17:00 Tue 30 Apr 2019
Curzon Energy plc - Results for the Year Ended 31 December 2018
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.
("Curzon" or the "Company")
Results for the Year Ended
A copy of the Company's annual report and financial statements for 2018, extracts of which are set out below, will be made available on the Company's website www.curzonenergy.com shortly.
Highlights
· MOU signed with Pared Energy to pursue a high-impact multi-TCF potential gas project in
· Well re-work operations and long-term testing at
· Board now considering go-forward options at
· Board of Directors streamlined and overall cost basis significantly reduced
· Deepened investor exposure to the revolution in US natural gas markets and associated LNG exports
· Pre-tax loss of
"2018 saw the evolution of Curzon into a leaner and more focused entity with a clear and compelling investment offering for investors. With the groundwork now in place to progress the potential
For further information please contact:
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+44 (0) 20 7747 9980 |
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+44 (0) 20 3470 0470 |
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+44 (0) 20 3137 1902 |
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Chairman's Statement
I am pleased to present the annual report for the Company covering its results for the year to
The Company was incorporated for the purpose of pursuing a targeted acquisition strategy of oil and gas assets. The Company's first acquisition occurred on
During the course of the year the Company focused on extended testing of the five existing wells at
In addition, the Company has announced a memorandum of understanding ("MOU") with
Phase 1 of the
Overall the Board feels that the
During the course of the year the Board underwent several changes with the focus being to bolster our presence in the
The Group incurred a loss of
With the first full year of trading now behind, my fellow Directors and I look forward to pursuing our US focused natural gas strategy with renewed vigour and look forward to updating shareholders on our further progress in due course.
Non-Executive Chairman
Strategic Report
Financial Results
The Company was formed in
The Group loss for the year to
The loss per share was
The Group's cash balances at the end of 2018 totalled
Following mixed results from well testing operations at
The Board believes that the Company will be able to raise, as required, sufficient cash and/or reduce its commitments to enable it to continue these objectives, and to continue to meet, as and when they fall due, its liabilities for at least the next twelve months from the date of approval of these financial statements. The financial statements have, therefore, been prepared on the going concern basis.
Following reductions made during 2018, the Group has 3 members of staff (including Directors).
Principal activities
The Company was incorporated in
The Group's business continues to be operated through the
The Company is a holding company with the following subsidiaries being part of the
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Country of Incorporation |
Proportion of equity ownership |
Principal activity |
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100% |
Gas Exploration & Development |
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100% |
Holding Company |
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100% |
Gas Exploration & Development |
Review of the business
2018 saw the Company conducting extensive well testing operations at
As such, the Company announced its intention to augment the
Key performance indicators (KPIs)
The Directors have identified the following key performance indicators ('KPIs') that the Company will track over 2019 and into future years. These will be refined and augmented as the Group's business matures.
The Directors consider that the KPIs are:
i) A well-funded business in terms of cash resources and operating cashflows; and
ii) Appraisal and drilling results of the Company's projects,
iii) Entering production and then monitoring levels of production of gas and condensates; and
iv) Operating costs once in production.
Principal Risks and Risk Management
Exploration is an inherently high-risk business:
· Even the most promising prospects can have failures for many reasons, such as:
o The gas assets may not be found in commercial quantities if there are errors in the underlying geological assumptions or analysis.
o Hydrocarbons may have been present but escaped due to unexpected geological events.
o The reservoir may not flow hydrocarbons at commercially viable rates of flow.
o The drilling may encounter technical problems which make it impossible or too expensive to reach the target.
o The ability of the Group to exploit and develop gas reserves depends on its current leases. There is no guarantee that existing leases will be continued beyond their primary term or additional leases acquired on attractive terms.
· The Company may take on commitments for which it then cannot find adequate funding. Although the Company can then potentially sell all or part of its assets:
o There is no guarantee it could find a buyer.
o Even if it does find a buyer, the transaction may take too long, and the Company's cash resources may become exhausted.
The Company's risk mitigation strategies include the following:
· Partnering with key experts that have demonstrated an ability to determine the presence or absence of hydrocarbons.
· Utilizing the Directors' experience who have excellent technical, commercial or local knowledge as to where to locate assets.
· Securing the support of a number of key private shareholders, and actively pursuing other sources of funding.
· Utilizing third parties to assist with the management of currency risk.
