25 September 2024

Indus Gas Limited

("Indus" or the "Company")

Audited Final Results for the 12 months ended 31 March 2024

Indus Gas Limited (AIM:INDI), an oil & gas exploration and development company, announces its full year audited results for the 12 months to 31 March 2024, which will be made available on its website and sent to shareholders.

The Company will shortly publish its notice of annual general meeting and a further announcement will be made in due course.

For further information please contact:

Highlights

§ As per revised Domestic gas pricing Guidelines, Sales gas price shall be 10 pct of monthly average of Indian crude basket as notified by PPAC on monthly basis from 8th April, 2023. The Gas sale price in the year ended March 2024 ranged from highest of US$ 9.20 per MMBTU to the lowest of US$ 7.48 per MMBTU.

§ New development wells produced rich Gas with lower CO2 content.

OPERATIONAL

§ Drilling and completion of production wells for the field development continued

§ Continued testing of previously drilled wells.

FINANCIAL

§ Total Revenues were US$ 42.93 million (2022-23: US$ 63.03 million).

§ Operating profit decreased to US$ 36.56 million (2022-23: US$ 54.76million).

§ Profit before tax decreased to US$ 36.12 million (2022-23: US$ 54.87 million).

§ Net Investments made in property, plant and equipment amounting to US$ 70.96 million (2022-23: US$ 74.21 million).

§ All repayments under the existing debt terms were made on a timely basis.

Chairman's Statements

The Board would like to thank employees, shareholders, bankers and all other stakeholders for their loyalty and continued support. The management team will continue to focus on the execution of the Company's long-term strategy of achieving both growth in reserves and commercial production.

Jonathan Keeling

Chairman

Board of Directors' Review

We are pleased to announce the consolidated total revenues totaling US$ 42.93 million (2022-23: US$ 63.03 million).

Operations

Operational activities over the last year have followed the Group's objectives and are summarized below:

a)    drilling and completion of production wells for the SGL, SSG and SSF field development continued.

b)    testing various wells previously drilled where gas shows were encountered to enable the Group to increase its reserve base; and

c)    testing the B&B gas recovery potential in addition to gas discovered in the Pariwar formation.

Additional testing is an important element of the operational programme to enhance production and maximize recovery of gas through efficient asset management. Activities such as these will continue to increase as we obtain and act on new data and production history. An important development in respect of the SGL Field was the discovery of new intervals within Pariwar. These were located below the existing producing P10 sands. These reservoirs were successfully exploited for production and going forward will add to the reserves and production from both existing and new wells.

Financials

During the financial year, the Company achieved total revenue of US$ 42.93 million (2022-23: US$ 63.03 million), resulting in reported operating profit of US$ 36.56 million (2022-23 US$ 54.76 million). The reported profit after tax was US$ 20.19 million (2022-23 US$ 30.87 million).

While the Company is not expected to pay any significant taxes on its income for many years in view of the 100% deduction allowed on the capital expenses incurred in the Block, the Company recognized a deferred tax expense of US$ 15.75 million (2022-23: US$ 23.99 million) as per IFRS requirements.           

Post this deferred tax liability provision, the net profit for the year was US$ 20.19 million (2022-23: US$ 30.87 million).

The net expenditure on the purchase of property, plant & equipment was US$ 70.96 million (2022-23: US$ 74.21 million). The property plant and equipment, including development assets and production assets, increased to US$ 1,291.62 million (2022-23: US$ 1,223.43 million). 

The current assets (excluding cash) as of 31 March 2024 stood at US$ 116.87 million (2022-23: US$ 123.92 million), which majorly includes US$ 8.94 million (2022-23: US$ 9.93 million) of inventories, US$ 107.31 million (2022-23: US$ 107.35 million) of receivables from related party and US$ 0.62 million (2022-23: US$ 6.64 million) of trade receivables and another receivable. The current liabilities of the Company, excluding the related party liability of US$ 0.01 million (2022-23           :US$ 0.33 million) and current portion of long-term debt of US$ 20.58 million (2022-23: US$ 28.46 million), stood at US$ 1.53 million (2022-23: US$ 2.03 million).

