Curzon Energy Plc
Registered company number: 09976843
Annual Report and Financial Statements for the Period Ended 31 December 2017
Curzon Energy Plc
Annual Report 2017
Contents
Page Number
Company Information
Chairman’s Statement
Strategic Report
Directors’ Report
Report of the Remuneration Committee
Statement of Directors’ Responsibilities in respect of the Strategic Report, the
Directors’ Report and the Financial Statements
Independent Auditors’ Report to the Members of Curzon Energy Plc
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Company Statement of Financial Position
Company Statement of Changes in Equity
Company Statement of Cash Flows
Notes to the Company Financial Statements
(i)
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Curzon Energy Plc
Company Information
Directors
John McGoldrick Chairman and Non-Executive Director
Thomas Wagenhofer
Thomas Mazzarisi
Stephen Schoepfer
Brian James Kinane
Owen May
Executive Director
Executive Director
Executive Director
Non-Executive Director
Non-Executive Director
Annual Report 2017
Company secretary
Thomas Mazzarisi
Company number
09976843
Registered address
Kemp House
152 City Road
London
EC1V 2NX
Independent auditors
Crowe Clark Whitehill LLP
St Bride’s House
10 Salisbury Square
London
EC4Y 8EH
Company’s Solicitors
McCarthy Denning Limited
25 Southampton Buildings
London
WC2A 1AL
Financial advisor and broker
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London W1S 2PP
Registrars
Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen B63 3DA
Bankers
Barclays Bank plc
Level 27
One Churchill Place
London E14 5HP
Competent Person
Dr. John Seidle Vice-President of
MHA Petroleum Consultants LLC
730 17th Street, Suite 410
Denver, CO 80202
USA
Curzon Energy Plc
Chairman’s Statement
Annual Report 2017
I am pleased to present the annual report for the Company covering its results for the period from 01
January 2017 to 31 December 2017.
The Company was incorporated for the purpose of pursuing a targeted acquisition strategy of oil and gas
assets. The Company’s first acquisition occurred on 03 October 2017 when the Company acquired 100%
of the membership interests of Coos Bay Energy LLC (“Coos Bay”), which is the owner and operator of
approximately 45,370 acres of coalbed methane leases in Coos Bay, Oregon, USA, pursuant to a
membership interest purchase agreement dated 20 May 2017 (the “Acquisition”). The consideration for
the Acquisition involved the issuance by the Company of an aggregate of 40 million Ordinary Shares to
the members of Coos Bay.
On 4 October, the Company admitted its shares to the Standard Listing segment of the Official List, to
trade on the London Stock Exchange’s main market for listed securities, raising gross proceeds of £2.3
million (approximately £1.6 million net of expenses), which are being used to fund the Company’s
operations and, in particular, its activities in connection with the Coos Bay project.
Following the Acquisition, the Group’s main focus has been on developing the business of Coos Bay.
The main objectives for the Coos Bay project are to complete Phase I (proof of concept) which involves
re-entering the five existing wells and bringing them to production, followed by the drilling and completion
of up to two additional wells, and then connecting the wells to the nearby pipeline. First gas from the wells
is expected in Q2 of 2018. Should Phase I be successful, the Company intends to seek further capital to
progress to Phase II (initial development), which would involve the development of approximately 58
additional wells. Should Phase II prove successful, a further funding round will be required to commence
and complete Phase III (large scale development), which would bring the total wells for the project to
400+.
The Board has been significantly strengthened during the 2017 fiscal year in order to pursue this strategy.
Corporate governance will remain a topic close to the top of the Board’s agenda going forward.
The Group incurred a loss of US$1,833,381 in the period ended 31 December 2017. A majority of this
loss comprised expenditures in relation to the acquisition of Coos Bay, the Group’s admission to the
London Stock Exchange and commencement of activities for Phase I of the Coos Bay project.
On behalf of the Board, I would like to take this opportunity to thank our staff and advisers for their hard
work as well as the shareholders for their support given to the Company. With the Coos Bay acquisition
now complete, the Board believes this will provide the potential to deliver significant value to shareholders.
We look forward to updating shareholders on our further progress in due course.
John McGoldrick
Non-Executive Chairman
30 April 2018
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Curzon Energy Plc
Strategic Report
Financial Results
Annual Report 2017
The Company was formed in January 2016 to undertake acquisitions in the oil and gas sector. As noted
in the Chairman’s Statement, during the period ended 31 December 2017, the Company commenced
trading and acquired Coos Bay.
The acquisition of Coos Bay was successfully concluded in October 2017 for an agreed consideration of
£3.2 million, payable by way of the issue of shares to the former owners of Coos Bay. We also completed
a placing of shares for a cash consideration of £2.3 million, pursuant to the Company’s admission to the
Official List. The costs of admission (including fees and commissions) were £0.7 million. The net proceeds,
after deducting fees and expenses in connection with admission were approximately £1.6 million.
The Group loss for the period to 31 December 2017 was US$1,833,381. There were no revenues and the
majority of the loss related to preliminary expenditures in connection with the Company’s acquisition of
Coos Bay, admission to the Official List and commencement of Phase I of the Coos Bay project.
As a result of these initial losses, there is no tax charge for the period.
The loss per share was US$0.03 (2016: loss US$0.08).
The Group’s cash balances at the end of 2017 totalled US$1,595,035. With the net proceeds from the
Company’s placing of shares in September 2017, as well as amounts available pursuant to the terms of
a loan facility provided by YA Global Investments, L.P., the Company’s cash resources are considered
sufficient to meet its obligations.
The Directors are now looking to implement the development of the Coos Bay business whilst keeping
day-to-day overhead costs under control. The acquisition of Coos Bay is the first step in the Company’s
acquisition strategy.
The Board believes that the Company will be able to raise, as required, sufficient cash or reduce its
commitments to enable it to continue these objectives, and to continue to meet, as and when they fall
due, its liabilities for at least the next twelve months from the date of approval of these financial
statements. The financial statements have, therefore, been prepared on the going concern basis.
Following the acquisition of Coos Bay, the Group has 7 staff (including Directors).
Principal activities
The Company was incorporated on 29 January 2016 in England and Wales as an investment company
to acquire oil and gas assets. Its first acquisition was of Coos Bay. The Directors expect to identify and
assess other oil and gas opportunities in the future and expect to return to the market if they wish to
acquire and/or raise funds for other projects.
Following the acquisition of Coos Bay by the Company, the Group’s main focus will be to develop the
business of Coos Bay and to focus on the Coal Bed Methane (“CBM’’) gas sector in Oregon. The
Company raised £650,362 in a private funding round principally from UK, US and European investors
prior to admission. These funds were primarily used to meet start-up costs and costs associated with
acquiring Coos Bay. The consideration for the acquisition was by the issue of 40 million Ordinary Shares
to the members in Coos Bay and assumption by the Company of certain loan notes as described in note
15 to the financial statements.
Coos Bay owns certain CBM and related assets, which it acquired on 4 November 2016 by acquiring
Westport Energy Acquisition, Inc. and its wholly owned subsidiary Westport Energy LLC (the ‘US Group
‘’) from Westport Energy Holdings Inc., a publicly held company trading on the OTC Pink Market. The US
Group had been operating a CBM business in Coos Bay, Oregon for 6 years. At the time of the Acquisition,
the US Group’s CBM business consisted of leases to approximately 45,370 acres in Coos Bay, Oregon.
The management team of the US Group, has continued in their management roles allowing the Group to
maintain management continuity and continuity in-field operations.
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Curzon Energy Plc
Annual Report 2017
The Group’s business will be operated through the US Group, with a focus on oil and gas exploration,
appraisal and development, with the goal of commencing production from certain assets in the near term.
Its first project is to appraise, develop and produce CBM gas from prospective and contingent resources
in the Coos Bay Basin, primarily targeting natural gas from coal seams of the Coaledo Formation in the
Coos Bay Basin. Secondary objectives of the Group may include the exploration, production and
acquisition of natural gas, and possibly oil, trapped in conventional reservoirs
Following the acquisition of Coos Bay, the Company is a holding company with the following subsidiaries:
Name
Coos Bay Energy
LLC
Westport Energy
Acquisition, Inc.
Westport Energy,
LLC
Country of
Incorporation
Nevada, USA
Proportion of
equity
ownership
100%
Principal activity
Gas Exploration &
Development
Delaware, USA
100%
Holding Company
Delaware, USA
100%
Gas Exploration &
Development
Coos Bay, which employs the Group’s employees and conducts operations in the Coos Bay Basin Area,
is held directly by the Company. Its two indirectly owned subsidiaries are Westport Energy Acquisition
Inc. and its wholly-owned subsidiary, Westport Energy LLC.
Review of the business
2017 saw the Company’s formation and development of management’s long-term plans for an acquisition
strategy in the oil and gas sector. These have been progressed further during 2017 culminating with the
acquisition of Coos Bay and the Company’s listing on the London Stock Exchange and the
commencement of Phase I of the Coos Bay project.
Key performance indicators (KPIs)
The Directors have identified the following key performance indicators (‘KPIs’) that the Company will track
over 2017 and into future years. These will be refined and augmented as the Group’s business matures:
The Directors consider that the KPIs are:
i)
ii)
A well-funded business in terms of cash resources; and
Appraisal and drilling results of its CBM assets.
Principal Risks and Risk Management
Exploration is an inherently risky business:
• Even the most promising prospects can have failures for many reasons, such as:
o The coal bed methane assets may not be found in commercial quantities if there are
errors in the underlying geological assumptions or analysis.
o CBM may have been present, but escaped due to unexpected geological events
o The reservoir may not flow at commercially viable rates of flow.
o The drilling may encounter technical problems which make it impossible or too expensive
to reach the target.
o The ability of the Group to exploit and develop gas reserves depends on its current
leases. The Group currently has under lease approximately 45,370 acres of prospective
coalbed methane lands in the Coos Bay Basin under two major leases and three ancillary
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Annual Report 2017
leases. There is no guarantee that existing leases will be continued beyond their primary
term.
•
The Company may take on commitments for which it then cannot find adequate funding. Although
the Company can then potentially sell all or part of its assets:
o There is no guarantee it can find a buyer.
o Even if it does find a buyer, the transaction may take too long and the Company’s cash
resources may become exhausted.
The Company’s risk mitigation strategies include the following:
• Partnering with key experts that have demonstrated an ability to predict the presence or absence
of hydrocarbons.
• Utilizing the Directors’ experience who have excellent local knowledge as to where to seek assets.
• Securing the support of a number of key private shareholders, and actively pursuing other sources
of funding.
• Utilizing third parties to assist with the management of currency risk.
Corporate Responsibility
The Company takes its responsibilities as a corporate citizen seriously. The Board’s primary goal is to
create shareholder value but in a responsible way which serves all stakeholders.
Governance
The Board considers sound governance as a critical component of the Company’s success and the
highest priority. The Company has an effective and engaged Board, with a strong non-executive presence
from diverse backgrounds and well-functioning governance committees. Through the Company’s
compensation policies and variable components of employee remuneration, the Remuneration
Committee of the Board seeks to ensure that the Company’s values are reinforced in employee behaviour
and that effective risk management is promoted.
Employees and their development
The Company is dependent upon the qualities and skills of its employees and the commitment of its
people plays a major role in the Company’s business success. Employees’ performance is aligned to the
Company’s goals through an annual performance review process and via incentive programmes. The
Company provides employees with information about its activities through regular briefings and other
media. The Company operates a share option and warrant scheme operated at the discretion of the
Remuneration Committee.
Diversity and inclusion
The Company does not discriminate on the grounds of age, gender, nationality, ethnic or racial origin,
non-job-related-disability, sexual orientation or marital status. The Company gives due consideration to
all applications and provides training and the opportunity for career development wherever possible. The
Board does not support discrimination of any form, positive or negative, and all appointments are based
solely on merit.
Health and safety
The Company endeavours to ensure that the working environment is safe and healthy and conducive to
the wellbeing of employees who are able to balance work and family commitments. The Company has a
Health and Safety at Work policy which is reviewed regularly by the Board and is committed to the health
and safety of its employees and others who may be affected by the Company’s activities. The Company
provides the information, instruction, training and supervision necessary to ensure that employees are
able to discharge their duties effectively. The Health and Safety procedures used by the Company ensure
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Annual Report 2017
compliance with all applicable legal, environmental and regulatory requirements, as well as its own
internal standards.
Outlook
The Company’s near-term goals are to develop the business of Coos Bay and to focus on the Coal Bed
Methane gas sector in Oregon.
The Company has successfully completed two fundraisings and is building a talented team to implement
its plans.
We have achieved significant progress and are confident that we can meet the challenges that lie ahead.
Signed by order of the board
Stephen Schoepfer
Chief Executive Officer
Date 30 April 2018
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Curzon Energy Plc
Annual Report 2017
Directors Report for the period ended 31 December 2017
The Directors present their report on the Company, together with the audited financial statements of the
Company for the period from 01 January 2017 to 31 December 2017.
Principal activities
The Company was formed to undertake acquisitions in the oil and gas sector. Following the acquisition
of Coos Bay in October 2017, the principal activities of the Group have been that of coal bed methane
exploration and development.
Cautionary statement
The review of the business and its future development in the Strategic Report has been prepared solely
to provide additional information to shareholders to assess the Company’s strategies and the potential for
these strategies to succeed. It should not be relied on by any other party for any other purpose. The
review contains forward looking statements which are made by the Directors in good faith based on
information available to them up to the time of the approval of the reports and should be treated with
caution due to the inherent uncertainties associated with such statements
Results and dividends
Given the nature of the business and its development strategy, it is unlikely that the Board will recommend
a dividend in the next few years. The Directors believe the Company should seek to re-invest profits to
fund the Company’s growth strategy over the medium term.
Business review and future developments
Details of the business activities and developments made during the period can be found in the Strategic
Report and in note 1 to the Financial Statements respectively.
Disclosure of information to auditor
The Directors who held office at the date of approval of this Directors’ report confirm that, so far as they
are each aware, there is no relevant audit information of which the Company’s auditor is unaware; and
each director has taken all the steps that he ought to have taken as a director to make himself aware of
any relevant audit information and to establish that the Company’s auditor is aware of that information.
Financial instruments and risk management
Disclosures regarding financial instruments are provided within note 19 to the Financial Statements.
Capital structure and issue of shares
Details of the Company’s share capital, together with details of the movements during the period are set
out in note 16 to the Financial Statements. The Company has one class of Ordinary Shares which carry
no right to fixed income.
Post balance sheet events
There were no events after the reporting date.
