Supporting the
regional transition
to a low-carbon
economy
Annual Report and Financial Statements
for the year ended 31 December 2022
Stock code: CORO
Company Number: 10472005
Annual Report and Accounts for the year ended 31 December 2022
1
Stock code: CORO
STRATEGIC REPORT
Contents
STRATEGIC REPORT
Statement from the Chairperson...........................................................................................................................................................................................3
Market Review....................................................................................................................................................................................................................................... 4
Our Markets.............................................................................................................................................................................................................................................5
Business Model.....................................................................................................................................................................................................................................6
Our Strategy............................................................................................................................................................................................................................................7
Building and Developing our Clean Energy Portfolio............................................................................................................................................8
Operational Review..........................................................................................................................................................................................................................10
Financial Review.................................................................................................................................................................................................................................13
Managing Risk.....................................................................................................................................................................................................................................15
ESG Statement of Intent.............................................................................................................................................................................................................20
ESG................................................................................................................................................................................................................................................................21
Directors’ Statement under s.172(1) CA 2006..............................................................................................................................................................22
GOVERNANCE
Corporate Governance Statement......................................................................................................................................................................................24
Board of Directors............................................................................................................................................................................................................................26
Corporate Governance Framework....................................................................................................................................................................................27
HSE Report............................................................................................................................................................................................................................................30
Directors’ Remuneration Report..........................................................................................................................................................................................32
Directors’ Report...............................................................................................................................................................................................................................35
Statement of Directors’ Responsibilities........................................................................................................................................................................36
Independent Auditor's Report...............................................................................................................................................................................................37
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income..........................................................................................................................................42
Consolidated Balance Sheet....................................................................................................................................................................................................43
Consolidated Statement of Changes in Equity.......................................................................................................................................................44
Consolidated Statement of Cash Flows..........................................................................................................................................................................45
Company Balance Sheet........................................................................................................................................................................................................... 46
Company Statement of Changes in Equity.................................................................................................................................................................47
Company Statement of Cash Flows.................................................................................................................................................................................48
Notes to the Financial Statements.................................................................................................................................................................................... 49
Company Information..................................................................................................................................................................................................................85
2
Coro Energy plc
www.coroenergyplc.com
Coro is a South East Asian energy company
supporting the regional transition to a
low-carbon economy.
Investment Case
Blended renewables and gas portfolio
underpinned by strong regional energy
demand growth
Electricity demand forecast to increase 152% by
2050 with post-Covid recovery strong in both the
Philippines and Vietnam, and the accelerating need
to replace coal as a primary energy source.
Read more in the Market Review on pages 4 to 5.
Sale of Italian gas portfolio to
accelerate development projects in
South East Asia
The Company signed the Sale and Purchase
Agreement ("SPA") for the disposal of its Italian
natural gas assets to Zodiac Energy plc by way of the
sale of the entire issued share capital of Coro Europe
Limited in March 2023. The disposal is fully in line
with the Company's strategic objectives, enabling
Coro to focus exclusively on South East Asia where
demand for energy and the opportunity for material
expansion remain very strong.
Significant potential of Duyung asset
Plan of Development for the Mako Gas Project
within the Duyung PSC, approved by the Indonesian
Ministry of Energy and Mineral Resources, with
Coro holding a 15% interest in the Duyung PSC
– the potential exists to provide Singapore with
reliable, less carbon intensive energy and generate
significant revenue for Coro from 2025 onward. The
Operator is expecting a signed GSA shortly and has
initiated a farm out process which is expected to
provide an opportunity for Coro to monetise some or
all of its position.
Read more in the Operational Review on pages 10
to 12.
Building the clean energy portfolio
Investment made in clean energy developer, ion
Ventures in November 2020 – Coro estimates
implied valuation has now increased over 300%.
Coro’s renewables portfolio in the Philippines
continues to evolve with existing projects across
solar and onshore wind progressing well, including
the recent Wind Energy Service Contract (“WESC”)
re-submission, and a pipeline of future projects in
place. The Philippines has an abundance of solar and
wind potential, which combined with accelerating
energy demand, makes it an ideal region for
renewable energy supply growth.
Coro has achieved revenue generation from its pilot
solar project in Vietnam. Additional build and buy
projects in country are currently being matured
which will accelerate the growth of the solar
portfolio in the country during 2023.
•
Read more in Building and Developing our
Clean Energy Portfolio on pages 8 to 9.
Unique offering in the London
marketplace
1. Significant position in high potential Indonesian
gas project approaching monetisation
2. Revenue generating renewables portfolio
3. Low-carbon investment strategy
4. Significant upside – early-stage development
entry point.
Annual Report and Accounts for the year ended 31 December 2022
3
Stock code: CORO
STRATEGIC REPORT
Whilst equity markets remain challenging, I am
pleased with the operational progress that Coro has
made over the course of 2022 and the first quarter
of this year with the Company’s flagship Indonesian
gas asset approaching monetisation, the sale of our
Italian gas assets well underway, and the continued
growth of our clean energy portfolio in Vietnam and
the Philippines.
Our strategy remains to monetise the Duyung PSC,
repay or restructure our corporate debt, complete
the sale of our Italian assets and then strategically
invest to grow our South East Asian renewables
business. The Company is also seeking to secure
new oil and gas opportunities in South East Asia,
which will assist the regional transition away from its
over-reliance on coal, while meeting its significant
and growing energy demand.
Consistent with this strategic focus on South East
Asia, we are delighted to have recently signed the
sale of our Italian assets to a well-funded operator in
Italy for a consideration of up to 7.5 million Euro and
to have received the first 1.5 million Euro payment.
Both sides are now fully focused on completing the
transaction quickly. The funds received from the
sale of the assets will be used to meet the Duyung
PSC pre FID expenditure, progress the Company’s
renewable portfolio and provide working capital.
Recent progress at the Duyung PSC has included
an approved plan of development and a revised
CPR, which together have delivered a significant
uplift in our core NAV. The Company looks
forward to the long awaited, yet mission critical,
Gas Sales Agreement and believes the operator’s
farm in process, which they advise is underway,
likely represents a unique opportunity for Coro to
monetise and / or fund its position. We expect any
monetisation of Duyung to provide the Company
with an opportunity to either repay or restructure its
corporate debt, well before its expiry in April 2024.
Meanwhile, the Company remains active
across multiple regional business development
opportunities, with a view to identifying potentially
transformational oil and gas and other energy assets
which would dovetail with the existing clean energy
portfolio.
In anticipation of the journey ahead, we have
also revised our Board and Executive team to
provide the right balance of technical, commercial,
operational and financial skills whilst maintaining a
controlled cost base. To that end, we were delighted
to welcome Naheed Memon as a Non-Executive
Director in April 2023.
It is in this context that we are delighted to present
our annual report and accounts to shareholders.
JAMES PARSONS
Executive Chair
Statement from the Chairperson
4
Coro Energy plc
www.coroenergyplc.com
Why renewable energy?
The global transition to lower carbon energy
continued to be a geopolitical priority in 2022, as the
war in Ukraine underlined the importance of energy
security and social pressures to divest from higher
carbon energy sources, particularly oil and coal,
intensified throughout the year.
Electrification of transport, residential homes, and
industry will require new investment in electricity
generation and battery storage, the urgency of
which has been highlighted by energy price spikes
throughout the year.
Renewables will look to take a share in the
replacement of coal produced power, as older coal
generation facilities come to end of life.
Energy generation from renewables is highly cost
competitive, when compared with fossil fuels.
Growing global interest and investment in
renewables provides a strong narrative for investor
comfort in long-term commitment to renewable
projects.
Why South East Asia?
Energy demand is forecast to rise significantly in the
region following strong recovery post-Covid, a rapidly
increasing population, and growing wealth.
South East Asia has significant capacity for the
development of renewable projects, with supportive
governments and abundant wind, solar and tidal
potential. Ultimately, overseas investment and
expertise can help countries in the region to reduce
their dependence on energy imports and decrease
reliance on fossil fuels, particularly coal.
Coal remains a dominant energy source in the
region with renewables penetration low for an area
with such considerable potential. International
cooperation and initiatives such as those proposed
at COP 26 have clearly influenced policy as the
Vietnamese and Indonesian governments seek to
direct investment away from legacy coal projects in
favour of clean energy developments.
Uncertainties regarding fossil fuel access and
continuation of supply, coupled with volatile pricing
have increased the attractiveness of stable resourced
power sources that are better insulated from
global events. Furthermore, government policies
on grid infrastructures are assisting the transition
to renewable projects as major energy sources
– improved infrastructure invariably accelerates
potential for mass adoption.
The impact of climate change directly impacts
South East Asia more than almost any region in the
world. An island nation, heavily dependent on the
sea and agriculture, the Philippines is vulnerable
to extreme weather events and is one of the top
three countries most affected by climate change
according to the Global Climate Risk Index.
In the medium term, renewables alone do not
yet have the capacity to meet South East Asia’s
accelerating energy demands. Coro continues to
evaluate medium risk/high reward hydrocarbon
prospects in the region to provide an economical
and secure energy mix to complement its renewable
activity in the region.
The proceeds of Coro’s shorter-term investments
in oil and gas projects would then be re-invested
in longer-term renewable projects with Coro
maintaining its position as a catalyst for the
sustainable energy transition in the region.
Any oil and gas activity in the region would mainly
focus on high-impact, low-medium risk gas
development, preferably onshore. The primary focus
for Coro would be on the redevelopment of brown
field sites, development of existing discoveries, and
near-field exploration.
Market Review
Annual Report and Accounts for the year ended 31 December 2022
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Stock code: CORO
STRATEGIC REPORT
Our Markets
South East Asia
Growth remains high in the region
ASEAN economies are predicted to grow 4.3% on
average this year according to Goldman Sachs, with
the Philippines and Vietnam experiencing the most
rapid expansion, with both predicted to grow by
5.8%. By comparison, GS predicts Singapore to grow
by 1.5% and Malaysia by 4%.
Electricity demand is rising as the population grows
and accumulates more wealth and a middle class
emerges.
As South East Asia continues its post-Covid recovery,
the demand for electricity continues to accelerate.
Electricity consumption grew by 3.8% in 2021 YoY
and will grow by 5% per annum in 2022–2024,
(source: IEA).
Demand for electricity in the Philippines is set to
increase from 15,282MW in 2020 to 54,655 MW in
2040 (source: Climate scope 2022).
Moreover, Vietnam’s electricity demand increased
by 10% p.a. from 2014–2019 and Electricity Vietnam
(EVN) estimates the country must triple installed
capacity by 2030 from c. 50 GW to 130 GW.
Renewables and Energy Storage
Cost of deploying renewables in country is
attractive
The levelised cost of energy considers the cost
of electricity production over an asset’s lifetime.
Renewable assets have an indicative project
lifespan of 25 years, significantly longer than many
hydrocarbon projects. The levelised cost of solar and
wind projects in South East Asia are significantly
lower than in many parts of the world, and look set
to continue to decrease.
Natural Landscape offers significant benefits
A typical 150 MW solar project should produce at
least 150 GWh of electricity a year – in South East
Asia this is significantly higher, due to higher levels
of irradiation.
“Vietnam has tremendous natural
endowments: 4 to 5 kilowatt-hours
per square meter for solar and
3,000 kilometres of coastlines with
consistent winds in the range of
5.5 to 7.3 meters per second.”
(source: McKinsey)
1 MW of peak power capacity in a solar plant in
Vietnam has the potential to produce 1.5 times more
energy than in the UK.
The Philippines also has an abundance of solar and
wind especially near its coastline making it the ideal
country for renewables growth.
High cost of coal and LNG in South East Asia
accelerating the use of renewables as part of
the energy mix
At the start of 2022, Indonesia, the world’s largest
coal exporter, placed a temporary ban on exports of
the fuel to avoid outages in domestic power stations.
Coal prices were 59% higher than two months
earlier, close to the previous peak on 15 October 2021.
This inflated cost of coal is accelerating the need
for energy security and the need for local energy
sources, which renewables can fill.
Renewables in Vietnam are set to have a similar
share to coal in the energy mix by 2024 (at 42% and
43% respectively).
Favourable Regulation
A number of regions within South East Asia offer
favourable regulation for renewables with preference
into the grid given in some countries like the
Philippines. This trend shows no sign of abating with
sustained international pressure to establish and
achieve emission reduction targets.
At the end of 2022, spot prices for LNG Reached over
US$42 per MMBTU.
Italy
In Italy, the consumption of natural gas peaked in
2021 at 72.5 billion cubic meters (source: Statista), the
highest since 2011.
Going forward, consumption is set to remain the
same or gradually decline to around 68.2 billion
cubic meters by 2030 (source: Statista). With the
forecasted supply of natural gas in Italy to go up
from 3.3 billion cubic meters in 2021 to around
6 billion cubic meters in 2025 (Source: Statista).
Gas prices in Italy have been steadily climbing as
demand increased post-Covid, with electricity and
gas rising 94% and 131% respectively in the first
quarter of 2022 compared to 2021. Europe is facing
soaring power prices as it, along with the global
economy, recovers from the pandemic. With natural
reserves on the continent worryingly low, Italy relies
heavily on imported gas.
Italy has one of the highest uses of gas within its
energy mix, with gas constituting 40% of all energy
consumption.
6
Coro Energy plc
www.coroenergyplc.com
Our Strengths
•
Entrepreneurial team:
Small, entrepreneurial management team with
“an eye for a deal”
•
Network and presence in region:
Board, Management and local teams are well-
connected in the region
•
Status of being an Independent Power
Producer now secured in Vietnam
3MW commercial & industrial rooftop under
operation
•
Access to capital:
Supported by key cornerstone institutional
investors, lenders and a Board with a track record
of technical, commercial and financing energy
investments
Renewables and Oil & Gas blend holding
significant interest to investors
•
Creating shareholder value:
Board who are experienced in creating
shareholder value, including through
M&A activity
•
ESG at our Core:
Clear vision of leading the energy transition
to renewables in South East Asia. ESG
strategy aligned with appropriate Sustainable
Development Goals (“SDGs”)
•
Ability to identify, screen and capture energy
opportunities in the region:
Experienced Board, including in M&A activity
Our Markets – South East Asia &
Europe
Develop existing assets:
•
Duyung
•
Vietnam
•
Philippines
•
ion Ventures
Grow asset portfolio:
•
Expand existing renewables portfolio in Vietnam
through operational asset acquisitions and new
build project
•
Increase size of Philippines' portfolio through
rigorous assessment of new opportunities and
securing the WESC
•
Dispose non-core Italian portfolio and maximize
revenues until the asset is sold
•
Identify new oil and gas opportunities in
the region to keep a good balance with the
renewable activity
•
Participate in the development of Mako field and
look for monetisation opportunities on the back
of the recently initiated farm out process
Operate Sustainably:
•
Bring benefit to the countries we operate in
•
Limit impact on the environment
•
Development of local community projects
•
Engagement with local providers to keep
investment benefits in country to develop our
presence and importance to local economies.
Business Model
Annual Report and Accounts for the year ended 31 December 2022
7
Stock code: CORO
STRATEGIC REPORT
Coro’s vision is to build a South East Asian energy business with a blend of Oil
and Gas and renewables exposure. To facilitate this, its near term focus in on
commercially de-risking and then monetising its position in the Duyung PSC so
that it can repay or restructure its corporate debt, which it is hoped will result
in a well funded and debt free vehicle for shareholders. In the meantime the
Company will continue to grow its renewables businesses to provide sustainable
cash flow generation.
Strategic Priorities
1. Vision in supporting the South East Asian
energy transition
GDP in the ASEAN region is forecast to more
than double to US$20tn by 2040, resulting in
increasing energy demand. To meet emissions
targets and boost energy independence and
security, significant investment in clean energy
and energy storage is planned in South East Asia
– up to US$500bn by 2040. Further investment
in energy sources, (including both renewables
and gas), that complement the energy mix and
reduce the dependence of the region on higher
polluting fossil fuels is necessary. Coro’s vision and
contribution to this reduction in greenhouse gases
is evidenced by our recent investments in assets
and businesses that are supporting the energy
transition in the region. Understanding the role gas
has in the energy transition validates our strategy
to continue to remain open to opportunities in the
sector, identifying assets where there is compelling
commercial logic.
2. Monetise the Duyung PSC and address the
Company’s capital structure
Coro has a 15% interest in the non-operated
Duyung PSC, which contains the Mako gas field, an
independently certified 2C gas resource of 384 Bcf
(gross, full field). The Mako field is one of the largest
gas fields to be discovered in the prolific West
Natuna basin, and its proximity to infrastructure
and markets underpins Coro’s value. The Operator
expects to deliver a signed GSA shortly and has
initiated a farm out process which is expected to
provide an opportunity for Coro to monetise and/
or fund its working interest. Proceeds from any
monetisation of Duyung are expected to provide
the Company with the opportunity to repay or
restructure its corporate debt.
3. Secure new Oil and Gas regional
opportunities
The Company is actively screening and working
up new regional oil and gas assets to provide long
term balance of its renewables portfolio, with a view
to ensuring any monetisation of Duyung does not
leave the Company with a renewables only portfolio.
Our Strategy
8
Coro Energy plc
www.coroenergyplc.com
Our energy transition strategy is to move from black
(oil, coal) to blue (gas) and then ultimately green
(renewables).
Our presence in the Philippines has exposed to us
numerous potential projects in which we could
invest. Not all projects presented to us are attractive
investment propositions, however, several projects
have met our preliminary criteria and may provide
expansion potential to our project pipeline. Several
such projects are now under assessment so their
true value can be determined, and action plans
formulated.
Our first projects, namely our 100 MW onshore Wind,
and 100 MW Solar in the Philippines continue to
provide ample comfort that our renewable projects
are significantly attractive, to the management, debt
funders and investors. Wind data collection from our
on-site Lidar equipment has begun to define the
wind resource, giving comfort in further investment
of a Met Mast tower, that collects bankable data, a
necessary requirement for debt providers.
As we continue to develop the projects further,
tangible value is attributed to each, as we secure
access to land, local approvals, and permits.
Our strategy in Vietnam, while still renewables-led,
is slightly different as we focus upon the commercial
and industrial rooftop solar space, which is the only
de-regulated section of the market and allows the
flexibility to originate deals in a controlled de-risked
manner. Our pilot project has secured our position
as an Independent Power Producer, giving us the
kudos of being a known entity in the Vietnamese
power generation market.
Vietnam Timeline
•
Joint development of rooftop solar through SPV
(Coro 85%; Vinh Phuc Energy (“VPE”) 15% carried)
•
150 MW project portfolio due diligence under way
as part of the de-risking process
•
Debt providers are being engaged to develop
construction capital for renewables rollout
•
VPE are one of the leading Vietnamese solar
asset developers, with an experienced team and
extensive experience deploying solar PV systems
•
Due diligence and signature of 3.25 MW
Acquisition
•
Other potential acquisitions under consideration
following initial investigation into production,
technical and financial performance
Strategic Rationale
•
Develop, build, own, operate now underway
•
Access to Vietnam rooftop Photovoltaic (PV)
market
•
Leverage local expertise of established industry
player
•
Low-risk entry, quick revenue generation
Drivers of Rooftop Solar Growth
•
Large electricity demand from manufacturing
•
Attractive IRRs
•
De-regulated market sector
•
Energy security and continuity
Tax Incentives
•
Preferential rates and tax holidays
•
Import duty and VAT relief
Attractive Power Purchase Arrangements
(PPAs)
•
100% “Take or pay” arrangements
•
20–25 years expected duration
•
Market price tracking, normally with guaranteed
floor pricing
Acquisition Opportunities
The Vietnamese C&I rooftop solar market is starting
to consolidate, as local developers start to exit,
typically influenced by recent increases in local
interest rates and the resulting increase in the
cost of debt. This trend provides an opportunity to
acquire assets at discounted pricing, in comparison
to new build, along with operational histrionics
and known payment schedules, all go to provide a
de-risked, profitable and attractive acquisition case.
Building and Developing our Clean Energy Portfolio
Annual Report and Accounts for the year ended 31 December 2022
9
Stock code: CORO
STRATEGIC REPORT
Philippines
Our Philippines portfolio pipeline has grown during
2022, our immediate focus remains our 100 MW
solar project and the 100 MW onshore wind project.
Both projects are strategically important to one
another, as they are co-located geographically and
share a common grid connection, which dilutes pre-
build cost and delivers maximum value. To deliver on
such a strategy requires a sensitive eye on mitigating
risk, which can cause progress delay, but ensures
investment is wisely spent and with lower risk.
Major elements of the project’s evolution are being
progressed with key stakeholders in country and
internationally. High level discussions with potential
power off-takers have commenced in a positive
manner and the Team looks to advance these
negotiations over the coming months, whilst key
permitting milestones are achieved.
Additionally, engineers, procurement and
contractors have been contacted, interviewed and
assessed and a core of suitably resourced and skilled
construction partners have been defined, this will
be critical in ensuring maximum value add to the
projects from a technical perspective, securing
production performance, build timeline, quality and
engineering as well as best value for money.
The Company has been balancing its deployment
of capital in the Philippines with the fluctuating
Italian revenue receipts which have caused some
delays to progress in capitalising the local Philippine
subsidiary. However, as recently announced, these
issues are now resolved and the WESC application
has been re-submitted.
Italy
Our Italian portfolio consists of six production
concessions and one exploration licence comprising
204.1 MMscm in 2P reserves and 141 MMscm in
2C resource. The exploration licence has been
relinquished in Q1 2023 after completion of the
remediation work on the land.
The 2022 production of 5.1 MMscm gas, in
conjunction with a high gas price, generated a
positive cash flow that has been reinvested in
renewable projects.
Focus on energy storage: Our investment in
ion Ventures
Energy storage and other flexible energy solutions
underpin the global transition to a low-carbon
energy system. The ongoing rapid deployment of
intermittent electricity generation assets, such as
wind and solar, increases the volatility of electricity
supply. This was seen in February 2022 when the UK
experienced some of the worst storms in history and
several areas were deprived of power and electricity
for days. In addition, the electrification of heating,
cooling, and transportation will increase electricity
demand and create new and varied demand
profiles. These trends point to an even greater role
for flexible energy solutions in order to maintain
a stable grid and ensure security of supply. For
example, in the UK, National Grid forecasts that up to
10 GW of additional energy storage will be required
by 2030, compared to 1.3 GW of capacity currently
installed. 130 MW was commissioned in 2021.
Energy storage, in the form of grid-connected
battery systems, is one such solution. Battery
systems can draw electricity from the grid at times
of high supply and discharge at periods of peak
demand. This allows battery owners to benefit from
price arbitrage in wholesale energy markets by
purchasing electricity at very low prices during peak
supply hours and selling back to the grid at much
higher prices during periods of peak demand and/or
low supply.
ion Ventures is a developer of these utility scale
battery systems, as well as other flexible energy
solutions suitable for smaller, off-grid, and rural
locations.
The market for flexible energy assets is growing
exponentially, with Bloomberg New Energy Finance
forecasting a global spend of US$840bn on energy
storage assets by 2050.
10
Coro Energy plc
www.coroenergyplc.com
Duyung PSC
Summary
•
Located in the prolific West Natuna basin,
Indonesia
•
Operated by Conrad Asia Energy Ltd
•
Contains the Mako gas field, a shallow gas
accumulation covering a large areal extent
•
Six wells have been drilled on the field including
a two well programme in 2019
•
Coro holds a 15% interest in the Duyung PSC in
which the Mako Gas Project is located.
•
POD approved by the Indonesian Government
•
The Updated Mako PoD is based on field
Contingent Resources of 297 billion cubic feet
(net attributable to 100% of the Duyung PSC Joint
Venture) and a daily production of 120 MMscf/d,
consistent with the Gaffney Cline Associates
competent persons report dated 26 August 2022,
details of which were also announced by the
Company on 9 September 2022.
•
Mako contains dry gas, no H2S, minimal CO2,
over 97% methane
•
Importation of pipeline gas would provide secure
and reliable energy to Singapore that is less
carbon intensive than LNG.
