REG - Sound Energy PLC - Half-year Report
RNS Number : 8681MSound Energy PLC19 September 2019
19 September 2019
Sound Energy plc
("Sound Energy" or the "Company")
HALF YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2019
Sound Energy, the Morocco focused upstream gas company, announces its unaudited half year report for the six months ended 30 June 2019.
OPERATIONAL AND CORPORATE HIGHLIGHTS
· Initiation of marketing process of Eastern Moroccan licences
· Completion of interpretation of seismic data for Eastern Moroccan licences
· Preparation for 2D seismic for Sidi Moktar
FINANCIAL SUMMARY
· Structural reduction in administrative expenses going forward
· Cash balances as at 30 June 2019 of £11.1 million
· Equity placing to raise £2.4 million at 10 pence per ordinary share completed in June 2019
Statement from the Chairman and Chief Executive Officer
The first half of 2019 was an incredibly active, if from an exploration perspective, rather disappointing period for the Company as it safely completed the first two wells of its 2018/19 Eastern Morocco exploration campaign on budget but without having achieved commercial gas flow rates. The Company subsequently went on to initiate a process to explore monetisation options in respect of its Eastern Morocco portfolio. The Eastern Morocco portfolio marketing process is ongoing and the Board continues to expect the marketing process to conclude prior to the end of 2019.
Exploration Drilling Programme
Following the completion of the TE-10 exploration well in December 2018 and following analysis of the well logs and well results which indicated the presence of a potential gross reservoir interval between a measured depth ("MD") of 1899m MD and 2009m MD, along with the recovery of an unstimulated gas sample to surface, the Company began planning to conduct an unstimulated and stimulated well test over the reservoir interval in early 2019. Following mobilisation of key equipment, the TE-10 well test was safely completed within schedule and within budget, further underlining the Company's operational capabilities.
Unfortunately, following stimulation, the well did not achieve a commercial gas flow rate and the decision was taken to end the well test and suspend the well after the installation of a downhole pressure gauge.
Following the test at the TE-10 well, the Company has taken an impairment charge of £6.5 million against the Company's intangible assets during the period.
The Company remains confident in the potential of its Eastern Moroccan portfolio which, following the drilling of five wells and the interpretation of new seismic data acquired by the Company, continues to contain a number of high impact opportunities and plays, including the existing Tendrara Production Concession and the TE-5 Horst discovery it contains and additional exploration potential in the TAGI and Palaeozoic formations across multiple leads and prospects.
Tendrara TE-5 Development
During the period the Company continued to make progress in advancing the development of the Tendrara TE-5 discovery, including the continuation of Front End Engineering & Design by the Enagas-led consortium together with the progression of the Moroccan environmental permitting process and has continued to progress discussions in relation to a gas sales agreement ("GSA") for offtake from the Tendrara Production Concession. The GSA is a critical element required to support project sanction. The Company has to date received a non-binding GSA offer from Morocco's Office National de l'Electricité et de l'Eau Potable ("ONEE") and negotiations on the terms of a GSA continue.
Structural Cost Reductions
The Company continues to manage its cash resources prudently and accordingly, having paused its operational programme, the Company initiated a structural cost reduction programme aimed at materially reducing the Company's ongoing operating expenditure during the period, including reductions in staff numbers and staff costs. Whilst these actions did not deliver a reduction in administrative costs during the period under review, the actions that have been and are being implemented are expected to deliver an annualised reduction in general and administrative expenses of over 50% from end 2019.
Sidi Moktar
The Company continues to view its Sidi Moktar licences as an exciting opportunity to explore for high impact prospectivity within the pre-salt Triassic and Palaeozoic plays in the underexplored Essaouira Basin in Southern Morocco. An Environmental Impact Assessment for the proposed seismic programme was initiated and the Company continues to pursue discussions for a potential farm-down of its interest ahead of the programme commencing.
