Final Results and Publication of Annual Report

Beacon Energy PLC

29 June 2023

 

29 June 2023

Beacon Energy plc

("Beacon Energy" or the "Company")

Final Results and Publication of Annual Report 

Beacon Energy (AIM:BCE) is pleased to announces its Final Results for the period ended 31 December 2022.

Copies of the Annual Report and Accounts will today be posted to shareholders and made available on the Company's website at: https://beaconenergyplc.com/

Mark Rollins, Non-Executive Chairman of Beacon Energy, commented:

"During this period the Board have worked tirelessly to stabilise the Company's financial position, refocus the strategy and, in line with that refocused strategy, pursue the acquisition of value enhancing opportunities to create a self-funding upstream oil & gas company. The Company is now in an exciting position having commenced drilling at the SCHB-2 development well so quickly after the completion of the transaction.

"It only remains for me to thank our new and existing shareholders for their ongoing support and to look forward to providing updates on our progress as we move through the rest of the year."

Enquiries:

Beacon Energy plc Larry Bottomley (CEO) / Stewart MacDonald (CFO)	[phone]
Strand Hanson Limited (Financial and Nominated Adviser) Rory Murphy / James Bellman	[phone]
Buchanan (Public Relations) Ben Romney / George Pope	[phone]
Tennyson Securities Limited (Joint Broker) Peter Krens / Ed Haig-Thomas	[phone]
Optiva Securities Limited (Joint Broker) Christian Dennis	[phone]

CHAIRMAN'S REPORT

Dear fellow shareholders,

On behalf of the Board of Directors, I hereby present the financial statements of Beacon Energy plc ("Beacon" or the "Company") for the 8-month period ended 31 December 2022.

During the period under review, the Board has worked tirelessly to stabilise the Company's financial position, refocus the strategy for the Company and, in line with that refocused strategy, pursue the acquisition of value enhancing opportunities to create a self-funding upstream oil & gas company.

To implement this strategy, on 26 July 2022 the Company successfully raised £425,000 from new and existing shareholders, including £80,000 from Directors of the Company, to enable the Company to select, negotiate and complete an acquisition. The Board appreciates the continued support shown by shareholders during this fund raise.

Subsequently, and in anticipation of a potential acquisition, the Company sought approval from shareholders to change the Company's name to Beacon Energy plc. The change of name was to reflect an exciting new chapter in the Company's story.

On 16 December 2022, the Company was delighted to announce that it had entered into a conditional Share Purchase Agreement ("SPA") with Tulip Oil Holding B.V. ("Tulip") and Deutsche Rohstoff A.G. ("DRAG") (collectively, the "Sellers") relating to the purchase of the entire issued and to be issued share capital of Rhein Petroleum GmbH ("Rhein Petroleum"), (the "Transaction").

The Board of Beacon Energy ("Board") believes that the Transaction represents a transformational, value enhancing transaction for shareholders, which is fully aligned with Beacon Energy's growth strategy:

·      The Transaction provides Beacon with a beneficial interest in a proven and producing oil field with material existing resources and a platform with potential to achieve production of up to 4,000 bopd in the coming years.

·      Beacon now has independently certified 2P net reserves of 3.85 mmbbl and a 2C net contingent resource base of 22.96 mmbbl, located across four core assets in Germany.

·      Beacon has a full-cycle portfolio of largely operated production, development, appraisal and exploration assets in a proven, mature hydrocarbon basin.

·      Onshore Germany presents compelling market dynamics with an advantageous fiscal and regulatory regime, predictable permitting processes and supportive regional authorities with a focus on domestic energy security.

·      The Transaction provides Beacon with a near-term active work programme designed to enhance production and cash flow, and a well understood existing production base which will generate immediate revenue.

Notwithstanding challenging market conditions in the first quarter of 2023, the Company successfully completed a fundraise of £6 million with new and existing shareholders in March 2023, the proceeds of which are currently being used to fund the drilling of the SCHB-2 development well. Following receipt of shareholder approval, the Company completed the Transaction on 11 April 2023.

As part of the Transaction, the Board and management team have been strengthened. In December 2022, the Company was delighted to announce that Interim CEO Larry Bottomley had agreed to become CEO on a permanent basis. Larry's transition into the permanent role reflects the focused determination that he has delivered and his significant experience and expertise in leadership roles of this kind.

Following completion of the Transaction, Stewart MacDonald and Leo Koot joined the Board as CFO and NED respectively. Stewart has over 20 years of energy industry and investment banking experience including 8 years as CFO of AIM listed Rockhopper Exploration plc and prior to that, 12 years energy investment banking experience with Rothschild. Leo Koot has over 30 years of experience in the energy and power sectors. Leo's previous roles include Drilling Engineer at Shell plc, Managing Director UK then President Iraq for TAQA, Executive Chairman of Columbus Energy Resources plc, and Independent Non-Executive Director for Sterling Energy plc. Leo is currently Executive Chairman of Tulip Oil Holdings B.V. and partner at Concordia Capital Partners (MENA GULF).

