REG - Coro Energy PLC - Final Results
22/05/2023 07:00
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RNS Number : 1128A Coro Energy PLC 22 May 2023
Certain information communicated within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014. Upon the publication of this announcement, this inside
information is now considered to be in the public domain.
22 May 2023
Coro Energy Plc
("Coro" or the "Company")
Final Results
Coro Energy Plc, the South East Asian energy company with a natural gas and
clean energy portfolio, announces its final results for the year ended 31
December 2022.
FY2022 Highlights
· Coro resumed and increased gas production from its Italian
onshore operations to benefit from the rise in gas prices in Italy resulting
in a profit of US$ 2.6m for the year and a cash benefit to the Group
· To capture the inherent value of the Italian natural gas
portfolio and a structural increase in gas prices an option to acquire the
business for up to Euro 7.5m was granted to Zodiac Energy plc. This option was
exercised with the parties entering into a Sale and Purchase Agreement in
March 2023
· Continued progress toward commercialising the Mako gas field
(Duyung PSC, Coro 15% interest), with the Duyung PSC operator focused on key
commercial workstreams including approval of an updated Plan of Development as
announced in November and continued focus on progressing a binding Gas Sales
Agreement
· In Vietnam successfully completed Coro's first rooftop solar
project of 3MW following signing a 25-year Power Purchase Agreement which
commenced delivering electricity in October. A further 3.25MW potential
acquisition was announced in November.
· In the Philippines planning and permitting activities continued
for both renewable solar and wind projects. An application for a WESC (Wind
Energy Service Contract) was submitted and the installation of a Lidar to
collect data
· The Company's Luxembourg listed EUR 22.5m Eurobond secured notes
were restructured in 2022 and now mature in April 2024
· Stephen Birrell joined as a Non-Executive Director and James
Parsons transitioned to Executive Chairman. Fiona MacAulay and Andrew Dennan
stepped down from their Non-Executive roles. Mark Hood transitioned to
Non-Executive Director.
Post Period End
· A Sale and Purchase agreement was entered into in March 2023 with
Zodiac Energy plc to acquire the Company's producing Italian gas portfolio for
up to Euro 7.5m
· The Operator of the Duyung PSC announced it had engaged a global
investment bank with a proven track record in similar transactions to lead a
farm-down process for the divestment of a portion of its interest in the
Duyung PSC. The Operator advised bids are expected to be received during the
second quarter of 2023. Coro may participate pro rata in the farm-down process
as various drag and tag along clauses exist in the Joint Operating Agreement.
Coro may also entertain a full exit, depending on the terms offered.
· Naheed Memon joined the board as a Non-Executive Director with Mark
Hood stepping down.
For further information please contact:
Coro Energy plc Via Vigo Consulting Ltd
James Parsons, Executive Chair
Ewen Ainsworth, Chief Financial Officer
Cenkos Securities plc (Nominated Adviser) Tel: 44 (0)20 7397 8900
Adrian Hadden
Ben Jeynes
Katy Birkin
Vigo Consulting (IR/PR Advisor) Tel: 44 (0)20 7390 0230
Patrick d'Ancona
Charlie Neish
WH Ireland (Broker) Tel: 44 (0)20 7220 1670 / 44 (0)113 946 618
Harry Ansell
Katy Mitchell
Gneiss Energy Limited (Financial Advisor) Tel: 44 (0)20 3983 9263
Jon Fitzpatrick
Doug Rycroft
Statement from the Chairperson
Whilst equity markets remain challenging, I am pleased with the operational
progress that Coro has made over the course of 2022 and the first quarter of
this year with the Company's flagship Indonesian gas asset approaching
monetisation, the sale of our Italian gas assets well underway, and the
continued growth of our clean energy portfolio in Vietnam and the Philippines.
Our strategy remains to monetise the Duyung PSC, repay or restructure our
corporate debt, complete the sale of our Italian assets and then strategically
invest to grow our South East Asian renewables business. The Company is also
seeking to secure new oil and gas opportunities in South East Asia, which will
assist the regional transition away from its over-reliance on coal, while
meeting its significant and growing energy demand.
Consistent with this strategic focus on South East Asia, we are delighted to
have recently signed the sale of our Italian assets to a well-funded operator
in Italy for a consideration of up to 7.5 million Euro and to have received
the first 1.5 million Euro payment. Both sides are now fully focused on
completing the transaction quickly. The funds received from the sale of the
assets will be used to meet the Duyung PSC pre FID expenditure, progress the
Company's renewable portfolio and provide working capital.
Recent progress at the Duyung PSC has included an approved plan of development
and a revised CPR, which together have delivered a significant uplift in our
core NAV. The Company looks forward to the long awaited, yet mission
critical, Gas Sales Agreement and believes the operator's farm in process,
which they advise is underway, likely represents a unique opportunity for Coro
to monetise and / or fund its position. We expect any monetisation of Duyung
to provide the Company with an opportunity to either repay or restructure its
corporate debt, well before its expiry in April 2024.
Meanwhile, the Company remains active across multiple regional business
development opportunities, with a view to identifying potentially
transformational oil and gas and other energy assets which would dovetail with
the existing clean energy portfolio.
In anticipation of the journey ahead, we have also revised our Board and
Executive team to provide the right balance of technical, commercial,
operational and financial skills whilst maintaining a controlled cost base. To
that end, we were delighted to welcome Naheed Memon as a Non-Executive
Director in April 2023.
It is in this context that we are delighted to present our final results for
the year end 31 December 2022.
JAMES PARSONS
Executive Chair
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
Notes 31 December 2022 31 December 2021
US$'000 US$'000
Continuing operations
Revenue 51 -
Depreciation and amortisation expense (21) -
Gross profit 30 -
Other income 19 309 -
General and administrative expenses 5 (3,574) (3,276)
Depreciation expense (15) (18)
Share of loss of associates (82) (249)
Loss from operating activities (3,332) (3,543)
Finance income 7 636 2,239
Finance expense 7 (5,491) (5,171)
Net finance expense (4,855) (2,932)
Loss before income tax (8,187) (6,475)
Income tax benefit/(expense) 8 - -
Loss for the period from continuing operations (8,187) (6,475)
Discontinued operations
Gain / (loss) for the period from discontinued operations 19 2,642 (1,510)
Total loss for the period (5,545) (7,985)
Other comprehensive income/loss
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign operations 2,925 485
Total comprehensive loss for the period (2,620) (7,500)
Loss attributable to:
Owners of the Company (5,479) (7,985)
Non-controlling interests (66) -
Total comprehensive loss attributable to:
Owners of the Company (2,554) (7,500)
Non-controlling interests (66) -
Basic loss per share from continuing operations ($) 9 (0.004) (0.003)
Diluted loss per share from continuing operations ($) 9 (0.004) (0.003)
Basic profit / (loss) per share from discontinued operations (US$) 0.001 (0.001)
Diluted profit / (loss) per share from discontinued operations (US$) 0.001 (0.001)
The consolidated statement of comprehensive income should be read in
conjunction with the accompanying notes.
Consolidated Balance Sheet
As at 31 December 2022
Notes 31 December 2022 31 December 2021
US$'000 US$'000
Non-current assets
Property, plant and equipment 12 1,854 10
Intangible assets 13 18,896 18,309
Investment in associates 23 259 401
Total non-current assets 21,009 18,720
Current assets
Cash and cash equivalents 21 166 3,334
Trade and other receivables 11 213 106
Inventory 10 34 37
Total current assets 413 3,477
Assets of disposal group held for sale 19 9,710 8,224
Total assets 31,132 30,421
Liabilities and equity
Current liabilities
Trade and other payables 15 819 425
Borrowings 16 - 26,637
Total current liabilities 819 27,062
Non-current liabilities
Borrowings 16 28,183 -
Total non-current liabilities 28,183 -
Liabilities of disposal group held for sale 19 9,443 8,889
Total liabilities 38,445 35,951
Equity
Share capital 17 3,184 2,943
Share premium 17 50,862 50,461
Merger reserve 18 9,708 9,708
Other reserves 18 7,267 4,180
Non-controlling interests (66) -
Accumulated losses (78,268) (72,822)
Total equity (7,313) (5,530)
Total equity and liabilities 31,132 30,421
The consolidated balance sheet should be read in conjunction with the
accompanying notes.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Attributable to equity shareholders of the Company
Share Share premium Merger Other Accumulated losses Total
capital
US$'000 reserve reserves US$'000 US$'000
US$'000
US$'000 US$'000
At 1 January 2021 1,103 45,786 9,708 3,305 (64,837) (4,935)
Total comprehensive loss for the period:
Loss for the period - - - - (7,985) (7,985)
Other comprehensive income - - - 485 - 485
Total comprehensive loss for the period - - - 485 (7,985) (7,500)
Transactions with owners recorded directly in equity:
Issue of share capital 1,840 4,675 - - - 6,515
Share-based payments for services rendered - - - 390 - 390
Total transactions with owners recorded directly in equity: 1,840 4,675 - 390 - 6,905
Balance at 31 December 2021 2,943 50,461 9,708 4,180 (72,822) (5,530)
Attributable to equity shareholders of the Company
Share capital Share premium Merger reserve Other reserves Accumulated losses Non-controlling interest Total
US$'000
US$'000 US$'000 US$'000
US$'000 US$'000 US$'000
At 1 January 2022 2,943 50,461 9,708 4,180 (72,822) - (5,530)
Total comprehensive loss for the period:
Loss for the period - - - - (5,479) (66) (5,545)
Other comprehensive income - - - 2,925 - - 2,925
Total comprehensive loss for the period - - - 2,925 (5,479) (66) (2,620)
Transactions with owners recorded directly in equity:
Issue of share capital 241 401 - - - - 642
Lapsed share options - - - (33) 33 - -
Share based payments for services rendered - - - 195 - - 195
Total transactions with owners recorded directly in equity: 241 401 - 162 33 - 837
Balance at 31 December 2022 3,184 50,862 9,708 7,267 (78,268) (66) (7,313)
The consolidated statement of changes in equity should be read in conjunction
with the accompanying notes including the description of reserves in notes 18.
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
Notes 31 December 2022 31 December 2021
US$'000 US$'000
Cash flows from operating activities
Receipts from customers 6,270 1,019
Payments to suppliers and employees (6,599) (3,873)
Interest paid 7 - (649)
Interest received 7 - 1
Net cash used in operating activities (329) (3,502)
Cash flow from investing activities
Payments for property, plant and equipment (1,868) -
Payments for exploration and evaluation assets 13 (338) (289)
Payments for intangible development assets 13 (257) -
Net cash used in investing activities (2,463) (289)
Cash flows from financing activities
Proceeds from issuance of shares 17 - 5,669
Net cash provided by or generated from/(used in) financing activities - 5,669
Net (decrease)/increase in cash and cash equivalents (2,792) 1,878
Cash and cash equivalents brought forward 3,551 1,761
Effects of exchange rate changes on cash and cash equivalents 25 (88)
Cash and cash equivalents carried forward 784 3,551
Cash and cash equivalents carried forward at 31 December 2022 includes US$618k
relating to discontinued operations (2021: US$217k) and US$166k relating to
continuing operations (2021: US$3,334k). Refer to note 19.
The consolidated statement of cash flows should be read in conjunction with
the accompanying notes, including the net debt reconciliation in note 16.
