Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.
30 April 2021
Curzon Energy Plc
("Curzon" or the "Company")
Results for the Year Ended 31 December 2020
Curzon Energy Plc (LON:CZN), ("Curzon" or the "Company"), the London Stock Exchange listed company, announces its full year audited results for the year ended 31 December 2020.
A copy of the Company's annual report and financial statements for the year ended 31 December 2020, extracts of which are set out below, will be made available on the Company's website www.curzonenergy.com shortly.
Curzon further announces that a Notice of Annual General Meeting ("AGM") will be posted to shareholders, along with the Annual Report and Financial Statements for the year ended 31 December 2020, on or before 7 May 2021.
The Company will be holding its AGM at the Company's business address, which is located at Curzon Energy Plc, (WeWork), 71-91 Aldwych House, London WC2B 4HN on Wednesday 9 June 2021 at 2.00 pm, the details of which are explained in the Notice of AGM, which will be also available on the Company's website www.curzonenergy.com shortly.
Due to the ongoing impact of the COVID-19 pandemic and related public health guidance, the Company intends to hold the meeting with a limited number of company representatives, attending in person, to ensure that a valid meeting is held. Other shareholders are strongly encouraged not to attend the AGM in person while government restrictions remain in force. Shareholders and guests who travel to the meeting may not be admitted if there are safety constraints.
Given the constantly evolving nature of the situation, if it subsequently becomes possible to welcome a number of shareholders to the venue, attendance in this way is likely to be restricted in terms of numbers and we would therefore still encourage shareholders not to attend the venue in person. Any updates to the position will be included on the Company's website and through a Regulatory Information Service. Shareholders are strongly encouraged to submit their Forms of Proxy, to ensure they can vote and be represented at the AGM.
Forms of proxy must be completed, signed and returned so as to be received by the Company's Registrars no later than 2.00 pm on 7 June 2021.
Scott Kaintz, Chief Executive Officer comments:
"With the initial turmoil of the COVID-19 pandemic and 2020 now behind us, the Board of Curzon looks forward to progressing its potential transaction with Poseidon Enhanced Technologies and to completing the repositioning of Curzon as an ESG centric business set to play a leading role in the post-pandemic world of tomorrow."
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For further information please contact: |
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| +44 (0) 20 7747 9980 | |
| Scott Kaintz |
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| +44 (0) 20 3470 0470 | |
| Richard Hail |
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Chairman's Statement
I am pleased to present the annual report for Curzon Energy Plc (the "Company"), covering its results for the year to 31 December 2020.
Period in Review
During the course of 2020, the Company focused its efforts on completing a potential reverse takeover transaction ("RTO") with Sun Seven Stars Investment Group ("SSSIG") that did not ultimately complete. While all parties put in significant amounts of time and effort towards this goal, and the target itself was considered of material scale and likely to be of real interest to potential investors, it was ultimately not possible to combine the various independent businesses proposed by SSSIG to progress a RTO to completion. As a result, the Company announced after the period, on 3 February 2021 that it had ceased discussions on a transaction with SSSIG.
Also on 3 February 2021, the Company announced that it had entered a period of exclusivity in order to conduct due diligence and to potentially acquire a 100% interest in Poseidon Enhanced Technologies Ltd ("PETL" or "Poseidon"), developer of a proprietary chemical Polyethylene terephthalate ("PET") plastic recycling technology, whose goal is to convert used PET into 100% recycled feedstock to support the global food-grade packaging and fibre industries. PETL's process allows for the conversion of previously unrecycled plastics such as colored bottles, trays, fibres and films, converting them directly into Poseidon rBHET, an interim feedstock for the global PET industry, and fully in line with and supporting a "Circular Economy".
Poseidon is currently developing its recycling technology at its facilities in Teesside, UK, and is planning a global industrial scale roll-out of its technology, following completion of its listing process and associated capital raise.
Activities at Coos Bay were minimal during the course of the year, with the project remaining on care and maintenance. The Company has been exploring formal extensions of the project leases as well as a potential farm-out or sale of the project more broadly.
Results
For the period ended 31 December 2020, the Group incurred a loss of US$617,574 (2019: a loss of US$3,580,750). The majority of this loss comprised administrative expenses, associated with supporting the SSSIG transaction as well as required listing and regulatory overheads. Overall administrative expenses fell during the period from US$913,572 in 2019 to US$528,799 as the Company continued to operate with reduced overheads.
Outlook
At the time of writing, the United Kingdom and the larger world continue to deal with the effects of the COVID-19 pandemic and its associated volatility. While many commentators quite reasonably projected an extended economic downturn following the spread of the COVID-19 pandemic, markets remain exceptionally buoyant, following various governments' significant economic stimulus packages lifting valuations and the rise of retail day traders. Meanwhile, during lockdown, countless individuals have increased their savings rates whether intentionally or simply due to a lack of viable consumption options for goods and services. Much of that nascent financial firepower remains on the sidelines, as do the buildings and capital infrastructure, largely unaffected by the virus itself, and points to a potential period of significant financial growth, as well of course as the looming threat of inflation, as vaccination levels increase and consumers make up for missed spending opportunities and lost time.
What is clear is that many of the world's governments from the United States to Europe have decided to use pandemic recovery efforts to refocus their attentions on the impact of carbon emissions and the environment, including sectors such agriculture, industry, waste, energy and transport. This invigorated environmental agenda means the opportunity in the Environmental, Social and Governance (ESG) space that PETL's chemical recycling addresses is a real one and is only likely to be bolstered by government spending stimulus and the introduction of further regulation and legislation by governments in support of this agenda. Forthcoming virgin plastics penalties in regions such as the EU are stimulating global brands to invest in and support companies such as PETL offering 100% recycled plastic solutions and facilitating some of the world's largest drinks and food brands to honour their aggressive and very publicly declared recycling targets. PETL is expected to attract very strong investor interest and intends to access green bonds and related ESG focused capital to tackle what is in essence a multi-national challenge; making plastics a sustainable part of the global economy.
Curzon, after many months of effort, thus finds itself well positioned with a potential transaction on the leading edge of a massive global shift towards ESG investments. Through this transaction, Curzon has ambitious plans to enter a sector involving the chemical recycling of PET plastics that could not be more in focus and topical, and where the completion of an RTO is likely to create a dynamic and high growth recycling entity. This new entity will appeal to institutional and retail investors alike and will be one that will help meet one of the world's great environmental challenges.
So, it is with high expectations that Curzon has begun 2021 and continues to advance a potential transaction with PETL. We thank all stakeholders for their support both historically and in the period ahead as we look to advance and execute on the opportunity in front of us.
John McGoldrick
Non-Executive Chairman
29 April 2021
Strategic Report
Financial Results
The Group loss for the year to 31 December 2020 was US$617,574 (2019: US$3,580,750). There were no revenues and the majority of this loss related to the administrative and listing costs.
The loss per share was US$0.008 (2019: loss per share US$0.044).
The Group currently has no source of revenue and is reliant on loans to continue to meet its overhead expenditure. The Group held cash balances of US$47,188 as at 31 December 2020 and has after the year end increased its borrowing capacity and current liquidity through the agreement with Poseidon Enhanced Technologies Ltd.
The Directors note that the Group will need additional funding to continue operations for the foreseeable future and this means there is a material uncertainty as to the Group's ability to continue as a going concern, however, the Directors are confident that the Group will be able to raise, as required, sufficient cash or reduce its commitments to enable it to continue its operations and to continue to meet, as and when they fall due, its liabilities for at least the next twelve months from the date of approval of the Group Financial Statements. The Group Financial Statements have, therefore, been prepared on the going concern basis.
The Group has 3 members of staff (including Directors).
Principal Activities
The Company was incorporated in England and Wales on 29 January 2016 as an investment company to acquire oil and gas assets. Its first acquisition was of Coos Bay, which has now been wholly written off.
The Group's business is now operated through the United Kingdom and is focused on identifying and acquiring a new business in a promising sector.
Review of the Business
In March 2020, the Company announced that it had executed a letter of intent with Seven Sun Stars Investment Group ("SSSIG") to acquire a 100% interest in the London Critical Metals Market ("LCMM"). Following several months of due diligence, LCMM was over a period of time unable to provide the data required to advance a reverse takeover process, and as such on 3 February 2021 the Company terminated these discussions.
On 3 February 2021, the Company announced that it had executed a letter of intent with Poseidon Enhanced Technologies Ltd to acquire a 100% interest via a potential RTO. PETL and the Company had entered a period of exclusivity, where each party will conduct due diligence on the other. The parties have further agreed that during this period they will work towards the execution and delivery of a sale and purchase agreement.
Key Performance Indicators (KPIs)
As the Company is currently pursuing a potential reverse takeover, the Directors take the view that KPIs would not provide materially useful information to investors at this time. As the business develops further, the addition of KPIs will be considered and added as appropriate.
Principal Risks and Risk Management
As the Company is currently pursuing a reverse takeover, that would materially change the nature of the business, the primary risk to the business during this period is going concern risk and a potential inability to fund the business through the transition.
The Company's Risk Mitigation Strategies Include the Following:
§ Utilising the Directors' experience in fundraising to maintain a balance of funding sources during the period of transition;
§ Managing the Company's existing debt positions, keeping all stakeholders up to date and informed as to progress of the transaction;
§ Judicious use of capital and cost control during the transition.
Corporate Responsibility
The Company takes its responsibilities as a corporate citizen seriously. The Board's primary goal is to create shareholder value in a responsible way, which serves all stakeholders.
Section 172 Statement
Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders in their decision making. The Directors continue to have regard to the interests of the Company's employees and other stakeholders, including the impact of its activities on the community, the environment and the Company's reputation, when making decisions. Acting in good faith and fairly between members, the Directors consider what is most likely to promote the success of the Company for its members in the long term.
The Directors are fully aware of their responsibilities to promote the success of the Company in accordance with section 172 of the Companies Act 2006. The Board regularly reviews our principal stakeholders and how we engage with them. The stakeholder voice is brought into the boardroom throughout the annual cycle through information provided by management and also by direct engagement with stakeholders themselves. The relevance of each stakeholder group may increase or decrease depending on the matter or issue in question, so the Board seeks to consider the needs and priorities of each stakeholder group during its discussions and as part of its decision making.
The Board welcomes the opportunity to engage with our shareholders and with the capital markets more generally. The Board achieves this through dialogue with shareholders, prospective shareholders and capital markets participants, including corporate brokers. Feedback from any such meetings or calls would be shared with all Board members.
Investors, prospective investors and analysts can contact the Executive Director as well as access information on our corporate website. The Board believes that appropriate steps have been taken during the year so that all members of the Board, and in particular the non-executive Directors, have an understanding of the views of major shareholders.