Immediately upon completion of the Transaction, the Company announced that it had secured a drilling rig from RED Drilling & Services GmbH to drill the SCHB-2 development well on the Erfelden field. Drilling operations commenced on 19 June 2023 and are expected to take in the region of 25 days to reach the prognosed TD drilling depth of 2,255m (1,709m True Vertical Depth), with an additional 12 days scheduled for testing.

Assuming success, this well has the scope to deliver a step-change in the Company's production and cash flow.

It only remains for me to thank our new and existing shareholders for their ongoing support for the Company, management team and our strategy. We are very excited about the year ahead with an active work programme designed to create long-term value for Beacon's shareholders. We very much see the acquisition of Rhein Petroleum as a first step in our strategy to build a material international upstream oil and gas business with a focus on cash generative assets and those with the potential to add significant value in the short to medium term. We look forward to providing updates on our progress as we move through the rest of the year.

Mark Rollins

Non-Executive Chairman

28 June 2023

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME   

	Note	For the 8 month period ended 31 December 2022 US$'000		For the year ended 30 April 2022 US$'000
Investment loss:
Impairment	11	-		(23,885)
		-		(23,885)
Other income:		-		-
Other administrative expenses	6	(1,004)		(2,878)
Net loss before finance costs and taxation		(1,004)		(26,763)
Finance costs		(47)		(198)
Share of net losses of associate accounted for using the equity method		-		(428)
Loss before tax		(1,051)		(27,389)
Tax expense	10	-		-
Loss after tax attributable to owners of the parent		(1,051)		(27,389)
Total comprehensive loss for the year attributable to owners of the parent		(1,051)		(27,389)
Basic loss per share attributable to owners of the parent during the year (expressed in US cents per share)	7	(0.08)		(2.67)

The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing.

The accompanying notes form an integral part of these Financial Statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Note	As at 31 December 2022 US$'000	As at 30 April 2022 US$'000
Assets
Non-current assets
Investments accounted for using the equity method	11	-	-
Total non-current assets		-	-
Current assets
Other receivables		564	89
Cash and cash equivalents		306	662
Total current assets		870	751
Total assets		870	751
Liabilities
Current liabilities
Trade and other payables	13	(411)	(304)
Total liabilities		(411)	(304)
Net assets		459	447
Equity attributable to the owners of the parent
Share premium	12	48,128	47,656
Share reserve		2,036	1,445
Accumulated deficit		(49,705)	(48,654)
Total shareholder funds		459	447

The Financial Statements were approved and authorised for issue by the Board of Directors on 27 June 2023 and were signed on its behalf by: Director

The accompanying notes form an integral part of these Financial Statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share premium	Share reserve	Accumulated deficit		Total equity
	US$'000	US$'000	US$'000		US$'000
Balance at 1 May 2021	47,656	1,039	(21,265)		27,430
Loss for the year to 30 April 2022	-	-	(27,389)	(27,389)
Total comprehensive income	-	-	(27,389)	(27,389)
Transactions with equity shareholders of the parent
Share based payments	-	406	-	406
Balance at 30 April 2022	47,656	1,445	(48,654)	447
Loss for the period to 31 December 2022	-	-	(1,051)	(1,051)
Total comprehensive income	-	-	(1,051)	(1,051)
Transactions with equity shareholders of the parent
Proceeds from shares issues	490	-	-	490
Cost of share issues	(18)	-	-	(18)
Share based payments	-	591	-	591
Balance at 31 December 2022	48,128	2,036	(49,705)	459

The accompanying notes form an integral part of these Financial Statements.

CONSOLIDATED CASH FLOW STATEMENT

	For the 8 month period ended 31 December 2022 US$'000		For the year ended 30 April 2022 US$'000
Cash flows from operating activities:
Net loss for the year	(1,051)		(27,389)
Adjustments for:
Share of net loss of associate	-		428
Share based payments	591		406
Impairment of investment	-		23,885
Change in working capital items:
Decrease/(Increase) in other receivables	(475)		114
(Decrease)/Increase in trade and other payables	107		(834)
Net cash used in operations	(828)		(3,390)
Cash flows from investing activities
Investment in associate	-		(4,051)
Net cash used in investing activities	-		(4,051)
Cash flows from financing activities
Proceeds from issue of share capital	490		-
Share issue costs	(18)		-
Net cash generated by financing activities	472		-
Net decrease in cash and cash equivalents	(356)		(7,441)
Cash and cash equivalents, at beginning of the year	662		8,103
Effect of foreign exchange rate changes	-		-
Cash and cash equivalents, at end of the year	306		662