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Curzon Energy Plc
Directors
Annual Report 2017
The Directors of the Company who have served during the period and at the date of this report are:
Director
Role
Date of
appointment
Board
Committee
John McGoldrick
Chairman and Non-Executive Director
4/10/2017
N, R, A
Thomas Wagenhofer
Executive Director
Thomas Mazzarisi
Executive Director
Stephen Schoepfer
Executive Director
27/9/2016
29/1/2016
29/1/2016
Brian James Kinane
Non-Executive Director
29/1/2016
N, R, A
Owen May
Non-Executive Director
27/9/2016
N, R
Board Committee abbreviations are as follows: N = Nomination Committee; A = Audit and Risk
Committee; R = Remuneration Committee
Board of Directors
Details of the current Directors and their backgrounds are as follows:
John McGoldrick
(Chairman and Non-Executive Director, aged 60)
John McGoldrick has over thirty years of experience in a variety of senior management roles, notably at
Enterprise Oil where he was responsible for its US operations up until Shell’s takeover in 2002. Since
then Mr. McGoldrick has served as executive chairman of Caza Oil & Gas Inc. (formerly Falcon Bay
Energy LLC), a US onshore exploration and production company, which went public in Toronto and
London in 2007, becoming non-executive chairman in 2010. From 2008 to 2013, Mr. McGoldrick was a
non-executive director of Vanguard Natural Resources LLC, a NYSE-listed Oil & Gas company focused
on the US. In January 2012 Mr. McGoldrick joined Dart Energy International as CEO, subsequently
becoming CEO of Dart Energy in March 2013. He held this post until Dart Energy’s £ takeover by IGas at
the end of 2014. Mr. McGoldrick holds a Bachelor of Engineering in Chemical Engineering with
Management economics from University of Bradford.
Thomas Wagenhofer
(Technical Executive Director, aged 46)
Mr. Wagenhofer is a petroleum engineer and oil and gas executive with over 20 years’ international
industry experience. He offers an excellent blend of technical, commercial and financial acumen from a
diversified career in operations, reserves evaluations and energy finance. He is the president of Gate
Energy, a UK based oil and gas consulting firm as well as a founder partner of Giant Capital, an oil and
gas investment specialist. He was non-executive chairman of AIM listed Magnolia Petroleum plc, which
has assets in the United States, until 31 March 2017. Prior to founding Giant Capital and Gate Energy,
Mr. Wagenhofer served as Senior Managing Director of Macquarie Bank’s oil and gas investment division
in London. Prior to that he was Vice President at Ryder Scott Company in Houston, Texas, where his
responsibilities included reserves evaluations and field development studies. He started his career in 1996
as a petroleum engineer with Atlantic Richfield Company in Dallas, Texas. Mr. Wagenhofer holds a MS
degree in Petroleum Engineering from the University of Texas at Austin (1995) and a BS degree in
Petroleum Engineering from the University of Alaska Fairbanks (1994). He is a registered Professional
Engineer with the Texas Board of Professional Engineers (current status inactive) in the State of Texas,
USA
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Curzon Energy Plc
Annual Report 2017
Thomas Mazzarisi
(Executive Director, Chief Financial Officer, Executive Vice President &
General Counsel, Secretary, aged 61)
Mr Mazzarisi has over 30 years of experience in legal and executive positions with varied organizations.
He began his career in 1983 as Deputy General Counsel for the New York Convention Center
Development Corporation, the developer of the Jacob K. Javits Convention Center in New York City.
While there he represented the corporation in various legal matters, including various real estate,
construction law, corporate and finance matters in connection with the development and operation of the
Jacob K. Javits Convention Center.
In 1988 Mr. Mazzarisi joined the international law firm of Coudert Brothers, where he represented U.S.
and foreign clients in various real estate acquisition, development, leasing and financing matters,
international construction projects, such as cogeneration plants, wastewater treatment plants, oil pipeline
projects, pulp & paper mill plants and mixed-use high-rise and hotel projects, as well as dispute resolutions
in connection with such projects.
Following his position at Coudert Brothers, Mr. Mazzarisi started his own firm in 1997 where he continued
to represent clients involved in domestic and international construction projects.
In 1999 Mr. Mazzarisi joined JAG Media Holdings, Inc., a publicly traded company, which provided live
online video-streamed financial news and mobile video surveillance software products, and which
broadcast its live programming from NYC into 20 million cable homes and streamed its live programming
to countless financial websites. Mr. Mazzarisi served as director and Executive Vice President & General
Counsel of JAG Media, and subsequently as its Chairman and Chief Executive Officer, where he oversaw
the company’s U.S. operations and legal matters, as well as the expansion of its operations in Europe
and Latin America.
After leaving JAG Media in 2009, Mr. Mazzarisi provided management consulting services to
CardioGenics, a Canadian development stage company engaged in the development and marketing of
an ultrasensitive immunoassay point-of-care analyser and a battery of four cardiovascular diagnostic tests
that seek to create a major shift in the way heart attacks and heart failure are diagnosed and treated,
resulting in improved patient outcomes and reduced costs associated with such healthcare. As part of
these services, Mr. Mazzarisi advised the company on various matters including strategic partnerships,
product distribution, joint ventures, corporate restructurings and other operational matters.
In 2010, Mr. Mazzarisi became a manager of Westport Energy LLC, where he helped take the company
public on the OTC market in the U.S., oversaw its recapitalization and currently supervises all corporate,
financial, legal and operational matters in connection with the company’s development of its gas
properties in Coos Bay, Oregon.
Mr. Mazzarisi is a graduate of Fordham University in New York, where he received a B.A. in Political
Economy in 1979 and was elected to Phi Beta Kappa, and Hofstra University School of Law, where he
received his J.D in 1982. Mr. Mazzarisi is admitted to the bar in the State of New York, USA.
Stephen Schoepfer
(Executive Director, Chief Executive Officer, aged 59)
Mr. Schoepfer has over 20 years of senior management and consulting experience working with start-up
companies in the US, Canada and the UK. Mr. Schoepfer has also negotiated cross-border transactions
and raised early stage funding for development stage companies, including investments from various
hedge funds and Wall Street investment banks.
After starting on Wall Street with Prudential Securities in 1993 and Legg Mason in 1995, where he
managed clients’ assets and trained brokers, he then moved to working with early stage companies. He
joined JAG Media Holdings, Inc., in 1999. While at JAG Media Holdings, Mr. Schoepfer served as a
director of the company, as well as Chief Operating Officer and Chief Financial Officer overseeing the
company’s operations in the U.S., UK and Latin America.
Mr. Schoepfer subsequently provided management consulting services to CardioGenics, including
assisting the company with investor relations, regulatory filings and business development. CardioGenics
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Curzon Energy Plc
Annual Report 2017
is a Canadian development stage company engaged in the development and marketing of an
ultrasensitive immunoassay point-of-care analyser and a battery of four cardiovascular diagnostic tests
that seek to create a major shift in the way heart attack and heart failure are diagnosed and treated,
resulting in improved patient outcomes and reduced costs associated with such healthcare.
Mr. Schoepfer served as Chief Executive Officer of Westport Energy LLC since 2010. Among his many
functions with the company, Mr. Schoepfer reorganized the company, took it public on the OTC market in
2010 and negotiated a plan of commercialization with NW Natural Gas, a leading gas utility and manager
of the Northwest pipeline which traverses several states in the western U.S.
Mr. Schoepfer attended Wagner College in New York from 1976-1980 where he studied economics and
finance.
Brian James Kinane
(Non-Executive Director, aged 46)
Brian Kinane is a UK-based corporate finance executive with over 20 years of industry and finance
experience.
After graduating from Trinity College Dublin, Mr. Kinane joined the Ericsson Group, a global leader in
telecommunications systems, and worked for Ericsson group companies in product management.
Mr. Kinane was subsequently recruited by Telenor Group, a major Nordic telecoms group where he
worked as a management consultant in the transition from voice to data-based business models.
Subsequently, Mr Kinane moved into an entrepreneurial phase including being a founding shareholder
and executive director of MobileAware Ltd and FeedHenry Ltd, specialist mobile technology companies.
In 2014, FeedHenry was acquired by Red Hat Inc. for approximately Euro 63 million. RedHat Inc. is a
public software company with a market capitalisation in excess of $15bn.
Mr Kinane is currently a partner at Shard Capital and a director of Riverfort Global Capital, both FCA-
authorised investment advisors, where he is an investment manager for venture capital and special
situations mezzanine/venture debt funds. Prior to his current role, Mr Kinane was a partner at Yorkville
advisors UK LLP, an FCA-authorised investment advisor allocating capital to mezzanine special situations
debt investments Mr. Kinane holds a BA in Computer Science from Trinity College Dublin and Master of
Business Administration Degrees from Columbia Business School and London Business School.
Owen May (Non-Executive Director, aged 57)
Mr. Owen May is an American banker with over 30 years of experience on Wall Street. He currently serves
as a Managing Director of MD Global Partners, a full-service investment-banking firm, and is actively
involved in a broad range of investment activities in Israel, China, and Europe.
Mr. May started his career at Lehman Brothers as a Financial Advisor in the high net worth division in
1985. After leaving Lehman Brothers in 1989, Mr. May joined D.H. Blair & Co., a small boutique firm on
Wall Street.
In 1993, Mr May went on to establish May Davis Group, a full-service investment banking firm on Wall
Street that offered a full range of investment banking, research, sales, trading and retail brokerage
services. The firm had offices in New York and Baltimore, and catered to a niche clientele, mainly small
to middle-sized firms that were too small to gain access to large investment banking services.
In 2007 Mr. May established MD Global Partners LLC, a firm that specializes in corporate finance,
mergers & acquisitions, restructuring and business development.
Mr. May has been involved in advising, restructuring and taking public many biotech firms and is actively
seeking investment opportunities in start-up companies in the medical science sector, especially in Israel.
In 2013, Mr May acted as an advisor to IntelliCell Biosciences Inc, a regenerative medicine company
utilizing adult autologous vascular fraction cells (SVFCs) derived from the blood vessels in lipoaspirate,
to advise on the company's restructuring, corporate positioning, and strategic opportunities.
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Curzon Energy Plc
Annual Report 2017
Following his undergraduate degree in biology at University of Miami, Mr. May earned an MBA in finance
from Duke University’s Fuqua School of Business, where he currently sits on the Board of Visitors and
offers career coaching and opportunities to program participants. He also continues to hold a position on
the President’s Council for the University of Miami.
Directors’ interests in shares
Directors’ interests in the shares of the Company at the date of this report are disclosed below.
Director
Ordinary shares held
% held
John McGoldrick
Thomas Wagenhofer
Thomas Mazzarisi
Stephen Schoepfer
Brian James Kinane
Owen May
Substantial interests
-
125,000
1,200,100
1,200,100
125,000
-
-
0.17
1.65
1.65
0.17
-
As at 24 April 2018, the Company has been advised of the following significant interests (greater than
3%) in its ordinary share capital:
Shareholder
Ordinary shares held
% held
Jim Nominees Limited
41,665,100
57.39
Reyker Nominees Limited A/C TFI
Regency Mines PLC
Queensbury Inc
Mountainville Limited
6,750,000
6,467,500
4,000,000
3,200,000
9.29
8.90
5.51
4.40
Except as referred to above, the Directors are not aware of any person who was interested in 3% or more
of the issued share capital of the Company or could directly or indirectly, jointly or severally, exercise
control.
Corporate Governance
As a Company listed on the Standard Segment of the Official List of the UK Listing Authority, the Company
is not required to comply with the provisions of the UK Corporate Governance Code. However, the Board
is committed to maintaining high standards of corporate governance and, so far as appropriate given the
Company’s size and the constitution of the Board, and intends to comply with the Corporate Governance
Guidelines for Small and Mid-Sized Companies (the “QCA Code”).
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Curzon Energy Plc
The Board
Annual Report 2017
The Board currently comprises three executive directors and three non-executive directors. The Board is
ultimately responsible for the day-to-day management of the Company’s business, its strategy and key
policies. Members of the Board are appointed by the Shareholders. The Board also has power to appoint
additional directors, subject to such appointments being approved by Shareholders. At least eight board
meetings are held per year.
As prescribed by the QCA Code, the Board has established three committees: An Audit and Risk
Committee, a Remuneration Committee and a Nomination Committee.
Each of the committees were formed on admission of the Company to the Standard Listing Segment on
4 October 2017. The Audit and Risk Committee has met once during 2017 and the other committees have
not yet held any meetings as of the end of the 2017 fiscal year.
Audit and Risk Committee
The Audit and Risk Committee, which comprises John McGoldrick and Brian Kinane, is responsible,
amongst other things, for monitoring the Group’s financial reporting, external and internal audits and
controls, including reviewing and monitoring the integrity of the Group’s annual and half-yearly financial
statements, reviewing and monitoring the extent of non-audit work undertaken by external auditors,
advising on the appointment of external auditors, overseeing the Group’s relationship with its external
auditors, reviewing the effectiveness of the external audit process and reviewing the effectiveness of the
Group’s internal control review function. The ultimate responsibility for reviewing and approving the annual
report and accounts and the half-yearly reports remains with the Board. The Audit and Risk Committee
gives due consideration to laws and regulations, the provisions of the UK Corporate Governance Code
and the requirements of the Listing Rules. The Audit and Risk Committee shall meet at least two times a
year at appropriate intervals in the financial reporting and audit cycle and otherwise as required.
Remuneration Committee
The Remuneration Committee, which comprises John McGoldrick, Brian Kinane and Owen May, is
responsible, amongst other things, for assisting the Board in determining its responsibilities in relation to
remuneration, including making recommendations to the Board on the Company’s policy on executive
remuneration, including setting the parameters and governance framework of the Group’s remuneration
policy and determining the individual remuneration and benefits package of each of the Company’s
Executive Directors and the Group. It is also responsible for approving the rules and basis for participation
in any performance related pay-schemes, share incentive schemes and obtaining reliable and up-to-date
information about remuneration in other companies. The Remuneration Committee shall meet at least
two times a year.
Nomination Committee
The Nomination Committee, which comprises John McGoldrick as Chairman, Brian Kinane and Owen
May, will identify and nominate, for the approval of the Board, candidates to fill Board vacancies as and
when they arise. The Nominations Committee will meet as required.
Share dealing policy
The Company has adopted a share dealing policy which sets out the requirements and procedures for
dealings in any of its listed securities. The share dealing policy applies widely to the Directors of the
Company and its subsidiaries, certain employees’ and person closely associated with them. The policy
complies with the Market Abuse Regulations, which came into effect on 3 July 2016.
Dividend policy
The objective of the Directors is the achievement of substantial capital growth. In the short-term they do
not intend to declare a dividend.
Anti-bribery and corruption policy
The Company has adopted an anti-corruption and bribery policy which applies to the Directors and all
employees of the Company. The Directors believe that the Group, through its internal controls, has
appropriate procedures in place to reduce the risk of bribery and that all employees, agents, consultants
and associated persons are made fully aware of the Group’s policies and procedures with respect to
ethical behaviour, business conduct and transparency.
11
Curzon Energy Plc
Health and safety
Annual Report 2017
The safety of the Group’s employees and contractors is critical to its operations. Coos Bay requires its
contractors working on site to comply with all applicable laws in connection with the performance of its
work, including applicable requirements of the Occupational Health and Safety Act and the rules
promulgated thereunder (OSHA). As Coos Bay currently maintains a limited number of employees and
almost all work on site is performed by independent contractors, Coos Bay has not developed any formal
safety procedures or training programs beyond those that may be required by OSHA or other applicable
laws. As Coos Bay’s field operations expand, the Board intends to review Coos Bay’s health and safety
practices from time-to-time to ensure that they remain consistent with current industry standards.
