# Borders & Southern Petroleum Plc ANNUAL REPORT AND ACCOUNTS 2023 # **CONTENTS** ### Strategic Report - 2 Company Overview - 3 Chairman's and CEO's Review - 4 Business Model - 6 Principal Risks and Uncertainties ### Governance - 9 Director's Duties - 11 Introduction to Governance - 12 Board of Directors - 13 Remuneration Committee Report - 14 Directors' Report - 16 Independent Auditor's Report ### **Financial Statements** - 22 Consolidated Statement of Comprehensive Income - 23 Consolidated Statement of Financial Position - 24 Consolidated Statement of Changes in Equity - 25 Company Statement of Financial Position - 26 Company Statement of Changes in Equity - 27 Consolidated Statement of Cash Flows - 28 Company Statement of Cash Flows - 29 Notes to the Financial Statements - 43 Corporate Directory Further information: www.bordersandsouthern.com # **Strategic Report** # **About Us** Borders & Southern is an independent oil and gas exploration company with three Production Licences and a Discovery Area Licence in the Falkland Islands. The Licences are located approximately 150 kilometres southeast of the Islands and cover an area of just under 10,000 square kilometres. The Company currently holds a 100% operating interest. Exploration activity to date has included the acquisition of 2,517 square kilometres of 3D seismic data and the drilling of two wells. The first well, drilled on the Darwin prospect, resulted in a significant, liquids rich, gas condensate discovery. The second well, drilled on the Stebbing prospect, a different play type to the first, failed to reach its reservoir target but had good hydrocarbon shows. The Darwin discovery has been independently assessed to contain 3.2 TCF of wet gas initially in-place (unrisked, best estimate), and a contingent and prospective resource of 462 million barrels of condensate and LPG (unrisked, best estimate). The Company has commissioned numerous engineering and technical studies to evaluate the discovery and to advance its appraisal and development. No technical roadblocks have been identified. Independent analysis indicates that, following successful appraisal, the discovery could be brought into production using a conventional FPSO development. Our objective is to monetise the Darwin discovery prior to testing further prospects within our extensive and exciting prospect inventory. # Falkland Islands # Chairman's and CEO's Review During the reporting period, the Company successfully completed the 2022 capital raise which was approved by shareholders at a General Meeting in January 2023. The total number of Ordinary shares now in issue is now 730,814,456. The Company finished the year with a cash balance of \$1.9 million (31 December 2022: \$2.7 million) and continues to be debt-free. The Company reports an operating loss for 2023 of \$1.0 million (2022: \$1.35 million). Administrative expense for the year was \$1.1 million (2022: \$1.1 million). The company continues to have a low cost base and notwithstanding wider inflationary pressures has managed to keep these costs at similar level to previous years. The company continues to focus on moving the Darwin discovery forward. Independent engineering studies have confirmed the financial robustness of our project and as we have all heard and read about, there is a growing realization that industrial change cannot keep pace with social change and as a result the world will be reliant on hydrocarbons for longer than previously thought. As a consequence, the global oil and gas industry is evolving with many companies rebalancing their capital expenditures towards increased upstream as they believe that demand for oil and gas will be higher over the next two decades than previously envisaged. As a result, in order to replace production, capital expenditures will need to increase across the industry. Darwin is an attractive investment as it could be brought into production relatively quickly and the condensate is very marketable globally, selling at or close to Brent. Few upstream oil and gas projects are like Darwin and have a 1-2 year payback at current oil prices. In addition to a conventional farm-out the Company is looking at alternative ways to finance the appraisal program and in the event these progress we will update investors. Once Darwin is in production, there are many options for the cashflow including returning it to shareholders, reinvesting in building production or a combination of both. In addition to increasing Darwin's production by drilling further wells, there are multiple prospects to grow production in the licence areas around Darwin. As we have previously reported, Howard Obee announced in early 2024 his intention to step down as CEO and board member at the end of February. We were very pleased to have appointed Harry Baker as CEO and board member effective 1 March 2024. Harry brings significant capital markets experience and industry connections to the Company which will be invaluable in the foreseeable future. We would like to again pay tribute to the significant contribution Howard made to the Company's development over the last nearly twenty years and wish him well in the future. **Harry Dobson** Non-Executive Chairman Harry Baker Chief Executive # **Business Model** **Our vision** is to be a successful exploration company through the discovery and subsequent monetisation of hydrocarbons for the benefit of all our stakeholders. **Our pledge** is to always act with honesty and integrity. Our drive to succeed will not compromise high standards of business ethics and we will act safely and responsibly in all our activities. ### **Exploration Strategy** The Company's exploration strategy focuses on frontier and emerging basins, where early entry, and access to a significant acreage position at relatively low cost, can be achieved. The basins we evaluate must have the potential to yield large individual prospect sizes and where there is a high yet-to-find. Critically, the basins must display good evidence for a working source rock. Prior to entry, a comprehensive technical screening is completed to help mitigate the sub-surface risks. Screening project economics are undertaken to confirm that the project rewards justify the investment decision. Our acreage in the Falklands met all our technical and commercial criteria. Post acreage capture, the acquisition of high-quality 3D seismic data is essential to unlocking the petroleum system. Applying industry leading tools and techniques helps reduce the sub-surface risks prior to drilling. The Company was fortunate to achieve success with its first well, as our pre-drill interpretation was proven to be correct. Our strategy requires access to financial resources at various stages in the project. The scale of resource required increases as the project matures. At the screening level capital expenditure is relatively modest but ramps up significantly through data acquisition, drilling, then appraisal and development. Our two main routes to funding are through the capital markets or securing partners. In the event of a development reaching final investment decision, funding is likely to come from both debt and equity. ### **Our Team** We have a small, experienced team, that is supported by expert consultants with extensive industry experience. Many of our consultants have worked with the Company over a long period of time. Our key strengths are: Technical rigour, Commercial discipline, and Risk management The technical team has a proven track record in basin evaluation and discovery. We acquire high quality data, use leading edge technology and create detailed sub-surface interpretations. The Company has robust financial controls in-place. We maintain a low overhead, hold no debt, and ensure that our financial resources are effectively directed towards our strategic objectives. Our activities are underpinned by thorough risk identification, monitoring and mitigation. Prior to operational phases, Company policies are reviewed and modified to ensure current industry best practice standards are applied. We aim to operate responsibly, displaying care and respect to all our stakeholders and the environment. # Darwin Gas Condensate The Darwin gas condensate discovery is located 150km south of the Falkland Islands, in 2000m of water. It comprises two adjacent tilted fault blocks (named Darwin East & Darwin West). The liquids-rich gas condensate has been independently assessed to contain (un-risked best estimate) 3.2 TCF of wet gas initially in-place. The un-risked best estimate contingent (2C) and prospective resource has been assessed to be 462 million barrels of condensate and LPG. The Early Cretaceous (Aptian) reservoir is a high-quality, laterally continuous shallow marine sandstone. It has been interpreted to represent shelf bars and sheet sands: The reservoir is exceptionally imaged on 3D seismic data, where hydrocarbons are marked by a positive AVO response, a clear flat spot and amplitude conformance to structure. The area of seismic amplitude anomaly is 26 square kilometres. The discovery well (61/17-1) encountered a gross reservoir interval of 84.5m, net pay of 67.8m, average porosity 22% (up to 30%) and average permeability of 337mD (up to 1D). The condensate yielded a CGR of 148stb/MMscf. The condensate has a 49 degrees API gravity, typical of an ultra-light crude oil. # Independent un-risked resource assessment | Estimated Wet Gas Initially In-place (Bscf) | | | Best Estimate Gross Contingent & Prospective Resource | | | | | |---------------------------------------------|---------------|----------------|-------------------------------------------------------|---------------------------------------------------------|----------------------|----------------------------|--| | | Low | Best | High | , , , | Condensate
MMSTB) | Condensate
& LPG(MMBBL) | | | Darwin East
Darwin West | 659
[1,361 | 1,096
2,110 | 1,759
3,160 | Darwin East (2C Contingent
Darwin West (Prospective) | t) 115
202 | 170
292 | | # **Phased Development Concept** The Company has designed, and had validated, a phased development concept. Following successful appraisal, an initial production rate of 26,000 bpd could be achieved from two production wells and one gas injector well on Darwin East. The concept would be a conventional FPSO development, utilising standard industry technology. Reservoir fluids would be produced from the field via subsea flow lines. The condensate would be processed and stored on the FPSO before being offloaded to shuttle tankers for export. The dry gas would not be flared, but reinjected back into the reservoir. Several options have been identified to expand production up towards 70,000bpd. The benefits of a phased development concept are clear. Less initial capital is required to get a field into production. The time to first production can be reduced. Project payback can be accelerated. And project expansion can come from free cash flow. Project payback for a Darwin East, 26,000 bpd scheme, could be achieved within two years of first production, assuming a \$60 per barrel oil price. Project economics are positively influenced by the quality of the reservoir that requires a relatively low number of development wells and the attractive fiscal terms set by the Falkland Islands Government. # **Principal Risks and Uncertainties** As an oil and gas exploration company, Borders & Southern is subject to a variety of risks and uncertainties. Managing risk effectively is fundamental to delivering safe and responsible business plans and strategic objectives. Our approach is to ensure that all significant risks are identified, their potential impact understood, and the likelihood of their occurrence assessed. The Board of Directors review the risk register and ensure management plans are put in place where appropriate. **Sub-surface risk** - exploration for oil and gas is inherently a risky business and commercial success cannot be guaranteed. Whilst many of the technical risks can be mitigated, they cannot be eliminated. The Company has an experienced sub-surface team with a proven track record. Industry experts provide specialist supplementary skills. Current technologies and techniques are used in all evaluations. **Health and Safety risk** – drilling for oil and gas in a remote, offshore environment presents many risks to personal safety including serious injury or death. The Company employs experienced drilling management teams. Prior to operations, detailed risk assessments and mitigation plans are put in place, along with emergency response exercises, closely following industry best practices. **Environmental risk** – the Falkland Islands are located in a remote area with an abundant range of wildlife and plant life that could be at risk from operational incidents. Prior to operations, the Company undertakes detailed environmental impact assessments and baseline studies using industry specialists. Mitigation plans are put in place including oil response training for all relevant personnel. **Climate change risk** – the activities of exploration and production companies could be subject to restrictions or moratoriums in response to carbon emission reduction targets. A Darwin