TIDMZEN
RNS Number : 9310D
Zenith Energy Ltd
02 November 2020
November 2, 2020
ZENITH ENERGY LTD.
("Zenith" or the "Company")
Condensed audited annual financial results
Zenith Energy Ltd. ("Zenith" or the "Company") (LSE: ZEN; OSE:
ZENA-ME), the listed international oil & gas production company
focused on pursuing African development opportunities, is pleased
to provide its condensed audited financial results for the
financial year ended March 31, 2020.
The audited financial results for the year ended March 31, 2020
(the "Financial Results") were filed on October 28, 2020 on SEDAR (
www.sedar.com ), in accordance with Canadian securities laws. For
reference, publication of the Financial Results and filing on SEDAR
of the same was announced yesterday (October 29, 2020) by the
Company via regulatory news announcement.
A copy of the Financial Results has also been made available for
review and download on the Company's website:
www.zenithenergy.ca
Lifting of Suspension
The Company can confirm it has now applied for the suspension
(announced to the market on October 6, 2020) in relation to its
common shares admitted to trading on the London Stock Exchange Main
Market to be lifted at the discretion of the Financial Conduct
Authority.
Further Information:
Zenith Energy Ltd
Andrea Cattaneo, Chief Executive Tel: +1 (587) 315 9031
Officer
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E-mail: info@zenithenergy.ca
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Allenby Capital Limited - Financial
Adviser & Broker
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Nick Harriss Tel: + 44 (0) 203 328
Nick Athanas 5656
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Notes to Editors :
Zenith Energy Ltd. is an international oil and gas production
company, listed on the London Stock Exchange (LSE:ZEN) and the
Merkur Market of the Oslo Stock Exchange (ZENA:ME).
Zenith's development strategy is to identify and rapidly seize
value-accretive hydrocarbon production opportunities in the onshore
oil & gas sector, specifically in Africa. The Company's board
of directors and senior management team have the experience and
technical expertise to develop the Company successfully.
Chairman's statement
Introduction
In the year ended March 31, 2020, a number of material changes
took place with regards to the Group's development strategy and
geographic concentration.
The Group is pursuing an ambitious acquisition campaign in
Africa by maximizing the use of its financial resources to enrich
its portfolio. This opportunity has arisen as a result of the
significant decline in oil prices caused by the COVID-19 pandemic.
The Group has acquired a highly prospective production, development
and exploration assets in the Republic of the Congo and after the
year end in Tunisia.
The Board believes this strategy will enable Zenith to develop
successfully and, in doing so, create value for all
stakeholders.
New African development strategy
On March 2, 2020, the Company announced that, in view of
Zenith's strategic focus on pursuing large-scale oil production and
development opportunities in Africa, it would return the Contract
Rehabilitation Area ("CRA") to SOCAR.
The Group had difficulties increasing production from the CRA
and was unable to satisfy the minimum production levels which the
Group was contractually obligated to meet within a specified time
frame in accordance with the REDPSA, as disclosed in the Prospectus
document published in January 2017 for Admission to the London
Stock Exchange and other key documents. The aforementioned, as well
as the Group's future investment obligations required to increase
production from the CRA, led the Board of Directors to unanimously
agree, in the interests of shareholders, that the Group's future
success could be better achieved in other assets with existing
production and near-term development and exploration potential in
Africa. These operations are shown as discontinued within the
financial statements.
The low oil price environment has facilitated access to a number
of highly attractive acquisition opportunities as a result of large
international oil companies restructuring their portfolios and
selling their working interests in small to medium size assets
across the region at advantageous commercial terms.
On April 20, 2020, and on September 8, 2020, Zenith entered into
two separate conditional acquisitions in Tunisia from KUFPEC and
CNPC respectively, two world-renowned oil companies, for their
respective working interests in the Sidi El Kilani Concession. Upon
completion, conditional upon regulatory approval being granted by
the Comité Consultatif des Hydrocarbures ("CCH") of the Republic of
Tunisia, it is expected that Zenith will have a daily production
ranging between 250-300 barrels of oil per day. The Board of
Directors is highly satisfied with the commercial terms agreed for
the transaction and is currently exploring further opportunities of
this kind.
The acquisition of Anglo African Oil & Gas Congo S.A.U
("AAOG Congo") from AAOG plc (a company quoted on the AIM of the
London Stock Exchange), the former operator of the highly
prospective Tilapia license in the Republic of the Congo,
represents a potentially transformational opportunity for the
Group. The Board is pleased to have been able to renegotiate the
initially agreed consideration of GBP1 million for an 80% interest
(announced on December 27, 2019) to a final consideration of
GBP200,000 for a 100% interest in AAOG Congo (announced on April
17, 2020). The acquisition of AAOG Congo has not only enabled
Zenith to acquire an existing operator in the Republic of the
Congo, but also US$5.3 million in receivables owed to AAOG Congo by
Société Nationale des Pétroles du Congo ("SNPC"), the national oil
company of the Republic of the Congo, which will be offset by a
US$2 million signature bonus payable to the Republic of the Congo
as part the application for a new licence.
The Tilapia licence expired in July 2020 and the Group has
submitted a comprehensive commercial and technical offer to the
Ministry of Hydrocarbons of the Republic of the Congo for the award
of a new 25-year license for the Tilapia oilfield. The Group has
established Zenith Energy Congo SA ("Zenith Congo"), at the request
of the Ministry of Hydrocarbons of the Republic of the Congo, for
the purpose of participating in the bid process and it is hoped
that it will receive a new 25-year license for the Tilapia
oilfield.
We thank shareholders for their support during what have been
unprecedented times and we look forward with enthusiasm to
delivering on our publicly announced objectives.
Production activities
During the financial year ended March 31, 2020, the Group:
a) Produced 74,290 bbls of oil from its assets in Azerbaijan, as
compared to 85,524 bbls of oil produced in the 2019 similar
period.
b) Sold 70,005 bbls of oil from its assets in Azerbaijan, as
compared to 75,913 bbls of oil sold in the 2019 similar period. As
of March 31, 2020, inventory consists of CAD $14k (2019 - CAD $nil)
of crude oil that has been produced but not yet sold, and CAD $785k
of materials (2019 - CAD $156k ).
c) Sold 17,666 mcf of natural gas from its Italian assets, as
compared to 10,868 mcf of natural gas in the 2019 similar
period.
d) Sold 10,500 MWh of electricity from its Italian electricity
production assets, as compared to 9,433 MWh for the corresponding
period of 2019.
e) Sold 214 bbls of condensate from its Italian assets, as
compared 628 bbls of condensate in the 2019 similar period.
Financing activities
The Company issued equity during the course of the financial
year ended March 31, 2020, raising a combined net total of
CAD$11.5m to finance its operational activities and finance the
purchase of key operational equipment for the development of its
operational activities in Azerbaijan. The funding was also used to
finance the Group's development strategy in Africa.
During the year, 316,645,857 new common shares were issued, as
detailed in the financial statements (note 16).
On January 20, 2020, the Company announced the issuance of the
following unsecured, multi-currency Euro Medium Term Notes,
governed by Austrian law, at par value (the "Notes"):
-- EURO 1,000,000 bearing interest of 10.125 per cent per year (the "EUR-Notes")
-- GBP 1,000,000 bearing interest of 10.50 per cent per year (the "GBP-Notes")
-- USD 1,000,000 bearing interest of 10.375 per cent per year (the "USD-Notes")
-- CHF 1,000,000 bearing interest of 10.00 per cent per year (the "CHF-Notes")
The Notes were issued, and kept in Treasury, under Zenith's EUR
25,000,000 multi-currency Euro Medium Term Notes Programme, as
announced by the Company on November 6, 2019, and will be due on
January 27, 2024. The Notes were admitted to trading on the Third
Market (MTF) of the Vienna Stock Exchange ("Wiener Borse AG"). As
of March 31, 2020, the Company sold Notes for GBP 76,000 and
USD$30,000.
The issue of the Notes is aligned with the Company's strategy of
diversifying its financing towards non-equity dilutive funding to
support its successful development.
Financial Results
The Group recorded an after-tax loss of CAD$570,309k for the
year ended March 31, 2020, compared to a loss of CAD$9,762k for the
year ended March 31, 2019. This result was brought about by the
loss from discontinued operations (CAD$580,633), related to the
results of the subsidiary in Azerbaijan, explained in note no. 21
of these financial statements.
Group production costs for the year were CAD$2,364k, compared to
CAD$530k in 2019.
Finance expense for the year was CAD$1,742k (2019: CAD$1,121k
expense).
Cash balances of CAD$ 1,220k (2019: CAD$3,058k) were held at the
end of the financial year.
Total equity attributable to the ordinary shareholders of the
Group was CAD$9,829k as of March 31, 2020, (2019: CAD$569,081k
).
Dr. José Ramón López-Portillo
Chairman
October 28, 2020
CEO Statement
Zenith Energy Ltd. ("Zenith" or "the Group") is an international
oil and gas production Group, incorporated in Canada, listed on the
Main Market for listed securities of the London Stock Exchange
under the ticker symbol "ZEN" and on the Merkur Market of the Oslo
Børs under the ticker "ZENA:ME". The Company has also issued two
series of EMTN, that are listed on the third Vienna Stock Exchange
Market.