•
Operator expecting a signed GSA shortly.
•
Operator has initiated a farm out process which
is expected to provide an opportunity for Coro to
monetise is position.
South East Asia by GCA (26 August 2022) results:
•
51% IRR
•
NPV10 net to Coro of US$87M (US$577M gross) in
the Best Case (2C) scenario
•
42 Bcf net entitlement 2C resources to Coro
during the PSC life
•
Plateau production of 120 MMscf/d for six years in
the Best Case (2C) scenario
•
CPR capital expenditure requirement to first
gas estimated at US$251M gross (US$38M net to
Coro). Coro expects to secure a Reserve Based
Lending facility for a large portion of the capital.
•
Operator has indicated that termed Gas Sales
Agreements ("GSA"), for gas sold into Singapore,
are under discussion with SKK Migas with a
view to finalising sales arrangements in the
near future.
Operational Review
Duyung PSC – Contingent Resources, GCA Operator CPR
Mako Gas Field
(Bcf gas)
Contingent Resources
Gross (100%)
Contingent Resources
Within PSC
Gross (100%) *
Contingent Resources
Net Attributable
to Coro (15%) **
Reservoir:
Upper sand, intermediate zone
and Lower sand
Low
Best
High
Low
Best
High
Low
Best
High
During Duyung PSC life
249
413
442
219
363
389
25
42
45
Requires Duyung PSC extension
24
336
21
296
2
34
Total
249
437
779
219
384
685
25
44
79
* The CPR estimates that 88% of the Mako field is within the PSC boundary
** After deduction of the 23% contractor take
The Operator CPR, and the updated PoD, assumes first gas in 2025 and calculates the last economic
production years prior to the current Duyung PSC expiry date for Low, Best and High cases of 2033, 2036 and
2036 respectively, which extend to 2039 and 2054 for the Best and High respectively if the Duyung PSC is
extended.
Annual Report and Accounts for the year ended 31 December 2022
11
Stock code: CORO
STRATEGIC REPORT
Italy
In August 2022, we announced that we had entered
into an agreement with Zodiac Energy plc for an
option to purchase the Italian portfolio for up to
€7.5 million (having received a non-refundable
€0.3 million upon award of the option which is
offsetable against the purchase price) and therefore
presented in these accounts as a discontinued
operation. On the 26 March 2023 a further
announcement was made that this option had
been exercised and a Sale and Purchase Agreement
concluded between the parties and subject to the
conditions for completion.
Production from the Italian portfolio continued
to increase during the year in line with the
expectations following the production resumption
of Sillaro (in March) and Bezzecca (in November).
The total production for 2022 was 5.2 million scm gas
with a record of 1.37 million scm during Q4 2022. This
exceptional combination of high production and
high gas prices led to a company record of €5.9M
total revenues.
Gas prices in Italy continued their upward trajectory
from 2021 to Q3 2022, when an average sale price of
1.91 €/scm was reached. In Q4 the average sale price
stabilized at 1.21 €/scm.
Going forward, gas prices are expected to remain
higher than 2020-21 prices, meaning continued high
revenue from our production assets until disposal.
Concerning the licensing activity, the extension
of the EIA study for the S. Alberto concession was
granted up to April 2025 and the site restoration of
Moirago-1dir well (Badile Licence) was completed
and formally accepted by the Mining Authority, last
fundamental step for the area relinquishment that
was granted by the Government in 1Q 2023.
Asset
2P Reserves
31 December
2021
(MMscm)
Production
2022
(MMscm)
2P Reserves
31 December
2022
(MMscm)
Sillaro
61.9
(2.2)
59.7
Bezzecca
64.7
(0.8)
63.9
S. Alberto
58.9
–
58.9
Rapagnano
21.0
(1.9)
19.0
Casa Tiberi
2.5
(0.3)
2.5*
TOTAL
209.0
(5.2)
204.1
* In consideration of the additional potential from a deeper producing level that will be opened in 2023.
12
Coro Energy plc
www.coroenergyplc.com
Vietnam
A 3 MW rooftop solar pilot project was completed
in 2022 and is currently revenue producing. The
next projects are currently being finalised with
PPA’s under discussion and near ready for signing.
The ambition is to deliver a 150 MW portfolio of
commercial and industrial rooftop solar PV within
a relatively short time frame, generating revenue
streams and sustainable business that contributes
value to the Group and shareholders.
As Vietnam’s energy strategy evolves with new
Government initiatives that address generation
capacity and climate change goals, our in-
country position with boots on the ground
allow us to monitor, assess, prepare and react
to potential upcoming opportunities within the
renewables sector.
There is also an acquisition of a further 3.25 MW
rooftop solar project and more projects under
consideration for a close date in 2023. Acquisitions
will assist in creating critical mass which is attractive
for debt providers, also our exposure to Vietnamese
lenders is significantly increased, offering further
insight into our funding solutions for 2023
and beyond.
Philippines
During 2022, the Marcos administration was
entrusted with the presidency of the Philippines for
a six-year term, with new ministerial appointments
in key departments, such as that of Energy, the
administration has strengthened the need for
greater renewables generation in country, reducing
dependency on fuel imports and addressing climate
change matters that the country is vulnerable to.
The Government of the Philippines continues to
champion renewable energy and looks to enact
legislation changes to make investment easier than
ever before.
Our projects in the Philippines are driven by an
experienced in-country team comprising of a board
of three Filipino national Directors. The board is
supported by a further team of three, fulfilling
a range of roles across technical, financial and
administration. The 88% share subsidiary of Coro
Energy Plc is called Coro Clean Energy Philippines
Inc. and was established in August 2021.
With the 100 MW wind project desktop studies
completed, during 2021, it was planned during
2022 to deploy a Lidar wind data collector to gain
real evidence of the wind resource in our chosen
location and prior to deploying a 130-metre Met
Mast for bankable wind data collection. With global
steel prices in turmoil during 2021 and 2022, costs
for this key item had spiralled way beyond pre-
planned budgets, but with a widened search and
careful negotiation during late 2022, a supplier
has been found who is able to deliver to initial
budgetary demands, within the planned timeline
and to the demanding specific set under domestic
and international standards for such a piece of
equipment. The contracting of the met mast
had been paused due to the balancing of capital
deployment in renewables against the fluctuating
cash flow generation of the Italian portfolio, however
is expected to be finalised shortly and be erected
during the summer.
The Met Mast and Lidar working harmoniously will
deliver robust data, needed for debt providers and
provide risk mitigation for wind turbine design and
performance.
Next steps for our projects include:
100 MW utility scale solar:
•
Pre-development project approximately
6 months from RTB status
•
Currently prioritising land access, PPA, energy
service contracts, construction permits
•
Management is targeting IRR between mid-teen
to mid-twenties
•
Potential to sell projects at RTB (current market is
c. US$200k per MW)
•
Pre-development cost of the wind and solar
projects of US$1.2m has been negotiated down to
US$0.95m to secure RTB then US$80m of capital
required to fund construction (targeting 75%
debt)
100 MW utility scale onshore wind:
•
Pre-development project approximately
15 months from RTB status
•
12-month wind data collection process initiated
(Lidar measurement campaign and 130m met
mast currently under contract review)
•
Annual production forecast to above 400,000
MWh with average wind speeds of >6m/s and
capacity factor in the range of 40-50%
•
Management is targeting IRR between mid-teen
to mid-twenties.
•
Pre-development cost of approx. US$2m
negotiated down to US$1.5m to secure RTB then
US$162M of capital required (targeting 75% debt)
Operational Review
continued
Annual Report and Accounts for the year ended 31 December 2022
13
Stock code: CORO
STRATEGIC REPORT
During 2022 the upward trajectory in energy prices,
which began in 2021, was maintained at least until
the middle of the year and in some instances into
Q3. Energy prices subsequently, and in 2023, have
pulled back from the highs of 2022 but prices, albeit
with differences between oil and gas, have broadly
settled in recent months around the highs seen in
the few years prior to 2021. We have maintained a
focus on keeping general and administrative costs
under control whilst in Italy costs increased due
to the higher activity levels to benefit from the
increased energy prices experienced in 2022. It is
against this backdrop that Coro decided to capture
the value inherent in the Italian natural gas portfolio
and recently concluded a Sale and Purchase
Agreement with Zodiac Energy plc (‘Zodiac’) to
acquire these assets, with the consideration then
being available to deploy in line with the Company’s
strategy as detailed in the Chair’s statement.
2022 Results
Revenue of $51,000 during 2022 reflects the
commencement in October of Coro’s first solar
project in Vietnam which after depreciation and
amortisation contributed a gross profit of $30,000.
The overhead cost base increased during 2022 to
$3.6m (2021: $3.3m) primarily driven by an increase in
employee related costs following a number of years
of cost reduction. This was offset by the receipt of
other income, being the fee for the option granted
to Zodiac for the right to acquire the shares in Coro
Europe Limited which in turn holds the interest in
the 100% Italian subsidiary Apennine SpA and the
various natural gas fields, and a reduced share of loss
in ion Ventures Holdings Limited, which combined
with the gross profit from Vietnam resulted in a
reduced loss from operating activities of $3.3m
(2021: $3.5m).
The interest charge on the Eurobond loan declined
in 2022 to $3.6m (2021: $4.5m) reflecting a lower
effective interest rate following the restructuring
of the Eurobond and the overall strengthening of
the US dollar versus the Euro during 2022. The net
foreign exchange loss for the year is $1.3m (2021:
$1.6m gain) mainly due to the revaluation of the
Eurobond loan balance.
The net effect of the above is that the 2022 loss
before tax from continuing operations was $8.2m
(2021: $6.4m) with the increase being driven by
a change in exchange rates and a revaluation
of balance sheet items denominated in various
currencies giving rise to foreign exchange gains and
losses in 2022 and 2021.
As announced on the 24 August 2022 Coro entered
into an Option Agreement with Zodiac to acquire
the Company's Italian natural gas asset portfolio
for up to Euro 7.5m. On the 26 March 2023 a further
announcement was made that this option had
been exercised and a Sale and Purchase Agreement
concluded between the parties and subject to
the conditions for completion. In accordance
with IFRS 5 Non-current assets held for sale and
discontinued operations, the assets and liabilities
of the Italian business are classified as a disposal
group held for sale at the 31 December 2022. The
Italian business represents a separate geographical
area of operation for the Group so remains as
a discontinued operation in the statement of
comprehensive income.
The discontinued operations (the Italian natural gas
fields) made a gross profit of $4.2m in 2022 (2021:
$0.2m) reflecting higher gas prices and rates of
production.
The focus during 2022 was to maximise cash flow
from the Italian operations and consequently costs
increased in comparison to 2021 reflecting the
higher level of activity.
The accounting profit from discontinued operations
was impacted by the reversal of an IFRS 5
impairment charge recorded against non-current
assets totalling $1.3m (2021: loss $2.4m). A tax charge
of $1.9m arose in the year (2021: $nil).
Overall the 2022 profit after tax from discontinued
operations was $2.6m (2021: loss $1.5m).
The total loss for the period was $5.5m (2021: $7.9m)
with the reduced loss benefiting from the Italian
natural gas fields contribution.
2022 Financial Position
The Group’s has a 20.3% interest in ion Ventures
and concluded that significant influence over ion
exists, and accordingly our investment is classified
as an investment in associates on the Group balance
sheet. Our share of ion losses for 2022 was $0.1m
(2021: $0.2m) with the resulting carrying value in the
balance sheet declining to $0.3m (2021:$0.4m) .
Intangible exploration and evaluation assets relating
to our 15% interest in the Duyung PSC increased to
$18.9m (2021: $18.3) reflecting the venture’s capital
expenditure for 2022.
Property, plant and equipment of $1.9m reflects the
investment in the Company’s first solar project in
Vietnam.
Financial Review
14
Coro Energy plc
www.coroenergyplc.com
Net debt increased by $4.7m from $23.3m to $28m (note 16 of the financial statements). Borrowings increased
by $1.6m, comprising of amortised Eurobond interest expense of $3.5m less non-cash interest payments of
$0.6m and an unrealised foreign exchange gain of $1.3m. Cash, including cash held in the discontinued Italian
operations, decreased by $2.8m. This decrease reflects the net effect of receipts from customers offset by
payments to suppliers and employees and investment in Vietnam, Philippines and the Duyung PSC.
Net assets of the Italian business, treated as a disposal group held for sale, totalled $267k at year-end (2021:
liability $665k).
The Group ended the year with net liabilities of $7.3m (2021: $5.5m).
Going Concern
The Group and Company financial statements have been prepared under the going concern assumption
which presumes that the Group and Company will be able to meet their obligations as they fall due for the
foreseeable future.
Management have prepared a consolidated cash flow forecast to the end of June 2024 inclusive of the
sale proceeds of the Italian business and shows that the Group has sufficient cash resources to meet its
obligations.
Further information relating to going concern as the basis of preparation is in Note 2c of the financial
statements.
The Group ended 2022 with a cash balance of $0.2m (2021: $3.4m) which excludes cash held in the disposal
group.
The Group’s €22.5m Eurobond was restructured in 2022 and now matures in April 2024.
The net cash proceeds due to Coro following completion of the Italian business is Euro 2.2m which is expected
to occur in 2023 with further payments following completion.
The auditors make reference to a material uncertainty in relation to going concern within their audit report.
EWEN AINSWORTH
Chief Financial Officer
Financial Review
continued
Annual Report and Accounts for the year ended 31 December 2022
15
Stock code: CORO
STRATEGIC REPORT
Our Approach To Risk Management
The Board of Directors recognises that an effective risk management framework is essential to safeguard
the Group’s assets and enable it to meet its strategic objectives. The Board takes overall responsibility for
identification and mitigation of risks, while the Audit Committee has delegated responsibility for reviewing
and monitoring the internal control and risk management systems on which the Group is reliant. In the
Board’s judgement, the following principal risks represent the biggest threat to the ability of the Group to
deliver on its strategy.
Risk
Description and Impact
Mitigation
Status
Strategic risks
Availability of
funding
Coro’s asset portfolio does not yet
generate the cash necessary to grow the
business at a rate commensurate with
its ambition and the Group will need to
raise additional funds to implement its
strategy. The ability of the Group to raise
funds will depend on factors not wholly
within the control of management,
including general market sentiment
and attitudes toward small-cap energy
companies. As a result, there can be no
assurance that the required funding will
be available on favourable terms, if at all.
Failure to raise required funds could have
a material adverse effect on the Group’s
business, operating results and financial
condition, and may result in erosion of
value for investors. Despite increased
revenue from Italian production, this risk
has increased due to the current global
political instability and availability of
funding for small-cap firms.
The Group’s strategic focus on
acquiring and developing an
asset portfolio, which is aligned
with the ongoing energy
transition, partly mitigates the
risk posed by negative sentiment
towards the future prospects
for the hydrocarbon industry.
Management also seeks to
mitigate this risk through prudent
management of costs and
rigorous evaluation of investment
opportunities to ensure these
will be attractive to investors in
the debt and capital markets.
Ultimately, the Group is targeting
self-sustaining cash flow from its
asset portfolio.
Failure to
identify
suitable M&A
opportunities
and/or failure
to successfully
execute M&A
The Group’s strategy is to build an
energy business focused on the South
East Asian market. To deliver on this
strategy, the Group needs to identify
and execute value-accretive acquisitions
in the region and is actively engaged in
evaluation of individual assets as well as
asset portfolios. There is a risk that the
Group fails to identify suitable acquisition
targets, or that deals cannot be closed
on assets deemed to be attractive.
Failure to identify and/or close M&A
opportunities could lead to a loss of
confidence in the Group’s management,
resulting in poor share price performance
and tightening of funding availability,
as well as depleting available cash
balances through unsuccessful business
development spend.
The Group mitigates this risk
through employing appropriately
skilled financial, technical and
operational staff/consultants with
experience across upstream oil
and gas and low-carbon energy
assets in South East Asia. Potential
opportunities are evaluated based
on a range of criteria both financial
and non-financial to ensure only
value-accretive assets suitable for
the Coro business are acquired.
Managing Risk
16
Coro Energy plc
www.coroenergyplc.com
Risk
Description and Impact
Mitigation
Status
Commodity
prices
The Group is exposed to risks arising
from fluctuations in the demand for, and
price of, hydrocarbons. Oil and gas prices
depend on numerous factors over which
the Group does not have any control,
including global supply, international
economic trends, currency exchange
fluctuations, inflation, consumption
patterns and global or regional
political events.
Through its investment in ion Ventures,
the Group is indirectly exposed to the
risk of fluctuation in wholesale electricity
prices, which impact the value of ion’s
energy storage assets.
This risk has increased as despite an
overall increase in energy prices, political
instability could bring further volatility in
the year ahead.
For assets in the production
phase, the Group mitigates this
risk through entering into fixed
price gas sales agreements where
commercially acceptable. In terms
of evaluating and sanctioning
new hydrocarbon or low-carbon
investments, the Group adopts
a conservative price forecast to
ensure capital is allocated to
projects with robust economics,
even in lower commodity price
environments.
Operational risks
Oil and gas
exploration
and
production
risks
Coro remains the operator of a portfolio
of gas assets in Italy. Through this
portfolio, and our non-operated interest
in the Duyung PSC, Coro is exposed to a
wide variety of risks, including failure to
locate hydrocarbons, changes to reserve
estimates or production volumes, variable
quality of hydrocarbons, weather impacts,
facility malfunctions, lack of access to
appropriate skills or equipment and cost
overruns. Failure to effectively manage
these risks could lead to decreased cash
generation, lower profitability and a
deterioration in the financial position
of the Group. This risk, however, has
decreased as high gas prices in Italy have
brought increased revenue in 2022.
The Group has extensive
experience operating its existing
asset base in Italy, as well as assets
in South East Asia, and has the
right mix of technical, financial
and operational skills necessary
to successfully develop and
produce oil and gas safely and
economically. In non-operated
joint ventures such as Duyung,
the Group seeks to be an active
participant in the key activities of
the venture, to the extent possible
under joint operating agreements.
Managing Risk
continued
Annual Report and Accounts for the year ended 31 December 2022
17
Stock code: CORO
STRATEGIC REPORT
Risk
Description and Impact
Mitigation
Status
Health,
safety and
environmental
matters
Development and production of oil
and gas involves risks that may impact
the health and safety of personnel,
the community and the environment.
Industry-wide operating risks include
fire, explosions, blow outs, pipe failures,
abnormally pressured formations and
environmental hazards such as accidental
spills or leakage of petroleum liquids,
gas leaks, ruptures, or discharge of toxic
gases. Failure to manage these risks could
result in injury or loss of life, damage or
destruction of property, and damage
to the environment. Losses or liabilities
arising from such incidents could
significantly impact the Group’s financial
results. As we keep up production in our
Italian portfolio, this risk remains high.
In 2022 our first renewables operational
asset started to produce power and
revenue, with a good understanding of
HSE learnt from our Italian operations,
the same practices and ethics have
been transferred across to our Vietnam
business. A small knowledge gap has
been bridged and key leading and
lagging indicators are now monitored
and recorded for monthly reporting by
the local team.
The Group operates its Italian
assets and mitigates these risks
through a focus on responsible
operation, ensuring close
adherence to all regulatory
standards in respect of Health,
Safety and Environment matters.
This includes regular inspection
and maintenance of all our gas
production facilities. All Health,
Safety and Environment activities
are overseen by a dedicated
Board committee. In 2022 the
HSE committee has increased the
site inspections and significantly
improved the HSE action planning
& monitoring, the emergency
response planning and
emergency drills.
Where we are not the operator
of a venture, we seek to take
an active role in joint venture
management and operating
committees, and work with the
operators to foster a culture of
responsible asset stewardship. Our
renewed sustainability strategy
that will be approved at board level
aligns us with relevant Sustainable
Development goals to ensure that
this stewardship is achieved.
18
Coro Energy plc
www.coroenergyplc.com
Risk
Description and Impact
Mitigation
Status
Changes to law,
regulations or
government
policy, political
and emerging
market risk
Changes in law, regulations and/or
government policy may adversely affect
Coro’s business. Examples include
changes to land access, the introduction
of legislation that restricts or inhibits
exploration, development and production
of hydrocarbons, and unexpected
changes to subsidy regimes for low-
carbon energy assets. Similarly, changes
to direct or indirect tax legislation may
have an adverse impact on the Group’s
profitability, net assets and cash flow.
Further, the Group has expanded its
footprint in South East Asia where
countries generally exhibit emerging
market characteristics such as less
established fiscal and monetary controls,
laws, policies and regulatory processes.
The Group is exposed to the resultant risk
of being adversely affected by possible
political or economic instability in its
countries of operation including, inter
alia, security risks, expropriation of assets,
changes in mining or investment policies,
inconsistent interpretation of laws and
regulations including tax law, extreme
fluctuations in currency exchange
rates and high rates of inflation. All of
these factors could materially adversely
affect the Group’s business, results
of operations, financial condition or
prospects. Once again, political instability
and threat of whole regime changes has
increased this risk.
To mitigate these risks, the Group
employs staff and professional
advisers with experience operating
in all the Group’s key territories and
continuously monitors political,
legal and economic developments
in all its geographies. Active
dialogue is maintained with
local regulatory authorities in the
Group’s areas of operation.
Managing Risk
continued
Annual Report and Accounts for the year ended 31 December 2022
19
Stock code: CORO
STRATEGIC REPORT
Risk
Description and Impact
Mitigation
Status
Alignment with
joint venture
partners
Development of energy assets is
commonly undertaken with partners to
spread risk and reduce upfront capital
commitments for each party. Coro is
currently party to a Joint Operating
Agreement on the Duyung PSC, a Joint
Venture partnership with VPE in Vietnam
for the development of a rooftop solar
portfolio and a Shareholder Agreement
for its investment in ion Ventures.
While these agreements are designed
to establish the rights and obligations
of all parties, and clarify governance
arrangements for investees, there is a risk
that the priorities of our partners will not
be aligned with our own. This could lead
to conflict between partners and delays
in development of projects, resulting in
variability in the Group’s forecast cash
flows and profitability. There are also
risks associated with the continuing
ability of partners to fund their share of
expenditures where this is applicable, as
it is on the Duyung venture. Our partners
are facing similar funding challenges;
hence we feel this risk has increased.
The Group seeks to mitigate this
risk through appropriate diligence
on potential partners prior to
investing in a venture, as well
as through active participation
in the key decisions of each
project to the extent permitted
by joint operating/shareholder
agreements.
Dependence
on key
personnel
The future performance of the Group
will, to a significant extent, be dependent
on its ability to retain the services and
personal connections or contacts of key
personnel and to attract, recruit, motivate
and retain other suitably skilled, qualified
and industry experienced candidates to
form a high-calibre management team.
Such key personnel are expected to play
an important role in the development
and growth of the Group, in particular by
maintaining good business relationships
with regulatory and governmental
departments and essential partners,
contractors and suppliers. The loss of the
services of any key personnel may have a
material adverse effect on the business,
operations, relationships and/or prospects
of the Group.
The Group seeks to mitigate
this risk through structuring
appropriate incentive packages
for key executives and staff, as
well as providing a challenging
and enjoyable work environment.
The Group’s key initiatives are also
managed internally by teams,
which mitigates the risk posed by
the loss of any key management
personnel.
20
Coro Energy plc
www.coroenergyplc.com
Coro initiatives to incorporate Environmental,
Social, and Governance (“ESG”) criteria into our
operating framework reflect our commitment to
our shareholders, partners, employees, and the
communities in which we operate.
As Coro progresses towards realising our vision
of building a mid-tier South-East Asian energy
company that supports the regional transition to
a low carbon economy, we will work to ensure ESG
is rooted in our systems, processes and decision-
making so it is a fundamental part of how we do
business. This will be a long-term, continuous
process of aligning our operations and controls with
our values as a company.
