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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Soco International Plc | LSE:SIA | London | Ordinary Share | GB00B572ZV91 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 61.80 | 61.90 | 62.40 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMSIA
RNS Number : 0289D
Soco International PLC
21 April 2017
SOCO International plc
("SOCO" or the "Company")
Annual Report & Accounts and Notice of Meeting
The Company announces that the following documents are available to view and download from the
Company's website, www.socointernational.com.
1. The Annual Report and Accounts 2016 2. A Shareholder Circular, which includes a Notice of Annual General Meeting
Paper copies of the above two documents are available on request from the Company Secretary at the Company's registered office at 48 Dover Street, London W1S 4FF, United Kingdom. Paper copies of the above two documents, together with a Form of Proxy, have been mailed to those shareholders having elected to receive paper copies.
In accordance with LR 9.6.1, copies of the above two documents, together with a Form of Proxy, have been submitted to the National Storage Mechanism and will shortly be available for inspection on the National Storage Mechanism's website, http://www.morningstar.co.uk/uk/NSM
The Company's Annual General Meeting will be held at The Bulgari Hotel, 171 Knightsbridge, London SW7 1DW on Tuesday 13 June 2017 at 10.00 a.m.
This dissemination announcement is based upon the Company's announcement of Preliminary Results for the Year Ended 31 December 2016 made on 23 March 2017 with the addition of information required by DTR 6.3.5 set out below in the Appendix.
Contact: Carol Fan, SOCO International plc. Tel: 020 7747 2000
Appendix
Following the release of the Company's Preliminary Results for the Year Ended 31 December 2016 made on 23 March 2017 additional information is set out below in accordance with DTR 6.3.5.
1. Directors' Responsibility Statement
The following is extracted from page 49 of the Company's Annual Report and Accounts 2016 at
www.socointernational.com.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm that, to the best of each person's knowledge:
(a) the Financial Statements set out on pages 90 to 112, which have been prepared in accordance with applicable United Kingdom law and IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and loss of the Company and the Group taken as a whole;
(b) this Directors' Report along with the Strategic Report, including each of the management reports forming part of these reports, includes a fair review of the development and performance of the business and the position of the Company and the Group taken as a whole, together with a description of the principal risks and uncertainties that they face; and
(c) 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 performance, business model and strategy.
By order of the Board
Cynthia Cagle
Company Secretary
22 March 2017
2. Principal Risks and Uncertainties
The following description of the principal risks and uncertainties is extracted from the Risk Management Report (pages 26 to 31) of the Annual Report and Accounts 2016 at www.socointernational.com
Key: PR Principal Risks
PR HEALTH, SAFETY, ENVIRONMENTAL AND SOCIAL RISKS MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- The Group operates in an industry sector with high risk SOCO aims to mitigate such risks by implementing the operating conditions and HSES risks. SOCO HSES MS on all SOCO-operated projects. These risks include major equipment and materials The SOCO HSES MS facilitates best practice failures, which could potentially harm the international standards, which exceed national workforce, the public and/or the environment. requirements in some countries. Further details of how Additionally, it operates in regions where there SOCO addresses these risks can be found is a greater risk of economic or social instability and in the CSR Report on pages 32 to 43. where local attitudes to risk differ compared with nations with more established or developed economies. Accordingly, the Group may be exposed to specific risks in relation to social and environmental factors as well as health and safety matters, including security. --- -------------------------------------------------------- ------------------------------------------------------- PR COMMODITY PRICE RISK MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- Crude oil and gas prices are impacted by a complex The Group does not currently maintain any fixed price, supply and demand matrix including global long term marketing contracts. Production and regional supply, potential supply growth from is sold on 'spot' or near term contracts, with prices unconventional sources, the global economy, fixed at the time of a transfer of custody refining capacity and initiatives to reduce carbon or on the basis of an average market price. The Board intensity. The rate of development of emerging may give consideration in certain circumstances economies, world population, geopolitical uncertainty, to the appropriateness of entering into fixed price, geopolitical developments, producing long term marketing contracts. Although nation alliances and technical advances, are all oil prices may fluctuate widely, it is the Group's factors in this complex