TIDMPXEN
RNS Number : 0770D
Prospex Energy PLC
25 June 2021
Prospex Energy PLC/ Index: AIM / Epic: PXEN / Sector: Oil and
Gas
Prospex Energy PLC ('Prospex' or the 'Company')
2020 Final Results
Prospex Energy PLC, the AIM quoted investment company, is
pleased to announce its audited annual results for the year ended
31 December 2020.
Building a European focused gas production and power generation
business
for the energy transition
Portfolio Overview
Podere Gallina Exploration Permit, onshore Italy - focused on
bringing Selva gas field ('Selva') into production at an initial
rate of up to 150,000 scm/day
-- Significant progress made with production concession permitting process
o Full environmental approval received from the Italian
Government post period end following technical approval received in
January 2020
o Preparation of documentation in support of application for a
full production licence for Selva
-- Advancing discussions with potential non-equity funders for
Prospex's c. EUR580,000 share of Selva development costs
-- Post period end commencement of development and preliminary
work to prepare the field for production in mid-2022
El Romeral, onshore Spain - completion of acquisition of
integrated gas and power project
-- Permitting process underway for a multi-well drilling
programme targeting low risk opportunities to increase gas supply
to 100% project owned power plant which is currently constrained to
operating at c. 22% capacity due to current wells' tail
production
o Two development locations with 5 billion cubic feet ('Bcf') of
gross contingent resources
o 11 prospects with 90 Bcf of gross, un-risked prospective
resources with high Chance of Success of >70% (in most
cases)
-- Full capacity at the plant can be achieved with one
successful new well coming on stream which, combined with selling
electricity at Spain's historic average price of EUR70 per MWh
(including subsidy), has the potential to indicatively generate
project level financials (on a gross basis) of:
o EUR4.2 million annual revenues
o EUR2.4 million profit before tax
o EUR1.8 million profit after tax
Financial/Corporate Overview
-- Total Assets of GBP5,748,211 (2019: GBP6,341,890) provide significant asset backing
-- 11% reduction in administrative expenses to GBP972,193 (2019: GBP1,091,871)
-- GBP720,000 raised via an oversubscribed placing of
600,000,000 new ordinary shares to help fund the Company's
acquisition of a 49.9% indirect stake in El Romeral
o Certain Directors acquired new shares in the Company with an
aggregate value of GBP140,000 as part of the Placing
-- Share re-organisation effecting one new ordinary share for 25 existing ordinary shares
-- Change of Company name to Prospex Energy plc
-- Divestment of 50% interest in the economic rights of the
EIV-1 Suceava Concession, onshore Romania for up to GBP215,000 in
cash
Edward Dawson, Managing Director of Prospex, said, "Prospex has
emerged from what has been a highly challenging year with strong
asset backing in the form of total assets of GBP5,748,211, a
focused portfolio of investments following the acquisition of El
Romeral and the disposal of Suceava, and with its roadmap to build
a highly cash generative, ESG focused, gas and power investment
company very much intact.
"Following the recent granting of full environmental approval
for the development of the Selva gas field in Italy, an application
for a full production licence is expected to be submitted shortly,
paving the way for production to commence in mid-2022 at a maximum
rate of up to 150,000 cubic metres per day. Having recently
completed the acquisition of a 49.9% interest in the vertically
integrated El Romeral gas and power project in Q1 2021, the
permitting process is underway for a multi-well drilling programme,
potentially commencing in 2022, targeting an increase in gas
production and electricity generation at the 100% project-owned
power plant.
"As a result, we have two independent work programmes ongoing,
each of which have the potential to generate material revenue
streams for Prospex in 2022 and beyond. These revenues will in turn
be reinvested in the multiple follow-up opportunities that have
been identified on our licences in Italy and Spain to grow the
Company further and, in the process, build Prospex into a European
energy supplier, one with visible and stable earnings and one with
a focus on cleaner natural gas."