development would have a lower carbon signature than many oil developments around the world. There is no indication that the Falkland Islands Government want to place restrictions on the production of hydrocarbons as the potential revenues will have a profound economic benefit to the Islands. **Financial (access to capital) risk** – The Company will need to raise further funds to carry out the implementation of its business plan in the absence of a farm-out. There can be no assurance that further funds will not be required in the future to complete future drilling or carry out the implementation of the Group's business plan The Company holds a high-quality asset (Darwin) with a low break-even oil price and a relatively small environmental footprint. Based on economic and environmental considerations, the Board considers Darwin to be very competitive against other global opportunities. At year end, the Company had \$1.9 million in cash resources which is sufficient to pay expected costs for 2024. Beyond that, the Company will either need to complete a farm-out or raise additional resources to demonstrate to the Falkland Islands Government that it has sufficient resources to pay the licence fees. **Energy Market Volatility** - energy prices have historically been very volatile with the potential for sustained low prices in the future. Whilst the Company can, when in production, potentially hedge some of this risk, it is very likely that the Company would continue to be impacted by any volatility in the energy markets. The Darwin project appears very robust at current levels of oil price. Project modelling suggests it is economic down to at least \$40 per barrel. **Political risk** – the sovereignty of the Falkland Islands is challenged by Argentina. In the 2013 referendum in the Falkland Islands the people voted unequivocally to remain as a British Overseas Territory. The British Government strongly supports the Falkland Islands right to determine their own future and rebuts Argentina's claim to sovereignty. ### Russia's war with Ukraine Whilst the Company is not currently in operations, if the Russia/Ukraine conflict is on-going when it is operating, it could disrupt the supply chains and increase costs. The oil industry is global with multiple supply sources around the world and has proven historically to be adept at adjusting to changing circumstances. ### Israel's war in Gaza The current war in Gaza does not have a direct impact on the Company but it has had an impact on investments into and out of the region. This has the potential to impact on future investments in upstream projects around the world high percentage on oil and gas revenues coming from that region. **Dependence on key personnel** - the success of the Group, in common with other businesses of a similar size, will be dependent on the expertise and experience of its directors and senior management. The loss of key personnel could harm the business or cause delays to the plans of the Group whilst management time is directed at finding suitable replacements. The future success of the Group is in part dependent upon its ability to identify, attract, motivate and retain staff with the requisite experience. Measures are in place and are under review to reward and retain key individuals and to protect the Group from the impact of staff turnover. **Reliance on third parties** - the Group may contract with third parties for commercial evaluation and support, equipment and services. The failure of a third party to perform its obligations and quality could subject the Group to additional costs, delays or abandonment of the projects. The oil industry is global and services, people and equipment can be sourced from many parts of the world, often at short notice. # **ESG** Borders & Southern's business is to create value through the discovery and monetisation of hydrocarbons. To be successful, we recognise that all our stakeholders should benefit, including shareholders, host governments, the communities in which we operate, employees and partners. We aim to conduct our operations safely, in line with industry best practice. We focus on limiting and mitigating our impact on the environment and we aim to conduct operations in an ethical and transparent way with strong corporate governance. ### **Climate Change and the Energy Transition** The 2016 Paris Agreement set out targets to reduce the anthropogenic emissions of gasses that contribute towards global warming. Energy production through the combustion of fossil fuels is one of several factors that contribute to greenhouse gas emissions. But with energy demand expected to increase in line with continued global population growth and economic development, the transition away from fossil-based energy resources to greener, renewable forms of energy is complex, particularly as recent events in Eastern Europe have highlighted the importance of energy security. The global challenge is to reduce carbon emissions by transitioning to renewable energy sources whilst maintaining the reliability of energy supply. During the energy transition, hydrocarbons are likely to remain a significant strategic resource. Advancements in carbon capture will play a role, but high grading of projects based on their carbon intensity might be expected. Upstream emissions from exploration, extraction and transportation differ widely between hydrocarbon accumulations. This reflects differences in the subsurface complexity, physical and thermodynamic properties of the hydrocarbons and production and management practices, along with differences in regulatory regimes. Tools available to assess the carbon intensity of global oil and gas fields highlight the differences. For instance, heavier crude oils typically require more energy to extract, transport and refine. Some regulatory regimes allow the flaring of gas during production, whilst others do not. Darwin, with its high quality reservoir and highly mobile reservoir fluids, will require a low number of development wells. There would be no routine flaring of gas. After the separation of the condensate, dry gas would be reinjected back into the reservoir. The carbon intensity from wellhead to refinery, is likely to be favourable compared to many other producing fields. Global benchmarking has shown that deep water fields with high throughput wells, less routine flaring, using modern technology, typically have lower carbon intensities than other categories such as offshore shelf, onshore shale and oil sands. In the downstream refining process, carbon intensity varies between different oil categories. Heavy oils, with low API, typically require more energy to refine than light oils. Condensate samples collected from the Darwin discovery well have an API gravity of 46-49 degree, similar to an ultra-light crude oil and putting it at the lighter end of the oil spectrum. At present the Company is in a non-operational phase and has a minimal environmental footprint. This will change when we enter the appraisal drilling phase, with an increase in emissions. Prior to the start of operations, the Company commits to fully integrating climate change into its business plan. We will define measures, report transparently, and mitigate our own emissions as far as practicable. # **Directors' Duties** The Directors act in accordance with a set of duties detailed in section 172 of the Companies Act which are summarised as follows: - A director of a company must act in the way they consider, in good faith, would be the most likely to promote the success of the company for the benefit of its shareholders as a whole and, in doing so, have regard to: - o The likely consequences of any decisions in the long term; - o The interests of the company's employees; - o The need to foster the company's business relationships with suppliers, customers and others; - o The impact of the company's operations on the community and environment; - o The desirability of the company maintaining a reputation for high standards of business conduct; and - o The need to act fairly between shareholders of the company. ### Going concern The 31 December 2023 annual report has been prepared based on the going concern basis that contemplates the countinuity of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business. The Parent Company is a holding entity and as such their going concern is dependent on the Group therefore the going concern assessment was performed as part of the Group's assessment. At 31 December 2023, the Group had a net cash position of \$1.9m (31 December 2022: \$2.7m). The Group does not have any external borrowings or debts. The Group has a commitment to drill a well before the expiry of its production licence on 31 December 2024 (see note 19). The Group plans to fund the well developments through a farm-out or by raising additional capital if the farm-out is not successful. If the Group does not successfully raise the capital needed or identify a suitable farm-out partner, the Group will seek to gain an extension to the licences and the associated commitment to drill the well. This is in line with previous extensions and the Directors are confident that further extensions will be granted. Historically, the Falkland's Government has required the Group to show evidence of it's ability to pay the licence fees before an extension which currently is not certain as further funding is required. In performing their assessment of the Group and Parent Company's ability to continue as a going concern, the Directors have prepared a cashflow forecast for the period ending 30 May 2025, which indicates that in current conditions, the Group and Parent Company will become cash negative in December 2024. At present the cost base of the business principally consists of administrative costs, listing costs and costs to maintain the licences in good-standing. Therefore, in the absence of a farm-out agreement or other funding arrangement contributing further working capital to the Group or Parent Company, additional funding will be required, before December 2024, to meet the day to day operational cashflow requirements, noted above, of the Group and Parent Company. As the Group and Parent Company are reliant on further funding being secured, which is not guaranted, this indicates the existence of a material uncertaintly which may cast significant doubt on the Group and Parent Company's ability to continue as a going concern and therefore they may be unable to realise their assets and discharge their liabilities in the normal course of the business. The Directors consider that the funding will be forthcoming and therefore the going concern basis of preparation is deemed appropriate. The financial statements do not include the adjustments that would be required should the going concern basis of preparation no longer be appropriate. ### Section 172 Statement In addition to that outlined in the Chairman's and CEO's report (page 3) the ESG section above and in the Director's Report (pages 14-15), the Directors fulfilled their duties during the year in the following ways. Throughout the year the Company has engaged with its key stakeholders and has incorporated their feedback into the Board's main strategic decisions. The two principal areas of strategic focus have been the pursuit of funding/partners for the next phase of operations and the advancement of the sub-surface technical work. As a company active in the Falkland Islands we ensure we represent the interests of the Falkland Islands community, the Falkland Islands Government, Department of Minerals and environmental groups. As a member of FIPLA (Falkland Islands Petroleum Licensee's Association), not only do we foster relationships with other Falkland Islands operating companies, but also engage with the government on petroleum policy development and matters impacting our business. We also provide support to environmental groups for base-line studies with the objective of minimising our impact on the natural environment. Through our monthly reporting to the Falkland Islands Department of Minerals we communicate developments in our subsurface work and listen to any feedback offered by their advisors at the British Geological Survey. In our technical work, we have developed wider relationships with the academic community. For many years we have made our data available to certain British universities and mentored students. The Company's strategies, results and on-going developments are communicated to shareholders and other stakeholders through the Company's website, incorporating London Stock Exchange public releases and presentation material. The Board of Directors are made aware of shareholder comments and feedback. Shareholders are encouraged, where possible, to attend the annual AGM to offer direct feedback to all the Company's Directors. As a relatively small company with a business structure that has a limited number of in-house roles supported by expert out-sourced functions, we are able to ensure a high level of communication with all employees. This cultivates a good appreciation of business risks and objectives and provides employees with direct access to all Board members and input into critical