supply and demand policy not to hedge crude oil sales unless curve. Additionally, impacts arise from availability hedging is required to mitigate financial risks and cost of infrastructure, alternative associated with debt financing of its assets energy sources, regulation, production levels, market or to meet its commitments. The budget and various speculation regarding future supply sensitivity cases, applying expert analysis and demand, weather conditions and natural or other and price forecasting, are regularly tested for disasters, and many other significant downside scenarios and provide comfort that and evolving underlying factors. Exposure to SOCO are able to meet its commitments. No price fluctuations in crude oil prices may lead to hedging mechanisms were in place during the reduced cash flows, impairment of assets or assets year. During periods when the Group sees an stranded due to locked in losses in longer opportunity to lock in attractive oil prices, term contracts. The sustained lower oil price has it may engage in limited price hedging. significantly impacted the industry as a whole. --- -------------------------------------------------------- ------------------------------------------------------- PR EMPOWERMENT RISK MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- The Group's international portfolio comprises oil and As operator in a project, SOCO can directly influence gas ventures in widespread, often remote operations and decision making. Where locations with government and industry partners. The SOCO is a co-venturer it seeks to maximise its conduct of operations requires the delegation influence through active participation with of a degree of decision making to partners, contractors management, including direct secondments and and locally based personnel. application of internal control best practice under a procedural framework. --- -------------------------------------------------------- ------------------------------------------------------- PR LIQUIDITY AND CREDIT RISK MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- The Group has continued to carry sizable cash balances To mitigate these risks and protect the Group's throughout the year and has a non-current financial position, cash balances are generally receivable in respect of two accumulating abandonment invested in short term, non-equity instruments or funds in Vietnam, which limits its exposure liquidity funds, not generally exceeding to liquidity risk but increases its exposure to credit three months forward. Investments are generally risk. confined to money market or fixed term deposits in major financial institutions. The Group seeks to minimise credit risk by maintaining balances with creditworthy third parties including major multinational oil companies subject to contractual terms in respect of trade receivables. The credit risk on liquid funds is limited as the Company only selects institutions with high credit ratings
assigned by international credit rating agencies and endeavours to spread cash balances and liquid investments to multiple institutions. The level of deposits held by different institutions is regularly reviewed. --- -------------------------------------------------------- ------------------------------------------------------- PR CAPITAL RISK MANAGEMENT MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- The Group manages its capital to ensure that entities The Group seeks to maintain a sizable free cash in the Group will be able to continue balance to fund its operations and shareholder as going concerns while maximising the return to distribution policy. There is regular reporting to the stakeholders through the optimisation of Board. Farm-out opportunities are considered debt and equity balances. where deemed appropriate to reduce exposure. There is daily reporting on cash balances and forecasts are regularly prepared to monitor cash requirements. Discretionary expenditures are reviewed for potential deferral and cost reduction programmes are in place. Sensitivity cases are monitored on an ongoing basis as funds are spent and forecasts are updated to determine the amount and timing of any additional financing required. The Group maintains relationships and active dialogue with various financial institutions and may consider raising debt or equity finance at the appropriate time --- -------------------------------------------------------- ------------------------------------------------------- PR RESERVES RISK MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- As discussed in Note 4b to the Financial Statements, Reserve estimates are reviewed regularly by the Group uses standard recognised evaluation independent consultants. Future development costs techniques to estimate its proven and probable oil and are estimated taking into account the level of gas reserves. Such techniques have development required to produce the reserves inherent uncertainties in their application. SOCO has by reference to operators, where applicable, and projects with booked reserves in the internal and third-party engineers. early stages of production, development or non-conventional fracture basement reservoirs. Upward or downward revisions to reserve estimates will be made when new and relevant information becomes available. Such revisions may impact the Group's