The accompanying notes form an integral part of these Financial Statements

NOTES TO FINANCIAL STATEMENTS

1     Reporting Entity

Beacon Energy plc (the "Company") is domiciled in the Isle of Man. The Company's registered office is at 55 Athol Street, Douglas, Isle of Man IM1 1LA. These consolidated financial statements comprise the Company and its subsidiaries (together referred to as the "Group"). The Group is primarily involved in the E&P business and on 16 December 2022 announced the proposed acquisition of Rhein Petroleum GmbH, an upstream oil and gas business operating in Germany. The Company's shares were suspended from trading on AIM on 9 September 2022. Please see Note 18 in the financial statements for further details regarding subsequent events.

2     Basis of accounting

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). They were approved and authorised for issue by the Company's Board of directors on 27 June 2023.

The comparatives are not entirely comparable and reflect the period from 1 May 2021 to 30 April 2022 whilst the current period figures represent the period from 1 May 2022 to 31 December 2022. The change in period length was to align the accounting period with the newly acquired subsidiary (see Note 18).

Details of the Group's accounting policies are included below:

Standards and amendments effective for periods beginning 1 May 2022 or later

A number of new standards are effective for annual periods beginning after 1 May 2022 and earlier application is permitted; however, the Group has not early adopted the new or amended standards in preparing these consolidated financial statements.

The following amended standards and interpretations are not expected to have a significant impact on the Group's consolidated financial statements:

·           IFRS 17 Insurance Contracts (effective on or after 1 January 2023)

·          Amendments to IAS 1: Classification of Liabilities as Current or Non-current (effective on or after 1 January 2023)

·          Amendments to IAS 12: Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction.

A. Basis of consolidation

i. Subsidiaries

Subsidiaries are entities controlled by the Group. The Group 'controls' an entity when it 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. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

ii. Non-controlling interests ("NCI")

NCI are measured initially at their proportionate share of the acquiree's identifiable net assets at the date of acquisition. Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

iii. Interests in equity-accounted investees

The Group's interests in equity-accounted investees comprise interests in associates.

Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies.

Interests in associates are accounted for using the equity method. They are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group's share of the profit or loss and other comprehensive income ("OCI") of equity accounted investees, until the date on which significant influence ceases.

iv. Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

B. Foreign currency

i. Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of Group companies at the exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss and presented within finance costs.

However, foreign currency differences arising from the translation of the following items are recognised in OCI:

-      an investment in equity securities designated as at FVOCI (except on impairment, in which case foreign currency differences that have been recognised in OCI are reclassified to profit or loss);

-      a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; and

-      qualifying cash flow hedges to the extent that the hedges are effective.

ii. Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into USD at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into USD at the exchange rates at the dates of the transactions.

Foreign currency differences are recognised in OCI and accumulated in the translation reserve, except to the extent that the translation difference is allocated to NCI.

When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to NCI. When the Group disposes of only part of an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

C. Employee benefits

i. Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

ii. Share-based payment arrangements

The grant-date fair value of equity-settled share-based payment arrangements granted to employees and other service providers is generally recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

D. Income tax

Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in OCI.

The Group has determined that interest and penalties related to income taxes, including uncertain tax treatments, do not meet the definition of income taxes, and therefore accounted for them under IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

i.Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.

Current tax assets and liabilities are offset only if certain criteria are met.

ii. Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

-      temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

-      temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

-      taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date, and reflects uncertainty related to income taxes, if any.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset only if certain criteria are met.

E. Exploration expenditure

Costs incurred prior to acquiring the right to explore an area of interest are expensed as incurred. Exploration and evaluation assets are intangible assets.

Exploration and evaluation assets represent the costs incurred on the exploration and evaluation of potential hydrocarbon resources, and include costs such as seismic acquisition and processing, exploratory drilling, activities in relation to the evaluation of technical feasibility and commercial viability of extracting hydrocarbons, and general administrative costs directly relating to the support of exploration and evaluation activities.

The Group assesses exploration and evaluation assets for impairment when facts and circumstances suggest that the carrying amount may exceed its recoverable amount. The recoverable amount is the higher of the assets fair value less costs to sell and value in use. Assets are allocated to cash generating units not larger than operating segments for impairment testing. Purchased exploration and evaluation assets are recognised as assets at their cost of acquisition or at fair value if purchased as part of a business combination. They are subsequently stated at cost less accumulated impairment. Exploration and evaluation assets are not amortised.

F. Share capital

Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity. Income tax relating to transaction costs of an equity transaction is accounted for in accordance with IAS 12.

G. Impairment

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

H. Fair value measurement

'Fair value' is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk.

A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

When one is available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as 'active' if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets and long positions at a bid price and liabilities and short positions at an ask price.

