Full-Year Results 2019 and Notice of AGM

RNS Number : 5556X

Solo Oil Plc

01 September 2020

1 September 2020

Solo Oil plc

("Solo" or "the Company")

Full-Year Results 2019 and Notice of AGM

Solo (AIM: SOLO), the AIM investing company targeting attractive production and development opportunities within the European energy market, is pleased to announce its audited annual results for the period ended 31 December 2019.

Period and Post-Period Highlights

· Launched new company strategy as set out in March 2019 to identify assets within the European energy market for long-term sustainable growth

· Proposed name change to Scirocco Energy plc subject to shareholder approval at the 2020 Annual General Meeting ("AGM")

· Formal process ongoing to explore value realisation for its assets in Tanzania with encouraging level of interest

· In April 2020, the Joint Venture for the Ruvuma asset received the extension of the Mtwara Licence in respect to the Ntorya Location from the Ministry of Energy of Tanzania

· In June 2020, the Company entered into an investment facility for up to US$5,000,000 with Prolific Basins LLC

· Continued focus on cost discipline including salary sacrifices and implementation of option based remuneration for Executives

· Continue to screen business development opportunities in line with stated strategy

The Company's Annual General Meeting ("AGM") will be held at 11a.m. BST on 25 September at The Gleneagles Hotel, Auchterarder PH3 1NF. The location has been selected as a Covid regulations compliant venue and is being held at the location at no cost to the Company.

The Board is closely monitoring the current Coronavirus situation and the UK Government's 'stay alert measures' and related guidance on social distancing and public gatherings ("COVID-19 Related Measures"). The Board recognises that the annual general meeting ("AGM") typically represents an opportunity to engage with members, and provides a forum that enables members to ask questions of, and speak with, the Board. However, in light of the current restrictions, the Board hopes that members will understand that the AGM will be held on a closed basis and this year members will not be able to attend. This decision has been taken to protect the health and safety of our colleagues and shareholders in light of the COVID-19 Related Measures currently in place and recognising the possibility of increased measures being introduced nearer to the date of the AGM. The AGM will be held as a closed meeting that is solely functional in format - the meeting will comprise only the formal votes without any business update or question and answer session. A very limited number of persons from the Company will be present to conduct the meeting such that relevant legal requirements can be satisfied.

As shareholders will not be able to attend in person, we strongly encourage voting on all resolutions by completing a proxy appointment form appointing the 'Chair of the Meeting' as your proxy. All valid proxy votes to be exercised by the 'Chair of the Meeting' will also be included in any vote taken at the meeting. The results of the votes on the proposed resolutions will be announced in the normal way, via poll, as soon as practicable after the conclusion of the AGM. Shareholders are encouraged to raise any questions on the business of the AGM in advance of the AGM with the Company Secretary at Solo@buchanan.uk.com (with "Solo Oil PLC AGM 2020" in the subject box). Questions must be received by 5.00 p.m. on 18 September 2020. Appropriate thematic questions will be replied to by the Board after the AGM

The Annual Report and notice convening the AGM will be posted to shareholders today and will be available shortly on the website www.solooil.co.uk

Tom Reynolds CEO commented: "During an unprecedented time for the industry, we are committed to working hard to deliver our strategy. We continue to explore options for the Tanzanian assets, and will ensure any decision is based on the best outcome for our shareholders. In the meantime, we are focused on identifying potential opportunities to grow the Company and are encouraged by the pipeline we are seeing, with the current challenges in the industry creating a broader range of opportunities in the European energy market. We look forward to updating our shareholders as things develop in the coming months."

For further information:

Solo Oil plc

Tom Reynolds, CEO

Doug Rycroft, COO

+44 (0) 20 7466 5000

Strand Hanson Limited, Nominated Adviser & Broker

James Spinney / Ritchie Balmer / Rory Murphy

+44 (0) 20 7409 3494

Buchanan, Financial PR

Ben Romney / Kelsey Traynor / James Husband

+44 (0) 20 7466 5000

On behalf of the Board of Directors, I hereby present the financial statements of Solo Oil plc (the "Company") for the year ended 31 December 2019.

I am pleased to provide the following statement as part of the 2019 Annual Report. The financial and operational highlights provide good context for the market backdrop and, more importantly, the Board's ambitions to execute its stated growth strategy.

Strategy and execution update

The focus for the Company through 2019/20 has been on execution of the strategy set forth in March 2019 Strategy Update, and while progress has undoubtedly been achieved as set out below, we are yet to deliver a transformational transaction due to a combination of factors that resulted in the very difficult market conditions that we are experiencing today.

This is a source of disappointment, especially given the amount of work that went into the ONE Dyas transaction that ultimately did not proceed, however also reflects the Board's unwavering commitment to only execute deals that will benefit our shareholders in the long-run.

Our strategy is intended to create a sustainable business capable of delivering long-term growth, and is therefore centred around an industry theme that we believe provides longevity and where we see an increasing opportunity to capitalise on a compelling divestment window.

While the European gas thematic represents the future of Solo Oil (to be re-named Scirocco Energy), the next chapter in the Company's story, numerous challenges have emerged since we set that strategy in motion which have made it more difficult to transact. Namely, as the commodity prices dipped to recent historic lows on account of macro factors regarding supply imbalance, accelerated by the ongoing pandemic, it has exacerbated what was already a difficult business environment by widening the expectation gap between buyers and sellers, resulting in challenges in agreeing terms that suit both parties.

We witnessed this reality ourselves with the terminated ONE Dyas deal, as the unforeseen changes in opex and lower forward gas pricing that occurred after we signed the SPA in October 2019 eroded the value of that deal to an unacceptable level which meant it was not in our interest to proceed on the agreed terms, and we were unable to agree amended terms that suited both parties. While this was extremely frustrating given the amount of work that went into that deal it was undoubtedly the correct decision by the Board, even more so with the power of hindsight, and reflects our priority of finding "the right deals" rather than bowing to the pressure to deliver an immediate deal. The signing of that SPA also reflected the Board's ability to identify and access opportunities with credible operators and indicated the type and scale of opportunities on which we will seek to realise our growth ambitions.

These are uncertain times for the industry and the global economies which makes the execution of our strategy more challenging, despite also providing a more compelling deal flow pipeline to consider. It is for this reason that we recently expanded the strategy to identify emerging opportunities within the broader transitional energy space. The uncertainty caused by recent developments is perhaps the most profound challenge we face, as would-be vendors, lenders and investors await better visibility in order to embolden confidence in decision making.

The Board has augmented its strategy to invest in a broader European energy market strategy targeting attractive growth opportunities predominantly within the European gas and energy transition market whilst maximising value for shareholders from the Company's existing portfolio.

The Board is seeking opportunities which meet the following criteria:

· cash generative, with the potential to re-invest operational cash flow in further growth;

· situated within the broad energy space, a market which the Board knows well;

· primary targets within the natural gas space, augmented by opportunities which may benefit from low carbon and electrification dynamics;

· assets which can attract the necessary investment capital, taking appropriate account of growing investor sentiment towards ESG and SRI indicators; and

assets which deliver stable returns, with lower exposure to global commodity prices

While the Board cannot control macro factors, it is wholly focussed on the outcomes it can control, and taking all appropriate action to ensure the company is well positioned for growth. To support this, the Company remains focused on delivering quality transactions that fully meet our stated investment criteria, and we continue to screen a pipeline of opportunities in various stages of discussions. We have focused on transitioning Solo into a vehicle capable of delivering the longer-term vision, and made strong progress in reshaping the portfolio through divestment of non-core assets.

Section 172 (1) Statement

The Company was admitted to the AIM Market of the London Stock Exchange on 12 April 2007 and has been a public company from this date. The Company is required to provide a Section 172(1) statement under the terms of its AIM listing. This disclosure aims to describe how the Directors have acted to promote the success of the company for the benefit of its members as a whole, taking into account (amongst other matters) the matters set out in section 172(1)(a) to (f) of the Companies Act which are set out below.

(a) the likely consequences of any decision in the long term

As previously discussed, the deal with ONE DYAS did not go through in the current year. The Company has not made any other decisions which will likely affect the company in the long term in the current financial year.

(b) the interests of the company's employees

Aside from the Directors, the Company does not have any other employees.

Aside from a small number of service providers, the success of the Company's investment strategy will be driven in part by the business relationships that exist between the Directors and the management of other oil and gas companies and as such the maintenance of such relationships is given a very high priority by the Directors.

(d)the impact of the company's operations on the community and the environment

During the current investment phase the Company has no operations. The Directors are nevertheless cognisant of the potential impact of future investments on affected communities and the environment and such factors will continue to be considered as part of investment appraisal and decision making.

(e) the desirability of the company maintaining a reputation for high standards of business conduct

The Company's standing and reputation with other oil and gas companies, equity investors, providers of debt, advisers and the relevant authorities are key in the Company achieving its investment objectives and the Company's ethics and behaviour, as summarised in the Company's Business Principle and Ethics, will continue to be central to the conduct of the Directors. The Company is advised by blue-chip experienced advisers which also assist in maintaining high standards of conduct.

(f) the need to act fairly as between members of the company

The Directors will continue to act fairly between the members of the Company as required under the Companies Act, the AIM Rules and QCA corporate governance principles.

Proposed name change

As announced, in October 2019 the Company intends to change its name to Scirocco Energy plc subject to shareholder approval at the Annual General Meeting ("AGM"). The change of name reflects the Company's ongoing strategic evolution towards a European gas, infrastructure and energy player focused on delivering investor returns in the transitional energy economy.

Portfolio Review

Solo's existing portfolio continues to be progressed through technical work, with an independent resource report verifying 2C contingent resource estimate of 763 billion cubic feet ("bcf") and Pmean gross gas initially in place ("GIIP") upgraded to 1.87 trillion cubic feet ("tcf"), Solo now holds net resources of approximately 467 bcf Pmean GIIP, resulting in excess of 190 bcf (over 30 million barrels oil equivalent ("mmboe")) of most likely contingent resources net to its 25% interest in the Ruvuma project.

In July 2018, Aminex announced a significant proposed farmout transaction in which it will be selling 50% of its interest in Ruvuma to ARA, a wholly owned subsidiary of the Zubair Corporation, who will also become Operator upon formal ratification of the transaction. The transaction represents a very significant milestone for Solo as it validates the commercial attractiveness of the project, and also brings in a well-capitalised and credible Operator into the JV to help drive the project forward towards successful development. Post-period end, Aminex have announced that it has completed all the requirements to allow the Minister of Energy to grant approval, being the final condition, to the completion of the 50% sale. At the time of writing, this approval has not yet been granted and Aminex and ARA have announced several extensions to the long-stop date for the completion, the most recent of which extended the date to the 30 September 2020.

Aminex's transaction emphasised the significant discount of value currently ascribed to Solo's material interest in this project. The transaction has galvanised Solo's confidence in its ability to divest its interest at a significant premium to the value currently assigned by the market, and the Company's efforts to realise value from this core investment have intensified.

In April 2020, the Joint Venture formally received the extension of the Mtwara Licence in respect to the Ntorya Location from the Ministry of Energy of Tanzania. The extension, which was applied for in late 2017, is valid for one year. Under the terms of the extension, the Company, through the Ruvuma PSA Joint Venture, is committed to acquire 200 square kilometres (surface coverage) of 3D seismic, drill the Chikumbi-1 exploration well, complete the negotiation of the Gas Terms for the Ruvuma PSA with the TPDC and using the data gathered from Chikumbi-1 and the seismic acquisition, prepare and submit an application for a Development Licence for the Ntorya Location area.

It is acknowledged by all parties that the full work programme is unlikely to be completed during this extension period and the Company will therefore apply for an additional extension(s) as necessary and as permissible under the current legislation.

Whilst the intention remains to divest of part or all of our interest in Ruvuma, we will only do so if it is in the best interest of shareholders. Our interest in Ruvuma remains the jewel in our current crown, however the strategy to diversify the business in line with our strategic vision will ensure the company is not reliant on a binary divestment outcome, the timelines and value of which remain uncertain.

Solo's investment in Helium One continues to represent one of the core investments in the portfolio and one that the Board believes will deliver a significant return on investment at the appropriate time, given the strong underlying fundamentals in the global supply / demand balance of helium.

As a result of the delay associated with the licence discussions, in April 2019 Helium One raised US$ 1 million for working capital purposes through the issuance of a convertible loan note ("CLN"). Solo subscribed for US$100,000 - maintaining its ownership position at 12.03%. Solo's total invested cost to date is approximately £2.93 million.

We expect to see further progress during 2020/21 in delivering a route to liquidity.

Whilst Solo's interest in Kiliwani-North is small at ~8.3%, it remains a core asset within the portfolio given the upside potential within the lower horizons and the Kiliwani South prospect, and provides a clear path to monetise new volumes quickly into existing infrastructure and under the existing gas sales agreement. Solo remains supportive of the operators plan to re-establish gas flow from the well through remedial work subject to approval from the Tanzanian authorities to conduct the work.

Prior year adjustments

In the current year, there have been adjustments to the figures previously reported in 2018. Within the FVOCI reserve (previously the AFS reserve), a revision in accounting policy has resulted in a restatement of 2018 profit. There has also been a decommissioning provision, which was previously not recognised for wells in Tanzania. This was as a result of an accounting error and has been adjusted in 2018. Detail of this can be found in note 30.

Outlook

The pending outcome of the Tanzanian sales process remains critical for our broader strategy and we are encouraged, but not surprised, by the level of interest in that process. It is our job to extract maximum value from that portfolio, particularly the high quality Ruvuma asset that remains the jewel in our crown, and critically we strengthened our negotiating position and optionality with the recent debt financing facility with Prolific Basins LLC as we signalled to the market that we are able to fund our near-term commitments and remain in the JV, unless we receive sensible offers that reflect what we believe to be in the best interest of the company and its shareholders. The Board remains pragmatic about what can be achieved in terms of realising fair value in this challenging climate, and must balance this fact with the strategic requirement of that sales process providing a better catalyst and optionality with regards to implementation of the broader strategy.

Cost discipline and cash preservation have been a core focus of the Board for some time and this has become even more important in recent times. We have successfully reduced G&A through aggressive cost cutting measures, and renegotiating contracts with advisors and contractors. I thank the Board and Executive Management team for the salary sacrifices that they have made and their alignment in terms of taking options in lieu of salary as part of the cash management programme in 2020. The management team is a core USP for this Company and central to our investment case. It's therefore imperative that we keep the team together and continue to back them to deliver on the long-term objectives, and the implementation of incentive schemes has been initiated with this objective in mind. The focus on cost discipline and cash preservation will continue indefinitely.

The Company remains in a state of transition and the focus for the remainder of this fiscal year will be to complete that transition into Scirocco Energy. To enable that to occur, the near-term priorities will be to obtain a satisfactory outcome with the Tanzanian sales process, crystallize a route to value realisation for our investment in Helium One, manage our balance sheet effectively with cost discipline and utilisation of the debt facility, if required, to provide flexibility and optionality, and of course to deliver an acquisition. The outcome and timing of all of these, bar the management of balance sheet, are largely dependent on market conditions and the Board will remain wholly focused on the tasks at hand and will update shareholders accordingly.

Conclusion

In summary, it has been a mixed year in terms of delivering progress, but not yet the transformation that we were hoping for. The Board remains confident that it has the right strategy in place, and the right team in place to deliver that strategy for the long-term benefit of our shareholders. The Board has a long-term view and remains confident in its ability to achieve its ambitions in the previously stated timelines, albeit acknowledging the timing impact of the aforementioned challenges. The significant work already put in by the team to stabilise the Company, enhance its overall Governance and ensure it's on a path to sustainable value creation cannot be underestimated and will hold the Company in good stead as we move forward.

With our proposed name change to Scirocco Energy taking effect, we are continuing our metamorphosis into the company we want to be and anticipate major transformation in the coming year as we deliver on our strategic priorities. We remain steadfast in our strategy, patient in our approach and confident in our ability to reward shareholders for their faith.

