Gasol plc
Annual Report and Accounts 2009
bringing African gas to the world The Africa-focused gas independent... Gasol plc is an Africa-focused gas independent listed on AIM (AIM: GAS).
The Group’s primary focus is to develop projects to monetise stranded gas reserves
in the Gulf of Guinea. This is to be achieved either by aggregation, liquefaction and
shipment of gas as Liquefied Natural Gas (LNG) to high-value markets world-wide,
or by alternative developments such as methanol, fertiliser or power generation. We
will work closely with host governments and communities to supply the domestic
market and align our business to local priorities.
Through a carefully considered programme of acquisitions, investments and
strategic alliances, Gasol aims to become the industry’s premier Africa-focused
gas independent, delivering value by commercialising stranded gas.
Gasol plc Annual Report and Accounts 2009
Gasol plc
Business Review
01 Highlights 2007/08
02 Identifying the opportunities
04 Strategy
06 Chairman’s Statement
08 Chief Executive Officer’s Statement
12 Financial Review
14 Board of Directors
16 Strategic Advisors
Corporate Governance
17 Directors’ Report
20 Corporate Governance Statement
22 Report of the Remuneration Committee
25 Statement of Directors’ Responsibilities
26 Independent Auditors’ Report
Financial Statements
27 Consolidated Income Statement
28 Consolidated Statement of Changes in Equity
29 Company Statement of Changes in Equity
30 Consolidated Balance Sheet
31 Company Balance Sheet
32 Consolidated Cash Flow Statement
33 Company Cash Flow Statement
34 Notes to the Consolidated Financial Statements
52 Notes to the Company Financial Statements
Shareholder Information
60 Officers and Professional Partners Highlights
01 Gasol plc Annual Report and Accounts 2009
 Completion of the acquisition of African LNG Holdings Ltd
in June 2008
 Successfully obtained the rights to develop and monetise the
Group’s first gas asset - the Zafiro gas project in Equatorial
Guinea - following a joint venture agreement with SONAGAS,
after the year end.
 Good progress in negotiations to access gas reserves in South
East Nigeria, including exclusive gas sale agreement negotiations.
 Successfully secured financing - £5 million in equity investment
in the period and a further £2 million since March 2009 as well
as a £10 million equity line of credit in June 2009. The Group
continues to pursue sources of further funding required for both
the short and the longer term.
 Strengthened strategic alliance as the exclusive mid/downstream
partner of Afren Plc (“Afren”), who also increased their stake in
the Company to 21% (as at 28 September 2009).
 Co-operation with Electricite de France (“EdF”) to assess the
feasibility of developing, aggregating and monetising gas assets
in the Gulf of Guinea for domestic and export purposes.
 Conducted successful initial feasibility study on bespoke midstream
liquefaction technology - Near Shore Production System
(NSPS™) under the technical advice of Mustang Engineering.
 Board and management team strengthened during the course
of the year including the appointment of Theo Oerlemans as
non-executive Chairman and Jean Vermeire to the Advisory Board.
Business Review
Corporate Governance
Financial Statements Identifying the opportunities –
West Africa becoming a critical gas hub
02 Gasol plc Annual Report and Accounts 2009
Why gas? Why Africa? Why Gasol?
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.
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 (“Tcf”) of reserves is particularly
well-positioned to supply to US and European
consumers and the rapidly-growing Far Eastern
markets. Nigeria alone is estimated to have 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.
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
(including utility companies, regasification terminals
and 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
(e) our expertise. Our experienced Board and
management team have long-standing
relationships in the region and experience
developing gas projects in Africa.
Gasol is focussed on delivering its first LNG
project by 2014-15, utilising small-scale
liquefaction technology, which is cost competitive
with lower project execution time. Gasol is also
reviewing other gas commercialisation projects,
including domestic projects, such as methanol,
fertilizer and power generation in order to
balance its portfolio of project opportunities.
Gasol is focused on developing projects to aggregate and
monetise stranded gas in the Gulf of Guinea region of
West Africa, primarily via Liquefied Natural Gas (LNG)
by utilising innovative and cost effective technologies
capable of rapid deployment. Gasol seeks to create value
by developing projects in the gas chain and by exporting
LNG from stranded West African gas fields to markets in
Europe, the Far East and North America, while also
developing domestic gas projects to add value to host
nations in Africa. 03 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
35
bcf/d
Nigeria produced 35bcf of gas per day
(equivalent to 31.5 million tonnes of oil)
in 2008, growing from 5.1bcf 10 years ago.
It represents 1.1% of the world production.
14.5
mt
Nigeria shipped 14.5 million tonnes of LNG
in 2008 (equivalent to 728 bcf), 71% went to
Europe and 22% to Asia.
*BP Statistical Review
39
%
Africa has an estimated 517.5 tcf of proven
gas reserves representing 8% of the total
world reserves; 39% of these reserves are in
the Gulf of Guinea.
185
tcf
Nigeria has an estimated proven gas reserve of
185tcf at the end of 2008*. It represents 2.8% of the
world reserves and 36% of the reserves in Africa.
Nigeria is endowed with the eight largest natural
gas reserves in the world, the largest in Africa. Strategy –
monetising stranded gas reserves
04 Gasol plc Annual Report and Accounts 2009
Upstream Pipelines
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.
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.
Gasol’s strategy to identify and develop commercially
attractive opportunities in the gas sector is based on four
key elements. Gasol’s experienced and seasoned board and
management are working to access competitively priced
gas, choose a low cost, quick to market gas monetisation
solution and negotiate gas sale and purchase agreements
with upstream and downstream partners.
Upstream Pipelines 05 Gasol plc Annual Report and Accounts 2009
Midstream technology Shipping Markets
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 supplying gas to conventional
land-based LNG plants. Alternate technologies to
monetise gas are also under evaluation.
Ships – transporting LNG to world markets
Gasol will explore opportunities to access
shipping capacities, either by investing or by
strategic alliances.
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. Gasol will also help develop
local gas markets, selling to local industry and
power stations.
Our four key differentiating factors
Business Review
Corporate Governance
Financial Statements
Liquefaction plant Shipping Markets
1
Gas aggregation model to
access low-cost reserves
Following the recent
disintermediation within the
industry, Gasol is working with
partners such as Afren to unlock
the value in smaller gas reserves
by aggregating to achieve
economic supply volumes.
2
Rapid gas monetisation
technology
Gasol is exploring innovative
technologies designed to
exploit smaller gas fields. The
Near Shore Production Solution
(“NSPS”) under development as
well as floating LNG solutions
can facilitate commercial
liquefaction at a lower
threshold of proven gas
reserves than current solutions.
3
End market and LNG
offtake partners
Long-term access to the end-
market is essential, and Gasol is
establishing partnerships with
downstream players, such as
EdF and leading utility
companies, which aside from
market access bring technical
skills and financial strength.
4
Experienced
management
Gasol has brought together
a management team with
substantial experience of
the gas sector and LNG in
particular. Between them they
have worked for some of the
industry’s most successful
companies, such as Shell,
BG Group, Nigeria LNG and
Egyptian LNG. Chairman’s Statement
06 Gasol plc Annual Report and Accounts 2009
Overview Future demand
Introduction
After my first year as Gasol’s Chairman, I feel
pleased with the achievements of the Group
since the Reverse Take Over (“RTO”) with African
LNG Holdings Limited. Despite deteriorating
economic and market conditions, the Group has
managed to make progress in our main areas
of activity.
The economic environment
The last 18 months have radically transformed
the way gas start-up companies can do business.
From 2005 to 2008, financial institutions, natural
resources and utility players were eager to get
involved in energy projects and more specifically
LNG ventures, but we are now experiencing a
significant business change: the short-term gas
supply / demand balance has reversed, debt
financing is less available for early-stage
companies and private equity / venture
capitalists are more cautious in making
commitments to early projects. However, even
though the environment is more challenging,
there is still a strong interest for well-managed,
risk-mitigated, innovative companies.
The gas and LNG economics:
The economic downturn has led to an
unprecedented fall in global energy demand and
our industry has therefore moved from being
short in LNG a year ago to being ‘LNG long’ today.
Gas prices have fallen substantially and are
currently out of line with LNG construction costs.
This means that it may be difficult for some
project developers to take investment decisions
on new LNG capacity in the short-term.The likely
consequence of this is that we could be staring at
a new ‘LNG short’ situation post 2014 or 2015. Gas
is a long-term business, and one thing we can be
sure of is that gas will continue to be the fuel of
choice: projects must be developed to meet the
increase in future demand.The industry needs to
seek creative solutions within current economic
constraints.We believe that small companies can
often lead the way.The longer-term need for gas
in developed countries combined with the
potential of West Africa continues to support our
business plan.
The longer-term need for
gas in developed countries
and the potential of West
Africa to supply gas for
exports and to develop local
gas projects have opened
doors for small companies
such as Gasol. 07 Gasol plc Annual Report and Accounts 2009
Niche player Economic and finance Outlook
West Africa potential:
In West Africa there are many stranded
un-contracted gas fields of below 0.1-2 Tcf.
Approximately 10% of these fields have a gas
volume range of 0.5-2 Tcf.These fields can form
the right resource base for projects such as
methanol, fertilizer or power generation, or with
some aggregation, can be the ideal gas resource
size for a small LNG project.This is where small
projects and small companies can create value.
The reduction in oil and gas revenues has caused
several countries to take a new, strategic and
realistic look at their resource sector.West-African
countries such as Nigeria have set out a new
framework under which companies who invest in
the country have to operate, with clear domestic
gas obligations of up to 30% of the new gas
produced.This represents a positive scenario for
companies such as Gasol who will be able to
develop gas reserves for LNG and other projects.
Gasol supports such Government initiatives and
we are fully prepared to dedicate a portion of gas
to the domestic sector and to develop our
projects in line with the Government’s priorities.
Funding:
In the present economic conditions, funding for
a small, AIM-listed company such as Gasol is not
easy. However, thanks to the continuous efforts
by management, and the support of our major
shareholders, in the last 13 months we have been
able to continue to secure sufficient funding for
our ongoing needs to date; however, as discussed
in the CEO statement, the Group requires further
funding both for the immediate short-term and
the medium to long-term.We have reduced our
ongoing costs substantially to match the more
difficult availability of funds. For the short and
medium term future we are pursuing various
potential sources of funding.We cannot at this
stage guarantee the success of these efforts as
obtaining the required substantial level of
funding for our projects will continue to be
challenging. However, we are reasonably
confident that with the right structure of these
projects, our efforts will eventually be successful.
This is discussed in more detail in the CEO
statement.
Business Review
Corporate Governance
Financial Statements
FLARE
FLARE
Gas flaring is the burning of unwanted gas or flammable gas.
According to research, worldwide 168 billion cubic metres of
natural gas is flared yearly. About 13 per cent of global flaring
originates from Nigeria. Gas flaring not only wastes a valuable
resource, but is also a major cause of environmental pollution.
Nigeria’s and Equatorial Guinea’s governments have been
amongst the first to aim to eliminate unnecessary gas flaring.
Gasol’s performance and outlook:
Gasol managed to make progress despite having
to operate in such a difficult environment.We can
be particularly pleased with the progress in
Equatorial Guinea and Nigeria.This is largely due
to the continuous efforts and dedication of our
management and staff and the assistance we
received from our advisors and board members.
As a small company we are dependent on our
partners and host governments to continue their
positive cooperation and support. On this basis I
am confident that we can continue to implement
our business plan.