Company Balance Sheet
As at 31 December 2022
Notes 31 December 2022 31 December 2021
US$'000 US$'000
Non-current assets
Investment in subsidiaries 20 17,501 19,236
Property, plant and equipment 12 3 10
Intangible assets 13 7 15
Investment in associates 23 602 662
Total non-current assets 18,113 19,923
Current assets
Cash and cash equivalents 21 130 3,269
Trade and other receivables 11 3,204 679
Loans to subsidiaries 20 65 666
Total current assets 3,399 4,614
Total assets 21,512 24,537
Liabilities and equity
Current liabilities
Trade and other payables 15 734 806
Borrowings 16 - 26,637
Total current liabilities 734 27,443
Non-current liabilities
Borrowings 16 28,183 -
Interest bearing loans 21 1,263 -
Total non-current liabilities 29,446 -
Total liabilities 30,180 27,443
Equity
Share capital 17 3,184 2,943
Share premium 17 50,862 50,461
Other reserves 18 2,713 2,095
Accumulated losses (65,427) (58,405)
Total equity (8,668) (2,906)
Total equity and liabilities 21,512 24,537
The Company balance sheet should be read in conjunction with the accompanying
notes.
As permitted by s408 of the Companies Act 2006, the Company has not presented
its own income statement. The Company loss for the year was US$7.1m (2021:
loss US$5.6m).
Company Statement of Changes in Equity
For the year ended 31 December 2022
Share Share premium Other Accumulated losses Total
capital US$'000 reserves US$'000 US$'000
US$'000 US$'000
At 1 January 2021 1,103 45,786 1,733 (52,830) (4,208)
Total comprehensive loss for the period:
Loss for the period - - - (5,575) (5,575)
Other comprehensive income - - (28) - (28)
Total comprehensive loss for the period - - (28) (5,575) (5,603)
Transactions with owners recorded directly in equity:
Issue of share capital 1,840 4,675 - - 6,515
Share-based payments for services rendered - - 390 - 390
Total transactions with owners recorded directly in equity 1,840 4,675 390 - 6,905
Balance at 31 December 2021 2,943 50,461 2,095 (58,405) (2,906)
Share Share premium Other Accumulated losses Total
capital US$'000 reserves US$'000 US$'000
US$'000 US$'000
At 1 January 2022 2,943 50,461 2,095 (58,405) (2,906)
Total comprehensive loss for the period:
Loss for the period - - - (7,055) (7,055)
Other comprehensive income - - 456 - 456
Total comprehensive loss for the period - - 456 (7,055) (6,599)
Transactions with owners recorded directly in equity:
Issue of share capital 241 401 - - 642
Lapsed share options - - (33) 33 -
Share-based payments for services rendered - - 195 - 195
Total transactions with owners recorded directly in equity 241 401 162 33 837
Balance at 31 December 2022 3,184 50,862 2,713 (65,427) (8,668)
The Company statement of changes in equity should be read in conjunction with
the accompanying notes.
Company Statement of Cash Flows
For the year ended 31 December 2022
Notes 31 December 2022 31 December 2021
US$'000 US$'000
Cash flows from operating activities
Payments to suppliers and employees (4,428) (2,594)
Interest paid 7 - (649)
Interest received 7 - 1
Net cash used in operating activities (4,428) (3,242)
Cash flow from investing activities
Investment in equity accounted associates 23 - -
Net cash used in investing activities - -
Cash flows from financing activities
Proceeds from issuance of shares 17 - 5,669
Loans to subsidiaries 20 - (551)
Interest bearing borrowings from subsidiaries 21 1,263 -
Net cash provided by or generated from/(used in) financing activities 1,263 5,118
Net (decrease)/increase in cash and cash equivalents (3,165) 1,876
Cash and cash equivalents brought forward 3,269 1,480
Effects of exchange rate changes on cash and cash equivalents 26 (87)
Cash and cash equivalents carried forward 130 3,269
The Company statement of cash flows should be read in conjunction with the
accompanying notes.
Notes to the Financial Statements
For the year ended 31 December 2022
NOTE 1: CORPORATE INFORMATION
Coro Energy plc (the "Company" and, together with its subsidiaries, the
"Group") is a company incorporated in England and listed on the AIM market of
the London Stock Exchange. The Company's registered address is c/o Pinsent
Masons LLP, 1, Park Row, Leeds, England, LS1 5AB, UK. The consolidated
financial statements for the year ended 31 December 2022 comprise the Company
and its interests in its subsidiaries, investments in associates and jointly
controlled operations (together referred to as the "Group").
NOTE 2: BASIS OF PREPARATION
(a) Statement of compliance
The financial statements are prepared in accordance with UK-adopted
international accounting standards and with the requirements of the Companies
Act 2006.
(b) Basis of measurement
These financial statements have been prepared on the basis of historical cost
apart from non-current assets (or disposal groups) held for sale, which are
measured at fair value less costs of disposal and derivative financial
instruments recorded at fair value through profit and loss.
(c) Going concern
The Group and Company financial statements have been prepared under the going
concern assumption, which presumes that the Group and Company will be able to
meet its obligations as they fall due for the foreseeable future.
At 31 December 2022 the Group had cash reserves of $0.2m (excluding cash
recorded within assets of the Italian disposal group held for sale). Post
year-end, the Group increased its available cash resources through an advance
of US$1.6m of the consideration for the sale of the Italian gas portfolio.
Management have prepared a consolidated cash flow forecast for the period to
30 June 2024 which shows that the Group has sufficient cash headroom to meet
its obligations during this period. However, this conclusion is conditional on
the Group successfully restructuring its Eurobond obligations. Currently, the
bonds are scheduled to mature in April 2024 when principal of €22.5m
($24.8m) will become repayable in full along with interest. If bondholders
continue to elect to receive interest payments in shares, accrued interest
will be €4.2m ($4.6m) at the repayment date. If bondholders cease to elect
to receive interest payments in shares from the quarter ending 12 July 2023,
accrued interest will be €6.8m ($7.5m).
This assumes that quarterly interest payments continue to be settled with the
issue of shares in the Company as has happened in recent quarters. The
directors have a reasonable expectation that a debt restructuring can be
achieved prior to maturity.
Negotiations with bondholders have not yet commenced, and the ability of the
Company to successfully restructure the bonds is not guaranteed. However,
based on the above, the Directors consider it appropriate to continue to adopt
the going concern basis of accounting in preparing the Group and Company
financial statements for the year ended 31 December 2022. Should the Group and
Company be unable to continue trading, adjustments would have to be made to
reduce the value of the assets to their recoverable amounts, to provide for
further liabilities which might arise and to classify fixed assets as current.
The auditors make reference to a material uncertainty in relation to going
concern within their audit report.
(d) Foreign currency transactions
The consolidated financial statements of the Group are presented in United
States Dollars ("USD" or "US$"), rounded to the nearest US$1,000.
The functional currency of the Company and all UK domiciled subsidiaries is
British Pounds Sterling ("GBP" or "£"). The Group's subsidiaries domiciled in
Singapore have a functional currency of USD. The Group's subsidiaries
domiciled in the Philippines have a functional currency of Philippines Pesos
("PHP"). The Group's subsidiaries domiciled in Vietnam have a functional
currency of Vietnamese Dong ("VND"). Apennine Energy SpA, the Group's Italian
subsidiary, included within the disposal group held for sale, has a functional
currency of Euros ("€").
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in profit or loss
as finance income or expense. Non-monetary assets and liabilities denominated
in foreign currencies are translated at the date of transaction and not
retranslated.
The results and financial position of Group companies that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
• Assets and liabilities are translated at the closing rate;
• Income and expenses are translated at average rates; and
• Equity balances are not retranslated. All resulting exchange
differences are recognised in other comprehensive income.
(e) Use of estimates and judgements
The preparation of the financial statements requires management to make
judgments regarding the application of the Group's accounting policies, and to
use accounting estimates that impact the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these
estimates.
This note sets out the estimates and judgements taken by management that are
deemed to have a higher risk of causing a material adjustment to the reported
carrying amounts of assets and liabilities in future years.
(i) Key accounting judgements
Accounting for investment in Coro Europe Limited and related balances
In August 2022, following unsolicited approaches, the Group entered into an
option agreement with Zodiac Energy plc ("Zodiac") whereby Zodiac acquired the
right, for a period of five months with a potential two month extension
period, to acquire 100% of the issued share capital of Coro Europe Limited
("CEL") for a total consideration of up to €7.5 million (the "Option
Agreement"). Completion of the disposal is dependent of executing a sale and
purchase agreement ("SPA") and customary regulatory consents. The SPA was
executed on 27 March 2023. The Group expects the disposal to complete by end
of Q3, 2023.
As at the reporting date, the Board of Directors had committed to the disposal
of CEL and the Italian operation under the terms of the Option Agreement, and
resultantly the Group classified the assets and liabilities of its Italian
business as a disposal group held for sale, as well as a discontinued
operation, as at 31 December 2022.
Accounting for investment in ion Ventures Holdings Limited
In November 2020, the Group acquired a 20.3% shareholding in ion Ventures
Holdings Limited ("IVHL") in exchange for cash consideration of £500k
(US$682k). IVHL was founded in the UK in 2018 to exploit opportunities that
arise from the increasing complexity of energy systems, the shift to
distributed generation and more localised networks, and the need for flexible
and responsive solutions.
Under IFRS, the accounting for an interest in another entity depends on the
level of influence held over the investee by the investor. Management have
concluded that IVHL is an associate of the Group, due to Coro exercising
"significant influence" over IVHL. With reference to the factors outlined in
IAS 28 Investments in Associates and Joint Ventures, we concluded that
significant influence arises as a result of:
• 20.3% shareholding in IVHL, which is above the 20% threshold at
which significant influence is presumed to exist under IFRS (though this
presumption can be rebutted);
• Right to appoint one director (of five) to the Board of Directors
of IVHL; and
• Ability to exercise reserved powers under a Shareholder Agreement
to participate in the key strategic and operational decisions of the investee,
such as approval of annual budgets.
Associates are accounted for using the equity method, which is described
further in note 3a.
Accounting for investment in Coro Renewables VN1 Joint Stock Company
In October 2021, a binding shareholder agreement was signed with Vinh Phuc
Energy JSC ("VPE") and the Group acquired an 85% interest in the newly
incorporated Vietnamese company, Coro Renewables VN1 Joint Stock Company
("CRV1"), which owns 100% of Coro Renewables VN2 Company Limited, which in
turn owns 100% of Coro Renewables Vietnam Company Limited.
Under IFRS, the accounting for an interest in another entity depends on the
level of influence held over the investee by the investor. Management have
concluded that CRV1 is an indirectly held subsidiary of the Company, due to
the Company controlling more than half of the voting rights. With reference to
the factors outlined in IAS 27 Consolidated and Separate Financial Statements,
we concluded that there were no contraindications of control.
• There is no agreement with VPE giving them control of the joint
venture;
• There is no statute or agreement ceding control to any other
party; and
• VPE does not have the power to appoint or remove the majority of
the Board of Directors.
During 2022 the three Vietnamese Companies commenced trading therefore 100% of
the transactions relating to CRV1 and its subsidiary undertakings have been
recorded in these consolidated financial statements and the Group has
recognised the appropriate non-controlling interest.
Share option and warrants
The Black-Scholes model is used to calculate the appropriate charge of the
share options and warrants. The use of this model to calculate the charge
involves a number of estimates and judgements to establish the appropriate
inputs to be entered into the model, covering areas such as the use of an
appropriate interest rate and dividend rate, exercise restrictions and
behavioural considerations. A significant element of judgement is therefore
involved in the calculation of the charge.
(ii) Key accounting estimates
Estimate of gas reserves and resources
The disclosed amount of the Group's gas reserves and resources impacts a
number of accounting estimates in the financial statements including future
cash flows used in asset impairment reviews, see note 13, and timing of
rehabilitation spend used to calculate rehabilitation provisions.
In respect of the Group's Italian assets that are held for sale, estimation of
recoverable quantities of Proved and Probable reserves is based on a number of
factors including expected commodity prices, discount rates, future capital
expenditure and operating costs impacting future cash flows. It also requires
interpretation of complex geological and geophysical models in order to make
an assessment of the size, shape, depth and quality of reservoirs, and their
anticipated recoveries. The economic, geological and technical factors used to
estimate reserves may change from period to period.