I would like to take this opportunity to thank the Board and the Executive Management for their hard work and commitment throughout this period.

Alastair Ferguson

Non-Executive Chairman

Date: 31/8/2020

Strategic Report

Tanzania

Solo holds interests in natural gas and industrial gas assets in Tanzania.

These projects have been selected for their significant subsurface potential. with existing reserves, significant prospective resources and proximity to existing infrastructure location Solo believes that its projects are well positioned to deliver investor returns.

Despite slow operational progress in 2019 due to challenges in receiving Tanzanian government approvals to progress operations the Board believes that all of its projects made progress from a technical evaluation and planning perspective. The projects are well placed to progress operationally once the relevant approvals are received.

A. Ruvuma PSA

Aminex plc (operator)	75%
Solo Oil plc	25%

In 2019 Solo held a 25% working interest in the Ruvuma Petroleum Sharing Agreement ("Ruvuma PSA") in the south-east of Tanzania covering an area of 3,447 square kilometres of which approximately 90% lies onshore and the balance offshore. The Ruvuma PSA is in a region of southern Tanzania where very substantial gas discoveries have been made offshore in recent years and where gas has also been discovered onshore and along the coastal islands at Ntorya, Mnazi Bay, Kiliwani North and Songo-Songo.

During 2018 the Joint Venture conducted further technical work with the support of RPS Energy Consultants Limited, on the resource estimates, and by IO Consulting, on the development engineering and economics, leading to the upgraded resource estimates included in Table 1. The independent studies now estimate gross 2C contingent resources of 763 bcf, of which 191 bcf are net to Solo's working interest, equivalent to approximately 31.8 mmbbls oil equivalent.

During 2019, the operator Ndovu Resources Limited (a wholly owned subsidiary of Aminex plc) has completed an updated well design for the Chikumbi-1 exploration well and has redesigned a significantly larger 3D seismic programme than was originally planned. The changes to the seismic programme reflect the intent of the Joint Venture to gather all of the information required in order to rapidly progress and early production scheme and then to full-field development delivering early cashflow from the Ntorya gas field.

The proposed gross 2020 contingent work programme and budget for Ruvuma includes approximately US$40 million of drilling and seismic work where Solo would be expected to fund approximately US$10 million. These costs are contingent on regulatory and joint venture approvals and the Company has not yet entered into any agreements to commit these costs.

In April 2020, the Joint Venture formally received the extension of the Mtwara Licence in respect to the Ntorya Location from the Ministry of Energy of Tanzania. The extension, which was applied for in late 2017, is valid for one year. Under the terms of the extension the Company, through the Ruvuma PSA Joint Venture, is committed to acquire 200 square kilometres of 3D seismic (surface coverage), drill the Chikumbi-1 exploration well, complete the negotiation of the Gas Terms for the Ruvuma PSA with the TPDC and prepare and submit an application for a Development Licence for the Ntorya Location area (using the data gathered from Chikumbi-1 and the seismic acquisition).

It is acknowledged by all parties that the full work programme is unlikely to be completed during this extension period and the Joint Venture will therefore apply for additional extensions as necessary and as permissible under the current legislation.

Resource summary - Ntorya Field

					Gross Licence Basis (bcf)
	Licence				1C	2C	3C	Gross Mean unrestricted GIIP
	Mtwara		Development pending		26	81	213
	Mtwara		Development unclarified		324	682	950	1,870
						763

Resource summary excluding Ntorya Field

				Prospective Resources (bcf)*
				Gross on Licence
	Prospect/Lead			1U	2U	3U	Mean unrisked	Pg %
	Chikumbi Jurassic			399	936	1,798	1,351**	8***
	Namisange			56	235	1,925	1,183	8***
	Likonde updip			39	166	702	444	10***
	Ziwani NW			8	35	153	68	<5***
	Ziwani SW			12	54	236	105	<5***

	*	Assuming development licence is ratified
	**	P50
	***	RPS assessment of PG

B. Kiliwani North Development Licence ("KNDL")

In 2018, following the exit of Bounty Oil and Gas NL from the Joint Venture, Solo increased its working interest holding to 8.3918% in the Kiliwani North Development Licence, although TPDC has a back-in right to take up an interest in the KNDL which would reduce Solo's interest to 7.975%. To date TPDC have not taken up that option.

During 2019, as a result of natural depletion and fluid build-up [in the well], the Kiliwani North-1 well has not produced. In late 2018 the operator conducted analysis which concluded that the sub-surface safety valve ("SSSV") had become stuck in the closed position. Schlumberger was mobilised to location and the SSSV was repaired. During the operation the well was fully opened, and test gas flowed to the plant for a short period. The Joint Venture believes that there is a fluid column in the well and is analysing the operational and testing data. The execution of the preliminary remedial work resulted in temporary gas flow to the gas facility.

The well has produced approximately 6.4 bcf of gas to date.

The Joint Venture has been exploring various options to reinstate production from the well. The Operator has prepared, and is awaiting approval for, a remedial work programme intended to establish fluid levels in the well bore, measure reservoir pressure and to unload fluid using foam treatment technology.

If successful, this operation is expected to re-establish gas production from the well. The Joint Venture has identified appropriate equipment and will begin sourcing as soon as approvals have been received. The Joint Venture has been awaiting final approvals for a significant period of time and whilst the Joint Venture is reassured that the unloading operation can be carried out, there is no firm timeline on when the approvals will be granted which would allow the operation carried out. The Joint Venture estimates that once approvals are in place the work could be carried out within a 3 to 6 month time period subject to travel restrictions associated with the ongoing Corona virus pandemic being lifted.

Following a reinterpretation of the existing seismic, the Joint Venture identified the Kiliwani South prospect, estimated by the Operator to contain 57 bcf unrisked mean GIIP. It is envisaged that as part of a larger 3D seismic programme, most of the Kiliwani North development licence will be covered by 3D seismic. This would then allow for the Kiliwani South prospect to be progressed to drill ready status and to target the remaining potential with the Kiliwani North structure.

In preparation for acquiring the 3D seismic over the Kiliwani North Development Licence, the Joint Venture reprocessed certain existing 2D seismic data. In combination with a fresh look at the regional data, remapping based on the reprocessed seismic data has identified multiple structural and stratigraphic leads across the licence which are ideally located in shallow waters and in close proximity to existing offtake infrastructure, meaning that any discovery could be rapidly monetised with relatively low-cost drilling and tie-backs.

A resource report by LR Senergy, completed in May 2015, attributed approximately 28 bcf gross best estimate contingent resource to the Kiliwani North field. These estimates were revisited by RPS in 2018 following production over an 18-month period totalling approximately 6.4 bcf. A new Pmean GIIP of 30.8 bcf and a remaining gross 2P reserve of 1.94 bcf. It is felt that with further intervention additional gas can be recovered from the KN-1 well.

The Operator continues, on behalf of the Joint Venture to meet regularly with the relevant Tanzanian authorities to discuss and resolve the issue of outstanding receivables from previous gas sales from KNDL.

The well has not produced since the first quarter of 2018, during which the Kiliwani North-1 ("KN-1") well produced intermittently. The well performance was driven mainly as a result of increased water production, natural reservoir depletion and a relatively high inlet pressure at the Songo Songo Island Gas Processing Plant ("SSIGPP").

The Joint Venture has identified the possibility of perforating a lower and potentially gas saturated section of the reservoir. Operator conducted analysis indicates the possibility of providing up to 8 BCF of additional resource from KN-1. The Joint Venture will continue to look at plans for 3D seismic acquisition over Kiliwani North would aid in identifying further drilling or side-track opportunities required to drain the remainder of the structure.

C. Helium One (12.03% interest)

Solo holds 12.03% in Helium One Limited ("Helium One") following an original equity subscription in 2017 and participation within a convertible loan note issuance in early 2019. Helium One owns exploration licences in a number of highly prospective helium properties in Tanzania.

As a result of the delay associated with the licence discussions, in April 2019 Helium One raised US$ 1 million for working capital purposes through the issuance of a convertible loan note ("CLN"). Solo subscribed for US$100,000 - maintaining its ownership position at c.12%. Solo's total invested cost to date is approximately £2.93 million.

Originally identified by means of helium macro-seeps the prospects under investigation by Helium One have been mapped using soil geochemistry anomalies, airborne geophysical tools and on legacy 2D seismic data acquired previously during the 1980s. The identified macro-seepage indicates high concentrations of helium (up to in excess of 10% by volume) in association with nitrogen that may be trapped in the subsurface.

Netherland & Sewell Associates International ("NSAI") has independently assessed the most mature of the projects, in the Rukwa Basin of the East African Rift Valley, as having the gross potential for close to 100 bcf of helium in place.

Global helium demand is approximately 6 bcf per annum. Supply is delivered by extracting helium from hydrocarbon production projects in a number of countries including the USA, Qatar, Algeria and Russia. Future supplies are also associated with hydrocarbon development projects where the development is driven by the demand for natural gas.

Demand for helium has been growing at a rate of between 1.5 to 3 per cent per annum over the last decade and is a vital component of many modern technologies. As a result of its unique properties as a super fluid, it plays a vital role in devices which use super conducting magnets; as in MRI machines. As an inert gas helium also plays a vital role in the production of many critical electronic components such as disk drives and fibre optics, and is additionally used for industrial testing, purging and leak detection. Helium, as a lifting gas in hybrid air vehicles (and other forms of airship), has also begun to have increased significance.

However, the US government has been selling its strategic reserve and will close the facility for international sales no later than September 2021, after which there is projected to be a significant shortage of helium available on world markets. In June 2017, several countries abruptly cut diplomatic relations with Qatar and imposed trade and travel bans. The ramifications for global helium supply were significant, with both Qatari plants being turned off for a period, as exports of helium were unable to pass the trade barriers imposed on Qatar. While only a temporary situation, it did highlight the fragility of the helium supply chain, and reliance on Qatari supplies. It should also be noted that helium output from LNG plants can only be increased if LNG demand also increases and as a result much of the global helium supply is highly illiquid.

Helium One holds one of the only known high-volume, standalone helium resource projects which is not reliant on associated hydrocarbon development. If successful it could provide much needed stability to global helium supply and if commercial volumes are discovered, could be developed as a major swing producer to global markets.

The Helium One Tanzania projects have excellent supply economics and, once liquefied close to production well sites, the helium could be transported to world markets via the deep-water port at Dar es Salaam. Given the competitive demand for crude helium on world markets Solo and Helium One would expect to sell helium at the wellhead through an off-take agreement with a large industrial gas company who would liquefy and transport the helium to market. During the 2018 auction of crude helium by the Bureau of Land Management ("BLM") in the USA the average price set for crude helium was US$280 per thousand cubic feet with spot prices reported at levels significantly higher than that level.

Investment Case

Solo believes that its participation in Helium One continues to provide exposure to attractive upside valuation in the event of a successful test of in place resources through appraisal drilling. Key positives supporting this:

· In situ Helium seeps at surface with Helium concentrations measured in the range of 8-10.2% which, if proven through appraisal drilling, would represent a world class source of Helium;

· A number of mapped structures potentially capable of holding approximately 100Bcf Helium in aggregate as indicated by an independent report prepared by Netherland Sewell and Associates;

· An experienced management team, recently augmented, with a proven track record of developing value in the natural resources sector;

· Robust supply/demand dynamics in the global helium market which support highly attractive valuation of any resource, if proven; and

· Engaged community of offtake parties in the specialty industrial gas market willing to fund the installation and operation of the necessary liquefaction and purification facilities.

Events in the period

Helium One activity within the period focused on the identification and characterisation of a number of prospective structures in order to high grade drilling targets and specify a drilling programme. The company also progressed discussions with the relevant authorities within Tanzania to clarify licence conditions and drilling permits. These discussions took longer than expected and as a result the IPO and operational programme originally planned for late 2019 has been deferred into 2020.

Events following the period

At the time of writing Helium One informed Solo that it has received confirmation from the Tanzanian authorities which will allow the operational programme to proceed.

Helium One is now focused on three key initiatives:

· IPO. A key objective for Helium One is to complete an IPO on a recognised stock exchange to provide access to capital for ongoing investment;

· Drilling programme. To execute a programme of appraisal wells to test selected target structures for the presents of Helium rich gas which can be recovered to surface; and

· Offtake programme. To engage with relevant counterparties in the speciality industrial gases sector regarding the offtake and sale of helium in a success case.

Receipt of licence extension from the Tanzanian authorities represents a crucial step towards achieving this. Solo remains supportive of Helium One and the above initiatives which will deliver a liquid platform for the company's shares which has the capacity to recognise the significant value upside which would be delivered by a successful drilling programme.

Other investments

A. Burj Africa, Nigeria, West Africa (20% interest)

Between 2013 and 2015 Solo made an investment into various ventures aimed at accessing known reserves in fields in Nigeria. These have resulted in a 20% interest in Burj Petroleum Africa Limited ("Burj Africa") a company which had applied for various undeveloped fields in the 2014 Nigerian Marginal Fields Bid Round ("Marginal Fields Round") along with joint venture partners Global Oil and Gas and Truvent Consulting.

In 2019, Solo disposed of its 20% interest in Burj Africa to Burj Petroleum Corporation, an existing shareholder in Burj Africa, for a nominal fee. In doing so Solo relinquished any future costs associated with Burj Africa and further achieved the Board's objective to exit historical positions and rationalise the portfolio.

B. Ontario, Canada (28.56% interest)

On 22 March 2019, Solo announced that as part of the portfolio rationalisation, the Company had signed Heads of Terms ("HoT") with Levant Exploration and Production Corp. ("Levant") for the divestment of Solo's 28.56% in Reef Resources Limited ("Reef") to Levant. The divestment of the Company's shareholding in Reef is subject to definitive documentation being agreed and further demonstrates the Company's commitment to rationalise its existing portfolio as it delivers its growth strategy.

Further to this announcement, on 8th July 2020 Solo announced that it had entered into an Asset Purchase Agreement with Reef Resources Limited and Levant Exploration and Production Corp., the Board expect the deal to close once the conditions precedent have been met.

Mr Tom Reynolds

Director

Date: 31/8/20

Glossary and Notes

2D seismic	seismic data collected using the two-dimensional common depth point method
3D	three-dimensional
AIM	London Stock Exchange Alternative Investment Market
API	American Petroleum Institute
barrel or bbl	45 US gallons
bbls	barrels of oil
bcf	billion cubic feet
best estimate or P50	the most likely estimate of a parameter based on all available data, also often termed the P50 (or the value of a probability distribution of outcomes ta the 50% confidence level)
billion	10 to the power of 9
bopd	barrels of oil per day
CNG	condensed natural gas
contingent resources	those quantities of petroleum estimated, at a given date, to be potentially recoverable from known accumulations, but the associated projects are not yet considered mature enough for commercial development due to one or more contingencies
CPR	Competent Persons Report
discovery	a petroleum accumulation for which one or several exploratory wells have been established through testing, sampling and/or logging the existence of a significant quantity of potentially moveable hydrocarbons
electric logs	tools used within the wellbore to measure the rock and fluid properties of the surrounding formations
GIIP	gas initally in place
GSA	gas sales agreement
HH-1	Horse Hill-1 well
HHDL	Horse Hill Developments Limited
KN-1	Kiliwani North-1 well
KNDL	Kiliwani North Development Licence
m	thousand (ten to the power 3)
mm	million (ten to the power 6)
mmbbls	milion barrels of oil
mmscf	million standard cubic feet of gas
mmscfd	millon standard cubic feet of gas per day
OGA	UK Oil and Gas Authority (formally the Department of Energy and Climate Change
oil in place or STOIIP	stock tank oil initally in place, those quantities of oil that are estimated to be known reservoirs prior to production commencing
pay	reservoir in portion of a reservoir formation that contains economically producible hydrocarbons. The overall interval in which pay sections occur is the gross pay; the portion of the gross pay that meets specific criteria such as minimum porosity, perme
PEDL	Petroleum Exploration and Development Licence
permeability	the capability of a porous rock or sediment to permit the flow of fluids through the pore space
petrophysics	the study of the physical and chemical properties of rock formations and their interactions with fluids
play	a set of known or postulated oil or gas accumulations sharing similarr geologic properties
porosity	the percentage of void space in a rock formation
prospective resources	those quantities of petroleum which are estimated, at a given date, to be potentially recovered from undiscovered accumulations
proven reserves	those quantities of petroleum, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable (1P), from a given data forward, from known reservoirs and under defined economic conditions,
probable reserves	those additional reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proven Reserves but more certain to be recovered than Possible Reserves. It is equally likely that actual remaining quantities recover

possible reserves	those additional reserves which analysis of geoscience and engineering data suggest are less likely to be recoverable than Probable Reserves. The total quantities ultimately recovered from the projkect have a low probability to exceed the sum of Proved reserves
PSA	petroleum sharing agreement
PRMS	Petroleum Resources Management system

reserves	those quantities of petroleum anticipated to be commercially recovered by application of development projects to known accumulations from a given date forward under defined conditions
reservoir	a subsurface rock formation containing an individual natural accumulation of moveable petroleum
SPE	Society of Petroleum Engineers
tcf	trillion cubic feet
trillion	10 to the power of 12
unconventional reservoir	widely accepted to mean those hydrocarbon reservoirs that are tight; that is have low permeability

The Directors are pleased to present this year's annual report together with the financial statements for the period ended 31 December 2019.

