TIDMZEN
RNS Number : 6848A
Zenith Energy Ltd
30 September 2020
September 30, 2020
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon
publication of this announcement via a regulatory information
service ("RIS"), the inside information contained in this document
is now considered to be in the public domain.
ZENITH ENERGY LTD.
("Zenith" or the "Company")
Preliminary unaudited financial results for the year ended March
31, 2020
Zenith Energy Ltd. ("Zenith" or the "Company") (LSE: ZEN; OSE:
ZENA-ME), the listed international oil & gas production company
focused on pursuing African development opportunities, is pleased
to announce its preliminary unaudited consolidated financial
results for the year ended March 31, 2020.
Following consultations with its independent auditor, PKF
LittleJohn, and a result of the imminent potential award of a new
25-year license in the Republic of the Congo for the Tilapia
oilfield, the Company will publish its audited financial results
for the year ended March 31, 2020 around the week starting October
19, 2020.
Zenith can also confirm that it has engaged the auditors to
perform an ISRE 2410 review on the interim financial statements for
the six months ended September 30, 2020.
Further, the Company is in the process of engaging a Big 4
accounting firm to perform a Purchase Price Allocation exercise
("PPA") in respect of the acquisition of Anglo African Oil &
Gas Congo S.A.U ("AAOG Congo").
Shareholders are cautioned not to place undue reliance on these
preliminary results as material differences may arise once the
audited financial results are published.
The Company and its subsidiaries have been impacted by the
COVID-19 pandemic and continue to be affected. The pandemic has
caused problems with international travel and in the availability
of appropriate individuals both within the Company and among
suppliers and government-sector bodies with which it interacts. In
addition, the sharp decline in world economic output as a result of
the pandemic, has had a negative impact on oil prices and demand
for oil products. While the Board believes matters will improve
substantially in the future as the effects of the COVID-19 pandemic
are progressively overcome, there remains a material possibility
that the pandemic situation may deteriorate further, which would
impact the financial situation of the Company.
Commenting on the results, Mr. Andrea Cattaneo, Chief Executive
Officer, stated:
"We are pleased to have achieved significant reductions in our
G&A expenses for the year ended March 31, 2020.
These results also reflect the reconfiguration of the Company's
geographic footprint following the cessation of oil production
activities in Azerbaijan and our new focus on acquiring onshore oil
production and development assets in Africa.
We are fully confident our recently announced acquisitions will
strongly position the Company, especially in terms of
profitability, when oil prices progressively recover with a return
to normalised worldwide economic activity following the progressive
alleviation of the COVID-19 pandemic.
In agreement with our independent auditors, we have delayed the
publication of our audited financial results for the year ended
March 31, 2020 whilst we await a final decision from the Ministry
of Hydrocarbons of the Republic of the Congo in response to our
comprehensive technical and commercial offer for a new 25-year
license for the Tilapia oilfield.
I look forward to reporting on our exciting progress in due
course."
Further Information:
Zenith Energy Ltd
Andrea Cattaneo, Chief Executive Officer Tel: +1 (587) 315 9031
-----------------------------
E-mail: info@zenithenergy.ca
-----------------------------
Allenby Capital Limited - Financial
Adviser & Broker
-----------------------------
Nick Harriss Tel: + 44 (0) 203 328
Nick Athanas 5656
-----------------------------
Notes to Editors :
Zenith Energy Ltd. is an international oil and gas production
company, listed on the London Stock Exchange (LSE:ZEN) and the
Merkur Market of the Oslo Stock Exchange (ZENA:ME).
Zenith's development strategy is to identify and rapidly seize
value-accretive hydrocarbon production opportunities in the onshore
oil & gas sector, specifically in Africa. The Company's board
of directors and senior management team have the experience and
technical expertise to develop the Company successfully.
Chairman's statement
Introduction
In the year ended March 31, 2020, a number of material changes
took place with regards to the Company's development strategy and
geographic concentration.
The Company is pursuing an ambitious acquisition campaign in
Africa by maximizing the use of its financial resources to enrich
its portfolio, at a time of singular opportunity made possible by
the significant decline in oil prices caused by the COVID-19
pandemic, to acquire highly prospective production, development and
exploration assets in Tunisia and the Republic of the Congo.
The Board believes this strategy will enable Zenith to develop
successfully and, in doing so, create value for all
stakeholders.
New African development strategy
On March 2, 2020, the Company announced that, in view of
Zenith's strategic focus on pursuing large-scale oil production and
development opportunities in Africa, it would return the Contract
Rehabilitation Area ("CRA") to SOCAR.
The Company's publicly reported difficulties in increasing
production from the CRA since 2016, as well as its past and future
investment obligations, led the Board of Directors to unanimously
agree, in the interest of shareholders, that the Company's future
success could be better achieved in other assets with existing
production and near-term development and exploration potential in
Africa.
The low oil price environment has facilitated access to a number
of highly attractive acquisition opportunities as a result of large
international oil companies restructuring their portfolios and
selling, at advantageous commercial terms, their working interests
in small to medium size assets across the region.
Zenith's recent acquisitions in Tunisia from KUFPEC and CNPC,
two world-renowned oil companies, are evidence of this strategy
being implemented. Upon completion, conditional upon regulatory
approval being granted by the Comité Consultatif des Hydrocarbures
("CCH") of the Republic of Tunisia, it is expected that Zenith will
have a daily production ranging between 250-300 barrels of oil per
day. The Board of Directors is highly satisfied with the commercial
terms agreed for both transactions and is currently exploring
further opportunities of this kind.
The acquisition of Anglo African Oil & Gas Congo S.A.U
("AAOG Congo") from AAOG plc (a company quoted on the AIM of the
London Stock Exchange), the former operator of the highly
prospective Tilapia license in the Republic of the Congo,
represents a potentially transformational opportunity for the
Company. The Board is pleased to have been able to renegotiate the
initially agreed consideration of GBP1 million for an 80% interest
(announced on December 27, 2020) to a final consideration of
GBP200,000 for a 100% interest in AAOG Congo (announced on April
17, 2020). The acquisition of AAOG Congo has not only enabled
Zenith to acquire an existing operator in the Republic of the
Congo, but also US$5.3 million in receivables owed to AAOG Congo by
Société Nationale des Pétroles du Congo ("SNPC"), the national oil
company of the Republic of the Congo, and the novation to Zenith of
100% of the inter-company loans between AAOG Congo and AAOG plc,
equivalent to approximately to approximately GBP12.5 million as of
the date of completion of the acquisition.
As publicly announced, the Company has submitted a comprehensive
commercial and technical offer to the Ministry of Hydrocarbons of
the Republic of the Congo for the award of a new 25-year license
for the Tilapia oilfield. The Company has established Zenith Energy
Congo SA ("Zenith Congo"), at the request of the Ministry of
Hydrocarbons of the Republic of the Congo, for the purpose of
participating in the bid process and, it is hoped, receive a new
25-year license for the Tilapia oilfield.
We thank shareholders for their support during what have been
unprecedented times and we look forward with enthusiasm to
delivering on our publicly announced objectives.
Dr. JOSÉ RAMÓN LÓPEZ-PORTILLO
Chairman
September 30, 2020
Production activities
During the financial year ended March 31, 2020, the Group:
a) Produced 74,290 bbls of oil from its assets in Azerbaijan, as
compared to 85,524 bbls of oil produced in the 2019 similar
period.
b) Sold 70,005 bbls of oil from its assets in Azerbaijan, as
compared to 75,913 bbls of oil sold in the 2019 similar period. As
at March 31, 2020, inventory consists of CAD $264 (2019 - CAD $nil)
of crude oil that has been produced but not yet sold, and CAD
$1,623k of materials (2019 - CAD $156k ).
c) Sold 17,666 mcf of natural gas from its Italian assets, as
compared to 10,868 mcf of natural gas in the 2019 similar
period.
d) Sold 10,500 MWh of electricity from its Italian electricity
production assets, as compared to 9,433 MWh for the corresponding
period of 2019.
e) Sold 214 bbls of condensate from its Italian assets, as
compared 628 bbls of condensate in the 2019 similar period.
Financing activities
The Company issued equity during the course of the financial
year ended March 31, 2020, raising a combined net total of
CAD$20.226m to finance its operational activities and fund the
purchase of key operational equipment for the development of its
operational activities in Azerbaijan.
During the year, 316,645,857 new common shares were issued, as
detailed in the financial statements (note 15).
On January 20, 2020, the Company announced the issuance of the
following unsecured, multi-currency Euro Medium Term Notes at par
value (the "Notes"):
-- EURO 1,000,000 bearing an interest of 10.125 per cent per year (the "EUR-Notes")
-- GBP 1,000,000 bearing an interest of 10.50 per cent per year (the "GBP-Notes")
-- USD 1,000,000 bearing an interest of 10.375 per cent per year (the "USD-Notes")
-- CHF 1,000,000 bearing an interest of 10.00 per cent per year (the "CHF-Notes")
The Notes were issued under Zenith's EUR 25,000,000
multi-currency Euro Medium Term Notes Programme, as announced by
the Company on November 6, 2019, and will be due on January 27,
2024. The Notes were admitted to trading on the Third Market (MTF)
of the Vienna Stock Exchange ("Wiener Borse AG").
The Notes are governed by Austrian law and, since the Notes are
not convertible into equity of Zenith, the issuance of the Notes
was not subject to the approval of the TSX Venture Exchange in
Canada.
The issue of the Notes is aligned with the Company's strategy of
diversifying its financing towards non-equity dilutive funding to
support its successful development.
Financial Results
The Group recorded an after-tax loss of CAD$562,551k for the
year ended March 31, 2020, compared to a loss of CAD$9,762k for the
year ended March 31, 2019.
Group production costs for the year were CAD$1,626k, compared to
CAD$4,900k in 2019.
Net finance income for the year was CAD$ 35k (2019: CAD$1,188k
expense).