decision making. The Strategic Report was approved by the Directors on 30 May 2024 and signed on its behalf by: **Harry Dobson** Non-Executive Chairman ### INTRODUCTION TO GOVERNANCE # Principles of corporate governance I am, along with the rest of the directors, responsible for corporate governance. The board currently comprises the Non-Executive Chairman, two Executive Directors and one Non-executive Director. The roles of the Chairman and CEO are separate and clearly defined. All of the Directors bring independent judgement to bear on issues of strategy, performance, resources, key appointments and standards. One of the critical roles of the board is to make decisions that are in the best interests of the Company and that follow the six key factors in S172(1) of the Companies Act. The board meets regularly throughout the year and all the necessary information is supplied to the Directors on a timely basis to enable them to discharge their duties effectively. The board considers that the current balance of Executive and Non-executive Directors is appropriate for the Company, taking into account its size and status. All Directors retire by rotation. ### **QCA Corporate Governance** The Company follows the QCA corporate governance code which was chosen as the most appropriate for the time being. The Company remains compliant with the principles of the code and further details can be found on its website under investor relations/corporate governance. ### My role as Chairman I have been Chairman of the Company since its inception and I am responsible for the effective running of the board and for ensuring that it plays a constructive role in the development of the Company. Together with the Chief Executive Officer, I also set and run the board meeting agendas. I am in regular contact with the Chief Executive Officer on matters to do with the strategy. # Role of the Non-executive Director William Hodson brings oil and gas business experience to the board and its Committees. He provides independent views on the Company's performance, operations and strategy. ### **Audit Committee** The Audit Committee comprises two Non- executive Directors. The members of the Audit Committee and their attendance at meetings of the Audit Committee during 2023 are detailed in the next page. The objectives of the Audit Committee are to ensure: - the accuracy and integrity of the financial statements and related disclosures: - the keeping of adequate books, records and internal controls; - compliance with legal and regulatory requirements; and - oversight and communication with the Auditors ### Internal Controls The board is responsible for approving all major projects, external reports and budgets. The Company has robust internal controls and risk management procedures which are reviewed regularly to ensure they are aligned with best practice. ### Insurances The Company has taken out Directors and Officers insurance that provides insurance cover for all Directors and senior officers of the Company: This insurance is reviewed annually. ### **Key performance indicators** At this stage in its development, the Company is focused on the development of the Darwin discovery. When the Company commences production, KPIs will be developed and reported as appropriate. The Directors do, however, closely monitor certain financial information, in particular overheads and cash balances. ### Harry Dobson Non-Executive Chairman May 2024 # **BOARD OF DIRECTORS** ### Harry Dobson Non-executive Chairman ### Committee Memberships Chairman of the Remuneration Committee and member of the Audit Committee ### Experience - Former investment banker and senior partner of Yorkton Securities plc - Former Chairman of American Pacific Mining Company Inc, Lytton Minerals Limited, Kirkland Lake Gold Inc and Rambler Metals and Mining plc - Former director of Copper Bay Limited, Glenmore Highlands Inc., Belvedere Resources Ltd and Concordia Resource Corp. ### Harry Baker Chief Executive Officer ### Committee Memberships None ### Experience Nearly 24 years of capital markets experience from previous roles with Auctus Advisors, GMP First Energy, Mirabaud Securities and Canaccord Capital. ### **Peter Fleming** Finance Director ### Committee Memberships None ### Experience - Over 30 years of upstream oil and gas experience including BHP Billiton - Held senior positions in exploration and business development, investment evaluation, acquisitions and disposals and strategic planning - Masters degrees in business administration and finance. ### William Hodson Non-executive Director ### Committee Memberships Chairman of the Audit Committee and member of the Remuneration Committee ### Experience - Over 20 years' experience advising clients in the natural resources sector. - Former partner of Ocean Equities Limited - Former partner in Pareto Securities Limited ### Number of board meetings during 2023 | Attendance | · | Board | Committee | Audit Committee | | | |----------------|---|-------|-----------|-----------------|--|--| | Harry Dobson | | 2 | 1 | 2 | | | | Howard Obee | | 2 | _ | _ | | | | Peter Fleming | | 2 | - | - | | | | William Hodson | | 2 | 1 | 2 | | | # REMUNERATION COMMITTEE REPORT On 18 May 2005 all of the Company's Directors entered into a service agreement with the Company except for William Hodson who joined during 2022 and Harry Baker in February 2024. The board has a Remuneration Committee comprising myself and one non-executive Director. The members of the Remuneration Committee are detailed in the Directors' Report. The purpose of the Remuneration Committee is to independently ensure the company remunerates fairly and responsibly and ensure that the level and composition of remuneration for all employees is competitive. Both short- and long-term performance-based components are reviewed. The Company benchmarks its remuneration and overheads with comparable peer group companies. The remuneration of the Directors for the year ended 31 December 2023 was as follows: | | Bas | c salary | Sha | re-based payment | Tot | al 2023 | Tota | 1 2022 | |----------------|---------|------------------|-----|------------------|----------|---------|---------|---------| | | £ | \$ | £ | \$ | £ | \$ | £ | \$ | | Harry Dobson | | · . . | _ | | - | _ : | : | | | Howard Obee | 125,000 | 150,000 | _ | | 125,000 | 150,000 | 125,000 | 150,000 | | Peter Fleming | 100,000 | 120,000 | _ | _ | 100,000 | 120,000 | 100,000 | 120,000 | | William Hodson | 20,000 | 24,000 | - | - , | 20,000 | 24,000 | 20,000 | 24,000 | | | 245,000 | 294,000 | - | · - | 245,000 | 294,000 | 245,000 | 294,000 | Howard Obee left the Company at the end of February 2024. The Company paid £39,000 (\$47,000) (2022: £39,000 (\$47,000)) in employee National Insurance for its Directors during the year. The Group operates a pension scheme for some of its employees. Bruce Farrer, a key management person, was paid a salary of £100,000 in 2023 ((£100,000 - 2022). Harry Dobson Non-Executive Chairman of the Remuneration Committee 30 May 2024 # **DIRECTORS' REPORT** ### Directors and their interests The beneficial and other interests of the Directors and their families in the share capital at 31 December 2023 and at 31 December 2022, were as follows: | | At 31 December
2023
Number | At 31 December
2022
Number | |----------------|----------------------------------|----------------------------------| | Harry Dobson | 81,372,000 | 61,372,000 | | Howard Obee | 10,000,000 | 10,000,000 | | Peter Fleming | 2,200,000 | 2,200,000 | | William Hodson | • | - | The ordinary shares in which Harry Dobson is interested are held by the Zila Corporation (Zila), a company owned by the Whitmill Trust Company Limited, as trustee of The Lotus Trust of which he is a beneficiary. During 2023 Zila subscribed to additional shares as part of the December 2022 capital raise. The Group has provided the Directors with qualifying indemnity insurance from a third party. ### Substantial shareholders At 31 March 2024, the following held 3% or more of the nominal value of the Company's shares carrying voting rights: | | | | | Number of
Ordinary shares | % of share
capital | |-----------------------|---|---|---------|------------------------------|-----------------------| | Zila Corporation | | |
• , | 81,372,000 | 11.13% | | Alan Brimacombe | | | | 75,000,000 | 10.26% | | Mr H Mason | | | | 52,570,635 | 7.22% | | Interactive Investor | | | | 47,568,234 | 6.51% | | Mr & Mrs Newlands | | | | 31,810,000 | 4.35% | | LGT Wealth Management | | | | 29,706,759 | 4.06% | | Bank Julius Baer | | | | 27,378,468 | 3.75% | | Hargreaves Lansdown | | | | 26,882,756 | 3.68% | | HSDL | • | | | 24,787,247 | 3.67% | | Damille Partners | 7 | • | | 24,284,117 | 3.32% | ### Domicile The Parent Company of the Group, Borders & Southern Petroleum plc, is a public limited company and is registered and domiciled in England. ### Results and dividends The Group Statement of Comprehensive Income is set out on page 24 and shows the result for the year. The Directors did not recommend the payment of a dividend (2022 – \$nil). ### Review of business and future developments A review on the operations of the Group is contained in the Chairman and CEO's Review on page 3 onwards. ### Charitable and political donations There were no political or charitable contributions made by the Company or the Group during the year (2022-\$nil). #### Financial instruments Details of the use of financial instruments by the Company and its subsidiary undertakings are contained in note 21 of the financial statements. ### Directors' responsibilities The Directors are responsible for preparing the Directors' Report, the Strategic Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group and Company financial statements in accordance with UK adopted International Accounting Standards. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on AIM market. In preparing these financial statements, the Directors are required to: - · Select suitable accounting policies and then apply them consistently; - · Make judgements and accounting estimates that are reasonable and prudent; - State whether they have been prepared in accordance with UK adopted International Accounting Standards, subject to any material departures disclosed and explained in the financial statements; and - Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. ### Website publication The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein. ### Audito All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Company's auditor for the purposes of its audit and to establish that the auditor is aware of that information. The Directors are not aware of any relevant audit information of which the auditor is unaware. BDO LLP has expressed its willingness to continue in office and a resolution to reappoint them will be proposed at the Annual General Meeting, by order of the board William Slack Company Secretary 30 May 2024 ### Review of business and future developments A review on the operations of the Group is contained in the Chairman and CEO's Review on page 3 onwards. ### Charitable and political donations There were no political or charitable contributions made by the Company or the Group during the year (2022- \$nil). #### Financial instruments Details of the use of financial instruments by the Company and its subsidiary undertakings are contained in note 21 of the financial statements. ### Directors' responsibilities The Directors are responsible for preparing the Directors' Report, the Strategic Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group and Company financial statements in accordance with UK adopted International Accounting Standards. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on AIM market. In preparing these financial statements, the Directors are required to: - · Select suitable accounting policies and then apply them consistently; - · Make judgements and accounting estimates that are reasonable and prudent; - State whether they have been prepared in accordance with UK adopted International Accounting Standards, subject to any material departures disclosed and explained in the financial statements; and - Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Company transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. ### Website publication The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein. ### Auditor All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Company's auditor for the purposes of its audit and to establish that the auditor is aware of that information. The Directors are not aware of any relevant audit information of which the auditor is unaware. BDO LLP has expressed its willingness to continue in office and a resolution to reappoint them will be proposed at the Annual General Meeting, by order of the board William Slack Company Secretary 30 May 2024 # Independent auditor's report to the members of Borders & Southern Petroleum Pic ### Opinion on the financial statements In our opinion: - the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 December 2023 and of the Group's loss for the year then ended; - the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards: - the Parent Company financial statements have been properly prepared in accordance with UK adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and - · the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements of Borders & Southern Petroleum Plc (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2023 which comprise the consolidated statement of comprehensive income, the consolidated statement of financial position, the company statement of changes in equity, the company statement of financial position, the company statement of changes in equity, the company statement of cash flows, the consolidated statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is UK adopted international accounting standards as applied in accordance with the provisions of the Companies Act 2006. ### Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. ### Independence We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. ### Material uncertainty related to going concern We draw attention to Note 1 of the financial statements which indicates that the Group and Parent Company require additional funding before December 2024, which is not guaranteed. As stated in Note 1, these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Group and Parent Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter. Given the material uncertainty noted above and our risk assessment we considered going concern to be a key audit matter. Our evaluation of the Directors' assessment of the Group and the Parent Company's ability to continue to adopt the going concembasis of accounting included: - Obtaining, challenging and assessing the Group and Parent Company's base case cash flow forecasts and the\nunderlying assumptions which have been approved by the Directors. In so doing we held discussions with the Directors to establish the level of certainty of the expected fund-raising initiatives expected to fund the Group's and Parent Company's costs. - We reviewed the correspondences between the Directors and Falkland Islands Government relating to the extension of the production and discovery area licences expiring in December 2024. - We compared the Group's and Parent Company's actual operational results to the budget for 2023 to assess the Directors' ability to forecast accurately. - We challenged costs by reference to actual costs and contracts as appropriate. - We reviewed the mathematical accuracy of the cash flow model. - Performing reverse stress testing analysis on the cash flows in order to determine whether there were alternative scenarios, other than those identified by the Directors, in which liquidity was breached. Our testing included scenarios as to remove expected avoidable costs and we recalculated the expected monthly cash flows to end of May 2025. We reviewed and considered the adequacy and consistency of the disclosure within the financial statements relating to the Directors' assessment of going concern basis of preparation against the cash flow models to ensure key judgements within the assessment are appropriately disclosed. In auditing the financial statements, we have concluded that Director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. ### Overview | Coverage | 100% (2022: 100%) of Group loss before tax
100% (2022: 100%) of Group total assets | | | | |-------------------|------------------------------------------------------------------------------------------------------------------|------------------|----------------------------|----------| | | | 2023 | 2022 | | | Key audit matters | Carrying value of exploration and evaluation of assets (Group) and intercompany loan receivable (Parent Company) | √ " | · • | : | | | Going Concern (Group and Parent) | Ž | | | | | Based on our assessment of the significant receivable (Parent Company) has been assess described below. | • | | • | | | In addition, Going Concern has been asset uncertainty described above. | ssed as a KA | M in 2023 because of the n | naterial | | Materiality | Group financial statements as a whole \$4.1m (2022;\$4.2m) based on 1.4% (2022; 1.4) | 194) of Total as | note | | ### An overview of the scope of our audit Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group's system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. The Group consists of the Parent Company and one subsidiary. We determined that both of these components were significant and were subject to full scope audits by the Group audit team. ### Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. ### Key audit matter Carrying value of exploration and evaluation assets (Group) and Intercompany loan receivable (Parent Company) (Please refer to notes 12 & 13 and note 1 for the relevant accounting policies) The Group's exploration and evaluation assets associated with the Darwin and Stebbing license areas in the Falkland Islands represent the key assets on the Group's statement of financial position. As at 31 December 2023, the Group's exploration and evaluation assets totalled \$293.7m (2022: \$293.2m). Management performed an impairment indicator review to assess whether there were any indicators of impairment for the exploration assets, noting that the current licences have an expiry date in December 2024. Given the inherent judgement involved in the assessment of potential triggers for impairment and any subsequently required assessment of the carrying value of the exploration and evaluation assets, and the overall significance of the carrying value in the context of the Group statement of financial position, we considered this to be a key audit matter As at 31 December 2023, the Parent Company has an intercompany loan receivable from its subsidiary, amounting to \$293.9 million (2022: \$293.8 million). Judgement is required in determining whether and expected credit loss should be recorded against the intercompany loan. Management considered whether the subsidiary could repay the loans if they were demanded at the statement of financial position date. Based on management's assessment, no expected credit loss was recognised. Given the inherent judgement involved in the assessment of the expected credit loss, and the significance of the carrying value in the context of the parent Company statement of financial position, we considered this to be a key audit matter. How the scope of our audit addressed the key audit matter - We assessed and challenged Management's impairment indicator review to establish whether it was performed in accordance with the Group's accounting policy and the relevant accounting standard. - We confirmed that the exploration licenses were valid at the year end and that no breaches of licences and commitments had occurred. - We considered whether there was evidence in the Group cash flow forecasts that funding was available to maintain the exploration and evaluation assets in full. - We have obtained the technical report prepared by the expert engaged by Management to report to them on the resources and possible production output of the project, which includes an economic model estimating the net present value of the exploration and evaluation assets over the life of the project. We considered the independence, competence and objectivity of Management's expert with reference to their scope of work, qualifications and the declarations of independence made in their report. We have read their report and considered whether its content highlights any indicators of impairment not already considered by Management. - We have confirmed our understanding of the nature and terms of the intercompany loan receivable through discussion with management and obtaining supporting documentation. - We have obtained and reviewed management's assessment for expected credit losses and evaluated the ability of the subsidiary to repay the loan balance, based on the assessment of the underlying exploration and evaluation assets. ### Key observations: We noted that the Group has a commitment to drill a well before the expiry of its production licence on 31 December 2024. The Directors are exploring the strategic options available to drill a well and the possibility of obtaining an extension to the licences and the associated commitments. Although we agreed with the Directors' assessment there were no triggers for impairment under IFRS 6 (Group) or expected credit losses under IFRS 9 (Parent Company) at 31 December 2023, we noted if the Directors did not identify a strategic option that would result in the drilling of a well or secure an extension to the licence, it could result in an impairment trigger or expected credit loss in future. The financial statements do not contain the adjustments that would be required if an impairment were to arise. We found the Directors' assessment of the carrying value of E&E assets and intercompany receivables to be acceptable. ### Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: | | Group financi | ial statements | Parent company f | Parent company financial statements | | | |------------------------------------------------------------------|-------------------------|-------------------------|---------------------------------------------------------|----------------------------------------------------------|--|--| | | 2023 | 2022 | 2023 | 2022 | | | | | \$m | \$ m | \$m | \$m | | | | Materiality | 4.1 | 4.2 | 4.1 | 4.1 | | | | Basis for | Group materiality was s | et at 1.4% (2022: 1.4%) | Parent company materia | lity was set at 1.4% (2022: | | | | determining | of the total assets. | | 1.4%) of the total assets | • | | | | materiality | | | | · . | | | | | | · | | | | | | Rationale for the benchmark applied | | | | areholders and other users
ural resources exploration | | | | Performance
materiality | 3.1 | 3.1 | 3.1 | 3.1 | | | | Basis for determining performance materiality | Performance materiality | was set at 75% (2022: 7 | 75%) of the above material | ity levels | | | | Rationale for the percentage applied for performance materiality | | • | considering the nature of cting identified misstatement | of activities, historic audit
ents. | | | ### Specific materiality We also determined that for Consolidated statement of comprehensive income, a misstatement of less than materiality for the financial statements as a whole, specific materiality, could influence the economic decisions of users. As a result, we determined materiality for these items based on 10% (2022:10%) of loss before taxation of \$102,000 (2022: \$135,000). We further applied a performance materiality level of 75% (2022:75%) of specific materiality to ensure that the risk of errors exceeding specific materiality was appropriately mitigated. ### Component materiality For the purposes of our Group audit opinion, we set materiality for each significant component of the Group based on a percentage of between 75% (2022: 75%) of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged from \$3.1m (2022: \$3.1m). In the audit of each component, we further applied performance materiality levels of 75% (2022: 75%) of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated. ### Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit differences in excess of \$82,000 (2022: \$83,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. ### Other information The directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. ### Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. | Strategic report
and Directors'
report | In our opinion, based on the work undertaken in the course of the audit: the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements. | |----------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors' report. | | Matters on
which we are