* *S * *
For further information visit www.prospexenergy.com or contact
the following:
Edward Dawson Prospex Energy Plc Tel: +44 (0) 20 3948
1619
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409
Ritchie Balmer 3494
Rob Patrick
Colin Rowbury Novum Securities Limited Tel: +44 (0) 20 7399
Jon Belliss 9427
Duncan Vasey Peterhouse Corporate Finance Tel: +44 (0) 20 7469
0932
Frank Buhagiar St Brides Partners Ltd Tel: +44 (0) 20 7236
Cosima Akerman 1177
Chairman's Report for the year ended 31 December 2020
Despite the disruption caused by the global pandemic, the year
under review, and beyond, has still seen major progress towards
building Prospex into a European focused gas and power business,
one that can play a part in the ongoing global energy transition.
In Spain, we completed the acquisition of a 49.9% interest in the
El Romeral Integrated gas and power project, which adds an interest
in three producing gas wells and an operational power plant to
Prospex's portfolio. In Italy, regulatory milestones were passed in
the permitting process required to bring the 17%-owned Selva gas
field in Italy into production, which is set to transform Prospex's
financial profile in the medium to long term. Elsewhere, the
divestment of a 50% interest in the Suceava gas asset in Romania
enables us to focus on our flagship Italian and Spanish
projects.
A gas and power business and the energy transition may appear
odd bedfellows, but the two are arguably inter-dependant. Moving
from a fossil-fuelled world to a decarbonised one requires a
substantial scaling up of the contribution to the global energy mix
made by renewable technologies. Considerable progress has been made
to date but, despite this, renewables are still having to grow from
a relatively low base. Much more needs to be done, a fact implicit
in governments around the world setting carbon neutral targets that
often lie one or more decades out into the future. Such is the
scale of the work that has to be undertaken, it is widely accepted
that the world will have to rely on hydrocarbons for a large
portion of its energy needs for years to come. This does not mean
that hydrocarbon focused energy companies have a licence to carry
on as normal. They too can make their own positive contributions
towards the goal of global decarbonisation.
It is set against this context that Prospex's focus on natural
gas production and power generation via its core Podere Gallina
Permit in Italy and El Romeral integrated gas and power project in
Spain ought to be seen. For natural gas is by far the cleanest
hydrocarbon in terms of carbon emissions when combusted. As I have
reported previously, the EIA has estimated that in terms of CO2
emitted per unit of energy output, natural gas emits 117 pounds of
CO2 per million British thermal units ('Btu') of energy compared to
228.6 pounds from coal, 161.3 pounds from diesel fuel and heating
oil, and 157.2 pounds from gasoline. The benefits to the
environment from displacing oil and coal with natural gas for power
generation are clear.
As well as the environmental benefits, there is also a business
case behind Prospex's focus on gas. Thanks to gas being typically
sold at prices agreed via long-term contracts, producers largely
avoid the volatility associated with spot markets, which in turn
provides significant visibility to earnings. We believe
shareholders will soon see for themselves the business case for gas
once production commences at the Podere Maiar well on the Selva gas
field in Italy in 2022. We estimate Podere Maiar, along with the
three existing gas wells supplying a project-owned power plant at
El Romeral in Spain, have the potential to produce over 7,800,000
scm net to Prospex over the course of a year. At today's prices,
this level of gas production would generate a material revenue
stream that would support the monetisation of low-risk follow-up
opportunities across our Italian and Spanish projects to grow the
asset base and revenues further.
Thanks to our existing assets, we have a roadmap to generate
considerable value for investors and at the same to play our part
in the global fight against climate change:
Internally generated revenues + multiple follow-up opportunities
+ natural gas focus = roadmap to an ESG focused, highly cash flow
generative gas and power investment company
Podere Gallina, Po Valley onshore Italy
All the ingredients in the above formula can be found in the
Podere Gallina permit in Italy in which Prospex holds a 17%
interest. Once the Selva gas field comes on stream in 2022 at an
initial daily rate of up to 150,000 cubic metres (5.3 mmscf/d),
Prospex will have a material stream of internally generated
revenues. In addition to the 13.3 Bcf (2P) Selva field, Podere
Gallina holds multiple follow-up opportunities including the two
historic gas producing North Flank and South Flank reservoirs at
Selva, which geophysical services consultancy CGG Services (UK)
Limited has estimated have a 60% - 70% chance of holding gross
contingent resources ('2C') of 14.1 Bcf. The permit also holds the
East Selva, Fondo Perino, Cembalina, and Riccardina prospects,
which are estimated to hold aggregate gross prospective resources
(best estimate) of 91.5 Bcf. All the targets identified at Podere
Gallina are focused on cleaner natural gas.