The best evidence of the fair value of a financial instrument on initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received. If the Group determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique for which any unobservable inputs are judged to be insignificant in relation to the measurement, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.

I. Going concern

 The financial statements have been prepared on a going concern basis.

The Group monitors its cash position, cash forecasts and liquidity on a regular basis and takes a conservative approach to cash management.

On 11 April 2023, the Group completed the acquisition of Rhein Petroleum GmbH including a fund raise the proceeds of which will be used to fund the drilling of the SCHB-2 development well. Drilling operations for the SCHB-2 well commenced on 19 June 2023. As at 21 June 2023, the Group had cash resources including 'restricted cash' of US$7.1 million.

Management's base case is that the SCHB-2 well will be drilled, tested and completed by the end of July and that production flow rates from the well will be consistent with the "best estimate" outlined in the Competent Persons Report ("CPR") published in December 2022.

Management have also considered a number of downside scenarios, including scenarios where the well is delayed, the cost of the well increases or the production flow rate from the well is materially below the "best estimate" outlined in the CPR.

Under the base case forecast, the Group will have sufficient financial headroom to meet forecast cash requirements for the 12 months from the date of approval of these consolidated financial statements. However, in the downside scenarios, in the absence of any mitigating actions, the Group may have insufficient funds to meet its forecast cash requirements. Potential mitigants include deferral and/or reduction of expenditure and raising additional equity or debt funding.

Accordingly, after making enquiries and considering the risks described above, the Directors have assessed that the cash balance and forecast cash flows provide the Group with adequate headroom for the following 12 months - as a result, the Directors are of the opinion that the Group is able to operate as a going concern for at least the next twelve months from the date of approval of these financial statements.

Nonetheless, these conditions indicate the existence of a material uncertainty which may cast doubt on the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would be required if the Group were unable to continue as a going concern.

3     Functional and presentation currency

These consolidated financial statements are presented in US Dollars ("USD" or "US$"), which is the Group's functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.

4     Use of judgements and estimates

In preparing these consolidated financial statements, management has made judgements and estimates that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

A. Judgements

Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements is included in the following notes:

- Note 11 - equity-accounted investees: whether the Group has significant influence over an investee;

- Note 15 - consolidation: whether the Group has de facto control over an investee. 

B. Assumptions and estimation uncertainties

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed below:

Share based payments (note 8)

The Group has made awards of options and warrants over its unissued capital. The valuation of these options and warrants involve making a number of estimates relating to price volatility, future dividend yields, expected life and forfeiture rates.

i) Measurement of fair values

A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Group has an established control framework with respect to the measurement of fair values.

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

-      Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

-      Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

-      Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

5     Operating Segments

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker ("CODM"). The CODM, who is responsible for allocating resources and assessing performance of the operating segments and make strategic decisions, has been identified as the Directors of the Group.  In the opinion of the Directors, the operations of the Group comprise one operating segment comprising oil and gas exploration and production operations in Germany.  As a result, the Group considers that it only has one reportable segment, and the Directors consider that the primary financial statements presented substantially reflect all the activities of the Company. 

6     Administrative expenses

Administration fees and expenses consist of the following:

	2022 December		2022 April
	US$'000		US$'000
Audit fees	20		45
Professional fees	103		1,178
Administration costs	63		164
Employee costs	-		95
Share based payments - warrants issued with July 2022 fund raise	425		-
Directors' fees (Note 9)	393		1,396
Other administrative expenses	1,004		2,878

7    Earnings per share

Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.                                                 

	2022 December	2022 April
Loss attributable to owners of the Group (USD thousands)	(1,051)	(27,389)
Weighted average number of ordinary shares in issue (thousands)	1,350,063	1,027,614
Loss per share (US cents)	(0.08)	(2.67)

In accordance with International Accounting Standard 33 'Earnings per share', no diluted earnings per share is presented as the Group is loss making.  Details of potentially dilutive share instruments are detailed in notes 8.

8     Share-based payment arrangements

The following is a summary of the share options and warrants outstanding and exercisable as at 31 December 2022 and 30 April 2022, and the changes during each year:

	Number of options and warrants	Weighted average exercise price (Pence)
Outstanding and exercisable at 1 May 2021	161,259,504	3.41
Outstanding and exercisable at 30 April 2022	118,259,511	2.68
Outstanding and exercisable at 31 December 2022	613,268,824	0.43

The above weighted average exercise prices have been expressed in pence and not cents due to the terms of the options and warrants. The following share options or warrants were outstanding and exercisable in respect of the ordinary shares:

