash at hand and in bank 245,189 282,286 1,446,955
Treasury reserve deposits – 500,000 –
Net cash and cash equivalents at the end of the period 245,189 782,286 1,446,955
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 with reputable banks registered in the United Kingdom and a number of small balances being held with
foreign banks.
There is no significant difference between the carrying value and fair value of cash and cash equivalents.
23. 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: 51 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
23. Financial instrument risk exposure and management continued
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 2010 the concentration of credit risk
was as follows:
31 March 31 March 29 February
2010 2009 2008
Restated
Counterparty £ ££
HSBC Bank Plc – 523,795 –
Barclays Bank Plc 227,354 243,775 1,266,325
Other banks 17,835 14,716 180,630
245,189 782,286 1,446,955
There are no other significant concentrations of credit risk at the balance sheet date.
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 period (31 March 2009: £nil, 29 February 2008: £nil).
The total estimated credit risk of the Group at 31 March 2010 was £303,067 (31 March 2009: £860,258, 29 February 2008: £1,791,179).
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. Notes to the Consolidated Financial Statements
for the year ended 31 March 2010continued
52 Gasol plc Annual Report and Accounts 2010
23. 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 2010
Accruals 138,619 ––
Trade and other payables 445,022 ––
Borrowings – 1,197,676 –
Total financial liabilities 583,641 1,197,676 –
At 31 March 2009
Accruals 182,364 ––
Trade and other payables 282,234 70,956 –
Total financial liabilities 464,598 70,956 –
At 29 February 2008 Restated
Accruals 292,355 ––
Trade and other payables 63,605 ––
Borrowings 74,156 ––
Total financial liabilities 430,116 ––
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 increase in net interest income of £3,990 (period ended 31 March 2009: £15,180).
A 1% increase in interest rates across the period would have led to an increase in net interest payable of £2,493 (period ended 31 March 2009: £nil). 53 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
23. Financial instrument risk exposure and management continued
Loans and Receivables
31 March 31 March 29 February
2010 2009 2008
Restated
Financial instruments by class and by category £ ££
Current financial assets
Trade and other receivables 57,878 77,972 344,224
Cash and cash equivalents 245,189 782,286 1,446,955
Total current financial assets 303,067 860,258 1,791,179
Financial liabilities measured at amortised cost
31 March 31 March 29 February
2010 2009 2008
Restated
£ ££
Current financial liabilities
Borrowings 1,197,676 – 74,156
Accruals 138,619 182,364 292,355
Trade and other payables 445,022 353,190 63,605
Total financial liabilities 1,781,317 535,554 430,116
24. 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 29 February
2010 2009 2008
Restated
£ ££
Total borrowings (note 17) 1,197,676 – 74,156
Less: cash and cash equivalents (245,189) (782,286) (1,446,955)
Net debt/(funds) 952,487 (782,286) (1,372,799)
Total equity 2,104,139 3,998,641 5,687,199
Total capital 3,056,626 3,216,355 4,314,400
Gearing ratio 31% n/a n/a
The increase in the gearing ratio during 2010 resulted primarily from the issue of a convertible loan note (see note 17). Notes to the Consolidated Financial Statements
for the year ended 31 March 2010continued
54 Gasol plc Annual Report and Accounts 2010
25. Related party transactions
In addition to the transactions detailed in the Directors’ Report, the Group entered into the following related party transactions.
As disclosed in note 21 the joint venture SONAF was gifted from African Gas Development Corporation Limited (“AfGas”), the majority shareholder in
Gasol.
Gasol paid Theo Oerlemans £65,215 – including ex-gratia payments totalling £20,476 (period ended 31 March 2009: £65,250, year ended 29 February
2008: £nil) in respect of consultancy services supplied in the year.These services were provided in addition to and outside of the scope of his contract as
Non-Executive Chairman of Gasol up to the date of his resignation.
Mr Ethelbert Cooper, a director and shareholder (though an intermediary company) in AfGas is a special advisor to the Gasol Board of Directors. He has
received £120,000 (period ended 31 March 2009: £90,000, year ended 29 February 2008: £nil) in respect of his services to Gasol in the year to 31 March
2010.