Cash balances of CAD$ 1,209k (2019: CAD$3,058k) were held at the
end of the financial year.
Total equity attributable to the ordinary shareholders of the
Group was CAD$ 17,632k as at March 31, 2020, (2019: CAD$ 569,081k
).
Post Balance Sheet Events
The Group continued it financing activities through issuing
465,000,000 shares, with gross proceeds of CAD$5,022k.
Details of the capital raising are available in note 29 to the
Financial Statements.
-- On April 17, 2020, the Company announced that it has
successfully renegotiated the terms for the acquisition from AIM
listed Anglo African Oil & Gas plc ("AAOG") of its fully owned
subsidiary in the Republic of the Congo, Anglo African Oil &
Gas Congo S.A.U, ("AAOG Congo") which has a 56 per cent. majority
interest in, and is the operator of, the Tilapia oilfield in the
Republic of the Congo (the "License").
The Company entered into a new conditional Deed of Variation
(the "Deed of Variation") which included the acquisition of a 100
per cent interest in AAOG Congo and related intercompany loans (the
"Acquisition") for a revised total consideration of GBP200,000
("Revised Consideration").
-- On April 20, 2020, the Company announced that its newly
created wholly owned subsidiary Zenith Energy Netherlands B.V.
("Zenith Netherlands") has signed a conditional sale and purchase
agreement ("SPA") with KUFPEC (Tunisia) Limited ("Seller"), a 100%
subsidiary of Kuwait Foreign Petroleum Exploration Company K.S.C.C,
a subsidiary of the State of Kuwait's national oil company, for the
acquisition of a working interest in, inter alia, the North
Kairouan permit and the Sidi El Kilani Concession (the "Tunisian
Acquisition"), which contains the Sidi El Kilani oilfield
("SLK").
The Seller holds an undivided 22.5% interest in the Tunisian
Acquisition, together with 25 Class B shares in Compagnie
Tuniso-Koweito-Chinoise de Pétrole (CTKCP), the operator,
representing 22.5% of the issued share capital of the company.
The Seller agreed to sell, assign and transfer to Zenith
Netherlands the Tunisian Acquisition on the terms and subject to
the conditions set out in the SPA.
The consideration payable by Zenith Netherlands under the SPA
was US$500,000.
-- On April 22, 2020, the Company announced the total repayment
of the Loan Facility for US$1,485,000 and accrued interest.
The amount of the principal, and related accrued interest, of
the Loan Facility is represented and accounted as a liability in
the audited Annual Financial Report of the Company as of March 31,
2019, and in the unaudited Q2 Financial Statements as of September
30, 2019, for an aggregate amount of US$2,080,523.
On October 1, 2019, the Company announced that, following
negotiations with the lender, it had successfully agreed to settle
the aforementioned liability for a reduced amount of US$1,000,000,
representing a profit of US$1,080,523.
The Company subsequently confirmed that the liability had been
settled in full.
-- On May 5, 2020, the Company announced the successful
completion of the acquisition from AIM listed Anglo African Oil
& Gas plc ("AAOG") of a 100 percent interest in its fully owned
subsidiary in the Republic of the Congo, Anglo African Oil &
Gas Congo S.A.U ("AAOG Congo"), which has a 56 percent majority
interest in, and is the operator of, the Tilapia oilfield.
In accordance with the terms of the amended share purchase
agreement, completion ("Completion") has taken place within one
business day of AAOG shareholder approval being obtained at the
AAOG general meeting held yesterday, May 4, 2020.
-- On May 28, 2020, the Company announced the TSX Venture
Exchange ("TSX-V") has confirmed that effective at the close of
business Friday, May 29, 2020, the common shares of the Company
will be delisted from the TSX-V at Zenith's request.
-- On June 11, 2020, the Company announced that it has made
payment for a total of US$250,000 to Kuwait Foreign Petroleum
Exploration Company K.S.C.C ("KUFPEC"), a subsidiary of the State
of Kuwait's national oil company, in relation to the acquisition of
a 22.5% working interest in the North Kairouan permit and the Sidi
El Kilani Concession (the "Tunisian Acquisition"), which contains
the Sidi El Kilani oilfield ("SLK").
Completion of the Tunisian Acquisition remains conditional on
approval being granted by the Comité Consultatif des Hydrocarbures
of the Republic of Tunisia in respect of the transfer of the
Seller's right, title and interest in and under the Tunisian
Acquisition to Zenith Netherlands. Zenith has initiated the
necessary formalities in relation to the aforementioned approval
process, and that a decision is expected in due course.
-- On June 25, 2020, the Company announced it completed the
handover process (the "Handover") of the Contract Rehabilitation
Area to SOCAR in the Republic of Azerbaijan. As a result of the
Handover, Zenith has ceased all oil production operations in
Azerbaijan and all field production personnel, approximately 170
employees, have been transferred to a division of SOCAR.
-- On July 7, 2020, the Company announced that it has entered
into a joint venture agreement (the "Agreement") with a local oil
& gas company in the Republic of the Congo.
The primary objective of the Agreement is the potential
acquisition of an onshore oil production license (the "Potential
Acquisition"), last producing at a rate of approximately 300
barrels of oil per day from the regionally proven Mengo formation
as recently as 2019. Production has currently been suspended
pending the assignation of a new license.
The Potential Acquisition is located in the Kouilou region of
the Republic of the Congo in proximity of Pointe-Noire, the
country's second largest city, and is also in the vicinity of
Tilapia, the Company's recently acquired oil production asset with
transformational production potential.
Under the terms of the Agreement, the Company and its local
partner will jointly submit an application to the relevant
authorities in the Republic of the Congo, including the Ministry of
Hydrocarbons, for the award of a new license in relation to the
Potential Acquisition.
Further, in accordance with the Agreement, it is stipulated that
Zenith shall have the role of joint operator and majority partner
in the event that a new license is successfully obtained in
relation to the Potential Acquisition.
Following preliminary technical analysis of the Potential
Acquisition, as part of the due diligence activities conducted
prior to entering into the Agreement, Zenith is confident that
profitable oil production operations can be achieved following the
reactivation of the Potential Acquisition and the performance of
targeted, low-intensity workover activities.
-- On July 31, 2020, the Company announced the termination, by
mutual agreement between the parties, of the sale and purchase
agreement entered into with Coro Energy plc ("Coro") relating to
the proposed acquisition by Zenith of Coro's entire Italian natural
gas production and exploration portfolio.
-- On August 10, 2020, the Company announced it had incorporated
Zenith Energy Congo SA ("Zenith Congo"), a fully owned subsidiary
of the Company, created under the laws of the Republic of Condo.
Zenith Congo has been established at the request of the Ministry of
Hydrocarbons for the purpose of receiving a new 25-year license
following the submission of a comprehensive commercial and
technical offer (the "Offer") to the Ministry of Hydrocarbons of
the Republic of the Congo for the award of a new 25-year license
for the Tilapia oilfield to be named "Tilapia II". As a result, and
in agreement with the Ministry of Hydrocarbons, the Company has
terminated the Plan for the Continuation of Activities, first
announced to the market on July 20, 2020, and returned operatorship
of the Tilapia license from AAOG Congo to a subsidiary of SNPC. It
is planned that, in the event the Offer is accepted by the Ministry
of Hydrocarbons of the Republic of the Congo, the new operator of
Tilapia II will be Zenith Congo.
-- On August 26, 2020, the Company announced that BCRA Credit
Rating Agency AD ("BCRA") has assigned Zenith a "B-" with Stable
Outlook long-term debt issuer credit rating.
-- On September 8, 2020, the Company announced that its wholly
owned subsidiary Zenith Energy Netherlands B.V. ("Zenith
Netherlands") had signed a conditional sale and purchase agreement
("SPA") with CNPC International (Tunisia) Ltd., ("Seller"), a 100%
subsidiary of CNPCI, CNPC International Ltd., for the acquisition
of a working interest in, inter alia, the North Kairouan permit and
the Sidi El Kilani Concession (the " Tunisian Acquisition"), which
contains the Sidi El Kilani oilfield ("SLK").
The Seller holds an undivided 22.5% interest in the Tunisian
Acquisition, together with 25 Class B shares in Compagnie
Tuniso-Koweito-Chinoise de Pétrole (CTKCP), the operator,
representing 25% of the issued share capital of the company.
The Seller agreed to sell, assign and transfer to Zenith
Netherlands the Tunisian Acquisition on the terms and subject to
the conditions set out in the SPA.
The consideration payable by Zenith Netherlands under the terms
of the SPA was US$300,000 (the "Consideration").
Completion of the SPA is conditional on approval being granted
by the Comité Consultatif des Hydrocarbures ("CCH") of the Republic
of Tunisia in respect of the transfer of the Seller's right, title
and interest in and under the SLK Concession to Zenith Netherlands
("Completion").
CEO Statement
Zenith Energy Ltd. ("Zenith" or the "Group") is an international
oil and gas production Group, incorporated in Canada, listed on the
Main Market for listed securities of the London Stock Exchange
under the ticker symbol "ZEN" and on the Merkur Market of the Oslo
Stock Exchange under the ticker "ZENA:ME".
Zenith's strategic objective is to become a mid-tier, Africa
focused hydrocarbon production and exploration company. Specific
attention is directed towards assets with proven development
potential via development drilling, field rehabilitation, and
low-risk exploration activities.
In view of the recent decline in oil prices, as well as
macroeconomic developments caused by the COVID-19 pandemic, a
singular time of opportunity has come about for companies such as
Zenith to acquire, at highly commercially advantageous terms, oil
and gas production and exploration assets being divested by many
oil majors and leading oil and gas companies. As a leadership team,
we are seeking to maximize this opportunity in order to ensure
Zenith emerges from the current low oil price environment a much
stronger and larger entity with significant future development
potential.