Relations with shareholders
As detailed further below, the Directors seek to build on a mutual understanding of objectives between
the Company and its shareholders by meeting to discuss long term issues and receive feedback,
communicating regularly throughout the year and issuing trading updates as appropriate. The Board also
seeks to use the Annual General Meeting to communicate with its shareholders.
Fair, balanced and understandable assessment of position and prospects
The Board has shown its commitment to presenting fair, balanced and comprehensible assessments of
the Company’s position and prospects by providing comprehensive disclosures within the financial report
in relation to its activities. The Board has applied the principles of good governance relating to Directors’
remuneration as described below. The Board has determined that there are no specific issues which need
to be brought to the attention of shareholders.
Remuneration strategy
The Company operates in a competitive market. If it is to compete successfully, it is essential that it
attracts, develops and retains high quality staff. Remuneration policy has an important part to play in
achieving this objective. The Company aims to offer its staff a remuneration package which is both
competitive in the relevant employment market and which reflects individual performance and
contribution.
Share options and warrants
On admission to the Official List, the Company granted a total of 8,263,904 Options and Warrants
pursuant to the terms of the Company’s stock option plan to subscribe for Ordinary Shares of £0.01 each
in the capital of the Company. Certain Directors have interests in these as follows:
Name
Riverfort Capital
Limited – a
company owned by
Mr. Brian Kinane
Riverfort Capital
Limited – a
company owned by
Mr. Brian Kinane
Riverfort Capital
Limited – a
company owned by
Mr. Brian Kinane
Gate Energy
Limited – a
company owned by
Mr. Thomas
Wagenhofer
Gate Energy
Limited – a
Number of
Options
Warrants
Exercise
Price
or
421,152
£0.10
421,152
£0.15
421,152
£0.30
Vesting
Expiry Date
On Date of
Grant
5 years from Admission
6-month
anniversary
of Admission
1 year from
Admission
5 years from Admission
5 years from Admission
842,562
£0.10
1 year from
Admission
5 years from Admission
842,562
£0.15
5 years from Admission
12
Curzon Energy Plc
company owned by
Mr. Thomas
Wagenhofer
Gate Energy
Limited – a
company owned by
Mr. Thomas
Wagenhofer
John McGoldrick
John McGoldrick
John McGoldrick
James Lewis
Candace Jane
Glenday
SP Angel
Letzdream
Foundation
Cuart Investments
PCC Limited
Annual Report 2017
2 years from
Admission
842,562
£0.30
3 years from
Admission
5 years from Admission
280,854
£0.10
280,854
£0.15
280,854
£0.30
500,000 warrants
500,000 warrants
130,200 warrants
1,000,000 warrants
1,500,000 warrants
£0.15
£0.15
£0.10
£0.15
£0.125
1 year from
Admission
2 years from
Admission
3 years from
Admission
5 years from Admission
5 years from Admission
5 years from Admission
1 year from Admission
1 year from Admission
3 years from Admission
1 year from Admission
3 years from Admission
Communication with shareholders
The Board attaches great importance to communication with both institutional and private shareholders.
Regular communication is maintained with all shareholders through Company announcements, the half-
year Statement and the Annual Report and financial statements.
The Directors seek to build on a mutual understanding of objectives between the Company and its
shareholders. Institutional shareholders are in contact with the Directors through presentations and
meetings to discuss issues and to give feedback regularly throughout the year. With private shareholders,
this is not always practical.
The Board therefore intends to use the Company’s Annual General Meeting as the opportunity to meet
private shareholders who are encouraged to attend, and at which the Board will give a presentation on
the activities of the Company.
Following the presentation there will be an opportunity to meet and ask questions of Directors and to
discuss development of the business.
The Company operates a website at; http://www.curzonenergy.com/investor-relations
The website contains details of the company and its activities; regulatory announcements, Company
announcements, interim statements, preliminary statements and annual reports.
Greenhouse gas emissions
The Group has as yet minimal greenhouse gas emissions to report from the operations of the Company
and its subsidiaries and does not have responsibility for any other emission producing sources under the
Companies Act 2006 (Strategic report and Directors report) Regulations 2014.
Financial Risk Management
The Group is exposed to a variety of financial risks including currency risk, credit risk and liquidity risk.
Some of the objectives and policies applied by management to mitigate these risks are outlined in note
19 to the Consolidated Financial Statements.
13
Curzon Energy Plc
Ordinary Share Capital
Annual Report 2017
The Company’s Ordinary Shares of £0.01 per share represent 100% of its total share capital. At a
meeting of the Company every member present in person or by proxy shall have one vote for every
Ordinary Share of which he is the holder. Holders of Ordinary Shares are entitled to receive dividends.
On a winding-up or other return of capital, holders are entitled to share in any surplus assets pro rata to
the amount paid up on their Ordinary Shares. The shares are not redeemable at the option of either the
Company or the holder. There are no restrictions on the transfer of shares.
Independent auditors
During the period, Crowe Clark Whitehill LLP was appointed as auditor to the Company.
Provision of information to auditors
Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed
that:
•
so far as that Director is aware, there is no information relevant to the audit of which the
Company's auditors are unaware, and;
• each Director has taken all the steps that ought to have been taken as a director in order to be
aware of any information needed by the Company's auditors in connection with preparing their
report and to establish that the Company's auditors are aware of that information.
Signed by order of the board
Thomas Mazzarisi
30 April 2018
14
Curzon Energy Plc
Report of the Remuneration Committee
Report of the Remuneration Committee
Annual Report 2017
The Board of Directors has established a Remuneration Committee. The Remuneration Committee (the
‘Committee’) comprises our three non-executive directors, John McGoldrick, Brian Kinane and Owen
May.
The members of the Remuneration Committee have the necessary experience of executive compensation
matters relevant to their responsibilities as members of such a committee by virtue of their respective
professions, contacts within the minerals industry as well as experience in the broader business
community. In addition, each member of the Remuneration Committee keeps abreast on a regular basis
of trends and developments affecting executive compensation. Accordingly, it is considered that the
Remuneration Committee has sufficient experience and knowledge to set appropriate levels of
compensation. Neither the Company nor the Remuneration Committee engaged independent consultants
to evaluate the levels of compensation during the year ended 31 December 2017.
Committee’s Main Responsibility
The Remuneration Committee, is responsible, amongst other things, for assisting the Board in
determining its responsibilities in relation to remuneration, including making recommendations to the
Board on the Company’s policy on executive remuneration, including setting the parameters and
governance framework of the Group’s remuneration policy and determining the individual remuneration
and benefits package of each of the Company’s Executive Directors and the Group. It is also responsible
for approving the rules and basis for participation in any performance related pay-schemes, share
incentive schemes and obtaining reliable and up-to-date information about remuneration in other
companies. The recommendations of the Remuneration Committee are submitted to the independent
members of the Board of Directors for consideration and approval. The Remuneration Committee shall
meet at least two times a year.
Statement of Policy on Directors’ Remuneration
The Company’s policy is to set remuneration to attract and retain the highest quality of directors and
senior executives, and to:
•
•
•
•
align their interests with shareholders’,
avoid incentivising excessive risk taking by executives,
be proportionate to the contribution of the individuals concerned, and
be sensitive to pay and employment conditions elsewhere in the group.
The Company is at an early stage of development. As a result, the use of traditional performance
standards, such as corporate profitability, is not considered by the Remuneration Committee to be
appropriate in the evaluation of corporate or directors’ performance. Discretionary bonuses may be paid
to aid staff retention and reward performance.
The Company provides executive directors with base fees which represent their minimum compensation
for services rendered during the financial year. The base fees of directors and senior executives depend
on the scope of their experience, responsibilities, and performance.
The Remuneration Committee has considered the risk implications of the Company’s compensation
policies and practices and has concluded that there is no appreciable risk associated with such policies
and practices since such policies and practices do not have the potential of encouraging an executive
officer or other applicable individual to take on any undue risk or to otherwise expose the Company to
inappropriate or excessive risks. Furthermore, although the Company does not have in place any specific
prohibitions preventing executives from purchasing financial instruments, including prepaid variable
forward contracts, equity swaps, collars, or units of exchange funds that are designed to hedge or offset
a decrease in market value of options or other equity securities of the Company granted in compensation
or held directly or indirectly, by the director, the Company is unaware of the purchase of any such financial
instruments by any director.
15
Curzon Energy Plc
Annual Report 2017
The Company does not anticipate making any significant changes to its compensation policies and
practices during 2018.
Directors’ Remuneration
The Directors who held office at December 31, 2017 and who had beneficial interests in the ordinary
shares of the Company are summarized as follows:
Name of Director
Stephen Schoepfer
Thomas Mazzarisi
Position
Chief Executive Officer, Executive Director
Chief Financial Officer, Executive Director
Thomas Wagenhofer
Executive Director
Brian Kinane
Non-Executive Director
Each of the directors entered into service agreements at the time of the Company’s admission to the
market in October 2017.
Directors’ service contracts
John McGoldrick has been appointed by the Company with effect from Admission to act as Chairman and
a Non-Executive Director of the Company under a letter of appointment dated 26 September 2017. His
appointment is for an initial term of 36 months and is terminable on three months’ written notice on either
side. He is entitled to a fee of £50,000 per annum.
Thomas Wagenhofer was appointed a director on 27 September 2016. He has been appointed to act as
an executive director of the Company pursuant to a letter of appointment dated 26 September 2017 which
takes effect on Admission pursuant to which he will receive no fee. His appointment is for an initial term
of 36 months and is terminable on three months’ written notice on either side.
Stephen Schoepfer was appointed a director on 29 January 2016. He has been appointed as an Executive
Director under a letter of appointment with the Company dated 26 September 2017, which takes effect
on Admission pursuant to which he will receive no fee. His appointment is for an initial term of 36 months
and is terminable on three months’ written notice on either.
Thomas Mazzarisi was appointed a director on 29 January 2016. He has been appointed as an Executive
Director under a letter of appointment with the Company dated 26 September 2017, which takes effect
on Admission, pursuant to which he will receive no fee. His appointment is for an initial term of 36 months
and is terminable on three months’ written notice on either side.
Brian Kinane was appointed a director on 29 January 2016. He has been appointed to act as a Non-
Executive Director of the Company pursuant to a letter of appointment with the Company dated 26
September 2017, which takes effect on Admission. His appointment is for an initial term of 36 months and
is terminable on three months’ written notice on either side. He is not entitled to a fee for the first twelve
months of the agreement and is entitled to a fee determined by the Board of up to £10,000 per annum
thereafter.
Owen May was appointed a director on 27 September 2016. He has been appointed to act as a Non-
Executive Director of the Company pursuant to a letter of appointment with the Company dated 23 May
2017, which takes effect on Admission. His appointment is for an initial term of 36 months and is
terminable on three months’ written notice on either side. He is not entitled to a fee for the first twelve
months of the agreement and is entitled to a fee determined by the Board of up to £10,000 per annum
thereafter.
16
Curzon Energy Plc
Other service contracts
Annual Report 2017
In addition to the director service contract indicated above, Mr. Schoepfer, through his limited liability
company, 4 Sea-Sons LLC, entered into a services agreement with the Company’s subsidiary, Coos Bay
Energy LLC, dated 1 September 2017 pursuant to which he agreed to serve as Manager, Chief Executive
Officer and President of Coos Bay The term of the agreement commenced on Admission and is due to
expire on the second anniversary of Admission. Mr. Schoepfer’s compensation pursuant to the services
agreement is $155,000 per annum for the first year of the agreement, while compensation for each
subsequent year will be subject to a three per cent. increase. Mr. Schoepfer is also entitled to two
milestone related bonuses, each of which are tied to progress milestones in connection with Coos Bay
Energy’s CBM project in Coos Bay, Oregon. If the agreement is not extended at the end of the initial two-
year term (or any extended term), the Company is obligated to make a payment to Mr. Schoepfer equal
to 25% of the contractual annual compensation amount for the immediately preceding expired year.
In addition to the director service contract indicated above, Mr. Mazzarisi, through his limited liability
company, M10 Ventures LLC, entered into a services agreement with Coos Bay dated 1 September May
2017 pursuant to which he agreed to serve as Manager, Chief Financial Officer, Treasurer, Executive
Vice President & General Counsel and Secretary of Coos Bay. The term of the agreement commenced
on Admission and is due to expire on the second anniversary of Admission. Mr. Mazzarisi’s compensation
pursuant to the services agreement is $155,000 per annum for the first year of the agreement, which
amount includes an allowance for health insurance, while compensation for each subsequent year will be
subject to a three per cent. increase. Mr. Mazzarisi is also entitled to two milestone related bonuses, each
of which are tied to progrees milestones in connection with Coos Bay Energy’s CBM project in Coos Bay,
Oregon. If the agreement is not extended at the end of the initial two-year term (or any extended term),
the Company is obligated to make a payment to Mr. Scheopfer equal to 25% of the contractual annual
compensation amount for the immediately preceding expired year.
In addition to the director service contract indicated above, Mr. Wagenhofer’s services are being made
available to the Group pursuant to a consultancy agreement between the Company and Gate Energy
Limited dated 28 September 2017 pursuant to which Mr. Wagenhofer will act as Technical Executive
Director of the Company. The agreement commenced on Admission and is terminable by either side on
three months’ notice from the beginning of the tenth month following Admission. Gate Energy will be paid
a monthly retainer of £10,000, plus an amount to cover applicable VAT.
Summary Compensation Table (audited)
The following table sets forth the compensation awarded, paid to or earned by each director during
2017:
John McGoldrick
Chairman and Non-Executive Director
Thomas Wagenhofer Executive Director
Thomas Mazzarisi
Executive Director
Stephen Schoepfer
Executive Director
Brian James Kinane
Non-Executive Director
Owen May
Total
Non-Executive Director
Total fees
2017
US$
Total fees
2016
US$
16,111
93,052
-
47,171
182,000
195,372
182,000
175,457
-
-
-
473,163
-
418,000
17
Curzon Energy Plc
Annual Report 2017
Share Option Plan and Share-Based Awards (audited)
The Company has awarded the following share options to the directors of the Company in accordance
with its share option plan:
Director
Brian Kinane
Brian Kinane
Brian Kinane
Number of
Options or
Warrants
Exercise
Price
Vesting
Expiry Date
421,152
£0.10
04/10/2017
04/10/2022
421,152
£0.15
04/04/2018
04/10/2022
421,152
£0.30
04/10/2018
04/10/2022
Thomas Wagenhofer
842,562
£0.10
04/10/2018
04/10/2022
Thomas Wagenhofer
842,562
£0.15
04/10/2019
04/10/2022
Thomas Wagenhofer
842,562
£0.30
04/10/2020
04/10/2022
John McGoldrick
John McGoldrick
John McGoldrick
280,854
£0.10
04/10/2018
04/10/2022
280,854
£0.15
04/10/2019
04/10/2022
280,854
£0.30
04/10/2020
04/10/2022
Brian Kinane through Cuart
Investments PCC Limited – a company
in which he has a material interest
1,500,000
warrants
£0.125
04/10/2017
04/10/2022
The options awarded to Brian Kinane have been issued to his service company Riverfort Capital
Limited.