required to | We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: | | report by exception | | | | | | | | ### Responsibilities of Directors As explained more fully in the Directors' responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so. ### Auditor's responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: Non-compliance with laws and regulations ### Based on: - Our understanding of the Group and the industry in which it operates; - · Discussion with management and those charged with governance; and - Obtaining and understanding of the Group's policies and procedures regarding compliance with laws and regulations. We considered the significant laws and regulations to be the applicable accounting framework, UK tax legislation, AIM Listing Rules and applicable Falklands Islands mineral resources laws and regulations. The Group is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be the UK Bribery Act. Our procedures in respect of the above included: - Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations: - Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws and regulations: - Review of financial statement disclosures and agreeing to supporting documentation: - Involvement of VAT tax specialists in the audit; and - Review of legal expenditure accounts to understand the nature of expenditure incurred. #### Fraud We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included: - Enquiry with management and those charged with governance, including the Audit Committee regarding any known or suspected instances of fraud; - Obtaining an understanding of the Group's policies and procedures relating to: - Detecting and responding to the risks of fraud; and - Internal controls established to mitigate risks related to fraud. - Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud; - Discussion amongst the engagement team as to how and where fraud might occur in the financial statements; - Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; and - Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these. Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of controls and fraudulent reporting on the annual report narrative disclosures. Our procedures in respect of the above included: - Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation: - Assessing significant estimates made by management for bias related to assessment of the impairment triggers carrying value of exploration asset; and - Reviewed the narrative disclosures on the annual report and assessed consistence with our understanding of the We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or noncompliance with laws and regulations throughout the audit. Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report. ### Use of our report This report is made solely to the Parent Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed. DocuStaned by: John Black John Black (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor London, UK 30 May 2024 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). # CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2023 | Continuing Operations | | | 2023 | 2022 | |-----------------------------------------------------------------------------------------|--------------------|----|--------------|--------------| | | Not | .e | \$'000 | \$'000 | | Administrative expenses | | | (1,141) | (1,129) | | Loss from operations | | 3 | (1,141) | (1,229) | | Finance income | | 9 | s 81 | - | | Finance expense | | 9 | • | (172) | | Other income | | | | 42 | | Loss before tax | | | (1,060) | (1,359) | | Tax expense | . 1 | 0 | - | - | | Loss for the year and total comprehensive loss for the year equity owners of the parent | ar attributable to | | (1,060) | (1,359) | | Basic and diluted loss per share (see note 4) | | 4 | (0.14) cents | (0.26) cents | There is no other comprehensive income. # CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 31 December 2023 | | | | | _ | | | | | |------------------------------------------------------|-----------|---|--------|------|---------------|----------|--------|----------| | | | • | | | 2023 | | 2022 | | | | | ٠ | Note | | \$'000 | \$'000 | \$'000 | \$'000 | | Assets | | : | ٠., | : | *** | | · : | | | Non-current assets | | | | | | | | , | | Property, plant and equipment | and the | ٠ | · 11 | . 1. | | 8 | | _ | | Intangible assets | | | 12 | | ٠. | 293,741 | | 293,244 | | Total non-current assets | | | | | · | 293,749 | | 293,244 | | | - | • | | | | 200,1.40 | • | 200,244 | | Current assets | | | .,
| | 404 | • | 570 | | | Other receivables | | | 14 | • | 164 | | 576 | | | Cash and cash equivalents | | | 15 | | 1,928 | · | 2,707 | | | Total current assets | | | | | | 2,092 | | 3,283 | | Total assets | | | | | | 295,841 | | 296,527 | | Liabilities | | | | | | 1.4 | | | | Current liabilities | | | | | | | | | | Trade and other payables | | | 16 | _ | | (156) | | (565) | | Total net assets | | | | | | 295,685 | | 295,962 | | Equity attributable to the equity the parent company | owners of | | | | | | ÷ | | | Share capital | | | 17 | | | 11,155 | | 10,718 | | Share premium | | | 17 | | | 310,541 | • | 310,195 | | Other reserves | | | | | | 1,778 | | 1,778 | | Retained deficit | | | | | | (27,773) | | (26,713) | | Foreign currency reserve | | | | | | (16) | | (16) | | Total equity | | | | | | 295,685 | | 295,962 | The notes on pages 29 to 42 form part of the financial statements. The financial statements were approved by the board of Directors and authorised for issue on 30 May 2024. Harry Baker Director Peter Fleming Director Company Number: 05147938 # CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 31 December 2023 | | | 2023 | | 2022 | | |----------------------------------------------------------------|------|--------|----------|--------|----------| | | Note | \$'000 | \$'000 | \$.000 | \$'000 | | Assets | | | | | | | Non-current assets | | | | | | | Property, plant and equipment | 11 | | 8 | | - | | Intangible assets | 12 | | 293,741 | | 293,244 | | Total non-current assets | | | 293,749 | | 293,244 | | Current assets | | | | | | | Other receivables | 14 | 164 | | 576 | | | Cash and cash equivalents | . 15 | 1,928 | | 2,707 | | | Total current assets | | | 2,092 | | 3,283 | | Total assets | | | 295,841 | | 296,527 | | Liabilities | | | | | | | Current liabilities | | | | | | | Trade and other payables | 16 | | (156) | | (565) | | Total net assets | | | 295,685 | | 295,962 | | Equity attributable to the equity owners of the parent company | | | | | | | Share capital | 17 | | 11,155 | | 10,718 | | Share premium | 17 | | 310,541 | | 310,196 | | Other reserves | | | 1,778 | | 1,777 | | Retained deficit | | | (27,773) | | (26,713) | | Foreign currency reserve | | | (16) | | (16) | | Total equity | | | 295,685 | | 295,962 | The notes on pages 29 to 42 form part of the financial statements. The financial statements were approved by the board of Directors and authorised for issue on 30 May 2024. Harry Baker Director **Peter Fleming** Director Company Number: 05147938 # **COMPANY STATEMENT OF FINANCIAL POSITION** At 31 December 2023 | | | 2023 | | 2022 | | |-----------------------------------------------------|------|--------|----------|--------|----------| | | Note | \$'000 | \$'000 | \$'000 | \$:000 | | Assets | | | | | | | Non-current assets | | | | | | | Property, plant and equipment | 11 | | 8 | | - | | Investment in subsidiary | 13 | | • | - | - | | Inter-company loan | 14 | | 293,920 | | 293,878 | | Total non-current assets | | | 293,928 | | 293,878 | | Current assets | | | | | | | Other receivables | 14 | 164 | | 120 | | | Cash and cash equivalents | 15 | 1,928 | | 2,707 | | | Total current assets | | | 2,092 | | 2,827 | | Total assets | | | 296,020 | | 296,705 | | Liabilities | | | | | | | Current liabilities | | | | | | | Trade and other payables | 16 | | (157) | | (565) | | Total net assets | | | 295,863 | | 296,140 | | Equity attributable to owners of the parent company | | -, | | | | | Share capital | 17 | | 11,155 | | 10,718 | | Share premium | 17 | | 310,541 | | 310,195 | | Other reserves | | | 1,778 | | 1,778 | | Retained deficit | | | (27,593) | | (26,533) | | Foreign currency reserve | | | (18) | | (18) | | Total equity | | | 295,863 | | 296,140 | The Parent Company has taken advantage of the exemption from the requirement to publish its own income statement. The Parent Company loss for the year ended 31 December 2023 was \$1,060,000 (2022: \$1,359,000). The notes on pages 31 to 42 form part of the financial statements. The financial statements were approved by the board of Directors and authorised for issue on 30 May 2024. Harry Baker Director Peter Fleming Director Company Number: 05147938 # **CONSOLIDATED STATEMENT OF CHANGES IN EQUITY** For the year ended 31 December 2023 | Balance at 31 December 2023 | 11,155 | 310,541 | 1,778 | (27,773) | (16) | 295,685 | |------------------------------------------------|----------------------------|----------------------------|-----------------------|---------------------------------------|------------------------------------------|-----------------| | Shares issue | 437 | 346 | - | · · · · · · · · · · · · · · · · · · · | | 783 | | Loss and total comprehensive loss for the year | · · | | _ | (1,060) | _ | (1,060) | | Balance at 31 December 2022 | 10,718 | 310,195 | 1,778 | (26,713) | (16) | 295,962 | | Shares issue | 2,188 | 1,593 | _ | | | 3,782 | | Loss and total comprehensive loss for the year | _ | - | _ | (1,359) | _ | (1,359) | | Balance at 1 January 2022 | 8,530 | 308,602 | 1,778 | (25,354) | (16) | 293,540 | | | Share
capital
\$'000 | Share
premium
\$'000 | Other reserves \$'000 | Retained
deficit
\$'000 | Foreign
currency
reserve
\$'000 | Total
\$'000 | The following describes the nature and purpose of each reserve within owners' equity: | Reserve | Description and purpose | |---------------------------|---------------------------------------------------------------------------------------------------| | Share capital | This represents the nominal value of shares issued. | | Share premium | Amount subscribed for share capital in excess of nominal value. | | Other reserves | Fair value of options issued less transfers to retained deficit on expiry. | | Retained deficit | Cumulative net gains and losses recognised in the Consolidated Statement of Comprehensive Income. | | Foreign currency reserves | Differences arising on the translation of foreign operation to US dollars. | # **COMPANY STATEMENT OF FINANCIAL POSITION** At 31 December 2023 | | | | | | • | | |----------------------------------------------|--------|------|--------|----------|----------|----------| | | | | 2023 | | 2022 | | | | | Note | \$'000 | \$'000 | . \$'000 | \$'000 | | Assets | | | | | | | | Non-current assets | | | •• | | | | | Property, plant and equipment | | 11 | | 8 | | · - | | Investment in subsidiary | | 13 | | • | | - | | Inter-company loan | | . 14 | | 293,920 | | 293,878 | | Total non-current assets | | · • | | 293,928 | | 293,878 | | Current assets | | | | | | | | Other receivables | | 14 | 164 | | 120 | | | Cash and cash equivalents | | 15 | 1,928 | | 2,707 | | | Total current assets | | | • | 2,092 | | 2,827 | | Total assets | | | | 296,020 | , | 296,705 | | Liabilities | | _ | - | • | • | | | Current liabilities | | | • , | | | | | Trade and other payables | | 16 | | (157) | | (565) | | Total net assets | | | | 295,863 | | 296,140 | | Equity attributable to owners of the company | parent | | | | | | | Share capital | | 17 | | 11,155 | | 10,718 | | Share premium | | 17 | | 310,541 | • | 310,195 | | Other reserves | | | • | 1,778 | | 1,778 | | Retained deficit | | | | (27,593) | | (26,533) | | Foreign currency reserve | | | | (18) | | (18) | | Total equity | | | • | 295,863 | | 296,140 | | | | | | | | | The Parent Company has taken advantage of the exemption from the requirement to publish its own income statement. The Parent Company loss for the year ended 31 December 2023 was \$1,060,000 (2022: \$1,359,000). The notes on pages 31 to 42 form part of the financial statements. The financial statements were approved by the board of Directors and authorised for issue on 30 May 2024. Harry Baker Director Company Number: 05147938 **Peter Fleming** Director # **COMPANY STATEMENT OF CHANGES IN EQUITY** At 31 December 2023 | | Share
capital | | Other reserves | Retained
deficit | Foreign
currency
reserve | Total | |------------------------------------------------|------------------|---------|----------------|---------------------|--------------------------------|---------| | · | \$'000 | \$'000 | \$'000 | \$'000 | \$'000 | \$'000 | | Balance at 1 January 2022 | 8,530 | 308,602 | 1,778 | (25,174) | (18) | 293,717 | | Loss and total comprehensive loss for the year | _ | _ | _ | (1,359) | _ | (1,359) | | Shares Based Payments | 2,188 | 1,593 | _ | _ | - | 3,782 | | Balance at 31 December 2022 | 10,718 | 310,195 | 1778 | (26,533) | (18) | 296,140 | | Loss and total comprehensive loss for the year | _ | _ | - | (1,060) | _ | (1,060) | | Shares issue | 437 | 346 | | _ | | 783 | | Balance at 31 December 2023 | 11,155 | 310,541 | 1,778 | (27,593) | (18) | 295,863 | The following describes the nature and purpose of each reserve within owners' equity: | Reserve | Description and | nurnose | |---------|-----------------|---------| | Kazatva | Description and | purpose | Share capital This represents the nominal value of shares issued. Share premium Amount subscribed for share capital in excess of nominal value. Other reserves Fair value of options issued less transfers to retained deficit on expiry. Retained deficit Cumulative net gains and losses recognised in the Consolidated Statement of Comprehensive Income. Foreign currency reserve Differences arising on the translation of foreign operation to US dollars. # **CONSOLIDATED STATEMENT OF CASH FLOWS** For the year ended 31 December 2023 | and the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second of the second o | | 202 | 3 | 2022 | | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------|-------------|-----------|-------------|---------| | | Note | \$'000 | \$'000 | \$'000 | \$'000 | | Cash flow from operating activities | | | | | | | Loss before tax | | ÷ . | (1,060) | | (1,359) | | Adjustments for: Depreciation | 11 | | • | | 22 | | Share-based payment | 8 | | - | | - | | Finance costs | 9 | | | | 172 | | Finance income | 9 | . | (81) | | - | | Cash flows used in operating activities before | • | | | | · | | changes in working capital | | • • | (1,141) | | (1,165) | | (Decrease)/increase in other receivables | 14 | | 412 | | (393) | | Increase/(decrease) in trade and other payables | 16 | | (408) | | 452 | | Net cash outflow from operating activities | | | . (1,137) | | (1,106) | | Cash flows used in investing activities | | | į | | | | Purchase of tangible assets | -11 | (8) | ·.
