Curzon Energy Plc
Registered Company Number: 09976843
Annual Report and Financial Statements for the Period Ended 31 December 2019
Curzon Energy Plc
Contents
Company Information
Chairman’s Statement
Strategic Report
Directors’ Report
Remuneration Report
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
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Company Statement of Financial Position
Company Statement of Changes in Equity
Company Statement of Cash Flows
Notes to the Company Financial Statements
Annual Report 2019
Page Number
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Curzon Energy Plc
Company Information
Annual Report 2019
Directors
John McGoldrick Chairman and Non-Executive Director
Scott Kaintz
Owen May
Non-Executive Director
Executive Director
Company Secretary
Sam Quinn
Company Number
09976843
Registered Address
Kemp House
152 City Road
London
EC1V 2NX
Independent Auditors
Crowe UK LLP
St Bride’s House
10 Salisbury Square
London
EC4Y 8EH
Company’s Solicitors
First Sentinel
Suite 12A
55 Park Lane
Mayfair, London, W1K 1NA
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
Curzon Energy Plc
Chairman’s Statement
Annual Report 2019
I am pleased to present the annual report for the Company covering its results for the year to 31 December
2019.
During the course of 2018, the Company focused on extended testing of existing wells at Coos Bay, and,
following several efforts to rework these wells, gas flow proved inconsistent and inconclusive. Thereafter,
the Company considered alternative options to advance the appraisal of the property, however, adequate
funding was not available.
In late 2018, the Company announced a memorandum of understanding with Pared Energy LLC to
develop a conventional gas fairway in Texas. The Company believed that the Texas Gas Project offered
multi-TCF potential through the application of modern drilling and completion techniques applied to known
hydrocarbon producing reservoirs. The Board further believed that the Texas Gas Project could provide
a highly complementary addition to the Company’s existing assets at Coos Bay, potentially creating a
larger US focused natural gas offering for UK investors.
Considerable effort during 2019 was spent conducting due diligence on the Texas Gas Project, followed
by a six month plus period of administrative and regulatory work required to complete a prospectus in
order to raise funds to participate in and then invest in, this project. Unfortunately, by the time these work
streams were at an advanced stage, public equity markets were unpredictable due to Brexit and the US
trade war uncertainties, and UK investor appetite for US oil investments was much depressed.
In addition, 2019 saw a marked reduction in the price of natural gas around the world and, by the end of
2019, it became apparent to the Board that the ongoing decline in the oil and gas markets would prove
difficult if not impossible to overcome. This meant that the Company’s involvement in the Texas Gas
Project and further attempts to restart activities and progress the Company’s project at Coos Bay, at least
in the near term, were unlikely. Further, efforts towards year-end to reach agreement with a potential
farm-in partner at Coos Bay became protracted due to the various factors mentioned previously and could
not be consummated.
The Company then implemented a new strategy and began discussions with a number of groups
presenting fresh opportunities both in and outside of the oil and gas sector and, on 18 March 2020, the
Company announced that it had entered a period of exclusivity in order to conduct due diligence and to
potentially acquire a 100% interest in London Critical Metals Market, the first unified global metals trading
exchange for critical metals that have few or no direct investment or trading options elsewhere.
For the period ended 31 December 2019, the Group incurred a loss of US$3,580,750. The majority of
this loss comprised the impairment of the Company’s coal bed methane assets at Coos Bay of
US$2,559,000 that has been recognized in the accounts.
At the time of writing, the United Kingdom and the World at large is in the process of dealing with the
COVID-19 pandemic and its associated aftershocks. While the disagreements between OPEC and
Russia combined with the drop in demand for oil due to the COVID-19 fallout has been exceptionally
destructive to the oil industry, we currently do not expect these developments to materially impact the
potential transaction with London Critical Metals Market under consideration. However, these same
developments will likely impact our ability to further develop our asset at Coos Bay and may make a
disposal or farm-in more challenging.