We are very pleased to have recently concluded two separate
transactions with CNPC, one of the largest oil and gas corporations
in the world, and KUFPEC, a subsidiary of the State of Kuwait's
national oil company, to acquire their respective working interests
of 22.5% in the Sidi El Kilani Concession and the North Kairouan
permit in Tunisia, which contain the producing Sidi El Kilani
oilfield. We look forward with confidence to receiving regulatory
approval from the Comité Consultatif des Hydrocarbures of the
Republic of Tunisia in respect of the transfer of ownership for
both acquisitions in due course.
Similarly, we are delighted to have established a presence in
the Republic of the Congo following our acquisition of Anglo
African Oil & Gas Congo S.A.U ("AAOG Congo"), the former
Congolese subsidiary of Anglo African Oil & Gas plc (a company
listed on the AIM of the London Stock Exchange) in May 2020. The
decline in oil prices brought about by the COVID-19 pandemic, as
well as renegotiations with the seller, enabled Zenith to acquire,
at highly advantageous terms, an interest, albeit brief, in the now
expired Tilapia I license (expired on July 18, 2020), as well as
receivables of approximately US$5.3 million dollars owed by SNPC
(Société Nationale des Pétroles du Congo) and the full novation to
Zenith of intercompany loans between AAOG plc and AAOG Congo
equivalent to US$16 million.
As publicly announced, the Company has presented a comprehensive
commercial and technical offer (the "Offer") to the Ministry of
Hydrocarbons of the Republic of the Congo in order to be awarded a
new 25-year license for the Tilapia oilfield (to be named Tilapia
II). We are confident that we shall be successful in obtaining a
new 25-year license. In the event our Offer is accepted, the
Company will look to begin drilling activities in well TLP-103C at
the earliest opportunity.
We are aware that the Company's operational track record in
Azerbaijan, and the handover of the Contract Rehabilitation Area
("CRA") to SOCAR announced to the market on March 2, 2020,
disappointed market expectations. However, in view of the
significant resources deployed to date and the future obligations
required for future development, as well as the underwhelming
operational results, the Board of Directors is firmly of the view
that this outcome was in the best interests of shareholders and the
future commercial success of the Company. The operational
challenges, as publicly communicated on a number of occasions, was
due, inter alia, to the severely dilapidated condition of the wells
from the Soviet era, the unreliability of historical data, and the
highly challenging geology of the field.
The results for the year ended March 31, 2020, ("2020 FY")
reflect the significant changes the Group has undergone during the
course of the 2020 Financial Year, specifically in result of the
impairment resulting from the handover of the CRA in Azerbaijan and
its associated reserves. However, it should be underlined, on a
positive note, that we have been able to achieve a significant
reduction in our General and Administrative Expenses during the
2020 FY to CAD$3,361k, compared to CAD$5,251k incurred in the
preceding financial year ended March 31, 2019.
We are very excited about our countercyclical acquisition
campaign in Africa in the current low oil price environment,
especially the highly prospective development production potential
of the Tilapia oilfield in the event we are successful in being
awarded a new 25-year license and the material daily production
revenue to be obtained from completion of our acquisitions in
Tunisia. Indeed, we are hopeful to conclude further acquisitions of
a similar kind in due course.
I thank shareholders for their loyal support. As is clear, my
confidence in Zenith, as well as that of the team, remains
unchanged. We fully believe that our new geographic concentration
in Africa, in less geologically challenging assets acquired at
highly advantageous commercial terms, will enable the Company to
achieve its operational objectives and deliver value to our
investors.
The Board is committed to sustained growth and exploiting any
value accretive opportunities that may present themselves. We shall
continue to evaluate the acquisition of additional energy
production opportunities building on the momentum of our recent
progress to further support the Group's expansion.
Andrea Cattaneo
President, CEO and Director
September 30, 2020
Consolidated Statement of Comprehensive Income
Continuing operations Financial year ended
Unaudited Audited
March 31, 2020 March 31, 2019
CAD $'000 CAD $'000
Revenue 718 6,567
Cost of sales
Production costs (2,952) (4,900)
Depletion and depreciation (726) (2,283)
Gross loss (2,960) (616)
------------------------------------------------- --- ------------------------ -----------------------------
Administrative expenses (5,479) (7,957)
Operating loss (8,439) (8,573)
------------------------------------------------- --- ------------------------ -----------------------------
Gain on business combination 20,111 -
Finance income/(expense) 25 (1,188)
Gain/(loss) for the year before taxation 11,697 (9,761)
------------------------------------------------- --- ------------------------ -----------------------------
Taxation (4) (1)
Gain/(loss) for the year from continuing
operations attributable to owners of the
parent 11,693 (9,762)
------------------------------------------------- --- ------------------------ -----------------------------
Loss from discontinued operations (580,404) -
Loss for the year attributable to owners of the
parent (568,711) (9,762)
------------------------------------------------- --- ------------------------ -----------------------------
Other comprehensive income
Items that may be subsequently reclassified to
profit or loss:
Exchange differences on translating foreign
operations, net of tax (655) (132)
------------------------------------------------- --- ------------------------ -----------------------------
Other comprehensive income for the year, net of
tax (655) (132)
------------------------------------------------- --- ------------------------ -----------------------------
Total comprehensive income for the year
attributable to owners of the parent (569,366) (9,894)
------------------------------------------------- --- ------------------------ -----------------------------
Earnings per share CAD $ CAD $
Basic from loss for the year (1.42) (0.04)
Diluted from loss for the year (1.42) (0.04)
From continuing operations - basic 0.03 (0.04)
From continuing operations - diluted 0.02 (0.04)
From discontinued operations - basic and diluted (1.45) -
Consolidated Statement of Financial Position
Financial year ended
Unaudited Audited
March 31, 2020 March 31, 2019
ASSETS CAD $'000 CAD $'000
Non-current assets
Property, plant and equipment 33,537 1,079,639
Financial assets at amortised cost 13 422
------------------------ -----------------------------
33,550 1,080,061
------------------------ -----------------------------
Current assets
Inventory 799 156
Trade and other receivables 30,902 5,413
Cash and cash equivalents 1,221 3,058
32,922 8,627
------------------------ -----------------------------
TOTAL ASSETS 66,472 1,088,688
======================== =============================
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share capital 40,400 28,866
Share warrants & option reserve 1,010 1,147
Contributed surplus 4,320 4,125
Retained earnings (34,307) 534,943
------------------------ -----------------------------
Total equity 11,423 569,081
------------------------ -----------------------------
Non-current liabilities
Loans 1,266 3,417
Non-convertible bonds 20,669 4,759
Deferred consideration payable - 483,178
Deferred tax liabilities - 2,398
Decommissioning provisions 13,501 9,089
Retirement provision 50 -
------------------------ -----------------------------
Total non-current liabilities 35,486 502,841
------------------------ -----------------------------
Current Liabilities
Trade and other payables 17,289 12,115
Loans 2,188 3,776
Non-convertible bonds 86 199
Deferred consideration payable - 676
------------------------ -----------------------------
Total current liabilities 19,563 16,766
TOTAL EQUITY AND LIABILITIES 66,472 1,088,688
======================== =============================
Signed
Jose Ramon Lopez-Portillo
Chairman
Attributable to owners of the parent
Consolidated Share capital Share warrants & Contributed surplus Retained earnings Total
Statement of option reserve
Changes in Equity
CAD $'000 CAD $'000 CAD $'000 CAD$'000 CAD $'000
Balance as at 1
April 2018 22,792 875 3,390 544,837 571,894
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Loss for the year - - - (9,762) (9,762)
Other comprehensive
income - - - (132) (132)
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Total comprehensive
income - - - (9,894) (9,894)
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Share issue net of
costs - debt
settlement 371 - - - 371
Share issue net of
costs - private
placement 5,703 - - - 5,703
Value of warrants
issued - 167 - - 167
Issue of options - 928 - - 928
Fair value of
options expired - (401) 313 - (88)
Warrants expired - (422) 422 - -
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Total transactions
with owners
recognised
directly in equity 6,074 272 735 - 7,081
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Balance as at March
31, 2019 28,866 1,147 4,125 534,943 569,081
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Loss for the year - - - (568,711) (568,711)
Other comprehensive
income - - - (655) (655)
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Total comprehensive
income - - - (569,366) (569,366)
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Share issue net of
costs - debt
settlement 748 - - - 748
Share issue net of
costs - private
placement 10,628 - - - 10,628
Value of warrants
issued - 174 - - 174
Exercise of options 158 (116) - 116 158
Warrants expired - (195) 195 - -
Total transactions
with owners
recognised
directly in equity 11,534 (137) 195 116 11,708
Balance as at March
31, 2020
(unaudited) 40,400 1,010 4,320 (34,307) 11,423
-------------------- -------------- -------------------- -------------------- ------------------ ----------
Reserve Description and purpose
Share capital Amount subscribed for share capital
Share warrants & Relates to increase in equity for services
received - equity settled
option reserve share transactions
Contributed surplus Expired share options issued in previous
years
Retained earnings Cumulative net gains and losses recognised in
the consolidated statement of comprehensive income.