For now, the priority at Podere Gallina is to bring Selva on
stream. The field development plan is centred around the
installation of a fully automated gas plant at the site of the
Podere Maiar 1dir well site, which successfully tested the field in
2018. The gas plant will be connected to the Italian National Grid
by a one-kilometre-long pipeline. In all, the development will have
a footprint of less than half a hectare, while it has been designed
in such a way to prevent any emissions from gas production at the
site. The net cost to Prospex to bring Selva into production is
estimated at EUR580,000, of which EUR400,000 relates to civil works
and hardware with the remainder made up of ancillary expenses.
Bringing Selva online is therefore low cost and, thanks to the
field's gross reserves of 13.3bcf, we can pursue non-equity funding
to cover our share of the development costs. We are in discussions
with potential providers and will update as and when
appropriate.
In the meantime, major milestones have been achieved with the
permitting process, despite the disruption caused by the global
pandemic. A preliminary gas Production Concession (80.68km(2)) was
granted by the Italian Ministry for Economic Development in early
2019 and during the year under review, formal technical
environmental approval for the development of Selva was received
from the Italian Environment Ministry. This was followed post
period end in April 2021 with full environmental approval from the
Italian Government, which paves the way for the grant of a full
production licence from Italy's Economic Development Ministry.
Targeting first production in mid-2022, preliminary development
work has now commenced at the site.
El Romeral, onshore Spain
As with Selva, El Romeral has the potential to become a
significant internal revenue generator, holds multiple follow-up
opportunities and is focused on cleaner natural gas. We announced
the conditional acquisition of up to a 49.9% indirect stake in the
integrated gas production and power station project in southern
Spain in December 2019. The onset of the pandemic just months later
resulted in a delay in the approval process for the acquisition and
the transfer of the asset to our Spanish affiliate, Tarba Energia
('Tarba'), both of which took place post period end in Q1 2021.
Completion may have taken longer than we had anticipated but we
firmly believe the wait will prove to have been well worth it,
especially as the acquisition adds power generation to our
portfolio.
El Romeral currently comprises three producing wells which
supply gas to a 100% project-owned 8.1MW power station. These three
wells are late life, and the maximum gas productivity of the wells
currently limits the power plant to operating at c. 22% capacity.
Thanks to the presence of multiple low risk targets, including two
development locations with gross contingent resources of 5 Bcf and
11 prospects with gross prospective gas resources of 90 Bcf, there
is considerable scope to increase gas production at the project. We
estimate one new well being brought online will be sufficient to
achieve 100% capacity utilisation at the plant .
At full capacity, El Romeral will become a second material
revenue generator for Prospex: producing electricity at the power
plant's name plate rate of c. 60,000 MWh gross per annum and
selling at Spain's historic average electricity price of EUR70 per
MWh (including subsidy) has the potential to deliver indicative
project level annual revenues and profit before tax of EUR4.2
million and EUR2.4 million respectively (EUR1.8 million profit
after tax). This level of revenues and profits would put El Romeral
on a par with Selva.
Post period end, Tarba has submitted early stage environmental
documents as part of the application process for the drilling of
multiple wells at El Romeral, potentially commencing in 2022.
Other projects
In addition to Podere Gallina and El Romeral, Prospex holds a
15% interest along with an option to increase this to 49.9% in
Tesorillo, a large gas project in southern Spain where historic
discoveries, notably the 1957 Almarchal-1 discovery well, have been
made. Following the onset of COVID, in March 2020, a work programme
focused on identifying and de-risking a prospect inventory was
paused.
In October 2020, we announced the divestment of the Company's
wholly owned subsidiary, PXOG Massey Limited ('Massey'), the sole
asset of which is a 50% interest in the economic rights of the
EIV-1 Suceava Concession, onshore Romania. Under the terms of the
sale, Prospex will receive up to GBP215,000 in cash in respect of
historical debt owed to the Company by Massey and nominal
consideration for shares in Massey. The divestment follows the
completion of a strategic review of Prospex's portfolio following
the acquisition of a 49.9% interest in El Romeral.