The options awarded to Thomas Wagenhofer have been issued to his service company Gate Energy
Limited.
The exercise price of the awards exceed the average share price for the period.
There were no awards of annual bonuses or incentive arrangements in the period. All remuneration was
therefore fixed in nature and no illustrative table of the application of remuneration policy has been
included in this report.
Directors’ interests in shares (audited)
Directors’ interests in the shares of the Company at the date of this report are disclosed below.
Director
Ordinary shares held
% held
John McGoldrick
Thomas Wagenhofer
Thomas Mazzarisi
Stephen Schoepfer
Brian James Kinane
-
125,000
1,200,100
1,200,100
125,000
-
0.17
1.65
1.65
0.17
18
Curzon Energy Plc
Annual Report 2017
Owen May
-
-
Other Matters subject to audit
The Company does currently have any pension plans for any of the Directors and does not pay pension
amounts in relation to their remuneration.
The Company has not paid any compensation to past Directors.
No payments were made for loss of office during the year.
Other Matters
The Company does not currently have any annual or long-term incentive schemes in place for any of the
Directors and as such there are no disclosures in this respect.
The performance of the Remuneration Committee has yet to be assessed given the short time frame that
it has been operational.
No performance graph has been included here as the Company is in the early stages of its business
development.
Signed
John McGoldrick, Chairman of the Remuneration Committee
30 April 2018
19
Curzon Energy Plc
Annual Report 2017
Statement of Directors’ Responsibilities in respect of the Strategic Report, the
Directors’ Report and the Financial Statements
The Directors are responsible for preparing the Strategic Report, the Directors’ 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 they have elected to prepare the financial statements in accordance with IFRSs as adopted by the
EU and applicable law.
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 of the profit or loss of 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 judgements and estimates that are reasonable and prudent;
•
state whether they have been prepared in accordance with IFRSs as adopted by the EU; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company’s transactions and disclose with reasonable accuracy at any time the financial
position of the Company and enable them to ensure that the financial statements comply with the
Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Company and to prevent and detect 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 UK governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
We confirm that to the best of our knowledge:
•
•
the financial statements, prepared in accordance with International Financial Reporting Standards as
adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or
loss of the company;
the director’s report includes a fair review of the development and performance of the business and
the position of the company, together with a description of the principal risks and uncertainties that
they face.
By Order of the Board
Thomas Mazzarisi, Director
30 April 2018
20
Curzon Energy Plc
Annual Report 2017
Independent auditor’s report to the members of Curzon Energy Plc
Opinion
We have audited the financial statements of Curzon Energy Plc for the year ended 31 December 2017 which comprise
the group statements of comprehensive income, the group and parent statements of financial position, the group and
parent company statements of cashflows, the group a parent company statements of changes in equity and notes to
the financial statements, including a summary of significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs)
as adopted by the European Union.
In our opinion, the financial statements:
•
•
•
•
give a true and fair view of the state of the group’s and company’s affairs as at 31 December 2017 and of
its loss for the year then ended;
have been properly prepared in accordance with International Financial Reporting Standards as adopted
by the European Union;
of the parent have been properly prepared in accordance with IFRSs as adopted by the European Union
as applied in accordance with the provisions of the Companies Act 2006; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you
when:
•
The directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
• The directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the Company’s ability to continue to adopt the going concern basis of accounting for a
period of at least twelve months from the date when the financial statements are authorised for issue.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An item is considered material if it could
reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept
of materiality to both focus our testing and to evaluate the impact of misstatements identified.
Based on our professional judgement, we determined overall materiality for the financial statements as a whole to be
£90,000, based on a percentage of total assets.
We use a different level of materiality (‘performance materiality’) to determine the extent of our testing for the audit of
the financial statements. Performance materiality is set based on the audit materiality as adjusted for the judgements
made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the internal control
environment.
Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party
transactions and directors’ remuneration.
We agreed with the Audit Committee to report to it all identified errors in excess of £4,000. Errors below that threshold
would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds.
Overview of the scope of our audit
There are two components of the Group, Curzon Energy Plc as an entity and the US Group headed by Coos Bay
Energy LLC. The audit of Curzon Energy Plc was conducted from the UK. The accounting records were provided to
us by management. The company engaged a US firm to undertake the audit work on the US group. The audit was
conducted under our direction. We issued instructions to the US firm that detailed the significant risks to be addressed
21
Curzon Energy Plc
Annual Report 2017
through the audit procedures and indicated the information we required to be reported. We reviewed their working
papers and discussed key findings.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Key audit matter
How the scope of our audit addressed the key audit matter
Valuation of Exploration and evaluation
assets
We reviewed management’s assessment which concluded that there
are no facts or circumstances that suggest the recoverable amount of
the asset exceeds the carrying amount.
The group’s primary focus is on exploration
activities in the Coos Bay Basin. The exploration
assets at 31 December 2017 totalled £2.6m.
We considered the risk that exploration assets
are impaired.
In considering this assessment we reviewed the following sources of
evidence:
•The primary lease agreement in place supporting the company’s right of
extraction.
•The third party valuation report commissioned by management as well as
the competent persons report that formed the basis of the valuation.
•Comparing the valuation methodology to the prior year, including the
underlying assumptions.
•Board minutes, budgets and other operational plans setting out the current
plans for the continued commercial appraisal of the asset;
• Discussing plans and intentions with management
Key observations
We reviewed the assumptions used in the valuation model and consider
them to be reasonable including, natural gas prices, royalty rates, Capex,
water disposal and well life.
Our audit procedures in relation to these matters were designed in the context of our audit opinion as a whole. They
were not designed to enable us to express an opinion on these matters individually and we express no such
opinion.
Other information
The directors are responsible for the other information. The other information comprises the information included in
the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
22
Curzon Energy Plc
Annual Report 2017
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
In our opinion based on the work undertaken in the course of our audit
•
•
the information given in the strategic report and the directors' report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the directors’ report and strategic report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the parent company and their environment obtained in
the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report
to you if, in our opinion:
•
•
•
adequate accounting records have not been kept by the company, or returns adequate for our audit have
not been received from branches not visited by us; or
the financial statements and the part of the directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit
Responsibilities of the directors for the financial statements
As explained more fully in the directors’ responsibilities statement on page 20, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
We designed our audit approach to be capable of detecting irregularities, including fraud. In particular:
We gained an understanding of the legal and regulatory framework applicable to the Group and
considered the risk of acts by the Group which were contrary to applicable laws and regulations, including
fraud.
We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment
Our tests included, but were not limited to: review of the financial statement disclosures to underlying
supporting documentation and enquiries of management. There are inherent limitations in the audit
procedures described above and the further removed non-compliance with laws and regulations is from
23
Curzon Energy Plc
Annual Report 2017
the events and transactions reflected in the financial statements, the less likely we would become aware
of it.
We did not identify any key audit matters relating to irregularities, including fraud. As in all of our audits
we also addressed the risk of management override of internal controls, including testing journals and
evaluating whether there was evidence of bias by the directors that represented a risk of material
misstatement due to fraud.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
Other matters which we are required to address
We were appointed by the Board on 21 November 2017 to audit the financial statements for the year ended 31
December 2017. Our total uninterrupted period of engagement is 2 years, covering the period ended 31 December
2016 to 31 December 2017.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the company and we remain
independent of the group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those
matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company and the company's members
as a body, for our audit work, for this report, or for the opinions we have formed.
Matthew Stallabrass
Senior Statutory Auditor
For and on behalf of
Crowe Clark Whitehill LLP
Statutory Auditor
London
30 April 2018
24
Curzon Energy Plc
Consolidated statement of comprehensive income
for the year ended 31 December 2017
Well field expenses
Administrative expenses
Loss from operations
Finance expense, net
Impairment of exploration and evaluation
assets
Other income
Loss before taxation
Income tax expense
Loss for the year attributable to
equity holders of the parent company
Other comprehensive income/(expense)
Gain/(loss) on translation of parent net assets
and results from functional currency into
presentation currency
Total comprehensive loss for the year
Loss per share
Basic and diluted, US$
Note
4
6
7
8
Annual Report 2017
2017
US$
2016
US$
(293,867)
(1,662,619)
(60,187)
(1,035,803)
(1,956,486)
(102,288)
(1,095,990)
(281,476)
-
225,393
(2,158,000)
-
(1,833,381)
-
(3,535,466)
-
(1,833,381)
(3,535,466)
44,624
(38,153)
(1,788,757)
(3,573,619)
(0.03)
(0.08)
The notes on pages 29 to 59 form part of these financial statements
25
Curzon Energy Plc
Consolidated statements of financial position
as at 31 December 2017
Annual Report 2017
Note
2017
US$
2016
US$
9
11
12
13
14
15
16
Assets
Non-current assets
Intangible assets
Restricted cash
Total non-current assets
Current assets
Prepayments and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Total liabilities
Capital and reserves attributable to
shareholders
Share capital
Share premium
Share-based payments reserve
Warrants reserve
Merger reserve
Foreign currency translation reserve
Accumulated losses
Total capital and reserves
Total equity and liabilities
2,559,000
125,440
2,684,440
2,559,000
125,315
2,684,315
148,616
1,595,035
1,743,651
-
370,722
370,722
4,428,091
3,055,037
463,413
578,599
1,042,012
581,842
363,829
945,671
1,042,012
945,671
964,575
3,199,004
114,659
191,011
31,212,041
6,471
(32,301,682)
3,386,079
639,925
763,854
-
-
31,212,041
(38,153)
(30,468,301)
2,109,366
4,428,091
3,055,037
The financial statements were approved and authorised for issue by the Board of Directors on 30 April
2018 and were signed on its behalf by:
Thomas Mazzarisi
Director
The notes on pages 29 to 59 form part of these financial statements.
26
Curzon Energy Plc
Consolidated statements of changes in equity
Annual Report 2017
Share capital
US$
530,803
-
-
-
109,122
-
639,925
-
Share
premium
US$
Other
reserves
US$
Accumulated
losses
US$
Total
US$
-
-
-
-
763,854
-
763,854
-
25,545,285
(26,948,973)
(872,885)
-
(3,519,328)
(3,519,328)
(38,153)
(38,153)
-
5,666,756
31,173,888
-
-
(38,153)
(3,519,328)
-
-
(30,468,301)
(1,833,381)
(3,557,481)
872,976
5,666,756
2,109,366
(1,833,381)
-
-
44,624
-
44,624
Equity as at 1 January
2016
Loss for the year
Other comprehensive
income for the year
Total comprehensive loss
for the year
Issue of shares
Increase in additional
capital of Coos Bay
At 31 December 2016
Loss for the year
Other comprehensive
income for the year
Total comprehensive
loss for the year
Issue of shares
Share issue costs
Issue of share warrants
Issue of share options
At 31 December 2017
Other Reserves
-
324,650
-
-
-
964,575
-
2,921,855
(486,705)
-
-
3,199,004
44,624
-
-
191,011
114,659
31,524,182
Merger
reserve
US$
Share-based
payments
reserve
US$
Warrants
reserve
US$
Equity as at 1 January
2016
Loss for the year
Other comprehensive
income for the year
Total comprehensive loss
for the year
Issue of shares
Increase in additional
capital of Coos Bay
At 31 December 2016
Loss for the year
Other comprehensive
income for the year
Total comprehensive
loss for the year
Issue of shares
Share issue costs
Issue of share warrants
Issue of share options
At 31 December 2017
25,545,285
-
-
-
-
5,666,756
31,212,041
-
-
-
-
-
-
-
31,212,041
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
114,659
114,659
-
-
-
191,011
-
191,011
(1,833,381)
-
-
-
-
(32,301,682)
Foreign
currency
translation
reserve
US$
(1,788,757)
3,245,505
(486,705)
191,011
114,659
3,386,079
Total Other
reserves
US$
-
-
25,545,285
-
(38,153)
(38,153)
(38,153)
-
-
(38,153)
-
44,624
44,624
-
-
-
-
6,471
(38,153)
-
5,666,756
31,173,888
-
44,624
44,624
-
-
191,011
114,659
31,524,182
27
Curzon Energy Plc
Consolidated statement of cash flows
Cash flow from operating activities
Loss before taxation
Adjustments for:
Finance cost, net
Income from payable write off
Licences impairment
Share-based payments charge
Unrealised foreign exchange movements
Operating cashflows before working capital changes
Changes in working capital:
Increase in payables
(Increase) in receivables
Net cash used in operating activities
Financing activities
Issue of ordinary shares
Costs of share issue
Proceeds from new borrowings
Net cash flow from financing activities
Annual Report 2017
Notes
2017
US$
2016
US$
6
17
(1,833,381)
(3,535,466)
86,473
(225,393)
-
111,367
50,184
(1,810,750)
344,354
-
2,158,000
-
(29,004)
(1,062,116)
66,576
(118,542)
(1,862,716)
209,637
-
(852,479)
16
15
3,087,266
(295,694)
250,000
3,041,572
872,979
-
350,815
1,223,794
Net Increase in cash and cash equivalents in the period
1,178,856
371,315
Cash and cash equivalents at the beginning of the period
Restricted cash held on deposits
Total cash and cash equivalents at the beginning of the
period, including restricted cash
11
370,722
125,315
515
124,424
496,037
125,019
Effect of the translation of cash balances into presentation
currency
Interest on restricted cash
45,457
125
(1,187)
891
Cash and cash equivalents at the end of the period
Restricted cash held on deposits
Total cash and cash equivalents at the end of the period,
including restricted cash
11
1,595,035
125,440
370,722
125,315
1,720,475
496,037
28
Curzon Energy Plc
Annual Report 2017
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
1.
General information
The Company was incorporated and registered in England and Wales on 29 January 2016 as a public
limited company under the name Westport Energy Plc. On 2 December 2016 the Company changed its
name to Curzon Energy Plc. The Company’s registered number is 09976843 and its registered office is
at Kemp House, 152 City Road, London EC1V 2NX. On 4 October 2017, the Company’s shares were
admitted to the Official List (by way of Standard Listing) and to trading on the London Stock Exchange’s
Main Market.
With effect from admission, the Company has been subject to the Listing Rules and the Disclosure
Guidance and Transparency Rules (and the resulting jurisdiction of the UK Listing Authority) to the extent
such rules apply to companies with a Standard Listing pursuant to Chapter 14 of the Listing Rules.
The principal activity of the Company is that of a holding company for its subsidiaries, as well as
performing all administrative, corporate finance, strategic and governance functions of the Group. The
Company’s investments comprise of subsidiaries operating in the coalbed methane (‘CBM’) gas sector.
The entire share capital of Coos Bay Energy, LLC (Coos Bay) was conditional on Admission, acquired by
the Company pursuant to a membership interest purchase agreement dated 20 May 2017 between the
Company, Coos Bay and the members of Coos Bay.