Governance
The Board considers sound governance as a critical component of the Company's success and the highest priority. The Company has an effective and engaged Board, with a strong non-executive presence drawn from diverse backgrounds and with well-functioning governance committees. Through the Company's compensation policies and variable components of employee remuneration, the Remuneration Committee of the Board seeks to ensure that the Company's values are reinforced in employee behavior and that effective risk management is promoted.
Analysis by Gender
| Category | Male | Female |
| Directors | 3 | 0 |
| Senior Managers | 0 | 0 |
| Other Employees | 0 | 0 |
Employees and Their Development
The Company is dependent upon the qualities and skills of its employees and their commitment plays a major role in the Company's business success. Employees' performance is aligned to the Company's goals through an annual performance review process and via incentive programs. The Company provides employees with information about its activities through regular briefings and other media. The Company operates a Share Option Scheme operated at the discretion of the Remuneration Committee.
Diversity and Inclusion
The Company does not discriminate on the grounds of age, gender, nationality, ethnic or racial origin, non-job-related-disability, sexual orientation or marital status. The Company gives due consideration to all applications and provides training and the opportunity for career development wherever possible. The Board does not support discrimination of any form, positive or negative, and all appointments are based solely on merit.
Health and Safety
The Company endeavors to ensure that the working environment is safe and healthy and conducive to the wellbeing of employees, who are able to balance work and family commitments. The Company has a Health and Safety at Work Policy, which is reviewed regularly by the Board and is committed to the health and safety of its employees and others, who may be affected by the Company's activities. The Company provides the information, instruction, training and supervision necessary to ensure that employees are able to discharge their duties effectively. The health and safety procedures used by the Company ensure compliance with all applicable legal, environmental and regulatory requirements as well as its own internal standards.
Outlook
Both PETL and the Company are currently working to expedite all aspects of a potential RTO process where such a transaction would be conditional upon agreeing definitive documentation and receipt of the required regulatory approvals from the FCA and its primary market functions, among other matters.
The Board's view is that current market conditions are ideal for an ESG-focused business such as PETL.
With the world beginning to come out of the COVID-19 pandemic and government stimulus expected to focus on green energy and sustainable investment, the Company anticipates that a transaction with PETL will deliver a dynamic business focused on plastics recycling with high-growth potential and with excellent ESG credentials. Such a business is expected to have broad appeal to both institutional and retail investors and attract appropriate funding that will allow it to achieve its potential in the coming years and in so doing help meet one of the world's great environmental recycling challenges.
After several challenging years, Curzon now seems poised to transform itself into an exciting and forward-looking proposition for the benefit of all of our stakeholders.
Signed by order of the Board.
Scott Kaintz
Chief Executive Officer
29 April 2021
Independent Auditor's Report to the Members of Curzon Energy Plc
Opinion
We have audited the Financial Statements of Curzon Energy Plc (the "Company") and its subsidiaries (the "Group") for the year ended 31 December 2020, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Cash Flows, the Consolidated and Company Statements of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the Company, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
§ the Financial Statements give a true and fair view of the state of the Group's and the Company's affairs as at 31 December 2020 and of the Group's loss for the year then ended;
§ the Group Financial Statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union;
§ the Company Financial Statements have been properly prepared in accordance with IFRSs as adopted by the European Union as applied in accordance with the provisions of the Companies Act 2006; and
§ the Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to note 2 to the Financial Statements, which details the factors the Group and the Company has considered, when assessing the going concern position. As detailed in note 2, the uncertainty surrounding the availability of funds to finance ongoing working capital requirements indicates the existence of a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the Financial Statements, we have concluded that the Director's use of the going concern basis of accounting in the preparation of the Financial Statements is appropriate. Our evaluation of the Directors assessment of the entity's ability to continue to adopt the going concern basis of accounting included review of letter of intent with Poseidon Enhanced Technologies Ltd and cashflow forecast prepared by management.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Overview of Our Audit Approach
Materiality
In planning and performing our audit, we applied the concept of materiality. An item is considered material if it could reasonably be expected to change the economic decisions of a user of the Financial Statements. We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified.
Based on our professional judgement, we determined overall materiality for the Financial Statements as a whole to be £35,000, based on 5% of the adjusted results of the year.
We use a different level of materiality ('performance materiality') to determine the extent of our testing for the audit of the Financial Statements. Performance materiality is set based on the audit materiality as adjusted for the judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the internal control environment.
Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party transactions and Directors' remuneration.
We agreed with the Audit Committee to report to it all identified errors in excess of £1,750. Errors below that threshold would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds.
Overview of the Scope of Our Audit
There are two key components of the Group, Curzon Energy Plc as an entity and the US Group headed by Coos Bay Energy LLC. The audit of Curzon Energy Plc was conducted from the UK. The accounting records were provided to us by management.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Besides the matter described in the Material Uncertainty Related to Going Concern section, we have determined no other matters to be communicated in our report.
Other Information
The Directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the Financial Statements and our Auditor's Report thereon. Our opinion on the Financial Statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the Financial Statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on Other Matters Prescribed by the Companies Act 2006
In our opinion, the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of our audit:
§ the information given in the Strategic Report and the Directors' Report for the financial year for which the Financial Statements are prepared is consistent with the Financial Statements; and
§ the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which We are Required to Report by Exception
In light of the knowledge and understanding of the Group and the Parent Company and their environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
§ adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or
§ the Financial Statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or
§ certain disclosures of Directors' remuneration specified by law are not made; or
§ we have not received all the information and explanations we require for our audit.
Responsibilities of the Directors for the Financial Statements
The Directors are responsible for the preparation of the Financial Statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below, however, the primary responsibility for the prevention and detection of fraud lies with management and those charged with governance of the Company. We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and the procedures in place for ensuring compliance. The most significant identified, was the Companies Act 2006.
§ As part of our audit planning process, we assessed the different areas of the Financial Statements, including disclosures, for the risk of material misstatement. This included considering the risk of fraud, where direct enquiries were made of management and those charged with governance concerning both, whether they had any knowledge of actual or suspected fraud and their assessment of the susceptibility of fraud. We considered the risk was greater in areas that involve significant management estimate or judgement. Based on this assessment we designed audit procedures to focus on the key areas of estimate or judgement, as disclosed within the Financial Statements.
§ We have read Board and Committee minutes of meetings, as well as regulatory announcements, as part of our risk assessment process to identify events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. As part of this process, we have considered whether remuneration incentive schemes or performance targets exist for the Directors.
§ In addition to the risk of management override of controls, we have considered the fraud risk related to any unusual transactions or unexpected relationships, including assessing the risk of undisclosed related party transactions. Our procedures to address this risk included specific testing of journal transactions based on risk criteria, both at the year end and throughout the year.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the Financial Statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK).
The potential effects of inherent limitations are particularly significant in the case of misstatement, resulting from fraud because fraud may involve sophisticated and carefully organised schemes, designed to conceal it, including deliberate failure to record transactions, collusion or intentional misrepresentations being made to us.
A further description of our responsibilities for the audit of the Financial Statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Other Matters which We are Required to Address
We were appointed by the Board on 24 June 2020 to audit the Financial Statements for the year ended 31 December 2020. Our total uninterrupted period of engagement is 5 years, covering the period ended 31 December 2016 to 31 December 2020.
The non-audit services, prohibited by the FRC's Ethical Standard, were not provided to the Company and we remain independent of the Group and the Parent Company in conducting our audit.
Our audit opinion is consistent with the additional report to the Audit Committee.
Use of Our Report
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditor's Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Matthew Stallabrass
Senior Statutory Auditor
For and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
29 April 2021
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2020
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| Note |
| 2020 | 2019 |
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|
| US$ | US$ |
|
|
|
|
|
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| Administrative expenses | 6 |
| (528,799) | (913,572) |
|
|
|
|
|
|
| Loss from operations |
|
| (528,799) | (913,572) |
| Finance expense, net | 7 |
| (88,775) | (108,178) |
| Impairment of exploration and evaluation assets | 10 |
| - | (2,559,000) |
|
|
|
|
|
|
| Loss before taxation | 4 |
| (617,574) | (3,580,750) |
| Income tax expense | 8 |
| - | - |
| Loss for the year attributable to |
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| equity holders of the parent company |
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| (617,574) | (3,580,750) |
|
|
|
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|
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| Other comprehensive loss |
|
|
|
|
| (Loss) on translation of parent net assets and results from functional currency into presentation currency |
|
| (82,297) |
(39,602) |
| Total comprehensive loss for the year |
|
| (699,871) | (3,620,352) |
|
|
|
|
|
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| Loss per share - Basic and diluted, US$ | 9 |
| (0.008) | (0.044) |
Consolidated Statements of Financial Position
as at 31 December 2020
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| Note |
| 2020 | As reported 2019 | Re-stated 2019* |
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| US$ | US$ | US$ |
| Assets |
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| Non-current assets |
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| Intangible assets | 10 |
| - | - | - |
| Property, plant and equipment |
|
| - | 683 | 683 |
| Restricted cash | 12 |
| 125,000 | 125,000 | 125,000 |
| Total non-current assets |
|
| 125,000 | 125,683 | 125,683 |
| Current assets |
|
|
|
|