The Group employs staff with the appropriate knowledge, skills and experience
to estimate reserves quantities. Periodically, the Group's reserves
calculations are also subject to independent third-party certification by a
competent person.
Measurement of non-current assets (and disposal groups) classified as held for
sale (note 19)
At 31 December 2022, the Group classified the assets and liabilities of its
Italian business (the "Italian portfolio") as a disposal group held for sale.
Given the Italian business represents a separate geographical area of
operation for the Group, the Italian results have also been treated as a
discontinued operation.
As required by IFRS 5, the Group estimated the fair value of the entire
Italian business at the balance sheet date to determine if any further
write-downs are required. Management determined the fair value of the disposal
group with reference to the Option Agreement with Zodiac. This led to an
impairment reversal of US$1,479k (2021: impairment of US$894k), which has been
allocated across non-current assets on a pro-rata basis.
Assessment of indicators of impairment of intangible exploration and
evaluation assets (note 13)
The Group's exploration and evaluation assets, comprising assets related to
the Duyung PSC (and excluding Italian exploration and evaluation assets held
in disposal group), are assessed for indicators of impairment under IFRS 6
Exploration for, and evaluation of, mineral resources. Based on estimates as
at 31 December 2022, there was $Nil write-off (2021: $Nil).
The Group acquired its 15% interest in the Duyung PSC in April 2019 and
participated in a 2-well drilling campaign in 2019 that successfully appraised
Mako gas field.
During 2022 the Operator of Mako field commissioned Gaffney, Cline and
Associates ("GCA") to perform an updated independent resource audit for the
Mako gas field as at 31 July 2022. The resource audit assessed that 2C
(contingent) recoverable resource estimates are 437 Bcf (gross), and in the
upside case, the 3C (contingent) resources increased are 779 Bcf (gross). The
results of this independent resource audit supports management's view on the
potential to develop the Mako field.
As a result of the resource confirmation, which was incorporated into our own
updated economic modelling for Duyung, no impairment indicators were noted.
Impairment testing of exploration and evaluation assets recorded as assets of
a disposal group held for sale is discussed above.
Rehabilitation provisions (note 19)
Costs relating to rehabilitation of oil and gas fields recorded within
liabilities of a disposal group held for sale will be incurred many years in
the future and the precise requirements for these activities are uncertain.
Technologies and costs are constantly changing, as well as political,
environmental, safety and public expectations. A change in the key assumptions
used to calculate rehabilitation provisions could have a material impact on
the carrying value of the provisions. Currently, the Group's rehabilitation
provisions relate solely to oil and gas fields in Italy, and are recorded
within liabilities of a disposal group held for sale.
The carrying value of these provisions in the financial statements represents
an estimate of the present value of the future costs expected to be incurred
to rehabilitate each field, which are reviewed at least annually. Future costs
are estimated by internal experts, with external specialists engaged
periodically to assist management. These estimates are based on current price
observations, taking into account developments in technology and changes to
legal and contractual requirements. Expectations regarding cost inflation are
also incorporated. Future cost estimates are discounted to present value using
a rate that approximates the time value of money, which ranges between 1.25%
and 1.75% (2021: 1.25% to 1.75%) depending on the expected year of
rehabilitation spend. The discount rate is based on the average yield on
Italian Government bonds of a duration that matches the expected year of
expenditures, incorporating a risk premium appropriate to the nature of the
liabilities.
Recoverability of deferred tax assets (note 8)
The recoverability of deferred tax assets recorded within assets of a disposal
group held for sale is dependent on the availability of taxable profits in
future years. The Group undertakes a forecasting exercise at each reporting
date to assess its expected utilisation of these losses. The key areas of
estimation uncertainty in these forecasts are future gas prices, production
rates, capital and operating costs, and overhead expenses, all of which could
impact the generation of taxable profits by Italian subsidiaries. The model
used to calculate expected utilisation of tax losses is prepared on a
consistent basis to the DCF models used to test for impairment, but with the
inclusion of corporate overheads and other non-asset specific costs. The DTA
was partially written down in 2018, and again in 2020; no further write-down
is deemed necessary at 31 December 2022 (2021: no write-down).
Assessment of indicators of impairment of investment in associates (note 23)
The Company holds a a 20.3% interest in ion Ventures Holdings Limited ("ion
Ventures"). This investment is accounted for as an associate using the equity
method.
The Company considered whether there should be any impairment of the
investment as at 31 December 2022 and based on the forecasts prepared by the
management of ion Ventures and the dividend stream expected from its
investment in Flexion Energy, the Company's investment in ion Ventures is
deemed to be recoverable in full.
Company only - impairment assessment for investment in subsidiaries, including
loans and receivables (notes 13, 15 and 20)
The Company is required to assess its investments in subsidiaries for
impairment at each reporting date. The Company's main assets are its Italian
gas portfolio, held by Apennine Energy SpA ("Apennine"), its interest in the
Duyung PSC, held by Coro Energy Duyung (Singapore) Pte Ltd ("CEDSPL") and its
investment in the solar pilot project in Vietnam, held by Coro Renewables
Vietnam Company Limited (CRVCL"). As such, the recoverability of investments
in subsidiaries depends on the Company's assessment of indicators of
impairment of the underlying assets recorded within its subsidiaries.
As noted above, and in note 13, the Company identified no indicators of
impairment for its 15% interest in the Duyung PSC and, accordingly, the
Company's investment in CEDSPL (held indirectly) is deemed to be recoverable
in full.
As noted further above, and in note 19, the Company's investment in Apennine
(held indirectly) is held at the lower of the net book value or its
recoverable amount being the sale price agreed Zodiac Energy plc pursuant to
the Option Agreement.
The Company performed an impairment tests on its solar pilot project in
Vietnam and found that the recoverable value in use exceeds the net book
value, accordingly, the Company's investment in CRVCL (held indirectly) and
receivables from CRVCL is deemed to be recoverable in full.
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements include the results of Coro Energy plc
and its subsidiary undertakings made up to the same accounting date.
Subsidiaries are entities controlled by the Group. The Group controls an
entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power over the entity. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that
control commences until the date that control ceases. The accounting policies
of subsidiaries have been changed when necessary to align them with the
policies adopted by the Group. All intra-group balances, transactions, income
and expenses are eliminated in full on consolidation.
(ii) Interests in other entities
The Group classifies its interests in other entities based on the level of
control exercised by the Group over the entity.
Associates
Associates are all entities over which the Group has significant influence but
not control or joint control. This is generally the case where the Group holds
between 20% and 50% of the voting rights. Investments in associates are
accounted for using the equity method of accounting.
Under the equity method of accounting, the investments are initially
recognised at cost, including any directly attributable transaction costs, and
adjusted thereafter to recognise the Group's share of the post-acquisition
profits or losses of the investee in profit or loss. The Group's share of
movements in other comprehensive income of the investee are recognised in
other comprehensive income. Dividends received or receivable from associates
and joint ventures are recognised as a reduction in the carrying amount of the
investment.
Where the Group's share of losses in an equity-accounted investment equals or
exceeds its interest in the entity, the Group does not recognise further
losses, unless it has incurred obligations or made payments on behalf of the
other entity.
Unrealised gains on transactions between the Group and its associates are
eliminated to the extent of the Group's interest in these entities. Unrealised
losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies of equity-accounted
investees have been changed where necessary to ensure consistency with the
policies adopted by the Group.
The carrying amount of equity-accounted investments is tested for impairment
at least annually.
Other investments
In a situation where the Group has direct contractual rights to the assets,
and obligations for the liabilities, of an entity but does not share joint
control, the Group accounts for its interest in those assets, liabilities,
revenues and expenses in accordance with the accounting standards applicable
to the underlying line item. This is analogous to the "joint operator" method
of accounting outlined in IFRS 11 Joint arrangements.
(b) Taxation
Income tax expense or credit for the period is the tax payable on the current
period's taxable income, based on the applicable income tax rate for each
jurisdiction, adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantially enacted at the date of the statement
of financial position, and any adjustment to tax payable in respect of
previous years.
Deferred tax is provided using the balance sheet liability method, providing
for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation
purposes. The following temporary differences are not provided for the initial
recognition of assets or liabilities that affect neither accounting nor
taxable profit, and differences relating to investments in subsidiaries to the
extent that the Group is able to control the timing of the reversal of the
temporary difference and it is probable that they will not reverse in the
foreseeable future. The amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying amount of assets
and liabilities using tax rates enacted at the date of the statement of
financial position.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Deferred tax assets and liabilities are offset where there is a legally
enforceable right to offset current tax assets and liabilities and where the
deferred tax balances relate to the same taxation authority. Current tax
assets and liabilities are offset where the entity has a legally enforceable
right to offset and intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
(c) Property, plant and equipment
(i) Recognition and measurement
Property, plant and equipment comprises the Group's tangible oil and gas
assets, solar equipment as well as office furniture and equipment. Items of
property, plant and equipment are recorded at cost less accumulated
depreciation, accumulated impairment losses and pre-commissioning revenue and
expenses. Cost includes expenditure that is directly attributable to
acquisition of the asset.
Gains and losses on disposal of an item of property, plant and equipment are
determined by comparing the proceeds from disposal with the carrying amount of
property, plant and equipment, and are recognised within "other income" in
profit or loss.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future
economic benefits associated with expenditure will flow to the Group.
(iii) Depreciation
Oil and gas assets
Oil and gas assets includes gas production facilities and the accumulation of
all exploration, evaluation, development and acquisition costs in relation to
areas of interest in which production licences have been granted and the
related project has moved to the production phase.
Amortisation of oil and gas assets is calculated on the units-of-production
("UOP") basis, and is based on Proved and Probable reserves. The use of the
UOP method results in an amortisation charge proportional to the depletion of
economically recoverable reserves. Amortisation commences when commercial
levels of production are achieved from a field or licence area.
The useful life of oil and gas assets, which is assessed at least annually,
has regard to both its physical life limitations and present assessments of
economically recoverable reserves of the field at which the asset is located.
These calculations require the use of estimates and assumptions, including the
amount of recoverable reserves and estimates of future capital expenditure.
The calculation of the UOP rate of depreciation/amortisation will be impacted
to the extent that actual production in the future is different from current
forecast production based on total proved reserves, or future capital
expenditure estimates change.
Changes to recoverable reserves could arise due to changes in the factors or
assumptions used in estimating reserves, including:
• The effect of changes in commodity price assumptions; or
• Unforeseen operational issues that impact expected recovery of
hydrocarbons.
Assets designated as held for sale, or included in a disposal group held for
sale, are not depreciated.
Other property, plant and equipment
Depreciation is recognised in profit or loss on a straight-line basis over the
estimated useful lives of each part of an item of property, plant and
equipment. The depreciation will commence when the asset is installed ready
for use.
The estimated useful lives of each class of asset fall within the following
ranges:
Solar equipment
8 - 25 years
Office furniture and equipment 3-5 years
The residual value, the useful life and the depreciation method applied to an
asset are reviewed at each reporting date.
(iv) Impairment
The Group assesses at each reporting date whether there is an indication that
an asset (or Cash Generating Unit - "CGU") may be impaired. For oil and gas
assets, management has assessed its CGUs as being an individual field, which
is the lowest level for which cash inflows are largely independent of those of
other assets. For Solar equipment, management has assessed its CGUs as being
individual solar arrays including inverters. If any indication exists, or when
annual impairment testing for an asset is required, the Group estimates the
asset's or CGU's recoverable amount. The recoverable amount is the higher of
an asset's or CGU's fair value less costs of disposal ("FVLCD") and value in
use ("VIU"). Where the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset/CGU is considered impaired and is written down
to its recoverable amount.