As of 31 March 2024, the outstanding debt of the Company to banks was US$ 180.26 million (2022-23: US$ 203.93 million), of which US$ 20.58 million (2022-23: US$ 28.46 million) was categorized as repayable within a year. During the year, the Company repaid an amount of US$ 23.65 million of the outstanding term loan facilities, as per the scheduled repayment plan. As of 31 March 2024, the outstanding unsecured debt from bonds was US$ 164.03 million (2022-23: US$ 163.92 million), of which US$ 4.34 million (2022-23: US$ 4.30 million) was categorized as repayable within a year and the remaining US$ 159.68 million (2022-23: US$ 159.61 million) has been categorized as a long-term liability.

Outlook

The company continues to see disruption to the quantity of gas supplied to its ultimate customer's power plant due to ongoing maintenance of the turbine at the plant. The company will announce the PSC extension when granted. Due to the ongoing disruption of gas supply the company will seek further external funding and/or shareholder funding in near future if required.

Jonathan Keeling 

Executive Chairman

Board of Directors

JONATHAN KEELING - EXECUTIVE CHAIRMAN

Jonathan was a founding partner and a main board member of Arden Partners plc, a small and mid-cap institutional stockbroker and Jonathan's career in equity capital markets spans in excess of 30 years.  Prior to Arden, Jonathan worked at Albert E Sharp, Harris All day and Old Mutual Securities. Jonathan is a Fellow of the Chartered Institute for Securities and Investment.

 ATIQ ANJARWALLA - DIRECTOR

 During the year, Mr. Atiq joined the board of director as independent non-executive   director on 3^rd October 2022. Mr. Atiq is an experience Lawyer and is a Solicitor of the Supreme Court of England and Wales Advocate of the High Court of Kenya and a Legal Consultant in Dubai. Atiq has a Master of Law from Jesus College Cambridge, England. Atiq's legal experience spans Corporate, Private Client, Banking, Project Finance and Capital Markets.

ELIZABETH POWELL - DIRECTOR

During the year, Mrs. Elizabeth Powell joined the board of director as independent non-executive director on 7^th March 2023. Liz's background is primarily in Human Resources through her work with a major Guernsey based independent fiduciary.  She has a CIPD qualification in HR and has become skilled in international payroll matters. In recent years, in addition to her personnel skills, she has taken on directorships in companies employing staff in the Oil & Gas sector as well as companies owning assets for international oil companies.

NICHOLAS SAUL - DIRECTOR

During the year, Mr. Nicholas Saul joined the board of director as independent non-executive director on 7^th March 2023. Nick started his career as a Merchant Navy Officer with Texaco in 1980 and has been working in the Oil & Gas industry since. Today, he owns successful Guernsey business that manages the employment of thousands working in the hydrocarbons industry as well over 10,000 mariners. Nick has a BSc in Maritime Commerce, is an Associate Fellow of the Nautical Institute and a Chartered Member of The Chartered Institute of Logistics and Transport.

Directors' Report

The Directors present their report and the financial statements of Indus Gas Limited ("the Company") and its subsidiaries, iServices Investments Ltd and Newbury Oil Co. Ltd (collectively the "Group"), which covers the year from 1 April 2023 to 31 March 2024.

PRINCIPAL ACTIVITY AND REVIEW OF THE BUSINESS

The principal activity of the Company and Group is that of oil and gas exploration, development and production and other related services.

RESULTS AND DIVIDENDS

The trading results for the year and the Group's financial position at the end of the year are shown in the attached financial statements. The Group has earned a profit before tax of USD 36.12 million (2022-23: US$ 54.87 million) during the year.

The Directors have not recommended a dividend for the year (2023-24) : Nil).

REVIEW OF BUSINESS AND FUTURE DEVELOPMENTS

A review of the business and likely future developments of the Company are contained in the Chairman's statement and the Board of Director's review, given above.

