TIDMCAD 
 
CADOGAN ENERGY SOLUTIONS PLC 
 
              Annual Results for the year ended 31 December 2022 
 
The Board of Cadogan Petroleum plc, ("Cadogan" or "the Company"), is pleased to 
announce the Company's annual results for the year ended 31 December 2022. 
 
Key Financial Highlights of 2022: 
 
§ Loss for the year: $1.6 million (2021: loss of $5.1 million) 
 
§ Average realized price[1]: $73.4/boe (2021: $55.7/boe) 
 
§ Gross revenues[2]: $8.5 million (2021: $8.8 million) 
 
§ G&A[3]: $3.4 million (2021: $3.7 million) 
 
§ Loss per share: 0.6 cents (2021: loss of 2.1 cents) 
 
§ Cash at year end: $13.9 million (2021: $15.0 million) 
 
Key Operational Highlights of 2022: 
 
§ Production: 117,793 bbl (2021: 127,662 bbl), a 8% decrease year-on-year 
 
§ Gas trading profit is nil million (2021: profit of $0.6 million) 
 
§ No LTI/TRI[4] 
 
§ ISO 14001 and 45001 certifications were re-validated by respective authority 
for one year. 
 
Group overview 
 
In 2022, the Group continued to maintain exploration and production assets, and 
to operate an oil services business in Ukraine. Cadogan's assets are 
concentrated in the West of the country. The oil services business focuses on 
workover operations, civil works services and other services to satisfy Cadogan 
intra-group operational needs. 
 
Our business model 
 
We aim to increase value through: 
 
§ Maintaining a robust balance sheet, monetising the remaining value of our 
Ukrainian assets and supplementing E&P cash flow with revenues from gas trading 
and oil services 
 
§ Pursuing farm-out to progress investments in Ukrainian license 
 
§ Diversify Cadogan's portfolio, both geographically and operationally 
 
Ukraine 
 
2022 has been extremely challenging for Cadogan due to the invasion of Ukraine 
by Russia and its direct and derived consequences on the operational activities 
in the Country. 
 
West Ukraine 
 
The Group continued to produce oil from its production Blazhiv license located 
in the West of Ukraine. In March 2022, the production was suspended for 3 weeks 
and was resumed after securing the employees, the assets, the financial 
transactions, and the sales process. In the second half of 2022, there have 
been several production stoppages due to the reduction of crude oil consumption 
by oil refineries caused mainly by the Russian air strikes or by power outage 
due to similar strikes on electricity infrastructure. As a result, the average 
net daily production in 2022 was 323 bbl, which is 8% below the production of 
the previous year. 
 
In 2020, Usenco Nadra filed two claims with the Kyiv Administrative Court to 
acknowledge inaction of the State Service of Geology (SGS) as unlawful, in 
particular their refusal to issue the Bitlyanska 20-year exploration and 
development license in the regulatory period and requested the Court to carry 
out commercial activities, at the area, effective from December 2019. This 
decision was taken by the subsoil controlling authority notwithstanding that 
Cadogan had fulfilled all license obligations, obtained all regulatory 
approvals and timely submitted the application on 19 August 2019, well ahead 
the license expiry date of 23 December 2019 and the new regulatory framework. 
After the rejection of its claims in February 2022, Usenco Nadra exercised its 
right for appeal against this decision. In 2022, the Appeal Court and further 
on the Supreme Court did not take into consideration the Company's arguments 
regarding the Bitlyanska license award approval and rejected the claims. 
 
East Ukraine 
 
In 2020, LLC AstroInvest-Energy, a fully owned subsidiary of Cadogan, 
introduced a claim against the State fiscal authority regarding additional tax 
assessment and related penalties. The Company won in the Court of First 
Instance and in the Court of Appeal. The State fiscal authority filed an appeal 
with the Supreme Court. In September 2022, the Supreme Court cancelled all 
decisions of the State fiscal authority and issued a decision in favor of the 
position defended by Cadogan. 
 
 
Subsidiary businesses 
 
Due to high market volatility caused by military escalation in Ukraine, no 
trading activities were conducted in 2022. 
 
Astroservice LLC, the oil services subsidiary, continued to support Blazhiv 
license wells' operations. 
 
Italy 
 
The Group owns a 90% interest in Exploenergy s.r.l., an Italian company, which 
has filed applications for two exploration licenses (Reno Centese and Corzano), 
located in the Po Valley region (Northern Italy). 
 
In February 2019, the Italian Parliament approved a moratorium of 18 months in 
the award of new licenses and a 25-fold increase of license fees. Exploenergy 
subsequently reduced its activity to the minimum required to fulfil its 
statutory obligations. It has also identified areas which can be voluntarily 
released in order to mitigate the impact of higher fees, when licenses are 
awarded, with a minimum impact on their exploration potential. 
 
In 2020, the moratorium was extended. In February 2022, the Plan for the 
Sustainable Energy Transition of Suitable Areas ("PITESAI") was approved by the 
Ministry for Environmental Transition. It delivers a new framework for the 
possible resumption of exploration and production activities on land and at 
sea. Exploenergy was notified in 2022 that its projects (Reno Centese and 
Corsano) were located in compatible areas identified by the PITESAI. The 
Company is currently in the qualification process as gas operator. 
 
In February 2019, the Group entered in a 2-year loan agreement with Proger 
Management & Partners Srl ("PMP") with an option which Cadogan could exercise, 
with no obligation, to get a 33% equity interest in Proger Ingegneria Srl which 
in turn held at 31 December 2020 a 75.95% equity interest in Proger Spa. Proger 
is an Italian engineering company providing services in Italy and in different 
international areas. 
 
Cadogan did not exercise the Call Option. In February 2021, Cadogan notified 
PMP that according to the Loan Agreement, the Maturity Date occurred on 25 
February 2021, and as the Call Option was not exercised, PMP must fulfill the 
payment of EUR 14,857,350, being the reimbursement of the Loan in terms of 
principal and the accumulated interest at this Maturity Date. PMP is in default 
since 25 February 2021. End of March 2021, PMP requested an arbitration to have 
the Loan Agreement recognized as an equity investment contract, which is 
rejected by Cadogan as the terms of the Loan Agreement are clear and include 
the right to repayment at maturity if the Call Option is not exercised. 
 
The Arbitration proceeding ended in July 2022. 
 
The Arbitral Committee: 
 
-      Rejected Proger's principal claim, and declared that the Loan Agreement 
is valid and effective, 
 
-      Deemed to qualify the Call Option as a preliminary contract under 
condition, but 
 
-      Rejected Proger's claim ex art. 2932 Italian Civil Code, stating that it 
is impossible to give an award producing the same effects of a final contract 
ex art. 2932 Italian Civil Code, 
 
-      This because of the duties established by the rules of the London 
Regulatory Authority and because of the need, possibly by both parties, to 
comply with the due proceedings before the formalization of the entry of 
Cadogan into the capital of Proger Ingegneria, 
 
-      Subordinated the stipulation of the final contract to the precedent 
completion of the proceeding and bureaucratic process as per the British rules, 
stating that, otherwise, 
 
-      There is the obligation on Proger Ingegneria to return the money 
received under the Loan Agreement. 
 
Strategic Report 
 
The Strategic Report has been prepared in accordance with Section 414A of the 
Companies Act 2006 (the "Act") and presented hereunder. Its purpose is to 
inform stakeholders and help them assess how the Directors have performed their 
legal duty under Section 172 of the Act to promote the success of the Company. 
 
Section 172 Statement 
 
The Company's section 172 statement is presented on page 35 and 37 and forms 
part of this strategic report. 
 
Principal activity and status of the Company 
 
The Company is registered as a public limited company (registration number 
05718406) in England and Wales. Its principal activity is oil and gas 
exploration, development and production; the Company also conducts gas trading 
and provides services. In November 2022, the shareholders approved the change 
of name and the strategy to expand its activities along the energy value chain 
to new forms of energy with a reduced impact on the environment. 
 
The Company's shares have a standard listing on the Official List of the UK 
Listing Authority and are traded on the Main Market of the London Stock 
Exchange. 
 
Key performance indicators 
 
The Group monitors its performance through five key performance indicators 
("KPIs"): 
 
-      to increase oil, gas and condensate production measured on the number of 
barrels of oil equivalent produced per day ("boepd"); 
 
-      to decrease administrative expenses; 
 
-      to increase the Group's basic earnings per share; 
 
-      to maintain no lost time incidents; and 
 
-      to grow geographically and operationally diversify the portfolio. 
 
The Group's performance in 2022 against these KPI's is set out in the table 
below, together with the prior year performance data. 
 
                                       Unit          2022        2021     2022 vs 
                                                                             2021 
 
Average production (working        boepd              323         350        (8)% 
interest basis) 1 
 
Overhead (G&A)                     $ million        (3.4)       (3.7)        (7)% 
 
Basic loss per share 2             cents            (0.6)       (2.1)       (71)% 
 
Lost time incidents 3              incidents            -           -           - 
 
Geographic diversification         new assets           -           -           - 
 
1.     Average production is calculated as the average daily production during 
the year 
 
2.     Basic (loss)/profit per ordinary share is calculated by dividing the net 
(loss)/profit for the year attributable to equity holders of the parent company 
by the weighted average number of ordinary shares during the year 
 
3.     Lost time incidents relate to the number of injuries where an employee/ 
contractor is injured and has time off work (IOGP classification) 
 
Chairman's Statement 
 
2022 was the most dramatic year in the independent history of Ukraine. The 
full-scale invasion of the Russian army has brought severe destructions and 
huge suffering. All the Board stands in solidarity with the Ukrainian 
population in their fight for freedom. 
 
The safety of our people is our highest priority. The Group is taking all 
possible actions to preserve the safety of its employees and meet their needs. 
 
2022 will remain another challenging year. From the very first days of the war 
and onwards Cadogan has immediately implemented required actions that have 
allowed to protect our staff and keep the Group's activities ongoing. The 
effectiveness of these measures and the dedication of everyone have been 
essential to mitigate the negative consequences of the war. Moreover, the Group 
is proud to report zero fatalities, injuries among its staff since the 
beginning of the invasion. 
 
For the existing operations in Ukraine, Cadogan continue to be committed to the 
territory and the communities where we operate and has fully financed social 
programs commitment for 2022 as agreed before with the Lviv Regional 
Administration and the local communities. Realizing the importance of 
unstoppable oil production to satisfy increased Ukrainian's demand - Cadogan 
has put maximum efforts to achieve this target. Despite all the difficulties 
imposed by the war situation, Cadogan stands confidently on its feet and 
continues to work. 
 
During 2022, the oil and gas markets of Ukraine witnessed severe volatility 
which was not correlated with world's trends. The oil prices have changed 
unpredictably and in different directions during the year. The quick response 
of the Group and the measures that were put in place have allowed the Group to 
mitigate the operational and the economic challenges. 
 
Despite all these challenges, the Group was able to improve its fundamentals 
and operate at high industry standards. This was possible thanks to the 
commitment of all with a competent and strong management. The Board remains 
focused on maximizing value from our assets and on our strategy based on the 
future diversification of our activities towards sectors providing lower 
impacts on environment. 
 
Michel Meeus 
 
Non-Independent Non-Executive Chairman 
 
27 April 2023 
 
Chief Executive's Review 
 
Due to the situation of war resulting from the Russian invasion of Ukraine, 
2022 has been a highly challenging year. The Company had to adapt its 
activities to operate in war reality and contingencies. After securing our 
employees, our assets, our procedures and our sales transactions, Cadogan was 
able to operate but under severe constraints, temporary operations shut-down, 
staff relocation, supply and trade chains changes. The consequences of this war 
on inflation, on consumption and on availability of the needed energy 
infrastructure have led to extreme oil price volatility. The martial law 
imposed by the Ukrainian government introduced additional constraints on the 
financial transactions, the mobilisation of employees, the increase of taxation 
on natural gas production and ended with additional risks. 
 
This situation has led to adapt and transform all the processes of Cadogan to 
align to the maximum of flexibility and efficiency given the high uncertainty 
even on the short-term. 
 
While in 2021 Ukraine had witnessed some signs of recovery for the oil & gas 
industry as well as slow progress towards modernization of its oil & gas 
legislative framework, the Russian aggression in 2022 has pushed down all these 
efforts. The Russian invasion and bombing have naturally affected the oil and 
gas production in the Country. Oil refineries as well as energy infrastructure 
have been severely damaged. Despite this situation, Cadogan managed to safely 
operate with zero fatalities and injuries among the staff. 
 
In March 2022, the Company staff was relocated from Kiev to the safe areas and 
continued operating remotely. On-field personnel ensured continuity of wells' 
operations with the maximum of safety and efficiency. The Company also faced a 
new risk with the mobilization of employees decided by the Ukrainian 
government. For the time being, 4 employees have been mobilized since the 
beginning of the martial law in March 2022. With this martial law, war period 
restrictions have been implemented, including financial ones. At the same time, 
the Parliament increased taxation on natural gas production. 
 
These unprecedented constraints encountered with Covid-19 during 2020 and 2021 
and during 2022 with the war in Ukraine, have delayed the implementation of 
Cadogan's strategy. In November 2022, following the approval of the 
shareholders, Cadogan Petroleum Plc became Cadogan Energy Solutions Plc, with 
the intention to expand its activities along the energy value chain, beyond 
current activities in the oil and gas sector, to new forms of energy with a 
reduced impact on the environment.  This reflects Cadogan's mission to be a 
diversified group in energy with the will to make investments offering energy 
solutions and alternative services with a lower environmental impact. 
 
Against this challenging background, Cadogan's operational activities performed 
as following: 
 
·    a 8% decrease in production, from 127,662 bbl in 2021 to 117,793 bbl bbl 
in 2022; 
 
·    a 7% decrease of overhead (G&A), from $3.7 million in 2021 to $3.4 million 
in 2022; 
 
·    a robust balance sheet, with $13.9 million of net cash, kept mostly in the 
UK banks; 
 
·    another year without LTIs'; 
 
·    the Supreme Court positive decision in favour of Cadogan in the tax 
litigation case. 
 
Core operations 
 
Cadogan has continued to safely produce from its Blazhiv field in the West of 
Ukraine. Oil production has decreased by 8% compared to the previous year. This 
decrease was due to several production stoppages caused by the reduction of 
crude oil treatment capacities in oil refineries, as a consequence of the 
Russian direct air strikes and by power outage due to similar strikes of 
electricity infrastructure. 
 
Regarding the Bitlyanska 20-year exploration and development license, Usenco 
Nadra filed two claims in 2020 against the absence of decision of the State 
Geological Service (SGS) in the regulatory due timeframe at this moment, and 
the further rejection of the application on the basis of a new regulatory 
framework that took effect on 25 February 2020. In February 2022, these claims 
were rejected by the Administrative Court. Further in 2022, Usenco Nadra 
exercised its right for appeal against this decision. The Kyiv Appeal Court and 
further on the Supreme Court did not take into consideration the Company's 
arguments and rejected the claims. This decision will not have a financial 
impact as Bitlyanska license had been totally impaired in the previous year. 
 
High operational standards of the Group have been confirmed again by zero LTI 
or TRI, with a total over 1,570,000 manhours since the last incident, and 
re-validation off ISO 14001 & 45001 certifications by respective authority for 
the one year. 
 
In Italy, the Plan for the Sustainable Energy Transition of Suitable Areas 
("PITESAI") was approved by the Ministry for Environmental Transition. It 
delivers a new framework for the possible resumption of exploration and 
production activities on land and at sea. Exploenergy was notified in 2022 that 
its projects (Reno Centese and Corsano) were located in compatible areas 
identified by the PITESAI. The Company is currently in the qualification 
process as gas operator. 
 
Non E&P operations 
 
The Company continues to monitor the gas markets in Europe and Ukraine, but in 
light of the extreme volatilities the Company followed its prudent and low risk 
trading strategy and did not perform gas trading operations during 2022. 
 
The oil services activities were used primarily to serve the Group's wells' 
operations. 
 
Proger 
 
In February 2019, Cadogan used part of its cash (euros 13.385 million) to enter 
into a 2-year Loan Agreement with Proger Managers & Partners, together with a 
Call Option Agreement which could be exercised by Cadogan, with no obligation, 
between September 2019 and February 2021, and subject to shareholders' 
approval, into a 33 % equity interest in Proger Ingegneria which in turn held, 
a 75.95% equity interest in Proger as at 31 December 2020, and a 96.48% equity 
interest in Proger as at 31 December 2021. 
 
As at 25 February 2021, being the Maturity Date, the Call Option was not 
exercised by Cadogan and accordingly to its previous notification Cadogan 
demanded repayment of the Loan together with the accumulated interest which in 
total amounted Euro 14,857,350. After five business days, PMP was in default 
and asked for an additional term that ended on 19 March 2021. The terms of the 
Loan Agreement provide for an additional default interest of 2%. End of March 
2021, PMP contested the default situation and the obligation to reimburse and 
asked for an Arbitration according to the said Loan Agreement to get the Loan 
Agreement recognised as an equity investment contract. Cadogan consider PMP's 
arguments as groundless and consider that they are intended to delay PMP 
reimbursement obligations. The Arbitration proceeding ended in July 2022. 
 
The Arbitral Committee: 
 
-      Rejected Proger's principal claim, and declared that the Loan Agreement 
is valid and effective, 
 
-      Deemed to qualify the Call Option as a preliminary contract under 
condition, but 
 
-      Rejected Proger's claim ex art. 2932 Italian Civil Code, stating that it 
is impossible to give an award producing the same effects of a final contract 
ex art. 2932 Italian Civil Code, 
 
-      This because of the duties established by the rules of the London 
Regulatory Authority and because of the need, possibly by both parties, to 
comply with the due proceedings before the formalization of the entry of 
Cadogan into the capital of Proger Ingegneria, 
 
-      Subordinated the stipulation of the final contract to the precedent 
completion of the proceeding and bureaucratic process as per the British rules, 
stating that, otherwise, 
 
-      There is the obligation on Proger Ingegneria to return the money 
received under the Loan Agreement. 
 
Proger refused to apply the requirements of the award and thus, Proger must 
reimburse the amount covered by the Loan Agreement plus interest accrued in the 
meantime. 
 
Outlook 
 
The current situation in Ukraine is imposing continuous difficulties and 
tremendous challenges on our operating activities in 2023. The Company is 
expecting another challenging year and is seeking to mitigate these constraints 
through a number of options and solutions. 
 
Cadogan will also study different options to minimize its CO2 emissions 
deriving from its current operating oil and gas activities. 
 
Regarding the Loan provided to Proger in February 2019, Cadogan will continue 
to engage all necessary legal actions to protect its interests and recover the 
cumulated amount due by Proger. 
 
Despite all these constraints, Cadogan will pursue its strategy aiming to 
diversify its activities and invest in sectors with a lower impact on 
environment. 
 
This strategy is totally aligned with the Climate Change requirements for 
sustainability of Cadogan's activities. 
 
Fady Khallouf 
Chief Executive Officer 
27 April 2023 
 
Operations Review 
 
Overview 
 
At 31 December 2022, the Group held working interests in one conventional gas, 
condensate and oil exploration and production license in the west of Ukraine. 
 
      Summary of the Group's licenses (as at 31 December 2022) 
 
   Working          License             Expiry         License type 
interest (%) 
 
    99.8            Blazhiv         November 2039       Production 
 
West Ukraine 
 
E&P activity remained focused on maintaining its license and safely and 
efficiently producing from the existing wells as well as implementing 
non-invasive production enhancement scenarios within the Blazhiv oil field. 
 
Blazhivska license 
 
During 2022, the average gross oil production rated at 323bpd, which is 8% 
lower than in 2021 (350bpd). In March 2022 production was suspended for 3 weeks 
and was resumed after securing the employees, the assets, the financial 
transactions and the sales process. In the second half of 2022, there have been 
several production stoppages due to the reduction of crude oil consumption by 
oil refineries caused mainly by the Russian strikes or by power outage due to 
similar strikes of electricity infrastructure. For the purpose of geological 
construction precision of Blazhiv oil field and Monastyretska fold and also 
identification of new perspective structures within the license area boundary, 
Cadogan has launched analyses for data reprocessing and reinterpretation of old 
2D seismic data at the end of 2021. The Company completed studies and received 
the required data for field skeleton structural and tectonic modelling. 
 
Bitlyanska license 
 
Usenco Nadra filed to the State Geological Service an application for a 20-year 
production license 5 months ahead of the license expiry date of 23 December 
2019. The Company secured approval of the Environmental Impact Assessment study 
by the Ministry of Ecology, the approval of the Reserves Report by the State 
Commission of Reserves and the approval of the license award by the Lviv 
Regional Council. Given the delay in awarding the new license beyond the 
regular timeline provided by legislation, the Company filed two claims with the 
Administrative Court to challenge the non-granting of the 20-year production 
license by the Licensing Authority. During 2021 the claims were not considered 
by the Court due to delays caused by the Covid-19 pandemic. In February 2022, 
the Company received information from the public register that its claim was 
rejected by the Court of 1st instance. Despite the restrictions imposed by the 
martial law in Ukraine, Usenco Nadra exercised its right for appeal against 
this decision and submitted an appeal. In 2022, the Kyiv Administrative Court 
and further on the Supreme Court have not taken into consideration the 
Company's arguments regarding the Bitlyanska license award approval and 
rejected the claims. 
 
Gas trading 
 
In light of these extreme volatilities during the war the Company, following 
its prudent and low risk trading strategy, decided to monitor the appropriate 
time for resuming trading activity. 
 
Service 
 
The Group continued to provide services through its wholly owned subsidiary 
Astroservice LLC. The provided services were primarily focused on serving 
intra-group operational needs in wells' re-entry/ repairs and stimulation 
operations, well surveys and field on-site activities. In the context of the 
prevailing situation in Ukraine, the services segment was dedicated totally to 
supporting the Group's production activities. Starting from 2022, production 
entities activities and service entity activities will be presented solely as 
Exploration and Production segment result. 
 
Other events 
 
After an inspection conducted by Ukraine's tax authorities in September 2019, 
Astroinvest Energy LLC was notified of a tax claim related to the historic 
costs for the liquidation of wells on the Zagoryanska license. The tax 
authorities notified Astroinvest Energy LLC that they considered non-deductible 
the recoverable VAT, totalling $3.6 million, that had subsequently been used to 
offset output VAT. They additionally considered that the subsidiary's tax 
losses carry forward of $15.3 million should be reduced (note 22). In 2019, 
Astroinvest Energy LLC filed a claim against the tax authority's decision. The 
Court of First Instance and the Court of Appeal decided in favour of the 
position of Cadogan, but the tax authorities filed an appeal with the Supreme 
Court. In September 2022, the Supreme Court cancelled all decisions of the 
fiscal authority and issued a decision in favor of the position defended by 
Cadogan. 
 
Financial Review 
 
Overview 
 
In 2022, the Group had no trading operations and its oil production decreased 
by 8%.  The average realized oil price increased by 32% and supported the Group 
revenue on the same level as previous year. The Group's operating divisions 
delivered a profit of $2.9 million (2021: profit of $1.8 million excluding the 
impairment of oil and gas assets). 
 
The E&P business positively contributed to the financial results of the Group, 
due to the increase in oil prices. The average realized oil price increased by 
32% from $55.7 to $73.4 per barrel. The trading business was not active during 
2022. 
 
Cash position decreased to $13.9 million as at 31 December 2022 compared to 
$15.0 million as at 31 December 2021. 
 
Income statement 
 
Revenues from production increased from $7.0 million in 2021 to $8.5 million in 
2022. This result has been achieved, despite the decrease in production 
volumes, due to an increase in oil average realized prices by 32%. E&P costs of 
sales increased from $5.3 million in 2021 to $5.6 million in 2022. These 
include production royalties and taxes, fees paid for the rented wells, 
depreciations, depletion of producing wells, direct staff costs and other costs 
for exploration and development. Overall, in 2022, E&P made a positive 
contribution of $2.9 million (2021: $1.8 million) to gross profit. 
 
The gas trading business had no activities during 2022 (2021: Revenue of $1.8 
million). 
 
Administrative expenses ("G&A") remained contained with a decrease of 7% 
compared to year 2021, note 8. 
 
Balance sheet 
 
The Property Plant & Equipment (PP&E) balance was $6.6 million at 31 December 
2022 (2021: $9.6 million). It primarily represents the carrying value of the 
assets invested and engaged in Blazhiv license. The E&E and PP&E are held by 
Ukrainian subsidiaries with functional currency Ukrainian Hryvna. The Ukrainian 
Hryvna was devaluated by 34% as at 31 December 2022 compared to 31 December 
2021, generating a movement in the E&E and PP&E value presented in the US 
Dollar. 
 
Trade and other receivables of $0.3 million (2021: $0.2 million) include $0.1 
million of recoverable VAT (2021: $0.1 million), which is expected to be 
recovered through production activities, and $0.2 million (2021: $0.1 million) 
of other receivables. 
 
Inventories slightly increased from $0.2 million to $0.3 million principally 
due to the increase of crude oil in the stock. 
 
The Proger loan was held at amortised cost at $15.8 million (2021: $16.7 
million). Refer to the Chief Executive's Report for further details together 
with note 4(d) and 27. 
 
The $1.4 million of trade and other payables as at 31 December 2022 (2021: $1.5 
million) consist of $0.6 million (2021: $0.6 million) of accrued expenses and 
$0.8 million (2021: $0.9 million) of other creditors. 
 
Provisions include $0.4 million (2021: $0.3 million) of long-term and current 
provisions for decommissioning costs which represents the present value of 
costs that are expected to be incurred in 2039 for producing assets, when the 
license will expire, and current provision for the decommissioning costs of 
Bitlyanska license. 
 
Net cash decreased to $13.9 million at 31 December 2022 compared to $15.0 
million at 31 December 2021. This was mostly due to negative operating cashflow 
and forex effect of Hryvna and EURO nominated cash accounts. 
 
Cash flow statement 
 
The Consolidated Cash Flow Statement on page 77 shows operating cash inflow 
before movements in working capital of $0.2 million (2021: outflow of $0.4 
million), which represents mostly cash generated by the E&P net of corporate 
expenses. 
 
Related party transactions 
 
Related party transactions are set out in note 29 to the Consolidated Financial 
Statements. 
 
Treasury 
 
The Group continually monitors its exposure to currency risk. It maintains a 
portfolio of cash mainly in US dollars ("USD") and Euro held primarily in the 
UK. Production revenues from the sale of hydrocarbons are received in Hryvna, 
the local currency in Ukraine. Since the martial law established in February 
2022 in Ukraine, the cash generated in Ukraine must be kept in Hryvna in 
Ukraine. 
 
Risks and uncertainties 
 
There are several potential risks and uncertainties that could have a material 
impact on the Group's long-term performance and could cause the results to 
differ materially from expected and historical results. Executive management 
review the potential risks and then classify them as having a high impact if 
above $5 million, medium impact if above $1 million but below $5 million, and 
low impact if below $1 million. They also assess the likelihood of these risks 
occurring. Risk mitigation factors are reviewed and documented based on the 
level and likelihood of occurrence. The Audit Committee reviews the risk 
register and monitors the implementation of risk mitigation procedures via 
Executive management, who are carrying out a robust assessment of the principal 
risks facing the Group, including those potentially threatening its business 
model, future performance, solvency and liquidity. 
 
The Group has analysed the following categories as key risks: 
 
Risk                                 Mitigation 
 
War risks 
 
Since Spring 2021, Russia has        Anticipating the beginning of the war, the 
gradually increased the              Group put in place, since the beginning of 
concentration of military equipment, February 2022, emergency procedures 
weapons and troops near the          communicated to all employees on the 
Ukrainian borders. On 24 February    different sites in Ukraine with an Emergency 
2022, the Russian troops attacked    Committee communicating every day. Safety 
Ukraine and invaded its territory.   measures have been dispatched with a remote 
Severe fights have been engaged in   working organization. Specific measures have 
Kyiv, and several other main cities  been put in place for the operations on 
like Kharkiv, Mariupol, Kherson,     site. In case of need, specific measures 
Sumy and Chernihiv                   were put in place to suspend the operations 
Missile attacks and bombing are used of the Blazhiv field wells, with technical 
by the Russian troops to destroy     measures for decommissioning and temporary 
infrastructures and facilities even  conservation of the wells. The transmission 
in the western cities, like Lviv.    and internet connection systems have been 
Cyber-attacks have increased. Given  secured with a satellite connection. IT 
the unpredictability of the issue of security has been reinforced. From February 
this war, a full-scale invasion of   2022 till June 2022, the salaries were paid 
Ukraine or a much longer duration of in anticipation to mitigate the risk of a 
this war could have material impacts shutdown of the banking system. The Group is 
on the Group's operations and on its monitoring the situation daily and taking 
human, industrial and financial      appropriate action to ensure the safety and 
resources.                           the essential needs of its employees. 
 
Operational risks 
 
Health, Safety and Environment 
("HSE") 
 
The oil and gas industry by its      The Group maintains a HSE management system 
nature conducts activities, which    in place and demands that management, staff 
can cause health, safety and         and contractors adhere to it. The system 
environmental incidents. Serious     ensures that the Group meets Ukrainian 
incidents can have not only a        legislative standards and for the CO2 
financial impact but can also damage emissions the British standards and achieves 
the Group's reputation and the       international standards to the maximum 
opportunity to undertake further     extent possible. 
projects.                            Management systems and processes have been 
                                     certified as ISO 14001 and ISO 45001 
                                     compliant. 
 
Covid-19 
 
The Group's operations are in        To manage and where possible mitigate the 
Ukraine with a Parent Company        risk of personnel infection with the virus 
located in the United Kingdom. These for our employees, special measures have 
locations are suffering from         been applied. These include administrative 
increasing levels of Covid-19        personnel remote working, strict sanitary 
infection and in due course there    and hygienic procedures and personal 
may be increasing disruption.  This  protection, rotation of field personnel by 
may include potential impacts        company cars, constant medical supervision 
through illness amongst our          during the work shift, regular sanitation of 
workforce, supply chain and sales    cars, offices and facilities. The covid-19 
channel disruption and the wider     treatment package has been included into the 
impact of economic disruption on     staff medical insurance coverage. We 
commodity prices. The national and   continue to monitor the situation closely 
local governments in each of our     and will respond accordingly as the position 
operating locations are recommending develops. To prevent the spread of covid-19, 
or implementing increasingly severe  the Company continued strictly maintaining 
restrictions in order to manage the  administrative and healthcare measures to 
situation.                           provide safe working conditions for its 
                                     employees as well as ensuring reasonable 
                                     vaccination level. 
 
Climate change 
 
After the Paris Agreement (COP 21)   A moratorium on domestic production is 
the international community is       deemed highly unlikely in Ukraine given the 
committed to reduce greenhouse gas   country's need for affordable energy. Such 
emissions to slow down the climate   risks exist in Italy, but the Group's 
change and contain its effects.      exposure there is limited. 
Countries may impose moratorium on E Management strives to reduce emissions in 
&P activities or enact tight limits  everything the Group does and has started 
to emissions level, which may        implementing alternatives to offset and/or 
curtail production. Shareholders may mitigate emissions. In 2023, the Group will 
also request that the Company adopt  review its administrative and operational 
stringent targets in terms of        process to identify the areas of further 
emissions reduction.                 improvement in the limitation of its 
                                     environmental impact. For the future, 
                                     Cadogan is going to diversify its activities 
                                     by investing in new activities with a lower 
                                     impact on environment. 
 
Drilling and Work-Over operations 
 
The technical difficulty of drilling The incorporation of detailed sub-surface 
or re-entering wells in the Group's  analysis into a robustly engineered well 
locations and equipment limitations  design and work programme, with appropriate 
can result in the unsuccessful       procurement procedures and competent on-site 
completion of the well.              management, aims to minimise risk. Only 
                                     certified personnel are hired to operate on 
                                     the rig floor. Contractor's access to the 
                                     operational sites is allowed only after 
                                     control of staff qualification and check-up 
                                     of appropriate technical condition of the 
                                     equipment and machinery 
 
Production and maintenance 
 
There is a risk that production or   All plants are operated and maintained at 
transportation facilities could fail standards above the Ukrainian minimum legal 
due to non-adequate maintenance,     requirements. Operative staff are 
control or poor performance of the   experienced and receive supplemental 
Group's suppliers.                   training to ensure that facilities are 
                                     properly operated and maintained. When not 
                                     in use the facilities are properly kept 
                                     under conservation and routinely monitored. 
                                     Service providers are rigorously reviewed at 
                                     the tender stage and are monitored during 
                                     the contract period. 
 