Zenith's strategic objective is to become a mid-tier, Africa
focused hydrocarbon production and exploration Group. Specific
attention is directed towards assets with proven development
potential via development drilling, field rehabilitation, and
low-risk exploration activities.
In view of the recent decline in oil prices, as well as
macroeconomic developments caused by the COVID-19 pandemic,
opportunities have arisen for companies such as Zenith to acquire,
at highly commercially advantageous terms, oil and gas production
and exploration assets being divested by many oil majors and
leading oil and gas companies. As a leadership team, we are seeking
to maximize this opportunity in order to ensure Zenith emerges from
the current low oil price environment a much stronger and larger
entity with significant future development potential.
We are very pleased to have entered into two separate
conditional transactions in relation to an onshore oil production
asset in Tunisia. The first with KUFPEC, a subsidiary of Kuwait
Petroleum Corporation, and the second with CNPC, one of the largest
oil and gas corporations in the world, and KUFPEC, to acquire their
respective working interests of 22.5% in the Sidi El Kilani
Concession and the North Kairouan permit in Tunisia, which contain
the producing Sidi El Kilani oilfield. We look forward to receiving
regulatory approval from the Comité Consultatif des Hydrocarbures
of the Republic of Tunisia in respect of the transfer of ownership
for both acquisitions within the next 60 days.
Similarly, we are delighted to have established a presence in
the Republic of the Congo following our acquisition of Anglo
African Oil & Gas Congo S.A.U ("AAOG Congo"), the former
Congolese subsidiary of Anglo African Oil & Gas plc (a company
listed on the AIM of the London Stock Exchange) in May 2020. The
decline in oil prices brought about by the COVID-19 pandemic, as
well as renegotiations with the seller, enabled Zenith to acquire,
at highly advantageous terms, an interest, albeit brief, in the now
expired Tilapia II license (expired on July 18, 2020), as well as
receivables of approximately US$5.3 million dollars owed by SNPC (
Société Nationale des Pétroles du Congo).
As publicly announced, the Company has presented a comprehensive
commercial and technical offer (the "Offer") to the Ministry of
Hydrocarbons of the Republic of the Congo in order to be awarded a
new 25-year license for the Tilapia oilfield (to be named Tilapia
II). We are confident that we shall be successful in obtaining a
new 25-year license. In the event our Offer is accepted, the
Company will look to deploy its 1,200hp drilling rig in the
Republic of the Congo in order to begin drilling activities in well
TLP-103C.
We are aware that the Company's operational track record in
Azerbaijan, and the handover of the Contract Rehabilitation Area
("CRA") to SOCAR announced to the market on March 2, 2020,
disappointed market expectations. However, in view of the
significant resources deployed to date and the future obligations
required for future development, as well as the underwhelming
operational results, the Board of Directors is firmly of the view
that this outcome was in the best interests of shareholders and the
future commercial success of the Company. The operational
challenges, as publicly communicated on a number of occasions, was
due, inter alia, to the severely dilapidated condition of the wells
from the Soviet era, the unreliability of historical data, and the
highly challenging geology of the field.
The results for the year ended March 31, 2020, ("2020 FY")
reflect the significant changes the Group has undergone during the
course of the 2020 Financial Year, specifically in result of the
impairment resulting from the handover of the CRA in Azerbaijan and
its associated reserves.
We are very excited about our countercyclical acquisition
campaign in Africa in the current low oil price environment,
especially the highly prospective development production potential
of the Tilapia oilfield and the material daily production revenue
to be obtained from completion of our acquisitions in Tunisia.
Indeed, we are hopeful to conclude further acquisitions of a
similar kind in due course.
I thank shareholders for their loyal support. As is clear, my
confidence in Zenith, as well as that of the team, remains
unchanged. We fully believe that our new geographic concentration
in Africa, in less geologically challenging assets acquired at
highly advantageous commercial terms, will enable the Group to
achieve its operational objectives and deliver value to our
investors.
The Board is committed to sustained growth and exploiting any
value accretive opportunities that may present themselves. We shall
continue to evaluate the acquisition of additional energy
production opportunities building on the momentum of our recent
progress to further support the Group's expansion.
Andrea Cattaneo
President, CEO and Director
October 28, 2020
Directors' Report
The Directors present their Annual Report and Financial
Statements of the Group for the year ended March 31, 2020.
Delisting from TSX-V
On May 28, 2020, the Company announced that effective at the
close of business Friday, May 29, 2020, the common shares of the
Company would be delisted from the TSX-V at Zenith's request.
As announced on April 22, 2020, following the Company's dual
listing on the Main Market for listed securities of the London
Stock Exchange ("LSE") in January 2017 and the admission of its
entire share capital to the Merkur Market of the Oslo Stock
Exchange ("Merkur Market") in November 2018, the Company has seen
its investor base move increasingly towards the UK and Norway, with
limited investor support from the Canadian market.
Given the aforementioned, and in light of the impact of the
COVID-19 pandemic and low oil price environment, the Company
reviewed its corporate structure to maximize cost control and,
following this review, elected to delist from the TSX-V. The
benefits of delisting include materially lower administrative
costs, greater operational efficiency and management time
savings.
Financial review of activity for the period
The Group issued equity on a number of occasions during the
financial year ended March 31, 2020, raising a combined net total
of CAD$11.534m to finance, in the first part of the financial year,
its drilling activities and the purchase of key operational
equipment for the development of its assets in Azerbaijan. In the
latter part of the financial year, once the Group reconfigured its
development strategy, it deployed the funds raised to finance its
new African development strategy.
During the year, 316,645,857 new Ordinary Shares were issued, as
detailed in the financial statements (note 16) and as per the
following table.
Number of Amount
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Shares CAD$'000
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Balance - March 31, 2019 260,427,064 28,866
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Unit private placement proceeds 247,323,573 9,515
Units issued in settlement of debt 18,011,080 748
Equity sharing agreement 50,000,000 1,389
Exercise of stock option 1,311,204 158
Issue costs - (276)
Total for the year 316,645,857 11,534
Balance - March 31, 2020 577,072,921 40,400
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Following the issue of the new Ordinary Shares, the Company had
577,072,921 common shares in issue and admitted to trading on the
Mekur Market of the Oslo Bors, as of March 31, 2020.
As of the same date, Zenith had 286,403,856 common shares in
issue and admitted to trading on the Main Market of the London
Stock Exchange.
Furthermore, to avoid the risk of the excessive dilution of the
capital, the Company issued 2 different sets of EMTN (Bond)
accruing interest payable semi-annually and listed on the third
Vienna Stock Exchange.
a. Zenith 8% EMTN - ISIN AT0000A23S79
During the financial year 2019, the Group issued Loan Notes to
finance its development activities in Azerbaijan for a total amount
of EUR3,120k (equivalent to CAD$4,759k), with the duration of 2
years. During the financial year ended March 31, 2020, the Company
issued additional loan Notes for a total amount of EUR6,880k
(equivalent to CAD$9.8M) . The maturity date of the Notes is 20
December 2021, and they carry an interest charge of 8% per annum,
payable at maturity.
During the year ended March 31, 2020, the Company sold EUR1,837k
(equivalent to CAD$2,617k) (2019 - EUR620k (equivalent to
CAD$883k)) of Zenith 8% EMTN - ISIN AT0000A23S79 and at March 31,
2020 had in treasury EUR7,543k (equivalent to CAD$11,030k), ready
to be sold.
b. Zenith EMTN Programme up to Euro 25+M
On January 20, 2020, the Company announced the issuance of the
following unsecured, multi-currency Euro Medium Term Notes,
governed by Austrian law, at par value (the "Notes"):
-- EURO 1,000,000 bearing interest of 10.125 per cent per year (the "EUR-Notes")
-- GBP 1,000,000 bearing interest of 10.50 per cent per year (the "GBP-Notes")
-- USD 1,000,000 bearing interest of 10.375 per cent per year (the "USD-Notes")
-- CHF 1,000,000 bearing interest of 10.00 per cent per year (the "CHF-Notes")
The Notes were issued, and kept in Treasury, under Zenith's EUR
25,000,000 multi-currency Euro Medium Term Notes Programme, as
announced by the Company on November 6, 2019, and will be due on
January 27, 2024. The Notes were admitted to trading on the Third
Market (MTF) of the Vienna Stock Exchange ("Wiener Borse AG"). As
of March 31, 2020, the Company sold Notes for GBP76k (equivalent to
CAD$128k) and USD$30k (equivalent to CAD$40k). The balance of the
Notes issued were kept in Treasury, ready to be sold, at that
date.
The issue of the Notes is aligned with the Group's strategy of
diversifying its financing towards non-equity dilutive funding to
support its successful development.
The EMTN Programme, created with the primary purpose of
financing the Company's development activities in Azerbaijan, with
the related Prospectus being approved on November 6, 2019. Since
its strategic reconfiguration, the Company has been using the EMTN
Programme to finance its activities in the Republic of the Congo,
Tunisia and Italy.The Company chose the Vienna Stock Exchange as it
was viewed as a highly accessible market in terms of simplicity of
process and listing costs.