Transparency and honesty to our stakeholders will
remain at the centre of our ESG journey. We are
currently implementing comprehensive policies
and management systems to govern our operations
and decision-making across our business. We are
also working towards reporting in compliance
with the internally recognised frameworks Global
Reporting Initiative (“GRI”) and the Taskforce for
Climate-Related Financial Disclosures (“TCFD”) for
the calendar year 2023.
Progress on our ESG Journey
In preparation for compliant reporting to GRI and
TCFD standards, we conducted an internal audit
in Q4 2021 of the key ESG data currently being
collected. We have begun putting in place processes
to ensure the data we collect is accurate across all
aspects of our business and that it is in line with our
future goals.
We conducted an internal review of our Material
Topics with the Management Team and plan to
expand and review this materiality assessment with
select stakeholders during 2023, to ensure we are
focusing on our partners and local communities.
We are in the process of finalising our ESG strategy,
which will include measurable targets and goals that
we can monitor and demonstrate our commitment
to delivering ESG within our operating framework
in a way that is transparent and provides for
continuous improvement.
Our ESG Intentions
We believe the Environmental, Social and
Governance facets of ESG are intricately connected
and cannot be addressed in isolation. We strive to
conduct our business in a holistic way that ensures
each of these elements are considered with the
objectives of minimising harm and maximising
benefits to the Company, the environment and all
our stakeholders.
Our core areas of focus for the next two years are:
•
Safe and efficient production from our Italian
gas assets and working on minimising our
environmental impact until disposal.
•
Efficient design, installation and operation of
our wind and solar renewable energy projects
in Vietnam and Philippines that has minimal
negative impact on the local environment and
communities.
•
Contribute to the long-term economic benefit of
local communities by supporting local content
and diversity and building local skills capacity.
•
Be a partner of choice for our employees and
communities through delivering consistent,
top quartile safety performance and supporting
health and education in the communities in
which we work.
•
Conduct our business with the highest degree
of ethics and integrity by demonstrating
management commitment to strong and
transparent ESG performance with zero tolerance
of bribery and corruption: and
•
Build positive stakeholder relationships for the
long term.
Committed to a Journey of
Continuous Improvement
The Management and Board of Coro is committed
to this journey of continuous improvement and
transparency, reporting its performance and
demonstrating to Coro’s stakeholders it is a
responsible energy partner to support South East
Asia in their transition to a low carbon economy.
ESG Statement of Intent
Annual Report and Accounts for the year ended 31 December 2022
21
Stock code: CORO
STRATEGIC REPORT
ESG
At Coro, we are conscious that while our strategy
is focused on the energy transition, our assets still
give us exposure to gas. However, as coal supply
(the dominant energy source in South East Asia)
becomes disrupted with Indonesia stopping exports,
it is clear the need for gas which is 50% less carbon
intensive than coal is still apparent and increasing.
During 2021 and early 2022, we reviewed our existing
ESG strategy. We will also be engaging with our key
stakeholders assessing what is important to them
from an ESG standpoint.
While we fine tune our ESG strategy, the core
principles as below remain in force across our
operations.
Environment
We respect the environment in which we operate
and pledge to act with consideration and minimal
impact on the natural world. We do business under
all appropriate international and local environmental
regulations. As we expand and develop our
operations in South East Asia, sensitivity around site
selection both in the development stage and, as our
assets reach final stage, sensitive restoration is key
for Coro.
Social
We treat our employees, partners and in country
hosts fairly and with respect. We encourage diversity
and social change for good and have been involved
in several projects in Italy over recent years, including
assisting with building a school in the local area. As
we expand on our operations, our relationships with
local communities in which we operate within South
East Asia will be a priority.
Governance
As a listed entity, we follow the Quoted Companies
Alliance Corporate Governance Code 2018 (“QCA
Code”), as well as the regulations and best practice
guidance given by AIM and the FCA. Our Board
meets regularly to opine on key strategic decisions
and our Company Secretary records all meetings
and (together with our Nominated Adviser) assists
with guiding us and advising us on all governance
related matters.
HSE/Technical Committee
The HSE/Technical Committee comprises Stephen
Birrell (Chair) and Leonardo Salvadori. Supported
by a local technical team with consolidated HSE/
Operational skillset. Fiona MacAulay served as Chair
until her resignation in March 2022.
Paramount to Coro’s ability to pursue its strategic
priorities is a safe workplace and a culture of
“safety first”. The Company regards environmental
awareness and sustainability as key strengths in
planning and carrying out business activities.
Coro’s daily operations are conducted in a way
that adheres to these principles and Management
is committed to their continuous improvement.
While growing from exploration roots, the Company
has strived to continually improve underlying
safety performance. The Company has adopted
a Health, Safety and Environment Management
System, which provides for a series of procedures
and routine checks (including periodical audits)
to ensure compliance with all legal and regulatory
requirements and best practices in this area.
In 2022, Coro maintained its outstanding
occupational health, safety and environmental track
record and only one near miss to report. During
2022, the total man-hours amounted to 31,672 (2021:
19,327) with zero Lost Time Injury (“LTIs”) recorded
(2021: nil).
The 2022 HSE Report is provided on page 30.
22
Coro Energy plc
www.coroenergyplc.com
Section 172 (1) of the Companies Act 2006 obliges the
Directors to promote the success of the Company for
the benefit of the Company’s members as a whole.
This section specifies that the Directors must act
in good faith when promoting the success of the
Company and in doing so have regard (amongst
other things) to:
a. the likely consequences of any decision in the
long term;
b. the interests of the Company’s employees;
c. the need to foster the Company’s business
relationship with suppliers, customers and others;
d. the impact of the Company’s operations on the
community and environment;
e. the desirability of the Company maintaining
a reputation for high standards of business
conduct; and
f. the need to act fairly as between members of the
Company.
The Board of Directors is collectively responsible
for formulating and delivering on the Company’s
strategy. The Board and Executive team continued
to work together to progress the growth of the
business as best as possible post pandemic.
Some of the key decisions taken by the Board in
2022, which we believe served to promote the
success of the Company for the benefit of all
stakeholders, included:
•
Development of renewable projects within South
East Asia including 100 MW solar and 100 MW
wind projects in the Philippines. In Vietnam,
negotiations continue for a second new build
rooftop solar project and due diligence continues
for the acquisition of an energised 3.25MW
rooftop solar portfolio close to Saigon.
•
Following structural increases in global gas
prices, the Company relaunched its Italian
portfolio, with production resumed at Sillaro,
Casa Tiberi, Rapagnano and Bezzecca, resulting
in significant free cash flow for the Group.
•
Entering an Option Agreement with Zodiac
Energy plc to purchase the Company’s Italian
gas asset portfolio for a remaining EUR 7.5M,
(having received a non-refundable €0.3 million
upon award of the option). The Company retains
full ownership and cash flows from the Italian
portfolio prior to completion of the disposal.
•
The partners in the Duyung PSC approved an
updated Plan of Development, which has been
submitted to the Ministry of Energy and Mineral
Resources for approval.
•
Broadening of our South East Asian energy
strategy: The Directors continue to strongly
believe in the potential of South East Asian
energy markets, where primary energy demand
is forecast to continue increasing and where
coal remains the primary source of electricity
generation. The expected reduction in coal’s
share of the energy mix in these growth markets,
to be replaced by gas and cleaner renewable
sources, remains a key driver of the Company’s
strategy. Against this backdrop of growth in
primary energy demand, a transition to cleaner
energy, and the prevailing market conditions
limiting the Company’s ability to pursue a purely
hydrocarbon-focused South East Asian energy
strategy in the near term, the Board approved
a broadening of the Group’s focus beyond
solely hydrocarbons to specifically include
alternative, low-carbon energy sources and
related technologies. This positions the Group
to continue to pursue investment opportunities
that satisfy growing energy demand in South
East Asia, while supporting the regional transition
to a low-carbon economy.
Our operations in Vietnam are primarily within
industrial zones and are always on rooftops, due to
the current opportunities within the local legislation,
which means our impact upon local communities
is minimal and unobtrusive. In relation to the
environment we are servicing electricity demand
using clean technology that has zero carbon
emissions, replacing grid supplied power that is
typically generated from fossil fuels.
The Philippines is ground mounted utility scale
projects that require significant land banks for
hosting our facilities, at every stage we consult
locally with communities and report to local and
national Government departments, to inform and
also to be aware of all environmental factors, if
land areas are of particular sensitivity, alternative
locations are sought, the areas that have been
chosen, will be subject to Environmental Impact
Assessments that are independently conducted
and provide recommendations for minimising
impact through construction and lifetime. All sites
are treated sympathetically and in harmony with
government guidance, which usually involves
habitat regeneration post construction through the
planting of trees and vegetation.
Directors’ Statement under s.172(1) CA 2006
Annual Report and Accounts for the year ended 31 December 2022
23
Stock code: CORO
STRATEGIC REPORT
Through our activities and increasing profiles,
suppliers and potential customers have engaged
with Coro and formed relationships. This has
allowed Coro to access manufacturers expertise
in engineering and the advances made through
their research and development programmes.
Key partnerships are being formed that will value
engineer projects and provide best value for money
solutions enhancing project IRR’s, delivering
maximum shareholder value.
The Board places equal importance on all
shareholders and strives for transparent and
effective external communications, within the
regulatory confines of an AIM-listed company.
The primary communication tool for regulatory
matters and matters of material substance is
through the Regulatory News Service (“RNS”). The
Company’s website is also updated regularly, and
provides further details on the business, as well as
links to helpful content such as our latest investor
presentations. We also hold investor events, which
are open to all shareholders and provide a means
through our website for investors to communicate
any questions or concerns to the Company.
Throughout 2022, we held Q&A sessions for investors,
with presentations and detailed updates given
on Coro’s strategy to shareholders and potential
new investors.
Our employees are one of the primary assets of
our business and are critical to the future success
of the Company. First and foremost, the Directors
strive to ensure a safe working environment for
all staff and contractors, and we are proud of our
safety achievements in 2022. We also seek to reward
employees with remuneration packages, which align
the interests of the Company and its shareholders
with those of employees. We believe we have
achieved this through the award of share options,
under the Company’s Long Term Incentive Plan,
which values medium to long-term performance
over short term achievements. Employees are
also provided with challenging work and external
training opportunities to ensure their continual
development.
Conclusion
The Directors believe they have acted the way they
consider most likely to promote the success of the
Company for the benefit of its members as a whole,
as required by Section 172 (1) of the Companies
Act 2006.
This Strategic Report was approved by the Board on
20 May 2023 and signed on its behalf by:
JAMES PARSONS
Executive Chair
24
Coro Energy plc
www.coroenergyplc.com
As Chair of the Company, it is my responsibility to
work with my fellow Board members to ensure that
the Company embraces the highest standards of
corporate governance and to manage the Board
in the best interests of our many stakeholders.
The Board shares my belief that practising solid
corporate governance is essential for building
a successful and sustainable business, and our
commitment to good corporate governance has
allowed us to build a healthy corporate culture
throughout the organisation.
The Company adopts the Quoted Companies
Alliance Corporate Governance Code (2018) (the
“QCA Code”), which it still believes to be the most
appropriate governance code for Coro. We report our
compliance with the QCA Code on the Company’s
website and in this Annual Report.
In early 2022 Fiona MacAulay stepped down
from the Board and Stephen Birrell joined as an
Independent Non-Executive Director. At the same
time I transitioned to Executive Chair in order to
reinforce the Company’s Executive capabilities in
anticipation for the next phase of the Company’s
development.
The Company is developing its growth strategy of
developing low carbon energy investments in South
East Asia, together with looking to monetise and/
or fund its existing interest in the Duyung PSC. The
Company is committed to responsible and ethical
business practices when we make any business
decisions, at both Board and operational levels.
This is particularly important to us as an acquisitive
business, and our culture is something that we
maintain and closely monitor.
In focusing on South East Asian developments
and growth, during 2022 the Company updated
its operational management structure. Leonardo
Salvadori, previously Coro's Managing Director – Italy,
was appointed Managing Director – Oil & Gas, with
overall and extended operational responsibility for
the Company's hydrocarbon assets across both Asia
and Italy, and Michael Carrington, previously Coro's
Chief Operating Officer, was appointed as Managing
Director – Renewables. Michael Carrington, with
overall operational responsibility for the Company's
renewable energy interests.
Following the Company’s announcement on
6 March 2023, Naheed Memon was appointed
as an Independent Non-Executive Director on
14 April 2023. Naheed is a dual UK and Pakistani
national and she has worked extensively across
the private and public sector in both Pakistan and
internationally. Mark Hood agreed to step down as a
Non-Executive Director in March 2023 to ensure the
Company maintains a balanced and cost effective
Board.
The importance of engaging with our shareholders
continues, and the Board strives to ensure that there
are numerous opportunities for investors to engage
with both the Board and Executive team.
JAMES PARSONS
Executive Chair
QCA Code – Application, Principles
and Disclosure Requirements
The Board of Directors of the Company recognises
the importance of corporate governance and
applies the QCA Code, which we believe is the
most appropriate governance code for a company
of our size with shares admitted to trading on
the Alternative Investment Market (“AIM”) of the
London Stock Exchange. The QCA Code provides
the Company with the framework to help ensure
that a strong level of governance is maintained,
enabling the Company to embed the governance
culture that exists within the organisation as part of
building a successful and sustainable business for all
its stakeholders.
The QCA Code has ten principles of corporate
governance that the Company has committed to
apply within the foundations of the business, as
summarised below. Further disclosures regarding
the Company’s application of the QCA Code can be
found on the Company’s website.
Corporate Governance Statement
Annual Report and Accounts for the year ended 31 December 2022
25
Stock code: CORO
GOVERNANCE REPORT
Principles
Coro Response
Establish a strategy and business
model that promotes long-term
value for shareholders
The Group’s strategy and business model are outlined on pages 6
to 7.
Seek to understand and meet
shareholder needs and expectations
The Group seeks to engage with shareholders regularly through
its Regulatory News Flow, periodic online Question and Answer
forums and preparation of investor presentations, which are updated
quarterly and available on the Group’s website, and at in person
General Meetings.
Take into account wider stakeholder
and social responsibilities and their
implications for long-term success
The Group seeks to be a responsible corporate citizen in all its
territories of operation and has an “open door” policy internally where
employees can raise opinions and concerns to management. We
are committed to operating our business according to the highest
international safety and environmental standards. We strive to deliver
lasting benefit to the communities and environments where we
work as well as our shareholders, contractors and employees.
Embed effective risk management,
considering both opportunities
and threats, throughout the
organisation
The Group has an effective risk management framework, which is
subject to oversight by the Audit Committee. See further details on
page 15 to 19.
Maintain the Board as a well-
functioning balanced team led by
the Chair
Refer to further discussion of the Board structure, composition and
processes on pages 27 to 29.
Ensure that between them the
Directors have the necessary
up-to-date experience, skills and
capabilities
The complementary skills and experience of our Board and
management team are included on page 26.
Evaluate Board performance based
on clear and relevant objectives,
seeking continuous improvement
Refer to a discussion of Board evaluation on page 28.
Promote a corporate culture that
is based on ethical values and
behaviours
The Group’s employees are bound by a Code of Conduct, which sets
forth the standards expected by the Company. This includes a zero-
tolerance approach to bribery and corruption, and a commitment
on the part of all employees to a high level of honesty, care, fair
dealing and integrity in the conduct of Coro’s business activities.
A Whistleblowing Policy is in place to provide a framework for
employees to call out unethical or illegal behaviour.
Maintain governance structures and
processes that are fit for purpose
and support good decision-making
by the Board
Refer to further discussion of the Group’s governance structures,
including matters reserved for the Board, on page 27.
Communicate how the Company
is governed and is performing
by maintaining a dialogue with
shareholders and other relevant
stakeholders
The Group’s financial and operational performance are summarised
in the Annual Report and the Interim Report, with regular updates
provided to stakeholders in other forums through the year, including
press releases, investor events and regular updates to the Group’s
website.
26
Coro Energy plc
www.coroenergyplc.com
JAMES PARSONS
Executive Chair
James has over 25 years’ experience in the fields
of strategy, management, finance and corporate
development in the energy industry. He started his
career with the Shell group where he spent 12 years
working across Brazil, the Dominican Republic,
Scandinavia, the Netherlands and London.
James is also Chair at Ascent Resources plc,
Corcel plc and Echo Energy plc.
James was previously Chief Executive at Sound
Energy Plc for eight years, is a qualified accountant
and has a BA Honours in Business Economics.
MARCO FUMAGALLI
Non-Executive Director
Marco is a Founding Partner at Continental
Investment Partners SA, a Swiss-based fund.
Marco is a well-known Italian businessman who
was a former Group Partner at 3i. He is a qualified
accountant and holds a degree in Business
Administration from Bocconi University in Milan.
Marco is also a Non-Executive Director of SourceBio
International Plc, Sound Energy plc and Ascent
Resources plc.
STEPHEN BIRRELL
Independent Non-Executive Director
(appointed on 25 March 2022)
Stephen is a Spanish speaking, geoscientist who
has worked in the upstream oil and gas industry
for over 37 years with a deep focus on Central
Eastern Europe. He has operated across multiple
jurisdictions including the Caribbean and Central
and Eastern Europe with Britoil, BP, Elf and Sterling
Resources Ltd. He is currently a Director of Ossian
Energy Ltd and holds a Non-Executive Board role
with Live Company Group plc and Ascent Resources
plc. Stephen has a BSc Honours in Applied Geology
where he majored in Mining, and Petroleum
Geology and Reservoir Engineering. He is a long
standing member of both the Society of Petroleum
engineers (SPE) and the Association of International
energy Negotiators (AIEN).
NAHEED MEMON
Non-Executive Director
(appointed on 14 April 2023)
Naheed has worked extensively across the private
and public sector in UK and Pakistan, in banking,
energy, manufacturing, and education. She routinely
rotates between Karachi, Dubai and London and is
Chief Executive of AIM quoted Oracle Power plc.
FIONA MACAULAY
Independent Non-Executive Director
Appointed to the Board on 12 December 2017 and
resigned on 25 March 2022
ANDREW DENNAN
Non-Executive Director
Appointed to the Board on 22 March 2019 and
resigned on 14 June 2022
MARK HOOD
Non-Executive Director
Appointed to the Board on 17 March 2021 until
24 March 2023
Management
EWEN AINSWORTH
Chief Financial Officer
Ewen is an experienced AIM company director. He
is currently a Non-Executive Director of Corcel Plc
and CEO of Discovery Energy Limited, an advisory,
consultancy and investment company and has
worked in a variety of senior and board-level roles in
the natural resource sector for over 30 years, most
recently as Finance Director for San Leon Energy
and Gulf Keystone Petroleum Ltd. He qualified as a
chartered management accountant, before moving
into leading commercial roles. He holds a degree
in Economics and Geography from Middlesex
University and is a member of the Energy Institute.
MICHAEL CARRINGTON
Managing Director Renewables
Michael co-founded Global Energy Partnership
Ltd and has over 30 years experience of energy
efficiency and clean tech generation in the built
environment, including strategic management,
acquisition integration, research and development
commercialisation, project origination, due
diligence, and project pre-development across
Europe, UK and ASEAN countries.
LEONARDO SALVADORI
Managing Director, Italy
Leonardo has over 30 years of international
exploration, business development and general
management experience. He has worked in Libya
and Norway as an explorationist and in Italy with
exploration and new ventures roles, focusing
on international asset evaluations, portfolio
development and corporate acquisitions, with a
specific focus on the Middle East, Africa, Asia and
the North Sea.
Board of Directors
Annual Report and Accounts for the year ended 31 December 2022
27
Stock code: CORO
GOVERNANCE REPORT
Role of the Board
The Group continued to evolve in 2022 and develop
the business in South East Asia. It is critical that the
Group’s governance and control structure is robust,
clearly defined and communicated. The Board of
Directors is responsible for the overall management
and performance of the Group and operates within
a framework of prudent and effective controls,
which enables risk to be assessed and managed. It
is also collectively responsible for the success of the
Group and operates within a framework of reserved
matters, delegations and assurance.
Governance Structure
In 2022, there were changes to the Board. The
Chair transitioned to Executive Chair and the Chief
Executive Officer transitioned to Non-Executive
Director of the Company and Country Chair –
Philippines. An Independent Non-Executive Director
was appointed and two Non-Executive Directors
resigned. There were further changes in the first half
of 2023 with Mark Hood stepping down as Non-
Executive Director and Naheed Memon joining as an
Independent Non-Executive Director.
Currently, the Board comprises of James Parsons,
Executive Chair; Marco Fumagalli, Non-Executive
Director; Stephen Birrell, and Naheed Memon as
Independent Non-Executive Directors.
Michael Carrington joined the Company in March
2021 as Chief Operating Officer. Michael co-founded
Global Energy Partnership Ltd and has over 30
years’ experience of energy efficiency and clean
tech generation in the built environment. Ewen
Ainsworth joined the Company as CFO, appointed
on 28 February 2022, Ewen has responsibility for
the commercial and financial management of the
Group. Leonardo Salvadori, Managing Director of
Italy, remains responsible for Italian operations and
assists with the Group’s wider South East Asian
activities as required.
Matters Reserved for the Board
The Board retains full and effective control over the
Group and is responsible for the Group’s strategy
and key financial and compliance issues. There are
certain matters that are reserved for the Board,
which are reviewed on an annual basis, and they
include:
•
Strategy and management
approval of strategic aims and objectives;
approval of the Group’s annual operating and
capital expenditure budgets and changes;
decision to cease to operate all or any material
part of the Group’s business;
•
Structure and capital
major changes to the Group’s corporate
structure; any change to the Company’s listing;
•
Financial reporting and controls
approval of financial results; annual reports and
accounts; dividend policy and declaration of
any dividend; significant changes in accounting
policies/practice; and treasury policies;
•
Internal controls
ensuring maintenance of a sound system of
internal control and management;
•
Contracts
major capital contracts; contracts that are
material or strategic; and major investments or
any acquisitions/disposals;
•
Communications
approval or resolutions and documentation put
forward to shareholders;
•
Board membership and other appointments
•
Remuneration
determining the remuneration policy for
Directors, senior Executives and Non-Executive
Directors; introduction of new share incentive
plans; and changes to existing plans;
•
Corporate governance matters
review of the Group’s overall corporate
governance arrangements;
•
Policies
approval of Group policies, including the share
dealing code;
•
Other
litigation involving £5m and over or otherwise
material to the Group; approval of the
appointment of professional advisers; and
approval of overall levels of insurance for
the Group.
Board Committees
The Board has formed four committees: the Audit
Committee, the HSE/Technical Committee, the
Nominations Committee and the Remuneration
Committee, with delegated responsibility to
monitor their respective areas and to report back
to the full Board. The Committees operate under
clearly defined terms of reference, which are
kept under review, to ensure proper functioning
of the Committees and effective application of
best practice. The Directors appointed to each
Committee are outlined below, with the HSE/
Technical Committee supported by additional
employees with the appropriate skills and
experience during the year.
Corporate Governance Framework
28
Coro Energy plc
www.coroenergyplc.com
Board Meeting Attendance
Year ended 31 December 2022
Board
(scheduled)
Board
(ad hoc1)
Audit
Committee
Remuneration
Committee
HSE
Committee
Nominations
Committee
Number of meetings held
5
6
3
3
6
0
James Parsons
5
6
–
–
–
–
Mark Hood
5
6
–
–
–
–
Andrew Dennan2
2
3
–
–
–
–
Marco Fumagalli
5
6
3
3
–
–
Fiona MacAulay3
2
2
1
1
2
–
Stephen Birrell4
3
4
2
2
4
–
1.
Ad hoc meetings are called for specific matters, generally of a more administrative nature not requiring full Board attendance.
2.
Resigned on 14 June 2022.
3.
Resigned on 25 March 2022.
4.
Appointed on 25 March 2022.
Board Evaluation
The Directors consider seriously the effectiveness
of the Board, its Committees and individual
performance.
The Board generally meets formally five times a
year with ad hoc Board meetings as the business
demands. There is a regular flow of communication
between the Directors and the Executive
Management team.
