28th Apr 2011 07:00
Afren plc (AFR LN)
Annual Financial Report and Notice of General Meeting
London 28 April 2011 - Following the release on 29 March 2011 of Afren plc's ("Afren" or the "Company") preliminary full year results for the year ended 31 December 2010 (the "Preliminary Announcement"), the Company announces it has published its Annual Report and Accounts for 2010 (the "Annual Report and Accounts").
The Company's 2011 Annual General Meeting will be held at the offices of White & Case LLP, 5 Old Broad Street, London, EC2N 1DW on Monday 6 June 2011 at 11.00 am. Copies of the Annual Report and Accounts and the Notice of the Annual General Meeting 2011 are available to view on the Company's website at www.afren.com.
In accordance with Disclosure and Transparency Rule 6.3.5(2) (b) additional information is set out in the appendices to this announcement. The Preliminary Announcement included a set of condensed financial statements and a fair review of the development and performance of the business and the position of the Company and the Group.
Pursuant to Listing Rule 9.6.1, two copies of each of the Annual Report and Accounts, the Notice of the Company's 2011 Annual General Meeting and the form of proxy in relation to the 2011 Annual General Meeting are being submitted to the UK Listing Authority. These documents will be available for inspection at the Document Viewing Facilities of the UK Listing Authority which is situated at offices of the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.
For further information contact: | ||
Afren plc | +44 20 7451 9700 | |
Osman Shahenshah | ||
Galib Virani | ||
Pelham Bell Pottinger |
+44 20 7861 3232 | |
James Henderson | ||
Mark Antelme | ||
Finsbury |
+44 20 7251 3801 | |
Roland Rudd | ||
Andrew Mitchell | ||
Notes to Editors
Afren is an African focused independent oil and gas exploration and production company listed on the main market of the London Stock Exchange and constituent of the Financial Times Stock Exchange Index of the leading 250 UK listed companies. Afren has a portfolio of 29 assets across 11 countries spanning the full cycle E&P value chain. Afren is currently producing from its assets offshore Nigeria and Côte d'Ivoire. Afren has exploration interests in Ghana, Nigeria, Côte d'Ivoire, Congo Brazzaville, the Joint Development Zone of Nigeria - São Tomé & Príncipe, Kenya, Ethiopia, Madagascar, Seychelles, Tanzania and South Africa.
For further information please refer to www.afren.com.
Appendix A: Directors' Responsibility Statement
The following Directors' Responsibility Statement is extracted from page 83 of the Annual Report and Accounts.
Directors' Responsibility Statement
I confirm to the best of my knowledge:
1. The financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
2. The management report, which is incorporated into the Directors' Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
By order of the Board
Osman Shahenshah
Chief Executive Officer
29 March 2011
Appendix B: Principal Risks and Uncertainties
The following description of principal risks and uncertainties is extracted from pages 42 and 43 of the Annual Report and Accounts.
Principal Risks and Uncertainties
The Group's overall strategy to risk management is to employ suitably skilled personnel, implement appropriate policies and procedures and maintain a balanced portfolio of assets. We have an established Risk Management System, that adheres to best practice as set out in international standard ISO 310000 and the UK government's Orange book.
The risks we face have evolved over the course of the year as the business has grown and external factors have impacted the environment in which we operate. Responsibility for reviewing the system of Risk Management rests with the Audit Committee of the Board which has reviewed and approved the corporate risk matrix and the measures that are being taken to mitigate the most significant risks.
The principal risks faced by Afren during 2010 related to operational risks involving the delivery of the Ebok project and Okoro and
CI-11 production targets, political risks related to the situation in Nigeria and Côte d'Ivoire and strategic risks associated with the growth of the organisation and the economic climate.
Our assessment and management of the most significant risks and uncertainties which could impact the Company's long-term performance is outlined in the following table. These risks are not set out in any order or priority and they do not comprise all the risks and uncertainties we face.
Key risk | Detail | How do we manage it? |
Field delivery risk | Operating in environments with operational risk which can cause delays, cost overruns, and ultimately lower than expected reserves. | Afren Nigeria review the project delivery programme against plan and take actions and develop new courses of action based on findings on a monthly basis.
The finance function monitor costs against budgets to identify potential overruns.
Our engineers analyse results from appraisal and development wells and determine the appropriate course of action in terms of drilling programme and facility design. |
Exploration risk | Exploration activities can be capital intensive and may involve a high degree of risk. | Budgets are produced by an experienced drilling team and regular peer reviews to capture best practice are performed.
Risk is managed using a portfolio approach, including the use of techniques such as farm downs.
Exploration programme is approved by the Board. |
Côte d'Ivoire and Nigeria country risk | Political instability in this developing economy could result in the loss of the business. | Ongoing monitoring and close liaison on the ground to monitor the situation from an Afren safety and security basis.
Contingency plans in place. |
Environmental / safety incidents | Major pollution arising from operations and/or significant loss of life due to systems or equipment failure. | We adopt best practice in the industry with on-site, country level and corporate level policies and procedures.
Recognised potential implications of recent Gulf of Mexico events.
Contingency plans in place. |
Management of growth / governance | Management of transition from an AIM listed to a Main Market listed company.
Ensuring the design and operation of controls is appropriate for its scale and size. | The board keeps internal controls and processes under constant review and takes steps to implement appropriate changes in the organisation.
The recruitment of an experienced Group Finance Director who has taken other businesses through the growth curve.
We have remuneration and training plans in place to attract and retain key people. |
Security incidents | Operating in regions where kidnapping, piracy and community unrest are commonplace. | Following the recent incident in Nigeria our procedures to deal with this type of incident have been reviewed and the security arrangements at both Ebok and Okoro facilities have been upgraded.
We would anticipate that this type of incident would continue to be a risk and as a consequence our procedures are robust and under constant review. |
Unfulfilled PSC work obligations | Loss of production interest or exploration licence due to incomplete fulfilment of PSC obligations. | The operations, finance and legal functions jointly monitor compliance with licence obligations.
Maintenance of good open working relationships with local governments in the countries of operation. |
Oil prices | Oil prices have fluctuated significantly over the past three years and given the current environment are expected to continue to fluctuate in the short term. | The policy of the group is to protect its minimum cash flow requirements in the context of a sustained downturn in oil prices.
The group strategy to manage oil price risk is to hedge between 20-30% of the production curve by using financial instruments which allow the group to protect the downside risk. |
Loss of key employees | Loss of knowledge and skills to the group in particular in countries of operation. | Succession planning is considered on a group wide basis, taking into account the development of the executive and senior management.
Remuneration policies are designed to incentivise, motivate and retain key employees. |
Taxation and other legislation changes | Operating in developing countries has additional risk of significant changes in taxation legislation on oil field profits or other legislation changes. | Our financial and legal teams monitor current legislation and proposed changes and incorporate these into our working practices.
Maintenance of good open working relationships with local authorities in the countries of operation. |
Treasury management | The availability of financing to maintain the ongoing operations of the business is key. | In 2011, the group issued a bond for $500 million, expects strong operating cashflow in 2011, has secured financing for Ebok field development and will continue to monitor its cash requirements carefully against the production curve and cash requirements. |
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