 
 
 
Sub-surface risks 
 
The success of the business relies   All externally provided and historic data is 
on accurate and detailed analysis of rigorously examined and discarded when 
the sub-surface. This can be         appropriate. New data acquisition is 
impacted by poor quality data,       considered, and appropriate programmes 
either historic or recently          implemented, but historic data can be 
gathered, and limited coverage.      reviewed and reprocessed to improve the 
Certain information provided by      overall knowledge base. Agreements with 
external sources may not be          qualified local and international 
accurate.                            contractors have been entered into to 
                                     supplement and broaden the pool of expertise 
                                     available to the Company. 
 
Data can be misinterpreted leading   All analytical outcomes are challenged 
to the construction of inaccurate    internally and peer reviewed.  Analysis is 
models and subsequent plans.         performed using modern geological software. 
 
The area available for drilling      Bottom hole locations are always checked for 
operations is limited due to         their operational feasibility, well 
logistics, infrastructures and       trajectory, rig type, and verified on 
moratorium. This increases the risk  updated sub-surface models. They are 
for setting optimum well             rejected if deemed to be too risky. 
coordinates. 
 
The Group may not be successful in   The Group performs, on an annual basis, a 
proving commercial production from   review of its oil and gas assets, impairs if 
its licenses and consequently the    necessary, and considers whether to 
carrying values of the Group's oil   commission a review from a third party or a 
and gas assets may have to be        Competent Person's Report ("CPR") from an 
impaired.                            independent qualified contractor depending 
                                     on the circumstances. 
 
Financial risks 
 
The Group is at risk from changes in Revenues in Ukraine are received in UAH and 
the economic environment both in     expenditure is made in UAH. 
Ukraine and globally, which can 
cause foreign exchange movements,    The Group continues to hold most of its cash 
changes in the rate of inflation and reserves in the UK mostly in USD and Euro. 
interest rates and lead to credit    Cash reserves are placed with leading 
risk in relation to the Group's key  financial institutions, which are approved 
counterparties.                      by the Audit Committee. Before the war in 
                                     Ukraine, foreign exchange risk was 
The martial law in Ukraine forbids   considered a normal and acceptable business 
the transfer of cash outside of      exposure and the Group did not hedge against 
Ukraine. The cash held in Ukraine    this risk for its E&P operations. The Group 
must be held in the local currency   is currently analysing different options. 
(Hryvna). 
 
The decrease of the value of the 
Hryvna is a major risk on the cash 
held by the Group in Ukraine. Since 
the martial law in Ukraine, there is 
an obligation to keep the cash held 
by Cadogan in Ukraine in Hryvna with 
period restrictions for transfers    The terms of the agreement are clear and 
out of the Country.                  include the right to repayment at maturity 
                                     if the Call Option is not exercised. As 
In February 2019, Cadogan entered    security for the reimbursement of the loan, 
into a 2-year Loan Agreement (Euros  Cadogan benefits from a pledge over the 
13.385 million) with Proger          shares held by Proger Managers & Partners in 
Management & Partners with a Call    Proger Ingegneria. In addition to that, 
Option that could be exercised by    Cadogan is engaging all the necessary 
Cadogan, between September 2019 and  actions in the Arbitration process and more 
February 2021, with no obligation,   generally the adequate legal actions to 
allowing a 33 % equity interest in   protect the interests of the Company and all 
Proger Ingegneria. This represented  of its stakeholders. The investigation is 
a key transaction and element of the closed. On July 28th, 2022, the Arbitration 
Group balance sheet. At 25 February  Committee delivered an award rejecting 
2021, being the Maturity Date,       Proger's request, established that the Loan 
Cadogan did not exercise its Call    Agreement was valid and effective, and 
Option and PMP must reimburse EUR    indicated the conditions precedent for the 
14,857,350. End of March 2021, PMP   completion of any transaction with Proger 
did not reimburse and asked for an   Ingegneria. In case of non-completion, 
arbitration to get the Loan          Proger must reimburse Cadogan according to 
Agreement recognized as an equity    the Loan Agreement. 
investment contract. 
                                     Refer to note 27 to the Consolidated 
                                     Financial Statements for detail on financial 
                                     risks. 
 
The Group is at risk that            Procedures are in place to scrutinize new 
counterparties will default on their counterparties via a Know Your Customer 
contractual obligations resulting in ("KYC") process, which covers their 
a financial loss to the Group.       solvency. In addition, when trading gas, the 
                                     Group seeks to reduce the risk of customer 
                                     non-performance by limiting the title 
                                     transfer to product until the payment is 
                                     received, prepaying only to known credible 
                                     suppliers. 
 
The Group is at risk that            The Group mostly enters back-to-back 
fluctuations in gas prices will have transactions where the price is known at the 
a negative result for the trading    time of committing to purchase and sell the 
operations resulting in a financial  product. Sometimes the Group takes exposure 
loss to the Group.                   to open inventory positions when justified 
                                     by the market conditions in Ukraine, which 
                                     is supported by analysis of the specific 
                                     transactions, market trends and models of 
                                     the gas prices and foreign exchange rate 
                                     trends. 
 
 
 
Country risks 
 
Legislative changes may bring        Compliance procedures, monitoring and 
unexpected risk and create delays in appropriate dialogue with the relevant 
securing licenses or ultimately      authorities are maintained to minimize the 
prevent licenses and license         risk. In all cases, deployment of capital in 
renewals /conversions from being     Ukraine is limited and investments are kept 
secured.                             at the level required to fulfil license 
                                     obligations. 
 
Other risks 
 
The Group's success depends upon     The Group periodically reviews the 
skilled management as well as        compensation and contract terms of its staff 
technical and administrative staff.  in order to remain a competitive employer in 
The loss of service of critical      the markets where it operates. 
members from the Group's team could 
have an adverse effect on the 
business. 
 
The Group is at risk of              The Group applies rigorous screening 
underestimating the risk and         criteria in order to evaluate potential 
complexity associated with the entry investment opportunities. It also seeks 
into new countries.                  input from independent and qualified experts 
                                     when deemed necessary. Additionally, the 
                                     required rate of return is adjusted to the 
                                     perceived level of risk. 
 
Local communities and stakeholders   The Group maintains a transparent and open 
may cause delays to the project      dialogue with authorities and stakeholders 
execution and postpone activities.   (i) to identify their needs and propose 
                                     solutions which address them as well as (ii) 
                                     to illustrate the activities which it 
                                     intends to conduct and the measures to 
                                     mitigate their impact. Local needs and 
                                     protection of the environment are always 
                                     taken into consideration when designing 
                                     mitigation measures, which may go beyond the 
                                     legislative minimum requirement. 
                                     The Group devotes the highest level of 
                                     attention and engage qualified consultants 
                                     to prepare the Environmental Impact 
                                     Assessment studies and to attend public 
                                     hearings, both introduced in Ukraine in 
                                     2019. 
 
Statement of Reserves and Resources 
 
In 2022, the company conducted routine rig-less production support activities 
at the Blazhiv-1, Blazhiv-3 and Blazhiv-Monastyrets-3 and Blazhiv-10 wells to 
maintain sustainable production using sucker rod pumping systems. 
 
                             Summary of Reserves1 
 
                              at 31 December 2022 
 
                                                                    Mmboe 
 
Proved, Probable and Possible Reserves at 1 January 2022             4.06 
 
Production                                                           0.12 
 
Proved, Probable and Possible Reserves at 31 December                3.94 
2022 
 
1 The study was conducted in 2016 by Brend Vik. 
 
In addition to the tabled reserves, Cadogan has 0.6 million boe of contingent 
resources associated with the Blazhiv license. 
 
Corporate Responsibility 
 
Under Section 414C of the Companies Act 2006 (the "Act"), the Board is required 
to disclose information about environmental matters, employees, human rights 
and community issues, including information about any policies it has in 
relation to these matters and the effectiveness of these policies. 
 
Being sustainable in our activities means conducting our business with respect 
for the environment and for the communities hosting us, with the aim of 
increasing the benefit and value to our stakeholders. We recognize that this is 
a key element to be competitive and to maintain our license to operate. 
 
The Board recognizes that the protection of the health and safety of its 
employees, the communities and the environment in which it operates is not just 
an obligation but is part of the personal ethics and beliefs of management and 
staff. These are the key drivers for a sustainable development of the Company's 
activity. Cadogan Petroleum, its management and employees are committed to 
continuously improve Health, Safety and Environment (HSE) performance; follow 
our Code of Ethics and apply, in conducting our operations, internationally 
recognized best practices and standards. 
 
Our activities are carried out in accordance with a policy manual, endorsed by 
the Board, which has been disseminated to all staff. The manual includes a 
Working with Integrity policy and policies on business conduct and ethics, 
anti-bribery, the acceptance of gifts and hospitality and whistleblowing. Such 
policies are subject to regular review. 
 
In August 2018, Cadogan Ukraine LLC obtained ISO 14001 and ISO 45001 
certifications for the following scope: "Supervision, coordination, management 
support, control in the field of oil and gas on-shore exploration and 
production." This provides formal recognition of the process embedded in the 
Company and demonstrates the commitment and efforts delivered by our employees 
and management. It is considered a baseline to continue with the efforts to 
improve the way we conduct the business. 
 
The Board believes that health and safety procedures, and training across the 
Group should be in line with best practice in the oil and gas sector. 
Accordingly, it has set up a committee to review and agree on the health and 
safety initiatives for the Company and to report back to the Board on the 
progress of these initiatives. Management regularly reports to the Board on HSE 
and key safety and environmental issues, which are discussed at the Executive 
Management level. The report of the Health, Safety and Environment Committee 
can be found on page 39 to 40. 
 
The General Director of Cadogan Ukraine is the acting Chairman of the HSE 
Committee and is supported in his role by Cadogan Ukraine's HSE Manager. In 
accordance with the ISO 14001 and ISO 45001, his role is to ensure that the 
Group continuously develops suitable procedures, that operational management 
and their teams incorporate them into daily operations and that the HSE 
management has the necessary level of autonomy and authority to discharge their 
duties effectively and efficiently. 
 
Health, safety and environment 
 
2022 was extremely challenging due to the Russian invasion of Ukraine  and the 
resulting subsequent war. Cadogan applied measures to mitigate the risk 
personnel injuries and loss of well control. Kiev office personnel have been 
relocated to the safe regions of Ukraine, on-field staff as well as all offices 
have been equipped with satellite means of communication, established internal 
emergency committee that coordinated the work and liaising with company 
management of the daily basis. Three employees have been mobilized to the army 
during 2022. 
 
Also the HSE management daily monitors health status of the personnel in terms 
of covid-19. 
 
The Group has implemented an integrated HSE management system in accordance 
with the ISO requirements. The system aims to ensure that a safe and 
environmentally friendly/protection culture is embedded in the organization 
with a focus on the local community involvement. The HSE management system 
ensures that both Ukrainian and international standards are met, with the 
Ukrainian HSE legislation requirements taken as an absolute minimum. All the 
Group's local operating companies actively participate in the process. ISO 
14001 and ISO 45001 certification were re-validated by the respective authority 
in August 2022 for a new term. 
 
A proactive approach based on a detailed induction process and near miss 
reporting has been in place throughout 2022 to prevent incidents. Staff 
training on HSE matters and discussions on near miss reporting are recognized 
as the key factors to continuously improve. In-house training is provided to 
help staff meet international standards and follow best practice. The process 
enacted by the certification, enhances attention to training on risk 
assessments, emergency response, incident prevention, reporting and 
investigation, as well as emergency drills regularly run-on operations' sites 
and offices. This process is essential to ensure that international best 
practices and standards are maintained to comply with, or exceed, those 
required by Ukrainian legislation, and to promote continuous improvement. 
 
The Board monitors the main Key Performance Indicators (lost time incidents, 
mileage driven, training received, CO2 emissions) as business parameters. The 
Board has benchmarked safety performance against the HSE performance index 
measured and published annually by the International Association of Oil and Gas 
Producers. In 2022, the Group recorded over 154,000 man-hours worked with no 
incidents and over 1,570,000 hours have been worked since the last injury in 
February 2016. 
 
During 2022 the Group continued to monitor its greenhouse gas emissions and 
collect statistical data relating to the consumption of electricity, industrial 
water and fuel consumption by cars, plants and other work sites, recording a 
continuous improvement in the efficient use of resources. 
 
Employees 
 
Wellness and professional development are part of the Company's sustainable 
development policy and wherever possible, local staff are recruited. The 
Group's activity in Ukraine is entirely managed by local staff. Qualified local 
contractors are engaged to supplement the required expertise when and to the 
extent it is necessary. 
 
Procedures are in place to ensure that recruitment is undertaken on an open, 
transparent and fair basis with no discrimination against applicants. Each 
operating company has its own Human Resources function to ensure that the 
Group's employment policies are properly implemented and followed. The Group's 
Human Resources policy covers key areas such as equal opportunities, wages, 
overtime and non-discrimination. As required by Ukrainian legislation, 
Collective Agreements are in place with the Group's Ukrainian subsidiary 
companies, which outline agreed level of staff benefits and other safeguards 
for employees. 
 
All staff are aware of the Group's grievance procedures. All employees have 
access to health insurance provided by the Group to ensure that all employees 
have access to adequate medical facilities. 
 
Each employee's training needs are assessed on an individual basis to ensure 
that their skills are adequate to support the Group's operations, and to help 
them to develop. 
 
Diversity 
 
The Board recognizes the benefits and importance of diversity (gender, ethnic, 
age, sex, disability, educational and professional backgrounds, etc.) and 
strives to apply diversity values across the business.  We endeavour to employ 
a skilled workforce that reflects the demographic of the jurisdictions in which 
we operate. The board will review the existing policies and intends to develop 
a diversity policy. 
 
Gender diversity 
 
The Board of Directors of the Company comprised of five Directors as of 31 
December 2022. The appointment of any new Director is made based on merit. See 
pages 23 and 24 for more information on the composition of the Board. 
 
As at 31 December 2022, the Company comprised a total of 75 persons, as 
follows: 
 
                                            Male  Female 
 
Non-executive directors                        3       1 
 
Executive directors                            1       - 
 
Management, other than Executive directors     7       2 
 
Other employees                               41      20 
 
Total                                         52      23 
 
Human rights 
 
Cadogan's commitment to the fundamental principles of human rights is embedded 
in our HSE policies and throughout our business processes. We promote the core 
principles of human rights pronounced in the UN Universal Declaration of Human 
Rights and our support for these principles is embedded throughout our Code of 
Conduct, our employment practices and our relationships with suppliers and 
partners wherever we do business. 
 
Community 
 
The Group's activities are carried out in rural areas of Ukraine and the Board 
is aware of its responsibilities to the local communities in which it operates 
and from which some of the employees are recruited. In our operational sites, 
management work with the local councils to ensure that the impact of operations 
is as low as practicable by putting in place measures to mitigate their effect. 
Projects undertaken include improvement of the road infrastructure in the area, 
which provides easier access to the operational sites while at the same time 
minimizing inconvenience for the local population and allowing improved road 
communications in the local communities, especially during winter season or 
harsh weather conditions. Specific community activities are undertaken for the 
direct benefit of local communities. All activities are followed and supervised 
by managers who are given specific responsibility for such tasks. 
 
The Group's companies in the Ukraine see themselves as part of the community 
and are involved and offer practical help and support. All these activities are 
run in accordance with our "Working with Integrity" policy and procedures. The 
recruitment of local staff generates additional income for areas that otherwise 
are predominantly dependent on the agricultural sector. 
 
The enactment in 2018 of a new legislation which introduces Environmental 
Impact Assessment studies and public hearings as part of the license's award/ 
renewal processes was anticipated effectively by the Group. The Group is 
complying with these requirements, building on the recognized competence of its 
people and advisors as well as on the good communication and relations 
established with local communities. 
 
Cadogan is committed to the territory and the communities where it operates and 
has fully financed social programs commitment for 2022 as per signed Memorandum 
between the Company, Lviv Regional Administration and local communities in 
2019. 
 
In 2022, the Group's operating locations were subject to continuous controlling 
levels of COVID-19 infection and normal working patterns have been disrupted. 
The Group is following all the recommendations and provides comprehensive 
measures inside the Group to restrict COVID-19 infection and spread. 
 
Approval 
 
The Strategic Report was approved by the Board of Directors on 27 April 2023 
and signed by order of the Board by: 
 
Ben Harber 
Company Secretary 
27 April 2023 
 
Board of Directors 
 
Current directors 
 
Michel Meeùs, 70, Belgian 
 
Non-Independent non-executive Chairman 
 
Mr Meeùs was appointed as a Non-executive Director on 23 June 2014. Mr. Meeùs 
was former Chairman of the Board of Directors of Theolia, an independent 
international developer and operator of wind energy projects. Since 2007, he 
has been a director within the Alcogroup SA Company (which gathers the ethanol 
production units of the Group), as well as within some of its subsidiaries. 
Before joining Alcogroup, Mr Meeùs carved out a career in the financial sector, 
at Chase Manhattan Bank in Brussels and London, then at Security Pacific Bank 
in London, then finally at Electra Kingsway Private Equity in London. 
 
Mr Meeus is currently Chairman of the Remuneration and Nomination Committees. 
 
Fady Khallouf, 62, French 
 
Chief Executive Officer 
 
Fady Khallouf was appointed as Director and CEO on 15 November 2019. He has a 
35-year experience in the energy, the environment, the engineering and the 
infrastructure sectors. He has previously held the position of CEO and CFO of 
FUTUREN (Renewable Energy, listed on Euronext Paris) where he achieved the 
restructuring and the turnaround of the group. Prior to that, he was the CEO of 
Tecnimont group (Petrochemicals and Oil & Gas), the Vice-President Strategy and 
Development of EDISON group (Electricity and Gas, E&P), the Head of M&A of EDF 
group (Energy). Fady Khallouf had beforehand held various management positions 
at ENGIE (Energy), Suez (Environmental Services), and DUMEZ (Construction and 
Infrastructures). 
 
Lilia Jolibois, 58, American 
 
Independent non-Executive Director 
 
Lilia Jolibois was appointed as Director on 15 November 2019. She is currently 
a member of three Boards: Cadogan Petroleum Plc, INSEAD Foundation, and CARA 
(UK and Wales). She is also a Venture and CEO Advisor at Loyal Venture Capital, 
a global VC fund. Her career spans Merrill Lynch Investment Banking, Sara Lee, 
and Lafarge in the USA and Europe. At Lafarge Group, Ms. Jolibois served in 
numerous positions in finance, strategy, business development, CEO and Chair of 
the Board for Lafarge Cement and Gypsum in Ukraine, and SVP and Chief 
Marketing-Sales-Supply Chain Officer for Lafarge Aggregates, Asphalt & Paving. 
 
Lilia is currently Chairman of the Company's Audit Committee and a member of 
the Remuneration and Nomination Committees. 
 
Jacques Mahaux, 71, Belgian 
 
Non-Executive Director 
 
Jacques Mahaux was appointed as Director on 15 November 2019. He has held 
various executive and directorship positions in Group Crédit Agricole in 
Luxembourg, CA Indosuez, Indosuez Bank and various Luxembourg and Swiss Holding 
companies active in industrial sectors. Previously he acted as an Attorney at 
Law at the Brussels Bar. 
 
Mr Mahaux is currently a member of the Audit, Remuneration and Nomination 
Committees. 
 
Gilbert Lehmann, 77, French 
 
Senior Independent Non-Executive Director 
 
Mr Lehmann was appointed to the Board on 18 November 2011. He was an adviser to 
the Executive Board of Areva, the French nuclear energy business, having 
previously been its Deputy Chief Executive Officer responsible for finance. He 
is also a former Chief Financial Officer and deputy CEO of Framatone, the 
predecessor to Areva, and was CFO of Sogee, part of the Rothschild Group. Mr 
Lehmann was also Deputy Chairman and Chairman of the Audit Committee of Eramet, 
the French minerals and alloy business. He is Deputy Chairman and Audit 
Committee Chairman of Assystem SA, the French engineering and innovation 
consultancy. He was Chairman of ST Microelectronics NV, one of the world's 
largest semiconductor companies, from 2007 to 2009, and stepped down as Vice 
Chairman in 2011. 
 
Mr Lehmann is currently a member of the Remuneration and Nomination Committees. 
 
Report of the Directors 
 
Directors 
 
The Directors in office during the year and to the date of this report are as 
shown below: 
 
Non-Executive Directors 
                     Executive Director 
Michel Meeus (Chairman) 
                                                               Fady Khallouf 
Gilbert Lehmann 
Lilia Jolibois 
Jacques Mahaux 
 
Directors' re-election 
 
The Board has decided previously that all Directors are subject to annual 
election by shareholders, in accordance with industry best practice and as 
such, all Directors will be seeking re-election at the Annual General Meeting 
to be held on 23rd June 2023. 
 
The biographies of the Directors in office at the date of this report are shown 
on pages 23and 24. 
 
Appointment and replacement of Directors 
 
The Company's Articles of Association allow the Board to appoint any individual 
willing to act as a Director either to fill a vacancy or act as an additional 
Director. The appointee may hold office only until the next annual general 
meeting of the Company whereupon his or her election will be proposed to the 
shareholders. 
 
The Company's Articles of Association prescribe that there shall be no fewer 
than three Directors and no more than fifteen. 
 
Directors' interests in shares 
 
The beneficial interests of the Directors in office at 31 December 2022 and 
their connected persons in the Ordinary shares of the Company at 31 December 
2022 are set out below. 
 
Director                                                         Number of 
                                                                    Shares 
 
Michel Meeus                                                    26,000,000 
 
Fady Khallouf                                                   10,425,455 
 
Gilbert Lehmann                                                          - 
 
Lilia Jolibois                                                           - 
 
Jacques Mahaux                                                           - 
 
Conflicts of Interest 
 
The Company has procedures in place for managing conflicts of interest. Should 
a director become aware that they, or any of their connected parties, have an 
interest in an existing or proposed transaction with the Company, its 
subsidiaries or any matters to be discussed at meetings, they are required to 
formally notify the Board in writing or at the next Board meeting. In 
accordance with the Companies Act 2006 and the Company's Articles of 
Association, the Board may authorize any potential or actual conflict of 
interest that may otherwise involve any of the directors breaching his or her 
duty to avoid conflicts of interest. All potential and actual conflicts 
approved by the Board are recorded in register of conflicts, which is reviewed 
by the Board at each Board meeting. 
 
Directors' indemnities and insurance 
 
The Company's Articles of Association provide that, subject to the provisions 
of the Companies Act 2006, all Directors of the Company are indemnified by the 
Company in respect of any liability incurred in connection with their duties, 
powers or office. Save for such indemnity provisions, there are no qualifying 
third-party indemnity provisions. In addition, the Company continues to 
maintain Directors' and Officers' Liability Insurance for all Directors who 
served during the year. 
 
Powers of Directors 
 
The Directors are responsible for the management of the business and may 
exercise all powers of the Company subject to UK legislation and the Company's 
Articles of Association, which includes powers to issue or buy back the 
Company's shares given by special resolution. The authorities to issue and buy 
back shares, granted at the 2022 Annual General Meeting, remains unused. 
 
Dividends 
 
The Directors do not recommend payment of a dividend for the year ended 31 
December 2022 (2021: nil). 
 
Principal activity and status 
 
The Company is registered as a public limited company (registration number 
05718406) in England and Wales. The principal activity and business of the 
Company is oil and gas exploration, development and production. 
 
Subsequent events 
 
In April 2023, SE Usenco Ukraine (a Cadogan subsidiary in Ukraine) completed 
the acquisition of the 5% share interest of Usenco Nadra LLC that were not yet 
owned by the Company. As a result, SE Usenco Ukraine consolidates now 100% of 
Usenco Nadra LLC in its ownership. 
 
This acquisition will allow the Company to further optimize its operating 
structure in Ukraine and be more cost effective at Blazhiv field. 
 
Structure of share capital 
 
The authorized share capital of the Company is currently £30,000,000 divided 
into 1,000,000,000 Ordinary shares of 3 pence each. The number of shares in 
issue as at 31 December 2022 was 244,128,487 Ordinary shares (each with one 
vote) with a nominal value of £7,323,854.61. The total number of voting rights 
in the Company is 244,128,421. The Companies (Acquisition of Own Shares) 
(Treasury Shares) Regulations 2003 allow companies to hold shares in treasury 
rather than cancel them. Following the consolidation of the issued capital of 
the Company on 10 June 2008, there were 66 residual Ordinary shares, which were 
transferred to treasury. No dividends may be paid on shares whilst held in 
treasury and no voting rights attached to shares held in treasury. 
 
Rights and obligations of Ordinary shares 
 
In accordance with applicable laws and the Company's Articles of Association, 
holders of Ordinary shares are entitled to: 
 
·    receive shareholder documentation including the notice of any general 
meeting; 
 
·    attend, speak and exercise voting rights at general meetings, either in 
person or by proxy; and 
 
·    a dividend where declared and paid out of profits available for such 
purposes. On a return of capital on a winding up, holders of Ordinary shares 
are entitled to participate in such a return. 
 
Exercise of rights of shares in employee share schemes 
 
None of the share awards under the Company's incentive arrangements are held in 
trust on behalf of the beneficiaries. 
 
Agreements between shareholders 
 
The Board is unaware of any agreements between shareholders, which may restrict 
the transfer of securities or voting rights. 
 
Restrictions on voting deadlines 
 
The notice of any general meeting of the Company shall specify the deadline for 
exercising voting rights and appointing a proxy or proxies to vote at a general 
meeting. To accurately reflect the views of shareholders, where applicable it 
is the Company's policy at present to take all resolutions at any general 
meeting on a poll. Following the meeting, the results of the poll are released 
to the market via a regulatory news service and published on the Company's 
website. 
 
Substantial shareholdings 
 
As at 31 December 2022 and 19 April 2023, being the last practicable date, the 
Company had been notified of the following interests in voting rights attached 
to the Company's shares: 
 
                                       31 December 2022        19 April 2023 
 
Major shareholder                     Number of % of total  Number of      % of 
                                    shares held     voting     shares     total 
                                                    rights       held    voting 
                                                                         rights 
 
SPQR Capital Holdings SA             67,298,498      27.57 67,298,498     27.57 
 
Mr Michel Meeus                      26,000,000      10.65 26,000,000     10.65 
 
Ms Veronique Salik                   17,959,000       7.36 17,959,000      7.36 
 
Devola SA                            17,409,000       7.13 17,409,000      7.13 
 
CA Indosuez Wealth Management        15,966,620       6.54 15,966,620      6.54 
 
Kellet Overseas Inc.                 14,002,696       5.74 14,002,696      5.74 
 
Mr Fady Khallouf                     10,425,455       4.27 10,425,455      4.27 
 
Mr Pierre Salik                       7,950,000       3.26  7,950,000      3.26 
 
Cynderella International SA           7,657,886       3.14  7,657,886      3.14 
 
Amendment of the Company's Articles of Association 
 
The Company's Articles of Association may only be amended by way of a special 
resolution of shareholders. 
 
Disclosure of information to auditor 
 
As required by section 418 of the Companies Act 2006, each of the Directors as 
at 27 April 2023 confirms that: 
 
(a) so far as the Director is aware, there is no relevant audit information of 
which the Company's auditor is unaware; and 
 
(b) the Director has taken all the steps that he ought to have taken as a 
Director in order to make himself aware of any relevant audit information and 
to establish that the Company's auditor is aware of that information. 
 
Going concern 
 
The Group's business activities, together with the factors likely to affect its 
future development, performance and position, are set out on pages 14 to 18. 
 
Having considered the Company's financial position and its principal risks and 
uncertainties, including uncertainties regarding the war in Ukraine and the 
assessment of potential risks associated with Covid-19 including a) 
restrictions applied by governments, illness amongst our workforce and 
disruption to supply chain and sales channels; and b) market volatility in 
respect of commodity prices associated with Covid-19 in addition to 
geopolitical factors, the Directors have a reasonable expectation that the 
Company and the Group have adequate resources to continue in operational 
existence for the foreseeable future. Accordingly, they continue to adopt the 
going concern basis in preparing the Consolidated and Company Financial 
Statements. For further detail please refer to the detailed discussion of the 
assumptions outlined in note 3(b) to the Consolidated Financial Statements. 
 
Reporting year 
 
The reporting year coincides with the Company's fiscal year, which is 1 January 
2022 to 31 December 2022. 
 
Financial risk management objectives and policies 
 
The Company's financial risk management objectives and policies including its 
policy for managing its exposure of the Company to price risk, credit risk, 
liquidity risk and cash flow risk. 
 
Management co-ordinates access to domestic and international financial markets 
and monitors and manages the financial risks relating to the operations of the 
Group in Ukraine through internal risks reports, which analyse exposures by 
degree and magnitude of risks. These risks include commodity price risks, 
foreign currency risk, credit risk, liquidity risk and cash flow interest rate 
risk. The Group does not enter into or trade financial instruments, including 
derivative financial instruments, for speculative purposes. 
 
Outlook 
 
Future developments in the business of the Company are presented on pages 5 to 
9. 
 
Change of control - significant agreements 
 
The Company has no significant agreements containing provisions, which allow a 
counterparty to alter and amend the terms of the agreement following a change 
of control of the Company. 
 
Should a change in control occur then certain Executive directors are entitled 
to a payment of salary and benefits for a period of six months. 
 
Streamlined energy and carbon reporting 
 
This section contains information on greenhouse gas ("GHG") emissions required 
by the Companies Act 2006 (Strategic Report and Directors' Report). 
 
 Methodology 
 
The principal methodology used to calculate the emissions is drawn from the 
'Environmental Reporting Guidelines: including mandatory greenhouse gas 
emissions reporting guidance (June 2013)', issued by the Department for 
Environment, Food and Rural Affairs ("DEFRA") and DEFRA GHG conversion factors 
for company reporting were utilised to calculate the CO2 equivalent of 
emissions from various sources (2018 update). Also, the used methodology was 
also updated based on methods proposed by DNV GL and in of GHG emissions 
Inventory referring to the following guidelines and international standards. 
 
The Company has reported on all the emission sources required under the 
Regulations. 
 
The Company does not have responsibility for any emission sources that are not 
included in its consolidated statement. 
 
Consolidation approach and organisation boundary 
 
An operational control approach was used to define the Company's organisational 
boundary and responsibility for GHG emissions. All material emission sources 
within this boundary have been reported upon, in line with the requirements of 
the Regulations. 
 
Scope of reported emissions 
 
Emissions data from the sources within Scope 1 and Scope 2 of the Company's 
operational boundaries is detailed below. This includes direct emissions from 
assets that fall within the Company's organisational boundaries (Scope 1 
emissions), as well as indirect emissions from energy consumption, such as 
purchased electricity and heating (Scope 2 emissions). 
 
Scope 1 emissions in 2022 increased compared to the previous year (14,631 tons 
in 2022 vs 13,063 tons in 2021). This was caused by the increase of the gas 
factor in the produced oil. 
 
Conversely, Scope 2 emissions decreased in 2022 (124 tons in 2022 vs 137 tons 
in 2021), as a result of the processes started in 2016 to improve the 
efficiency of the structure, logistic and facilities. Total emissions in 2022 
were 14,755 tons versus the 13,200 tons of 2021. 
 
Intensity ratio 
 
In order to express the GHG emissions in relation to a quantifiable factor 
associated with the Company's activities, wellhead production of crude oil and 
natural gas has been chosen as the normalisation factor for calculating the 
intensity ratio. This will allow comparison of the Company's performance over 
time, as well as with other companies in the Company's peer group. 
 
The intensity ratio for E&P operations (same reporting perimeter) increased to 
125,26 tons CO2e/Kboe in 2022 vs 103,4 tons CO2e/Kboe in 2021. 
 
Total greenhouse gas emissions data for the year from 1 January to 31 December 
 
CO2 emissions level increase was caused by the increase of associated gas 
volume recovered during oil production. Another factor impacted emissions level 
growing was increase of methane in CO2 level in the gas composition as detected 
by bottomhole sampling oil analyses executed during the last hydrodynamic 
surveys of Blazhiv wells. The Company has planned repetition survey and 
sampling in 2023 to reconcile the data as well as different technological 
scenario for reducing emissions to the atmosphere. 
 