Corporate Responsibility
The Company takes its responsibilities as a corporate citizen seriously. The Board's primary goal is to create shareholder value but in a responsible way which serves all stakeholders.
Governance
The Board considers sound governance as a critical component of the Company's success and the highest priority. The Company has an effective and engaged Board, with a strong non-executive presence drawn from diverse backgrounds and with well-functioning governance committees. Through the Company's compensation policies and variable components of employee remuneration, the Remuneration Committee of the Board seeks to ensure that the Company's values are reinforced in employee behaviour and that effective risk management is promoted.
Analysis by Gender
Category |
Male |
Female |
Directors |
3 |
0 |
Senior Managers |
0 |
0 |
Other Employees |
0 |
0 |
Employees and their development
The Company is dependent upon the qualities and skills of its employees and their commitment plays a major role in the Company's business success. Employees' performance is aligned to the Company's goals through an annual performance review process and via incentive programmes. The Company provides employees with information about its activities through regular briefings and other media. The Company operates a share option and warrant scheme operated at the discretion of the Remuneration Committee.
Diversity and inclusion
The Company does not discriminate on the grounds of age, gender, nationality, ethnic or racial origin, non-job-related-disability, sexual orientation or marital status. The Company gives due consideration to all applications and provides training and the opportunity for career development wherever possible. The Board does not support discrimination of any form, positive or negative, and all appointments are based solely on merit.
Health and safety
The Company endeavours to ensure that the working environment is safe and healthy and conducive to the wellbeing of employees who are able to balance work and family commitments. The Company has a Health and Safety at Work policy which is reviewed regularly by the Board and is committed to the health and safety of its employees and others who may be affected by the Company's activities. The Company provides the information, instruction, training and supervision necessary to ensure that employees are able to discharge their duties effectively. The Health and Safety procedures used by the Company ensure compliance with all applicable legal, environmental and regulatory requirements, as well as its own internal standards.
Outlook
The Company's near-term goals are to develop the business through the acquisition of a meaningful interest in the
While the performance of the inherited wells at
In
Together the proposed
Signed by order of the Board.
Chief Executive Officer
Independent auditor's report to the members of
Opinion
We have audited the consolidated financial statements of
In our opinion:
· the financial statements give a true and fair view of the state of the group's and company's affairs as at
· have been properly prepared in accordance with International Financial Reporting Standards as adopted by the
· the company financial statements have been properly prepared in accordance with IFRSs as adopted by the
· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (
Material uncertainty related to going concern
We draw attention to note 2 to the financial statements, which details the factors the company has considered when assessing the going concern position. As detailed in note 2, the uncertainty surrounding the availability of funds to finance ongoing working capital requirements indicates the existence of a material uncertainty that may cast significant doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An item is considered material if it could reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified.
Based on our professional judgement, we determined overall materiality for the financial statements as a whole to be
We use a different level of materiality ('performance materiality') to determine the extent of our testing for the audit of the financial statements. Performance materiality is set based on the audit materiality as adjusted for the judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the internal control environment.
Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party transactions and directors' remuneration.
We agreed with the Audit Committee to report to it all identified errors in excess of
Overview of the scope of our audit
There are two components of 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) that we identified. These matters included 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.
This is not a complete list of all risks identified by our audit.
Key audit matter |
How the scope of our audit addressed the key audit matter |
Valuation of Intangible assets The group's primary focus is on exploration activities in the
Given the impairment recognised we considered the risk that the residual intangible assets relating to the |
We reviewed management's assessment which concluded that no further impairment charge was required. In considering this assessment we reviewed the following sources of evidence: · The primary lease agreement in place supporting the company's right of extraction; · The Competent Persons Report (CPR) that formed the basis of the valuation; · Board minutes, budgets and other operational plans relating to the commercial appraisal of the asset; · Compared the valuation methodology to the prior year's approach and the independent third party valuation commissioned in 2017; · Assessed the reasonability of the inputs and key underlying assumptions, challenging management's inputs and assessing the impact of independently derived inputs on the valuation model; · Discussed plans and intentions with management. We also considered the appropriateness of the disclosure. Key observations We reviewed the valuation methodology and concur that it is consistent with that used in prior years. We assessed the key inputs and assumptions used in the valuation model and consider them to be reasonable. |
Our audit procedures in relation to this matter were designed in the context of our audit opinion as a whole. They were not designed to enable us to express an opinion on these matters individually and we express no such opinion.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. 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 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 or a material misstatement of the other information. 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.