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| Prepayments and other receivables | 13 |
| 41,699 | 31,203 | 31,203 |
| Cash and cash equivalents | 14 |
| 47,188 | 28,709 | 28,709 |
| Total current assets |
|
| 88,887 | 59,912 | 59,912 |
| Total assets |
|
| 213,887 | 185,595 | 185,595 |
| Liabilities | |||||
| Current liabilities |
|
|
|
|
|
| Trade and other payables* | 15 |
| 737,835 | 835,826 | 690,315 |
| Borrowings | 16 |
| 1,183,018 | 698,798 | 698,798 |
| Total current liabilities |
|
| 1,920,853 | 1,534,624 | 1,389,113 |
| Total liabilities |
|
| 1,920,853 | 1,534,624 | 1,389,113 |
| Capital and reserves attributable to shareholders | |||||
| Share capital | 17 |
| 1,105,547 | 1,103,457 | 1,103,457 |
| Share premium |
|
| 3,619,332 | 3,586,947 | 3,586,947 |
| Share-based payments reserve |
|
| 474,792 | 474,792 | 474,792 |
| Warrants reserve |
|
| 375,198 | 213,250 | 213,250 |
| Merger reserve |
|
| 31,212,041 | 31,212,041 | 31,212,041 |
| Foreign currency translation reserve |
|
| (185,673) | (103,376) | (103,376) |
| Accumulated losses* |
|
| (38,308,203) | (37,836,140) | (37,690,629) |
| Total capital and reserves |
|
| (1,706,966) | (1,349,029) | (1,203,518) |
| Total equity and liabilities |
|
| 213,887 | 185,595 | 185,595 |
The Financial Statements were approved and authorised for issue by the Board of Directors on 29 April 2021 and were signed on its behalf by:
John McGoldrick
Director
Consolidated Statements of Changes in Equity
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| Share capital | Share premium | Other reserves | Accumulated losses | Total |
|
| US$ | US$ | US$ | US$ | US$ |
| Equity at 1 January 2019, as reported | 1,024,036 | 3,563,122 | 31,793,304 | (34,255,390) | 2,125,072 |
| Re-stated 2018 loss* | - | - | - | 145,511 | 145,511 |
| Equity at 1 January 2019, re-stated | 1,024,036 | 3,563,122 | 31,793,304 | (34,109,879) | 2,270,583 |
|
|
|
|
|
|
|
| Loss for the year | - | - | - | (3,580,750) | (3,580,750) |
| Other comprehensive loss for the year | - | - | (39,602) | - | (39,602) |
| Total comprehensive loss for the year | - | - | (39,602) | (3,580,750) | (3,620,352) |
| Issue of shares | 79,421 | 46,064 | - | - | 125,485 |
| Issue of warrants | - | (22,239) | 22,239 | - | - |
| Issue of share options | - | - | 20,766 | - | 20,766 |
| Total transactions with shareholders | 79,421 | 23,825 | 43,005 | - | 146,251 |
| Equity at 31 December 2019, re-stated | 1,103,457 | 3,586,947 | 31,796,707 | (37,690,629) | (1,203,518) |
|
|
|
|
|
|
|
| Loss for the year | - | - | - | (617,574) | (617,574) |
| Other comprehensive loss for the year | - | - | (82,297) | - | (82,297) |
| Total comprehensive loss for the year | - | - | (82,297) | (617,574) | (699,871) |
| Issue of shares | 2,090 | 206,871 | - | - | 208,961 |
| Share issue costs | - | (12,538) | - | - | (12,538) |
| Issue of warrants | - | (161,948) | 161,948 | - | - |
| Total transactions with shareholders | 2,090 | 32,385 | 161,948 | - | 196,423 |
| Equity at 31 December 2020 | 1,105,547 | 3,619,332 | 31,876,358 | (38,308,203) | (1,706,966) |
Other Reserves
|
| Merger reserve | Share-based payments reserve | Warrants reserve | Foreign currency translation reserve | Total Other reserves |
|
| US$ | US$ | US$ | US$ | US$ |
|
|
|
|
|
|
|
| Other reserves at 1 January 2019 | 31,212,041 | 454,026 | 191,011 | (63,774) | 31,793,304 |
| Other comprehensive loss for the year | - | - | - | (39,602) | (39,602) |
| Total comprehensive loss for the year | - | - | - | (39,602) | (39,602) |
| Issue of warrants | - | - | 22,239 | - | 22,239 |
| Issue of share options | - | 20,766 | - | - | 20,766 |
| Other reserves at 31 December 2019 | 31,212,041 | 474,792 | 213,250 | (103,376) | 31,796,707 |
|
|
|
|
|
|
|
| Other comprehensive loss for the year | - | - | - | (82,297) | (82,297) |
| Total comprehensive loss for the year | - | - | - | (82,297) | (82,297) |
| Issue of warrants | - | - | 161,948 | - | 161,948 |
| Other reserves at 31 December 2020 | 31,212,041 | 474,792 | 375,198 | (185,673) | 31,876,358 |
Consolidated Statement of Cash Flows
|
| Notes | 2020 | 2019 |
|
|
| US$ | US$ |
|
Cash flow from operating activities |
|
|
|
| Loss before taxation |
| (617,574) | (3,580,750) |
| Adjustments for: |
|
|
|
| Finance expenses | 7 | 111,881 | 112,093 |
| Share-based payments charge | 18 | - | 20,766 |
| Impairment of exploration assets | 10 | - | 2,559,000 |
| Unrealised foreign exchange movements | 7 | (23,106) | (3,915) |
| Operating cashflows before working capital changes |
| (528,799) | (892,806) |
| Changes in working capital: |
|
|
|
| Increase in payables |
| 26,464 | 309,917 |
| (Increase)/decrease in receivables |
| (10,496) | 27,084 |
| Net cash used in operating activities |
| (512,831) | (555,805) |
| Financing activities |
|
|
|
| Issue of ordinary shares, net of share issue costs | 17 | 196,423 | 104,021 |
| Proceeds from new borrowings | 16 | 331,760 | 362,320 |
| Net cash flow from financing activities |
| 528,183 | 466,341 |
| Net increase /(decrease) in cash and cash equivalents in the period |
| 15,352 | (89,464) |
| Cash and cash equivalents at the beginning of the period |
| 28,709 | 125,621 |
| Restricted cash held on deposits | 12 | 125,000 | 125,000 |
| Total cash and cash equivalents at the beginning of the period, including restricted cash |
| 153,709 | 250,621 |
| Effect of the translation of cash balances into presentation currency |
| 3,127 | (7,448) |
| Cash and cash equivalents at the end of the period |
| 47,188 | 28,709 |
| Restricted cash held on deposits | 12 | 125,000 | 125,000 |
| Total cash and cash equivalents at the end of the period, including restricted cash |
| 172,188 | 153,709 |
Notes to the Consolidated Financial Information
1. General Information
The Company is incorporated and registered in England and Wales as a public limited company. The Company's registered number is 09976843 and its registered office is at Kemp House, 152 City Road, London EC1V 2NX. On 4 October 2017, the Company's shares were admitted to the Official List (by way of Standard Listing) and to trading on the London Stock Exchange's Main Market.
With effect from admission, the Company has been subject to the Listing Rules and the Disclosure Guidance and Transparency Rules (and the resulting jurisdiction of the UK Listing Authority) to the extent such rules apply to companies with a Standard Listing pursuant to Chapter 14 of the Listing Rules.
The principal activity of the Company is that of an investment company, currently focused on acquiring a new business in the environmental, social and corporate governance space (ESG).
2. Accounting Policies
The principal accounting policies adopted are set out below.
The Group Financial statements are presented in US Dollars as historically the entirety of the Company's operations have been located in the United States.
Basis of Preparation
The Financial Statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as endorsed by the EU ("IFRS") and the requirements of the Companies Act applicable to companies reporting under IFRS.
The Financial Statements are prepared on a going concern basis and under the historical cost convention.
The preparation of the Group Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Directors to exercise their judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment and complexity, or areas where assumptions and estimates are significant to the Group Financial Statements are disclosed below.
Current assets and liabilities disclosed in the notes to the accounts are those expected to be settled in less than one year.
a) New standards, interpretations and amendments effective from 1 January 2020
There were no new standards or interpretations effective for the first time for periods beginning on or after 1 January 2020 that had a significant effect on the Curzon Group's Financial Statements. During the period, the following new standards were adopted:
§ Amendments to References to Conceptual Framework in IFRS Standards - effective from 1 January 2020;
§ Definition of Material (Amendments to IAS 1 and IAS 8) - effective from 1 January 2020;
§ Amendments to IFRS 9, IAS 39 and IFRS17: Interest Rate Benchmark Reform;
§ Amendment to IFRS 3 Business Combinations - effective 1 January 2020.
The adoption of these standards has not had a material impact on the financial information of the Group in reporting period and is not expected to have a significant impact in the future. Other new and amended standards and Interpretations issued by the IASB did not impact the Group as they are either not relevant to the Group's activities or require accounting, which is consistent with the Group's current accounting policies.
b) New standards, interpretations and amendments not yet effective
At the date of authorisation of these Financial Statements, a number of amendments to existing standards and interpretations, which have not been applied in these Financial Statements, were in issue but not yet effective for the year presented. The Directors do not expect that the adoption of these standards will have a material impact on the financial information of the Group in future periods.
Prior Period Error Re-stated
In the reporting period, the Groups identified an error related to the year ended 31 December 2018. A US$145,511 accrual to previous Directors of the Company for bonus payments, that were never earned or paid out and was waived by the previous Directors in the year ended 31 December 2018, was still included in the Accounts Payable balance and therefore required to be reversed from the accounts.
The error was retrospectively corrected through opening Retained Earnings at 1 January 2019, which affected comparative year balances at 31 December 2019 in the following lines in the Statement of Financial position:
§ Accounts Payable balance decreased from previously reported US$835,826 to re-stated number of US$690,315;
§ Accumulated Loss balance changed from previously reported loss of US$37,836,140 to re-stated loss of US$37,690,629.
Basis of Consolidation
The Company was incorporated on the 29 of January 2016. It acquired Coos Bay Energy LLC on the 4 of October 2017. At the time of its acquisition by the Company, Coos Bay Energy LLC consisted of Coos Bay Energy LLC and its wholly owned US Group. It is the Directors' opinion that the Company at the date of acquisition of Coos Bay Energy LLC did not meet the definition of a business as defined by IFRS 3 and therefore the acquisition was outside on the IFRS 3 scope.
Where a party to an acquisition fails to satisfy the definition of a business, as defined by IFRS 3, management have decided to adopt a "merger accounting" method of consolidation as the most relevant method to be used.
The Group consistently applies it to all similar transactions in the following way:
§ the acquired assets and liabilities are recorded at their existing carrying values rather than at fair value;
§ no goodwill is recorded;
§ all intra-group transactions, balances and unrealised gains and losses on transactions are eliminated from the beginning of the first comparative period or inception, whichever is earlier;
§ comparative periods are restated from the beginning of the earliest comparative period presented based on the assumption that the companies have always been together;
§ all the pre-acquisition accumulated losses of the legal acquirer are assumed by the Group as if the companies have always been together;
§ all the share capital and membership capital contributions of all the companies, included into the legal acquiree sub-group less the Company's cost of investment into these companies, are included into the merger reserve; and
§ the Company's called up share capital is restated at the preceding reporting date to reflect the value of the new shares that would have been issued to acquire the merged company had the merger taken place at the first day of the comparative period. Where new shares have been issued during the current period that increased net assets (other than as consideration for the merger), these are recorded from their actual date of issue and are not included in the comparative statement of financial position.
Going Concern
The Group Financial Statements have been prepared on a going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The operations of the Company are currently being financed by funds lent to the Company by Poseidon Enhanced Technologies Ltd. ("PET"). In exchange for a period of exclusivity in relation to a potential reverse takeover transaction, PET has agreed to loan the Company an initial amount of £65,000 in the form of a one-year loan note carrying an annual interest rate of 10%. PET has agreed to lend up to a total of £500,000 in order to support the Company during the ongoing due diligence and potential reverse takeover process.
The Company further continues to rely on a US$1,000,000 credit facility provided from a company related to the largest shareholder that provides the Group up to US$500,000 minimum funding and an additional US$500,000 at the discretion of the lender. On 13 February 2020, the Company was notified that the entire outstanding balance of this loan, constituting US$200,000 of principal and US$32,000 of interest was sold to C4 Energy Ltd, a UK incorporated private entity, and was subsequently refinanced to 30 October 2020. This left US$800,000 of the underlying facility undrawn with the original lender. If any amounts were to be drawn on this facility, they would be repayable 12 months from the date of drawdown.