On 30 June 2020, the Company announced that it had fully paid
the semi-annual interest in relation to the Notes. The most recent
interest payment in relation to the Notes is the third such
payment, with previous interest payments having taken place during
the months of June 2019 and December 2019 respectively.
On March 2, 2020, the Company announced that, in view of
Zenith's strategic focus on pursuing large-scale oil production and
development opportunities in Africa, it would return the Contract
Rehabilitation Area ("CRA") to SOCAR. This return of the CRA to
SOCAR resulted in the termination of the Group's oil production
operations in Azerbaijan, and the consequent removal of the related
economic and financial effects. This has had a significant impact
on the financial situation of the Group, specifically as the oil
production revenues in Azerbaijan are no longer available.
The Group's yearly loss was mostly impacted by the loss from
discontinued operations, related to the results of write-off of the
producing operations in Azerbaijan, better explained at note no. 21
of this document.
During the year the Group incurred Production costs of
CAD$2,364k (2019 - CAD $530) and General and Administrative costs
of CAD$6,991k (2019 - CAD $6,429k). The comparative amounts
contained the results of the Azeri operations which was included
within discontinued operations in the year ended March 31,
2020.
Cash flow
Cash used in investing activities totalled CAD$1,242k (2019 -
CAD $4,827k). The cash from financing activities in 2020 totalled
CAD$11,465k (2019 - CAD $12,142k), due to the share placings, issue
of convertible loans and issue of bonds.
Closing cash
As of March 31, 2020, the Group held CAD$1,220k in cash (2019 -
CAD $3,058k).
Position of Group's business at the year end
The Group refocused the geographic area of its investment plans.
In fact, on March 2, 2020, the Company announced that, in view of
Zenith's strategic focus on pursuing large-scale oil production and
development opportunities in Africa, it will hand over the Contract
Rehabilitation Area to SOCAR.
The handover of the Contract Rehabilitation Area ("CRA") was
effectively concluded in June 2020. The Group continued to operate
the CRA from March 2020 until June 2020 when the handover of the
CRA was completed. The Group achieved a near total reduction of
operating expenses in Azerbaijan upon completion of the handover of
the Contract Rehabilitation Area.
The Group explained this decision stating that initially in
2015, it viewed the Azeri acquisition as an important opportunity
and its main asset, which was acquired with no consideration
because of the then-ongoing oil crisis. This acquisition greatly
helped the Group gain credibility and presence whilst it was
preparing for Admission to the London Stock Exchange Main
Market.
However, after several years and more than US$5 million
invested, the Company decided to abandon the operations in
Azerbaijan due to the challenging geology of the oilfield and its
production reservoirs, the unreliability of historical field data
rendering the planning and execution of well interventions
significantly more difficult, as well as the poor condition of many
of the Soviet-era wells. These were the contributing factors which
prevented the Group from achieving the minimum production levels
which they were contractually obligated to meet. The Group's
inability to meet these levels within a specified time period
resulted in a material breach of the contract. The Group entered
into discussions with SOCAR and reached agreement in March 2020 to
handover the CRA and assets after a 3-month transition period. In
addition, with the environment of the country rapidly changing, the
Company decided to reconfigure its strategy, having deliberated
that Zenith's financial resources would be best deployed in new
assets with less complex geological and technical profiles. This
decision was additionally influenced by the Company's success in
establishing high-level relationships in French speaking African
countries. The CEO of the Group, as well as other Directors, are
French speaking individuals who have long-established professional
relationships in Africa. Further, the Group has established a
network of advisors in Africa in support of its development
strategy.
At the year end the Group's Statement of Financial Position
shows current assets totaling CAD$15,943k (2019 - CAD$8,627k) and
non-current assets totaling CAD$34,318k (2019 - CAD$
1,080,061k).
Business strategy
As of the date of this report the Company's primary activity is
that of being an international oil and gas production, development
and exploration business. The Company has a portfolio of oil and
gas assets in Italy and Africa. The Group's principal assets are
held through: (i) its wholly-owned subsidiary, Zenith Energy
Netherlands BV ("Zenith Netherlands"), which entered into a
conditional agreement to acquire a 22.5% interest in the Sidi El
Kilani Concession in Tunisia from KUFPEC (announced to the market
April 20, 2020) which is subject to the regulatory approval of
Comité Consultatif des Hydrocarbures of the Republic of Tunisia ;
(ii) Zenith Netherlands entered into a second conditional agreement
to acquire a 22.5% interest in the Sidi El Kilani Concession in
Tunisia from CNPC International (Tunisia) Ltd (announced to the
market on September 8, 2020) (iii) its wholly-owned subsidiary,
Anglo African Oil e Gas Congo SAU ("AAOGC") which is expected to
hold a 56% majority interest in, and be the operator of, the
Tilapia oilfield in the Republic of the Congo upon acceptance of
the comprehensive commercial and technical offer to the Ministry of
Hydrocarbons by the Republic of the Congo in order to be awarded a
new 25-year license for the Tilapia oilfield ; and (iv) Canoel
Italia S.r.l. (in which the Company has a 98.64% shareholding),
which holds various working interests in 13 onshore exploration and
production properties in Italy.
The Company's strategy is, among other things, to (i) grow
through international acquisitions; (ii) increase the production
and reserves from its international inventory of oil and gas
assets; (iii) target its operations at areas with advantageous
access points for its exploration activities with a reasonably
stable economic and business environment; (iv) develop a balanced
portfolio of short, medium and long-term opportunities; (v) seek
innovative ways to unlock value; (vi) achieve and maintain a
robust, well-funded business with the financial flexibility to fund
high-impact exploration, appraisal and development programmes; and
(vii) unlock oil and gas reserves still unexploited in old and
marginal oil and gas fields through the use of new technology.
Principal risks and uncertainties
The Group operates in an uncertain environment and is subject to
a number of risk factors. The Directors consider the following risk
factors are of particular relevance to the Group's activities and
to any investment in the Group. It should be noted that the list is
not exhaustive and that other risk factors not presently known or
currently deemed immaterial may apply. The risk factors are
summarised below:
The impact of global oil prices on the Company
Demand for oil and gas is closely related to the health of the
world economy while supply is determined more by political matters.
The price of oil and gas is set at a global level with small
variances for local conditions. Zenith is a very small producer and
the price it receives for the oil and gas it produces is determined
by global supply and demand factors beyond its control.
Oil and gas prices depend on numerous factors over which the
Group does not have any control, including global supply,
international economic trends (such as the current downturn caused
by COVID-19), currency exchange fluctuations, inflation,
consumption patterns and global or regional political events.
The Group's financial performance may therefore be substantially
impacted both positively and negatively by factors. Changes in
global prices for oil and gas may result in the Group no longer
being able to produce oil and/or gas on a profitable basis.
Historically, international crude oil and natural gas prices have
fluctuated widely. A material decline in the price of crude oil or
natural gas would have a material adverse effect on the Group's
financial results and reserves estimates.
A substantial portion of the Group's assets and operations
outside of Europe are exposed to political and economic risks, and
future disruptions may have a material adverse effect on THE
GROUP's business
A significant portion of the Group's oil and gas assets and of
the Group's supply sources is located in countries outside of the
European Union - with developing economies or unstable political
environments. As a result, a significant portion of the Group's
revenue is derived from, or is dependent on, countries in which the
Group's operations are exposed to economic and political risks,
including expropriation and nationalisation of property, civil
strife and acts of war or terrorism. In addition, in certain
countries in which the Group is active, it may be difficult to
repatriate investment and profits. If it is perceived that the
Group is not respecting or advancing the economic and social
progress of the communities in which it operates, its reputation
and shareholder value could be damaged. Any future disruptions may
have a material adverse effect on the Group's business, results of
operations and financial condition.
Activities in the oil and gas sectors can be dangerous, posing
health, safety and environmental risks
Oil and natural gas exploration, development and production
operations are subject to all the risks and hazards typically
associated with such operations, including hazards such as fire,
explosion, blowouts, cratering, sour gas releases and spills, each
of which could result in substantial damage to oil and natural gas
wells, production facilities, other property as well as the
environment or personal injury.
In particular, the Group may produce sour natural gas in certain
areas. An unintentional leak of sour natural gas could result in
personal injury, loss of life or damage to property and may
necessitate an evacuation of populated areas, all of which could
result in a liability to the Group.
In accordance with industry practice, the Group is not fully
insured against all of these risks, nor are all such risks
insurable. Although the Group maintains liability insurance (in
respect of its Italian operations only) in an amount that it
considers consistent with industry practice, the nature of these
risks is such that liabilities could exceed policy limits, in which
event the Group could incur significant costs. Oil and natural gas
production operations are also subject to all the risks typically
associated with such operations, including encountering unexpected
formations or pressures, premature decline of reservoirs and the
invasion of water into producing formations.
Losses resulting from the occurrence of any of these risks may
have a material adverse effect on the Group's business, financial
condition, results of operations and prospects.
Risks relating to the Group's business strategy
The Group is dependent on the ability of the Directors to
identify suitable investment opportunities and to implement the
Group's strategy. There is no assurance that the Group's activities
will be successful in implementing its strategy or acquiring a
suitable investment that will ultimately be developed.