Grant Date	Expiry Date	1 May 2021	Issued	Expired	30 April 2022	Exercise Price
Warrants
13.05.16	13.05.21	42,000,000	-	(42,000,000)	-	0.20p
31.01.17	31.01.22	10,000,000	-	(10,000,000)	-	0.20p
31.01.17	31.01.22	8,000,000	-	(8,000,000)	-	0.25p
31.01.17	31.01.22	6,666,666	-	(6,666,666)	-	0.30p
22.05.17	22.05.22	15,000,000	-	-	15,000,000	0.10p
22.05.17	22.05.22	35,000,000	-	-	35,000,000	0.10p
19.08.17	19.08.22	90,769,231	-	-	90,769,231	0.06p
01.09.17	01.09.22	70,769,231	-	-	70,769,231	0.06p
06.12.17	06.12.22	638,569,604	-	-	638,569,604	0.05p
03.08.18	02.08.21	300,000,000	-	(300,000,000)	-	0.02p
Consolidation		(1,192,439,239)	-	359,333,333	(833,105,906)
20.09.18	20.09.21	5,217,391	-	(5,217,391)	-	1.15p
20.09.18	20.09.21	34,782,608	-	(34,782,608)	-	2.00p
15.03.19	14.03.22	16,666,666	-	(16,666,666)	-	0.45p
21.06.19	20.06.22	18,059,856	-	-	18,059,856	0.155p
21.06.19	20.06.22	10,833,334	-	-	10,833,334	0.155p
02.07.19	01.07.22	3,178,235	-	-	3,178,235	0.157p
03.07.19	02.07.22	833,334	-	-	833,334	0.157p
10.12.20	09.12.23	545,455	-	-	545,455	0.22p
31.03.21	31.03.26	38,511,644	-	-	38,511,644	0.00p
Consolidation		(137,667,632)	-	57,600,005	(80,067,627)
19.04.21	19.04.24	21,488,500	-	-	21,488,500	2.60p
19.04.21	19.04.26	24,064,620	-	-	24,064,620	2.60p
Options
01.10.18	01.10.23	4,500,000	-	-	4,500,000	2.00p
01.02.20	01.02.25	68,750,000	-	(37,500,000)	31,250,000	0.30p
01.02.20	01.02.25	68,750,000	-	(37,500,000)	31,250,000	0.30p
08.07.20	08.07.25	25,000,000	-	(25,000,000)	-	0.30p
Consolidation		(150,300,000)	-	90,000,000	(60,300,000)
19.04.21                19.01.26		83,710,000	-	(56,600,000)	27,110,000	2.60p
17.03.22	17.03.27	-	30,000,000	-	30,000,000	0.03p
		161,259,504	30,000,000	(72,999,993)	118,259,511

Grant Date	Expiry Date	1 May 2022	Issued	Expired	31 December 2022	Exercise Price
Warrants
22.05.17	22.05.22	15,000,000	-	(15,000,000)	-	0.10p
22.05.17	22.05.22	35,000,000	-	(35,000,000)	-	0.10p
19.08.17	19.08.22	90,769,231	-	(90,769,231)	-	0.06p
01.09.17	01.09.22	70,769,231	-	(70,769,231)	-	0.06p
06.12.17	06.12.22	638,569,604	-	(638,569,604)	-	0.05p
Consolidation		(833,105,906)	-	833,105,906	-
21.06.19	20.06.22	18,059,856	-	(18,059,856)	-	0.155p
21.06.19	20.06.22	10,833,334	-	(10,833,334)	-	0.155p
02.07.19	01.07.22	3,178,235	-	(3,178,235)	-	0.157p
03.07.19	02.07.22	833,334	-	(833,334)	-	0.157p
10.12.20	09.12.23	545,455	-	-	545,455	0.22p
31.03.21	31.03.26	38,511,644	-	-	38,511,644	0.00p
Consolidation		(80,067,627)	-	44,916,232	(35,151,395)
19.04.21	19.04.24	21,488,500	-	-	21,488,500	2.60p
19.04.21	19.04.26	24,064,620	-	-	24,064,620	2.60p
26.07.22	27.07.25	-	500,000,000	-	500,000,000	0.13p
Options
01.10.18	01.10.23	4,500,000	-	-	4,500,000	2.00p
01.02.20	01.02.25	31,250,000	-	-	31,250,000	0.30p
01.02.20	01.02.25	31,250,000	-	-	31,250,000	0.30p
Consolidation		(60,300,000)	-	-	(60,300,000)
19.04.21                19.01.26		27,110,000	-	-	27,110,000	2.60p
17.03.22	17.03.27	30,000,000	-	-	30,000,000	0.30p
		118,259,511	500,000,000	(4,990,687)	613,268,824

The options and warrants issued during the period were valued using the Black-Scholes valuation method and the assumptions used are detailed below.  The expected future volatility has been determined by reference to the historical volatility:

Grant date	Share price at grant	Exercise price	Volatility	Option life	Dividend yield	Risk-free investment rate	Fair value per option
01.02.20	1.15p	3.00p	40%	5 years	0%	3%		0.13p
08.07.21	1.85p	3.00p	95%	5 years	0%	0.7%		1.19p
19.04.21	2.40p	2.60p	70%	5 years	0%	0.7%		1.33p

    17.03.22         0.03p            0.03p             231%              5 years               0%                    1.5%                   0.025p

The Group recognised US$591,000 (30 April 2022: US$552,000) relating to equity-settled share-based payment transactions during the year arising from Option or Warrant grants, which was charged US$Nil (2022: US$Nil) in respect of services performed in connection with the issue of new shares charged to share premium, US$472,000 (2022: US$559,000) in respect of directors' fees and US$7,000 reversed (2022: US$7,000) in respect of employee costs to the income statement.

The 83,710,000 options granted on 19 April 2021 will vest on 1 January 2022 and 1 January 2023 in equal amounts.  Vesting of the options is subject to the option holder providing continuous service during the vesting period and there are no other performance conditions attached to the options.

There were 68,750,000 of unvested options at the 30 April 2020 held by current Directors and consultants, which vested on 1 February 2021. 

The 30,000,000 options granted on 17 March 2022 will vest on 17 September 2022 and 17 March 2023 in equal amounts. Vesting of the options is subject to the option holder providing continuous service during the vesting period and there are no other performance conditions attached to the options.

For the share options and warrants outstanding as at 31 December 2022, the weighted average remaining contractual life is 4 years (30 April 2022: 4.64 years).

9     Employee benefits (including directors)

The group employed an average of 4 individuals during the period, including the directors (2021: 5).

			2022 December	2022 April
			US$'000	US$'000
Directors' remuneration (see below)			227	1,133
Share based payments - Directors (see below)			166	406
Directors' health insurance			-	16
Employees			-	84
Amount due to former consultant			-	(160)
			393	1,479

Key management of the Group are considered to be the Directors.

The remuneration of the directors during the period ended 31 December 2022 was as follows:

		Short term employee benefits	Social security payments	Pension contribution	Share based payments	Total 2022
		US$'000	US$'000	US$'000	US$'000	US$'000
Ross Warner		33	-	-	14	47
Mark Rollins		67	-	-	70	137
Stephen West		-	(2)	-	-	(2)
Steve Whyte		33	4	-	6	43
Larry Bottomley		88	4	-	76	168
Total Key Management		221	6	-	166	393

The remuneration of the directors during the year ended 30 April 2022 was as follows:

		Short term employee benefits	Social security payments	Pension contribution	Share based payments	Total 2022
		US$'000	US$'000	US$'000	US$'000	US$'000
Ross Warner		53	-	-	56	109
Mark Rollins		158	-	-	284	442
Leslie Peterkin		484	-	28	-	535
Stephen West		233	30	27	-	333
Steve Whyte		54	6	-	23	60
Larry Bottomley		54	6	-	43	60
Total Key Management		1,036	42	55	406	1,539

10     Income tax expense

The Parent Company is resident for tax purposes in the Isle of Man and is subject to Isle of Man tax at the current rate of 0% (2021: 0%).  During the period and in the prior year, no subsidiaries were subject to corporation tax.

Taxation reconciliation

The charge for the year can be reconciled to the loss per the consolidated statement of comprehensive income as follows:

	2022 December	2022 April
	US$'000	US$'000
Loss before income tax	(1,051)	(27,389)
Tax on loss at the weighted average corporate tax rate of 0% (2022: 0%)	-	-
Total income tax expense	-	-

The deferred tax asset has not been recognised for in accordance with IAS 12. The Group does not have a material deferred tax liability at the year end.

11     Business combination

On 19 April 2021, Beacon Energy plc, via its wholly owned subsidiary Advance Energy TL Limited, acquired a 50% equity interest in Carnarvon Petroleum Timor Unipessoal Lda which in turn is the holder of a 100% working interest in, and the contractor of, the Buffalo Production Sharing Contract ("PSC").

Details of the purchase consideration and the net assets acquired are as follows:

Purchase consideration

		2021
		US$'000
Cash paid		20,000
Purchase costs		274
Total		20,274

On 24 January 2022 the company announced that the Buffalo project had not been successful. The Operator, Carnarvon Petroleum Timor, Lda, had advised the company that the wireline logging operations have been completed with only residual oil being encountered. The Company announced that the well will therefore be plugged and abandoned, and the rig demobilised. As a result of this, the carrying amount of the investment in the associate of US$19,834,000 will be written off and a share of the losses for 2022 will be recognised in the consolidated statement of comprehensive income US$428,000 (2021: loss US$12,000). The investment in associate has been fully impaired at 30 April 2022.