Present turmoil aside, the Company continues to progress diligence activities in regards to London Critical
Metals Market as announced in March this year, and the Board remains enthusiastic about the scale and
quality of the opportunity this transaction represents for Curzon stakeholders. The potential move from
oil and gas into the trading of the metals the world requires to continue the transition to renewables and
energy storage appears prescient, and the Company expects to make additional announcements on
progress in the near term.
John McGoldrick
Non-Executive Chairman
18 May 2020
1
Curzon Energy Plc
Strategic Report
Financial Results
Annual Report 2019
The Group loss for the year to 31 December 2019 was US$ 3,580,750 (2018: US$1,953,708). There were
no revenues and the majority of this loss related to the impairment of the Company’s coal bed methane
interests at Coos Bay, Oregon.
The loss per share was US$0.044 (2018: loss per share US$0.026).
Following mixed results from well testing operations at Coos Bay in 2018, the Directors put the project on
care and maintenance in late 2018 and no significant development was undertaken during 2019.
Following the lack of progress on the project in 2019, and a general lack of interest in funding US oil
projects observed in the UK equity market, an impairment loss on the project of US$ (2,559,000) has
been recognised in the accounts.
The Group currently has no source of revenue and is reliant on loans to continue to meet its overhead
expenditure. The Group held cash balances of US$28,709 as at 31 December 2019 and has subsequently
increased its borrowing capacity and current liquidity through the agreement with Seven Sun Stars
Investment Group.
The Directors note that the Group will need additional funding to continue operations for the foreseeable
future and this means there is a material uncertainty as to the Group’s ability to continue as a going
concern, however, the Directors are confident that the Group will be able to raise, as required, sufficient
cash or reduce its commitments to enable it to continue its operations, and to continue to meet, as and
when they fall due, its liabilities for at least the next twelve months from the date of approval of the Group
financial statements. The Group financial statements have, therefore, been prepared on the going
concern basis.
The Group has 3 members of staff (including Directors).
Principal Activities
The Company was incorporated in England and Wales on 29 January 2016 as an investment company
to acquire oil and gas assets. Its first acquisition was of Coos Bay.
The Group’s business continues to be operated through the US Group, with a focus on oil and gas
exploration, appraisal and development.
The Company is a holding company with the following subsidiaries being part of the US Group:
Name
Country of
Incorporation
Proportion of
Equity
Ownership
Principal Activity
Coos Bay Energy
LLC
Nevada, USA
100%
Gas Exploration &
Development
Westport Energy
Acquisition, Inc.
Westport Energy,
LLC
Delaware, USA
100%
Holding Company
Delaware, USA
100%
Gas Exploration &
Development
Curzon Energy, Inc.* Delaware, USA
100%
Holding Company
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Curzon Energy Plc
Annual Report 2019
Rigel Energy, LLC** Delaware, USA
100%
Holding Company
* Incorporated on 1 May 2019 and dissolved on 26 February 2020 as related transaction did not complete.
** Incorporated on 1 May 2019 and dissolved on 27 February 2020 as related transaction did not complete.
Coos Bay LLC, 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, which are held by Coos Bay
Energy LLC.
Review of the Business
2018 saw the Company conducting extensive well testing operations at Coos Bay in Oregon where the
gas flow rates proved inconsistent and inconclusive.
As such, the Company announced its intention to augment the Coos Bay project with a complementary
project developed jointly with Pared Energy that offered significant multi-trillion cubic feet of upside in an
established oil and gas region in Texas, USA. The Company proceeded to sign a memorandum of
understanding in November 2018, announcing its intention to pursue joint development of this project. In
February 2020, the Company announced that it had ended discussions with Pared Energy in Texas as
the transaction could not be completed.
In March 2020, the Company announced that it had executed a letter of intent with Seven Sun Stars
Investment Group (“SSSIG”) to acquire a 100% interest in the London Critical Metals Market (“LCMM”)
the first unified global metals trading exchange for critical metals that have few or no direct investment or
trading operations elsewhere in the world.