BOARD CHANGES

The Company announces the following changes to its Board:  

·      Mr. Clive Gibbons has stepped down from the Board effective from 26th September 2023.

·      Fareed Soreefan* has stepped down from the Board effective from 04 August 2023.

·      Ms Wendy Ramakrishnan* has been appointed as a Non-Executive Director with effect from 04 August 2023.

DIRECTORS REMUNERATION

The Directors' remuneration for the year ended 31 March 2024 was:

*Directors of subsidiary companies (I Services and Newbury)

 The Directors' remuneration for the year ended 31 March 2023 was:

*Directors of subsidiary companies (iServices and Newbury)

The Director remuneration consists of monthly/quarterly compensation as per the agreed terms. There are no further cash payments or benefits provided to Directors.

GAS MARKETS IN INDIA

India has a significant deficit of hydrocarbons which we believe will result in a long-term, steady demand for gas produced by our Block.  According to the Petroleum and Natural Gas Regulatory Board ("PNGRB") Report, Vision 2030, India's natural gas demand will grow significantly to 746 MMSCM/d (26.3 BCF/d) by the end of Fiscal 2030.  India is expected to have approximately 32,727 km of natural gas pipeline with a design capacity of 815 MMSCM/d in place by 2030. In order to further boost the consumption of natural gas in the country, the Government established a Gas Trading Hub/ Exchange (GTHE), where natural gas can be traded and supplied through a market-based mechanism instead of multiple formula driven prices. Initial trading has already started on Indian Gas Exchange.

From April 2023 to March 2024 gas sales were invoiced at prices ranging from the highest of US$ 9.20 per MMBTU to the lowest of US$ 7.48 per MMBTU.

FINANCIAL INSTRUMENTS

Details of the use of financial instruments by the Company are contained in note 28 to the attached financial statements.

RELATED PARTY TRANSACTIONS

Details of significant related party transactions are contained in note 16 and note 23 to the attached financial statements.

INTERNAL CONTROL

The Directors acknowledge their responsibility for the Company's system of internal control and for reviewing its effectiveness. The system of internal control is designed to manage the risk of failure to achieve the Company's strategic objectives. It cannot totally eliminate the risk of failure but will provide reasonable, although not absolute, assurance against material misstatement or loss.

GOING CONCERN

Production Sharing Contract (PSC) of the Group has expired on 20 August 2024. Further, the contract of the Group with its sole customer will expire on 30 September 2024. At the date of signing the financial statements, considering expiry of above mentioned two contracts and an obligation of the Group to pay current portion of borrowings of US$ 20,575,321 (2022-23: US$ 28,458,200), in line with the accounting and auditing framework, this indicates a material uncertainty that may cast significant doubt on the group's ability to continue as a going concern.

The group has considered following factors relevant to support going concern.

The Group has applied for an extension of the Production Sharing Contract (PSC) which expired on 20 August 2024. The Board is confident that the extension will be received considering that Clause 2.1 of PSC provides that PSC can be extended up to 35 years. Further, the Group is in process of renewing the existing contract with the sole customer (GAIL) for supply of gas which will expire on 30 September 2024. Moreover, the power plant in this region is the customer of GAIL and for running that plant, the supply of gas from the block is essential. The Board is confident that the customer contract will be renewed soon along with PSC extension considering the ongoing discussions with the customer and accordingly, the Group will be able to supply the gas based on a mutually agreed contract.

Subsequent to the year end, the Group has repaid an amount of US$ 15,315,827 and accordingly the amount of US$ 5,259,494 (including interest payable) is due for repayment within the next 12 months, which the Group expects to meet from its internal generation of cash from operations (as evident from the group cash flow forecast and support from largest shareholder). The Group has sufficient cash flows to repay the maturing debt as the Group is financially sound. The Group has net working capital of US$ 96,827,206 (2022-23: US$ 104,859,475) as at 31 March 2024.

Based on business strategies and operating plans/forecasts of the Group, and based on the above reasons, the management is confident that the Group will continue to meet all its obligations as and when they fall due in the normal course of business. Accordingly, these financial statements have been prepared on a going concern basis.

DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Directors' report and consolidated financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the consolidated statement of comprehensive income of the Group for that year. In preparing those financial statements the Directors are required to:

o   Select suitable accounting policies and apply them consistently;

o   Make judgements and estimates that are reasonable and prudent;

o   State whether International Financial Reporting Standards as adopted by EU have been followed subject to any material departures disclosed and explained in the financial statements; and

o   Prepare consolidated financial statements on a going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors confirm that the financial statements comply with the above requirements.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and of the Group to enable them to ensure that the financial statements comply with the requirements of the Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the provision and detection of fraud and other irregularities.

The Directors are responsible for maintaining the integrity of the corporate financial information included on the Group's website. Legislation in Guernsey governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.

To the best of our knowledge and belief:

·      The financial statements have been prepared in accordance with International Financial Reporting Standards, as adopted by the European Union;

·      Give a true and fair view of the financial position and results of the Group; and

·      The financial statements include an analysis of the principal financial instruments specific risks and uncertainties faced by the Group.

AUDITOR

All of the current Directors have taken all steps that they ought to have taken to make themselves aware of any information needed by the Group's Auditor for the purposes of their audit and to establish that the Auditor is aware of that information. The Directors are not aware of any relevant audit information of which the Auditor is unaware.

By order of the Board

Jonathan Keeling

Risks and Risk Management

In planning our future activities and reacting to changes in our ongoing business environment, we seek to identify, assess, mitigate and monitor the risks that we face. Considerable effort is made during our planning process to reduce and mitigate the various risks to the extent that this is practical and commercially sound. Ideally large decisions taken early means that any later adaptation or reaction should be small.

We cannot remove the Company from all risk and the oil and gas industry brings with it many special challenges in specific risks. What we can and do strive to achieve is to understand and manage the risk environment we work within.

The Company faces the appraisal, development and production risks of the oil and gas industry. The business relies on extensive engineering, geological and geophysical judgements.

As activities on the Block have grown and generated actual data and experience, we have used this knowledge to reduce these risks. There has been an increase in the number of wells to find hydrocarbons through the knowledge gained from almost complete 3D seismic data and analysis of drilling results. We shall continue to de-risk this area of our operations but the risk of a dry hole will never reach zero. The risk of mechanical issues or well construction failing remains. However, with greater standardization of well design and repetition of activities this has reduced.

We currently depend on one customer for the sale of gas and substantially all of our revenues. Discussions are on-going to find and develop new customer relationships.

GAIL has significant financial resources and maintains a strong credit rating providing comfort in meeting any obligations under our Agreement. Our gas is purchased at our field and shipped via a GAIL owned pipeline to the power plant. The pipeline is purpose built and operating well within its design specification.

The Company has one bank debt facility outstanding from its group of lenders. These facilities were obtained on attractive terms in difficult lending markets. Debt service for the facility remains strong and contributes to our sound borrower track record. Additional amounts were raised during 2018 through unsecured bonds, which were further re-financed with the additional bond offering made by the Company in November 2022. The Company has benefited from consistent support of the majority shareholder particularly reducing the risk of any funding gaps due to the delay in closing external finance. The Production Sharing Contract that includes cost recovery and sales contract for gas provide an enhanced cash flow to service debt and give protection to lenders.

Our business, revenues and profits may fluctuate with changes in oil and gas prices. Our production is mainly gas and has been sold on strong "Take or Pay" contracts that significantly reduce the impact of fluctuations in the wider global energy market. However, the prevailing prices of oil and gas can have some bearing on new contracts and price revisions.

As per the revised Domestic gas pricing Guidelines, Sales gas price shall be 10 pct of monthly average of Indian crude basket as notified by PPAC on a monthly basis from 8th April, 2023. The Gas sale price in the year ended March 2024 ranged from highest of US$ 9.20 per MMBTU to the lowest of US$ 7.48 per MMBTU.     