Consolidated statement of cash flows Financial year ended
Unaudited Audited
March 31, 2020 March 31, 2019
OPERATING ACTIVITIES CAD $'000 CAD $'000
Loss for the year before taxation (568,707) (9,761)
Shares issued for services - 371
Options/warrants charge 58 1,007
Foreign exchange 23,176 (441)
Gain on business combination (20,111) -
Depletion and depreciation 726 2,283
Discontinued operations 580,404 -
Finance (income)/expense (538) 1,188
Change in working capital (20,118) (1,401)
----------------------------------------------------------- --------------------- ----------------------
Net cash outflows from operating activities (5,110) (6,754)
INVESTING ACTIVITIES
Purchase of property, plant and equipment (22,017) (5,205)
Proceeds from disposal of property, plant and equipment 1,066 378
----------------------------------------------------------- --------------------- ----------------------
Net cash outflows from investing activities (20,951) (4,827)
----------------------------------------------------------- --------------------- ----------------------
FINANCING ACTIVITIES
Proceeds from issue of shares, net of transaction costs 11,376 5,703
Proceeds from exercise of options 158 -
Proceeds from issue of bonds 8,692 1,099
Repayments of loans (5,029) (208)
Proceeds from loans 2,004 2,109
Repayment of bonds (2,790) (375)
Proceeds from bonds in treasury 9,813 3,814
Net cash flows from financing activities 24,224 12,142
----------------------------------------------------------- --------------------- ----------------------
Net (decrease)/increase in cash and cash equivalents (1,837) 561
Cash and cash equivalents at beginning of year 3,058 2,497
----------------------------------------------------------- --------------------- ----------------------
Cash and cash equivalents at end of year 1,221 3,058
----------------------------------------------------------- --------------------- ----------------------
Notes to the financial statements
1. Corporate and Group information
The unaudited financial information for the year ended March 31,
2020 contained in this preliminary announcement was approved by the
Board on September 30, 2020. This announcement does not constitute
the final accounts for the Group but is derived from those
accounts. Accounts for the year ended March 31, 2019 have been
lodged as required. Statutory accounts for the year ended March 31,
2020 will be lodged as required. The auditors have reported on the
2019 accounts. Their reports were not qualified but within the key
audit matter in relation to the carrying value of D and P assets
drew attention to the fact the licenses may be lost should the
required production levels within the REDSPA not be satisfied. It
also included a material uncertainty in relation to going
concern.
New standards and interpretations
a. Adoption of new and revised standards
The following IFRSs or IFRIC interpretations are those that were
effective for the first time for the financial year beginning April
1, 2019 and relevant to the entity:
Standard / Interpretation/Amendments
----------------------------------------- --------------------------------------------------------
IFRS 9 Pre-pay-ment Features with Negative Com-pen-sa-tion
to address the concerns about how IFRS 9 'Financial
In-stru-ments' clas-si-fies par-tic-u-lar
pre-payable financial assets. In addition,
the IASB clarified an aspect of the accounting
for financial li-a-bil-i-ties following a
mod-i-fi-ca-tion.
----------------------------------------- --------------------------------------------------------
IFRS 16 Leases
----------------------------------------- ------------------------------------------------------
IAS 19 (plan amend-ments) P lan Amendment, Cur-tail-ment or Set-tle-ment
to harmonise accounting practices and
to provide more relevant in-for-ma-tion
for de-ci-sion-mak-ing.
----------------------------------------- ------------------------------------------------------
IAS 28 (long-term interests) Long-term Interests in As-so-ci-ates
and Joint Ventures to clarify that
an entity applies IFRS 9 'Financial
In-stru-ments' to long-term interests
in an associate or joint venture that
form part of the net in-vest-ment in
the associate or joint venture but
to which the equity method is not applied.
----------------------------------------- ------------------------------------------------------
IFRIC 23 Un-cer-tainty over Income Tax Treat-ments.
----------------------------------------- ------------------------------------------------------
Annual Im-prove-ments Amend-ments to IAS 12 "Income Taxes",
to IFRS Standards 2015-2017 IAS 23 "Borrowing Costs", IFRS 3 "Business
Cycle Combinations" and IFRS 11 "Joint Arrangements"
as result of the IASB's annual im-prove-ments
project.
----------------------------------------- ------------------------------------------------------
The adoption of these new and revised Standards and
Interpretations has not resulted in significant changes to the
Group's accounting policies that have affected the amounts reported
for the current or prior years.
b. New standards and interpretations in issue but not yet effective
At the date of authorization of these financial statements, the
Group has not applied the following new and revised IFRSs that have
been issued but are not yet effective:
Standard / Interpretation impact on initial application effective date
--------------------------- ------------------------------- ----------------
IFRS 17 Insurance contracts. 1 January 2021
=========================== =============================== ================
The Directors do not expect that the adoption of the Standards
listed above, in particular IFRS 16, will have a material impact on
the financial statements of the Group in future periods.
Business combinations
The acquisition method of accounting is used to account for
acquisitions of subsidiaries and assets that meet the definition of
a business under IFRS. The cost of an acquisition is measured as
the fair value of the assets given, equity instruments issued and
liabilities incurred or assumed at the date of exchange. The
consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration agreement.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at fair value at the acquisition date. The excess of the
cost of acquisition over the fair value of the identifiable assets,
liabilities and contingent liabilities acquired is recorded as
goodwill. If the cost of an acquisition is less than the fair value
of the net assets of the subsidiary acquired, a bargain purchase
gain is recognised immediately in the consolidated statement of
comprehensive income.
Transaction costs that are incurred in connection with a
business combination other than those associated with the issue of
debt or equity instruments are expensed as incurred.
Intercompany balances and transactions are eliminated on
consolidation, and any unrealized income and expenses arising from
intercompany transactions are eliminated in preparing the
consolidated financial statements.
2. Administrative expenses
During the year ended March 31, 2020, the Group incurred CAD$
5,479k (2019 - CAD$ 7,957k) of Administrative Expenses.
Furthermore, during the same period the Group incurred CAD$ 2,118k
(2019 - CAD$ 2,706k) of non-recurrent expenses which relate to the
cost of raising funds, negotiation for potential acquisition of
producing assets and the share based payments costs, which is a
non-cash item.
Unaudited Audited
March 31, 2020 March 31,
2019
------------------------------------
CAD$'000 CAD$'000
------------------------------------ ---------------- -----------
Auditors remuneration - audit
fees Group 105 129
Auditors remuneration - associates - -
of Group auditors
Accounting and bookkeeping 23 30
Consultancy fees 538 1,021
Legal 45 163
Office 630 627
Administrative expenses 420 481
Foreign exchange (gain)/loss (150) (314)
Salaries 1,325 2,547
Travel 425 567
General and administrative
expenses 3,361 5,251
------------------------------------ ---------------- -----------
Non-recurring expenses
Bond issue costs 44 127
Listing costs (Norway and
UK) 658 1,167
Negotiation costs for acquisitions 823 -
Aborted Transaction Costs - 405
Share based payments 174 1,007
Release of prepaid insurance 419 -
Total non-recurring expenses 2,118 2,706
------------------------------------ ---------------- -----------
Total general and administrative
expenses 5,479 7,957
------------------------------------ ---------------- -----------
3. Business combinations
On May 5, 2020, the Company announced it had successfully
completed the acquisition of a 100 percent interest in Anglo
African Oil & Gas Congo S.A.U ("AAOG Congo") from AIM listed
Anglo African Oil & Gas plc (the "Seller"). At the time of the
acquisition, AAOG Congo had a 56 percent majority interest in, and
was the operator of, the Tilapia oilfield in the Democratic
Republic of the Congo.
As previously announced on April 17, 2020, the Company had
entered into a conditional deed of variation to vary the terms of a
share purchase agreement with AAOG for the acquisition of a 100 per
cent
interest in AAOG Congo and related intercompany loans (the
"Acquisition") for a revised total consideration of GBP200,000
("Consideration").
Pursuant to the terms of the Acquisition, the Seller novated
100% of the intercompany loans with AAOG Congo, thereby
transferring all its rights and obligations relating to these
intercompany loans, to Zenith as of the date of Completion,
equivalent to approximately GBP12.5 million. As a result, this
credit balance has been transferred to Zenith's balance sheet.
The Business Combinations outlines the accounting process to be
followed when an acquirer obtains control of a business. Such
business combinations are accounted for using the 'acquisition
method', which generally requires assets acquired and liabilities
assumed to be measured at their fair values at the acquisition
date.
The Company has engaged a Big 4 accounting firm to perform a
Purchase Price allocation exercise ("PPA") in respect of the
acquisition of Anglo African Oil & Gas Congo S.A.U ("AAOG
Congo").
Zenith can also confirm that it has engaged PKF LittleJohn to
perform an ISRE 2410 review on the interim financial statements for
the six months ended September 30, 2020.
This number may change as a result of the above reviews and
would also be impacted in the event that Zenith did not receive a
new license in relation to the oil and gas assets owned by AAOG
Congo at the time of the acquisition.
Fair value of net assets acquired CAD$'000 (unaudited)
CAD$'000
Development and production assets 20,184
Other net assets 5,839
Decommissioning obligations (5,561)
Less consideration payable (351)
----------------------------------- ---------
Gain on business combination 20,111
----------------------------------- ---------
4. Staff cost
(a) Employee compensation cost
During the year, the Group had an average of 190 (2019: 207)
full time employees based in its offices in London in the UK, Baku
in Azerbaijan, and Genoa in Italy.
