TIDMPXEN
RNS Number : 7023A
Prospex Energy PLC
26 May 2023
Prospex Energy PLC / Index: AIM / Epic: PXEN / Sector: Oil and
Gas
26 May 2023
Prospex Energy PLC
('Prospex' or the 'Company')
Final Results for Year ended 31 December 2022
and
Annual General Meeting
Prospex Energy plc, the AIM quoted investment company, is
pleased to announce its audited Final Results for the year ended 31
December 2022 and Notice of Annual General Meeting ("AGM") on 20
June 2023.
Corporate and Financial Highlights (as at 31 December 2022)
-- Total Assets of GBP16,064,640 from GBP6,697,305 in 2021, an
increase of 240% reflecting the after-tax effect of the revaluation
of the Company's working interest in the Podere Gallina licence in
Italy increasing to 37% from 17% which completed in April 2022.
-- The combined value of these equity investments, current and
non-current loans is GBP21,561,316 up from GBP8,726,484 in 2021 a
221% increase.
-- Successfully completed a placing of GBP2,454,800 in February
at 3.5p per share with no warrants.
-- Raised debt/equity hybrid financing of GBP2,370,000 in
aggregate from the issue of convertible loan notes convertible at
4.25p per share and 5.5p per share to existing and new investors,
with participation of all the directors of the Company.
-- Hybrid financing enabled Prospex to fund fully its 37% share
in the Selva field development to the point of first gas then
scheduled early in the second quarter of 2023.
-- Cash and cash equivalents at the year-end of GBP1,482,762 (2021: GBP220,060).
Operational Highlights
-- Selva Field
o During the year development work started at the Selva field in
the Po Valley region of northern Italy, operated by Po Valley
Energy (ASX:PVE) ("Po Valley" or "the operator").
o In January 2022, Po Valley, started and fully funded the
installation of the background seismic monitoring network to be
operational ahead of the 12 months required by the regulators.
o In June 2022, the penultimate approval for the production
concession at the Podere Gallina licence was granted by the Emilia
Romagna Regional Council. This local government approval was a
prerequisite for Italy's MITE to grant the Final Production
Concession at Selva Malvezzi.
o On 29 July 2022, full production concession approval was
granted by the MITE. In August 2022, contracts were awarded, and
construction commenced of the automated gas plant facilities, the
installation of a 1,000 metre four-inch pipeline and the connection
to the national gas grid network operated by SNAM.
o In September 2022, Po Valley completed the land acquisition
required to connect the pipeline from the suspended well at Selva
Malvezzi to the SNAM gas grid and purchased the required 1km of
4-inch steel pipe.
o In November 2022, final approvals were received to commence
field development works at the Selva Gas Field and gas plant
construction and pipeline installation started.
-- El Romeral
o Operations continued at El Romeral in Andalucía, southern
Spain through the Company's investment in Tarba Energía, the
operator.
o Gross monthly revenue from electricity generation at the El
Romeral power plant peaked at over EUR500,000 in March 2022.
o In March 2022, Tarba completed the El Romeral plant automation
project which started in December 2021 allowing 24/7 production
operations.
o On 28 April 2022, Tarba completed the repayment of its
outstanding loans plus interest to the two co-owners Prospex Energy
and Warrego Energy.
o In June 2022, Tarba commenced the first of two solar
installation projects at El Romeral, 'Project Apollo' the
installation of solar panels on the power station roof. The second
solar project 'Project Helios' which involves the installation of a
4.9MW solar farm adjacent to the power plant was recommended for an
investment decision and front-end engineering and design ('FEED')
studies commenced.
o By August 2022 the El Romeral asset was generating healthy
revenues with daily electricity spot prices averaging more than
EUR180/MWhr in the quarter to 30 June 2022.
o In August 2022, the installation of 83 solar panels on the
roof of the power plant was completed. Project Apollo has an
estimated return on investment of 3 - 4 years.
o By December 2022, the reinterpretation of the reprocessed 2D
seismic lines across the El Romeral Production Concessions started
in May 2022, was nearing completion with the aim of optimising the
top 5 drilling targets for the permitting application process as
requested by MITECO, the Spanish regulator.
Post period highlights
-- In February 2023, a joint Gas Sales agreement was signed to
offtake and sell gas from the Selva field in Italy.
-- In May 2023, the gas plant construction at Selva was
completed and is ready for commissioning. The connections to the
gas grid operated by SNAM are complete, enabling the delivery of
gas to the Italian gas grid. With the SNAM connection and
transmission arrangements finalised, Po Valley Operations has
initiated the process of recovering EUR757,000 performance bond
funds (100% basis - EUR280,090 net to Prospex), previously
deposited with SNAM.
-- In April 2023, the Company strengthened the board of
directors with the appointment of Andrew Hay as a Non-Executive
Director.
Notice of Annual General Meeting
The Company also gives notice that its AGM will be held at the
offices of Shakespeare Martineau LLP, 6th Floor 60 Gracechurch
Street, London, United Kingdom, EC3V 0HR at 11.00 a.m. on 20 June
2023.
The Financial Results for the year ended 31 December 2022
together with the Notice of AGM will be available to download today
from the Company's website and will also be posted to shareholders
on or around 26 May 2023.
Commenting on the results, Mark Routh, Prospex's CEO, said:
"I am pleased with these strong results that have laid the
foundation for Prospex to progress to the next level, with
increased gas production imminent from the Selva field in Italy.
2023 is set to be a truly transformational year for the Company. We
are continuously looking for ways to improve our current
investments and we have made advancements at our Spanish plant with
Project Helios which would increase output from the plant by up to
60%. With the completion of the project expected to take less than
12 months, it is an exciting time in Prospex's history.
"Looking ahead, I expect to be reporting on the organic growth
of the Company's assets with several future planned wells
proceeding through the permitting process. We are continually
monitoring other prospects for any potential opportunities to
expand the business but will remain technically rigorous in our
selection of growth opportunities that we believe will only benefit
the Company.
"Prospex is in a strong operational position with an experienced
team who remain committed to increase shareholder value."
* *S * *
For further information visit www.prospex.energy or contact the
following:
Mark Routh Prospex Energy PLC Tel: +44 (0) 20
7236 1177
Ritchie Balmer Strand Hanson Limited Tel: +44 (0) 20
Rory Murphy 7409 3494
Andrew Monk (Corporate Broking) VSA Capital Limited Tel: +44 (0) 20
Andrew Raca/Alex Cabral (Corporate Finance) 3005 5000
Colin Rowbury Novum Securities Tel: +44 (0) 20
Jon Belliss Limited 7399 9427
Susie Geliher St Brides Partners Tel: +44 (0) 20
Ana Ribeiro Limited 7236 1177
Notes
About Selva:
The Podere Gallina Licence is in the Po Valley region of
northern Italy. The licence contains the currently shut--in Selva
gas-field as well as exciting exploration and development
opportunities. The Podere Maiar-1 well at Selva was completed in
December 2017 and successfully found a commercial gas accumulation
up-dip of the previous wells on the Selva field. The Company has a
37% working interest in the Podere Gallina licence held via
Prospex's two wholly owned subsidiaries, PXOG Marshall Ltd (17% of
the Licence) and UOG Italia Srl (20% of the Licence).
The Podere Gallina Licence holds independently verified 2P gross
reserves of 13.4 Bcf (5.0 Bcf net to Prospex at 37% WI) in Selva,
gross Contingent 2C Resources of 14.1 Bcf (5.2 Bcf net) and a
further 88.2 Bcf of gross Best Estimate Prospective Resources
(un-risked) (32.6 Bcf net).([1])
An independent Competent Person's Report of the Podere Gallina
Licence was prepared by CGG Services (UK) Limited in January 2019
on behalf of the joint venture.([1]) It attributed a total of 379
MMscm (13.4 Bcf) gross 2P reserves for the Selva redevelopment
project.
References:
([1]) Source: "Competent Person's Report Podere Gallina Licence,
Italy" prepared by CGG Services (UK) Limited in July 2022 [
https://bit.ly/3JASCc2 ]
About El Romeral and Tarba
The El Romeral gas and power project in Spain, with gas
production wells supplying gas to an 8.1MW power plant near Carmona
in Southern Spain is owned and operated by Tarba. It is currently
operating at about 30% of its full capacity because Tarba is
waiting on permits to drill further infill wells on the concessions
to increase production. Tarba is already categorised as a hybrid
energy provider with the successful installation of photovoltaic
panels on the roof of the plant in August 2022. Prospex owns a
49.9% working interest in the El Romeral project via Tarba. The
remaining 50.1% working interest is owned by Warrego Energy
Limited. Warrego Energy is now wholly owned by Hancock Energy (PB)
Pty Ltd. in Perth Western Australia. Tarba sells electricity
generated from the plant on the spot market in Spain. The El
Romeral licences comprise three contiguous production
concessions.
Glossary:
scm Standard cubic metres
MMscm Million standard cubic metres
Bcf Billion standard cubic feet
MMscfd million standard cubic feet per day
MWh Mega Watt hour
Qualified Person Signoff
In accordance with the AIM notice for Mining and Oil and Gas
Companies, the Company discloses that Mark Routh, the CEO and a
director of Prospex Energy plc has reviewed the technical
information contained herein. Mark Routh has an MSc in Petroleum
Engineering and has been a member of the Society of Petroleum
Engineers since 1985. He has over 40 years operating experience in
the upstream oil and gas industry. Mark Routh consents to the
inclusion of the information in the form and context in which it
appears.
Chairman's Report
for the year ended 31 December 2022
During 2022 there was increased activity not only from ongoing
operations in Spain but also from the start of construction and
development works on our asset in Italy. Operations in the
Company's investment portfolio were carried out with an exemplary
safety performance by our operators, contractors and partners with
no loss time incidents, health and safety or environmental issues.
The Company continues to monitor its HSE performance by promoting a
high level of HSE awareness and rewarding good practices and
culture with its partners, operators and subcontractors.