The Group believes that, based on the current low overhead expenditure, the proceeds from the loans being provided by PET and the undrawn amount of US$800,000 remaining on the US$1,000,000 credit facility will be sufficient for the Group to operate for a period of 12 months from the date of the approval of these Financial Statements.
The Group currently has no source of revenue and is reliant on loans to continue to meet its overhead expenditures. The Group held cash balances of US$47,188 as at 31 December 2020 and has subsequently increased its borrowing capacity and current liquidity through the agreement with PET.
The Directors note that the Group will need additional funding to continue operations for the foreseeable future and this means there is a material uncertainty as to the Group's ability to continue as a going concern, however the Directors are confident that the Group will be able to raise, as required, sufficient cash or reduce its commitments to enable it to continue its operations, and to continue to meet, as and when they fall due, its liabilities for at least the next 12 months from the date of approval of the Group Financial Statements. The Group Financial Statements have, therefore, been prepared on the going concern basis.
Functional Currency
Functional and Presentation Currency
The individual financial information of each Group entity is measured in the currency of the primary economic environment in which the entity operates (its functional currency). The Company's functional currency is UK Pound Sterling (£). All other companies, belonging to the Curzon Group, have US Dollar as their functional currency. The Group Financial Statements are presented in US Dollars ($).
Transactions and Balances
Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the end of the reporting period are translated at the rates ruling as of that date.
Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are recognised in profit or loss.
On consolidation, the assets and liabilities of the Group's Pound Sterling operations are translated into the Group's presentational currency (US Dollar) at exchange rates prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period unless exchange rates have fluctuated significantly during the year, in which case the exchange rate at the date of the transaction is used. All exchange differences arising, if any, are recognised as other comprehensive income and are transferred to the Group's foreign currency translation reserve.
Rates applied in these Financial Statements:
|
|
| 2020 | 2019 |
| Closing USD/GBP rate at 31 December |
| 1.3672 | 1.3116 |
| Average USD/GBP rate for the year |
| 1.2760 | 1.2760 |
Decommissioning Costs
Where a material liability for the removal of production facilities and site restoration at the end of the field life exists, a provision for decommissioning is made. The amount recognised is the present value of estimated future expenditure determined in accordance with local conditions and requirements. An asset of an amount equivalent to the provision is also created and depreciated on a unit of production basis. Changes in estimates are recognised prospectively, with corresponding adjustments to the provision and the associated asset. At 31 December 2020 and 31 December 2019, no provisions were deemed necessary.
Impairment
Impairment of Financial Assets
All financial assets are assessed at the end of each reporting period as to whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. For an equity instrument, a significant or prolonged decline in the fair value below its cost is considered to be objective evidence of impairment.
An impairment loss in respect of financial assets carried at amortised cost is recognised in profit or loss and is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
Impairment of Non-Financial Assets
The carrying values of assets, other than those to which IAS 36 "Impairment of Assets" does not apply, are reviewed at the end of each reporting period for impairment, when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets' fair value less costs to sell and their value-in-use, which is measured by reference to discounted future cash flow.
An impairment loss is recognised in profit or loss immediately.
When there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately, unless the asset is carried at its revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Financial Instruments
Financial instruments are recognised in the statements of financial position, when the Group has become a party to the contractual provisions of the instruments.
Financial Assets
The Group classifies its financial assets as financial assets carried at amortised cost, cash and cash equivalents and restricted cash. Financial assets are initially measured at fair value and subsequently carried at amortised cost.
Financial assets are derecognized, when the contractual rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. On de-recognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.
Amortised Cost
These assets incorporate such types of financial assets, where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost, using the effective interest rate method, less provision for impairment. Impairment provisions receivables are recognised based on the simplified approach within IFRS 9, using a provision matrix in the determination of the lifetime expected credit losses. During this process, the probability of the non-payment of the receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the receivables. On confirmation that the receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward-looking expected credit loss model. The methodology, used to determine the amount of the provision, is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses, along with gross interest income, are recognised. For those for which credit risk has increased significantly but not determined to be credit impaired, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.
The Group's financial assets, measured at amortised cost, comprise other receivables and cash and cash equivalents in the Consolidated Statement of Financial Position.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, bank balances, bank overdrafts, deposits with financial institutions and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Restricted Cash
Restricted cash are funds held as a collateral related to stand-by letters of credit related to the Group's oil and gas properties. Such deposits are classified as non-current assets and are not classified as part of cash and cash equivalents as these deposits are not accessible by the Company for unrestricted use and are not accessible for more than 3 months. More details on the Group's restricted cash are given in the note 12.
Financial Liabilities
Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.
Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses, relating to a financial instrument classified as a liability, are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity.
All financial liabilities are recognised initially at fair value less financial costs and subsequently measured at amortised cost, using the effective interest method other than those categorised as fair value through the Statement of Comprehensive Income.
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same party on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability and the difference in the respective carrying amounts is recognised in the Income Statement.
Financial liabilities include the following items:
§ Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost, using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption as well as any interest or coupon, payable while the liability is outstanding;
§ Liability components of convertible loan notes are measured as described further below;
§ Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost, using the effective interest method.
Convertible Debt
The proceeds, received on issue of the Group's convertible debt, are allocated into their liability and equity components. The amount, initially attributed to the debt component, equals the discounted cash flows, using a market rate of interest that would be payable on a similar debt instrument that does not include an option to convert. Subsequently, the debt component is accounted for as a financial liability, measured at amortised cost until extinguished on conversion or maturity of the bond. The remainder of the proceeds is allocated to the conversion option and is recognised as a separate equity component within shareholders' equity, net of income tax effects.
Equity instruments
Ordinary Shares
Ordinary shares are classified as equity. Incremental costs, directly attributable to the issue of new shares, are shown in Share Premium account as a deduction, net of tax, from proceeds. Dividends on ordinary shares are recognised as liabilities, when approved for distribution.
Warrants
Warrants classified as equity are recorded at fair value as of the date of issuance on the Company's Consolidated Statement of Financial Position and no further adjustments to their valuation are made. Management estimates the fair value of these liabilities, using option pricing models and assumptions that are based on the individual characteristics of the warrants or instruments on the valuation date as well as assumptions for future financings, expected volatility, expected life, yield and risk-free interest rate.
Taxation
Income tax for each reporting period comprises current and deferred tax.
Current tax is the expected amount of income taxes, payable in respect of the taxable profit for the year and is measured, using the tax rates that have been enacted or substantively enacted at the end of the reporting period.
Deferred tax is provided in full, using the liability method, on temporary differences, arising between the tax bases of assets and liabilities and their carrying amounts in the Group Financial Statements.
Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.
Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the Group's interest in the net fair value of the acquired Company's identifiable assets, liabilities and contingent liabilities over the business combination costs or from the initial recognition of an asset or liability in a transaction, which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period, when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the end of the reporting period.
Deferred tax assets and liabilities are offset, when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow deferred tax assets to be recovered.
Deferred tax, relating to items recognised outside profit or loss, is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transactions either in other comprehensive income or directly in equity.
Deferred tax assets and liabilities are recognized, where the carrying amount of an asset or liability in the Consolidated Statement of Financial Position differs from its tax base, except for differences, arising on the initial recognition of goodwill, the initial recognition of an asset or liability in a transaction, which is not a business combination and at the time of the transaction affects neither accounting or taxable profit, and investments in subsidiaries and joint arrangements, where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.
Leases
The Group held leases to approximately 45,370 acres of prospective coalbed methane lands in the Coos Bay Basin during the period. These leases are outside of IFRS16 scope. The annual rental payments, under these operating leases, were recognised as an expense on a straight-line basis over the lease term.
Employee Benefits
Short-Term Benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group.
Post-Employment Benefits
The Group does not currently make provision for post-employment benefits by way of pension plans or similar arrangements.
Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized, when the Group has a present or constructive obligation as a result of past events, when it is probable that an outflow of resources, embodying economic benefits, will be required to settle the obligation and when a reliable estimate of the amount can be made. Provisions are reviewed at the end of each financial reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the provision is the present value of the estimated expenditure required to settle the obligation.
A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required or the amount of obligation cannot be measured reliably.
A contingent liability is not recognised but is disclosed in the notes to the Financial Statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.
A contingent asset is a probable asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly within the control of the Group. The Group does not recognise contingent assets but discloses its existence, where inflows of economic benefits are probable, but not virtually certain.
Share-Based Payment Arrangements
Equity-settled share-based payments to employees and others, providing similar services, are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 18 to the Group Financial Statements.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Directors' estimate of equity instruments that will eventually vest, with a corresponding increase in equity. Where the conditions are non-vesting, the expense and equity reserve, arising from share-based payment transactions is recognised in full immediately on grant.
At the end of each reporting period, the Directors revise their estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to other reserves.
Operating Segments
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses. The results of an operating segment are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.
Summary of Critical Accounting Estimates and Judgments
The preparation of the Group Financial Statements, in conformity with IFRS, requires the use of certain critical accounting estimates. It also requires the Directors to exercise their judgment in the process of applying the accounting policies, which are detailed above. These judgments are continually evaluated by the Directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The key estimates and underlying assumptions, concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
The prime areas, involving a higher degree of judgment or complexity, where assumptions and estimates are significant to the Financial Statements, are as follows:
Going Concern
The Group Financial Statements have been prepared on a going concern basis as the Directors have assessed the Group's ability to continue in operational existence for the foreseeable future. The operations are currently being financed by third party loans. See Going Concern section for more details.
The Group is reliant on the continuing support from its shareholders and the expected support of future shareholders.
The Group Financial Statements do not include the adjustments that would result if the Group were not to continue as a going concern.
Areas of Uncertainty
On 03 February 2021, the Company announced that it had signed a letter of intent with Poseidon Enhanced Technologies Ltd to potentially acquire a 100% interest in their business, a developer of a proprietary chemical recycling process for PET plastics. At this stage, there can be no assurance that this transaction will be completed.
As of H1 2021, the COVID-19 pandemic continued to cause significant economic disruption across nearly all aspects of the global economy. While the direct material effects on Curzon Energy were considered relatively minor at the time of writing, the potential for significant ongoing uncertainties, due to the Pandemic, were expected to continue to exist for the foreseeable future and any impact on the ability to consummate a reverse takeover transaction with Poseidon Enhanced Technologies was unclear.
3. Segmental Analysis
IFRS 8 "Operating Segments" requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker (which takes the form of the Directors) as defined in IFRS 8 "Operating Segments", in order to allocate resources to the segment and to assess its performance.