              Greenhouse gas emissions source                           E&P 
 
                                                                      2022          2021 
 
Scope 1 
 
Direct emissions, including combustion of fuel and                  14,631        13,063 
operation of facilities 
(tonnes of CO2 equivalent) 
 
Scope 2 
 
Indirect emissions from energy consumption, such as                    124           137 
electricity and heating purchased for own use (tonnes of 
CO2 equivalent) 
 
Total (Scope 1 & 2)                                                 14,755        13,200 
 
Normalisation factor 
 
Barrels of oil equivalent, net                                     117,793       127,662 
 
Intensity ratio 
 
Emissions reported above normalised to tonnes of CO2e per           125,26         103,4 
total wellhead production of crude oil, condensates and 
natural gas, in thousands of Barrels of Oil Equivalent, net 
 
Energy consumption 
 
The Company started in 2020 to monitor energy consumption in KwH. 
 
                    2022      2021         % change 
 
                     KwH       KwH       2022 - 2021 
 
Ukraine             575,876   572,890        0,5% 
 
Energy consumption in the UK is immaterial. 
 
Task force on climate-related financial disclosures ('TCFD') 
 
Climate change remains one of the Group's principal risks with governance over 
climate-related transition and physical risks provided at the Board and 
operational levels. The Board has ultimate accountability for ensuring Cadogan 
maintains sound climate risk management and internal control systems. The Board 
is ultimately accountable for Cadogan's strategic response to climate change 
and the energy transition. Directors are responsible for ensuring they remain 
sufficiently informed of climate related risks to Cadogan and the broader 
energy sector. 
 
TCFD related disclosures 
 
Governance   Describe the Board's oversight of climate-related risks and  p.14-18 
             opportunities. 
 
             Describe Management's role in assessing and managing 
             climate-related risks and opportunities. 
 
Strategy     Describe the climate-related risks and opportunities the       p.5-9 
             organisation has identified over the short, medium and long 
             term. 
 
             Describe the impact of climate-related risks and 
             opportunities on the organisation's businesses, strategy 
             and financial planning 
 
Risk         Describe the organisation's processes for identifying and    p.20-21 
management   assessing climate-related risks. 
 
             Describe the organisation's processes for managing 
             climate-related risks. 
 
             Describe how processes for identifying, assessing and 
             managing climate-related risks are integrated into the 
             organisation's overall risk management. 
 
Metrics and  Disclose the metrics used by the organisation to assess      p.27-28 
targets      climate-related risks and opportunities, in line with its 
             strategy and risk management process 
 
             Disclose Scope 1 and Scope 2greenhouse gas (GHG) emissions.  p.28-29 
 
             Describe the targets used by the organisation to manage 
             climate-related risks, opportunities, and performances 
             against targets. 
 
2023 Annual General Meeting 
 
The 2023 Annual General Meeting ("AGM") of the Company provides an opportunity 
to communicate with shareholders and the Board welcomes their participation. 
Board members constantly strive to engage with shareholders on strategy, 
governance and a number of other issues. 
 
The Board looks forward to welcoming shareholders to the AGM.  The AGM notice 
will be issued to shareholders well in advance of the meeting with notes to 
provide an explanation of all resolutions to be put to the AGM. In addition, 
shareholder information will be enclosed as usual with the AGM notice to 
facilitate voting and feedback in the usual way. 
 
The Chairman of the Board and the members of its committees will be available 
to answer shareholder questions at the AGM. All relevant shareholder 
information including the annual report for 2022 and any other announcements 
will be published on our website - www.cadoganenergysolutions.com. 
 
This Report of Directors comprising pages 25 to 30 has been approved by the 
Board and signed by the order of the Board by: 
 
Ben Harber 
Company Secretary 
27 April 2023 
 
Corporate Governance Statement 
 
As a Company listed on the standard segment of the London Stock Exchange it is 
not required to apply a specific corporate governance code and, given its size, 
has elected not to do so. However, the Board of the Company is committed to the 
highest standards of corporate governance and believe that the 2018 UK 
Corporate Governance Code ("the Code") issued by the Financial Reporting 
Council ("FRC") provides a suitable benchmark for the Company's corporate 
governance framework. This Statement outlines how Cadogan Energy Solutions plc 
("Cadogan" or the "Company") has applied the relevant principles of the Code 
and complied with its provisions. 
 
This Statement outlines how Cadogan Energy Solutions plc ("Cadogan" or the 
"Company") has applied the relevant principles of the Code and complied with 
its provisions. 
 
During the year under review, the Company complied with all the provisions of 
the Code, other than the exceptions noted below or elsewhere in this statement: 
 
·    Provision 5 (Workforce Engagement): Given the size of the business, the 
Board does not consider it appropriate to adopt the suggested methods outlined 
within the UK Corporate Governance Code 2018 to engage with its employees given 
the size of the Company. Employee engagement continues to be undertaken by 
senior management and any issues are escalated to the Board through the Chief 
Executive Officer. The Board believes that the arrangements in place are 
effective but will continue to keep this under review. 
 
·    Provision 9 (regarding the independence criteria of the Chair on 
appointment): Under the 2018 Corporate Governance Code, the Company's Chair, Mr 
Michel Meeùs, is not considered to be independent given the size of his 
shareholding in the Company. Despite this, the Board considers Mr Meeùs to be 
independent in character, mindset and judgement. 
 
·    Provision 21 (Board Evaluation): Given the size of the Board it was felt 
that a board evaluation would not provide added value however the Board will 
continue to assess this provision periodically. 
 
·    Provision 24 (Audit Committee Composition): Given the size of the Board, 
the Audit Committee does not totally consist of independent non-executive 
directors. Ms Lilia Jolibois, Independent non-executive director, chairs the 
Audit Committee whilst Mr Jacques Mahaux, non-executive director, is a member 
of the Audit Committee. 
 
·    Provision 32 (Remuneration Committee Composition): Given the size of the 
Board, the Remuneration Committee does not totally consist of independent 
non-executive directors. The Remuneration Committee consists of Mr Michel 
Meeùs, Ms. Lilia Jolibois, Mr Jacques Mahaux and Mr Gilbert Lehmann. 
 
Board Leadership and Company Purpose 
 
The Board provides leadership and oversight, and its role is to ensure the 
long-term success of the Company by implementing the Company's strategy and 
business plan, overseeing its affairs, and providing constructive challenge to 
management as they do this. In addition to this, the Board oversees financial 
matters, governance, internal controls and risk management. The purpose of the 
Board is to: 
 
·    monitor Group activities to see that sustainable value is being created; 
 
·    evaluate business strategies and monitor their implementation; 
 
·    monitor and review the performance of management; 
 
·    provide accountability to shareholders through appropriate reporting and 
regulatory compliance; 
 
·    understand and ensure the management of operational business and financial 
risks to which the Group is exposed; and 
 
·    ensure that the financial controls and systems of risk management are 
robust and defensible 
 
The Board comprises a Non-Independent non-executive Chairman, Chief Executive 
Officer, two Independent Non-Executive Directors and a non-executive Director. 
The Board has appointed Mr Lehmann as the Senior Independent Director. 
 
The biographical details for each of the Directors and their membership of 
Committees are incorporated into this report by reference and appear on pages 
23 to 24. 
 
The formal schedule of matters reserved for the Board's decision is available 
on the Company's website. 
 
The Board recognises the importance of building strong relationships with 
stakeholders and understanding their views in order to help the Company deliver 
its strategy and promote the development of the business over the long-term. 
The Board is committed to having effective engagement with its stakeholders. 
Our section 172 statement can be found on pages 35 to 36 which summarises the 
Board's engagement with the Company's main stakeholders and some examples of 
how their views have been taken into account in the Board's decision-making. 
 
The Company seeks to ensure that it always acts lawfully, ethically and with 
integrity. The Company has in place the following policies which the Board 
reviews periodically: 
 
·    Code of Business Conduct and Ethics 
 
·    Anti-Bribery Policy 
 
·    Share Dealing Code 
 
·    Disclosure Policy 
 
·    Health, Safety and Environmental policies. 
 
The Company has procedures in place for managing conflicts of interest. Should 
a director become aware that they, or any of their connected parties, have an 
interest in an existing or proposed transaction with the Company, its 
subsidiaries or any matters to be discussed at meetings, they are required to 
formally notify the Board in writing or at the next Board meeting. In 
accordance with the Companies Act 2006 and the Company's Articles of 
Association, the Board may authorize any potential or actual conflict of 
interest that may otherwise involve any of the directors breaching his or her 
duty to avoid conflicts of interest. All potential and actual conflicts 
approved by the Board are recorded in register of conflicts, which is reviewed 
by the Board at each Board meeting. 
 
Directors' declarations of interests is a regular Board agenda item. A register 
of directors' interests (including any actual or potential conflicts of 
interest) is maintained and reviewed regularly to ensure all details are kept 
up to date. Authorisation is sought prior to a director taking on a new 
appointment or if any new conflicts or potential conflicts arise. New Directors 
are required to declare any conflicts, or potential conflicts, of interest to 
the Board at the first Board meeting after his or her appointment. The Board 
believes that the procedures established to deal with conflicts of interest are 
operating effectively. 
 
Division of Responsibilities 
 
The Directors possess a wide range of skills, knowledge and experience relevant 
to the strategy of the Company, including financial, legal, governance, 
regulatory and industry experience as well as the ability to provide 
constructive challenge to the views and actions of executive management in 
meeting agreed strategic goals and objectives. 
 
The roles and responsibilities of the Chairman and Chief Executive Officer are 
separate with a clear and formal division of each individual's 
responsibilities, which has been agreed and documented by the Board. 
 
The Non-Executive Directors bring an independent view to the Board's 
discussions and the development of its strategy. Their range of experience 
ensures that management's performance in achieving the business goals are 
challenged appropriately. Two Non-Executive Directors, Ms Lilia Jolibois, and 
Mr Gilbert Lehmann are considered by the Board to be independent. Mr Gilbert 
Lehmann, Senior Independent non-executive Director, has served on the Board for 
longer than 9 years since his appointment, the board is of the view that he 
retains his independent judgement and continues to make a valuable contribution 
to the board. 
 
Mr Michel Meeus, who is a significant shareholder and Mr Jacques Mahaux are not 
considered independent as defined within the UK Corporate Governance Code 2018, 
however the Board believes they are independent in character and judgement and 
free from relationships or circumstances that could affect their judgement. 
 
The Board has access to the advice of the company secretary. 
 
Composition, Succession and Evaluation 
 
The Company has established a nomination committee which leads the process for 
Board appointments by identifying and nominating candidates for the approval of 
the Board to fill Board vacancies and making recommendations to the Board on 
Board's composition and balance. The Company's Nomination Committee Report can 
be found on page 41. 
 
Under the Company's Articles of Association, all Directors must seek 
re-election by members at least once every three years. However, the Board has 
agreed that all Directors will be subject to annual election by shareholders in 
line with Corporate Governance best practice. Accordingly, all members of the 
Board will be standing for re-election at the 2023 Annual General Meeting due 
to be held on 23rd June 2023. 
 
All Directors continue to be effective and have sufficient time available to 
perform their duties. The letters of appointment for the Non-Executive 
Directors are available for review at the Registered Office and prior to the 
Annual General Meeting. Each of the Non-Executive Directors independently 
ensures that they update their skills and knowledge sufficiently to enable them 
to fulfil their duties appropriately. 
 
The Chairman, in conjunction with the Company Secretary, plans the programme 
for the Board during the year. While no formal structured continuing 
professional development program has been established for the non-executive 
Directors, every effort is made to ensure that they are fully briefed before 
Board meetings on the Company's business. The agenda for Board and Committee 
meetings are considered by the relevant Chairman and issued with supporting 
papers during the week preceding the meeting. For each Board meeting, the 
Directors receive a Board pack including management accounts, briefing papers 
on commercial and operational matters and major capital projects including 
acquisitions. The Board also receives briefings from key management on specific 
issues. 
 
Audit, Risk and Internal Control 
 
The Board has delegated certain responsibilities to its committees including 
its audit committee. The Company's Audit Committee Report can be found on pages 
37 to 38. 
 
The role of the Audit Committee is to monitor the integrity of the Company's 
financial reporting, to review the Company's internal control and risk 
management systems and to oversee the relationship with the Group's external 
auditors. The Audit Committee focuses particularly on compliance with legal 
requirements, accounting standards and the rules of the Financial Services 
Authority. The Audit Committee will meet at least three times a year with 
further meetings that are determined by the committee. Any member of the 
committee or the external auditors may request any additional meetings they 
consider necessary. 
 
The Directors are responsible for the Group's system of internal control and 
for maintaining and reviewing its effectiveness. The Group's systems and 
controls are designed to safeguard the Group's assets and to ensure the 
reliability of information used both within the business and for publication. 
The Board has delegated responsibility for the monitoring and review of the 
Group's internal controls to the Audit Committee. 
 
Systems are designed to manage, rather than eliminate the risk of failure to 
achieve business objectives and can provide only reasonable, and not absolute 
assurance against material misstatement or loss. 
 
The key features of the Group's internal control and risk management systems 
that ensure the accuracy and reliability of financial reporting include clearly 
defined lines of accountability and delegation of authority, policies and 
procedures that cover financial planning and reporting, preparing consolidated 
financial statements, capital expenditure, project governance and information 
security. 
 
The key features of the internal control systems, which operated during 2022 
and up to the date of signing the Financial Statements are documented in the 
Group's Corporate Governance Policy Manual and Finance Manual. These manuals 
and policies have been circulated and adopted throughout the Group throughout 
the period. 
 
Day-to-day responsibility for the management and operations of the business has 
been delegated to the Chief Executive Officer and senior management. Certain 
specific administrative functions are controlled centrally. Taxation and 
treasury functions report to the Group Director of Finance who reports directly 
to the Chief Executive Officer. 
 
The legal function for Ukraine's related assets and activities is managed by 
the General Counsel, who reports to the General Director of Cadogan Ukraine. 
The Health, Safety and Environment functions report to the Chairman of the HSE 
Committee, the HSE Committee Report can be found on pages 39 to 40. The Group 
does not have an internal audit function. Due to the small scale of the Group's 
operations at present, the Board does not feel that it is appropriate or 
economically viable to have an internal audit function in place, however this 
will be kept under review by the Audit Committee on an annual basis. 
 
The Board has reviewed internal controls and risk management processes, in 
place from the start of the year to the date of approval of this report. During 
the course of its review the Board did not identify nor were advised of any 
failings or weaknesses which it has deemed to be significant. 
 
A summary of the principal risks facing the Company and the mitigating actions 
in place are contained on pages 14 to 18 of the annual report. 
 
The Company's going concern is contained on pages 27 to 28 of the annual 
report. 
 
Further information on the work undertaken by the Committee during the year can 
be found on pages 37 to 38 of the annual report. 
 
Remuneration 
 
The Board has established a Remuneration Committee and the Company's 
Remuneration Committee Report can be found on pages 43 to 63 of the annual 
report. 
 
The role of the Remuneration Committee is to determine and agree with the Board 
the broad policy for the remuneration of executives and Senior Managers as 
designated, as well as for setting the specific remuneration packages, 
including pension rights and any compensation payments of all executive 
Directors and the Chairman. The Company's remuneration policies and practices 
are designed to support its long-term strategy and promote the long-term 
sustainable success of the Company. 
 
Attendance at Meetings 
 
Six Board meetings took place during 2022. The attendance of those Directors in 
place at the year end at Board and Committee meetings during the year was as 
follows: 
 
                                    Board     Audit Nomination  Remuneration 
                                          Committee  Committee     Committee 
 
No. Held                                6         2        0 *             1 
 
No. Attended: 
 
M Meeus                                 6       n/a          0             1 
 
F Khallouf                              6       n/a        n/a           n/a 
 
L Jolibois                              6         2          0             1 
 
G Lehmann                               6       n/a          0             1 
 
J Mahaux                                6         2          0             1 
 
*There was no meeting of the Nomination Committee held during 2022. 
 
Responsibilities and membership of Board Committees 
 
The Board has agreed written terms of reference for the Nomination Committee, 
Remuneration Committee, Audit Committee and HSE committee. The terms of 
reference for the Board Committees are published on the Company's website, 
www.cadoganenergysolutions.com, and are also available from the Company 
Secretary at the Registered Office. A review of the Committees including their 
membership and activities of all Board Committees is provided on pages 37 to 
42. 
 
Relations with shareholders 
 
The Chairman and Executive Directors of the Company have a regular dialogue 
with analysts and substantial shareholders. The outcome of these discussions is 
reported to the Board at quarterly meetings and discussed in detail. Mr 
Lehmann, as the Senior Independent Director, is available to meet with 
shareholders who have questions that they feel would be inappropriate to raise 
via the Chairman or Executive Directors. 
 
The Annual General Meeting is used as an opportunity to communicate with all 
shareholders. In addition, financial results are posted on the Company's 
website, www.cadoganenergysolutions.com, as soon as they are announced. The 
Notice of the Annual General Meeting is also contained on the Company's 
website, www.cadoganenergysolutions.com. It is intended that the Chairmen of 
the Nomination, Audit and Remuneration Committees will be present at the Annual 
General Meeting. The results of all resolutions will be published on the 
Company's website, www.cadoganenergysolutions.com. 
 
Directors' section 172 statement 
 
The disclosure describes how the Directors have regard to the matters set out 
in section 172(1)(a) to (f) and forms the Directors' statement required under 
section 414CZA of The Companies Act 2006. This new reporting requirement is 
made in accordance with the new corporate governance requirements identified in 
The Companies (Miscellaneous Reporting) Regulations 2018. 
 
The matters set out in section 172(1) (a) to (f) are that a Director must act 
in the way they consider, in good faith, would be most likely to promote the 
success of the Company for the benefit of its members as a whole, and in doing 
so have regard (amongst other matters) to: 
 
(a) the likely consequences of any decision in the long term; 
 
(b) the interests of the Company's employees; 
 
(c) the need to foster the Company's business relationships with suppliers, 
customers and others; 
 
(d) the impact of the Company's operations on the community and the 
environment; 
 
(e) the desirability of the Company maintaining a reputation for high standards 
of business conduct; and 
 
(f) the need to act fairly between members of the Company. 
 
Being sustainable in our activities means conducting our business with respect 
for the environment and for the communities hosting us, with the aim of 
increasing the benefit and value to our stakeholders. We recognize that this is 
a key element to be competitive and to maintain our licence to operate. 
 
Further details of how the Directors have regard to the issues, factors and 
stakeholders considered relevant in complying with S 172 (1) (a)-(f), the 
methods used to engage with stakeholders and the effect on the Group's decision 
making can be found throughout the annual report and in particular pages 34 
(which outlines how the Company engages with its stakeholders), pages 20 to 22 
(which contains Cadogan's corporate responsibility statement) pages 28 to 30 
(which contains the Company's report on greenhouse gas emissions) and page 35 
(which outlines the ways in which the Company engages with its shareholders). 
 
The Group has implemented an integrated HSE management system aiming to ensure 
a safe and environmentally friendly culture in the organization (pages 20 to 
22). However, regarding the environmental sustainability of the Group's 
activities, the Directors are fully aware of the need to direct future 
development in new activities with a lower impact on environment (CEO outlook 
page 9, 28). 
 
When assessing the Proger Loan, the Directors carefully considered the issues 
and decisions with their impact on the Group and all its stakeholders (pages 8, 
9, 16, 17). 
 
The Board has a formal schedule of matters specifically reserved for its 
decision, including approval of acquisitions and disposals, major capital 
projects, financial results, Board appointments, dividend recommendations, 
material contracts and Group strategy. For each Board meeting, the Directors 
receive a Board pack including management accounts, briefing papers on 
commercial and operational matters and major capital projects including 
acquisitions. The Board also receives briefings from key management on specific 
issues. 
 
In particular, as a consequence of the invasion of Ukraine by Russia in 
February 2022, and the war situation prevailing in Ukraine the Board discussed 
the current situation and its consequences on the security of the employees, 
the organization of the operations in Ukraine and the potential impacts on its 
human, financial and operational assets. The Group has been able to implement 
immediately emergency procedures with safety and protection measures 
communicated to all employees and put in place for every location. Specific 
measures have been put in place for the operations on site to ensure the human, 
the industrial and the environmental safety. The Group is monitoring the 
situation daily and taking appropriate action to ensure the safety and 
essential needs of its employees. 
 
Board Committee Reports 
 
Audit Committee Report 
 
The Audit Committee is appointed by the Board, on the recommendation of the 
Nomination Committee, from the Non-Executive Directors of the Group. The Audit 
Committee's terms of reference are reviewed annually by the Audit Committee and 
any changes are then referred to the Board for approval. The terms of reference 
of the Committee are published on the Company's website, 
www.cadoganenergysolutions.com, and are also available from the Company 
Secretary at the Registered Office. Two members constitute a quorum. 
 
Responsibilities 
 
§ To monitor the integrity of the annual and interim financial statements, the 
accompanying reports to shareholders, and announcements regarding the Group's 
results; 
 
§ To review and monitor the effectiveness and integrity of the Group's 
financial reporting and internal financial controls; 
 
§ To review the effectiveness of the process for identifying, assessing and 
reporting all significant business risks and the management of those risks by 
the Group; 
 
§ To oversee the Group's relations with the external auditor and to make 
recommendations to the Board, for approval by shareholders, on the appointment 
and removal of the external auditor; 
 
§ To consider whether an internal audit function is appropriate to enable the 
Audit Committee to meet its objectives; and 
 
§ To review the Group's arrangements by which staff of the Group may, in 
confidence, raise concerns about possible improprieties in matters of financial 
reporting or other matters. 
 
Governance 
 
Ms Jolibois and Mr Mahaux are both members of the Audit Committee. The Audit 
Committee is chaired by Ms Jolibois who had relevant financial experience 
within a major European company as well as holding several non-executive roles 
in major international entities. 
 
At the invitation of the Audit Committee, the Group Director of Finance and 
external auditor regularly attend meetings. The Company Secretary attends all 
meetings of the Audit Committee. 
 
The Audit Committee also meets the external auditor without management being 
present. 
 
Activities of the Audit Committee 
 
During the year, the Audit Committee discharged its responsibilities as 
follows: 
 
Assessment of the effectiveness of the external auditor 
 
The Committee has assessed the effectiveness of the external audit process. 
They did this by: 
 
§ Reviewing the 2022 external audit plan; 
 
§ Discussing the results of the audit including the auditor's views on material 
accounting issues and key judgements and estimates, and their audit report; 
 
§ Considering the robustness of the audit process; 
 
§ Reviewing the quality of the service and people provided to undertake the 
audit; and 
 
§ Considering their independence and objectivity. 
 
Financial statements 
 
The Audit Committee examined the Group's consolidated and Company's financial 
statements and, prior to recommending them to the Board, considered: 
 
·    the appropriateness of the accounting policies adopted; 
 
·    reviewed critical judgements, estimates and underlying assumptions; and 
 
·    assessed whether the financial statements are fair, balanced and 
understandable. 
 
Going concern 
 
After making enquiries and considering the uncertainties described on pages 14 
to 18, the Committee has a reasonable expectation that the Company and the 
Group has adequate resources to continue in operational existence for the 
foreseeable future and consider the going concern basis of accounting to be 
appropriate. For further detail including the assessment of the impact of 
Covid-19 and the basis for the conclusion, please refer to the detailed 
discussion of the assumptions outlined in note 3 (b) to the Consolidated 
Financial Statements. 
 
Internal controls and risk management 
 
The Audit Committee reviews and monitors financial and control issues 
throughout the Group including the Group's key risks and the approach for 
dealing with them. Further information on the risks and uncertainties facing 
the Group are detailed on pages 100 to 103 and in note 27 to the financial 
statements. 
 
External auditor 
 
The Audit Committee is responsible for recommending to the Board, for approval 
by the shareholders, the appointment of the external auditor. 
 
The Audit Committee considers the scope and materiality for the audit work, 
approves the audit fee, and reviews the results of the external auditor's work. 
Following the conclusion of each year's audit, it considers the effectiveness 
of the external auditor during the process. An assessment of the effectiveness 
of the audit process was made, considering reports from the auditor on its 
internal quality procedures. The Committee reviewed and approved the terms and 
scope of the audit engagement, the audit plan and the results of the audit with 
the external auditor, including the scope of services associated with 
audit-related regulatory reporting services. Additionally, auditor independence 
and objectivity were assessed, considering the auditor's confirmation that its 
independence is not impaired, the overall extent of non-audit services provided 
by the external auditor and the past service of the auditor. 
 
A breakdown of the non-audit fees is disclosed in note 11 to the Consolidated 
Financial Statements. The Audit Committee has reviewed the nature, level and 
timing of these services in the course of the year and is confident that the 
objectivity and independence of the auditor are not impaired by the reason of 
such non-audit work. 
 
Internal audit 
 
The Audit Committee considers annually the need for an internal audit function 
and believes that, due to the size of the Group and its current stage of 
development, an internal audit function will be of little benefit to the Group. 
 
Whistleblowing 
 
The Group's whistleblowing policy encourages employees to report suspected 
wrongdoing and sets out the procedures employees must follow when raising 
concerns. The policy, which was implemented during 2008 is reviewed 
periodically.  The Group's policies on anti-bribery, the acceptance of gifts 
and hospitality, and business conduct and ethics are circulated to staff as 
part of a combined manual on induction with changes regularly communicated. 
 
Overview 
 
As a result of its work during the year, the Audit Committee has concluded that 
it has acted in accordance with its terms of reference and has ensured the 
independence and objectivity of the external auditor. 
 
The Chairman of the Audit Committee will be available at the Annual General 
Meeting to answer any questions about the work of the Audit Committee. 
 
Lilia Jolibois 
Chairman of the Audit Committee 
27 April 2023 
 
Health, Safety and Environment Committee Report 
 
The Health, Safety and Environment Committee (the "HSE Committee") is appointed 
by the Board, on the recommendation of the Nomination Committee. The HSE 
Committee's terms of reference are reviewed annually by the Committee and any 
changes are then referred to the Board for approval. The terms of reference of 
the Committee are published on the Company's website, 
www.cadoganenergysolutions.com, and are also available from the Company 
Secretary at the Registered Office. Two members constitute a quorum, one of 
whom must be a Director. 
 
Governance 
 
The Committee is chaired by Mr Andrey Bilyi (Cadogan Ukraine General Director) 
as acting Head of the HSE Committee and its other member is Ms Snizhana Buryak 
(HSE Manager). The CEO attends meetings of the HSE Committee as necessary. 
During 2022, the HSE Committee held four meetings to monitor the HSE risks and 
activities across the business, following which actions were identified for the 
continuous improvement of the various processes and the mitigation of risk. 
 
Responsibilities 
 
·    To regularly maintain and implement the continuous improvement of the HSE 
Management System with the aim of improving the Company's performances; 
 
·     To manage and mitigate the risks of personnel infection with covid-19 
virus. Work-out respective administrative and healthcare measures to provide 
safe working conditions for the employees. Prevent the spread of covid-19 as 
well as ensuring staff reasonable vaccination level. 
 
·    Assessments of the risks to employees, contractors, customers, partners, 
and any other people who could be affected by the Company's activities with the 
aim of reducing the global risk of the Company and increasing its level of 
acceptability; 
 
·    Evaluate the effectiveness of the Group's policies and systems for 
identifying and managing health, safety and environmental risks within the 
Group's operation; 
 
·    Assess the policies and systems within the Group for ensuring compliance 
with health, safety and environmental regulatory requirements; 
 
·    Assess the performance of the Group with regard to the impact of health, 
safety, environmental and community relations decisions and actions upon 
employees, communities and other third parties and also assess the impact of 
such decisions and actions on the reputation of the Group and make 
recommendations to the Board on areas for improvement; 
 
·    On behalf of the Board, receive reports from management concerning any 
fatalities and serious accidents within the Group and actions taken by 
management as a result of such fatalities or serious accidents; 
 
·    Evaluate and oversee, on behalf of the Board, the quality and integrity of 
any reporting to external stakeholders concerning health, safety, environmental 
and community relations issues; and 
 
·    Where it deems it appropriate to do so, appoint an independent auditor to 
review performance with regard to health, safety, environmental and community 
relations matters and review any strategies and action plans developed by 
management in response to issues raised and, where appropriate, make 
recommendations to the Board concerning the same. 
 
Activities of the Health, Safety and Environment Committee 
 
The HSE Committee in discharging its duties reviewed and considered the 
following: 
 
·    Company activities execution and control over contractors services 
execution in line with company policies and HSE procedures 
 
·    Monthly statistics and reports on the activity were regularly distributed 
to the CEO, Management and to the members of the committee; 
 
·    Ensured that the implementation of new legislation and requirements were 
punctually followed-up and promptly updated; 
 
·    Compliance with HSE regulatory requirements was ensured through discussion 
of the results of inspections, both internal inspections and those carried out 
by the Authorities. The results of the inspections and drills were analysed and 
commented to assess the need for corrective actions and/or training 
initiatives; 
 
·    A standing item was included on the agenda at every meeting to monitor 
monthly HSE performance, key indicators and statistics allowing the HSE 
Committee to assess the Company's performance by analysing any lost-time 
incidents, near misses, HSE training and other indicators; 
 
·    Interaction with contractors, Authorities, local communities and other 
stakeholders were discussed among other HSE activities; 
 
·    Compliance to ISO 14001 and ISO 45001 has been proved by the authorized 
third party auditor. Also the Company had its entire data calculation process 
as well as emissions measurement system re-validated by a different independent 
third party. 
 
·    Ensuring all the Observation and Actions requested by the Certification 
Body have been implemented 
 
Overview 
 
The Company's HSE Management System and the Guidelines and Procedures have been 
updated to fit with the ISO requirements and are adequate for the proper 
execution of the Company's operations. 
 
As a result of its work during the year, the HSE Committee has concluded that 
it has acted in accordance with its terms of reference. 
 
Nomination Committee Report 
 
The Board delegates some of its duties to the Nomination Committee and appoints 
the members of the Nomination Committee which are non-executive Directors of 
the Group. The membership of the Committee is reviewed annually and any changes 
to its composition are referred to the Board for approval. The terms of 
reference of the Nomination Committee are published on the Company's website, 
www.cadoganenergysolutions.com, and are available from the Company Secretary at 
the Registered Office. Two members constitute a quorum. 
 
Governance 
 
Mr. Michel Meeus (Remuneration and Nomination Committee Chairman), Ms. Lilia 
Jolibois, Mr. Jacques Mahaux and Mr. Gilbert Lehmann (Non-Executive Directors) 
are the members of the Nomination Committee. The Company Secretary attends all 
meetings of the Nomination Committee. 
 
Responsibilities 
 
·    To regularly review the structure, size and composition (including the 
skills, knowledge and experience) required of the Board compared to its current 
position and make recommendations to the Board with regard to any changes; 
 
·    Be responsible for identifying and nominating candidates to fill Board 
vacancies as and when they arise, for the Board's approval; 
 
·    Before appointments are made by the Board, evaluate the balance of skills, 
knowledge, experience and diversity (gender, ethnic, age, sex, disability, 
educational and professional backgrounds, etc.) on the Board and, in the light 
of this evaluation, prepare a description of the role and capabilities required 
for a particular appointment; and 
 
·    In identifying suitable candidates, the Nomination Committee shall use 
open advertising or the services of external advisers to facilitate the search 
and consider candidates from a wide range of backgrounds on merit, ensuring 
that appointees have enough time available to devote to the position. 
 
The Nomination Committee shall also make recommendations to the Board 
concerning: 
 
·    Formulating plans for succession for both executive and non-executive 
Directors and in particular for the key roles of Chairman and Chief Executive 
Officer; 
 
·    Membership of the Audit and Remuneration Committees, in consultation with 
the Chairmen of those committees; 
 
·    The reappointment of any non-executive Director at the conclusion of their 
specified term of office, having given due regard to their performance and 
ability to continue to contribute to the Board in the light of the knowledge, 
skills and experience required; and 
 
·    The re-election by shareholders of any Director having due regard to their 
performance and ability to continue to contribute to the Board in the light of 
the knowledge, skills and experience required. 
 