The 2022 financial and Corporate Highlights for Prospex Energy
were underlined by progress on a number of fronts plus strong
commodity prices leading to a very strong rise in the Company's
share price - a rise of more than 300% in the year. Subsequent to
year end, commodity pricing has returned to lower levels with a
consequent reduction in share price.
In April 2022, the Company increased its stake in the Selva Gas
Field in the Po Valley in Italy to 37% following a successful
fundraise of GBP2,454,800 from the issue of shares at 3.5p. The
fundraising was supported by existing institutional and retail
investors, as well as the Directors of the Company.
The increase in the net book value of investments to
GBP16,064,640 from GBP6,697,305 at the end of last year reflects
the after-tax effect of the revaluation of the Company's 37% (2021
: 17%) working interest in the Podere Gallina licence in Italy.
We have applied the same valuation methodology which was used in
the audited financial statements at the end of 2021, consistently
applied it to the additional 20% working interest acquired in the
current period and updated the underlying future gas pricing
assumptions to the European forward contract gas prices applicable
on 11 May 2023.
The current forward contract prices for European natural gas at
the date of preparation of these results remain above those at the
end of 2021, upon which the valuations to-date have been based, but
below those at the current reporting date of 31 December 2022.
Applying the more recent forward gas prices provides us with a
more up-to-date estimate of future revenues, and a valuation which
we consider fair and reasonable having taken into account all
current market expectations.
In May 2022, the Company appointed VSA Capital Ltd as its Joint
Corporate Broker and Joint Financial Adviser.
In July 2022, GBP1.87 million was raised from the issue of
Convertible Loan Notes convertible at 4.25p per share to existing
and new investors, with participation of all of the Directors of
the Company.
In September 2022, a further GBP0.5 million was raised from the
issue of Convertible Loan Notes convertible at 5.5p per share to
existing investors.
This debt/equity hybrid financing of GBP2,370,000 in aggregate,
meant that Prospex was able to state that it had sufficient cash in
hand to fund fully its 37% share in the Selva field development to
the point of first gas then scheduled early in the second quarter
of 2023.
This funding by the Company via Convertible Loan Notes from our
existing network of shareholders and supporters over the years plus
a number of new subscribers was undertaken without issuing
warrants, with no fees to brokers and at the prevailing market
share price at the time or at a small premium. A total of
GBP4,824,800 was raised during the year via the issue of
Convertible Loan Notes and new equity. The interest and capital
repayments on the Convertible Loan Notes have been conservatively
scheduled to fall well within the expected post-tax, post-royalty
cash flows from Selva, with the first capital repayments scheduled
on 30 September 2023, unless previously converted. Part of the
remaining cash flow generated from the Italian asset will be
earmarked for future drilling and seismic data acquisition on our
existing permits in both Italy and Spain.
The conversion of historic 3p warrants between April and October
2022 generated further funds of GBP730,000 and the exercise of
management options at 4p generated GBP70,640.
Chairman's Report
for the year ended 31 December 2022
Operational Highlights:
Selva Field in Italy (37% working interest)
In January 2022, Po Valley Energy, the operator of the Selva
field in the Po Valley in Italy, starts and fully funds the
installation of the background seismic monitoring network to be
operational ahead of the 12 months required by the regulators.
In February 2022, the equity fund-raise of GBP2,454,800 at 3.5p
per share allowed the Company to complete the acquisition of the
additional 20% of the Selva Field in Italy which was agreed in
August 2021 in a sale and purchase agreement with UOG.
In April 2022, the acquisition of the extra 20% of the Selva Gas
Field completed, with the Ministry of Ecological Transition
("MITE") in Rome approving Prospex's acquisition of UOG Italia Srl
which owns 20% of the joint venture in the licence. Together with
the existing stake in the joint venture held through PXOG Marshall,
this brought the Company's stake in the project to 37%.
The acquisition of 100% of UOG Italia increased the Company's
holding in the asset from 17% to 37% and therefore increased
Prospex's share of Selva's independently verified 2P gas reserves
by 2.7 Bcf, from 2.3 Bcf to 5.0 Bcf([1]) .
In June 2022, the penultimate approval for the production
concession at the Podere Gallina licence was granted by the Emilia
Romagna Regional Council. This local government approval was a
prerequisite for Italy's MITE to grant the Final Production
Concession at Selva Malvezzi.
On 29 July 2022, full production concession approval was finally
granted by the MITE for the Selva Gas Field. This led to the
awarding of contracts and first payments made to the contractors
for the construction of the automated gas plant facilities, the
installation of a 1,000 metre four-inch pipeline and the connection
to the national gas grid network operated by SNAM. Full production
concession approval was also the trigger for Prospex to pay its 37%
share of the EUR757,000 SNAM Bond (EUR280,090 net to Prospex)
necessary to procure the connection to the national gas grid with
SNAM. The EUR757,000 had been advanced to SNAM by the operator Po
Valley Energy on behalf of the Joint Venture in February 2022.
On 8 August 2022, Po Valley Energy the operator signed a
construction contract with TESI Srl ('TESI') an Italian engineering
firm, to install the gas plant and pipeline to connect the
suspended Podere Maiar-1 well at Selva to Italy's gas grid. The
contract secured development costs and timing with construction
costs EUR130,000 (GBP110,000) less than previously forecast. Post
period end, construction has completed and first gas is expected in
Q2 of 2023.
Following the successful completion of funding through
Convertible Loan Notes, in September 2022, Prospex could now state
that it was fully funded to first gas at the Selva Field.
Also in September 2022, Po Valley the operator of Selva,
completed the land acquisition required to connect the pipeline
from the suspended well at Selva Malvezzi to the SNAM gas grid and
purchased the required 1km of 4-inch steel pipe.
In November 2022, final approvals were received to commence
field development works at the Selva Gas Field and gas plant
construction and pipeline installation started.
In December 2022, gas purchase and off-take agreements for the
sale of gas from the Selva field were nearing completion for the
joint sale of the total gas production from the asset.
Post period end: A Gas Sales agreement was signed in February
2023 and in May 2023 the gas plant construction was completed and
is ready for commissioning. The connections to the gas grid
operated by SNAM are complete, enabling the delivery of gas to the
Italian gas grid. With the SNAM connection and transmission
arrangements finalised, Po Valley Operations has initiated the
process of recovering EUR757,000 performance bond funds (100% basis
- EUR280,090 net to Prospex), previously deposited with SNAM.
([1]) Source: "Competent Person's Report Podere Gallina Licence,
Italy" prepared by CGG Services (UK) Limited in July 2022
https://bit.ly/3JASCc2
Chairman's Report
for the year ended 31 December 2022
El Romeral in Spain (49.9% interest)
The El Romeral gas and power project in Spain, with gas
production wells supplying gas to an 8.1MW power plant near Carmona
in Southern Spain is owned and operated by Tarba Energía Srl the
operating company. It is currently operating at about 30% of its
full capacity because Tarba is waiting on permits to drill further
infill wells on the concessions to increase production. Prospex
owns a 49.9% working interest in the El Romeral project via Tarba.
The remaining 50.1% working interest is owned by Warrego Energy
Limited. Tarba sells electricity generated from the plant on the
spot market in Spain. The El Romeral licences comprise three
contiguous production concessions.
In March 2022, Tarba completed the El Romeral plant automation
project which started in December 2021 allowing the live testing of
24/7 production operations. A detailed reservoir modelling project
was completed which confirmed that continuous production operation
was not only feasible but also optimised ultimate gas recovery.
Gross monthly revenue from electricity generation at the El
Romeral power plant peaked at over EUR500,000 in March 2022.
By April 2022, the El Romeral power plant was generating
electricity 24 hours a day and 7 days per week and electricity
sales were at record levels.
On 28 April 2022, Tarba completed the repayment of its
outstanding loans plus interest to the two co-owners Prospex Energy
and Warrego Energy. The loans repaid of EUR289,577, plus accrued
interest of EUR19,092.97, equalled a total of EUR308,669.97.
Prospex's share of this is EUR153,698.64. The repayment of loans
held in the El Romeral asset totalled EUR589,577, plus accrued
interest of EUR19,092.97.
In May 2022, the reprocessing of 250km of 2D seismic lines was
instigated to improve the subsurface imaging across the three El
Romeral Production Concessions.
In June 2022, Tarba commenced the first of two solar
installation projects at El Romeral, 'Project Apollo' the
installation of solar panels on the power station roof. The second
solar project 'Project Helios' which involves the installation of a
4.9MW solar farm adjacent to the power plant was recommended for an
investment decision and front-end engineering and design ('FEED')
studies commenced.
In June 2022, the Spanish government announced that it would
invoke a gas price cap for companies selling gas for electricity
generation of EUR48.8/MWhr. As a result, Spanish daily electricity
prices were expected to average EUR150/MWhr for the next 12 months.
Average prices remained or exceeded this level until year end.
August 2022 saw the El Romeral asset continuing to generate
healthy revenues with daily electricity spot prices averaging more
than EUR180/MWhr in the quarter to 30 June 2022.
August 2022 also saw the completion of the installation of 83
solar panels on the roof of the power plant. Project Apollo has an
estimated return on investment of 3 - 4 years.
By December 2022, the reinterpretation of the reprocessed 2D
seismic lines across the El Romeral Production Concessions was
nearing completion with the aim of optimising the top 5 drilling
targets for the permitting application process as requested by
MITECO, the Spanish regulator.
By the year end, Prospex's JV partner in its assets in Spain,
through Tarba, Warrego Energy is subject to a takeover bid in
Australia.
Post period end, Hancock Energy (PB) Pty Ltd completed the
acquisition of 100% of the shares of Warrego Energy Ltd, which was
then de-listed from the ASX exchange in Sydney, Australia.
Chairman's Report
for the year ended 31 December 2022
Financial Review
For the year ended 31 December 2022, the Company is reporting
Total Assets of GBP23,062,739 (2021: GBP8,984,437), the value of
which largely comprises the Company's investment in PXOG Marshall
Ltd, the vehicle for the Company's Italian assets. The 156.7%
increase is dominated by a revaluation reflecting measured
recognition of positive changes in the forward curve of European
gas prices at 31 December 2022 and includes revaluations of the
Company's investments ('the Investments') as well as repayments and
advances on loans receivable from those investments. Unrealised
gains arising on revaluation of Investments at fair value amounted
to GBP9,367,435 (2021: GBP3,076,415).