At the time of its acquisition by the Company, Coos Bay consisted of Coos Bay Energy, LLC and its wholly
owned US Group as specified below. The Company, Coos Bay Energy, LLC and the US Group as
specified below together are referred to the Curzon Group.
Coos Bay Energy, LLC is a limited liability corporation incorporated in Nevada, USA whose registered
office is 1370 Crowley Avenue SE, Portland, Oregon 97302, USA.
The US Group at the date of its acquisition by Coos Bay Energy, LLC consisted of Westport Energy
Acquisition, Inc. and its wholly-owned subsidiary, Westport Energy, LLC (together, the “US Group”).
Westport Energy Acquisition, Inc., was incorporated in May 2010 in Delaware, USA. Its registered office
is located at 100 Overlook Center, 2nd Floor, Princeton Junction, NJ 08540, USA.
Westport Energy, LLC was incorporated in December 2008 in Delaware, USA. Its registered office is
located at 100 Overlook Center, 2nd Floor, Princeton Junction, NJ 08540, USA.
The principal business of the US Group is the exploration for CBM in the Coos Bay region of Oregon,
USA. The US Group holds leases to approximately 45,370 acres of prospective CBM lands in the Coos
Bay Basin.
As a result of Coos Bay Energy, LLC acquisition, the Group owns certain CBM and related assets, which
it acquired on 4 November 2016 by acquiring the US Group from Westport Energy Holdings Inc., a publicly
held company trading on the OTC Pink Market. Coos Bay acquired the US Group pursuant to a
foreclosure agreement dated 4 November 2016 between Coos Bay, Westport Energy Holdings, Inc., the
US Group and the three creditors of Westport Energy Holdings Inc. (which at the time of the foreclosure
was the parent company of the US Group). Pursuant to the terms of the foreclosure agreement, all
outstanding debt and security instruments of Westport Energy Holdings, Inc., which was secured by all of
the assets of the US Group, was terminated, along with the creditors’ related security interests in the
assets of the US Group. In addition, outstanding royalty agreements with Queensbury, Inc. and YA Global
Investments Limited were also terminated. YA Global Investments L.P. was the major creditor and held a
75% interest in Coos Bay prior to the Acquisition. YA Global Investments L.P. now holds a majority interest
in the Coos Bay and 44.72% interest in the Company.
Prior to the acquisition of the US Group by Coos Bay, the US Group was wholly-owned by Westport
Energy Holdings Inc., which had acquired the Oregon CBM business, on 17 August 2010 from New
Earthshell Corporation, a corporation formed in Delaware in October 2008 to hold title to the CBM assets
through Westport Energy LLC. The parent company of New Earthshell Corporation was YA Global
29
Curzon Energy Plc
Annual Report 2017
Investments L.P. who had, foreclosed on, and took title to, those Oregon CBM assets from Torrent Energy
on 26 November 2008.
2.
Accounting policies
The principal accounting policies adopted are set out below.
The Group Financial statements are presented in US Dollars.
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting
Standards and IFRIC interpretations as endorsed by the EU (“IFRS”) and the requirements of the
Companies Act applicable to companies reporting under IFRS.
The preparation of the Group financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires the Directors to exercise their judgment in the process of
applying the Group’s accounting policies. The areas involving a higher degree of judgment and
complexity, or areas where assumptions and estimates are significant to the Group financial statements
are disclosed below.
a) New standards, interpretations and amendments effective from 1 January 2017
There were no new standards or interpretations effective for the first time for periods beginning on or after
1 January 2017 that had a significant effect on the Curzon Group’s financial statements.
b) New standards, interpretations and amendments not yet effective
There are a number of standards and interpretations which have been issued by the International
Accounting Standards Board that are effective in future accounting periods that the group has decided
not to adopt early. The most significant of these are:
- IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers (both mandatorily
effective for periods beginning on or after 1 January 2018); and
- IFRS 16 Leases (mandatorily effective for periods beginning on or after 1 January 2019).
The Directors do not expect that the adoption of these standards will have a material impact on the
financial information of the Group in future periods.
IFRS 9 “Financial Instruments” will impact both the measurement and disclosures of financial instruments.
IFRS 15 “Revenue from Contracts with Customers” – the Company is pre-revenue hence the adoption
would have no impact on the reported results. Under IFRS 15 management expect gas revenue to be
recognised at the point the gas is transferred to the customers control, for example delivery into the
customer's pipeline.
Adoption of IFRS 16 will result in the group recognising right of use of assets and lease liabilities for all
contracts that are, or contain, a lease. For leases currently classified as operating leases, under current
accounting requirements the group does not recognise related assets or liabilities, and instead spreads
the lease payments on a straight-line basis over the lease term, disclosing in its annual financial
statements the total commitment. Due to the fact that the Group currently only has short term (less than
12 months) operating leases, IFRS 16 will not have an impact on the results or balance sheet of the
Group.
Basis of consolidation
The Company was incorporated on the 29th of January 2016. It acquired Coos Bay Energy, LLC on the
4th of October 2017. At the time of its acquisition by the Company, Coos Bay Energy, LLC consisted of
Coos Bay Energy, LLC and its wholly owned US Group. It is the Directors’ opinion that the Company at
the date of acquisition of Coos Bay Energy, LLC did not meet the definition of a business as defined by
IFRS 3 and therefore the acquisition is outside on the IFRS 3 scope. More details on the judgement
30
Curzon Energy Plc
Annual Report 2017
involved is disclosed in the section Basis of consolidation under Summary of critical accounting estimates
and judgements on page 37.
Where a party to an acquisition fails to satisfy the definition of a business, as defined by IFRS 3,
management have decided to adopt a “merger accounting” method of consolidation as the most relevant
method to be used.
The Group consistently applies it to all similar transactions in the following way:
- the acquired assets and liabilities are recorded at their existing carrying values rather than at fair value;
- no goodwill is recorded;
- all intra-group transactions, balances and unrealised gains and losses on transactions are eliminated
from the beginning of the first comparative period or inception, whichever is earlier;
- comparative periods are restated from the beginning of the earliest comparative period presented based
on the assumption that the companies have always been together;
- all the pre-acquisition accumulated losses of the legal acquire are assumed by the Group as if the
companies have always been together;
- all the share capital and membership capital contributions of all the companies included into the legal
acquiree sub-group less the Company’s cost of investment into these companies are included into the
merger reserve; and
- the Company’s called up share capital is restated at the preceding reporting date to reflect the value of
the new shares that would have been issued to acquire the merged company had the merger taken place
at the first day of the comparative period. Where new shares have been issued during the current period
that increased net assets (other than as consideration for the merger), these are recorded from their actual
date of issue and are not included in the comparative statement of financial position.
Going concern
The Group financial statements have been prepared on the going concern basis, which assumes that the
Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The
operations are currently being financed by funds raised from an equity placing completed on 4 October
2017 (the Equity Placing”) and proceeds from a $1,000,000 third-party credit facility that provides the
Group up to $500,000 additional minimum funding (the “Credit Facility Minimum Funding”) and an
additional $500,000 at the discretion of the lender. The Group believes that, based on current projected
operational plans, the proceeds from the Equity Placement and the Credit Facility Minimum Funding are
sufficient for the Group to implement its Phase 1 operational plans.
The Group held cash balances of $1,720,475 as at 31 December 2017 and has funding plans in place for
further capital to meet its planned activities.
The Directors believe that the Group will be able to raise, as required, sufficient cash or reduce its
commitments to enable it to continue its operations, including the pursuit of future exploration
opportunities, and to continue to meet, as and when they fall due, its liabilities for at least the next twelve
months from the date of approval of the Group financial statements. The Group financial statements have,
therefore, been prepared on the going concern basis.
Functional currency
Functional and presentation currency
The individual financial information of each Group entity is measured in the currency of the primary
economic environment in which the entity operates (its functional currency). The Company’s functional
currency is UK Pound Sterling (£). All other companies, belonging to the Curzon Group, have US Dollar
as their functional currency. The Group financial statements are presented in US Dollars ($).
Transactions and balances
Transactions in foreign currencies are converted into the respective functional currencies on initial
recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary
assets and liabilities at the end of the reporting period are translated at the rates ruling as of that date.
31
Curzon Energy Plc
Annual Report 2017
Non-monetary assets and liabilities are translated using exchange rates that existed when the values
were determined. All exchange differences are recognised in profit or loss.
On consolidation, the assets and liabilities of the Group’s Pound Sterling operations are translated into
the Group’s presentational currency (US Dollar) at exchange rates prevailing at the reporting date. Income
and expense items are translated at the average exchange rates for the period unless exchange rates
have fluctuated significantly during the year, in which case the exchange rate at the date of the transaction
is used. All exchange differences arising, if any, are recognised as other comprehensive income and are
transferred to the Group’s foreign currency translation reserve.
Oil and gas exploration and evaluation expenditure
All exploration and evaluation costs incurred or acquired on the acquisition of a subsidiary are
accumulated in respect of each identifiable project area. These costs are classified as intangible assets
and are only carried forward to the extent that they are expected to be recouped through the successful
development of the area or where activities in the area have not yet reached a stage which permits
reasonable assessment of the existence of economically recoverable reserves (the “successful efforts’’
method). Other costs are written off unless commercial reserves have been established or the
determination process has not been completed. Accumulated costs in relation to an abandoned area are
written off in full against profit in the year in which the decision to abandon the area is made. When
production commences the accumulated costs for the relevant area of interest are transferred from
intangible assets to tangible assets as “Developed Oil and Gas Assets” and amortised over the life of the
area according to the rate of depletion of the economically recoverable costs.
The properties are currently unproved, and therefore capitalised costs are not amortised, but subject to
impairment testing. In addition, as no properties have been classified as proved, development activities
have not commenced.
Impairment of oil and gas exploration and evaluation assets
The carrying value of unevaluated areas is assessed when there has been an indication that impairment
in value may have occurred. The impairment of unevaluated prospects is assessed based on the
Directors’ intention with regard to future exploration and development of individual significant areas and
the ability to obtain funds to finance such exploration and development.
Decommissioning costs
Where a material liability for the removal of production facilities and site restoration at the end of the field
life exists, a provision for decommissioning is made. The amount recognised is the present value of
estimated future expenditure determined in accordance with local conditions and requirements. An asset
of an amount equivalent to the provision is also created and depreciated on a unit of production basis.
Changes in estimates are recognised prospectively, with corresponding adjustments to the provision and
the associated asset. As at each of 31 December 2016 and 31 December 2017, no provisions were
deemed necessary.
Impairment
Impairment of financial assets
All financial assets (other than those categorised at fair value through profit or loss), are assessed at the
end of each reporting period as to whether there is any objective evidence of impairment as a result of
one or more events having an impact on the estimated future cash flows of the asset. For an equity
instrument, a significant or prolonged decline in the fair value below its cost is considered to be objective
evidence of impairment.
An impairment loss in respect of loans and receivables financial assets is recognised in profit or loss and
is measured as the difference between the asset’s carrying amount and the present value of estimated
future cash flows, discounted at the financial asset’s original effective interest rate.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised
32
Curzon Energy Plc
Annual Report 2017
impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial
asset at the date the impairment is reversed does not exceed what the amortised cost would have been
had the impairment not been recognised.
Impairment of non-financial assets
The carrying values of assets, other than those to which IAS 36 “Impairment of Assets” does not apply,
are reviewed at the end of each reporting period for impairment when there is an indication that the assets
might be impaired. Impairment is measured by comparing the carrying values of the assets with their
recoverable amounts. The recoverable amount of the assets is the higher of the assets' fair value less
costs to sell and their value-in-use, which is measured by reference to discounted future cash flow.
An impairment loss is recognised in profit or loss immediately.
When there is a change in the estimates used to determine the recoverable amount, a subsequent
increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss
and is recognised to the extent of the carrying amount of the asset that would have been determined (net
of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in
profit or loss immediately, unless the asset is carried at its revalued amount, in which case the reversal
of the impairment loss is treated as a revaluation increase.
Financial instruments
Financial instruments are recognised in the statements of financial position when the Group has become
a party to the contractual provisions of the instruments.
Financial assets
The Group classifies its financial assets as loans and receivables, cash and cash equivalents and
restricted cash.
Financial assets are derecognised when the contractual rights to receive cash flows from the financial
assets have expired or have been transferred and the Group has transferred substantially all the risks
and rewards of ownership. On de-recognition of a financial asset in its entirety, the difference between
the carrying amount and the sum of the consideration received and any cumulative gain or loss that had
been recognised in other comprehensive income is recognised in profit or loss.
Loans and receivables
These are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They arise through the provision of goods or services (trade receivables), but also
incorporate other types of contractual monetary asset. They are initially recognised at fair value plus
transactions costs that are directly attributable to their acquisition or issue, and are subsequently carried
at amortised cost using effective interest rate method, less provision for impairment. The Group’s loans
and receivables financial assets comprise notes and other receivables.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, bank balances, bank overdrafts, deposits with financial
institutions and short-term, highly liquid investments that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value.
Restricted cash
Restricted cash are funds held as a collateral related to stand-by letters of credit related to the Group’s
oil and gas properties. Such deposits are classified as non-current assets and are not classified as part
of cash and cash equivalents as these deposits are not accessible by the Company for unrestricted use
and are not accessible for more than 3 months. More details on the Group’s restricted cash are given in
the note 11.
33
Curzon Energy Plc
Financial liabilities
Annual Report 2017
Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the
financial instrument.
Financial instruments are classified as liabilities or equity in accordance with the substance of the
contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified
as a liability are reported as an expense or income. Distributions to holders of financial instruments
classified as equity are charged directly to equity.
All financial liabilities are recognised initially at fair value plus directly attributable transaction costs and
subsequently measured at amortised cost using the effective interest method other than those categorised
as fair value through the Statement of Comprehensive Income.
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or
expires. When an existing financial liability is replaced by another from the same party on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a de-recognition of the original liability and the recognition of a new liability, and
the difference in the respective carrying amounts is recognised in the income statement.
Loans and borrowings
Borrowings are presented as current liabilities unless the Group has an unconditional right to defer
settlement for at least twelve months after the reporting date, in which case they are presented as non-
current liabilities.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised
cost using the effective interest rate method. Gains and losses are recognised in the income statement
when the liabilities are derecognised. Amortised cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the effective interest rate.
All borrowing costs are recognised in profit or loss in the period in which they are incurred.
Equity instruments
Ordinary Shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
are shown in Share Premium account as a deduction, net of tax, from proceeds. Dividends on ordinary
shares are recognised as liabilities when approved for distribution.
Warrants
Warrants classified as equity are recorded at fair value as of the date of issuance on the Company’s
consolidated balance sheets and no further adjustments to their valuation are made. Management
estimates the fair value of these liabilities using option pricing models and assumptions that are based on
34
Curzon Energy Plc
Annual Report 2017
the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions
for future financings, expected volatility, expected life, yield, and risk-free interest rate.
Taxation
Income tax for each reporting period comprises current and deferred tax.
Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year
and is measured using the tax rates that have been enacted or substantively enacted at the end of the
reporting period.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the Group financial statements.
Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and
unused tax credits to the extent that it is probable that future taxable profits will be available against which
the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The
carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or
part of the deferred tax assets to be utilised.
Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from
goodwill or excess of the Group’s interest in the net fair value of the acquired company’s identifiable
assets, liabilities and contingent liabilities over the business combination costs or from the initial
recognition of an asset or liability in a transaction which is not a business combination and at the time of
the transaction, affects neither accounting profit nor taxable profit.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period
when the asset is realised or the liability is settled, based on the tax rates that have been enacted or
substantively enacted at the end of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when the deferred income taxes relate to the same taxation
authority.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent
that it has become probable that future taxable profit will allow deferred tax assets to be recovered.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred
tax items are recognised in correlation to the underlying transactions either in other comprehensive
income or directly in equity.
Deferred tax arising from a business combination is included in the resulting goodwill or excess of the
Group’s interest in the net fair value of the acquired company’s identifiable assets, liabilities and
contingent liabilities over the business combination costs.
35
Curzon Energy Plc
Leases
Annual Report 2017
The determination of whether an arrangement is, or contains, a lease is based on the substance of the
arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific
asset or assets or the arrangement conveys a right to use the asset.
The Group holds leases to approximately 45,370 acres of prospective coalbed methane lands in the Coos
Bay Basin. The annual rental payments under these operating leases are recognised as an expense on
a straight-line basis over the lease term, except where another systematic basis is more representative
of the time pattern in which economic benefits from the leased asset are consumed.
The Group also leases equipment under operating leases where the annual rentals are recognised in a
similar manner.
There were no leases classified under the category of finance leases.
Employee benefits
Short-term benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in
the period in which the associated services are rendered by employees of the Group.
Post-employment benefits
The Group does not currently make provision for post-employment benefits by way of pension plans or
similar arrangements.
Provisions, contingent liabilities and contingent assets
Provisions are recognised when the Group has a present or constructive obligation as a result of past
events, when it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation, and when a reliable estimate of the amount can be made. Provisions are reviewed
at the end of each financial reporting period and adjusted to reflect the current best estimate. Where the
effect of the time value of money is material, the provision is the present value of the estimated
expenditure required to settle the obligation.
A contingent liability is a possible obligation that arises from past events and whose existence will only be
confirmed by the occurrence of one or more uncertain future events not wholly within the control of the
Group. It can also be a present obligation arising from past events that is not recognised because it is not
probable that an outflow of economic resources will be required or the amount of obligation cannot be
measured reliably.
A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a
change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as
a provision.
A contingent asset is a probable asset that arises from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain events not wholly within the control
of the Group. The Group does not recognise contingent assets but discloses its existence where inflows
of economic benefits are probable, but not virtually certain.
Share-based payment arrangements
Equity-settled share-based payments to employees and others providing similar services are measured
at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair
value of equity-settled share-based transactions are set out in note 17 to the Group financial statements.
The fair vale determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Directors’ estimate of equity instruments that will
eventually vest, with a corresponding increase in equity. Where the conditions are non-vesting, the
36
Curzon Energy Plc
Annual Report 2017
expense and equity reserve arising from share based payment transactions is recognised in full
immediately on grant.
At the end of each reporting period, the Directors revised their estimate of the number of equity
instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in
profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding
adjustment to other reserves.
Operating segments
An operating segment is a component of the Group that engages in business activities from which it may
earn revenues and incur expenses. The results of an operating segment are reviewed regularly by the
chief operating decision maker to make decisions about resources to be allocated to the segment and
assess its performance, and for which discrete financial information is available.
Summary of critical accounting estimates and judgements
The preparation of the Group financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires the Directors to exercise their judgement in the process of
applying the accounting policies, which are detailed above. These judgements are continually evaluated
by the Directors and management and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The key estimates and underlying assumptions concerning the future and other key sources of estimation
uncertainty at the Statement of Financial Position date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial period are reviewed
on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate
is revised if the revision affects only that period or in the period of the revision and future periods if the
revision affects both current and future periods.
The prime areas involving a higher degree of judgement or complexity, where assumptions and estimates
are significant to the financial statements, are as follows:
Going concern
The Group financial statements have been prepared on a going concern basis as the Directors have
assessed the Group’s ability to continue in operational existence for the foreseeable future. The
operations are currently being financed by third party loans and funds raised from an equity placing
completed on 4 October 2017. See Going Concern section on page 31 for more details.
The Group is reliant on the continuing support from its shareholders and the expected support of future
shareholders.
The Group financial statements do not include the adjustments that would result if the Group were not to
continue as a going concern. See Going Concern section on page 31 for more details.
Basis of consolidation
The Company was incorporated on the 29th of January 2016. It acquired Coos Bay Energy, LLC on the
4th of October 2017. At the time of its acquisition by the Company, Coos Bay Energy, LLC consisted of
Coos Bay Energy, LLC and its wholly owned US Group. It is the Directors’ opinion that the Company at
the date of acquisition of Coos Bay Energy, LLC did not meet the definition of a business as defined by
IFRS 3 and therefore the acquisition is outside on the IFRS 3 scope.
37
Curzon Energy Plc
Annual Report 2017
Summary of critical accounting estimates and judgements continued
Coos Bay Energy, LLC was incorporated on 2 September 2016. It acquired Westport Energy Acquisition,
Inc. on 4 November 2016. Westport Energy Acquisition, Inc. was a sole owner of the US Group. More
details on the US Group composition are given in the note 1. It is the Directors’ opinion that Coos Bay
Energy, LLC at the date of acquisition of Westport Energy Acquisition, Inc. did not meet the definition of
a business as defined by IFRS 3 and therefore the acquisition is outside on the IFRS 3 scope.
There is no other specific guidance on this topic elsewhere in IFRS. Management therefore needs to use
judgement to develop an accounting policy that provides relevant and reliable information and apply it
consistently to all similar transactions.
The management has decided that a “merger accounting” method would be the most relevant method to
be used for the two acquisitions described above. It involves accounting for the post-acquisition entities
in the Group as if the companies have always been together. Details of how the Group has applied the
method are given in the section Basis of consolidation in the Accounting policies above.
The results and cash flows of all the combining entities were brought into the financial statements of the
combined entity from the beginning of the financial year in which the combination occurred, adjusted so
as to achieve uniformity of accounting policies. The comparative information was restated by including
the total comprehensive income for all the combining entities for the previous reporting period and their
statement of financial position for the previous reporting date, adjusted as necessary to achieve uniformity
of accounting policies.
The Company’s called up share capital was restated at 1 January 2016 to reflect the nominal value of the
2 incorporation shares and the new 40,000,000 shares that would have been issued to acquire the merged
Coos Bay sub-group had the merger taken place on that date. The total amount of share capital
recognised by the Company on 1 January 2016 was $530,803. Also, on 1 January 2016 the Group has
recognised the US Group’s accumulated losses in full in the amount of $26,948,973. On consolidation,
the Company has recognised the merger reserve in the amount of $25,545,285, which was calculated as
a difference between the sum of the US Group share capital and additional capital of $26,076,085 and
the cost of investment deemed to have been made by Curzon into Coos Bay’s shares in the amount of
$530,800.
At 31 December 2017 and 31 December 2016 the group results include the results of Curzon Energy Plc,
Coos Bay Energy, LLC, Westport Energy Acquisitions, Inc. and Westport Energy, LLC.
Impairment of capitalised exploration and evaluation expenditure
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest
the carrying value may exceed its recoverable amount. During the year ended 31 December 2016, there
was sufficient data available to indicate that, although the development of the remaining wells is expected
to proceed, the previous carrying value of exploration and evaluation assets were unlikely to be recovered
in full from successful development or sales. Therefore, the Directors deemed that an impairment of
$2,158,000 was necessary as described in note 9. No impairment was made for the year ended 31
December 2017. As at 31 December 2017 the carrying value of the exploration and evaluation assets
was US$2,559,000.
Valuation of share options and warrants
The Group measures the cost of equity-settled transactions with employees by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value of share options is
determined using the Black-Scholes model. The model has its strengths and weaknesses and requires
six inputs as a minimum: 1. The share price; 2. The exercise price; 3. The risk free rate of return; 4. The
expected dividends or dividend yield; 5. The life of the option; and 6. The volatility of the expected return.
The first three inputs are normally, but not always, straightforward. The last three involve greater
judgement and have the greatest impact on the fair value. More details on how the volatility was
determined in the absence of the historical trading date are given in the note 17.
38
Curzon Energy Plc
3.
Segmental analysis
Annual Report 2017
IFRS 8 “Operating Segments” requires operating segments to be identified on the basis of internal reports
about components of the Group that are regularly reviewed by the chief operating decision maker (which
takes the form of the Directors) as defined in IFRS 8 “Operating Segments”, in order to allocate resources
to the segment and to assess its performance.
The Group’s business involves exploring for hydrocarbon liquids and gas. As at each of 31 December
2016 and 31 December 2017, the Directors consider there is one reportable operating segment
Accordingly, an analysis of segment profit or loss, segment assets, segment liabilities and other material
items has not been presented.
The Group operates in one geographic area, being the USA. All intangible assets and operating assets
and liabilities are located in the USA. The Group has not yet commenced production and therefore has
no revenue.
4.
Loss for the year before taxation
Loss before tax is stated after charging / (crediting):
Impairment of exploration and evaluation expenditure
Auditor’s remuneration:
-
-
fees payable to the Company’s auditor for the audit of
the consolidated and Company financial statements
fees payable to the Company’s auditor for other
services: corporate finance services
Directors’ remuneration
Share-based payments
Foreign currency translation loss/(gain)
Operating lease rentals:
- property
- mineral rights
2017
US$
2016
US$
-
2,158,000
58,000
51,222
148,223
473,163
111,367
36,794
2,939
38,972
-
418,000
-
(62,878)
1,462
8,213
5.
Directors and staff
There were no staff employed by the Group during the two years ended 31 December 2017.
Remuneration of key management personnel
Directors’ emoluments and benefits as follows:
Consultancy fees
Total remuneration of key management
2017
US$
2016
US$
473,163
473,163
418,000
418,000
The directors’ emoluments are paid from Coos Bay Energy LLC and the Company.
In 2017 Stephen Schoepfer received $182,000 (2016: US$175,457) of which US$38,750 (2016: US$nil)
39
Curzon Energy Plc
Annual Report 2017
was paid to him through his service company 4 Sea-Sons LLC.
In the 2017 Thomas Wagenhofer was paid all his fees of US$93,052 (2016: US$47,171) through his
service company Gate Energy Limited.
In 2017 Thomas Mazzarisi was paid all if his fees of US$182,000 (2016: US$195,372) through his
service company M10 Ventures LLC.
6.
Finance expense (net)
Foreign exchange loss/(gain)
Other interest received
Other interest paid
Promissory notes
7.
Taxation
2017
US$
2016
US$
36,794
(62,878)
(125)
16,138
49,481
102,288
(891)
-
345,245
281,476
The Group has made no provision for taxation as it has not yet generated any taxable income. A
reconciliation of income tax expense applicable to the loss before taxation at the statutory tax rate to the
income tax expense at the effective tax rate of the Group is as follows:
Loss before tax
UK corporation tax credit at 19.25% (2016: 20%)
Effect of non-deductible expense
Differences in overseas tax rates
Effect of tax benefit of losses carried forward
Current tax (credit)
2017
US$
2016
US$
(1,833,381)
(3,535,466)
(352,926)
(707,093)
21,438
-
(120,048)
(628,130)
451,535
1,335,223
-
-
As at 31 December 2017, the tax effects of temporary timing differences giving rise to deferred tax assets
was US$812,000 (2016: US$1,812,000).
A deferred tax asset in respect of these losses and temporary differences has not been established as
the Group has not yet generated any revenues and the Directors have therefore assessed the likelihood
of future profits being available to offset such deferred tax assets to be uncertain.
8.
Pro forma basic and diluted loss per share
The basic loss per share is derived by dividing the loss for the year attributable to ordinary shareholders
of the Company by the weighted average number of shares in issue.
Diluted loss per share is derived by dividing the loss for the year attributable to ordinary shareholders of
the Company by the weighted average number of shares in issue plus the weighted average number of
ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary
shares.
40
Curzon Energy Plc
Annual Report 2017
The acquisition of Coos Bay Energy, LLC by Curzon Energy Plc was not within the scope of the IFRS 3
due to Curzon Energy Plc not meeting the definition of a business. This acquisition was accounted using
the principles of merger accounting as described in the accounting policy in note 2. The weighted average
number of shares for the purposes of loss per share calculation for reporting and comparative years were
adjusted as described below.
During the year ended 31 December 2017, 40,000,000 shares in Curzon Energy Plc were issued to Coos
Bay Energy, LLC previous owners as a consideration for the acquisition of Coos Bay Energy, LLC. These
new shares were included into the weighted average number for shares calculation as if they were in
issue from the first day of the first period presented in these financial statements, 1 January 2016. The 2
ordinary shares, that were issued by Curzon on incorporation, have also been included into the calculation
as if they were in issue since 1 January 2016.
The new shares have been issued during the current and comparative periods that increased net assets
(other than as consideration for the Coos Bay acquisition, which was accounted for using the principles
of merger accounting). Such shares were included into the weighted average number of shares
calculation recorded from their actual date of issue and were not included in the comparative weighted
average number of shares.
The following reflects the loss and share data used in the basic and diluted loss per share computations:
Loss after tax (US$)
Weighted average number of ordinary shares of £0.01 in
issue
Effect of dilutive options and warrants
Weighted average number of ordinary shares of £0.01 in
issue inclusive of outstanding dilutive options and warrants
Loss per share - basic and fully diluted (US$)
2017
2016
(1,833,381)
(3,535,466)
54,095,138 44,333,077
-
-
54,095,138 44,333,077
0.03
0.08
Options and warrants with all conditions met at the end of each respective period:
Share options granted to employees - fully vested at the end
of the respective period
Warrants given to shareholders as a part of placing equity
instruments - fully vested at the end of the respective period
Total instruments fully vested
2017
Number
2016
Number
421,152
3,630,200
4,051,352
-
-
-
At 31 December 2017, the effect was anti-dilutive as it would lead to a further reduction of loss per share,
therefore they were not included into the diluted loss per share calculation.
Options and warrants with conditions not met at the end of the period, that could potentially dilute basic
EPS in the future, but were not included in the calculation of diluted EPS for the periods presented:
2017
Number
2016
Number
Share options granted to employees - not vested at the end of
the respective period
Warrants given to shareholders as a part of placing equity
instruments – conditions not all met
Total options and warrants with conditions not all met
4,212,552
-
4,212,552
-
-
-
41
Curzon Energy Plc
Total number of instruments (vested and not vested) in issue
not included into the fully diluted EPS calculation
9.