A statement on Corporate Governance is set out on pages 19 to 32.

Principal Activities

The principal activity is to acquire a diverse global portfolio of direct and indirect interests in attractive production and development opportunities within the European energy market. The Board is seeking to invest in a broader European energy market strategy in opportunities which meet the following criteria:

· cash generative, with the potential to re-invest operational cash flow in further growth;

· situated within the broad energy space, a market which the Board knows well;

· primary targets within the natural gas space, augmented by opportunities which may benefit from low carbon and electrification dynamics;

· assets which can attract the necessary investment capital, taking appropriate account of growing investor sentiment towards ESG and SRI indicators; and

· assets which deliver stable returns, with lower exposure to global commodity prices.

The Company may invest by way of outright acquisition or by the acquisition of assets, including the intellectual property, of a relevant business, partnerships or joint venture arrangements. Such investments may result in the Company acquiring the whole or part of a company or project (which in the case of an investment in a company may be private or listed on a stock exchange, and which may be pre-revenue), and such investments may constitute a minority stake in the company or project in question. The Company's investments may take the form of equity, joint venture debt, convertible instruments, licence rights, or other financial instruments as the Directors deem appropriate.

Solo intends to be a long-term investor and the Directors will place no minimum or maximum limit on the length of time that any investment may be held.

There is no limit on the number of projects into which the Company may invest, nor the proportion of the Company's gross assets that any investment may represent at any time.

Business Review and Future Developments

A detailed review of the Company's business is set out in the Chairman's statement incorporating the strategic report (pages 1-10).

Details of expected future developments for the Company are set out in the Chairman's statement incorporating the strategic report (pages 1-10).

Results and Dividends

Loss on ordinary activities after taxation amounted to £2.561 million (2018 restated: £0.974 million). The Directors do not recommend payment of a dividend (2018: nil).

Key Performance Indicators

Given the nature of the business and that the Company had adopted a new strategy and is in the early stages of developing new operations, the directors are of the opinion that analysis using KPI's is not appropriate for an understanding of the development, performance or position of our businesses at this time. The Board has agreed to introduce this for 2021.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:


Executive Directors	Date of Appointment	Date of Resignation
Daniel Maling*		7 February 2019
Jonathan Fitzpatrick
Alastair Ferguson**
Thomas Reynolds***

Non-Executive Directors
Donald Nicolson****	11 November 2019

* Mr Daniel Maling resigned from his role as Managing Director on 11 February 2019
** Mr Alastair Ferguson assumed the Executive Chairman role from 11 February 2019 to 8 October 2019
*** Mr Thomas Reynolds was a Non-Executive Director until 8 October 2019 upon which date he became Chief Executive Officer
**** Mr Donald Nicolson was appointed as a Non-Executive Director on 11 November 2019

Directors' Remuneration

The Company remunerates the Directors at a level commensurate with the size of the Company and the experience of its Directors. The Remuneration Committee has reviewed the Directors' remuneration and believes it upholds the objectives of the Company with regard to these issues. Details of the Director emoluments and payments made for professional services rendered are set out in Note 7 to the financial statements.

Directors' Interests

The Directors' interests in the share capital of the Company at 31 December 2019 were:


	At 31 December 2019 or date of resignation			At 31 December 2018 or date of resignation
Director	Shares		Options	Shares		Options
Daniel Maling	11,150,847		3,250,000	11,150,847		3,250,000
Jonathan Fitzpatrick	28,708,641	*	2,500,000	28,708,641	*	2,500,000
Alastair Ferguson	16,825,397		-	16,825,397		-
Tom Reynolds	2,464,108	**	-	2,464,108	**	-
Donald Nicolson ***	-		-	-		-
* includes indirect interest of 916,624 shares held by Carolyn Fitzpatrick
** includes indirect interest of 286,738 shares held by Paula Reynolds
*** Donald Nicolson joined the Board on 11 November 2019

No Director had, during the year or at the end of the year, other than disclosed above, a material interest in any contract in relation to the Company's activities except in respect of service agreements. Gneiss Energy maintains a service contract for the provision of operational and technical management services (including the provision of an outsourced COO and technical personnel with the competency to approve the Company's public technical statements), guidance and support on public relations and market engagement strategy, flexible work space and meeting rooms, telephones, company secretary support and corporate finance advisory services with the Company the details of which are disclosed in Note 24 to the financial statements.

Subject to the conditions set out in the Companies Act 2006, the Company has arranged appropriate Directors' and Officers' insurance to indemnify the Directors against liability in respect of proceedings brought by third parties. Such provisions remain in force at the date of this report.

Substantial Shareholdings

At 27 August 2020 the following had notified the Company of disclosable interests in 3% or more of the nominal value of the Company's shares:


Shareholder	Number of shares	% of Issued Capital
Interactive Investor Services Nominees Limited	69,811,575	10.78%
Barclays Direct Investing Nominees Limited	48,605,804	7.51%
Hargreaves Lansdown (Nominees) Limited	45,098,085	6.96%
HSDL Nominees Limited	39,303,408	6.07%
Hargreaves Lansdown (Nominees) Limited	35,002,292	5.41%
Hargreaves Lansdown (Nominees) Limited	33,206,960	5.13%
Interactive Investor Services Nominees Limited	32,132,623	4.96%
Mr Jonathan Fitzpatrick	28,708,641	4.43%
HSBC Client Holdings Nominee (UK) Limited	27,935,032	4.31%
The Bank of New York (Nominee) Limited	24,525,123	3.79%
Pershing Nominee Limited	24,325,395	3.76%
HSDL Nominees Limited	20,886,148	3.23%

Environmental Responsibility

The Company is aware of the potential impact that its investee companies may have on the environment. The Company ensures that it, and its investee companies at a minimum comply with the local regulatory requirements and the revised Equator Principles with regard to the environment.

Supplier Payment Policy

The Company's policy is to agree terms and conditions with suppliers in advance; payment is then made in accordance with the agreement provided the supplier has met the terms and conditions. Suppliers are typically paid within 30 days of issue of invoice.

Employment Policies

The Company will be committed to promoting policies which ensure that high calibre employees are attracted, retained and motivated, to ensure the ongoing success for the business. Employees and those who seek to work within the Company are treated equally regardless of sex, marital status, creed, colour, race or ethnic origin

Political Contributions and Charitable Donations

During the period the Company did not make any political contributions or charitable donations.

Financial Instruments

See Note 23 to the financial statements.

Related Party Transactions

See Note 24 to the financial statements.

Post Reporting Date Events

At the date these financial statements were approved, being 31 August 2020, the Directors were not aware of any significant post balance sheet events other than those set out in the notes to the financial statements.

Annual General Meeting ("AGM")

This report and ﬁnancial statements will be presented to shareholders for their approval at the AGM. The Notice of the AGM will be distributed to shareholders together with the Annual Report.

Health and Safety

The Company's aim will always be to achieve and maintain the highest standard of workplace safety. In order to achieve this objective the Company sets demanding standards for workplace safety and will provide comprehensive training and support to employees.

Auditor

Chapman Davis LLP resigned as auditors to the Company and were replaced by the appointment of PKF Littlejohn LLP as auditors. A resolution to re-appoint the auditor, PKF Littlejohn LLP, will be proposed at the next Annual General Meeting.

Going Concern

The Directors note the losses that the Company has made for the year ended 31 December 2019. The Directors have prepared cash ﬂow forecasts for the period ending 30 September 2021 which take account of the current cost and operational structure of the Company.

The cost structure of the Company comprises a high proportion of discretionary spend and therefore in the event that cash ﬂows become constrained, costs can be quickly reduced to enable the Company to operate within its available funding.

These forecasts demonstrate that the Company has suﬃcient cash funds available to allow it to continue in business for a period of at least twelve months from the date of approval of these ﬁnancial statements. Accordingly, the ﬁnancial statements have been prepared on a going concern basis.

Comments on going concern are included in the Operations report and note 1. The critical assumption in the going concern determination is that the progress on the Ruvuma PSA and the associated development of the Ntoyra natural gas discovery. If additional funding was not available there is a risk that commitments could not be fulfilled, and assets would be relinquished.

Prior year adjustments

Statement of Disclosure to the Auditor

In the case of each person who was a Director at the time this report was approved:

· So far as that Director was aware there was no relevant available information of which the Company's auditor was unaware; and

· That Director had taken all necessary steps to make themselves aware of any relevant audit information, and to establish that the Company's auditors were aware of that information.

Electronic Communication

The maintenance and integrity of the Company's website is the responsibility of the Directors: the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

The Company's website is maintained in accordance with AIM Rule 26.

Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

On behalf of the board

Mr Tom Reynolds

Director

31 August 2020

The Directors are responsible for preparing 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 are required to prepare the Financial Statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgments and accounting estimates that are reasonable and prudent;

· state whether the applicable IFRSs as adopted by the European Union have been followed subject to any material departures disclosed and explained in the financial statements; and

· prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the 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.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

The Company is compliant with AIM Rule 26 regarding the Company's website.

As Chairman of Solo Oil plc, it is my responsibility to ensure that the Board is performing its role effectively and has the capacity and ability, structure and support to enable it to continue to do so.

How we govern the Company

Information on how the Company organises its Corporate Governance is set out below and can also be found on the Company's website www.solooil.co.uk and is, in the opinion of the Board, fully in accordance with the revised requirements of AIM Rule 26.

From September 2018, onwards, all AIM quoted companies are required to set out details of the recognised corporate governance code that the Board of Directors has decided to adopt and provide reasons for any departures where it does not comply with the code. The Company has elected to adopt the 2018 Quoted Companies Alliance Corporate Governance Code for Small and Mid-Sized Companies (the "QCA Code"). The Company intends to adhere to the recommendations of the QCA Code to the extent it considers them appropriate in light of the Company's size, liquidity and capital resources.

The QCA code is constructed around 10 broad principles and a set of disclosures. The QCA has stated what it considers to be appropriate arrangements for growing companies and asks companies to provide an explanation of how they are meeting the principles through the prescribed disclosures. We have considered how we apply each principle to the extent that the Board judges these to be appropriate in the circumstances, and below we provide an explanation of the approach take in relation to each. The Board considers that it does not depart from any of the principles of the QCA Code during the period under review.

2019 and 2020 have seen, amongst others, the following governance developments:

· The Chairman and CEO met with major shareholders and hosted a number conference calls with investors;

· Conducted a full strategy review in Q1 2019;

· Addition of Donald Nicolson to the Board;

· Establishment of the AIM Rules Compliance and Disclosures Committee; and

· Appointment of a CEO and a COO.

Board of Directors

The Board is responsible for the overall governance of the Company. Its responsibilities include setting the strategic direction of the Company, providing leadership to put the strategy into action and to supervise the management of the business.

During 2019, the Solo operated with both a three-member and a four-member Board as changes were made following the exit of the Company's Managing Director in February 2019. Following the exit of the Managing Director the company's Non-Executive Chairman, Alastair Ferguson, assumed the role of Executive Chairman. In October 2019, upon announcing the Company's intention to acquire producing and development gas assets offshore Netherlands, the company announced that Tom Reynolds would step up from his role as a Non-Executive to CEO. At this time Alastair Ferguson returned to his role as Non-Executive Chairman. The Board was further strengthened in November 2019 when it was joined by an Independent Non-Executive Director, Mr Donald Nicolson.

The Board currently comprises three non-executive Directors ('NEDs') and the CEO. Biographies of the Directors are on pages 22. Due to their shareholding in the Company, two of the NEDs are not considered by the Board to be independent. The roles and responsibilities of the Chairman, CEO, Independent Director ('INED') and Company Secretary are set out on the website and summarised below.

The Board has established the corporate governance values of the Company and has overall responsibility for setting the Company's strategic aims, deﬁning the business plan and strategy and managing the ﬁnancial and operational resources of the Company. Overall supervision, acquisition, divestment and other strategic decisions are considered and determined by the Board. The Executive team is supported by the wider team and external service providers as required. The Directors are of the opinion that the Board comprises a suitable balance and that the recommendations of the QCA Code have been implemented to an appropriate level.

The Board, through the Chairman in particular, maintains regular contact with its advisers and public relations consultants in order to ensure that the Board develops an understanding of the views of major shareholders about the Company.

Terms of Reference

The Terms of Reference of all Board Committees are available on the website.

Record of meetings

The Board meets regularly throughout the year. For the period ending 31 December 2019 the Board met 14 times (2018: 10, 2017: 4) in relation to normal operational matters and on an ad hoc basis as required to transact additional business to support the Company's activities.

The Board is responsible for formulating, reviewing and approving the Company's strategy, ﬁnancial activities and operating performance. Day-to-day management is devolved to the Executive Directors' and management who are charged with consulting the Board on all signiﬁcant ﬁnancial and operational matters. All Directors have access to the advice of the Company's solicitors and the Company Secretary necessary information is supplied to the Directors on a timely basis to enable them to discharge their duties eﬀectively and all Directors have access to independent professional advice, at the Company's expense, as and when required.

Internal controls

The Directors acknowledge their responsibility for the Company's systems of internal controls and for reviewing their effectiveness. These internal controls are designed to safeguard the assets of the Company and to ensure the reliability of ﬁnancial information for both internal use and external publication. Whilst they are aware that no system can provide absolute assurance against material misstatement or loss, in light of increased activity and further development of the Company, continuing reviews of internal controls will be undertaken to ensure that they are adequate and eﬀective.

Compliance

The Company has also reviewed the appropriate policies and procedures to ensure compliance with the UK Bribery Act. The Company continues actively to promote good practice throughout the Company and has initiated a rolling programme of anti-bribery and corruption training for all relevant employees and consultants.

QCA Principles

Review of each of the QCA Principles:


Principle 1:
Establish a strategy and business model which promote long-term value for shareholders	Solo Oil plc is a natural resources investment company whose strategy is to acquire a diverse portfolio of direct and indirect interests in attractive production and development opportunities within the European energy market. In 2020, the Board announced its plan to review and augmented its strategy to invest in a broader European energy market strategy targeting attractive growth opportunities predominantly within the European gas and energy transition market whilst maximising value for shareholders from the Company's existing portfolio.

	The Board is seeking opportunities which meet the following criteria:
	·	cash generative, with the potential to re-invest operational cash flow in further growth;
	·	situated within the broad energy space, a market which the Board knows well;
	·	primary targets within the natural gas space, augmented by opportunities which may benefit from low carbon and electrification dynamics;
	·	assets which can attract the necessary investment capital, taking appropriate account of growing investor sentiment towards ESG and SRI indicators; and
	·	assets which deliver stable returns, with lower exposure to global commodity prices.