The Group bases its impairment calculation on detailed budgets and forecasts,
which are prepared separately for each of the Group's CGUs to which the
individual assets are allocated. These budgets and forecasts generally cover
the forecasted life of the CGUs. VIU does not reflect future cash flows
associated with improving or enhancing an asset's performance.
For assets/CGUs, an assessment is made at each reporting date to determine
whether there is an indication that previously recognised impairment losses
may no longer exist or may have decreased. If such indication exists, the
Group estimates the asset's or CGU's recoverable amount. A previously
recognised impairment loss is reversed only if there has been a change in the
assumptions used to determine the asset's/CGU's recoverable amount since the
last impairment loss was recognised. The reversal is limited so that the
carrying amount of the asset/CGU does not exceed either its recoverable
amount, or the carrying amount that would have been determined, net of
depreciation/amortisation, had no impairment loss been recognised for the
asset/CGU in prior years. Such a reversal is recognised in the income
statement.
(d) Intangible assets
(i) Exploration and evaluation assets
Exploration and evaluation assets are carried at cost less accumulated
impairment losses in the statement of financial position. Exploration and
evaluation assets include the cost of oil and gas licences, and subsequent
exploration and evaluation expenditure incurred in an area of interest.
Exploration and evaluation assets are not depreciated. When the commercial and
technical feasibility of an area of interest is proved, capitalised costs in
relation to that area of interest are transferred to property, plant and
equipment (oil and gas assets) and depreciation commences in line with the
depreciation policy outlined above.
Exploration and evaluation assets are assessed for impairment if sufficient
data exists to determine technical feasibility and commercial viability or
facts and circumstances suggest that the carrying value amount exceeds the
recoverable amount.
Exploration and evaluation assets are tested for impairment when any of the
following facts and circumstances exist:
• the term of the exploration licence in the specific area of
interest has expired during the reporting period or will expire in the near
future, and is not expected to be renewed;
• substantive expenditure on further exploration for an evaluation
of mineral resources in the specific area is not budgeted nor planned;
• exploration for and evaluation of mineral resources in the
specific area have not led to the discovery of commercially viable quantities
of mineral resources and the decision was made to discontinue such activities
in the specific area; or
• sufficient data exists to indicate that, although a development in
the specific area is likely to proceed, the carrying amount of the exploration
and evaluation asset is unlikely to be recovered in full from successful
development or by sale.
Areas of interest that no longer satisfy the above policy are considered to be
impaired and are measured at their recoverable amount, with any subsequent
impairment loss recognised in the profit and loss.
(ii) Software
Costs for acquisition of software, including directly attributable costs of
implementation, are capitalised as intangible assets and amortised over their
expected useful life (currently five years).
(iii) Goodwill
Goodwill arising from business combinations is included in intangible assets.
Goodwill is not amortised but it is tested for impairment annually, or more
frequently if events or changes in circumstances indicate that it might be
impaired, and is carried at cost less accumulated impairment losses.
Goodwill is allocated to cash-generating units for the purpose of impairment
testing. The allocation is made to those cash-generating units or groups of
cash-generating units that are expected to benefit from the business
combination in which the goodwill arose.
(iv) Research and Development
Development costs that are directly attributable to the design and development
of identifiable and unique projects controlled by the Group are recognised as
intangible assets when the following criteria are met:
• It is technically feasible to complete the project;
• Management intends to complete the project;
• There is sufficient certainty that contractual rights, planning
and permitting will be agreed;
• It can be demonstrated how the project will generate probable
future economic benefits;
• Adequate technical, financial and other resources to complete the
project are available; and
• The expenditure attributable to the project can be reliably
measured.
Other development expenditures that do not meet these criteria are recognised
as an expense as incurred.
(e) Inventory
Inventory is comprised of drilling equipment and spares and is carried at the
lower of cost and net realisable value. Any impairment on value is taken to
the income statement.
(f) Non-current assets (or disposal groups) held for sale and discontinued
operations
Non-current assets (or disposal groups) are classified as held for sale if
their carrying amount will be recovered principally through a sale transaction
rather than through continuing use, they are available for sale in their
present condition, they are being actively marketed, and a sale is considered
highly probable. These conditions must be continuing for the assets to
continue to be classified as held for sale.
Disposal groups are measured at the lower of their carrying amount and fair
value less costs to sell, except for certain assets such as deferred tax
assets, which are specifically exempt from this requirement. An impairment
loss is recognised for any initial or subsequent write-down of the asset (or
disposal group) to fair value less costs to sell. A gain is recognised for any
subsequent increases in fair value less costs to sell of an asset (or disposal
group), but not in excess of any cumulative impairment loss previously
recognised. A gain or loss not previously recognised by the date of the sale
of the non-current asset (or disposal group) is recognised at the date of
derecognition.
Non-current assets (including those that are part of a disposal group) are not
depreciated or amortised while they are classified as held for sale. Interest
and other expenses attributable to the liabilities of a disposal group
classified as held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal
group classified as held for sale are presented separately from the other
assets in the balance sheet. The liabilities of a disposal group classified as
held for sale are presented separately from other liabilities in the balance
sheet.
A discontinued operation is a component of the entity that has been disposed
of or is classified as held for sale and that represents a separate major line
of business or geographical area of operations, is part of a single
co-ordinated plan to dispose of such a line of business or area of operations,
or is a subsidiary acquired exclusively with a view to resale. The results of
discontinued operations are presented separately in the statement of profit or
loss.
(g) Investments and financial assets
(i) Classification
The Group classifies its financial assets in the following measurement
categories:
• those to be measured subsequently at fair value (either through
other comprehensive income or through profit or loss); and
• those to be measured at amortised cost.
The classification depends on the entity's business model for managing the
financial assets and the contractual terms of the cash flows.
(ii) Recognition and measurement
A financial asset is recognised if the Group becomes a party to the
contractual provisions of the instrument. Financial assets are derecognised if
the Group's contractual rights to the cash flows from the financial assets
expire or if the Group transfers the financial asset to another party without
retaining control or substantially all risks and rewards of the asset. Regular
way purchases and sales of financial assets are accounted for at trade date,
i.e. the date the Group commits itself to purchase or sell the asset.
At initial recognition, the Group measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through profit or
loss ("FVTPL"), transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets
carried at FVTPL are expensed in profit or loss.
Subsequent measurement of debt instruments depends on the Group's business
model for managing the asset and the cash flow characteristics of the asset.
Currently, the Group's financial assets are all held for collection of
contractual cash flows, which are solely payments of principal and interest.
Accordingly, the Group's financial assets are measured subsequent to initial
recognition at amortised cost.
Cash and cash equivalents comprise cash balances and call deposits. Bank
overdrafts that are repayable on demand and form an integral part of the
Group's cash management are included as a component of cash and cash
equivalents for the purpose of the statement of cash flows.
(iii) Impairment
On a forward-looking basis, the Group estimates the expected credit losses
associated with its receivables and other financial assets carried at
amortised cost, and records a loss allowance for these expected losses.
(iv) Investment in subsidiaries
In the Company balance sheet, investments in subsidiaries are carried at cost
less accumulated impairment.
(h) Derivatives
Derivatives are initially recognised at fair value on the date a derivative
contract is entered into, and they are subsequently remeasured to their fair
value at the end of each reporting period.
(i) Provisions
(i) Rehabilitation provision
Rehabilitation obligations arise when the Group disturbs the natural
environment where its oil and gas assets are located and is required by local
laws/regulations to restore these sites.
Full provision for these obligations is made based on the present value of the
estimated costs to be incurred in dismantling infrastructure, plugging and
abandoning wells and restoring sites to their original condition. Changes to
future cost estimates are capitalised and recorded in property, plant and
equipment (oil and gas assets) as rehabilitation assets, unless the carrying
value of these assets is not supportable, in which case changes to
rehabilitation provisions are recorded directly in the income statement.
Future cost estimates are inflated to the expected year of rehabilitation
activity and discounted to present value using a market rate of interest that
is deemed to approximate the time value of money.
The estimated costs of rehabilitation are reviewed annually and adjusted
against the relevant rehabilitation asset or in the income statement, as
appropriate. Annual increases in the provision relating to the unwind of the
discount rate are accounted for in the income statement as a finance expense.
(ii) Other provisions
Other provisions are measured at the present value of management's best
estimate of the expenditure required to settle the present obligation at the
end of the reporting period. The provisions are discounted to present value
using a market rate of interest that is deemed to approximate the time value
of money. The increase in the provision due to the passage of time is
recognised as interest expense.
(j) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs
incurred, and subsequently measured at amortised cost. Any difference between
the proceeds (net of transaction costs) and the redemption amount is
recognised in profit or loss over the period of the borrowings using the
effective interest method. Loan fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan and amortised over
the life of the borrowings.
Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at least 12
months after the reporting period.
(k) Trade and other payables
Trade and other payables represent liabilities for goods and services provided
to the Group prior to the end of the financial year that are unpaid. The
amounts are unsecured and are usually paid within 30 days of the invoice date.
Trade and other payables are presented as current liabilities unless payment
is not due within 12 months after the reporting period. They are recognised
initially at their fair value and subsequently measured at amortised cost
using the effective interest method.
(l) Share capital
Ordinary Shares are classified as equity. Incremental costs directly
attributable to issue of shares are recognised as a deduction from equity, net
of any tax effects.
(m) Share-based payments
Share-based payments relate to transactions where the Group receives services
from employees or service providers and the terms of the arrangements include
payment of a part or whole of consideration by issuing equity instruments to
the counterparty. The Group measures the services received from non-employees,
and the corresponding increase in equity, at the fair value of the goods or
services received. When the transactions are with employees, the fair value is
measured by reference to the fair value of the share based payments. The
expense is recognised over the vesting period, which is the period over which
all of the specified vesting conditions are to be satisfied.
(n) Revenue
Under IFRS 15 Revenue from Contracts with Customers, there is a five-step
approach to revenue recognition:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the
contract; and
Step 5: Recognise revenue when (or as) the entity satisfies a performance
obligation.
The Group has two revenue streams, being the sale of gas (recorded within
profit from discontinued operations), and the sale electricity from a solar
project. Gas is sold to wholesale customers under gas supply agreements, which
have different volume and price specifications (both fixed and variable). Gas
sales revenue is recognised when control of the gas passes at the delivery
point into the local gas pipeline network, which is the only performance
obligation. Electricity is sold to an industrial customer under a power
purchase agreement. Revenue is recognised based on actual produced
electricity, which is the only performance obligation, at contractual rates.
Revenue is presented net of value added tax ("VAT"), rebates and discounts and
after eliminating intra-group sales.
(o) Leases
Leases are recognised as a right-of-use asset and a corresponding lease
liability at the date at which the leased asset is available for use by the
Group.
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
• Fixed payments (including in-substance fixed payments), less any
lease incentives receivable;
• Variable lease payment that are based on an index or a rate,
initially measured using the index or rate as at the commencement date;
• Amounts expected to be payable by the Group under residual value
guarantees;
• The exercise price of a purchase option if the Group is reasonably
certain to exercise that option; and
• Payments of penalties for terminating the lease, if the lease term
reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also
included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined, which is generally the case
for leases in the Group, the lessee's incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right-of-use asset
in a similar economic environment with similar terms, security
and conditions.
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period.
Right-of-use assets are measured at cost which comprises the following:
• The amount of the initial measurement of the lease liability;
• Any lease payments made at or before the commencement date less
any lease incentives received;
• Any initial direct costs; and
• Restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis. If the Group is
reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset's useful life.
Payments associated with short-term leases (term less than 12 months) and all
leases of low-value assets (generally less than US$5k) are recognised on a
straight-line basis as an expense in profit or loss.