Financial Review
For the period ended 31 December 2020, the Company is reporting
Total Assets of GBP5,748,211 (31 Dec 2019: GBP6,341,890), the value
of which is largely comprised of the Company's investment in PXOG
Marshall Ltd, the vehicle for the Company's Italian assets. This
movement includes revaluations of the Company's investments ('the
Investments') and movements (repayments and advances) on loans
receivable from those investments.
Unrealised losses arising on revaluation of Investments at fair
value amounted to GBP377,498 (2019: unrealised loss - GBP270,220).
This resulted from the revaluation of PXOG Marshall Ltd, which
included an update to forward gas price assumptions that had been
used in a previous CPR. The time frame for this exercise coincided
in a weakening in Italian gas prices in response to the pandemic
and associated lockdowns. Since the revaluation was carried out,
Italian gas prices have risen as vaccination programmes and
economic activity have picked up.
The fluctuation in Total Assets is primarily due to the write
down of loans of GBP744,317 (2019: GBP203,705) triggered by the
sale of PXOG Massey Ltd.
Aside from the nominal cost of equity being included in the
Company's Investments, the bulk of the carrying value of the
Company's Spanish investments is represented within loans made by
the Company to the investment vehicle for the Spanish assets and
other receivables.
As at 31 December 2020, the fair value of the Company's
investments stood at GBP3,620,890 (2019: GBP3,998,388), with a
further GBP1,762,990 (2019: GBP2,218,326) of loans to investee
companies expected to be repaid in due course. The latter is after
a provision of GBPnil (2019: GBP203,705). The combined value of
these equity investments and current and non-current loans is
GBP5,383,880 (2019: GBP6,216,714). The Company continues to have
significant asset backing relative to its market
capitalisation.
Administrative expenses for the full year totalled GBP972,193,
an 11% reduction on 2019's GBP1,091,871, as management took steps
to reduce the Company's cost base further in response to the impact
of the pandemic on economic activity. During the period, the
Company received a loan of approximately GBP50,000 from its bank
under the Government's COVID-19 Bounce Back Loan Scheme.
The Company is reporting a net loss after taxation from
continuing operations of GBP1,806,492 (2019: loss - GBP1,300,669).
Unrealised losses arising from the revaluation at fair value of
financial assets including PXOG Marshall Ltd and the write-off of
the loans to PXOG Massey Ltd totalled GBP1,121,815 (2019: loss -
GBP473,925).
In February 2020, the Company raised GBP720,000 gross via an
oversubscribed placing of 600,000,000 new ordinary shares to help
fund the Company's acquisition of a 49.9% indirect stake in El
Romeral. Certain Directors of the Company took part in the Placing,
acquiring new shares in the Company with an aggregate value of
GBP140,000.
As at 31 December 2020, the Company held cash and cash
equivalents of GBP220,618 (2019: GBP69,387). Post period end in
March 2021, the Company raised GBP750,000 gross via a placing of
50,000,000 new ordinary shares to fund planned programmes in Spain
and Italy and also to fund the evaluation of new business
opportunities.
In June 2020, the Company completed a share re-organisation
effecting a one new ordinary share for 25 existing ordinary
shares.
Outlook
The world is a very different place to what it was 12 months
ago. While vaccination programmes are being rolled out across the
world to curb the spread of COVID-19, the effects of the pandemic
will continue to be felt for years to come. One potential lasting
consequence of the coronavirus is that it could well lead to a
sustained acceleration in the ongoing movement to decarbonise the
global economy. We are already seeing this in the continued
development of environmental legislation across Europe.
Individual European countries may be moving at their own pace,
but all are looking to cut emissions within EU and global
frameworks. In Italy, after a two-year moratorium on exploration
was introduced in 2019, it appears exploration will restart in
2021, but in a more restrictive manner. In Spain, post year end,
the country passed its Climate Change and Energy Transition Law. As
part of a broad range of measures, Spain has decided not to issue
any new exploration licences and has further tightened up and made
further restrictions on certain types of exploitation permit. Our
interests in exploitation permits at this time seem largely
unaffected, whether any further changes to the right to explore are
made remains to be seen. Legislative pragmatists do recognise the
need for transition, and we hope that, once countries set their
road maps to carbon neutrality, we will be able to explore and
exploit as per the permitting framework. The Company therefore
believes its current producing / development assets can run all if
not the vast majority of their economic life. As a result, we
believe Prospex is well placed to play its part in the energy
transition.