Principle 2:
Seek to understand and meet shareholder needs and expectations		The Board is committed to maintaining good communication and having constructive dialogue with all its shareholders. The Company has close ongoing relationships with its private shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend, where possible, the Company's Annual General Meeting. Investors also have access to current information on the Company though its website, www.solooil.co.uk, and via Tom Reynolds (CEO) and Doug Rycroft (COO) , who are available to answer investor relations enquiries. The Company in conjunction with its investor relations advisor has developed a Communications Strategy to formalise how shareholder communications are managed.

Principle 3:
Take into account wider stakeholder and social responsibilities and their implications for long-term success		The Board recognises that the long term success of the Company is reliant upon its ability and willingness to engage with the broader range of stakeholders to positively influence the development of the Company and the communities we interact with operationally and corporately. The Board has put in place a range of processes and systems to ensure that there is close oversight and contact with its key resources and relationships. Given that Solo Oil plc is a small company there is close interaction between the Board and Executive Management to help ensure successful two way communication with agreement on goals, targets and aspirations for the Company. Solo Oil plc through its advisers and JV partners has developed close ongoing relationships with a broad range of its stakeholders and provides them with the opportunity to raise issues and provide feedback to the Company.

Principle 4:
Embed effective risk management, considering both opportunities and threats, throughout the organization.		It is critical that Solo Oil plc has a robust view of its risk profile and appetite so as to ensure both its existing and new investments are managed within acceptable margins of risk. The processes are in place to understand the Company's key drivers for success and to be able to assess the associated risks in delivering on its strategy successfully. Given the specialised nature of investing in, and being involved in, the operations of development and production assets in the natural resource sector, it is imperative that the Board considers at all times that it has the appropriate risk management system including both people and processes to successfully mitigate these risks.

		The Board encourages a dynamic and constructuve dialogue between Executive Management, its advisers and the Board including the willingness to challenge assumptions and the consideration of emerging and interrelated risks for its investment portfolio.

		In addition to its other roles and responsibilities, the Audit Committee is responsible to the Board for ensuring that procedures are in place and are being implemented effectively to identify, evaluate and manage the significant risks faced by the Company. The risk assessment matrix below sets out those risks, and identifies the controls that are currently in place. This matrix is updated as changes arise in the nature of risks or the controls that are implemented to mitigate them. The Audit Committee reviews the risk matrix and the effectiveness of scenario testing on a regular basis. The Board has a comprehensive review of the risks every six months and works with Executive Management to understand and agree on the types and format of risk information that the Board requires. In addition the Board periodically assesses the risk oversight processes and ensure suitability with/and alongside its current policies.

		See risk management section which begins on page 27.

	The Board shall review annually the appropriateness and opportunity for continuing professional development whether formal or informal.

	Alastair Ferguson (Non-Executive Chairman)
	Mr Ferguson is a Chartered Engineer and has over 40 years' experience in the oil and gas industry, the last seven of which have been spent in various Chairman and non-executive director positions. Mr Ferguson has considerable commercial management experience and has specific expertise in business development and managing projects in complex political environments.

	Jon Fitzpatrick (Non-Executive Director)
	Mr Fitzpatrick is a qualified corporate lawyer, petroleum economist, investment banker and energy sector adviser. He began his career in 1994 as a research associate at the Centre for Energy, Petroleum, Mineral Law and Policy at the University of Dundee. In 2016, Jon founded his own advisory practice, Gneiss Energy Limited, operating exclusively within the energy and resources sectors.

	Solo Oil plc and Gneiss Energy Limited have an ongoing advisory relationship.

	Donald Nicolson (Independent Non-Executive Director)
	Mr Nicolson is a senior business leader with more than 35 years experience in oil, gas, mining and natural stone sectors. During this time, he has held multiple board roles, executive & non-executive, in both publicly-listed and private companies. Between 2016 and 2019, Mr Nicolson held the role of Chairman and interim CEO for Levantina Natural Stone Co., having previously held Vice Chairman, non-Executive Director and Advisor roles. Mr Nicolson spent more than 26 years with BP Exploration, during which he held roles including Director of BP North Sea, Chief of Staff to BP CEO (E&P), Vice President for BP Alaska and Vice President for BP Canada.

	Tom Reynolds (CEO)
	Mr Reynolds is a Chartered Engineer with over 25 years' experience in the energy sector, including a range of technical and commercial roles with BP plc, Total SA and British Nuclear Fuels plc. He has also held management positions at private equity investment and advisory firms, including 3i plc, and specialises in strategic planning, investment management and cross-border M&A transaction execution in the oil, gas, energy and infrastructure sectors.

Principle 5:
Maintain the Board as a well-functioning, balanced team led by a chair		The Board is currently comprised of four Directors; Alastair Ferguson, Non-Executive Chairman; Jon Fitzpatrick, Non-Executive Director; Donald Nicolson, Independent Non-Executive Director and Tom Reynolds, CEO. Biographical details of the current Directors are set out within Principle Six below.

		The Board notes that the QCA recommends a balance between executive and non-executive Directors and recommends that there be two independent non-executives. At this current time, the Board only comprises one independent non-executive director and therefore the Company diverges in this regard from the QCA Code. As the Company develops, it will keep under review the potential appointment of a further suitably qualified independent non-executive director.

		Executive and Non-Executive Directors are subject to re-election at intervals of no more than three years. The letters of appointment of all Directors are available for inspection at the Company's registered office during normal business hours. The Executive Director is considered to be a full time employee whilst the Non-Executive Directors are considered to be part time but are expected to provide as much time to the Company as is required. The Board elects a Chairman to chair every meeting.

		The Board notes that the QCA recommends that the Chairman's responsibilities should be devolved from the day-to-day running of the business in order to ensure independence. Following the resignation of the former Managing Director in February 2019, Alastair Ferguson temporarily assumed the role of Executive Chairman in order to maintain a balance between executive and non-executive roles on the Board and to ensure the Company has sufficient executive oversight. The appointment of Tom Reynolds as CEO in October 2019 enabled Alastair Ferguson to step back into the role of Non-Executive Chairman.

		The Board meets at least four times per calendar year. It has established an Audit Committee, a Remuneration Committee and an AIM Rules Compliance and Disclosures Committee, which are set out in more detail below. At this stage, the Board does not consider it necessary to establish a separate Nominations Committee. It shall continue to monitor the need to match resources to its operational performance and costs and the matter will be kept under review going forward.

		Attendance at Board and Committee Meetings The Company reports annually on the number of Board meetings held during the year and the attendance record of individual Directors. To date in the current financial year the Directors have a good record of attendance at such meetings. In order to be efficient, the Directors meet formally and informally both in person and by telephone. To date there have been at least quarterly meetings of the Board, and the volume and frequency of such meetings is expected to continue at this rate.

Principle 6:
Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities		The Board currently consists of four Directors. The Company believes that the current balance of skills and experience in the Board as a whole, reflects a very broad range of commercial and professional skills across geographies and industries and all of the Director's have experience in public markets.

		The Board recognises that it currently has a limited diversity and this will form a part of any future recruitment consideration if the Board concludes that replacement or additional directors are required.

	The Board shall review annually the appropriateness and opportunity for continuing professional development whether formal or informal.

	Alastair Ferguson (Non-Executive Chairman)
	Mr Ferguson is a Chartered Engineer and has over 40 years' experience in the oil and gas industry, the last seven of which have been spent in various Chairman and non-executive director positions. Mr Ferguson has considerable commercial management experience and has specific expertise in business development and managing projects in complex political environments.

	Jon Fitzpatrick (Non-Executive Director)
	Mr Fitzpatrick is a qualified corporate lawyer, petroleum economist, investment banker and energy sector adviser. He began his career in 1994 as a research associate at the Centre for Energy, Petroleum, Mineral Law and Policy at the University of Dundee. In 2016, Jon founded his own advisory practice, Gneiss Energy Limited, operating exclusively within the energy and resources sectors.

	Solo Oil plc and Gneiss Energy Limited have an ongoing advisory relationship.

	Donald Nicolson (Independent Non-Executive Director)
	Mr Nicolson is a senior business leader with more than 35 years experience in oil, gas, mining and natural stone sectors. During this time, he has held multiple board roles, executive & non-executive, in both publicly-listed and private companies. Between 2016 and 2019, Mr Nicolson held the role of Chairman and interim CEO for Levantina Natural Stone Co., having previously held Vice Chairman, non-Executive Director and Advisor roles. Mr Nicolson spent more than 26 years with BP Exploration, during which he held roles including Director of BP North Sea, Chief of Staff to BP CEO (E&P), Vice President for BP Alaska and Vice President for BP Canada.

	Tom Reynolds (CEO)
	Mr Reynolds is a Chartered Engineer with over 25 years' experience in the energy sector, including a range of technical and commercial roles with BP plc, Total SA and British Nuclear Fuels plc. He has also held management positions at private equity investment and advisory firms, including 3i plc, and specialises in strategic planning, investment management and cross-border M&A transaction execution in the oil, gas, energy and infrastructure sectors.

Principle 7:
Evaluate Board performance base on clear and relevant objectives, seeking continuous improvement.		Internal evaluation of the Board, the Committees and individual Directors is to be undertaken on an annual basis in the form of peer appraisal and discussions to determine their effectiveness and performance as well as testing the Directors' continued independence. This will be undertaken in conjunction with external advisers as appropriate.

		The results and recommendations that come out of the appraisals for the directors shall identify the key corporate and financial targets that are relevant to each Director and their personal targets in terms of career development and training. Progress against previous targets shall also be assessed where relevant.

Principle 8:
Promote a corporate culture that is based on ethical values and behaviours		The Board is aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that partners, contractors and advisors behave. The corporate governance arrangements that the Board has adopted are designed to ensure that the Company delivers long term value to its shareholders and that shareholders have the opportunity to express their views and expectations for the Company in a manner that encourages open dialogue with the Board.

		A large part of the Company's activities is centred upon what needs to be an open and respectful dialogue with partners, clients and other stakeholders. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company to successfully achieve its corporate objectives. The Board places great import on this aspect of corporate life and seeks to ensure that this flows through all that the Company does.

		The directors consider that at present the Company has an open culture facilitating comprehensive dialogue and feedback and enabling positive and constructive challenge. The Company has adopted a code for Directors' and employees' dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016.

Principle 9:
Maintain governance structures and process that are fit for purpose and support good decision making by the Board		Ultimate authority for all aspects of the Company's activities rests with the Board, the respective responsibilities of the Chairman and Executive Director arising as a consequence of delegation by the Board. The Board has adopted appropriate delegations of authority which set out matters which are reserved to the Board. The Chairman is responsible for the effectiveness of the Board, while management of the Company's business and primary contact with shareholders has been delegated by the Board to the Executive Director.

		Audit Committee
		The Audit Committee is comprised of Donald Nicolson (Chairman) and Alastair Ferguson. This committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported. It receives reports from the Executive Management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Audit Committee shall meet not less than twice in each financial year and it has unrestricted access to the Company's auditors.

Remuneration Committee

The Remuneration Committee is comprised of Alastair Ferguson (Chairman), Jon Fitzpatrick and Donald Nicolson. The Remuneration Committee reviews the performance of the executive directors and employees and makes recommendations to the Board on matters relating to their remuneration and terms of employment. The Remuneration Committee also considers and approves the granting of share options pursuant to the share option plan and the award of shares in lieu of bonuses.

AIM Rules Compliance and Disclosures Committee

The AIM Rules Compliance and Disclosure Committee is responsible for ensuring the Company has at all times sufficient procedures, resources and controls in place to enable compliance with the AIM Rules for Companies and make accurate disclosures to meet its disclosure obligations under MAR. The committee is comprised of Jon Fitzpatrick (Chairman), Donald Nicolson, and Tom Reynolds.

Non-Executive Directors

The Board has adopted guidelines for the appointment of Non-Executive Directors which have been in place and which have been observed throughout the year. These provide for the orderly and constructive succession and rotation of the Chairman and non-executive directors insofar as both the Chairman and non-executive directors will be appointed for an initial term of five years and may, at the Board's discretion believing it to be in the best interests of the Company, be appointed for subsequent terms.

In accordance with the Companies Act 2006, the Board complies with: a duty to act within their powers; to promote the success of the Company; to exercise independent judgement; to exercise reasonable care, skill and diligence; to avoid conflicts of interest; not to accept benefits from third parties and to declare any interest in a proposed transaction or arrangement.

External Representation

The Company has in the past invested in projects and jurisdictions where it believes it has a competitive advantage in providing early stage capital alongside specialist knowledge to realise potential value. In order to ensure the Company has full visibilty and appropriate controls over the projects it has invested in the Company has representative participation in the various operating committees and / or Boards. The detail of which is outlined in the table below;

Asset

Ruvuma PSC - Operating Committee

Kiliwani North Development Licence - Operating Committee

Helium One - Board representation

Principle 10:
Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders		The Board is committed to maintaining good communication and having constructive dialogue with all of its shareholders. The Company has close ongoing relationships with its private shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged, where possible, to attend the Company's Annual General Meeting. As part of the Communications Strategy the Board has engaged investor relations advisers to guide the Company on best practice methods of communicating through digital, print and verbal mediums.

		Investors also have access to current information on the Company though its website and via the Executive Management Team comprising of Tom Reynolds (CEO) and Doug Rycroft (COO), who are available to answer investor relations enquiries. The Company proposes in 2020, subject to the necessary formalities, to move to electronic communications with shareholders.

		The Company shall include, when relevant, in its annual report, any matters of note arising from the three Board committees.

Risk Management

Solo's activities are subject to a range of financial risks including commodity prices, liquidity, exchange rates and loss of operational equipment or wells.

These risks are managed with the oversight and the Audit Committee through ongoing review, considering the operational business and economic circumstance at that time. The primary risk facing the business is that of liquidity.

Activity	Risk	Impact	Control(s)

Financial	Liquidity, market and credit risk	Inability to continue as a going concern	Robust capital management policies and procedures

		Reduction in asset values

	Inappropriate controls and accounting policies	Incorrect reporting of assets	Appropriate authority and investment levels as agreed and delegated by the Board

			Adherence to Statement of Accounting Policies as detailed in financial statements

			Audit Committee

Regulatory adherence	Breach of rules	Censure of withdrawl of listing authorisation	Strong compliance regime instilled at the management, advisory and Board levels of the Company

			Company established an AIM Rules Compliance and Disclosure Committee in 2020

Strategic	Damage to reputation	Inability to secure new capital or investments	Effective communication with shareholders coupled with consistent messaging to potential investees

			Robust compliance and adherence to the Company's ABC Policy

	Inadequate disaster recovery procedures	Loss of key operational and financial data	Secure off-site storage of data

Operational	Significant operational event in JVs	Damage/loss of equipment and injury/death	Review of operator emergency response plans and appropriate contingency plans

	Significant geopolitical event in one of our operating theatres	Loss of operating ability and/or major project delays	Stakeholders engagement plans to ensure visibility in political operating environment

Management	Recruitment and retention of key staff and advisors	Reduction in operating capability	Alignment of company's recruitment and retention objectives to ensure a motivated workforce and a safe working environment

			Balancing salary with longer term incentive and retention plans aligning participants directly to the shareholder experience

Tom Reynolds

Director

Audit Committee Report

Solo's Audit Committee meets at least twice a year and is presently chaired by Donald Nicolson and Alastair Ferguson is the other member of the Committee. Mr Nicolson joined the Board on 11th November 2019 and assumed the role of Audit Committee Chairman. Prior to Nr Nicolson's appointment to the Board, the Audit Committee was chaired by Jon Fitzpatrick.