Theo W. Oerlemans
Chairman Chief Executive Officer’s Statement
Business Review
08 Gasol plc Annual Report and Accounts 2009
Strategy LNG industry
I am pleased to report that during the year Gasol
progressed in the development of the Group’s
long-term growth opportunities. Our unique and
distinctive strategy has enabled us to secure our
first access to gas (announced after year end), to
develop an innovative, cost efficient midstream
technology concept and to establish strategic
alliances and joint ventures with major players in
the gas chain and national gas companies.
The macro environment:
Despite a sharp downturn in the global economy,
natural gas will remain one of the world’s most
important commodities, central to long-term
energy needs. For a growing number of countries,
the importance of gas within the broader energy
mix is magnified further by security concerns and
climate change. Even though we may see a
decline in energy needs in the short-term, there is
clear evidence that the demand for energy will
continue to grow in the long-run, particularly
driven by developing markets.Whilst the global
LNG market remains relatively immature,
accounting for the delivery of around 7% of gas
volumes worldwide, it is expected to expand
rapidly once the current flattening due to the
prevalent economic conditions has passed.
Overview:
Shareholders will by now be familiar with our
core strategy: a focus on monetising stranded
gas assets in the Gulf of Guinea, either by
aggregation, liquefaction and shipment of LNG
to high-value markets worldwide, or by domestic
commercialisation projects to supply methanol,
fertiliser or power plants. It is a strategy that
Gasol is particularly well-placed to deliver: we
combine a deep understanding and experience
of the global gas market and the operating
environment in Africa, and we have developed
strong relationships with partners along the
value chain, technology providers, and national
gas companies and host Governments.We intend
to deliver small scale gas projects, which can be
quicker and cost effective. Alignment with host
nations and communities is also a key priority. In
summary, our strategy is designed to deliver
value to our shareholders over the long-term by
unlocking the strategic value of stranded gas.
2008-09 has been a central and strategic year for
Gasol.We have made progress on the four
cornerstones of our strategy:
• Access to low cost gas: successfully negotiated
(signed and announced post year end) our first
right to gas in Equatorial Guinea and made
important progress in negotiations to procure
gas in South East Nigeria
• Continued development of a cost-effective
technology concept: we have conducted initial
successful feasibility studies on the Near Shore
Production Solution (NSPS) which can be
deployed in our projects to monetise stranded
gas assets in Gulf of Guinea
• Creating partnership along the gas value
chain: we have strengthened and expanded
our relationships with upstream, technology
and downstream companies
• Strengthening our Board and Management
team: several key members have joined our
Board and our management team • Raise sufficient funding to meet our short
and longer term project and corporate
expense requirements
• Acquire gas assets in the Gulf of Guinea
• Start of the Front End Engineering Design and
Conceptual Engineering in our projects in
Nigeria and Equatorial Guinea
• Sign binding project development agreements
with partners
• Explore domestic gas monetisation projects
with shorter lead times
• June 2008: Reverse Takeover of African LNG
• September 2008: MOU signed with Electricity de
France (EDF) to jointly develop LNG project
• February 2009: Initial successful feasibility study
on bespoke midstream liquefaction solution –
Near Shore Production System (NSPS™)
• March 2009: Strengthening of exclusive alliance
with Afren plc
• April 2009: Gasol in direct joint venture with
SONAGAS in Equatorial Guinea
• May 2009: Access to gas in Equatorial Guinea
• May 2009: £10 million equity line of credit in place
• Well-defined strategy to monetise value in
stranded gas
• Progress in portfolio of opportunities
• Strengthened Board and Management Team
• Progress in negotiations to procure gas
in Nigeria
• Development of strategic alliances with
players in the gas chain
• £7 million raised from March 2008 to August
2009: £5 million during the period and a
further £2 million post year end.
2008-2009 highlights 2009-2010 key objectives
Our unique and distinctive strategy has
enabled us to secure our first access to gas,
to develop an innovative, cost efficient technology
solution and to work closely with major upstream and
downstream partners as well as national gas companies.
09 Gasol plc Annual Report and Accounts 2009
Niche gas assets Technology
Access to gas:
Whilst for a long time, gas was seen as a hurdle in
the process of extracting oil, gas is now extremely
valuable. In West Africa, most of the gas has been
regarded as “stranded” as the fields are either too
small or isolated to justify development on a
stand-alone basis or the fields are owned by
smaller local companies which lack technical
and/or financial resources to develop
monetisation projects independently. By working
directly with upstream partners with access to
these proven gas resources such as Afren and
SONAGAS, Gasol is well positioned to secure
access to enough gas to develop a competitive
and quick to market LNG project.Various
commercial structures are under consideration -
Gasol can either directly acquire gas with one of
its upstream partners or enter into gas purchase
agreements while its upstream partner owns/
farms into the gas asset.The gas field
development is planned to be undertaken by
upstream partners or gas asset owners, with
Gasol negotiating access to gas at a competitive
price at the well-head. Gasol’s strategic objective
is to minimize exposure to exploration risk.
Rapid gas monetisation solution:
Gasol has been contemplating several
monetisation solutions for its various project
opportunities: in particular smaller scale
liquefaction technologies that would make the
aggregation of stranded and marginal gas fields
economically viable. Gasol has continued to
develop the concept of a barge based modular
Near-Shore LNG Production System (NSPS) with
technical advice from Mustang (a leading US
based engineering company).The NSPS utilises
existing technologies in storage, liquefaction
and transfer systems and achieves a highly
competitive cost per tonne. By virtue of its
simplicity it can be delivered and made
operational in a relatively short time frame
compared to conventional liquefaction
technologies: Gasol expects that the commission
and construction phase will be 3-4 years after
conclusion of the front end engineering design
study. Deploying the NSPS provides potential for
a high degree of local content using local
manpower, suppliers and service providers.
Delivering local content is often a high priority
with host nations in Africa. NSPS has the added
advantage of being scalable from 1 million
tonnes to 6 million tonnes per annum, with the
provision for an integrated gas to power solution.
The simple topside and storage design of the
NSPS is ideal for the benign sea conditions of
West Africa.
Business Review
Corporate Governance
Financial Statements
Gasol is also exploring technologies (other than
LNG) to be applied for monetising stranded gas,
considered too small or remote for LNG
aggregation play.
The next step is to agree with our partners the
technology deployment in our projects and
proceed to the pre-front end engineering and
design stage. Gasol’s objective is to adopt
whichever technology works best for each
project, whether it be NSPS or floating LNG or
other alternate solutions. Being a project developer,
Gasol provides monetisation
solutions to gas assets owners
by developing projects which
provide a route to domestic
and export markets.
Chief Executive Officer’s Statement
Business Review
10 Gasol plc Annual Report and Accounts 2009
TEAM
Gasol’s board and management team are key in
successfully executing Gasol’s business strategy.
The company has brought together a team with
substantial experience in the gas sector, particularly
in LNG in Africa.
Strong management Partners
Strategic alliances:
As a project developer, Gasol plays a crucial
role in the gas value chain: we are focusing on
developing projects to connect competitively
priced gas from upstream owners to end
customers served by downstream companies
such as utilities, regasification terminals, trading
companies... or directly to local industry such as
power, methanol and fertilizer.
On the upstream, Gasol has identified several
opportunities to work in partnerships with gas
asset owners. Gasol has a strategic alliance with
Afren plc (the leading Africa-focused independent
oil and gas company) to pool complementary skills
to develop gas assets for monetisation in Africa. As
the exclusive mid-downstream partner of Afren,
Gasol has the right of first refusal to gas supply
from Afren’s portfolio. In addition, Gasol has signed
a joint venture agreement with SONAGAS to
develop gas monetisation projects in Equatorial
Guinea after the year end. Gasol is also exploring
further strategic tie-ups with upstream entities in
areas outside the scope of its current alliances.
On the mid – downstream side, Gasol has entered
into a cooperation agreement with Electricite de
France to pursue opportunities in the Gulf of
Guinea. Gasol is also in negotiations with several
other strategic partners and LNG off-takers to
develop additional opportunities in the portfolio.
Experienced and focused:
Gasol’s board and management teams are key
in making Gasol’s business strategy a success.
The company has brought together a team with
substantial experience of the gas sector and in
particular in LNG.There were a number of
changes to the Board and the management team
through 2008. Following his appointment as
Petroleum Minister of Nigeria, Dr Lukman stepped
down as strategic advisor to Gasol in December
2008. Charles Osezua stepped down in June 2009
to take over as the Chairman of the steering
committee of the Equatorial Guinea project.
Rachel English resigned late 2008 to pursue other
professional opportunities.They leave with our
thanks and best wishes for the future. Pursuant to
the reverse takeover of African LNG in June 2008,
Theo Oerlemans joined as the Non – executive
Chairman and Bert Cooper as strategic advisor to
the Board.We are also pleased to welcome Jean
Vermeire who joined as a special advisor in
December 2008. Mr Vermeire is currently the
Non-Executive Chairman of Distrigas, a leading
Belgium-based natural gas company; previously
Jean worked in senior management assignments
over 17 years with Chevron.
During the year under review,the management
team has been reinforced by senior,talented and
experienced people,mostly from leading energy
companies and consultancies. 11 Gasol plc Annual Report and Accounts 2009
We are actively developing
key relationships and
alliances with companies
along the value chain in
order to progress our
business development
activities.
Business Review
Corporate Governance
Financial Statements
Project opportunities
Our portfolio:
Gasol is currently working on project
opportunities in four countries (Nigeria,
Equatorial Guinea, Ghana and, Ivory Coast). Of
these, SENCO (South East Nigeria Project) and
Equatorial Guinea projects are relatively
advanced (though still early stage), with Ghana
and Ivory Coast being in the earlier opportunity
screening stage. Other gas monetisation
opportunities in Cameroon, Gabon and Congo
Brazzaville are under consideration.
SENCO is developing an integrated LNG and
domestic gas supply project with the objective of
monetising gas from identified core gas fields in
South East Nigeria. Currently negotiations are
ongoing with the multiple gas asset owners; once
procured and developed by upstream partners,
gas produced from these fields is planned to be
aggregated and processed, before distribution to
both a near shore liquefaction facility (for LNG
export) and large-scale domestic gas consumers.
The core gas fields have 2P reserves totaling
approximately 2.5Tcf, with potential to tie- in
nearby fields to increase gas supply to 3.5 tcf.
As per current project plans, the base case
liquefaction project is likely to have a capacity
of 2 million tons of LNG per annum, with a
competitive project cost and timeline due to the
application of small scale- near shore liquefaction
facilities. Gasol’s share in this project is under
negotiation with equity partners to develop this
project; negotiations are also ongoing with
upstream partners and potential LNG off-takers.
The project is expected to meet the various
criteria set out in the Gas Master Plan announced
by the Nigerian Government, including
obligations to allocate part of the supply to
domestic industry. One of the key objectives for
Gasol and our partners is to secure the necessary
financing to continue progress with this project
until the final investment decision.
11 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
In April 2009, African Gas Development
Corporation (Afgas) assigned its 50% share in
SONAF, a joint venture with SONAGAS G.E., to
Gasol.The company is now a direct equity holder
in the joint venture, which has been established
to develop gas commercialization projects and
associated infrastructure in Equatorial Guinea,
primarily to combat and monetise flared gas
with particular emphasis on Block B in the Zafiro
Development Area (“ZDA”). SONAF aims to
capture and commercialise gas currently being
flared in the ZDA. In June, the company
announced rights to first associated gas from
ZDA, estimated at 500- 750 bcf as per Wood
Mackenzie. Currently a study is being conducted
to establish an accurate estimate of the gas
reserves.Various project options are under
evaluation, including stripping out liquids from
the wet gas to generate additional revenue
streams. In the coming months, the joint venture
will be focusing on negotiations with gas
suppliers, off-takers, infrastructure providers
and technology partners with the objective to
achieve an economically viable project, which
should generate revenue from Liquified
Petroleum Gas (LPG), LNG and Natural Gas
Liquid (NGL). Chief Executive Officer’s Statement
Financial Review
12 Gasol plc Annual Report and Accounts 2009
Investing for the future
In order to advance our portfolio of opportunities
over the last 13 months, we have committed
funds mainly to business development activities.
