TIDMADV
RNS Number : 8287M
Advance Energy PLC
26 January 2021
26 January 2021
Advance Energy plc
("Advance Energy" or the "Company")
Interim Results
Advance Energy plc (AIM:ADV), the energy company seeking growth
through acquisition or farm-in to non-operated interests in
discovered upstream projects, announces its half-yearly report for
the six months ended 31 October 2020.
For further information, please contact:
Advance Energy plc +44 (0)1624 681 250
Leslie Peterkin (CEO) / Stephen West (CFO)
Strand Hanson Limited (Financial and Nominated Adviser) +44
(0)20 7409 3494
James Harris / Rory Murphy / Georgia Langoulant
Buchanan (Public Relations) +44 (0)20 7466 5000
Ben Romney / Kelsey Traynor
Tennyson Securities (Joint Broker) +44 (0)20 7186 9030
Peter Krens / Ed Haig-Thomas
Optiva Securities Limited (Joint Broker) +44 (0)20 3411 1881
Christian Dennis
The Interim Report will be available from the Company's website
www.advanceplc.com
Chairman's Statement
Dear Shareholders,
We are pleased to report that the Company has made significant
progress in the half-year to 31 October 2020 and in the period
since then in carrying out its strategy to grow through acquisition
or farm-in to non-operated interests in upstream oil and gas
projects where there is an opportunity to add significant value in
the short to medium term.
In particular, we are delighted to have agreed a potentially
transformative transaction with Carnarvon Petroleum Limited to
acquire up to a 50% indirect interest in the Buffalo Oil Field in
Timor-Leste. This asset reflects our stated strategy perfectly. The
teams at Advance Energy and Carnarvon believe the Buffalo Oil Field
holds material unrealised value that can be unlocked through
redevelopment.
The Buffalo Oil Field is a proven oil field that produced 21
MMbbls over 5 years in the early 2000s. Subject, inter alia, to
raising the necessary finance and securing the requisite
shareholder approval for the transaction, the Company's planned
subscription in the Joint Venture Company for a consideration of up
to US$20 million will be applied to funding the drilling of the
B-10 appraisal well and certain PSC related costs, to appraise the
independently certified 2C (probable contingent) oil resource of
31.1 MMbbls, with the intention for drilling to take place in late
2021.
The transaction is classified as a reverse takeover pursuant to
the AIM Rules for Companies and accordingly the Company's shares
were temporarily suspended from trading on AIM, and will remain
suspended from trading on AIM until such time as either an
Admission Document setting out details of the proposed Transaction
is published or confirmation is given that the Transaction is not
proceeding. We are confident that we can convey the compelling and
value accretive nature of this transaction to the market as we
seek, inter alia, to raise the funds that will enable the deal to
proceed.
Meanwhile, we continue to build on our ambitious growth strategy
and are in the early stages of negotiating a possible participation
in other projects. So with this in mind, we view Buffalo as the
first stepping stone to our growth ambitions of becoming a mid-cap
player in the next few years, and would hope to conclude at least
one other transaction this calendar year.
The accounts for the six months naturally do not reflect this
progress, consisting as they do just of the corporate expenditure
in the period of $631,000 and an accounting loss of the same
amount. Whilst we show a net liability position of $317,000 on the
balance sheet at 31 October 2020, this has been managed by the
deferral of much of the expenditure, including directors' fees, and
a capital raise of $410,000 (before costs) in November 2020.
The interests of the Directors and other members of the Advance
Energy team are fully aligned with those of other shareholders, and
we intend to demonstrate our confidence in the Buffalo transaction
and aligning our interests even more closely through participation
in the placing. We look forward to updating the market with the
publication of the Admission Document and a Notice of EGM in the
coming weeks.
Mark Rollins
Non-Executive Chairman
25 January 2021
Interim Consolidated Statement of Comprehensive Income
Unaudited Unaudited
Six months Six months
ended Audited ended
31 Oct Year ended 31 Oct
2020 30 Apr 2020 2019
Notes $'000 $'000 $'000
------------------------------------ ------ ------------ ------------- ------------
Investment income/(losses):
Unrealised losses on investments - (604) -
Impairment of exploration asset - (267)
- (871) -
------ ------------ ------------- ------------
Asset evaluation and operating
expenses 4 - (23) (83)
Other administrative expenses 4 (643) (293) (419)
Net loss before Finance Costs
and Taxation (643) (1,187) (502)
Finance costs 12 (44) (26)
Loss before tax (631) (1,231) (528)
------------------------------------ ------ ------------ ------------- ------------
Tax expense - - -
Loss after tax (631) (1,231) (528)
------------------------------------ ------ ------------ ------------- ------------
Total comprehensive loss after
tax (631) (1,231) (528)
------------------------------------ ------ ------------ ------------- ------------
Total comprehensive loss (631) (1,231) (528)
------------------------------------ ------ ------------ ------------- ------------
Basic and diluted loss per share
attributable to owners of the
parent during the year
(expressed in US cents per share) 6 (0.04) (0.11) (0.06)
------------------------------------ ------ ------------ ------------- ------------
The accompanying notes from an integral part of these
consolidated financial statements.