The following table details the amounts of total employee
compensation included in the consolidated statement of
comprehensive income:
Unaudited
March 31. Audited
2020 March 31, 2019
CAD $'000 CAD $'000
Operating 42 2,285
General and administrative 1,325 2,547
Share based payments 174 1,007
------------------------------ ----------- ----------------
Total employee compensation
cost 1,541 5,839
------------------------------ ----------- ----------------
(b) Key management compensation
Key management personnel are those people having authority and
responsibility for planning, directing and controlling the
activities of an entity, either directly or indirectly. The
following table summarises annual compensation and long-term
compensation of the Group's "Named Executive Officers" for the two
most recently completed financial years that ended on March 31,
2020. The named executive officers equate to key management
personnel:
Short term Other Other
Name and employee short-term long-term Share based Other
principal benefit benefits benefits payments benefits Total
position Year(2) CAD $'000 CAD $'000 CAD $'000 CAD $'000 CAD $'000 CAD $'000
Andrea
Cattaneo
(1) 2019 667 - - 462 419 1,548
-------- ---------- ----------- ---------- ----------- ---------- ----------
2020 567 - - - 181 748
------------------------- ---------- ----------- ---------- ----------- ---------- ----------
Luigi
Regis
Milano
(2) 2019 60 - - 36 17 113
-------- ---------- ----------- ---------- ----------- ---------- ----------
2020 61 - - - - 61
------------------------- ---------- ----------- ---------- ----------- ---------- ----------
Jose Ramon
Lopez-Portillo 2019 - - - 22 - 22
-------- ---------- ----------- ---------- ----------- ---------- ----------
2020 - - - - - -
-------- ---------- ----------- ---------- ----------- ---------- ----------
Dario
Sodero(3) 2019 8 - - 18 - 26
-------- ---------- ----------- ---------- ----------- ---------- ----------
2020 19 - - - - 19
------------------------- ---------- ----------- ---------- ----------- ---------- ----------
Erik Larre 2019 - - - 62 - 62
-------- ---------- ----------- ---------- ----------- ---------- ----------
2020 - - - - - -
-------- ---------- ----------- ---------- ----------- ---------- ----------
Sergey
Borovskiy 2019 - - - 62 - 62
-------- ---------- ----------- ---------- ----------- ---------- ----------
2020 - - - - - -
-------- ---------- ----------- ---------- ----------- ---------- ----------
Luca (4)
Benedetto 2019 199 - - 116 23 338
-------- ---------- ----------- ---------- ----------- ---------- ----------
2020 231 - - - 7 238
------------------------- ---------- ----------- ---------- ----------- ---------- ----------
Notes:
1. Andrea Cattaneo was appointed President and Chief Executive
Officer effective 01 January 2009. As proposed by the Compensation
Committee, Mr. Cattaneo's annual consulting fee payment is
approximately GBP210k (CAD $367k), payable in equal monthly
instalments, plus benefits for the year ended March 31, 2020, and
yearly bonus compensation of CAD$200k from the parent Company.
During the FY 2019, Mr. Cattaneo has agreed to swap his full salary
for new Common Shares (" Salary Sacrifice Shares "), with effect
from 1 April 2019. The new Common Shares were issued on a quarterly
basis at a price that is the average price at which the Common
Shares traded during the period, based on the mid-market closing
price on the London Stock Exchange.
2. Mr. Luigi Regis Milano had a yearly compensation of CAD$61k
from subsidiary undertakings for the year ended March 31, 2020
3. Mr. Sodero received a fee for professional consulting
services of approximately CAD$19k during the year ended March 31,
2020.
4. Mr. Luca Benedetto was appointed as Chief Financial Officer
from April 2017 and received a compensation of CAD$168k from the
parent Company and CAD$63k from subsidiary undertakings, as well as
benefits for CAD$7k, during the year ended March 31, 2020.
5. Finance expense
Unaudited Audited
March 31. 2020 March 31, 2019
CAD $'000 CAD $'000
Interest and debt waived (1,376) -
Interest expense 621 469
Accretion of decommissioning provision 356 363
Effective interest on financial liabilities held at amortised cost 424 356
Decretion of bonds - -
---------------- ----------------
Net finance expense 25 1,188
---------------- ----------------
6. Taxation
Unaudited Audited
March 31. 2020 March 31, 2019
CAD $'000 CAD $'000
Current tax 4 1
Deferred tax - -
------------------------------- ---------------- ----------------
Total tax charge for the year 4 1
-------------------------------- ---------------- ----------------
The difference between tax expense for the year and expected
income taxes based on the statutory tax rate arises as follows:
Unaudited, Audited
March 31, 2020 March 31, 2019
CAD $'000 CAD $'000
Profit/(loss) before taxation (563,496) (9,761)
Expected tax at 27% (152,144) (2,635)
Differences on tax rates attributable to other jurisdictions 39,590 85
Non-deductible expenses 109,622 272
Changes in enacted rates and other - (48)
Temporary differences (115,118) (30)
Tax losses carried forward 118,046 2,355
Under(over)provided in prior years -
--------------------------------------------------------------
Tax charge (4) (1)
--------------------------------------------------------------- ---------------- ----------------
The tax (charge) / credit for the year ended March 31, 2020
comprised CAD $4 (2019 - CAD $1) of current tax expense and CAD
$Nil deferred tax expense (2019 - CAD $Nil deferred tax
expense).
Recognised deferred tax liabilities are attributable to the
following:
Unaudited Audited
March 31, 2020 March 31, 2019
CAD $'000 CAD $'000
Property and equipment (2,109) (2,554)
Decommissioning obligations 1,751 47
Non--capital loss carry forwards 358 109
-------------------------------------- ----------------------- -----------------------
Recognised deferred tax liabilities - (2,398)
-------------------------------------- ----------------------- -----------------------
Deferred tax assets have not been recognised in respect of the
following temporary differences as it is not considered probable
that sufficient taxable income will allow the deferred tax assets
to be utilised and recovered:
Unaudited Audited
March 31, 2020 March 31, 2019
CAD $'000 CAD $'000
Non--capital loss carry forwards 606,733 64,980
Share issuance costs 603 156
Decommissioning obligations 1,827 -
Capital losses 1,467 3,408
Other 76 978
----------------------------------- ----------------------- -----------------------
Unrecognised deferred tax assets 610,706 69,522
----------------------------------- ----------------------- -----------------------
As at March 31, 2020, the Group has accumulated non-capital
losses in Canada totalling CAD $604,796 (2019 - CAD $638,484k)
which expire in varying amounts between 2022 and 2040 and CAD
$2,295k (2019 - CAD $795k) of non-capital losses with no expiry
date.
7. Property, plant and equipment
D&P Assets
CAD $'000
Carrying amount at March 31, 2018 1,077,445
------------------------------------------------ ------------
Additions 5,205
Disposals (378)
Depletion and depreciation (2,283)
Compensatory oil delivered (347)
Foreign exchange differences (3)
------------------------------------------------ ------------
Carrying amount at March 31, 2019 (audited) 1,079,639
------------------------------------------------ ------------
Additions 22,017
Disposals (1,066)
Depletion and depreciation (726)
Impairment - Discontinued operations (note 20) (1,066,570)
Foreign exchange differences 243
------------------------------------------------ ------------
Carrying amount at March 31, 2020 (unaudited) 33,537
------------------------------------------------ ------------
Impairment test for property, plant and equipment
As of March 31, 2020, a review was undertaken of the carrying
amounts of property, plant and equipment to determine whether there
was any indication of a trigger that may have led to these assets
suffering an impairment loss. Following this review impairment
triggers were noted in relation to the Azerbaijan assets due to the
carrying amount of the Group net assets exceeding the Company's
market capitalization and also the Group encountered some
operational difficulty with well workovers which led to lower than
expected production levels compared to forecasts for the same
period.
As there is no readily available market for the Group's oil and
gas properties, fair value is derived as the net present value of
the estimated future cash flows arising from the continued use of
the assets, incorporating assumptions that a typical market
participant would take into account. The value in use of an oil and
gas property is generally lower than its Fair Value Less Costs of
Disposal ('FVLCD') as value in use reflects only those cash flows
expected to be derived from the asset in its current condition.
FVLCD includes appraisal and development expenditure that a market
participant would consider likely to enhance the productive
capacity of an asset and optimize future cash flows. Consequently,
the Group determines recoverable amount based on FVLCD using a
Discounted Cash Flow ('DCF') methodology.
The DCF was derived by estimating discounted after-tax cash
flows for each CGU based on estimates that a typical market
participant would use in valuing such assets. The impairment tests
compared the recoverable amount of the respective CGUs noted below
to the respective carrying values of their associated assets. The
estimates of FVLCD meet the definition of level three fair value
measurements as they are determined from unobservable inputs.
Italian Cash Generating Unit
Key assumptions:
-- Production profiles: these were based on the latest available information from management.
-- Capital and operating costs: these were based on the current
operating and capital costs in Italy.
-- Gas price: An average 2020 gas price of $4.944/Mscf based on
information from the World Bank European gas price forecast and
information provided by management.
-- Discount rate: The estimated fair value less costs to sell of
the Italian CGU was based on 15% (2019 - 15%). This was based on a
Weighted Average Cost of Capital analysis consistent with that used
in previous impairment reviews.
Based on the key assumptions set out above:
-- The estimated recoverable amount of the Italian CGU on March
31, 2020 was higher than its carrying amount by CAD$8m, therefore,
no impairment was recognized in the year ended March 31, 2020 (2019
- CAD $nil) in the consolidated statement of comprehensive
income.
Congo Cash Generating Unit
The assets in the Congo CGU were transferred to the group on 20
January 2020. As of the date of these financial statements no
impairment review has been carried out because the assets have been
in the group for less than three months. An impairment review will
be undertaken in the next financial year.
8. Inventory
As of March 31, 2020, inventory consists of CAD $14 (2019 - CAD
$nil) of crude oil that has been produced but not yet sold, and CAD
$785k of materials (2019 - CAD $156k ). The amount of inventory
recognised in the statement of comprehensive income is CAD $ 167 k
(2019 - CAD $ 220k ).
Unaudited Audited
March 31, 2020 March 31, 2019
Barrels CAD $'000 Barrels CAD $'000
Congo - 14 - -
Congo - materials - 765 - -
Azerbaijan - - - -
Azerbaijan - materials - - - 148
Dubai - materials - 12 - -
Italy - 8 - 8
----------------------------- -------------- --------------- ------------- ---------------
- 799 - 156
-------------------------------------------- --------------- ------------- ---------------
9. Trade and other receivables
Unadited Audited
March 31, 2020 March 31,
2019
CAD $'000 CAD $'000
Trade receivables 2,394 1,362
Bonds in treasury 16,550 3,835
Other receivables 11,958 52
Directors loan account - 164
Total trade and other receivables 30,902 5,413
------------------------------------ ---------------- -----------
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade receivables. To measure expected credit losses
on a collective basis, trade receivables are grouped based on
similar credit risk and ageing. The Group's customer base is of a
similar bracket and share the same characteristics, as such these
have been treated as one population. The Group's customers are all
State customers, therefore, the lifetime expected losses are
considered to be CAD$ nil.