Any matters relating to the continuation in office of any Director at any time 
including the suspension or termination of service of an executive Director as 
an employee of the Company subject to the provisions of the law and their 
service contract. 
 
Michel Meeus 
Nomination Committee Chairman 
27 April 2023 
 
Remuneration Committee 
 
Statement from the Chairman 
 
I am pleased to present the Annual Report on Remuneration for the year ended 31 
December 2022. 
 
Cadogan's Remuneration Policy was approved as proposed by the shareholders at 
the Annual General Meeting of June 25, 2021 and is attached at the end of the 
Annual Report on Remuneration. The Remuneration Committee is not proposing to 
make any changes to the existing Policy however in line with industry best 
practice and the three-year Policy cycle the Company will be seeking 
shareholder approval at this year's AGM. 
 
The key elements of the Remuneration Policy are: 
 
·    A better long-term alignment of the executives' remuneration with the 
interests of the shareholders; 
 
·    A material reduction in the maximum remuneration level for the Executive 
Directors, both in terms of annual bonus and of long-term incentive 
(performance share plan); 
 
·    The payment of at least 50% of the Annual Bonus in shares with the 
remaining 50% to be paid in cash or shares at the discretion of the 
Remuneration Committee. Shares will be priced for this award based on their 
market value at closing on the Business Day prior to the Subscription Date; 
 
·    The introduction of claw-back and malus provisions on both bonuses and 
share awards; and 
 
·    The expectation that the Executive Directors build a substantial 
shareholding position in the company through their mandate. 
 
Michel Meeus 
Chairman of the Remuneration Committee 
27 April 2023 
 
ANNUAL REPORT ON REMUNERATION 2022 
 
Remuneration Committee Report 
 
The Remuneration Committee is committed to principles of accountability and 
transparency to ensure that remuneration arrangements demonstrate a clear link 
between reward and performance. 
 
Governance 
 
The Remuneration Committee is appointed by the Board from the non-executive 
Directors of the Company. The Remuneration Committee's terms of reference are 
reviewed annually by the Remuneration Committee and any changes are then 
referred to the Board for approval. The terms of reference of the Remuneration 
Committee are published on the Company's website, 
www.cadoganenergysolutions.com, and are also available from the Company 
Secretary at the Registered Office. 
 
The Remuneration Committee consists of Mr. Michel Meeus, Ms. Lilia Jolibois, 
Mr. Jacques Mahaux and Mr. Gilbert Lehmann. At the discretion of the 
Remuneration Committee, the Chief Executive Officer is invited to attend 
meetings when appropriate but is not present when his own remuneration is being 
discussed. None of the directors are involved in deciding their own 
remuneration. The Company Secretary attends the meetings of the Remuneration 
Committee. 
 
Responsibilities 
 
In summary, the Remuneration Committee's responsibilities, as set out in its 
terms of reference, are as follows: 
 
§ To determine and agree with the Board the policy for the remuneration of the 
executive Directors, the Company Secretary and other members of executive 
management as appropriate; 
 
§ To consider the design, award levels, performance measures and targets for 
any annual or long-term incentives and approve any payments made and awards 
vesting under such schemes; 
 
§ Within the terms of the agreed remuneration policy, to determine the total 
individual remuneration package of each executive Director and other senior 
executives including bonuses, incentive payments and share options or other 
share awards; and 
 
§ To ensure that contractual terms on termination, and any payments made, are 
fair to the individual and the Company, that failure is not rewarded and that 
the duty to mitigate loss is fully recognised. 
 
Overview 
 
The Chairman and Executive Directors of the Company have a regular dialogue 
with analysts and substantial shareholders, which includes the subject of 
Directors' Remuneration. The outcome of these discussions is reported to the 
Board and discussed in detail both there and during meetings of the 
Remuneration Committee. 
 
As a result of its work during the year, the Remuneration Committee has 
concluded that it has acted in accordance with its terms of reference. The 
chairman of the Remuneration Committee will be available at the Annual General 
Meeting to answer any questions about the work of the Committee. 
 
Remuneration consultants 
 
The Remuneration Committee did not take any advice from external remuneration 
consultants, with the exception of the review undertaken of the Remuneration 
Report. 
 
Single total figure of remuneration for executive and non-executive directors 
(audited) 
 
           Salary and fees  Taxable benefit Contributions  Annual bonus        Total 
                                  [5]        to pension 
                                               schemes 
 
                  $                $              $              $               $ 
 
Executive Director 
 
              2022     2021    2022    2021   2022   2021   2022     2021     2022    2021 
 
F Khallouf 479,720  519,926  29,486  30,173 75,035 78,619      -        -  584,241 628,717 
 
 
Non-executive Directors 
 
M Meeus     89,000   89,000       -       -      -      -      -        -   89,000  89,000 
 
L Jolibois  48,000   48,000       -       -      -      -      -        -   48,000  48,000 
 
J Mahaux    43,000   43,000       -       -      -      -      -        -   43,000  43,000 
 
G Lehmann   38,000   38,000       -       -      -      -      -        -   38,000  38,000 
 
 
 
 
                      Total Fixed Remuneration         Total Variable 
                                                        Remuneration 
 
                                 $                            $ 
 
                              2022           2021      2022            2021 
 
Executive Director         584,241        628,717         -               - 
 
Non-executive              218,000        218,000         -               - 
Directors 
 
Notes to the table 
 
Mr Fady Khallouf 
 
Mr Khallouf was appointed as Chief Executive Officer on 15 November 2019. Mr 
Khallouf's salary is ?440,000 per annum. 
 
KPIs 
 
 The CEO is subject to a performance-related, bonus scheme built around a 
scorecard with a set of challenging KPI's aligned with the company strategy. 
Given the current situation in Ukraine and any potential future difficulties 
for the Company Mr Fady Khallouf had requested that any annual performance 
related bonus to be considered and paid by the Remuneration Committee during 
2023, in respect of the financial year ended 31st December 2022, be waived. 
 
Benefits 
 
Benefits may be provided to the executive directors, in the form of private 
medical insurance and life assurance. 
 
The Chairman and Non-Executive Directors 
 
As mentioned above, fees for non-Executive Directors were reduced by 20 percent 
on 15th January 2020 with effect from 15th November 2019. The fees are as 
follows: the Chairman's fee at $89,000 and the fee for acting as a 
non-executive Director at $38,000 with an additional $10,000 for acting as 
Chairman of the Audit Committee and an additional $5,000 for a committee 
membership. 
 
Scheme interests awarded during the financial year (audited) 
 
There were no scheme interests awarded during the year. 
 
Payments to past directors (audited) 
 
In 2022 there were no payments to past directors. 
 
Payments for loss of office (audited) 
 
No notice period was either worked or paid. 
 
Directors' interests in shares (audited) 
 
The beneficial interests of the Directors in office as at 31 December 2022 and 
their connected persons in the Ordinary shares of the Company at 31 December 
2022 are set out below. 
 
Shares as at 31 December                        2022       2021 
 
Michel Meeus                              26,000,000 26,000,000 
 
Fady Khallouf                             10,425,455 10,425,455 
 
Gilbert Lehmann                                    -          - 
 
Lilia Jolibois                                     -          - 
 
Jacques Mahaux                                     -          - 
 
There were no changes in the Directors shareholding at 31 December 2022 
compared to 31 December 2021. 
 
The Company does not currently operate formal shareholding guidelines. Whilst 
there is no specified level, the Company expects that under the new 
Remuneration Policy, the Executive Director will continue to build up a 
significant shareholding position in the Company during his mandate. 
 
The Company's performance 
 
The graph below highlights the Company's total shareholder return ("TSR") 
performance for the last twelve years compared to the FTSE All Share Oil & Gas 
Producers index. This index has been selected on the basis that it represents a 
sector specific group, which is an appropriate group for the Company to compare 
itself against, and has been retained ever since, primarily for continuity 
purposes TSR is the return from a share or index based on share price movements 
and notional reinvestment of declared dividends. 
 
Historic Remuneration of Chief Executive 
 
             Salary  Taxable    Annual    Long-term  Pension Loss of    Total 
                     benefits    bonus    incentives         office 
 
                $       $          $          $         $       $         $ 
 
2009         422,533    -       284,552       -         -       -      707,085 
 
2010         547,067    -          -          -         -       -      547,067 
 
2011         669,185    -          -          -         -       -      669,185 
 
2012         511,459    -          -          -      31,966  126,808   670,233 
 
2013         384,941    -          -          -         -       -      384,941 
 
2014         405,433  20,734       -          -         -       -      426,167 
 
2015         432,409  15,987    243,132       -         -       -      691,528 
               [6] 
 
2016         487,080  15,353  210,504[7]      -         -       -      712,937 
 
2017         497,288  27,273    126,992       -         -       -      651,553 
 
2018         521,664  39,838    201,872       -         -       -      763,374 
 
2019         492,581  45,453  495,109[8]      -         -       -     1,033,143 
 
2020         517,389  59,294       -          -      58,300     -      634,983 
 
2021         535,999  30,173       -          -      78,619     -      644,791 
 
2022         479,720  29,486       -          -      75,035     -      584,241 
 
In 2022, the Remuneration Committee, after consultation with the CEO, have 
decided to postpone any variable performance related bonus for year ended 2022 
given the impact of Covid-19 and volatility in oil and gas prices. 
 
The annual bonus received by the CEO as a percentage of the maximum opportunity 
is presented in the following table. 
 
Year        CEO              CEO single figure     Annual bonus pay-out 
                                 of total            against maximum 
                              remuneration $          opportunity % 
 
2022        Mr. Khallouf          584,241                   - 
 
2021        Mr. Khallouf          644,791                   - 
 
2020        Mr. Khallouf          634,983                   - 
 
2019        Mr. Khallouf[9]       444,465                   - 
 
            Mr. Michelotti        588,678                   10 
 
2018        Mr. Michelotti        763,374                   32 
 
2017        Mr. Michelotti        651,553                   12 
 
2016        Mr. Michelotti        712,937                 22[10] 
 
2015        Mr. Michelotti        502,021                 27[11] 
 
            Mr. des               189,507                   - 
            Pallieres 
 
2014        Mr. des               426,167                   - 
            Pallieres 
 
2013        Mr. des               384,941                   - 
            Pallieres 
 
2012        Mr. des               389,935                   - 
            Pallieres 
 
            Mr. Barron          280,298[12]                 - 
 
2011        Mr. des               273,201                   - 
            Pallieres[13] 
 
            Mr. Barron            395,984                   - 
 
2010        Mr. Barron            547,067                   - 
 
2009        Mr. Barron[14]        707,085                   67 
 
Percentage change in the remuneration of the Chief Executive 
 
The following table shows the percentage change in the remuneration of the 
Chief Executive in 2022 and 2021 compared to that of all employees within the 
Group. 
 
                                                  2022       2021 
                                                                      Average 
 
                                                 $'000      $'000   change, % 
 
Base salary                CEO                     480        536         -8% 
 
                           All employees[1]      1,897      1,978         -4% 
 
Taxable benefits           CEO                     104        108         -3% 
 
                           All employees           125        126         -1% 
 
Annual Bonus               CEO                       -          -           - 
 
                           All employees             -          -           - 
 
Total                      CEO                     584        628         -7% 
 
                           All employees         2,022      2,104         -4% 
 
[1] All employees mean all employees of the Group, including CEO and other 
Directors (note 12, page 92). 
 
In 2022 none of the directors participated in long-term incentives. 
 
In 2022 there was no increase in executive and non-executive directors' salary 
in base currency. The difference in pay represents the change in exchange rate 
between the base currency and USD as a reporting currency. 
 
Percentage change in Non-Executive director remuneration 
 
                                         Michel Meeus               All employees 
 
                                2022           2021        % change      % change 
                               $'000          $'000          2022 -   2022 - 2021 
                                                               2021 
 
Base salary/fees               89,000         89,000              -           -4% 
 
Taxable benefits                 -              -                 -           -1% 
(including pensions) 
 
Annual bonus                     -              -                 -            0% 
 
Total                          89,000         89,000              -           -4% 
 
 
 
                                        Lilia Jolibois              All employees 
 
                                2022           2021        % change      % change 
                               $'000          $'000          2022 -   2022 - 2021 
                                                               2021 
 
Base salary/fees               48,000         48,000              -           -4% 
 
Taxable benefits                 -              -                 -           -1% 
(including pensions) 
 
Annual bonus                     -              -                 -            0% 
 
Total                          48,000         48,000              -           -4% 
 
 
 
                                        Jacques Mahaux              All employees 
 
                                2022           2021        % change      % change 
                               $'000          $'000          2022 -   2022 - 2021 
                                                               2021 
 
Base salary/fees               43,000         43,000              -           -4% 
 
Taxable benefits                 -              -                 -           -1% 
(including pensions) 
 
Annual bonus                     -              -                 -            0% 
 
Total                          43,000         43,000              -           -4% 
 
 
 
                                       Gilbert Lehmann              All employees 
 
                                2022           2021        % change      % change 
                               $'000          $'000          2022 -   2022 - 2021 
                                                               2021 
 
Base salary/fees               38,000         38,000              -           -4% 
 
Taxable benefits                 -              -                 -           -1% 
(including pensions) 
 
Annual bonus                     -              -                 -            0% 
 
Total                          38,000         38,000              -           -4% 
 
Relative importance of spend on pay 
 
The table below compares shareholder distributions (i.e. dividends and share 
buybacks) and total employee pay expenditure of the Group for the financial 
years ended 31 December 2021and 31 December 2022. 
 
                                     2022      2021      Year-on-year 
                                    $'000     $'000         change, % 
 
All-employee remuneration           2,022    2, 104               -4% 
 
Distributions to shareholders           -         -                 - 
 
Shareholder voting at the Annual General Meeting 
 
The Directors' Remuneration Policy was approved by shareholders at the Annual 
General Meeting held on 25 June 2021 and remains unchanged. The Remuneration 
Policy can be found on the Group's website and at pages 50 to 63 of this Annual 
Report on Remuneration. The votes cast by proxy were as follows: 
 
Directors' Remuneration       Number of votes        % of votes cast 
Policy 
 
For                               100,135,172                  82.19 
 
Against                            21,693,116                  17.81 
 
Total votes cast                  121,828,288                 100.00 
 
Number of votes withheld                    0 
 
The Directors' Annual Report on Remuneration is approved by shareholders at 
each Annual General Meeting. A summary of the votes cast by proxy in 2022 and 
2021 were as follows: 
 
                                                2022                               2021 
 
Director's Annual      Number of votes    % of votes    Number of votes      % of votes 
Report on Remuneration                          cast                               cast 
 
For                         83,255,878         91.89        100,135,172           82.19 
 
Against                      7,348,465          8.11         21,693,116           17.81 
 
Total votes cast            90,604,343                      121,828,288          100.00 
 
Number of votes                  5,234                                0 
withheld 
 
Implementation of Remuneration Policy in 2022 
 
The performance related elements of remuneration remain unchanged and will be 
built around a scorecard with a set of KPI's aligned with the Group strategy. 
The Remuneration Policy can be found on the Group's website and at pages 50 to 
63 of this Annual Report on Remuneration. 
 
Approval 
 
The Directors' Annual Report on Remuneration was approved by the Board on 27 
April 2023 and signed on its behalf by: 
 
Michel Meeus 
Chairman 
27 April 2023 
 
Directors' Remuneration Policy 
 
§ Introduction 
 
This Directors' Remuneration Policy (the "Policy") contains the information 
required to be set out as the directors' remuneration policy for the purposes 
of The Large and Medium-sized Companies and Groups (Accounts and Reports) 
(Amendment) Regulations 2013. 
 
The Policy was approved by shareholders at the 2021 AGM of the Company. The 
Remuneration Committee is not proposing to make any changes to the existing 
Policy however in line with industry best practice and the three-year Policy 
cycle the Company will be seeking shareholder approval at this year's AGM. The 
effective date of this Policy is the date on which the Policy is approved by 
shareholders. 
 
The Policy applies in respect of all executive officers appointed to the Board 
of Directors ("executive directors") and non-executive directors. Other senior 
executives may be subject to the Policy, including in relation to annual bonus 
and shares incentive arrangements in particular if and to the extent that the 
Remuneration Committee determines it is appropriate. 
 
The Remuneration Committee will keep the Policy under review to ensure that it 
continues to promote the long-term success of the Company by giving the Company 
its best opportunity of delivering on the business strategy. It is the 
Remuneration Committee's intention that the Policy be put to shareholders for 
approval every three years unless there is a need for the Policy to be approved 
at an earlier date. 
 
The Company aims to provide sufficient flexibility in the Policy for 
unanticipated changes in compensation practices and business conditions to 
ensure the Remuneration Committee has appropriate discretion to retain its top 
executives who perform. The Remuneration Committee reserves the right to 
approve any payments that may be outside the terms of this Policy, where the 
terms of that payment were agreed before the Policy came into effect, or before 
the individual became a director of the Company. 
 
Maximum caps are provided to comply with the required legislation and should 
not be taken to indicate an intent to make payments at that level. The maximum 
caps are valid at the time that the relevant employment agreement or 
appointment letter is entered into and the caps may be adjusted to take into 
account fluctuations in exchange rates. 
 
§ Remuneration policy table: executive directors 
 
 Component   Purpose and link Maximum opportunity    Operation and performance 
               to strategy                                    measures 
 
Salary and   To provide fixed The maximum annual  Salary is paid on a monthly 
Fees         remuneration at  base combined       basis. 
             an appropriate   salary and fees for The Remuneration Committee takes 
             level, to        executive directors into account a number of factors 
             attract and      is ?440,000[16].    when setting salaries including: 
             retain directors The Remuneration    § scope and difficulty of the 
             as part of the   Committee will      role; 
             overall          consider the        § skills and experience of the 
             compensation     factors set out     individual; 
             package.         under the           § salary levels for similar 
                              "Operation" column  roles within the international 
                              when determining    industry; and 
                              the appropriate     § pay and conditions elsewhere 
                              level of base       in the Group.Salaries are 
                              salary within the   reviewed on an annual basis, but 
                              formal Policy       are not necessarily increased at 
                              maximum.            each review. 
                                                  No performance measures. 
 
Annual Bonus To incentivise   The maximum award   The payment of any bonus is at 
             and reward the   is 125% of combined the discretion of the Board with 
             achievement of   base salary and     reference to the performance 
             individual and   fees.               year. 
             business                             § The Remuneration Committee 
             objectives which                     sets, in advance, a scorecard 
             are key to the                       with a set of Key Performance 
             delivery of the                      Indicators ("KPIs") aligned with 
             Company's                            the Company's strategy. The 
             business                             measures and the relative 
             strategy.                            weightings are substantiated by 
                                                  the Remuneration Committee and 
                                                  aim to be stretching and to 
                                                  support the Company's business 
                                                  strategy.  Measures are related 
                                                  to Company financial 
                                                  performance, operational 
                                                  performance and the Company's 
                                                  health and safety record. In 
                                                  general relative weightings of 
                                                  each KPI are expected not to 
                                                  exceed 50% and not to be less 
                                                  than 10%. 
                                                  § The Remuneration Committee 
                                                  retains the flexibility to 
                                                  determine and, if it considers 
                                                  appropriate, change the KPIs and 
                                                  weightings of the KPIs based on 
                                                  the outcome of its annual 
                                                  review. The Remuneration 
                                                  Committee may also adjust KPIs 
                                                  during the year to take account 
                                                  of material events, such as 
                                                  (without limitation) material 
                                                  corporate events, changes in 
                                                  responsibilities of an 
                                                  individual and/ or currency 
                                                  exchange rates. Any such changes 
                                                  will be within the overall 
                                                  target and maximum payouts 
                                                  approved in the policy. 
                                                  § The KPI targets and specific 
                                                  weightings in the scorecard are 
                                                  defined annually early in the 
                                                  year, once the budget has been 
                                                  approved. A summary of the KPI 
                                                  targets, weightings for the KPIs 
                                                  and how far the KPIs are met 
                                                  will be included retrospectively 
                                                  each year in the Implementation 
                                                  Report for the year. 
                                                  § All bonuses that may become 
                                                  payable are subject to malus and 
                                                  clawback provisions in the event 
                                                  of material financial 
                                                  misstatement of the Company or 
                                                  fraud or material misconduct on 
                                                  the part of the executive, as 
                                                  explained further below. 
                                                  § 50% of the bonuses that may 
                                                  become payable must be applied 
                                                  to subscribe for or acquire 
                                                  shares in the Company (after the 
                                                  deduction of any income tax and/ 
                                                  or employee social security 
                                                  contributions payable). The 
                                                  Company is proposing to adopt 
                                                  and operate a Deferred Bonus 
                                                  Plan as a framework plan for the 
                                                  delivery of shares to 
                                                  executives, which may be 
                                                  satisfied by the issue of new 
                                                  shares or transfer of existing 
                                                  or treasury shares. 
                                                  § The Remuneration Committee 
                                                  will determine whether the 
                                                  remainder of the bonus shall be 
                                                  paid in cash or must be applied 
                                                  to subscribe for or acquire 
                                                  shares (after the deduction of 
                                                  any income tax and/ or employee 
                                                  social security contributions 
                                                  payable).  In making its 
                                                  determination as to how the 
                                                  remainder of the bonus shall be 
                                                  paid, the Remuneration Committee 
                                                  may take into account: 
                                                  profitability of the Company; 
                                                  the executive's shareholding as 
                                                  measured against any Company 
                                                  shareholding guidelines; 
                                                  potential liabilities of the 
                                                  recipients to income tax and 
                                                  social security contributions, 
                                                  among other things. Additional 
                                                  shares representing the value of 
                                                  dividends payable on the 
                                                  deferred shares may be paid. 
                                                  § The Remuneration Committee may 
                                                  impose holding periods of up to 
                                                  three years on any of the shares 
                                                  delivered pursuant to the annual 
                                                  bonus plan. 
                                                  § There are no prescribed 
                                                  minimum levels of performance in 
                                                  the annual bonus structure and 
                                                  so it is possible that no bonus 
                                                  award would be made. 
 
Share        To incentivise,  Awards can be made  The Company has adopted and 
Incentive    retain and       under the PSP with  operates the 2018 Performance 
Arrangements reward eligible  a value of up to a  Share Plan ("PSP") to replace 
             employees and    maximum of 200% of  the 2008 Performance Share Plan. 
             align their      base salary and     The PSP offers the opportunity 
             interests with   fees or 300% in     to earn shares in the Company 
             those of the     exceptional         subject to the achievement of 
             shareholders of  circumstances.      stretching but realistic 
             the Company.                         performance conditions. 
                                                  Performance conditions will be a 
                                                  main feature of the PSP. 
                                                  The PSP will be administered by 
                                                  the Remuneration Committee. 
                                                  § Awards can be made under the 
                                                  PSP at the direction of the 
                                                  Remuneration Committee within 
                                                  the policy maximum in the form 
                                                  of contingent share awards. 
                                                  § PSP awards will have a minimum 
                                                  vesting period of 3 years and, 
                                                  for directors, the PSP awards 
                                                  have a further holding period of 
                                                  2 years following the end of the 
                                                  vesting period (subject to any 
                                                  number of shares that may need 
                                                  to be sold to meet any income 
                                                  tax and employee social security 
                                                  contributions due on vesting). 
                                                  § The Remuneration Committee 
                                                  will develop clear KPIs that aim 
                                                  to align directors with Company 
                                                  strategy over time periods in 
                                                  excess of one financial year. 
                                                  Any performance measures and 
                                                  targets used for share incentive 
                                                  awards during 2019 will be 
                                                  relevant and stretching in line 
                                                  with the overall strategy of the 
                                                  Company. 
                                                  § The Remuneration Committee may 
                                                  adjust or change the PSP 
                                                  measures, targets and weightings 
                                                  for new awards under the PSP to 
                                                  ensure continued alignment with 
                                                  Company strategy. 
                                                  § PSP awards are subject to 
                                                  malus and clawback in the event 
                                                  of material financial 
                                                  misstatement of the Company or 
                                                  fraud or material misconduct on 
                                                  the part of the executive. 
                                                  § Upon vesting of an award, the 
                                                  award holder must pay the 
                                                  nominal value in respect of each 
                                                  share that vests. 
                                                  § PSP Awards will normally lapse 
                                                  where the award holder ceases 
                                                  employment with the Company 
                                                  before vesting.  PSP Awards will 
                                                  not lapse and will vest 
                                                  immediately if the award holder 
                                                  is considered to be a Good 
                                                  Leaver (leaves due to death or 
                                                  disability) subject to the 
                                                  Remuneration Committee being 
                                                  satisfied that performance 
                                                  conditions have been satisfied 
                                                  or are likely to be satisfied as 
                                                  at the end of the relevant 
                                                  performance period. In other 
                                                  circumstances, the Remuneration 
                                                  Committee may determine that 
                                                  awards will not lapse and will 
                                                  continue to vest at their normal 
                                                  vesting date, subject to 
                                                  pro-ration to reflect the period 
                                                  of service during the 
                                                  performance period and 
                                                  performance conditions. The 
                                                  Remuneration Committee has 
                                                  residuary discretions to 
                                                  disapply pro ration and bring 
                                                  forward the date of vesting. 
                                                  § In the event of a change of 
                                                  control of the Company, if the 
                                                  acquiring company agrees, awards 
                                                  will be exchanged for equivalent 
                                                  awards over shares in the 
                                                  acquiring company and continue 
                                                  to vest according to the 
                                                  original vesting schedule. If 
                                                  the acquiring company does not 
                                                  agree to exchange the awards, 
                                                  the awards will vest at the 
                                                  Committee's absolute discretion. 
                                                  Awards that vest will be subject 
                                                  to time pro-ration and 
                                                  performance conditions. 
                                                  § Benefits under the PSP will 
                                                  not be pensionable. 
                                                  § The PSP Plan Limits are set 
                                                  out at Note 2.4 below. 
 
 
Pension      To provide a     Any pension         No performance measures. 
             retirement       benefits will be 
             benefit that     set at an 
             will foster      appropriate level 
             loyalty and      in line with market 
             retain           practice, and in no 
             experienced      event will the 
             executive        contributions paid 
             directors.       by the Company 
                              exceed 15% of 
                              combined base 
                              salary and fees. 
 
Benefits     To provide a     Any benefits will   § The executive directors are 
             market           be set at an        entitled to private medical 
             competitive      appropriate level   insurance and life assurance 
             level of         in line with market cover (of four times the 
             benefits to      practice, and in no combined salary and fee) and 
             executive        event will the      directors' and officers' 
             directors.       value of the        liability insurance. 
                              benefits exceed 15% § The Remuneration Committee may 
                              of combined base    decide to provide other benefits 
                              salary and fees.    commensurate with the market. 
                                                  Such benefits may include (for 
                                                  instance) company car or 
                                                  allowance, physical examinations 
                                                  and medical support, 
                                                  professional advice, assistance 
                                                  with filling out tax returns and 
                                                  occasional minor benefits.  A 
                                                  tax equalisation payment may be 
                                                  paid to an executive director if 
                                                  any part of the remuneration of 
                                                  the executive director becomes 
                                                  subject to double taxation. Tax 
                                                  gross ups may be paid, where 
                                                  appropriate. The Company does 
                                                  not, at present, provide other 
                                                  taxable benefits to the 
                                                  executive directors. 
                                                  § Executive directors are 
                                                  reimbursed for reasonable 
                                                  business expenses incurred in 
                                                  the course of carrying out their 
                                                  duties. 
                                                  § No performance measures. 
 
Notes to the executive directors' remuneration policy table 
 
The Remuneration Committee's philosophy is that remuneration arrangements 
should be appropriately positioned to support the Group's business strategy 
over the longer term and the creation of value for shareholders. In this 
context the following key principles are considered to be important: 
 
-        remuneration arrangements should align executive and employee 
interests with those of shareholders; 
 
-        remuneration arrangements should help retain key executives and 
employees; and 
 
-        remuneration arrangements should incentivise executives to achieve 
short, medium and long-term business targets which represent value creation for 
shareholders. Targets should relate to the Group's performance in terms of 
overall revenue and profit and the executive's own performance. Exceptional 
rewards should only be delivered if there are exceptional returns. 
 
The Remuneration Committee reserves the right to make any remuneration payments 
(including satisfying awards of variable remuneration) and payments for loss of 
office notwithstanding that they are not in line with the Policy set out above, 
where the terms of that payment were agreed before the Policy came into effect, 
or before the individual became a director of the Company (provided the payment 
was not in consideration for the individual becoming a director). 
 
§ Performance measures and targets 
 
(a)          Annual Bonus 
 
The performance measures for executive directors comprise of financial measures 
and business goals linked to the Company's strategy, which could include 
financial and non-financial measures. The business goals are tailored to 
reflect each executive director's role and responsibilities during the year. 
The performance measures are chosen to enable the Remuneration Committee to 
review the Company's and the individual's performance against the Company's 
business strategy and appropriately incentivise and reward the executive 
directors. 
 
Annual bonus targets are set by the Remuneration Committee each year. They are 
stretching but realistic targets which reflect the most important areas of 
strategic focus for the Company. The factors taken into consideration when 
setting targets include the Company's Key Performance Indicators (which are 
determined annually by the Remuneration Committee), and the extent to which 
they are under the control or influence of the executive whose remuneration is 
being determined. 
 
Performance is measured over the financial year against the measures and 
targets set according to the scorecard. The Remuneration Committee retains the 
right to exercise its judgement to adjust the bonus outcome for an individual 
to ensure the outcome reflects any other aspects of the Company's performance 
that become relevant during the financial year. 
 
The Remuneration Committee used Company operational and financial performances 
and safety as performance measures for the 2020 scorecard. For years following 
2020, the structure of the annual bonus scorecard will be reviewed by the 
Remuneration Committee. 
 
2022 Annual bonus scorecard measures for executive director 
 
          40% weighting                           50% weighting 
 
                                  Company financial performance, including cash 
Operational performance, such as  targets and profit targets. 
production, sales, geographical 
diversification, and starting new 
projects. 
 
10% weighting 
 
Indicators of health and safety 
to promote the effective risk 
management of the Company. 
 
(b)          Share Plans 
 
The Remuneration Committee will make the vesting of a Plan award conditional 
upon the satisfaction of stretching but realistic performance conditions. These 
conditions are meant to achieve a long-term alignment of the executives' 
remuneration with the interest of the shareholders. 
 
EBITDA growth, increase of P1 reserves (in millions boe), and changes to the 
free cash-flow are the key KPIs to be used by the Remuneration Committee and 
will be measured over time periods of three financial years. The performance 
measures are chosen to align the performance of participants with the 
attainment of financial performance targets over the vesting period of the 
award. The targets are set by the Remuneration Committee by reference to the 
Company's strategy and business plan and the results achieved at the time of 
the vest are determined by the Remuneration Committee. 
 
Under the PSP plan rules, the Board may vary a performance target where it 
considers that any performance target to which an award is subject is no longer 
a true or fair measure of the participant's performance, provided that the 
Board must act fairly and reasonably and that the new performance target is 
materially no more difficult and no less difficult to satisfy than the original 
performance target. 
 
§ Malus and clawback (applicable to bonuses and share awards) 
 
The Remuneration Committee has the discretion to reduce the bonus before 
payment or require the executive director to pay back shares or a cash amount 
in the event of material financial misstatement of the Company or fraud or 
material misconduct on the part of the executive. The amount that may be clawed 
back on any such event is limited to the value of the bonus, taking into 
account the cash paid and the shares delivered to the executive, taking the 
value of the shares at the time of the clawback, less any income tax or 
employee social security contributions paid on the bonuses. 
 
§ Share ownership guidelines for executives 
 
The Remuneration Committee is planning to implement share ownership guidelines 
for executive directors to further align the interests of the executive 
directors with those of shareholders. The share ownership guidelines will 
include an expectation that executive directors build up their shareholding to 
200% of base salary over a period of five years from the later of: the date of 
adoption of this policy and the date of appointment. Once the shareholding 
guideline is reached, executive directors would be expected to maintain it. The 
intention would be for the shareholding guideline to be reached through the 
retention of vested shares from share plans (e.g. the deferred share element of 
the annual bonus and shares vested under the PSP). As such, the Remuneration 
Committee's discretion may be used to increase the proportion of an annual 
bonus to be delivered in shares to assist the executive director in meeting 
this guideline. The deferred share mechanism in the annual bonus and the design 
of the PSP will assist executive directors in reaching the guidelines. 
Executive directors will not be expected to top up their shareholding with 
personal acquisitions of Company shares outside the usual share plans described 
in the Policy. The Remuneration Committee will monitor the executive directors' 
shareholdings and may adjust the guideline in special individual and Company 
circumstances, for example in the case of a share price fall. 
 