Key Performance Indicators (KPIs)
As the Company is traditionally a pure exploration business with no production or proven reserves and
which is currently exploring reverse takeover options that might materially change the business, the
Directors take the view that KPIs would not provide materially useful information to investors at this time.
As the business develops further, the addition of KPIs will be considered and added as appropriate.
Principal Risks and Risk Management
Exploration is an inherently high-risk business:
Even the most promising prospects can have failures for many reasons, such as:
o The gas assets may not be found in commercial quantities if there are errors in the
underlying geological assumptions or analysis.
o Hydrocarbons may have been present but escaped due to unexpected geological events.
o The reservoir may not flow hydrocarbons 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. There is no guarantee that existing leases will be continued beyond their primary
term or additional leases acquired on attractive terms.
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 could 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.
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Curzon Energy Plc
Annual Report 2019
The Company’s Risk Mitigation Strategies Include the Following:
Partnering with key experts that have demonstrated an ability to determine the presence or
absence of hydrocarbons.
Utilising the Directors’ experience who have excellent technical, commercial or local knowledge
as to where to locate assets.
Securing the support of a number of key private shareholders and actively pursuing other sources
of funding.
Utilising 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 in a responsible way, which serves all stakeholders.
Section 172 Statement
Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of
stakeholders in their decision making. The Directors continue to have regard to the interests of the
Company’s employees and other stakeholders, including the impact of its activities on the community, the
environment and the Company’s reputation, when making decisions. Acting in good faith and fairly
between members, the Directors consider what is most likely to promote the success of the Company for
its members in the long term.
The Directors are fully aware of their responsibilities to promote the success of the Company in
accordance with section 172 of the Companies Act 2006. The Board regularly reviews our principal
stakeholders and how we engage with them. The stakeholder voice is brought into the boardroom
throughout the annual cycle through information provided by management and also by direct engagement
with stakeholders themselves. The relevance of each stakeholder group may increase or decrease
depending on the matter or issue in question, so the Board seeks to consider the needs and priorities of
each stakeholder group during its discussions and as part of its decision making.
The Board welcomes the opportunity to engage with our shareholders and with the capital markets more
generally. The Board achieves this through dialogue with shareholders, prospective shareholders and
capital markets participants, including corporate brokers. Feedback from any such meetings or calls
would be shared with all Board members.
Investors, prospective investors and analysts can contact the Executive Director as well as access
information on our corporate website. The Board believes that appropriate steps have been taken during
the year so that all members of the Board, and in particular the non-executive Directors, have an
understanding of the views of major shareholders.
Governance
The Board considers sound governance as a critical component of the Company’s success and the
highest priority. The Company has an effective and engaged Board, with a strong non-executive
presence drawn from diverse backgrounds and with well-functioning governance committees. Through
the Company’s compensation policies and variable components of employee remuneration, the
Remuneration Committee of the Board seeks to ensure that the Company’s values are reinforced in
employee behavior and that effective risk management is promoted.
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Curzon Energy Plc
Analysis by Gender
Category
Directors
Senior Managers
Other Employees
Annual Report 2019
Male
Female
3
0
0
0
0
0
Employees and Their Development
The Company is dependent upon the qualities and skills of its employees and their commitment plays a
major role in the Company’s business success. Employees’ performance is aligned to the Company’s
goals through an annual performance review process and via incentive programs. The Company provides
employees with information about its activities through regular briefings and other media. The Company
operates a Share Option Scheme operated at the discretion of the Remuneration Committee.
Diversity and Inclusion
The Company does not discriminate on the grounds of age, gender, nationality, ethnic or racial origin,
non-job-related-disability, sexual orientation or marital status. The Company gives due consideration to
all applications and provides training and the opportunity for career development wherever possible. The
Board does not support discrimination of any form, positive or negative, and all appointments are based
solely on merit.
Health and Safety
The Company endeavors to ensure that the working environment is safe and healthy and conducive to
the wellbeing of employees who are able to balance work and family commitments. The Company has a
Health and Safety at Work policy which is reviewed regularly by the Board and is committed to the health
and safety of its employees and others who may be affected by the Company’s activities. The Company
provides the information, instruction, training and supervision necessary to ensure that employees are
able to discharge their duties effectively. The health and safety procedures used by the Company ensure
compliance with all applicable legal, environmental and regulatory requirements, as well as its own
internal standards.