Environmental and other regulatory requirements
The event of a breach with any environmental or regulatory
requirements may give rise to reputational, financial or other
sanctions against the Group, and therefore the Board considers
these risks seriously and designs, maintains and reviews its
policies and processes so as to mitigate or avoid these risks.
Whilst the Board has a good record of compliance, there is no
assurance that the Group's activities will always be compliant.
Government intervention and regulation may have a material
adverse effect on Zenith's business. Zenith might not be able to
comply with its obligations under licences.
The oil and gas industry is subject to regulation and
intervention by governments, in particular in matters such as the
award of exploration and production interests, restrictions on
production and exports, environmental measures, control over the
development and abandonment of fields and installations, the
nationalization or renationalization of assets, imposition of
specific drilling obligations, environmental and health and safety
protection controls and other risks relating to changes in local
government regimes and policies.
In addition, Zenith has to comply with conditions contained in
licenses, such as operating permits. A failure by Zenith to comply
with substantial conditions might lead to governmental
intervention. Any violations of substantial conditions may
therefore have a material adverse effect on Zenith's business,
results of operations and financial condition.
Zenith buys, sells and trades oil and gas products in certain
regulated commodity markets. The oil industry is also subject to
the payment of royalties and taxation, which tend to be high
compared with those payable in respect of other commercial
activities, and operates in certain tax jurisdictions that feature
a degree of uncertainty relating to the interpretation of, and
changes to, tax law. As a result of new laws and regulations or
government interventions, Zenith could be required to curtail or
cease certain operations, or Zenith could incur additional costs,
all of which may have a material adverse effect on Zenith's
business, results of operations and financial condition.
Lack of diversification of the Company's business activity
The Company is currently only involved in oil production in
Africa and natural gas and electricity production in Italy.
Therefore any legal, regulatory or other change of the framework
conditions in one of those national industries may have a
substantial negative effect on the financial situation of the whole
Group, since it will likely not be able to compensate negative
effects that appear in one field of business with its business
activities in another area of operations.
Financing
The Board are seeking to grow and acknowledge that financing
could depend upon the Group's ability to obtain financing primarily
through a further raising of new equity capital. The Group's
ability to raise further funds may be affected by the success of
its investments both in terms of both in terms of acquisitions and
developing its asset base. The Group may not be successful in
procuring the requisite funds on terms which are acceptable to it
(or at all) and, if such funding is unavailable, the Group may be
required to reduce the scope of its operations. Further,
Shareholders' holdings of Ordinary Shares may be materially diluted
if debt financing is not available.
Brexit
The Group does not foresee any material issues with Brexit at
this stage and indeed would not look to conclude any transaction
where the possibility of a detrimental effect caused by Brexit
would be likely. There may be issues raising funds from investors
in the short term however investor markets in the UK have continued
to be strong and it remains too early to say if there will be any
direct impact. The Directors continue to monitor events and as the
Directors receive more information from the Government and the EU,
they will assess the impact to the Group and take appropriate steps
as required.
COVID-19
The recent global health crisis brought about by the COVID-19
pandemic has affected the Group's business operations in a very
limited manner. More particularly, only its operations in Italy
were affected to a limited degree because third-party employees
working on the concessions were working a reduced regime as per
government guidelines.
However, it should be underlined that the crisis has proven
favourable for the Group's acquisition campaign in Africa.
Specifically, the Group has been able to obtain favourable
commercial terms in its conditional agreement for the acquisition
of onshore production acreages in Tunisia and an acquisition in the
Republic of the Congo. The decline in oil prices caused by the
COVID-19 pandemic has therefore been beneficial to the Group in
pursuing its acquisition activities.
In addition, management has taken significant steps during 2020
to reduce the Group's cost base to help the Group navigate a more
challenging macro-economic environment as a result of the COVID-19
pandemic. While significant cost savings have been identified and
implemented, additional funds will still need to be raised to
enable the Group to remain in operation for the foreseeable future.
At the date of preparing these financial statements, this funding
has not been secured. This represents a material uncertainty
regarding the ability of the Group to continue as a going
concern.
Market conditions
Market conditions, including general economic conditions and
their effect on exchange rates, interest rates and inflations
rates, may impact the ultimate value of the Group regardless of its
operating performance. The Group also faces competition from other
organizations, some of which may have greater resources or be more
established in a particular territory. The Board considers and
reviews all market conditions to try and mitigate any risks that
may arise from these.
Substantial shareholders
As of October 23, 2020, the total number of issued Ordinary
Shares with voting rights in the Company was:
Class of share Total number Number Total number of
of shares of voting voting rights per
rights class of share
per share
Common Shares in issue
and admitted to trading
on the Main Market of the
London Stock Exchange 313,400,824 1 313,400,824
--------------- ------------ --------------------
Common Shares in issue
and admitted to trading
on the Merkur Market of
the Oslo Børs - representing
the total outstanding common
share capital of the Company 1,042,072,921 1 1,042,072,921
--------------- ------------ --------------------
Zenith holds 25,395,828 Common Shares in treasury. The above
figure for total number of Common Shares may be used by
shareholders in the Company as the denominator for the calculations
by which they will determine if they are required to notify their
interest in, or a change to their interest in, the Company under
the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules.
Directors interest
This table represents the Directors interests in the Company, as
of the date of publication of this report:
2020 2019
NUMBER OF ORDINARY NUMBER OF ORDINARY
PARTY NAME SHARES % OF SHARE CAPITAL SHARES % OF SHARE CAPITAL
----------------------- ------------------- ------------------------ -------------------
ANDREA CATTANEO 57,984,115 5.56 21,007,911 6.72
----------------------- ------------------- ------------------------ -------------------
ERIK LARRE (1) 4,334,068 0.42 4,334,068 1.39
----------------------- ------------------- ------------------------ -------------------
LUIGI REGIS MILANO (2) 10,813,674 1.04 8,662,963 2.77
----------------------- ------------------- ------------------------ -------------------
SERGEY BOROWSKIY 3,849,289 0.37 - -
----------------------- ------------------- ------------------------ -------------------
DARIO SODERO (3) 77,500 0.01 77,500 0.02
----------------------- ------------------- ------------------------ -------------------
JOSE RAMON
LOPEZ-PORTILLO 48,000 0.01 48,000 0.01
----------------------- ------------------- ------------------------ -------------------
1) Mr. Larre controls no. 4,334,068 Common Shares of the Company
in indirect ownership. The 4,334,068 Common Shares in which Erik
Larre has a beneficial interest are held by Tonsenhagen
Forretningssentrum, a company controlled by Mr. Larre. Mr. Larre
owns 100% of the share capital of Tonsenhagen
Forretningssentrum.
2) Mr. Regis Milano controls 2,150,711 Common Shares of the
Company in direct ownership and 8,662,963 Common Shares in indirect
ownership.
The 8,662,963 Common Shares stated for Luigi Regis Milano are
held by Pole Position SRL, a company controlled by members of Mr.
Regis Milano's immediate family. The relevant members of Mr. Regis
Milano's immediate family own 100% of the share capital of Pole
Position SRL. Mr. Regis Milano is also the sole director of Pole
Position SRL
3) Mr. Sodero controls 77,500 Common Shares of the Company in
indirect ownership. The 77,500 Common Shares in which Dario Sodero
has a beneficial interest are held by Planaval Resources Ltd., a
company controlled by Mr. Sodero. Mr. Sodero owns 100% of the share
capital of Planaval Resources Ltd.
The Company has been notified of the following interests of 3
per cent or more in its issued share capital as at the date of
approval of this report.
2020 2019
NUMBER OF ORDINARY
PARTY NAME SHARES % OF SHARE CAPITAL NUMBER OF ORDINARY SHARES % OF SHARE CAPITAL
---------------------- ------------------- ---------------------------- -------------------
ANDREA CATTANEO 57,984,115 5.56 21,007,911 6.72
---------------------- ------------------- ---------------------------- -------------------
DEAN ANTONY CLARK 46,500,000 4.46 28,000,000 8.96
---------------------- ------------------- ---------------------------- -------------------
MITON UK MICROCAP
TRUST PLC 19,848,312 1.90 13,848,312 4.43
---------------------- ------------------- ---------------------------- -------------------
MIRABAUD & CIE SA 11,556,167 1.11 11,556,167 3.70
---------------------- ------------------- ---------------------------- -------------------
Dividends
The Directors do not propose a dividend in respect of the year
ended March 31, 2020 (March 31, 2019: nil).
Events subsequent to the year end
Details of events subsequent to the year-end are set out in note
31.
Going concern
The Group's business activities, together with facts likely to
affect its future operations and financial and liquidity positions
are set out in the Chairman's Statement. In addition, note 26 to
the financial statements discloses the Group's financial risk
management policy and note 2 details out further considerations
made by the Director in respect of going concern. Their
consideration has included a review of forecasts and an assessment
as to whether the Tilapia Oilfield licence will be granted to the
Group.
The Directors therefore have made an informed judgment, at the
time of approving the financial statements, that there is a
reasonable expectation that the Group has access to adequate
resources to continue in operational existence for the foreseeable
future. As a result, the Directors have adopted the going concern
basis of accounting in the preparation of the annual financial
statements. Further details on assumptions and conclusions drawn on
going concern are included in the statement of going concern
included in note 2 to the financial statements.