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.
In our opinion based on the work undertaken in the course of our 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 directors' report and strategic report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
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:
· adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or
· the 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
· we have not received all the information and explanations we require for our audit
Responsibilities of the directors for the financial statements
As explained more fully in the directors' responsibilities statement set out on page 17, 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 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 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 (
We designed our audit approach to be capable of detecting irregularities, including fraud. In particular:
We gained an understanding of the legal and regulatory framework applicable to the Group and considered the risk of acts by the Group which were contrary to applicable laws and regulations, including fraud.
We designed audit procedures to respond to the risk, recognising that 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
Our tests included, but were not limited to: review of the financial statement disclosures to underlying supporting documentation and enquiries of management. There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
We did not identify any key audit matters relating to irregularities, including fraud. As in all of our audits we also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
A further description of our responsibilities for the audit of the financial statements is located on the
Other matters which we are required to address
We were appointed by the Board on
The non-audit services prohibited by the FRC's Ethical Standard were not provided to the 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 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.
Senior Statutory Auditor
For and on behalf of
Statutory Auditor
Consolidated statement of comprehensive income
for the year ended
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2018 |
2017 |
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US$ |
US$ |
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Well field expenses |
- |
(293,867) |
Administrative expenses |
(1,363,949) |
(1,662,619) |
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Loss from operations |
(1,363,949) |
(1,956,486) |
Finance expense, net |
(14,443) |
(102,288) |
Impairment of exploration and evaluation assets |
(575,316) |
- |
Other income |
- |
225,393 |
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Loss before taxation |
(1,953,708) |
(1,833,381) |
Income tax expense |
- |
- |
Loss for the year attributable to |
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equity holders of the parent company |
(1,953,708) |
(1,833,381) |
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Other comprehensive income/(expense) |
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Gain/(loss) on translation of parent net assets and results from functional currency into presentation currency |
(70,245) |
44,624 |
Total comprehensive loss for the year |
(2,023,953) |
(1,788,757) |
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Loss per share |
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Basic and diluted, US$ |
(0.03) |
(0.03) |
Consolidated statements of financial position
as at
|
2018 |
2017 |
|
US$ |
US$ |
Assets |
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Non-current assets |
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Intangible assets |
2,559,000 |
2,559,000 |
Restricted cash |
125,000 |
125,440 |
Total non-current assets |
2,684,000 |
2,684,440 |
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Current assets |
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Prepayments and other receivables |
36,157 |
148,616 |
Cash and cash equivalents |
125,621 |
1,595,035 |
Total current assets |
161,778 |
1,743,651 |
Total assets |
2,845,778 |
4,428,091 |
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Liabilities |
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Current liabilities |
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Trade and other payables |
506,894 |
463,413 |
Borrowings |
213,812 |
578,599 |
Total current liabilities |
720,706 |
1,042,012 |
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Total liabilities |
720,706 |
1,042,012 |
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Capital and reserves attributable to shareholders |