Intangible assets
Exploration and evaluation expenditure
Cost:
Annual Report 2017
8,263,904
-
2017
US$
2016
US$
At the beginning and end of year
24,141,000 24,141,000
Impairment provision:
At the beginning of the year
Provision for the year
At end of the year
Net Book Value
(21,582,000) (19,424,000)
-
(2,158,000)
(21,582,000) (21,582,000)
2,559,000
2,559,000
The oil and gas properties are currently unproven and ongoing exploration activities are planned and will
require additional significant expenditures. These exploration activities include formation stimulation and
production testing of existing wells drilled in the Coos Bay project. As the first phase of exploration
and development activities on the Coos Bay Project’s unproved properties are still in progress, an
assessment will be made upon completion of that phase as to whether a reclassification of a portion of
the unproved reserves to proven reserves should be made. Once properties have been classified as
proven, they are transferred from intangible assets to tangible assets as “Developed Oil and Gas Assets”
and amortised over the life of the area according to the rate of depletion of the economically recoverable
costs.
Impairment
In accordance with IFRS 6 “Exploration and Evaluation of Mineral Resources”, the Directors have
assessed whether any indication of impairment exists in respect of these intangible assets as follows:
In the period up to 31 December 2012, impairment losses totalling $19,424,000 were made.
During the year ended 31 December 2016, the carrying amount of the Coos Bay Property was assessed
to be greater than the fair value of the remaining wells and a further impairment loss of $2,158,000 was
recorded. The fair value was independently valued based upon a discounted cash flow using the Directors’
estimates, which are considered level 3 inputs. The impairment was recognised immediately in the
statement of comprehensive income.
In assessing the fair value of the assets, the key inputs were considered to be the discount rate of 10%,
which is considered to be an industry standard rate for appraising such assets, and the gas price. For the
gas price the 2016 average Oregon price of $4.39/mcf was used. If this price varied by $0.10/mcf the
impact on the impairment would have been approximately $650,000.
During the year ended 31 December 2017 the fair value exceeded the carrying value of the property and
no impairment was recorded. The fair value of the property was independently valued based upon a
discounted cash flow using management’s estimates, which are considered level 3 inputs. the key inputs
were a discount rate of 10%, and a gas price of $4.36/mcf being the 2017 average Oregon gas price.
Environmental matters
The Group has established procedures for a continuing evaluation of its operations to identify potential
environmental exposures and to assure compliance with regulatory policies and procedures. The
Directors monitor these laws and regulations and periodically assesses the propriety of its operational
42
Curzon Energy Plc
Annual Report 2017
and accounting policies related to environmental issues. The nature of the Group’s business requires
routine day-to-day compliance with environmental laws and regulations. The Group has incurred no
material environmental investigation, compliance or remediation costs for each of the years ended 31
December 2016, and 31 December 2017. The Directors are unable to predict whether the Group’s future
operations will be materially affected by these laws and regulations. It is believed that legislation and
regulations relating to environmental protection will not materially affect the results of operations of the
Group.
10.
Subsidiary Undertakings
The Group has the following subsidiary undertakings:
Name
Country of
incorporation
Coos Bay Energy, LLC
Westport Energy
Acquisitions, Inc.
Westport Energy, LLC
USA
USA
USD
Issued capital
Membership
interests
Shares
Membership
interests
Proportion held
by Group
100%
100%
Activity
Holding company
Holding company
100%
Oil and gas exploration
All the above subsidiaries have same registered office with address 1001 SW 5th Avenue, Suite 1100,
Portland, OR 97204, USA.
11.
Restricted cash
Restricted cash includes funds held as a collateral to support stand-by letters of credit related to the
Group’s oil and gas properties. The letters of credit secure the Group’s reclamation obligations under the
leases and state law. The cash can be taken by Umpqua Bank in the event the letters of credit are drawn
on by the State of Oregon, Department of Geology & Mineral Industries (DOGAMI). The cash is held in
the form of a Certificate of Deposit.
12.
Prepayments and other receivables
VAT recoverable
Other debtors
2017
US$
2016
US$
114,260
34,356
148,616
-
-
-
The fair value of receivables and deposits approximates their carrying amount, as the impact of
discounting is not significant. The receivables are not impaired and are not past due.
13.
Cash and cash equivalents
For the purpose of the statements of financial position, cash and cash equivalents comprise the
following:
Cash in hand and at bank
2017
US$
1,595,035
1,595,035
2016
US$
370,722
370,722
43
Curzon Energy Plc
14.
Trade and other payables
Trade and other payables
Accruals
15.
Borrowings
Annual Report 2017
2017
US$
2016
US$
385,840
581,842
77,573
-
463,413
581,842
During the year ended 31 December 2017, the Coos Bay issued two short term promissory notes totalling
US$250,000. A promissory note for £300,000 was issued by Coos Bay on 29 December 2016. Details of
the notes are disclosed in the table below:
Origination
date
Contractual
settlement date
Note value in
original currency
Note value,
US$
Annual
interest
rate
Security
Cuart Investments
PCC, Ltd.
YA Global
Jonathan Gellis
29 Dec 2016
18 Apr 2017
extended to 31
Dec 2018
31 Dec 2018
1 Sep 2017
31 Dec 2018
£300,000
$404,730
12%
unsecured
$150,000
$100,000
$150,000
$100,000
10%
15%
unsecured
unsecured
No interim payments are required under the promissory notes, as the payment terms require the original
principal amount of each note, and all accrued interest thereon, to be paid in single lump payments on
the respective contractual settlement dates.
On the acquisition of Coos Bay by Curzon, all three notes were transferred to Curzon from Coos Bay as
a part of the purchase consideration. Immediately after the acquisition, one of the notes of US$150,000,
issued to YA Global, was discharged by conversion into 1,200,000 share in Curzon.
At 1 January
Received during the year
Interest accrued during the year
Exchange rate differences
Discharged during the year by issue of shares in Curzon
At 31 December
2017
US$
363,829
250,000
57,725
66,285
(159,240)
2016
US$
-
363,707
122
-
-
578,599
363,829
Reconciliation of liabilities arising from financing activities
31 Dec 2016
Cash flows
Non cash flow
Forex
movement
Non cash flow
Conversion
Non cash flow
Interest accrued
31 Dec
2017
Cuart Investments
PCC, Ltd.
YA Global
Jonathan Gellis
363,829
-
-
-
150,000
100,000
63,949
2,336
-
-
45,889
473,667
(159,240)
-
6,904
4,932
-
104,932
44
Curzon Energy Plc
Annual Report 2017
Total liabilities
from financing
activities
363,829
250,000
66,285
(159,240)
57,725
578,599
16.
Share capital
Authorised share capital
As permitted by the Companies Act 2006, the Company does not have an authorised share capital.
Issued equity share capital
2017
2016
Number
US$
Number
US$
-
-
81,297
109,125
72,594,700
964,575
8,129,700
109,125
-
- 40,000,000
530,800
Issued and fully paid
Ordinary share of £1 each (before share
split on 28 May 2017)
Ordinary shares of £0.01 each (after share
split on 28 May 2017)
Ordinary shares of £0.01 each deemed to
have been issued on 1 Jan 2016 as a
consideration for the acquisition of Coos
Bay
Total ordinary shares of £0.01 each
72,594,700
964,575 48,128,700
639,925
The Company has one class of Ordinary shares which carry no right to fixed income.
At Incorporation date 29 January 2016
Issue of shares (Ordinary shares of £1 each) (a-h)
At 31 December 2016
Share split (i)
Issue of shares (j)
Issue of shares (k)
Issue of shares (l)
At 31 December 2017
(a)
Issue of shares
Number
2
81,295
81,297
Ordinary shares of £0.01
each, number
8,129,700
1,200,000
40,000,000
23,265,000
72,594,700
On 29 January 2016, the Company was incorporated and on incorporation, the issued share
capital of the Company was £2, comprising 2 Ordinary shares of £1.00 each.
(b)
Issue of shares
On 8 February 2016, the Company allotted and issued 6,375 Ordinary shares of £1.00 each for
a subscription price of £8.00 per Ordinary share.
45
Curzon Energy Plc
(c)
Issue of shares
Annual Report 2017
On 12 February 2016, the Company allotted and issued 6,250 Ordinary shares of £1.00 each
for a subscription price of £8.00 per Ordinary share.
(d)
Issue of shares
On 23 March 2016, the Company allotted and issued 11,250 Ordinary shares of £1.00 each for
a subscription price of £8.00 per Ordinary share.
(e)
Issue of shares
On 11 July 2016, the Company allotted and issued 35,545 Ordinary shares of £1.00 each for a
subscription price of £8.00 per Ordinary share.
(f)
Issue of shares
On 12 September 2016, the Company allotted and issued 12,500 Ordinary shares of £1.00
each for a subscription price of £8.00 per Ordinary share.
(g)
Issue of shares
On 19 September 2016, the Company allotted and issued 9,375 Ordinary shares of £1.00 each
for a subscription price of £8.00 per Ordinary share.
(h)
Issue of shares
On 12 September 2016, the Company allotted and issued 12,500 Ordinary shares of £1.00
each for a subscription price of £8.00 per Ordinary share.
(i)
Share split
On 28 May 2017, the Company subdivided each Ordinary share of £1 each into 100 Ordinary
shares of £0.01 each. Following the subdivision, the aggregate number of Ordinary shares in
issue was 8,129,700.
(j)
Issue of shares
On 26 September 2017, the Company allotted and issued 1,200,000 Ordinary shares of £0.01
each in full satisfaction of all amounts owed under its US$150,000 short-term promissory note
with YA Global. The 1,200,000 Ordinary shares are subject to a one-year lock-in agreement.
(k)
Issue of shares
On 3 October 2017, the Company allotted and issued 40,000,000 Ordinary shares of £0.01
each for a subscription price of £0.10 per Ordinary share.
(l)
Issue of shares
On 4 October 2017, the Company allotted and issued 23,265,000 Ordinary shares of £0.01
each for a subscription price of £0.10 per Ordinary share.
The ordinary shares carry the right to one vote per share at general meetings of the company and the
rights to share in any distribution of profits or returns of capital and to share in any residual assets
available for distribution in the event of a winding up.
46
Curzon Energy Plc
Annual Report 2017
17.
Share Based Payments
Employee share options
The Company established employee share option plans to enable the issue of options as part of the
remuneration of key management personnel and Directors to enable them to purchase Ordinary shares
in the Company. Under IFRS 2 “Share-based Payments”, the Company determines the fair value of the
options issued to Directors and employees as remuneration and recognises the amount as an expense
in the statement of income with a corresponding increase in equity.
At 31 December 2017, the Company had outstanding options to subscribe for Ordinary shares as follows:
Option exercise price
£0.10
£0.15
£0.10
£0.30
£0.15
£0.30
Total granted during
the year
Number of
options
granted
421,152
421,152
1,123,416
421,152
1,123,416
1,123,416
4,633,704
Vesting date
Expiry date
4 Oct 2017
4 Apr 2018
4 Oct 2018
4 Oct 2018
4 Oct 2019
4 Oct 2020
4 Oct 2022
4 Oct 2022
4 Oct 2022
4 Oct 2022
4 Oct 2022
4 Oct 2022
Fair value of
individual
option
£0.074
£0.067
£0.074
£0.055
£0.067
£0.055
2017
2016
Outstanding at the beginning of the period
Granted during the period
Forfeited during the period
Exercised during the period
Number of
options
-
4,633,704
-
-
Lapsed during the period
Outstanding at the end of the period
Vested and exercisable at the end of the period
-
4,633,704
421,152
Weighted
average
exercise
price
£
-
0.18
-
-
-
0.18
0.10
Weighted
average
exercise
price
£
-
Number of
options
-
-
-
-
-
-
-
-
-
-
-
-
-
During the financial year 4,633,704 options were granted subject to the Company’s admission, at an
exercise price ranging from £0.1 to £0.3. The grant date was the date of Admission, 4 October 2017 and
they expire on the 4th of October 2022. Each Option is conditional upon the relevant Director being a
director of the Company on the date of vesting.
The weighted average fair value of each option granted during the year was £0.065 (2016: nil).
The exercise price of options outstanding at 31 December 2017 ranged between £0.1 and £0.30 (2016:
nil). Their weighted average remaining contractual life was 4.76 years (2016: nil years).
The weighted average share price (at the date of exercise) of options exercised during the year was nil
(2016: nil) as no options were exercised.
47
Curzon Energy Plc
Annual Report 2017
The following information is relevant in the determination of the fair value of the options granted during
the year under equity-settled share-based remuneration schemes:
Option pricing model used
Weighted average share price at grant date, £
Weighted average contractual life, years
Expected volatility,%
Expected dividend growth rate,%
Risk-free interest rate (5 year bond),%
Granted on 4 October 2017
Black-Scholes
0.105
5.00
90.91
0
0.802
Calculation of volatility involves significant judgement by the Directors due to the absence of the historical
trading data for the Company at the date of the grant. Volatility number above was estimated based on
the range of 5 year month end volatilities of 10 similar size AIM listed companies operating in Oil and Gas
sector.
Share-based remuneration expense related to the share options granted during the reporting period is
included in the administration expenses line in the consolidated income statement in the amount of
$111,367 (2016: US$nil).
Warrants
During the year ended 31 December 2017 the Company issued the following warrants to subscribe for
shares:
Warrant exercise
price
£0.10
£0.125
£0.15
Total granted during
the year
Number of
warrants
granted
130,200
1,500,000
2,000,000
3,630,200
All warrants granted vested on 4 October 2017.
Vesting date
Expiry date
Fair value of
individual
option
4 Oct 2017
4 Oct 2017
4 Oct 2017
4 Oct 2020
4 Oct 2020
4 Oct 2018
£0.061
£0.056
£0.026
The weighted average fair value of each warrant granted during the year was £0.04 (2016: nil).
The exercise price of options outstanding at 31 December 2017 ranged between £0.1 and £0.15 (2016:
nil). Their weighted average remaining contractual life was 1.65 years (2016: nil years).
The weighted average share price (at the date of exercise) of options exercised during the year was nil
(2016: nil) as no warrants were exercised.
48
Curzon Energy Plc
Annual Report 2017
The following information is relevant in the determination of the fair value of the warrants granted during
the year:
Warrant pricing model used
Weighted average share price at grant date, £
Weighted average contractual life, years
Expected volatility,%
Expected dividend growth rate,%
Risk-free interest rate (5 year bond),%
Granted on 4 October 2017
Black-Scholes
0.105
1 - 3
90.91
0
0.802
Calculation of volatility involves significant judgement by the Directors due to the absence of the historical
trading data for the Company at the date of the grant. Volatility number above was estimated based on
the range of 5 year month end volatilities of 10 similar size AIM listed companies operating in Oil and Gas
sector.
The aggregate fair value related to the share warrants granted during the reporting period has been
allocated to share premium as share issue cost in the amount of US$191,011 (2016: US$nil).
18.
Reserves
Share premium
The share premium account represents the excess of consideration received for shares issued above
their nominal value net of transaction costs.
Foreign currency translation reserve
The translation reserve represents the exchange gains and losses that have arisen from the retranslation
of overseas operations.
Retained earnings
Retained earnings represent the cumulative profit and loss net of distributions to owners.
Warrants reserve
The warrants reserve represents the cumulative fair value of the warrants, granted to the investors
together with placement shares, still outstanding and not exercised.