(p) Changes to accounting policies, disclosures, standards and interpretations
(i) New and amended standards adopted by the Group
The following new standards, amendments and interpretations are effective for
the first time in these financial statements. However, none has had a material
impact on the financial statements:
Standard Effective date
Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37) 1 January 2022
Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, 1 January 2022
IFRS 16 and IAS 41)
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 1 January 2022
16)
References to Conceptual Framework (Amendments to IFRS 3) 1 January 2022
(ii) New standards not yet adopted
There are no new International Financial Reporting Standards and
Interpretations issued but not effective for the reporting period ending 31
December 2022 that will materially impact the Group.
NOTE 4: SEGMENT INFORMATION
The Group's reportable segments as described below are based on the Group's
geographic business units. This includes the Group's upstream gas operations
in Italy, upstream gas and renewables operations in South East Asia, and the
corporate head office in the United Kingdom. This reflects the way information
is presented to the Board of Directors. Results from the Group's Italian
business are classified as a discontinued operation. See note 19.
Italy Asia UK Total
31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
2022 2021 2022 2021 2022 2021 2022 2021
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Revenue - - 51 - - - 51 -
Depreciation and amortisation - - (21) - (15) (18) (36) (18)
Interest expense - - - - (3,584) (4,500) (3,584) 4,500
Share of loss of associates - - - - (82) (249) (82) (249)
Segment loss before tax from continuing operations - - (662) (278) (7,525) (6,197) (8,187) (6,475)
Segment profit/(loss) before tax from discontinued operations 2,642 (1,510) - - - - 2,642 (1,510)
Italy Asia UK Total
31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
2022 2021 2022 2021 2022 2021 2022 2021
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Segment assets 9,710 8,224 20,129 17,985 1,293 4,212 31,132 30,421
Segment liabilities (9,548) (8,889) (182) (1,073) (28,715) (25,989) (38,445) (35,951)
NOTE 5: GENERAL AND ADMINISTRATIVE EXPENSES
31 December 31 December
2022 2021
US$'000 US$'000
Employee benefits expense (note 6) 1,401 1,031
Business development 650 786
Corporate and compliance costs 667 451
Investor and public relations 223 247
G&A - Duyung venture 275 199
Other G&A 162 314
Share-based payments (note 22) 196 248
3,574 3,276
Auditor's remuneration
Services provided by the Group's auditor and its associates
During the year, the Group (including its overseas subsidiaries) obtained the
following services from the Company's auditor and its associates:
31 December 31 December
2022 2021
US$'000 US$'000
Fees payable to the Company's auditor for the audit of the Parent Company and 49 49
consolidated financial statements
Fees payable to the Company's auditor for other services:
Audit of subsidiaries - -
NOTE 6: STAFF COSTS AND DIRECTORS' EMOLUMENTS
Group
Staff costs 31 December 31 December
2022 2021
US$'000 US$'000
Wages and salaries 436 327
Pensions and other benefits 50 18
Social security costs 59 41
Share-based payments (note 22) 51 88
Total employee benefits 596 474
Average number of employees from continuing operations 4 2
(excluding Directors)
Group
Directors' emoluments 31 December 31 December
2022 2021
US$'000 US$'000
Wages and salaries 776 568
Pensions and other benefits 5 7
Social security costs 100 70
Share-based payments (note 22) 145 160
Total employee benefits 1,026 805
The highest paid Director received aggregate emoluments of US$403k (2021:
US$205k).
NOTE 7: FINANCE INCOME/EXPENSE
Group
Finance income 31 December 31 December
2022 2021
US$'000 US$'000
Interest income - 1
Foreign exchange gain 636 2,238
Total finance income 636 2,239
Group
Finance expense 31 December 31 December
2022 2021
US$'000 US$'000
Interest on borrowings 3,584 4,500
Foreign exchange loss 1,907 671
Total finance expense 5,491 5,171
NOTE 8: INCOME TAX
Income tax
Group
31 December 31 December
2022 2021
US$'000 US$'000
Deferred tax (583) -
Current tax (1,325) -
Total tax expense (1,908) -
Income tax expense is attributable to:
Loss from discontinued operations (1,908) -
(1,908) -
Numerical reconciliation of income tax result recognised in the statement of
comprehensive income to tax benefit/expense calculated at the Group's
statutory income tax rate is as follows:
Group
31 December 31 December
2022 2021
US$'000 US$'000
Loss from continuing operations before tax (8,187) (6,475)
Profit from discontinued operations before tax 4,550 (1,510)
Total loss before tax (3,637) (7,985)
Income tax benefit using the Group's blended tax rate of 12.7% (2021: 19.0%) 462 1,180
Non-deductible expenses (548) (339)
Non-taxable income 607 -
Deferred tax expense (583) -
Prior year adjustment (363) (260)
Tax losses utilised 583 -
Special excess profit tax - Italy (1,325) -
Current year losses and temporary differences for which no deferred tax asset (741) (581)
was recognised
Income tax benefit/(expense) (1,908) -
Deferred tax
Deferred tax assets ("DTA") totalling US$674k (2021: US$1.3m) are recorded
within assets of the disposal group, and have been recognised in respect of
tax losses and temporary differences based on management assessment that
future taxable profit will be available against which the Italian subsidiary
company can utilise the benefits. No DTA in respect of carried forward tax
losses has been recognised in respect of any UK or Singapore domiciled Group
company due to doubt about the availability of future profits in these
companies. Total unrecognised losses (gross) in respect of continuing
operations are US$25m (2021: US$17m). Unrecognised losses (gross) relating to
discontinued operations total US$88m (2021: US$82m).
NOTE 9: EARNINGS PER SHARE
31 December 31 December
2022 2021
Basic loss per share from continuing operations (US$) (0.004) (0.003)
Diluted loss per share from continuing operations (US$) (0.004) (0.003)
Basic profit/(loss) per share from discontinued operations (US$) 0.001 (0.001)
Diluted profit/(loss) per share from discontinued operations (US$) 0.001 (0.001)
The calculation of basic loss per share from continuing operations was based
on the loss attributable to shareholders of US$8.2m (2021: US$6.5m) and a
weighted average number of Ordinary Shares outstanding during the year of
2,170,773,822 (2021: 1,917,559,412).
Basic profit or loss per share from discontinued operations was based on the
profit attributable to shareholders from discontinued operations of US$2.9m
(2021: loss of US$1.5m).
Diluted loss per share from continuing operations for the current and
comparative periods and diluted loss per share from discontinued operations
for the comparative period is equivalent to basic loss per share since the
effect of all dilutive potential Ordinary Shares is anti-dilutive. Diluted
profit per share from discontinued operations for the current period includes
the potential dilutive effect of all share options and warrants that were "in
the money" as at 31 December 2022, being 151,031,166 options issued to
Directors and management. The potential dilutive shares includes options
issued to Directors and management (note 22).
NOTE 10: INVENTORY
Group
31 December 31 December
2022 2021
US$'000 US$'000
Inventory - Duyung PSC 34 37
34 37
Inventory represents the Group's share of inventory held by the Duyung PSC,
which is mainly comprised of drilling spares.
NOTE 11: TRADE AND OTHER RECEIVABLES
Group
31 December 31 December
2022 2021
US$'000 US$'000
Current:
Trade receivables 37 -
Indirect taxes receivable 103 39
Other receivables 18 20
Prepayments and accrued income 55 47
213 106
Company
31 December 31 December
2022 2021
US$'000 US$'000
Current:
Indirect taxes receivable 41 39
Other receivables 107 1
Intercompany receivables 3,022 576
Prepayments 34 63
3,204 679
NOTE 12: PROPERTY, PLANT AND EQUIPMENT
Group
31 December 31 December
2022 2021
US$'000 US$'000
Office furniture and equipment 3 10
Solar assets 1,851 -
1,854 10
Reconciliation of the carrying amounts for each class of property, plant and
equipment are set out below:
Group
31 December 31 December
2022 2021
US$'000 US$'000
Office furniture and equipment:
Carrying amount at beginning of period 10 16
Additions 2 3
Depreciation expense (8) (9)
Effect of foreign exchange (1) -
Carrying amount at end of period 3 10
Group
31 December 31 December
2022 2021
US$'000 US$'000
Solar assets:
Carrying amount at beginning of period - -
Additions 1,868 -
Depreciation expense (21) -
Effect of foreign exchange 4 -
Carrying amount at end of period 1,851 -
Company
31 December 31 December
2022 2021
US$'000 US$'000
Office furniture and equipment 3 10
3 10
Reconciliation of the carrying amounts for each class of property, plant and
equipment are set out below:
Company
31 December 31 December
2022 2021
US$'000 US$'000
Office furniture and equipment:
Carrying amount at beginning of period 10 16
Additions 2 3
Depreciation expense (8) (9)
Effect of foreign exchange (1) -
Carrying amount at end of period 3 10
NOTE 13: INTANGIBLE ASSETS
Group
31 December 31 December
2022 2021
US$'000 US$'000
Exploration and evaluation assets 17,707 17,540
Intangible development assets 428 -
Goodwill 754 754
Software 7 15
18,896 18,309
Reconciliation of the carrying amounts for each material class of intangible
assets are set out below:
Group
31 December 31 December
2022 2021
US$'000 US$'000
Exploration and evaluation assets:
Carrying amount at beginning of period 17,540 17,251
Reclassification to intangible development assets (171) -
Additions 338 289
Carrying amount at end of period 17,707 17,540
Exploration and evaluation assets relate to the Group's interest in the Duyung
PSC. No indicators of impairment of these assets were noted. See note 2e.
Group
31 December 31 December
2022 2021
US$'000 US$'000
Intangible development assets :
Carrying amount at beginning of period - -
Reclassification from exploration and evaluation assets 171
Additions 257 -
Carrying amount at end of period 428 -
Intangible development assets comprise additions related to expenditure
directly attributable to the design and development of identifiable and unique
renewables projects controlled by the Group in the Philippines.
Group
31 December 31 December
2022 2021
US$'000 US$'000
Goodwill:
Carrying amount at beginning of period 754 -
Recognised on acquisition - 754
Carrying amount at end of period 754 754
As explained further in note 14, goodwill was recognised following the
acquisition of GEPL. No impairment of goodwill was noted following testing
performed at 31 December 2022.
Company
31 December 31 December
2022 2021
US$'000 US$'000
Software 7 15
7 15
NOTE 14: BUSINESS COMBINATION
Global Energy Partnership Limited
On 17 March 2021, the Company completed the acquisition of 100% of the issued
capital of Global Energy Partnership Limited ("GEPL") in exchange for 142.5
million new Ordinary Shares in the Company. GEPL is incorporated in the United
Kingdom and involved in the origination and development of renewable energy
projects in South East Asia.
The Company issued 142.5 million new Ordinary Shares to the former GEPL
shareholders at 0.4p per share, being the same price as the fundraise
completed concurrently with the acquisition, resulting in a total value of
consideration of £570k (US$754k), which together with transaction costs of
US$379k was recorded as an investment in GEPL by the Company. Transaction
costs were expensed within General and Administrative expenses as business
development costs in the Group's 2021 consolidated financial statements.
The full purchase consideration of £570k (US$754k at the date of the
transaction) was allocated to goodwill. No impairment of goodwill was
identified in the period from acquisition to 31 December 2022.
Revenue and profit contribution
The acquired business contributed nil revenues and a net loss of US$23k to the
Group in the period from 17 March 2021 to 31 December 2021. If the business
were acquired on 1 January 2021, the Group's loss before tax for 2021 would
have increased by US$2k.
NOTE 15: TRADE AND OTHER PAYABLES
Group
31 December 31 December
2022 2021
US$'000 US$'000
Current
Trade payables 143 216
Other payables 78 90
Accrued expenses 416 119
Joint venture payables 182 -
819 425
Company
31 December 31 December
2022 2021
US$'000 US$'000
Current
Trade payables 265 687
Accrued expenses 414 119
Intercompany payables 55 -
734 806
Included within trade payables of the Company is a net payable of US$92k
(2021: US$464k) due to Sound Energy plc ("Sound") for the expected sales
proceeds to be received for the sale of the Badile land, which are due to
Sound under an agreement entered into by the two companies in 2018, offset by
certain rehabilitation costs in relation Badile land which remains the
financial responsibility of Sound and is due by Sound to Coro under the same
agreement.