Outlook
The Company spent the majority of 2019 working with Pared Energy and the Company’s advisors to both
structure and fund an investment in Pared’s Texas gas project in the United States. This involved
significant planning and administrative work as required by the Company’s listing on the Standard List of
the London Stock Exchange. By the end of the year, it became apparent that a transaction in the oil and
gas sector was not going to complete. The Board then turned its attention to exploring new options for
Curzon and implemented a new strategy.
In March 2020, the Company announced that it had executed a letter of intent with the Sun Seven Stars
Investment Group ("SSSIG") to potentially acquire a 100% interest in London Critical Metals Market
("LCMM"), the first unified global metals trading exchange for critical metals that have few or no direct
investment or trading options elsewhere in the World.
The Board is enthusiastic about the opportunity to potentially acquire LCMM and is currently working to
complete its due diligence on the company, so as to facilitate the drafting and execution of a definitive
agreement to acquire the business. While it has been a difficult year for Curzon, the potential move out
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Curzon Energy Plc
of the oil and gas sector into critical metals trading appears timely and offers the Company the best
prospects for growth and development going forward.
Annual Report 2019
Signed by order of the Board.
.
Scott Kaintz
Chief Executive Officer
18 May 2020
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Curzon Energy Plc
Annual Report 2019
Directors Report for the period ended 31 December 2019
The Directors present their report on the Company, together with the audited financial statements of the
Company for the year ended 31 December 2019.
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 any profits
to fund the Company’s growth strategy over the short- and medium-term horizons.
Directors’ Insurance and Indemnities
The Directors have the benefit of the indemnity provisions contained in the Company’s Articles of
Association (‘Articles’), and the Company has maintained throughout the year Directors’ and officers’
liability insurance for the benefit of the Company, the Directors and its officers. The Company has entered
into qualifying third-party indemnity arrangements for the benefit of all its Directors in a form and scope,
which comply with the requirements of the Companies Act 2006, and which were in force throughout the
year and remain in force.
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.
Financial Instruments and Risk Management
Disclosures regarding financial instruments are provided within note 20 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 17 to the Financial Statements. The Company has one class of Ordinary Shares which carry
no right to fixed income.
Post Balance Sheet Events
On 13 February 2020, the Company announced that it had been informed by YA Global Investments LP
of the sale of its outstanding debt due to YA Global to C4 Energy Ltd, a UK incorporated private Company.
The balance of the loan agreement at that time was US$200,000, with approximately US$32,000 of
accrued interest. The Company further announced that it had terminated discussions with Pared Energy
around a potential oil and gas transaction in Texas, and that the Company would be exploring
opportunities outside of the oil and gas sector.
On 18 March 2020, the Company announced that it had executed a letter of intent with the Sun Seven
Stars Investment Group ("SSSIG") to potentially acquire a 100% interest in London Critical Metals Market
("LCMM"), the first unified global metals trading exchange for critical metals that have few or no direct
investment or trading options elsewhere in the World. The Company indicated that it would now enter an
initial period of exclusivity with SSSIG during which each party would conduct due diligence on the
other. The parties have agreed that during this period they will work towards the execution and delivery
of a definitive purchase agreement contemplating a reverse takeover of Curzon by LCMM ("RTO"),
including receipt of the required regulatory approvals from the FCA and its primary market functions. The
due diligence period was expected to last approximately 1 month. For providing SSSIG with an initial
period of exclusivity lasting through to 30 June 2020, SSSIG will lend the Company an initial amount
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Curzon Energy Plc
Annual Report 2019
of £125,000 in the form of a one-year loan note carrying an annual interest rate of 10% per annum,
convertible at the price of any subsequent share issue in the contemplated RTO transaction. After 30
April 2020, further loan funds may be made available by SSSIG to the Company if the envisaged
transaction continues to progress, or in order to extend the initial period of exclusivity beyond 30 June
2020.