The oil and gas industry are subject to laws and regulations relating to environmental and safety matters in exploration for and the development and production of hydrocarbons. We are bound by the environmental laws and regulations applicable to India and satisfy and in some areas exceed these requirements by using good industry practice, trained staff and quality equipment.

We are committed to upholding procedures to protect the environment and enforce environmental, health, safety and security mechanisms through accountability at all levels, suitable policies, feedback and full compliance by each employee and contractor to all policies we develop.

The Government has historically played a key role, and is expected to continue to play a key role in regulating, reforming and restructuring the Indian oil and natural gas industry. A major platform for shaping the industry has been the award of assets by various rounds under the NELP. Our Block was awarded before the formation of NELP and therefore places greater emphasis on our Production Sharing Contract (PSC) in our dealings with Government in various forms. To date the Block Management Committee created under our PSC and including multiple Government agencies has assisted the development progress we have made so far. The Field Development Plan for the area beyond SGL was approved by Management Committee consisting representatives of DGH and government created under PSC.

Corporate Governance

The Directors recognize the importance of sound corporate governance and have chosen to apply the Quoted Companies Alliance ("QCA") Corporate Governance Code and Guernsey regulations in so far as they are appropriate given the Company's size and stage of development. The Company may take additional Corporate Governance measures beyond QCA guidelines and Guernsey regulations as may be appropriate considering the Company's operations from time to time.

The Company has not adopted the UK Corporate Governance Code ("the Code") and has chosen to apply the QCA Corporate Governance Code for Small and Mid-Size Quoted Companies which is in line with most growing AIM companies adopted practices. The disclosure requirements under the code have been complied with and the detailed report is available on the official website (http://www.indusgas.com/) of the company.

Corporate Governance standards and procedures adopted by the Company are regularly reviewed by the Chairman who has maintained dialogue and answered questions of shareholders throughout the year. The Chairman has consulted the Nomad on the objectives of Corporate Governance within the Company.

BOARD OF DIRECTORS

The Board is responsible for the proper management of the Company. The resumes of the current board members are as outlined in the section 'Board of Directors' on page no. 6.

Mr. Ajay Kalsi brings knowledge of the oil and gas industry and a range of general business skills and continues to be an advisor to the company.

All Directors have access to independent professional advice, at the Company's expense, when required.

SUB-COMMITTEES

The Board had constituted the nomination and remuneration sub-committees, which were then disbanded in March 2022 as a result of the Board's reduced size. Given the Board's new directors appointed recently, nomination and remuneration sub-committees may reform in future. Further, currently, all the responsibilities of these sub committees are being carried out directly by the Board in line with defined policies and processes.

AUDIT COMMITTEE

The committee is responsible for ensuring that the financial performance of the Company is monitored and reported on, for meeting with the Auditor and reviewing findings of the audit with the external auditor. It is authorized to seek any information it properly requires from any employee and may ask questions of any employee. It meets the Auditor once per year without and is responsible for considering and making recommendations regarding the engagement and remuneration of the Auditor.

SHARE DEALING

The Company has adopted a share dealing code (based on the Model Code) and the Company takes all proper and reasonable steps to ensure compliance by Directors and relevant employees.

THE CITY CODE ON TAKEOVERS AND MERGERS

Being a Channel Islands incorporated company, the Company is subject to the UK City Code on Takeovers and Mergers.

DISCLOSURE AND TRANSPARENCY RULES

As a Company incorporated in Guernsey, Shareholders are not obliged to disclose their interests in the Company in the same way as shareholders of certain companies incorporated in the UK. In particular, the relevant provisions of chapter 5 of the Disclosure and Transparency Rules (DTR) do not apply. While the Articles contain provisions requiring disclosure of voting rights in Ordinary Shares, which are similar to the provisions of the DTR, this may not always, ensure compliance with the requirements of Rule 17 of the AIM Rules. Furthermore, the Articles may be amended in the future by a special resolution of the Shareholders.