During the course of 2019 and 2020 the Committee has reviewed:

· Internal financial controls systems and other internal control and risk management systems;

· The statements to be included in the Annual report concerning internal control, risk management and the going concern statement;

· The carrying values of the producing and intangible assets;

· The adequacy and security of the Company's arrangements for its employees and contractors to raise concerns about possible wrongdoing in financial reporting or other matters;

· The procedures for detecting fraud;

· The systems and controls for the prevention of bribery; and

· The need for an internal audit function.

The committee has overseen the relationship with the external auditor, including:

· Approved their remuneration for audit and non-audit services;

· Approved their terms of engagement and the scope of the audit;

· Satisfied itself that there are no relationships between the auditor and the Company which could adversely affect the auditor's independence and objectivity;

· Monitored the auditor's processes for maintaining independence, its compliance with relevant UK law, regulation, other professional requirements and the Ethical Standard, including the guidance on the rotation of audit partner and staff;

· Assessed the qualifications, expertise and resources, and independence of the external auditor and the effectiveness of the external audit process;

· Evaluated the risks to the quality and effectiveness of the financial reporting process in the light of the external auditor's communications with the committee;

· Met with the external auditor without management being present, to discuss the auditor's remit and any issues arising from the audit; and

· Discussed with the external auditor the factors that could affect audit quality and reviewed and approved the annual audit plan, ensuring it is consistent with the scope of the audit engagement, having regard to the seniority, expertise and experience of the audit team.

The committee reviewed the findings of the audit with the external auditor, including:

· A discussion of issues which arose during the audit, including any errors identified during the audit; and the auditor's explanation of how the risks to audit quality were addressed;

· Key accounting and audit judgements;

· The auditor's view of their interactions with senior management;

· A review of any representation letters requested by the external auditor before they were signed by management;

· A review of the management letter and management's response to the auditor's findings and recommendations; and

· A review of the effectiveness of the audit process, including an assessment of the quality of the audit, the handling of key judgements by the auditor, and the auditor's response to questions from the committee.

Donald Nicolson			Jonathan Fitzpatrick
Audit Committee Chair (current)			Audit Committee Chair (1 January to 10 November 2019)

Remuneration Committee Report

Solo's Remuneration Committee reviews the scale and structure of the Executive Directors' remuneration and the terms of their service contracts.

The remuneration and terms and conditions of appointment of the Non-Executive Directors are set by the Board.

Alastair Ferguson chairs the committee and Jon Fitzpatrick is the other member. The Remuneration Committee met twice in the year. Following the reporting period end Donald Nicolson joined the Remuneration Committee in 2020.

In setting the remuneration for the Executive Directors and key staff, the committee compares published remuneration data for other AIM and Main LSE Board oil and gas companies of a similar market capitalisation and seeks to ensure that the remuneration of the Executive Directors is broadly comparable to their peers in other similarly sized organisations.

In 2019:

· There were no changes to remuneration policy, pension rights and any compensation payments; and

· There were no other changes to pay and employment conditions across the Company, and no salary increases.

Alastair Ferguson

Remuneration Committee Chair

AIM Rules Compliance and Disclosures Committee

Solo's AIM Rules Compliance and Disclosures Committee is responsible for ensuring the Company has, at all times, sufficient procedures, resources and controls in place to enable compliance with the AIM Rules for Companies and make accurate disclosures to meet its disclosure obligations under MAR. The committee is comprised of Jon Fitzpatrick (Chairman), Donald Nicolson, and Tom Reynolds.

The Committee was established in 2020 and has been active as part of the process in producing the financial statements. The Committee has established protocols to:

· Ensure that each meeting of the full Board includes discussions of AIM matters, in particular to brief the Board as to issues raised with the Nomad and advice given, as they arise;

· Ensure that the executive Directors are communicating as necessary with the Company's Nomad regarding ongoing compliance with the AIM Rules and in relation to proposed or potential transactions;

· Ensure that advice received from the Nomad is recorded and taken into account;

· Ensure that all announcements made have been verified and approved by the Nomad whose name must be on all material announcements to RNS;

· Ensure that the Nomad is supplied with information on the Company's financial condition on a regular and timely basis and of any other key developments in the Company from time to time;

· Ensure that the Nomad is maintaining regular contact with the Company;

· Circulate to other members of the Board details of any rule changes which are notified to the Chairman of the Committee by the Nomad; and

· Ensure that the executive Directors take into account advice given by the Nomad from time to time.

Jonathan Fitzpatrick

AIM Rules Compliance and Disclosures Committee Chair

Opinion

We have audited the financial statements of Solo Oil Plc (the 'company') for the year ended 31 December 2019 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the 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 their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

In our opinion, the financial statements:

· give a true and fair view of the state of the company's affairs as at 31 December 2019 and of its loss for the year then ended;

· have been properly prepared in accordance with IFRSs as adopted by the European Union; and

· have been prepared in accordance with the requirements 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 are independent of the 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of matter - Covid 19

We draw your attention to note 1 of the financial statements, which describes the company's assessment of the COVID-19 impact on its ability to continue as a going concern. The company have explained that the events arising from the COVID-19 outbreak do not impact its use of the going concern basis of preparation nor do they cast significant doubt about the company's ability to continue as a going concern for a period of at least twelve months from the date when the financial statements are authorised for issue.

Our opinion is not modified in this respect.

Emphasis of matter - Recoverability of receivables

We draw your attention to note 3 of the financial statements, which describes the company's assessment of the recoverability over the receivables of £255k which remains outstanding. The company have explained their assessment over the recoverability within critical accounting estimates and conclude that there is no further impairment due. The financial statements do not include the adjustments that would result if the Company was unable to fully recover the debt,

Our opinion is not modified in this respect.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

· the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

· the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Our application of materiality

Materiality

In planning and performing our audit we applied the concept of materiality. An item is considered material if it could reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified.

We use a different level of materiality ('performance materiality') to determine the extent of our testing for the audit of the financial statements. Performance materiality is set based on the audit materiality as adjusted for the judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the internal control environment.

Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party transactions and directors' remuneration.

We agreed with the Audit Committee to report to it all identified errors in excess of £10,400. Errors below that threshold would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds.

An overview of the scope of our audit

In designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular we looked at areas involving significant accounting estimates and judgements by the Directors in respect of the carrying values of the Company's investments and considered future events that are inherently uncertain., We also addressed the risk of management override of internal controls, including evaluation whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.

Key audit matters

Key audit matters are those matters that, in our professional judgment, 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) 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		How the scope of our audit responded to the key audit matter

Valuation of Intangible Assets
The entity has capitalised deferred exploration and evaluation expenditure. Management are required to ensure that only costs which meet the IFRS criteria of an asset and accord with the company's accounting policy are capitalised. Additionally, in accordance with the requirements of IFRS, management are required to assess whether there is any indication of impairment of these assets. The significance of the intangible non-current assets on the company's statement of financial position and the significant management judgement involved in the determination and the assessment of the carrying values of these assets there is increased risk of material misstatement or that the values will not be recovered due to the inherent uncertainties which exist with oil and gas exploration activities.		Our work in this area included but was not limited to: · Testing an appropriate sample of movement during the year to supporting documentation; · Ensuring the reasonableness of the valuation of intangible assets; · Considering whether there were indications of impairment of the intangible assets such as expiring concessions, licences or rights, projections of declining oil and gas prices and/or declining demand and projections of increased future capital costs or operating costs; · Reviewing management's assessment of the impairment of intangible assets and Challenging their assumptions and estimates used as a basis to value the intangible assets. We will also review the financial statements of the joint operator; and · Reviewing the movement of intangible assets to ensure it is accounted for and disclosed correctly. In forming our opinion on the financial statements, which is not modified, we draw to the users attention to the fact that the latest available financial statement of the Joint Venture Partner and operator, Aminex Plc for the year ended 31 December 2019 makes reference to a material uncertainty on going concern . If Aminex Plc are unable to secure the necessary funds over the next twelve months, or divestment to a related party does not materialise, there may be an impact to the carrying value of investments. The financial statements do not include the adjustments that may be required to the carrying value of these assets.

Valuation and impairment of Investments
The Company held investments with a value of £2.9m as at 31 December 2019. These are valued in accordance with IFRS 13 and the fair value hierarchy; and classified as per IFRS 9. There is the risk that these investments have not been valued in accordance with IFRS 13 and IFRS 9 and require impairment.		Our work in this area included; · Reviewing the valuation methodology for the investment held and ensuring that the carrying values are supported by sufficient and appropriate audit evidence; · Ensuring that all asset types are categorised according to IFRS, including the accounting disclosures ; · Ensuring that Solo Oil Plc has full title to the investments held; · Ensuring that appropriate disclosures surrounding the estimates made in respect of any valuations are included in the financial statements; and · Considering whether the transactions have been accounted for correctly within the financial statements. Our work indicated that the investments are fairly stated in the financial statements.

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information. 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. In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.

Opinions on other matters prescribed by the Companies Act 2006

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.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the 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.

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:

· adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

· the financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

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 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 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.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: http://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 company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Zahir Khaki (Senior Statutory Auditor)

for and on behalf of PKF Littlejohn LLP

Statutory Auditor

15 Westferry Circus, London, E14 4HD

Date: 31/8/2020

		2019			2018
					as restated
	Notes	£000			£000
Revenue from contracts with customers	5	17			-
Administrative expenses	6		(2,558)			(2,048)
Operating expenses		-				(181)



Loss before investment activities	6		(2,541)			(2,229)

Interest income	5	55			-
Finance costs	9		(12)			(50)
Other gains and losses	10		(63)		1,248
Other income	8	-			57



Loss before taxation			(2,561)			(974)

Income tax expense	11	-			-



Loss and total comprehensive income for the year			(2,561)			(974)



Total comprehensive income for the year attributable to equity shareholders of the parent				(2,561)		(974)



Earnings per share (pence)
Basic and diluted	12		(0.41)			(0.19)



The accounting policies and notes on pages 43 to 76 form part of these financial statements.

		31 Dec			31 Dec		1 Jan
		2019			2018		2018
				as restated

	Notes	£000			£000		£000

Non-current assets
Intangible assets	13	15,092			15,119		13,816
Oil & gas properties	14	358			365		365
Investments	15	2,927			2,903		3,226



		18,377			18,387		17,407



Current assets
Financial assets held at FVTPL	16	-			1,523		-
Trade and other receivables	18	1,437			716		1,395
Cash and cash equivalents		1,064			2,999		396



		2,501			5,238		1,791



Total assets		20,878			23,625		19,198



Current liabilities

Trade and other payables	19	365			548		324
Borrowings		-			-		1,080
Provisions	20	184			184		-



		549			732		1,404



Net current assets		1,952			4,506		387



Non-current liabilities

Long term provisions	20	168			171		171



Total liabilities		717			903		1,575



Net assets		20,161			22,722		17,623



Equity

Called up share capital	21	1,264			1,264		785
Share premium account	21	37,316			37,316		31,749
Deferred share capital	21	1,831			1,831		1,831
Share based payments	22	1,135			1,135		1,129
FVOCI reserve		-			-			(693)
Retained earnings			(21,385)			(18,824)		(17,178)



Total equity		20,161			22,722		17,623



The accounting policies and notes on pages 43 to 76 form part of these financial statements.

The financial statements were approved by the board of directors and authorised for issue on 31 August 2020 and are signed on its behalf by:

Mr Tom Reynolds

Director

Company Registration No. 05542880

		Share capital	Share premium account	Revaluation reserve	Equity reserve	Deferred share capital	Share based payments		FVOCI (previously AFS reserve)			Retained earnings			Total
		£000	£000	£000	£000	£000	£000		£000			£000			£000
As restated for the period ended 31 December 2018:

Balance at 1 January 2018		785	31,749	-	-	1,831	1,129				(693)		(17,178)			17,623
Effect of change in accounting policy	30	-	-	-	-	-	-		-			-			-



Balance at 1 January 2018		785	31,749	-	-	1,831	1,129				(693)		(17,178)			17,623

Year ended 31 December 2018 :
Loss and total comprehensive income for the year		-	-	-	-	-	-		-					(1,667)		(1,667)
Issue of share capital		479	5,567	-	-	-	-		-			-			6,046
Share-based payment charge		-	-	-	-	-	27		-			-			27
Transfers		-	-	-	-	-	-		693			-			693
Release of expired share options		-	-	-	-	-		(21)		-		21			-



Balance at 31 December 2018 (as restated)		1,264	37,316	-	-	1,831	1,135		-					(18,824)		22,722



Year ended 31 December 2019:
Loss and total comprehensive income for the year		-	-	-	-	-	-		-					(2,561)		(2,561)



Balance at 31 December 2019		1,264	37,316	-	-	1,831	1,135		-					(21,385)		20,161



On 1 January 2018 (the date of initial application of IFRS 9), the Company's management have assessed that assets previously held under assets held for sale no longer apply. As a result, the remaining value was transferred into retained earnings in the year to 31 December 2018. This is a restatement from the 2018 accounts in which this was written off through profit and loss.

				2019				2018
						as restated
	Notes	£000		£000		£000		£000

Cash flows from operating activities

Cash absorbed by operations	28				(2,514)				(266)
Interest paid					(12)			-



Net cash outflow from operating activities					(2,526)				(266)

Investing activities
Purchase of intangible assets			(147)				(1,341)
Proceeds on disposal of investments		1,668				-
Payments to acquire investments			(854)			-
Increase in loans and receivables			(76)			-
Interest received		-				57



Net cash generated from/(used in) investing activities				591					(1,284)

Financing activities
Proceeds from issue of shares		-				5,431
Share issue costs		-					(311)
Repayment of borrowings		-					(967)



Net cash generated from financing activities				-				4,153



Net (decrease)/increase in cash and cash equivalents					(1,935)			2,603

Cash and cash equivalents at beginning of year				2,999				396



Cash and cash equivalents at end of year				1,064				2,999



The accounting policies and notes on pages 43 to 76 form part of these financial statements.

1 Accounting policies

Company information

Solo Oil plc ("Solo", the "Company") is a public listed company incorporated in England & Wales. The address of its registered office 1 Park Row, Leeds, United Kingdom, LS1 5AB. The Company's ordinary shares are traded on the AIM Market operated by the London Stock Exchange. The financial statements of Solo Oil plc for the year ended 31 December 2019 were authorised for issue by the Board on 31 August 2020 and the statement of financial position is signed on the Board's behalf by Mr Reynolds.

Investing policy

Solo's investing policy is to acquire a diverse portfolio of direct and indirect interests in exploration, development and production oil and gas assets, and any other subsurface gas assets of potential commercial significance, located worldwide but predominantly in the Americas, Europe or Africa.

The Company may invest by way of outright acquisition or by the acquisition of assets, including the intellectual property, of relevant business, partnerships or joint venture arrangements. Such investments may result in the Company acquiring the whole part of a company or project (which in the case of an investment in a company may be private or listed on a stock exchange, and which may be pre-revenue), may constitute a minority stake in the Company or project in question and may take the form of equity, joint venture debt, convertible instruments, license rights, or other financial instruments as the Directors deem appropriate.

Solo intends to be a long-term investor and the Directors will place no minimum or maximum limit on the length of time that any investment may be held.

There is no limit on the number of projects into which the Company may invest, nor the proportion of the Company's gross assets that any investment may represent at any time and the Company will consider possible opportunities anywhere in the world.

All of Solo's assets will be held in its own name, or through wholly owned subsidiaries.

Statement of compliance with IFRS

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. The principal accounting policies adopted by the Company are set out below.

Accounting convention

The financial statements have been prepared on the historical cost basis, except for the measurement to fair value of assets and financial instruments as described in the accounting policies below, and on a going concern basis.

The financial report is presented in Pound Sterling (£) and all values are rounded to the nearest thousand pounds (£'000) unless otherwise stated. The functional currency of the company is also GBP.

1 Accounting policies

Going concern

The Directors noted the losses that the Company has made for the Year Ended 31 December 2019. The Directors have prepared cash flow forecasts for the period ending 30 September 2021 which take account of the current costs and operational structure of the Company.