Italy Disposal
Following the disposal of the Company's Italian licence portfolio, work has continued with the new owners on the restoration of the Badile land, to which the Company retains its economic rights to receive the proceeds from a future sale.
Corporate
In June, the Company successfully completed an equity placing of US$3 million (before expenses) to strengthen the Company's cash position as it continues to explore monetisation options for its Eastern Morocco portfolio. The Company remains well positioned for the second half of 2019 with a 30 June 2019 cash balance of £11.1 million.
Simon Davies
Non-Executive Chairman
James Parsons
Chief Executive Officer
For further information please contact:
Vigo Communications - PR Adviser
Patrick d'Ancona
Chris McMahon
Tel: 44 (0)20 7390 0230
Sound Energy
James Parsons, Chief Executive Officer
JJ Traynor, Chief Financial Officer
Cenkos Securities - Nominated Adviser
Azhic Basirov
David Jones
Ben Jeynes
Tel: 44 (0)20 7397 8900
RBC - Joint Broker
Matthew Coakes
Martin Copeland
Tel: 44 (0)20 7653 4000
Macquarie Capital (Europe) Limited - Joint Broker
Alex Reynolds
Nick Stamp
Tel: 44 (0)20 3031 2000
Condensed Interim Consolidated Income Statement
Notes
Six months ended
30 June 2019
Unaudited £'000s
Six months ended
30 June 2018
Unaudited £'000s
Year
ended
31 Dec
2018
Audited
£'000sContinuing operations
Exploration costs
(6,494)
-
(4,058)
Gross loss
(6,494)
-
(4,058)
Administrative expenses
(3,995)
(4,077)
(8,857)
Group operating loss from continuing operations
(10,489)
(4,077)
(12,915)
Finance revenue
57
35
233
Foreign exchange gain
116
1,885
3,387
Other (losses
- derivative financial instruments
-
(80)
(80)
External interest costs
(1,151)
(1,195)
(2,374)
Loss for period from continuing operations before taxation
(11,467)
(3,432)
(11,749)
Tax credit/(expense)
-
-
-
Profit/(loss) for period from continuing operations after taxation
(11,467)
(3,432)
(11,749)
Discontinued operations
Profit from discontinued operations
10
-
5,236
4,953
Total profit/(loss) for the period
(11,467)
1,804
(6,796)
Other comprehensive (loss)/income
Items that may be subsequently be reclassified
to profit and loss account:
Foreign currency translation income
349
2,872
7,614
Total comprehensive profit/(loss) for
the period attributable to equity holders
of the parent
(11,118)
4,676
818
Pence
Pence
Pence
Basic and diluted profit/(loss) per share for the period from continuing and discontinued operations attributable to equity holders of the parent
3
(1.08)
0.17
(0.66)
Basic and diluted loss per share for the period from continuing operations attributable to equity holders of the parent
3
(1.08)
(0.34)
(1.14)
Condensed Interim Consolidated Balance Sheet
As at 30 June 2019
Notes
30 June
2019Unaudited
£'000s
30 June 2018
Unaudited
£'000s
31 Dec
2018
Audited
£'000s
Non-current assets
Property, plant and equipment
4
152,844
680
151,005
Intangible assets
5
30,996
170,585
32,008
Interest in Badile land
10
985
-
1,618
184,825
171,265
184,631
Current assets
Inventories
1,020
602
929
Other receivables
6
1,963
8,235
3,365
Prepayments
126
227
178
Cash and short term deposits
11,091
14,664
20,536
14,200
23,728
25,008
Total assets
199,025
194,993
209,639
Current liabilities
Trade and other payables
6,243
5,925
10,068
Lease liabilities
8
181
-
-
6,424
5,925
10,068
Non-current liabilities
Lease liabilities
8
151
-
-
Loans and borrowings
7
21,337
19,290
20,476
21,488
19,290
20,476
Total liabilities
27,912
25,215
30,544
Net assets
171,113
169,778
179,095
Capital and reserves
Share capital and share premium
24,835
10,974
22,600
Warrant reserve
4,090
4,090
4,090
Foreign currency reserve
2,512
(2,579)
2,163
Accumulated surplus