Board meeting agendas are set in consultation
with the Management team and the Chair, with
consideration being given to both standing agenda
items and the strategic and operational needs of
the business. Comprehensive Board papers are
circulated well in advance of meetings, giving
Directors ample time to review the documentation
and enabling an effective meeting.
Resulting actions are tracked for appropriate delivery
and follow up. The Directors have a broad knowledge
of the business and understand their responsibilities
as Directors of a UK company quoted on AIM.
The Company’s Nomad provides annual Boardroom
training as well as initial training as part of a
Director’s onboarding. The Company Secretary,
assisted by the Group’s solicitors, helps keep the
Board up-to-date with developments in corporate
governance and liaise with the Nomad on areas
of AIM requirements. The Company Secretary has
frequent communication with both the Chair
and Management team and is available to other
members of the Board as required.
The Directors also have access to the Company’s
auditors and lawyers as and when required, and
the Directors are able, at the Company’s expense,
to obtain advice from other external advisers if
required.
The Board recognises that, in order to meet the
requirements of the QCA Code, a Board effectiveness
process needs to be considered in the short to
medium term. To date, a formal Board effectiveness
review has not been undertaken given recent Board
changes; however, a formal review will be arranged
as and when considered appropriate. The Directors
are committed to ensuring the ongoing efficient
functioning of the Board to ensure it is meeting its
objectives.
Auditor Rotation
The Company’s policy is to undertake an audit
tender at least every ten years and to change
auditors at least every 20 years. The incumbent
auditor, PKF Littlejohn LLP, has been the Company’s
auditor since its first financial period, which ended
31 December 2017, meaning this is their sixth year
as the Company’s auditors. The audit of the 2021
financial statements was the final year for the audit
partner, Joseph Archer, who has been replaced with
Daniel Hutson, given the requirement to change
audit partner every five years. The Company does
not have any plans to retender the audit in the next
12 months.
Corporate Governance Framework
continued
Annual Report and Accounts for the year ended 31 December 2022
29
Stock code: CORO
GOVERNANCE REPORT
Board Reports
Audit Committee
The Audit Committee comprises Marco Fumagalli
(Chair) and Stephen Birrell. Fiona MacAulay served
as Chair until her resignation in March 2022.
Scope and responsibilities:
The Audit Committee is mainly responsible for the
oversight of financial reporting in accordance with
regulatory and statutory requirements, and for
the review and monitoring of the Group’s internal
financial control and risk management systems.
The Committee meets a minimum of twice a year.
2022 activities:
•
Reviewed the 2021 audit plan and approved
auditor’s remuneration.
•
Reviewed and approved the Group’s 2021 Annual
Report and 2022 Interim Report.
•
Reviewed the independence and competence
of the Group’s auditor, PKF Littlejohn LLP (“PKF”)
and recommended their reappointment.
•
Considered the going concern position of
the Group.
•
Reviewed the Group’s risk register.
Remuneration Committee
The Remuneration Committee comprises Non-
Executive Directors Stephen Birrell (Chair), and
Marco Fumagalli. Fiona MacAulay stepped down
from the Board and as Committee Chair in
March 2022.
The Committee generally meets twice a year
and is responsible for making recommendations
to the Board of Directors on senior Executives’
remuneration.
The Committee reviews the overall Remuneration
policy of the Company, the Executive Director’s
scorecard, and bonus awards related to the
achievements of the targets set.
2022 activities:
•
Reviewed and approved the 2021 bonus awards
to Executives and management and the 2021
scorecard.
•
Discussed and debated the changes to the
Executive management team.
•
Reviewed the Group’s long-term incentive
structures.
•
Approved options made under the Company’s
Long-Term Incentive Plan (“LTIP”) scheme.
•
Reviewed and approved the 2022 scorecard.
•
Considered the remuneration package for
the Executive Chair, CEO and members of the
Executive Management team.
Nominations Committee
The Nominations Committee comprises of Stephen
Birrell (Chair) and Marco Fumagalli. Fiona MacAulay
served as Chair until her resignation in March 2022,
when James Parsons assumed the position as Chair
until Stephen Birrell’s appointment.
The Committee was established during 2020, with
matters pertaining to Nominations previously dealt
with by the Remuneration Committee.
The role of the Committee is to consider Board
composition and succession planning, to identify
candidates for NED positions and to make
recommendations to the Board.
2022 activities:
•
Considered the near term composition of
the Board.
HSE/Technical Committee
The HSE/Technical Committee comprises Stephen
Birrell (Chair) and Leonardo Salvadori. Fiona
MacAulay served as Chair until her resignation in
March 2022.
Paramount to Coro’s ability to pursue its strategic
priorities is a safe workplace and a culture of
“safety first”. The Company regards environmental
awareness and sustainability as key strengths in
planning and carrying out business activities.
Coro’s daily operations are conducted in a way
that adheres to these principles and Management
is committed to their continuous improvement.
While growing from exploration roots, the Company
has strived to continually improve underlying
safety performance. The Company has adopted
a Health, Safety and Environment Management
System, which provides for a series of procedures
and routine checks (including periodical audits)
to ensure compliance with all legal and regulatory
requirements and best practices in this area.
In 2022, Coro maintained its outstanding
occupational health, safety and environmental track
record and only one near miss to report. During
2022, the total man-hours amounted to 33,144 (2021:
16,268) with zero Lost Time Injury (“LTIs”) recorded
(2021: nil).
The 2022 HSE Report is provided on page 30.
30
Coro Energy plc
www.coroenergyplc.com
In the first 2 months of 2022, the Group only operated the Rapagnano and Casa Tiberi gas fields. Starting from
March and November respectively also Sillaro and Bezzecca fields were put into production. Plant and well site
maintenance activities were carried out on all sites in compliance with the national HSE regulations.
Key activities undertaken in 2022 included:
•
Implementation of all COVID-19 government measures including any necessary update of the health
protocol for safe operational management and within the terms of the law.
•
Continuous update of all Company safety and environmental documentation required by the Italian
regulations.
•
Completion of the ten-year maintenance activity at Sillaro and Bezzecca.
•
Renewal of the fire prevention and protection certificates on all sites.
•
Monthly HSE visits on all sites, including those where production is suspended, continued as required.
The total man-hours worked in 2022 were 31,672 with key HSE statistics recorded in the following four
main categories:
1) Man-hours Worked
2022
2021
Company
7,794
7,794
Contractors
23,878
8,474
Total man-hours
31,672
16,268
2) Lagging Indicators
2022
2021
Fatality
0
0
Lost Time Injury (LTI)
0
0
Restricted Work Case (RWC)
0
0
Medical Treatment Case (MTC)
0
0
First Aid Case (FAC)
0
0
Property damage
0
0
Environmental incident
0
0
Road Traffic Accident (RTA)
0
0
Near miss
1
0
HiPo (high potential incidents)
0
0
Lost workdays
0
0
HSE Report
Annual Report and Accounts for the year ended 31 December 2022
31
Stock code: CORO
GOVERNANCE REPORT
3) Leading Indicators
2022
2021
HSE inspections
329
337
HSE audits
11
6
HSE meetings
18
6
HSE inductions
453
342
Emergency drills
0
3
TBTs
0
3
Training hours
14
173
SHOC cards
0
2
JSAs
11
10
Management visits
6
5
4) Environmental Data
2022
2021
Diesel consumed (mc)
25
13
Water consumed (mc)
36
48
Mud cuttings (mc)
0
0
Non-hazardous waste (tonne)
1949
419
Hazardous waste (tonne)
2
0
Instrumentation gas (mc)
4680
4,200
Electrical energy (MWh)
98
47
Coro is proud of its HSE achievements, with zero LTIs placing us ahead of industry averages.
32
Coro Energy plc
www.coroenergyplc.com
Remuneration Committee
The Remuneration Committee recognises the
importance of attracting, retaining and motivating
talent within the Boardroom and the wider
Executive team to ensure the success of the
Company.
The Remuneration Committee is responsible
for reviewing and determining compensation
arrangements for all Directors and senior Executives.
The Committee considers the appropriateness of
the nature and amount of emoluments of such
officers on a periodic basis by reference to relevant
employment market conditions with the overall
objective of ensuring maximum stakeholder benefit
from the retention of a high-quality Board and
senior Executive team.
There were changes made to the Company’s Board
and Executive team in 2022. The Chair transitioned
to an Executive Chair position at the request of the
Remuneration Committee alongside Mark Hood
stepping down as Chief Executive but remaining
as a Non Executive Director and Country Chair –
Philippines for a period of time, following which (in
2023) he stepped down from the Board. To facilitate
this transition of leadership, Leonardo Salvadori,
previously Coro's Managing Director – Italy, was
appointed Managing Director – Oil & Gas, with
overall and extended operational responsibility for
the Company's hydrocarbon assets across both Asia
and Italy, and Michael Carrington, previously Coro's
Chief Operating Officer, was appointed as Managing
Director – Renewables. Michael Carrington, with
overall operational responsibility for the Company's
renewable energy interests. Naheed Memon
joined the Board as an Independent Non Executive
Director in April 2023.
The Committee will continue to work to ensure that
the appropriate policies and framework are in place
to reward the new Executive team for achievements
and targets met, which, in turn, creates value for
stakeholders.
Remuneration Package –
Executive Directors
The Company offers a fixed remuneration package
of salary, pension and certain benefits. In addition,
Executive Directors are eligible for a discretionary
bonus award. Award of bonuses depends on
performance against a balanced scorecard, which is
agreed by the Committee. In 2022 the Committee
awarded options under the LTIP scheme in which
Executives are entitled to participate. Under the LTIP,
options may be granted to Executives annually, at
the discretion of the Committee, and will generally
vest in three years subject to performance vesting
conditions determined by the Committee, and in
accordance with the rules of the LTIP.
Non-Executive Directors’ Fees
The fees paid to the Non-Executive Directors are
set at a level both in line with the market and to
appropriately reward and retain individuals of a high
calibre and are reviewed and approved by the Board.
The fees paid reflect the level of commitment and
contribution to the Company. Fees are paid monthly
in cash and are inclusive of all Committee roles and
responsibilities. In addition, Directors were awarded
Company share options in 2018 with a three-year
vesting period to align the interests of Directors and
shareholders.
Directors’ Remuneration Report
Annual Report and Accounts for the year ended 31 December 2022
33
Stock code: CORO
GOVERNANCE REPORT
Remuneration of Directors
The following remuneration table comprises Directors’ salaries and benefits in kind that were payable to
Directors who held office during the year ended 31 December 2022:
Salary and
cash benefits
US$’000
Transitional
support
Bonus
US$’000
Benefits
in kind
US$’000
Pensions
US$’000
Total 2022
US$’000
Total 2021
US$’000
Executive Director
James Parsons
2241
26²
152³
1
403
202
Non-Executive Director
Mark Hood
228
18
2
5
253
204.6
Andrew Dennan
22
-
-
22
55
Fiona MacAulay
16
-
-
16
55
Marco Fumagalli
49
-
-
49
55
Stephen Birrell
38
-
-
38
-
1.
Represents both the Non-Executive Chair fee up to 25 March 2023 and thereafter (upon the exit of the CEO who was not replaced)
the salary for Executive Chair.
2.
Represents the agreed temporary uplift to Non-Executive Chair fee to provide additional support to executives.
3.
Bonus awarded by Rem Com based on pre agreed scorecard including delivering debt restructuring, delivering revenue from
Vietnam pilot and maintaining strong Italian production levels through period of high gas prices.
Share-Based Payments
In 2022, James Parsons was granted 47,080,979 new share options and Mark Hood was granted 21,522,733 new
share options in the Company. There were no other new share options granted to Directors in the year under
the LTIP. The table below shows all outstanding share awards to the Directors. All other options were awarded
to individual directors prior to the adoption of the LTIP and each have an exercise price of 4.38p per share
and vest on the third anniversary of grant date. The options awarded to Directors will vest after three years
subject to fulfilling the set performance conditions. The total share-based payments expense recognised in
respect of Directors in 2022 was US$45k (2021: US$160k). For further details, refer to note 22 of the Notes to the
Financial Statements.
The number of share options held by the Directors in the current and prior year is set out below:
Options
held at
1 January
2022
Granted
during
the year
Exercised
during
the year
Lapsed/
forfeited
during
the year
Options
held at
31 December
2022
Mark Hood
37,500,000
21,522,733
–
–
59,022,733
James Parsons
10,000,000
47,080,979
–
–
57,080,979
Andrew Dennan
15,000,000
–
–
–
15,000,000
Fiona MacAulay
10,000,000
–
–
–
10,000,000
Marco Fumagalli
10,000,000
–
–
–
10,000,000
34
Coro Energy plc
www.coroenergyplc.com
Directors’ Interest in Shares
Directors and their connected persons had the following interests in shares of the Company at
31 December 2022:
Name of Director
No. of
shares at
31 December
2022
No. of
shares at
31 December
2021
Andrew Dennan
7,280,194
7,280,194
Mark Hood
76,415,477
72,720,558
James Parsons
4,695,414
4,695,414
Marco Fumagalli1
–
–
1.
Marco Fumagalli holds no Ordinary Shares directly. M Fumagalli holds a 25% interest in Continental Investment Partners S.A
(“Continental”), which has 3,817,065 Ordinary Shares.
This Remuneration Report was approved by the Board of Directors on 20 May 2023 and signed on its behalf
by:
JAMES PARSONS
Executive Chair
Directors’ Remuneration Report
continued
Annual Report and Accounts for the year ended 31 December 2022
35
Stock code: CORO
GOVERNANCE REPORT
The Directors present their Annual Report and
the audited Group and Company financial
statements of Coro Energy plc for the year ended
31 December 2022.
Principal Activities
Coro is an AIM-listed South East Asian energy
company supporting the regional transition to a
low-carbon economy, with a strategy centred on
low-carbon energy investments, supported by an
existing platform of gas assets.
The Company has gas assets in Italy which during
2022 were classified as a disposal group and held for
sale and therefore presented in these accounts as a
discontinued operation.
As announced on the 24 August 2022 Coro entered
into an Option Agreement with Zodiac Energy plc
to acquire the Company's Italian natural gas asset
portfolio for up to Euro 7.5m. On the 26 March
2023 a further announcement was made that this
option had been exercised and a Sale and Purchase
Agreement concluded between the parties and
subject to the conditions for completion.
Results and Dividends
The Group made a net loss after tax of US$5.5m (2021:
US$8.0m), which comprised a loss after tax from
continuing operations of US$8.2m (2021: $6.5m).
The Directors have not recommended payment of
a dividend (2021: nil).
Directors
The Directors who served during the period, and up
to the date of this report and subsequently, were
as follows:
•
James Parsons
•
Andrew Dennan (resigned on 16 June 2022)
•
Marco Fumagalli
•
Fiona MacAulay (resigned on 25 March 2022)
•
Mark Hood (until 24 March 2023)
•
Stephen Birrell (appointed 25 March 2022)
•
Naheed Memon (appointed 14 April 2023)
Directors’ and Officers’ Indemnity
Insurance
The Group has made qualifying third-party
indemnity provisions for the benefit of its Directors
and officers. These were made during the previous
year and renewed post year end, and remain in force
at the date of this report.
Provision of Information to Auditor
So far as each of the Directors is aware at the time
this report is approved:
•
there is no relevant audit information of which
the Company’s auditor is unaware; and
•
the Directors have taken all steps that they ought
to have taken to make themselves aware of any
relevant audit information and to establish that
the auditor is aware of that information.
Future Developments
Future developments are included in the Statement
from the Chair.
Information on the financial instruments of the
Group and its approach to financial risk management
is disclosed in note 21 to the financial statements.
Substantial Shareholdings
The Directors were advised of the following
significant direct and indirect interests in the
issued share capital of the Company above 3%. The
information is as at register analysis cut-off date of
30 December 2022, except where TR-1 notifications
are made subsequent to that date.
Name of shareholder
Interest
CIP Merchant Capital Ltd
8.03%
Novum Securities*
5.42%
Spreadex Ltd**
4.49%
Hargreaves Lansdown Asset Mgt*
3.35%
*
Private Investor Holdings
** 67,396,000 votes (2.62%) – CFD/Spread bet financial
instruments – 62,153,318 ordinary shares (2.42%) held directly.
Subsequent Events
The events after the reporting period are set out in
note 26 to the financial statements.
Going Concern
The Group and Company financial statements
have been prepared under the going concern
assumption, which presumes that the Group and
Company will be able to meet their obligations as
they fall due for the foreseeable future.
Further discussion on the Directors’ assumptions
and their conclusions are included in note 2c to the
financial statements. The auditors make reference to
a material uncertainty in relation to going concern
within their audit report.
This Directors’ Report was approved by the Board on
20 May 2023 and signed on its behalf by:
JAMES PARSONS
Executive Chair
Directors’ Report
36
Coro Energy plc
www.coroenergyplc.com
The Directors are responsible for preparing the
Annual Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare
financial statements for each financial year. Under
that law the Directors are required to prepare
the Group and Company Financial Statements
in accordance with UK-adopted international
accounting standards and, as regards the Company
financial statements, as applied in accordance with
the requirements of the Companies Act 2006.
Under company law, the Directors must not approve
the financial statements unless they are satisfied
that they give a true and fair view of the state of
affairs of the Company and the Group as at the
end of the financial year and of the profit or loss
of the Group and the Company for that period. In
preparing these financial statements, the Directors
are required to:
•
select suitable accounting policies and then
apply them consistently;
•
make judgments and accounting estimates that
are reasonable and prudent;
•
state whether the applicable UK adopted
international accounting standards have been
followed subject to any material departures
disclosed and explained in the financial
statements; and
•
prepare the financial statements on a going
concern basis unless it is inappropriate to
presume that the Group and the Company will
continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group and Company’s transactions and
disclose with reasonable accuracy at any time the
financial position of the Company and the Group
and enable them to ensure that the financial
statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets
of the Company and Group and hence for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the Company’s website.
Legislation in the United Kingdom governing the
preparation and dissemination of the financial
statements may differ from legislation in other
jurisdictions.
The Group is compliant with AIM Rule 26 regarding
the Group’s website.
This report was approved by the Board on 20 May
2023 and signed on its behalf by:
JAMES PARSONS
Executive Chair
Statement of Directors’ Responsibilities
Annual Report and Accounts for the year ended 31 December 2022
37
Stock code: CORO
GOVERNANCE REPORT
Independent Auditor's Report
To the Members of Coro Energy Plc
Opinion
We have audited the financial statements of
Coro Energy PLC (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 31
December 2022 which comprise the Consolidated
Statement of Comprehensive Income, the
Consolidated and Parent Company Statement of
Financial Position, the Consolidated and Parent
Company Statements of Changes in Equity, the
Consolidated and Parent Company Statements of
Cash Flows and notes to the financial statements,
including significant accounting policies. The
financial reporting framework that has been applied
in their preparation is applicable law and UK-
adopted international accounting standards and as
regards the parent company financial statements,
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 of the parent
company’s affairs as at 31 December 2022 and of
the group’s loss for the year then ended;
•
the group financial statements have been
properly prepared in accordance with UK-
adopted international accounting standards;
•
the parent company financial statements have
been properly prepared in accordance with UK-
adopted international accounting standards and
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 group and parent 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
as applied to listed entities, 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 2c of the financial
statements which notes that whilst the Group has
increased its cash since the year end due to an
advance on the consideration for the sale of the
Italian gas portfolio of $1.6m, its Eurobonds are due
for repayment within 12 months of signing the
Group financial statements. The Group is therefore
reliant upon restructuring the repayment of the
Eurobonds or raising sufficient funds in order to
repay them. The Group remain reliant upon the
completion of the disposal of the Italian gas portfolio
and the success of future solar and wind projects
to generate sufficient revenue to continue to fund
the groups cash requirements. Should downside
scenarios occur, including failure to restructure the
Eurobond repayment dates, the group and parent
company would be required to secure further
funding. As stated in note 2c, these conditions
are necessarily considered to represent a material
uncertainty that may cast significant doubt over the
group's and the parent 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 Directors’
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 group and the parent company’s
ability to continue to adopt the going concern basis
of accounting included evaluating the following:
•
We critically assessed the Directors' financial
forecasts through comparing actual outcomes
in the current year results against forecasts.
Underlying key assumptions, including revenue,
operating and capital expenditure were assessed
by considering factors such as historical revenue
profiles, and operating expenditure historic
actuals in order to assess the reasonableness of
the forecasts.
•
We assessed the reasonableness of key
assumptions underpinning the forecasts by
reference to publicly available information and
underlying source documentation.
•
We performed sensitivity analysis on the cash
flow forecast to consider the available headroom
under different reasonably possible scenarios, an
increase in expenses, and additional capex.
•
We made enquiries of Management and
Directors and reviewed Board minutes and key
operational contracts to assess the completeness
of commitments considered in the cash flow
forecasts.
38
Coro Energy plc
www.coroenergyplc.com
Independent Auditors' Report
To the Members of Coro Energy Plc continued
•
We evaluated the adequacy of disclosures made
in the financial statements in respect of going
concern.
Based on the work we have performed, we have
not identified any material uncertainties relating to
events or conditions that, individually or collectively,
may cast significant doubt on the group's or parent
company’s ability to continue as a going concern for
a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of
the directors with respect to going concern are
described in the relevant sections of this report.
Our application of materiality
Entity
Basis for
materiality
Materiality
Coro Energy Plc – Group
5% of
net assets
$293k
(2021: $216k)
Parent company
5% of
net assets
$180k
(2021: $99k)
The scope of our audit was influenced by our
application of materiality. We set certain quantitative
thresholds for materiality. These, together with
qualitative considerations, helped us to determine
the scope of our audit and the nature, timing and
extent of our audit procedures on the individual
financial statement line items and disclosures and
in evaluating the effect of misstatements, both
individually and on the financial statements as
a whole.
Based on our professional judgement, we consider
net assets to be the most significant determinant
of the group’s and parent company’s financial
performance used by shareholders as the group
continues to progress its assets and the parent
company continues to support the groups
development activities.
Whilst materiality for the financial statements as
a whole was set at $293k (2021:$216k), significant
components of the group were audited to a level
of materiality ranging between $91k - $205k (2021:
$99k-$208k). Performance materiality for the group
and components was set at 70% (2021:70%) to
ensure sufficient coverage of key balances. We apply
the concept of materiality both in planning and
performing our audit, and in evaluating the effect
of misstatements. At the planning stage materiality
is used to determine the financial statement areas
that are included within the scope of our audit and
the extent of sample sizes during the audit.
We agreed with management that we would
report to the audit committee all individual audit
differences identified during the course of our audit
in excess of $14.7k (2021:$10.8k)for the financial
statements as a whole and $9k (2021: $4.9k) for
the parent company. We also agreed to report
differences below these thresholds that, in our view
warranted reporting on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality
and assessed the risk of material misstatement in
the financial statements. In particular, we looked
at areas requiring the directors to make subjective
judgements, for example in respect of significant
accounting estimates including the carrying value
of assets and the consideration of future events that
are inherently uncertain. We also addressed the
risk of management override of internal controls,
including evaluating whether there was evidence
of bias by the directors that represented a risk of
material misstatement due to fraud.
An audit was performed on the financial information
of the group’s operating components which for the
year ended 31 December 2022 were located in the
United Kingdom, Italy and Asia, with the group’s
accounting functions being based in the UK and Italy.
The audit work surrounding our key audit matter
in respect of the carrying value of investments was
performed by us as group auditor and is explained
further in the Key audit matters section.
The Italian component, Apennine Energy SpA
has been assessed as a significant component
of the group. As at 31 December 2022, the Italian
operations, headed by group subsidiary Coro Europe
Limited, are recorded as a disposal group and
accounted for under IFRS 5. The held for sale assets
and liabilities are included as line items on the group
statement of financial position, and the profit for
the period from discontinued operations is included
as a line item on the consolidated statement of
comprehensive income. The key balances held
within the disposal group are exploration and
evaluation assets and rehabilitation provisions.