The auditors have made reference to going concern by way of a
material uncertainty in their audit report.
Auditors
The auditors, PKF Littlejohn LLP, have expressed their
willingness to continue in office and a resolution to reappoint
them will be proposed at the Annual General Meeting.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law and
regulations.
The Directors are required to prepare financial statements for
each financial year. The Directors have elected to prepare the
consolidated financial statements in accordance with International
Financial Reporting Standards (IFRSs) as issued by the
International Accounting Standards Board ("IASB"). The Directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Group and of the profit or loss of the Group for that year. In
preparing these financial statements, the Directors are required
to:
-- Select suitable accounting policies and then apply them consistently;
-- Make judgments and accounting estimates that are reasonable and prudent;
-- State whether applicable IFRSs as issued by the IASB have
been followed, subject to any material departures disclosed and
explained in the financial statements; and
-- Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Group. They are also responsible for
safeguarding the assets of the Group, and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Group's
website.
Disclosure of information to auditors
So far as the Directors are aware, there is no relevant audit
information of which the Group's auditors are unaware, and each
Director has taken all the steps that he ought to have taken as a
Director in order to make himself aware of any relevant audit
information and to establish that the Group's auditors are aware of
that
information.
Approved by the Board dated on October 28, 2020
Signed .................................................
Jose Ramon Lopez-Portillo Chairman
Governance Report
General
As Zenith Energy Ltd has a standard listing within the United
Kingdom, it is not required to comply with the Financial Conduct
Authority's requirements report on compliance with, and application
of, the UK Corporate Governance Code. The disclosures below,
however, are required by Disclosure Guidance & Transparency
Rules and NI 58-101 Disclosure of Corporate Governance Practices.
The board of directors (the "Board") of Zenith Energy Ltd. (the
"Company") has not adopted a Governance Code as the size of the
Company and the number of staff at the parent Company does not
warrant the adoption of such code, however, the Board recognizes
that good corporate governance is of fundamental importance to the
success of the Group and procedures are in place in operating
entities.
The Group's governance practices are the responsibility of the
Board.
Leadership
The Group is headed by an effective Board which is collectively
responsible for the long-term success of the Group. The role of the
Board is to oversee the activity of management and to decide the
strategy going forward. The role of the Non-Executive Directors is
to review and monitor the activity of the Directors and managers
that are involved in the operations of the Group. Acquisitions and
disposals, borrowing facilities, equity issuances and any other
major decisions out of the ordinary course of business are
specifically reserved for the Board.
The Board is formed by a highly incentivized and committed group
of indviduals, including founders of the Group with significant
interest in the common share capital of the Group, that understand
and believe in the Group's strategy, providing their support even
without an effective remuneration, waiting for the desired
development to lead to financial conditions such that the
recognition of a fee does not divert funds from investments.
Mr Borowskiy was unable to attend certain Board meetings due to
other professional commitments and time zone differences. However,
he has provided consistent support and constant interaction with
the Company's management, specifically in relation to the Company's
fruitful new relationship with CNPC.
Mr. Larre has been heavily engaged in his own important
investment projects and, during the year, was unable to attend
Board meetings. It is expected that Mr. Larre will stand down as a
Non-Executive Director at the next AGM.
The Directors attendance to meetings up to the date of this
report was as follows:
Date of Board Jose Ramon Andrea Luigi Dario Erik Larre Sergey Borowskiy
Meeting Lopez-Portillo Cattaneo Regis Ezio Sodero
Milano
29/07/2019 (AC)
---------------- ---------- -------- ------------- ----------- -----------------
29/08/2019 (B)
---------------- ---------- -------- ------------- ----------- -----------------
11/11/2019 (AC)
---------------- ---------- -------- ------------- ----------- -----------------
11/11/2019 (B)
---------------- ---------- -------- ------------- ----------- -----------------
11/02/2020 (B)
---------------- ---------- -------- ------------- ----------- -----------------
12/02/2020 (AC)
---------------- ---------- -------- ------------- ----------- -----------------
13/04/2020 (B)
---------------- ---------- -------- ------------- ----------- -----------------
AC: Audit Committee Meeting - B: Board Meeting
The Board
The Board is ultimately responsible for the effectiveness of the
Group 's system of internal controls. The Board verifies the
implementation and effectiveness of the system that the top and
middle management have implemented in the Group to prevent losses,
fraud, corruption and missuse of assets, human resources and cash.
Its key strategy has been to establish financial reporting
procedures that provide the Board of Directors with a reasonable
basis to make judgements as to the financial position and prospects
of the Group .
Executive directors and non-executive directors have been
appointed by the Board to assist with the implementation of this
strategy and report progress to the Board. All the non-executive
directors are considered independent from executive directors and
management.
The Group's board of directors consists of six members
namely
-- Jose Ramon Lopez-Portillo (Chairman and Non-Executive Director)
-- Andrea Cattaneo (President, CEO and Director)
-- Luigi Regis Milano (Director)
-- Dario Ezio Sodero (Non-Executive Director)
-- Erik Larre (Non-Executive Director)
-- Sergey Borowskiy (Non-Executive Director)
As demonstrated by the background of the directors and managers,
the Board present a large diversity in citizenship, age, education,
profession and religion. The Board is committed to equal
opportunities and intends to appoint a female Non-Executive
Director in the near future.
Directorships and partnerships
In addition to their respective roles and directorships at the
Group, the Directors are members of the administrative, management
or supervisory bodies (the "directorships") or partners of the
following companies or partnerships:
Name Current directorships/partnerships
Jose Ramon Lopez-Portillo Hybridair Ltd
World SkyCat Ltd
Luigi Regis Milano DP Lubrificanti S.r.l.
Pole Position S.r.l.
Andrea Cattaneo -
Dario Ezio Sodero Planaval Resources Ltd
Erik Larre Black Sea Property EME Int. Ltd
German Property AS TF Italia Srl
Tonsenhagen Forrenthingssentrum AS
Tonsenhagen Forrenthingssentrum 2
Sergey Borovskiy Sanju Environmental Protection (Hong Kong) Limited
General Transactions Inc.
Petro Chemical Solutions
South China Heavy Industries Group
Orientation and continuing education
The Board is responsible for the orientation and education of
new members of the board of directors and all new directors are
provided with copies of the Group's board and committee mandates
and policies, the Group's by-laws, documents from recent Board
meetings and other reference materials relating to the duties and
obligations of directors, the business and operations of the Group.
New directors are also provided with opportunities for meeting and
discussions with senior management and other directors.
Prior to joining the board, each new director will meet with the
Chief Executive Officer of the Group. Such officer is responsible
for outlining the business and prospects of the Group, both
positive and negative, with a view to ensuring that the new
director is properly informed to commence his duties as a
director.
Each new director is also given the opportunity to meet with the
auditors and counsel to the Group. As part of the annual Board of
Directors' assessment process, the Board of Directors determines
whether any additional education and training is required for its
members.
Ethical business conduct
The directors encourage and promote a culture of ethical
business conduct through communication and supervision as part of
their overall stewardship responsibility. In addition, the Group
has adopted a Code of Conduct which addresses the Group's
continuing commitment to integrity and ethical behavior. The Code
of Conduct establishes procedures that allow directors, officers
and employees of the Group to confidentially submit their concerns
to the Chief Executive Officer or the Chairman of the Board
regarding questionable ethical, moral, accounting or auditing
matters, without fear of retaliation. To the Group's knowledge
there have been no departures from this Code of Conduct that would
necessitate the filing of a material change report.
A copy of the Code of Conduct is available to review at the head
office of the Group during business hours.
Nomination of Directors
The Board as a whole is responsible for identifying suitable
candidates to be recommended for election to the Board by the
shareholders of the Group, with the goal of ensuring that the Board
consists of an appropriate number of directors who collectively
possess the competencies identified as being appropriate to the
effectiveness of the Board as a whole.
Remuneration
The Remuneration Committee is responsible for reviewing the
Group's overall compensation strategy, as well as being responsible
for reviewing and recommending for approval the salaries and
compensation of the Group's executive officers.
The Remuneration Committee also reviews the compensation of the
outside directors on an annual basis, taking into account such
matters as time commitment, responsibility and compensation
provided by comparable organizations.
The remuneration for key management personnel, specifically
those persons having authority and responsibility for planning,
directing and controlling the activities of the Group, either
directly or indirectly, are detailed in the following note 7-b) Key
management compensation
Board Committees
The Group's Board of Directors has three committees, the Audit
Committee, the Remuneration Committee and the Corporate Governance
Committee.
(a) Audit Committee
The Audit Committee comprises Jose Ramon Lopez-Portillo, Dario
Sodero and Erik Larre and is chaired by Dario Sodero. The Audit
Committee meets at least three times a year and otherwise as
required. It has responsibility for ensuring that the financial
performance of the Company is properly reported on and reviewed,
and its role includes monitoring the integrity of the financial
statements of the Group (including annual and interim accounts and
results announcements), reviewing the effectiveness of the Group's
internal control review function and risk management systems,
reviewing any changes to accounting policies, reviewing and
monitoring the extent of the non-audit services undertaken by
external auditors and advising on the appointment of external
auditors. The Audit Committee has unrestricted access to the
Group's external auditors. The ultimate responsibility for
reviewing and approving the annual reports and accounts and the
interim reports remains with the Board. The Audit Committee gives
due consideration to laws and regulations and the requirements of
the Listing Rules. The Group has an Audit Committee Charter.