139,676
157,293
150,242
Total equity
171,113
169,778
179,095
Condensed Interim Consolidated Statement of Changes in Equity
Share
capital
£'000s
Share
premium
£'000s
Accumulated
surplus/
(deficit)£'000s
Warrant
reserve
£'000s
Foreign currency
reserves
£'000s
Total
equity
£'000s
At 1 January 2019
10,551
12,049
150,242
4,090
2,163
179,095
Total loss for the period
-
-
(11,467)
-
-
(11,467)
Other comprehensive income
-
-
-
-
349
349
Total comprehensive income for the period
-
-
(11,467)
-
349
(11,118)
Issue of share capital
245
2,228
-
-
-
2,473
Share issue costs
-
(238)
-
-
-
(238)
Share based payments
-
-
901
-
-
901
At 30 June 2019 (unaudited)
10,796
14,039
139,676
4,090
2,512
171,113
At 1 January 2018
10,159
277,670
(115,508)
4,090
(3,918)
172,493
Total loss for the year
-
-
(6,796)
-
-
(6,796)
Other comprehensive loss
-
-
-
-
7,614
7,614
Total comprehensive loss
-
-
(6,796)
-
7,614
818
Issue of share capital
392
12,687
-
-
-
13,079
Share issue costs
-
(570)
-
-
-
(570)
Reclassification to profit and loss account on Italy divestment
-
-
-
-
(1,533)
(1,533)
Reclassification on share premium account cancellation
-
(277,738)
277,738
-
-
-
Distribution to shareholders on Italy divestment
-
-
(7,994)
-
-
(7,994)
Share based payments
-
-
2,802
-
-
2,802
At 31 December 2018
10,551
12,049
150,242
4,090
2,163
179,095
Share
capital
£'000s
Share
premium
£'000s
Shares
to be issued
£'000s
Accumulated
deficit
£'000s
Warrant
reserve
£'000s
Foreign currency
reserves
£'000s
Total
equity
£'000s
At 1 January 2018
10,159
277,670
-
(115,508)
4,090
(3,918)
172,493
Total loss for the period
-
-
-
1,804
-
-
1,804
Other comprehensive income
-
-
-
-
-
2,872
2,872
Total comprehensive income for the period
-
-
-
1,804
-
2,872
4,676
Reclassification to profit and loss account on Italy divestment
-
-
-
-
-
(1,533)
(1,533)
Reclassification on share premium account cancellation
-
(277,738)
-
277,738
-
-
-
Distribution to shareholders on Italy divestment
-
-
-
(7,994)
-
-
(7,994)
Issue of share capital
41
842
-
-
-
-
883
Share based payments
-
-
-
1,253
-
-
1,253
At 30 June 2018 (unaudited)
10,200
774
-
157,293
4,090
(2,579)
169,778
Condensed Interim Consolidated Cash Flow Statement
Six months
ended
30 June 2019 Unaudited £'000s
Six months
ended
30 June
2018 Unaudited £'000s
Year
ended
31 Dec
2018
Audited
£'000s
Cash flow from operating activities
Cash flow from operations
(6,591)
(1,202)
(281)
Interest received
57
61
259
Net cash flow from operating activities
(6,534)
(1,141)
(22)
Cash flow from investing activities
Capital expenditure and disposals
(963)
(382)
(937)
Exploration expenditure
(4,351)
(3,122)
(8,855)
Disposed of Italian operations
761
(2,655)
(2,655)
Net cash flow from investing activities
(4,553)
(6,159)
(12,447)
Cash flow from financing activities
Net proceeds from equity issue
2,235
607
12,218
Interest payments
(627)
(634)
(1,274)
Lease payments
(83)
-
-
Net cash flow from financing activities
1,525
(27)
10,944
Net decrease in cash and cash equivalents
(9,562)
(7,327)
(1,525)
Net foreign exchange difference
117
(20)
50
Cash and cash equivalents at the beginning of the period
20,536
22,011
22,011
Cash and cash equivalents at the end of the period
11,091
14,664
20,536
Cash flow from operations reconciliation
Profit/(loss) before tax from continuing operations
(11,467)
(3,432)
(11,749)
Profit/(loss) before tax from discontinued operations
-
5,236
4,953
Total profit/(loss) for the period before tax
(11,467)
1,804
(6,796)
Finance revenue
(57)
(61)
(259)
Exploration expenditure written off and impairment of assets
6,494
-
4,058
Gain on disposal of Italian operations
-
(3,967)
(3,684)
Decrease in accruals and short term payables
(4,365)