CONTROL BY SIGNIFICANT SHAREHOLDER

Gynia Holdings Limited, along with its wholly owned subsidiary Focus oil Inc. own a significant percentage of outstanding shares of the Company. As a significant shareholder, Gynia could exercise significant influence over certain corporate governance matters requiring shareholder approval, including the election of directors and the approval of significant corporate transactions and other transactions requiring a majority vote.

The Company, Strand Hanson Limited (Nomad and Broker), Gynia and Mr. Ajay Kalsi have entered into a relationship agreement to regulate the arrangements between them. The relationship agreement applies for as long as Gynia directly or indirectly holds in excess of thirty per cent of the issued share capital of the Company and the Company's shares remain admitted to trading on AIM. The relationship agreement includes provisions to ensure that:

a)   The Board and its committees are able to carry on their business independently of the personal interests of Gynia;

b)   The constitutional documents of the Company are not changed in such a way which would be inconsistent with the relationship agreement.

c)   All transactions between the Group and Gynia (or its affiliates) are on a normal commercial basis and at arm's length;

d)   In the event of a conflict of interest between Gynia and the Board, no person who is connected with Gynia is appointed as a Non-Executive Director of the Company and no existing Non-Executive Director is removed as a director of the Company unless such an appointment or removal has been previously approved by the nomination committee of the Board and that to the extent that any previously approved by the nomination committees concerns the composition of the Board which has been approved by the Board requiring the approval of the shareholders of the Company then Gynia will vote its Ordinary Shares in favour; and

e)   The Shareholder puts certain restrictions in place to prevent interference with the business of the Company.

INDEPENDENT AUDITOR'S REPORT

To the members of Indus Gas Limited

Opinion

We have audited the Consolidated financial statements of Indus Gas Limited (the "Company") and its subsidiary (the "Group") for year ended 31 March 2024, which comprise the Consolidated Statement of Financial Position, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows for the year then ended, and Notes to the Consolidated financial statements, including material accounting policy information. The Consolidated financial statements framework that has been applied in their preparation is applicable law and IFRS Accounting Standards as adopted by the European Union (EU).

In our opinion, the consolidated financial statements:

·      give a true and fair view of the financial position of the Group as at 31 March 2024, and of its financial performance and its cashflows for the year then ended;

·      are in accordance with IFRS Accounting Standards as adopted by the European Union (EU); and

·      comply with the Companies (Guernsey) Law, 2008.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) and applicable law. Our responsibilities under those standards are further described in the 'Auditor's responsibilities for the audit of the consolidated financial statements' section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), together with the ethical requirements that are relevant to our audit of the consolidated financial statements in Guernsey, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty related to going concern

We draw attention to note 6.16 in the consolidated financial statements, which indicates that the Production Sharing Contract (PSC) of the Group expired on 20 August 2024, and at the date of approval of the financial statements, had not yet been extended by the approving authority to ensure continued operations of business. The Group transfers its complete production of gas to its sole customer, Gas Authority of India Limited (GAIL) in accordance with the Gas Sales and Purchase Agreement (GSPA), and pursuant to the expiry of the PSC contract, the GSPA will expire on 30 September 2024. These events or conditions, along with the other matters set forth in note 6.16, indicate that a material uncertainty exists that may cast a significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. 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.

Other information in the Annual Report

The directors are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated 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 consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the consolidated financial statements

As explained more fully in the directors' responsibilities, the Directors are responsible for the preparation of the consolidated financial statements which give a true and fair view in accordance with IFRS Accounting Standards as adopted by the European Union (EU), and for such internal control as the Directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated 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 will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

·    Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

·    Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

·    Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

·    Conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

·    Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.   

·    Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Michael Carpenter.

Use of our report

This report is made solely to the Company's members, as a body, in accordance with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:

·      proper accounting records have not been kept by the Company; or

·      the Group's consolidated financial statements are not in agreement with the accounting records; or

·      we have not obtained all the information and explanations, which to the best of our knowledge and belief, are necessary for the purposes of our audit.

Grant Thornton Limited

Chartered Accountants

St Peter Port

Guernsey

Date: 23 September 2024