Share-based payment reserve
The share-based payment reserve represents the cumulative charge for options granted, still outstanding
and not exercised.
Merger reserve
The merger reserve represents the cumulative share capital and membership capital contributions of all
the companies included into the legal acquire sub-group less cost of investments into these legal acqirees.
19.
Financial instruments – risk management General objectives, policies and processes
The overall objective of the Directors is to set policies that seek to reduce risk as far as possible without
unduly affecting the Group’s competitiveness and flexibility. Further details regarding these policies are
set out below.
The Directors review the Group’s monthly reports through which they assess the effectiveness of the
processes put in place and the appropriateness of the objectives and policies it sets.
49
Curzon Energy Plc
Categories of financial assets and liabilities
Annual Report 2017
The Group’s activities are exposed to a variety of market risk (including interest rate and currency risk)
and liquidity risk. The Group’s overall financial risk management policy focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on its financial performance.
The principal financial instruments used by the Group, from which financial instrument risk arises, are as
follows:
•
•
•
•
trade and other receivables;
cash and cash equivalents;
trade and other payables; and
borrowings.
Trade and other receivables are initially measured at fair value and subsequently carried at amortised
cost. Book values and expected cash flows are reviewed by the Directors and any impairment charged
to the consolidated statement of comprehensive income in the relevant period.
The financial assets and financial liabilities maturing within the next 12 months approximated their fair
values due to the relatively short-term maturity of the financial instruments.
The Group had no financial assets or liabilities carried at fair values at the end of each reporting date.
A summary of the financial instruments held by category is provided below:
Financial assets
Cash and cash equivalents
Other receivables
Restricted cash
Financial liabilities
Trade payables
Short-term borrowings
Credit risk
2017
US$
2016
US$
1,595,035
370,772
148,616
125,440
-
125,315
385,840
578,599
581,842
363,829
The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from notes and
other receivables. The Directors manage the Group’s exposure to credit risk by the application of
monitoring procedures on an ongoing basis. For other financial assets (including cash and bank
balances), the Directors minimise credit risk by dealing exclusively with high credit rating counterparties.
Credit risk concentration profile
The Group’s receivables do not have significant credit risk exposure to any single counterparty or any
group of counterparties having similar characteristics. The Directors define major credit risk as exposure
to a concentration exceeding 10% of a total class of such asset.
Exposure to credit risk
As the Group does not hold any collateral, the maximum exposure to credit risk is represented by the
carrying amount of the financial assets as at the end of each reporting period.
50
Curzon Energy Plc
Market risk - interest rate risk
Annual Report 2017
The Group’s interest rate risk arises from short-term borrowings. Borrowings issued at variable rates
expose the Group to cash flow interest rate risk, which is partially offset by cash held at variable rates.
Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Directors’ policy is
to maintain a majority of the Group’s borrowings in fixed rate instruments.
The Directors have analysed the Group’s interest rate exposure on a dynamic basis. This takes into
consideration refinancing, renewal of existing positions and alternative financing. Based on these
considerations, the Directors believe the Group’s exposure to cash flow and fair value interest rate risk is
not significant.
Market risk - currency risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign
exchange rates. Currency risk arises when future commercial transactions and recognised assets and
liabilities are denominated in a currency that is not the Group’s measurement currency. The Group is
exposed to foreign exchange risk arising from various currency exposures primarily with respect to the
UK Pound Sterling (£). The Directors monitor the exchange rate fluctuations on a continuous basis and
acts accordingly.
The following sensitivity analysis shows the effects on loss before tax of 10% increase/decrease in the
exchange rates of the US$ versus closing exchange rates of UK Pound Sterling as at 31 December 2017:
Loss per tax
Liquidity risk
+10%
US$
-10%
US$
Increase in loss by
US$90,536
Decrease in loss by
US$90,536
The Group currently holds cash balances to provide funding for normal trading activity. Trade and other
payables are monitored as part of normal management routine.
Capital management
The Group defines capital as the total equity of the Group. The Directors’ objectives when managing
capital are to safeguard its ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
To meet these objectives, the Directors review the budgets and projections on a regular basis to ensure
there is sufficient capital to meet the needs of the Group through to profitability and positive cash flow.
The capital structure of the Group consists of shareholders’ equity as set out in the consolidated statement
of changes in equity. All working capital requirements are financed from existing cash resources and
borrowings.
Whilst the Group does not currently have distributable profits, it is part of the capital strategy to provide
returns for shareholders and benefits for members in the future.
Capital for further development of the Group’s activities will, where possible, be achieved by share issues
or other finance as appropriate.
In order to maintain or adjust the capital structure, the Directors may adjust the amount of dividends paid
to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. It also
ensures that distributions to shareholders do not exceed working capital requirements.
The Group has no external debt finance and is not subject to any external capital requirements.
51
Curzon Energy Plc
Fair value hierarchy
Annual Report 2017
All the financial assets and financial liabilities recognised in the Group financial statements are shown at
the carrying value, which also approximates the fair values of those financial instruments. Therefore, no
separate disclosure for fair value hierarchy is required.
20.
Operating lease commitments
All the Group’s leases are short-term leases, which are month-to-month obligations (i.e., UK virtual
office, US virtual office and US storage operating leases). There are no future minimum lease payments
under non-cancellable operating leases to disclose.
21.
Related party transactions
Balances and transactions between the Company and its subsidiaries, Coos Bay Energy LLC, Westport
Energy Acquisition, Inc., and Westport Energy LLC are eliminated on consolidation and are not
disclosed in this note. Balances and transactions between the Group and other related parties are
disclosed below.
Third party promissory notes
During the year ended 31 December 2017, US$150,000 of promissory notes issued to YA Global
Investments, a shareholder of the Company, were discharged by way of the issue of 1,200,000 shares
in the Company see note 15 for further information.
During the year ended 31 December 2017, Cuart Investments PCC Limited (‘Cuart’) who are holders of
US$404,730 of promissory notes were issued with 1,500,000 warrants with an exercise price of
US$0.169 (£0.125) On 04 October 2017, Cuart transferred its entire interest in the promissory note to
Barry Liben but retained the above-referenced warrant see notes 15 and 17 for further information
Remuneration of Directors
The remuneration of the senior Executive Management Committee members, who are the key
management personnel of the Group, is set out in aggregate for each of the categories specified in IAS
24 “Related Party Disclosures” in note 5.
52
Curzon Energy Plc
Company statement of financial position
as at 31 December 2017
Assets
Non-current assets
Investments in subsidiaries
Amounts receivable from subsidiary undertakings
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Total liabilities
Capital and reserves attributable to shareholders
Share capital
Share premium
Merger relief reserve
Warrants reserve
Share-based payments reserve
Accumulated losses brought forward
Loss for the year
Total capital and reserves
Total equity and liabilities
Annual Report 2017
Note
2017
£
2016
£
27
28
29
30
31
32
32
3,733,699
1,103,855
4,837,554
87,867
755,104
842,971
5,680,525
-
437,427
437,427
-
10,715
10,715
448,142
87,314
428,877
516,191
91,456
-
91,456
725,947
2,404,000
2,800,000
143,942
86,405
(293,676)
(702,428)
5,164,334
5,680,525
81,297
569,065
-
-
-
-
(293,676)
356,686
448,142
The financial statements were approved by the Board of Directors and authorised for issue on 30 April
2018 and are signed on its behalf by:
Thomas Mazzarisi
Director
The notes to the Company statement of financial position form part of these financial statements.
53
Curzon Energy Plc
Company statement of changes in equity
Annual Report 2017
Share
capital
£
Share
Premium
£
Merger
relief
reserve
£
Share-
based
payments
reserve
£
Share
warrants
reserve
£
Accumulated
loss
£
Equity as at Incorporation
date 29 January 2016
Loss for the year
Other comprehensive
income for the year
Total comprehensive loss
for the year
Issue of shares
Costs associated with
issue of shares
Equity-settled share-based
payments
Equity as at 31 December
2016
Loss for the year
Other comprehensive
income for the year
Total comprehensive
loss for the year
Issue of shares
Share issue and
fundraising costs
Issue of share warrants
Issue of share options
Acquisition of Coos Bay
Equity as at 31 December
2017
2
-
-
-
-
-
-
-
81,295
569,065
-
-
-
-
81,297
569,065
-
-
-
-
-
-
644,650
2,201,850
-
-
-
-
(222,829)
(143,942)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,800,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
86,405
-
-
-
-
-
-
-
-
-
-
-
-
-
-
143,942
-
-
Total
£
2
-
(293,676)
(293,676)
-
-
(293,676)
(293,676)
-
-
-
650,360
-
-
(293,676)
356,686
(702,428)
(702,428)
-
-
(702,428)
(702,428)
-
-
-
-
-
2,846,500
(222,829)
-
86,405
2,800,000
725,947
2,404,144
2,800,000
86,405
143,942
(996,104)
5,164,334
54
Curzon Energy Plc
Company statement of cash flows
for the year ended 31 December 2017
Cash flow from operating activities
Loss before taxation
Adjustments for:
Finance expense
Finance income
Share-based payments charge
Unrealised foreign exchange movements
Operating cashflows before working capital changes
Changes in working capital:
(Decrease)/increase in payables
Decrease/(increase) in receivables
Net cash used in operating activities
Financing activities
Issue of ordinary shares
Cost of share issue
Finance costs
Amounts due from subsidiaries
Net cash flow from financing activities
Annual Report 2017
Notes
2017
£
29 Jan – 31
Dec 2016
£
(702,428)
(293,676)
12,522
(36,611)
86,405
2,656
(637,456)
(4,142)
(87,867)
(729,465)
(21,423)
-
-
-
(315,099)
91,456
-
(223,643)
2,326,500
(222,829)
-
(629,817)
1,473,854
650,362
-
-
(416,004)
234,358
Net increase in cash and cash equivalents in the period
Cash and cash equivalents at the beginning of the period
744,389
10,715
10,715
-
Cash and cash equivalents at the end of the period
755,104
10,715
55
Curzon Energy Plc
Notes to the Company financial statements
22.
Significant accounting policies
Annual Report 2017
The separate financial statements of the Company are presented as required by the Companies Act
2016 (“the Act”). As permitted by the Act, the separate financial statements have been prepared in
accordance with International Financial Reporting Standards.
The financial statements have been prepared on the historical cost basis. The principal accounting
policies adopted are the same as those set out in note 2 to the consolidated financial statements except
as noted below.
Company statement of comprehensive income
As permitted by Section 408 Companies Act 2006, the Company has not presented its own income
statement or statement of comprehensive income. The Company’s loss for the financial year was
£702,428 (2016: £293,676). The Company’s other comprehensive loss for the financial year was
£702,428 (2016: £293,676).
Investments in subsidiaries
Available-for-sale investments, including investments in subsidiaries, are stated at cost and reviewed for
impairment, if there are any indications that the carrying value may not be recoverable.
23.
Critical accounting judgements and key sources of estimation uncertainty
The Company’s finacial statements, and in particular its investments in and receivables from
subsidiaries, are affected by the critical accountin judgements and key sources of estimation uncertainty
in respect of the recoverability of exploration and evaluation assets which are described in note 2 to the
consolidated financial statements.
Recoverability of investment in subsidiaries and amounts due from subsidiaries
Where the majority of the assets of subsidiary undertakings are exploration and evaluation assets,
determining whether an investment in and loan to a subsidiary is impaired requires an assessment of
whether there are any indicators of impairment, of these underlying exploration and evaluation assets.
If there is any indication of potential impairment, an impairment test is required based on value in use of
the asset. This assessment involves judgement as to: (i) the likely future commerciality of each cost
pool of assets; (ii) when such commerciality should be determined, and (iii) the potential future
revenues and value in use. The value in use calculation requires the entity to estimate the future cash
flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate
present value.
24.
Auditor’s remuneration
The auditor’s remuneration for audit and other services is disclosed in note 4 to the consolidated
financial statements.
25.
Directors and staff
There were no staff employed by the Company during the two years ended 31 December 2017.
Key management remuneration is disclosed in note 5 to the consolidated financial statements.
26.
Administrative expenses
2017
£
2016
£
56
Curzon Energy Plc
Annual Report 2017
Costs in connection with the Acquisition and Admission
-
315,052
Share based payments
Professional and consultancy fees
General administrative expenses
Total
27.
Investments
Investment in subsidiaries
Costs at beginning of the year
Additions
Total
86,405
452,781
136,978
676,164
-
-
32
315,084
2017
£
-
3,733,699
3,733,699
2016
£
-
-
-
The Company’s subsidiaries are disclosed in note 10 to the consolidated financial statements.
28.
Receivables from subsidiaires
As at 31 December 2017, amounts receivable from the subsidiaries were £1,103,855 (2016: £437,427).
The carrying amount of these assets are their fair value. Please also see note 33
57
Curzon Energy Plc
29.
Current assets
Prepayments and other receivables
VAT recoverable
Other debtors
Annual Report 2017
2017
£
84,693
3,174
87,867
2016
£
-
-
-
The fair value of receivables and deposits approximates their carrying amount, as the impact of
discounting is not significant. The receivables are not impaired and are not past due.
Cash and cash equivalents
For the purpose of the statements of cash flows, cash and cash equivalents comprise the following:
Cash in hand and at bank
30.
Current liabilities
Trade and other payables
Trade and other payables
Accruals
31.
Borrowings
2017
£
755,104
2016
£
10,715
2017
£
29,814
57,500
87,314
2016
£
91,456
-
91,456
As at 31 December 2017, the Company had an outstanding promissory note of £428,877 (2016: nil),
refer note 15.
32.
Share capital
The movements on this item are disclosed in note 16 to the consoldiated financial statements.
33.
Related party transactions
Group companies
2017
£
2016
£
1,103,855
1,103,855
437,427
437,427
The Group (comprising Coos Bay Energy LLC and its directly and indirectly wholly-owned subsidiaries
Westport Energy Acquisition, Inc. Westport Energy LLC ) is a related party through common control.
58
Curzon Energy Plc
Annual Report 2017
During the period ended 31 December 2017, the maximum amount owed by the Group to the Company
was £1,138,435. The related party loans are unsecured and are repayable on December 31, 2018.
Interest is receivable at a rate of 9%. At 31 December 2017 £58,034 was accrued and included in the
above balance.
34.
Financial instruments – risk management
The Company’s strategy and financial risk management objectives are described in note 19.
Principal financial instruments
The principal financial instruments used by the Company from which risk arises are as follows:
Financial assets
Cash and cash equivalents
Other receivables
Loans due from subsidiaries
Financial liabilities
Trade payables
Short-term borrowings
2017
£
2016
£
755,104
87,867
10,715
-
1,103,855
437,427
29,814
428,877
91,456
-
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the Company.
In addition to the risks described in note 19 , which affect the Group, the Company is also subject to
credit risk on the balances receivable from subsidiaries, see note 28.
35.
Events after the reporting period
There were no events to disclose after the reporting period
36.
Ulitmate controlling party
As at 31 December 2017, the Company did not have an ultimate controlling party.
59