Our flagship projects in Italy and Spain are focused on gas,
widely viewed as a key transitional fuel on account of it being
significantly cleaner than oil and coal. Both projects are either
already or soon to be producing. Both hold multiple and significant
low risk follow-up exploration / development opportunities. The
building blocks are in place to transform Prospex into a highly
cash generative gas and power producer that is fit for purpose for
the energy transition. With Selva expected to commence production
in mid-2022 and with the application process now commenced for a
multi-well drilling programme at El Romeral, potentially in 2022,
the year ahead promises to see major progress made and I look
forward to providing further updates in the year ahead.
Finally, I would like to take this opportunity to thank the
Board and management team for their continued hard work,
commitment, and support during what has been an unprecedented
period for all.
Bill Smith
Non-executive Chairman
24 June 2021
Statement of Profit or Loss and Other Comprehensive Income
for the year ended 31 December 2020
2020 2019
GBP GBP
--------------------------------------- -------------------- ---------------------
CONTINUING OPERATIONS
Other operating income 247,143 198,528
Administrative expenses (972,193) (1,091,871)
---------------------------------------- -------------------- ---------------------
OPERATING LOSS (725,050) (893,343)
Loss on revaluation of investments (1,121,815) (473,925)
Profit on disposal of investment - 40,462
---------------------------------------- -------------------- ---------------------
(1,846,865) (1,326,806)
Finance income 91,362 76,612
Finance costs (50,989) (50,475)
---------------------------------------- -------------------- ---------------------
LOSS BEFORE INCOME TAX (1,806,492) (1,300,669)
Income tax - -
--------------------------------------- -------------------- ---------------------
LOSS AFTER INCOME TAX (1,806,492) (1,300,669)
OTHER COMPREHENSIVE INCOME - -
--------------------------------------- -------------------- ---------------------
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (1,806,492) (1,300,669)
---------------------------------------- -------------------- ---------------------
LOSS PER SHARE - BASIC AND DILUTED (2.10p) (2.12p)
---------------------------------------- -------------------- ---------------------
Statement of Financial Position
31 December 2020
2020 2019
GBP GBP
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment - -
Investments 3,620,890 3,998,388
Loans and other financial assets - 1,048,978
Trade and other receivables 989,645 808,360
--------------------- ----------------
4,610,535 5,855,726
----------------------------------------- --------------------- ----------------
CURRENT ASSETS
Trade and other receivables 917,058 416,777
Cash and cash equivalents 220,618 69,387
1,137,676 486,164
----------------------------------------- --------------------- ----------------
TOTAL ASSETS 5,748,211 6,341,890
------------------------------------------ --------------------- ----------------
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 7,035,589 6,435,587
Share premium 10,185,819 10,095,358
Merger reserve 2,416,667 2,416,667
Capital redemption reserve 43,333 43,333
Retained earnings (14,965,030) (13,260,713)
------------------------------------------ --------------------- ----------------
TOTAL EQUITY 4,716,378 5,730,232
------------------------------------------ --------------------- ----------------
LIABILITIES
NON-CURRENT LIABILITIES
Financial liabilities - borrowings
- Interest bearing loans and borrowings 579,998 386,523
------------------------------------------ --------------------- ----------------
CURRENT LIABILITIES
Trade and other payables 164,262 96,294
Financial liabilities - borrowings
- Interest bearing loans and borrowings 287,573 128,841
------------------------------------------
451,835 225,135
----------------------------------------- --------------------- ----------------
TOTAL LIABILITIES 1,031,833 611,658
------------------------------------------ --------------------- ----------------
TOTAL EQUITY AND LIABILITIES 5,748,211 6,341,890
------------------------------------------ --------------------- ----------------
Statement of Changes in Equity
for the year ended 31 December 2020
Capital
Share Merger redemption Retained
capital Share premium reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
Balance at 1
January 2019 6,035,587 9,756,759 2,416,667 43,333 (11,955,212) 6,297,134
Changes in
equity
Profit for the
year - - - - (1,300,669) (1,300,669)
Issue of shares 400,000 400,000 - - - 800,000
Costs of shares
issued - (66,233) - - - (66,233)
Lapse of share
options 10,142 - - (10,142) -
Equity-settled
share-based