On 17 April 2020, the Company announced that it would be holding a General Meeting on Wednesday 6
May 2020.
On 1 May 2020 the Company announced that it had agreed to refinance its outstanding secured loan
notes of £216,553 and its unsecured loan notes of US$200,000. As previously announced on 13 February
2020, the Company has further agreed with the Secured Note lenders to capitalise the amounts due to
date into a new principal amount of £263,265 as of 1 April 2020. The interest rate is to remain the same
at 13% per annum. The maturity date of the Secured Loan notes has been extended and is now the
sooner of the completion of a reverse takeover, or 1 October 2020. As previously announced on 13
February 2020, the Company has agreed with the Unsecured Note lenders to refinance by extending the
existing balance to 1 October 2020. The interest rate is to remain the same at 15% per annum, and the
total outstanding principal and interest is approximately US$238,918.
On 6 May 2020, the Company announced that at the General Meeting held earlier, all resolutions were
passed unanimously on a show of hands. At the General Meeting of the Company held on 6 May 2020,
the Company sought shareholder approval for the subdivision and re-designation of the 83,032,971
Existing Ordinary Shares ("Existing Ordinary Shares") of £0.01 each in the capital of the Company into (i)
83,032,971 New Ordinary Shares ("New Ordinary Shares") of £0.0001 each and (ii) 83,032,971 Deferred
Shares ("Deferred Shares") of £0.0099 each in the capital of the Company, and to amend the Company's
Articles of Association accordingly. The proposed share capital reorganisation was passed at the General
Meeting and amendments will be made to the Company's Articles of Association in respect of the Deferred
Shares and the subdivision and re-designation of the Existing Ordinary Shares. Each New Ordinary
Share will carry the same rights in all respects under the amended Articles of Association as each Existing
Ordinary Share does at present under the existing Articles of Association, including the rights in respect
of voting and the entitlement to receive dividends. Each Deferred Share will have very limited rights and
will effectively be valueless. CREST accounts of Shareholders will not be credited in respect of any
entitlement to Deferred Shares and the Company will not issue any share certificates in respect of
Deferred Shares. The Deferred Shares shall have the rights and restrictions as set out in the amended
Articles of Association and shall not entitle the holder thereof to receive notice of or attend and vote at
any General Meeting of the Company or to receive a dividend or other distribution.
Directors
The Directors of the Company who have served during the period and at the date of this report are:
Director
Role
John McGoldrick
Scott Kaintz
Owen May
Chairman and Non-
Executive Director
Executive Director
Non-Executive Director
Date of
Appointment
Date of
Resignation
Board
Committee
4/10/2017
N, R, A
27/06/2018
27/09/2016
N, R, A
Board Committee abbreviations are as follows: N = Nomination Committee; A = Audit and Risk
Committee; R = Remuneration Committee.
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Curzon Energy Plc
Board of Directors
Annual Report 2019
Details of the current Directors and their backgrounds are as follows:
John McGoldrick (Chairman and Non-Executive Director, aged 62)
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.
Scott Kaintz (Executive Director and Chief Executive Officer, aged 42)
Scott has extensive experience leading, funding and operating publicly traded natural resource
exploration and development businesses on the London markets. He started his career as a US Air Force
Officer working across Europe, the Middle East and Central Asia. He subsequently held managerial and
technology roles in the defence sector in Europe before transitioning to corporate finance and investment
positions focused primarily on capital raising and making debt and equity investments in small-cap listed
companies. Scott has significant experience in emerging markets, with a particular emphasis on the
countries of the former Soviet Union. Scott holds a BSLA in Russian language and Russian Area Studies
from Georgetown University as well as MBA degrees from Columbia Business School and London
Business School. He is also a Director of Regency Mines Plc and Red Rock Resources Plc.
Owen May (Non-Executive Director, aged 59)
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.
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 programme 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.