Cash expenditures from operating activities
amounted to £4.4 million (£0.5 million in 2008).
The increase represents additional investments in
technology and project development,
progressing the joint venture with SONAGAS
and, SENCO. Also, Gasol’s team has grown with
important additions in the business development
team. During the year, there has also been
expenditure on completing the reverse takeover
and integration of African LNG. Gasol will
continue to carefully manage its costs and
cash expenditure.
Financial results
The financial statements for this year reflect
two major elements. First of all, Gasol changed
its reporting year end from 28th February to
31st March 2009.The financial statements are
therefore prepared for the 13 months to 31 March
2009. Secondly, the financial statements reflect
the “Reverse Acquisition” accounting rules
following the exercise of the 80% option to
acquire African LNG in June 2008.Taking into
consideration these elements, the Group
recorded a loss for the 13 months to 31st March
2009 of £5.05 million (2008: £0.43 million loss)
or a loss per share of 0.67 p (2008: 0.09p loss).
The Group had cash balances of £0.8 million
(2008: £0.1 million) and no debt at 31 March 2009.
Since 31 March 2009, Gasol has raised additional
£2 million equity in May and August 2009.
Due to slower than anticipated progress in a
difficult external environment and uncertainties
in valuation given the early stage of
development of African LNG, Afgas Nigeria and
Afgas Infrastructure Limited, provisions have
been made against the carrying value of Gasol’s
investment in these companies, amounting to
£32.2 million for African LNG and £0.4 million for
Afgas Nigeria and Afgas Infrastructure Limited.
These charges affect the company accounts of
Gasol only and do not impact the consolidated
result and position of the Group.
At the heart of Gasol’s
business is our ability to
attract partners of the
highest calibre, whether
they be indigenous
partners, national energy
companies or major
utilities.
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. 13 Gasol plc Annual Report and Accounts 2009
Financing Outlook and Challenges
During February 2008 to March 2009, we have
raised £5 million equity (£4 million in May 2008
and £1 million in February 2009). Since March
2009, we have also raised £2 million equity from
our major shareholders: African Gas Corporation
and Afren plc.The continued support from our
major shareholders reflects their confidence in
Gasol’s progress. In June 2009, we put in place a
£10 million equity line of credit with GEM Global
Yield Fund.The ability to draw on the £10 million
facility is dependent upon certain conditions
outside of the control of the Group, including
share price and share trading volumes. It is not
viewed as likely that the full £10 million could be
drawn in one tranche given historical share prices
and volumes. Given these conditions, the Group
requires and is continuing to seek further sources
of funding for its short term and longer term
needs. Further details of this are set out in note 1
to the financial statements. For Gasol to realise its
strategy, significant amounts of funds will be
needed to progress our projects to final
investment decision stage and beyond; gas
projects, and LNG in particular, are capital
intensive; while banks would normally finance a
large portion of the investment costs post final
investment decision, the challenge for Gasol is to
fund our share of equity in the early stages of the
projects, which include costs for acquisition of
gas, development of technology, feasibility
studies and front end engineering design.
The company is considering different financing
structures and sources, including funding from
strategic and financial investors.The longer term
success of Gasol will - to a large extent - depend
on our ability to mobilise the required funding
for our projects and our corporate development
expenditure. Gasol is currently in the process of
raising additional funding to meet its short-term
working capital requirements.Through 2009 and
2010, we expect to report how we progress in
fund raising activities.
Whilst the economic environment and the
energy/LNG sector has been challenging over the
last year and the short-term gas economics are
relatively weak, the longer term fundamentals
will continue to support the development of
strategic gas and LNG projects. Under these
circumstances, Gasol is making steady but slower
than anticipated progress: negotiating access to
gas, developing a blue print of a small scale, quick
to market gas monetisation solution and
progressing alliances with downstream/upstream
partners.We hope to accelerate progress in the
coming year, however much will depend on the
success of our fund raising efforts, both for the
projects and for corporate business development
activities – and the way we manage the early
stage risks normally associated with gas projects.
We have a focused strategy and a strong team -
these should stand us in good stead to face these
challenges and to deliver long term value to our
shareholders.
Soumo Bose
Chief Executive Officer
Business Review
Corporate Governance
Financial Statements
VALUE
We have a focused strategy and a strong team -
these would stand us in good stead to face current
challenges and to deliver long term value to
our shareholders. Board of Directors
14 Gasol plc Annual Report and Accounts 2009
Theo Oerlemans (71) Chairman
Theo Oerlemans has over 40 years’ experience in
gas and LNG.
He had a long and distinguished career at Shell,
mostly in the development and management of
Shell’s international gas and LNG business. As a
Director of Shell International Gas Ltd he was
involved in the development of Shell LNG
Projects such as Sakhalin, Oman, Brunei and
Malaysia. From 1993 to 1997 he was Managing
Director and Chief Executive of Nigeria LNG
Limited.
Mr Oerlemans holds an MSc in Engineering from
the University of Delft.
Soumo Bose (46) Chief Executive Officer
Soumo Bose has had an extensive international
career. He brings substantial global experience of
the gas sector, having lived and worked in Egypt,
China, India, UK, France and Netherlands. At BG
Group, he was Chief Financial Officer and BG’s
senior representative at Egyptian LNG. At SHV
Gas, he held a variety of senior management
positions, including reporting directly to the
Global CEO.
Mr Bose is a member of the Institute of Chartered
Accountants of India and a graduate of the
University of Calcutta.
Soumo Bose Chief Executive Officer Theo Oerlemans Chairman 15 Gasol plc Annual Report and Accounts 2009
Osman Shahenshah (47) 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.
Charles Osezua (56) Non-Executive Director
Dr. Charles Osezua is an authority on the
emerging West African gas market, with oil and
gas industry experience spanning 20 years.
Dr. Osezua is Chairman of the Owel-Linkso Group
in Nigeria, a services company providing
solutions to the oil and gas sector. Formerly, he
was Special Assistant on Petroleum Matters to
the Head of State, Federal Republic of Nigeria and
a member of the Technical Advisory Committee
of Nigeria LNG Limited.
Paul Biggs (43) 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.
Haresh Kanabar (51) 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, Blue Star Capital 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.
Osman Shahenshah Non-Executive Director Charles Osezua Non-Executive Director
Paul Biggs Non-Executive Director Haresh Kanabar Non-Executive Director
Business Review
Corporate Governance
Financial Statements Strategic Advisors
16 Gasol plc Annual Report and Accounts 2009
Jean Vermeire (65)
Strategic Advisor to the Board
Ethelbert J L Cooper (55)
Strategic Advisor to the Board
Jean Vermeire is currently the Non-Executive
Chairman of Distrigas NV (“Distrigas”), the€4.5
billon Belgian-based natural gas company, and
one of the largest in Europe. In his earlier career
with Distrigas, he held positions of General
Director and Commercial Director of the natural
gas business.
Prior to Distrigas, Jean worked for the Chevron
Corporation for 17 years and was involved in
various senior managerial assignments in
commercial, finance and planning in the oil and
gas activities of the corporation, with
international positions in Belgium, Italy, UK, USA
and Australia.
Among his other appointments, Jean is currently
a member of the supervisory board of
Nederlandse Gasunie and is President of the
Paris-based International Group of LNG
Importers. He holds a degree in Engineering from
the State University of Ghent (Belgium) and an
MBA from the University of Berkeley (California).
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. Directors’ Report
for the period ended 31 March 2009
17 Gasol plc Annual Report and Accounts 2009
The Directors present their report on the Company and the Group, together with the audited financial statements for the year ended 28 February 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 Executive’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
• Deliver binding strategic alliances and project development agreements
• Securing finance to support business development activities
• Explore domestic gas monetisation projects with shorter lead times
As discussed in the CEO statement, Gasol has continued to develop the concept of the NSPS, has secured its first right gas assets in Equatorial Guinea
(signed post year end), has strengthened its cooperation with Afren, has signed a Cooperation Agreement with EdF and is progressing dialogue with other
gas asset owners and potential partners, while exercising appropriate cost control: important milestones in Gasol’s development. Gasol has also
completed the reverse takeover of African LNG. Adequate funding has been secured throughout the year to support company operations to date.
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 economically viable to exploit due to the high cost of
extraction 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 level of political risk and regulatory uncertainties including
government regulations, policies or directives relating to exploration, foreign investors, restriction 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 the Group have progressed in negotiations with investors and advisors
regarding securing funding and are reasonably confident of a successful conclusion to these negotiations. Certain major shareholders of the Group have
indicated to the Board their intent to participate in a near term fund raising, pro rata to their current shareholding and subject to certain conditions.
Post year end, as referred to in the Chief Executive Officer’s statement, the Group has 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 Balance Sheet would differ under a break-up valuation. Notably, goodwill and investments in subsidiary undertakings would
be likely to carry a £nil value.
Further information regarding going concern is provided in note 1 to these financial statements.
Business Review
Corporate Governance
Financial Statements Directors’ Report
for the period ended 31 March 2009continued
18 Gasol plc Annual Report and Accounts 2009
Result and dividend
The results of the Group for the thirteen months ended 31 March 2009 are set out on pages 27 to 35.
The Directors do not recommend payment of a dividend for the period.
Directors
The names of individuals who served as directors of the Company from the beginning of the period are as follows:
Name of Director
Haresh Kanabar
Osman Shahenshah
Paul Biggs
Charles Osezua Resigned 25 June 2009
Soumo Bose
Rachel English Appointed 14 April 2008 / Resigned 22 December 2008
Theo Oerlemans Appointed 25 June 2008
Directors’ remuneration and Directors’ interests
Details of the Directors’ remuneration is set out in the Report of the Remuneration Committee on pages 22 to 24.
Related Party transactions
Details of related party transactions are contained in note 26 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 24] 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 31 days (year ended 29 February 2008: zero days).
Share capital
On 8 April 2008, Gasol announced the successful placing of 50 million ordinary shares with institutional investors, raising £4 million before fees and
expenses. Afren, of which Osman Shahenshah is Chief Executive Officer, subscribed for 9,379,100 ordinary shares as part of the placing.
On 25 June 2008, Gasol acquired the remaining 80% of the issued share capital of African LNG for a consideration of 623,067,064 new shares in Gasol.
500,000 shares were issued to Jefferies as consideration for £50,000 of fees due as a result of advice on the re-listing of Gasol on 25 June 2008.
On 12 February 2009, 200,000,000 shares were issued to Afren at 0.5 pence per share, raising £1 million.
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 50,624,198 4.67%
Charitable and political donations
No charitable or political donations were made during the period (year ended 29 February 2008: £nil). Events after the balance sheet date
On 27th May 2009, as part of its funding initiative, Gasol issued 28,169,016 ordinary shares to African Gas Cooperation Development (“AfGas”) and Afren
for a £1 million consideration.
On 1st June 2009, Gasol finalised a £10 million equity line of credit with Global Emerging Market (“GEM”).
On 26th June 2009, 2,315,083 shares were issued to Charles Osezua as consideration for $50,000 fees payable for advice and support to the Zafiro project
in Equatorial Guinea.
On 26th June 2009, 530,973 shares were issued to Emmanuel Quartey as a result of advice and support on project development in Ghana.
On 30th June 2009, 2,212,390 shares were issued to Jefferies arising from financial advice and NOMAD services for the period January to June 2009.