payments (5,310) - - 5,310 -
Balance at 31
December 2019 6,435,587 10,095,358 2,416,667 43,333 (13,260,713) 5,730,232
---------------- ------------------ --------------------- ------------------ ------------------ --------------------- ------------------
Changes in
equity
Loss for the
year - - - - (1,806,492) (1,806,492)
Issue of shares 600,002 119,998 - - - 720,000
Costs of shares
issued - (29,537) - - - (29,537)
Lapse of share
options - - - - - -
Equity-settled
share-based
payments - - - - 102,175 102,175
Balance at 31
December 2020 7,035,589 10,185,819 2,416,667 43,333 (14,965,030) 4,716,378
---------------- ------------------ --------------------- ------------------ ------------------ --------------------- ------------------
Statement of Cash Flows
for the year ended 31 December 2020
2020 2019
GBP GBP
-------------------------------------------- -------------------- ---------------------
Cash outflow from operations (1,106,861) (776,978)
--------------------------------------------- -------------------- ---------------------
Cash flows from investing activities
Proceeds from sale of investments - 119,014
Interest paid (51,664) -
-------------------------------------------- -------------------- ---------------------
Net cash outflow from investing activities (51,664) 119,014
--------------------------------------------- -------------------- ---------------------
Cash flows from financing activities
New loan notes 265,000 -
Bank loan 49,632
Loan repayment/(payments) 304,661 (239,554)
Share issue 720,000 800,000
Costs of shares issued (29,537) (66,233)
--------------------------------------------- -------------------- ---------------------
Net cash inflow from financing activities 1,309,756 494,213
--------------------------------------------- -------------------- ---------------------
Increase/(decrease) in cash and cash
equivalents 151,231 (163,751)
Cash and cash equivalents at beginning
of year 69,387 233,138
--------------------------------------------- -------------------- ---------------------
Cash and cash equivalents at end of
year 220,618 69,387
--------------------------------------------- -------------------- ---------------------
RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM
OPERATIONS
2020 2019
GBP GBP
------------------------------------------ -------------------- ---------------------
Cash flows from operations
Loss before income tax (1,806,492) (1,300,669)
Loss on revaluation of fixed asset
investments 377,498 270,220
Profit on sale of investments - (40,462)
Provision against loan to subsidiary
undertaking 744,317 203,705
Finance income (91,362) (76,612)
Finance costs 50,989 50,475
------------------------------------------- -------------------- ---------------------
Operating loss (725,050) (893,343)
(Increase)/decrease in trade and other
receivables (590,204) 105,929
Increase in trade and other payables 67,968 10,436
Equity settled share-based payments 102,175 -
Issue of loan note to settle liabilities 38,250 -
------------------------------------------ -------------------- ---------------------
Net cash outflow from operations (1,106,861) (776,978)
------------------------------------------- -------------------- ---------------------
Notes to the financial information
Year ended 31 December 2020
1 Basis of preparation and accounting policies
Prospex Energy Plc is a public limited company, is registered in
England and Wales and is quoted on the AIM Market of the London
Stock Exchange Plc. The Company's registered office address is
Stonebridge House, Chelmsford Road, Hatfield Heath, Essex CM22
7BD.
The audited financial information set out in this statement does
not constitute the Company's statutory accounts for the years ended
31 December 2020 or 31 December 2019, as defined in section 434 of
the Companies Act 2006.
Statutory accounts for 2019 have been delivered to the Registrar
of Companies and those for 2020 will be delivered in due course.
The Company's auditors, Adler Shine LLP, have reported on the 2209
accounts; their report was unqualified and did not contain
statements under s498 (2) or (3) Companies Act 2006. Their report
included a statement of material uncertainty relating to going
concern, drawing attention to the Going Concern policy below, the
reliance on future fund raising to continue the company's
activities as budgeted and the significant doubt on the ability to
continue as a going concern, should future fund raising be
unsuccessful. Their opinion is not modified in this respect. Whilst
the financial information included in this announcement has been
computed in accordance with International Financial Reporting
Standards as adopted by the EU ("IFRS") this announcement does not
itself contain sufficient information to comply with IFRS.