The work on this component was performed
by component auditors operating under our
instruction. There was regular interaction with the
component auditors during all stages of the audit,
and we were responsible for the scope and direction
of the audit process. We reviewed key working
papers and reporting appendices to understand the
work performed and conclusions reached, in order to
gain sufficient appropriate evidence for our opinion
on the group financial statements.
All audit work on other components was conducted
by the group audit team.
Annual Report and Accounts for the year ended 31 December 2022
39
Stock code: CORO
GOVERNANCE REPORT
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our scope addressed this matter
Carrying value of capitalised exploration costs (Note 13)
Capitalised exploration costs totalling $18.9m
represent the most material balance within the
group’s financial statements in respect of its
continuing operations and it is from said assets that
group hopes to deliver future value to its shareholders.
There is the risk that these amounts are impaired,
and that the capitalised amounts do not meet the
recognition criteria of IFRS 6. Given the significance
of the assets to the group’s consolidated statement
of financial position and the significant management
judgements and estimates involved in this area, we
considered this a key audit matter.
Our work in this area included:
•
Reviewing management’s assessment for
indicators of impairment under IFRS 6 and
performing our own review of underlying
information including: obtaining and reviewing
any third party reports regarding the resource
estimate, as well as management’s forecasts/
budgets, and relevant correspondence with
parties to the agreement and forming our
own view.
•
Confirmation that the Group has good title to the
applicable licences held.
•
Review of component work on Apennine Energy
S.p.A in respect of capitalised costs including
the considerations made in respect of IFRS 6’s
recognition and impairment indicators.
•
Considering the appropriateness of disclosure
included in the financial statements.
Carrying value of investments in subsidiaries (Company only) (Note 20)
Investments in subsidiary undertakings totalling
$17.5m represents the largest asset on the
company’s balance sheet. Recoverability depends on
Management’s assumptions regarding their future
performance which is in turn dependent on the
successful recoverability of resources from exploration
assets held by its investments.
We have therefore identified the risk over the
impairment of investments in the Parent company
financial statement. Given the significance of the
assets to the parent company’s statement of financial
position and the significant management judgements
and estimates involved in this area, we considered this
a key audit matter.
Our work in this area included:
•
Confirmation of ownership;
•
Review of management’s impairment
assessment for the subsidiaries, and specifically
challenging the data, assumptions and
methodologies applied within internal valuation
modelling in respect of the Duyung project and
the Italian portfolio; and
•
Considering the appropriateness of disclosure
included in the financial statements.
40
Coro Energy plc
www.coroenergyplc.com
Independent Auditors' Report
To the Members of Coro Energy Plc continued
Other information
The other information comprises the information
included in the annual report, other than the
financial statements and our auditor’s report
thereon. The directors are responsible for the other
information contained within the annual report.
Our opinion on the group and parent company
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. 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 course of 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 this gives
rise to a material misstatement in the financial
statements themselves. 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, based on the work undertaken in the
course of the 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 the 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 in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
adequate accounting records have not been kept
by the parent company, or returns adequate for
our audit have not been received from branches
not visited by us; or
•
the parent company financial statements 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 directors
As explained more fully in the directors’
responsibilities statement, the directors are
responsible for the preparation of the group
and parent company financial statements and
for being satisfied that they give a true and fair
view, and for such internal control as the directors
determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company
financial statements, the directors are responsible
for assessing the group and the parent 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 group or
the parent 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:
•
We obtained an understanding of the group and
parent company and the sector in which they
operate to identify laws and regulations that
Annual Report and Accounts for the year ended 31 December 2022
41
Stock code: CORO
GOVERNANCE REPORT
could reasonably be expected to have a direct
effect on the financial statements. We obtained
our understanding in this regard through
discussions with management about the
potential instances of non-compliance with laws
and regulations both in the UK and in overseas
subsidiaries. We also selected a specific audit
team based on experience with auditing entities
within this industry of a similar size.
•
We determined the principal laws and
regulations relevant to the group and parent
company in this regard to be those arising from:
–
Companies Act 2006
–
AIM Rules
–
Local industry regulations Italy, Indonesia,
and Vietnam
–
Local tax and employment law
•
We designed our audit procedures to ensure the
audit team considered whether there were any
indications of non-compliance by the group and
parent company with those laws and regulations.
These procedures included, but were not
limited to:
–
Making enquiries of management
–
A review of Board minutes
–
A review of legal ledger accounts
–
A review of RNS announcements
•
We also identified the risks of material
misstatement of the financial statements due to
fraud. We considered, in addition to the non-
rebuttable presumption of a risk of fraud arising
from management override of controls, there
were no other significant fraud risks.
•
As in all of our audits, we addressed the risk of
fraud arising from management override of
controls by performing audit procedures which
included, but were not limited to: the testing of
journals; reviewing accounting estimates for
evidence of bias; and evaluating the business
rationale of any significant transactions that
are unusual or outside the normal course of
business; and reviewing transactions through
the bank statements to identify potentially large
or unusual transactions that do not appear to
be in line with our understanding of business
operations.
Because of the inherent limitations of an audit,
there is a risk that we will not detect all irregularities,
including those leading to a material misstatement
in the financial statements or non-compliance
with regulation. This risk increases the more that
compliance with a law or regulation is removed
from the events and transactions reflected in the
financial statements, as we will be less likely to
become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves
intentional concealment, forgery, collusion, omission
or misrepresentation.
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.
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.
DANIEL HUTSON (SENIOR STATUTORY AUDITOR)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
20 May 2023
42
Coro Energy plc
www.coroenergyplc.com
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
Notes
31 December
2022
US$’000
31 December
2021
US$’000
Continuing operations
Revenue
51
–
Depreciation and amortisation expense
(21)
–
Gross profit
30
–
Other income
19
309
–
General and administrative expenses
5
(3,574)
(3,276)
Depreciation expense
(15)
(18)
Share of loss of associates
(82)
(249)
Loss from operating activities
(3,332)
(3,543)
Finance income
7
636
2,239
Finance expense
7
(5,491)
(5,171)
Net finance expense
(4,855)
(2,932)
Loss before income tax
(8,187)
(6,475)
Income tax benefit/(expense)
8
–
–
Loss for the period from continuing operations
(8,187)
(6,475)
Discontinued operations
Gain/(loss) for the period from discontinued operations
19
2,642
(1,510)
Total loss for the period
(5,545)
(7,985)
Other comprehensive income/loss
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign operations
2,925
485
Total comprehensive loss for the period
(2,620)
(7,500)
Loss attributable to:
Owners of the Company
(5,479)
(7,985)
Non-controlling interests
(66)
–
Total comprehensive loss attributable to:
Owners of the Company
(2,554)
(7,500)
Non-controlling interests
(66)
–
Basic loss per share from continuing operations ($)
9
(0.004)
(0.003)
Diluted loss per share from continuing operations ($)
9
(0.004)
(0.003)
Basic profit/(loss) per share from discontinued operations (US$)
0.001
(0.001)
Diluted profit/(loss) per share from discontinued operations (US$)
0.001
(0.001)
The consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes.
Annual Report and Accounts for the year ended 31 December 2022
43
Stock code: CORO
FINANCIAL STATEMENTS
Consolidated Balance Sheet
As at 31 December 2022
Notes
31 December
2022
US$’000
31 December
2021
US$’000
Non-current assets
Property, plant and equipment
12
1,854
10
Intangible assets
13
18,896
18,309
Investment in associates
23
259
401
Total non-current assets
21,009
18,720
Current assets
Cash and cash equivalents
21
166
3,334
Trade and other receivables
11
213
106
Inventory
10
34
37
Total current assets
413
3,477
Assets of disposal group held for sale
19
9,710
8,224
Total assets
31,132
30,421
Liabilities and equity
Current liabilities
Trade and other payables
15
819
425
Borrowings
16
–
26,637
Total current liabilities
819
27,062
Non-current liabilities
Borrowings
16
28,183
–
Total non-current liabilities
28,183
–
Liabilities of disposal group held for sale
19
9,443
8,889
Total liabilities
38,445
35,951
Equity
Share capital
17
3,184
2,943
Share premium
17
50,862
50,461
Merger reserve
18
9,708
9,708
Other reserves
18
7,267
4,180
Non-controlling interests
(66)
–
Accumulated losses
(78,268)
(72,822)
Total equity
(7,313)
(5,530)
Total equity and liabilities
31,132
30,421
The consolidated balance sheet should be read in conjunction with the accompanying notes.
The financial statements on pages 42 to 84 were authorised for issue by the Board of Directors on 20 May
2023 and were signed on its behalf by:
JAMES PARSONS
Executive Chair
44
Coro Energy plc
www.coroenergyplc.com
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Attributable to equity shareholders of the Company
Share
capital
US$’000
Share
premium
US$’000
Merger
reserve
US$’000
Other
reserves
US$’000
Accumulated
losses
US$’000
Total
US$’000
At 1 January 2021
1,103
45,786
9,708
3,305
(64,837)
(4,935)
Total comprehensive loss for
the period:
Loss for the period
–
–
–
–
(7,985)
(7,985)
Other comprehensive income
–
–
–
485
–
485
Total comprehensive loss for
the period
–
–
–
485
(7,985)
(7,500)
Transactions with owners recorded
directly in equity:
Issue of share capital
1,840
4,675
–
–
–
6,515
Share-based payments for services
rendered
–
–
–
390
–
390
Total transactions with owners
recorded directly in equity:
1,840
4,675
–
390
–
6,905
Balance at 31 December 2021
2,943
50,461
9,708
4,180
(72,822)
(5,530)
Attributable to equity shareholders of the Company
Share
capital
US$’000
Share
premium
US$’000
Merger
reserve
US$’000
Other
reserves
US$’000
Accumulated
losses
US$’000
Non-
controlling
interest
US$’000
Total
US$’000
At 1 January 2022
2,943
50,461
9,708
4,180
(72,822)
–
(5,530)
Total comprehensive
loss for the period:
Loss for the period
–
–
–
–
(5,479)
(66)
(5,545)
Other comprehensive
income
–
–
–
2,925
–
–
2,925
Total comprehensive
loss for the period
–
–
–
2,925
(5,479)
(66)
(2,620)
Transactions with
owners recorded
directly in equity:
Issue of share capital
241
401
–
–
–
–
642
Lapsed share options
–
–
–
(33)
33
–
–
Share based payments
for services rendered
–
–
–
195
–
–
195
Total transactions
with owners recorded
directly in equity:
241
401
–
162
33
–
837
Balance at
31 December 2022
3,184
50,862
9,708
7,267
(78,268)
(66)
(7,313)
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes
including the description of reserves in notes 18.
Annual Report and Accounts for the year ended 31 December 2022
45
Stock code: CORO
FINANCIAL STATEMENTS
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
Notes
31 December
2022
US$’000
31 December
2021
US$’000
Cash flows from operating activities
Receipts from customers
6,270
1,019
Payments to suppliers and employees
(6,599)
(3,873)
Interest paid
7
–
(649)
Interest received
7
–
1
Net cash used in operating activities
(329)
(3,502)
Cash flow from investing activities
Payments for property, plant and equipment
(1,868)
–
Payments for exploration and evaluation assets
13
(338)
(289)
Payments for intangible development assets
13
(257)
–
Net cash used in investing activities
(2,463)
(289)
Cash flows from financing activities
Proceeds from issuance of shares
17
–
5,669
Net cash provided by or generated from/(used in) financing activities
–
5,669
Net (decrease)/increase in cash and cash equivalents
(2,792)
1,878
Cash and cash equivalents brought forward
3,551
1,761
Effects of exchange rate changes on cash and cash equivalents
25
(88)
Cash and cash equivalents carried forward
784
3,551
Cash and cash equivalents carried forward at 31 December 2022 includes US$618k relating to discontinued
operations (2021: US$217k) and US$166k relating to continuing operations (2021: US$3,334k). Refer to note 19.
The consolidated statement of cash flows should be read in conjunction with the accompanying notes,
including the net debt reconciliation in note 16.
46
Coro Energy plc
www.coroenergyplc.com
Company Balance Sheet
As at 31 December 2022
Notes
31 December
2022
US$’000
31 December
2021
US$’000
Non-current assets
Investment in subsidiaries
20
17,501
19,236
Property, plant and equipment
12
3
10
Intangible assets
13
7
15
Investment in associates
23
602
662
Total non-current assets
18,113
19,923
Current assets
Cash and cash equivalents
21
130
3,269
Trade and other receivables
11
3,204
679
Loans to subsidiaries
20
65
666
Total current assets
3,399
4,614
Total assets
21,512
24,537
Liabilities and equity
Current liabilities
Trade and other payables
15
734
806
Borrowings
16
–
26,637
Total current liabilities
734
27,443
Non-current liabilities
Borrowings
16
28,183
–
Interest bearing loans
21
1,263
–
Total non-current liabilities
29,446
–
Total liabilities
30,180
27,443
Equity
Share capital
17
3,184
2,943
Share premium
17
50,862
50,461
Other reserves
18
2,713
2,095
Accumulated losses
(65,427)
(58,405)
Total equity
(8,668)
(2,906)
Total equity and liabilities
21,512
24,537
The Company balance sheet should be read in conjunction with the accompanying notes.
As permitted by s408 of the Companies Act 2006, the Company has not presented its own income statement.
The Company loss for the year was US$7.1m (2021: loss US$5.6m).
The financial statements on pages 42 to 84 were authorised for issue by the Board of Directors on 19 May
2023 and were signed on its behalf by:
JAMES PARSONS
Executive Chair
Annual Report and Accounts for the year ended 31 December 2022
47
Stock code: CORO
FINANCIAL STATEMENTS
Company Statement of Changes in Equity
For the year ended 31 December 2022
Share
capital
US$’000
Share
premium
US$’000
Other
reserves
US$’000
Accumulated
losses
US$’000
Total
US$’000
At 1 January 2021
1,103
45,786
1,733
(52,830)
(4,208)
Total comprehensive loss for the period:
Loss for the period
–
–
–
(5,575)
(5,575)
Other comprehensive income
–
–
(28)
–
(28)
Total comprehensive loss for the period
–
–
(28)
(5,575)
(5,603)
Transactions with owners recorded directly
in equity:
Issue of share capital
1,840
4,675
–
–
6,515
Share-based payments for services rendered
–
–
390
–
390
Total transactions with owners recorded directly
in equity
1,840
4,675
390
–
6,905
Balance at 31 December 2021
2,943
50,461
2,095
(58,405)
(2,906)
Share
capital
US$’000
Share
premium
US$’000
Other
reserves
US$’000
Accumulated
losses
US$’000
Total
US$’000
At 1 January 2022
2,943
50,461
2,095
(58,405)
(2,906)
Total comprehensive loss for the period:
Loss for the period
–
–
–
(7,055)
(7,055)
Other comprehensive income
–
–
456
–
456
Total comprehensive loss for the period
–
–
456
(7,055)
(6,599)
Transactions with owners recorded directly
in equity:
Issue of share capital
241
401
–
–
642
Lapsed share options
–
–
(33)
33
-
Share-based payments for services rendered
–
–
195
–
195
Total transactions with owners recorded directly
in equity
241
401
162
33
837
Balance at 31 December 2022
3,184
50,862
2,713
(65,427)
(8,668)
The Company statement of changes in equity should be read in conjunction with the accompanying notes.
48
Coro Energy plc
www.coroenergyplc.com
Company Statement of Cash Flows
For the year ended 31 December 2022
Notes
31 December
2022
US$’000
31 December
2021
US$’000
Cash flows from operating activities
Payments to suppliers and employees
(4,428)
(2,594)
Interest paid
7
–
(649)
Interest received
7
–
1
Net cash used in operating activities
(4,428)
(3,242)
Cash flow from investing activities
Investment in equity accounted associates
23
–
–
Net cash used in investing activities
–
–
Cash flows from financing activities
Proceeds from issuance of shares
17
–
5,669
Loans to subsidiaries
20
–
(551)
Interest bearing borrowings from subsidiaries
21
1,263
–
Net cash provided by or generated from/(used in) financing activities
1,263
5,118
Net (decrease)/increase in cash and cash equivalents
(3,165)
1,876
Cash and cash equivalents brought forward
3,269
1,480
Effects of exchange rate changes on cash and cash equivalents
26
(87)
Cash and cash equivalents carried forward
130
3,269
The Company statement of cash flows should be read in conjunction with the accompanying notes.
Annual Report and Accounts for the year ended 31 December 2022
49
Stock code: CORO
FINANCIAL STATEMENTS
Notes to the Financial Statements
For the year ended 31 December 2022
Note 1: Corporate Information
Coro Energy plc (the “Company” and, together with its subsidiaries, the “Group”) is a company incorporated in
England and listed on the AIM market of the London Stock Exchange. The Company’s registered address is c/o
Pinsent Masons LLP, 1, Park Row, Leeds, England, LS1 5AB. The consolidated financial statements for the year
ended 31 December 2022 comprise the Company and its interests in its subsidiaries, investments in associates
and jointly controlled operations (together referred to as the “Group”), whose principal activities are described
further in the Directors’ Report on page 35.
Note 2: Basis of Preparation
(a) Statement of compliance
The financial statements are prepared in accordance with UK-adopted international accounting standards
and with the requirements of the Companies Act 2006.
(b) Basis of measurement
These financial statements have been prepared on the basis of historical cost apart from non-current assets
(or disposal groups) held for sale, which are measured at fair value less costs of disposal and derivative financial
instruments recorded at fair value through profit and loss.
(c) Going concern
The Group and Company financial statements have been prepared under the going concern assumption,
which presumes that the Group and Company will be able to meet its obligations as they fall due for the
foreseeable future.
At 31 December 2022 the Group had cash reserves of $0.2m (excluding cash recorded within assets of the
Italian disposal group held for sale). Post year-end, the Group increased its available cash resources through an
advance of US$1.6m of the consideration for the sale of the Italian gas portfolio. Management have prepared a
consolidated cash flow forecast for the period to 30 June 2024 which shows that the Group has sufficient cash
headroom to meet its obligations during this period. However, this conclusion is conditional on the Group
successfully restructuring its Eurobond obligations. Currently, the bonds are scheduled to mature in April 2024
when principal of €22.5m ($24.8m) will become repayable in full along with interest. If bondholders continue
to elect to receive interest payments in shares, accrued interest will be €4.2m ($4.6m) at the repayment date.
If bondholders cease to elect to receive interest payments in shares from the quarter ending 12 July 2023,
accrued interest will be €6.8m ($7.5m).
This assumes that quarterly interest payments continue to be settled with the issue of shares in the Company
as has happened in recent quarters. The directors have a reasonable expectation that a debt restructuring can
be achieved prior to maturity.
Negotiations with bondholders have not yet commenced, and the ability of the Company to successfully
restructure the bonds is not guaranteed. However, based on the above, the Directors consider it appropriate
to continue to adopt the going concern basis of accounting in preparing the Group and Company financial
statements for the year ended 31 December 2022. Should the Group and Company be unable to continue
trading, adjustments would have to be made to reduce the value of the assets to their recoverable amounts,
to provide for further liabilities which might arise and to classify fixed assets as current. The auditors make
reference to a material uncertainty in relation to going concern within their audit report.
(d) Foreign currency transactions
The consolidated financial statements of the Group are presented in United States Dollars (“USD” or "US$"),
rounded to the nearest US$1,000.
The functional currency of the Company and all UK domiciled subsidiaries is British Pounds Sterling (“GBP”
or "£"). The Group’s subsidiaries domiciled in Singapore have a functional currency of USD. The Group’s
subsidiaries domiciled in the Philippines have a functional currency of Philippines Pesos (“PHP”). The Group’s
subsidiaries domiciled in Vietnam have a functional currency of Vietnamese Dong (“VND”). Apennine Energy
SpA, the Group’s Italian subsidiary, included within the disposal group held for sale, has a functional currency
of Euros "€".
50
Coro Energy plc
www.coroenergyplc.com
Note 2: Basis of Preparation continued
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss as finance income or expense. Non-
monetary assets and liabilities denominated in foreign currencies are translated at the date of transaction and
not retranslated.
The results and financial position of Group companies that have a functional currency different from the
presentation currency are translated into the presentation currency as follows:
•
Assets and liabilities are translated at the closing rate;
•
Income and expenses are translated at average rates; and
•
Equity balances are not retranslated. All resulting exchange differences are recognised in other
comprehensive income.
(e) Use of estimates and judgements
The preparation of the financial statements requires management to make judgments regarding the
application of the Group’s accounting policies, and to use accounting estimates that impact the reported
amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
This note sets out the estimates and judgements taken by management that are deemed to have a higher
risk of causing a material adjustment to the reported carrying amounts of assets and liabilities in future years.
(i) Key accounting judgements
Accounting for investment in Coro Europe Limited and related balances
In August 2022, following unsolicited approaches, the Group entered into an option agreement with Zodiac
Energy plc (“Zodiac”) whereby Zodiac acquired the right, for a period of five months with a potential two
month extension period, to acquire 100% of the issued share capital of Coro Europe Limited (“CEL”) for a total
consideration of up to €7.5 million (the “Option Agreement”). Completion of the disposal is dependent of
executing a sale and purchase agreement (“SPA”) and customary regulatory consents. The SPA was executed
on 27 March 2023. The Group expects the disposal to complete by end of Q3, 2023.
As at the reporting date, the Board of Directors had committed to the disposal of CEL and the Italian
operation under the terms of the Option Agreement, and resultantly the Group classified the assets and
liabilities of its Italian business as a disposal group held for sale, as well as a discontinued operation, as at 31
December 2022.
Accounting for investment in ion Ventures Holdings Limited
In November 2020, the Group acquired a 20.3% shareholding in ion Ventures Holdings Limited (“IVHL”)
in exchange for cash consideration of £500k (US$682k). IVHL was founded in the UK in 2018 to exploit
opportunities that arise from the increasing complexity of energy systems, the shift to distributed generation
and more localised networks, and the need for flexible and responsive solutions.
Under IFRS, the accounting for an interest in another entity depends on the level of influence held over the
investee by the investor. Management have concluded that IVHL is an associate of the Group, due to Coro
exercising “significant influence” over IVHL. With reference to the factors outlined in IAS 28 Investments in
Associates and Joint Ventures, we concluded that significant influence arises as a result of:
•
20.3% shareholding in IVHL, which is above the 20% threshold at which significant influence is presumed to
exist under IFRS (though this presumption can be rebutted);
•
Right to appoint one director (of five) to the Board of Directors of IVHL; and
•
Ability to exercise reserved powers under a Shareholder Agreement to participate in the key strategic and
operational decisions of the investee, such as approval of annual budgets.
Associates are accounted for using the equity method, which is described further in note 3a.
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
51
Stock code: CORO
FINANCIAL STATEMENTS
Note 2: Basis of Preparation continued
Accounting for investment in Coro Renewables VN1 Joint Stock Company
In October 2021, a binding shareholder agreement was signed with Vinh Phuc Energy JSC (“VPE”) and the
Group acquired an 85% interest in the newly incorporated Vietnamese company, Coro Renewables VN1 Joint
Stock Company (“CRV1”), which owns 100% of Coro Renewables VN2 Company Limited, which in turn owns
100% of Coro Renewables Vietnam Company Limited.
Under IFRS, the accounting for an interest in another entity depends on the level of influence held over
the investee by the investor. Management have concluded that CRV1 is an indirectly held subsidiary of
the Company, due to the Company controlling more than half of the voting rights. With reference to the
factors outlined in IAS 27 Consolidated and Separate Financial Statements, we concluded that there were no
contraindications of control.
•
There is no agreement with VPE giving them control of the joint venture;
•
There is no statute or agreement ceding control to any other party; and
•
VPE does not have the power to appoint or remove the majority of the Board of Directors.
During 2022 the three Vietnamese Companies commenced trading therefore 100% of the transactions
relating to CRV1 and its subsidiary undertakings have been recorded in these consolidated financial
statements and the Group has recognised the appropriate non-controlling interest.