The cost structure of the Company comprises a high proportion of discretionary spend and therefore in the event that cash flows become constrained, costs can be quickly reduced to enable the Company to operate within its available funding.

These forecasts, demonstrate that the Company has sufficient cash resources available to allow it to continue in business for a period of at least twelve months from the date of approval of these financial statements. Accordingly, the financial statements have been prepared on a going concern basis.

In their assessment of going concern the directors have considered the current and developing impact on the business as a result of the COVID-19 virus and the oil price crash, including revisions where required to budgets and projections. The COVID-19 pandemic has not had a significant, immediate impact on the Company's operations but the Directors are aware that if the current situation becomes prolonged then this may change. Having regard to the above, the directors continue to believe it appropriate to adopt the going concern basis of accounting in preparing the financial statements. The financial statements do not include any adjustments that may result from any significant changes in the assumptions noted above in preparing the financial statements on a going concern basis.

It is the prime responsibility of the Board to ensure the Company remains a going concern. The Company has sufficient funding to meet their debts as they fall due. At 31 December 2019 the Company had cash and cash equivalents of £1,064k and borrowings of £nil. The Company has minimal contractual expenditure commitments and the Board considers the present funds sufficient to maintain the working capital of the Company for a period of at least 12 months from the date of signing in the Annual Report and Financial Statements taking into account the current COVID-19 and oil price environment. For these reasons the Directors adopt the going concern basis in the preparation of the Financial Statements.

Revenue recognition

Revenue is recognised to the extent that the right to consideration is obtained in exchange for performance. Payment received in advance of performance is deferred on the balance sheet as a liability and released as services are performed or products are exchanged as per the agreement with the customer.

Revenue is generated from one main source of income currently. In the current year, revenue is being generated from the Company's Farm-in interests, on an accrued monthly basis, along with associated costs.

Revenue from the production of gas, in which the Company has an interest with other producers, is recognised based on the Company's working interest and the terms of the relevant production sharing contracts. Differences between gas lifted and sold and the Company's share of production are not significant.

Intangible assets

Externally acquired intangible assets comprising deferred exploration and evaluation expenditure are initially recognised at cost in compliance with IFRS 6 "Exploration for an evaluation of mineral resources."

The Company follows the successful efforts method of accounting for exploration and evaluation expenditure. All license, acquisition, exploration and evaluation costs are capitalised in cost centres by area of interest pending determination of the commercial viability of the relevant product.

1 Accounting policies

Impairment of tangible and intangible assets

At each balance sheet date the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If there is such indication then an estimate of the asset's recoverable amount is performed and compared to the carrying amount.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted at their present value. Where the asset does not generate cash flows that are independent from other assets, the Company estimated the recoverable amount of the cash-generating unit to which the asset belongs.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the assets is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a re-valued amount, in which case the impairment loss is treated as a revaluation decrease,

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a re-valued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Fair value measurement

IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The resulting calculations under IFRS 13 affected the principles that the Company uses to assess the fair value, but the assessment of fair value under IFRS 13 has not materially changed the fair values recognised or disclosed. IFRS 13 mainly impacts the disclosures of the Company. It requires specific disclosures about fair value measurements and disclosures of fair values, some of which replace existing disclosure requirements in other standards. There is one financial instrument measured at fair value, details of which can be seen at Note 23.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks.

1 Accounting policies

Financial instruments

Financial assets and financial liabilities are recognised on the balance sheet when the Company has become a party to the contractual provisions of the instrument.

Classification

The company classifies its financial assets and liabilities in the following measurement categories:

· those to be measured subsequently at fair value (either through Other Comprehensive Income or through profit or loss); and

· those to be measured at amortised cost.

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.

Recognition and measurement

A financial instrument is recognised if the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Company's contractual rights to the cash flows from the financial assets expire or if the Company transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e. the date the Company commits itself to purchase or sell the asset.

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss ("FVTPL"), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss.

Subsequent measurement of debt instruments depends on the Company's business model for managing the asset and the cash flow characteristics of the asset. Currently, the Company's financial assets are all held for collection of contractual cash flows, which are solely payments of principal and interest. Accordingly, the Company's financial assets are measured subsequent to initial recognition at amortised cost.

Impairment

On a forward-looking basis, the Company estimates the expected credit losses associated with its receivables and other financial assets carried at amortised cost, and records a loss allowance for these expected losses.

Trade and other receivables

Trade and other receivables outside of normal payment terms accrue interest at a rate determined by the operator and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

Financial liability and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.

Trade and other payables

Trade and other payables are non interest bearing and are stated at their nominal value.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs

1 Accounting policies

Equity reserves

Share capital is determined using the nominal value of shares that have been issued.

The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

The share based payment reserve represents the cumulative amount which has been expensed in the income statement in connection with share based payments, less any amounts transferred to retained earnings on the exercise of share options.

FVOCI reserve represents the market value movement of FVOCI investments.

Retained earnings includes all current and prior period results as disclosed in the income statement.

Taxation

The tax expense represents the sum of the current tax and deferred tax.

Current tax

The current tax is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit not the accounting profit.

Provisions

Provisions are recognised for liabilities of uncertain timings or amounts that have arisen as a result of past transactions and are discounted at a pre-tax rate reflecting current market assessments of the time value of money and the risks specific to the liability.

1 Accounting policies

Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet 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. 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 income statement over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the income statement is charged with the fair value of goods and services received. Equity-settled share-based payments are measured at a fair value at the date of grant except if the value of the service can be reliably established. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest.

Foreign exchange

Transactions in currencies other than Sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in the income statement for the period.

1 Accounting policies

Oil and gas properties and other property, plant and equipment

(i) Initial recognition

Oil and gas properties and other property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses.

The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, the initial estimate of the decommissioning obligation and, for qualifying assets (where relevant), borrowing costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset. The capitalised value of a finance lease is also included within property, plant and equipment.

When a development project moves into the production stage, the capitalisation of certain construction/development costs ceases, and costs are either regarded as part of the cost of inventory or expensed, except for costs which qualify for capitalisation relating to oil and gas property asset additions, improvements or new developments.

(ii) Depreciation/amortisation

Oil and gas properties are depreciated/amortised on a unit-of production basis over the total proved developed and undeveloped reserves of the field concerned, except in the case of assets whose useful life is shorter than the lifetime of the field, in which case the straight-line method is applied. Rights and concessions are depleted on the unit-of-production basis over the total proved developed and undeveloped reserves of the relevant area.

The unit-of production rate calculation for the depreciation/amortisation of field development costs takes into account expenditures incurred to date, together with sanctioned future development expenditure. An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss and other comprehensive income when the asset is derecognised.

The asset's residual values, useful lives and methods of depreciation/amortisation are reviewed at each reporting period and adjusted prospectively.

(iii) Major maintenance, inspection and repairs

Expenditure on major maintenance refits, inspections or repairs comprises the cost of replacement assets or parts of asset, inspection costs and overhaul costs. Where an asset, or part of an asset that was separately depreciated and is now written off is replaced and it is probably that future economic benefits associated with the item will flow to the Company, the expenditure will be capitalised. Where part of the asset replaced was not separately considered as a component and therefore not depreciated separately, the replacement value is used to estimate the carrying amount of the replaced asset(s) and is immediately written off. Inspection costs associated with major maintenance programmes are capitalised and amortised over the period of the next inspection. All other day-to-day repairs and maintenance costs are expensed as incurred.

1 Accounting policies

Provision for rehabilitation / Decommissioning Liability

The Company recognises a decommissioning liability where it has a present legal or constructive obligation as a result of past events, and it is probably that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of obligation can be made.

The obligation generally arises when the asset is installed or the ground/environment is disturbed at the field location. When the liability is initially recognised, the present value of the estimated costs is capitalised by increasing the carrying amount of the related oil and gas assets to the extent that it is incurred by the development/construction of the field. Any decommissioning obligations that arise through the production of inventory are expensed when the inventory item is recognised in cost of goods sold.

Changes in the estimated timing or cost of decommissioning are dealt with prospectively by recording an adjustment to the provision and a corresponding adjustment to oil and gas assets. Any reduction in the decommissioning liability and, therefore, any deduction from the asset to which it relates, may not exceed the carrying amount of that asset. If it does, any excess over the carrying value is taken immediately to the statement of profit or loss and other comprehensive income.

Segmental reporting

A business segment is a group of assets or operations engaged in providing services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing services within a particular economic environment that is subject to different risks and returns from other segments in other economic environments. The company has two segments; corporate head office costs and Tanzania.

Investments

The Company's financial asset investments are classified and measured at fair value, under IFRS 9, with changes in fair value recognised in profit and loss as they arise.

Gains and losses on investments disposed of or identified are included in the net profit or loss for the period.

Investments held by the Company are held for resale. Therefore where the Company's equity stake in an investee company is 20% or more equity accounting for associates is not considered to be appropriate.

Correction of error

In the prior year, there was an error in the presentation of impairment of assets previously held for sale. This resulted in profit for the year being understated by £693k. This has no impact upon equity as it was a transfer between the FVOCI reserve and retained earnings.

There has also been a restatement for a decommissioning provision which should have been recognised relating to obligations for fields in Tanzania. This has no impact on equity as the provision results in an increase in the asset value held under oil and gas properties.

2	Adoption of new and revised standards and changes in accounting policies

	In the current year, the following new and revised Standards and Interpretations have been adopted by the Company. The adoption of these standards has had no impact on the current period however may have an effect on future periods.

	IFRS 9	Prepayment features with negative compensation

	IFRS 16	Leases

	Standards which are in issue but not yet effective

	At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

	IFRS 10 and IAS 28 (Amendments)	Sale of Contribution of Assets between an Investor and Associate or Joint Venture

	IFRS 3 (Amendments)	Definition of a business

	IAS 1 and IAS 8 (Amendments)	Definition of material

	Conceptual Framework	Amendments to References to the Conceptual Framework in IFRS Standards

	The directors do not expect that the adoption of the other Standards listed above will have a material impact on the financial statements of the Company aside from additional disclosures.

3 Critical accounting estimates and judgements

The Company makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Useful lives of intangible assets and property, plant and equipment (note 13)

Intangible assets and property, plant and equipment are amortised or depreciated over their useful lives. Useful lives are based on the management's estimates of the period that the assets will generate revenue, which are based on judgement and experience and periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying value and amounts charged to the income statement in specific periods.

Share-based payments (note 22)

The Company utilised an equity-settled share-based remuneration scheme for employees. Employee services received, and the corresponding increase in equity, are measured by reference to the fair value of the equity instruments at the date of grant, excluding the impact of any non-market vesting conditions. The fair value of share options are estimated by using Black-Scholes valuation method as at the date of grant. The assumptions used in the valuation are described in Note 22 and include, among others, the expected volatility, expected life of the options and number of options expected to vest.

3 Critical accounting estimates and judgements

Deferred taxation (note 11)

Deferred tax assets are recognised when it is judged more likely than not that they will be recovered. Deferred tax assets are currently nil based on the likelihood of recovery.

Hydrocarbon reserve and resource estimates (note 14)

Hydrocarbon reserves are estimates of the amount of hydrocarbons that can be economically and legally extracted from the Company's oil and gas properties. The Company estimates its commercial reserves and resources based on information compiled by appropriately qualified persons relating to the geological and technical data on the size, depth, shape and grade of the hydrocarbon body and suitable production techniques and recovery rates. Commercial reserves are determined using estimates of oil and gas in place, recovery factors and future commodity prices, the latter having an impact on the total amount of recoverable reserves and the proportion of the gross reserves which are attributable to the host government under the terms of the Production-Sharing Agreements. A breakdown of reserves can be found below. Future development costs are estimated using assumptions as to the number of wells required to produce the commercial reserves, the cost of such wells and associated production facilities, and other capital costs. The current long-term gas price assumption used in the estimation of commercial reserves currently held by the Company is US$3/MMTBU. The carrying amount of oil and gas development and production assets at 31 December 2019 is shown in note 14.

The Company estimates and reports hydrocarbon reserves in line with the principles contained in the SPE Petroleum Resources Management Reporting System (PRMS) framework. As the economic assumptions used may change and as additional geological information is obtained during the operation of a field, estimates of recoverable reserves may change. Such changes may impact the Company's financial position and results which include:

· The carrying value of exploration and evaluation assets; oil and gas properties; property and plant and equipment may be affected due to changes in estimated future cash flows

· Depreciation and amortisation charges in the income statement may change where such charges are determined using the Units of Production (UOP) method, or where the useful life of the related assets change

· Provisions for decommissioning may require revision - where changes to the reserve estimates affect expectations about when such activities will occur and the associated cost of these activities.

3	Critical accounting estimates and judgements

	Resource summary - Ntorya Field

						Gross Licence Basis (bcf)
		Licence				1C	2C	3C	Gross Mean unrestricted GIIP
		Mtwara		Development pending		26	81	213
		Mtwara		Development unclarified		324	682	950	1,870
							763
	Resource summary excluding Ntorya Field

					Prospective Resources (bcf)*
					Gross on Licence
		Prospect/Lead			1U	2U	3U	Mean unrisked	Pg %
		Chikumbi Jurassic			399	936	1,798	1,351**	8***
		Namisange			56	235	1,925	1,183	8***
		Likonde updip			39	166	702	444	10***
		Ziwani NW			8	35	153	68	<5***
		Ziwani SW			12	54	236	105	<5***

		*	Assuming development licence is ratified
		**	P50
		***	RPS assessment of PG

3 Critical accounting estimates and judgements

Exploration and evaluation expenditures (note 13)

The application of the Company's accounting policy for exploration and evaluation expenditure requires judgement to determine whether future economic benefits are likely, from either future exploitation or sale, or whether activities have not reached a stage which permits a reasonable assessment of the existence of reserves. The determination of reserves and resources is itself an estimation process that involves varying degrees of uncertainty depending on how the resources are classified. These estimates directly impact when the Company defers exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and assumptions about future events and circumstances, in particular, whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after expenditure is capitalised, information becomes available suggesting that the recovery of the expenditure is unlikely, the relevant capitalised amount is written off in the income statement and in the period when the new information becomes available.

Units of production (UOP) depreciation of oil and gas assets (note 14)

Oil and gas properties are depreciated using the UOP method over total proved development and undeveloped hydrocarbon reserves. This results in a depreciation/amortisation charge proportional to the depletion of the anticipated remaining production from the field.

The life of each item, which is assessed at least annually, has regard to both its physical life limitations and present assessments of economically recoverable reserves of the field at which the asset is located. These calculations require the use of estimates and assumptions, including the amount of recoverable reserves and estimates of future capital expenditure. The calculation of the UOP rate of depreciation/amortisation will be impacted to the extent that actual production in the future is different from current forecast production based on total proved reserves, or future capital expenditure estimates change. Changes to the proved reserves could arise due to changes in the factors or assumptions used in estimating reserves, including:

· The effect on proved reserves of differences between actual commodity prices and commodity price assumptions

· Unforeseen operational issues

Recoverability of oil and gas assets (note 14)

The Company assesses each asset or cash generating unit (CGU) each reporting period to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of the fair value less costs of disposal (VLCD) and value in use (VIU). The assessments require the use of estimates and assumptions such as long-term oil prices (considering current and historical prices, price trends and related factors), discount rates, operating costs, future capital requirements, decommissioning costs, exploration potential reserves (see(a) Hydrocarbon reserves and resource estimates above) and operating performance (which includes production and sales volumes). These estimates and assumptions are subject to risk and uncertainty. Therefore, there is possibility that changes in circumstances will impact these projections, which may impact the recoverable amount of assets and/or CGUs.

Decommissioning provisions (note 20)

There is uncertainty around the cost of decommissioning as cost estimates can vary in response to many factors, including changes to the relevant legal requirements, the emergence of new technology or experience at other assets. The expected timing, work scope and amount and currency mix of expenditure may also change. Therefore, significant estimates and assumptions are made in determining the provision for decommissioning.