The principal activity of the Company is that of an investment company, currently focused on acquiring a new business in the environmental, social and corporate governance space (ESG). At 31 December 2020 and 31 December 2019, the Directors consider there is one reportable operating segment. Accordingly, an analysis of segment profit or loss, segment assets, segment liabilities and other material items has not been presented.
The Group operates in one geographic area, being the USA. All intangible assets and operating assets and liabilities are located in the USA, excluding cash and cash equivalents, which are currently kept and managed from the UK head office. The management does not consider the UK to be a separate operating segment. The Group has not yet commenced production and therefore has no revenue.
4. Loss for the Year Before Taxation
| Loss before tax is stated after charging / (crediting): |
| 2020 | 2019 |
|
|
| US$ | US$ |
|
Impairment of exploration and evaluation expenditure |
| - | 2,559,000 |
| Auditor's remuneration: |
|
|
|
| - fees payable to the Company's auditor for the audit of the consolidated and Company financial statements |
| 31,900 | 32,538 |
| - fees payable to the Company's auditor for other services: corporate finance services |
| - | 29,048 |
| Share-based payments |
| - | 20,766 |
| Foreign currency translation (gain) |
| (23,106) | (3,916) |
5. Directors and Staff
There were no staff employed by the Group during the two years ended 31 December 2020, except for one Director, Mr Scott Kaintz, who was employed by the Company from 27 June 2018.
Remuneration of Key Management Personnel
The following table sets forth the compensation awarded, paid to or earned by each Director during 2020:
| 2020 | Directors' fees US$ | Social security costs US$ | Total cash-compensation US$ | Share-based Payments (options) US$ | Total compensation US$ |
| John McGoldrick | 63,800 | - | 63,800 | - | 63,800 |
| Scott Kaintz | 148,335 | 20,995 | 169,330 | - | 169,330 |
| Owen May | 29,242 | - | 29,242 | - | 29,242 |
| Total Directors' compensation | 241,377 | 20,995 | 262,371 | - | 262,371 |
| 2019 | Directors' fees US$ | Social security costs US$ | Total cash-compensation US$ | Share-based Payments (options) US$ | Total compensation US$ |
| John McGoldrick | 63,799 | - | 63,799 | 20,766 | 84,565 |
| Scott Kaintz | 95,699 | 7,800 | 103,499 | - | 103,499 |
| Owen May | 31,900 | - | 31,900 | - | 31,900 |
| Brian James Kinane | - | - | - | - | - |
| Total Directors' compensation | 191,398 | 7,800 | 199,198 | 20,766 | 219,964 |
The Directors' emoluments are paid from Coos Bay Energy LLC and the Company.
John McGoldrick has, through agreement with the Company, agreed to defer payment of his 2017, 2018, 2019 and 2020 Director's compensation, which at 31 December 2020 totaled £152,500 (US$208,498).
Owen May has, through agreement with the Company, agreed to defer payment of his 2018, 2019 and 2020 Director's compensation, which at 31 December 2020 totaled £47,917 (US$65,512).
6. Administrative Expenses
|
|
| 2020 | 2019 |
| |||
|
|
| US$ | US$ |
| |||
| Staff costs |
|
|
|
| |||
| Directors' salaries |
| 241,376 | 212,164 |
| |||
| Employers NI |
| 15,891 | 7,800 |
| |||
| Consultants |
| 42,445 | 66,943 |
| |||
| Professional services |
|
|
|
| |||
| Accounting, audit & taxation |
| 74,752 | 87,927 |
| |||
| Legal |
| - | 5,684 |
| |||
| Marketing |
| 12,235 | 29,647 |
| |||
| Other |
| - | 20,757 |
| |||
| Regulatory compliance |
| 93,484 | 101,471 |
| |||
| Standard Listing Regulatory Costs |
| - | 260,281 |
| |||
| Travel |
| 492 | 14,306 |
| |||
| Business development |
| - | 29,345 |
| |||
| Office and Admin |
|
|
|
| |||
| General |
| - | 6,329 |
| |||
| IT costs |
| 1,622 | 2,355 |
| |||
| Mineral rights lease (outside of IFRS 16 scope) |
| 11,349 | 32,049 | ||||
| Temporary storage and office rent |
| 19,140 | 17,545 | ||||
| Insurance |
| 16,013 | 18,969 |
| |||
| Total administrative costs |
| 528,799 | 913,572 |
| |||
7. Finance Expense (net)
|
|
| 2020 | 2019 |
|
|
| US$ | US$ |
| Foreign exchange (gain) |
| (23,106) | (3,915) |
| Interest expense on promissory notes and other short-term loans |
| 111,881 | 112,093 |
| Total finance expense |
| 88,775 | 108,178 |
8. Taxation
The Group has made no provision for taxation as it has not yet generated any taxable income. A reconciliation of income tax expense, applicable to the loss before taxation at the statutory tax rate to the income tax expense at the effective tax rate of the Group, is as follows:
|
|
| 2020 | 2019 |
|
|
| US$ | US$ |
|
|
|
|
|
| Loss before tax |
| (617,574) | (3,580,750) |
| UK corporation tax credit at 19.00% (2019: 19.00%) |
| (117,339) | (680,342) |
| Effect of non-deductible expense |
| 10,559 | 501,265 |
| Differences in overseas tax rates |
| (1,287) | (3,140) |
| Effect of tax benefit of losses carried forward |
| 108,067 | 182,217 |
| Current tax (credit) |
| - | - |
As at 31 December 2020, the tax effects of temporary timing differences, giving rise to deferred tax assets, was US$1,417,411 (2019: US$1,336,991).
A deferred tax asset in respect of these losses and temporary differences has not been established as the Group has not yet generated any revenues and the Directors have, therefore, assessed the likelihood of future profits being available to offset such deferred tax assets to be uncertain.
9. Loss Per Share
The basic loss per share is derived by dividing the loss for the year attributable to ordinary shareholders of the Company by the weighted average number of shares in issue.
Diluted loss per share is derived by dividing the loss for the year attributable to ordinary shareholders of the Company by the weighted average number of shares in issue plus the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares.
The following reflects the loss and share data used in the basic and diluted loss per share computations:
|
|
| 2020 | 2019 |
|
|
|
|
|
| (Loss) after tax attributable to the shareholders of the parent (US$) |
| (617,574) | (3,580,750) |
| Weighted average number of ordinary shares of £0.01 in issue used calculation of in basic and diluted EPS |
| 92,632,948 | 81,185,175 |
| (Loss) per share - basic and fully diluted (US$) |
| (0.008) | (0.044) |
At 31 December 2020, the effect of all potential ordinary shares and contingently issuable shares, that are presented in the table below, was anti-dilutive as it would lead to a further reduction of loss per share, therefore, these instruments were not included in the diluted loss per share calculation.
|
|
| 2020 | 2019 |
|
|
| Number | Number |
| Share options granted to employees - fully vested at the end of the respective period |
| 280,854 | 280,854 |
| Warrants given to shareholders as a part of placing equity instruments - fully vested at the end of the respective period |
| 20,612,925 | 5,636,531 |
| Total instruments fully vested |
| 20,893,779 | 5,917,385 |
| Total number of instruments and potentially issuable instruments (vested and not vested) not included into the fully diluted EPS calculation |
| 20,893,779 | 5,917,385 |
10. Intangible Assets
|
|
| 2020 | 2019 |
| Exploration and evaluation expenditure |
| US$ | US$ |
| Cost: |
|
|
|
| At the beginning of the year |
| 24,716,316 | 24,716,316 |
| Additions - exploration costs capitalised |
| - | - |
| At the end of the year |
| 24,716,316 | 24,716,316 |
|
|
|
|
|
| Impairment provision: |
|
|
|
| At the beginning of the year |
| (24,716,316) | (22,157,316) |
| Provision for the year |
| - | (2,559,000) |
| At end of the year |
| (24,716,316) | (24,716,316) |
| Net Book Value |
| - | - |
Environmental Matters
The Group has established procedures for a continuing evaluation of its operations to identify potential environmental exposures and to assure compliance with regulatory policies and procedures. The Directors monitor these laws and regulations and periodically assesses the propriety of its operational and accounting policies related to environmental issues. The nature of the Group's business requires routine day-to-day compliance with environmental laws and regulations. The Group has incurred no material environmental investigation, compliance or remediation costs for each of the years ended 31 December 2020 and 31 December 2019. The Directors are unable to predict whether the Group's future operations will be materially affected by these laws and regulations. It is believed that legislation and regulations, relating to environmental protection will not materially affect the results of operations of the Group.
11. Subsidiary Undertakings
The Group has the following subsidiary undertakings:
| Name | Country of incorporation | Issued capital | Proportion held by Group | Activity |
| Coos Bay Energy LLC | USA | Membership interests | 100% | Holding company |
| Westport Energy Acquisitions Inc. | USA | Shares | 100% | Holding company |
| Westport Energy LLC | USA | Membership interests | 100% | Oil and gas exploration |
| Curzon Energy Inc.* | USA | Shares | 100% | Holding company |
| Rigel Energy LLC** | USA | Membership interests | 100% | Holding company |
* Incorporated on 1 May 2019 and dissolved on 26 February 2020 as related transaction did not complete.
** Incorporated on 1 May 2019 and dissolved on 27 February 2020 as related transaction did not complete.
Coos Bay Energy LLC is a limited liability corporation incorporated in Nevada, USA whose registered office is 1370 Crowley Avenue SE, Portland, Oregon 97302, USA.
Westport Energy Acquisition Inc. was incorporated in May 2010 in Delaware, USA. Its registered office is located at 100 Overlook Center, 2nd Floor, Princeton Junction, NJ 08540, USA.
Westport Energy LLC was incorporated in December 2008 in Delaware, USA. Its registered office is located at 100 Overlook Center, 2nd Floor, Princeton Junction, NJ 08540, USA.
12. Restricted Cash
Restricted cash includes funds held as a collateral to support stand-by letters of credit related to the Group's oil and gas properties. The letters of credit secure the Group's reclamation obligations under the leases and state law. The cash can be taken by Umpqua Bank in the event the letters of credit are drawn on by the State of Oregon, Department of Geology & Mineral Industries (DOGAMI). The cash is held in the form of a Certificate of Deposit.
13. Prepayments and Other Receivables
|
|
| 2020 | 2019 |
|
|
| US$ | US$ |
| VAT recoverable |
| 3,106 | 4,503 |
| Other debtors |
| 38,593 | 26,700 |
| Total prepayments and other receivables |
| 41,699 | 31,203 |
The fair value of receivables and deposits approximates their carrying amount as the impact of discounting is not significant. The receivables are not impaired and are not past due.