As at 31 December 2022, the fair value of the Company's
investments stood at GBP16,064,160 (2021: GBP6,697,305). The
combined value of these equity investments, current and non-current
loans is GBP21,561,316 (2021: GBP8,726,484).
This increase in the net book value of investments to
GBP16,064,640 from GBP6,697,305 at the end of last year reflects
the after-tax effect of the revaluation of the Company's working
interest in the Podere Gallina licence in Italy. In April 2022, the
Company increased its stake in the Selva Gas Field in the Po Valley
in Italy to 37% following the acquisition of a further 20% working
interest in the licence from UOG.
The asset was also re-valued using the same valuation
methodology which was used in the audited financial statements at
the end of 2021 but utilising the underlying future gas pricing
assumptions to the TTF European forward contract gas prices
applicable on 11 May 2023. The current forward contract prices for
European natural gas at the date of preparation of these results
remain above those at the end of 2021, upon which the valuations
to-date have been based, but below those at the current reporting
date of 31 December 2022.
The Company continues to have significant asset backing relative
to its market capitalisation.
Administrative expenses for the full year totalled GBP975,725, a
9.4% increase from 2021's GBP891,676.
As at 31 December 2022, the Company held cash and cash
equivalents of GBP1,482,762 (2021: GBP220,060).
Business Development
The financial year ended 2022 saw unprecedented volatility in
both gas and electricity prices on account of several dramatic
events on the world stage. The Company, through its Tarba
investment, enjoyed record income from power generation in the
month of March 2022, but the combination of regulation, attempts at
price capping and the macro effects of the energy market supply and
demand forces have seen prices reducing and volatility normalising.
In evaluating business development opportunities, the Prospex Board
applied a conservative approach to forward energy pricing during
the year. Several data rooms were attended and assessed and
discussions on many acquisitions progressed to various degrees, but
none was finalised during the year, with the exception of the 20%
acquisition from UOG of the Selva Joint Venture detailed above,
which was signed in August 2021 and finalised in April 2022. The
Company continues to focus on onshore natural gas and power assets
in Western Europe. The Company's leadership considers that this
geographical and product focus is an essential ingredient to
setting Company strategy and defining the boundaries within which
we operate. Natural gas has been widely recognised as the
transition fuel as Europe progresses to rely upon less carbon
intensive energy sources. In 2022, the Company actively pursued
investments in renewable energy sources with two solar photovoltaic
projects at the El Romeral asset in Spain. This has already moved
Prospex Energy to be categorised as an integrated energy company
with a business model of utilising the traditional natural gas
assets to expand into the renewable energy space.
Chairman's Report
for the year ended 31 December 2022
Outlook
The outlook for Prospex remains one of consolidation and growth.
With the Selva asset generating cash flows from Q2-2023, the
Company expects to deliver organic growth in its two main assets in
Spain and Italy. Subsurface technical work and reprocessing of the
2D seismic lines is underway on the Selva Malvezzi production
concession in order to optimise the final well locations for the
next three wells to be drilled, Selva North, Selva South and East
Selva. In Spain on the Romeral production concessions, the
environmental impact assessment process has been initiated in order
to be granted the permits to drill five new wells which can be
connected to Tarba's local pipeline network so that the El Romeral
power plant can re-establish 100% of its installed generation
capacity. Currently running at just 30% capacity with just one of
the three engines generating electricity at a time, it only needs
two of the three proposed wells to be connected to the power plant
for the power station to have sufficient gas to run all three
engines and achieve the nameplate output capacity of 8.1MW.
Once the El Romeral concession wells are permitted, the Spanish
regulator has undertaken to address the issue of the suspended
Tesorillo permit. The owners of Tarba are ready to initiate the
permitting process for the appraisal well to be drilled on the
permit once the licence has been converted into an exploitation
concession.
The year ahead promises to see major progress. I look forward to
providing further updates as developments occur.
The significant impacts of COVID were still with us at the
beginning of 2022 and long-term effects continue. Our management,
staff, contractors and partners were steadfast in moving the
Company ahead throughout this challenging period and deserve our
thanks. After the year end, Dr Richard Mays, one of the founding
directors of the Company, retired from the Board after years of
providing strong and insightful leadership. Andrew Hay agreed to
join the Board and has proved an excellent addition. I would like
to take this opportunity to thank our investors whose support has
enabled the Company to achieve a level of success and to our
current and past directors, the Board and management team for their
continued hard work, commitment and support.
Bill Smith
Non-Executive Chairman
24 May 2023
Prospex Energy Plc
Statement of Profit or Loss and Other Comprehensive Income
for the year ended 31 December 2022
2022 2021
Notes GBP GBP
------------------------------------ ------ ------------ ---------------------
CONTINUING OPERATIONS
Other operating income 5 - 86,604
Administrative expenses (975,725) (891,676)
Share-based payment charges 23 (187,417) -
------------------------------------ ------ ------------ ---------------------
OPERATING LOSS (1,163,142) (805,072)
Gain on revaluation of investments 12 9,367,435 3,076,415
------------------------------------ ------ ------------ ---------------------
8,204,293 2,271,343
Finance income 7 324,052 109,618
Finance costs 7 (173,023) (80,771)
------------------------------------ ------ ------------ ---------------------
PROFIT BEFORE INCOME TAX 8 8,355,322 2,300,190
Income tax 9 (1,218,415) (40,394)
------------------------------------ ------ ------------ ---------------------
PROFIT FOR THE YEAR 7,136,907 2,259,796
------------------------------------ ------ ------------ ---------------------
EARNINGS PER SHARE 10
Basic earnings pence per share 2.88p 1.61p
Diluted earnings pence per share 2.66p 1.61p
------------------------------------ ------ ------------ ---------------------
Prospex Energy Plc (Registered number: 03896382)
Statement of Financial Position
31 December 2022
2022 2021
Notes GBP GBP
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 11 - -
Investments 12 16,064,640 6,697,305
Trade and other receivables 13 - 1,225,570
--------------------- --------------------
16,064,640 7,922,875
----------------------------------------- ------ --------------------- --------------------
CURRENT ASSETS
Trade and other receivables 13 5,515,237 841,502
Investments 14 100 -
Cash and cash equivalents 15 1,482,762 220,060
6,998,099 1,061,562
----------------------------------------- ------ --------------------- --------------------
TOTAL ASSETS 23,062,739 8,984,437
----------------------------------------- ------ --------------------- --------------------
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 16 7,225,893 7,124,355
Share premium 14,850,928 11,599,333
Merger reserve 2,416,667 2,416,667
Capital redemption reserve 43,333 43,333
Fair value reserve 14,755,732 6,067,267
Retained earnings (20,141,952) (18,748,005)
----------------------------------------- ------ --------------------- --------------------
TOTAL EQUITY 19,150,601 8,502,950
----------------------------------------- ------ --------------------- --------------------
LIABILITIES
NON-CURRENT LIABILITIES
Financial liabilities - borrowings
- Interest bearing loans and borrowings 18 799,145 247,232
Deferred taxation 19 1,258,809 40,394
2,057,954 287,626
----------------------------------------- ------ --------------------- --------------------
CURRENT LIABILITIES
Trade and other payables 17 41,440 52,892
Financial liabilities - borrowings
- Interest bearing loans and borrowings 18 1,812,744 140,969
-----------------------------------------
1,854,184 193,861
----------------------------------------- ------ --------------------- --------------------
TOTAL LIABILITIES 3,912,138 481,487
----------------------------------------- ------ --------------------- --------------------
TOTAL EQUITY AND LIABILITIES 23,062,739 8,984,437
----------------------------------------- ------ --------------------- --------------------
The financial statements were approved by the Board of Directors
and authorised for issue on 24 May 2023 and were signed on its
behalf by:
Mark Routh
Director
Prospex Energy Plc
Statement of Changes in Equity
for the year ended 31 December 2022
Capital
Merger redemption Fair value Retained
Share capital Share premium reserve reserve reserve earnings Total
GBP GBP GBP GBP GBP GBP
Balance at 1
January 2021 7,035,589 10,185,819 2,416,667 43,333 - (14,965,030) 4,716,378
Changes in
equity
Loss for the
year - - - - - 2,259,796 2,259,796
Issue of shares 88,766 1,492,910 - - - - 1,581,676
Costs of shares
issued - (54,900) - - - - (54,900)
Equity-settled
share-based
payments (24,496) - - - 24,496 -
Transfer to
fair value
reserve - - - - 6,067,267 (6,067,267) -
Balance at 31
December 2021 7,124,355 11,599,333 2,416,667 43,333 6,067,267 (18,748,005) 8,502,950
---------------- ------------------ --------------------- ------------------ ------------------ ------------------ --------------------- ---------------------
Changes in
equity
Profit for the
year - - - - - 7,136,907 7,136,907
Issue of shares 101,538 3,333,893 - - - - 3,435,431
Costs of shares
issued - (112,104) - - - - (112,104)
Lapse of share
options - 29,806 - - - (29,806) -
Equity-settled
share-based
payments - - - - - 187,417 187,417
Transfer to
fair value
reserve - - - - 8,688,465 (8,688,465) -
Balance at 31
December 2022 7,225,893 14,850,928 2,416,667 43,333 14,755,732 (20,141,952) 19,150,601
---------------- ------------------ --------------------- ------------------ ------------------ ------------------ --------------------- ---------------------
Share capital - The nominal value of the issued share
capital
Share premium account - Amounts received in excess of the
nominal value of the issued share capital less costs associated
with the issue of shares
Merger reserve - The difference between the nominal value of the
share capital issued by the Company and the fair value of the
subsidiary at the date of acquisition
Capital redemption reserve - The amounts transferred following
the redemption or purchase of the Company's own shares
Retained earnings - Accumulated comprehensive income for the
year and prior periods
Fair value reserve - the cumulative fair value changes of the
company's fixed asset investment, net of deferred tax
Prospex Energy Plc
Statement of Cash Flows
for the year ended 31 December 2022
2022 2021
Notes GBP GBP
-------------------------------------------- ------ ------------------ ---------------------
Cash outflow from operations 1 (4,113,537) (941,242)
-------------------------------------------- ------ ------------------ ---------------------
Cash flows from investing activities
Interest received 2,247 -
Interest paid (124,338) (106,722)
-------------------------------------------- ------ ------------------ ---------------------
Net cash outflow from investing activities (122,091) (106,722)
-------------------------------------------- ------ ------------------ ---------------------
Cash flows from financing activities
New loan notes 2,370,000 -
Bank loan repayment (42,394) (7,238)
Loan repayments (131,353) (56,294)
Share issue 3,414,181 1,165,838
Costs of shares issued (112,104) (54,900)
-------------------------------------------- ------ ------------------ ---------------------
Net cash inflow from financing activities 5,498,330 1,047,406
-------------------------------------------- ------ ------------------ ---------------------
Increase/(decrease) in cash and cash
equivalents 1,262,702 (558)
Cash and cash equivalents at beginning
of year 2 220,060 220,618
-------------------------------------------- ------ ------------------ ---------------------
Cash and cash equivalents at end
of year 2 1,482,762 220,060
-------------------------------------------- ------ ------------------ ---------------------
Prospex Energy Plc
Notes to the Statement of Cash Flows
for the year ended 31 December 2022
1. RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS
2022 2021
GBP GBP
----------------------------------------- --------------- ---------------------
Cash flows from operations
Profit before income tax 8,355,322 2,300,190
Gain on revaluation of fixed asset
investments (9,367,435) (3,076,415)
Finance income (324,052) (109,618)
Finance costs 173,023 80,771
------------------------------------------ --------------- ---------------------
Operating loss (1,163,142) (805,072)
Increase in trade and other receivables (3,126,358) (50,751)
Decrease in trade and other payables (11,454) (85,419)
Equity settled share-based payments 187,417 -
----------------------------------------- --------------- ---------------------
Net cash outflow from operations (4,113,537) (941,242)
------------------------------------------ --------------- ---------------------
2. CASH AND CASH EQUIVALENTS
The amounts disclosed on the Statement of Cash Flows in respect
of cash and cash equivalents are in respect of these Statement of
Financial Position amounts:
Year ended 31 December 2022 31.12.22 01.01.22
GBP GBP
----------------------------- ----------------- -----------------
Cash and cash equivalents 1,482,762 220,060
------------------------------ ----------------- -----------------
Year ended 31 December 2021 31.12.21 01.01.21
GBP GBP
----------------- -----------------
Cash and cash equivalents 220,060 220,618
------------------------------ ----------------- -----------------
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
1. STATUTORY INFORMATION
Prospex Energy Plc is a public limited company, is registered in
England and Wales and is quoted on the AIM Market of the London
Stock Exchange Plc. The Company's registered number and registered
office address can be found on the Company Information page.