The estimated decommissioning costs are reviewed annually by an internal expert from the joint venture partner. Provision for environmental clean-up and remediation costs is based on current legal and contractual requirements, technology and management's estimate of costs with reference to current price levels. Future cost estimates are discounted to present value using a rate that approximates the time value of money, which is currently 5.89%. The discount rate is based on the average yield on Tanzanian Government bonds for foreign currency loans of a duration of more than 10 years.

3 Critical accounting estimates and judgements

Operating segments (note 4)

The Board considers operating segments to be operations in Tanzania and head office costs.

Recoverability of trade receivables (note 18)

The Company considers the recoverability of trade receivables to be a key area of judgement. The Company considers trade receivables to be credit impaired once there is evidence a loss has been incurred. An expected credit loss is calculated on an annual basis. The directors believe that the debtor is still recoverable based on their knowledge of the market in Tanzania and historical evidence of similar receivables being paid.

4 Operating Segments

Based on risks and returned, the directors consider that the primary reporting format is by business segment. The directors consider that there are two business segments:

· Operations on its investments in Tanzania

· Head office support from the UK

In the prior year, the company held investments with companies operating in Canada. These have been disposed of in the current year.



2019	Canada		Tanzania			UK			Total
	£000		£000			£000			£000
Revenue	-		17			-			17
Administrative expenses	-		-					(2,558)		(2,558)
Interest income	-		55			-			55
Finance costs	-				(12)		-				(12)
Other gains and losses		(67)		-		4					(63)
Other income	-		-			-			-



Profit/(Loss) from operations per reportable segment		(67)		60				(2,554)		(2,561)



Additions to non-current assets	-		337			-			337
Reportable segment assets	125		18,639			2,167			20,931
Reportable segment liabilities	-		168			600			768

2018	Canada		Tanzania			UK			Total
	£000		£000			£000			£000
Revenue	-		-			-			-
Administrative expenses	-		-					(2,048)		(2,048)
Operating expenses	-		-					(181)		(181)
Interest income	-		-			-			-
Finance costs	-		-					(50)		(50)
Other gains and losses	-		1,777					(529)		1,248
Other income	-		57			-			57



Profit/(Loss) from operations per reportable segment	-		1,834					(2,808)		(974)

4	Operating Segments

	2018		Canada	Tanzania		UK		Total
			£000	£000		£000		£000

	Additions to non-current assets		-	1,844		-		1,844
	Reportable segment assets		201	18,230		5,249		23,680
	Reportable segment liabilities		-	171		787		958

5		Revenue

					2019		2018
					£000		£000
		Revenue analysed by class of business
		Natural gas sales			17		-



					2019		2018
					£000		£000
		Other significant revenue
		Interest income			55		-



					2019		2018
					£000		£000
		Revenue analysed by geographical market
		Tanzania			17		-



		Contract balances
					2019		2018
					£000		£000

		Trade receivables			283		294
		Accrued income and interest			76		-

5 Revenue

Trade receivables accrued interest for non payment. Outstanding debtors accrue interest at a rate in accordance with the joint venture agreement and are generally on terms of 30 days. In 2019, there is a provision of £28k for expected credit losses on trade receivables.

Interest income relates to interest charged on outstanding invoices.

An operating segment is a distinguishable component of the Company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Company's chief operating decision maker to make decisions about the allocation of resources and assessment of performance and about which discrete financial information is available.

The Company's current revenue from customers is all generated in Tanzania from oil & gas production in accordance with its farm-in/profit sharing agreements, within Tanzania. However this segment is only in its third period of production, and the only major related transactions are the carrying value of the oil & gas properties assets as described in Note 14. This year's revenue from this segment was £17k (2018:£nil). All revenue is recognised at a point in time. In the current year, there was no production, however revenue was recognised as a result of under accrued gas sales relating to 2017.

Subject to further acquisitions, the Company expects to further reviews its segmental information during the forthcoming financial year and update accordingly.

Performance obligations

Under our sales contracts, we are entitled to payment from purchasers once its performance obligations have been satisfied upon delivery of the product, at which point payment is unconditional. Revenues are recorded when production is transported by pipeline or when production is sold to a purchaser at a fixed or determinable price, when delivery has occurred, title has transferred and collectability of the revenue is probable. We record invoiced amounts as "Trade receivables" in the accompanying statement of financial position.

5 Revenue

Interest income relates to interest charged on outstanding invoices.

Subject to further acquisitions, the Company expects to further reviews its segmental information during the forthcoming financial year and update accordingly.

Performance obligations


6	Expenses by Nature
		2019	2018
		£000	£000

	Exchange losses	65	84
	Fees payable to the Company's auditor for the audit of the Company's financial statements	23	14
	Professional, legal and consulting fees	855	820
	AIM related costs including investor relations	246	243
	Costs relating to OneDYAS transaction	653	-
	Accounting related services	196	51
	Travel and subsistence	85	68
	Office and administrative expenses	46	11
	Other expenses	19	9
	Share-based payments	-	27
	Directors remuneration	299	607
	Wages and salaries and other related costs	71	114



		2,558	2,048

7	Employees

	The average number of employees (excluding executive directors) was:

				2019	2018

				-	1



	There was one employee during the year who resigned in March 2019 therefore average employee numbers for the year ended 31 December 2019 was nil.

				2019	2018
				£000	£000
	Their aggregate remuneration comprised :
	Wages and salaries			8	40



	Directors remuneration			299	607



		Salary and fees	Share-based payments	Termination payments	Total
		£000	£000	£000	£000
	Year ended 31 December 2019
	Dan Maling (resigned 7 February 2019)	38	-	-	38
	Jonathan Fitzpatrick	62	-	-	62
	Alastair Ferguson	134	-	-	134
	Tom Reynolds	52	-	-	52
	Don Nicolson (appointed 11 November 2019)	8	-	-	8
	Don Strang (resigned 26 November 2018)	5	-	-	5



		299	-	-	299

7	Employees

		Salary and fees	Share-based payments		Termination payments		Total
		£000	£000		£000		£000
	Year ended 31 December 2018
	Neil Ritson (resigned 6 August 2018)	99	-		-		99
	Don Strang (resigned 26 November 2018)	45	-		-		45
	Dan Maling (resigned 7 February 2019)	220	-		-		220
	Fergus Jenkins (including termination provision)	28	-		62		90
	Jon Fitzpatrick (appointed 2 May 2018)	107	27		-		134
	Alastair Ferguson (appointed 6 August 2018)	19	-		-		19
	Tom Reynolds (appointed 4 December 2018)	-	-		-		-



		518	27		62		607



	No directors received pension contributions in 2019 or 2018.

8	Other income
				2019		2018
				£000		£000

	Other interest income			-		57



	Total other income			-		57



	Finance income represents interest receivable on the loan to Horse Hill Developments Ltd, which was disposed of in 2018.

9	Finance costs
				2019		2018
				£000		£000

	Finance fees			-		50
	Other interest payable			7		-
	Unwinding of discount on provisions			5		-



				12		50

10	Other gains and losses
		2019			2018
		£000			£000

	Gain on disposal of Horse Hill Developments	-			1,777
	Loss on revaluation of shares	-					(529)
	Loss on disposal of shares in Deloro Energy			(67)		-
	Loss on disposal of UKOG Shares			(236)		-
	Gain on disposal of UKOG PEDL 331	240			-



			(63)			1,248



11	Income tax expense
		2019			2018
		£000			£000

	UK corporation tax on profits for the current period	-			-



	Total UK current tax	-			-



	Deferred tax
	Origination and reversal of temporary differences	-			-



		-			-



	Total tax charge	-			-

11		Income tax expense

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

			2019				2018
			£000				£000

		Loss before taxation			(2,561)			(974)



		The reason for the difference between the actual tax charge for the year and the standard rate of corporation tax in the UK applied to profits for the year are as follows:

		Expected tax credit based on a corporation tax rate of 19.00%			(487)			(185)
		Effect of expenses not deductible in determining taxable profit	201						(105)
		Adjustment in respect of prior years	-				23
		Other permanent differences	-						(62)
		Deferred tax not recognised	256				33
		Adjust deferred tax to average rate of 19.00%	30				3
		Adjustments to losses	-				293



		Taxation charge for the year	-				-



		No deferred tax asset has been recognised because there is uncertainty of the timing of suitable future profits against which they can be recovered. The company has losses carried forward of £2,347k (2018: £1,439k).

12	Earnings per share

	The calculation of loss per share is based on the loss after taxation divided by the weighted average number of shares in issue during the year.

				2019				2018
				£000				£000
	Number of shares
	Weighted average number of ordinary shares for basic loss per share (000)			631,704				509,360

	Earnings
	Continuing operations
	Loss for the period from continued operations					(2,561)				(974)

	Earnings per share for continuing operations
	Basic and diluted loss per share (pence)					(0.41)				(0.19)



	As inclusion of the potential ordinary shares would result in a decrease in the loss per share they are considered to be anti-dilutive, as such, a diluted loss per share is not included.

13	Intangible assets
		Exploration and evaluation expenditure
		£000
	Cost
	At 1 January 2018	16,474
	Additions	1,341
	Foreign currency adjustments		(38)



	At 1 January 2019	17,777
	Additions	237
	Disposals		(264)



	At 31 December 2019	17,750



	Impairment
	At 1 January 2018 and 2019	2,658



	Carrying amount
	At 31 December 2019	15,092



	At 31 December 2018	15,119



	The additions to deferred exploration and evaluation expenditure during the period relate mainly to the completion of drilling operations for the Ntorya-2 appraisal and subsequent testing of the well. During the year ended 31 December 2019 the loan to UKOG PEDL 331 was disposed in full and a gain of £240k was recognised on disposal. Following a review of the carrying value and future prospects for Solo's assets no impairment has been recongnised as the carrying value is deemed appropriate based on the future outlook.

14	Oil & Gas properties
		2019		2018
				as restated
		£000		£000
	Cost
	At 1 January 2019	1,124		1,124
	Foreign exchange		(7)		-



	At 31 December 2019	1,117		1,124



	Accumulated depreciation
	At 1 January 2019 and 31 December 2019	759		759



	Carrying value
	At 31 December 2019	358		365



	At 31 December 2018	365		194



	The Oil & Gas properties comprise the 8.29% participating interest in the Kiliwani North Development Licence, in Tanzania. A decommissioning provision has been recognised in 2018 for future liabilities relating to oil and gas properties. This future obligation is denominated in USD therefore there has been a foreign exchange on this in 2019. Accumulated amortisation has been calculated on a units of production basis. As there was no production during 2019, the amortisation charge for the year is nil (2018: £nil). Impairment Review The Directors have carried out an impairment review as at 31 December 2019, and determined that an impairment charge is not currently required. The Directors based this assessment on continuing operational work schedules that are ongoing to improve operational efficiencies and production.

15	Investments - unquoted equity investments

		£000
	Cost
	At 31 December 2017	4,377
	Additions	277
	Disposals		(600)



	At 31 December 2018	4,054
	Additions	100
	Disposals		(1,227)



	At 31 December 2019	2,927



	Impairment
	At 31 December 2017	1,151
	Charge in the period	-
	Disposals	-



	At 31 December 2018	1,151
	Charge in the period	-
	Disposals		(1,151)



	At 31 December 2019	-



	Net book value
	At 31 December 2019	2,927
	At 31 December 2018	2,903



	The investments in the current year relate to an equity investment held in Helium One Ltd, a company incorporated in the British Virgin Islands. Their subsidiaries hold helium mining licences across Tanzania. The balance of the investment at December 2019 relates to the investment in Helium One. During 2019 Solo Oil PLC paid supplier invoices on behalf of Helium One totalling £100k. This was considered an addition to the value of the investment in Helium One. On 8 October 2019 the investment in Burj Africa was disposed for a consideration of £1. This investment was fully impaired at the date of disposal and at 31 December 2018. On 9 December 2019 the investment in Petroteq shares (formerly Deloro Energy) was disposed for a consideration of £9k. This investment was held at £76k and a loss on disposal of £67k was recognised.

16	Financial assets held at FVTPL

			2019			2018
			£000			£000
	Investments held for resale		-			1,523



	In the prior year, the company disposed of its entire 15% interest in Horse Hill Developments Limited ("HHDL") to UK Oil and Gas plc ("UKOG") for a total cash consideration of £4.5 million together with a simultaneous purchase of 234,042,221 new ordinary shares in UKOG equivalent to a 4.2% interest in UKOG at the time of the transaction. At the end of 2018, 106,842,221 shares were held as a Level 1 quoted investment. Subsequently, the company received 17,989,326 shares on disposal of the UKOG PEDL 331 interest. All of these were sold during 2019 for a loss of £236k as seen in Note 10.

17	Subsidiary company

	The only subsidiary of Solo Oil Plc is Scirocco Energy International Limited a wholly-owned, UK incorporated micro-entity, which is dormant, and has been since incorporation with an issued share capital of £1. The registered office of the subsidiary is 1 Park Row, Leeds, United Kingdom, LS1 5AB. The subsidiary has not been consolidated into these accounts as it does not have a material impact on Solo Oil Plc as it is dormant.

18		Trade and other receivables

				2019			2018
				£000			£000

		Trade receivables		283			294
		Provision for bad and doubtful debts (note 23)			(28)			-



				255			294

		Other receivables		774			300
		VAT recoverable		122			-
		Loan to Helium One Ltd		76			100
		Prepayments		210			22



				1,437			716



		The directors consider that the carrying amount of trade and other receivables approximates to their fair value. In 2018, Solo Oil PLC paid supplier invoices on behalf of Helium One totalling £100k. This was a debtor at the end of 2018. In 2019, this has been reclassified and is now considered an addition to the value of the investment in Helium One. On 1 March 2019 the Company subscribed to USD $1,000,000 convertible loan notes from Helium One Limited for USD $100,000. In accordance with the terms of the agreement, a redemption note can be issued with five days notice. This currently has a carrying value of £76,000.

19	Trade and other payables
		2019	2018
		£000	£000

	Trade payables	193	171
	Accruals	167	93
	Other payables	5	284



		365	548



	The directors consider that the carrying amount of trade payables approximates to their fair value.

20	Provisions for liabilities
			2019		2018
					as restated
			£000		£000

	PAYE Settlement		184		184
	Decommissioning Provision		168		171



			352		355



	Analysis of provisions
	Provisions are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

	Current liabilities		184		184
	Non-current liabilities		168		171



			352		355



	Movements on provisions:	PAYE Settlement	Decom Provision		Total
		£000	£000		£000

	At 1 January 2019	184	171		355
	Unwinding of discount	-	5		5
	Adjustment for change in discount rate	-		(1)		(1)
	Exchange difference	-		(7)		(7)
	Other	-	-		-



	At 31 December 2019	184	168		352



	The PAYE settlement provision relates to the amounts owed by Daniel Maling, former Managing Director for the PAYE on the share settled transactions.

20		Provisions for liabilities

		Decommissioning costs are expected to be incurred over the remaining lives of the wells, which are estimated to end between 2036 and 2042. the provision for decommissioning is reviewed annually and at 31 December 2018 and 2019 relates to wells in Tanzania. The provision has been calculated assuming industry established oilfield decommissioning techniques and technology at current prices which are discounted at 5.89% per annum.

21	Share capital
					Number of shares	Nominal value

						£000
a)	Called up, allotted, issued and fully paid: Ordinary shares of 0.2 p each

	As at 31 December 2018 and 2019				631,704,118	1,264



					2019	2018
					£000	£000
b)	Deferred shares
	Deferred shares of 265,324,634 at 0.69 pence each				1,831	1,831



c)	Total Share options in issue
	During the year no options were granted (2018:nil).

	As at 31 December 2019, the unexercised options in issue were restated as:

	Exercise Price (original)		Amended	Expiry Date	Amended	Original Options in Issue
						31 December 2019
	0.5p		10p	31 December 2020	10,200,000	204,000,000
	0.5p		10p	31 December 2020	3,425,000	68,500,000
	0.3p		6p	31 December 2020	5,000,000	100,000,000
	0.35p		7p	31 October 2021	10,625,000	212,500,000



					29,250,000	585,000,000



d)	Total warrants in issue
	No warrants lapsed in the year and no warrants were issued, cancelled or exercised during the year (2018: 1,597,658).