Apennine Energy SpA, the Company's subsidiary, entered into an agreement with
Immobilandia Srl to dispose of the Badile land in two parcels, Area 1 and Area
2. The sale of Area 1 was completed on 12 February 2021 for proceeds of
€250k (US$283k at year-end 2021 exchange rates), which were remitted to
Sound net of costs incurred by Apennine. The sale of Area 2 is expected to
complete in the first half of 2023. Subject to satisfactory completion of the
rehabilitation works, Immobilandia will acquire Area 2 for €350k (US$373k at
year-end exchange rates).
The estimated outstanding Badile land rehabilitation liabilities due from
Sound was €264k (US$ 282k at year-end exchange rates). The Company has
therefore recognised the net payable to Sound of US$92k above.
NOTE 16: BORROWINGS
31 December 31 December
2022 2021
US$'000 US$'000
Current
Eurobond - 26,637
- 26,637
Non-current
Eurobond 28,183 -
28,183 -
In 2019, the Group successfully completed the issue of €22.5m three-year
Eurobonds with attached warrants to key institutional investors. The bonds
were issued in two equal tranches A and B, ranking pari passu, with Tranche A
paying a 5% cash coupon annually in arrears, and Tranche B accruing interest
at 5% per annum payable on redemption.
The Eurobonds were due to mature on 12 April 2022 at 100% of par value plus
any accrued and unpaid coupon. Bond subscribers were issued with 41,357,500
warrants to subscribe for ten new Ordinary Shares in the Company at an
exercise price of 4p per share at any time over the three-year term of the
bonds. An additional 6,000,000 warrants were issued to the firm subscriber
Lombard Odier Asset Management (Europe) Limited and underwriter Pegasus
Alternative Fund Ltd. All warrants related to the Eurobonds expired in April
2022 and none were exercised.
The warrants were valued on grant date at 3.3p per warrant using the
Black-Scholes method, with the total fair value of warrants (US$2.0m) treated
as a transaction cost and amortised over the life of the bonds.
The bonds were initially recognised at fair value and subsequently are
recorded at amortised cost, with an average effective interest rate of 18.10%.
In March and April 2022 respectively, the tranche B Noteholders and Tranche A
Noteholders approved the extension of the maturity of the bonds by two years
to 12 April 2024 with an increase in the coupon to 10% accrued annually and
payable in cash on redemption. In addition, the Company undertook to the
Noteholders that in the event of a sale of the Company's interest in the
Duyung PSC to utilise the net cash proceeds of such disposal(s) to first repay
the capital and rolled up interest on the Notes and thereafter to distribute
20% of remaining net proceed(s) to Noteholders. The remaining net proceeds of
any sales would be retained and/or distributed to shareholders by the Company.
The restructured bonds were initially recognised at fair value and
subsequently are recorded at amortised cost, with an average effective
interest rate of 12.10%. The contingent payment upon the sale of the Company's
interest in the Duyung PSC has not been considered in the estimate of the
effective interest rate as it meets the definition of a contingent liability
(note 24).
At the option of a requisite number of Noteholders they may, at the expiry of
each quarter on or after 12 July 2022, demand quarterly interest payments in
newly issued ordinary shares of the Company. This election was made for the
quarter ended 12 October 2022 and the quarterly interest was settled in shares
(note 17).
Net debt reconciliation
An analysis of net debt and the movements in net debt for each of the periods
presented is shown below:
Group
31 December 31 December
2022 2021
US$'000 US$'000
Cash and cash equivalents 166 3,334
Borrowings (28,183) (26,637)
Net debt (28,017) (23,303)
Cash and cash equivalents Borrowings Lease Total
US$'000 US$'000 liabilities US$'000
US$'000
Net debt as at 1 January 2021 1,706 (25,049) - (23,343)
Cashflows 1,715 649 - 2,364
Eurobond amortisation - (4,512) - (4,512)
Effects of foreign exchange (87) 2,275 - 2,188
Net debt as at 31 December 2021 3,334 (26,637) - (23,303)
Cashflows (3,193) - - (3,193)
Eurobond amortisation - (2,832) - (2,832)
Effects of foreign exchange 25 1,286 - 1,311
Net debt as at 31 December 2022 166 (28,183) - (28,017)
NOTE 17: SHARE CAPITAL AND SHARE PREMIUM
Number Nominal Share premium Total
000s value US$'000 US$'000
US$'000
As at 1 January 2022 2,124,036 2,943 50,461 53,404
Shares issued during the period:
Proceeds from share issuance for Eurobond interest 215,941 241 401 642
Closing balance at 31 December 2022 2,339,977 3,184 50,862 54,046
Number Nominal Share premium Total
000s value US$'000 US$'000
US$'000
As at 1 January 2021 806,908 1,103 45,786 46,889
Shares issued during the period:
Issued as consideration for the acquisition of GEPL 142,500 200 597 797
Proceeds from share issuance 1,162,215 1,624 4,046 5,670
Issued for services rendered 12,413 16 32 48
Closing balance at 31 December 2021 2,124,036 2,943 50,461 53,404
All Ordinary Shares are fully paid and carry one vote per share and the right
to dividends. In the event of winding up the Company, Ordinary shareholders
rank after creditors. Ordinary Shares have a par value of £0.001 per share.
Share premium represents the issue price of shares issued above their nominal
value. As at the date of these financial statements, the Company has unused
authority to issue up to 434,059,278 new Ordinary Shares to Eurobond
Noteholders in lieu of interest and up to 637,211,000 new Ordinary Shares for
any other purpose.
No dividends were paid or declared during the current period (2021: nil).
NOTE 18: RESERVES
Merger reserve
The Merger reserve of US$9.7m relates to the reorganisation of ownership of
Northsun Italia SpA, which occurred in the first half of 2017, being the
difference between the value of shares issued and the nominal value of the
subsidiary's shares received.
Other reserves
Share-based payments reserve
The increase in share-based payments reserve is attributable to the current
period charge relating to options issued to Directors and management of the
Company, which was US$195k (2021: US$391k). US$33k (2021: US$nil) share
options lapsed during the year and were recycled to accumulated losses.
Functional currency translation reserve
The translation reserve comprises all foreign currency differences arising
from translation of the financial position and performance of the Parent
Company and certain subsidiaries, which have a functional currency different
to the Group's presentation currency of USD. The total loss on foreign
exchange recorded in other reserves for the period was US$2,925k (2021:
US$485k).
NOTE 19: DISCONTINUED OPERATIONS
As at 31 December 2021, the Group classified the assets and liabilities of its
Italian business as a disposal group held for sale following a decision by the
Board of Directors to prioritise full divestment of the Group's Italian
operations in the first half of 2019. Given the Italian business represents a
separate geographical area of operation for the Group, the Italian results
were also treated as a discontinued operation.
In May 2021, the Group announced it had entered into a conditional Sale and
Purchase Agreement ("SPA") with Dubai Energy Partners, Inc ("DEPI") to dispose
of the Company's interest in Coro Europe Limited ("CEL"), which in turn owns
Apennine Energy SpA ("AES"), for cash consideration of €300,000 (the
"Disposal"). AES owns all the Group's gas properties in Italy. Completion of
the Disposal was conditional on, inter alia, receipt of required regulatory
approvals from the Italian authorities by 26 February 2022. The Disposal had
an economic effective date of 26 May 2021, however Coro continued to control
CEL and AES. As a result, the Group continued to consolidate the results of
CEL and AES in line with the requirements of IFRS 10. The required regulatory
approvals to complete the Disposal were not received by 26 February 2022 and
as such, the Disposal was terminated by the parties.
On 7 March 2022 the Group announced that having completed a full review of the
Italian assets it was decided that, despite the Group remaining focussed on
South East Asia, to maximise shareholder value, the Italian assets would no
longer be marketed for sale and would instead be managed for value and cash
flow. As such the Italian business temporarily did not qualify as a disposal
group or discontinued operation under IFRS 5 from this date.
The Group, in common with other European gas producers, experienced a
significant increase in wholesale gas prices since March 2022, which resulted
in a materially positive impact on the value of the Italian operations. In
August 2022, following unsolicited approaches, the Group entered into an
option agreement with Zodiac Energy plc ("Zodiac") whereby Zodiac acquired the
right, for a period of five months with a potential two month extension
period, to acquire 100% of the issued share capital of CEL for a total
consideration of up to €7.5 million (the "Option Agreement"). As announced
by the Company on 24 August 2022, Zodiac paid a non-refundable deposit of
€300,000 with a further €5,700,000 to be paid in cash on completion and
further contingent payments up to an aggregate of €1,500,000 through a net
profit interest. A definitive sale and purchase agreement was executed on 27
March 2023 and a initial cash payment of €1,500,000 was received on 4 April
2023 (see note 26). The shareholders of the company approved the disposal on
25 April 2023 and the disposal remains dependent only on customary regulatory
consents. The Group expects the disposal to complete by end of Q3, 2023.
The Board of Directors are committed to the disposal of the Italian operation
under the terms of the Option Agreement, and resultantly the Group classified
the assets and liabilities of its Italian business as a disposal group held
for sale, as well as a discontinued operation, as at 31 December 2022.
The results of the Italian operations for the period are presented below:
31 December 31 December
2022 2021
US$'000 US$'000
Revenue 6,270 1,202
Operating costs (2,060) (971)
Gross profit 4,210 231
Other income 30 1,214
General and administrative expenses (1,012) (469)
Change in rehabilitation provisions 52 (25)
Impairment reversals/(losses) 1,330 (2,382)
Profit/(loss) from operating activities 4,610 (1,431)
Finance income - -
Finance expense (60) (79)
Profit/(loss) before tax 4,550 (1,510)
Income tax expense (1,908) -
Profit/(loss) for the period after tax 2,642 (1,510)
The major classes of assets and liabilities of the Italian operations
classified as held for sale as at 31 December 2022 are as follows:
31 December 31 December
2022 2021
US$'000 US$'000
Assets
Property, plant and equipment 4,086 3,499
Exploration and evaluation assets 2,215 1,574
Land 374 396
Deferred tax assets 674 1,342
Inventories 241 163
Trade and other receivables 1,502 1,033
Cash 618 217
Total assets 9,710 8,224
Liabilities
Trade and other payables 2,258 1,298
Lease liabilities 221 -
Provisions 6,964 7,591
Total liabilities 9,443 8,889
Net assets 267 (665)
The net cash flows of the Italian operations were as follows:
31 December 31 December
2022 2021
US$'000 US$'000
Net cash flow from operating activities 1,606 (953)
Net cash flow from investing activities (308) 1,195
Net cash flow from financing activities 897 (80)
Net cash inflow 401 162
As explained in note 2e, there were no specific impairments recorded in 2022
to oil and gas assets (producing assets within PPE and development assets
within intangible assets). An impairment of US$21k (2021: US$137k) was
recorded on other PPE (office furniture and equipment) and other assets,
representing the amount that would have otherwise been depreciated if IFRS 5
accounting was not applied. The disposal group as a whole was tested for
impairment as required under IFRS 5. This resulted in a reversal of previous
impairment of US$1,408k (2021: impairment of US$894k), which was allocated
across non-current assets pro-rata.
Refer to note 15 for further discussion on the presentation of balances owing
to and from Sound Energy, which relate to the disposal group.