The presentation currency of the financial statements is the
Pound Sterling (GBP).
2. ACCOUNTING POLICIES
Basis of preparation
The Company's financial statements have been prepared in
accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006 as they apply to
the financial statements of the Company for the year ended 31
December 2022 and as applied in accordance with the provisions of
the Companies Act 2006.
The Company financial statements have been prepared under the
historical cost convention or fair value where appropriate.
Preparation of consolidated financial statements
The Company is an investment entity and, as such, does not
consolidate the investment entities it controls. The Company's
interests in subsidiaries are recognised at fair value through
profit and loss.
Going concern
The Company has reported an operating loss for the 2022 year of
GBP1,163,142. In 2023 it is expected that the Company will have
increased receipts resulting from first gas sales at its investment
in Italy. These receipts will initially be received as loan
repayments together with interest charged, reimbursing the Company
for capital advances made in prior years which were applied to
acquisition, exploration and development costs. As a result, it is
expected that the Company will again record an operating loss
during 2023, but an increase in cash inflows and balance sheet
strength.
The Directors have prepared detailed financial forecasts and
cash flows looking beyond 12 months from the date of the approval
of these financial statements. In developing these forecasts, the
Directors have made assumptions based upon their view of the
current and future economic conditions that are expected to prevail
over the forecast period. The Directors estimate that the cash held
by the Company together with known receivables and anticipated
income from its Italian asset will be sufficient to support the
current level of activities beyond 2023. Furthermore, the Company's
asset in Spain is fully self-funding at current operating levels
and is expected to have sufficient cash resources and income to
fund existing operations beyond the end of 2023.
The Board expects to raise additional funding only as and when
required to cover any shortfall between the Group's own cash
resources and its development and expansion of activities. Should
regulatory approval be received which allows for an expansion of
current operations, or appropriate new investment opportunities
arise which meet the Company's objectives and criteria, then the
Directors will explore all potential sources of funding available
to meet such shortfall. Based on the Company's track-record, assets
and prospects, the Directors have a reasonable expectation that
they will be able to secure such further funding should the need
arise.
The Directors have therefore prepared the financial statements
on a going concern basis.
Property, plant and equipment
Depreciation is provided at the following annual rates in order
to write off the cost less estimated residual value of each asset
over its estimated useful life.
Computer equipment - 25% per annum on reducing balance
Financial instruments
Financial assets and financial liabilities are recognised on the
balance sheet when the Company becomes a party to the contractual
provisions of the instrument.
Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. The
principal financial assets of the Company are loans and
receivables, which arise principally through the provision of goods
and services to customers (e.g. trade receivables) but also
incorporate other types of contractual monetary asset. They are
included in current assets, except for maturities greater than 12
months after the balance sheet date. These are classified as
non-current assets.
The Company's loans and receivables are recognised and carried
at the lower of their original amount less an allowance for any
doubtful amounts. An allowance is made when collection of the full
amount is no longer considered possible.
The Company's loans and receivables comprise trade and other
receivables and cash and cash equivalents in the consolidated
statement of financial position.
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
2. ACCOUNTING POLICIES - continued
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the entity after deducting all
of its financial liabilities.
Where the contractual obligations of financial instruments
(including share capital) are equivalent to a similar debt
instrument, those financial instruments are classed as financial
liabilities. Financial liabilities are presented as such in the
balance sheet. Finance costs and gains or losses relating to
financial liabilities are included in the profit and loss account.
Finance costs are calculated so as to produce a constant rate of
return on the outstanding liability.
Where the contractual terms of share capital do not have any
terms meeting the definition of a financial liability then this is
classed as an equity instrument. Dividends and distributions
relating to equity instruments are debited direct to equity.
Equity comprises the following:
- Share capital represents the nominal value of equity
shares;
- Share premium represents the excess over nominal value of the
fair value of consideration received for equity shares, net of
expenses of the share issue;
- Profit and loss reserve represents retained deficit;
- The capital redemption reserve arises on redemption of shares
in previous years and own share reserve;
- Merger reserve represents the difference between the nominal
value of the share capital issued by the Company and the fair value
of the subsidiary at the date of acquisition;
- Fair value reserve represents the cumulative fair value
changes of the company's fixed asset investment, net of deferred
tax.
Leases
Leases are recognised as finance leases. The lease liability is
initially recognised at the present value of the lease payments
which have not yet been made and subsequently measured under the
amortised cost method. The initial cost of the right-of-use asset
comprises the amount of the initial measurement of the lease
liability, lease payments made prior to the lease commencement
date, initial direct costs and the estimated costs of removing or
dismantling the underlying asset per the conditions of the
contract.
Where ownership of the right-of-use asset transfers to the
lessee at the end of the lease term, the right-of-use asset is
depreciated over the asset's remaining useful life. If ownership of
the right-of-use asset does not transfer to the lessee at the end
of the lease term, depreciation is charged over the shorter of the
useful life of the right-of-use asset and the lease term.
Taxation
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules, using
tax rates enacted or substantially enacted by the statement of
financial position date.
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes. Deferred tax is determined using tax rates that have been
enacted or substantially enacted at the balance sheet date and are
expected to apply when the related deferred income tax asset is
realised, or the deferred tax liability is settled. Deferred tax is
charged or credited in the income statement, except when it relates
to items charged or credited to equity, in which case the deferred
tax is also dealt with in equity. Deferred tax assets are only
recognised to the extent that it is probable that future taxable
profit will be available against which the asset can be
utilised.
Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand and
short-term deposits with an original maturity of three months or
less.
Trade and other payables
Trade and other payables are initially measured at fair value
and subsequently measured at amortised cost using the effective
interest rate method.
Foreign currency translation
Items included in the Financial Statements are measured using
the currency of the primary economic environment in which the
Company operates (the functional currency) which is UK sterling
(GBP). The Financial Statements are accordingly presented in UK
Sterling.
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
2. ACCOUNTING POLICIES - continued
Foreign currency translation - continued
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or at an average rate for a period if the rates do not
fluctuate significantly. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the
Statement of Profit or Loss. Non-monetary items that are measured
in terms of historical cost in a foreign currency are not
retranslated.
Finance income and finance costs
Finance income is recognised when it is probable that the
economic benefits will flow to the Company and the amount of income
can be measured reliably. It is accrued on a time basis by
reference to the principal outstanding and at the effective
interest rate applicable.
Borrowing costs are recognised as an expense in the period in
which they are incurred.
Equity-settled share-based payment
The Company makes equity-settled share-based payments. The fair
value of options granted is recognised as an expense, with a
corresponding increase in equity. The fair value is measured at
grant date and spread over the vesting period, which is the period
over which all of the specified vesting conditions are to be
satisfied. The fair value of the options granted is measured based
on the Black-Scholes framework, taking into account the terms and
conditions upon which the instruments were granted. At each balance
sheet date, the Company revises its estimate of the number of
options that are expected to become exercisable. It recognises the
impact of the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
Government grants
Grants that compensate the Company for expenses incurred are
recognised in profit or loss on a systematic basis in the periods
in which the expenses are recognised.