Gasol have an agreement with African Gas Trading & Services SA, a wholly-owned subsidiary of AfGas to provide office space and general admin and
support services. AfGas incurred costs of £68,000 (period ended 31 March 2009: £39,565, year ended 29 February 2008: £nil) in respect of these services for
the year ended 31 March 2010. Of this, £6,433 (2009: £6,433, 2008: £6,433) was receivable by Gasol at 31 March 2010. In addition, Gasol paid African Gas
Trading and Services SA a total of £2,720 (2009: £19,040, 2008: £nil) in the period for European investor relation services.
Up to the balance sheet date, Gasol has provided funding of £386,517 to the African LNG companies to fund working capital requirements. Amounts
repayable from the African LNG companies are short term and earn no interest on the outstanding loan balances.This balance was outstanding at the
year end.
Up to the balance sheet date, Gasol has provided loans of £1,702,286 to AIL to fund its working capital requirements. Amounts repayable from AIL are
short term and earn no interest on the outstanding loan balances.This balance was outstanding at the year end.
Up to the balance sheet date, Gasol has provided loans of £233,819 to SONAF G.E.S.A. to fund its working capital requirements. Amounts repayable from
SONAF are short term and earn no interest on the outstanding loan balances. This balance was outstanding at the year end.
Up to the balance sheet date, Gasol has provided loans of £287,285 to Afgas Nigeria Limited to fund its working capital requirements. Amounts repayable
from Afgas Nigeria Limited are short term and earn no interest on the outstanding loan balances.This balance was outstanding at the year end.
Details of shares issued to related parties are shown in note 19.
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.
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. 55 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
Notes to the Company Financial Statements
for the year ended 31 March 2010
The following notes are in respect of the Gasol plc company only financial statements.
26. Investments in subsidiary undertakings and goodwill
The value of the subsidiaries owned by the Company at 31 March 2010 is as follows:
£
Cost
At 29 February 2008 as originally stated 6,790,400
Prior year adjustment (note 1) 60,749,039
At 29 February 2008 as restated 67,539,439
Transferred to goodwill (note 1) (67,139,439)
At 31 March 2009 (restated) and 31 March 2010 400,000
Impairment
At 29 February 2008 –
Impairment charge in the period 32,590,806
Transferred to goodwill (note 1) (32,190,806)
At 31 March 2009 (restated) and 31 March 2010 400,000
Carrying amount
At 31 March 2009 (restated) and 31 March 2010 –
At 29 February 2008 as restated 67,539,439
The value of the goodwill owned by the Company at 31 March 2010 is as follows:
£
Cost
At 29 February 2008 –
Transferred from investment in subsidiary undertakings 34,948,633
At 31 March 2009 and 31 March 2010 34,948,633
Impairment
At 29 February 2008, 31 March 2009 and 31 March 2010 –
Carrying amount
At 31 March 2009 and 31 March 2010 34,948,633
At 29 February 2008 as restated –
Per note 21, no value has been attributed to the investment in the SONAF joint venture during the year.
Per note 1, the investment in subsidiary undertakings value of £34,948,633 has been transferred to goodwill during the period ended 31 March 2009 due to
the hive up of the trade from African LNG Holdings to Gasol. 27. Property, plant and equipment
Office Fixtures
equipment and fittings Total
££ £
Cost
At 29 February 2008 87,775 342,060 429,835
Additions 24,431 65,178 89,609
At 31 March 2009 112,206 407,238 519,444
Additions –– –
At 31 March 2010 112,206 407,238 519,444
Depreciation
At 29 February 2008 44,902 74,435 119,337
Charge for the period 48,626 101,867 150,493
At 31 March 2009 93,528 176,302 269,830
Charge for the year 13,075 101,810 114,885
At 31 March 2010 106,603 278,112 384,715
Carrying amount
At 31 March 2010 5,603 129,126 134,729
At 31 March 2009 18,678 230,936 249,614
At 29 February 2008 42,873 267,625 310,498
No impairment losses have been realised on any property, plant and equipment during the year (2009: nil).
28. Trade and other receivables
31 March 31 March 29 February
2010 2009 2008
£ ££
Trade receivables – 1,166 –
VAT recoverable 25,853 ––
Other receivables 5,533 31,244 249,628
Prepayments and accrued income 158,368 162,708 66,524
Amounts owed by subsidiary undertakings – – 972,194
Amounts owed by related parties 6,433 6,433 6,433
196,187 201,551 1,294,779
Due to the long-term nature of Gasol’s projects and the fact that its subsidiaries are all reliant on funding from Gasol, the amounts owed by subsidiaries
have been fully provided for. A total provision of £2,609,908 has been made (31 March 2009: £2,706,034 provision, 29 February 2008: £nil) 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.