Share option and warrants
The Black-Scholes model is used to calculate the appropriate charge of the share options and warrants. The
use of this model to calculate the charge involves a number of estimates and judgements to establish the
appropriate inputs to be entered into the model, covering areas such as the use of an appropriate interest rate
and dividend rate, exercise restrictions and behavioural considerations. A significant element of judgement is
therefore involved in the calculation of the charge.
(ii) Key accounting estimates
Estimate of gas reserves and resources
The disclosed amount of the Group’s gas reserves and resources impacts a number of accounting estimates in
the financial statements including future cash flows used in asset impairment reviews, see note 13, and timing
of rehabilitation spend used to calculate rehabilitation provisions.
In respect of the Group’s Italian assets that are held for sale, estimation of recoverable quantities of Proved
and Probable reserves is based on a number of factors including expected commodity prices, discount rates,
future capital expenditure and operating costs impacting future cash flows. It also requires interpretation of
complex geological and geophysical models in order to make an assessment of the size, shape, depth and
quality of reservoirs, and their anticipated recoveries. The economic, geological and technical factors used to
estimate reserves may change from period to period.
The Group employs staff with the appropriate knowledge, skills and experience to estimate reserves quantities.
Periodically, the Group’s reserves calculations are also subject to independent third-party certification by a
competent person.
Gas reserves and resources are disclosed in the Operational Report on page 10.
Measurement of non-current assets (and disposal groups) classified as held for sale (note 19)
At 31 December 2022, the Group classified the assets and liabilities of its Italian business (the “Italian portfolio”)
as a disposal group held for sale. Given the Italian business represents a separate geographical area of
operation for the Group, the Italian results have also been treated as a discontinued operation.
As required by IFRS 5, the Group estimated the fair value of the entire Italian business at the balance sheet
date to determine if any further write-downs are required. Management determined the fair value of the
disposal group with reference to the Option Agreement with Zodiac. This led to an impairment reversal
of US$1,479k (2021: impairment of US$894k), which has been allocated across non-current assets on a
pro-rata basis.
52
Coro Energy plc
www.coroenergyplc.com
Note 2: Basis of Preparation continued
Assessment of indicators of impairment of intangible exploration and evaluation assets (note 13)
The Group’s exploration and evaluation assets, comprising assets related to the Duyung PSC (and excluding
Italian exploration and evaluation assets held in disposal group), are assessed for indicators of impairment
under IFRS 6 Exploration for, and evaluation of, mineral resources. Based on estimates as at 31 December 2022,
there was $Nil write-off (2021: $Nil).
The Group acquired its 15% interest in the Duyung PSC in April 2019 and participated in a 2-well drilling
campaign in 2019 that successfully appraised Mako gas field.
During 2022 the Operator of Mako field commissioned Gaffney, Cline and Associates (“GCA”) to perform an
updated independent resource audit for the Mako gas field as at 31 July 2022. The resource audit assessed
that 2C (contingent) recoverable resource estimates are 437 Bcf (gross), and in the upside case, the 3C
(contingent) resources increased are 779 Bcf (gross). The results of this independent resource audit supports
management’s view on the potential to develop the Mako field.
As a result of the resource confirmation, which was incorporated into our own updated economic modelling
for Duyung, no impairment indicators were noted.
Impairment testing of exploration and evaluation assets recorded as assets of a disposal group held for sale is
discussed above.
Rehabilitation provisions (note 19)
Costs relating to rehabilitation of oil and gas fields recorded within liabilities of a disposal group held for sale
will be incurred many years in the future and the precise requirements for these activities are uncertain.
Technologies and costs are constantly changing, as well as political, environmental, safety and public
expectations. A change in the key assumptions used to calculate rehabilitation provisions could have a
material impact on the carrying value of the provisions. Currently, the Group’s rehabilitation provisions relate
solely to oil and gas fields in Italy, and are recorded within liabilities of a disposal group held for sale.
The carrying value of these provisions in the financial statements represents an estimate of the present value
of the future costs expected to be incurred to rehabilitate each field, which are reviewed at least annually.
Future costs are estimated by internal experts, with external specialists engaged periodically to assist
management. These estimates are based on current price observations, taking into account developments
in technology and changes to legal and contractual requirements. Expectations regarding cost inflation are
also incorporated. Future cost estimates are discounted to present value using a rate that approximates the
time value of money, which ranges between 1.25% and 1.75% (2021: 1.25% to 1.75%) depending on the expected
year of rehabilitation spend. The discount rate is based on the average yield on Italian Government bonds of
a duration that matches the expected year of expenditures, incorporating a risk premium appropriate to the
nature of the liabilities.
Recoverability of deferred tax assets (note 8)
The recoverability of deferred tax assets recorded within assets of a disposal group held for sale is dependent
on the availability of taxable profits in future years. The Group undertakes a forecasting exercise at each
reporting date to assess its expected utilisation of these losses. The key areas of estimation uncertainty in
these forecasts are future gas prices, production rates, capital and operating costs, and overhead expenses,
all of which could impact the generation of taxable profits by Italian subsidiaries. The model used to calculate
expected utilisation of tax losses is prepared on a consistent basis to the DCF models used to test for
impairment, but with the inclusion of corporate overheads and other non-asset specific costs. The DTA was
partially written down in 2018, and again in 2020; no further write-down is deemed necessary at 31 December
2022 (2021: no write-down).
Assessment of indicators of impairment of investment in associates (note 23)
The Company holds a 20.3% interest in ion Ventures Holdings Limited (“ion Ventures”). This investment is
accounted for as an associate using the equity method.
The Company considered whether there should be any impairment of the investment as at 31 December 2022
and based on the forecasts prepared by the management of ion Ventures and the dividend stream expected
from its investment in Flexion Energy, the Company’s investment in ion Ventures is deemed to be recoverable
in full.
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
53
Stock code: CORO
FINANCIAL STATEMENTS
Note 2: Basis of Preparation continued
Company only – impairment assessment for investment in subsidiaries, including loans and receivables
(notes 13, 15 and 20)
The Company is required to assess its investments in subsidiaries for impairment at each reporting date. The
Company’s main assets are its Italian gas portfolio, held by Apennine Energy SpA (“Apennine”), its interest
in the Duyung PSC, held by Coro Energy Duyung (Singapore) Pte Ltd (“CEDSPL”) and its investment in
the solar pilot project in Vietnam, held by Coro Renewables Vietnam Company Limited (CRVCL”). As such,
the recoverability of investments in subsidiaries depends on the Company’s assessment of indicators of
impairment of the underlying assets recorded within its subsidiaries.
As noted above, and in note 13, the Company identified no indicators of impairment for its 15% interest in
the Duyung PSC and, accordingly, the Company’s investment in CEDSPL (held indirectly) is deemed to be
recoverable in full.
As noted further above, and in note 19, the Company’s investment in Apennine (held indirectly) is held at the
lower of the net book value or its recoverable amount being the sale price agreed Zodiac Energy plc pursuant
to the Option Agreement.
The Company performed an impairment tests on its solar pilot project in Vietnam and found that the
recoverable value in use exceeds the net book value, accordingly, the Company’s investment in CRVCL (held
indirectly) and receivables from CRVCL is deemed to be recoverable in full.
Note 3: Significant Accounting Policies
(a) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements include the results of Coro Energy plc and its subsidiary undertakings
made up to the same accounting date. Subsidiaries are entities controlled by the Group. The Group controls
an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control commences until the date that
control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with
the policies adopted by the Group. All intra-group balances, transactions, income and expenses are eliminated
in full on consolidation.
(ii) Interests in other entities
The Group classifies its interests in other entities based on the level of control exercised by the Group over the
entity.
Associates
Associates are all entities over which the Group has significant influence but not control or joint control.
This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in
associates are accounted for using the equity method of accounting.
Under the equity method of accounting, the investments are initially recognised at cost, including any directly
attributable transaction costs, and adjusted thereafter to recognise the Group’s share of the post-acquisition
profits or losses of the investee in profit or loss. The Group’s share of movements in other comprehensive
income of the investee are recognised in other comprehensive income. Dividends received or receivable from
associates and joint ventures are recognised as a reduction in the carrying amount of the investment.
Where the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the
entity, the Group does not recognise further losses, unless it has incurred obligations or made payments on
behalf of the other entity.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of
the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have
been changed where necessary to ensure consistency with the policies adopted by the Group.
The carrying amount of equity-accounted investments is tested for impairment at least annually.
54
Coro Energy plc
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Note 2: Basis of Preparation continued
Other investments
In a situation where the Group has direct contractual rights to the assets, and obligations for the liabilities,
of an entity but does not share joint control, the Group accounts for its interest in those assets, liabilities,
revenues and expenses in accordance with the accounting standards applicable to the underlying line item.
This is analogous to the “joint operator” method of accounting outlined in IFRS 11 Joint arrangements.
(b) Taxation
Income tax expense or credit for the period is the tax payable on the current period’s taxable income, based
on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences and to unused tax losses.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantially enacted at the date of the statement of financial position, and any adjustment to tax payable in
respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The following temporary differences are not provided for the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments
in subsidiaries to the extent that the Group is able to control the timing of the reversal of the temporary
difference and it is probable that they will not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities using tax rates enacted at the date of the statement of financial position.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets
and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets
and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on
a net basis, or to realise the asset and settle the liability simultaneously.
(c) Property, plant and equipment
(i) Recognition and measurement
Property, plant and equipment comprises the Group’s tangible oil and gas assets, solar equipment as well as
office furniture and equipment. Items of property, plant and equipment are recorded at cost less accumulated
depreciation, accumulated impairment losses and pre-commissioning revenue and expenses. Cost includes
expenditure that is directly attributable to acquisition of the asset.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised
within “other income” in profit or loss.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with
expenditure will flow to the Group.
(iii) Depreciation
Oil and gas assets
Oil and gas assets includes gas production facilities and the accumulation of all exploration, evaluation,
development and acquisition costs in relation to areas of interest in which production licences have been
granted and the related project has moved to the production phase.
Amortisation of oil and gas assets is calculated on the units-of-production (“UOP”) basis, and is based on
Proved and Probable reserves. The use of the UOP method results in an amortisation charge proportional
to the depletion of economically recoverable reserves. Amortisation commences when commercial levels of
production are achieved from a field or licence area.
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
55
Stock code: CORO
FINANCIAL STATEMENTS
Note 2: Basis of Preparation continued
The useful life of oil and gas assets, which is assessed at least annually, has regard to both its physical
life limitations and present assessments of economically recoverable reserves of the field at which the
asset is located. These calculations require the use of estimates and assumptions, including the amount
of recoverable reserves and estimates of future capital expenditure. The calculation of the UOP rate of
depreciation/amortisation will be impacted to the extent that actual production in the future is different from
current forecast production based on total proved reserves, or future capital expenditure estimates change.
Changes to recoverable reserves could arise due to changes in the factors or assumptions used in estimating
reserves, including:
•
The effect of changes in commodity price assumptions; or
•
Unforeseen operational issues that impact expected recovery of hydrocarbons.
Assets designated as held for sale, or included in a disposal group held for sale, are not depreciated.
Other property, plant and equipment
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part
of an item of property, plant and equipment. The depreciation will commence when the asset is installed
ready for use.
The estimated useful lives of each class of asset fall within the following ranges:
Solar equipment
8 – 25 years
Office furniture and equipment
3–5 years
The residual value, the useful life and the depreciation method applied to an asset are reviewed at each
reporting date.
(iv) Impairment
The Group assesses at each reporting date whether there is an indication that an asset (or Cash Generating
Unit – “CGU”) may be impaired. For oil and gas assets, management has assessed its CGUs as being an
individual field, which is the lowest level for which cash inflows are largely independent of those of other
assets. For Solar equipment, management has assessed its CGUs as being individual solar arrays including
inverters. If any indication exists, or when annual impairment testing for an asset is required, the Group
estimates the asset’s or CGU’s recoverable amount. The recoverable amount is the higher of an asset’s or
CGU’s fair value less costs of disposal (“FVLCD”) and value in use (“VIU”). Where the carrying amount of an
asset or CGU exceeds its recoverable amount, the asset/CGU is considered impaired and is written down to its
recoverable amount.
The Group bases its impairment calculation on detailed budgets and forecasts, which are prepared separately
for each of the Group’s CGUs to which the individual assets are allocated. These budgets and forecasts
generally cover the forecasted life of the CGUs. VIU does not reflect future cash flows associated with
improving or enhancing an asset’s performance.
For assets/CGUs, an assessment is made at each reporting date to determine whether there is an indication
that previously recognised impairment losses may no longer exist or may have decreased. If such indication
exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment
loss is reversed only if there has been a change in the assumptions used to determine the asset’s/CGU’s
recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying
amount of the asset/CGU does not exceed either its recoverable amount, or the carrying amount that would
have been determined, net of depreciation/amortisation, had no impairment loss been recognised for the
asset/CGU in prior years. Such a reversal is recognised in the income statement.
(d) Intangible assets
(i) Exploration and evaluation assets
Exploration and evaluation assets are carried at cost less accumulated impairment losses in the statement of
financial position. Exploration and evaluation assets include the cost of oil and gas licences, and subsequent
exploration and evaluation expenditure incurred in an area of interest.
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Coro Energy plc
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Note 2: Basis of Preparation continued
Exploration and evaluation assets are not depreciated. When the commercial and technical feasibility of
an area of interest is proved, capitalised costs in relation to that area of interest are transferred to property,
plant and equipment (oil and gas assets) and depreciation commences in line with the depreciation policy
outlined above.
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical
feasibility and commercial viability or facts and circumstances suggest that the carrying value amount
exceeds the recoverable amount.
Exploration and evaluation assets are tested for impairment when any of the following facts and
circumstances exist:
•
the term of the exploration licence in the specific area of interest has expired during the reporting period
or will expire in the near future, and is not expected to be renewed;
•
substantive expenditure on further exploration for an evaluation of mineral resources in the specific area is
not budgeted nor planned;
•
exploration for and evaluation of mineral resources in the specific area have not led to the discovery of
commercially viable quantities of mineral resources and the decision was made to discontinue such
activities in the specific area; or
•
sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the
carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful
development or by sale.
Areas of interest that no longer satisfy the above policy are considered to be impaired and are measured at
their recoverable amount, with any subsequent impairment loss recognised in the profit and loss.
(ii) Software
Costs for acquisition of software, including directly attributable costs of implementation, are capitalised as
intangible assets and amortised over their expected useful life (currently five years).
(iii) Goodwill
Goodwill arising from business combinations is included in intangible assets.
Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made
to those cash-generating units or groups of cash-generating units that are expected to benefit from the
business combination in which the goodwill arose.
(iv) Research and Development
Development costs that are directly attributable to the design and development of identifiable and unique
projects controlled by the Group are recognised as intangible assets when the following criteria are met:
•
It is technically feasible to complete the project;
•
Management intends to complete the project;
•
There is sufficient certainty that contractual rights, planning and permitting will be agreed;
•
It can be demonstrated how the project will generate probable future economic benefits;
•
Adequate technical, financial and other resources to complete the project are available; and
•
The expenditure attributable to the project can be reliably measured.
Other development expenditures that do not meet these criteria are recognised as an expense as incurred.
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
57
Stock code: CORO
FINANCIAL STATEMENTS
Note 2: Basis of Preparation continued
(e) Inventory
Inventory is comprised of drilling equipment and spares and is carried at the lower of cost and net realisable
value. Any impairment on value is taken to the income statement.
(f) Non-current assets (or disposal groups) held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use, they are available for sale in their
present condition, they are being actively marketed, and a sale is considered highly probable. These conditions
must be continuing for the assets to continue to be classified as held for sale.
Disposal groups are measured at the lower of their carrying amount and fair value less costs to sell, except
for certain assets such as deferred tax assets, which are specifically exempt from this requirement. An
impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair
value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an
asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or
loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised
at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while
they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group
classified as held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are
presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as
held for sale are presented separately from other liabilities in the balance sheet.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for
sale and that represents a separate major line of business or geographical area of operations, is part of a
single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired
exclusively with a view to resale. The results of discontinued operations are presented separately in the
statement of profit or loss.
(g) Investments and financial assets
(i) Classification
The Group classifies its financial assets in the following measurement categories:
•
those to be measured subsequently at fair value (either through other comprehensive income or through
profit or loss); and
•
those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows.
(ii) Recognition and measurement
A financial asset is recognised if the Group becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets
expire or if the Group transfers the financial asset to another party without retaining control or substantially all
risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade
date, i.e. the date the Group commits itself to purchase or sell the asset.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss (“FVTPL”), transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit
or loss.
Subsequent measurement of debt instruments depends on the Group’s business model for managing the
asset and the cash flow characteristics of the asset. Currently, the Group’s financial assets are all held for
collection of contractual cash flows, which are solely payments of principal and interest. Accordingly, the
Group’s financial assets are measured subsequent to initial recognition at amortised cost.
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Coro Energy plc
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Note 2: Basis of Preparation continued
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on
demand and form an integral part of the Group’s cash management are included as a component of cash
and cash equivalents for the purpose of the statement of cash flows.
(iii) Impairment
On a forward-looking basis, the Group estimates the expected credit losses associated with its receivables and
other financial assets carried at amortised cost, and records a loss allowance for these expected losses.
(iv) Investment in subsidiaries
In the Company balance sheet, investments in subsidiaries are carried at cost less accumulated impairment.
(h) Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered into, and they are
subsequently remeasured to their fair value at the end of each reporting period.
(i) Provisions
(i) Rehabilitation provision
Rehabilitation obligations arise when the Group disturbs the natural environment where its oil and gas assets
are located and is required by local laws/regulations to restore these sites.
Full provision for these obligations is made based on the present value of the estimated costs to be incurred
in dismantling infrastructure, plugging and abandoning wells and restoring sites to their original condition.
Changes to future cost estimates are capitalised and recorded in property, plant and equipment (oil and gas
assets) as rehabilitation assets, unless the carrying value of these assets is not supportable, in which case
changes to rehabilitation provisions are recorded directly in the income statement. Future cost estimates are
inflated to the expected year of rehabilitation activity and discounted to present value using a market rate of
interest that is deemed to approximate the time value of money.
The estimated costs of rehabilitation are reviewed annually and adjusted against the relevant rehabilitation
asset or in the income statement, as appropriate. Annual increases in the provision relating to the unwind of
the discount rate are accounted for in the income statement as a finance expense.
(ii) Other provisions
Other provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the present obligation at the end of the reporting period. The provisions are discounted to
present value using a market rate of interest that is deemed to approximate the time value of money. The
increase in the provision due to the passage of time is recognised as interest expense.
(j) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred, and subsequently measured
at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
Loan fees paid on the establishment of loan facilities are recognised as transaction costs of the loan and
amortised over the life of the borrowings.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting period.
(k) Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end
of the financial year that are unpaid. The amounts are unsecured and are usually paid within 30 days of the
invoice date. Trade and other payables are presented as current liabilities unless payment is not due within 12
months after the reporting period. They are recognised initially at their fair value and subsequently measured
at amortised cost using the effective interest method.
(l) Share capital
Ordinary Shares are classified as equity. Incremental costs directly attributable to issue of shares are
recognised as a deduction from equity, net of any tax effects.
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
59
Stock code: CORO
FINANCIAL STATEMENTS
Note 2: Basis of Preparation continued
(m) Share-based payments
Share-based payments relate to transactions where the Group receives services from employees or service
providers and the terms of the arrangements include payment of a part or whole of consideration by issuing
equity instruments to the counterparty. The Group measures the services received from non-employees, and
the corresponding increase in equity, at the fair value of the goods or services received. When the transactions
are with employees, the fair value is measured by reference to the fair value of the share based payments.
The expense is recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied.
(n) Revenue
Under IFRS 15 Revenue from Contracts with Customers, there is a five-step approach to revenue recognition:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the contract; and
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.
The Group has two revenue streams, being the sale of gas (recorded within profit from discontinued
operations), and the sale electricity from a solar project. Gas is sold to wholesale customers under gas supply
agreements, which have different volume and price specifications (both fixed and variable). Gas sales revenue
is recognised when control of the gas passes at the delivery point into the local gas pipeline network, which
is the only performance obligation. Electricity is sold to an industrial customer under a power purchase
agreement. Revenue is recognised based on actual produced electricity, which is the only performance
obligation, at contractual rates. Revenue is presented net of value added tax (“VAT”), rebates and discounts
and after eliminating intra-group sales.
(o) Leases
Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased
asset is available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:
•
Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
•
Variable lease payment that are based on an index or a rate, initially measured using the index or rate as at
the commencement date;
•
Amounts expected to be payable by the Group under residual value guarantees;
•
The exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
•
Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the
measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is
used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an
asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security
and conditions.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss
over the lease period.
60
Coro Energy plc
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Note 2: Basis of Preparation continued
Right-of-use assets are measured at cost which comprises the following:
•
The amount of the initial measurement of the lease liability;
•
Any lease payments made at or before the commencement date less any lease incentives received;
•
Any initial direct costs; and
•
Restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on
a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
Payments associated with short-term leases (term less than 12 months) and all leases of low-value assets
(generally less than US$5k) are recognised on a straight-line basis as an expense in profit or loss.
(p) Changes to accounting policies, disclosures, standards and interpretations
(i) New and amended standards adopted by the Group
The following new standards, amendments and interpretations are effective for the first time in these financial
statements. However, none has had a material impact on the financial statements:
Standard
Effective date
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)
1 January 2022
Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16
and IAS 41)
1 January 2022
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
1 January 2022
References to Conceptual Framework (Amendments to IFRS 3)
1 January 2022
(ii) New standards not yet adopted
There are no new International Financial Reporting Standards and Interpretations issued but not effective for
the reporting period ending 31 December 2022 that will materially impact the Group.
Note 4: Segment Information
The Group’s reportable segments as described below are based on the Group’s geographic business units.
This includes the Group’s upstream gas operations in Italy, upstream gas and renewables operations in South
East Asia, and the corporate head office in the United Kingdom. This reflects the way information is presented
to the Board of Directors. Results from the Group’s Italian business are classified as a discontinued operation.
See note 19.
Italy
Asia
UK
Total
31 Dec
2022
US$’000
31 Dec
2021
US$’000
31 Dec
2022
US$’000
31 Dec
2021
US$’000
31 Dec
2022
US$’000
31 Dec
2021
US$’000
31 Dec
2022
US$’000
31 Dec
2021
US$’000
Revenue
–
–
51
–
–
–
51
–
Depreciation and amortisation
–
–
(21)
–
(15)
(18)
(36)
(18)
Interest expense
–
–
–
–
(3,584)
(4,500)
(3,584)
4,500
Share of loss of associates
–
–
–
–
(82)
(249)
(82)
(249)
Segment loss before tax
from continuing operations
–
–
(662)
(278)
(7,525)
(6,197)
(8,187)
(6,475)
Segment profit/(loss) before tax
from discontinued operations
2,642
(1,510)
–
–
–
–
2,642
(1,510)
Italy
Asia
UK
Total
31 Dec
2022
US$’000
31 Dec
2021
US$’000
31 Dec
2022
US$’000
31 Dec
2021
US$’000
31 Dec
2022
US$’000
31 Dec
2021
US$’000
31 Dec
2022
US$’000
31 Dec
2021
US$’000
Segment assets
9,710
8,224
20,129
17,985
1,293
4,212
31,132
30,421
Segment liabilities
(9,548)
(8,889)
(182)
(1,073)
(28,715)
(25,989)
(38,445)
(35,951)
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
61
Stock code: CORO
FINANCIAL STATEMENTS
Note 5: General and Administrative Expenses
31 December
2022
US$’000
31 December
2021
US$’000
Employee benefits expense (note 6)
1,401
1,031
Business development
650
786
Corporate and compliance costs
667
451
Investor and public relations
223
247
G&A – Duyung venture
275
199
Other G&A
162
314
Share-based payments (note 22)
196
248
3,574
3,276
Auditor’s remuneration
Services provided by the Group’s auditor and its associates
During the year, the Group (including its overseas subsidiaries) obtained the following services from the
Company’s auditor and its associates:
31 December
2022
US$’000
31 December
2021
US$’000
Fees payable to the Company’s auditor for the audit of the Parent Company and
consolidated financial statements
49
49
Fees payable to the Company’s auditor for other services:
Audit of subsidiaries
–
–
Note 6: Staff Costs and Directors’ Emoluments
Group
Staff costs
31 December
2022
US$’000
31 December
2021
US$’000
Wages and salaries
436
327
Pensions and other benefits
50
18
Social security costs
59
41
Share-based payments (note 22)
51
88
Total employee benefits
596
474
Average number of employees from continuing operations
(excluding Directors)
4
2
62
Coro Energy plc
www.coroenergyplc.com
Note 6: Staff Costs and Directors’ Emoluments continued
Group
Directors’ emoluments
31 December
2022
US$’000
31 December
2021
US$’000
Wages and salaries
776
568
Pensions and other benefits
5
7
Social security costs
100
70
Share-based payments (note 22)
145
160
Total employee benefits
1,026
805
The highest paid Director received aggregate emoluments of US$403k (2021: US$205k) as disclosed in the
Directors’ Remuneration Report on page 32.