§ PSP Plan Limits 
 
The PSP may operate over new issue shares, treasury shares or shares purchased 
in the market. In any ten-calendar year period, the Company may not issue (or 
grant rights to issue) more than: 
 
(a)          10% of the issued ordinary share capital of the Company under the 
Plan and any other employee share plan adopted by the Company; and 
 
(b)          5% of the issued ordinary share capital of the Company under the 
Plan and any other executive share plan adopted by the Company. 
 
Treasury shares will count as new issue shares for the purposes of these limits 
unless institutional investors decide that they need not count. These limits do 
not include rights to shares which have been renounced, released, lapsed or 
otherwise become incapable of vesting, awards that the Remuneration Committee 
determines after grant to be satisfied by the transfer of existing shares and 
shares allocated to satisfy bonuses (including pursuant to the Deferred Bonus 
Plan). 
 
§ Remuneration throughout the Group 
 
Differences in the Company's pay policy for executive directors from that 
applying to employees within the Group generally reflect the appropriate market 
rate for the individual executive roles. 
 
§ Remuneration policy table: non-executive directors 
 
Component Purpose and link     Maximum opportunity          Operation and performance 
            to strategy                                             measures 
 
Fees      To provide an    § The maximum annual fees    Non-executive directors receive a 
          appropriate      paid to non-executive        standard annual fee, which is 
          reward to        directors is £50,000 for a   paid on a quarterly basis in 
          attract and      non-executive director role, arrears. 
          retain           and £100,000 for the role of Additional fees may also be paid 
          high-calibre     Chairman. An additional £    to recognise the additional work 
          individuals with 10,000 will be paid to the   performed by members of any 
          the relevant     individual acting as         committees set up by the Board, 
          skills,          Chairman of the Audit        and for the role of chair of a 
          knowledge and    Committee.                   committee. 
          experience to                                 Fees are reviewed on an annual 
          progress the                                  basis, but are not necessarily 
          Company                                       increased at each review. Fees 
          strategy.                                     are set at a rate that takes into 
                                                        account: 
                                                        § market practice for comparative 
                                                        roles; 
                                                        § the financial results of the 
                                                        Company; 
                                                        § the time commitment and duties 
                                                        involved; and 
                                                        § the requirement to attract and 
                                                        retain the quality of individuals 
                                                        required by the Company. 
                                                        The remuneration of the 
                                                        non-executive directors is a 
                                                        matter for the Board to consider 
                                                        and decide upon. 
                                                        There are no performance measures 
                                                        related to non-executive 
                                                        directors' fees. 
 
Notes to the Policy Table 
 
The payment policy for non-executive directors is to pay a rate which will 
secure persons of a suitable calibre. The remuneration of the non-executive 
directors is determined by the Board. External benchmarking data and specialist 
advisers are used when setting fees, which will be reviewed at appropriate 
intervals. The maximum caps are valid at the time that the relevant appointment 
letter is entered into and the caps may be adjusted to take into account 
fluctuations in exchange rates. 
 
Expenses reasonably and wholly incurred in the performance of the role of 
non-executive director of the Company may be reimbursed or paid for directly by 
the Company, as appropriate, and may include any tax due on the expense. 
 
The non-executive directors' fees are non-pensionable. The non-executive 
directors have not to date been eligible to participate in any incentive plans 
(such as bonuses or share plans); however, the Board considers that it may be 
appropriate in the future to enable such participation, subject to suitably 
stretching performance thresholds. 
 
Non-executive directors may receive professional advice in respect of their 
duties with the Company which will be paid for by the Company. They will be 
covered by the Company's insurance policy for directors. 
 
§ Recruitment 
 
The Company's policy on the recruitment of directors is to pay a fair 
remuneration package for the role being undertaken and the experience of the 
individual being recruited. The Remuneration Committee will consider all 
relevant factors, which include the abilities of the individual, their existing 
remuneration package, market practice, and the existing arrangements for the 
Company's current directors. 
 
The Remuneration Committee will determine that any arrangements offered are in 
the best interests of the Company and shareholders and will endeavour to pay no 
more than is necessary. 
 
The Remuneration Committee intends that the components of remuneration set out 
in the policy tables, and the approach to the components as set out in the 
policy tables, will be equally applicable to new recruits, i.e. salary, annual 
bonus, share plan awards, pension and benefits for executive directors, and 
fees for non-executive directors. However, the Company acknowledges that 
additional flexibility may be required to ensure the Company is in the best 
position to recruit the best candidate for any vacant roles and, as such, a 
buy-out arrangement may be required. 
 
§ Flexibility 
 
The salary and compensation package designed for a new recruit may be higher or 
lower than that applying for existing directors. The Remuneration Committee may 
decide to appoint a new executive director to the Board at a lower than typical 
salary, such that larger and more frequent salary increases may then be awarded 
over a period of time to reflect the individual's growth in experience within 
the role. 
 
Remuneration will normally not exceed those set out in the policy table above. 
However, to ensure that the Company can sufficiently compete with its 
competitors, the Remuneration Committee considers it important that the 
recruitment policy has sufficient flexibility in order to attract and 
appropriately remunerate the high-performing individuals that the Company 
requires to achieve its strategy. As such, the Remuneration Committee reserves 
discretion to provide a buy-out arrangement and benefits (such as a sign-on 
bonus and additional share awards) in addition to those set out in the policy 
table (or mentioned in this section) where the Remuneration Committee considers 
it reasonable and necessary to do so in order to secure an external appointment 
(see below for more detail in relation to buy-out arrangements). 
 
§ Buy-out arrangements 
 
The Remuneration Committee retains the discretion to enter into buy-out 
arrangements to compensate new hires for incentive awards forfeited in joining 
the Company. The Remuneration Committee will use its discretion in awarding and 
setting any such compensation, which will be decided on a case-by-case basis 
and likely on an estimated like-for-like basis. In deciding the appropriate 
type and quantum of compensation to replace existing awards, the Remuneration 
Committee will take into account all relevant factors, including the type of 
award being forfeited, the likelihood of any performance measures attached to 
the forfeited award being met, and the proportion of the vesting period 
remaining. The Remuneration Committee will appropriately discount the 
compensation payable to take account of any uncertainties over the likely 
vesting of the forfeited award to ensure that the Company does not, in the view 
of the Remuneration Committee, pay in excess of what is reasonable or 
necessary. 
 
Compensation for awards forfeited may take the form of a bonus payment or a 
share award. For the avoidance of doubt, the maximum amounts of compensation 
contained in the policy table will not apply to such buy-out arrangements. The 
Company has not placed a maximum value on the compensation that can be paid 
under this section, as it does not believe it would be in shareholders' 
interests to set any expectations for prospective candidates regarding such 
awards. 
 
§ Payments for loss of office 
 
Any compensation payable in the event that the employment of an executive 
director is terminated will be determined in accordance the terms of the 
employment contract between the Company and the executive, as well as the 
relevant rules of any share plan and this Policy, and in accordance with the 
prevailing best practice. 
 
The Remuneration Committee will consider a variety of factors when considering 
leaving arrangements for an executive director and exercising any discretions 
it has in this regard, including (but not limited to) individual and business 
performance during office, the reason for leaving, and any other relevant 
circumstances (for example, ill health). 
 
In addition to any payment that the Remuneration Committee may decide to make, 
the Remuneration Committee reserves discretion as it considers appropriate to: 
 
(a)          pay an annual bonus for the year of departure; 
 
(b)          continue providing any benefits for a period of time; and 
 
(c)          provide outplacement services. 
 
Non-executive directors are subject to one month notice periods prior to 
termination of service and are not entitled to any compensation on termination 
save for accrued fees as at the date of termination and reimbursement of any 
expenses properly incurred prior to that date. 
 
§ Share plan awards 
 
The treatment of any share award on termination will be governed by the PSP 
rules. 
 
Under the PSP, outstanding share awards held by an individual who ceases to be 
a director or employee of the Company will lapse, unless the cessation is due 
to death, illness, injury or disability, redundancy, retirement, the Company 
ceasing to be a member of the Group or the transfer of an undertaking or part 
of an undertaking to a person who is not a member of the Group, or the Board 
exercises its discretion otherwise. 
 
Under the PSP, the Board has discretion to decide the period of time for which 
the award will continue, and whether any unvested award shall be treated as 
vesting on the date of cessation of employment or in accordance with the 
original vesting schedule, in both cases have regard to the extent to which the 
performance targets have been satisfied prior to the date of cessation. 
 
For executive directors, the vesting period will be set by the Remuneration 
Committee with a minimum three-year period.  The Remuneration Committee will 
(unless the vesting period is set as a period equal to or longer than five 
years) impose a holding period on shares (or awards) so that the executive is 
not able to sell the shares that the executive director acquires through the 
PSP until the fifth anniversary of the date of the award.   The holding period 
will not apply to the number of shares equivalent in value to the amount 
required by the Company or the executive director to fund any income tax and 
employee social security contributions due on the vesting of the awards or 
otherwise in connection with the awards. 
 
§ Executive director employment agreements 
 
This section contains the key employment terms and conditions of the executive 
directors that could impact on their remuneration or loss of office payments. 
 
The Company's policy on employment agreements is that executive directors' 
agreements should be terminable by either the Company or the director on not 
more than six months' notice. The employment agreements contain provision for 
early termination, among other things, in the event of a breach by the 
executive but make no provision for any termination benefits except in the 
event of a change of control of the Company, where the executive becomes 
entitled to a lump sum equal to 24 months' base salary plus benefits plus (if 
any), bonus received on termination by the Company. The employment agreements 
contain restrictive covenants for a period of 12 months following termination 
of the agreement. Details of employment agreements in place as at the date of 
this report are set out below: 
 
        Director         Current agreement start       Notice period 
                                   date 
 
F Khallouf               15 November 2019         Six months 
 
Directors' employment agreements are available for inspection at the Company's 
registered office in London. 
 
§ Non-executive directors' letters of appointment 
 
This section contains the key terms of the appointments of non-executive 
directors that could impact on their remuneration. 
 
Typically, the non-executive directors are appointed by letter of appointment 
for an initial term of three years which may be extended. All non-executive 
directors are subject to annual re-election by the Company's shareholders and 
their appointments may be terminated earlier with one month's prior written 
notice (or with immediate effect, in the case of specific serious circumstances 
such as fraud or dishonesty). On termination of appointment, non-executive 
directors are usually only entitled to accrued fees as at the date of 
termination together with reimbursement of any expenses properly incurred prior 
to that date and the company has no obligation to pay further compensation when 
the appointment terminates. Non-executive directors' letters of appointment are 
available for inspection at the Company's registered office in London. 
 
 Non-executive Director  Current agreement start            Term 
                                   date 
 
Michel Meeus             25 June 2021             Two years 
 
Lilia Jolibois           24 June 2022             Two years 
 
Jacques Mahaux           24 June 2022             Two years 
 
Gilbert Lehmann          25 June 2021             Two years 
 
§ Illustration of the Remuneration Policy 
 
The bar charts below show the levels of remuneration that the CEO could earn 
over the coming year under the Policy. 
 
                     CEO: minimum and maximum remuneration 
 
The bar chart shows future possible maximum remuneration. 
 
Pension entitlements were provided in 2022. 
 
§ Consideration of shareholder views 
 
The Chairman and executive directors of the Company have a regular dialogue 
with analysts and substantial shareholders, which includes the subject of 
directors' remuneration. The outcome of these discussions is reported to the 
Board and discussed in detail both there and during meetings of the 
Remuneration Committee. 
 
The Remuneration Committee will take into account the results of the 
shareholder vote on remuneration matters when making future remuneration 
decisions. The Remuneration Committee remains mindful of shareholder views when 
evaluating and setting ongoing remuneration strategy. 
 
§ Consideration of employment conditions within the Group 
 
When determining remuneration levels for its executive directors, the Board 
considers the pay and employment conditions of employees across the Group. The 
Remuneration Committee will be mindful of average salary increases awarded 
across the Group when reviewing the remuneration packages of the executive 
directors. 
 
§ Minor changes 
 
The Remuneration Committee may make, without the need for shareholder approval, 
minor amendments to the Policy for regulatory, exchange control, tax or 
administrative purposes or to take account of changes in legislation. 
 
Statement of Directors' Responsibilities in respect of the Annual Report and 
the Financial Statements 
 
The Directors are responsible for preparing the Annual Report and the financial 
statements in accordance with applicable law and regulation. 
 
Company law requires the directors to prepare financial statements for each 
financial year. Under that law the directors have prepared the group and 
company financial statements in accordance with UK-adopted international 
accounting standards. In preparing the Company and Group's financial 
statements, IAS Regulation requires that Directors: 
 
§ properly select and apply accounting policies; 
 
§ make judgements and accounting estimates that are reasonable and prudent; 
 
§ present information, including accounting policies, in a manner that provides 
relevant, reliable, comparable and understandable information; 
 
§ state whether applicable UK-adopted international accounting standards have 
been followed, subject to any material departures disclosed and explained in 
the financial statements; 
 
§ provide additional disclosures when compliance with the specific requirements 
in IFRSs are insufficient to enable users to understand the impact of 
particular transactions, other events and conditions on the Company's and 
Group's financial position and financial performance; and 
 
§ make an assessment of the Company's and Group's ability to continue as a 
going concern, prepare the financial statements on the going concern basis 
unless it is inappropriate to presume that the Company and Group will continue 
in business. 
 
The Directors are responsible for keeping adequate accounting records that are 
sufficient to show and explain the Company and Group's transactions and 
disclose with reasonable accuracy at any time the financial position of the 
Company and Group 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. Under applicable 
law and regulations, the Directors are also responsible for preparing a 
Strategic Report, Report of the Directors, Annual Report on Remuneration, 
Directors' Remuneration Policy and Corporate Governance Statement that comply 
with that law and those regulations. The Directors are responsible for the 
maintenance and integrity of the corporate and financial information and 
statements included on the Company's website, www.cadoganenergysolutions.com. 
Legislation in the United Kingdom governing the preparation and dissemination 
of the financial statements may differ from legislation in other jurisdictions. 
The directors' responsibility also extends to the ongoing integrity of the 
financial statements contained therein. 
 
Responsibility Statement of the Directors in respect of the Annual Report 
 
We confirm to the best of our knowledge: 
 
(1)  the financial statements, prepared in accordance with International 
Financial Reporting Standards in conformity with the requirements of the 
Companies Act 2006, 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 as a whole; and 
 
(2) the Annual 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; and 
 
(3) the annual report and the financial statements, taken as a whole, are fair, 
balanced and understandable, and provide the information necessary for the 
shareholders to assess the Group's position, performance, business model and 
strategy. 
 
On behalf of the Board 
Michel Meeus 
Chairman 
27 April 2023 
 
 
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF CADOGAN ENERGY SOLUTIONS PLC 
(FORMERLY CADOGAN PETROLEUM PLC) 
 
Qualified Opinion 
 
We have audited the financial statements of Cadogan Energy Solutions Plc (the 
Company) and its subsidiaries (the Group) for the year ended 31 December 2022 
which comprise the consolidated income statement, the consolidated statement of 
comprehensive income, the consolidated balance sheet, the consolidated cash 
flow statement, the consolidated statement of changes in equity, the company 
balance sheet, the company cash flow statement, the company statement of 
changes in equity, the notes to the consolidated financial statements and the 
notes to the company financial statements, including significant accounting 
policies. The financial reporting framework that has been applied in their 
preparation is applicable law and UK adopted international accounting standards 
and, as regards the Parent company financial statements, as applied in 
accordance with the provisions of the Companies Act 2006. 
 
In our opinion, except for the effect of the matter described in the Basis for 
qualified opinion paragraph below: 
 
·      the financial statements give a true and fair view of the state of the 
Group's and of the Parent company's affairs as at 31 December 2022 and of the 
group's loss for the year then ended; 
 
·      the Group financial statements have been properly prepared in accordance 
with UK adopted international accounting standards; 
 
·      the Parent Company financial statements have been properly prepared in 
accordance with UK adopted international accounting standards and as applied in 
accordance with the provisions of the Companies Act 2006; and 
 
·      the financial statements have been prepared in accordance with the 
requirements of the Companies Act 2006. 
 
Basis for qualified opinion 
 
In February 2019, the Group advanced a Euro 13,385,000 loan to Proger Managers 
& Partners Srl ("PMP"), a privately owned Italian company whose only asset is a 
72.92% interest in Proger Ingegneria Srl ("Proger Ingegneria"), a privately 
owned company which itself held a 67.91% participating interest in Proger S.P.A 
("Proger") at the date of the loan was advanced. 
 
The loan carries an entitlement to interest at a rate of 5.5% per year, payable 
at maturity (which is 24 months after the execution date of February 2019 and 
assuming that the call option described below was not exercised). The principal 
of the loan is secured by a pledge over PMP's current participating interest in 
Proger Ingegneria Srl, up to a maximum guaranteed amount of Euro 13,385,000. 
 
Through the Agreement, the Group was granted a call option to acquire, at its 
sole discretion, a 33% participating interest in Proger Ingegneria; the 
exercise of the option would have given Cadogan, through Cadogan Petroleum 
Holdings BV, an indirect 25% interest in Proger. The call option was granted at 
no additional cost and could be exercised at any time between the 6th and 24th 
months following the execution date of the loan agreement. 
 
The call option was not exercised within the relevant timeframe (February 2021) 
and consequently in accordance with the loan agreement the principal amount and 
any accrued interest became repayable in full. At that date the Group 
reclassified the asset from a financial asset held at fair value through profit 
and loss to a financial asset held at amortised cost. 
 
In March 2021, PMP requested arbitration to have the loan agreement recognised 
as an equity investment contract. In July 2022, the Arbitra Camera in Rome 
decided to reject the main claim of PMP to recognise the loan as an equity 
investment. 
 
As part of our risk assessment we considered the recoverability of the loan 
note (page 100, note 27) to be a key audit matter, and in respect of this 
matter we: 
 
·      made enquiries of management and the Audit Committee regarding the 
structure of the transaction and the latest status of legal proceedings; 
 
·      obtained and reviewed the original loan documents including the call 
option agreement; 
 
·      obtained loan working papers and reviewed the accounting entries; 
 
·      met with management to obtain an understanding of their assessment of 
the recoverable amount of the loan and why management believes no impairment of 
the carrying value of the loan note is required ; 
 
·      discussed with management their understanding of the process of 
assessing recoverability of the loan note; 
 
·      requested and received information from Cadogan legal advisors on the 
current legal status and legal proceedings; 
 
·      based on available information to us we critically assessed the ability 
of the counterparty to repay the amounts due; and 
 
·      reviewed the disclosures in relation to financial instruments including 
the accounting policy, critical judgments and estimates and financial 
instrument disclosures. 
 
Based on the procedures performed above we were unable to obtain sufficient, 
appropriate audit evidence regarding the recoverability of the loan note, and 
accordingly we were also unable to obtain sufficient appropriate audit evidence 
to enable us to conclude whether the carrying value of the loan note is 
materially accurate. 
 
In addition, the predecessor auditor was not able to obtain sufficient, 
appropriate audit evidence as to whether the carrying value of the loan note 
was materially accurate as at 31 December 2021 and as a result the audit 
opinion for the year ended 31 December 2021 was also qualified in respect of 
this issue. Consequently, we were unable to determine what impact this may have 
on the loss of the group for the year ended 31 December 2022. 
 
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 Group 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 public interest 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 qualified opinion. Our audit opinion is consistent with the 
additional report to the audit committee. 
 
Our approach to the audit 
 
We tailored the scope of our audit to ensure we performed sufficient work to be 
able to express an opinion on the financial statements as a whole, taking into 
account the structure of the Group and the Company, its environment, including 
the group's system of internal control, and assessing the risks of material 
misstatement in the financial statements.  We also addressed the risk of 
management override of internal controls, including assessing whether there was 
evidence of bias by the directors that may have represented a risk of material 
misstatement. 
 
The significant majority of the Group's operations are located in the Ukraine 
and account for 100% of the Group's revenue. We instructed a component audit 
team in the Ukraine to perform a full scope audit of the Ukrainian sub-group. 
In our assessment the group comprises five significant components together with 
the Ukrainian sub-group. The audit of the Ukrainian sub-group was performed by 
Crowe Erfolg in the Ukraine under the supervision and direction of the Group 
audit engagement team, as described in more detail below. The remaining 
significant components of the Group namely Cadogan Energy Solutions Plc, 
Cadogan Petroleum Holdings Limited, Cadogan Petroleum Holdings B.V., and 
Zagoryanska Petroleum B.V. were audited by the Group audit engagement team. 
 
Our involvement with the component auditors 
 
As part of our supervision and direction of the component audit team, we 
determined the level of involvement needed in order to be able to conclude 
whether sufficient appropriate audit evidence has been obtained in respect of 
the Ukraine sub group as a basis for our opinion on the Group financial 
statements as a whole. Our involvement with the component auditors included the 
following: 
 
·      We issued detailed Group reporting instructions to the component 
auditor, which included the significant areas to be covered by the audit 
(including areas that were considered to be key audit matters as detailed 
below) and set out the information required to be reported to the Group audit 
team. 
 
·      Due to the travel restrictions resulting from the ongoing war in the 
Ukraine, the Group audit engagement partner and senior members of the Group 
audit engagement team were unable to visit the Ukraine to meet with component 
management and the component audit team during the audit. Accordingly, we 
performed a remote review of the component audit files in the Ukraine using 
appropriate technologies and held regular calls and video conferences with 
component management during the audit. 
 
·      The Group audit team performed reviews of relevant working papers and 
undertook additional procedures where necessary in respect of the significant 
risk areas that represented Key Audit Matters for the group. 
 
Key audit matters 
 
Key audit matters are those matters that, in our professional judgement, were 
of most significance in our audit of the financial statements of the current 
period and include the most significant assessed risks of material misstatement 
(whether or not due to fraud) 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. 
 
In addition to the matter described in the basis for qualified opinion section, 
we have determined the matters described below to be the key audit matters to 
be communicated in our report. 
 
Key Audit Matters                     How our scope addressed this matter 
 
Valuation of development and          .     We critically assessed 
production assets                     management's impairment assessment 
                                      which was based on the value in use 
Refer to page 85 (Accounting policy)  model (ViU). 
and 95 (note 17 Property, plant and   .     We challenged the key 
equipment).                           judgements and estimates made by 
                                      management, including forecast oil 
As at 31 December 2022 the Group held prices, production levels.. 
development and production assets     .     We critically assessed 
with a carrying value of $6.4m (2021: management's assumptions in 
$9.3m).                               estimating the discount rates. 
                                      .     We held discussions with 
Management has performed an           operational management to evaluate 
impairment review of development and  the basis for forecast decreases in 
production assets and concluded that  production associated with well 
no impairment is required.            stimulation activities, considered 
                                      the historical impact of such 
The assessment of the recoverable     activities and evaluated the extent 
value of the development and          to which appropriate costs were 
production assets                     included in the forecasts. 
required judgments and estimates by   .     We performed sensitivity 
management regarding the inputs       analysis on the impairment models to 
applied in the models including       establish the impact of possible 
future oil and gas prices, production changes of key assumptions. 
and reserves, operating and 
development costs and discount rates. Based on our work performed we 
The carrying value of the Group's     consider there is no material 
development and production assets     difference between the carrying value 
were therefore considered to be a key of these assets and their recoverable 
audit matter.                         amounts. 
 
Our application of materiality 
 
The scope of our audit was influenced by our application of materiality. We set 
certain quantitative thresholds for materiality. These, together with 
qualitative considerations, helped us to determine the scope of our audit, the 
nature, timing and extent of our audit procedures, both individually and in 
aggregate on the financial statements as a whole. Based on our professional 
judgement, we determined materiality for the financial statements as follows: 
 
            The Group               The Company 
 
Overall     $725,000                $400,000 
group 
materiality 
 
Basis of    2.0% of total assets    2.0% of total assets restricted to $400,000. 
determining 
materiality 
 
Rationale   When determining materiality, we determine an appropriate percentage of our 
for the     chosen benchmark, with the choice of an appropriate benchmark as our 
benchmark   starting point. We determined that an asset based measure of materiality is 
applied     appropriate as the Group and the Company holds significant cash and loan 
            balances and its principal activity is the exploration and development of 
            oil and gas assets. As a result we concluded that the asset base is a key 
            financial metric for users of financial statements. 
 
Performance $362,500                $200,000 
materiality 
 
Basis for   We use performance materiality to reduce to an appropriately low level the 
performance probability that the aggregate of uncorrected and undetected misstatements 
materiality exceeds overall materiality. Specifically, we use performance materiality 
            in determining the scope of our audit and the nature and extent of our 
            testing of account balances, classes of transactions and disclosures, for 
            example in determining sample sizes. 
            Our performance materiality was 50% of overall materiality, amounting to £ 
            362,500) for the Group financial statements and $200,000 for the Company 
            financial statements. 
            When considering the level at which to set performance materiality, we 
            considered a number of factors, including the risk assessment and 
            aggregation risk, and the effectiveness of controls and our knowledge of 
            the business. 
 
We agreed with the Board and Audit Committee that we would report to them 
misstatements identified during the audit greater than 5% of overall 
materiality.  We also agreed to report differences below this threshold that, 
in our view, warranted reporting on qualitative grounds. 
 
Conclusions relating to going concern 
 
In auditing the financial statements, we have concluded that the directors' use 
of the going concern basis of accounting in the preparation of the financial 
statements is appropriate. Our evaluation of the directors' assessment of the 
Group's and the Parent Company' ability to continue to adopt the going concern 
basis of accounting included: 
 
·      Review of management's going concern assessment paper and the cash flow 
forecast prepared by management and approved by the Board. 
 
·      We critically assessed the going concern paper and the forecast taking 
into account key assumptions and various scenarios prepared by management and 
the impact they would have on the group's ability to continue operating on 
going concern basis. 
 
·      We performed sensitivity assessments over the key assumptions in the 
forecast to assess the impact of severe unlikely downside scenarios, and 
extending these beyond the 12 months from the date of approval these financial 
statements to assess the group's ability to continue as a going concern. 
 
·      As part of our sensitivity assessment of the forecast and scenario 
forecast for the period to April 2024 we critically assessed the level of 
headroom available and the assumptions including, potential geopolitical 
impacts, oil production, oil prices, operating expenditure and capital 
expenditure. In doing so we compared production forecasts to historical trends 
and considered the oil price assumptions against consensus market prices and 
historical discount levels between Brent oil prices and the local market. We 
compared forecast costs with historical expenditure. 
 
·      We reviewed the adequacy of the disclosures in the financial statements 
in respect of going concern against the requirements of UK-adopted 
international accounting standards. 
 
Based on the work we have performed, we have not identified any material 
uncertainties relating to events or conditions that, individually or 
collectively, may cast significant doubt on the Group's and Parent company's 
ability to continue as a going concern for a period of at least twelve months 
from when the financial statements are authorised for issue. 
 
Our responsibilities and the responsibilities of the directors with respect to 
going concern are described in the relevant sections of this report. 
 
Emphasis of Matter 
 
We draw attention to Note 3 (b) on page 80 to the financial statements which 
describes the uncertainty related to the outcome of the ongoing war in Ukraine. 
The Group have included various scenarios that take into account the ongoing 
war in its cash flow projections. However, due to the unpredictable outcome, 
length, scale and extent of the conflict its impact on the Group and the 
Company cannot be predicted with any certainty. Our opinion is not modified in 
respect of this matter. 
 
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 contained within the annual 
report. 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 course of the audit or otherwise appears to be 
materially misstated. If we identify such material inconsistencies or apparent 
material misstatements, we are required to determine whether there is a 
material misstatement in the financial statements themselves. If, based on the 
work we have performed, we conclude that there is a material misstatement of 
this other information, we are required to report that fact. 
 
As described in the basis for qualified opinion section of our report, our 
audit opinion is qualified because we were unable to obtain sufficient 
appropriate audit evidence in respect of certain loan receivables. We have 
concluded that where the other information refers to these receivables or to 
related balances or classes of transactions it may also be materially misstated 
for the same reason. 
 
Opinions on other matters prescribed by the Companies Act 2006 
 
In our opinion the part of the directors' remuneration report to be audited has 
been properly prepared in accordance with the Companies Act 2006. 
 
Except for the possible effect of the matter described in the basis for the 
qualified opinion section of our report, in our opinion, based on the work 
undertaken in the course of the audit: 
 
·      the information given in the Strategic report and the Directors' report 
for the financial year for which the financial statements are prepared is 
consistent with the financial statements; and 
 
·      the Strategic report and the Directors' report have been prepared in 
accordance with applicable legal requirements. 
 
Matters on which we are required to report by exception 
 
Except for the possible effect of the matter described in the basis for the 
qualified opinion section of our report, in the light of the knowledge and 
understanding of the Group and the Parent Company and its environment obtained 
in the course of the audit, we have not identified material misstatements in 
the Strategic report or the Directors' report. 
 
In respect solely of the limitation on our work relating to certain loan 
receivables, described above: 
 
·      we have not received all the information and explanations we require for 
our audit; and 
 
·      we were unable to determine whether adequate accounting records have 
been kept by the Parent Company 
 
We have nothing to report in respect of the following matters where the 
Companies Act 2006 requires us to report to you if, in our opinion: 
 
·      returns adequate for our audit have not been received from branches not 
visited by us; or 
 
·      the Parent Company financial statements and the part of the Directors' 
remuneration report to be audited are not in agreement with the accounting 
records and returns; or 
 
·      certain disclosures of Directors' remuneration specified by law are not 
made; or 
 
·      a corporate governance statement has not been prepared by the Parent 
Company. 
 
Responsibilities of directors 
 
As explained more fully in the statement of directors' responsibilities set out 
on page 64, the directors are responsible for the preparation of the financial 
statements and for being satisfied that they give a true and fair view, and for 
such internal control as the directors determine is necessary to enable the 
preparation of financial statements that are free from material misstatement, 
whether due to fraud or error. 
 
In preparing the financial statements, the directors are responsible for 
assessing the group's and the Parent company's ability to continue as a going 
concern, disclosing, as applicable, matters related to going concern and using 
the going concern basis of accounting unless the directors either intend to 
liquidate the Group or the Parent Company or to cease operations, or have no 
realistic alternative but to do so. 
 
Auditor's Responsibilities for the audit of the financial statements 
 
Our objectives are to obtain reasonable assurance about whether the financial 
statements as a whole are free from material misstatement, whether due to fraud 
or error, and to issue an auditor's report that includes our opinion. 
Reasonable assurance is a high level of assurance, but is not a guarantee that 
an audit conducted in accordance with ISAs (UK) will always detect a material 
misstatement when it exists. Misstatements can arise from fraud or error and 
are considered material if, individually or in 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 is available on the FRC's website 
at https://www.frc.org.uk/auditors/auditor-assurance/ 
auditor-s-responsibilities-for-the-audit-of-the-fi/ 
description-of-the-auditor's-responsibilities-for 
 
Explanation as to what extent the audit was considered capable of detecting 
irregularities, including fraud 
 
Irregularities, including fraud, are instances of non-compliance with laws and 
regulations. We design procedures in line with our responsibilities, outlined 
above, to detect material misstatements in respect of irregularities, including 
fraud. The extent to which our procedures are capable of detecting 
irregularities, including fraud is detailed below. 
 
The objectives of our audit in respect of fraud, are; to identify and assess 
the risks of material misstatement of the financial statements due to fraud; to 
obtain sufficient appropriate audit evidence regarding the assessed risks of 
material misstatement due to fraud, through designing and implementing 
appropriate responses to those assessed risks; and to respond appropriately to 
instances of fraud or suspected fraud identified during the audit. However, the 
primary responsibility for the prevention and detection of fraud rests with 
both management and those charged with governance of the company. 
 
Based on our understanding of the Group and its operations, we identified the 
principal risks of non-compliance with laws and regulations related to the UK 
and Ukrainian tax legislation, employment and health and safety regulations, 
licensing regulations and we considered the extent to which non-compliance 
might have a material effect on the financial statements. We also considered 
those laws and regulations that have a direct impact on the financial 
statements such as the Companies Act 2006 and Listing Rules. 
 