(379)
1,078
Depreciation
266
176
164
Share based payments charge and bonuses paid in shares
901
1,529
3,094
Decrease/(Increase) in drilling inventories
(91)
28
(299)
Loss on derivative financial instruments
-
80
80
Finance costs and exchange differences
1,035
(690)
(1,013)
Foreign currency translation gain reclassified from other comprehensive income
-
(1,533)
(1,533)
Decrease in short term receivables and prepayments
693
1,811
4,829
Cash flow from operations
(6,591)
(1,202)
(281)
Notes to the Condensed Interim Consolidated Financial Statements
1. Basis of preparation
The condensed interim consolidated financial statements do not represent statutory accounts within the meaning of section 435 of the Companies Act 2016. The financial information for the year ended 31 December 2018 is based on the statutory accounts for the year ended 31 December 2018. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies and did not contain statements under section 498(2) or (3) of the Companies Act 2006.
The condensed interim financial information is unaudited and has been prepared on the basis of the accounting policies set out in the Group's 2018 statutory accounts, except for the adoption of IFRS 16, Leases and in accordance with IAS 34 Interim Financial Reporting. The Group adopted IFRS 16 which became effective on 1 January 2019. As allowed by IFRS 16, the Group used the modified retrospective method and therefore the comparatives were not restated and the reclassifications and adjustments arising from the adoption of IFRS 16 were recognised in the opening balance sheet on 1 January 2019. The Group's leases are in respect of the UK and Morocco office premises. On adoption of IFRS 16, the Group recognised £0.3 million as lease liability and right of use assets of the same amount, adjusted for prepaid amounts relating to the lease. The Group elected to recognise as an expense on a straight-line basis for short-term leases (lease term of 12 months or less) and leases of low value assets. Further information on the leases is provided in note 8.
The seasonality or cyclicality of operations does not impact on the interim financial statements.
Going concern
As at 30 June 2019, the Company's cash balance was £11.1 million. The Company's Condensed Interim Consolidated Financial Statements have been prepared on a going concern basis, which contemplates the realisation of assets and the settlement of liabilities and commitments in the normal course of operations. The Company has paused further operations as it explores the monetisation options available to the Company in respect of its Eastern Moroccan licences. The Company has initiated a structural cost reduction programme to conserve cash resources and meet its ongoing obligations including the settlement of coupon interest on the Company's €28.8 million bond. The Company's cashflow forecast for the twelve-month period to September 2020 indicates that additional funding will be required to enable the Company to meet its obligations.
These conditions indicate the existence of a material uncertainty which, were it not for the expected funding due from the marketing process, may cast significant doubt about the Company's ability to continue as a going concern. These Condensed Interim Consolidated Financial Statements do not include adjustments that would be required if the Company was unable to continue as a going concern. The directors have formed a judgement based on the Company's proven success in raising capital and a review of the strategic options available to the Company, that the going concern basis should be adopted in preparing the Condensed Interim Consolidated Financial Statements.