Interim Consolidated Statement of Financial Position
Unaudited Audited Unaudited
31 Oct 30 Apr 31 Oct
2020 2020 2019
Notes $'000 $'000 $'000
--------------------------------- ------ ---------- --------- ----------
Non-current assets
Financial asset at fair value
through profit or loss - - 604
Other investments - - 267
- - 871
--------------------------------- ------ ---------- --------- ----------
Current assets
Other receivables 14 15 88
Cash and cash equivalents 261 562 42
275 577 130
--------------------------------- ------ ---------- --------- ----------
Total assets 275 577 1,001
--------------------------------- ------ ---------- --------- ----------
Current liabilities
Trade and other payables 7 (592) (323) (1,005)
--------------------------------- ------ ---------- --------- ----------
Total liabilities (592) (323) (1,005)
--------------------------------- ------ ---------- --------- ----------
Net assets (317) 254 (4)
--------------------------------- ------ ---------- --------- ----------
Equity attributable to equity holders
of the company
Share premium 18,665 18,665 17,630
Accumulated deficit (18,982) (18,411) (17,634)
--------------------------------- ------ ---------- --------- ----------
Total shareholder funds (317) 254 (4)
--------------------------------- ------ ---------- --------- ----------
The accompanying notes from an integral part of these
consolidated financial statements.
Interim Consolidated Statement of Changes in Equity
Share premium Accumulated Total
deficit equity
$'000s $'000s $'000s
Balance at 1 May 2019 16,878 (17,131) (253)
Loss for the period to 31 October
2019 (unaudited) - (528) (528)
---------------------------------------- --------------- ------------ --------
Total comprehensive loss - (528) (528)
Transactions with equity shareholders
of the parent:
Share based payments - options - 25 25
Proceeds from shares issued 831 - 831
Cost of share issue (79) - (79)
Balance at 31 October 2019 (unaudited) 17,630 (17,634) (4)
Loss for the period to 30 April
2020 - (703) (703)
---------------------------------------- --------------- ------------ --------
Total comprehensive loss - (703) (703)
Transactions with equity shareholders
of the parent:
Share based payments - warrants 49 (49) -
Share based payments - options - (25) (25)
Proceeds from shares issued 1,002 - 1,002
Cost of share issue (16) - (16)
Balance at 30 April 2020 (audited) 18,665 (18,411) 254
---------------------------------------- --------------- ------------ --------
Loss for the period to 31 October
2020 (unaudited) - (631) (631)
---------------------------------------- --------------- ------------ --------
Total comprehensive loss - (631) (631)
Transactions with equity shareholders
of the parent:
Share based payments - warrants - 60 60
Balance at 31 October 2020 (unaudited) 18,665 (18,982) (317)
---------------------------------------- --------------- ------------ --------
The accompanying notes from an integral part of these
consolidated financial statements.
Interim Consolidated Cash Flow Statement
Unaudited Audited Unaudited
31 Oct 30 Apr 31 Oct
2020 2020 2019
Notes $'000 $'000 $'000
--------------------------------------- ------- ---------- -------- ----------
Cash flows from operating activities:
Loss before tax (631) (1,231) (528)
Adjustments for:
Share-based payment 5 240 - 25
Impairment of intangible asset - 267 -
Change in working capital items:
Movement in other receivables 1 59 4
Movement in trade and other payables 89 (529) 136
--------------------------------------- ------- ---------- -------- ----------
Net cash used in operations (301) (1,434) (363)
--------------------------------------- ------- ---------- -------- ----------
Cash flows from investing activities
Cost of financial asset at fair
value (-) - (604)
Net cash flows from investing
activities - - (604)
--------------------------------------- ------- ---------- -------- ----------
Cash flows from financing activities
Proceeds from issue of share
capital - 1,833 831
Share issue costs - (95) (79)
Net cash flows from financing
activities - 1,738 752
--------------------------------------- ------- ---------- -------- ----------
Net increase in cash and cash
equivalents (301) 304 (216)
--------------------------------------- ------- ---------- -------- ----------
Effect of exchange rate changes - - -
Cash and cash equivalents at
beginning of period 562 258 258
--------------------------------------- ------- ---------- -------- ----------
Cash and cash equivalents at
end of period 261 562 42
--------------------------------------- ------- ---------- -------- ----------
The accompanying notes from an integral part of these
consolidated financial statements.