, | - | | | Purchase of intangible assets | 12 _ | (497) | · _ | (498) | | | Net cash used in investing activities | | | (505) | | (498) | | Cash flows used in financing activities | | | | | | | Lease interest | 9 | - | | - | | | Lease payments | 16 | • | | (13) | | | Shares issue | 17 | 783 | | 3,781 | | | Net cash from (used in) financing activities | .: | | 783 | | 3,768 | | Net increase/(decrease) in cash and cash equivalents | | • | (859) | _ | (2,164) | | Cash and cash equivalents at the beginning of the year | 15 | | 2,707 | | 714 | | Exchange (loss)/gain on cash and cash equivalents | | | 81 | | (172) | | Cash and cash equivalents at the end of the year | | | 1,928 | | 2,707 | # **COMPANY STATEMENT OF CASH FLOWS** For the year ended 31 December 2023 | | 2 | 023 | 2 | 022 | | |--------------------------------------------------------|------|--------|---------|--------|------------| | | Note | \$'000 | \$'000 | \$'000 | \$'000 | | Cash flow from operating activities | | | - | | | | Loss before tax | | | (1,060) | | (1,359) | | Adjustments for: Depreciation | 11 | | • | | 22 | | Share-based payment | 8 | | - | | - | | Finance costs | 9 | | - | | 172 | | Finance income | 9 | | (81) | | · | | Cash flows used in operating activities before | 4 | | | | | | changes in working capital | | | (1,139) | | (1,165) | | (Decrease)/Increase in other receivables | 14 | | (46) | | 63 | | Decrease/(increase) in trade and other payables | 16 | | (408) | • | 452 | | Net cash outflow from operating activities | | • | (1,593) | | (650) | | Cash flows used in investing activities | | • | • | | | | Purchase of tangible assets | . 11 | . (8) | | - | | | Increase in amounts due from Group undertaking | -14 | (42) | | (953) | | | Net cash from/(used in) investing activities | | | (50) | | (953) | | Cash flows from financing | | | | | | | Cash flows from financing activities | | | | | | | Lease interest | 9 | • | | - | • | | Lease payments | 16 | - | | (13) | | | Shares issue | 17 | 783 | | 3,781 | | | Net cash from/(used in) financing activities | | | 783 | | 3,768 | | Net increase/(decrease) in cash and cash equivalents | | | (860) | | 2,165 | | Cash and cash equivalents at the beginning of the year | 15 | | 2,707 | | 714 | | Exchange (loss)/gain on cash and cash equivalents | | | 81 | | (172) | | Cash and cash equivalents at the end of the year | | | 1,928 | | 2,707 | | | | | | | | For the year ended 31 December 2023 ### 1 Accounting policies ### Basis of preparation The principal accounting policies adopted in the preparation of the financial statements are set out below and have been consistently applied to all years presented. The consolidated and Parent Company financial statements have been prepared in accordance with UK adopted international accounting standards and, as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006. The consolidated financial statements have been prepared under the historical cost convention. ### New standards, interpretations and amendments adopted from 1 January 2023 The following new standards and amendments are effective for the period beginning 1 January 2023: - IFRS 17 Insurance contracts - Disclosure of Accounting policies (Amendments to IAS 1 Presentation of financial statements and IFRS Practice statement 2 Making materiality judgements) - Definition of Accounting estimates (Amendments to IAS 8 Accounting policies, Changes in accounting estimates and Errors) - Deferred tax related to Assets and Liabilities arising from a single transaction (Amendments to IAS 12 Income taxes) - International Tax reform Pillar 2 Model rules (Amendment to IAS 12 Income taxes). None of these amendments had any impact on the Group. ### New standards, interpretations and amendments not yet effective At the date of authorisation of these financial statements, the group has not applied the following new Accounting Standards. - Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture - Amendments to IAS 1 Classification of Liabilities as Current or Non-current - Amendments to IAS 1 Non-current Liabilities with Covenants - Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements - Amendments to IFRS 16 Léase Liability in a Sale and Leaseback The directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the group in future periods. ### **Basis of consolidation** ### Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation. ### Going Concern The 31 December 2023 annual report has been prepared based on the going concern basis that contemplates the countinuity of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business. The Parent Company is a holding entity and as such their going concern is dependent on the Group therefore the going concern assessment was performed as part of the Group's assessment. At 31 December 2023, the Group had a net cash position of \$1.9m (31 December 2022: \$2.7m). The Group does not have any external borrowings or debts. The Group has a commitment to drill a well before the expiry of its production licence on 31 For the year ended 31 December 2023 # 1 Accounting policies continued December 2024 (see note 19). The Group plans to fund the well developments through a farm-out or by raising additional capital if the farm-out is not successful. If the Group does not successfully raise the capital needed or identify a suitable farm-out partner, the Group will seek to gain an extension to the licences and the associated commitment to drill the well. This is in line with previous extensions and the Directors are confident that further extensions will be granted. Historically, the Falkland's Government has required the Group to show evidence of it's ability to pay the licence fees before an extension which currently is not certain as further funding is required. In performing their assessment of the Group and Parent Company's ability to continue as a going concern, the Directors have prepared a cashflow forecast for the period ending 30 May 2025, which indicates that in current conditions, the Group and Parent Company will become cash negative in December 2024. At present the cost base of the business principally consists of administrative costs, listing costs and costs to maintain the licences in good-standing. Therefore, in the absence of a farm-out agreement or other funding arrangement contributing further working capital to the Group or Parent Company, additional funding will be required, before December 2024, to meet the day to day operational cashflow requirements, noted above, of the Group and Parent Company. As the Group and Parent Company are reliant on further funding being secured, which is not guaranted, this indicates the existence of a material uncertaintly which may cast significant doubt on the Group and Parent Company's ability to continue as a going concern and therefore they may be unable to realise their assets and discharge their liabilities in the normal course of the business. The Directors consider that the funding will be forthcoming and therefore the going concern basis of preparation is deemed appropriate. The financial statements do not include the adjustments that would be required should the going concern basis of preparation no longer be appropriate. ### Loss for the financial year The Company has taken advantage of the exemption allowed under Section 408 of the Companies Act 2006 and has not presented its own income statement in these financial statements. The Group loss for the year includes a loss after tax of \$1.022 million (2022 – loss after tax of \$1.36 million) which is dealt with in the financial statements of the Parent Company. ### The Company's investments in subsidiaries The Parent Company's subsidiaries are carried at cost less amounts provided for impairment. ### Finance income Finance income consists of interest on cash deposits and foreign exchange gain. Interest is recognised using the effective interest method. ### Finance expense The finance expense consists of interest on lease liabilities and foreign exchange losses. Interest paid is recognised using the effective interest method. ### Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board of Directors. ### Property, plant and equipment Office equipment is initially recorded at cost. Depreciation is provided on office equipment to write off the cost, less any estimated residual value, over their expected useful economic life as follows: Office equipment - 33.3% Right-of-use assets (Property) - over term of lease Assets are depreciated from the date of acquisition and on a straight-line basis. Right of use assets are depreciated from the date that the asset is available for use. For the year ended 31 December 2023 ### 1 Accounting policies continued ### Exploration and evaluation expenditure The Group applies the requirements of IFRS 6 Exploration for and Evaluation of Mineral Resources in respect of its exploration and evaluation expenditure. The requirements of IFRS 6 are not applied to expenditure incurred by the Group before legal rights to explore in a specific area have been granted, generally referred to as pre-licence expenditure. Likewise, the Group does not apply the requirements of IFRS 6 after the point at which the technical feasibility and commercial viability of extracting hydrocarbons are demonstrable. The costs of exploring for and evaluating hydrocarbon resources are accumulated and capitalised as intangible assets by reference to appropriate cash-generating units (CGUs), generally referred to as full cost accounting. Such CGUs have been determined by the Group to be a Darwin CGU and a Stebbing CGU and are noted as not being larger than an operating segment prior to aggregation as determined in accordance with IFRS 8 Operating Segments. Whilst the short-term focus is on developing Darwin, Stebbing remains a viable prospect for growth beyond Darwin. Capitalised exploration and evaluation expenditure may include, amongst other costs, costs of licence acquisition, third party technical services and studies, seismic acquisition, exploration drilling and testing, but do not include general overheads. Any property, plant and equipment (PPE) acquired for use in exploration and evaluation activities is classified as property, plant and equipment. However, to the extent that such PPE is consumed in developing an intangible exploration and evaluation asset, the amount reflecting that consumption is recorded as part of the cost of the intangible exploration and evaluation asset. Intangible exploration and evaluation assets are not depreciated and are carried forward, subject to the provisions of the Group's impairment of exploration and evaluation policy, until the technical feasibility and commercial viability of extracting hydrocarbons are demonstrable. At such point, exploration and evaluation assets are assessed for impairment and any impairment loss is recognised before reclassification of the assets to a category of property, plant and equipment. ### Impairment of exploration and evaluation expenditure The Group's exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of the exploration and evaluation assets may exceed the assets' recoverable amount. In accordance with IFRS 6, the Group firstly considers the following facts and circumstances in their assessment of whether the Group's exploration and evaluation assets may be impaired: - whether the period for which the Group has the right to explore in a specific area has expired during the period or will expire in the near future, and is not expected to be renewed; - whether substantive expenditure on further exploration for and evaluation of mineral resources in a specific area is neither budgeted nor planned; - whether exploration for and evaluation of hydrocarbons in a specific area have not led to the discovery of commercially viable quantities of hydrocarbons and the Group has decided to discontinue such activities in the specific area; and - whether sufficient data exists to indicate that although a development in a specific area is likely to proceed, the carrying amount of the exploration and evaluation assets is unlikely to be recovered in full from successful development or by sale. If any such facts or circumstances are noted, the Group, as a next step, perform an impairment test in accordance with the provisions of IAS 36. In such circumstances, the aggregate carrying value of the exploration and evaluations assets is compared against the expected recoverable amount of the CGU. The recoverable amount is the higher of value in use and the fair value less costs to sell. The Group has identified two cash-generating units, a Darwin CGU and a Stebbing CGU. In accordance with the provisions of IFRS 6 the level identified for the purposes of assessing the Group's exploration and evaluation assets for impairment may comprise one or more cash-generating units. For the year ended 31 December 2023 ### 1 Accounting policies continued ### **Provisions** A provision is recognised in the Statement of Financial Position when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. #### Foreign currencies Transactions in foreign currencies are translated into US dollars at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into US dollars at the closing rates at the reporting date and the exchange differences are included in the Statement of Comprehensive Income. The functional and presentational currency of the Parent and all Group companies is the US dollar. ### Leases All leases are accounted for by recognising a right-of-use asset and a lease liability except for: - · Leases of low value assets; and - Leases with a duration of 12 months or less. Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate. On initial recognition, the carrying value of the lease liability also includes amounts expected to be payable under any residual value guarantee; - Right of use assets are initially measured at the amount of the lease liability incentives received, and increased for lease payments made at or before commencement of the lease; and - initial direct costs incurred Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term. When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised, except the discount rate remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in profit or loss. ### Share-based payments The fair value of employee share option plans is calculated using the Black-Scholes pricing model. Non-employee options granted as part of consideration for services rendered are valued at the fair value of those services. Where information on the fair value of services rendered is not readily available, the fair value is calculated using the Black-Scholes pricing model. In accordance with IFRS 2 Share-based Payments the resulting cost is charged to the Statement of Comprehensive Income over the vesting period of the options. The amount of charge is adjusted each year to reflect expected and actual levels of options vesting. Where equity-settled share options are awarded, the fair value of the options at the date of grant is charged to the Statement of Comprehensive Income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. For the year ended 31 December 2023 ### 1 Accounting policies continued ### Share-based payments continued. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition. Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the Consolidated Statement of Comprehensive Income over the remaining vesting period. ### Financial instruments Financial instruments are initially recorded at fair value. Subsequent measurement depends on the designation of the instrument, as follows: - Other receivables are initially recognised at fair value and subsequently at amortised cost using the effective rate of interest, net of expected credit losses. - Trade and other payables are initially recognised at fair value and subsequently at amortised cost using the effective rate of interest Financial instruments issued by Group companies are treated as equity only to the extent that they do not meet the definition of a financial liability. - The Group's and Company's ordinary shares are all classified as equity instruments. - Cash and cash equivalents consist of cash at bank on demand and balances on deposit with an original maturity of three months or less from inception. - Inter-company receivables are held in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. These receivables are initially recognised at fair value and are subsequently carried at amortised cost. ### IFRS 9: Impairment of financial assets The Company has provided a loan to its 100% owned subsidiary that is the license holder in The Falkland Islands. Management have completed a scenario-based assessment of the expected credit loss in accordance with IFRS 9 and concluded that this loss is immaterial. ### Taxes The major components of tax on the profit or loss include current and deferred tax. Current tax is based upon the profit or loss for the year adjusted for items that are non-assessable or disallowed and is calculated using tax rates and laws that have been enacted, or substantively enacted, by the reporting date. Tax is charged or credited to the Statement of Comprehensive Income, except where the tax relates to items credited or charged directly to other comprehensive income or equity, in which case the tax is also dealt within other comprehensive income or equity respectively. Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the Statement of Financial Position differs to its tax base. Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised. The amount of the asset or liability is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date and are expected to apply when deferred tax liabilities and assets are settled or recovered. For the year ended 31 December 2023 ### 2 Critical accounting estimates and judgements ### Critical accounting estimates and key sources of estimation uncertainty The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the financial statements. If in the future such estimates and assumptions, which are based on management's best judgement at the date of signing of the financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change. Where necessary, the comparatives will be reclassified from the previously reported results to take into account presentational changes. ### Critical judgements in applying the Group's accounting policies Management has made the following judgements which have the most significant effects on the amounts recognised in the financial statements: ### Recoverability of exploration and evaluation costs Management has made the judgement to group two CGU's together for impairment purposes as both resources are contained within the same license and are close in proximity. Expenditure is capitalised as an intangible asset by reference to the CGUs and is assessed for impairment when circumstances suggest that the carrying amount may exceed its recoverable value. This assessment involves judgement as to whether there are any circumstances which are considered to be an indicator of impairment. The current Production licences and the Discovery Area Licence associated with the CGUs expire in December 2024. The Group has a commitment to drill a well before the expiry of its production licence on 31 December 2024. The Group plans to fund the well developments through a farm-out or by raising additional capital if the farm-out is not successful. If the Group does not successfully raise the capital needed or identify a suitable farm-out partner, the Group will seek to gain an extension to the licences and the associated commitment to drill the well. This is in line with previous extensions and the Directors are confident and has made a judgement that further extensions will be granted. Historically, the Falkland's Government has required the Group to show evidence of it's ability to pay the license fees before an extension which currently is not certain as further funding is required. When taken alongside the positive resource report communicated in 2018 and the expected cash flows from the development of Darwin, management have concluded that there is no impairment of the CGUs at the year end. ### Recoverability of inter-group receivable balances (Company only) Management are required to apply their judgement in the assessment of whether the inter-group receivable balances held by the Company are subject to any potential expected credit loss. Management have assessed the recoverability of the balances by reference to chances of success of finding first liquids attributed to the specific assets, probabilities around funding and the overall indicative value of the assets derived from third party reports. ### 3 Loss from operations | Loss from operations is stated after charging (crediting): | 2023
\$'000 | 2022
\$'000 | |-------------------------------------------------------------------------------------------------------------|----------------|----------------| | Staff costs (note 6) | 480 | 484 | | Share-based payment – equity-settled | | - | | Services provided by the auditors: | | | | Fees payable to the Company's auditors for the audit of the Parent Company and consolidated annual accounts | . 88 | 74 | | Fees payable to the Company's auditor and its associates for other services: | | | | Tax services | 6 | 17 | | Depreciation of office equipment | | 22 | | Foreign exchange loss/(gain) | (71) | 172 | For the year ended 31 December 2023 ### 4 Basic and dilutive loss per share The calculation of the basic and dilutive loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. The loss for the financial year for the Group was \$1,060,000 (2022 – loss \$1,359,000) and the weighted average number of shares in issue for the year was 730,814,456 (2022 – 530,203,093). During the year the potential ordinary shares are anti-dilutive and therefore diluted loss per share has not been calculated. At the Statement of Financial Position date, there were 2,700,000 (2022: 3,300,000) potentially dilutive ordinary shares being the share options (see note 8 for further details). ### 5 Segment analysis The Company operates in one operating segment (exploration for oil and gas) and in substantially one geographical market (the Falkland Islands), therefore no additional segmental information is presented. Of the Group's total non-current assets, the property, plant and equipment are based in the UK and all other non-current assets are located in the Falkland Islands. ### 6 Staff costs Staff costs (including Directors) comprise: | | | | 2023
\$000 | 2022
\$000 | |------------------|-----------------------------|-----|---------------|---------------| | Wages and salar | ries | | 429 | 431 | | Employers' natio | nal insurance contributions | | 47 | 49 | | Employers' pens | ion contributions | | 4 | 4 | | | | , . | 480 | 484 | The average number of employees (including Directors) employed during the year was five (2022 – five). All employees and Directors of the Group and the Company are considered to be the key management personnel. The employee National Insurance payments made during the year are detailed in the Remuneration Committee Report. ### 7 Directors' emoluments The Directors' emoluments for the year are as follows: | | 2023
\$'000 | 2022
\$'000 | |---------------------|----------------|----------------| | Executive directors | | | | Wages and salaries | 294 | 294 | | | 294 | 294 | The fees and share-based payments made to each Director are disclosed in the Remuneration Committee Report. During the year, the highest paid director received total remuneration of \$150,000 (2022 – \$150,000). In addition, Bruce Farrer, Business Development Manager, was paid a salary of £100,000. For the year ended 31 December 2023 # 8 Share-based payment | | 2023
Weighted
average
exercise
price | 2023
Number | 2022
Weighted
average
exercise price | 2022
Number | |------------------------------------------------|--------------------------------------------------|----------------|-----------------------------------------------|----------------| | Outstanding at 1 January | 11p | 3,300,000 | 29p | 6,400,000 | | Lapsed during the year Granted during the year | 15p | 600,000 | 50p | 3,100,000 | | Outstanding at 31 December | 7p | 2,700,000 | 11p | 3,300,000 | | Exercisable at 31 December | 7p | 2,700,000 | 11p | 3,000,000 | The Company operates a share option scheme. All options are issued at market price at the time of issue, vest after three years and have a life of ten years. When exercised they are equity-settled. The weighted average contractual life of the options outstanding at the year end was 2.1 years (2022 – 3.2 years). The range of exercise prices of share options outstanding at the end of the year is 0.018p-0.1125p (2022 – 0.1125p-0.1525pp). # 9 Finance income and expense | | 2023
\$'000 | 2022
\$'000 | |-------------------------------------------------------|----------------|----------------| | Foreign exchange (loss)/gain | 71 | (172) | | Bank interest received | 10 | • | | | 81 | (172) | | | | | | 10 Tax expense | | | | | | | | | 2023 | 2022 | | | \$'000 | \$'000 | | Loss before taxation | (1,060) | (1,359) | | Standard corporation tax charge at 23.5% (2022 -19%) | (249) | (258) | | Remeasurement of deferred tax for changes in tax rate | (15) | (78) | | Movement in unrecognised deferred tax for the year | 264 | 336 | | Total current and deferred tax for the year | | | The Group has a deferred tax asset of approximately \$3,403,844 (2022 - \$3,254,585) in respect of unrelieved tax losses of approximately \$13,615,377at 2023 (2022 - \$12,707,092), fixed asset timing differences of \$110,000 (2022 - \$111,526) and short term timing differences of \$4,889 (2022 - \$704). The rate of tax used in the calculation for the deferred tax asset is 25% (2022 - 25%). The deferred tax asset has not been recognised in the financial statements as the timing of the economic benefit is uncertain. For the year ended 31 December 2023 11 Property, plant and equipment - Group and Company | | | | Right of use | | | |------------------------|-------|---------------------------------------|-----------------------------------------------|----------------------------|--------------| | | | | (Property)
\$'000 | Office equipment
\$'000 | Total \$'000 | | Cost | | | | | | | As at 1 January 2022 | | | . 311 | 132 | 443 | | As at 31 December 2022 | | | 311 | 132 | 443 | | Depreciation | | | | | | | As at 1 January 2022 | | | 301 | 120 | 421 | | Charge for the year | | · · · · · · · · · · · · · · · · · · · | 10 | 12 | 22 | | As at 31 December 2022 | | | 311 | 132 | 443 | | | | | Right of use
asset
(Property)
\$'000 | Office equipment
\$'000 | Total \$'000 | | Cost | , and | | | | | | As at 1 January 2023 | | | 311 | 132 | 443 | | Additions | | | | 8 | 8 | | As at 31 December 2023 | | | 311 | 140 | 451 | | Depreciation | | | | | | | As at 1 January 2023 | 1 | | 311 | 132 | 443 | | Charge for the year | | | | | | | As at 31 December 2023 | | | 311 | 132 | 443 | | Net book value | • | | | 8 | 8 | For the year ended 31 December 2023 ### 12 Intangible assets | Group | | | Exploration and evaluation costs \$'000 | |-----------------------------------------------|---|---------------------|-----------------------------------------| | Cost