2. Segment information
The Group categorises its operations into three business segments based on Corporate, Exploration and Appraisal and Development and Production. The Group's Exploration and Appraisal activities are carried out in Morocco. The Group's reportable segments are based on internal reports about the components of the Group which are regularly reviewed by the Board of Directors, being the Chief Operating Decision Maker (''CODM''), for strategic decision making and resources allocation to the segment and to assess its performance. The segment results for the period ended 30 June 2019 are as follows:
Segment results for the period ended 30 June 2019
Corporate £'000s
Development & Production £'000s
Exploration & Appraisal £'000s
Total
£'000s
Exploration costs
-
-
(6,494)
(6,494)
Administration expenses
(3,995)
-
-
(3,995)
Operating loss segment result
(3,995)
-
(6,494)
(10,489)
Finance revenue
57
-
-
57
Finance costs and exchange adjustments
(1,035)
-
-
(1,035)
Loss for the period before taxation
(4,973)
-
(6,494)
(11,467)
The segments assets and liabilities at 30 June 2019 are as follows:
Corporate £'000s
Development & Production £'000s
Exploration & Appraisal £'000s
Total
£'000s
Capital expenditure
1,590
152,247
30,988
184,825
Other assets
12,490
-
1,710
14,200
Total liabilities
(22,820)
-
(5,092)
(27,912)
The geographical split of non-current assets is as follows:
UK
£'000s
Morocco
£'000s
Development and production assets
-
152,247
Interest in Badile land
985
-
Fixtures, fittings and office equipment
75
198
Right of use assets
120
204
Exploration and evaluation assets
-
30,824
Software
8
164
Total
1,188
183,637
Segment results for the period ended 30 June 2018
Corporate £'000s
Development & Production £'000s
Exploration
& Appraisal
£'000s
Total
£'000s
Administration expenses
(4,077)
-
-
(4,077)
Operating loss segment result
(4,077)
-
-
(4,077)
Finance revenue
35
-
-
35
Gain/(loss) on derivative financial instruments
(80)
-
-
(80)
Finance costs and exchange adjustments
690
-
-
690
Profit/(loss) for the period before taxation
(3,432)
-
-
(3,432)
The segments assets and liabilities at 30 June 2018 were as follows:
Corporate £'000s
Development & Production £'000s
Exploration
& Appraisal
£'000s
Total
£'000s
Capital expenditure
680
-
170,585
171,265
Other assets
19,999
-
3,729
23,728
Liabilities attributable to continuing operations
(21,080)
-
(4,135)
(25,215)
The geographical split of non-current assets is as follows:
UK
£'000s
Morocco
£'000s
Fixtures, fittings and office equipment
148
532
Exploration and evaluation assets
-
170,449
Software
45
91
Total
193
171,072
Segment results for the year ended 31 December 2018
Corporate
£'000s
Development
& Production
£'000s
Exploration &
Appraisal
£'000s
Total
£'000s
Exploration costs
-
-
(4,058)
(4,058)
Administration expenses
(8,857)
-
-
(8,857)
Operating loss segment result
(8,857)
-
(4,058)
(12,915)
Interest receivable
233
-
-
233
Loss on derivative financial instruments
(80)
-
-
(80)
Finance costs and exchange adjustments
1,013
-
-
1,013
Loss for the period before taxation from continuing operations
(7,691)
-
(4,058)
(11,749)
The segments assets and liabilities at 31 December 2018 were as follows:
Corporate
£'000s
Development
& Production
£'000s
Exploration &
Appraisal
£'000s
Total
£'000s
Non-current assets
405
150,600
33,626
184,631
Current assets
22,056
-
2,952
25,008
Liabilities attributable to continuing operations
(22,377)
(320)
(7,847)
(30,544)
The geographical split of non-current assets is as follows:
UK
£'000s
Morocco
£'000
Development and production assets
-
150,600
Interest in Badile land
1,618
-
Fixtures, fittings and office equipment
113
292
Exploration and evaluation assets
-
31,799
Software
24
185
Total
1,755
182,876
3. Profit/(loss) per share