(b) Remuneration Committee
The Remuneration Committee comprises Jose Ramon Lopez-Portillo,
Dario Sodero and Erik Larre and is chaired by Jose Ramon
Lopez-Portillo. The Remuneration Committee has not met during the
year ended 31 March 2020. The Remuneration Committee has
responsibility for determining the Group's policy on the
remuneration packages of the Group's chief executive, the chairman,
the executive and non-executive directors and other senior
executives. The Remuneration Committee also has responsibility for
(i) recommending to the Board a compensation policy for directors
and executives and monitoring its implementation; (ii) approving
and recommending to the Board and the Group's Shareholders the
total individual remuneration package of the chairman, each
executive and non-executive director and the chief executive
officer (including bonuses, incentive payments and share options or
other share awards); and (iii) approving and recommending to the
Board the total individual remuneration package of all other senior
executives (including bonuses, incentive payments and share options
or other share awards), in each case within the terms of the
Group's remuneration policy and in consultation with the chairman
of the Board and/or the chief executive officer. No Director or
manager may be involved in any discussions as to their own
remuneration.
(c) Corporate Governance Committee
The Corporate Governance Committee comprises Sergey Borovskiy,
Dario Sodero and Jose Ramon Lopez-Portillo and is chaired by Sergey
Borovskiy. The Corporate Governance Committee has not met during
the year ended 31 March 2020. The Corporate Governance Committee
ensures that the Group has in place sufficient procedures,
resources and controls to enable it to comply with its continuing
obligations as a company admitted to the Standard Segment of the
Official List. The Corporate Governance Committee also monitors the
Group's procedures to approve (a) announcements to ensure that the
information disclosed by the Group is timely, accurate,
comprehensive and relevant to the business of the Group and (b) any
share dealings by directors or employees or announcements made by
the Group to ensure compliance with the Group's policies, the
Market Abuse Regulation, the Disclosure Guidance and Transparency
Rules and the Listing Rules and such other regulations to which the
Group is subject from time to time.
Assessments
The Remuneration Committee is responsible for developing an
annual assessment of the overall performance of the Board and its
committees.
The objective of this review is to contribute to a process of
continuous improvement in the Board's execution of its
responsibilities. To date, the Remuneration Committee and the Board
have not put into place a formal process for assessing the
effectiveness of the Board as a whole, its committees or individual
directors, but will consider implementing one in the future should
circumstances warrant. Based on the Group's size, its stage of
development and the number of individuals on the Board of
Directors, the Remuneration Committee and the Board consider a
formal assessment process to be inappropriate at this time. The
Remuneration Committee and the Board plan to continue evaluating
the Board's effectiveness on an ad hoc basis.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF ZENITH ENERGY
LIMITED
Opinion
We have audited the financial statements of Zenith Energy Ltd
('the group') for the year ended 31 March 2020 which comprise the
Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Financial Position, the Consolidated Statement of
Changes in Equity, the Consolidated Statement of Cash Flows and
notes to the financial statements, including a summary of
significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the International Accounting Standards Board (IASB).
In our opinion, the group financial statements:
-- give a true and fair view of the state of the group's affairs
as of 31 March 2020 and of its loss for the year then ended;
and
-- have been properly prepared in accordance with IFRSs as adopted by the IASB.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. In
addition, for the purposes of the group's regulatory filing
requirements as a reporting issuer in Canada, we have also
conducted our audit in accordance with International Standards on
Auditing as issued by the International Auditing and Assurance
Standards Board (ISAs (IAASB)). Our responsibilities under those
standards are further described in the Auditor's responsibilities
for the audit of the financial statements section of our
report.
We are independent of the group in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC's Ethical Standard as
applied to listed entities and the International Ethics Standards
Board for Accountants' Code of Ethics, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements, which
indicates that the Group is required to raise additional funds
within the going concern period in order to continue developing its
oil and gas projects and to simultaneously satisfy loan repayments
which are due within the going concern period. The Group has not
secured these funds at the date of this report. As stated in note
2, these events or conditions indicate that a material uncertainty
exists that may cast significant doubt on the Group's ability to
continue as a going concern.
Our opinion is not modified in respect of this matter.
Our application of materiality
Group materiality Group materiality Basis for materiality
2020 2019
CAD$530k CAD$10,800k 4% of net assets excluding
net assets acquired on business
combination
------------------ ---------------------------------
The basis of materiality represents a change from that used to
calculate the materiality in 2019 which was 1% of gross assets. We
considered net assets excluding those acquired in the business
combination during the year to be the most relevant consideration
of the group's financial performance as the group focuses on a new
geographical strategy. We consider this is likely to be the most
stable metric at a time when the structure of the group is changing
significantly.
Whilst materiality for the financial statements as a whole was
CAD$530k, each significant component of the group was audited to a
level of materiality ranging between CAD$120k - CAD$400k. We
applied the concept of materiality both in planning and performing
our audit, and in evaluating the effect of misstatements. We agreed
with the audit committee that we would report to the committee all
individual audit differences identified during the course of our
audit in excess of CAD$26.5k (2019: CAD$540k). There were no
misstatements identified during the course of our audit that were
individually, or in aggregate, considered to be material.
An overview of the scope of our audit
In designing our audit, we determined materiality, as above, and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at areas involving significant
accounting estimates and judgements by the directors and considered
future events that are inherently uncertain. These include the Key
Audit Matters, including going concern. We also addressed the risk
of management override of internal controls, including among other
matters consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud. Of the
ten reporting components of the group, an audit was performed on
the financial information of six components. The other four
components were not deemed to be significant but two of them had
material balances and were subject to limited review procedures.
The remaining two components were deemed not significant or
material and as such these components were subject to analytical
review procedures at group level.
Of the six reporting components subject to an audit of the
financial information, one was located in Azerbaijan and we had
oversight of, and regular communication with, the component auditor
who was operating under our instructions. A further component was
located in The Republic of the Congo and we had oversight of, and
regular communication with, the component auditor who was operating
under our instructions. The audit of the remaining four components
subject to an audit of their financial information was carried out
by ourselves along with the limited review procedures and
analytical review procedures on the non-significant components. An
audit file review of the non-PKF component auditors were performed
by members of the Group audit team. This, in conjunction with
additional procedures performed, gave us sufficient appropriate
evidence for our audit opinion on the Group financial
statements.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
In addition to the matter described in the Material uncertainty
related to going concern section we have determined the matters
described below to be the key audit matters to be communicated in
our report.
Key Audit Matter How the scope of our audit responded
to the key audit matter
Carrying value of Property, Our work in this area included:
Plant and Equipment ("PPE") * Obtaining the board approved impairment assessment
(refer to notes 4 and 11) paper and challenging the key assumptions and
estimations therein;
The carrying value of PPE in
the financial statements is
CAD$34.3m which represents 67% * Reviewing management's assessment of recoverable
of the Group's total assets. amount (likely a VIU calculation) and critically
assessing all inputs;
Included within PPE is CAD$20.1m
of assets which were acquired
in the business combination * Reviewing the underlying economic models used in the
of AAOG for which a purchase Comptent Persons Report ("CPR") from which the
price allocation ("PPA") is valuation arises and challenging the key assumptions
not yet available. The carrying therein including:
value also includes CAD$14.2
million of PPE in respect of
the Group's producing assets
in Italy and its Dubai entity. o Ensuring that the Competent Person
The Group has fully impaired had the relevant expertise to perform
the PPE in Azerbaijan resulting their work to the appropriate level
in a charge to the statement of skill;
of comprehensive income of CAD$1,065m.
Management are required to use o Comparing commodity price assumptions
their estimation and judgement to future prices;
in assessing the carrying value
of PPE for impairment and for o Challenging key inputs into the
this reason, we consider the models including the discount rates
carrying value of PPE to be used and benchmarking them where appropriate;
a key audit matter.
o Reviewing the CPR for mathematical
In addition, the following external accuracy and performing sensitivity
indications of impairment existed analysis of the various underlying
at 31 March 2020: assumptions;
* The carrying amount of the Group's net assets exceed o Assessing the carrying value by
the market capitalisation; and considering the range of valuations
indicated by the differing scenarios;
o Considering the ability of the group
* Global oil and gas prices have been impacted as a to perform the required site development
result of COVID-19 as well as other factors and these to ensure the site can meet production
will directly impact the value in use calculation. levels included in and underlying
the CPR valuation and to have access
to the capital resources required
to develop projects successfully;
o A review of historical forecasts/budgets
against actual to assess the ability
of management and their experts to
accurately forecast; and
* Reviewing the work performed by the component
auditors and requesting additional procedures where
required.
We draw attention to note 4 and note
11 of the financial statements which
explains that the Tilapia licence,
which is central to generating returns
from the AAOG acquisition, expired
in July 2020 and the Group is waiting
to hear on the outcome of a competitive
tender process. An unsuccessful outcome
may result in the impairment of the
related PPE which would likely have
a material impact on the financial
statements.
Our opinion is not modified in this
respect.