Accounting standards issued but not yet effective and/or
adopted
As at the date of approval of these financial statements, the
following standards were in issue but not yet effective. These
standards have not been adopted early by the Company as they are
not expected to have a material impact on the Company's financial
statements.
Effective
date (period
beginning
on or after)
--------------------- ----------------------------------------------------- --------------
IFRS 4 Amendments - Applying IFRS 9 'Financial Instruments' 01/01/2023
with IFRS 4 'Insurance Contracts'
IFRS 16 Amendment - Lease Liability in a Sale and Leaseback 01/01/2024
IAS 1 Amendment - Classification of Liabilities as 01/01/2023
Current or Non-Current
IAS 1, IFRS Practice Amendment - Disclosure of accounting policies 01/01/2023
Statement 2
IAS 1 Amendment - Non-current Liabilities with Covenants 01/01/2024
IAS 8 Amendment - Definition of Accounting estimates 01/01/2023
IAS 12 Amendment - Deferred Taxation related to Assets 01/01/2023
and Liabilities arising from a Single Transaction
--------------------- ----------------------------------------------------- --------------
The International Financial Reporting Interpretations Committee
has also issued interpretations which the Company does not consider
will have a significant impact on the financial statements.
Revenue recognition
Revenue is measured at the fair value of consideration
receivable, net of any discounts and VAT. It is recognised to the
extent that the transfer of promised services to a customer has
been satisfied and the revenue can be reliably measured.
Revenue from the rendering of services to the customer is
considered to have been satisfied when the service has been
undertaken.
Revenue which is not related to the principal activity of the
Company is recognised in the Statement of Profit or Loss as other
operating income. Such income includes consultancy fees and rent
receivable.
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the financial information in conformity with
IFRS requires the use of certain critical accounting estimates that
affect the reported amounts of assets and liabilities at the date
of the financial information and the reported amounts of revenue
and expenses during the reporting period. Although these estimates
are based on management's best knowledge of the amounts, events or
actions, actual results ultimately may differ from these estimates.
The estimates and underlying assumptions are as follows:
Investment entities
The judgements, assumptions and estimates involved in the
Company's accounting policies that are considered by the Board to
be the most important to the portrayal of its financial condition
are the fair valuation of the investment and the assessment
regarding investment entities. The investment portfolio is held at
fair value. The Directors review the valuations policies, process
and application to individual investments.
Entities that meet the definition of an investment entity within
IFRS 10 are required to account for most investments in controlled
entities, as well as investments in associates and joint ventures,
at fair value through profit and loss. The Board has concluded that
the Company continues to meet the definition of an investment
entity as its strategic objective of investing in portfolio
investments for the purpose of generating returns in the form of
investment income and capital appreciation remains unchanged
Fair value is the underlying principle and is defined as "the
price that would be received to sell an asset in an orderly
transaction between market participants at the measurement date".
Fair value is therefore an estimate and, as such, determining fair
value requires the use of judgement. The quoted assets in our
portfolio are valued at their closing bid price at the balance
sheet date. The largest investment in the portfolio, however, is
represented by an unquoted investment.
Impairment of assets
The Company's principal investments are in wholly owned unquoted
subsidiaries which each have a minority interest in overseas
entities with energy assets.
The Company is required to test, on an annual basis, whether its
non-current assets have suffered any impairment. Determining
whether these assets are impaired requires an estimation of the
value in use of the cash-generating units to which the assets have
been allocated. The value in use calculation requires the Directors
to estimate the future cash flows expected to arise from the
cash-generating unit and a suitable discount rate to calculate the
present value. Subsequent changes to the cash generating unit
allocation or to the timing of cash flows could impact on the
carrying value of the respective assets.
The calculation of value-in-use for energy assets under
development or in production is most sensitive to the following
assumptions:
- Commercial reserves
- production volumes;
- commodity prices;
- fixed and variable operating costs;
- capital expenditure; and
- discount rates.
A potential change in any of the above assumptions may cause the
estimated recoverable value to be lower than the carrying value,
resulting in an impairment loss. The assumptions which would have
the greatest impact on the recoverable amounts of the fields are
production volumes and commodity prices
Share based payments
The estimates of share-based payments requires that management
selects an appropriate valuation model and make decisions on
various inputs into the model including the volatility of its own
share price, the probable life of the options before exercise and
behavioural consideration of employees.
Deferred tax assets
Deferred taxation is provided for using the liability method.
Deferred tax assets are recognised in respect of tax losses where
the Directors believe that it is probable that future profits will
be relieved by the benefit of tax losses brought forward. The Board
considers the likely utilisation of such losses by reviewing
budgets and medium-term plans for the Company. The Directors have
decided that no deferred tax asset should be recognised at 31
December 2022. If the actual profits earned by the Company differs
from the budgets and forecasts used then the value of such deferred
tax assets may differ from that shown in these financial
statements.
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
4. REVENUE
Segmental reporting
The Company is an Investing Company. The results for this
continuing operation, all of which were carried out in the UK, are
disclosed in the Income Statement. The net assets as at 31 December
2022 as shown on the Statement of Financial Position all relate to
the Investment activity.
5. OTHER OPERATING INCOME
2022 2021
GBP GBP
------------------- --------------------- ------------------
Consultancy fees - 29,150
Government grants - 57,454
-------------------- ---------------------- ------------------
- 86,604
---------------------- ------------------ ------------------
6. EMPLOYEES AND DIRECTORS
2022 2021
GBP GBP
----------------------- ---------------- ------------------
Wages and salaries 484,633 460,249
Social security costs 56,425 49,550
Other pension costs 10,140 21,395
Share-based payments 179,971 -
----------------------- ---------------- ------------------
731,169 531.194
----------------------- ---------------- ------------------
The average number of employees during the year was as
follows:
2022 2021
Number Number
----------- ------------------- ---------------------
Directors 4 6
Staff 3 4
7 10
----------- ------------------- ---------------------
Under the Pensions Act 2008, every employer must put certain
staff into a pension scheme and contribute to it. The Company
auto-enrolled its eligible employees in a defined contribution
scheme. The charge to the Statement of Profit or Loss represents
the amounts paid to the scheme. At the year end, the amount due to
the pension scheme was GBPnil (2021: GBPnil).
Details of Directors' remuneration can be found in note 24.
7. NET FINANCE COSTS
2022 2021
GBP GBP
----------------------------------- -------------------- ---------------------
Finance income
Interest receivable on group loan 321,805 109,618
Bank interest receivable 2,247 -
-------------------- ---------------------
324,052 109,618
----------------------------------- -------------------- ---------------------
Finance costs
Loan interest payable 166,718 70,211
Bank loan interest 821 1,375
Other interest payable - 1,333
Interest on overdue tax 5,484 7,852
------------------------------------ -------------------- ---------------------
173,023 80,771
----------------------------------- -------------------- ---------------------
Net finance income 151,029 28,847
------------------------------------ -------------------- ---------------------
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
8. PROFIT BEFORE INCOME TAX
The profit before income tax is stated after charging:
2022 2021
GBP GBP
------------------------------ -------------------- ------------------
Other operating leases - 9,744
Auditors' remuneration 27,000 25,000
Foreign exchange differences 1,733 3,743
------------------------------- -------------------- ------------------
9. INCOME TAX
2022 2021
GBP GBP
Current tax charge
UK corporation tax on profit for the period at 19% (2021: 19%) - -
Deferred taxation 1,218,415 40,394
--------------------------------------------------------------- ---------------------- -------
Tax charge for the year 1,218,415 40,394
--------------------------------------------------------------- ---------------------- -------
Factors affecting the tax expense
The tax assessed for the year is higher than the standard rate
of corporation tax in the UK. The difference is explained
below:
2022 2021
GBP GBP
Factors affecting the tax charge for the year:
Profit before income tax 8,355,322 2,300,190
------------------------------------------------------ ------------ --------------
Profit before income tax multiplied by effective
rate of UK corporation tax of 19.00% (2021: 19.00%) 1,587,511 437,036
------------------------------------------------------ ------------ --------------
Effects of
Non-deductible expenses 36,560 (3,366)
Losses used for group relief 17,638 1,792
Tax losses not utilised 138,104 149,057
Unrealised chargeable losses (1,779,813) (584,519)
Deferred taxation 1,218,415 40,394
------------------------------------------------------ ------------ --------------
(369,096) (396,642)
------------------------------------------------------ ------------ --------------
Current tax charge 1,218,415 40,394
------------------------------------------------------ ------------ --------------
There is no provision for UK Corporation Tax due to adjusted
losses for tax purposes, subject to agreement with HM Revenue and
Customs. The deferred tax asset, measured at the standard rate of
25%, of approximately GBP2.1m (2021: 25% - GBP1.9m) arising from
the accumulated tax losses of approximately GBP8.4m (2021: GBP7.6m)
carried forward has been used to reduce the deferred tax charge on
the unrealised gain arising on the revaluation of investments. This
will be subject to agreement with HMRC.
The main UK corporation tax rate has changed from 19% to 25%
with effect from 1 April 2023. The deferred tax liability arising
on the revaluation of the Company's fixed asset investments has
been calculated using 25%, reduced by the availability of tax
losses.
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
10. EARNINGS PER SHARE
Year ended 31 December 2022 Year ended 31 December
2021
--------------------------------------- ------------------------------------------------
Per Per
Number of share Number of share
Earnings shares amount Earnings shares amount
GBP GBP
Basic EPS
Profit for the
year and earnings
available to
ordinary shareholders 7,136,907 247,635,519 2.88p 2,259,796 140,431,111 1.61p
Effect of dilutive
securities
Options and warrants - 3,057,387 - 200,265
Convertible Loan
Notes 129,734 22,291,906 - -
Diluted EPS
-------------- ------------- ------------------ ----------------
Adjusted earnings 7,266,641 272,984,812 2.66p 2,259,796 140,631,376 1.61p
============== ============= ================== ================
The exercisable share options and warrants are deemed to be
dilutive in nature where their exercise price is less than the
average share price for the period .