Note 7: Finance Income/Expense
Group
Finance income
31 December
2022
US$’000
31 December
2021
US$’000
Interest income
–
1
Foreign exchange gain
636
2,238
Total finance income
636
2,239
Group
Finance expense
31 December
2022
US$’000
31 December
2021
US$’000
Interest on borrowings
3,584
4,500
Foreign exchange loss
1,907
671
Total finance expense
5,491
5,171
Note 8: Income Tax
Income tax
Group
31 December
2022
US$’000
31 December
2021
US$’000
Deferred tax
(583)
–
Current tax
(1,325)
–
Total tax expense
(1,908)
–
Income tax expense is attributable to:
Loss from discontinued operations
(1,908)
–
(1,908)
–
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
63
Stock code: CORO
FINANCIAL STATEMENTS
Note 8: Income Tax continued
Numerical reconciliation of income tax result recognised in the statement of comprehensive income to tax
benefit/expense calculated at the Group’s statutory income tax rate is as follows:
Group
31 December
2022
US$’000
31 December
2021
US$’000
Loss from continuing operations before tax
(8,187)
(6,475)
Profit from discontinued operations before tax
4,550
(1,510)
Total loss before tax
(3,637)
(7,985)
Income tax benefit using the Group’s blended tax rate of 12.7% (2021: 19.0%)
462
1,180
Non-deductible expenses
(548)
(339)
Non-taxable income
607
–
Deferred tax expense
(583)
–
Prior year adjustment
(363)
(260)
Tax losses utilised
583
–
Special excess profit tax – Italy
(1,325)
–
Current year losses and temporary differences for which no deferred tax asset
was recognised
(741)
(581)
Income tax benefit/(expense)
(1,908)
–
Deferred tax
Deferred tax assets (“DTA”) totalling US$674k (2021: US$1.3m) are recorded within assets of the disposal
group, and have been recognised in respect of tax losses and temporary differences based on management
assessment that future taxable profit will be available against which the Italian subsidiary company can
utilise the benefits. No DTA in respect of carried forward tax losses has been recognised in respect of any
UK or Singapore domiciled Group company due to doubt about the availability of future profits in these
companies. Total unrecognised losses (gross) in respect of continuing operations are US$25m (2021: US$17m).
Unrecognised losses (gross) relating to discontinued operations total US$88m (2021: US$82m).
Note 9: Earnings per Share
31 December
2022
31 December
2021
Basic loss per share from continuing operations (US$)
(0.004)
(0.003)
Diluted loss per share from continuing operations (US$)
(0.004)
(0.003)
Basic profit/(loss) per share from discontinued operations (US$)
0.001
(0.001)
Diluted profit/(loss) per share from discontinued operations (US$)
0.001
(0.001)
The calculation of basic loss per share from continuing operations was based on the loss attributable to
shareholders of US$8.2m (2021: US$6.5m) and a weighted average number of Ordinary Shares outstanding
during the year of 2,170,773,822 (2021: 1,917,559,412).
Basic profit or loss per share from discontinued operations was based on the profit attributable to
shareholders from discontinued operations of US$2.9m (2021: loss of US$1.5m).
Diluted loss per share from continuing operations for the current and comparative periods and diluted loss
per share from discontinued operations for the comparative period is equivalent to basic loss per share since
the effect of all dilutive potential Ordinary Shares is anti-dilutive. Diluted profit per share from discontinued
operations for the current period includes the potential dilutive effect of all share options and warrants that
were “in the money” as at 31 December 2022, being 151,031,166 options issued to Directors and management.
The potential dilutive shares includes options issued to Directors and management (note 22).
64
Coro Energy plc
www.coroenergyplc.com
Note 10: Inventory
Group
31 December
2022
US$’000
31 December
2021
US$’000
Inventory – Duyung PSC
34
37
34
37
Inventory represents the Group’s share of inventory held by the Duyung PSC, which is mainly comprised of
drilling spares.
Note 11: Trade and Other Receivables
Group
31 December
2022
US$’000
31 December
2021
US$’000
Current:
Trade receivables
37
–
Indirect taxes receivable
103
39
Other receivables
18
20
Prepayments and accrued income
55
47
213
106
Company
31 December
2022
US$’000
31 December
2021
US$’000
Current:
Indirect taxes receivable
41
39
Other receivables
107
1
Intercompany receivables
3,022
576
Prepayments
34
63
3,204
679
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
65
Stock code: CORO
FINANCIAL STATEMENTS
Note 12: Property, Plant and Equipment
Group
31 December
2022
US$’000
31 December
2021
US$’000
Office furniture and equipment
3
10
Solar assets
1,851
–
1,854
10
Reconciliation of the carrying amounts for each class of property, plant and equipment are set out below:
Group
31 December
2022
US$’000
31 December
2021
US$’000
Office furniture and equipment:
Carrying amount at beginning of period
10
16
Additions
2
3
Depreciation expense
(8)
(9)
Effect of foreign exchange
(1)
–
Carrying amount at end of period
3
10
Group
31 December
2022
US$’000
31 December
2021
US$’000
Solar assets:
Carrying amount at beginning of period
–
–
Additions
1,868
–
Depreciation expense
(21)
–
Effect of foreign exchange
4
–
Carrying amount at end of period
1,851
–
Company
31 December
2022
US$’000
31 December
2021
US$’000
Office furniture and equipment
3
10
3
10
66
Coro Energy plc
www.coroenergyplc.com
Note 12: Property, Plant and Equipment continued
Reconciliation of the carrying amounts for each class of property, plant and equipment are set out below:
Company
31 December
2022
US$’000
31 December
2021
US$’000
Office furniture and equipment:
Carrying amount at beginning of period
10
16
Additions
2
3
Depreciation expense
(8)
(9)
Effect of foreign exchange
(1)
–
Carrying amount at end of period
3
10
Note 13: Intangible Assets
Group
31 December
2022
US$’000
31 December
2021
US$’000
Exploration and evaluation assets
17,707
17,540
Intangible development assets
428
–
Goodwill
754
754
Software
7
15
18,896
18,309
Reconciliation of the carrying amounts for each material class of intangible assets are set out below:
Group
31 December
2022
US$’000
31 December
2021
US$’000
Exploration and evaluation assets:
Carrying amount at beginning of period
17,540
17,251
Reclassification to intangible development assets
(171)
–
Additions
338
289
Carrying amount at end of period
17,707
17,540
Exploration and evaluation assets relate to the Group’s interest in the Duyung PSC. No indicators of
impairment of these assets were noted. See note 2e.
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
67
Stock code: CORO
FINANCIAL STATEMENTS
Note 13: Intangible Assets continued
Group
31 December
2022
US$’000
31 December
2021
US$’000
Intangible development assets
Carrying amount at beginning of period
–
–
Reclassification from exploration and evaluation assets
171
–
Additions
257
–
Carrying amount at end of period
428
–
Intangible development assets comprise additions related to expenditure directly attributable to the design
and development of identifiable and unique renewables projects controlled by the Group in the Philippines.
Group
31 December
2022
US$’000
31 December
2021
US$’000
Goodwill:
Carrying amount at beginning of period
754
–
Recognised on acquisition
–
754
Carrying amount at end of period
754
754
As explained further in note 14, goodwill was recognised following the acquisition of GEPL. No impairment of
goodwill was noted following testing performed at 31 December 2022.
Company
31 December
2022
US$’000
31 December
2021
US$’000
Software
7
15
7
15
Note 14: Business Combination
Global Energy Partnership Limited
On 17 March 2021, the Company completed the acquisition of 100% of the issued capital of Global Energy
Partnership Limited (“GEPL”) in exchange for 142.5 million new Ordinary Shares in the Company. GEPL is
incorporated in the United Kingdom and involved in the origination and development of renewable energy
projects in South East Asia.
The Company issued 142.5 million new Ordinary Shares to the former GEPL shareholders at 0.4p per share,
being the same price as the fundraise completed concurrently with the acquisition, resulting in a total value
of consideration of £570k (US$754k), which together with transaction costs of US$379k was recorded as an
investment in GEPL by the Company. Transaction costs were expensed within General and Administrative
expenses as business development costs in the Group’s 2021 consolidated financial statements.
The full purchase consideration of £570k (US$754k at the date of the transaction) was allocated to goodwill.
No impairment of goodwill was identified in the period from acquisition to 31 December 2022.
Revenue and profit contribution
The acquired business contributed nil revenues and a net loss of US$23k to the Group in the period from
17 March 2021 to 31 December 2021. If the business were acquired on 1 January 2021, the Group’s loss before tax
for 2021 would have increased by US$2k.
68
Coro Energy plc
www.coroenergyplc.com
Note 15: Trade and Other Payables
Group
31 December
2022
US$’000
31 December
2021
US$’000
Current
Trade payables
143
216
Other payables
78
90
Accrued expenses
416
119
Joint venture payables
182
–
819
425
Company
31 December
2022
US$’000
31 December
2021
US$’000
Current
Trade payables
265
687
Accrued expenses
414
119
Intercompany payables
55
–
734
806
Included within trade payables of the Company is a net payable of US$92k (2021: US$464k) due to Sound
Energy plc (“Sound”) for the expected sales proceeds to be received for the sale of the Badile land, which are
due to Sound under an agreement entered into by the two companies in 2018, offset by certain rehabilitation
costs in relation Badile land which remains the financial responsibility of Sound and is due by Sound to Coro
under the same agreement.
Apennine Energy SpA, the Company’s subsidiary, entered into an agreement with Immobilandia Srl to dispose
of the Badile land in two parcels, Area 1 and Area 2. The sale of Area 1 was completed on 12 February 2021 for
proceeds of €250k (US$283k at year-end 2021 exchange rates), which were remitted to Sound net of costs
incurred by Apennine. The sale of Area 2 is expected to complete in the first half of 2023. Subject to satisfactory
completion of the rehabilitation works, Immobilandia will acquire Area 2 for €350k (US$373k at year-end
exchange rates).
The estimated outstanding Badile land rehabilitation liabilities due from Sound was €264k (US$ 282k at year-
end exchange rates). The Company has therefore recognised the net payable to Sound of US$92k above.
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
69
Stock code: CORO
FINANCIAL STATEMENTS
Note 16: Borrowings
31 December
2022
US$’000
31 December
2021
US$’000
Current
Eurobond
–
26,637
–
26,637
Non-current
Eurobond
28,183
–
28,183
–
In 2019, the Group successfully completed the issue of €22.5m three-year Eurobonds with attached warrants
to key institutional investors. The bonds were issued in two equal tranches A and B, ranking pari passu, with
Tranche A paying a 5% cash coupon annually in arrears, and Tranche B accruing interest at 5% per annum
payable on redemption.
The Eurobonds were due to mature on 12 April 2022 at 100% of par value plus any accrued and unpaid coupon.
Bond subscribers were issued with 41,357,500 warrants to subscribe for ten new Ordinary Shares in the
Company at an exercise price of 4p per share at any time over the three-year term of the bonds. An additional
6,000,000 warrants were issued to the firm subscriber Lombard Odier Asset Management (Europe) Limited
and underwriter Pegasus Alternative Fund Ltd. All warrants related to the Eurobonds expired in April 2022 and
none were exercised.
The warrants were valued on grant date at 3.3p per warrant using the Black-Scholes method, with the total fair
value of warrants (US$2.0m) treated as a transaction cost and amortised over the life of the bonds.
The bonds were initially recognised at fair value and subsequently are recorded at amortised cost, with an
average effective interest rate of 18.10%.
In March and April 2022 respectively, the Noteholders and Tranche A Noteholders approved the extension of
the maturity of the bonds by two years to 12 April 2024 with an increase in the coupon to 10% accrued annually
and payable in cash on redemption. In addition, the Company undertook to the Noteholders that in the event
of a sale of the Company’s interest in the Duyung PSC to utilise the net cash proceeds of such disposal(s) to
first repay the capital and rolled up interest on the Notes and thereafter to distribute 20% of remaining net
proceed(s) to Noteholders. The remaining net proceeds of any sales would be retained and/or distributed to
shareholders by the Company.
The restructured bonds were initially recognised at fair value and subsequently are recorded at amortised
cost, with an average effective interest rate of 12.10%. The contingent payment upon the sale of the Company’s
interest in the Duyung PSC has not been considered in the estimate of the effective interest rate as it meets
the definition of a contingent liability (note 24).
At the option of a requisite number of Noteholders they may, at the expiry of each quarter on or after
12 July 2022, demand quarterly interest payments in newly issued ordinary shares of the Company. This election
was made for the quarter ended 12 October 2022 and the quarterly interest was settled in shares (note 17).
Net debt reconciliation
An analysis of net debt and the movements in net debt for each of the periods presented is shown below:
Group
31 December
2022
US$’000
31 December
2021
US$’000
Cash and cash equivalents
166
3,334
Borrowings
(28,183)
(26,637)
Net debt
(28,017)
(23,303)
70
Coro Energy plc
www.coroenergyplc.com
Note 16: Borrowings continued
Cash and cash
equivalents
US$’000
Borrowings
US$’000
Lease
liabilities
US$’000
Total
US$’000
Net debt as at 1 January 2021
1,706
(25,049)
–
(23,343)
Cashflows
1,715
649
–
2,364
Eurobond amortisation
–
(4,512)
–
(4,512)
Effects of foreign exchange
(87)
2,275
–
2,188
Net debt as at 31 December 2021
3,334
(26,637)
–
(23,303)
Cashflows
(3,193)
–
–
(3,193)
Eurobond amortisation
–
(2,832)
–
(2,832)
Effects of foreign exchange
25
1,286
–
1,311
Net debt as at 31 December 2022
166
(28,183)
–
(28,017)
Note 17: Share Capital and Share Premium
Number
000s
Nominal
value
US$’000
Share
premium
US$’000
Total
US$’000
As at 1 January 2022
2,124,036
2,943
50,461
53,404
Shares issued during the period:
Proceeds from share issuance for Eurobond interest
215,941
241
401
642
Closing balance at 31 December 2022
2,339,977
3,184
50,862
54,046
Number
000s
Nominal
value
US$’000
Share
premium
US$’000
Total
US$’000
As at 1 January 2021
806,908
1,103
45,786
46,889
Shares issued during the period:
Issued as consideration for the acquisition of GEPL
142,500
200
597
797
Proceeds from share issuance
1,162,215
1,624
4,046
5,670
Issued for services rendered
12,413
16
32
48
Closing balance at 31 December 2021
2,124,036
2,943
50,461
53,404
All Ordinary Shares are fully paid and carry one vote per share and the right to dividends. In the event of
winding up the Company, Ordinary shareholders rank after creditors. Ordinary Shares have a par value of
£0.001 per share. Share premium represents the issue price of shares issued above their nominal value. As at
the date of these financial statements, the Company has unused authority to issue up to 434,059,278 new
Ordinary Shares to Eurobond Noteholders in lieu of interest and up to 637,211,000 new Ordinary Shares for any
other purpose.
No dividends were paid or declared during the current period (2021: nil).
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
71
Stock code: CORO
FINANCIAL STATEMENTS
Note 18: Reserves
Merger reserve
The Merger reserve of US$9.7m relates to the reorganisation of ownership of Northsun Italia SpA, which
occurred in the first half of 2017, being the difference between the value of shares issued and the nominal
value of the subsidiary’s shares received.
Other reserves
Share-based payments reserve
The increase in share-based payments reserve is attributable to the current period charge relating to options
issued to Directors and management of the Company, which was US$195k (2021: US$391k). US$33k (2021:
US$nil) share options lapsed during the year and were recycled to accumulated losses.
Functional currency translation reserve
The translation reserve comprises all foreign currency differences arising from translation of the financial
position and performance of the Parent Company and certain subsidiaries, which have a functional currency
different to the Group’s presentation currency of USD. The total loss on foreign exchange recorded in other
reserves for the period was US$2,925k (2021: US$485k).
Note 19: Discontinued Operations
As at 31 December 2021, the Group classified the assets and liabilities of its Italian business as a disposal group
held for sale following a decision by the Board of Directors to prioritise full divestment of the Group’s Italian
operations in the first half of 2019. Given the Italian business represents a separate geographical area of
operation for the Group, the Italian results were also treated as a discontinued operation.
In May 2021, the Group announced it had entered into a conditional Sale and Purchase Agreement ("SPA")
with Dubai Energy Partners, Inc ("DEPI") to dispose of the Company's interest in Coro Europe Limited (“CEL”),
which in turn owns Apennine Energy SpA (“AES”), for cash consideration of €300,000 (the "Disposal"). AES
owns all the Group’s gas properties in Italy. Completion of the Disposal was conditional on, inter alia, receipt
of required regulatory approvals from the Italian authorities by 26 February 2022. The Disposal had an
economic effective date of 26 May 2021, however Coro continued to control CEL and AES. As a result, the Group
continued to consolidate the results of CEL and AES in line with the requirements of IFRS 10. The required
regulatory approvals to complete the Disposal were not received by 26 February 2022 and as such, the
Disposal was terminated by the parties.
On 7 March 2022 the Group announced that having completed a full review of the Italian assets it was decided
that, despite the Group remaining focussed on South East Asia, to maximise shareholder value, the Italian
assets would no longer be marketed for sale and would instead be managed for value and cash flow. As such
the Italian business temporarily did not qualify as a disposal group or discontinued operation under IFRS 5
from this date.
The Group, in common with other European gas producers, experienced a significant increase in wholesale
gas prices since March 2022, which resulted in a materially positive impact on the value of the Italian
operations. In August 2022, following unsolicited approaches, the Group entered into an option agreement
with Zodiac Energy plc (“Zodiac”) whereby Zodiac acquired the right, for a period of five months with
a potential two month extension period, to acquire 100% of the issued share capital of CEL for a total
consideration of up to €7.5 million (the “Option Agreement”). As announced by the Company on 24 August
2022, Zodiac paid a non-refundable deposit of €300,000 with a further €5,700,000 to be paid in cash on
completion and further contingent payments up to an aggregate of €1,500,000 through a net profit interest.
A definitive sale and purchase agreement was executed on 27 March 2023 and a initial cash payment of
€1,500,000 was received on 4 April 2023 (see note 26). The shareholders of the company approved the disposal
on 25 April 2023 and the disposal remains dependent only on customary regulatory consents. The Group
expects the disposal to complete by end of Q3, 2023.
The Board of Directors are committed to the disposal of the Italian operation under the terms of the Option
Agreement, and resultantly the Group classified the assets and liabilities of its Italian business as a disposal
group held for sale, as well as a discontinued operation, as at 31 December 2022.
72
Coro Energy plc
www.coroenergyplc.com
Note 19: Discontinued Operations continued
The results of the Italian operations for the period are presented below:
31 December
2022
US$’000
31 December
2021
US$’000
Revenue
6,270
1,202
Operating costs
(2,060)
(971)
Gross profit
4,210
231
Other income
30
1,214
General and administrative expenses
(1,012)
(469)
Change in rehabilitation provisions
52
(25)
Impairment reversals/(losses)
1,330
(2,382)
Profit/(loss) from operating activities
4,610
(1,431)
Finance income
–
–
Finance expense
(60)
(79)
Profit/(loss) before tax
4,550
(1,510)
Income tax expense
(1,908)
–
Profit/(loss) for the period after tax
2,642
(1,510)
The major classes of assets and liabilities of the Italian operations classified as held for sale as at 31 December
2022 are as follows:
31 December
2022
US$’000
31 December
2021
US$’000
Assets
Property, plant and equipment
4,086
3,499
Exploration and evaluation assets
2,215
1,574
Land
374
396
Deferred tax assets
674
1,342
Inventories
241
163
Trade and other receivables
1,502
1,033
Cash
618
217
Total assets
9,710
8,224
Liabilities
Trade and other payables
2,258
1,298
Lease liabilities
221
–
Provisions
6,964
7,591
Total liabilities
9,443
8,889
Net assets
267
(665)
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
73
Stock code: CORO
FINANCIAL STATEMENTS
Note 19: Discontinued Operations continued
The net cash flows of the Italian operations were as follows:
31 December
2022
US$’000
31 December
2021
US$’000
Net cash flow from operating activities
1,606
(953)
Net cash flow from investing activities
(308)
1,195
Net cash flow from financing activities
897
(80)
Net cash inflow
401
162
As explained in note 2e, there were no specific impairments recorded in 2022 to oil and gas assets (producing
assets within PPE and development assets within intangible assets). An impairment of US$21k (2021: US$137k)
was recorded on other PPE (office furniture and equipment) and other assets, representing the amount that
would have otherwise been depreciated if IFRS 5 accounting was not applied. The disposal group as a whole
was tested for impairment as required under IFRS 5. This resulted in a reversal of previous impairment of
US$1,408k (2021: impairment of US$894k), which was allocated across non-current assets pro-rata.
Refer to note 15 for further discussion on the presentation of balances owing to and from Sound Energy, which
relate to the disposal group.
Note 20: Investment in, and Loans to, Subsidiaries
Company
2022
US$’000
2021
US$’000
Cost
At 1 January
52,374
51,255
Additions
–
1,119
At 31 December
52,374
52,374
Accumulated impairment
At 1 January
(33,298)
(33,298)
Impairment
–
–
At 31 December
(33,298)
(33,298)
Impact of foreign exchange
(1,575)
160
Net book value
At 31 December
17,501
19,236
In March 2021, the Company acquired 100% of the issued capital of Global Energy Partnership Limited (“GEPL”)
in exchange for 142.5 million new Ordinary Shares in the Company at 0.4p per share, being the same price as
the fundraise completed concurrently with the acquisition, resulting in a total value of consideration of £570k
(US$754k), which together with transaction costs of US$379k was recorded as an investment in GEPL by the
Company. Restated at the year-end exchange rate at 31 December 2021 the carrying value of the investment is
US$1.1m.
74
Coro Energy plc
www.coroenergyplc.com
Note 20: Investment in, and Loans to, Subsidiaries continued
During the year the Company incurred costs in relation to the CRV1 group’s solar pilot project in Vietnam to
the value of US$2,043k and this amount is included in receivables from the CRV1 group and included in trade
and other receivables.