NOTE 20: INVESTMENT IN, AND LOANS TO, SUBSIDIARIES
Company
2022 2021
US$'000 US$'000
Cost
At 1 January 52,374 51,255
Additions - 1,119
At 31 December 52,374 52,374
Accumulated impairment
At 1 January (33,298) (33,298)
Impairment - -
At 31 December (33,298) (33,298)
Impact of foreign exchange (1,575) 160
Net book value
At 31 December 17,501 19,236
In March 2021, the Company acquired 100% of the issued capital of Global
Energy Partnership Limited ("GEPL") in exchange for 142.5 million new Ordinary
Shares in the Company at 0.4p per share, being the same price as the fundraise
completed concurrently with the acquisition, resulting in a total value of
consideration of £570k (US$754k), which together with transaction costs of
US$379k was recorded as an investment in GEPL by the Company. Restated at the
year-end exchange rate at 31 December 2021 the carrying value of the
investment is US$1.1m.
During the year the Company incurred costs in relation to the CRV1 group's
solar pilot project in Vietnam to the value of US$2,043k and this amount is
included in receivables from the CRV1 group and included in trade and other
receivables.
The Company's subsidiary undertakings at the date of issue of these financial
statements are set out below:
Name Incorporated Principal activity % owned Registered address
Apennine Energy SpA* Italy Exploration, development and production company 100% Via XXV Aprile 5, San Donato Milanese, (MI) 2009, Italy
Coro Europe Limited* England Holding company 100% c/o Pinsent Masons LLP, 1 Park Row, Leeds, England LS1 5AB
Coro Energy Asia Limited* England Holding company 100% c/o Pinsent Masons LLP, 1 Park Row, Leeds, England LS1 5AB
Coro Energy Holdings Cell A Limited England Holding company 100% c/o Pinsent Masons LLP, 1 Park Row, Leeds, England LS1 5AB
Coro Energy (Singapore) Pte Ltd* Singapore Holding company 100% 80 Robinson Road #02-00, Singapore 068898
Coro Energy Bulu (Singapore) Pte Ltd* Singapore Holding company 100% 80 Robinson Road #02-00, Singapore 068898
Coro Energy Duyung (Singapore) Pte Ltd* Singapore Exploration and development company 100% 80 Robinson Road #02-00, Singapore 068898
Coro Asia Renewables Ltd(†) Scotland Holding company 100% 12 Traill Drive, Montrose
DD10 8SW, Scotland
Coro Clean Energy Philippines Inc* # Philippines Exploration and development company 40% 1008 The Infinity Tower, 26th Street, Bonifacio Global City, Taguig City,
Fourth District, National Capital Region, Philippines, 1634.
Coro Philippines Project 109 Inc* Philippines Exploration and development company 100% 1008 The Infinity Tower, 26th Street, Bonifacio Global City, Taguig City,
Fourth District, National Capital Region, Philippines, 1634
Coro Philippines Project 121 Inc* Philippines Exploration and development company 100% 1008 The Infinity Tower, 26th Street, Bonifacio Global City, Taguig City,
Fourth District, National Capital Region, Philippines, 1634
Coro Philippines Project 128 Inc* Philippines Exploration and development company 100% 1008 The Infinity Tower, 26th Street, Bonifacio Global City, Taguig City,
Fourth District, National Capital Region, Philippines, 1634
Coro Clean Energy Ltd England Holding company 100% c/o Pinsent Masons LLP, 1 Park Row, Leeds, England LS1 5AB
Coro Clean Energy Vietnam Ltd* England Holding company 100% c/o Pinsent Masons LLP, 1 Park Row, Leeds, England LS1 5AB
Coro Renewables VN1 Joint Stock Company* Vietnam Holding company 85% 110 Bui Ta Han Street, An Phu Ward,
Thu Duc City, Ho Chi Minh City, Vietnam
Coro Renewables VN2 Company Ltd* Vietnam Holding company 85% 110 Bui Ta Han Street, An Phu Ward,
Thu Duc City, Ho Chi Minh City, Vietnam
Coro Renewables Vietnam Company Ltd* Vietnam Exploration and development company 85% 110 Bui Ta Han Street, An Phu Ward,
Thu Duc City, Ho Chi Minh City, Vietnam
* Indirectly held.
† Formerly Global Energy Partnership Limited, acquired on 17 March
2021.
# The Group has 80% economic interest and management's judgement is that
Company controls this entity
The following subsidiaries are exempt from audit for the 2022 financial year
under s479A of the Companies Act 2006: Coro Europe Limited, Coro Clean Energy
Limited, Coro Energy Asia Limited, Coro Energy Holdings Cell A Limited, Coro
Clean Energy Vietnam Limited, and Coro Asia Renewables Limited.
Loans to subsidiaries
Company
2022 2021
US$'000 US$'000
Current
Loans to subsidiaries 750 666
Loans from subsidiaries (685) -
At 31 December 65 666
Loans to subsidiaries are unsecured, interest free and are repayable on
demand.
NOTE 21: FINANCIAL INSTRUMENTS
Carrying amount versus fair value
The fair values of financial assets and financial liabilities, together with
the carrying amounts in the consolidated statement of financial position, are
as follows:
31 December 2022
Group
Carrying amount Fair value
US$'000 US$'000
Financial assets
Trade receivables (current and non-current) 158 158
Cash and cash equivalents 166 166
Financial liabilities
Trade and other payables 819 819
Borrowings (current and non-current) 28,183 28,183
31 December 2021
Group
Carrying amount Fair value
US$'000 US$'000
Financial assets
Trade receivables (current and non-current) 41 41
Cash and cash equivalents 3,334 3,334
Financial liabilities
Trade and other payables 383 383
Borrowings (current and non-current) 26,637 26,637
31 December 2022
Company
Carrying amount Fair value
US$'000 US$'000
Financial assets
Trade and intercompany receivables (current and non-current) 3,170 3,170
Loans to subsidiaries 65 65
Cash and cash equivalents 130 130
Financial liabilities
Trade and other payables 734 734
Interest bearing borrowings 1,263 1,263
Borrowings (current and non-current) 28,183 28,183
31 December 2021
Company
Carrying amount Fair value
US$'000 US$'000
Financial assets
Trade and intercompany receivables (current and non-current) 616 616
Loans to subsidiaries 666 666
Cash and cash equivalents 3,269 3,269
Financial liabilities
Trade and other payables 765 765
Borrowings (current and non-current) 26,637 26,637
Determination of fair values
All the Group's financial instruments are carried at amortised cost. The
carrying value of trade and other receivables, cash and cash equivalents and
trade and other payables approximates their fair value. Borrowings comprises
the Group's Eurobond, which is listed on the Luxembourg Stock Exchange. The
carrying value is deemed to approximate fair value at the balance sheet date.
Interest bearing borrowings comprise a loan from Apennine Energy S.p.A., a
wholly owned indirect subsidiary of the Company with a total facility value of
€2 million and a duration of 7 years but can be settled early at any time at
the election of the Company. The interest rate on the loan is equal to the
rate charged by a primary national banking institution in Italy.
Financial risk management
Exposure to credit, market and liquidity risks arise in the normal course of
the Group's business.
This note presents information about the Group's exposure to each of the above
risks, their objectives, policies and processes for measuring and managing
risk, and the management of capital.
Risk recognition and management are viewed as integral to the Group's
objectives of creating and maintaining shareholder value, and the successful
execution of the Group's strategy. The Board as a whole is responsible for
oversight of the processes by which risk is considered for both ongoing
operations and prospective actions. In specific areas, it is assisted by the
Audit Committee.
Management is responsible for establishing procedures that provide assurance
that major business risks are identified, consistently assessed and
appropriately addressed.
(i) Credit risk
The Group is exposed to credit risk on its cash and cash equivalents and trade
and other receivables. The maximum exposure to credit risk is represented by
the carrying amount of each financial asset as shown in the table above and in
note 19.
Credit risk with respect to cash is reduced through maintaining banking
relationships with financial intermediaries with acceptable credit ratings.
All banks with which the Group has a relationship have an investment grade
credit rating and a stable outlook, according to recognised credit rating
agencies.
The Group undertakes credit checks for all material new counterparties prior
to entering into a contractual relationship.
(ii) Market risk
Interest rate risk
The Group is primarily exposed to interest rate risk arising from cash and
cash equivalents that are interest bearing. The Group's Eurobond bears
interest at a fixed rate. Interest rate risk is currently not material for the
Group.
Currency risk
The Group operates internationally and is exposed to foreign exchange risk.
Foreign exchange risk arises from future commercial transactions and
recognised assets and liabilities denominated in a currency that is not the
functional currency of the relevant Group entity. The Group's primary currency
exposure is to Euros, which is the denomination of the Eurobond. The Group is
also exposed to changes in the Sterling exchange rate against the US Dollar.
The Group holds a majority of its cash in US Dollars, which is the currency in
which the Group's investment expenditures in South East Asia are denominated.
This gives rise to Sterling exposure due to a predominantly Sterling cost base
in the UK.
The Group's and Company's exposure to foreign currency risk at the end of the
reporting period is summarised below. All amounts are presented in US Dollar
equivalent.
Group
2022 2022 2021 2021
US$'000 US $'000 US$'000 US$'000
USD EUR USD EUR
Cash and cash equivalents 119 1 2,649 113
Trade and other payables - (21) (87) (124)
Borrowings (current and non-current) - (28,183) - (26,637)
Net exposure 119 (28,203) 2,562 (26,648)
Company
2022 2022 2021 2021
US$'000 US$'000 US$'000 US$'000
USD EUR USD EUR
Trade and other receivables (current and non-current) 3,022 - - -
Cash and cash equivalents 118 1 2,649 86
Loans to subsidiaries 750 (685) 1,008 27
Trade and other payables (32) (136) (87) (1,694)
Borrowings (current and non-current) - (29,446) - (26,637)
Net exposure 3,858 (30,266) 3,570 (28,218)
Sensitivity analysis
As shown in the table above, the Group is primarily exposed to changes in the
GBP:USD exchange rate through its cash balance held in USD by the Company, and
to changes in the GBP:EUR exchange rate due to the Eurobond denominated in
EUR. The table below shows the impact in USD on pre-tax profit and loss of a
10% increase/decrease in the GBP to USD exchange rate, holding all other
variables constant. Also shown is the impact of a 10% increase/decrease in the
GBP to EUR exchange rate, being the other primary currency exposure.
Group Company
US$'000 US$'000
31 December 2022
USD:GBP exchange rate increases 10% (34) 1
USD:GBP exchange rate decreases 10% 34 (1)
EUR:GBP exchange rate increases 10% (2,820) (3,026)
EUR:GBP exchange rate decreases 10% 2,820 3,026
31 December 2021
USD:GBP exchange rate increases 10% 256 256
USD:GBP exchange rate decreases 10% (233) (233)
EUR:GBP exchange rate increases 10% (2,665) (2,665)
EUR:GBP exchange rate decreases 10% 2,423 2,565
(iii) Capital management
The Group's policy is to maintain a strong capital base so as to maintain
creditor confidence and to sustain future development of the business,
safeguard the Group's ability to continue as a going concern and provide
returns for shareholders.
As explained further in note 16 and note 2c, the Group's Eurobonds were due to
mature in April 2022 at 100% of par value plus any accrued and unpaid coupon.
In March 2022, the tranche B Noteholders approved the extension of the
maturity of the tranche B bonds by two years to 12 April 2024 with an increase
in the coupon to 10% accrued annually and payable on redemption.
In April 2022, the tranche A Noteholders approved the extension of the
maturity of the tranche A bonds by two years to 12 April 2024 with an increase
in the coupon to 10% accrued annually and payable on redemption.
(iv) Liquidity risk
The Group's approach to managing liquidity is to ensure that it will always
have sufficient liquidity to meet its liabilities when due. Refer to the going
concern statement in note 2c for further commentary.
The table below analyses the Group's financial liabilities into relevant
maturity groupings based on their contractual maturities. The amounts
presented are the contractual undiscounted cash flows.