·      We obtained an understanding of how the Group and Company complies with 
these requirements by discussions with management and those charged with 
governance; 
 
·      Based on this understanding, we designed specific appropriate audit 
procedures to identify instances of non-compliance with laws and regulations. 
This included making enquiries of management and those charged with governance 
and obtaining additional corroborative evidence as required; 
 
·      We inquired of management and those charged with governance as to any 
known instances of non-compliance or suspected non-compliance with laws and 
regulations; 
 
·      We held calls and discussions with external legal advisers representing 
the Group to enquire about known non-compliance with laws and regulations; 
 
·      We performed a review of external press releases; 
 
·      We assessed the risk of material misstatement of the financial 
statements, including the risk of material misstatement due to fraud and how it 
might occur, by holding discussions with management and those charged with 
governance. 
 
·      We challenged assumptions and judgements made by management in relation 
to the estimates made in respect of development and production assets; and 
 
·      Identifying and testing journal entries, in particular any journal 
entries posted with unusual account combinations, and unusual users. 
 
There are inherent limitations in the audit procedures described above. We are 
less likely to become aware of instances of non-compliance with laws and 
regulations that are not closely related to events and transactions reflected 
in the financial statements. Also, the risk of not detecting a material 
misstatement due to fraud is higher than the risk of not detecting one 
resulting from error, as fraud may involve deliberate concealment by, for 
example, forgery or intentional misrepresentations, or through collusion. 
 
Other matters which we are required to address 
 
We were appointed by the Board of Directors on 17 February 2023 to audit the 
financial statements for the period ended 31 December 2022. Our total 
uninterrupted period of engagement is 1 year, covering the period ended 31 
December 2022 to 28 April 2023. 
 
The non-audit services prohibited by the FRC's Ethical Standard were not 
provided to the Group or the Parent Company and we remain independent of the 
Group and the Parent Company in conducting our audit. 
 
Our audit opinion is consistent with the additional report to the audit 
committee. 
 
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 for no purpose other than to draw to the attention of the company's 
members those matters which we are required to include in an auditor's report 
addressed to them. To the fullest extent permitted by law, we do not accept or 
assume responsibility to any party other than the company and company's members 
as a body, for our work, for this report, or for the opinions we have formed. 
 
 Signature 
27 April 2023 
 
 
 
Matthew Banton  (Senior Statutory Auditor) 
for and on behalf of Moore Kingston Smith LLP, Statutory 
Auditor 
6th Floor 
9 Appold Street 
London 
EC2A 2AP 
 
 
Consolidated Income Statement                            Notes 
For the year ended 31 December 2022                                2022     2021 
                                                                  $'000    $'000 
 
CONTINUING OPERATIONS 
 
Revenues                                                     6    8,472    8,793 
 
Cost of sales                                                7  (5,553)  (6,372) 
 
Gross profit                                                      2,919    2,421 
 
Administrative expenses                                      8  (3,441)  (3,712) 
 
Impairment of gas and oil assets                            16    (269)  (2,474) 
 
Impairment of other assets                                   9     (27)    (994) 
 
Reversal of impairment of other assets                       9       20       20 
 
Other operating expenses, net                               10      (3)     (18) 
 
Net foreign exchange (losses)/gain                              (1,131)  (1,591) 
 
Operating loss                                                  (1,932)  (6,348) 
 
Finance income, net                                         13      372    1,250 
 
Loss before tax                                                 (1,560)  (5,098) 
 
Taxation                                                    14        -        - 
 
Loss for the year                                               (1,560)  (5,098) 
 
Attributable to: 
 
Owners of the Company                                           (1,562)  (5,070) 
 
Non-controlling interest                                              2     (28) 
 
                                                                (1,560)  (5,098) 
 
Loss per Ordinary share                                           Cents    Cents 
 
Basic and diluted                                           15    (0.6)    (2.1) 
 
 
 
Consolidated Statement of Comprehensive 
Income                                                          2022       2021 
For the year ended 31 December 2022                            $'000      $'000 
 
Loss for the year                                            (1,560)    (5,098) 
 
Other comprehensive (loss)/profit 
 
 
Items that may be reclassified subsequently to profit or 
loss: 
 
Unrealised currency translation differences                  (3,287)        466 
 
Other comprehensive (loss)/profit                            (3,287)        466 
 
Total comprehensive (loss)/profit for the                    (4,847)    (4,632) 
year 
 
Attributable to: 
 
  Owners of the Company                                      (4,849)    (4,604) 
 
  Non-controlling interest                                         2       (28) 
 
                                                             (4,847)    (4,632) 
 
 
 
Consolidated Balance Sheet                          Notes 
As at 31 December 2022                                         2022        2021 
                                                              $'000       $'000 
 
ASSETS 
 
Non-current assets 
 
Intangible exploration and evaluation                  16         -           - 
assets 
 
Property, plant and equipment                          17     6,633       9,598 
 
Right-of-use assets                                    23       108         200 
 
Deferred tax asset                                     22       319         431 
 
                                                              7,060      10,229 
 
Current assets 
 
Inventories                                            19       295         177 
 
Trade and other receivables                            20       318         218 
 
Loan receivable at amortised cost                      27    15,825      16,724 
 
Cash                                                   21    13,934      15,011 
 
                                                             30,372      32,130 
 
Total assets                                                 37,432      42,359 
 
LIABILITIES 
 
Non-current liabilities 
 
Long-term lease liability                              23      (28)       (104) 
 
Provisions                                             25     (261)       (300) 
 
                                                              (289)       (404) 
 
Current liabilities 
 
Trade and other payables                               24   (1,401)     (1,479) 
 
Short-term lease liability                             23      (79)       (102) 
 
Current provisions                                     25     (136)           - 
 
                                                            (1,616)     (1,581) 
 
Total liabilities                                           (1,905)     (1,985) 
 
NET ASSETS                                                   35,527      40,374 
 
EQUITY 
 
Share capital                                          26    13,832      13,832 
 
Share premium                                                   514         514 
 
Retained earnings                                           184,331     185,893 
 
Cumulative translation reserves                           (164,976)   (161,689) 
 
Other reserves                                                1,589       1,589 
 
Equity attributable to owners of the                         35,290      40,139 
Company 
 
Non-controlling interest                                        237         235 
 
TOTAL EQUITY                                                 35,527      40,374 
 
 
 
The consolidated financial statements of Cadogan Energy Solutions plc, 
registered in England and Wales no. 05718406, were approved by the Board of 
Directors and authorised for issue on 27 April 2023. They were signed on its 
behalf by: 
 
Fady Khallouf 
Chief Executive Officer 
27 April 2023 
The notes on pages 79 to 111 form an integral part of these financial 
statements. 
 
 
Consolidated Statement of Changes in Equity 
For the year ended 31 December 2022 
 
                       Share                    Cumulative                       Non-controlling    Total 
                     capital         Retained  translation                              interest    $'000 
                       $'000         earnings     reserves                                 $'000 
                                        $'000        $'000 
 
                               Share                          Other       Equity 
                             premium                       reserves attributable 
                             account                          $'000 to owners of 
                               $'000                                 the Company 
 
As at 1 January 2021  13,832     514  190,963    (162,155)    1,589       44,743             263   45,006 
 
Net loss for the           -       -  (5,070)            -        -      (5,070)            (28)  (5,098) 
year 
 
Other comprehensive        -       -        -          466        -          466               -      466 
profit 
 
Total comprehensive        -       -  (5,070)          466        -      (4,604)            (28)  (4,632) 
loss for the year 
 
As at 1 January 2022  13,832     514  185,893    (161,689)    1,589       40,139             235   40,374 
 
Net loss for the           -       -  (1,562)            -        -      (1,562)               2  (1,560) 
year 
 
Other comprehensive        -       -        -      (3,287)        -      (3,287)               -  (3,287) 
loss 
 
Total comprehensive        -       -  (1,562)      (3,287)        -      (4,849)               2  (4,847) 
loss for the year 
 
As at 31 December     13,832     514  184,331    (164,976)    1,589       35,290             237   35,527 
2022 
 
 
 
 
Consolidated Cash Flow Statement 
For the year ended 31 December 2022                          Note    2022         2021 
                                                                    $'000        $'000 
 
Operating loss                                                    (1,932)      (6,348) 
 
Adjustments for: 
 
Depreciation and depletion of property, plant and           17,23     764          889 
equipment 
 
Impairment of oil and gas assets                               16     269        2,474 
 
(Reversal of impairment)/impairment of inventories              9    (20)          994 
 
Impairment of receivables                                       9      16            - 
 
Impairment/(reversal of impairment) of VAT recoverable          9      11         (21) 
 
Effect of foreign exchange rate changes                             1,131        1,591 
 
Operating cash inflow/(outflow) before movements in                   239        (421) 
working capital 
 
(Increase)/decrease in inventories                                  (155)        1,049 
 
(Increase)/decrease in receivables                                  (946)        1,526 
 
(Increase)/decrease in payables                                     (197)         (28) 
 
Cash generated by operations                                      (1,059)        2,126 
 
Interest received                                                     185           68 
 
Net cash (outflow) /inflow from operating activities                (874)        2,194 
 
 
Investing activities 
 
Purchases of property, plant and equipment                           (93)        (150) 
 
Purchases of intangible exploration and evaluation                      -          (9) 
assets 
 
Interest received                                                      97            8 
 
Net cash used in investing activities                                   4        (151) 
 
Net (decrease)/increase in cash                                     (870)        2,043 
 
Effect of foreign exchange rate changes                             (207)        (285) 
 
Cash at beginning of year                                          15,011       13,253 
 
Cash at end of year                                                13,934      15,011 
 
 
Notes to the Consolidated Financial Statements 
 
For the year ended 31 December 2022 
 
1.        General information 
 
Cadogan Energy Solutions plc (the "Company", together with its subsidiaries the 
"Group"), is registered in England and Wales under the Companies Act 2006. The 
address of the registered office is 6th Floor, 60 Gracechurch Street, London 
EC3V 0HR. 
 
The Group principal activity has been up to now oil and gas exploration, 
development and production; the Group also conducts gas trading and provides 
services to other E&P operators. The strategy of the Group is to expand its 
activities along the energy value chain, beyond current activities to new forms 
of energy with a reduced impact on the environment. 
 
The Company's shares have a standard listing on the Official List of the UK 
Listing Authority and are traded on the Main Market of the London Stock 
Exchange. 
 
2.        Adoption of new and revised Standards 
 
 New IFRS accounting standards, amendments and interpretations effective from 1 
January 2022 
 
The disclosed policies have been applied consistently by the Group for both the 
current and previous financial year with the exception of the new standards 
adopted. 
 
The IFRS financial information has been drawn up on the basis of accounting 
policies consistent with those applied in the financial statements for the year 
to 31 December 2021, except for the following: 
 
(a)   COVID-19-related Rent Concessions beyond 30 June 2021 - Amendments to 
IFRS 16; 
 
(b)   Amendment to IFRS 16 Leases: COVID-19-Related Rent Concessions beyond 30 
June 2022 
 
(c)   Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent 
Assets: Onerous Contracts - Cost of Fulfilling a Contract 
 
(d)  Amendments to IFRS 3 Business Combinations: Reference to the Conceptual 
Framework 
 
(e)  Annual Improvements to IFRS Standards 2018-2020 
 
The application of the above standards has had no impact on the disclosures or 
the amounts recognised in the Group's consolidated financial statements. 
 
New IFRS accounting standards, amendments and interpretations not yet effective 
 
Below is a list of new and revised IFRSs that are not yet mandatorily effective 
(but allow early application) for the year ending 31 December 2022 and have not 
been early adopted by the Group. These standards are not expected to have a 
material impact on the Group in the future reporting periods and on foreseeable 
future transactions. 
 
 IFRS accounting standards                                          Effective 
                                                                    periods 
                                                                    beginning on or 
                                                                    after 
 
Amendments to IFRS 17 Insurance contracts: Initial Application of   01 January 2023 
IFRS 17 and IFRS 9 - Comparative Information 
 
Classification of Liabilities as Current or Non-current -           01 January 2023 
Amendments to IAS 1 
 
IFRS 17, 'Insurance contracts'                                      01 January 2023 
 
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS    01 January 2023 
Practice Statement 2 
 
Definition of Accounting Estimates - Amendments to IAS 8            01 January 2023 
 
Amendments to IFRS 16 Leases: Lease Liability in a Sale and         01 January 2024 
Leaseback 
 
Deferred Tax related to Assets and Liabilities arising from a       01 January 2023 
Single Transaction - Amendments to IAS 12 
 
3.      Significant accounting policies 
 
(a)    Basis of accounting 
 
The financial statements have been prepared in accordance with international 
accounting standards in conformity with the requirements of the Companies Act 
2006 and in accordance with international financial reporting standards as 
adopted by the UK pursuant to Regulation (EC) No 1606/2002 as it applies in the 
European Union. 
 
The financial statements have been prepared on the historical cost convention 
basis. 
 
The principal accounting policies adopted are set out below: 
 
(b)    Going concern 
 
The Group's cash balance at 31 December 2022 was $13.9 million (2021: $15.0 
million). The Directors believe that the funds available at the date of the 
issue of these financial statements are sufficient for the Group to manage its 
business risks and planned investments successfully. 
 
The Directors' have carried out a robust assessment of the principal risks 
facing the Group. 
 
The Group's forecasts and projections, taking into account reasonably possible 
changes in trading activities, operational performance, flow rates for 
commercial production and the price of hydrocarbons sold to Ukrainian 
customers, show that there are reasonable expectations that the Group will be 
able to operate on funds currently held and those generated internally, for the 
foreseeable future. 
 
Notwithstanding the Group's current financial performance and position, the 
Board are cognisant of the actual risks related to the war situation in 
Ukraine. The Board has considered possible reverse stress case scenarios for 
the impact on the Group's operations, financial position and forecasts.  Whilst 
the potential future impacts of the invasion of Ukraine by Russia are unknown, 
the Board has considered operational disruption that may be caused by the 
factors such as a) restrictions applied by governments, illness amongst our 
workforce and disruption to supply chain and sales channels; b) market 
volatility in respect of commodity prices associated in addition to military 
and geopolitical factors. 
 
In addition to sensitivities that reflect future expectations regarding 
country, commodity price and currency risks that the Group may encounter 
reverse stress tests have been run to reflect possible negative effects of  the 
war in Ukraine. The Group's forecasts demonstrate that owing to its cash 
resources the Group is able to meet its operating cash flow requirements and 
commitments whilst maintaining significant liquidity for a period of at least 
the next 12 months allowing for sustained reductions in commodity prices and 
extended and severe disruption to operations should such a scenario occur. 
 
After making enquiries and considering the uncertainties described above, the 
Directors have a reasonable expectation that the Company and the Group have 
adequate resources to continue in operational existence for the foreseeable 
future and consider the going concern basis of accounting to be appropriate 
and, thus, they continue to adopt the going concern basis of accounting in 
preparing the annual financial statements. 
 
(c) Basis of consolidation 
 
The consolidated financial statements incorporate the financial statements of 
the Company and entities controlled by the Company (its subsidiaries) made up 
to 31 December each year. IFRS 10 defines control to be investor control over 
an investee when it is exposed, or has rights, to variable returns from its 
involvement with the investee and has the ability to control those returns 
through its power over the investee. The results of subsidiaries disposed of 
during the year are included in the consolidated income statement from the 
effective date of acquisition or up to the effective date of disposal, as 
appropriate. Where necessary, adjustments are made to the financial statements 
of subsidiaries to bring accounting policies used into line with those used by 
the Group. All intra-group transactions, balances, income and expenses are 
eliminated on consolidation. 
 
3.    Significant accounting policies (continued) 
 
(c)    Basis of consolidation (continued) 
 
Non-controlling interests in subsidiaries are identified separately from the 
Group's equity therein. Those interests of non-controlling shareholders that 
are present ownership interests entitling their holders to a proportionate 
share of net assets upon liquidation may be initially measured at fair value or 
at the non-controlling interests' proportionate share of the fair value of the 
acquiree's identifiable net assets. The choice of measurement is made on an 
acquisition-by-acquisition basis. Other non-controlling interests are initially 
measured at fair value. 
 
Subsequent to acquisition, the carrying amount of non-controlling interests is 
the amount of those interests at initial recognition plus the non-controlling 
interests' share of subsequent changes in equity. Total comprehensive income is 
attributed to non-controlling interests even if this results in the 
non-controlling interests having a deficit balance. 
 
Changes in the Group's interests in subsidiaries that do not result in a loss 
of control are accounted for as equity transactions. The carrying amount of the 
Group's interests and the non-controlling interests are adjusted to reflect the 
changes in their relative interests in the subsidiaries. Any difference between 
the amount by which the non-controlling interests are adjusted and the fair 
value of the consideration paid or received is recognised directly in equity 
and attributed to the owners of the Company. 
 
(d)     Investments in joint ventures 
 
Financial statements of equity-accounted entities are prepared for the same 
reporting year as the Group. The Group assesses investments in equity-accounted 
entities for impairment whenever events or changes in circumstances indicate 
that the carrying value may not be recoverable. In doing so, the Group applies 
the criteria of IFRS 6 'Exploration for and evaluation of mineral resources' as 
the joint venture holds exploration phase assets. If any such indication of 
impairment exists, the carrying amount of the investment is compared with its 
recoverable amount, being the higher of its fair value less costs of disposal 
and value in use. If the carrying amount exceeds the recoverable amount, the 
investment is written down to its recoverable amount. 
 
The Group ceases to use the equity method of accounting from the date on which 
it no longer has joint control over the joint venture or significant influence 
over the associate, or when the interest becomes classified as an asset held 
for sale. 
 
(e)    Revenue recognition 
 
Revenue from contracts with customers is recognized when or as the Group 
satisfies a performance obligation by transferring a promised good or service 
to a customer. A good or service is transferred when the customer obtains 
control of that good or service. Revenue is measured based on measurement 
principles of IFRS 15 and represents amounts receivable for hydrocarbon 
products and services provided in the normal course of business, net of value 
added tax ('VAT') and other sales-related taxes, excluding royalties on 
production.  Royalties on production are recorded within cost of sales. 
 
The crude oil produced by the upstream operations is sold to external 
customers. Revenue from the sale of crude oil is recognised at the point in 
time when control of the product is transferred to the customer, which is 
typically when goods are despatched, and title has passed. The Group despatches 
oil at the production point (EXW incoterms) therefore the Group has no 
transportation and shipping costs associated with the transfer of the product 
to the customer. 
 
The Group's sales of crude oil are priced based on the consideration specified 
in contracts with customers based on a conducted tender result on the opened 
tender platform. Invoices are typically paid at the day of product despatch. 
 
3.  Significant accounting policies (continued) 
 
E&P and Trading business segments 
 
The transfer of control of hydrocarbons usually coincides with title passing to 
the customer and the customer taking physical possession as the product passes 
a physical point such as a designated point in the pipeline for the sale of gas 
or loading point in the case of oil. The Group principally satisfies its 
performance obligations at a point in time. 
 
To the extent that revenue arises from test production during an evaluation 
programme, an amount is credited to evaluation costs and charged to cost of 
sales, to reflect a zero-net margin. 
 
Interest income is accrued on a time basis, by reference to the principal 
outstanding and at the effective interest rate applicable, which is the rate 
that exactly discounts estimated future cash receipts through the expected life 
of the financial asset to that asset's net carrying amount on initial 
recognition. 
 
(f)     Foreign currencies 
 
The functional currency of the Group's Ukrainian operations is Ukrainian 
Hryvnia.  The functional currency of the Group's UK subsidiaries and the parent 
company is US Dollar. 
 
In preparing the financial statements of the individual companies, transactions 
in currencies other than the functional currency of each Group company 
('foreign currencies') are recorded in the functional currency 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 into the functional currency at the rates 
prevailing on the balance sheet date. Non-monetary assets and liabilities 
carried at fair value that are denominated in foreign currencies are translated 
at the rates prevailing at the date when the fair value was determined. 
Non-monetary items that are measured in terms of historical cost in a foreign 
currency are not retranslated. Foreign exchange differences on cash are 
recognized in operating profit or loss in the period in which they arise. 
 
Exchange differences are recognized in the profit or loss in the period in 
which they arise except for exchange differences on monetary items receivable 
from or payable to a foreign operation for which settlement is neither planned 
nor likely to occur. This forms part of the net investment in a foreign 
operation, which is recognized in the foreign currency translation reserve and 
in profit or loss on disposal of the net investment. 
 
For the purpose of presenting consolidated financial statements, the results 
and financial position of each entity of the Group, where the functional 
currency is not the US dollar, are translated into US dollars as follows: 
 
i.             assets and liabilities of the Group's foreign operations are 
translated at the closing rate on the balance sheet date; 
 
ii.            income and expenses are translated at the average exchange rates 
for the period, where it approximates to actual rates. In other cases, if 
exchange rates fluctuate significantly during that period, the exchange rates 
at the date of the transactions are used; and 
 
iii.           all resulting exchange differences arising, if any, are 
recognized in other comprehensive income and accumulated equity (attributed to 
non-controlling interests as appropriate), transferred to the Group's 
translation reserve. Such translation differences are recognized as income or 
as expenses in the period in which the operation is disposed of. 
 
Goodwill and fair value adjustments arising on the acquisition of a foreign 
entity are treated as assets and liabilities of the foreign entity and 
translated at the closing rate. 
 
                         The relevant exchange rates used were as follows: 
 
                 Year ended 31 December 2022        Year ended 31 December 2021 
 
                 GBP/USD    EURO/USD      USD/UAH    GBP/USD   EURO/USD   USD/UAH 
 
Closing rate      1.2104      1.0708      37.0663     1.3514     1.1344   27.5776 
 
Average rate      1.2372      1.0539      32.4569     1.3761     1.1847   27.5112 
 
 
3.    Significant accounting policies (continued) 
 
(g)  Taxation 
 
The tax expense represents the sum of the tax currently payable and deferred 
tax. 
 
The tax currently payable is based on taxable profit for the year. Taxable 
profit differs from net profit as reported in the consolidated income statement 
because it excludes items of income or expense that are taxable or deductible 
in other years and it further excludes items that are never taxable or 
deductible. The Group's liability for current tax is calculated using tax rates 
that have been enacted or substantively enacted by the balance sheet date. 
 
Deferred tax is the tax expected to be payable or recoverable on differences 
between the carrying amounts of assets and liabilities in the financial 
statements and the corresponding tax bases used in the computation of taxable 
profit. This is accounted for using the balance sheet liability method. 
Deferred tax liabilities are generally recognized 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 
recognized if the temporary difference arises from the initial recognition of 
goodwill or from the initial recognition (other than in a business combination) 
of other assets and liabilities in a transaction that affects neither the 
taxable profit nor the accounting profit. Deferred tax liabilities are 
recognized for taxable temporary differences arising on investments in 
subsidiaries and associates, and interests in joint ventures, except where the 
Group is able to control the reversal of the temporary difference and it is 
probable that the temporary difference will not reverse in the foreseeable 
future. 
 
The carrying amount of deferred tax assets is reviewed at each balance sheet 
date and reduced to the extent that it is no longer probable that sufficient 
taxable profits will be available to allow all or part of the asset to be 
recovered. Deferred tax is calculated at the tax rates that are expected to 
apply in the period when the liability is settled or the asset is realized. 
Deferred tax is charged or credited in the income statement, except when it 
relates to items charged or credited in other comprehensive income, in which 
case the deferred tax is also dealt with in other comprehensive income. 
 
Deferred tax assets and liabilities are offset when there is a legally 
enforceable right to set off current tax assets against current tax liabilities 
and when they relate to income taxes levied by the same taxation authority and 
the Group intends to settle its current tax assets and liabilities on a net 
basis. 
 
In case of the uncertainty of the tax treatment, the Group assess, whether it 
is probable or not, that the tax treatment will be accepted, and to determine 
the value, the Group use the most likely amount or the expected value in 
determining taxable profit (tax loss), tax bases, unused tax losses, unused tax 
credits and tax rates. 
 
(h)    Other property, plant and equipment 
 
Property, plant and equipment ('PP&E') are carried at cost less accumulated 
depreciation and any recognized impairment loss. Depreciation and amortization 
is charged so as to write-off the cost or valuation of assets, other than land, 
over their estimated useful lives, using the straight-line method, on the 
following bases: 
 
Other PP&E                                       10% to 30% 
 
The gain or loss arising on the disposal or retirement of an asset is 
determined as the difference between the sales proceeds and the carrying amount 
of the asset and is recognized in income. 
 
(i)    Intangible exploration and evaluation assets 
 
The Group applies the modified full cost method of accounting for intangible 
exploration and evaluation ('E&E') expenditure, which complies with 
requirements set out in IFRS 6 Exploration for and Evaluation of Mineral 
Resources. Under the modified full cost method of accounting, expenditure made 
on exploring for and evaluating oil and gas properties is accumulated and 
initially capitalized as an intangible asset, by reference to 
 
3.    Significant accounting policies (continued) 
 
(i)     Intangible exploration and evaluation assets (continued) 
 
appropriate cost centres being the appropriate oil or gas property. E&E assets 
are then assessed for impairment on a geographical cost pool basis, which are 
assessed at the level of individual licences. 
 
E&E assets comprise costs of (i) E&E activities which are in progress at the 
balance sheet date, but where the existence of commercial reserves has yet to 
be determined (ii) E&E expenditure which, whilst representing part of the E&E 
activities associated with adding to the commercial reserves of an established 
cost pool, did not result in the discovery of commercial reserves. 
 
Costs incurred prior to having obtained the legal rights to explore an area are 
expensed directly to the income statement as incurred. 
 
Exploration and Evaluation costs 
 
E&E expenditure is initially capitalized as an E&E asset. Payments to acquire 
the legal right to explore, costs of technical services and studies, seismic 
acquisition, exploratory drilling and testing are also capitalized as 
intangible E&E assets. 
 
Tangible assets used in E&E activities (such as the Group's vehicles, drilling 
rigs, seismic equipment and other property, plant and equipment) are normally 
classified as PP&E. However, to the extent that such assets are consumed in 
developing an intangible E&E asset, the amount reflecting that consumption is 
recorded as part of the cost of the intangible asset. Such intangible costs 
include directly attributable overheads, including the depreciation of PP&E 
items utilised in E&E activities, together with the cost of other materials 
consumed during the exploration and evaluation phases. 
 
E&E assets are not amortized prior to the conclusion of appraisal activities. 
 
Treatment of E&E assets at conclusion of appraisal activities 
 
Intangible E&E assets related to each exploration property are carried forward, 
until the existence (or otherwise) of commercial reserves has been determined. 
If commercial reserves have been discovered, the related E&E assets are 
assessed for impairment on individual assets basis as set out below and any 
impairment loss is recognized in the income statement. Upon approval of a 
development programme, the carrying value, after any impairment loss, of the 
relevant E&E assets is reclassified to the development and production assets 
within PP&E. 
 
Intangible E&E assets which relate to E&E activities that are determined not to 
have resulted in the discovery of commercial reserves remain capitalized as 
intangible E&E assets at cost less accumulated amortization, subject to meeting 
a pool-wide impairment test in accordance with the accounting policy for 
impairment of E&E assets set out below. 
 
Impairment of E&E assets 
 
E&E assets are assessed for impairment when facts and circumstances suggest 
that the carrying amount may exceed its recoverable amount. Such indicators 
include, but are not limited to those situations outlined in paragraph 20 of 
IFRS 6 Exploration for and Evaluation of Mineral Resources such as, a) license 
expiry during year or in the near future and will not likely to be renewed; b) 
expenditure on E&E activity neither budgeted nor planned; c) commercial 
quantities of mineral resources have been discovered; and d) sufficient data 
exist to indicate that carrying amount of E&E asset is unlikely to be recovered 
in full from successful development or sale. 
 
Where there are indications of impairment, the E&E assets concerned are tested 
for impairment. Where the E&E assets concerned fall within the scope of an 
established full cost pool, which are not larger than an operating segment, 
they are tested for impairment together with all development and production 
assets associated with that cost pool, as a single cash generating unit. 
 
3. Significant accounting policies (continued) 
 
The aggregate carrying value of the relevant assets is compared against the 
expected recoverable amount of the pool, generally by reference to the present 
value of the future net cash flows expected to be derived from production of 
commercial reserves from that pool. Where the assets fall into an area that 
does not have an established pool or if there are no producing assets to cover 
the unsuccessful exploration and evaluation costs, those assets would fail the 
impairment test and be written off to the income statement in full. 
 
Impairment losses are recognized in the income statement and are separately 
disclosed. 
 
(j) Development and production assets 
 
Development and production assets are accumulated on a field-by-field basis and 
represent the cost of developing the commercial Reserves discovered and 
bringing them into production, together with E&E expenditures incurred in 
finding commercial Reserves transferred from intangible E&E assets. 
 
The cost of development and production assets comprises the cost of 
acquisitions and purchases of such assets, directly attributable overheads, 
finance costs capitalized, and the cost of recognizing provisions for future 
restoration and decommissioning. 
 
Depreciation of producing assets 
 
Depreciation is calculated on the net book values of producing assets on a 
field-by-field basis using the unit of production method. The unit of 
production method refers to the ratio of production in the reporting year as a 
proportion of the Proved and Probable Reserves of the relevant field based on 
assessments of internal geologists utilising the most recent Competent Person 
Report and subsequent drilling and exploration, taking into account future 
development expenditures necessary to bring those Reserves into production. 
 
Producing assets are generally grouped with other assets that are dedicated to 
serving the same Reserves for depreciation purposes, but are depreciated 
separately from producing assets that serve other Reserves. 
 
(k) Impairment of development and production assets and other property, plant 
and equipment 
 
At each balance sheet date, the Group reviews the carrying amounts of its PP&E 
to determine whether there is any indication that those assets have suffered an 
impairment loss. If any such indication exists, the recoverable amount of the 
asset is estimated in order to determine the extent of the impairment loss (if 
any). Where the asset does not generate cash flows that are independent from 
other assets, the Group estimates the recoverable amount of the cash-generating 
unit to which the asset belongs. The recoverable amount is the higher of fair 
value less costs to sell and value in use. In assessing value in use, the 
estimated future cash flows are discounted to their present value using a 
pre-tax discount rate that reflects current market assessments of the time 
value of money and the risks specific to the asset for which the estimates of 
future cash flows have not been adjusted. In determining fair value less cost 
to sell, the estimated future cash flows are discounted to their present value 
using a post-tax discount rate that reflects current market assessments of the 
time value of money and the risks specific to the asset for which the estimates 
of future cash flows have not been adjusted.  Such cash flows include relevant 
development expenditure that a market participant would reasonably be expected 
to undertake. 
 
If the recoverable amount of an asset (or cash-generating unit) is estimated to 
be less than its carrying amount, the carrying amount of the asset 
(cash-generating unit) is reduced to its recoverable amount. An impairment loss 
is recognised as an expense immediately. 
 
Where an impairment loss subsequently reverses, the carrying amount of the 
asset (cash-generating unit) is increased to the revised estimate of its 
recoverable amount, but so that the increased carrying amount does not exceed 
the carrying amount that would have been determined had no impairment loss been 
recognised for the asset (cash-generating unit) in prior years. A reversal of 
an impairment loss is recognized as income immediately. 
 
(l)      Inventories 
 
Oil and gas stock and spare parts are stated at the lower of cost and net 
realisable value. Costs comprise direct materials and, where applicable, direct 
labour costs and those overheads that have been incurred in bringing the 
inventories to their present location and condition. Cost is allocated using 
the weighted average method. Net realisable value represents the estimated 
selling price less all estimated costs of completion and costs to be incurred 
in marketing, selling and distribution. 
 
(m)  Financial instruments 
 
Financial assets and financial liabilities are recognized in the consolidated 
statement of financial position when the Group becomes party to the contractual 
provisions of the instrument. 
 