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Share capital |
1,024,036 |
964,575 |
Share premium |
3,563,122 |
3,199,004 |
Share-based payments reserve |
454,026 |
114,659 |
Warrants reserve |
191,011 |
191,011 |
Merger reserve |
31,212,041 |
31,212,041 |
Foreign currency translation reserve |
(63,774) |
6,471 |
Accumulated losses |
(34,255,390) |
(32,301,682) |
Total capital and reserves |
2,125,072 |
3,386,079 |
Total equity and liabilities |
2,845,778 |
4,428,091 |
The financial statements were approved and authorised for issue by the Board of Directors on
Director
Consolidated statements of changes in equity
|
Share capital |
Share premium |
Other reserves |
Accumulated losses |
Total |
|
US$ |
US$ |
US$ |
US$ |
US$ |
|
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|
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|
|
Equity as at |
639,925 |
763,854 |
31,173,888 |
(30,468,301) |
2,109,366 |
Loss for the year |
- |
- |
- |
(1,833,381) |
(1,833,381) |
Other comprehensive income for the year |
- |
- |
44,624 |
- |
44,624 |
Total comprehensive loss for the year |
- |
- |
44,624 |
(1,833,381) |
(1,788,757) |
Issue of shares |
324,650 |
2,921,855 |
- |
- |
3,245,505 |
Share issue costs |
- |
(486,705) |
- |
- |
(486,705) |
Issue of share warrants |
- |
- |
191,011 |
- |
191,011 |
Issue of share options |
- |
- |
114,659 |
- |
114,659 |
At |
964,575 |
3,199,004 |
31,524,182 |
(32,301,682) |
3,386,079 |
Loss for the year |
- |
- |
- |
(1,953,708) |
(1,953,708) |
Other comprehensive income for the year |
- |
- |
(70,245) |
- |
(70,245) |
Total comprehensive loss for the year |
- |
- |
(70,245) |
(1,953,708) |
(2,023,953) |
Issue of shares |
59,461 |
416,223 |
- |
- |
475,684 |
Share issue costs |
- |
(52,105) |
- |
- |
(52,105) |
Issue of share options |
- |
- |
339,367 |
- |
339,367 |
At |
1,024,036 |
3,563,122 |
31,793,304 |
(34,255,390) |
2,125,072 |
Other Reserves
|
Merger reserve |
Share-based payments reserve |
Warrants reserve |
Foreign currency translation reserve |
Total Other reserves |
|
US$ |
US$ |
US$ |
US$ |
US$ |
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Equity as at |
31,212,041 |
- |
- |
(38,153) |
31,173,888 |
Loss for the year |
- |
- |
- |
- |
- |
Other comprehensive income for the year |
- |
- |
- |
44,624 |
44,624 |
Total comprehensive loss for the year |
- |
- |
- |
44,624 |
44,624 |
Issue of share warrants |
- |
- |
191,011 |
- |
191,011 |
Issue of share options |
- |
114,659 |
- |
- |
114,659 |
At |
31,212,041 |
114,659 |
191,011 |
6,471 |
31,524,182 |
Loss for the year |
- |
- |
- |
- |
- |
Other comprehensive loss for the year |
- |
- |
- |
(70,245) |
(70,245) |
Total comprehensive loss for the year |
- |
- |
- |
(70,245) |
(70,245) |
Issue of share options |
- |
339,367 |
- |
- |
339,367 |
At |
31,212,041 |
454,026 |
191,011 |
(63,774) |
31,793,304 |
Consolidated statement of cash flows
|
2018 |
2017 |
|
US$ |
US$ |
Cash flow from operating activities |
|
|
Loss before taxation |
(1,953,708) |
(1,833,381) |
Adjustments for: |
|
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Finance cost, net |
42,321 |
86,473 |
Income from payable write off |
- |
(225,393) |
Share-based payments charge |
339,367 |
111,367 |
Impairment of exploration assets |
575,316 |
- |
Unrealised foreign exchange movements |
(27,878) |
50,184 |
Operating cashflows before working capital changes |
(1,024,582) |
(1,810,750) |
Changes in working capital: |
|
|
(Decrease)/increase in payables |
(22,541) |
66,576 |
Decrease/(increase) in receivables |
112,461 |
(118,542) |
Net cash used in operating activities |
(934,662) |
(1,862,716) |
|
|
|
Investing activities |
|
|
Capitalised exploration costs |
(575,316) |
- |
Net cash outflow from investing activities |
(575,316) |
- |
|
|
|
Financing activities |
|
|
Issue of ordinary shares |
- |
3,087,266 |
Costs of share issue |
(52,105) |
(295,694) |
Proceeds from new borrowings |
100,000 |
250,000 |
Net cash flow from financing activities |
47,895 |
3,041,572 |
|
|
|
|
(1,462,083) |
1,178,856 |
|
|
|
Cash and cash equivalents at the beginning of the period |
1,595,035 |
370,722 |
Restricted cash held on deposits |
125,440 |
125,315 |
Total cash and cash equivalents at the beginning of the period, including restricted cash |
1,720,475 |
496,037 |
|
|
|
Effect of the translation of cash balances into presentation currency |
(7,331) |
45,457 |
(Charge)/Interest on restricted cash |
(440) |
125 |
Cash and cash equivalents at the end of the period |
125,621 |
1,595,035 |
Restricted cash held on deposits |
125,000 |
125,440 |
Total cash and cash equivalents at the end of the period, including restricted cash |
250,621 |
1,720,475 |
|
|
|
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