On 23 June 2009, Afgas transferred its 50% share in the SONAF joint venture in Equatorial Guinea to Gasol and novated all agreements into Gasol’s name.
On 20th August 2009, as part of its funding initiative, Gasol issued 21,164,021 ordinary shares to African Gas Cooperation Development (“AfGas”) for a
£1 million consideration.
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.
Auditors
BDO Stoy Hayward LLP have expressed their willingness to continue in office as auditors 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:
Soumo Bose
Chief Executive Officer
29 September 2009
19 Gasol plc Annual Report and Accounts 2009 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.
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 key employees’ 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.
Theo Oerlemans’ role within Gasol is as Chairman and also as a consultant. Paul Biggs’ role within Gasol is as a Non-Executive Director and also as a
professional adviser in his capacity as a partner of Trinity International LLP (“Trinity”). Gasol has entered into an arrangement with Trinity, whereby Trinity
will make introductions to potential investors in Gasol and its projects for a success fee payable if funds are raised. In addition,Trinity will on request
provide legal work in connection with a Gasol fundraising transaction for success fees contingent on completion of the relevant fundraising. Osman
Shahenshah’s role within Gasol is as a Non-Executive Director and also as upstream gas partner to Gasol in his capacity as Chief Executive Officer of Afren
plc (“Afren”). Afren has a 22% shareholding in Gasol and has entered into an arrangement with Gasol whereby both parties will work together to develop
gas projects.Where directors have an interest in a matter at a board meeting, they will declare their interest and do not vote on such matter. All other 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 Company also has an Audit Committee, a Nominations Committee, a
Remuneration Committee, and an Investment Committee, each with formally defined rules and responsibilities.
The Audit, Risk Management and Corporate Governance Committee ensures that financial reporting procedures, internal controls, corporate governance
practices and risk management systems are thoroughly reviewed and adhered to, and reviews the Company’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 Nomination 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 meets at least once each year and comprises from 1st March 2008 to 31st July 2008,
Osman Shahenshah (Chairman) and Soumo Bose. From 1st August 2008, it comprises Theo Oerlemans (Chairman) and Osman Shahenshah.
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 meets 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 22 to 24.
The Investment Committee is responsible for reviewing capital expenditure, project appraisals and final investment decisions. It meets twice a year and
since 1st August 2008, comprises of Theo Oerlemans (Chairman), Charles Osezua, Paul Biggs, Osman Shahenshah. As of 26th June 2009, Charles Osezua
resigned and is no longer a board member of the Investment Committee.
Corporate Governance Statement
for the period ended 31 March 2009
20 Gasol plc Annual Report and Accounts 2009 21 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
Attendance at Board Meetings
Full Board
Gasol plc Board Audit Remuneration Nomination Investment Committees EGM AGM
Number of meetings 12 2 2 21 62 1
Soumo Bose 12 22 2 15 21
Haresh Kanabar 10 2 1 521
Osman Shahenshah 5 2211
Paul Biggs 9 2 2 11
Charles Osezua1111
Rachel English 31 4 1
Theo Oerlemans 61 1 132
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
Soumo Bose, CEO.
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 working 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.
Directors’ Share Dealings
The Company has adopted a model code for Directors’ and key employees’ 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). Report of the Remuneration Committee
for the period ended 31 March 2009
INFORMATION NOT SUBJECT TO AUDIT
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.
22 Gasol plc Annual Report and Accounts 2009 23 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
AUDITED INFORMATION
Directors’ remuneration
The remuneration of the Directors for the year ended 29 February 2008 is shown below:
Year ended Year ended
31 March 29 February
2009 2008
££
Aggregate emoluments of Executive Directors 714,936 403,082
Payments to Non-Executive Directors 183,239 137,892
Total Directors’ remuneration 898,175 540,974
The aggregate emoluments for Executive Directors include £30,000 of contributions to a personal pension plan for Soumo Bose.There were no pension
benefits accruing to Directors under defined benefit schemes in the period (year ended 29 February 2008: £nil).
The key management personnel of the Group are the Directors of Gasol.
No Director exercised any share options during the period (year ended 29 February 2008: nil). Details of Directors’ shareholdings can be found in the
Directors’ Report.
Of the aggregate remuneration paid to Executive Directors, £374,786 (year ended 29 February 2008: £126,018) was in the form of share-based payments.
Of the aggregate remuneration paid to Non-Executive Directors, £Nil (year ended 29 February 2008: £53,954) was in the form of share-based payments.
The highest paid Director received total emoluments in the period in respect of service of £690,353 (year ended 29 February 2008: £285,249).
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 period ended 31 March 2009, the cost of this insurance was £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 2009 are as follows:
Ordinary shares of 0.5p each
31 March 29 February
2009 2008
Haresh Kanabar Nil Nil
Osman Shahenshah Nil Nil
Paul Biggs 413,776 Nil
Soumo Bose Nil Nil
Theo Oerlemans * 300,000 Nil
Charles Osezua 333,333 333,333
* At 31 March 2009,The Gasol Employee Benefit Trust held 27,259,184 shares in trust to satisfy the eventual issue of shares to Theo Oerlemans as part of a
share option agreement. Report of the Remuneration Committee
for the period ended 31 March 2009continued
24 Gasol plc Annual Report and Accounts 2009
Directors’ interests (continued)
The Directors’ interests in options over the equity share capital of the Company at 31 March 2009 are as follows:
At 1 March Exercised/ At 31 March Exercise
Exerciseable
2008 Granted Lapsed 2009 Price From To
Haresh Kanabar 500,000 –– 500,000 15p 25/08/2006 25/08/2009
Osman Shahenshah 500,000 –– 500,000 15p 25/08/2006 25/08/2009
Paul Biggs 500,000 –– 500,000 15p 27/06/2007 05/06/2010
Charles Osezua 500,000 –– 500,000 15p 27/06/2007 21/06/2010
Soumo Bose 400,000 –– 400,000 15p 06/06/2007 05/06/2012
Soumo Bose 400,000 –– 400,000 15p 06/06/2008 05/06/2013
Soumo Bose 400,000 –– 400,000 25p 06/06/2008 05/06/2013
Soumo Bose 400,000 –– 400,000 35p 06/06/2008 05/06/2013
Soumo Bose 400,000 –– 400,000 25p 06/06/2009 05/06/2014
Soumo Bose 400,000 –– 400,000 35p 06/06/2009 05/06/2014
Soumo Bose 800,000 –– 800,000 50p 06/06/2009 05/06/2014
Soumo Bose – 600,000 – 600,000 15p 25/06/2009 25/06/2018
Soumo Bose – 1,200,000 – 1,200,000 15p 25/06/2010 25/06/2018
Soumo Bose – 1,200,000 – 1,200,000 15p 25/06/2011 25/06/2018
Soumo Bose – 600,000 – 600,000 25p 25/06/2009 25/06/2018
Soumo Bose – 1,200,000 – 1,200,000 25p 25/06/2010 25/06/2018
Soumo Bose – 1,200,000 – 1,200,000 25p 25/06/2011 25/06/2018
Soumo Bose – 800,000 – 800,000 40p 25/06/2009 25/06/2018
Soumo Bose – 1,600,000 – 1,600,000 40p 25/06/2010 25/06/2018
Soumo Bose – 1,600,000 – 1,600,000 40p 25/06/2011 25/06/2018
Rachel English – 300,000 – 300,000 15p 14/04/2008 31/12/2009
Rachel English – 300,000 – 300,000 15p 01/05/2009 31/12/2009
Rachel English – 300,000 (300,000) –
Rachel English – 300,000 (300,000) –
Rachel English – 300,000 (300,000) –
Rachel English – 300,000 (300,000) –
Rachel English – 600,000 (600,000) –
If Gasol’s closing mid-market share price is at an average of 75p or above over a continuous period of 30 days before 30 September 2009 or 100p or above
over a continuous period of 30 days before 30 September 2010, an additional 1,000,000 options will be granted to Soumo Bose at an exercise price of 10p
per ordinary share.
Rachel English was granted a total of 2,400,000 options over the ordinary share capital of Gasol upon accepting her post as Chief Financial Officer in April
2008. Upon her resignation in December 2008, 1,800,000 of these options lapsed. Rachel’s remaining 600,000 options lapse after one year from
termination date i.e. 22nd December 2009.
The market price of the ordinary shares of the Company at 31 March 2009 was 1.50 pence (29 February 2008: 9.38 pence) and the range during the period
was 0.22 pence to 13.50 pence (year ended 29 February 2008: 4.75 pence to 10.75 pence).
This report was approved by the Board of Directors on 29 September 2009 and signed on its behalf by:
Osman Shahenshah
Chairman, Remuneration Committee
29 September 2009 25 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
Statement of Directors’ Responsibilities
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the
Company, for safeguarding the assets of the Company, for taking reasonable steps for the prevention and detection of fraud and other irregularities and
for the preparation of a Directors’ Report which complies with the requirements of the Companies Act 1985.
The Directors are responsible for preparing the annual report and the financial statements in accordance with the Companies Act 1985.The Directors have
chosen to prepare financial statements for the Group in accordance with International Financial Reporting Standards (IFRS) as adopted by the European
Union and the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.The Directors have chosen to
prepare financial statements for the Company in accordance with IFRS.
International Accounting Standard 1 requires that financial statements present fairly for each financial period the Group’s financial position, financial
performance and cash flows.This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board’s ‘Framework for the
preparation and presentation of financial statements’ . In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable
IFRS. A fair presentation also requires the Directors to:
• consistently select and apply appropriate accounting policies;
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; and
• provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of
particular transactions, other events and conditions on the entity’s financial position and financial performance.
Financial statements are published on the Group’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 Group’s website is the
responsibility of the Directors.The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein. Independent Auditors’ Report
for the year ended 31 March 2009
Independent auditors’ report to the shareholders of Gasol plc
We have audited the Group and parent company financial statements (the ''financial statements'') of Gasol Plc for the 13 months ended 31 March 2009,
which comprise the consolidated income statement, the consolidated and company balance sheets, the consolidated and company cash flow statements,
the consolidated and company statements of changes in equity and the related notes.These financial statements have been prepared under the
accounting policies set out therein.
Respective responsibilities of Directors and auditors
The Directors' responsibilities for preparing the financial statements in accordance with applicable law and International Financial Reporting Standards
(IFRS) as adopted by the European Union are set out in the statement of Directors' responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and have been properly prepared in accordance with the
Companies Act 1985 and whether the information given in the Directors’ Report is consistent with those financial statements.We also report to you if, in
our opinion, the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit,
or if information specified by law regarding Directors' remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements.This other
information comprises only the Chairman’s Statement, Chief Executive Officer’s Statement, Directors’ Report, Corporate Governance Statement, Report of
the Remuneration Committee and Statement of Directors’ Responsibilities.We consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
Our report has been prepared pursuant to the requirements of the Companies Act 1985 and for no other purpose. No person is entitled to rely on this
report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of the Companies Act 1985 or has been expressly
authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such liability.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are
appropriate to the group's and company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
In our opinion:
• the Group financial statements give a true and fair view, in accordance with IFRS as adopted by the European Union, of the state of the group's affairs as
at 31 March 2009 and of its loss for the 13 months then ended;
• the parent company financial statements give a true and fair view, in accordance with IFRS as adopted by the European Union as applied in accordance
with the provisions of the Companies Act 1985, of the state of the parent company's affairs as at 31 March 2009;
• the financial statements have been properly prepared in accordance with the Companies Act 1985; and
• the information given in the Directors’ Report is consistent with the financial statements.
Emphasis of matter – going concern and carrying value of investments and 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 both for operating needs and to fund cash generating projects. Although access to a £10 million line of credit was
obtained in June 2009, to fund operating needs if required, 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 £10 million 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 about 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 the disclosures made in notes 3 and 34.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.
BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
Manchester
28 September 2009
26 Gasol plc Annual Report and Accounts 2009 27 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
Consolidated Income Statement
for the 13 months ended 31 March 2009
13 month
period ended Year ended
31 March 29 February
2009 2008
Notes £ £
Other operating income 11 249,697 –
Administrative expenses (5,327,347) (427,654)
Loss from operations 4 (5,077,650) (427,654)
Finance income 6 44,837 855
Finance costs 7 (18,225) –
Loss before taxation (5,051,038) (426,799)
Tax expense 8 – –
Loss for the period /year (5,051,038) (426,799)
Loss per ordinary share
Basic and diluted loss per share 10 (0.67p) (0.09p)
All results relate to continuing activities.
All losses for the period are attributable to equity shareholders of the parent.
The notes on pages 34 to 59 form part of these financial statements. 28 Gasol plc Annual Report and Accounts 2009
Consolidated Statement of Changes in Equity
for the 13 months ended 31 March 2009
Reverse Capital
Share Share acquisition contribution Translation Retained Total
capital premium reserve reserve reserve earnings equity
££ ££££ £
At 1 March 2007 50 –– 350,000 – (421,982) (71,932)
Loss for the period –– – (426,799) (426,799)
Total recognised income and expense
for the year ended 29 February 2008 –– – (426,799) 426,799)
Capital contribution from shareholders –– – 550,000 –– 550,000
At 29 February 2008 50 –– 900,000 – (848,781) 51,269
Exchange rate translation –– –– (12,669) – (12,669)
Loss for the period –– ––– (5,051,038) (5,051,038)
Total recognised income and expense for
the thirteen months ended 31 March 2009 –– –– (12,669) (5,051,038) (5,063,707)
Reverse acquisition 4,146,618 71,695,196 (67,694,366) (900,000) –– 7,247,448
Capital contribution received –– – 74,156 –– 74,156
Issue of share capital 1,000,000 –– ––– 1,000,000
Recognition of share-based payments –– ––– 382,687 382,687
At 31 March 2009 5,146,668 71,695,196 (67,694,366) 74,156 (12,669) (5,517,132) 3,691,853
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
Retained earnings records the cumulative profits less losses recognised in the income statement, net of any distributions made.
The notes on pages 34 to 59 form part of these financial statements. 29 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
Company Statement of Changes in Equity
for the 13 months ended 31 March 2009
Share Share Retained
capital premium earnings Total
££ ££
At 1 March 2007 778,833 10,263,993 (178,716) 10,864,110
Loss for the year and total recognised
income and expense for the year –– (1,686,883) (1,686,883)
Recognition of share-based payments –– 179,971 179,971
At 29 February 2008 778,833 10,263,993 (1,685,628) 9,357,198
Loss and total recognised income and expense for
the thirteen months ended 31 March 2009 –– (39,937,769) (39,937,769)
Issue of share capital 4,367,835 61,431,203 – 65,799,038
Recognition of share-based payments 2,500 47,500 382,687 382,687
At 31 March 2009 5,146,668 71,695,196 (41,240,710) 35,601,154
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 income statement, net of any distributions made.
The notes on pages 34 to 59 form part of these financial statements. 30 Gasol plc Annual Report and Accounts 2009
Consolidated Balance Sheet
as at 31 March 2009
31 March 29 February
2009 2008
Notes £ £
Assets
Non-current assets
Goodwill 13 2,978,700 –
Property, plant and equipment 15 260,853 –
Total non-current assets 3,239,553 –
Current assets
Trade and other receivables 16 268,602 16,558
Cash and cash equivalents 23 782,286 108,867
Total current assets 1,050,888 125,425
Total assets 4,290,441 125,425
Liabilities
Current liabilities
Trade and other payables 17 598,588 –
Total current liabilities 598,588 –
Non-current liabilities
Long-term borrowings 18 – 74,156
Total non-current liabilities – 74,156
Total liabilities 598,588 74,156
Net assets 3,691,853 51,269
Equity
Share capital 20 5,146,668 50
Share premium account 71,695,196 –
Reverse acquisition reserve (67,694,366) –
Total issued equity 9,147,498 50
Capital contribution reserve 74,156 900,000
Translation reserve (12,669) –
Retained losses (5,517,132) (848,781)
Total equity attributable to equity holders of the parent 3,691,853 51,269
The notes on pages 34 to 59 form part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 29 September 2009.
Soumo Bose
Chief Executive Officer 31 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
Company Balance Sheet
as at 31 March 2009
31 March 31 March
2009 2008
Notes £ £
Assets
Non-current assets
Investment in subsidiary undertakings 34 34,948,633 6,790,400
Property, plant and equipment 35 249,614 310,498
Total non-current assets 35,198,247 7,100,898
Current assets
Trade and other receivables 36 201,551 1,294,779
Cash and cash equivalents 39 746,836 1,312,130
Total current assets 948,387 2,606,909
Total assets 36,146,634 9,707,807
Liabilities
Current liabilities
Trade and other payables 37 545,480 350,609
Total current liabilities 545,480 350,609
Total liabilities 545,480 350,609
Net assets 35,601,154 9,357,198
Equity
Share capital 20 5,146,668 778,833
Share premium account 71,695,196 10,263,993
Retained losses (41,240,710) (1,685,628)
Total equity attributable to equity holders of the parent 35,601,154 9,357,198
The notes on pages 34 to 59 form part of these financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 29 September 2009.
Soumo Bose
Chief Executive Officer Consolidated Cash Flow Statement
for the period ended 31 March 2009
32 Gasol plc Annual Report and Accounts 2009
Period ended Year ended
31 March 29 February
2009 2008
Notes £ £
Loss before taxation (5,051,038) (426,799)
Adjustments for:
Finance income (44,837) (855)
Finance costs 18,225 –
Depreciation charges 108,903 –
Impairment of intangible asset 633,481 –
Share-based payment charge 382,687 –
Operating cash flows before movements in working capital (3,952,579) (427,654)
Decrease in receivables 75,857 23,384
Decrease in payables (533,453) (51,894)
Net cash absorbed by operating activities (4,410,175) (456,164)
Cash flows from investing activities
Interest received 44,837 855
Net cash recognised on reverse acquisitions 4,275,227 –
Expenditure on development of intangible assets (127,281) –
Purchases of property, plant and equipment (90,964) –
Net cash received from investing activities 4,101,819 855
Cash flows from financing activities
Interest paid (18,225) –
Capital contributions received – 550,000
Proceeds from issue of share capital net of issue costs 1,000,000 –
Net cash generated from financing activities 981,775 550,000
Net increase in cash and cash equivalents 673,419 94,691
Cash and cash equivalents at beginning of period 108,867 14,176
Cash and cash equivalents at end of period 23 782,286 108,867
The notes on pages 34 to 59 form part of these financial statements. 33 Gasol plc Annual Report and Accounts 2009
Company Cash Flow Statement
for the period ended 31 March 2009
Period ended Year ended
31 March 29 February
2009 2008
Notes £ £
Loss before taxation (39,937,769) (1,686,883)
Adjustments for:
Finance income (100,113) (155,314)
Finance costs 20,655 553
Depreciation of property, plant and equipment 150,493 116,578
Impairment to investment in subsidiary 32,590,806 –
Equity settled expense 50,000 –
Share-based payment charge 382,687 179,971
Operating cash flows before movements in working capital (6,843,241) (1,545,095)
Decrease/(increase) in receivables 1,093,227 (1,212,543)
Increase/(decrease) in payables 194,871 (72,724)
Net cash absorbed by operating activities (5,555,143) (2,830,362)
Cash flows from investing activities
Interest received 100,113 155,314
Purchases of property, plant and equipment (89,609) (297,407)
Acquisition of subsidiaries – (400,000)
Capital contributions made to subsidiaries – (300,000)
Net cash generated from/(absorbed by) investing activities 10,504 (842,093)
Cash flows from financing activities
Proceeds from issue of share capital net of issue costs 5,000,000 –
Interest paid (20,655) (553)
Net cash generated from/(absorbed by) financing activities 4,979,345 (553)
Net decrease in cash and cash equivalents (565,294) (3,673,008)
Cash and cash equivalents at start of period 1,312,130 4,985,138
Cash and cash equivalents at end of period 39 746,836 1,312,130
The notes on pages 34 to 59 form part of these financial statements.
Business Review
Corporate Governance
Financial Statements Notes to the Consolidated Financial Statements
for the period ended 31 March 2009
34 Gasol plc Annual Report and Accounts 2009
1. Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations issued by the
International Accounting Standards Board as adopted by the European Union (“IFRS”) and also those parts of the Companies Act 1985 applicable to
companies preparing their accounts under IFRS.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 periods presented, unless otherwise stated.
As outlined below, comparative figures for the year ended 29 February 2008 have been included under the principles of reverse acquisition accounting.
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 price and share trading volumes. It is
not viewed as likely that the full £10 million could be drawn down in one tranche given historical share prices and volumes. Given these conditions, the
Group continues to seek further sources of funding for its short term and longer term needs. Gasol is currently involved in discussions with external
investors and advisors to secure future financing arrangements. Certain major shareholders of the Group have indicated to the Board their intent to
participate in a near term fund raising, pro rata to their current shareholding and subject to certain conditions.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
company’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 to secure the funding required to progress the gas projects to cash generation 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 company’s ability to continue as a going
concern.The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern.
Standards and Interpretations effective in the current period
Three interpretations issued by the International Financial Reporting Interpretations Committee are effective for the current period.These are IFRIC 11
‘IFRS 2: Group and Treasury Share transactions, IFRIC 12 ‘Service Concession Arrangements’ and IFRIC 14 ‘IAS 19 – The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction’ .The adoption of these Interpretations has not led to any changes in the Group’s accounting policies.:
Standards issued but not yet effective
At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied in these financial
statements were in issue but not yet effective:
International Accounting Standards (IAS/IFRS) Effective date (periods beginning)
IFRS 2 ‘Amendment – Share based payment: vesting conditions and cancellations’ 1 January 2009
IFRS 2 ‘Amendment – group cash-settled share-based payment transactions’ * 1 January 2010
IFRS 3 ‘Revised – Business combinations’ 1 July 2009
IFRS 5 ‘Amendment – Non-current Assets Held for Sale and Discontinued Operations’ 1 July 2009
IFRS 7 ‘Amendment – disclosures about fair value and liquidity risk’ 1 January 2009
IFRS 8 ‘Operating Segments’ 1 January 2009
IAS 1 ‘Amendment – Presentation of financial statements: a revised presentation’ 1 January 2009
IAS 23 ‘Amendment – Borrowing costs’ 1 January 2009
IAS 27 and IFRS 1 ‘Amendment – Cost of an investment on first-time adoption’ 1 January 2009
IAS 32 and 1 ‘Amendment – Puttable financial instruments and obligations arising on Liquidation’ 1 January 2009
IAS 36 ‘Amendment – Impairment of assets’ 1 January 2009
IAS 38 ‘Amendment – Intangible assets’ 1 January 2009
IAS 39 ‘Financial Instruments: Recognition and Measurement – Amendment for eligible hedged items’ 1 July 2009
IAS 39 Financial Instruments: Recognition and Measurement – ‘Amendments for embedded derivatives
when reclassifying financial instruments’ 30 June 2009
International Financial Reporting Interpretations (IFRIC) Effective date (periods beginning)
IFRIC 13 ‘Customer loyalty programmes’ 1 July 2008
IFRIC 15 ‘Agreements for the Construction of Real Estate’ 1 January 2009
IFRIC 16 ‘Hedges of a Net Investment in a Foreign Operation’ 1 October 2008
IFRIC 17 ‘Distributions of Non-cash Assets to Owners’ 1 July 2009
IFRIC 18 ‘Transfers of Assets from Customers’ Transfers received on or after 1 July 2009
The directors anticipate that the adoption of these standards, interpretations and amendments will not have a material impact on the financial statements
of the company except that IFRS 8 and IAS 1 (revised) will have a presentational impact. IFRS 3 (revised) may impact upon accounting for future acquisitions. 35 Gasol plc Annual Report and Accounts 2009 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.