11. PROPERTY, PLANT AND EQUIPMENT
Computer
equipment
GBP
COST
At 1 January 2021 and 2022 and 31 December
2022 1,699
----------------------------------------------- --------------------
DEPRECIATION
At 1 January 2021 and 2022 and 31 December
2022 1,699
----------------------------------------------- --------------------
NET BOOK VALUE
At 31 December 2022 -
----------------------------------------------- --------------------
At 31 December 2021 -
----------------------------------------------- --------------------
12. INVESTMENTS
Shares in Unlisted Total
group undertakings investments
GBP GBP GBP
COST
At 1 January 2021 3,570,890 50,000 3,620,890
Revaluations 3,076,415 - 3,076,415
------------------------------- --------------------- ------------------ --------------
At 31 December 2021 6,647,305 50,000 6,697,305
Revaluations 9,367,435 - 9,367,435
Reclassified to current asset
investments (100) - (100)
At 31 December 2022 16,014,640 50,000 16,064,640
------------------------------- --------------------- ------------------ --------------
Shares in group undertakings represent investments in PXOG
Marshall Limited of GBP16,014,540 (2021: GBP6,647,205) and PXOG
Muirhill Limited of GBP100 (2021: GBP100).
The Company's investments at the Statement of Financial Position
date in the share capital of companies include the following:
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
12. INVESTMENTS - continued
PXOG Marshall Limited
Registered office: 60 Gracechurch Street, London
EC3V 0HR
Nature of business: Investment entity % holding
Class of shares:
Ordinary shares 100.00
2022 2021
GBP GBP
Aggregate capital and reserves 16,014,540 6,647,205
Profit for the year 9,367,335 3,076,415
--------------------------------------- ---------------- ----------- ----------
The underlying value of PXOG Marshall Limited is based on the underlying
value of the Podere Gallina permit, Po Valley, Italy, of which it owned
37% at the year end. Consistent with prior years, a discounted cash
flow ("DCF") model was produced at the year end, based on proved and
probable (2P) reserves supported by a Competent Person Report (CPR)
produced in July 2022. The DCF model has been updated to reflect forward
gas prices as at 11 May 2023 using the Dutch TTF Gas Futures contracts
for 2023 and subsequent production years. The DCF model has also been
updated to account for an accelerated annual production rate which
shortens the cashflow period from 15 years to 10 years. The increased
annual production rate is based on testing carried out by the operator.
The DCF cashflows were discounted at 10% p.a. In addition, consistent
with the prior year, a risked valuation of 2C contingent resources
in the Selva North and South fields in the 2022 CPR has been updated
and included.
PXOG Muirhill Limited
Registered office: 60 Gracechurch Street, London
EC3V 0HR
Nature of business: Investment entity % holding
Class of shares:
Ordinary shares 100.00
2022 2021
GBP GBP
Aggregate capital and reserves 17,311 (19,984)
Profit/(loss) for the year 37,295 (20,084)
--------------------------------------- ---------------- ----------- ----------
PXOG Muirhill Limited holds its interests in the Tesorillo and
El Romeral projects through its holdings of A and B shares
respectively in Tarba Energia S.L. Consistent with the prior year,
these investments are being held at the cost of investment in
Prospex Energy Limited and in PXOG Muirhill Limited.
All of the subsidiaries are incorporated in the UK and
registered in England & Wales.
Investments are recognised and de-recognised on the date when
their purchase or sale is subject to a relevant contract and the
associated risks and rewards have been transferred. The Company
manages its investments with a view to profiting from the receipt
of investment income and capital appreciation from changes in the
fair value of investments.
All investments are initially recognised at the fair value of
the consideration given and are subsequently measured at fair value
through profit and loss.
Unquoted investments, including both equity and loans are
designated at fair value through profit and loss and are
subsequently carried in the statement of financial position at fair
value. Fair value is determined in line with the fair value
guidelines under IFRS.
In accordance with IFRS 10, the proportion of the investment
portfolio held by the Company's unconsolidated subsidiaries is
presented as part of the fair value of investment entity
subsidiaries, along with the fair value of their other assets and
liabilities.
The holding period of the Company's investment portfolio is on
average greater than one year. For this reason, the portfolio is
classified as non-current. It is not possible to identify with
certainty investments that will be sold within one year.
Investments in investment entity subsidiaries are accounted for
as financial instruments at fair value through profit and loss and
are not consolidated in accordance with IFRS10.
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
12. INVESTMENTS - continued
These entities hold the Company's interests in investments in
portfolio companies. The fair value can increase or reduce from
either cash flows to/from the investment entities or valuation
movements in line with the Company's valuation policy.
The fair value of these entities is their net asset values.
The Directors determine that in the ordinary course of business,
the net asset values of an investment entity subsidiary are
considered to be the most appropriate to determine fair value. At
each reporting period, they consider whether any additional fair
value adjustments need to be made to the net asset values of the
investment entity subsidiaries. These adjustments may be required
to reflect market participants' considerations about fair value
that may include, but are not limited to, liquidity and the
portfolio effect of holding multiple investments within the
investment entity subsidiary.
13. TRADE AND OTHER RECEIVABLES
2022 2021
GBP GBP
------------------------------------ -------------------- ------------------
Current:
Trade debtors - 22,470
Amounts owed by group undertakings 5,496,676 803,609
Other debtors 1,883 1,883
VAT 5,760 6,988
Prepayments and accrued income 10,918 6,552
-------------------- ------------------
5,515,237 841,502
------------------------------------ -------------------- ------------------
Non-current:
Amounts owed by group undertakings - 1,225,570
------------------------------------- -------------------- ------------------
Aggregate amounts 5,515,237 2,067,072
------------------------------------- -------------------- ------------------
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
In 2018 the Company provided an interest-free loan to PXOG
Marshall Limited, a wholly owned subsidiary. The fair value of the
financial element of the loan has been calculated by discounting
the future cash flow of the loan, GBP1,056,391, at the market rate
of 10%. The difference between the total loan and the fair value of
the loan i.e. the non-financial element of the loan, has been
accounted for as an addition to shares in group undertakings (note
12).
Since 1 January 2022, the above loan has been amalgamated with
further loans provided to PXOG Marshall Limited, with interest
charged at 10% per annum on the total balance. These loans are
repayable on demand.
14. CURRENT ASSET INVESTMENTS
2022 2021
Shares held for sale GBP GBP
----------------------------- ----- -----
Shares in group undertakings 100 -
----------------------------- ----- -----
The investment in PXOG Massey Limited is held at GBP100, based
on the SPA agreement which is pending completion of sale to H2Oil
Limited. In August 2020, Prospex signed a sale and purchase
agreement ('SPA') with H2Oil Limited ('H2Oil') regarding the sale
of the entire issued share capital of PXOG Massey Limited
('Massey'). Under the terms of the SPA, the Company will receive up
to GBP215,000 in cash in respect of historical debt owed to the
Company by Massey and nominal consideration for shares in Massey of
which 85% of the funds (GBP182,650) had been received by Prospex by
31 December 2020. As at the balance sheet date, although it is
still expected, the final condition of the SPA had not been
met.
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
15. CASH AND CASH EQUIVALENTS
2022 2021
GBP GBP
--------------- --------------- ---------------
Bank accounts 1,482,762 220,060
---------------- --------------- ---------------
The Directors consider that the carrying amount of cash and cash
equivalents approximates to their fair value. All of the Company's
cash and cash equivalents are at floating rates of interest.
16. CALLED UP SHARE CAPITAL
2022 2021 2022 2021
Number Number GBP GBP
---------------------------- ------------------- ---------------------- ------------ ----------
Allotted, called up and
fully paid
Ordinary shares of 0.1p
each - new 278,847,512 177,310,283 278,848 177,310
Deferred shares of 0.1p
each 942,462,000 942,462,000 942,462 942,462
Deferred shares of GBP24
each 54,477 54,477 1,307,459 1,307,459
Deferred shares of 0.9p
each 285,785,836 285,785,836 2,572,073 2,572,073
Deferred shares of GBP4.80
each 442,719 442,719 2,125,051 2,125,051
7,225,893 7,124,355
---------------------------- ------------------- ---------------------- ------------ ----------
Share issues
In February 2022, the Company raised GBP2,454,800 before
expenses by way of a placing of 70,137,143 new ordinary shares of
GBP0.001 each in the Company at a price of 3.50 pence per share
(the "Placing"). The net proceeds of the Placing were primarily
used to fund the acquisition of 20% of the Selva Field in Italy
through its subsidiary PXOG Marshall Limited and as development
costs of the Selva project.
In October 2022, GBP21,250 of the Convertible Loan Note 2022,
were converted into 500,000 new ordinary shares of GBP0.001 each at
a price of 4.25 pence per share
During the year, 1,920,000 new ordinary shares of GBP0.001 were
issued at a price of 2.25 pence each on the exercise of warrants,
raising GBP43,200 before expenses.
During the year, 24,325,955 new ordinary shares of GBP0.001 were
issued at a price of 3.00 pence each on the exercise of warrants,
raising GBP729,779 before expenses.
In September and October 2022, 4,654,131 new ordinary shares of
GBP0.001 were issued at a price of 4.00 pence each on the exercise
of share options, raising GBP186,165 before expenses.
Deferred shares rights
The deferred shares have no rights to vote, attend or speak at
general meetings of the Company or to receive any dividend or other
distribution and have limited rights to participate in any return
of capital on a winding-up or liquidation of the Company.