The assets and liabilities recognised as a result of the acquisition are as follows:

		Fair value 2021
		US$'000
Rights *		21,149
Buffalo exploration & appraisal		1,685
Property, plant and equipment		1
Cash		20,023
Creditors		(31)
Loan payable to Carnarvon		(2,278)
Net identifiable assets at acquisition		40,549
Less: Other interests		(20,274)
Goodwill		-
Net assets acquired		20,275

* Carnarvon Petroleum Timor Unipessoal Lda owns the Buffalo Oil Field re-development project located in the Buffalo PSC Contract Area (the "Buffalo Project") and is the Contractor and Operator of the Buffalo PSC.  The rights attached to this have been fair valued by Beacon Energy in determining the purchase price apportionment.

Equity investment in associate

	2022 December		2022 April
	US$'000		US$'000
Carrying value at beginning of year	-		20,262
Cash call	-		4,051
Share of losses post acquisition	-		(428)
Impairment	-		(23,885)
Carrying value at year end	-		-

Summarised financial information for associate

The table below provide summarised financial information for those associates that are material to the group. The information disclosed reflects the amounts presented in the financial statements of the relevant associate and not Beacon Energy's share of those amounts. They have been amended to reflect adjustments made by the entity when using the equity method, including fair value adjustments and modifications for differences in accounting policy.

Summarised statement of comprehensive income for the 12 months to 30 April 2022

	2022 December		2022 April
	US$'000		US$'000
Revenue	-		-
Cost of sales	-		-
Gross profit	-		-
Administrative expenses	-		(802)
Operating loss	-		(802)
Finance costs	-		(53)
Loss on ordinary activities before taxation	-		(855)
Taxation	-		-
Loss from continuing operations	-		(855)
Group share of post-acquisition losses	-		(428)

12     Capital and reserves

All shares are Nil Coupon fully paid and each ordinary share carries one vote. No warrants have been exercised at the reporting date.

Allotted, called-up and fully paid:	Number	Pence per share	Share premium US$'000
Balance at 30 April 2021	1,027,614,008		47,656
Equity Placing	-	-	-
Cost of issue	-	-	-
Balance at 30 April 2022	1,027,614,008		47,656
26 July 2022-Equity placing	500,000,000	0.13	490
Cost of issue	-	-	(18)
Balance at 31 December 2022	1,527,614,008		48,128

13     Trade and other payables

Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method.

			2022 December	2022 April
			US$'000	US$'000
Trade payables			230	51
Accruals and other payables			181	253
			411	304

14    Risk Management

Financial Risks

The Group's activities expose it to a variety of financial risks: market risk (including foreign currency exchange risk and interest rate risk), credit risk and liquidity risk. The Board of Directors seek to identify and evaluate financial risks.

Market risk

A.  Foreign currency exchange risk

Foreign exchange risk arises because the Group entities enter into transactions in currencies that are not the same as their functional currencies, resulting in gains and losses on retranslation into US Dollars. It is the Group's policy to ensure that individual Group entities enter into local transactions in their functional currency wherever possible and that only surplus funds over and above working capital requirements should be transferred to the treasury of the Parent Company. The Group and Company considers this policy minimises any unnecessary foreign exchange exposure. Despite this policy, the Group cannot avoid being exposed to gains or losses resulting from foreign exchange movements, at the reporting date a 5% decrease in the strength of the US Dollar would result in a corresponding reduction of US$6,000 (2021: US$373,000) in the net assets of the Group.

B.  Cash flow interest rate risk

The Group's cash and cash equivalents are invested at short term market interest rates. As market rates are low, the Group is not subject to significant cash flow interest rate risk and no sensitivity analysis is provided. The Group is also not subject to significant fair value interest rate risk.

	2022 December	2022 April
	US$'000	US$'000
Cash & Cash Equivalents
USD	294	511
GBP	12	151
Total Financial Assets	306	662
Trade & other payables
USD	181	253
GBP	184	51
EUR	46	-
Total Financial Liabilities	411	304

Credit risk

Credit risk arises on investments, cash balances and receivable balances. The amount of credit risk is equal to the amounts stated in the Statement of Financial Position for each of these assets. Cash balances and transactions are limited to high-credit-quality financial institutions. There are no impairment provisions as at 31 December 2022 (30 April 2022: nil).

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group has adopted a policy of maintaining surplus funds with approved financial institutions.

Management of liquidity risk is achieved by monitoring budgets and forecasts against actual cash flows.  Should the Group enter into borrowings during the year, management monitor the repayment and servicing of these arrangements against the contractual terms and reviewed cash flows to ensure that sufficient cash reserves were maintained.