	As at 31 December 2019 there were 3,547,129 at 2.25p outstanding (31 December 2018: 3,547,129 at 2.25p).

22	Share based payment

	The Company used the Black-Scholes model to determine the value of the options and the inputs. There were no share options for the year ended 31 December 2019. The value of the options and the inputs for the year ended 31 December 2018 were as follows:

		Issue 12/02/2018
	Share price at grant (pence)	0.032
	Fair Value at grant (pence)	0.0109
	Expected volatility (%)	82.2%
	Expected life (years)	3 years
	Risk free rate (%)	0.61%
	Expected dividends (pence)	nil

	Expected volatility was determined by using the Company's share price for the preceding 12 months.

	The total share-based payment expense in the year for the Company was £nil in relation to issue of options (2018: £27,000) and £nil finance charges in relation to warrants (2018: £nil).

	Employee Benefit Trust

	The Company established on 7 December 2012, an employee benefit trust called the Solo Oil Employee Benefit Trust ("EBT") to implement the use of the Company's existing share incentive plan over 5% of the Company's issued share capital from time to time in as efficient a manner as possible for the beneficiaries of that plan. The EBT is a discretionary trust for the benefit of directors and employees of the Company and its subsidiaries.

	No further subscriptions for shares in the Company has been made by the EBT during the years ended 31 December 2019 and 2018.

23	Financial instruments

	Categories of financial instruments
	The following table combines information about: · Classes of financial instruments based on their nature and characteristics; and · The carrying amounts of financial instruments.

			2019	2018
			£000	£000
	Financial assets at amortised cost
	Trade receivables		255	294
	Other debtors		774	300
	Prepayments and accrued income		210	22
	Current Loans - Helium One		-	100
	Cash and cash equivalents		1,064	2,999



			2,303	3,715

23	Financial instruments

		Book Value	Fair Value	Book Value	Fair Value
		2019	2019	2018	2018
		£000	£000	£000	£000
	Financial assets at fair value
	Non-current Investment - Helium One	2,927	2,927	-	-
	Current Loans - Helium One	76	76	-	-



		3,003	3,003	-	-



				2019	2018
				£000	£000
	Financial liabilities at amortised cost
	Trade payables			193	171
	Accruals and deferred income			167	93



				359	264



	The table below analyses financial instruments carried at fair value, by valuation method. 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). The fair values for the Company's assets and liabilities are not materially different from their carrying values in the financial statements. The following table presents the Company's financial assets that are measured at fair value:

		Level 1	Level 2	Level 3	Total
		£000	£000	£000	£000

	Non-current Investment - Helium One	-	-	2,927	2,927
	Current Loans - Helium One	-	-	76	76



	The Company does not have any liabilities measured at fair value. There have been no transfers in to or transfers out of fair value hierarchy levels in the period.

	Financial instruments in level 1
	The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the Company is the current bid price. No investments are valued using level 1 inputs in the period.

23 Financial instruments

Financial instruments in level 2

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. No investments are valued using level 2 inputs in the period.

Financial instruments in level 3

If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. Following the guidance of IFRS 9, these financial instruments have been assessed to determine the fair value of the instrument. In their assessment, the Directors have considered both external and internal indicators to decide whether an impairment charge must be made or whether there needs to be a fair value uplift on the instrument. Instruments included in Level 3 comprise of convertible loan notes held with Helium One. Details of this can be found at Note 18.

The carrying value of the Company's financial assets and liabilities measured at amortised cost are approximately equal to their fair value.

The Company is exposed through its operations to one or more of the following financial risk:

· Fair value or cash flow interest rate risk

· Foreign currency risk

· Liquidity risk

· Credit risk

· Market risk

· Expected credit losses

Policy for managing these risks is set by the Board. The policy for each of the above risks is described in more detail below.

Fair value and cashflow interest rate risk

Generally the Company has a policy of holding debt at a floating rate. The directors will revisit the appropriateness of this policy should the Company's operations change in size or nature. Operations are not permitted to borrow long-term from external sources locally.

Foreign currency risk

Foreign exchange risk arises because the Company has operations located in various parts of the world whose functional currency is not the same as the functional currency in which the Company's investments are operating. The Company's net assets are exposed to currency risk giving rise to gains or losses on retranslation into sterling. Only in exceptional circumstances will the Company consider hedging its net investments in overseas operations as generally it does not consider that the reduction in volatility in net assets warrants the cash flow risk created from such hedging techniques.

23 Financial instruments

The Company's exposure to foreign currency risk at the end of the reporting period is summarised below. All amounts are presented in GBP equivalent.

23	Financial instruments

	The Company's exposure to foreign currency risk at the end of the reporting period is summarised below. All amounts are presented in GBP equivalent.

		2019		2019		2018			2018
						as restated			as restated
		£000		£000		£000			£000
		USD		EUR		USD			EUR
	Trade and other receivables	283		659		294			-
	Cash and cash equivalents	94		-		204			-
	Trade and other payables		(41)		-	-			-
	Provisions		(352)		-			(355)



	Net exposure	117		659		273			-



	Sensitivity analysis
	As shown in the table above, the Company is primarily exposed to changes in the GBP:USD exchange rate through its cash balance held in USD and trading balances and to changes in the GBP:EUR exchange rate due to the deposit denominated in EUR. The table below shows the impact in GBP on pre-tax profit and loss of a 10% increase/decrease in the GBP to USD exchange rate, holding all other variables constant. Also shown is the impact of a 10% increase/decrease in the GBP to EUR exchange rate, being the other primary currency exposure.

						2019			2018
									as restated
						£000			£000
	GBP:USD exchange rate increases 10%					11			25
	GBP:USD exchange rate decreases 10%						(13)			(30)
	GBP: EUR exchange rate increases 10%					60			-
	GBP: EUR exchange rate decreases 10%						(73)			-



	Liquidity risk
	The liquidity risk of each entity is managed centrally by the treasury function. Each operation has a facility with treasury, the amount of the facility being based on budgets. The budgets are set locally and agreed by the board annually in advance, enabling the cash requirements to be anticipated. Where facilities of entities need to be increased, approval must be sought from the finance director. Where the amount of the facility is above a certain level agreement of the board is needed.

	All surplus cash is held centrally to maximise the returns on deposits through economies of scale. The type of cash instrument used and its maturity date will depend on the forecast cash requirements.

	The table below analyses the company's financial liabilities into relevant maturity groupings based on their contractual maturities. The amounts presented are the undiscounted cash flows.

23	Financial instruments

		Less than 6 months	6 to 12 months	Between 1 and 2 years	Between 2 and 5 years
		£000	£000	£000	£000
	31 December 2019
	Trade and other payables	365	-	-	-
	Provisions	-	184	-	-



	Total	365	184	-	-



	31 December 2018
	Trade and other payables	548	-	-	-
	Provisions	-	-	184	-



	Total	548	-	184	-

Credit risk

The Company is mainly exposed to credit risk from credit sales. It is Company policy, implemented locally, to access the credit risk of new customers before entering contracts. Such credit ratings are taken into account by local business practices.

The Company does not enter into complex derivatives to manage credit risk, although in certain isolated cases may take steps to mitigate such risks if it is sufficiently concentrated.

Market risk

As the Company is now investing in listed companies, the market risk will be that of finding suitable investments for the Company to invest in and the returns that those investments will return given the markets that in which investments are made.

Expected credit losses

Allowances are recognised as required under the IFRS 9 impairment model and continue to be carried until there are indicators that there is no reasonable expectation of recovery.

For trade and other receivables which do not contain a significant financing component, the Company applies the simplified approach. This approach requires the allowance for expected credit losses to be recognised at an amount equal to lifetime expected credit losses. For other debt financial assets the Company applies the general approach to providing for expected credit losses as prescribed by IFRS 9, which permits for the recognition of an allowance for the estimated expected loss resulting from default in the subsequent 12-month period. Exposure to credit loss is monitored on a continual basis and, where material, the allowance for expected credit losses is adjusted to reflect the risk of default during the lifetime of the financial asset should a significant change in credit risk be identified.

The majority of the Company's financial assets are expected to have a low risk of default. A review of the historical occurrence of credit losses indicates that credit losses are insignificant due to the size of the Company's clients and the nature of the services provided. The outlook for the oil and gas industry is not expected to result in a significant change in the Company's exposure to credit losses. As lifetime expected credit losses are not expected to be significant the Company has opted not to adopt the practical expedient available under IFRS 9 to utilise a provision matrix for the recognition of lifetime expected credit losses on trade receivables. Allowances are calculated on a case-by-case basis based on the credit risk applicable to individual counterparties.

23 Financial instruments

Exposure to credit risk is continually monitored in order to identify financial assets which experience a significant change in credit risk. In assessing for significant changes in credit risk the Company makes use of operational simplifications permitted by IFRS 9. The Company considers a financial asset to have low credit risk if the asset has a low risk of default; the counterparty has a strong capacity to meet its contractual cash flow obligations in the near term; and no adverse changes in economic or business conditions have been identified which in the longer term may, but will not necessarily, reduce the ability of the counterparty to fulfil its contractual cash flow obligations. Where a financial asset becomes more than 30 days past its due date additional procedures are performed to determine the reasons for non-payment in order to identify if a change in the exposure to credit risk has occurred.

Should a significant change in the exposure to credit risk be identified the allowance for expected credit losses is increased to reflect the risk of expected default in the lifetime of the financial asset. The Company continually monitors for indications that a financial asset has become credit impaired with an allowance for credit impairment recognised when the loss is incurred. Where a financial asset becomes more than 90 days past its due date additional procedures are performed to determine the reasons for non-payment in order to identify if the asset has become credit impaired.

The Company considers an asset to be credit impaired once there is evidence that a loss has been incurred. In addition to recognising an allowance for expected credit loss, the Company monitors for the occurrence of events that have a detrimental impact on the recoverability of financial assets. Evidence of credit impairment includes, but is not limited to, indications of significant financial difficulty of the counterparty, a breach of contract or failure to adhere to payment terms, bankruptcy or financial reorganisation of a counterparty or the disappearance of an active market for the financial asset.

A financial asset is only written off when there is no reasonable expectation of recovery.

A provision matrix can be used based on historical data of default rates adjusted for a forward looking estimate. The history of default rates needs to be accessed in conjunction with the aging of the trade receivable balance. The aging of a balance alone does not require a provision but can be used as a structure to apply the rates calculated. The historical default rates are used in accordance with forward looking information. From a commercial perspective the TPDC has continued to delay settlement of the trade receivables balance based on requests from the TPDC to Aminex for payments of certain amounts which they wish to offset against the trade receivables. Until this issue is resolved there will be no payment of the invoices and as such an ECL is required to be recognised.

In order to determine the amount of ECL to be recognised in the financial statements, Solo is using a provision matrix based on its historical observed default rates which is adjusted for forward-looking estimates and establishes that ECL should be calculated as:

Non-past due	0.5% of carrying value
30 days past due	2% of carrying value
31-60 past due	4% of carrying value
61-90 past due	6% of carrying value
More than 90 days past due	10% of carrying value

The simplified approach enables Solo to make an estimate of ECL as they are unable to track the credit worthiness of customers. The matrix above reflects the best estimate of the directors that the claim by TPDC will be successful and is the lifetime credit loss expected.

The total outstanding amount is £283k at 31 December 2019 which is all over 90 days past due resulting in an ECL of £28k in the current year.

24	Related party transactions

	The Company had the following amounts outstanding from its investee companies (Note 18) at 31 December:

			2019		2018
			£000		£000
	Helium One		76		100



	There were no transactions between the parent and its dormant subsidiary, which are related parties, during the year. Details of director's remuneration, being key personnel, are given in Note 7.

	The Company entered into transactions with the following related parties who have common directors during the current year:

			2019		2018
			£000		£000
	NR Global Consulting Ltd - provision of management services - common director Neil Ritson			(14)		44
	Gneiss Energy Limited - provision of corporate finance advisory - common director Jonathan Fitzpatrick		538		763
	Quixote Advisors Ltd - provision of management services - common director Tom Reynolds		53		-

25		Ultimate controlling party

		In the opinion of the directors there is no controlling party.

26	Commitments

	As at 31 December 2019, the Company had no material commitments (2018: £nil).

27	Retirement benefit scheme

	The Company operates only the basic pension plan required under UK legislation, contributions thereto during the year amounted to £nil (2018: £1,000).

28	Cash generated from operations
		2019			2018
		£000			£000

	Loss for the year after tax			(2,561)		(974)

	Adjustments for:
	Finance costs	12			41
	Investment income	-					(57)
	Loss on disposal of investments	236			-
	Other gains and losses	-			511
	Equity settled share based payment expense	-			27
	(Decrease)/increase in provisions			(3)		355

	Movements in working capital:
	Decrease/(increase) in trade and other receivables	107					(13)
	Decrease in trade and other payables		(305)			(156)



	Cash absorbed by operations			(2,514)		(266)

29 Post balance sheet event

Covid-19

In December 2019, a novel strain of coronavirus ("COVID-19") surfaced in China and has spread around the world resulting in worldwide business and social disruption. This has resulted in a drop in oil prices. The assets which the Company holds are currently not operational therefore they have not felt a strong impact of the COVID-19 pandemic, however the Board are aware that this may impact the valuation of the assets held and potential target companies.

Sale of Tanzanian Assets

The Board announced on the 2nd of March that the most appropriate course of action regarding Tanzanian assets is to run a formal process to explore value realisation options for the assets including, but not limited to, the sale of Solo's interests in the certain, or all, of its Tanzanian assets. In particular, the Board is confident in the inherent value of its 25% interest in the Ruvuma asset and will consider reasonable offers that reflect the quality of the asset and its significant upside potential. A formal dataroom has been established and the formal process was begun in March.

30	Prior period adjustment

	Changes to the statement of financial position
		At 31 December 2018

		Previously reported		Adjustment		As restated
		£000		£000		£000
	Fixed assets
	Investment properties	194		171		365
	Provisions for liabilities
	Other provisions		(184)		(171)		(355)
	Net assets	22,006		-		22,006

30	Prior period adjustment

		At 31 December 2018
		Previously reported			Adjustment			As restated

	Capital and reserves
	Total equity	22,722			-			22,722



	Changes to the income statement
		Period ended 31 December 2018

		Previously reported			Adjustment			As restated
		£000			£000			£000

	Revenue	1,758					(1,758)		-
	Cost of sales		(2,442)			2,442		-
	Administrative expenses		(2,750)			702		(2,048)
	Other operating income	2,461					(2,461)		-
	Finance costs		(41)			(9)			(50)
	Other gains and losses		(529)			1,777		1,248
	Loss for the financial period		(1,667)			693		(974)



	Reconciliation of changes in loss for the previous financial period
								2018
				Notes				£000

	Loss as previously reported								(1,667)

	Adjustments to prior year
	Removal of impairment charge							693



	Loss as adjusted								(974)

Notes to reconciliation

There has been a restatement to the 2018 accounts. This is as a result of reviewing the activities which the directors class as revenue generating. As a result, a number of gains on investment have been moved as post operating profit activities, while these were previously classed as revenue. Foreign exchanges gains and losses have also been consolidated to report these fully through administration expenses.

On 1 January 2018 (the date of initial application of IFRS 9), the Company's management have assessed that assets previously held under assets held for sale no longer apply. As a result, the remaining value was transferred into retained earnings in the year to 31 December 2018. This is a restatement from the 2018 accounts in which this was written off through profit and loss.

There has also been the recognition of a decommissioning provision previously not recognised. This has increased assets and liabilities by £171,000.

These restatements have no overall impact on the equity as reported at 31 December 2018.

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Scirocco Energy (SCIR)

Wednesday, 11th December 2024

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