Notes to the Interim Consolidated Financial Statements
1 Reporting entity
Advance Energy plc is a public limited company incorporated and
domiciled in the Isle of Man whose shares are publicly traded on
the AIM market of the London Stock Exchange.
The Company and its subsidiary, Resolute Oil & Gas (UK)
Limited, are collectively referred to as the Group.
The principal activity of the Group during the period was the
acquisition and development of oil and gas assets.
2 Basis of accounting
These interim consolidated financial statements have been
prepared in accordance with International Accounting Standard 34
"Interim Financial Reporting". These interim consolidated financial
statements do not include all the information and disclosures
required in the annual financial statements and should be read in
conjunction with the Group's annual financial statements for the
year ended 30 April 2020, which were prepared in accordance with
IFRSs as adopted by the European Union. However, selected
explanatory notes are included to explain events and transactions
that are significant to an understanding of the changes in the
Group's financial position and performance since the last annual
financial statements.
In preparing these interim financial statements, management has
made judgements and estimates that affect the application of
accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from
these estimates. The significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those disclosed in the
Group's statutory financial statements for the year ended 30 April
2020.
The interims are presented in US Dollars unless otherwise
indicated.
There are no IFRSs or IFRIC interpretations that are effective
for the first time for the financial period beginning on or after 1
May 2020 that would be expected to have a material impact on the
Group.
The consolidated financial statements of the Group as at and for
the year ended 30 April 2020 are available upon request from the
Company's registered office at 55 Athol Street, Douglas, Isle of
Man or the Company website https://www.advanceplc.com
These interim consolidated financial statements have been
approved and authorised for issue by the Company's Board of
directors on 25 January 2021.
3 Going concern
The Group had negative $317,000 net assets at 31 October 2020.
The Group currently has limited cash resources and will therefore
need to secure additional financing to complete the acquisition
shown in note 10 and provide for general working capital.
On 12 November 2020, the Company raised GBP300,000 (gross),
equivalent to $401,000, by way of a placing of 136,363,636 new
ordinary shares of no par value in the Company at a price of 0.22
pence per share (see note 10).
The Group intends to raise the additional funding to finance
future acquisitions and provide for general working capital needs
by way of additional capital through the issue of further ordinary
shares. The Directors believe that the Group will be successful in
raising the necessary finance.
Notes to the Interim Consolidated Financial Statements
(continued)
Accordingly, the Directors have a reasonable expectation that
the Company and the Group will continue in operational existence
for the foreseeable future, and for a period of at least 12 months
from the date of signing of these financial statements.
Whilst the Directors are confident of being able to raise such
funding if required, there is no certainty that such funding will
be available and/or the terms of such funding. The financial
statements do not include the adjustments that would result if the
Company and the Group were unable to continue as a going
concern.
4 Expenses
Administration fees and expenses consist of the following:
Unaudited Audited Unaudited
Six months Six months
ended Year ended ended
31 Oct 202 30 Apr 202
0 0 31 Oct 2019
$'000 $'000 $'000
-------------- ------------- ---------------
Corporate overheads:
* Directors fees 408 (146) 221
* Professional fees 174 241 116
* Audit fees 12 32 -
* Bad debt write off - 117 34
* Administration costs 49 49 48
-------------- ------------- ---------------
643 293 419
-------------- ------------- ---------------
Asset evaluation and operating
expenses:
* Office costs - 13 13
* Consulting and farm-in expenses - (36) 28
* Travel and accommodation - 46 42
-------------- ------------- ---------------
- 23 83
-------------- ------------- ---------------
Total expenses 643 316 502
-------------- ------------- ---------------
5 Directors remuneration
The remuneration of those in office during the period ended 31
October 2020 was as follows:
Unaudited Unaudited
Six months Audited Six months
ended ended
31 Oct 2020 Year ended 31 Oct 2019
$'000 30 Apr 2020 $'000
$'000
------------- -------------- -------------
Salaries paid in cash 156 413 223
Accrued entitlement to shares 240 - -
and warrants
Directors' health insurance 12 3 -
Waiver of fees - (562) -
------------- -------------- -------------
408 (146) 223
------------- -------------- -------------
Notes to the Interim Consolidated Financial Statements
(continued)
Ross Warner (Non-Executive Director) is entitled to a fixed
monthly fee of $5,000 payable in cash. Mark Rollins (Chairman) and
Leslie Peterkin (Chief Executive Officer) are entitled to a fixed
monthly fee of $5,000 and $10,000 respectively payable in cash, and
$10,000 payable in shares each. Stephen West (Chief Financial
Officer) is entitled to a fixed monthly fee of GBP4,082 payable in
cash together with an amount of warrants in the Company calculated
on a monthly basis by dividing GBP8,165 by the Company's mid-market
price on the date of determination, being no later than the last
day of each month ("Director Warrants"). The Director Warrants
accrue monthly, have an exercise price of zero, expire five years
from the issue date and vest three months from the issue date.