17. TRADE AND OTHER PAYABLES
2022 2021
GBP GBP
--------------------------------- -------------------- ------------------
Current:
Trade creditors - 8,423
Social security and other taxes 15,419 19,469
Accruals and deferred income 26,021 25,000
41,440 52,892
--------------------------------- -------------------- ------------------
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
18. FINANCIAL LIABILITIES - BORROWINGS
2022 2021
GBP GBP
---------------------- -------------------- ------------------
Current:
Bank loan - 9,616
Unsecured loan notes 1,812,744 131,353
-----------------------
1,812,744 140,969
---------------------- -------------------- ------------------
2022 2021
GBP GBP
---------------------- -------------------- ------------------
Non-current:
Bank loan - 32,778
Unsecured loan notes 799,145 214,454
-----------------------
799,145 247,232
---------------------- -------------------- ------------------
Terms and debt repayment schedule:
1 year 1-2 years 2-5 years Total
or less
2022 GBP GBP GBP GBP
---------------------- ----------------- ----------------- ----------------- ------------------
Bank loan - - - -
Unsecured loan notes 1,812,744 799,145 - 2,611,889
---------------------- ----------------- ----------------- ----------------- ------------------
1,812,744 799,145 - 2,611,889
---------------------- ----------------- ----------------- ----------------- ------------------
1 year 1-2 years 2-5 years Total
or less
2021 GBP GBP GBP GBP
---------------------- ----------------- ----------------- ----------------- ------------------
Bank loan 9,616 9,859 22,919 42,394
Unsecured loan notes 131,353 214,454 - 345,807
---------------------- ----------------- ----------------- ----------------- ------------------
140,969 224,313 22,919 388,201
---------------------- ----------------- ----------------- ----------------- ------------------
Loan notes
Loan notes
----------------------------------------------------------------
2018 2020 2021 2022 Total
GBP GBP GBP GBP
-------------- -------------- -------------- ---------------- ------------------
At 1 January 2021 402,101 415,838 - - 817,939
Converted into shares - (415,838) - (415,838)
Transferred to new
loan note (321,681) - 321,681 - -
Repaid in year (56,294) - - - (56,294)
-------------- -------------- -------------- ---------------- ------------------
At 31 December 2021 24,126 - 321,681 - 345,807
Issued in year - - - 2,370,000 2,370,000
Interest capitalised - - - 48,685 48,685
Converted into shares - - - (21,250) (21,250)
Repaid in year (24,126) - (107,227) - (131,353)
At 31 December 2022 - - 214,454 2,397,435 2,611,889
----------------------- -------------- -------------- -------------- ---------------- ------------------
2018 Loan note
The 2018 Notes pay 10% interest biannually. Repayments of
capital started in December 2020 with final repayment due on 30
June 2022 (four equal payments). See below for details of capital
rolled into 2021 Loan note.
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
18. FINANCIAL LIABILITIES - BORROWINGS - continued
2020 Loan note
The 2020 Notes pay 10% interest per annum. The term of the 2020
Notes is 18 months with capital repayment of unconverted amounts
due on 30 June 2022. The 2020 Notes granted the subscribers the
right but not the obligation to convert the loan, on notice, into
new ordinary shares in the Company each at 2.05 pence per
share.
During 2021, the loan note subscribers converted their loans of
GBP415,838 into 20,284,787 new ordinary shares of 0.1p per share at
a price of 2.05p per share.
2021 Non-Convertible Loan note
In June 2021, holders of GBP321,681 of the 2018 loan note agreed
to rollover their combined holdings into a new unsecured loan note
('the 2021 Loan Note'). The Company issued GBP321,681 of the 2021
Loan Note to existing holders of the 2018 Loan Note ('the
Subscribers'), including several directors of the Company.
Under the terms of 2018 Loan Note, holders were entitled to the
outstanding capital returned in equal instalments in June 2021,
December 2021 and June 2022. The terms of the 2021 Loan Note
reflect those of the 2018 Loan Note except all the capital
repayment dates have effectively been extended by 18 months to
December 2022, June 2023 and December 2023, while the annualised
interest rate is now 12% versus 10%. The 2021 Loan Note will pay 6%
interest every six months, with the first payment due on 31
December 2021. The 2021 Loan Note is not convertible.
July 2022 Convertible Loan note
The July 2022 Convertible Loan Notes totalling GBP1.87 million
pay interest at 12% per annum, on a quarterly basis. The first
interest payment on 30 September 2022 was capitalised and added to
the loan principal.
The July 2022 Convertible Loan Notes are convertible at 4.25p
per ordinary share at any time at the election of the Noteholder.
The Loan principal is to be repaid in three equal tranches - 30
September 2023, 31 December 2023 and 31 March 2024.
September 2022 Convertible Loan note
The September 2022 Convertible Loan Notes totalling GBP0.5
million pay interest at 15% per annum, on a quarterly basis. The
first interest payment on 30 September 2022 was capitalised and
added to the loan principal.
The September 2022 Convertible Loan Notes are convertible at
5.50p per ordinary share at any time at the election of the
Noteholder. The Loan principal is to be repaid in three equal
tranches - 30 September 2023, 31 December 2023 and 31 March
2024.
19 DEFERRED TAXATION
2022 2021
GBP GBP
------------------------------- ---------------- ---------------------
At 1 January 2022 40,394 -
On revaluation of investments 1,218,415 40,394
--------------------------------
At 31 December 2022 1,258,809 40,394
-------------------------------- ---------------- ---------------------
20. FINANCIAL INSTRUMENTS
The principal financial instruments used by the Company, from
which financial instrument risk arises are as follows:
- Trade and other receivables
- Cash and cash equivalents
- Trade and other payables
A summary of the financial instruments held by category is
provided below:
2022 2021
Financial assets measured at amortised GBP GBP
costs:
---------------------------------------- -------------- ----------------
Trade and other receivables 7,643 37,893
Cash and cash equivalents 1,482,762 220,060
Amounts owing from group undertakings 5,496,676 2,029,179
---------------------------------------- -------------- ----------------
6,987,081 2,287,132
---------------------------------------- -------------- ----------------
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
20. FINANCIAL INSTRUMENTS - continued
2022 2021
Financial liabilities measured GBP GBP
at amortised costs:
-------------------------------- ------------------ ----------------
Bank loans - 42,394
Unsecured loan notes 2,611,889 345,807
Trade and other payables 41,440 52,892
Total financial liabilities 2,653,329 441,093
-------------------------------- ------------------ ----------------
Financial assets at fair value through profit or loss
Financial instruments that are measured at fair value are
classified using a fair value hierarchy that reflects the source of
inputs used in deriving the fair value. The three classification
levels are:
- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities;
- Level 2: inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable market inputs).
The following table presents the Company's assets carried at
fair value by valuation method:
Financial assets at fair value through profit
or loss:
Fair value measurement
------------------------- ---------------------------------------------------------------
Level 1 Level 2 Level 3
GBP GBP GBP
------------------------- ----------------------- -------------------- --------------
At 31 December 2022 - - 16,064,640
At 31 December 2021 - - 6,697,305
------------------------- ------------------------ --------------------- --------------
The financial assets at fair value through profit and loss are
the Company's holdings in subsidiary undertakings and one unquoted
security and within Level 3 of the fair value hierarchy.
The fair value is determined to be equal to the cost of the
investment and is reviewed periodically based on information
available about the performance of the underlying business. Where
cost is deemed to be inappropriate, t he following table shows the
valuation technique used in measuring Level 3 fair values for
financial instruments measured at fair value in the statement of
financial position, as well as the significant unobservable inputs
used. The only method used is that of NPV.
Valuation technique Significant unobservable Inter-relationship
inputs between significant
unobservable inputs
and fair value measurement
NPV - The valuation Forecast annual revenue The estimated fair
model considers the growth rate value would increase
present value of expected Forecast gas prices (decrease) if:
receipts, discounted Risk-adjusted discount - the annual revenue
using a risk-adjusted rate growth rate were higher
discount rate. The (lower);
expected receipt is - the gas prices were
determined by considering higher (lower); or
the possible scenarios - the risk-adjusted
of forecast revenue discount rate were
and gas prices, the lower (higher).
amount to be received Generally, a change
under each scenario in the any of the
and the probability above variables would
of each scenario. be accompanied by
a directionally similar
change in revenue
receipts and a consequential
change in the valuation
of the investment
------------------------- ------------------------------
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
20. FINANCIAL INSTRUMENTS - continued
Financial risk management
The Company's activities expose it to a variety of risks
including market risk (foreign currency risk and interest rate
risk), credit risk and liquidity risk. The Company manages these
risks through an effective risk management programme and through
this programme, the Board seeks to minimise potential adverse
effects on the Company's financial performance.
The Board provides written objectives, policies and procedures
with regards to managing currency and interest risk exposures,
liquidity and credit risk including guidance on the use of certain
derivative and non-derivative financial instruments.
Credit risk
Credit risk is the risk of financial loss to the Company if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Company's credit risk is primarily
attributable to its receivables and its cash deposits. It is
Company policy to assess the credit risk of new customers before
entering contracts. The credit risk on liquid funds is limited
because the counterparties are banks with high credit-ratings
assigned by international credit-rating agencies.
Liquidity risk and interest rate risk
Liquidity risk arises from the Company's management of working
capital. It is the risk that the Company will encounter difficulty
in meeting its financial obligations as they fall due. The Board
regularly receives cash flow projections for a minimum period of 12
months, together with information regarding cash balances
monthly.
The Company is principally funded by equity and invests in
short-term deposits, having access to these funds at short notice.
The Company's policy throughout the period has been to minimise
interest rate risk by placing funds in risk free cash deposits but
also to maximise the return on funds placed on deposit.
All cash deposits attract a floating rate of interest. The
benchmark rate for determining interest receivable and floating
rate assets is linked to the UK base rate.
Foreign currency exposure
At 31 December 2022, the Company's monetary assets and
liabilities are denominated in GBP Sterling, the functional
currency of the Company and therefore at the year end the company
had no exposure to net currency gains and losses.
Although the Company's subsidiary undertakings operate in the
Eurozone and the Company provides working capital to those
companies, it has no formal policies in place to hedge the
Company's activities to the exposure to currency risk. It is the
Company's policy to ensure that it enters into transactions in its
functional currency wherever possible.
Management regularly monitor the currency profile and obtain
informal advice to ensure that the cash balances are held in
currencies which minimise the impact on the results and position of
the Company from foreign exchange movements.
21. RELATED PARTY DISCLOSURES
Included in loans to group undertakings is an amount of GBP13
(2021: GBP13) due from PXOG Massey Limited, the Company's wholly
owned subsidiary.