14. Cash and Cash Equivalents
For the purpose of the Statements of Financial Position, cash and cash equivalents comprise the following:
|
|
| 2020 | 2019 |
|
|
| US$ | US$ |
| Cash in hand and at bank |
| 47,188 | 28,709 |
15. Trade and Other Payables
|
|
| 2020 | 2019 re-stated |
|
|
| US$ | US$ |
| Trade and other payables |
| 332,159 | 362,748 |
| Accruals |
| 388,718 | 327,567 |
| Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost |
| 720,877 | 690,315 |
| Other payables - tax and social security payments |
| 16,958 | - |
| Total trade and other payables |
| 737,835 | 690,315 |
16. Borrowings
Details of the notes and borrowings originated by the Group are disclosed in the table below:
|
| Origination date | Contractual settlement date | Original note value in original currency | Annual interest rate | Security | Status at 31 December 2020 |
| C4 Energy Ltd | 22 Sept 2017 | Conversion/Repayment at RTO date | $200,000 | 15% | unsecured | Outstanding |
| Bruce Edwards | 1 Sep 2017 | Conversion at RTO date | $100,000 | 15% | unsecured | Outstanding |
| HNW Investor Group | 1 July 2019* | Conversion/Repayment at RTO date | £263,265 | 13% | 100% interest in Coos Bay LLC | Outstanding |
| Sun Seven Stars Investment Group ("SSSIG") | 13 Mar 2020 | 30 Aug 2021 | £260,000 | 10% | unsecured | Outstanding |
*Please refer to note 23 Post Balance Sheet Events for more information
No interim payments are required under the promissory notes, as the payment terms require the original principal amount of each note and all accrued interest thereon, to be paid in single lump payments on the respective contractual settlement dates.
|
|
| 2020 | 2019 |
|
|
| US$ | US$ |
| At 1 January |
| 698,798 | 213,812 |
| Received during the year |
| 331,760 | 362,320 |
| Interest accrued during the year |
| 109,943 | 110,700 |
| Exchange rate differences |
| 42,517 | 11,966 |
| Short-term loans and borrowings 31 December |
| 1,183,018 | 698,798 |
Reconciliation of Liabilities Arising from Financing Activities
|
| 31 Dec 2019 | Cash flows Proceeds from new borrowings | Non-cash flow Forex movement | Non-cash flow Interest accrued | 31 Dec 2020 |
| HNW Investor Group | 334,070 | - | 17,286 | 43,704 | 395,060 |
| C4 Energy Ltd. | 232,378 | - | - | 30,000 | 262,378 |
| Bruce Edwards | 132,350 | - | - | 15,000 | 147,350 |
| Sun Seven Stars Investment Group ("SSSIG") | - | 331,760 | 25,231 | 21,239 | 378,230 |
| Total liabilities from financing activities | 698,798 | 331,760 | 42,517 | 109,943 | 1,183,018 |
|
| 31 Dec 2018 | Cash flows Proceeds from new borrowings | Non-cash flow Forex movement | Non-cash flow Interest accrued | 31 Dec 2019 |
| HNW Investor Group | - | 262,320 | 1,948 | 69,802 | 334,070 |
| C4 Energy Ltd. | 100,433 | 100,000 | 5,459 | 26,486 | 232,378 |
| Bruce Edwards | 113,379 | - | 4,559 | 14,412 | 132,350 |
| Total liabilities from financing activities | 213,812 | 362,320 | 11,966 | 110,700 | 698,798 |
17. Share Capital
Authorised Share Capital
As permitted by the Companies Act 2006, the Company does not have an authorised share capital. The Company has one class of ordinary shares, which carry no right to fixed income. The ordinary shares carry the right to one vote per share at General Meetings of the Company and the rights to share in any distribution of profits or returns of capital and to share in any residual assets available for distribution in the event of a winding up.
Issued Equity Share Capital
|
| Ordinary shares, number | Deferred shares, number | Share capital, US$ |
| At 1 January 2019 | 77,020,316 | - | 1,024,036 |
| Issue of shares at £0.0158 per share via placement on 1 March 2019 for cash | 6,012,655 | - | 79,421 |
| At 31 December 2019 | 83,032,971 | - | 1,103,457 |
| Share subdivision on 6 May 2020 - details of subdivision are presented in the table below | 83,032,971 | 83,032,971 | 1,103,457 |
| Issue of shares at £0.01 per share via placement on 3 June 2020 for cash | 16,606,594 | - | 2,090 |
| At 31 December 2020 | 99,639,565 | 83,032,971 | 1,105,547 |
|
| Number Ordinary shares of £0.0001 | Number Deferred shares of £0.0099 | Share Capital, US$ | Number Ordinary shares of £0.01 before subdivision | Share Capital, US$ |
| Issued and fully paid |
|
|
|
|
|
| Existing Ordinary Shares of £0.01 each immediately before subdivision | - | - | - | 83,032,972 | 1,103,457 |
| After subdivision*: |
|
|
|
|
|
| New Ordinary shares of £0.0001 each | 83,032,972 | - | 11,035 | - | - |
| Deferred Shares of £0.0099 each | - | 83,032,972 | 1,092,422 | - | - |
| Total Share Capital |
|
| 1,103,457 |
| 1,103,457 |
*On 6 May 2020, the Company's shareholders approved the subdivision and re-designation of the 83,032,971 Existing Ordinary Shares ("Existing Ordinary Shares") of £0.01 each in the capital of the Company into (i) 83,032,971 New Ordinary Shares ("New Ordinary Shares") of £0.0001 each and (ii) 83,032,971 Deferred Shares ("Deferred Shares") of £0.0099 each in the capital of the Company, and to amend the Company's Articles of Association accordingly.
Each New Ordinary Share carries the same rights in all respects under the amended Articles of Association as each Existing Ordinary Share did under the existing Articles of Association, including the rights in respect of voting and the entitlement to receive dividends. Each Deferred Share carries no rights and is deemed effectively valueless.
18. Share Based Payments
Employee Share Options
At 31 December 2020, the Company had outstanding options to subscribe for ordinary shares as follows:
| Option exercise price | Number of options granted | Vesting date | Expiry date | Fair value of individual option |
|
|
|
|
|
|
| £0.10 | 280,854 | 4 Oct 2018 | 4 Oct 2022 | £0.074 |
| Total options outstanding at 31 December 2020 | 280,854 |
|
|
|
|
| 2020 | 2019 | ||
|
| Number of options | Weighted average exercise price £ | Number of options | Weighted average exercise price £ |
| Outstanding at the beginning of the period | 280,854 | 0.10 | 7,633,704 | 0.17 |
| Granted during the period | - | - | - | - |
| Forfeited during the period | - | - | (6,089,394) | 0.16 |
| Exercised during the period | - | - | - | - |
| Lapsed during the period | - | - | (1,263,456) | 0.18 |
| Outstanding at the end of the period | 280,854 | 0.10 | 280,854 | 0.10 |
| Vested and exercisable at the end of the period | 280,854 | 0.10 | 280,854 | 0.10 |
During the financial year, no options (2019: none) were granted. The weighted average fair value of each option granted during the year was £nil (2019: nil).
The exercise price of options outstanding on 31 December 2020 and 31 December 2019 is £0.1 Their weighted average remaining contractual life was 1.45 years (2019: 2.45 years).
No options were exercised during the reporting year (2019: nil).
Share-based remuneration expense, related to the share options granted during the comparative period and part of the charge relating to the options granted in 2017, is included in the administration expenses line in the consolidated income statement in the amount of US$ nil (2019: US$20,766).
Warrants
On 31 December 2020, the following warrants were in issue:
| Warrant exercise price | Number of warrants granted | Expiry date | Fair value of individual warrant |
| £0.0158 | 3,006,331 | 5 Mar 2021 | £0.0056 |
| £0.01 | 17,606,594 | 3 June 2022 | £0.00731 |
| Total warrants in issue at 31 December 2020 | 20,612,925 |
|
|
|
| 2020 Number of warrants | 2019 Number of warrants |
| Outstanding at the beginning of the period | 5,636,531 | 3,630,200 |
| Granted during the period | 17,606,594 | 4,006,331 |
| Lapsed during the period | (2,630,200) | (2,000,000) |
| Exercised during the period | - | - |
| Outstanding at the end of the period | 20,612,925 | 5,636,531 |
| Vested and exercisable at the end of the period | 20,612,925 | 5,636,531 |
The exercise price of warrants, outstanding on 31 December 2020, ranged between £0.01 and £0.158 (2019: ranged between £0.0158 and £0.1). Their weighted average remaining contractual life was 1.24 years (2019: 0.93 years).
The weighted average share price (at the date of exercise) of warrants exercised during the year was nil (2019: nil) as no warrants were exercised.
The following information is relevant in the determination of the fair value of the warrants granted during the year ended 31 December 2020:
|
| Granted on 3 June 2020 |
| Warrant pricing model used | Black-Scholes |
| Weighted average share price at grant date, £ | 0.013 |
| Warrant exercise price, £ | 0.015 |
| Weighted average contractual life, years | 2 |
| Expected volatility, % | 117 |
| Expected dividend growth rate, % | 0 |
| Risk-free interest rate (2-year bond), % | 0.006 |
| FV of 1 warrant, £ | 0.00731 |
Calculation of volatility involves significant judgement by the Directors due to the absence of the historical trading data for the Company at the date of the grant. Volatility number above was estimated based on the range of 5-year month end volatilities of 10 similar sized listed companies operating in the Oil and Gas sector.
The aggregate fair value, related to the share warrants granted to shareholders acting in the capacity of shareholders during the reporting period, has been allocated to share premium as directly attributable share issue cost in the amount of US$161,948 (2019: US$22,239).
19. Reserves
Share Premium
The share premium account represents the excess of consideration received for shares issued above their nominal value net of transaction costs.
Foreign Currency Translation Reserve
The translation reserve represents the exchange gains and losses that have arisen from the retranslation of operations with a functional currency, which differs to the presentation currency.
Retained Earnings
Retained earnings represent the cumulative profit and loss net of distributions to owners.
Warrants Reserve
The warrants reserve represents the cumulative fair value of the warrants, granted to the investors together with placement shares, still outstanding and not exercised.
Share-Based Payment Reserve
The share-based payment reserve represents the cumulative charge for options granted, still outstanding and not exercised.
Merger Reserve
The merger reserve represents the cumulative share capital and membership capital contributions of all the companies included into the legal acquire sub-group less cost of investments into these legal acquirees.
20. Financial Instruments - Risk Management
General Objectives, Policies and Processes
The overall objective of the Directors is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below.
The Directors review the Group's monthly reports through which they assess the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.
Categories of Financial Assets and Liabilities
The Group's activities are exposed to a variety of market risk (including currency risk) and liquidity risk. The Group's overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on its financial performance.
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
§ other receivables;
§ cash and cash equivalents;
§ trade and other payables; and
§ borrowings.
The carrying value of financial assets and financial liabilities, maturing within the next 12 months, approximates their fair value due to the relatively short-term maturity of the financial instruments.