financial position and results, in particular, in relation to DD&A costs and impairment provisions. Portfolio management through exploration, appraisal or The Group continues to evaluate projects in existing acquisition may fail to yield reserves and potentially new areas of interest. in commercial quantities sufficient to replace The Group is focused on pursuing business development production. Commercial reserves must be technically and growth opportunities deemed appropriate and economically recoverable and are subject to risks and commercial when applying the most current associated with technical success, future information on underlying trends and factors commodity price and future capital and operating cost under various sensitivities. profiles. Changes in these factors may result in reserves being stranded due to premature writedowns, reduced valuations or conversion to liabilities. --- -------------------------------------------------------- ------------------------------------------------------- PR STAKEHOLDER AND REPUTATIONAL RISK MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- The Group operates in locations, and in an industry Where SOCO is operator, it implements its health, sector, where social and environmental safety, environmental and social responsibility matters may be highly sensitive both on the ground and policies to ensure that Company activities conform to as perceived globally. This can potentially international best practice. For joint lead to a reputational risk which may influence various or non-operated projects, SOCO seeks to maximise its Group stakeholders. The actions of influence to promote best practice. SOCO international bodies may harm the objectives of the garners the views of its stakeholders through direct Company and its regional partners. and indirect engagement and by referring to external sources. Further details of how SOCO addresses these risks can be found in the CSR Report on pages 32 to 43. --- -------------------------------------------------------- ------------------------------------------------------- PR OPERATIONAL RISK MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- There are inherent risks in conducting exploration, SOCO seeks to mitigate its operational risks through drilling, and construction operations the application of international best in the upstream industry. The level of risk is practice, including both in the design and build of potentially impacted by harsh or unexpectedly its infrastructure and in its operating extreme geological, geographical or weather conditions procedures. Further details of how SOCO addresses which may result in an associated impact these risks can be found in the CSR Report on resource availability and increased costs. on pages 32 to 43. Mitigation may also be achieved by transferring risk, for example, by entering into partnerships or farm-outs and by maintaining, at a minimum, standard industry best practice insurance. The Board of Directors does not believe that it is practical or prudent to obtain third-party insurance to cover all adverse circumstances it may encounter as a result of its oil and gas activities. However, the Board believes that SOCO's comprehensive property, control of well, casualty, liability and other policy cover conforms to industry best practice. As such, it provides substantial protection against typical industry operational risks. The Board believes it has struck an appropriate balance between exposure and coverage. --- -------------------------------------------------------- ------------------------------------------------------- PR STR ATEGIC RISK MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- There is a need to ensure that the Company is well The Company reviews a three year plan as part of its funded to deliver on its capital commitments planning cycle and Going Concern and and business development opportunities whilst achieving Viability Statement testing. The actual results to its core strategies of Recognising budget and forecasts are reviewed regularly
Opportunity, Capturing Potential and Realising Value in by the Board. The Company also reviews regularly the order to deliver long term viability remaining life of field economics given for the business. changes in economic conditions. Potential business development opportunities are assessed utilising the most current analysis for forecasting and sensitivities. The Board discusses strategy at each meeting of the Directors which includes an appropriate allocation between business development activities and shareholder returns. --- -------------------------------------------------------- ------------------------------------------------------- PR HUMAN RESOURCE RISK MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- The retention and recruitment of high quality personnel The Remuneration Committee retains independent is essential for SOCO to deliver on advisors to test the competitiveness of compensation its strategy. The loss of key experience and expertise packages for key employees. SOCO operates bonus and could result in serious gaps within long term incentive plans as well as the the Company knowledge base. share option plans to provide incentive. Succession planning is in place for all key areas of the business. Further details of SOCO's remuneration policies and