As at 1 January 2022
Additions | : | *** | 292,7 46
498 | | As at 31 December 2022 | | | 293,244 | | Net book value
As at 1 January 2022 | |
· · | 292,746 | | As at 31 December 2022 | | | 293,244 | | Group | | | Exploration and evaluation costs \$'000 | | Cost
As at 1 January 2023
Additions | | 5 + 1
| 293,244
497 | | As at 31 December 2023 | | | 293,741 | | Net book value
As at 1 January 2023 | |
%. * | 293,244 | | As at 31 December 2023 | | * o., * * | 293,741 | In December 2022 the Company received notice from The Falkland Islands Government that the Company's application to extend the expiry date of the Second Term for Production Licences PL018, PL019 and part of PL020 was extended until 31 December 2024. The expiry date of Darwin East Discovery Area licence is also 31 December 2024. As noted, the Company has a one exploration well commitment on its production licences. In considering the carrying value of intangible assets, the Company used external independent estimates of resource volume, production rates and operating and capital costs to compare the carrying value with net present value to assess whether there were any issues that would trigger an impairment assessment and based on these third-party reports, it was concluded that there were no triggers, so no impairments have been made. As noted earlier in the report, the current development plan is to bring Darwin into 25,000bpd of liquids using three wells and an FPSO. This should enable a quick pay-back and provide funds to either increase production or for other projects. ### 13 Investment in subsidiary | Company | | | | | 2023 | 2022 | |---------------------------------|---|---|-----|---|------|------| | Company | | | *** | | Ψ . | | | Cost | | | | | | | | As at 1 January and 31 December | • | | | | 2 . | 2 | | Net book value | • | - | | | ·· | | | As at 31 December | • | · | | • | 2 | 2 | The Company owns the two ordinary £1 subscriber share, being 100% of the issued share capital, in Borders & Southern Falkland Islands Limited. The Company is registered in England and its principal activity is oil and gas exploration. The Company's registered office is in One Fleet Place, London EC4M 9AF. For the year ended 31 December 2023 ### 14 Other receivables | 4. 4 | | Group | | Compa | ny | |----------------------------|------------|----------------|----------------|----------------|----------------| | | | 2023
\$'000 | 2022
\$'000 | 2023
\$'000 | 2022
\$'000 | | Noncurrent |
| | | | | | Amount due from subsidiary | : | • | - | 293,920 | 293,878 | | Current | | .• | | | • | | Other receivables | • | 164 | 576 | 164 | 120 | | Prepayments | ` . | - | 483 | - | 27 | | Total other receivables |
| 164 | 1,059 | 294,084 | 294,025 | All amounts owed by or to entities outside the group are shown as other receivables and prepayments and fall due for payment within one year. The Group's exploration licenses are held by a wholly owned subsidiary and all costs incurred by the subsidiary have been financed by the parent company. The amount due from the subsidiary is interest free and payable on demand and is expected to be repaid from the revenues of the Darwin field production. Management considers the loan to be in stage 2. All the internal and external technical and economic studies undertaken to date have confirmed Darwin to be economic. Sensitivities have been applied to the key inputs into the models used to analyse Darwin and the field has been proven to be robust under different scenarios. Management have also completed a scenario-based assessment based on their judgments of the expected credit loss in accordance with IFRS 9 and concluded that any loss is immaterial. ### 15 Cash and cash equivalents and restricted use cash | Group and Company | | 2023
\$'000 | 2022
\$'000 | |--------------------------|---|----------------|----------------| | Cash available on demand | | 1,926 | 2,705 | | Cash on deposit | · | 2 | 2 | | Total | | 1,928 | 2,707 | Cash and cash equivalents consist of cash at bank on demand and balances on deposit with an original maturity of three months or less All of the company's bank deposits are with Lloyds Bank plc. It has a P-2 credit rating with Moody's, F1 with Fitch and A-2 with Standard & Poor's. ### 16 Trade and other payables | | | Group | | Compan | у | |---------------------------------------|----------|----------------|----------------|----------------|----------------| | | | 2023
\$'000 | 2022
\$'000 | 2023
\$'000 | 2022
\$'000 | | Trade payables | | 12 | 471 | 12 | 471 | | Other taxes and social security costs | • | 17 | 17 | 17 | 17 | | Accruals | | 127 | 77 | 128 | 77 | | Total | | 156 | 565 | 157 | 565 | For the year ended 31 December 2023 ### 17 Share capital | Group and Company | 2023
\$000 | 2022
\$000 | |--------------------------------------------------------------------------------------------------------|---------------|---------------| | Authorised 750,000,000 ordinary shares of 1 pence each (2022 – 750,000,000) | 14,926 | 14,926 | | Allotted, called up and fully paid : 730,814,456 ordinary shares of 1 pence each (2022 – 693,671,599 ) | 11,155 | 10,718 | | Share capital At 1 January | 10,718 | 8,530 | | Share issue | 437 | 2,188 | | At 31 December | 11,155 | 10,718 | | Share premium At 1 January | 310,195 | 308,602 | | Share issue | 346 | 1,593 | | At 31 December | 310,541 | 310,195 | There are no restrictions on the share capital. ### 18 Related party transactions ### Company During the year Borders & Southern Petroleum Plc paid expenses of \$497,000 (2022 – \$505,000) on behalf of its 100% owned subsidiary Borders & Southern Falkland Islands Limited. At the year end \$293,920,000 (2022 – \$293,878,000) was due from the subsidiary. ### 19 Commitments The Group Production Licence commitment is to drill one exploration well before 31 December 2024. The Company is seeking the funds to drill this well but, if it cannot before they are due to expire, the Company will seek to extend the Licences. ### 20 Financial instruments The main risks arising from the Group's operations are cash flow interest rate risk, foreign currency translation risk and credit risk. The Group monitors risk on a regular basis and takes appropriate measures to ensure risks are managed in a controlled manner. The Group's deposits are held with Lloyds on short term deposits. Whilst there is a risk of Lloyds' ability to repay these deposits, the Group considers this risk to be low. Liquidity is not considered to be a risk due to the funds raised during the year giving sufficient cash funds readily available to the Group at the year end. 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. There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in the note. For the year ended 31 December 2023 ### 20 Financial instruments continued ### Principal financial instruments The principal financial instruments used by the Group from which financial instrument risk arises, held by category, are as follows: | | Group | Group | | Company | | |---------------------------|--------------------|----------------|----------------|----------------|--| | Amortised Cost |
2023
\$'000 | 2022
\$'000 | 2023
\$'000 | 2022
\$'000 | | | Other Receivables |
127 | 576 | 294,002 | 294,025 | | | Cash and cash equivalents | 1,928 | 2,707 | 1,928 | 2,707 | | | Trade and other payables | 156 | - 565 | 157 | 548 | | Other receivables do not include items that are not financial instruments. The fair values of the Group's financial assets and liabilities at 31 December 2023 and at 31 December 2022 are materially equivalent to the carrying value as disclosed in the Statement of Financial Position and related notes. ### a) Cash flow interest rate risk The Group is exposed to cash flow interest rate risk from monies held at bank and on deposit at variable rates. The considerations below and the figures quoted are the same for both Group and Company. The Group's financial assets and liabilities accrue interest at prevailing floating rates in the United Kingdom or at pre-arranged fixed rates, as described further below. The Group does not currently use derivative instruments to manage its interest rate risk. At 31 December 2023 the Group held cash at bank and in deposits under its control of \$1,928,000 (2022 – \$2,707,000), which forms the majority of the Group's working capital. Of the cash at bank and in deposit, \$1,928,000 (2022 – \$2,707,000) relates to deposits placed with banking institutions that are available on demand which carry interest at prevailing United Kingdom deposit floating rates. If there was 1% change in interest rates the impact on the Statement of Comprehensive Income would be \$20,000 (2022 – \$27,000). # b) Foreign currency translation risk The operational currency of the oil and gas exploration and evaluation activities of the Group is US\$ and the Group's presentational currency is US\$. Foreign exchange risk arises because the Group's services and treasury function is UK sterling, which results in gains or losses on retranslation into US\$. To minimise this foreign currency risk, cash balances are held in both £ sterling and US\$. The foreign currency profile of financial assets and liabilities of the Group and the Company are as follows: | | Gro | up | Comp | pany | |-------------------------------------------|-----------------------------------------|-----------------------------------------|-----------------------------------------|-----------------------------------------| | ÷ | Other receivables measured at amortised | Other receivables measured at amortised | Other receivables measured at amortised | Other receivables measured at amortised | | | cost
2023 | cost
2022 | cost
2023 | cost
2022 | | Current financial assets | \$000 | \$000 | \$000 | \$000 | | Held in UK £: | | | | | | Trade and other receivables | 127 | 93 | 127 | 93 | | Cash and cash equivalents | 1,888 | 2,654 | 1,888 | 2,654 | | Total current financial assets held in UK | 2,015 | 2,747 | 2,015 | 2,747 | | Held in US\$: | | | | | | Trade and other receivables | • | - | - | - | | Cash and cash equivalents | 40 | 52 | 40 | 52 | | Total financial assets | 2,055 | 2,799 | 2,055 | 2,799 | If there was a 10% change in the year end exchange rate there would be a movement in the US\$ equivalent of financial assets held in UK£ of \$200,000 (2022: \$270,000) for the Group and Company. For the year ended 31 December 2023 ### 20 Financial instruments continued | | Gro | Group | | Company | | | |------------------------------------------|--------------------------------------------------------------|--------------------------------------------------------------|--------------------------------------------------------------|--------------------------------------------------------------|--|--| | | Financial
liabilities
measured at
amortised
cost | Financial
liabilities
measured at
amortised
cost | Financial
liabilities
measured at
amortised
cost | Financial
liabilities
measured at
amortised
cost | | | | · | 2023
\$000 | 2022
\$000 | 2023
\$000 | 2022
\$000 | | | | Held in UK£:
Frade and other payables | 156 | 565 | 157 | 565 | | | | Total financial liabilities | 156 | 565 | 157 | 565 | | | ### c) Credit risk Neither the Group nor the Company have customers, so formal credit procedures are in the process of being established. Credit risk on cash balances is managed by only banking with reputable financial institutions with a high credit rating. The only significant concentration of credit risk on an ongoing basis is cash held at bank and the maximum credit risk exposure for the Group and Company is detailed in the table below: | | 202 | 2023 | | 2022 | | |------------------------------|----------------------------|------------------------------|----------------------------|------------------------------|--| | | Carrying
Value
\$000 | Maximum
exposure
\$000 | Carrying
Value
\$000 | Maximum
exposure
\$000 | | | Cash and cash equivalents | 1,928 | 1,928 | 2,706 | 2,716 | | | Maximum credit risk exposure | 1,928 | 1,928 | 2,706 | 2,706 | | ### Capital The objective of the Directors is to maximise shareholder return and minimise risk by keeping a reasonable balance between debt and equity. To date, the Group has minimised risk by being purely equity financed. The Group considers its capital to comprise its ordinary share capital, share premium, accumulated retained deficit and other reserves. # **CORPORATE DIRECTORY** Directors Harry Dobson Harry Baker Peter Fleming William Hodson Secretary William Slack Registered office One Fleet Place London EC4M 7WS Business address 33 St James's Square London SW1Y 4JS Nominated advisor and Broker SP Angel Corporate Finance LLP Prince Frederick House 35-39 Maddox Street London W1S 2PP Solicitors Wedlake Bell LLP 71 Queen Victoria Street London EC4V 4AY Registrars Link Asset Services 10th Floor Central Square 29 Wellington Street Leeds LS1 4DL Bankers Lloyds TSB Bank plc 19-21 The Quadrant Richmond Surrey TW9 1BP Independent Auditors BDO LLP 55 Baker Street London W1U 7EU Investor Relations Tavistock 18 St. Swithin's Lane London EC4N 8AD Borders & Southern Petroleum plc 33 St James's Square London SW1Y 4JS United Kingdom Tel: +44 (0)20 7661 9348 Fax: +44 (0)20 7661 8055 info@bordersandsouthern.com www.bordersandsouthern.com