The Group had no financial assets or liabilities carried at fair values at the end of each reporting date.
A summary of the financial instruments held by category is provided below:
|
|
| 2020 | 2019, *re-stated |
|
|
| US$ | US$ |
| Financial assets |
|
|
|
| Cash and cash equivalents |
| 47,188 | 28,708 |
| Other receivables |
| - | 1,245 |
| Restricted cash |
| 125,000 | 125,000 |
|
|
|
|
|
| Financial liabilities |
|
|
|
| Trade payables* |
| 349,117 | 362,748 |
| Accruals |
| 388,718 | 327,567 |
| Short-term borrowings |
| 1,183,018 | 698,798 |
Credit Risk
The Group's exposure to credit risk, or the risk of counterparties defaulting, arises mainly from notes and other receivables. The Directors manage the Group's exposure to credit risk by the application of monitoring procedures on an ongoing basis. For other financial assets (including cash and bank balances), the Directors minimise credit risk by dealing exclusively with high credit rating counterparties.
Credit Risk Concentration Profile
The Group's receivables do not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Directors define major credit risk as exposure to a concentration exceeding 10% of a total class of such asset.
The Company maintains its cash reserves in Barclays Bank UK PLC, which maintains the following credit ratings:
| Credit Agency | Standard and Poor's | Moody's | Fitch | R&I |
| Long Term | A/Stable | A1/Stable | A+/Negative | A/Stable |
| Short Term | A-1 | P-1 | F1 | N/A |
| Unsupported Group Credit /Baseline Credit Assessment/Viability Rating | bbb+ | baa3 | a | N/A |
Exposure to Credit Risk
The Group is exposed to the credit risk of the US Specialty Insurance Company, currently holding a US$125,000 bond on behalf of the Company's Coos Bay Energy LLC subsidiary.
Market Risk - Interest Rate Risk
Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Directors' policy is to maintain a majority of the Group's borrowings in fixed rate instruments. The Directors have analysed the Group's interest rate exposure on a dynamic basis. This takes into consideration refinancing, renewal of existing positions and alternative financing. Based on these considerations, the Directors believe the Group's exposure to cash flow and fair value interest rate risk is not significant.
Market Risk - Currency Risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Company's (Pound Sterling, £) or its subsidiaries' functional currency (US$). The Group is exposed to foreign exchange risk, arising from currency exposures primarily with respect to the UK Pound Sterling (£). The Directors monitor the exchange rate fluctuations on a continuous basis and act accordingly. The following sensitivity analysis shows the effects on loss before tax of 10% increase/decrease in the exchange rates of the US$ versus closing exchange rates of UK Pound Sterling as at 31 December 2020:
|
| +10% | -10% |
|
| US$ | US$ |
| Loss before tax | Increase in loss by US$56,435 | Decrease in loss by US$56,435 |
|
| 2020 | 2020 | 2020 | 2019, *re-stated | 2019 | 2019, *re-stated |
| Assets and liabilities by currency of denomination, al numbers are presented in US$ | US$ |
£ | Total US$ | US$ |
£ | Total US$ |
| Financial assets |
|
|
|
|
|
|
| Cash and cash equivalents | 299 | 46,889 | 47,188 | 118 | 28,590 | 28,708 |
| Other receivables | - | - | - | - | 1,245 | 1,245 |
| Restricted cash | 125,000 | - | 125,000 | 125,000 | - | 125,000 |
|
|
|
|
|
|
|
|
| Financial liabilities |
|
|
|
|
|
|
| Trade payables* | 54,805 | 294,312 | 349,117 | 65,066 | 297,682 | 362,748 |
| Accruals | - | 388,718 | 388,718 | 29,721 | 297,846 | 327,567 |
| Short-term borrowings | 409,728 | 773,290 | 1,183,018 | 364,727 | 334,071 | 698,798 |
Liquidity Risk
The Group currently holds cash balances to provide funding for normal trading activity. Trade and other payables and short-term borrowings are monitored as part of normal management routine and all amounts outstanding fall due in one year or less. Borrowings are conducted in both US$ and UK Pound Sterling and as such the Company monitors fluctuations that may impact both present and future liquidity levels.
Capital Management
The Group defines capital as the total equity of the Group. The Directors' objectives, when managing capital, are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
To meet these objectives, the Directors review the budgets and projections on a regular basis to ensure there is sufficient capital to meet the needs of the Group through to profitability and positive cash flow.
The capital structure of the Group consists of shareholders' equity as set out in the consolidated statement of changes in equity. All working capital requirements are financed from existing cash resources and borrowings.
Whilst the Group does not currently have distributable profits, it is part of the capital strategy to provide returns for shareholders and benefits for members in the future.
Capital for further development of the Group's activities will, where possible, be achieved by share issues or other finance as appropriate.
In order to maintain or adjust the capital structure, the Directors may return capital to shareholders, issue new shares or sell assets to reduce debt. It also ensures that distributions to shareholders do not exceed working capital requirements.
Fair Value Hierarchy
All the financial assets and financial liabilities, recognised in the Group Financial Statements, are shown at the carrying value, which also approximates the fair values of those financial instruments. Therefore, no separate disclosure for fair value hierarchy is required.
21. Leases
All the Group's leases are short-term leases, which are month-to-month obligations (i.e., US administrative storage operating lease).
22. Related Party Transactions
Balances and transactions between the Company and its subsidiaries, Coos Bay Energy LLC, Westport Energy Acquisition Inc. and Westport Energy LLC are eliminated on consolidation and are not disclosed in this note. Balances and transactions between the Group and other related parties are disclosed below.
Promissory Notes
During the year ended 31 December 2019, US$100,000 of promissory notes were issued to YA Global Investments LP, a company that is also the majority shareholder of the business, see note 16 for further information.
On 13 February 2020, the Company announced that it had been informed by YA Global Investments LP of the sale of its outstanding debt due to YA Global to C4 Energy Ltd, a UK incorporated private Company. The balance of the loan agreement at that time was US$200,000, with approximately US$32,000 of accrued interest.
Remuneration of Directors
The remuneration of the senior Executive Management Committee members, who are the key management personnel of the Group, is set out in aggregate for each of the categories specified in IAS 24 "Related Party Disclosures" in note 5.
23. Events After the Reporting Period
Termination of Discussions - Execution of LOI
On 03 February 2021, the Company announced that it has informed Sun Seven Stars Investment Group ("SSSIG") of the formal termination of the Letter of Intent, first announced on 18 March 2020. As the period of exclusivity with SSSIG had already expired, no further obligations remain among the parties.
The Company further announced the execution of a Letter of Intent ("LOI") with Poseidon Enhanced Technologies Limited ("PET"). The Company will now enter an initial period of exclusivity with PET during which each party will conduct due diligence on the other. The parties have agreed that during this period they will work towards the execution and delivery of a definitive purchase agreement, contemplating a reverse takeover of Curzon by PET ("RTO"), which will be conditional upon receipt of the required regulatory approvals from the FCA and its primary market functions, among other matters. For providing PET with an initial period of exclusivity, lasting through to 28 February 2021, PET will lend the Company an initial amount of £65,000 in the form of a one-year loan Note (the "Note"), carrying an annual interest rate of 10% per annum, and convertible at the price of any subsequent share issue alongside the contemplated RTO transaction. Under the terms of the Note, a total of £500,000 is authorised to be made available to the Company through mutually agreed drawdowns. Any additional drawdowns, including in relation to potential ongoing exclusivity, will be deducted from this total authorised amount as they are made. After 1 March 2021, further loan funds may be made available by PET to the Company if the envisaged transaction continues to progress, or in order to extend the initial period of exclusivity beyond 28 February 2021.
Exclusivity Extension
On 1 March 2021, the Company announced that under the terms of the LOI initially announced on 3 February 2021, Poseidon Enhanced Technologies has informed the Company of an extension of the existing exclusivity period through 1 April 2021.
On 29 March 2021, the Company announced that Poseidon Enhanced Technologies has informed the Company of an extension of the existing period through 1 May 2021.
On 28 April 2021, the Company announced that Poseidon Enhanced Technologies had informed the Company of an extension of the existing exclusivity period through 1 June 2021.
Loan Extension
On 25 March 2021, the Company announced that it had extended its outstanding loan with Sun Seven Stars Investment Group to 30 August 2021.
Company Statement of Financial Position
as at 31 December 2020
|
| Note | 2020 | 2019 |
|
|
| £ | £ |
|
Assets |
|
|
|
| Non-current assets |
|
|
|
| Property, plant and equipment |
| - | 521 |
| Investments in subsidiaries | 28 | - | - |
| Amounts receivable from subsidiary undertakings | 29 | - | - |
| Total non-current assets |
| - | 521 |
| Current assets |
|
|
|
| Trade and other receivables | 30 | 30,500 | 23,790 |
| Cash and cash equivalents | 31 | 34,514 | 21,888 |
| Total current assets |
| 65,014 | 45,678 |
| Total assets |
| 65,014 | 46,199 |
| Liabilities |
|
|
|
| Current liabilities |
|
|
|
| Trade and other payables | 32 | 499,583 | 454,048 |
| Borrowings | 33 | 865,285 | 532,783 |
| Total liabilities |
| 1,364,868 | 986,831 |
| Capital and reserves attributable to shareholders |
|
|
|
| Share capital | 34 | 831,990 | 830,330 |
| Share premium | 34 | 2,718,932 | 2,693,194 |
| Share-based payments reserve |
| 355,269 | 355,269 |
| Warrants reserve |
| 289,481 | 160,777 |
| Merger relief reserve |
| 2,800,000 | 2,800,000 |
| Accumulated losses |
| (8,295,526) | (7,780,202) |
| Total capital and reserves |
| (1,299,854) | (940,632) |
| Total equity and liabilities |
| 65,014 | 46,199 |
Company Statement of Comprehensive Income
As permitted by Section 408 Companies Act 2006, the Company has not presented its own income statement or statement of comprehensive income. The Company's loss for the financial year was £515,324 (2019: £5,191,316). The Company's total comprehensive loss for the financial year was £515,324 (2019: £5,191,316).
The Financial Statements were approved by the Board of Directors and authorised for issue on 29 April 2021 and are signed on its behalf by:
John McGoldrick
Director
The notes to the Company Statement of Financial Position form part of these Financial Statements.