9
Curzon Energy Plc
Director
John McGoldrick
Scott Kaintz
Owen May
Substantial Interests
Annual Report 2019
Ordinary shares held % held
316,455
949,367
-
0.38
1.14
-
As at 01 May 2020, the Company has been advised of the following significant interests (greater than 3%)
in its ordinary share capital:
Shareholder
Jim Nominees Limited
Queensbury Inc
Ordinary shares held
% held
55,173,708
4,000,000
66.45
4.82
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
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, complies with the Corporate Governance
Guidelines for Small and Mid-Sized Companies (the “QCA Code”).
The Board
The Board currently comprises one executive Director and two 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 six board
meetings are held per year.
Director
Number of Meetings Held
During Tenure
Number of Meetings Attended
John McGoldrick
Scott Kaintz
Owen May
9
9
9
9
9
9
As prescribed by the QCA Code, the Board has established three committees: An Audit and Risk
Committee, a Remuneration Committee and a Nomination Committee.
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Curzon Energy Plc
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 and the Remuneration Committees have met once each
during 2019.
Annual Report 2019
Audit and Risk Committee
The Audit and Risk Committee, which comprises John McGoldrick and Owen May, 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 once 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 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
once a year.
Nomination Committee
The Nomination Committee, which comprises John McGoldrick as Chairman 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, the Company’s 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 Anti-Corruption Policy
The Company has adopted an Anti-Bribery and Anti-Corruption Policy, which applies to the Directors and
any future 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
Annual Report 2019
Health and Safety
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 no 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. 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
Certain Directors have interests in these as follows:
Name
Number of
Options or Warrants Exercise Price Vesting
Expiry Date
John McGoldrick
280,854
£0.10
4 Oct 2018
4 Oct 2022
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.
12
Curzon Energy Plc
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.
Annual Report 2019
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.
COVID-19 Pandemic
The Group has been largely unaffected by the COVID-19 to date, however the ongoing disruptions to the
world economy may ultimately impact the Company’s future prospects. Capital for future development
may be scare or unavailable, and material transactions such as the one currently proposed with Sun Stars
Investment Group (more fully detailed above in Post Balance Sheet Events) could ultimately be more
difficult to complete.
The Company currently intends to hold its Annual General Meeting on 24 June 2020 at 14:00 pm, and
due to potential social distancing restrictions that may still be in place at that time, it encourages all
shareholders to vote via proxy to avoid putting themselves and others at risk by attending the meeting in
person.
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
20 to the Consolidated Financial Statements.
Ordinary Share Capital
The Company’s Ordinary Shares of £0.0001 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 year, Crowe U.K. LLP was re-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
Scott Kaintz
18 May 2020
13
Curzon Energy Plc
Remuneration Report
Annual Report 2019
The Board of Directors has established a Remuneration Committee. The Remuneration Committee (the
‘Committee’) comprises our two Non-Executive Directors, John McGoldrick 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 2019.
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 for 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 once 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.
The Company does not anticipate making any significant changes to its compensation policies and
practices during 2020.
14
Curzon Energy Plc
Directors’ Remuneration
Annual Report 2019
The Directors who held office on 31 December 2019 and who had beneficial interests in the ordinary
shares of the Company are summarised as follows:
Name of Director
Position
John McGoldrick
Chairman, Non-Executive Director
Scott Kaintz
Chief Executive Officer, Executive Director
Directors’ Service Contracts
John McGoldrick was 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 04 October 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.
Owen May was appointed as 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. His appointment is for an initial term of 36 months and is terminable on three months’ written notice
on either side. Owen is entitled to a fee of £25,000 per annum payable in cash or shares at the discretion
of the Board.
Scott Kaintz was appointed as a Director on 27 June 2018. He was appointed to act as an Executive
Director and Chief Executive officer as of 5 November 2018. His appointment is for an initial term of 12
months and continues thereafter until terminated by either party giving four months written notice. Scott
is entitled to a fee of £120,000 per annum.