Loan classified at amortised cost 
 
Loan is measured at the amount recognised at initial recognition minus 
principal repayments, plus or minus the cumulative amortization of any 
difference between that initial amount and the maturity amount, and any loss 
allowance. Interest income is calculated using the effective interest method 
and is recognised in profit and loss. Changes in fair value are recognised in 
profit and loss when the asset is derecognised or reclassified. In accordance 
with IFRS 9, the loan is measured at amortised cost. The Group applies the 
simplified approach to providing for expected credit losses (ECL) prescribed by 
IFRS 9, which permits the use of the lifetime expected loss provision for the 
loan. Expected credit losses are assessed on a forward-looking basis. The loss 
allowance is measured at initial recognition and throughout its life at an 
amount equal to lifetime ECL. Any impairment is recognized in the income 
statement. 
 
Trade and other payables 
 
Payables are initially measured at fair value, net of transaction costs and are 
subsequently measured at amortized cost using the effective interest method. 
 
Trade and other receivables 
 
Trade and other receivables are recognized initially at their transaction price 
in accordance with IFRS 9 and are subsequently measured at amortised cost. The 
Group applies the simplified approach to providing for expected credit losses 
(ECL) prescribed by IFRS 9, which permits the use of the lifetime expected loss 
provision for all trade receivables. Expected credit losses are assessed on a 
forward-looking basis. The loss allowance is measured at initial recognition 
and throughout its life at an amount equal to lifetime ECL. Any impairment is 
recognized in the income statement. 
 
Cash 
 
Cash comprise cash on hand and on-demand deposits. Deposits are recorded as 
cash and cash equivalents when they have a maturity of less than 90 days at 
inception. 
 
(n)    Provisions 
 
Provisions are recognized when the Group has a present obligation (legal or 
constructive) as a result of a past event, it is probable that the Group will 
be required to settle that obligation and a reliable estimate can be made of 
the amount of the obligation. The amount recognized as a provision is the best 
estimate of the consideration required to settle the present obligation at the 
balance sheet date, taking into account the risks and uncertainties surrounding 
the obligation. When a provision is measured using the cash flows estimated to 
settle the present obligation, its carrying amount is the present value of 
those cash flows. 
 
(o)      Decommissioning 
 
A provision for decommissioning is recognized in full when the related 
facilities are installed. The decommissioning provision is calculated as the 
net present value of the Group's share of the expenditure expected to be 
incurred at the end of the producing life of each field in the removal and 
decommissioning of the production, storage and transportation facilities 
currently in place. The cost of recognizing the decommissioning provision is 
included as part of the cost of the relevant asset and is thus charged to the 
income statement on a unit of production basis in accordance with the Group's 
policy for depletion and depreciation of tangible non-current assets. Period 
charges for changes in the net present value of the decommissioning provision 
arising from discounting are included within finance costs. 
 
(p)      Leases 
 
At inception of a contract, the Group assesses whether a contract is, or 
contains, a lease based on whether the contract conveys the right to control 
the use of an identified asset for a period of time in exchange for 
consideration. Service agreements for equipment on the working sites are not 
considered leases as, based upon an assessment of the terms and nature of their 
contractual arrangements, the contracts do not convey the right to control the 
use of an identified asset. 
 
The right-of-use asset is initially measured based on the initial amount of the 
lease liability adjusted for any lease payments made at or before the 
commencement date, plus any initial direct costs incurred and an estimate of 
costs to dismantle and remove the underlying asset or to restore the underlying 
asset or the site on which it is located, less any lease incentives received. 
 
The asset is depreciated to the earlier of the end of the useful life of the 
right-of-use asset or the lease term using the straight-line method as this 
most closely reflects the expected pattern of consumption of the future 
economic benefits. The lease term includes periods covered by an option to 
extend if the Group is reasonably certain to exercise that option. In addition, 
the right-of-use asset is periodically reduced by impairment losses, if any, 
and adjusted for certain remeasurements of the lease liability. 
 
The lease liability is initially measured at the present value of the lease 
payments that are not paid at the commencement date, discounted using the 
interest rate implicit in the lease or, if that rate cannot be readily 
determined, the incremental borrowing rate. The lease liability is measured at 
amortized cost using the effective interest method. It is remeasured when there 
is a change in future lease payments arising from a change in an index or rate, 
if there is a change in the Group's estimate of the amount expected to be 
payable under a residual value guarantee, or if the Group changes its 
assessment of whether it will exercise a purchase, extension or termination 
option. When the lease liability is remeasured in this way, a corresponding 
adjustment is made to the carrying amount of the right-of-use asset, or the 
effect is recorded in profit or loss if the carrying amount of the right-of-use 
asset has been reduced to zero. 
 
The Group elected to apply the practical expedient not to recognise 
right-of-use assets and lease liabilities for short-term leases that have a 
lease term of 12 months or less and leases of low-value assets. The Group also 
made use of the practical expedient to not recognize a right-of-use asset or a 
lease liability for leases for which the lease term ends within 12 months of 
the date of initial application. 
 
The lease payments associated with these leases are recognized as an expense on 
a straight-line basis over the lease term. 
 
4.      Critical accounting judgements and key sources of estimation 
uncertainty 
 
In the application of the Group's accounting policies, which are described in 
note 3, the Directors are required to make judgements, estimates and 
assumptions about the carrying amounts of the assets and liabilities that are 
not readily apparent from other sources. The estimates and associated 
assumptions are based on historical experience and other factors that are 
considered to be relevant. Actual results may differ from these estimates. 
 
The estimates and underlying assumptions are reviewed on an ongoing basis. 
Revisions to accounting estimates are recognized in the period in which the 
estimate is revised if the revision affects only that period or in the period 
of the revision and future periods if the revision affects both the current and 
future periods. 
 
The following are the critical judgements and estimates that the Directors have 
made in the process of applying the Group's accounting policies and that have 
the most significant effect on the amounts recognized in the financial 
statements. 
 
Critical judgements and estimates 
 
(a) Impairment indicator assessment for E&E assets 
 
Cadogan had fully complied with legislative requirements and submitted its 
application for a 20-year exploration and production license 5 months before 
its expiry on 23 December 2019. A decision on the award was expected to be 
provided by State Geological Service of Ukraine before 19 January 2020, since 
all other intermediary approvals had been secured in line with the applicable 
legislation requirements. Given the delay in granting of the new license beyond 
the regular timeline provided by legislation in Ukraine, Cadogan has launched a 
claim before the Administrative Court to challenge the non-granting of the 
20-year production license by the Licensing Authority. 
 
In 2022, the claims of Usenco Nadra have been rejected by the Court of 1st 
Instance, the Court of Appeal and the Supreme Court. 
 
(b)    Impairment of PP&E 
 
Management assesses its development and production assets for impairment 
indicators and if indicators of impairment are identified performs an 
impairment test. Management performed an impairment assessment using a 
discounted cash flow model which required estimates including forecast oil 
prices, reserves and production, costs and discount rates (note 17). 
 
(c)   Recoverability and measurement of VAT 
 
Judgment is required in assessing the recoverability of VAT assets and the 
extent to which historical impairment provisions remain appropriate, 
particularly noting the recent recoveries against historically impaired VAT. In 
forming this assessment, the Group considers the nature and age of the VAT, the 
likelihood of eligible future supplies to VAT, the pattern of recoveries and 
risks and uncertainties associated with the operating environment (note 9). 
 
(d)  Proger Loan recoverability 
 
The recoverability of the carrying value of loan from PMP represents a 
significant accounting judgment. In making their assessment over estimated 
recoverability of the loan, management considered the latest outcome of 
arbitration, assessment of the security provided by the pledge over shares, and 
the delay in the recovery of the expected amount. As a result, management 
concluded that $15.8 million represents its best estimate of recoverable amount 
as at 31 December 2022 (2021: $16,7 million). For further detail please refer 
to the note 27. 
 
(e)  Well services and rental agreements 
 
The Group's well rental arrangements in Ukraine for oil and gas extraction 
activities are outside of the scope of IFRS 16. Judgment was required in 
forming this assessment, based on analysis of the scope of IFRS 16 and the 
nature of the well rental arrangements. This assessment focused on the extent 
to which the rental agreements provided access to sub-surface well structures 
to extract hydrocarbons versus surface level infrastructure for the transport 
and processing of extracted hydrocarbons. 
 
(f)   Deferred tax assets 
 
Deferred tax assets and liabilities require management judgement in determining 
the amounts to be recognised. In particular, significant judgement is used when 
assessing the extent to which deferred tax assets should be recognised, with 
consideration given to the timing and level of future taxable income in the 
relevant tax jurisdiction. 
 
5. Segment information 
 
Segment information is presented on the basis of management's perspective and 
relates to the parts of the Group that are defined as operating segments. 
Operating segments are identified on the basis of internal reports provided to 
the Group's chief operating decision maker ("CODM"). The Group has identified 
its senior management team as its CODM and the internal reports used by the 
senior management team to oversee operations and make decisions on allocating 
resources serve as the basis of information presented. These internal reports 
are prepared on the same basis as these consolidated financial statements. 
 
Segment information is analysed on the basis of the type of activity, products 
sold, or services provided. The majority of the Group's operations and all 
Group's revenues are located within Ukraine. Segment information is analysed on 
the basis of the types of goods supplied by the Group's operating divisions. 
The Group's reportable segments under IFRS 8 are therefore as follows: 
 
Exploration and Production 
 
§ E&P activities on the exploration and production licences for natural gas, 
oil and condensate. 
 
Trading 
 
§ Import of natural gas from European countries; and 
 
§ Local purchase and sales of natural gas operations with physical delivery of 
natural gas. 
 
The accounting policies of the reportable segments are the same as the Group's 
accounting policies described in note 3. Sales between segments are carried out 
at rates considered to approximate market prices. The segment result represents 
operating profit under IFRS before unallocated corporate expenses. Unallocated 
corporate expenses include management remuneration, representative expenses and 
expenses incurred in respect of the maintenance of office premises. This is the 
measure reported to the CODM for the purposes of resource allocation and 
assessment of segment performance. The Group does not present information on 
segment assets and liabilities as the CODM does not review such information for 
decision-making purposes. 
 
As at 31 December 2022 and for the year then ended the Group's segmental 
information was as follows: 
 
                                 Exploration       Trading Consolidated 
                                         and 
                                  Production 
 
                                       $'000         $'000        $'000 
 
Sales of hydrocarbons                  8,465             -        8,465 
 
Other revenue                              7             -            7 
 
Sales between segments                     -             -            - 
 
Total revenue                          8,472             -        8,472 
 
Cost of sales                        (5,553)             -      (5,553) 
 
Administrative expenses                (450)         (125)        (575) 
 
Impairment of oil and gas              (269)             -        (269) 
assets 
 
Other operating expenses, net            (3)             -          (3) 
 
Impairment of other assets              (16)          (11)         (27) 
 
Reversal of impairment of other           20             -           20 
assets 
 
Finance income (1)                       185             -          185 
 
Segment results                        2,386         (136)        2,250 
 
Unallocated administrative                                      (2,866) 
expenses 
 
Other finance income, net                                           187 
 
Net foreign exchange loss                                       (1,131) 
 
Loss before tax                                                 (1,560) 
 
(1)          Net finance income includes $185 thousand of interest on cash 
deposits used for operations. 
 
As at 31 December 2021 and for the year then ended the Group's segmental 
information was as follows: 
 
                                 Exploration       Trading Consolidated 
                                         and 
                                  Production 
 
                                       $'000         $'000        $'000 
 
Sales of hydrocarbons                  7,017         1,769        8,786 
 
Other revenue                              7             -            7 
 
Sales between segments                     -             -            - 
 
Total revenue                          7,024         1,769        8,793 
 
Cost of sales                        (5,268)       (1,104)      (6,372) 
 
Administrative expenses                (487)         (145)        (632) 
 
Other operating costs                   (35)             -         (35) 
 
Impairment of other assets             (974)             -        (974) 
 
Impairment of oil and gas            (2,474)             -      (2,474) 
assets 
 
Finance income (2)                         -            68           68 
 
Segment results                      (2,214)           588      (1,626) 
 
Unallocated administrative                 -             -      (3,080) 
expenses 
 
Other income, net(3)                       -             -        1,199 
 
Net foreign exchange loss                  -             -      (1,591) 
 
Loss before tax                            -             -      (5,098) 
 
(2)          Net finance income includes $68 thousand of interest on cash 
deposits used for trading. 
 
(3)          Includes interest on loan of $1,225 thousand 
 
. 
 
Fixed assets related to Exploration and Production segment are disclosed in the 
note 17. 
 
6.        Revenue 
 
                                                                   2022      2021 
                                                                  $'000     $'000 
 
Sale of hydrocarbons (exploration and production) - point in      8,472     7,024 
time 
 
Sale of hydrocarbons (trading) - point in time                        -     1,769 
 
Total                                                             8,472     8,793 
 
Revenue is generated in Ukraine. Refer to note 3 (e) for details of the 
performance obligations. Service revenue and associated contract assets and 
liabilities are immaterial. 
 
Information about major customers 
 
80% of exploration and production business segment revenue arose from sales to 
five largest customers. Three of them contributed for more than 10% of the 
total revenue of the exploration and production business segment revenue for 
the year ended 31 December 2022. 
 
65% of prior year exploration and production business segment revenue arose 
from sales to four largest customers. Each of them contributed for more than 
10% of the total revenue of the exploration and production business segment 
revenue for the year ended 31 December 2021. 
 
Trading segment revenue for the year ended 31 December 2021 of $1.8 million 
arose from sales to the Group's four customers. 
 
7.        Cost of sales 
 
                                                                 2022         2021 
 
                                                                $'000        $'000 
 
Subsoil tax                                                     3,522        3,061 
 
Natural Gas cost (Inventory)                                        -        1,101 
 
Well rent                                                         789          745 
 
Depreciation                                                      536          751 
 
Staff cost                                                        245          260 
 
Materials (Inventory)                                             143          129 
 
Machinery services                                                111           68 
 
Electricity                                                        67           55 
 
Security services                                                  65           77 
 
Other expenses                                                     75          125 
 
Total                                                           5,553        6,372 
 
8.        Administrative expenses 
 
                                                                       2022    2021 
                                                                      $'000   $'000 
 
Staff                                                                 1,774   1,897 
 
Professional fees                                                       872     827 
 
Depreciation                                                            217     251 
 
Insurance                                                               215     350 
 
IT and communication                                                     62      68 
 
Cars and travel                                                          61      75 
 
Office costs including utilities                                         51      73 
and maintenance 
 
Bank charges                                                             34      43 
 
Other                                                                   155     128 
 
Total                                                                 3,441   3,712 
 
9.        Reversal of impairment/(impairment) of other assets 
 
                                                                       2022    2021 
                                                                      $'000   $'000 
 
Inventory                                                                20       - 
 
Other receivables                                                         -      20 
 
Reversal of impairment of other assets                                   20      20 
 
$1.0 million (2021: $1.3 million) of historical VAT receivables remain 
impaired. Refer to Note 4 and 20. 
 
                                                                       2022    2021 
                                                                      $'000   $'000 
 
Inventories                                                               -   (994) 
 
Other receivables                                                      (16)       - 
 
VAT recoverable                                                        (11)       - 
 
Impairment of other assets                                             (27)   (994) 
 
10.      Other operating expenses, net 
 
                                                                       2022    2021 
                                                                      $'000   $'000 
 
Other expenses                                                          (3)    (18) 
 
Total                                                                   (3)    (18) 
 
11.        Auditor's remuneration 
 
The analysis of auditor's remuneration is as follows: 
 
                                                                      2022    2021 
                                                                     $'000   $'000 
 
Audit fees 
 
Fees payable to the Company's auditor and their associates for         192     156 
the audit of the Company's annual accounts 
 
Fees payable to the Company's auditor and their associates for 
other services to the Group: 
 
-  The audit of the Company's subsidiaries                               8       8 
 
Total audit fees                                                       200     164 
 
Non-audit fees 
 
-  Review of regulatory communications                                   -       - 
 
Non-audit fees                                                           -       - 
 
Audit fees for 2022, of $200 thousand, refer to Moore Kingstone Smith for the 
audit of group accounts and subsidiaries as of and for the year ended 31 
December 2022. 
 
12.        Staff costs 
 
The average monthly number of employees (including Executive Directors) was: 
 
                                                                   2022     2021 
                                                                 Number   Number 
 
Executive Director                                                    1        1 
 
Other employees                                                      74       77 
 
Total                                                                75       78 
 
Total number of employees at 31 December                             75       78 
 
                                                                  $'000    $'000 
 
Their aggregate remuneration comprised: 
 
Wages and salaries                                                1,596    1,671 
 
Social security costs                                               301      307 
 
Annual bonus                                                          -        - 
 
Charge for bonus granted in shares                                    -        - 
 
Total                                                             1,897    1,978 
 
13.      Finance income/(costs), net 
 
                                                                      2022    2021 
                                                                     $'000   $'000 
 
Interest on loan (note 27)                                              38   1,225 
 
Investment revenue                                                      97       8 
 
Interest income on cash deposits in Ukraine                            185      68 
 
Change in provision (note 25)                                           93       - 
 
Total interest income on financial assets                              413   1,301 
 
Interest on lease                                                     (18)    (28) 
 
Unwinding of discount on decommissioning provision (note 25)          (23)    (23) 
 
Total                                                                  372   1,250 
 
14.      Tax 
 
                                                                     2022    2021 
                                                                    $'000   $'000 
 
Current tax                                                             -       - 
 
Deferred tax                                                            -       - 
 
Total                                                                   -       - 
 
The Group's operations are conducted primarily outside the UK, namely in 
Ukraine. The most appropriate tax rate for the Group is therefore considered to 
be 18 % (2021: 18%), the rate of profit tax in Ukraine, which is the primary 
source of revenue for the Group. Taxation for other jurisdictions is calculated 
at the rates prevailing in the respective jurisdictions. 
 
The taxation charge for the year can be reconciled to the profit/(loss) per the 
income statement as follows: 
 
                                                      2022      2022      2021      2021 
                                                     $'000         %     $'000         % 
 
(Loss)/profit before tax                           (1,560)       100   (5,098)       100 
 
Tax credit at Ukraine corporation tax rate of        (281)        18     (918)        18 
18% (2021: 18%) 
 
Permanent differences                              (1,361)        87     (920)        20 
 
Unrecognized tax losses generated in the year        1,682     (108)     1,969      (41) 
 
Effect of different tax rates                         (40)         3     (131)         3 
 
                                                         -         -         -         - 
 
Adjustments recognized in the current year in 
relation                                                 -         -         -         - 
with the current tax of prior years 
 
Income tax (benefit)/expense recognized in               -         -         -         - 
profit or loss 
 
Permanent differences mostly represent items, including provisions, accruals 
and impairments related to taxation in Ukraine, these are items not deductible 
in tax computations. 
 
15.      Loss per Ordinary share 
 
Loss attributable to owners of the Company                            2022    2021 
                                                                     $'000   $'000 
 
Loss for the purposes of basic loss per share being net loss       (1,562) (5,070) 
attributable to owners of the Company 
 
                                                                    Number  Number 
Number of shares                                                      '000    '000 
 
Weighted average number of Ordinary shares used in calculation 
of earnings per share: 
 
Basic                                                              244,128 244,128 
 
Diluted                                                            244,128 244,128 
 
                                                                      Cent    Cent 
 
Loss per Ordinary share 
 
Basic and diluted                                                    (0.6)   (2.1) 
 
Basic loss per Ordinary share is calculated by dividing the net loss for the 
year attributable to owners of the Company by the weighted average number of 
Ordinary shares outstanding during the year. The calculation of the basic loss 
per share is based on the following data: 
 
In 2022 and 2021 the Group generated a loss and therefore there is no 
difference between basic and diluted EPS. 
 
16.      Intangible exploration and evaluation assets 
 
                                                                     $'000 
Cost 
 
At 1 January 2021                                                   16,211 
 
Additions                                                                - 
 
Disposals                                                                - 
 
Change in estimate of decommissioning assets (note                      25 
25) 
 
Exchange differences                                                   465 
 
At 1 January 2022                                                   16,701 
 
Additions                                                                - 
 
Disposals                                                          (5,878) 
 
Change in estimate of decommissioning assets (note                     269 
25) 
 
Exchange differences                                               (3,577) 
 
At 31 December 2022                                                  7,515 
 
Impairment 
 
At 1 January 2021                                                   13,830 
 
   Disposals                                                         2,474 
 
Exchange differences                                                   397 
 
At 1 January 2022                                                   16,701 
 
   Addition                                                              - 
 
   Disposals                                                       (5,878) 
 
   Impairment                                                          269 
 
   Exchange differences                                            (3,577) 
 
At 31 December 2022                                                  7,515 
 
Carrying amount 
 
At 31 December 2022                                                      - 
 
At 31 December 2021                                                      - 
 
Disposal of $5.8 million relates to E&E assets impaired in previous years. 
Company was analysing on possibility to realise any benefits from those assets. 
In 2022, based on the conducted analysis management decided to dispose those 
assets from the balance sheet. 
 
The carrying amount of E&E assets at 31 December 2022 relates to the Bitlyanska 
license. 
 
Usenco Nadra has fully complied with legislative requirements and submitted its 
application for a 20-year exploration and production license 5 months before 
its expiry on 23 December 2019. A decision on the award was expected to be 
provided by State Geological Service of Ukraine before 19 January 2020, since 
all other intermediary approvals had been secured in line with the applicable 
legislation requirements. Given the delay to granting of the new license beyond 
the regular timeline provided by legislation in the Ukraine, Cadogan filed a 
claim before the Administrative Court to challenge the non-granting of the 
20-year production license by the Licensing Authority. 
 
After the rejection of its claims, in February 2022, the Company exercised its 
right for appeal. The Appeal Court and further on the Supreme Court rejected 
all the Company's claims. 
 
Cadogan has fully impaired the Bitlyanska license. 
 
17.      Property, plant and equipment 
 
Cost                                           Development            Total 
                                                       and            $'000 
                                                production    Other 
                                                    assets    $'000 
                                                     $'000 
 
At 1 January 2021                                   14,018    2,853  16,871 
 
Additions                                              127       23     150 
 
Change in estimate of decommissioning                   22        -      22 
assets (note 25) 
 
Disposal                                               (2)     (27)    (29) 
 
Exchange differences                                   402       81     483 
 
At 1 January 2022                                   14,567    2,930  17,497 
 
Additions                                               71       30     101 
 
Change in estimate of decommissioning                    -        -       - 
assets (note 25) 
 
Disposal                                             (701)      (7)   (708) 
 
Exchange differences                               (3,651)    (753) (4,404) 
 
At 31 December 2022                                 10,286    2,200  12,486 
 
Accumulated depreciation and impairment 
 
At 1 January 2021                                    4,499    2,409   6,908 
 
Charge for the year                                    647      150     797 
 
Disposals                                                -      (2)     (2) 
 
Exchange differences                                   127       69     196 
 
At 1 January 2022                                    5,273    2,626   7,899 
 
Charge for the year                                    604       68     672 
 
Disposals                                            (693)      (7)   (700) 
 
Exchange differences                               (1,338)    (680) (2,018) 
 
At 31 December 2022                                  3,846    2,007   5,853 
 
Carrying amount 
 
At 31 December 2022                                  6,440      193   6,633 
 
At 31 December 2021                                  9,294      304   9,598 
 
Other property, plant and equipment include fixtures and fittings for the 
development and production activities. 
 
The carrying amount of development and production assets at 31 December 2022 of 
$6.4 million relates to the Blazhiv license. Depreciation includes $0.6 million 
for the Blazhiv license. 
 
Management has performed an impairment review of Development and production 
assets based on the underlying discounted cash flow forecasts. The impairment 
review supported the conclusion that no impairment was applicable. Key 
assumptions used in the impairment assessment were: future oil prices which 
were assumed at a constant $408 (2021: $401), real per tonne; a production 
forecast with a natural decline; estimated reserves and a discount rate of 25%, 
nominal. 
 
 Sensitivity analysis for the Development and production assets 
 
Any impairment is dependent on judgement used in determining the most 
appropriate basis for the assumptions and estimates made by management, 
particularly in relation to the key assumptions described above. Sensitivity 
analysis to potential changes in key assumptions to reach break-even has been 
provided below: 
 
Change in the assumptions to be break-even 
 
Oil price                                                  (17%) 
 
Oil production volumes                                     (25%) 
 
Discount rate                                               36% 
 
18.      Subsidiaries 
 
The Company had investments in the following subsidiary undertakings at 31 
December 2022: 
 
Name                    Country of    Proportion Activity    Registered office 
                        incorporation of voting 
                        and operation interest % 
 
Directly held 
 
Cadogan Petroleum       UK            100        Holding     6th Floor 60 Gracechurch 
Holdings Ltd                                     company     Street, London, United 
                                                             Kingdom, EC3V 0HR 
 
Indirectly held 
 
Cadogan Petroleum       Netherlands   100        Holding     Hoogoorddreef 15, 1101 BA 
Holdings BV                                      company     Amsterdam 
 
Cadogan Bitlyanske BV   Netherlands   100        Holding     Hoogoorddreef 15, 1101 BA 
                                                 company     Amsterdam 
 
Zagoryanska Petroleum   Netherlands   100        Holding     Hoogoorddreef 15, 1101 BA 
BV                                               company     Amsterdam 
 
LLC Cadogan Ukraine     Ukraine       100        Holding     48/50a, Zhylyanska Street, 
                                                 company     Kyiv, Ukraine 
 
LLC Astro Gas           Ukraine       100        Dormant     5a, Pogrebnyak Street, ap. 2, 
                                                             Zinkiv, Poltava region, 
                                                             Ukraine, 38100 
 
LLC Astroinvest-Energy  Ukraine       100        Trading     5a, Pogrebnyak Street, ap. 2, 
                                                             Zinkiv, Poltava region, 
                                                             Ukraine, 38100 
 
SE USENCO Ukraine       Ukraine       100        Production  8, Mitskevycha sq.,Lviv, 
                                                             Ukraine,79000 
 
LLC USENCO Nadra        Ukraine       95         Production  9a, Karpenka-Karoho str., 
                                                             Sambir, Lviv region, Ukraine 
 
LLC Astro-Service       Ukraine       100        Service     3 Petro Kozlaniuk str, 
                                                 Company     Kolomyia, Ukraine 
 
Exploenergy s.r.l.      Italy         90         Exploration Via Adige 17, San Donato 
                                                             Milanese_ Milano, CAP 20097, 
                                                             Italy 
 
There were no changes to the Group structure during 2022. 
 
19.      Inventories 
 
 
                                                                  2022     2021 
                                                                 $'000    $'000 
 
Natural gas                                                         45        - 
 
Crude oil                                                          182      101 
 
Other inventories                                                1,184    1,599 
 
Impairment provision                                           (1,116)  (1,523) 
 
Carrying amount                                                    295      177 
 
The impairment provision at 31 December 2022 and 2021 is made so as to reduce 
the carrying value of the inventories to the net realizable value. 
 
20.      Trade and other receivables 
 
                                                                2022       2021 
                                                               $'000      $'000 
 
Trade receivables                                                166         38 
 
VAT recoverable                                                   77         64 
 
Prepayments                                                       60         89 
 
Other receivables                                                 15         27 
 
                                                                 318        218 
 
The Group considers that the carrying value of receivables approximates their 
fair value. 
 
VAT recoverable is presented net of the cumulative provision of $1.0 million 
(2021: $1.3 million) against Ukrainian VAT receivable that has been recognized 
as at 31 December 2022. VAT recoverable relates to the oil production and gas 
trading operations and is expected to be recovered through the gas and oil 
sales VAT. 
 
21.      Notes supporting statement of cash flows 
 
Cash at 31 December 2022 of $13.9 million (2021: $15.0 million) comprise cash 
held by the Group. Ukrainian subsidiaries of the Group hold $3.6 million as at 
31 December 2022. 
 
With the start of the Russian invasion into Ukraine on 24 February 2022, the 
Ukrainian government introduced Martial Law affecting, among others, aspects 
relating to lending agreements, foreign exchange and currency controls and 
banking activities. As a result of the introduced Martial Law, the National 
Bank of Ukraine ("NBU") has introduced significant currency and capital control 
restrictions in Ukraine. These measures are affecting the Group in terms of its 
cross-border payments to be made, which are restricted and may be carried out 
only in exceptional cases specified in the amendments to the resolution No. 18. 
Based on the regulations, Ukrainian subsidiaries of the Group are not able to 
pay dividends to the parent Company but are able to use the cash in normal 
course of business. 
 
The Directors consider that the carrying amount of these assets approximates to 
their fair value. There were no cash transactions from financing activities for 
the year 2022. 
 
22.      Deferred tax 
 
The following are the major deferred tax liabilities and assets recognised by 
the Group and movements thereon during the current and prior reporting period: 
 
                                                          Temporary differences 
                                                                          $'000 
 
Asset at 1 January 2021                                                     419 
 
   Deferred tax benefit                                                       - 
 
   Exchange differences                                                      12 
 
Asset at 1 January 2022                                                     431 
 
   Deferred tax benefit                                                       - 
 
Exchange differences                                                      (112) 
 
Asset at 31 December 2022                                                   319 
 
At 31 December 2022, the Group had the following unused tax losses available 
for offset against future taxable profits: 
 
                                                                 2022      2021 
                                                                $'000     $'000 
 
UK                                                             17,541    19,949 
 
Ukraine                                                        43,138    50,782 
 
                                                               60,679    70,731 
 
Deferred tax assets have been recognized in respect of those tax losses where 
there is sufficient certainty that profit will be available in future periods 
against which they can be utilized. The Group's unused tax losses of $17.5 
million (2021: $19.9 million) relating to losses incurred in the UK are 
available to shelter future non-trading profits arising within the Company. 
These losses are not subject to a time restriction on expiry. No deferred tax 
asset is recorded. 
 
Unused tax losses incurred by Ukraine subsidiaries amount to $43.1 million 
(2021: $50.8 million). Under general tax law provisions, these losses may be 
carried forward indefinitely to be offset against any type of taxable income 
arising from the same company. Tax losses may not be surrendered from one 
Ukraine subsidiary to another. The deferred tax asset recorded is expected to 
be utilized based on forecasts and relates to oil production subsidiaries which 
are generating taxable profits in the foreseeable future. 
 
23.      Lease liabilities 
 
The Group recognized right-of-use assets and lease liabilities based on rental 
contract for a rent of Kyiv office with maturity date end of February 2024 
which was entered into in the period. The Group initially recognized 
right-of-use assets of $292 thousand as of 31 December 2020. Right-of-use 
assets are depreciated over the useful life of the underlying asset. 
Depreciation of $92 thousand is recognized for the year 2022 and represented as 
a part of other administrative expenses. Carrying value of right-of-use assets 
is $108 thousand as of 31 December 2022. 
 
The following table sets out a maturity analysis of lease liability, showing 
the undiscounted lease payments to be paid after the reporting date. 
 
                                                                  2022    2021 
                                                                 $'000   $'000 
 
2022                                                                 -     110 
 
2023                                                                99     118 
 
2024                                                                20      20 
 
Less: unearned interest                                           (12)    (42) 
 
Lease liabilities                                                  107     206 
 
 
 
                                                                  2022    2021 
                                                                 $'000   $'000 
 
Analysed as: 
 
Current                                                             79     102 
 
Non-current                                                         28     104 
 
Lease liabilities                                                  107     206 
 
24.      Trade and other payables 
 
                                                                  2022    2021 
                                                                 $'000   $'000 
 
Accruals                                                           281     194 
 
Trade creditors                                                    569     481 
 
Prepayments received                                                32      17 
 
Other payables                                                     519     787 
 
                                                                 1,401   1,479 
 
Trade creditors and accruals principally comprise amounts outstanding for 
ongoing costs. The average credit period taken for trade purchases is 30 days 
(2021: 29 days). The Group has financial risk management policies to ensure 
that all payables are paid within the credit timeframe. 
 
Other payables include unused vacation reserve provision of $0.37 million 
(2021: $0.34 million), subsoil tax payables of $0.13 million (2021: $0.35) and 
other payables of $0.02 million (2021: $0.1). 
 
The Directors consider that the carrying amount of trade and other payables 
approximates to their fair value. No interest is generally charged on 
outstanding balances. 
 
25.    Provisions 
 
The provisions at 31 December 2022 comprise of $0.4 million (2021: $0.3 
million) of decommissioning provision. 
 