During the period, Gasol changed its reporting year end to 31 March 2009.These financial statements are therefore prepared for the 13 (thirteen) months
to 31 March 2009.
These consolidated financial statements incorporate the financial statements of Gasol, African LNG Holdings Limited, African LNG Services Limited, Afgas
Infrastructure Limited and Afgas Nigeria Limited. Comparative figures for the year ended 29 February 2008 have been included under the principles of
reverse acquisition accounting. At 29 February 2008, Gasol held a 20% investment in the equity share capital in African LNG Holdings and its wholly owned
subsidiary, African LNG Services Limited. Gasol consolidated these companies by virtue of an option held by Gasol to acquire the remaining 80% of the
equity share capital. In June 2008, the option was exercised and, due to the number of shares issued as consideration for this transaction, it was required to
be accounted for under the “Reverse Acquisition” method. Under this method, goodwill of £2,978,700 was initially recognised.
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 230 of the Companies Act 1985 and has not presented its income statement in these
financial statements.The Company’s income statement for the thirteen months ended 31 March 2009 includes a loss after tax of £39,937,769 (year ended
29 February 2008: loss after tax of £1,686,883).
Reverse acquisition accounting
At the previous year end, African LNG was consolidated as part of the Gasol group.Whilst the Group only held a 20% legal interest in African LNG, an
option existed to acquire the remaining 80% which gave Gasol control over African LNG as set out within IAS 27.
During the current period, the exercise of the option and the acquisition of African LNG and its wholly owned subsidiary African LNG Services Limited by
Gasol was funded through the issue of new shares as set out within [note 12].The number of shares issued as consideration has resulted in the former
majority shareholder of African LNG becoming the majority shareholder in Gasol.This business combination has therefore been accounted for under the
principles of reverse acquisition accounting as required by IFRS3. 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.
The following accounting treatment has been applied in respect of the reverse acquisition:
• The assets and liabilities of the legal subsidiary, African LNG and its subsidiary African LNG Services Limited (together, the “African LNG Group”), are
recognised and measured in the consolidated financial statements at the pre-combination carrying amounts, without restatement to fair value;
• The retained earnings and other equity balances recognised in the consolidated financial statements reflect the retained earnings and other equity
balances of the African LNG Group immediately before the business combination.The results of the period from 1 March 2008 to the date of the
business combination are those of the African LNG Group. However, the equity structure appearing in the consolidated financial statements reflects the
equity structure of the legal parent, Gasol Plc, including the equity instruments issued in order to effect the business combination; and
• Comparative numbers presented in the financial statements are the consolidated numbers of the African LNG Group for the year ended 29 February
2008.
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. Notes to the Consolidated Financial Statements
for the period ended 31 March 2009continued
36 Gasol plc Annual Report and Accounts 2009
2. Significant accounting policies continued
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.
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 balance sheets. 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.
Internally generated intangible assets
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from the Group’s development activities is recognised only if all of the following conditions are met:
• an asset is created that can be identified;
• it is probable that the asset created will generate future economic benefits; and
• the development cost of the asset can be measured reliably.
Internally-generated intangible assets are amortised on a straight-line basis over their useful lives from the point at which they are brought into use.
Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is
incurred.
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 balance sheet 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 balance sheet 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. 37 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
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 balance sheet 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.
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 balance sheet 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. Notes to the Consolidated Financial Statements
for the period ended 31 March 2009continued
38 Gasol plc Annual Report and Accounts 2009
2. Significant accounting policies continued
Borrowings
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 balance sheet date, and
are discounted to present value where the effect is material.
Share-based payments
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding
the effect of non market-based vesting conditions) at the date of grant.The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based on the group’s estimate of shares that will eventually vest and adjusted for
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.
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, but before crediting or charging finance income
or expense.
Segmental reporting
Gasol currently operates only one class of business and all operations are based out of the same location, being the United Kingdom. As such, no separate
analysis of the performance and position of business segments has been disclosed in the financial statements.
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 balance sheet date, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
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
opportunities arising in African LNG Holdings Limited (“African LNG”).
African LNG has undertaken extensive negotiations, whereby they will get 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 intention is for African LNG to earn revenues through the liquefaction and distribution of gas from the marginal fields.
The targeted commercial start of the project is 2014. 39 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
The main risks and sensitivities impacting the valuation of the goodwill relate to the following:
• Ability of upstream partners to secure the appropriate gas assets;
• Obtaining government approvals;
• Reaching a binding Project Development Agreement between the parties, which includes determining the Group’s share of the project;
• Up and downstream gas prices remaining within expected parameters;
• Securing sufficient funding to meet expected project development costs; and
• Delivering production within the projected timeframe and cost.
For discounting purposes, a rate of 15% has been used, to reflect the cost of capital associated with this type of development.
Discounting to present value, the carrying value of goodwill related to African LNG is supported entirely.The directors’ valuation of African LNG’s share of
the project at 31 March 2009 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 applied their best estimate, using all available information in forming their views.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.
4. Loss from operations
Loss from operations is stated after charging:
Period ended Year ended
31 March 29 February
2009 2008
£ £
Depreciation of property, plant and equipment 108,903 –
Staff costs 1,721,548 74,426
Operating lease payments 251,309 –
Share-based payments 382,867 –
Auditors’ remuneration
As auditors (Parent and consolidation) 21,500 –
As auditors (Subsidiaries) 5,500 5,000
Corporate finance services 50,000 –
Other 14,000 –
Staff costs presented above include fees paid to directors of the Company and are shown net of share-based payments made to Directors and employees. In
the thirteen months period to 31 March 2009 all of the share-based payments charge included in the loss for the period related to share options granted to
directors of Gasol except for £3,002 of share options granted to group employees and £4,900 of options issued in exchange for goods and services. All of the
share-based payments are equity settled.There was no share-based payment expense in the year ended 29 February 2008. Notes to the Consolidated Financial Statements
for the period ended 31 March 2009continued
40 Gasol plc Annual Report and Accounts 2009
5. Staff costs
Period ended Year ended
31 March 29 February
2009 2008
£ £
Directors’ fees and emoluments 778,025 –
Director’s termination payment for loss of office 120,150 –
Wages and salaries 987,140 65,980
Social security costs 164,020 8,445
2,049,335 74,425
The average number of employees (including executive directors) employed by the Group during the period was:
Number Number
Management and finance 11 3
Admistrative and support 3 –
14 3
In the period ended 31 March 2009, £36,054 was paid by Gasol into defined contribution pension schemes as part of staff remuneration (year ended
29 February 2008: £nil).
The remuneration of the Directors for the period ended 31 March 2009 is shown below:
Period ended Year ended
31 March 29 February
2009 2008
£ £
Aggregate emoluments of Executive Directors 714,936 403,082
Payments to Non-Executive Directors 183,239 137,892
898,175 540,974
The aggregate emoluments for Executive Directors include £30,000 of contributions to a personal pension plan for Soumo Bose.There were no pension
benefits accruing to Directors under defined benefit schemes in the period (year ended 29 February 2008: £nil).
The highest paid Director received total emoluments in the period in respect of service of £690,353 (year ended 29 February 2008: £285,249).
Further information regarding the remuneration of directors is included in the Report of the Remuneration Committee on pages 22 to 24.
6. Finance income
Period ended Year ended
31 March 29 February
2009 2008
£ £
Interest received on bank deposits 44,837 855 41 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
7. Finance costs
Period ended Year ended
31 March 29 February
2009 2008
£ £
Interest paid 18,225 –
8. Taxation
Period ended Year ended
31 March 29 February
2009 2008
£ £
Loss before taxation (5,051,038) (426,799)
Loss before taxation at the standard rare of corporation tax in the UK of 28%
(year ended 29 February 2008: 30%) (1,414,291) (128,040)
Effects of:
Expenses not deductible for tax purposes 139,497 –
Unutilised tax losses 1,274,794 128,040
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 £9,957,592 at 31 March 2009 (29 February 2008: of £3,476,802) would be
recognised at a rate of 28%.
9. Dividends
No dividend has been paid or proposed for the period ended 31 March 2009 (year ended 29 February 2008: £nil).
10. Loss per ordinary share
The calculation of a basic loss per share of 0.67 pence for the thirteen month period (year ended 29 February 2008: 0.09 pence) is based on the loss for the
period attributable to equity holders of Gasol Plc of £5,051,038 (year ended 29 February 2008: £426,799) and on the weighted average number of shares
in issue during the period of 753,830,346 (year ended 29 February 2008: 497,442,866).
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 2009, there were 48,344,667 potentially dilutive shares in issue (29 February 2008: nil) as part of a share-based payment scheme.
11. Other operating income
Other operating income relates to rental income received on the sub-letting of surplus office space. Notes to the Consolidated Financial Statements
for the period ended 31 March 2009continued
42 Gasol plc Annual Report and Accounts 2009
12. Acquisition of subsidiary by reverse acquisition
On 25 June 2008 Gasol acquired the remaining 80% of the issued share capital of African LNG Holdings Limited (“African LNG”) for a consideration of
623,067,064 new shares in Gasol Plc, constituting 75% of the enlarged Group post the acquisition. Due to the former majority shareholder of African LNG
having become the majority shareholder in Gasol, this transaction has been accounted for as a reverse acquisition.
The consideration shares issued as part of the acquisition of African LNG were deemed to have a value of 9.75 pence each, being the market price of one
ordinary share in Gasol Plc on the date of the acquisition.The total value recorded in Gasol’s books of the acquisition of the remaining 80% of the ordinary
share capital of African LNG was £60,749,039. Immediately post acquisition, the book value of the 100% investment in African LNG recorded in Gasol’s
books was £67,139,439. Following a review of the valuation of the investment in African LNG, the directors have written its value down to £34,948,633. For
further information as to how this valuation was derived, see note 3.
Upon consolidation, goodwill of £2,978,700 arises on the reverse acquisition of Gasol. A reverse acquisition reserve of £67,694,366 has also been
established.
The values of pre-acquisition reserves of the Gasol group (excluding interests in African LNG group companies) immediately prior to the reverse
acquisition were as follows:
At 25 June 2008
£
Retained earnings (4,599,858)
Capital contributions 1,430,990
(3,168,868)
The pre-acquisition reserves detailed in the above table have been eliminated upon consolidation.
A summary of the assets and liabilities of the Gasol group (excluding the African LNG group) immediately prior to the reverse acquisition is shown in the
table below. For the purposes of reverse acquisition accounting, all assets and liabilities are taken at book value and no revaluations for fair value
adjustments have been made.
Book value
£
Property, plant and equipment (net of accumulated depreciation) 278,792
Intangible assets 506,200
Trade and other receivables 327,901
Cash and cash equivalents 4,275,227
Trade and other payables (1,129,198)
Total net assets 4,259,022
Goodwill arising on acquisition 2,978,700
Net cash inflow arising on acquisition
Cash consideration –
Cash and cash equivalents acquired 4,275,227
4,275,227
The comparative figures shown in these interim financial statements and accompanying notes are those of the African LNG Group.