practices can be found in the Directors' Remuneration Report on pages 65 to 81. --- -------------------------------------------------------- ------------------------------------------------------- CLIMATE CHANGE RISK MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- Global transition to a lower carbon intensity economy This report sets out the manner in which the Group in response to climate change could seeks to mitigate each of its principal result in reduced demand and increased operating cost, risks, including those that may be impacted by a capital cost, regulation and taxation. global transition to a lower carbon intensity Accordingly, it is a factor that impacts many of the economy. There continues to be a wide range of views Group's principal risks set out herein, regarding future global energy markets, including those associated with commodity price, from a relatively benign main scenario, considered reserves, operations, political, stakeholder most likely, to substantially more severe and reputational. scenarios that may arise from a sharper transition. In applying the mitigation measures for each of the Group's principal risks, SOCO seeks to monitor and apply the most current and evolving information on trends and factors that may impact on its current projects and as may be applicable to proposed future projects and the strategy for developing the business. Further details on climate change can also be found in the CSR Report on pages 32 to 43. --- -------------------------------------------------------- ------------------------------------------------------- POLITICAL AND REGIONAL RISK MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- Many of the Group's projects are in developing SOCO seeks to minimise such risks by using both countries or countries with emerging free market international and in- country professional systems where the regulatory environment may not be as advisors and by engaging directly with the relevant mature as in more developed countries. authorities where appropriate. The Group There may be a high level of risk in relation to assesses the risks of operating in specific areas compliance with and interpretation of emerging before beginning operations in order to hydrocarbon law, taxation and other regulations. Some determine these risks as commercially acceptable. of the Group's interests are in regions Project reviews are conducted on a risked identified as potentially more susceptible to business basis considering the most relevant project-based interruptions due to the consequences factors under various sensitivities. SOCO of possible unrest. Additionally, the energy sector is does not currently carry political risk insurance or exposed to a wide range of international associated business interruption insurance political developments which could impact the operating coverage to mitigate such risks. However, it and regulatory environment resulting periodically assesses the cost and benefit of in increased operating costs, compliance and taxation. both and future circumstances may lead the Group to acquire such insurance cover. --- -------------------------------------------------------- ------------------------------------------------------- BUSINESS CONDUCT AND BRIBERY RISK MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- SOCO operates both in an industry sector and in certain The Group seeks to mitigate these risks by ensuring countries where the promotion of transparent that it has adequate procedures (including procurement and investment policies is perceived as vendor due diligence) in place to eliminate bribery having a low priority and where customary and that all employees, agents and other practice may fall short of the standards expected by associated persons are made fully aware of the Group's the UK Bribery Act. policies and procedures with regard to ethical behaviour, business conduct and transparency. The annual training and compliance certifications by all associated persons, refreshes and reinforces SOCO's Code of Business Conduct and Ethics. Running in parallel with the Group's general risk management process, the Audit & Risk Committee has established a detailed bribery risk assessment and mitigation reporting procedure. Bribery risks are monitored throughout the year along with implementation of procedures to mitigate any new risks identified. The Company has arrangements for 'whistleblowing', whereby staff may, in confidence, raise concerns regarding improprieties, which would be addressed with appropriate follow-up action. To facilitate such reporting the Company maintains an Ethics Hotline Service using an independent, confidential telephone service that can be used by staff members and other stakeholders to report a suspected breach of SOCO's Code of Business Conduct