The principal accounting policies used in preparing this
preliminary results announcement are those that the Company applies
in its statutory accounts for the year ended 31 December 2020 and
are unchanged from those disclosed in the Company's Annual Report
and Accounts for the year ended 31 December 2019.
2 Going concern
The current economic environment is challenging, and the Company
has reported an operating loss for the year of GBP725,050. These
losses are expected to continue in the current accounting year to
31 December 2021.
The Company regularly carries out fund-raising exercises in
order that it can provide the necessary working capital and
investment funds for the Company. As detailed in note 24, since the
year end, the Company has raised GBP750,000 before expenses,
through the issue of new ordinary shares. The board expects to
continue to raise additional funding as and when required to cover
the Group's development, primarily from the issue of further
shares, or, if available on suitable terms, debt finance.
Furthermore, the directors have evaluated the impact to the
company in respect of the COVID-19 (Coronavirus) pandemic ongoing
at the time of approving these financial statements. The company's
investment activities through its subsidiary undertakings take
place in countries that have been impacted by the virus. Beyond a
short-term energy price drop, mid to long term prices remain only
marginally affected. The business has been affected but has been
able to transfer office-based activities to a "working from home"
in host countries in lock down. Fields activities so far have not
been affected but are minimal anyway. The industry by its nature
does, and is required to, interface with its regulators; to date
regulators in host countries are still engaging, via email. Whilst
it remains hard to assess the impact on timelines, the fact that
civil servants remain engaged is taken as a positive in a negative
environment. Financial markets remain volatile but have settled
down from the extremes seen during 2020. Whilst market conditions,
largely attributed to COVID-19, are currently tough the directors
believe the quality and long-term nature of the underlying assets
in the subsidiary undertakings will enable further financing as
required. As a result, the directors do not consider there to be a
material uncertainty to the company's ability to continue as a
going concern as a result of COVID-19.
The Directors have prepared detailed financial forecasts and
cash flows looking beyond 12 months from the date of the approval
of these financial statements. In developing these forecasts, the
Directors have made assumptions based upon their view of the
current and future economic conditions that are expected to prevail
over the forecast period. The Directors estimate that the cash held
by the Company together with known receivables will be sufficient
to support the current level of activities into the first quarter
of 2022. The Directors are continuing to explore sources of finance
available to the Company and based upon initial discussions with a
number of existing and potential investors they have a reasonable
expectation that they will be able to secure sufficient cash
inflows for the Company to continue its activities for not less
than 12 months from the date of approval of these financial
statements; they have therefore prepared the financial statements
on a going concern basis.
3 Income tax
No liability to UK corporation tax arose for the year ended 31
December 2020 nor for the year ended 31 December 2019.
4 Loss per share
The loss and number of shares used in the calculation of
earnings per ordinary share are set out below:
2020 2019
GBP GBP
Basic:
Loss for the financial period (1,806,492) (1,300,669)
------------------------------------- ------------- ---------------
Weighted average number of shares* 85,855,239 61,475,232
Loss per share (2.10p) (2.12p)
------------------------------------- ------------- ---------------
The loss and the weighted average number of shares used for
calculating the diluted loss per share are identical to those for
the basic loss per share. The outstanding share options and share
warrants would have the effect of reducing the loss per share and
would therefore not be dilutive under IAS 33 'Earnings per
Share'.
*The comparative weighted average number of shares for 2019 has
been adjusted to account for the share reorganisation which was
effected during the year whereby 1 new ordinary share of 0.1p each
was issued in exchange for 25 existing ordinary shares of 0.1p
each.
4 Publication of report and accounts
Full financial statements for the year ended 31 December 2020
will be posted to shareholders before 30 June 2021 and are now
available on the Company's website www.prospex.energy .
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END
FR GZGZVLDMGMZM
(END) Dow Jones Newswires
June 25, 2021 02:00 ET (06:00 GMT)
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