10. Change in working capital
Unadited Audited
March 31, March 31, 2019
2020
CAD $'000 CAD $'000
Trade and other receivables (25,445) (3,510)
Inventory (644) 21
Prepaid expenses (39) 5
Prepaid property and equipment
insurance 422 19
Trade and other payables 5,588 2,064
Total change in working capital (20,118) (1,401)
---------------------------------- ----------- ----------------
11. Share Capital
Zenith is authorised to issue an unlimited number of Common
Shares, of which 316,645,857 were issued at no par value and fully
paid during the year ended March 31, 2020 (2019 - 101,628,366). All
Common Shares have the right to vote and the right to receive
dividends. Zenith is authorised to issue an unlimited number of
preferred shares, issuable in series, of which none have been
issued as of the date of these Financial Statements. The Directors
of the Group may by resolution fix the rights, privileges,
restrictions and conditions of the preferred shares of each
series.
Following the issue of the new Ordinary Shares, the Company had
577,072,921 common shares in issue and admitted to trading on the
Mekur Market of the Oslo Bors, as of March 31, 2020.
As of the same date, Zenith had 286,403,856 common shares in
issue and admitted to trading on the Main Market of the London
Stock Exchange.
Issued Number of Amount
common shares CAD $'000
Balance - April 1, 2018 158.798.698 22.792
Settlement of debt (i) 1.123.068 185
Non-brokered unit private placement
(ii) 54.172.451 3.694
Finder's fee - - 187
Balance - June 30, 2018 214.094.217 26.484
Finder's fee - - 5
Balance - September 30, 2018 214.094.217 26.479
Settlement of debt (iii) 2.225.941 186
Non-brokered unit private placement
(iv) 20.782.429 1.141
Non-brokered unit private placement
(v) 2.857.143 157
Finder's fee - - 107
Balance - December 31, 2018 239.959.730 27.856
Non-brokered unit private placement
(vi) 10.364.640 517
Non-brokered unit private placement
(vi) 10.102.694 519
Finder's fee - - 26
Balance - 31 March 2019 260.427.064 28.866
Non-brokered unit private placement
(vii) 20.000.000 1.000
Finder's fee - - 40
Non-brokered unit private placement
(vii) 17.647.059 794
Finder's fee - - 63
Non-brokered unit private placement
(viii) 14.334.602 702
Finder's fee - - 42
Balance - 30 June 2019 312.408.725 31.217
Exercise of stock option (ix) 622.407 75
Exercise of stock option (x) 688.797 83
Non-brokered unit private placement
(xi) 47.812.500 1.913
Finder's fee - - 34
Settlement of debts (xii) 6.589.678 303
Balance - 30 September 2019 368.122.107 33.557
Settlement of debts (xiii) 11.421.402 445
Non-brokered unit private placement
(xiv) 37.000.000 1.857
Finder's fee - 97
Non-brokered unit private placement
(xv) 35.000.000 1.124
Balance - 31 December 2019 451.543.509 36.886
Non-brokered unit private placement
(xvi) 55.529.412 1.610
Non-brokered unit private placement
(xvii) 9.000.000 232
Equity sharing agreement (xviii) 50.000.000 1.389
Non-brokered unit private placement
(xix) 11.000.000 283
Balance - 31 March 2020 (unaudited) 577.072.921 40.400
12. Warrants and options
Number of options Number of warrants Weighted average exercise Amount CAD$'000
price
----------------------------- ------------------ ------------------- ---------------------------- ----------------
Balance - April 1, 2018 4,100,000 27,027,644 0.19 875
----------------------------- ------------------ ------------------- ---------------------------- ----------------
Options issued 10,500,000 - 0.12 927
Warrants issued - 1,280,000 0.07 43
Warrants expired - (1,807,500) 0.25 (192)
Warrants expired - (8,628,813) 0.15 -
----------------------------- ------------------ ------------------- ---------------------------- ----------------
Balance - June 30, 2018 14,600,000 17,871,331 0.19 1,653
----------------------------- ------------------ ------------------- ---------------------------- ----------------
Warrants issued - 6,977,988 0.05 59
Warrants expired - (1,350,000) 0.25 (46)
Options expired (1,000,000) - 0.15 (119)
Options expired (1,500,000) - 0.17 (193)
Options expired (1,000,000) - 0.12 (88)
Warrants expired - (4,214,125) 0.25 (107)
Warrants expired - (732,920) 0.20 -
----------------------------- ------------------ ------------------- ---------------------------- ----------------
Balance - December 31, 2018 11,100,000 18,552,274 0.15 1,159
----------------------------- ------------------ ------------------- ---------------------------- ----------------
Warrants issued - 11,358,390 0.10 65
Warrants expired - (10,114,286) 0.18 (77)
Balance - March 31, 2019 11,100,000 19,796,378 0.12 1,147
----------------------------- ------------------ ------------------- ---------------------------- ----------------
Balance - June 30, 2019 11,100,000 19,796,378 0.12 1,147
----------------------------- ------------------ ------------------- ---------------------------- ----------------
Warrants issued - 47,812,500 0.10 111
Options exercised (1,311,204) 0.12 (116)
----------------------------- ------------------ ------------------- ---------------------------- ----------------
Balance - September 30, 2019 9,788,796 67,608,878 0.12 1,142
----------------------------- ------------------ ------------------- ---------------------------- ----------------
Options expired (703,571) - 0.12 (62)
----------------------------- ------------------ ------------------- ---------------------------- ----------------
Balance - December 31, 2019 9,085,225 67,608,878 0.12 1,080
----------------------------- ------------------ ------------------- ---------------------------- ----------------
Warrants expired - (18,422,628) 0.14 (133)
Warrants issued - 6,477,734 0.06 63
----------------------------- ------------------ ------------------- ---------------------------- ----------------
Balance - March 31, 2020
(unaudited) 9,085,225 55,663,984 0.12 1,010
----------------------------- ------------------ ------------------- ---------------------------- ----------------
Type Grant Date Number of options Exercise price per unit CAD$ Expiry Date
--------------- ---------------- ------------------ ----------------------------- --------------
Stock options November 2016 1,100,000 0.10 November 2021
Stock options November 2017 500,000 0.18 November 2022
Stock options April 2018 9,500,000 0.18 April 2023
TOTAL OPTIONS 11,100,000
Stock options November 2016 1,100,000 0.10 November 2021
Stock options November 2017 500,000 0.18 November 2022
Stock options April 2018 7,485,225 0.12 April 2023
TOTAL OPTIONS 9,085,225
Options
The Group has a stock options plan (the "Plan") for its
directors, employees and consultants. The maximum number of shares
available under the Plan is limited to 10% of the issued and
outstanding common shares at the time of granting options. Granted
options are fully vested on the date of grant, at which time all
related share--based payment expense is recognized in the
consolidated statements of income (loss) and comprehensive income
(loss). Share options expire five years from the date of
granting.
As at March 31, 2020, the Group had 9,085,225 stock options
outstanding (relating to 9,085,225 shares) and exercisable at a
weighted average exercise price shown on the table above per share
with a weighted average life remaining of 2.73 years.
The fair value of the options was calculated using the
Black-Scholes pricing model calculations based on the following
significant assumptions:
Risk-free interest rate 0.50% - 0.70%
Expected volatility 100%
Expected life 5 years
Dividends Nil
Granting of options
On April 3, 2018, the Board of Directors resolved to grant its
directors, certain employees and consultants a total of 10,500,000
stock options (the "Options"), in accordance with the Company's
Stock Option Plan. The exercise price of the Options was equivalent
to the Company's TSXV closing price of March 26, 2018, being
CAD$0.12 (approximately GBP0.067). The Options are fully vested and
have an expiry date of five years from the date of granting.
Exercise of options
-- On July 3, 2019, the Chief Executive Officer & President
of the Company, Mr. Andrea Cattaneo, exercised stock options to
acquire 622,407 common shares of no-par value in the capital of the
Company, at an exercise price of CAD$0.12 per New Share.
-- On July 4, 2019, the Chief Executive Officer & President
of the Company, Mr. Andrea Cattaneo, exercised stock options and
acquire 688,797 common shares of no-par value in the capital of the
Company, at an exercise price of CAD$0.12 per New Share.
Expiry of options
A director, who had been granted share options, left the Group
in previous quarters and, as stipulated in the stock option
agreements, these options expired upon the elapsing of three months
from the date of leaving. During the quarter ending December 31,
2019, the Group updated their holdings for the 703,571 (2018 -
3,500,000) expired stock options.
Type Grant Date Number of Warrants Price per unit CAD$ Expiry Date
--------------------- ------------------------- ------------
Warrants January-18 180,000 0.16 January-20
Warrants April-18 93,750 0.40 May-21
Warrants June-18 1,280,000 0.07 June-21
Warrants Septeber-18 6,977,988 0.05 February-20
Warrants February-19 10,364,640 0.10 February-20
Warrants February 19 900,000 0.10 February 20
---------------------
TOTAL WARRANTS 19,796,378
Warrants April-18 93,750 0.40 May-21
Warrants June-18 1,280,000 0.07 June-21
Warrants August 19 47,812,500 0.10 August 20
Warrants October-19 6,477,734 0.06 October-22
TOTAL WARRANTS 55,663,984
As of March 31, 2020, the Group had 55,663,984 warrants
outstanding (relating to 55,663,984 shares) and exercisable at a
weighted average exercise price of CAD$0.10 per share with a
weighted average life remaining of 0.42 year.