Had the Group been treated as one consolidated group for the whole accounting period, a consolidated loss for the period of £7.07m would have been
recognised.The normalised loss for the period is £4.93m (after taking out non-recurring acquisition costs of £1.13m, write-downs of intangible assets of
£0.63m, and share-based payments of £0.38m); this compares with a loss of £2.73m reported by Gasol in June 2008 for the year ended 29 February 2008.
The increase in the core costs relate primarily to an increase in headcount and other business development costs as the Group pursues an increased
number of business development opportunities. 43 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
13. Goodwill
£
Cost
At 28 February 2007 and 29 February 2008 –
Additions 2,978,700
At 31 March 2009 2,978,700
Accumulated impairment losses
At 28 February 2007, at 29 February 2008 and at 31 March 2009 –
Carrying amount
At 31 March 2009 2,978,700
At 28 February 2007 and 29 February 2008 –
The goodwill recognised in the period was as a result of the acquisition of the remaining 80% of the holding in African LNG.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 opportunities arising in African
LNG.
No impairment in goodwill has been identified in the period (year ended 29 February 2008: £nil).
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. Before recognition of impairment losses, the carrying amount of goodwill has been allocated as follows:
Period ended Year ended
31 March 29 February
2009 2008
£ £
Purchase of subsidiary through reverse acquisition 2,978,700 –
2,978,700 –
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. Notes to the Consolidated Financial Statements
for the period ended 31 March 2009continued
44 Gasol plc Annual Report and Accounts 2009
14. Other Intangible assets
£
Cost
At 29 February 2008 –
Acquired through business combinations 506,200
Additions in the period 127,281
Impairment of intangible assets (633,481)
At 31 March 2009 –
Amortisation
At 28 February 2007, at 29 February 2008 and at 31 March 2009 –
Carrying amount
At 31 March 2009 –
At 29 February 2008 –
At 28 February 2007 –
During the period, management have assessed progress on the project, developments during the period and recoverability of the capitalised costs. As a
result of uncertainties surrounding this, the amounts have been written off.This has led to a charge in the income statement 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.
15. Property, plant and equipment
Office Fixtures
equipment and fittings Total
££ £
Cost
At 28 February 2007 and 29 February 2008 –– –
Additions 23,670 67,294 90,964
Acquired through business combinations 89,170 357,823 446,993
At 31 March 2009 112,840 425,117 537,957
Depreciation
At 28 February 2007 and 29 February 2008 –– –
Acquired through business combinations (59,068) (109,133) (168,201)
Charge for the period (41,735) (67,168) (108,903)
At 31 March 2009 (100,803) (176,301) (277,104)
Carrying amount
At 31 March 2009 12,037 248,816 260,853
At 28 February 2007 and 29 February 2008 –– – 45 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
16. Trade and other receivables
31 March 29 February
2009 2008
£ £
Trade receivables 1,165 –
Prepayments and accrued income 190,630 16,558
Other receivables 70,374 –
Amounts owed by related parties 6,433 –
268,602 16,558
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
17. Trade and other payables
31 March 29 February
2009 2008
£ £
Other taxes and social security 63,034 –
Accruals 182,364 –
Trade payables 340,132 –
Other payables 13,058 –
598,588 –
Trade and other payables comprise amounts outstanding for trade purchases and ongoing costs.The average credit period taken for trade purchases is 31
days (year ended 29 February 2008: zero 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.
18. Long-term borrowings
31 March 29 February
2009 2008
£ £
Loan due to related party – 74,156
– 74,156
The long term borrowings of the group related to amounts borrowed from African Gas Development Corporation Limited (“AGDC”), the main share holder
in African LNG prior to the reverse takeover transaction during the period.The amounts were provided in order to fund the working capital of African LNG
and have been reclassified to capital contributions after agreement with AGDC that they would waive the right to receive the outstanding amount.
The group has no external borrowings.
There is no significant difference between the carrying value and fair value of Gasol’s long-term borrowings. Notes to the Consolidated Financial Statements
for the period ended 31 March 2009continued
46 Gasol plc Annual Report and Accounts 2009
19. Operating lease arrangements
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under noncancellable operating leases, which
fall due as follows:
31 March 29 February
2009 2008
£ £
Within one year 246,686 –
In the second to fifth years 472,815 –
719,501 –
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.
20. Share capital
31 March 29 February 31 March 29 February
2009 2008 2009 2008
Number Number £ £
Authorised:
Ordinary shares of 0.5p each (29 February 2008: ordinary shares of £1 each) 2,000,000,000 50 10,000,000 50
Issued and fully paid:
Ordinary shares of 0.5p each (29 February 2008: ordinary shares of £1 each) 1,029,333,730 50 5,146,668 50
The 29 February 2008 comparative share capital recognised in the consolidated financial statements reflects the share capital of African LNG Holdings
Limited. Following the RTO as set out in note 12, the share capital appearing in the consolidated financial statements at 31 March 2009 reflects the equity
structure of the legal parent, Gasol Plc, including the equity instruments issued in order to effect the business combination.
At 29 February 2008, Gasol had authorised share capital of 400,000,000 (with a nominal cash value of £2,000,000) ordinary shares of 0.5p each. Of those
ordinary shares, 155,766,666 were in issue at that date (with a nominal cash value of £778,833).
The Company has one class of ordinary share which carries no right to fixed income.
The following issues of shares were undertaken in the period ended 31 March 2009:
50,000,000 shares placed with institutional investors at a price of 8p per share on 8 April 2008.
623,067,064 issued to AGDC as consideration for the acquisition of the remaining 80% shareholding in African LNG of 25 June 2008.
500,000 shares issued to Jefferies as consideration for £50,000 of fees due as a result of advice on the re-listing of Gasol on 25 June 2008.
200,000,000 shares issued to Afren at 0.5 pence per share on 12 February 2009. Immediately after this investment, Afren, a UK listed company and
substantial shareholder of Gasol owned more than 20% of Gasol’s issued share capital. 47 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
21. Share options and other share-based payments
Share options were granted during the period to the Directors of the Company and also to certain staff as part of an employee share incentive scheme.
Details of share options granted to Directors are detailed in the Report of the Remuneration Committee on page 22. Note that the comparative disclosures
in this note relate to share options issued and outstanding in the name of Gasol. African LNG neither issued any share options nor had any outstanding at
29 February 2008.
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 during the period.
Number of Number of
share options share options
Period ended WAEP Year ended WAEP
31 March pence 29 February pence
2009 2009 2008 2008
Outstanding at beginning of the period 55,650,000 14.91 51,450,000 14.91
Granted during the period 14,694,667 33.38 4,200,000 32.14
Exercised during the period – n/a – n/a
Lapsed during the period (22,000,000) 10.55 ––
Outstanding at end of the period 48,344,667 24.01 55,650,000 16.21
Exercisable at end of the period 34,150,000 19.67 52,850,000 14.91
The weighted average remaining contractual life of the options outstanding at the balance sheet date was 3.3 years (29 February 2008: 1.6 years).
The following table lists the inputs to the model used to determine the fair value of options granted:
Period ended Year ended
31 March 29 February
2009 2008
Option pricing model used Black-Scholes Black-Scholes
Weighted average share price at grant date (pence) 9.13 5.80
Weighted average exercise price (pence) 33.38 32.14
Weighted average contractual life (years) 9.42 6.53
Share price volatility (%) 64% to 201% 120%
Dividend yield 0% 0%
Risk-free interest rate(%) 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 total share based payment expense for the period ended 31 March 2009 was £382,687 (year ended 29 February 2008: £nil).The share based payment
expense recognised in the published consolidated accounts of Gasol for the year ended 29 February 2008 was £179,971.
No share based payment liability existed at 31 March 2009 (29 February 2008: £nil).
All share based payments are equity settled.
22. Subsidiaries
Details of the Company’s subsidiaries at 31 March 2009 are as follows:
Place of Proportion of Proportion of
incorporation ownership of voting
(or registration) interest power 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 Instructure Limited The Republic of Seychelles Infrastructure development 75% 75%
Afgas Nigeria Limited Nigeria Energy research 75% 75%
On 7 May 2008 Gasol exercised its option to purchase the remaining 80% of the issued share capital of African LNG Holdings Limited from AGDC.The
acquisition was accounted for as a reverse takeover under the AIM rules for Companies. Notes to the Consolidated Financial Statements
for the period ended 31 March 2009continued
48 Gasol plc Annual Report and Accounts 2009
23. Cash and cash equivalents
31 March 29 February
2009 2008
£ £
Cash at hand and in bank 282,286 108,867
Treasury reserve deposits 500,000 –
Net cash and cash equivalents at the end of the period 782,286 108,867
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.
24. 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
• bank overdraft
• trade and other payables
• other borrowings
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies.The Board receives monthly reports
from the Group Financial Controller through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and
policies it sets.
The overall objective of the Board is to set polices that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and
flexibility. Further details regarding these policies are set out below.
Credit risk
The Group’s principal financial assets are bank balances and trade and other receivables.
Credit risk arises principally from the Group’s cash balances with further risk arising due to its trade receivables. Credit risk is the risk that the counterparty
fails to repay its obligation in respect of the amounts owed.
The concentration of the Group’s credit risk is considered by counterparty, geography and by currency.The Group has a significant concentrations of cash
held on deposit with two large banks in the United Kingdom. At 31 March 2009 the concentration of credit risk was as follows:
31 March 29 February
2009 2008
Counterparty £ £
HSBC Bank Plc 523,795 –
Barclays Bank Plc 243,775 –
Other banks 14,716 108,867
782,286 108,867
There are no other significant concentrations of credit risk at the balance sheet date. 49 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
24. Financial instrument risk exposure and management continued
Cash and cash equivalents
The total estimated credit risk of the Group at 31 March 2009 was £860,258 (29 February 2008: £108,867).
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.
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 (29 February 2008: £nil).
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.
Of the liabilities of the Group, bank overdrafts are repayable on demand and trade payables fall due within 30 days. At 31 March 2009, all liabilities on the
balance sheet fall due within 30 days.
Due between
Due within 30 days and Due after
30 days one year one year
Maturity of financial liabilities £ £
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
Long-term borrowings –– 74,156
Total financial liabilities –– 74,156
Market risk
With the exception of cash and cash equivalents, 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 £15,180 (year ended 29 February 2008: £nil). Notes to the Consolidated Financial Statements
for the period ended 31 March 2009continued
50 Gasol plc Annual Report and Accounts 2009
Loans and Receivables
31 March 29 February
2009 2008
Financial instruments by class and by category £ £
Current financial assets
Trade and other receivables 77,972 –
Cash and cash equivalents 782,286 108,867
Total current financial assets 860,258 108,867
Financial liabilities
measured at amortised cost
31 March 29 February
2009 2008
£ £
Current financial liabilities
Accruals 182,364 –
Trade and other payables 353,190 –
Total current financial liabilities 535,554 –
Non-current financial liabilities
Long-term borrowings – 74,156
Total non-current financial liabilities – 74,156
Total financial liabilities 535,554 74,156
25. Capital management
The Group funds itself primarily through equity financing, with very little use of debt finance.The Group has access to capital via AIM, on which it is listed.
To date, the majority of Gasol’s financing has been raised through placings with institutional investors. Gasol has not employed significant debt financing
in the past. 51 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
26. Related party transactions
In addition to the transactions detailed in the Directors’ Report, the Group entered into the following related party transactions.
On 24th June 2008, Gasol completed the acquisition of the balance of 80% of the issued share capital of African LNG from AGDC.The purchase was
satisfied by the issue of 623,067,064 new Gasol shares issued fully paid, represented at the time approximately 75% of the Company’s enlarged share
capital.