The accrued entitlement of shares and warrants includes a prior
accrual of $60,000.
The accrued shares are recorded in note 8 and the accrued share
based payment expense is as shown above. The corresponding warrants
cost is recorded in Consolidated Statement of Changes in
Equity.
6 Earnings per share
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
Unaudited Audited Unaudited
Outstanding Outstanding Outstanding
at 31 Oct at 30 Apr at 31 Oct
2020 2020 2019
Loss attributable to owners
of the Group
(USD thousands) (631) (1,231) (528)
Weighted average number of ordinary
shares in issue (thousands) 1,560,637 1,107,577 890,057
Loss per share (US cents) (0.04) (0.11) (0.06)
In accordance with International Accounting Standard 33
'Earnings per share', no diluted earnings per share is presented as
the Group is loss making.
7 Trade and other payables
Trade and other payables are obligations to pay for goods or
services that have been acquired in the ordinary course of
business. Accounts payable are classified as current liabilities if
payment is due within one year or less (or in the normal operating
cycle of the business if longer). If not, they are presented as
non-current liabilities. Trade payables are recognised initially at
fair value, and subsequently measured at amortised cost using the
effective interest method.
Unaudited Audited Unaudited
Outstanding Outstanding Outstanding
at 31 Oct at 30 Apr at 31 Oct
2020 2020 2019
Trade payables 315 299 523
Accruals and other payables 277 24 482
------------- ------------- -------------
592 323 1,005
------------- ------------- -------------
Notes to the Interim Consolidated Financial Statements
(continued)
8 Shares in issue
The number of shares in issue throughout the period was
1,560,636,834. In addition to the shares in issue, as described in
note 5, Mark Rollins and Leslie Peterkin receive part of their
remuneration in new shares in lieu of cash. As at 31 October 2020,
they each had an entitlement to receive 43,980,136 shares. Stephen
West receives part of his remuneration in the form of zero cost
warrants. As at 31 October 2020, he was entitled to receive
24,994,042 warrants.
The notional number of shares in issue taking into account the
above entitlements and assuming the warrants are exercised would be
1,673,591,148. The Company intends to issue the shares and warrants
to the directors in accordance with their entitlement in
conjunction with a later capital-raising event.
In addition, after the period end new shares were issued for
cash and to settle certain third party creditors, as described in
note 10.
9 Commitments and contingencies
There were no capital commitments authorised by the Directors or
contracted other than those provided for in these financial
statements as at 31 October 2020 (30 April 2020: None).
There are 81,250,000 unvested options issued to the current
directors and consultants that are due to vest in 2021.
There are 10,790,608 of unvested zero cost warrants to the
current directors that are yet to vest.
10 Subsequent events
Placing and Issue of Equity
On 12 November 2020, the Company raised GBP300,000 (gross),
equivalent to $401,000, by way of a placing of 136,363,636 new
ordinary shares of no par value in the Company at a price of 0.22
pence per share. The funds are being used to progress new venture
opportunities and for general working capital purposes.
In addition, the Company issued 21,416,515 ordinary shares to
various creditors to settle liabilities amounting to $69,000.
The total number of shares in issue as at the date of this
report is 1,718,416,985.
Reverse Takeover Transaction and Suspension of Trading
On 17 December 2020, the Company created a new wholly owned
subsidiary, Advance Energy TL Limited ("AETL"), with which it
entered into a subscription agreement with Timor-Leste Petroleum
Pty Ltd ("CVNA") (a subsidiary of Carnarvon Petroleum Limited
(ASX:CVN, "Carnarvon")) pursuant to which AETL will subscribe for
equity such that AETL holds up to 50% of the total equity interest
in Carnarvon Petroleum Timor, Unipessoal Lda (a subsidiary of CVNA
incorporated in Timor-Leste) for a consideration of up to US$20
million.
The transaction is classified as a reverse takeover pursuant to
the AIM Rules for Companies and accordingly the Company's shares
were temporarily suspended from trading on AIM as of 17 December
2020 and will remain suspended from trading on AIM until such time
as either an Admission Document setting out details of the proposed
transaction is published or confirmation is given that the
transaction is not proceeding.
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END
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