The Company’s subsidiary undertakings at the date of issue of these financial statements are set out below:
Name
Incorporated
Principal activity
% owned Registered address
Apennine Energy SpA*
Italy
Exploration, development
and production company
100%
Via XXV Aprile 5, San Donato Milanese,
(MI) 2009, Italy
Coro Europe Limited*
England
Holding company
100%
c/o Pinsent Masons LLP, 1 Park Row,
Leeds, England LS1 5AB
Coro Energy Asia Limited* England
Holding company
100%
c/o Pinsent Masons LLP, 1 Park Row,
Leeds, England LS1 5AB
Coro Energy Holdings Cell
A Limited
England
Holding company
100%
c/o Pinsent Masons LLP, 1 Park Row,
Leeds, England LS1 5AB
Coro Energy (Singapore)
Pte Ltd*
Singapore
Holding company
100%
80 Robinson Road #02-00, Singapore
068898
Coro Energy Bulu
(Singapore) Pte Ltd*
Singapore
Holding company
100%
80 Robinson Road #02-00, Singapore
068898
Coro Energy Duyung
(Singapore) Pte Ltd*
Singapore
Exploration and
development company
100%
80 Robinson Road #02-00, Singapore
068898
Coro Asia Renewables Ltd† Scotland
Holding company
100%
12 Traill Drive, Montrose
DD10 8SW, Scotland
Coro Clean Energy
Philippines Inc*#
Philippines
Exploration and
development company
40%
1008 The Infinity Tower, 26th Street,
Bonifacio Global City, Taguig City,
Fourth District, National Capital Region,
Philippines, 1634.
Coro Philippines Project
109 Inc*
Philippines
Exploration and
development company
100%
1008 The Infinity Tower, 26th Street,
Bonifacio Global City, Taguig City,
Fourth District, National Capital Region,
Philippines, 1634
Coro Philippines Project
121 Inc*
Philippines
Exploration and
development company
100%
1008 The Infinity Tower, 26th Street,
Bonifacio Global City, Taguig City,
Fourth District, National Capital Region,
Philippines, 1634
Coro Philippines Project
128 Inc*
Philippines
Exploration and
development company
100%
1008 The Infinity Tower, 26th Street,
Bonifacio Global City, Taguig City,
Fourth District, National Capital Region,
Philippines, 1634
Coro Clean Energy Ltd
England
Holding company
100%
c/o Pinsent Masons LLP, 1 Park Row,
Leeds, England LS1 5AB
Coro Clean Energy
Vietnam Ltd*
England
Holding company
100%
c/o Pinsent Masons LLP, 1 Park Row,
Leeds, England LS1 5AB
Coro Renewables VN1
Joint Stock Company*
Vietnam
Holding company
85%
110 Bui Ta Han Street, An Phu Ward,
Thu Duc City, Ho Chi Minh City, Vietnam
Coro Renewables VN2
Company Ltd*
Vietnam
Holding company
85%
110 Bui Ta Han Street, An Phu Ward,
Thu Duc City, Ho Chi Minh City, Vietnam
Coro Renewables Vietnam
Company Ltd*
Vietnam
Exploration and
development company
85%
110 Bui Ta Han Street, An Phu Ward,
Thu Duc City, Ho Chi Minh City, Vietnam
*
Indirectly held.
†
Formerly Global Energy Partnership Limited, acquired on 17 March 2021.
#
The Group has 80% economic interest and management’s judgement is that Company controls this entity
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
75
Stock code: CORO
FINANCIAL STATEMENTS
Note 20: Investment in, and Loans to, Subsidiaries continued
The following subsidiaries are exempt from audit for the 2022 financial year under s479A of the Companies
Act 2006: Coro Europe Limited, Coro Clean Energy Limited, Coro Energy Asia Limited, Coro Energy Holdings
Cell A Limited, Coro Clean Energy Vietnam Limited, and Coro Asia Renewables Limited.
Loans to subsidiaries
Company
2022
US$’000
2021
US$’000
Current
Loans to subsidiaries
750
666
Loans from subsidiaries
(685)
–
At 31 December
65
666
Loans to subsidiaries are unsecured, interest free and are repayable on demand.
Note 21: Financial Instruments
Carrying amount versus fair value
The fair values of financial assets and financial liabilities, together with the carrying amounts in the
consolidated statement of financial position, are as follows:
31 December 2022
Group
Carrying
amount
US$’000
Fair value
US$’000
Financial assets
Trade receivables (current and non-current)
158
158
Cash and cash equivalents
166
166
Financial liabilities
Trade and other payables
819
819
Borrowings (current and non-current)
28,183
28,183
31 December 2021
Group
Carrying
amount
US$’000
Fair value
US$’000
Financial assets
Trade receivables (current and non-current)
41
41
Cash and cash equivalents
3,334
3,334
Financial liabilities
Trade and other payables
383
383
Borrowings (current and non-current)
26,637
26,637
76
Coro Energy plc
www.coroenergyplc.com
Note 21: Financial Instruments continued
31 December 2022
Company
Carrying
amount
US$’000
Fair value
US$’000
Financial assets
Trade and intercompany receivables (current and non-current)
3,170
3,170
Loans to subsidiaries
65
65
Cash and cash equivalents
130
130
Financial liabilities
Trade and other payables
734
734
Interest bearing borrowings
1,263
1,263
Borrowings (current and non-current)
28,183
28,183
31 December 2021
Company
Carrying
amount
US$’000
Fair value
US$’000
Financial assets
Trade and intercompany receivables (current and non-current)
616
616
Loans to subsidiaries
666
666
Cash and cash equivalents
3,269
3,269
Financial liabilities
Trade and other payables
765
765
Borrowings (current and non-current)
26,637
26,637
Determination of fair values
All the Group’s financial instruments are carried at amortised cost. The carrying value of trade and other
receivables, cash and cash equivalents and trade and other payables approximates their fair value. Borrowings
comprises the Group’s Eurobond, which is listed on the Luxembourg Stock Exchange. The carrying value is
deemed to approximate fair value at the balance sheet date. Interest bearing borrowings comprise a loan
from Apennine Energy S.p.A., a wholly owned indirect subsidiary of the Company with a total facility value of
€2 million and a duration of 7 years but can be settled early at any time at the election of the Company. The
interest rate on the loan is equal to the rate charged by a primary national banking institution in Italy.
Financial risk management
Exposure to credit, market and liquidity risks arise in the normal course of the Group’s business.
This note presents information about the Group’s exposure to each of the above risks, their objectives, policies
and processes for measuring and managing risk, and the management of capital.
Risk recognition and management are viewed as integral to the Group’s objectives of creating and
maintaining shareholder value, and the successful execution of the Group’s strategy. The Board as a whole
is responsible for oversight of the processes by which risk is considered for both ongoing operations and
prospective actions. In specific areas, it is assisted by the Audit Committee.
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
77
Stock code: CORO
FINANCIAL STATEMENTS
Note 21: Financial Instruments continued
Management is responsible for establishing procedures that provide assurance that major business risks are
identified, consistently assessed and appropriately addressed.
(i) Credit risk
The Group is exposed to credit risk on its cash and cash equivalents and trade and other receivables. The
maximum exposure to credit risk is represented by the carrying amount of each financial asset as shown in
the table above and in note 19.
Credit risk with respect to cash is reduced through maintaining banking relationships with financial
intermediaries with acceptable credit ratings. All banks with which the Group has a relationship have an
investment grade credit rating and a stable outlook, according to recognised credit rating agencies.
The Group undertakes credit checks for all material new counterparties prior to entering into a contractual
relationship.
(ii) Market risk
Interest rate risk
The Group is primarily exposed to interest rate risk arising from cash and cash equivalents that are interest
bearing. The Group’s Eurobond bears interest at a fixed rate. Interest rate risk is currently not material for
the Group.
Currency risk
The Group operates internationally and is exposed to foreign exchange risk. Foreign exchange risk arises from
future commercial transactions and recognised assets and liabilities denominated in a currency that is not
the functional currency of the relevant Group entity. The Group’s primary currency exposure is to Euros, which
is the denomination of the Eurobond. The Group is also exposed to changes in the Sterling exchange rate
against the US Dollar. The Group holds a majority of its cash in US Dollars, which is the currency in which the
Group’s investment expenditures in South East Asia are denominated. This gives rise to Sterling exposure due
to a predominantly Sterling cost base in the UK.
The Group’s and Company’s exposure to foreign currency risk at the end of the reporting period is
summarised below. All amounts are presented in US Dollar equivalent.
Group
2022
US$’000
USD
2022
US$’000
EUR
2021
US$’000
USD
2021
US$’000
EUR
Cash and cash equivalents
119
1
2,649
113
Trade and other payables
–
(21)
(87)
(124)
Borrowings (current and non-current)
–
(28,183)
–
(26,637)
Net exposure
119
(28,203)
2,562
(26,648)
Company
2022
US$’000
USD
2022
US$’000
EUR
2021
US$’000
USD
2021
US$’000
EUR
Trade and other receivables (current and non-current)
3,022
–
–
–
Cash and cash equivalents
118
1
2,649
86
Loans to subsidiaries
750
(685)
1,008
27
Trade and other payables
(32)
(136)
(87)
(1,694)
Borrowings (current and non-current)
–
(29,446)
–
(26,637)
Net exposure
3,858
(30,266)
3,570
(28,218)
78
Coro Energy plc
www.coroenergyplc.com
Note 21: Financial Instruments continued
Sensitivity analysis
As shown in the table above, the Group is primarily exposed to changes in the GBP:USD exchange rate
through its cash balance held in USD by the Company, and to changes in the GBP:EUR exchange rate due
to the Eurobond denominated in EUR. The table below shows the impact in USD on pre-tax profit and loss
of a 10% increase/decrease in the GBP to USD exchange rate, holding all other variables constant. Also shown
is the impact of a 10% increase/decrease in the GBP to EUR exchange rate, being the other primary currency
exposure.
Group
US$’000
Company
US$’000
31 December 2022
USD:GBP exchange rate increases 10%
(34)
1
USD:GBP exchange rate decreases 10%
34
(1)
EUR:GBP exchange rate increases 10%
(2,820)
(3,026)
EUR:GBP exchange rate decreases 10%
2,820
3,026
31 December 2021
USD:GBP exchange rate increases 10%
256
256
USD:GBP exchange rate decreases 10%
(233)
(233)
EUR:GBP exchange rate increases 10%
(2,665)
(2,665)
EUR:GBP exchange rate decreases 10%
2,423
2,565
(iii) Capital management
The Group’s policy is to maintain a strong capital base so as to maintain creditor confidence and to sustain
future development of the business, safeguard the Group’s ability to continue as a going concern and
provide returns for shareholders.
As explained further in note 16 and note 2c, the Group’s Eurobonds were due to mature in April 2022 at 100%
of par value plus any accrued and unpaid coupon.
In March 2022, the tranche B Noteholders approved the extension of the maturity of the tranche B bonds
by two years to 12 April 2024 with an increase in the coupon to 10% accrued annually and payable on
redemption.
In April 2022, the tranche A Noteholders approved the extension of the maturity of the tranche A bonds
by two years to 12 April 2024 with an increase in the coupon to 10% accrued annually and payable on
redemption.
(iv) Liquidity risk
The Group’s approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet
its liabilities when due. Refer to the going concern statement in note 2c for further commentary.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on their
contractual maturities. The amounts presented are the contractual undiscounted cash flows.
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
79
Stock code: CORO
FINANCIAL STATEMENTS
Note 21: Financial Instruments continued
Group
31 December 2022
Less than
6 months
US$’000
6 to 12
months
US$’000
Between
1 and 2 years
US$’000
Between
2 and 7 years
US$’000
Total
contractual
cash flows
US$’000
Trade and other payables
406
–
–
–
406
Borrowings
–
–
28,183
–
28,183
Total
406
–
28,183
–
28,589
31 December 2021
Less than
6 months
US$’000
6 to 12
months
US$’000
Between
1 and 2 years
US$’000
Between
2 and 7 years
US$’000
Total
contractual
cash flows
US$’000
Trade and other payables
383
–
–
–
383
Borrowings
26,637
–
–
–
26,637
Total
27,020
–
–
–
27,020
Company
31 December 2022
Less than
6 months
US$’000
6 to 12
months
US$’000
Between
1 and 2 years
US$’000
Between
2 and 7 years
US$’000
Total
contractual
cash flows
US$’000
Trade and other payables
320
–
–
–
320
Borrowings
–
–
28,183
1,263
29,446
Total
320
–
28,183
1,263
29,766
31 December 2021
Less than
6 months
US$’000
6 to 12
months
US$’000
Between
1 and 2 years
US$’000
Between
2 and 7 years
US$’000
Total
contractual
cash flows
US$’000
Trade and other payables
301
464
–
–
765
Borrowings
26,637
–
–
–
26,637
Total
26,938
464
–
–
27,402
80
Coro Energy plc
www.coroenergyplc.com
Note 22: Share-Based Payments
Ordinary Shares
During 2022, the Company issued nil (2021: 12,413,794) new Ordinary Shares to service providers in lieu of cash
compensation for services provided.
Share options and warrants
The following equity settled share-based awards have been made under the Company’s discretionary share
option plan.
31 December 2022
31 December 2021
Average
exercise price
per option
(pence)
Number
of options
Average
exercise price
per option
(pence)
Number
of options
As at 1 January
1.90 137,687,500
4.38
58,000,000
Granted during the year
0.10
93,825,666
0.10
79,687,500
Exercised during the year
–
–
–
–
Forfeited during the year
1.88 (38,500,000)
–
–
As at 31 December
1.03 193,013,166
1.90 137,687,500
Vested and exercisable at 31 December
4.38
42,000,000
4.38
48,000,000
All remaining unvested options vest after three years of continuous service with the Company and on
condition that the mid-market closing price per Coro ordinary share on the last day of the three year vesting
period is equal to or higher than 0.46 pence per ordinary share for 2021 grants and higher than 0.43 pence
per ordinary share for 2022 grants. Once vested, the Options may be exercised at any time until the sixth
anniversary of grant.
For options that have not yet vested, the number of options which will vest on the vesting date will depend
on the Company’s Total Shareholder Return (“TSR”) over the 3 year performance period starting on the date of
grant, compared to a comparator group of 20 energy companies selected by the Company’s Remuneration
Committee. The number of Options vesting will be calculated as follows:
Relative TSR
Percentage of Options vesting on the Vesting Date
Below median
0%
Median
30%
Upper decile
100%
Between median and upper decile
Straight-line vesting between 30% and 100%
Vested options are exercisable at a price of 4.38p per new ordinary share.
The fair value of services rendered in return for 2022 share options is based on the fair value of share options
granted and was measured using a Black Scholes model.
The inputs used in the measurement of the options granted during the year are summarised in the table
below, with the volatility estimate of 52% based on the Company’s historical volatility:
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
81
Stock code: CORO
FINANCIAL STATEMENTS
Note 22: Share-Based Payments continued
April 2021
options
Fair value at grant date (p)
0.40
Share price at grant date (p)
0.48
Exercise price
0.10
Expected volatility
126%
Option life
3 years
Risk-free interest rate (based on yield on five-year gilts)
1.5%
Expiry date
1 April 2028
p – British pence.
The fair value of the options granted are spread over the vesting period. The amount recognised in the income
statement for the year ended 31 December 2022 was US195$k (2021: US$248k).
During the year, 22,500,000 options granted to the Peter Christie, a former CFO of the Company
lapsed and was forfeited. The cost previously recognised as an expense of US$33k has been recycled to
accumulated losses (2021: US$nil). All other lapsed options related to options that had already fully vested by
31 December 2021.
Note 23: Interests in Other Entities
ion Ventures
The Company holds a 20.3% interest in ion Ventures Holdings Limited (“ion Ventures”). This investment is
accounted for as an associate using the equity method.
ion Ventures, incorporated and domiciled in the UK, is a South East Asian and UK focused developer of clean
energy projects, primarily energy storage.
Summarised financial information for ion Ventures, which has a financial year end date of 31 December, is
included below:
Summarised balance sheet
31 December
2022
US$’000
31 December
2021
US$’000
Current assets
463
522
Non-current assets
2,507
2,907
Current liabilities
(1,062)
(833)
Non-current liabilities
(630)
(621)
Net assets
1,278
1,975
Group’s share in %
20.3%
20.3%
Group’s share in US$
259
401
Summarised statement of comprehensive income
31 December
2022
US$’000
31 December
2021
US$’000
Revenue
1,555
1,564
Loss from continuing operations
(404)
(1,227)
Other comprehensive income
–
–
Total comprehensive income
(404)
(1,227)
82
Coro Energy plc
www.coroenergyplc.com
Note 23: Interests in Other Entities continued
As required by IAS 28 Investment in Associates, the excess between the fair value of ion Ventures’ net assets on
acquisition date and the consideration paid for Coro’s investment has been recorded as notional goodwill and
is included within non-current assets in the previous table.
In the Company balance sheet the investment in ion Ventures is carried at the cost of the investment of
£500k, which is US$602k translated at the year-end exchange rate (2021: US$662k).
Duyung PSC
The Group’s wholly owned subsidiary, Coro Energy Duyung (Singapore) Pte Ltd, is the owner of a 15% interest
in the Duyung Production Sharing Contract (“PSC”).
The Duyung PSC partners have entered into a Joint Operating Agreement (“JOA”), which governs the
arrangement. Through the JOA, the Group has a direct right to the assets of the venture, and direct obligation
for its liabilities. Accordingly, Coro accounts for its share of assets, liabilities and expenses of the venture in
accordance with the IFRSs applicable to the particular assets, liabilities and expenses.
The operator of the venture is West Natuna Exploration Ltd (“WNEL”). WNEL is a company incorporated in the
British Virgin Islands and its principal place of business is Indonesia.
Coro Renewables VN1 Joint Stock Company
In October 2021, a binding shareholder agreement was signed with VPE and the Group acquired an 85%
interest in the newly incorporated Vietnamese company, Coro Renewables VN1 Joint Stock Company, which
owns 100% of Coro Renewables VN2 Company Limited, which in turn owns 100% of Coro Renewables Vietnam
Company Limited. During the year the Company incurred costs in relation to the CRV1 group’s solar pilot
project in Vietnam to the value of US$2,043k and this amount is included in receivables from the CRV1 group
and included in trade and other receivables.
Note 24: Contingencies and Commitments
Commitments
Coro’s share of the 2023 Duyung Work Programme and Budget is estimated at US$1.2m, which will be
allocated between items of capital expenditure and joint venture G&A. The Group had no committed work
programmes in it Philippine or Vietnam operations.
Contingencies
The Company undertook to the Noteholders that in the event of a sale of the Company’s interest in the
Duyung PSC to utilise the net cash proceeds of such disposal(s) to first repay the capital and rolled up interest
on the Notes and thereafter to distribute 20% of remaining net proceed(s) to Noteholders. The remaining net
proceeds of any sales would be retained and/or distributed to shareholders by the Company. Due to its nature,
it is not possible to quantify the financial impact of this contingent liability.
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
83
Stock code: CORO
FINANCIAL STATEMENTS
Note 25: Related Party Transactions
Key management personnel compensation
2022
US$’000
2021
US$’000
Short-term benefits
1,201
885
Post-employment benefits
–
–
Share-based payments
197
221
Key management personnel consists of the Directors of the Company and Ewen Ainsworth (CFO) and
Michael Carrington (COO).
Other related party transactions
ion Ventures Holdings Limited is a related party due to the Company’s 20.3% shareholding and ability
to appoint one director to the Board of Directors of ion. There were no transactions between the two
companies in 2022 or 2021 with the exception of Coro’s initial £500k investment in ion.
Energy PTS is a company incorporated in Scotland in which Mark Hood, a director of the Company during
the reporting period, has a majority interest. The Company paid consulting fees on an arm’s length basis of
£18k to Energy PTS during the reporting period.
Note 26: Subsequent Events
On 13 January 2023 the Company announced that the Noteholders have elected by the requisite majority
to receive interest payments on the Eurobonds in relation to the quarter to 12 January 2023 in new ordinary
shares of the Company and that a total of 229,325,962 new ordinary shares would be issued to Noteholders.
On 27 January 2023 the Company announced that is has increased its entitlement to dividends from
its subsidiary, Coro Clean Energy Philippines Inc., from 80% to 88%. As consideration for the increased
entitlement the Company issued 20,000,000 ordinary shares in Coro at a price of 0.3p representing total
consideration of £120,000.
On 9 February 2023 the Company announced that it had granted an aggregate of 70,000,000 options over
new ordinary shares in the Company to certain employees (the "Options"). The Options will vest on the third
anniversary of the grant on 9 February 2026, subject to the achievement of performance criteria and are
exercisable at a price of 0.255p per new ordinary share at any time until 9 February 2028.
On 14 February 2023 the Company announced legal proceedings against an Italian contractor in relation
to damages following the historical cessation of production at the Bezzecca field in Italy. The Company is
claiming damages of approximately €300k for the capital and related costs of the replacement equipment
and necessary cathodic protection and a further €7m for consequential losses.
On 27 March 2023 the Company announced that it had signed the Sale and Purchase Agreement ("SPA")
for the disposal of its Italian Portfolio to Zodiac Energy plc ("Zodiac" or the "buyer") by way of the sale of
the entire issued share capital of Coro Europe Limited. Zodiac Energy plc is a UK based holding company
for an Italian subsidiary company Pengas Italiana Srl, which extracts crude petroleum and natural gas in
Italy. The SPA was signed conditional on approval by the shareholders of the Company and is furthermore
also conditional on, amongst other things, regulatory approval by the Italian authorities. The SPA contains
total consideration of up to €7.5M, including contingent payments of up to an aggregate of €1.5M through
a 10% net profit interest (“NPI”) in the Italian Portfolio over the three years from the date of completion of
any disposal of the Italian Portfolio. An initial cash payment of €1.5m was received by the Company in April
2023. The €1.5m payment will be repayable together with a 10% per annum coupon in the event that the
transaction does not complete, and is secured over the Apennine bank account and gas sales. Any proceeds
from the Bezzecca legal claim which was detailed in an announcement dated the 14 February 2023, and the
cash flows from the business prior to completion, accrue to Coro and are in addition to the consideration
of up to €7.5m. Whilst the Company retains full ownership and cash flows from the Italian Portfolio prior to
Completion, the Company has agreed not to withdraw further cash from Coro Europe and its subsidiary. The
accumulated cash in the business, alongside any inter-company loans and the 2022 Italian tax payments
(including the extraordinary windfall tax introduced recently) will be adjustments to the final consideration
using an industry standard net cash/debt adjustment at Completion.
84
Coro Energy plc
www.coroenergyplc.com
Note 26: Subsequent Events
On 13 April 2023 the Company announced that the Noteholders have elected by the requisite majority to
receive interest payments on the Eurobonds in relation to the quarter to 12 April 2023 in new ordinary shares
of the Company and that a total of 257,556,133 new ordinary shares would be issued to Noteholders.
On 25 April 2023 the Company’s shareholders approved the sale of the Group’s Italian natural gas assets (the
"Italian Portfolio") at a general meeting.
On 2 May 2023 the Company announced that Conrad Asia Energy Ltd, the operator of the Mako gas field
within the Duyung PSC ("Mako"), has engaged an investment bank to farm-down its interest in Mako. The
Group may participate pro rata in the farm-down process as various drag and tag along clauses exist in the
Joint Operating Agreement. Coro may also entertain a full exit, depending on the terms offered.
Notes to the Financial Statements
For the year ended 31 December 2022 continued
Annual Report and Accounts for the year ended 31 December 2022
85
Stock code: CORO
FINANCIAL STATEMENTS
Directors
James Parsons (Executive Chair)
Marco Fumagalli (Non-Executive Director)
Stephen Birrell (Non-Executive Director)
Naheed Memon Non-Executive Director)
Company secretary
AMBA Secretaries Limited
Registered office
c/o Pinsent Masons LLP
1 Park Row
Leeds
LS1 5AB
England
Registered number
10472005 (England and Wales)
Nominated adviser
Cenkos Securities plc
6–8 Tokenhouse Yard
London
EC2R 7AS
Broker
W H Ireland
24 Martin Lane
London
EC4R 0DR
Legal advisers
Pinsent Masons LLP
1 Park Row
Leeds
LS1 5AB
Auditor
PKF Littlejohn LLP
15 Westferry Circus
Canary Wharf
London
E14 4HD
Share registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Company Information
c/o Pinsent Masons LLP
1 Park Row
Leeds LS1 5AB