56 Gasol plc Annual Report and Accounts 2010
Notes to the Company Financial Statements
for the year ended 31 March 2010continued 57 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
29. Trade and other payables
31 March 31 March 29 February
2010 2009 2008
restated
£ ££
Other taxes and social security 21,787 63,034 12,342
Amounts owed to subsidiary undertakings – 482,800 –
Accruals 129,120 173,864 292,355
Trade payables 258,332 295,524 45,912
Other payables 186,952 13,058 –
596,191 1,028,280 350,609
Trade and other payables comprise amounts outstanding for trade purchases and ongoing costs.The average credit period taken for trade purchases is
52 days (period ended 31 March 2009: 26 days, year ended 29 February 2008: 30 days).
The Company 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.
30. Cash and cash equivalents
31 March 31 March 29 February
2010 2009 2008
£ ££
Cash at hand and in bank 235,506 246,836 1,312,130
Treasury reserve deposits – 500,000 –
Net cash at the end of the year/period 235,506 746,836 1,312,130
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.
All cash is held with reputable banks registered in the United Kingdom. 58 Gasol plc Annual Report and Accounts 2010
31. 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 23 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 £2,609,908 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 23 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 2010continued 59 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
31. 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 2010
Borrowings – 1,197,676 –
Accruals 129,120 ––
Trade and other payables 445,284 ––
Total financial liabilities 574,404 1,197,676 –
At 31 March 2009
Accruals 173,864 ––
Trade payables 237,626 70,956 –
Total financial liabilities 411,490 70,956 –
At 29 February 2008
Accruals 292,355 ––
Trade and other payables 45,912 ––
Total financial liabilities 338,267 ––
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 increase in net interest income of £3,900 (31 March 2009: £23,099).
A 1% increase in interest rates across the period would have led to an increase in net interest payable of £2,493 (period ended 31 March 2009: £nil). 31. Financial instrument risk exposure and management continued
Loans and Receivables
31 March 31 March 29 February
2010 2009 2008
Financial instruments by class and by category £ ££
Current financial assets
Trade and other receivables 11,966 38,843 256,061
Cash and cash equivalents 235,506 746,836 1,312,130
Total current financial assets 247,472 785,679 1,568,191
Trade and other receivables are stated inclusive of amounts owed by subsidiaries and other related parties of £2,616,341 (31 March 2009: £2,712,465). Of
the amounts owed by subsidiaries and other related parties, a provision for non-recoverability of £2,609,908 (31 March 2009: £2,706,034) has been made
and is included in the balance for trade and other receivables.
Financial liabilities measured at amortised cost
31 March 31 March 29 February
2010 2009 2008
£ ££
Current financial liabilities
Borrowings 1,197,676 ––
Accruals 129,120 173,864 292,355
Trade and other payables 445,284 308,582 45,912
Total financial liabilities 1,772,080 482,446 338,267
32. Capital management
The Company’s capital management objectives and policies are aligned with those of the Group and are outlined in note 24 to the consolidated
financial statements.
Notes to the Company Financial Statements
for the year ended 31 March 2010continued
60 Gasol plc Annual Report and Accounts 2010 61 Gasol plc Annual Report and Accounts 2010 Business Review
Corporate Governance
Financial Statements
Officers and Professional Partners
as at 07 September 2010
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
3 Hardman Street
Spinningfields
Manchester M3 3AT
Solicitors K & L Gates LLP
110 Cannon Street
London EC4N 6AR
Registrars Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands B63 3DA
Printed on Revive 50:50 offset.This paper comes from
well managed forests and is fully recyclable and biodegradable.
Made from 25% post-consumer waste, 25% pre-consumer
waste and 50% virgin wood fibre.The paper mill and the
printer are accredited with the ISO 14001 environmental
management standard.The printer is also carbon neutral.
Design & production
www.ckdcorp.co.uk
Print
www.empresslitho.com Gasol plc
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 Gasol plc Annual Report and Accounts 2010
Spine is nominal 7mm width