During the period ended 31 March 2009, AGDC agreed that an outstanding loan balance of £74,156 with Gasol’s subsidiary African LNG be deemed a
contribution to Gasol’s equity, with no additional voting rights or ownership rights attributed.
Gasol paid Theo Oerlemans £65,250 in respect of consultancy services supplied from 1 July 2008 up to the 31 March 2009.These services were provided in
addition to and outside of the scope of his contract as Non-Executive Chairman of Gasol.
Mr Ethelbert Cooper, a director and shareholder (though an intermediary company) in AGDC is a special advisor to the Gasol Board of Directors. He has
received £90,000 in respect of his services to Gasol in the period to 31 March 2009.
Gasol have an agreement with African Gas Trading & Services SA, a wholly-owned sub of AGDC to provide office space and general admin and support
services. AGDC incurred costs of £39,565 in respect of these services for the period ended 31 March 2009. Of this, £6,433 was receivable by Gasol at 31
March 2009. In addition, Gasol paid African Gas Trading and Services SA a total of CHF 28,000 in the period for European investor relation services.
Gasol incurred a total of £10,000 in respect of consultancy services rendered by Owel Linkso, a group of companies for whom Charles Osezua is Chairman.
Up to the balance sheet date, Gasol has provided funding of £891,452 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.
Up to the balance sheet date, Gasol has provided loans of £1,532,565 to AIL to fund its working capital requirements. Amounts repayable from AIL are
short term and earn no interest on the outstanding loan balances.
Up to the balance sheet date, Gasol has provided loans of £282,016 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.
Osman Shahenshah is the Chief Executive Officer and a shareholder of Afren. On 12 February 2009, Afren invested in 200,000,000 new ordinary shares in
Gasol and as a result has a holding in Gasol of greater than 20% of the equity capital in issue.
Details of shares issued to related parties are included in note 20 – Share capital.
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, AGDC
is deemed to be the ultimate controlling party.
27. Events after the balance sheet day
Events occurring after the balance sheet date are discussed in the Directors’ Report on page 19. Notes to the Company Financial Statements
for the period ended 31 March 2009continued
52 Gasol plc Annual Report and Accounts 2009
28. Significant accounting policies
The separate financial statements of the company are presented as required by the Companies Act 1985. As permitted by that Act, the separate financial
statements have been prepared in accordance with IFRS.
The principal accounting policies adopted are the same as those set out in note 2 to the consolidated financial statements except as noted below.
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
29. Loss from operations
Loss from operations has been arrived at after charging:
Period ended Year ended
31 March 29 February
2009 2008
£ £
Depreciation of property, plant and equipment 150,493 116,578
Staff costs 1,390,460 484,548
Operating lease payments 251,309 159,667
Share-based payments 432,687 179,971
Impairment loss recognised on investment in subsidiary undertakings 32,590,806 –
Impairment loss recognised on intercompany receivables 2,706,034 –
Auditors’ remuneration
As auditors 21,500 21,000
Corporate finance services 50,000 –
Other 14,000 8,500
Staff costs presented above include fees paid to directors of the Company and are shown net of share-based payments made to Directors and employees.
In the 13 months ended 31 March 2009, £374,785 of the share-based payments related to share options granted to Directors of Gasol (year ended 29
February 2008: £179,971), £3,002 related to share options granted to staff of Gasol (year ended 29 February 2008: £nil). £4,900 of options issued in
exchange for goods and services and new ordinary shares were issued to Jefferies in respect of £50,000 of services provided.
Further information on the valuation of share-based payments is disclosed in note 21.
30. Staff costs
Period ended Year ended
31 March 29 February
2009 2008
£ £
Directors’ fees and emoluments 1,083,746 540,974
Director’s termination payment for loss of office 120,150 –
Wages and salaries 433,593 74,092
Social security costs 130,758 48,853
1,768,247 664,519
In the period ended 31 March 2009, £25,537 was paid by Gasol into defined contribution pension schemes as part of remuneration for Gasol staff.
The average number of employees (including executive directors) employed by the Group during the period was:
Number Number
Management and finance 5 3
Administrative and support 4 2
9 5
Further information regarding the remuneration of directors is included in the Report of the Remuneration Committee on pages 22 to 24. 53 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
31. Finance income
Period ended Year ended
31 March 29 February
2009 2008
£ £
Bank interest 100,113 155,314
32. Finance costs
Period ended Year ended
31 March 29 February
2009 2008
£ £
Interest charged on trade finance agreements 11,331 –
Bank interest 9,324 553
20,655 553
33. Taxation
Period ended Year ended
31 March 29 February
2009 2008
£ £
Loss before taxation (39,937,769) (1,686,883)
Loss before taxation at the standard rate of corporation tax
in the UK of 28% (year ended 29 February 2008 – 30%) (11,182,575) (506,065)
Effects of:
Expenses not deductible for tax purposes 10,047,831 88,965
Unutilised tax losses 1,134,744 417,000
Current tax charge – –
The Company 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 Company makes profits in the future, unrecognised timing differences of £6,215,723 at 31 March 2009 (29 February 2008: £2,163,065) would be
recognised at a rate of 28%. Notes to the Company Financial Statements
for the period ended 31 March 2009continued
54 Gasol plc Annual Report and Accounts 2009
34. Investments in subsidiary undertakings
The value of the subsidiaries owned by the Company at 31 March 2009 is as follows:
£
Cost
At 28 February 2007 6,090,400
Additions 700,000
At 29 February 2008 6,790,400
Additions 60,749,039
At 28 February 2009 67,539,439
Impairment
At 29 February 2007 and 29 February 2008 –
Impairment charges in the period 32,590,806
At 31 March 2009 32,590,806
Carrying amount
At 31 March 2009 34,948,633
At 29 February 2008 6,790,400
At 28 February 2007 6,090,400
Investments in subsidiary undertakings
During the period, Gasol acquired the remaining 80% of the share capital in African LNG for a fair value consideration of £60,749,039.
Upon review of the investments held at 31 March 2009, the directors have concluded that an impairment charge of £32,590,806 is appropriate.
£32,190,806 relates to the investment in African LNG and the key factors in this assessment are detailed in note 3 to the consolidated accounts.The
remaining charge of £400,000 is the book value of Gasol’s investments in Afgas Nigeria Limited and Afgas Infrastructure Limited.The decision to fully
provide against those companies is due to the changing nature of Gasol’s projects in Nigeria and Equatorial Guinea with projected future revenue streams
flowing directly into Gasol and not through those subsidiaries. 55 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
35. Property, plant and equipment
Office Fixtures
equipment and fittings Total
££ £
Cost
At 28 February 2007 43,644 88,784 132,428
Additions 44,131 253,276 297,407
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
Depreciation
At 28 February 2007 2,759 – 2,759
Charge for the period 42,143 74,435 116,578
At 29 February 2008 44,902 74,435 119,337
Charge for the year 48,626 101,867 150,493
At 31 March 2009 93,528 176,302 269,830
Carrying amount
At 31 March 2009 18,678 230,936 249,614
At 29 February 2008 42,873 267,625 310,498
At 28 February 2007 40,885 88,784 129,669
No impairment losses have been realised on any property, plant and equipment during the period.
36. Trade and other receivables
31 March 29 February
2009 2008
£ £
Trade receivables 1,166 –
Other receivables 31,244 249,628
Prepayments and accrued income 162,708 66,524
Amounts owed by related parties 6,433 6,433
Amounts owed by subsidiaries 2,706,034 972,194
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 £2,706,033 was raised in the period (29 February 2008: £nil provision) against outstanding receivables
from subsidiaries.The directors will continue to assess the recoverability of these receivables.
The directors consider that the carrying amount of the remaining trade and other receivables approximates to their fair value. Notes to the Company Financial Statements
for the period ended 31 March 2009continued
56 Gasol plc Annual Report and Accounts 2009
37. Trade and other payables
31 March 29 February
2009 2008
£ £
Other taxes and social security 63,034 12,342
Accruals 173,864 292,355
Trade payables 295,524 45,912
Other payables 13,058 –
545,480 350,609
Trade and other payables comprise amounts outstanding for trade purchases and ongoing costs.The average credit period taken for trade purchases is 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.
38. Operating lease arrangements
At the balance sheet date, the Company had outstanding commitments for future minimum lease payments under non-cancellable operating leases,
which fall due as follows:
31 March 29 February
2009 2008
£ £
Within one year 246,686 151,200
In the second to fifth years 472,815 453,600
719,501 604,800
At the balance sheet date, the Company had no outstanding commitment for future minimum operation lease payments after the next five years.
39. Cash and cash equivalents
31 March 29 February
2009 2008
£ £
Cash at bank and in hand 246,836 1,312,130
Treasury reserve deposits 500,000 –
Net cash at the end of the period 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. 57 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
40. 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
• bank overdraft
• trade and other payables
• other 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 24 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 39.
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 £2,706,032 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 24 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 period ended 31 March 2009continued
58 Gasol plc Annual Report and Accounts 2009
40. Financial instrument risk exposure and management continued
Maturity of financial liabilities
Due within Due between 30 Due after
30 days days and one year one year
£ £ £
At 31 March 2009
Accruals 173,864 ––
Trade and otherpayables 237,626 70,956 –
Total financial liabilities 411,490 70,956 –
At 29 February 2008
Accruals 292,355 ––
Trade payables 45,912 ––
Long-term borrowings –– 74,156
Total financial liabilities 338,267 – 74,156
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 £23,099 (year ended 29 February 2008: £31,486).
Financial instruments by class and by category
Loans and Receivables
31 March 29 February
2009 2008
£ £
Current financial assets
Trade and other receivables 38,843 1,228,255
Cash and cash equivalents 746,836 1,312,130
Total current financial assets 785,679 2,540,385
Trade and other receivables are stated inclusive of amounts owed by subsidiaries and other related parties of £2,712,465 (29 February 2008: £978,627). Of
the amounts owed by subsidiaries and other related parties, a provision for non-recoverability of £2,706,033 (29 February 2008: £nil) has been made and is
included in the balance for trade and other receivables. 59 Gasol plc Annual Report and Accounts 2009 Business Review
Corporate Governance
Financial Statements
Financial liabilities
measured at amortised cost
31 March 29 February
2009 2008
£ £
Current financial liabilities
Accruals 173,864 292,355
Trade payables 308,582 45,912308,582
Total current financial liabilities 482,446 338,267
Non-current financial liabilities
Long-term borrowings – 74,156
Total non-current financial liabilities – 74,156
Total financial liabilities 482,446 412,423
41. Capital management
Gasol funds itself primarily through equity financing, with very little use of debt finance.The Company has access to capital via AIM, on which it is listed.To
date, the majority of Gasol’s financing has been raised through placings with institutional investors. Gasol has not employed significant debt financing in
the past. 60 Gasol plc Annual Report and Accounts 2009
Officers and Professional Partners
as at 25 June 2009
Country of incorporation and domicile United Kingdom
Legal form Public Limited Company
Directors Theo Oerlemans Chairman
Soumo Bose Chief Executive Officer
Haresh Kanabar Non-Executive Director
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 Jefferies International Ltd
Vintners Place
68 Upper Thames Street
London EC4V 3BJ
Accountants Whale Rock Limited
2nd Floor
50 Gresham Street
London EC2V 7AY
Auditors BDO Stoy Hayward LLP
3 Hardman Street
Spinningfields
Manchester M3 3AT
Solicitors Kilpatrick & Lockhart Preston Gates Ellis LLP
110 Cannon Street
London EC4N 6AR
Registrars Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen
West Midlands B63 3DA Gasol plc Annual Report and Accounts 2009
Printed on Revive 50:50.This paper comes from sustainable
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.thecolourhouse.com Gasol plc
Annual Report and Accounts 2009
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