Company Statement of Changes in Equity
|
| Share capital £ | Share Premium £ | Share-based payments reserve £ | Warrants reserve £ | Merger relief reserve £ | Accumulated loss £ | Total £ |
| Equity at 1 January 2019 | 770,203 | 2,675,156 | 338,995 | 143,942 | 2,800,000 | (2,588,886) | 4,139,410 |
| Loss for the year 2019 | - | - | - | - | - | (5,191,316) | (5,191,316) |
| Total comprehensive loss for the year 2019 | - | - | - | - | - | (5,191,316) | (5,191,316) |
| Issue of shares | 60,127 | 34,873 | - | - | - | - | 95,000 |
| Issue of warrants | - | (16,835) | - | 16,835 | - | - | - |
| Issue of share options | - | - | 16,274 | - | - | - | 16,274 |
| Total transactions with shareholders | 60,127 | 18,038 | 16,274 | 16,835 | - | - | 111,274 |
| Equity at 31 December 2019 | 830,330 | 2,693,194 | 355,269 | 160,777 | 2,800,000 | (7,780,202) | (940,632) |
| Loss for the year 2020 | - | - | - | - | - | (515,324) | (515,324) |
| Other comprehensive loss for the year | - | - | - | - | - | - | - |
| Total comprehensive loss for the year 2020 | - | - | - | - | - | (515,324) | (515,324) |
| Issue of shares | 1,661 | 164,405 | - | - | - | - | 166,066 |
| Transaction costs | - | (9,964) | - | - | - | - | (9,964) |
| Issue of warrants | - | (128,704) | - | 128,704 | - | - | - |
| Total transactions with shareholders | 1,661 | 25,737 | - | 128,704 | - | - | 156,102 |
| Equity at 31 December 2020 | 831,990 | 2,718,932 | 355,269 | 289,481 | 2,800,000 | (8,295,526) | (1,299,854) |
Company Statement of Cash Flows
for the Year Ended 31 December 2020
|
| Notes | 2020 | 2019 |
|
|
| £ | £ |
|
Cash flow from operating activities |
|
|
|
| Loss before taxation |
| (515,324) | (5,191,316) |
| Adjustments for: |
|
|
|
| Finance expense |
| 87,681 | 87,849 |
| Finance income |
| (39,368) | (39,368) |
| Share-based payments charge |
| - | 16,274 |
| Impairment of loans and receivables |
| 94,627 | 1,713,317 |
| Impairment of investments in subsidiaries |
| - | 2,800,275 |
| Income from forgiven creditors |
| (15,816) | - |
| Unrealised foreign exchange movements |
| (18,110) | (3,069) |
| Operating cashflows before working capital changes |
| (406,310) | (616,038) |
| Changes in working capital: |
|
|
|
| Increase in payables |
| 64,802 | 233,718 |
| (Increase)/decrease in receivables |
| (6,709) | 20,649 |
| Net cash used in operating activities |
| (348,217) | (361,671) |
| Financing activities |
|
|
|
| Issue of ordinary shares, net of share issue costs |
| 156,102 | 78,750 |
| Proceeds from new borrowings |
| 260,000 | 277,540 |
| Advances granted to subsidiaries |
| (55,259) | (71,722) |
| Net cash flow from financing activities |
| 360,843 | 284,568 |
| Net increase/(decrease) in cash and cash equivalents in the period |
| 12,626 | (77,103) |
| Cash and cash equivalents at the beginning of the period |
| 21,888 | 98,991 |
| Cash and cash equivalents at the end of the period |
| 34,514 | 21,888 |
|
|
|
|
|
Notes to the Company Financial Statements
24. Significant Accounting Policies
The separate Financial Statements of the Company are presented as required by the Companies Act 2016 ("the Act"). As permitted by the Act, the separate Financial Statements have been prepared in accordance with International Financial Reporting Standards.
The Financial Statements have been prepared on the historical cost basis. The principal accounting policies adopted are the same as those set out in note 2 to the Consolidated Financial Statements except as noted below.
Investments in Subsidiaries
Investments in subsidiaries are carried at cost and are regularly reviewed for impairment if there are any indications that the carrying value may not be recoverable.
Receivables from Subsidiaries
Impairment provisions for receivables from related parties and loans to related parties are recognized, based on a forward-looking expected credit loss model. The methodology, used to determine the amount of the provision, is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly but not determined to be credit impaired, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.
Critical Accounting Judgments and Key Sources of Estimation Uncertainty
The Company's Financial Statements, and in particular its investments in and receivables from subsidiaries, are affected by the critical accounting judgments and key sources of estimation uncertainty in respect of going concern judgements which are more fully described in note 2 to the Consolidated Financial Statements.
25. Auditor's Remuneration
The auditor's remuneration for audit and other services is disclosed in note 4 to the Consolidated Financial Statements.
26. Directors and Staff
Scott Kaintz, Executive Director of the Company, has been the only employee of the Company in the reporting year after he was employed on 5 November 2018 and to date.
Key management remuneration is disclosed in note 5 to the Consolidated Financial Statements.
27. Administrative Expenses
|
|
| 2020 | 2019 |
|
|
| £ | £ |
| Staff costs |
| 218,954 | 166,113 |
| Share-based payments |
| - | 16,274 |
| Standard Listing Prospectus Costs |
| - | 203,985 |
| Standard Listing Regulatory Costs |
| 73,263 | 79,524 |
| Professional and consultancy fees |
| 75,672 | 103,121 |
| Other general administrative expenses |
| 38,421 | 63,296 |
| Total |
| 406,310 | 632,312 |
28. Investments
Investment in subsidiaries
|
|
| 2020 | 2019 |
|
|
| £ | £ |
| Costs at beginning of the year |
| - | 2,800,275 |
| Impairment |
| - | (2,800,275) |
| Total investments in subsidiaries |
| - | - |
29. Receivables from Subsidiaries and Related Party Transactions
|
|
| 2020 | 2019 |
|
|
| £ | £ |
| Loans to subsidiaries |
| - | - |
| Total loans to subsidiaries |
| - | - |
During the year ended 31 December 2020, the Company recognised expected credit losses in relation to the intercompany loans in the amount of £94,627 (2019: £1,713,317). This relates to the write-off of the Company's Coos Bay coal bed methane project in full, due primarily to the lack of capital available to advance the project in declining US oil and gas markets.
During the year ended 31 December 2020, the maximum amount owed by the Group to the Company was £94,627 (2019: £1,713,317). The related party loans are unsecured and are repayable at the time of completion of a reverse takeover. Interest is receivable at a rate of 9%. At 31 December 2020, £39,368 (2019: £39,368) was accrued and included in the above balance.
The remuneration of the senior Executive Management Committee members, who are the key management personnel of the Group, is set out in aggregate for each of the categories specified in IAS 24 "Related Party Disclosures" in note 5.
30. Prepayments and Other Receivables
|
|
| 2020 | 2019 |
|
|
| £ | £ |
| VAT recoverable |
| 2,272 | 3,433 |
| Prepayments |
| 28,227 | 19,408 |
| Other debtors |
| - | 949 |
| Total prepayments and other receivables |
| 30,499 | 23,790 |
The fair value of receivables and deposits approximates their carrying amount, as the impact of discounting is not significant. The receivables are not impaired and are not past due.
31. Cash and Cash Equivalents
For the purpose of the statements of cash flows, cash and cash equivalents comprise the following:
|
|
| 2020 | 2019 |
|
|
| £ | £ |
| Cash in hand and at bank |
| 34,514 | 21,888 |
32. Current Liabilities
Trade and Other Payables
|
|
| 2020 | 2019 |
|
|
| £ | £ |
| Trade and other payables |
| 215,266 | 226,962 |
| Accruals |
| 284,317 | 227,086 |
| Total trade and other payables |
| 499,583 | 454,048 |
33. Short-Term Borrowings
At 31 December 2020, the Company had an outstanding promissory notes and loans of £865,285 (2019: £532,783), please refer to note 16.
|
| 1 Jan 2020, £ | Cash flows Proceeds from new borrowings, £ | Non-cash flow Forex movement, £ | Non-cash flow Interest accrued, £ | 31 Dec 2020, £ |
| HNW Investor Group | 254,705 | - | - | 34,251 | 288,956 |
| C4 Energy Ltd | 177,171 | - | (8,773) | 23,511 | 191,909 |
| Bruce Edwards | 100,907 | - | (4,888) | 11,756 | 107,775 |
| Sun Seven Stars Investment Group ("SSSIG") | - | 260,000 | - | 16,645 | 276,645 |
| Total liabilities from financing activities | 532,783 | 260,000 | (13,661) | 86,163 | 865,285 |
|
| 1 Jan 2019, £ | Cash flows Proceeds from new borrowings, £ | Non-cash flow Forex movement, £ | Non-cash flow Interest accrued, £ | 31 Dec 2019, £ |
| HNW Investor Group | - | 200,000 | - | 54,705 | 254,705 |
| C4 Energy Ltd | 79,143 | 77,540 | - | 20,488 | 177,171 |
| Bruce Edwards | 89,343 | - | - | 11,564 | 100,907 |
| Total liabilities from financing activities | 168,486 | 277,540 | - | 86,757 | 532,783 |
34. Share Capital
The movements in the share capital account are disclosed in note 17 to the Financial Statements.
35. Financial Instruments - Risk Management
The Company's strategy and financial risk management objectives are described in note 20.
Principal Financial Instruments
The principal financial instruments used by the Company from which risk arises are as follows:
|
|
| 2020 | 2019 |
|
|
| £ | £ |
| Financial assets |
|
|
|
| Cash and cash equivalents |
| 34,514 | 21,888 |
| Other receivables |
| - | 949 |
| Loans due from subsidiaries |
| - | - |
| Financial liabilities |
|
|
|
| Trade payables |
| 215,266 | 226,961 |
| Accruals |
| 284,317 | 227,086 |
| Short-term borrowings |
| 865,285 | 532,783 |
Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial loss to the Company.
In addition to the risks described in note 20, which affect the Group, the Company is also subject to credit risk on the balances receivable from subsidiaries, see note 29. In the year ended 31 December 2020, credit losses were recognised in full in relation to all the balances receivable from subsidiaries.
Market Risk - Currency Risk
The Company is exposed to foreign exchange risk, arising from currency exposures primarily with respect to the US Dollar (US$). The Directors monitor the exchange rate fluctuations on a continuous basis and act accordingly.
| Assets and liabilities by currency of denomination, al numbers are presented in £ | 2020 US$ |
2020 £ | 2020 Total £ | 2019 US$ |
2019 £ |
2019 Total £ |
| Financial assets |
|
|
|
|
|
|
| Cash and cash equivalents | 219 | 34,295 | 34,514 | 90 | 21,798 | 21,888 |
| Other receivables | - | - | - | - | 949 | 949 |
| Financial liabilities |
|
|
|
|
|
|
| Trade payables | - | 215,266 | 215,266 | - | 226,961 | 226,961 |
| Accruals | - | 284,317 | 284,317 | - | 227,086 | 227,086 |
| Short-term borrowings | 299,684 | 565,601 | 865,285 | 278,078 | 254,705 | 532,783 |
36. Events After the Reporting Period
Events after the reporting period are more fully described in note 23.
37. Controlling Party
At 31 December 2020, the Company did not have an ultimate controlling party.
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