29 Apr 2010 07:00
Afren plc (AFR LN)
Annual Financial Report and Notice of General Meeting
London 29 April 2010 Following the release on 29 March 2010 of Afren plc's ("Afren" or the "Company") preliminary full year results for the year ended 31 December 2009 (the "Preliminary Announcement"), the Company announces it has published its Annual Report and Accounts for 2009 (the "Annual Report and Accounts").
The Company's 2010 Annual General Meeting will be held at the offices of White & Case LLP, 5 Old Broad Street, London, EC2N 1DW on Monday 7 June 2010 at 11.00 am. Copies of the Annual Report and Accounts and the Notice of the Annual General Meeting 2010 are available to view on the Company's website at www.afren.com.
In accordance with Disclosure and Transparency Rule 6.3.5(2) (b) additional information is set out in the appendices to this announcement. The Preliminary Announcement included a set of condensed financial statements and a fair review of the development and performance of the business and the position of the Company and the group.
Pursuant to Listing Rule 9.6.1, two copies of each of the Annual Report and Accounts, the Notice of the Company's 2010 Annual General Meeting and the form of proxy in relation to the 2010 Annual General Meeting are being submitted to the UK Listing Authority. These documents will be available for inspection at the Document Viewing Facilities of the UK Listing Authority which is situated at offices of the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.
| For further information contact: |
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| Afren plc |
| +44 20 7451 9700 |
| Osman Shahenshah |
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| Galib Virani |
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Pelham Bell Pottinger |
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+44 20 7337 1500 |
| James Henderson |
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| Mark Antelme |
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Finsbury |
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+44 20 7251 3801 |
| Roland Rudd |
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| Andrew Mitchell |
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Notes to Editors
Afren is an African focused independent oil and gas exploration and production company listed on the main market of the London Stock Exchange. Afren is currently producing from its assets offshore Nigeria and Côte d'Ivoire, with a significant appraisal and development project due onstream in 2010 from Nigeria. Afren has operated exploration interests in Ghana, Côte d'Ivoire and Nigeria, with minority exploration interests in Congo Brazzaville and the Joint Development Zone of Nigeria - São Tomé & Príncipe.
For further information please refer to www.afren.com.
Appendix A: Directors' Responsibility Statement
The following Directors' Responsibility Statement is extracted from page 76 of the Annual Report and Accounts.
Directors' Responsibility Statement
I confirm to the best of my knowledge:
1. the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
2. the management report, which is incorporated into the Directors' Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
By order of the Board
Osman Shahenshah
Chief Executive Officer
29 March 2010
Appendix B: Principal Risks and Uncertainties
The following description of principal risks and uncertainties is extracted from pages 62 and 63 of the Annual Report and Accounts.
Principal Risks and Uncertainties
The effective management of risk is essential to the success of Afren. The specific risks to Afren include those associated with the nature of the upstream oil and gas industry, those arising from political, social and infrastructure issues in the countries in which the Group operates and those which are internal to the organisation of the Company and its strategy. The Group's overall strategy to risk management is to employ suitably skilled personnel, implement appropriate policies and procedures and maintain a balanced portfolio of assets.
During 2009 considerable focus was placed on reinforcing and formalising the system of business risk management which underpins Afren's assurance of high standards of corporate governance. This effort has culminated in the development of a business risk management system, a corporate framework for identifying, assessing, managing and reporting risks that threaten the delivery of corporate objectives. The Afren business risk management system has been structured so that it adheres to best practice as set out in international standard ISO 31000 and the UK government's Orange book. As part of the business risk management system the Company has drawn up a corporate risk register. Overseeing the process is the Audit Committee of the Board which is responsible for reviewing the corporate risk register and providing assurance that the required controls are in place and effective.
During 2009 the Group also introduced a Code of Business Conduct which all employees and contractors are obliged to follow. Adhering to the Code reduces the risk to the Group from the activities of employees which may fail to meet the Group's standards.
The following are the principal operational risks which the Company has identified as presenting the most serious challenge to achieving its business objectives:
Political and social risks
The Group's operations are based in countries where there are uncertainties arising from political instability, corruption, civil strife, poor infrastructure, inconsistent application of law and uncertain fiscal regimes.
The executive and senior management have extensive experience in the oil and gas industry in West Africa amongst other regions. Combined with strong local management teams the Company maintains positive relationships with communities and governments. Combined with adherence to the Group's Code of Business Conduct this allows the Group to navigate these difficulties without sacrificing its ethical principles.
The Group has a corporate responsibility programme, details of which are set out on page 46 of this report. This programme seeks to ensure that Afren meets it obligations to the local communities where it operates.
Operational risks
Development of oil and gas assets
Inherent in oil exploration and production are risks associated with estimating the extent of the resource base and with the production profile of a field. In addition the cost of development may often vary significantly from expectation due to unexpected technical, engineering or regulatory considerations or cost escalation. The Group manages such risks by employing a suitably qualified staff with extensive experience in developments similar to those being undertaken. Independent reviews are carried out as required to support the Company's technical assessment. Projects are subject to rigorous budgetary control and a regular review of KPIs and project milestones.
Oil price movements
The revenue of the Group is subject to fluctuations in the oil and gas price. The Group has entered into hedging contracts for a portion of its future sales which will mitigate the effect of fluctuations for that portion. To the extent that the remainder is not hedged the Group is satisfied that the cost of such hedging outweighs the benefit to be obtained.
Unexpected events
The nature of the Group's business is such that there is a risk from unexpected events such as an environmental incident, accident or security problem which may disrupt operations. By ensuring there are robust environmental and health and safety policies and procedures in place, including crisis management plans, the Group can minimise the probability of occurrence and impact of such events. In addition the Group has comprehensive insurance cover which is reviewed annually to ensure it continues to meet the requirements of the Company.
Strategy risks
Staffing
The Group is reliant on the skills and experience of its senior management to execute its strategy. The loss of key staff would pose a serious risk to the ability of the Company to operate profitably and grow. The Company seeks to recruit and retain suitably qualified staff with suitable remuneration, appraisal and development policies.
Liquidity
The Group uses a mix of operational cash flow, debt and equity financing to fund its developments. By managing the correct balance between these sources and with regular reviews of cash flow forecasts the Group seeks to ensure that it has the necessary funding to meet its requirements.
Rate of growth
The Company continues to grow rapidly. The Company regularly reviews its staffing levels, business processes and policies to ensure that they continue to be appropriate for the scale of business and its speed of growth as it evolves.