and Ethics. Further details on the Company's Anti-Bribery and Corruption programme can be found in the CSR Report on pages 32 to 43. --- -------------------------------------------------------- ------------------------------------------------------- FOREIGN CURRENCY RISK MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- Generally, it is the Company's policy to conduct and The Group seeks to minimise the impact that debt manage its business in US dollars. Cash financing has on its balance sheet by negotiating balances in Group subsidiaries are primarily held in US borrowings in matching currencies. The impact of a 10% dollars, but smaller amounts may be movement in foreign exchange rates held in GB pounds or local currencies to meet immediate on the Group's foreign currency denominated net assets operating or administrative expenses, as at 31 December 2016 would not have or to comply with local currency regulations. From time been material (2015: not material) and would not have to time the Company may take short been material with respect to the Group's term hedging positions to protect the value of any cash profit in 2016 (2015: not material). balances it holds in non-US dollar currencies. The currency markets have been impacted by the Brexit decision in June 2016. SOCO's free cash flow from operations is USD based and any conversion to fund GBP based costs, is favourably impacted post the Brexit result. However, there could be an unfavourable impact on any funding of potential USD denominated acquisitions through an equity raise on the London Stock Exchange in GBP. --- -------------------------------------------------------- ------------------------------------------------------- CYBER RISK MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- Cyber security breaches could result in the loss of key SOCO continues to focus its efforts on prevention and confidential data, disrupt critical detection to these threats and employs business systems or cause reputational and/ or a programme of effective continuous monitoring. financial harm. --- -------------------------------------------------------- ------------------------------------------------------- CONTR ACTUAL RISK MITIGATION --- -------------------------------------------------------- ------------------------------------------------------- The Group enters into various contractual arrangements The Group manages its commitments via the annual in the ordinary course of its business. budget and regular forecasts, reporting against Such contracts may rely on provisional information actuals on a monthly basis. Board delegated authority which is subject to further negotiation minimises the exposure to unauthorised at a later date. This may give rise to uncertainty of commitments such information. --- -------------------------------------------------------- -------------------------------------------------------
3. Related Party Transactions
The following is extracted from Note 35 to the Financial Statements (page 112) of the Annual Report and Accounts 2016 at www.socointernational.com
During the year, the Company recorded a net credit of $1.1m (2015: net credit of $4.5m) in respect of services rendered between Group companies. The Company had a short-term payable of $1.4m to a Group company outstanding as at 31 December 2016 (2015: $nil). Transactions between the Company and its subsidiaries have been eliminated on consolidation.
Remuneration of key management personnel
The remuneration of the Directors of the Company, who are considered to be its key management personnel, 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 Directors' Remuneration Report on pages 65 to 81.
2016 2015 $ million $ million ----------------------------- ---------- ------------- Short term employee benefits 4.7 3.5 ----------------------------- ---------- ------------- Post-employment benefits 0.3 0.3 ----------------------------- ---------- ------------- Share-based payments 2.9 1.9 ----------------------------- ---------- ------------- 7.9 5.7 ----------------------------- ---------- -------------
Directors' transactions
Pursuant to a lease dated 20 April 1997, Comfort Storyville (a company wholly owned by Mr Ed Story) has leased to the Group, office and storage space in Comfort, Texas, USA. The lease, which was negotiated on an arm's length basis, has a fixed monthly rent of $1,000.
Under the terms of an acquisition approved by shareholders in 1999, the Company and its Investor Group, including Quantic group of companies, of which Mr Rui de Sousa is a 50% beneficial interest holder, jointly participated in certain regions in which the Investor Group utilised its long established industry and government relationships to negotiate and secure commercial rights in oil and gas projects. In the 2004 Annual Report and Accounts the form of participation to be utilised was set out to be through equity shareholdings in which the Investor Group holds a non-controlling interest in special purpose entities created to hold such projects. The shareholding terms were modelled after the SOCO Vietnam arrangement which was negotiated with third parties. The non-controlling holdings by Quantic group of companies in the subsidiary undertakings, which principally affected the profits or net assets of the Group, are shown in Note 18. The Group has entered into a consulting agreement, which is terminable by either party on 30 days' written notice, wherein Quantic Limited, which is part of the Quantic group companies, is entitled to a consulting fee in the amount of $50,000 per month in respect of such services as are required to review, assess and progress the realisation of oil and gas exploration and production opportunities in certain areas.
[END]
This information is provided by RNS
The company news service from the London Stock Exchange
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