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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Zenith Energy Ltd. | LSE:ZEN | London | Ordinary Share | CA98936C8584 | COM SHS NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.80 | 1.70 | 1.90 | 1.80 | 1.80 | 1.80 | 0.00 | 07:42:08 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jul 2019 to Jul 2024
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:
Hot Features
Premium
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$11.534m to finance, in the first part of the financial year, its drilling activities and the purchase of key operational equipment for the development of its assets in Azerbaijan. In the latter part of the financial year, once the Group reconfigured its development strategy, it deployed the funds raised to finance its new African development strategy.
During the year, 316,645,857 new Ordinary Shares were issued, as detailed in the financial statements (note 16) and as per the following table.
Number of Amount
------------------------------------
Shares CAD$'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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