Summary Compensation Table (audited)
The following table sets forth the compensation awarded, paid to or earned by each Director during 2019:
2019
John McGoldrick
Scott Kaintz
Owen May
Brian James Kinane
Total directors’
compensation
Directors’
fees
US$
63,799
95,699
31,900
-
Social
security
costs
US$
Total cash-
compensation
US$
Share-based
Payments
(options)
US$
Total
compensation
US$
-
63,799
20,766
84,565
7,800
103,499
-
-
31,900
-
-
-
-
103,499
31,900
-
191,398
7,800
199,198
20,766
219,964
John McGoldrick has through agreement with the Company agreed to defer payment of his 2017, 2018
and 2019 director’s compensation, which at 31 December 2019 totaled £102,500 (US$134,439).
Owen May has through agreement with the Company agreed to defer payment of his 2018 and 2019
director’s compensation, which at 31 December 2019 totaled £25,000 (US$31,900).
15
Curzon Energy Plc
Summary Compensation Table (audited)
Annual Report 2019
2018
John McGoldrick
Scott Kaintz
Owen May
Brian James Kinane
Thomas Wagenhofer
Thomas Mazzarisi
Stephen Schoepfer
Directors’
fees
US$
67,178
16,148
-
-
97,407
103,333
103,333
Social
security
costs
US$
-
1,968
-
-
-
-
-
Total cash-
compensation
US$
Share-based
Payments
(options)
US$
Total
compensation
US$
67,178
18,116
-
-
37,149
-
-
104,327
18,116
-
74,891
74,891
97,407
149,828
247,235
103,333
103,333
38,750
142,083
38,750
142,083
Total directors’ compensation
387,399
1,968
389,367
339,368
728,735
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
Number of
Options
Exercise
Price
Vesting
Expiry Date
John McGoldrick
280,854
£0.10
10 Apr 2018
10 Apr 2022
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.
16
Curzon Energy Plc
Directors’ Interests in Shares (audited)
Directors’ interests in the shares of the Company at the date of this report are disclosed below.
Annual Report 2019
Director
John McGoldrick
Scott Kaintz
Owen May
Ordinary Shares Held
% held
316,455
949,367
-
0.38
1.14
-
Other Matters Subject to Audit
The Company does not currently have any pension plans for any of the Directors and does not pay
pension amounts in relation to their remuneration.
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 is 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
18 May 2020
17
Curzon Energy Plc
Annual Report 2019
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 Group and of the profit or loss of the Group
for that period. In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgments and 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 Group;
the Directors 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
John McGoldrick, Director
18 May 2020
18
Curzon Energy Plc
Annual Report 2019
Independent Auditor’s Report to the Members of Curzon Energy Plc
Opinion
We have audited the consolidated financial statements of Curzon Energy Plc and its subsidiaries (the
“Group”) for the year ended 31 December 2019, which comprise the consolidated statement of
comprehensive income, the consolidated and company statements of financial position, the consolidated
and company statements of cash flows, the consolidated and company statements of changes in equity
and notes to the financial statements, including a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union.
In our opinion:
•
the financial statements give a true and fair view of the state of the Group’s and the Company’s
affairs as at 31 December 2019 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;
•
•
the company financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union as applied in accordance with the provisions of the Companies
Act 2006; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to note 2 to the financial statements, which details the factors the Company has
considered when assessing the going concern position. As detailed in note 2, the uncertainty surrounding
the availability of funds to finance ongoing working capital requirements indicates the existence of a
material uncertainty that may cast significant doubt on the company’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
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 £30,000, based on 5% of the adjusted results of the year.
We use a different level of materiality (‘performance materiality’) to determine the extent of our testing for
the audit of the financial statements. Performance materiality is set based on the audit materiality as
adjusted for the judgements made as to the entity risk and our evaluation of the specific risk of each audit
area having regard to the internal control environment.
Where considered appropriate performance materiality may be reduced to a lower level, such as, for
related party transactions and Directors’ remuneration.
We agreed with the Audit Committee to report to it all identified errors in excess of £1,500. Errors below
that threshold would also be reported to it if, in our opinion as auditor, disclosure was required on
qualitative grounds.