The calculation of basic profit/(loss) per Ordinary Share is based on the profit/(loss) after tax and on the weighted average number of Ordinary Shares in issue during the period. The calculation of diluted profit/(loss) per share is based on the profit/(loss) after tax on the weighted average number of ordinary shares in issue plus weighted average number of shares that would be issued if dilutive options and warrants were converted into shares. Basic and diluted profit/(loss) per share is calculated as follows:
30 June
2019
£'000
30 June
2018
£'000
31 December
2018
£'000
Loss after tax from continuing operations
(11,467)
(3,432)
(11,749)
Profit/(loss) after tax from discontinued operations
-
5,236
4,953
Total profit/(loss) for the period
(11,467)
1,804
(6,796)
million
million
million
Weighted average shares in issue
1,057
1,019
1,035
Dilutive potential ordinary shares
-
33
18
Diluted weighted average number of shares
1,057
1,052
1,053
Basic profit/(loss) per share
Pence
Pence
Pence
Basic loss per share from continuing operations
(1.08)
(0.34)
(1.14)
Basic profit/(loss) per share from discontinued operations
-
0.51
0.48
Basic profit/(loss) per share from continuing and discontinued operations
(1.08)
0.17
(0.66)
Diluted profit/(loss) per share
Pence
Pence
Pence
Diluted loss per share from continuing operations
(1.08)
(0.34)
(1.14)
Diluted profit/(loss) per share from discontinued operations
-
0.50
0.47
Diluted profit/(loss) per share from continuing and discontinued operations
(1.08)
0.17
(0.66)
The effect of the potential dilutive shares noted above on the earnings per share from continuing operations would be anti-dilutive and therefore are not included in the above calculation of diluted earnings per share from continuing operations.
4. Property, plant and equipment
30 June
2019
£'000s
30 June
2018
£'000s
31 Dec
2018
£'000s
Cost
At start of period
151,394
646
646
Transfer from intangible assets
-
-
146,245
Additions
1,390
382
882
Exchange adjustments
620
6
3,625
Disposal
(1)
-
(4)
At end of period
153,403
1,034
151,394
Depreciation
At start of period
389
274
274
Exchange adjustments
(51)
2
21
Disposals
-
-
(2)
Charge for period
221
78
96
At end of period
559
354
389
Net book amount
152,844
680
151,005
5. Intangibles
30 June
2019
Unaudited £'000s
30 June
2018
Unaudited
£'000s
31 Dec
2018
Audited
£'000s
Cost
At start of period
36,412
164,018
164,018
Additions
5,268
3,408
11,447
Transfer to property, plant & equipment
-
-
(146,245)
Exchange adjustments
383
3,304
7,192
At end of period
42,063
170,730
36,412
Impairment and Depreciation
At start of period
4,404
79
79
Charge for period
6,539
64
4,126
Exchange adjustments
124
2
199
At end of period
11,067
145
4,404
Net book amount
30,996
170,585
32,008
Approximately £6.5 million impairment charge was recognised during the period following sub-commercial well results at TE-10 well,
Onshore Morocco. The impairment charge is reported within exploration costs in the profit and loss account.
6. Other receivables
30 June
2019
Unaudited
£'000s
30 June
2018
Unaudited
£'000s
31 Dec
2018
Audited
£'000s
Italian Vat refundable
-
2,730
-
Interest in Badile land
-
1,592
-
Other receivable
1,963
3,913
3,365
1,963
8,235
3,365
7. Loans and Borrowings
30 June
2019
Unaudited
£'000s
30 June
2018
Unaudited
£'000s
31 Dec
2018
Audited
£'000s
Non-current liability
5-year secured bonds
21,337
19,290
20,476
21,337
19,290
20,476
The Company has 5-year non-amortising secured bonds with an aggregate value of €28.8 million. The bonds are secured over the share capital of Sound Energy Morocco South Limited, have a 5% coupon and were issued at a 32% discount to par value. Alongside the bonds, the Company issued 70,312,500 warrants to subscribe for new ordinary shares in the Company at an exercise price of 30 pence per ordinary share and an exercise period of approximately five years, concurrent with the term of the bonds. The effective interest rate is approximately 16.3%. The 5-year secured bonds are due in June 2021.