The fair value of the warrants was calculated using the
Black-Scholes pricing model calculations based on the following
significant assumptions:
Risk-free interest rate 0.50% - 0.70%
Expected volatility 75-100%
Expected life 2 years
Dividends Nil
13. Trade and other payables
Unaudited Audited
March 31, March 31,
2020 2019
CAD $'000 CAD $'000
Trade payables 16,097 10,990
Other payables 1,192 290
Accrued interest - 835
Total trade and other payables 17,289 12,115
--------------------------------- ----------- -----------
14. Loans
Unaudited Audited
Loans March 31, 2020 March 31, 2019
CAD $'000 CAD $'000
---------------------------- ---------------- ----------------
Loan payable - current 2,188 3,776
Loan payable - non-current 1,266 3,417
----------------------------- ---------------- ----------------
Total 3,454 7,193
----------------------------- ---------------- ----------------
Unaudited Audited
March 31, 2020 March 31, 2019
---------------------------
Loans - current CAD $'000 CAD $'000
--------------------------- ---------------- ----------------
As at 1 April 3,776 237
Transfer from non-current 2,151 3,747
Loan receipt 2,004 -
Loan waived (584) -
Repayments (5,029) (208)
Foreign exchange (130) -
As at 31 March 2,188 3,776
---------------------------- ---------------- ----------------
Unaudited Audited
March 31, 2020 March 31, 2019
---------------------------
Loans - non current CAD $'000 CAD $'000
--------------------------- ---------------- ----------------
As at 1 April 3,417 4,949
Loan receipt - 2,109
Transfer to current (2,151) (3,747)
Foreign exchange - 106
---------------------------- ---------------- ----------------
As at 31 March 1,266 3,417
---------------------------- ---------------- ----------------
15. Non-convertible bonds
Unaudited Audited
Non-convertible bonds March 31, 2020 March 31, 2019
CAD $'000 CAD $'000
----------------------- ---------------- ----------------
Current 86 199
Non-current 20,669 4,759
------------------------ ---------------- ----------------
Total 20,755 4,958
------------------------ ---------------- ----------------
Non-convertible bonds
CAD $'000
Balance - March 31, 2018 407
--------------------------------------- ----------
Interest 14
Issue of notes 153
Loan notes 4,759
Repayment of bonds (375)
Balance - March 31, 2019 4,958
--------------------------------------- ----------
Interest 82
Issue of notes -
Loan notes 18,505
Repayment of bonds (2,790)
Balance - March 31, 2020 (unaudited) 20,755
--------------------------------------- ----------
(a) Loan Notes
To avoid the risk of the excessive dilution of the capital, the
Company issued two different sets of EMTN (Bond) accruing interest
payable semi-annually and listed on European Stock Exchanges.
a. Zenith 8% EMTN - ISIN AT0000A23S79
During the financial year 2019, as announced in September 2018
and January 2019, the Company issued Loan Notes to finance its
development activities in Azerbaijan for a total amount of
CAD$4,759k, with the duration of 2 years.
During the financial year ended March 21, 2020, the Company
issued additional loan Notes for a total amount of CAD$9.8M.
The maturity date of the Notes is 20 December 2021, and they
carry an interest charge of 8% per annum, payable upon the maturity
of 20 December 2021.
b. Zenith EMTN Programme up to Euro 25M
On January 20, 2020, the Company announced the issuance of the
following unsecured, multi-currency Euro Medium Term Notes at par
value (the "Notes"):
-- EURO 1,000,000 bearing an interest of 10.125 per cent per year
-- GBP 1,000,000 bearing an interest of 10.50 per cent per year
-- USD 1,000,000 bearing an interest of 10.375 per cent per year
-- CHF 1,000,000 bearing an interest of 10.00 per cent per year
The Notes, as announced by the Company on November 6, 2019
(https://www.zenithenergy.ca/investors/at-prospectus/), are due on
January 27, 2024. The Notes are admitted to trading on the Third
Market (MTF) of the Vienna Stock Exchange ("Wiener Borse AG").
The Notes are governed by Austrian law and, since the Notes are
not convertible into equity of Zenith.
The issue of the Notes is aligned with the Company's strategy of
diversifying its financing towards non-equity dilutive funding to
support its successful development.
The EMTN Programme was carried out primarily with the purpose of
financing the Company's development activities in Azerbaijan
(financing of the 1,200hp drilling rig and a new well). The Company
chose the Vienna Stock Exchange because it was considered the most
accessible market in terms of simplicity of process and listing
costs. The currently available amount for the drawing under the
Programme is intended to be used for the development of the
Company's activities in Congo, Tunisia and Italy.
c. Revolving credit facility
On October 18, 2019, the Company entered into a revolving credit
line facility for the total amount of Euro 200,000 (CAD$294k) for a
duration of 18 months. The facility is secured by a corresponding
EMTN Zenith 8%, 2021 value.
d. Accounting situation as of March 31, 2020
At the year ended March 31, 2020, CAD$82k (March 31, 2019 -
CAD$14k) is classified as a current liability and CAD$18,505k
(March 31, 2019 - CAD$4,759k) is classified as long-term
16. Loss from discontinued operations (unaudited)
On March 2, 2020, the Company announced that it would return the
Contract Rehabilitation Area ("CRA") to SOCAR (the "Handover") and
that it would continue to operate the CRA and maintain oil
production activities in Azerbaijan without interruption until the
Handover was completed. The Company stated it would achieve a near
total reduction of operating expenses in Azerbaijan upon completion
of the handover of the CRA, which was effectively completed in June
2020.
As a result of the Handover, all production infrastructure and
employees associated with the CRA were transferred to a division of
SOCAR. As per the REDPSA agreement with SOCAR, Zenith is not liable
for any kind of compensation fee as a result of the termination
thereof. In addition, there are no decommissioning fees to be borne
by Zenith, whereas its Azerbaijan subsidiary has recently received
a payment for oil production of approximately US$508,000 from SOCAR
corresponding to material revenues for the months of April, May and
part of June 2020.
The unaudited results of the subsidiary in Azerbaijan have been
included in the loss from discontinued operations in the statement
of comprehensive income and they are comprised as follows:
Unaudited
March 31, 2020
CAD$'000
--------------------------------------------------- -----------------
Loss from operations in the year (1,712)
Impairment of property, plant and equipment (1,065,874)
Impairment of inventories (395)
Impairment of assets acquired from Zena Drilling (696)
Write back of deferred consideration payable 483,690
Write back of decommissioning obligations 1,790
Write back of deferred tax 2,793
Total 580,404
--------------------------------------------------- -----------------
17. Decommissioning provision
The following table presents the reconciliation of the carrying
amount of the obligation associated with the reclamation and
abandonment of the Group's oil and gas properties:
Unaudited
March 31, Audited
2020 March 31, 2019
CAD $'000 CAD $'000
Balance - beginning of year 9,089 9,140
Accretion 672 363
On acquisition of subsidiary 5,561 -
Eliminated on discontinued operations
(Note 20) (1,790) -
Foreign currency translation (31) (414)
---------------------------------------- ----------- ----------------
Balance - end of year 13,501 9,089
---------------------------------------- ----------- ----------------
The provision has been made by estimating the decommissioning
costs at current prices using existing technology. The following
significant weighted average assumptions were used to estimate the
decommissioning obligation:
2020 2019
Undiscounted cash flows
- uninflated CAD $8 million CAD $8 million
Undiscounted cash flows
-- inflated CAD $8 million CAD $8 million
Risk free rate 3.4% 3.4%
Inflation rate 1.4% 1.4%
Expected timing of cash
flows 13.5 years 14.5 years
The timings of the cash flows depend on the capital expenditure
incurred and the development of assets in each concession. Each
concession has a license for a set number of years; however, the
licenses could be extended for longer periods if the operator
incurs capital expenditure and develops the area. The application
process starts after a license is not extended or when the reserves
of a particular concession have been fully extracted.
18. Earnings per share
Unaudited Audited
March 31, March 31,
2020 2019
CAD $'000 CAD $'000
--------------------------------------- --- ----------- ------- ----------- --------
Net loss for the year (580,404) (9,762)
Net profit/(loss) from continued
operations 11,693 (9,762)
Net loss from discontinued operations (568,711) -
--------------------------------------- --- ----------- --- --------------- --------
Basic weighted average number
of shares 401,617 227,509
Potential dilutive effect on shares n/a n/a
issuable under warrants
Potential diluted weighted average n/a n/a
number of shares
--------------------------------------- --- ----------- --- --------------- --------
Net earnings per share - basic
(1) $ (1.42) $ (0.04)
Net earnings per share - diluted $ (1.42) $ (0.04)
From continuing operations - basic $ 0.03 $ (0.04)
From continuing operations - diluted $ 0.02 $ (0.04)
From discontinued operations - $ (1.45) $ -
basic and diluted
--------------------------------------- --- ----------- --- --------------- --------
(1) The Group did not have any in-the-money convertible notes,
warrants and stock options during the years ended March 31, 2020
and 2019. The effect of convertible notes, warrants and stock
options is anti-dilutive in loss periods.
The basic and diluted loss per share for 2020 are the same as
there are no dilutive effects on earnings as the effect of the
exercise of share options would be to decrease the earnings per
share. Details of share warrants and options that could potentially
dilute earnings per share in future years are set out in Note
15.
19. Commitments and contingencies
Acquisition commitments
The Company acquired two producing assets in Africa, Tunisia and
Congo, by the acquisition of local subsidiaries. Related to the
acquisition, assets and liabilities were incorporated in the
Company's balance sheet, with the commitment to pay the outstanding
debt balances.
Asset Purchase commitments
The Company acquired the Congolese asset for a consideration of
GBP 200,000, which was completely paid during May 2020, and the
Tunisian asset for a consideration of USD 500,000, of which USD
250,000 was paid in June 2020. The balance of the purchase price is
due upon completion of the acquisition, that the Company estimates
to be obtained during the month of October 2020.