Capital Risks

The Directors determine the appropriate capital structure of the Group, specifically, how much is raised from shareholders (equity) and how much is borrowed from financial institutions (debt), in order to finance the Group's business strategy. The Group's policy in the long term is to seek to maintain the level of equity capital and reserves to maintain an optimal financial position and gearing ratio which provides financial flexibility to continue as a going concern and to maximise shareholder value. The capital structure of the Group consists of shareholders' equity together with net debt (where relevant). The Group's funding requirements are met through a combination of debt, equity and operational cash flow.

15     List of subsidiaries and associates

The parent of the Group has shareholdings in the following entities:

Name	Interest 2022	Interest 2021	Country of incorporation	Nature of business
Advance Energy TL Limited	100%	100%	UK	Intermediate Hold Co
Carnarvon Petroleum Timor Unipessoal Lda	0%	50%	Timor-Leste	Oil exploration
Eagle Gas Limited	25%	25%	UK	Oil and gas Exploration
Beacon Energy RP Limited	100%	N/A	Isle of Man	Dormant

16     Commitments

There were no capital commitments authorised by the Directors or contracted other than those provided for in these financial statements as at 31 December 2022 (30 April 2022: None).

17     Related parties

Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence.

Related parties may be individuals (being members of key management personnel, significant shareholders and/or their close family members) or other entities and include entities which are under significant influence of related parties of the Group where those parties are individuals, and post-employment benefit plans which are for the benefit of employees of the Group or of any entity that is a related party of the Group.

Details of Directors remuneration are disclosed in Note 9 Directors Remuneration. For details of any related party transactions entered into after the year-end please refer to Note 18 Subsequent Events. 

18     Subsequent events

On 3 January 2023, the Company announced the approval of the proposed acquisition of Rhein Petroleum announced on 16 December 2022. On the same day, there was also a proposal to appoint Stewart MacDonald as an Executive director and Chief financial officer subject to the completion of the proposed acquisition transaction. Tulip Oil also nominated Leo Koot as its representative non-executive director, subject to completion of the proposed transaction in accordance with the share purchase agreement announced on 16 December 2022.

On 7 March 2023, Beacon Energy Plc announced that, subject to the completion of the acquisition of Rhein Petroleum GmbH, it changed its accounting reference from 30 April to 31 December so that it aligns with the report periods for Rhein Petroleum GmbH. On the same date the board agreed on and subject to the completion of the acquisition of Rhein Petroleum, the company will issue options, exercisable at nil cost, to the existing Company Directors in lieu of accrued and unpaid fees of £212,185. The publication of the pathfinder admission document was done on the same date.

On 21 March 2023, the Company announced that it had issued 5,491,516,026 new ordinary shares by way of placing and a Primary Bid Offer at a fundraise price of 0.11 pence to raise £6.04 million (the "Fundraise"). The net proceeds of the Fundraise together with the Company's existing cash resources will be used to fund the drilling of the SCHB-2 development well (onshore South West Germany) and for general working capital requirements. The Company's existing and proposed (now current) Directors (excluding Ross Warner) subscribed for, in aggregate, £0.47 million of new ordinary shares pursuant to the Fundraise.

On 5 April 2023, the Company held an extraordinary general meeting to announce that the existing ordinary shares were to be cancelled from trading on AIM and the new ordinary shares would be admitted to trading on 11 April 2023. Following admission, the company had 10,507,679,620 ordinary shares in issue.

The director shareholding was also announced and set out as below:

Director	Number of Existing Ordinary shares	Director Subscription Shares	Number of Director Fee Share1	Number of Ordinary Shares on Admission	Percentage of Enlarged Share Capital (%)
Mark Rollins	76,461,976	159,090,909	89,728,363	325,281,248	3.10
Stephen Whyte2	391,266	22,727,272	29,610,360	52,728,898	0.50
Ross Warner	205,287	-	-	205,287	0.00
Larry Bottomley	47,058,823	68,181,818	246,753,000	361,993,641	3.45
Stewart MacDonald	-	18,181,818	192,727,272	210,909,090	2.01
Leo Koot3	-	159,090,909	-	159,090,909	1.51

¹ The majority of Director Fee Shares will be held in escrow in a subsidiary of the Company and will be released to the Directors as appropriate after two years.

² Stephen Whyte's interest is held in the name of Nicola Louise Whyte, his wife.

³ 29,610,360 Director Fee Shares that were to be held for the benefit of Leo Koot will now be held for the benefit of Tulip Oil Holding B.V. on Admission and as such are included in its holding as set out below.

On 11 April 2023, the Company announced that it had successfully completed the acquisition of Rhein Petroleum, Beacon Energy was re-admitted to trading on AIM. On the same date Stewart MacDonald and Leo Koot were appointed as directors.

On 19 June 2023, the Company announced that drilling had started at the Schwarzbach-2 ("SCHB-2") development well within the Erfelden Field, onshore South West Germany.

 

END