8. Lease liabilities
30 June 2019
Unaudited
£'000s
30 June 2018
Unaudited
£'000s
31 December
2018
Audited
£'000s
Amounts due within one year
181
-
-
Amounts due after more than one year
151
-
-
332
-
-
The Group has adopted IFRS 16 Leases, from 1 January 2019. As allowed by IFRS 16, the comparatives were not restated and the reclassifications and the adjustments arising from the new leasing rules were recognised in the opening balance sheet on 1 January 2019. The Group's leases are in respect of the UK and Morocco offices premises. On adoption of IFRS 16, the Group recognised lease liabilities in relation to the office leases which were previously classified as operating leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the individual entities incremental borrowing rates. The weighted average incremental borrowing rate was 5.6%.
The associated right of use assets for the office leases were measured at an amount equal to the lease liability but adjusted for prepaid amounts relating to the lease recognised in the balance sheet as at 31 December 2018. The right of use assets are reported within property, plant and equipment and had a carrying value of £0.3 million as at 30 June 2019.
9. Shares in issue and share based payments
As at 30 June 2019, the Company had 1,079,570,324 ordinary shares in issue. On 18 June 2019, the Company announced the issue of 23,830,328 shares at 10 pence per share following a placing. The net proceeds of the placing were approximately £2.1 million.
During the period to 30 June 2019, the Company granted 0.8 million restricted stock units awards to staff under its long term incentive plan. 625,000 share options were exercised and 550,000 expired during the period.
10. Discontinued operations
On 5 October 2017, the Company announced that it had entered into non-binding conditional heads of terms with Saffron Energy plc (''Saffron'') and Po Valley Energy Limited under which it was proposed that the Company disposed of its portfolio of Italian interests and permits through the sale of Sound Energy Holdings Italy (''SEHIL'') and Apennine Energy SpA (''APN'') (the ''disposal'') for the consideration of 185,907,500 new ordinary shares in Saffron (subsequently renamed Coro Energy plc) issued directly to the Company's shareholders. On 23 January 2018, the Company announced that it had entered into a binding agreement with Saffron for the disposal and the transaction completed on 9 April 2018. The value of the 185, 907, 500 Coro Energy plc shares distributed to the Company's shareholders was £8.0 million using the completion date share price of 4.3 pence. The Company was also entitled to receive proceeds of VAT refund from the Badile well operations and retained economic interest in Badile land. The Company was also obligated to fund Badile land restoration for a fixed amount. During the period to 30 June 2019 the Company received approximately £0.8 million VAT refund from the Badile well operations and recognised £0.6 million impairment charge in respect of the interest in Badile land due to decline in expected sale price.
The results of the Italian operations for the period are presented below:
Six months ended
30 June 2019
Unaudited
£'000
Six months
ended30 June 2018
Unaudited
£'000
Twelve months
ended31 December 2018
Audited
£'000
Revenue
-
140
140
Operating costs
-
(170)
(170)
Exploration costs
-
(25)
(25)
Gross loss
-
(55)
(55)
Administrative expenses
-
(235)
(235)
Operating loss from discontinued operations
-
(290)
(290)
Finance revenue
-
26
26
Foreign currency translation gain reclassified from other comprehensive income
-
1,533
1,533
Gain on disposal of Italian operations
-
3,967
3,684
Profit/(loss) for the period before and after taxation from discontinued operations
-
5,236
4,953
The net cash flows for the period were as follows:
Net cash flow from operating activities
-
1,897
1,897
Net cash flow from investing activities
761
-
(2,655)
Net cash flow from financing activities
-
-
-
Net cash outflow
761
1,897
(758)
11. Post Balance Sheet events
There are no significant subsequent events to report.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDIR CKFDKABKDCCD
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