Decommissioning 
 
                                                                        $'000 
 
At 1 January 2021                                                         223 
 
Change in estimate (note 16 and 17)                                        25 
 
Additional provisions recognized in the period                              - 
 
Utilization of provision on impaired oil and gas                            - 
assets 
 
Unwinding of discount on decommissioning                                   22 
provision (note 13) 
 
Exchange differences                                                       30 
 
At 1 January 2022                                                         300 
 
Change in estimate: exploration and evaluation                            269 
assets (note 16) 
 
Change in estimate: development and production                           (93) 
assets 
 
Additional provisions recognized in the period                              - 
 
Utilization of provision on impaired oil and gas                            - 
assets 
 
Unwinding of discount on decommissioning                                   23 
provision (note 13) 
 
Exchange differences                                                    (102) 
 
At 31 December 2022                                                       397 
 
 
                                                                        $'000 
 
At 1 January 2021                                                         223 
 
 Non-current                                                              300 
 
 Current                                                                    - 
 
At 1 January 2022                                                         300 
 
 Non-current                                                              261 
 
 Current                                                                  136 
 
At 31 December 2022                                                       397 
 
In accordance with the Group's environmental policy and applicable legal 
requirements as of 31st December 2022, the Group intends to restore the sites 
it is working on after completing the exploration or development activities. 
 
Provision for the decommissioning and site restoration used by development and 
production assets has been decreased by $93 thousand due to change in 
discounting rate used for the provision calculation (2022: 21%; 2021: 9%). The 
change in the provision has been recognised as other financial income/(loss) 
for the year together with unwinding of discount on decommissioning provision. 
 
A long-term provision of $0.26 million (2021: $0.3 million) has been made for 
decommissioning costs for Borynya-3 well, which is expected to be incurred in 
2024, and Blazhiv-10 well, which is to be incurred at the end of Blazhiv 
licenses period as a result of the demobilization of gas and oil facilities and 
respective site restoration. Current provision of $0.14 million (2021: nil) has 
been made for decommissioning costs, which are expected to be incurred in 2023 
as a result of the demobilization of gas and oil facilities and respective site 
restoration on Bitlyanska license. 
 
26.    Share capital 
 
Authorised and issued equity share capital 
 
                                                    2022               2021 
 
                                                Number    $'000    Number    $'000 
                                                ('000)             ('000) 
 
Authorized                                   1,000,000   57,713 1,000,000   57,713 
Ordinary shares of £0.03 each 
 
Issued 
Ordinary shares of £0.03 each                  244,128   13,832   244,128   13,832 
 
Authorized but unissued share capital of £30 million has been translated into 
US dollars at the historic exchange rate of the issued share capital. The 
Company has one class of Ordinary shares, which carry no right to fixed income. 
 
Issued equity share capital 
 
                                                                 Ordinary shares 
                                                                        of £0.03 
 
At 31 December 2020                                                  244,128,487 
 
Issued during year                                                             - 
 
At 31 December 2021                                                  244,128,487 
 
Issued during year                                                             - 
 
At 31 December 2022                                                  244,128,487 
 
27.  Financial instruments 
 
Capital risk management 
 
The Group manages its capital to ensure that entities in the Group will be able 
to continue as a going concern, while maximising the return to shareholders. 
 
The capital resources of the Group consist of cash arising from equity 
attributable to owners of the Company, comprising issued capital, reserves and 
retained earnings as disclosed in the Consolidated Statement of Changes in 
Equity. 
 
Externally imposed capital requirement 
 
The Group is not subject to externally imposed capital requirements. 
 
Categories of financial instruments 
 
                                                                   2022      2021 
                                                                  $'000     $'000 
 
Financial assets (includes cash) 
 
Loan provided at amortised cost                                  15,825    16,724 
 
Cash                                                             13,934   15,011 
 
Other receivables - amortized cost                                  181      154 
 
                                                                 29,940    31,889 
 
Financial liabilities - measured at fair value 
 
Trade creditors                                                     569       498 
 
Lease liabilities                                                   107       206 
 
Accruals                                                            281       194 
 
Other payables                                                      519       787 
 
                                                                  1,476     1,685 
 
 
 
 
                             Financial assets at fair           Financial assets 
                             value through profit and          at amortised cost 
                                                 loss                      $'000 
                                                $'000 
 
As at 1 January 2021                           16,812                          - 
 
Reclassification from FVPL                   (16,812)                     16,812 
to AC 
 
Addition                                                                   1,225 
 
Exchange differences                                                     (1,313) 
 
As at 31 December 2021                                                    16,724 
 
The Proger loan is recorded at management's best estimate of recoverable amount 
as set out in note 4(d) although management have not been able to undertake a 
valuation exercise under the income method based on Proger's underlying cash 
flows or market-based method which would incorporate relevant recent financial 
information on the investee or its prospects. 
 
The Group has applied a level 3 valuation under IFRS as inputs to the valuation 
have included assessment of the cash repayments anticipated under the loan 
terms at maturity, delayed by the arbitration process requested by PMP (the 
Borrower), historical financial information for the periods prior to 2020 and 
assessment of the security provided by the pledge over shares together with the 
impact of the Covid-19 on the activity of Proger. As a result, $ 16.8 million 
was determined as the best estimate of fair value as at 31 December 2020, being 
equal to anticipated receipts and timing thereof discounted at an estimated 
market rate of interest of 7.8%. 
 
In February 2021, Cadogan notified PMP that according to the Loan Agreement, 
the Maturity Date occurred on 25 February 2021. As the Call Option was not 
exercised, PMP must fulfil the payment of EUR 14,857,350, being the 
reimbursement of the Loan in terms of principal and the accumulated interest. 
PMP is in default since 25 February 2021. In case of default payment, the terms 
of the agreement provide for the application of an increased interest rate on 
the amount of the debt. 
 
Since the Call Option was not exercised before the Maturity Date and the asset 
is held within a business model whose objective is to hold assets in order to 
collect contractual cash flows, the Loan provided was reclassified from 
'Financial assets at fair value through profit and loss' to 'Financial assets 
at amortized cost'. 
 
 
                                                                            $'000 
 
As at 1 January 2021                                                       16,812 
 
Movement in amortised at cost                                               1,225 
 
Exchange differences                                                      (1,313) 
 
As at 1 January 2022                                                       16,724 
 
Movement in amortised at cost                                                  38 
 
Exchange differences                                                        (937) 
 
As at 31 December 2022                                                     15,825 
 
The Group considers that the carrying amount of financial instruments 
approximates their fair value. 
 
Financial risk management objectives 
 
Management co-ordinates access to domestic and international financial markets 
and monitors and manages the financial risks relating to the operations of the 
Group in Ukraine through internal risks reports, which analyse exposures by 
degree and magnitude of risks. These risks include commodity price risks, 
foreign currency risk, credit risk, liquidity risk and cash flow interest rate 
risk. The Group does not enter into or trade financial instruments, including 
derivative financial instruments, for speculative purposes. 
 
The Audit Committee of the Board reviews and monitors risks faced by the Group 
at meetings held throughout the year. 
 
Interest rate risk 
 
Interest rate risk arises from the possibility that changes in interest rates 
will affect the value of the financial instruments. The Group is not exposed to 
interest rate risk because entities of the Group borrow funds at fixed interest 
rates. 
 
Commodity price risk 
 
The commodity price risk related to Ukrainian gas and condensate prices and 
prices for crude oil are the Group's most significant market risk exposures. 
World prices for gas and crude oil are characterised by significant 
fluctuations that are determined by the global balance of supply and demand and 
worldwide political developments, including actions taken by the Organization 
of Petroleum Exporting Countries. 
 
The Group does not hedge market risk resulting from fluctuations in gas, 
condensate and oil prices, and holds no financial instruments, which are 
sensitive to commodity price risk. 
 
Foreign exchange risk and foreign currency risk management 
 
The Group holds a large portion of its monetary assets in the US Dollars and 
Euro, mitigating the exchange risk between the US Dollars and Euro and monetary 
liability in the US Dollars. 
 
Sensitivity analysis is represented below based on 10% exchange rate deviation: 
 
                                    As at 31 December 2022    Change in EURO/USD 
                                                                   exchange rate 
 
                                                     $'000      +10%        -10% 
 
Cash positions                                      13,934       222       (222) 
 
Loan receivable at amortised cost                   15,825     1,582     (1,582) 
 
Net assets                                          35,527     1,804     (1,804) 
 
 
Inflation risk management 
 
Inflation in Ukraine and in the international market for oil and gas may affect 
the Group's cost for equipment and supplies. The Directors will proceed with 
the Group's practices of keeping deposits in US dollar accounts until funds are 
needed and selling its production in the spot market to enable the Group to 
manage the risk of inflation. 
 
Credit risk management 
 
Credit risk refers to the risk that counterparty will default on its 
contractual obligations resulting in financial loss to the Group. The Group's 
credit management process includes the assessment, monitoring and reporting of 
counterparty exposure on a regular basis. Credit risk with respect to 
receivables is mitigated by active and continuous monitoring the credit quality 
of its counterparties through internal reviews and assessment. There was no 
material past due receivables as at year end. 
 
The Group makes allowances for expected credit losses on receivables in 
accordance with its accounting policy. 
 
The credit risk on liquid funds (cash) is considered to be limited because the 
counterparties are financial institutions with high and good credit ratings, 
assigned by international credit-rating agencies in the UK and Ukraine 
respectively. 
 
The carrying amount of financial assets recorded in the financial statements 
represents the Group's maximum exposure to credit risk. 
 
Liquidity risk management 
 
Ultimate responsibility for liquidity risk management rests with the Board of 
Directors, which has built an appropriate liquidity risk management framework 
for the management of the Group's short, medium and long-term funding and 
liquidity management requirements. The Group manages liquidity risk by 
maintaining adequate cash reserves and by continuously monitoring forecast and 
actual cash flows. 
 
The following tables sets out details of the expected contractual maturity of 
financial liabilities. 
 
                                                 3 months More than 
                                          Within     to 1    1 year    Total 
                                        3 months     year 
 
                                           $'000    $'000     $'000    $'000 
 
At 31 December 2021 
 
Trade and other payables                   1,479        -         -    1,479 
Lease liability                                -      110       138      248 
 
At 31 December 2022 
 
Trade and other payables                   1,401        -         -    1,401 
Lease liability                                -       99        20      119 
 
28.      Commitments and contingencies 
 
Licence contingent liability 
 
The Group has working interests in Blazhiv license to conduct its exploration 
and development activities in Ukraine. The license is not held any obligation 
on a settlement of exploration activities within its term. 
 
Tax contingent liabilities 
 
The Group assesses its liabilities and contingencies for all tax years open for 
audit by UK, Netherlands and Ukraine tax authorities based upon the latest 
information available. Where management concludes that it is not probable that 
a particular tax treatment is accepted, a provision is recorded based on the 
most likely amount or the expected value of the tax treatment when determining 
taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and 
tax rates. The decision should be based on which method provides better 
predictions of the resolution of the uncertainty. Inherent uncertainties exist 
in estimates of tax contingencies due to complexities of interpretation and 
changes in tax laws. 
 
Whilst the Group believes it has adequately provided for the outcome of these 
matters, certain periods are under audit by the UK, Netherlands and Ukraine tax 
authorities, and therefore future results may include favourable or 
unfavourable adjustments to these estimated tax liabilities in the period the 
assessments are made or resolved. The final outcome of tax examinations may 
result in a materially different outcome than assumed in the tax liabilities. 
 
29. Related party transactions 
 
All transactions between the Company and its subsidiaries, which are related 
parties, have been eliminated on consolidation and are not disclosed in this 
note. 
 
In February 2019, the Group entered in a 2-year loan agreement with Proger 
Management & Partners Srl with an option to convert it into a direct 33% equity 
interest in Proger Ingegneria. At that time, Mr Michelotti was a non-executive 
Director of Proger Ingegneria Srl and Proger Spa, and CEO of Cadogan Petroleum 
PLC. Mr Michelotti did not participate to the voting for the approval of the 
loan agreement at the Board of Cadogan. 
 
Directors' remuneration 
 
The remuneration of the Directors, who are the key management personnel of the 
Group, is set out below in aggregate for each of the categories specified in 
IAS 24 Related Party Disclosures. Further information about the remuneration of 
individual Directors is provided in the audited part of the Annual Report on 
Remuneration 2022 on page 43. 
 
                                   Purchase of services      Amounts owing 
 
                                        2022        2021      2022     2021 
                                       $'000       $'000     $'000    $'000 
 
Directors' remuneration                  693         754        83        - 
 
Social contribution on Directors'         72         126         -        - 
remuneration 
 
The total remuneration of the highest paid Director was $0.5 million in the 
year (2021: $0.5 million). 
 
No guarantees have been given or received and no provisions have been made for 
doubtful debts in respect of the amounts owed by related parties. 
 
30.      Events after the balance sheet date 
 
 In April 2023, SE Usenco Ukraine (a Cadogan subsidiary in Ukraine) completed 
the acquisition of the 5% minority interest of Usenco Nadra LLC. As a result, 
SE Usenco Ukraine consolidates now 100% of Usenco Nadra LLC in its ownership. 
 
This acquisition will allow the Company to further optimize its operating 
structure in Ukraine and be more cost effective at Blazhiv field. 
 
PJSC Ukrnafta, the largest oil company in Ukraine, and Cadogan have signed the 
extension of Blazhiv-3 and Blazhiv-Monastyrets-3 wells' lease contracts for a 
5-year period (the past term was 3 years). The signature of this lease 
extension ahead the expiry period will allow to avoid a production stoppage and 
secure profit inflows for both parties during this unprecedented severe and 
challenging context which Ukraine is facing now. 
 
Company Balance Sheet                                     Notes      2022      2021 
As at 31 December 2022                                              $'000     $'000 
 
ASSETS 
 
Non-current assets 
 
Receivables from subsidiaries                                34    35,918    36,769 
 
                                                                   35,918    36,769 
 
Current assets 
 
Trade and other receivables                                  34         -         3 
 
Cash                                                         34     2,391     3,857 
 
                                                                    2,391     3,860 
 
Total assets                                                       38,309    40,629 
 
LIABILITIES 
 
Current liabilities 
 
Trade and other payables                                     35     (337)     (255) 
 
                                                                    (337)     (255) 
 
Total liabilities                                                   (337)     (255) 
 
Net assets                                                         37,972    40,374 
 
EQUITY 
 
Share capital                                                36    13,832    13,832 
 
Share premium                                                         514       514 
 
Retained earnings[17]                                             132,345   134,747 
 
Cumulative translation reserves                              37 (108,719) (108,719) 
 
Total equity                                                       37,972    40,374 
 
As permitted by section 408 of the Act, the Company has elected not to present 
its profit and loss account for the year. 
 
The financial statements of Cadogan Petroleum plc, registered in England and 
Wales no. 05718406, were approved by the Board of Directors and authorized for 
issue on 27 April 2023. 
 
They were signed on its behalf by: 
 
Fady Khallouf 
Chief Executive Officer 
27 April 2023 
 
The notes on pages 108 to 111 form part of these financial statements. 
 
Company Cash Flow Statement                                            2022      2021 
For the year ended 31 December 2022                                   $'000     $'000 
 
 Operating activities 
Profit/(loss) for the year                                          (2,402)   (3,746) 
 
Adjustments for: 
Interest received                                                       (4)         - 
Impairment of receivables from subsidiaries                               -       665 
Effect of foreign exchange rate changes                               1,053     1,451 
Movement in provisions                                                 (11)        58 
 
Operating cash outflows before movements in working                 (1,364)   (1,572) 
capital 
 
Decrease/(Increase) in receivables                                        2       (4) 
 
Increase/(Decrease) in payables                                          99      (38) 
 
Cash used in operations                                             (1,263)   (1,614) 
 
Income taxes paid                                                         -         - 
 
Net cash outflow from operating activities                          (1,263)   (1,614) 
 
 
Investing activities 
 
Interest received                                                         4         - 
 
Net cash generated in investing activities                                4         - 
 
Net decrease in cash                                                (1,259)   (1,614) 
 
Effect of foreign exchange rate changes                               (207)     (288) 
 
Cash at beginning of year                                             3,857     5,759 
 
Cash at end of year                                                   2,391     3,857 
 
 
 
 
                                           Share                       Cumulative 
Company Statement of Changes    Share    premium   Retained     Other translation 
         in Equity            capital    account   earnings   Reserve    reserves    Total 
   For the year ended 31        $'000      $'000      $'000     $'000       $'000    $'000 
       December 2022 
 
As at 1 January 2021           13,832        514    138,493         -   (108,719)   44,120 
 
Net loss for the year               -          -    (3,746)         -           -  (3,746) 
 
Total comprehensive loss for        -          -    (3,746)         -           -  (3,746) 
the year 
 
Issue of ordinary shares            -          -          -         -           -        - 
 
As at 1 January 2022           13,832        514    134,747         -   (108,719)   40,374 
 
Net income for the year             -          -    (2,402)         -           -  (2,402) 
 
Total comprehensive income          -          -    (2,402)         -           -  (2,402) 
for the year 
 
As at 31 December 2022         13,832        514    132,345         -   (108,719)   37,972 
 
 
Notes to the Company Financial Statement 
 
For the year ended 31 December 2022 
 
31.  Significant accounting policies 
 
The separate financial statements of the Company are presented as required by 
the Companies Act 2006 (the "Act"). As permitted by the Act, the separate 
financial statements have been prepared in accordance with International 
Financial Reporting Standards ("IFRSs") adopted by the UK. 
 
The financial statements have been prepared on the historical cost basis. The 
principal accounting policies adopted are the same as those set out in note 3 
to the Consolidated Financial Statements except as noted below. 
 
As permitted by section 408 of the Act, the Company has elected not to present 
its profit and loss account for the year. Cadogan Energy Solutions plc reports 
a loss for the financial year ended 31 December 2022 of $2.4 million (2021: 
loss $3.7 million). 
 
Investments 
 
Investments in subsidiaries are stated at cost less, where appropriate, 
provisions for impairment. 
 
Receivables from subsidiaries 
 
Loans to subsidiary undertakings are subject to IFRS 9's new expected credit 
loss model. As all intercompany loans are repayable on demand, the loan is 
considered to be in stage 3 of the IFRS 9 ECL model on the basis the subsidiary 
does not have enough liquid assets in order to repay the loans if demanded. 
Lifetime ECLs are determined using all relevant, reasonable and supportable 
historical, current and forward-looking information that provides evidence 
about the risk that the subsidiaries will default on the loan and the amount of 
losses that would arise as a result of that default. Analysis indicated that 
the Company will fully recover the carrying value of the loans (net of historic 
credit loss provisions) so no additional ECL has been recognised in the current 
period. 
 
Critical accounting judgements and key sources of estimation uncertainty 
 
The Company's financial statements, and in particular its investments in and 
receivables from subsidiaries, are affected by certain of the critical 
accounting judgements and key sources of estimation uncertainty. 
 
The critical estimates and judgments referred to application of the expected 
credit loss model to intercompany receivables (note 33). Management determined 
that the interest free on demand loans were required to be assessed on the 
lifetime expected credit loss approach and assessed scenarios considering risks 
of loss events and the amounts which could be realised on the loans.  In doing 
so, consideration was given to factors such as the cash held by subsidiaries 
and the underlying forecasts of the Group's divisions and their incorporation 
of prospective risks and uncertainties. 
 
32.  Auditor's remuneration 
 
The auditor's remuneration for audit and other services is disclosed in note 11 
to the Consolidated Financial Statements. 
 
33.  Investments 
 
The Company's subsidiaries are disclosed in note 18 to the Consolidated 
Financial Statements. The investments in subsidiaries are all stated at cost 
less any provision for impairment. 
 
34.  Financial assets 
 
The Company's principal financial assets are bank balances and cash and 
receivables from related parties none of which are past due. The Directors 
consider that the carrying amount of receivables from related parties 
approximates to their fair value. 
 
34.   Financial assets (continued) 
 
Receivables from subsidiaries 
 
At the balance sheet date gross amounts receivable from the fellow Group 
companies were $349.1 million (2021: $350 million). The Company did not 
recognise additional expected credit loss provisions in relation to receivables 
from subsidiaries in 2022 (2021: $0.7 million). The accumulated provision on 
receivables at 31 December 2022 was $313.2 million (2021: $312.2 million). The 
carrying value of the receivables from the fellow Group companies at 31 
December 2022 was $35.9 million (2021: $36.8 million). Receivables from 
subsidiaries are interest free and repayable on demand. There are no past due 
receivables. The receivables are classified as non-current based on the 
expected timing of receipt notwithstanding their terms. 
 
Cash 
 
Cash comprises cash held by the Company and short-term bank deposits with an 
original maturity of three months or less. The carrying value of these assets 
approximates to their fair value. 
 
35.    Financial liabilities 
 
Trade and other payables 
 
                                                                     2022     2021 
                                                                    $'000    $'000 
 
Accruals                                                              141      174 
 
Unused vacation provision                                              85       63 
 
Amounts owing to Directors                                             82        - 
 
Trade creditors                                                        29       18 
 
                                                                      337      255 
 
Trade payables principally comprise amounts outstanding for trade purchases and 
ongoing costs. The average credit period taken for trade purchases is 29 days 
(2021: 30 days). 
 
Unused vacation provision of $85 thousand accrued for CEO of the Company (2021: 
$63 thousand). 
 
The Directors consider that the carrying amount of trade and other payables 
approximates to their fair value. No interest is charged on balances 
outstanding. 
 
36.    Share capital 
 
The Company's share capital is disclosed in note 26 to the Consolidated 
Financial Statements. 
 
37.    Cumulative translation reserve 
 
The directors decided to change the functional currency of the Company from 
sterling to US dollars with effect from 1 January 2016. The effect of a change 
in functional currency is accounted for prospectively. In other words, the 
Company translates all items into the US dollar using the exchange rate at the 
date of the change. The resulting translated amounts for non-monetary items are 
treated as their historical cost. Exchange differences arising from the 
translation of an operation previously recognised in other comprehensive income 
in accordance with paragraphs 32 and 39(c) IAS 21 "Foreign Currency" are not 
reclassified from equity to profit or loss until the disposal of the operation. 
 
38.  Financial instruments 
 
The Company manages its capital to ensure that it is able to continue as a 
going concern while maximising the return to shareholders. Refer to note 27 for 
the Group's overall strategy and financial risk management objectives. 
 
The capital resources of the Company consist of cash arising from equity, 
comprising issued capital, reserves and retained earnings. 
 
Categories of financial instruments 
 
                                                                  2022     2021 
                                                                 $'000    $'000 
 
Financial assets - measured at amortised cost 
 
Cash                                                             2,391    3,857 
 
Amounts due from subsidiaries                                   35,918   36,769 
 
                                                                38,309   40,626 
 
Financial liabilities - measured at fair value 
 
Trade creditors                                                  (196)     (81) 
 
                                                                 (196)     (81) 
 
Interest rate risk 
 
All financial liabilities held by the Company are non-interest bearing. As the 
Company has no committed borrowings, the Company is not exposed to any 
significant risks associated with fluctuations in interest rates. 
 
Credit risk 
 
Credit risk refers to the risk that counterparty will default on its 
contractual obligations resulting in financial loss to the Company. For cash, 
the Company only transacts with entities that are rated equivalent to 
investment grade and above. Other financial assets consist of amounts 
receivable from related parties. 
 
The Company's credit risk on liquid funds is limited because the counterparties 
are banks with high credit ratings assigned by international credit-rating 
agencies. 
 
The carrying amount of financial assets recorded in the Company financial 
statements, which is net of any impairment losses, represents the Company's 
maximum exposure to credit risk. 
 
Liquidity risk management 
 
Ultimate responsibility for liquidity risk management rests with the Board of 
Directors, which has built an appropriate liquidity risk management framework 
for the management of the Company's short, medium and long-term funding and 
liquidity management requirements. The Company maintains adequate reserves, by 
continuously monitoring forecast and actual cash flows. 
 
The Company's financial liabilities are not significant and therefore no 
maturity analysis has been presented. 
 
Foreign exchange risk and foreign currency risk management 
 
The Company holds a large portion of its monetary assets in the US Dollars and 
Euro, mitigating the exchange risk between the US Dollars and Euro and monetary 
liability in the US Dollars. More information on the foreign exchange risk and 
foreign currency risk management is disclosed in note 27 to the Consolidated 
Financial Statements. 
 
39.  Related parties 
 
Amounts due from subsidiaries 
 
The Company has entered into a number of unsecured related party transactions 
with its subsidiary undertakings. The most significant transactions carried out 
between the Company and its subsidiary undertakings are mainly for short and 
long-term financing. Amounts owed from these entities are detailed below: 
 
                                                                  2022    2021 
                                                                 $'000   $'000 
 
Cadogan Petroleum Holdings Limited                              35,918  36,769 
 
                                                                35,918  36,769 
 
Refer to note 34 for details on the Company's receivables due from 
subsidiaries. 
 
The remuneration of the Directors, who are the key management personnel of the 
Group, is set out below in aggregate for each of the categories specified in 
IAS 24 Related Party Disclosures. In 2022 there were no other employees in the 
Company. Further information about the remuneration of individual Directors is 
provided in the audited part of the Annual Report on Remuneration 2022 on pages 
43 to 49. 
 
                                   Purchase of services      Amounts owing 
 
                                        2022        2021      2022     2021 
                                       $'000       $'000     $'000    $'000 
 
Directors' remuneration                  693         754        83        - 
 
Social contribution on Directors'         72         126         -        - 
remuneration 
 
The total remuneration of the highest paid Director was $0.5 million in the 
year (2021: $0.6 million). 
 
40. Events after the balance sheet date 
 
Events after the balance sheet date are disclosed in note 30 to the 
Consolidated Financial Statements. 
 
Glossary 
 
IFRSs                                International Financial Reporting 
Standards 
 
JAA                                   Joint activity agreement 
 
UAH                                 Ukrainian hryvnia 
 
GBP                                  Great Britain pounds 
 
$                                       United States dollars 
 
bbl                                    Barrel 
 
boe                                  Barrel of oil equivalent 
 
mmboe                           Million barrels of oil equivalent 
 
mboe                               Thousand barrels of oil equivalent 
 
mboepd                          Thousand barrels of oil equivalent per day 
 
boepd                              Barrels of oil equivalent per day 
 
bcf                                    Billion cubic feet 
 
mmcm                             Million cubic metres 
 
mcm                                Thousand cubic metres 
 
Reserves                         Those quantities of petroleum anticipated to 
be commercially recoverable by application of development projects to known 
accumulations from a given date forward under defined conditions. Reserves 
include proved, probable and possible reserve categories. 
 
Proved Reserves           Those additional Reserves which analysis of 
geoscience and engineering data can be estimated with reasonable certainty to 
be commercially recoverable, from a given date forward, from reservoirs and 
under defined economic conditions, operating methods and government 
regulations. 
 
Probable Reserves        Those additional Reserves which analysis of geoscience 
and engineering data indicate are less likely to be recovered than proved 
Resources but more certain to be recovered than possible Reserves. 
 
Possible Reserves         Those additional Reserves which analysis of 
geoscience and engineering data indicate are less likely to be recoverable than 
probable Reserves. 
 
Contingent Resources Those quantities of petroleum estimated, as of a given 
date, to be potentially recoverable from known accumulations by application of 
development projects, but which are not currently considered to be commercially 
recoverable due to one or more contingencies. 
 
Prospective Resources Those quantities of petroleum which are estimated as of a 
given date to be potentially recoverable from undiscovered accumulations. 
 
P1                                     Proved Reserves 
 
P2                                     Probable Reserves 
 
P3                                     Possible Reserves 
 
1P                                     Proved Reserves 
 
2P                                     Proved plus Probable Reserves 
 
3P                                     Proved plus Probable plus Possible 
Reserves 
 
Workover                       The process of performing major maintenance or 
remedial treatment of an existing oil or gas well 
 
E&E / E&P                      Exploration and Evaluation / Exploration and 
Production 
 
LTI                                    Lost time incidents 
 
Shareholder Information 
 
Enquiries relating to the following administrative matters should be addressed 
to the Company's registrars: Link Group, 10th Floor, Central Square, 29 
Wellington Street, Leeds LS1 4DL. 
 
Telephone: 0371 664 0300. Calls are charged at the standard geographic rate and 
will vary by provider. Calls outside the United Kingdom will be charged at the 
applicable international rate. Lines are open between 09:00 - 17:30, Monday to 
Friday excluding public holidays in England and Wales. 
 
§ Loss of share certificates. 
 
§ Notification of change of address. 
 
§ Transfers of shares to another person. 
 
§ Amalgamation of accounts: if you receive more than one copy of the Annual 
Financial Report, you may wish to amalgamate your accounts on the share 
register. 
 
You can access your shareholding details and a range of other services at the 
Shareholder Portal www.signalshares.com. 
 
Information concerning the day-to-day movement of the share price of the 
Company can be found on the Group's website www.cadoganpetroleum.com or that of 
the London Stock exchange www.prices.londonstockexchange.com. 
 
Unsolicited mail 
 
As the Company's share register is, by law, open to public inspection, 
shareholders may receive unsolicited mail from organisations that use it as a 
mailing list. To reduce the amount of unsolicited mail you receive, contact: 
The Mailing Preference Service, FREEPOST 22, London W1E 7EZ. Telephone: 0845 
703 4599. Website: www.mpsonline.org.uk. 
 
Financial calendar 2022/2023 
Annual General Meeting                               June 2023 
Half Yearly results announced                     September 2022 
Annual results announced                            April 2023 
 
Investor relations 
Enquiries to: info@cadoganpetroleum.com 
 
Registered office 
Shakespeare Martineau LLP, 
6th Floor, 60 Gracechurch Street, London EC3V 0HR 
Registered in England and Wales no. 05718406 
 
Ukraine 
48/50A Zhylyanska Street 
Business center "Prime", 8th floor 
01033 Kyiv 
Ukraine 
Email:    info@cadoganpetroleum.com 
Tel:        +38 044 594 58 70 
Fax:        +38 044 594 58 71 
 
www.cadoganenergysolutions.com 
 
References to page numbers throughout this announcement relates to the page 
numbers within the Annual Report of the Company for the year ended 31st 
December 2022.  In addition all graphs and graphics have been removed for the 
purposes of the announcement. 
 
[1] Average realized price is calculated as total revenue from oil sales for 
the period divided by total volume of sold oil for the period 
 
[2] Gross revenues of $8.5 million (2021: $8.8 million) included nil (2021: 
$1.8 million) from trading of natural gas, $8.5 million (2021:     $7.0 
million) from exploration and production 
 
[3] Administrative expenses ("G&A") 
 
[4] LTI: Lost Time Incidents; TRI: Total Recordable Incidents 
 
[5] Taxable benefits include insurance provided to the executive and leased 
car. 
 
[6] 2015 CEO's salary is the sum of Mr. des Pallieres' salary for the period 
January to June and of Mr. Michelotti's salary for the period July to December. 
 
[7] In relation to performance in 2016 and 2015, the CEO used the entire amount 
of the bonus to buy at market price newly issued company shares on 22 September 
2017. 
 
[8] 2019 Annual bonus is a sum of Mr Michelotti's bonus of $112,140 and welcome 
bonus for Mr Khallouf equivalent in value of 5,500,000 ordinary shares based on 
share's price of £0.0525. Welcome bonus for Mr Khallouf was provided in May 
2020 based on share's price of £0.03. Respective correction of the bonus 
reserve equivalent to $185 thousand was recognised through share premium 
account in 2020. 
 
[9] Includes a welcome bonus for Mr Khallouf equivalent in value of 5,500,000 
ordinary shares based on share's price of £0.0525. 
 
[10] Mr Michelotti undertook to use the entire bonus to buy company's share at 
market price in order to leave the Company cash neutral. 
 
[11] Year-end performance-based bonus was an alternative to an up-front sign-on 
bonus. Mr Michelotti use the entire bonus to buy company's share at market 
price on 22 September 2017. 
 
[12] $280,298 paid as fees, pension and loss of office. 
 
[13] From 1 August, 2011. 
 
[14] From 19 March 2009. 
 
[15] All employees mean all employees of the Group, including CEO and other 
Directors (note 12, page 92). 
 
[16] Please note that the salary of the CEO for 2022 remain at ?440,000. 
 
[17] Included in retained earnings, loss for the financial year ended 31 
December 2022 was $2.4 million (2021: profit $3.7 million). 
 
 
 
END 
 
 

(END) Dow Jones Newswires

April 28, 2023 03:25 ET (07:25 GMT)

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