======================================================================
Key Audit Matter How the scope of our audit responded
to the key audit matter
Business combination and fair Our work in this area included:
value accounting (refer to notes * Obtaining and reviewing the terms within the
4 and 6) acquisition agreement and assessing them in
accordance with the control criteria in IFRS 3 to
During the period under review ascertain if a business combination had taken place;
management undertook a material
transaction in respect of the
acquisition of AAOG. Management * Critically reviewing Management's assessment of the
have not completed a purchase timing that the business combination took place;
price allocation ("PPA") in
respect of the business combination
and have used provisional values * Reviewing management's assessment of fair value and
to account for the transaction challenging all judgements and estimations within
as at 31 March 2020. Management that assessment;
have undertaken to engage a
top 10 accounting firm to complete
the PPA but this exercise has * Obtaining and reviewing the latest CPR for indication
not been started at the date of impairment including direct discussion with the
of this report. preparer to discuss their report;
In the absence of a formal PPA,
management have used their estimation * Reviewing the CPR for mathematical accuracy and
and judgement in accounting performing sensitivity analysis on the key inputs and
for the acquisition of AAOG assumptions;
in line with IFRS 3 Business
combinations including their
provisional assessment of the * Reviewing the CPR against performance to date and
fair values of the net assets budgeted performance including challenging how
acquired. We consider the business management will meet the levels within the CPR;
combination accounting to be
a key audit matter.
* Consideration of management's ability to have access
to the capital resources to meet the minimum required
levels within the CPR; and
* Reviewing the work performed by the component
auditors and requesting additional procedures where
required.
We draw attention to note 4 and note
6 of the financial statements which
explains that management have employed
a third party to perform a PPA exercise
in respect of the acquisition of AAOG.
This exercise remains incomplete as
at the date of signing the financial
statements therefore the amount included
within these financial statements
represents managements best provisional
estimate but may be subject to change
following the external PPA exercise.
The process undertaken by management
is in accordance with IFRS 3 "Business
Combinations" which allows for up
to one year from the date of acquisition,
being the measurement period, for
the completion of such an exercise.
The Tilapia licence, which is central
to generating returns from the AAOG
acquisition, expired in July 2020
and the Group is waiting to hear on
the outcome of a competitive tender
process. An unsuccessful outcome may
result in the impairment of the fair
valued acquired assets and negatively
impact the Group's African expansion,
as well as the result of the third
party PPA exercise.
The acquisition of AAOG resulted in
Zenith obtaining a receivable of US$5.3
million from the Congolese government.
The outcome of the competitive tender
process may impact the valuation and
recoverability of this balance.
Our opinion is not modified in this
respect.
==================================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information. Our opinion on the group financial statements
does not cover the other information and we do not express any form
of assurance conclusion thereon. In connection with our audit of
the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required
to determine whether there is a material misstatement in the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we
are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Directors
As explained more fully in the statement of directors'
responsibilities, the directors are responsible for the preparation
of the group financial statements and for being satisfied that they
give a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the group financial statements, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) or ISA (IAASB) will always
detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor's report.
Joseph Archer (Engagement Partner) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP
Canary Wharf
Statutory Auditor
London E14 4HD
Date: October 28, 2020
Statement of Comprehensive Income
Financial year ended
March 31, 2020 March 31, 2019
Continuing operations Note CAD $'000 CAD $'000
Revenue 735 834
Cost of sales
Production costs (2,364) (530)
Depletion and depreciation 11 (846) (425)
Gross loss (2,475) (121)
---------------------------------------------------- ---------- ------------------- ---------------------
Administrative expenses 5 (6,991) (6,429)
Operating loss (9,466) (6,550)
---------------------------------------------------- ---------- ------------------- ---------------------
Gain on business combination 6 20,111 -
Other gains and losses 8 1,425 -
Finance expense 9 (1,742) (1,121)
Gain/(loss) for the year before taxation 10,328 (7,671)
---------------------------------------------------- ---------- ------------------- ---------------------
Taxation 10 (4) (1)
Gain/(loss) for the year from continuing
operations attributable to owners of the parent 10,324 (7,672)
---------------------------------------------------- ---------- ------------------- ---------------------
Loss from discontinued operations ( attributable to
owners of the parent) 21 (580,633) (2,090)
Loss for the year attributable to owners of the
parent (570,309) (9,762)
---------------------------------------------------- ---------- ------------------- ---------------------
Other comprehensive income
Items that may be subsequently reclassified to
profit or loss:
Exchange differences on translating foreign
operations, net of tax (651) (132)
---------------------------------------------------- ---------- ------------------- ---------------------
Other comprehensive income for the year, net of tax (651) (132)
---------------------------------------------------- ---------- ------------------- ---------------------
Total comprehensive income for the year
attributable to owners of the parent (570,960) (9,894)
---------------------------------------------------- ---------- ------------------- ---------------------
Earnings per share 23 CAD $ CAD $
Loss for the year - basic (1.42) (0.04)
Loss for the year - diluted (1.42) (0.04)
From continuing operations - basic 0.03 (0.03)
From continuing operations - diluted 0.03 (0.03)
From discontinued operations - basic and diluted (1.45) (0.01)
Statement of Financial Position
Financial year ended
March 31, 2020 March 31, 2019
ASSETS Note CAD $'000 CAD $'000
Non-current assets
Property, plant and equipment 11 34,305 1,079,639
Financial assets at amortised cost 12 13 422
------------------- ---------------------
34,318 1,080,061
------------------- ---------------------
Current assets
Inventory 13 799 156
Trade and other receivables 14 14,386 5,249
Director's loan account 7, 14 360 164
Cash and cash equivalents 1,220 3,058
16,765 8,627
------------------- ---------------------
TOTAL ASSETS 51,083 1,088,688
=================== =====================
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital 16 40,400 28,866
Share warrants & option reserve 17 1,010 1,147
Contributed surplus 4,320 4,125
Retained earnings (35,901) 534,943
------------------- ---------------------
Total equity 9,829 569,081
------------------- ---------------------
Non-current liabilities
Loans 19 2,260 3,417
Non-convertible bonds 20 4,273 4,759
Deferred consideration payable 21 - 483,178
Deferred tax liabilities 21 - 2,398
Decommissioning provision 22 13,543 9,089
Retirement provision 50 -
------------------- ---------------------
Total non-current liabilities 20,126 502,841
------------------- ---------------------
Current Liabilities
Trade and other payables 18 18,832 12,115
Loans 19 2,210 3,776
Non-convertible bonds 20 86 199
Deferred consideration payable 21 - 676
------------------- ---------------------
Total current liabilities 21,128 16,766
TOTAL EQUITY AND LIABILITIES 51,083 1,088,688
=================== =====================
Attributable to owners of the parent
Statement of Share capital Share warrants & Contributed surplus Retained earnings Total
Changes in Equity option reserve
CAD $'000 CAD $'000 CAD $'000 CAD$'000 CAD $'000
Balance as at 1
April 2018 22,792 875 3,390 544,837 571,894
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Loss for the year - - - (9,762) (9,762)
Other comprehensive
income - - - (132) (132)
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Total comprehensive
income - - - (9,894) (9,894)
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Share issue net of
costs - debt
settlement 371 - - - 371
Share issue net of
costs - private
placement 5,703 - - - 5,703
Value of warrants
issued - 167 - - 167
Issue of options - 928 - - 928
Fair value of
options expired - (401) 313 - (88)
Warrants expired - (422) 422 - -
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Total transactions
with owners
recognised
directly in equity 6,074 272 735 - 7,081
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Balance as at March
31, 2019 28,866 1,147 4,125 534,943 569,081
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Loss for the year - - - (570,309) (570,309)
Other comprehensive
income - - - (651) (651)
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Total comprehensive
income - - - (570,960) (570,960)
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Share issue net of
costs - debt
settlement 748 - - - 748
Share issue net of
costs - private
placement 10,628 - - - 10,628
Value of warrants
issued - 174 - - 174
Exercise of options 158 (116) - 116 158
Warrants expired - (195) 195 - -
Total transactions
with owners
recognised
directly in equity 11,534 (137) 195 116 11,708
Balance as at March
31, 2020 40,400 1,010 4,320 (35,901) 9,829
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Reserve Description and purpose
Share capital Amount subscribed for share capital
Share warrants & Relates to increase in equity for services
received - equity settled
option reserve share transactions
Contributed surplus Expired share options and warrants issued in
previous years
Retained earnings Cumulative net gains and losses recognised in
the consolidated statement of comprehensive income.