Group
31 December 2022 Less than 6 to 12 Between Between Total contractual cash flows
6 months months 1 and 2 years 2 and 7 years US$'000
US$'000 US$'000 US$'000 US$'000
Trade and other payables 406 - - - 406
Borrowings - - 28,183 - 28,183
Total 406 - 28,183 - 28,589
31 December 2021 Less than 6 to 12 Between Between Total contractual cash flows
6 months months 1 and 2 years 2 and 7 years US$'000
US$'000 US$'000 US$'000 US$'000
Trade and other payables 383 - - - 383
Borrowings 26,637 - - - 26,637
Total 27,020 - - - 27,020
Company
31 December 2022 Less than 6 to 12 Between Between Total contractual cash flows
6 months months 1 and 2 years 2 and 7 years US$'000
US$'000 US$'000 US$'000 US$'000
Trade and other payables 320 - - - 320
Borrowings - - 28,183 1,263 29,446
Total 320 - 28,183 1,263 29,766
31 December 2021 Less than 6 to 12 Between Between Total contractual cash flows
6 months months 1 and 2 years 2 and 7 years US$'000
US$'000 US$'000 US$'000 US$'000
Trade and other payables 301 464 - - 765
Borrowings 26,637 - - - 26,637
Total 26,938 464 - - 27,402
NOTE 22: SHARE-BASED PAYMENTS
Ordinary Shares
During 2022, the Company issued nil (2021: 12,413,794) new Ordinary Shares to
service providers in lieu of cash compensation for services provided.
Share options and warrants
The following equity settled share-based awards have been made under the
Company's discretionary share option plan.
31 December 2022 31 December 2021
Average exercise price per option (pence) Number of options Average exercise price per option Number of options
(pence)
As at 1 January 1.90 137,687,500 4.38 58,000,000
Granted during the year 0.10 93,825,666 0.10 79,687,500
Exercised during the year - - - -
Forfeited during the year 1.88 (38,500,000) - -
As at 31 December 1.03 193,013,166 1.90 137,687,500
Vested and exercisable at 31 December 4.38 42,000,000 4.38 48,000,000
All remaining unvested options vest after three years of continuous service
with the Company and on condition that the mid-market closing price per Coro
ordinary share on the last day of the three year vesting period is equal to or
higher than 0.46 pence per ordinary share for 2021 grants and higher than 0.43
pence per ordinary share for 2022 grants. Once vested, the Options may be
exercised at any time until the sixth anniversary of grant.
For options that have not yet vested, the number of options which will vest on
the vesting date will depend on the Company's Total Shareholder Return ("TSR")
over the 3 year performance period starting on the date of grant, compared to
a comparator group of 20 energy companies selected by the Company's
Remuneration Committee. The number of Options vesting will be calculated as
follows:
Relative TSR Percentage of Options vesting on the Vesting Date
Below median 0%
Median 30%
Upper decile 100%
Between median and upper decile Straight-line vesting between 30% and 100%
Vested options are exercisable at a price of 4.38p per new ordinary share.
The fair value of services rendered in return for 2022 share options is based
on the fair value of share options granted and was measured using a Black
Scholes model.
The inputs used in the measurement of the options granted during the year are
summarised in the table below, with the volatility estimate of 52% based on
the Company's historical volatility:
April 2021
options
Fair value at grant date (p) 0.40
Share price at grant date (p) 0.48
Exercise price 0.10
Expected volatility 126%
Option life 3 years
Risk-free interest rate (based on yield on five-year gilts) 1.5%
Expiry date 1 April 2028
p - British pence.
The fair value of the options granted are spread over the vesting period. The
amount recognised in the income statement for the year ended 31 December 2022
was US195$k (2021: US$248k).
During the year, 22,500,000 options granted to the Peter Christie, a former
CFO of the Company lapsed and was forfeited. The cost previously recognised as
an expense of US$33k has been recycled to accumulated losses (2021: US$nil).
All other lapsed options related to options that had already fully vested by
31 December 2021.
NOTE 23: INTERESTS IN OTHER ENTITIES
ion Ventures
The Company holds a 20.3% interest in ion Ventures Holdings Limited ("ion
Ventures"). This investment is accounted for as an associate using the equity
method.
ion Ventures, incorporated and domiciled in the UK, is a South East Asian and
UK focused developer of clean energy projects, primarily energy storage.
Summarised financial information for ion Ventures, which has a financial year
end date of 31 December, is included below:
Summarised balance sheet 31 December 2022 31 December 2021
US$'000 US$'000
Current assets 463 522
Non-current assets 2,507 2,907
Current liabilities (1,062) (833)
Non-current liabilities (630) (621)
Net assets 1,278 1,975
Group's share in % 20.3% 20.3%
Group's share in US$ 259 401
Summarised statement of comprehensive income 31 December 2022 31 December 2021
US$'000 US$'000
Revenue 1,555 1,564
Loss from continuing operations (404) (1,227)
Other comprehensive income - -
Total comprehensive income (404) (1,227)
As required by IAS 28 Investment in Associates, the excess between the fair
value of ion Ventures' net assets on acquisition date and the consideration
paid for Coro's investment has been recorded as notional goodwill and is
included within non-current assets in the previous table.
In the Company balance sheet the investment in ion Ventures is carried at the
cost of the investment of £500k, which is US$602k translated at the year-end
exchange rate (2021: US$662k).
Duyung PSC
The Group's wholly owned subsidiary, Coro Energy Duyung (Singapore) Pte Ltd,
is the owner of a 15% interest in the Duyung Production Sharing Contract
("PSC").
The Duyung PSC partners have entered into a Joint Operating Agreement ("JOA"),
which governs the arrangement. Through the JOA, the Group has a direct right
to the assets of the venture, and direct obligation for its liabilities.
Accordingly, Coro accounts for its share of assets, liabilities and expenses
of the venture in accordance with the IFRSs applicable to the particular
assets, liabilities and expenses.
The operator of the venture is West Natuna Exploration Ltd ("WNEL"). WNEL is a
company incorporated in the British Virgin Islands and its principal place of
business is Indonesia.
Coro Renewables VN1 Joint Stock Company
In October 2021, a binding shareholder agreement was signed with VPE and the
Group acquired an 85% interest in the newly incorporated Vietnamese company,
Coro Renewables VN1 Joint Stock Company, which owns 100% of Coro Renewables
VN2 Company Limited, which in tun owns 100% of Coro Renewables Vietnam Company
Limited. During the year the Company incurred costs in relation to the CRV1
group's solar pilot project in Vietnam to the value of US$2,043k and this
amount is included in receivables from the CRV1 group and included in trade
and other receivables.
NOTE 24: CONTINGENCIES AND COMMITMENTS
Commitments
Coro's share of the 2023 Duyung Work Programme and Budget is estimated at
US$1.2m, which will be allocated between items of capital expenditure and
joint venture G&A. The Group had no committed work programmes in it
Philippine or Vietnam operations.
Contingencies
The Company undertook to the Noteholders that in the event of a sale of the
Company's interest in the Duyung PSC to utilise the net cash proceeds of such
disposal(s) to first repay the capital and rolled up interest on the Notes and
thereafter to distribute 20% of remaining net proceed(s) to Noteholders. The
remaining net proceeds of any sales would be retained and/or distributed to
shareholders by the Company. Due to its nature, it is not possible to quantify
the financial impact of this contingent liability.
NOTE 25: RELATED PARTY TRANSACTIONS
Key management personnel compensation
2022 2021
US$'000 US$'000
Short-term benefits 1,201 885
Post-employment benefits - -
Share-based payments 197 221
Key management personnel consists of the Directors of the Company and Ewen
Ainsworth (CFO) and Michael Carrington (COO).
Other related party transactions
ion Ventures Holdings Limited is a related party due to the Company's 20.3%
shareholding and ability to appoint one director to the Board of Directors of
ion. There were no transactions between the two companies in 2022 or 2021 with
the exception of Coro's initial £500k investment in ion.
Energy PTS is a company incorporated in Scotland in which Mark Hood, a
director of the Company during the reporting period, has a majority interest.
The Company paid consulting fees on an arm's length basis of £18k to Energy
PTS during the reporting period.
NOTE 26: SUBSEQUENT EVENTS
On 13 January 2023 the Company announced that the Noteholders have elected by
the requisite majority to receive interest payments on the Eurobonds in
relation to the quarter to 12 January 2023 in new ordinary shares of the
Company and that a total of 229,325,962 new ordinary shares would be issued to
Noteholders.
On 27 January 2023 the Company announced that is has increased its entitlement
to dividends from its subsidiary, Coro Clean Energy Philippines Inc., from 80%
to 88%. As consideration for the increased entitlement the Company issued
20,000,000 ordinary shares in Coro at a price of 0.3p representing total
consideration of £120,000.
On 9 February 2023 the Company announced that it had granted an aggregate of
70,000,000 options over new ordinary shares in the Company to certain
employees (the "Options"). The Options will vest on the third anniversary of
the grant on 9 February 2026, subject to the achievement of performance
criteria and are exercisable at a price of 0.255p per new ordinary share at
any time until 9 February 2028.
On 14 February 2023 the Company announced legal proceedings against an Italian
contractor in relation to damages following the historical cessation of
production at the Bezzecca field in Italy. The Company is claiming damages of
approximately €300k for the capital and related costs of the replacement
equipment and necessary cathodic protection and a further €7m for
consequential losses.
On 27 March 2023 the Company announced that it had signed the Sale and
Purchase Agreement ("SPA") for the disposal of its Italian Portfolio to Zodiac
Energy plc ("Zodiac" or the "buyer") by way of the sale of the entire issued
share capital of Coro Europe Limited. Zodiac Energy plc is a UK based holding
company for an Italian subsidiary company Pengas Italiana Srl, which extracts
crude petroleum and natural gas in Italy. The SPA was signed conditional on
approval by the shareholders of the Company and is furthermore also
conditional on, amongst other things, regulatory approval by the Italian
authorities. The SPA contains total consideration of up to €7.5M, including
contingent payments of up to an aggregate of €1.5M through a 10% net profit
interest ("NPI") in the Italian Portfolio over the three years from the date
of completion of any disposal of the Italian Portfolio. An initial cash
payment of €1.5m was received by the Company in April 2023. The €1.5m
payment will be repayable together with a 10% per annum coupon in the event
that the transaction does not complete, and is secured over the Apennine bank
account and gas sales. Any proceeds from the Bezzecca legal claim which was
detailed in an announcement dated the 14 February 2023, and the cash flows
from the business prior to completion, accrue to Coro and are in addition to
the consideration of up to €7.5m. Whilst the Company retains full ownership
and cash flows from the Italian Portfolio prior to Completion, the Company has
agreed not to withdraw further cash from Coro Europe and its subsidiary. The
accumulated cash in the business, alongside any inter-company loans and the
2022 Italian tax payments (including the extraordinary windfall tax introduced
recently) will be adjustments to the final consideration using an industry
standard net cash/debt adjustment at Completion.
On 13 April 2023 the Company announced that the Noteholders have elected by
the requisite majority to receive interest payments on the Eurobonds in
relation to the quarter to 12 April 2023 in new ordinary shares of the Company
and that a total of 257,556,133 new ordinary shares would be issued to
Noteholders.
On 25 April 2023 the Company's shareholders approved the sale of the Group's
Italian natural gas assets (the "Italian Portfolio") at a general meeting.
On 2 May 2023 the Company announced that Conrad Asia Energy Ltd, the operator
of the Mako gas field within the Duyung PSC ("Mako"), has engaged an
investment bank to farm-down its interest in Mako. The Group may participate
pro rata in the farm-down process as various drag and tag along clauses exist
in the Joint Operating Agreement. Coro may also entertain a full exit,
depending on the terms offered.
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. END FR PPUQGAUPWGBGRecent news on Coro Energy
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