Included in trade and other receivables is an amount of
GBP4,821,467 (2021: GBP1,225,570) due from PXOG Marshall Limited,
the Company's wholly owned subsidiary. Interest receivable of
GBP321,805 (2021: GBP109,618) has been accounted for in the
Statement of Profit or Loss.
Included in trade and other receivables is an amount of
GBP675,196 (2021: GBP803,596) due from PXOG Muirhill Limited, the
Company's wholly owned subsidiary.
Included in trade and other receivables is an amount of GBPnil
(2021: GBP22,470) due from Tarba Energia S.L. ("Tarba"). Mark Routh
is a director of Tarba.
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
21. RELATED PARTY DISCLOSURES
At the balance sheet date, the Directors had the following
interests in the unsecured loan notes (note 18):
2022 2021
GBP GBP
------------------- ---------------- ---------------------
Mark Routh 51,164 -
Richard Mays 87,589 13,403
William Smith 51,164 40,210
Alasdair Buchanan 51,042 -
-------------------- ---------------- ---------------------
22. ULTIMATE CONTROLLING PARTY
In the opinion of the Directors, there is no ultimate
controlling party.
23. SHARE-BASED PAYMENT TRANSACTIONS
Share options
At 31 December 2021 and 31 December 2022 outstanding awards to
subscribe for ordinary shares of 0.1p each in the Company, granted
in accordance with the rules of the share option scheme, were as
follows:
Weighted
average Weighted
remaining average
Number of contractual exercise
shares life (years) price (pence)
2022
-------------------------- ---------------- ------------------ --------------------
Brought forward 5,820,544 1.46 6.27
Granted during the year 10,300,000 -
Exercised during the year (4,654,131) -
Lapsed during the year (1,600) -
-------------------------- ------------------ --------------------
Carried forward 11,464,813 2.84 6.61
-------------------------- ---------------- ------------------ --------------------
Weighted
average Weighted
remaining average
Number of contractual exercise
shares life (years) price (pence)
2021
----------------- ------------------ ------------------ ------------------
Brought forward 5,820,544 2.46 6.27
------------------ ------------------ ------------------ ------------------
Carried forward 5,820,544 1.46 6.27
------------------ ------------------ ------------------ ------------------
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
23. SHARE-BASED PAYMENT TRANSACTIONS - continued
All options were exercisable at the year end. 4,654,131options
were exercised during the year.
The following share-based payment arrangements were in existence
at the year-end.
Fair value
Expiry Exercise at grant
Options Number date price date
---------------------- ------------ ----------- --------- -----------
1 Granted 16 April 2015 113,884 15/04/2025 76.25p 1.94p
2 Granted 1 June 2020 1,050,929 01/06/2023 4.00p 1.79p
3 Granted 18 March 2022 6,700,000 17/03/2025 5.00p 1.23p
Granted 23 September
4 2022 3,600,000 23/09/2027 8.15p 2.91p
---------------------- ------------ ----------- --------- -----------
The fair value of remaining share options has been calculated
using the Black Scholes model. The assumptions used in the
calculation of the fair value of the share options outstanding
during the year are as follows:
Grant Expected Risk-free
date share Exercise Expected option life interest
Options price price volatility (years) rate
---------------------- ------------- ---------- ------------- ---------------- -----------
1 Granted 16 April 2015 100.00p 76.25p 71.50% 3.00 0.71%
2 Granted 1 June 2020 2.75p 4.00p 163.60% 3.00 0.64%
3 Granted 18 March 2022 3.85p 5.00p 89.40% 2.00 1.21%
Granted 23 September
4 2022 7.85p 8.15p 87.40% 2.00 4.03%
---------------------- ------------- ---------- ------------- ---------------- -----------
The fair value has been calculated assuming that there will be
no dividend yield.
Volatility was determined by reference to the standard deviation
of expected share price returns based on a statistical analysis of
daily share prices over a 3-year period to grant date. All of the
above options are equity settled.
All of the share options are equity settled and the charge for
the year is GBP187,417 (2021: GBPnil).
Warrants
At 31 December 2021 and 31 December 2022, outstanding warrants
to subscribe for ordinary shares of 0.1p each in the Company,
granted in accordance with the warrant instruments issued by
Prospex, were as follows:
Weighted
average Weighted
remaining average
Number of contractual exercise
shares life (years) price (pence)
2022
----------------------- ----------------- ----------------- ------------------
Brought forward 27,245,000 1.22 3.03
Exercised in the year (26,253,316) 3.02
Lapsed during the year (325,000) 10.00
----------------------- ----------------- ------------------
Carried forward 666,684 0.23 3.00
----------------------- ----------------- ----------------- ------------------
Weighted
average Weighted
remaining average
Number of contractual exercise
shares life (years) price (pence)
2021
--------------------------- ---------------- ------------------ ------------------
Brought forward 18,806,694 1.97 2.38
Granted during the year 26,920,000 2.95
Exercised during the year (18,481,694) 2.95
---------------------------- ---------------- ------------------ ------------------
Carried forward 27,245,000 1.22 3.03
---------------------------- ---------------- ------------------ ------------------
During 2022, 7,361 of Treasury Shares were used to satisfy the
exercise of warrants.
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
23. SHARE-BASED PAYMENT TRANSACTIONS - continued
Warrants - continued
All warrants were exercisable at the year end.
The following warrants were in existence at the year end.
Fair value
Expiry Exercise at grant
Warrants Number date price date
---------------------- -------------- ----------- --------- -----------
1 Granted 23 March 2021 666,684 23/03/2023 3.00p N/A
---------------------- -------------- ----------- --------- -----------
The fair value of the remaining warrants has been calculated
using the Black-Scholes model. The assumptions used in the
calculation of the fair value of the share options outstanding
during the year are as follows:
Grant Expected Risk-free
date share Exercise Expected option life interest
Warrants price price volatility (years) rate
---------------------- ------------- ---------- ------------- ---------------- -----------
1 Granted 23 March 2021 1.65p 3.00p N/A 2.00 N/A
---------------------- ------------- ---------- ------------- ---------------- -----------
The fair value has been calculated assuming that there will be
no dividend yield.
Volatility was determined by reference to the standard deviation
of expected share price returns based on a statistical analysis of
daily share prices over a 3-year period to grant date. All of the
above options are equity settled.
25m of the warrants granted on 23 March 2021 fell outside the
scope of IFRS and as such no charge was made. All of the share
warrants are equity settled and the charge for the year is GBPnil
(2021: GBP24,496). As the warrants relating to the charge for 2021
were all in consideration of shares issued during the year, it was
taken directly to equity and charged against the share premium as
costs in respect of the issue of shares.
24. DIRECTORS' EMOLUMENTS
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling activities
of the Company, including all directors of the Company.
2022 2021
GBP GBP
---------------------------------------- -------------------- ------------------
Salaries and other short-term employee
benefits 254,833 192,072
Post-employment benefits - 11,267
Share-based payment 163,994 -
---------------------------------------- -------------------- ------------------
418,827 203,339
---------------------------------------- -------------------- ------------------
Prospex Energy Plc
Notes to the Financial Statements - continued
for the year ended 31 December 2022
24. DIRECTORS' EMOLUMENTS - continued
Salaries Benefits Pension Share-based
and fees in kind contributions payment 2022 2021
GBP GBP GBP GBP GBP GBP
------------------------------------ -------- ---------- ---------------- ------------ -------- --------
Mark Routh 200,833 - - 52,094 252,927 71,923
Richard Mays 15,000 - - 37,300 52,300 15,000
William Smith 24,000 - - 37,300 61,300 13,500
Alasdair Buchanan 15,000 - - 37,300 52,300 4,615
Edward Dawson - resigned
27/07/2021 - - - - - 89,551
James Smith - resigned 27/07/2021 - - - - - 8,750
254,833 - - 163,994 418,827 203,339
------------------------------------ -------- ---------- ---------------- ------------ -------- --------
The number of directors for whom retirement benefits are
accruing under money purchase pension schemes amounted to nil
(2021:1).
The Directors interests in share options as at 31 December 2022
are as follows:
Number of Exercise First date Final date
Director shares price Date of grant of exercise of exercise
------------------- ----------- ---------- -------------- ------------- -------------
Mark Routh 2,100,000 5.00p 18/03/2022 18/03/2022 17/03/2025
Mark Routh 900,000 8.15p 23/09/2022 23/09/2022 22/09/2027
3,000,000
-----------
Richard Mays 21,669 76.25p 14/04/2015 14/04/2015 13/04/2025
Richard Mays 900,000 5.00p 18/03/2022 18/03/2022 17/03/2025
Richard Mays 900,000 8.15p 23/09/2022 23/09/2022 22/09/2027
1,821,669
-----------
William Smith 21,669 76.25p 14/04/2015 14/04/2015 13/04/2025
William Smith 900,000 5.00p 18/03/2022 18/03/2022 17/03/2025
William Smith 900,000 8.15p 23/09/2022 23/09/2022 22/09/2027
1,821,669
-----------
Alasdair Buchanan 900,000 5.00p 18/03/2022 18/03/2022 17/03/2025
Alasdair Buchanan 900,000 8.15p 23/09/2022 23/09/2022 22/09/2027
1,800,000
------------------- ----------- ---------- -------------- ------------- -------------
The options awarded to Richard Mays are held in the name of
Sallork Limited, a company he owns and controls.
25. EVENTS AFTER THE REPORTING PERIOD
In February 2023, the Company granted 3,700,000 share options in
the Company to directors and other staff. The options were awarded
at 12.25p per share, vest on 1 June 2023 and are exercisable for a
period of five years. The options issued to the directors were:
Mark Routh 1,233,333
William Smith 370,000
Alasdair Buchanan 370,000
1,973,333
------------------- ----------
Between January and March 2023 GBP197,882 of the July 2022
Convertible Loan Notes have been converted in to 4,656,073 ordinary
shares of the company.
In February 666,484 3p warrants were exercised generating
proceeds of GBP20,000.
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END
FR UVRSRORUVUAR
(END) Dow Jones Newswires
May 26, 2023 02:00 ET (06:00 GMT)
Prospex Energy (AQSE:PXEN.GB)
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