statement of cash flows Financial year ended
March 31, 2020 March 31, 2019
OPERATING ACTIVITIES Note CAD $'000 CAD $'000
Loss for the year before taxation (570,305) (9,761)
Shares issued for services - 371
Options/warrants charge 17 174 1,007
Foreign exchange (1,266) (441)
Gain on business combination (20,111) -
Depletion and depreciation 11 846 2,283
Discontinued operations 21 578,104 -
Other gains and losses 8 (1,425) -
Finance expense 9 1,742 1,188
Change in working capital 15 180 (1,401)
--------------------------------------------------------- ----- ---------------------- ---------------------
Net cash used in operating activities (12,061) (6,754)
INVESTING ACTIVITIES
Cash acquired on business combination 6 105 -
Purchase of property, plant and equipment 11 (1,347) (5,205)
Proceeds from disposal of property, plant and equipment 11 - 378
--------------------------------------------------------- ----- ---------------------- ---------------------
Net cash used in investing activities (1,242) (4,827)
--------------------------------------------------------- ----- ---------------------- ---------------------
FINANCING ACTIVITIES
Proceeds from issue of shares, net of transaction costs 10,689 5,703
Proceeds from exercise of options 158 -
Finance Expense 9 (830) -
Repayments of loans 19 (3,420) (208)
Proceeds from loans 19 2,004 2,109
Proceeds from issue of bonds 3,058 1,099
Repayment of bonds 20 (194) (375)
Proceeds from bonds in treasury 20 - 3,814
Net cash generated from financing activities 11,465 12,142
--------------------------------------------------------- ----- ---------------------- ---------------------
Net (decrease)/increase in cash and cash equivalents (1,838) 561
Cash and cash equivalents at beginning of year 3,058 2,497
--------------------------------------------------------- ----- ---------------------- ---------------------
Cash and cash equivalents at end of year 1,220 3,058
--------------------------------------------------------- ----- ---------------------- ---------------------
The cash transactions from discontinued operations included
above are as follows:
Operating activities (2,528) (484)
Investing activities (696) (719)
Financing activities - 3
Net cash used in discontinued operations (3,224) (1,200)
-------------------------------------------- -------- --------
CONSOLIDATION
The following entities have been consolidated within the Group's
financial statements:
Name Country of incorporation Proportion of Principal activity
and place of business ownership interest
Canoel Italia Genova, Italy 98.6% Gas, electricity
S.r.l. (1) and condensate
production
------------------------- --------------------- ---------------------
Ingenieria Petrolera Argentina 100% Not trading
del Rio de la
Plata S.r.l.
------------------------- --------------------- ---------------------
Zenith Aran Oil British Virgin 100% Oil production
Company Limited Islands
------------------------- --------------------- ---------------------
Aran Oil Operating British Virgin 80% owned subsidiary Oil production
Company Limited Islands of Zenith Aran
Oil Company Limited
------------------------- --------------------- ---------------------
Zenith Energy United Kingdom 100% Administrative
(O&G) Ltd services
------------------------- --------------------- ---------------------
Zena Drilling Incorporated in 100% Oil and gas drilling
Limited UAE
Place of business:
Azerbaijan
------------------------- --------------------- ---------------------
Altasol SA Switzerland 100% Oil trading
------------------------- --------------------- ---------------------
Zenith Norway Norway 100% Holding Company
AS (2)
------------------------- --------------------- ---------------------
Anglo African Democratic Republic 100% Oil production
Oil & Gas Congo of the Congo
S.A.U. (3)
------------------------- --------------------- ---------------------
(1) Zenith Energy Ltd. has 100% control over Canoel Italia
S.r.l. The Group granted 1.4% to the Director managing the Italian
subsidiary in order to limit the risk of any liability to that
entity. Therefore, no non-controlling interest arises from the
consolidation of this subsidiary.
(2) On January 30, 2020, the Company announced the establishment
of its fully owned Norwegian subsidiary, Zenith Energy AS ("Zenith
Norway"), to be used as a vehicle for intended participation in
future licensing bids to be organized by the Norwegian Ministry of
Petroleum and Energy, as well as to actively pursue the potential
acquisition of working interests in mature energy production assets
across Northern Europe.
(3) On January 13, 2020, the Company announced the passing of a
resolution by the shareholders of Anglo African Oil & Gas plc
to approve the share purchase agreement, signed between the parties
on December 27, 2019, for the acquisition of its fully owned
subsidiary in the Republic of the Congo, Anglo African Oil &
Gas Congo S.A.U.
Subsidiaries are entities over which the Group has control. 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 on which control
commences until the date on which control ceases. Adjustments are
made to the results of subsidiaries to bring the accounting
policies used by them, with those used by the Group.
Intercompany balances and transactions are eliminated on
consolidation, and any unrealized income and expenses arising from
intercompany transactions are eliminated in preparing the
consolidated financial statements.
The following entities have not been consolidated within the
Group's financial statements because they are considered to be
immaterial to the Group:
Name Country of incorporation Proportion of Principal activity
and place of business ownership interest
Leonardo Energy Genova, Italy 48% Dormant
Consulting S.r.l.
------------------------- -------------------- -------------------
Zenith Energy Netherlands 100% Dormant
Netherlands BV
------------------------- -------------------- -------------------
LOSS FROM DISCONTINUED OPERATIONS
The Group has re-focused the geographic area of its activities.
On March 2, 2020, the Company announced that, in view of Zenith's
strategic focus on pursuing large-scale oil production and
development opportunities in Africa, it would return the Contract
Rehabilitation Area to SOCAR.
The handover of the Contract Rehabilitation Area ("CRA") was
effectively concluded in June 2020. As publicly announced, the
Group continued to operate the CRA from March 2020 until June 2020
when the handover of the CRA was completed. The Group achieved a
near total reduction of operating expenses in Azerbaijan upon
completion of the handover of the Contract Rehabilitation Area.
As per the REDPSA agreement with SOCAR, Zenith does not have to
pay any kind of compensation fee as a result of the termination
thereof. In addition, there are no decommissioning fees to be borne
by Zenith. The Group has received a payment post year end for oil
production of approximately US$508,000 from SOCAR corresponding to
material revenues for the months of April, May and part of June
2020.
The costs associated with the termination of the Group's
operations in Azerbaijan are approximately USD 0.5 million which
are related to the transportation costs due to the relocation of
the rig which was previously installed in Azerbaijan to its
operations in Congo.
As a result of this decision, the results of the subsidiary in
Azerbaijan have been included in the loss from discontinued
operations in the statement of comprehensive income and they are
comprised as follows:
2020 2019
CAD$'000 CAD$000
--------------------------------------------------- ------------- ---------
Revenue 4,074 5,733
Operating expenses (3,041) (4,370)
Depletion and depreciation (1,118) (1,857)
Administrative expenses (2,383) (1,528)
Finance expenses (61) (68)
------------- ---------
Loss from operations in the year (2,529) (2,090)
------------- ---------
Impairment of property, plant and equipment (1,065,075) -
Impairment of inventories (747) -
Impairment of assets acquired from Zena Drilling (615) -
Write back of deferred consideration payable 483,690 -
Write back of decommissioning provision 1,790 -
Write back of well abandonment obligations 60 -
Write back of deferred tax 2,793 -
------------- ---------
Total (580,633) (2,090)
--------------------------------------------------- ------------- ---------
OPERATING SEGMENTS
The Group's operations are conducted in one business sector, the
oil and natural gas industry. Geographical areas are used to
identify Group's reportable segments. A geographic segment is
considered a reportable segment once its activities are regularly
reviewed by the Board of the Directors.
The Group has three reportable segments which are as
follows:
-- Italy, which commenced gas operations following the acquisition of assets in June 2013;
-- The Republic of the Congo, which was acquired during the 2020 FY
-- Other, which includes corporate assets and the operations in
the Canadian, Swiss, Argentinian and Norwegian entities.
Azerbaijan, which was acquired during the FY 2017 and divested
during FY 2020, is mentioned only for comparative purposes with the
past financial year. The results for Azerbaijan as of March 31,
2020 are included in the " Discontinued Operations" (note 21).
YEAR 2019 Azerbaijan Italy Other Total
CAD $000 CAD $000 CAD $000 CAD $000
Property and equipment 1,064,988 8,369 6,281 1,079,638
Other assets 1,058 1,025 6,966 9,049
Total liabilities 492,921 8,401 18,285 519,607
Capital Expenditures 719 74 4,412 5,205
----------- --------- --------- ----------
Revenue - 834 - 834
Operating and transportation - (210) (320) (530)
General and Administrative - (405) (6,024) (6,429)
Depletion and depreciation - (375) (50) (425)
Loss on discontinued operations (2,090) - - (2,090)
Finance and other expenses - (380) (741) (1,121)
Taxation - - (1) (1)
Segment loss (2,090) (536) (7,136) (9,762)
----------- --------- --------- ----------
YEAR 2020 Azerbaijan Congo Italy Other Total
CAD $000 CAD $000 CAD $000 CAD $000 CAD $000
------------------- ------------------ ------------------ -----------------
Property and
equipment - 20,171 8,437 5,697 34,305
Other assets 1,318 10,531 1,316 3,613 16,778
Total liabilities 5,330 11,303 9,462 15,159 41,254
Capital
Expenditures 696 60 60 531 1,347
------------------- ------------------ ------------------ -----------------
Revenue - 94 641 - 735
Operating and
transportation - (131) (376) (1,857) (2,364)
General and
Administrative - (294) (807) (5,890) (6,991)
Depletion and
depreciation - (33) (284) (529) (846)
Loss on
discontinued
operations (580,633) - - - (580,633)
Gain on business
combination - 20,111 - - 20,111
Other gains 1,425 1,425
Finance and other
expenses - - (449) (1,293) (1,742)
Taxation - (4) - (4)
Segment loss (580,633) 19,743 (1,275) (8,144) (570,309)
------------------
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