20. Financial risk management and financial instruments
Unaudited
March 31, Audited
2020 March 31, 2019
Financial assets CAD $'000 CAD $'000
Financial assets held at amortised
cost 30,902 5,413
Cash and cash equivalents 1,221 3,058
------------------------------------- ----------- ----------------
Total financial assets 32,123 8,471
------------------------------------- ----------- ----------------
Financial liabilities
Unaudited at amortised
March 31, 2020 cost
Financial liabilities CAD $'000
Trade and other payables 17,289
Loans 3,454
Non-convertible bond and notes 20,755
Deferred consideration -
-------------------------------- ----------------------
Total financial liabilities 41,498
--------------------------------- ----------------------
Financial liabilities
Audited at amortised
March 31, 2019 cost
Financial liabilities CAD $'000
Trade and other payables 12,115
Loans 7,193
Non-convertible bond and notes 4,958
Deferred consideration 483,854
--------------------------------- ----------------------
Total financial liabilities 508,120
--------------------------------- ----------------------
Zenith finances its operations through a mixture of equity, debt
and retained earnings. Finance requirements are reviewed by the
Board when funds are required for acquisition, exploration and
development of projects.
Zenith's policy is to maintain an appropriate financial position
to sustain future development of the business. There were no
changes to the Group's capital management approach during the year
ended March 31, 2020.
Zenith's treasury functions, which are managed by the board, are
responsible for managing fund requirements and investments which
include banking, cash flow management, interest and foreign
exchange exposure to ensure adequate liquidity to meet cash
requirements.
Zenith's principal financial instruments are cash and deposits,
and also trade and other receivables. These instruments are used
for meeting the Group's requirement for operations.
Zenith's main financial risks are foreign currency risk,
liquidity risk, interest rate risk, commodity price risk and credit
risks. Set out below are policies that are used to manage such
risks:
a) Credit risk
Credit risk is the risk of an unexpected loss if a customer or
counter party to a financial instrument fails to meet its
commercial obligations. The Group's maximum credit risk exposure is
limited to the carrying amount cash of CAD $1,226k (2019 - CAD
$3,058k) and trade and other receivables of CAD $30,902k (2019 -
CAD $5,248k).
Deposits are, as a general rule, placed with banks and financial
institutions that have credit rating of not less than AA or
equivalent which are verified before placing the deposits.
The composition of trade and other receivables is summarised in
the following table:
Unaudited
March 31, Audited
2020 March 31, 2019
CAD $'000 CAD $'000
--------------------------- ------------------ -------------------
Oil and natural gas sales 2,394 1,321
Goods and services tax - 41
Other 28,508 4,051
30,902 5,413
--------------------------- ------------------ -------------------
The receivables related to the sale of oil and natural gas are
due from large companies who participate in the oil and natural gas
industry in Argentina and Italy. Oil and natural gas sales
receivables are typically collected in the month following the
sales month.
The Group considers its receivables to be aged as follows:
Unaudited
March 31, Audited
2020 March 31, 2019
CAD $'000 CAD $'000
----------- ----------- -----------------
Current 2,394 1,238
90 + days - 124
2,394 1,362
----------- ----------- -----------------
b) Liquidity risk
Liquidity risk is the risk that the Group will incur
difficulties meeting its financial obligations as they are due. The
Group's approach to managing liquidity is to ensure, as far as
possible, that it will have sufficient liquidity to meet its
liabilities when due, under both normal and distressed conditions
without incurring unacceptable losses or risking harm to the
Group's reputation.
The Directors have considered the recoverability of the
outstanding debts of the Group and do not consider there to be any
impairment necessary.
21. Net debt reconciliation
This section sets out an analysis of net debt and the movements
in net debt for each of the periods presented.
Unaudited Audited
March 31, 2020 March 31, 2019
CAD $'000 CAD $'000
---------------- ----------------
Cash and cash equivalents 1,221 3,058
Loans - repayable
within one year (2,188) (3,776)
Loans - repayable
after one year (1,266) (3,417)
Non-convertible
bond - repayable
within one year (86) (199)
Non-convertible
bond - repayable
after one year (20,669) (4,759)
(22,988) (9,093)
---------------- ----------------
Cash Loans due Loans due Non-convertible Non-convertible Total
within after one bond due within bond due
one year year one year after one
year
Net debt CAD $'000 CAD $'000 CAD $'000 CAD $'000 CAD $'000 CAD $'000
---------- ---------- ----------- ----------------- ---------------- ----------
April 1, 2018 2,497 (237) (4,949) (407) - (3,096)
---------- ---------- ----------- ----------------- ---------------- ----------
Issue of non-convertibles
bonds 1,099 - - (154) (945) -
---------- ---------- ----------- ----------------- ---------------- ----------
Interest on
non-convertible
bonds - - - (13) - (13)
---------- ---------- ----------- ----------------- ---------------- ----------
Bonds in treasury - - - - (3,814) (3,814)
---------- ---------- ----------- ----------------- ---------------- ----------
Repayment
of non-convertible
bonds (375) - - 375 - -
---------- ---------- ----------- ----------------- ---------------- ----------
Transfer from
current to
non-current - (3,747) 3,747 - - -
---------- ---------- ----------- ----------------- ---------------- ----------
Issue of convertible
loans - - (2,109) - - (2,109)
---------- ---------- ----------- ----------------- ---------------- ----------
Repayment
of loans (208) 208 - - - -
---------- ---------- ----------- ----------------- ---------------- ----------
Foreign exchange - - (106) - - (106)
---------- ---------- ----------- ----------------- ---------------- ----------
Net cash flow 45 - - - - 45
---------- ---------- ----------- ----------------- ---------------- ----------
March 31,
2019 3,058 (3,776) (3,417) (199) (4,759) (9,093)
---------- ---------- ----------- ----------------- ---------------- ----------
March 31,
2019 3,058 (3,776) (3,417) (199) (4,759) (9,093)
---------- ---------- ----------- ----------------- ---------------- ----------
Issue of non-convertibles
bonds 8,692 (8,692)
---------- ---------- ----------- ----------------- ---------------- ----------
Interest on
non-convertible
bonds (82) (82)
---------- ---------- ----------- ----------------- ---------------- ----------
Bonds in treasury (9,813) (9,813)
---------- ---------- ----------- ----------------- ---------------- ----------
Repayment
of non-convertible
bonds (2,790) 195 2,595
---------- ---------- ----------- ----------------- ---------------- ----------
Transfer from
non-current
to current (2,151) 2,151
---------- ---------- ----------- ----------------- ---------------- ----------
Issue of loans 2,004 (2,004)
---------- ---------- ----------- ----------------- ---------------- ----------
Loan waived
(net of expenses) 584 584
---------- ---------- ----------- ----------------- ---------------- ----------
Repayment
of loans (5,029) 5,029
---------- ---------- ----------- ----------------- ---------------- ----------
Foreign exchange 130 130
---------- ---------- ----------- ----------------- ---------------- ----------
Net cash flow (4,714) (4,714)
---------- ---------- ----------- ----------------- ---------------- ----------
March 31,
2020
(unaudited) 1,221 (2,188) (1,266) (86) (20,669) (22,988)
---------- ---------- ----------- ----------------- ---------------- ----------
22. Operating segments
The Group's operations are conducted in one business sector, the
oil and natural gas industry. Geographical areas are used to
identify Group's reportable segments. A geographic segment is
considered a reportable segment once its activities are regularly
reviewed by the Board of the Directors.
The Group has three reportable segments which are as
follows:
-- Italy, which commenced gas operations following the acquisition of assets in June 2013;
-- The Republic of the Congo, which was acquired during the 2020 FY
-- Other, which includes corporate assets and the operations in
the Canadian, Swiss, Argentinian and Norwegian entities.
Azerbaijan, which was acquired during the FY 2017 and divested
during FY 2020, is mentioned only for comparative purposes with the
past financial year. The unaudited results for Azerbaijan as of
March 31, 2020 are included in the " Discontinued Operations"
(section 16).
YEAR 2019 (audited) Azerbaijan Italy Other Total
CAD $000 CAD $000 CAD $000 CAD $000
------------------------------ --------- ----------
Property and equipment 1,064,988 8,369 6,281 1,079,638
Other assets 1,058 1,025 6,966 9,049
Total liabilities 492,921 8,401 18,285 519,607
Capital Expenditures 719 74 4,412 5,205
------------------------------ --------- ----------
Revenue 5,733 834 - 6,567
Operating and transportation (4,370) (210) (320) (4,900)
General and Administrative (1,528) (405) (6,024) (7,957)
Depletion and depreciation (1,857) (375) (50) (2,283)
Finance and other expenses (68) (380) (741) (1,188)
Taxation - - (1) (1)
Segment loss (2,090) (536) (7,136) (9,762)
---------
YEAR 2020
(unaudited) Azerbaijan Congo Italy Other Total
CAD $000 CAD $000 CAD $000 CAD $000 CAD $000
------------------ ------------------ ------------------ ------------------
Property and
equipment - 20,171 8,440 4,926 33,537
Other assets 985 10,531 1,263 20,156 32,935
Total liabilities 5,575 11,303 9,295 28,876 55,049
Capital
Expenditures 1,021 20,184 61 751 22,017
------------------ ------------------ ------------------ ------------------
Revenue - 94 624 - 718
Operating and
transportation - (131) (416) (2,405) (2,952)
General and
Administrative - (294) (823) (4,362) (5,479)
Depletion and
depreciation - (33) (282) (411) (726)
Loss on
discontinued
operations (580,404) - - - (580,404)
Gain on business
combination - (2,742) - 22,853 20,111
Finance and other
expenses - - (364) 389 25
Taxation - (4) - (4)
Segment loss (580,404) (3,110) (1,261) 16,064 (568,711)
------------------
The following customers combined have 10% or more of the Group's
revenue:
Audited
Unaudited March 31,
March 31, 2020 2019
------------
CAD $000 CAD $000
------------ ---------------- -----------
Customer A - 5,734
Customer B 528 691
---------------- -----------
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