19
Curzon Energy Plc
Overview of the Scope of Our Audit
Annual Report 2019
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.
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 Intangible assets
The Group’s primary focus is on
exploration activities in the Coos Bay
Basin. The exploration assets at 31
December 2019 was $2.6m and an
impairment of $2.6m was recognised in
the year as it has not yielded meaningful
gains in flow rates and well
performance. The view has thus been
taken that this work may not result in
future recoverable economic value.
Given the impairment recognised, we
considered the risk that the residual
intangible assets relating to the Coos
Bay Basin was impaired.
In considering this assessment we carried out the
following audit procedures:
• Review the board minutes and announcements which
indicated that well testing was not carried out during
the year ended 31 December 2019.
• Discussions with management regarding the plans
•
and intentions in relation to the existing wells drilled in
the Coos Bay Project.
It was confirmed by management that they were not
expecting to carry out drilling operations for
foreseeable future.
• Assessment of the appropriateness of the accounting
treatment of the exploration activities in accordance
with IFRS 6.
In addition, we considered the primary lease agreement,
which expires during 2020 and has not been renewed to
date.
Key observations
We concur with management’s decision to fully impair
the cost of exploration activities capitalised to date.
Our audit procedures in relation to this matter 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.
20
Curzon Energy Plc
Annual Report 2019
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on Other Matters Prescribed by the Companies Act 2006
In our opinion the part of the Directors’ remuneration report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion based on the work undertaken in the course of our audit
•
•
the information given in the Strategic Report and the Directors' Report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the 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 set out on page 17, 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,
21
Curzon Energy Plc
Annual Report 2019
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
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 15 April 2020 to audit the financial statements for the year ended 31
December 2019. Our total uninterrupted period of engagement is 4 years, covering the period ended 31
December 2016 to 31 December 2019.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and
we remain independent of the Group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
Use of Our Report
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the Company and the Company's members as a body, for our audit work, for this report, or for the
opinions we have formed.
Matthew Stallabrass
Senior Statutory Auditor
For and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
18 May 2020
22
Curzon Energy Plc
Annual Report 2019
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2019
Note
6
7
10
4
8
2019
US$
2018
US$
(913,572)
(1,363,949)
(913,572)
(1,363,949)
(108,178)
(14,443)
(2,559,000)
(575,316)
(3,580,750)
(1,953,708)
-
-
(3,580,750)
(1,953,708)
Administrative expenses
Loss from operations
Finance expense, net
Impairment of exploration and evaluation assets
Loss before taxation
Income tax expense
Loss for the year attributable to
equity holders of the parent company
Other comprehensive loss
(Loss) on translation of parent net assets and results
from functional currency into presentation currency
Total comprehensive loss for the year
(39,602)
(70,245)
(3,620,352)
(2,023,953)
Loss per share - Basic and diluted, US$
9
(0.04)
(0.03)
The notes on pages 28 to 65 form part of these financial statements
23
Curzon Energy Plc
Consolidated Statements of Financial Position
as at 31 December 2019
Note
10
12
13
14
15
16
Assets
Non-current assets
Intangible assets
Property, plant and equipment
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
Annual Report 2019
2019
US$
2018
US$
-
683
2,559,000
-
125,000
125,000
125,683
2,684,000
31,203
28,709
59,912
36,157
125,621
161,778
185,595
2,845,778
835,826
698,798
1,534,624
1,534,624
506,894
213,812
720,706
720,706
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
17
1,103,457
1,024,036
3,586,947
3,563,122
474,792
213,250
454,026
191,011
31,212,041
31,212,041
(103,376)
(63,774)
(37,836,140)
(34,255,390)
(1,349,029)
2,125,072
185,595
2,845,778
The financial statements were approved and authorised for issue by the Board of Directors on 18 May
2020 and were signed on its behalf by:
John McGoldrick
Director
The notes on pages 28 to 65 form part of these financial statements.
24
Curzon Energy Plc
Annual Report 2019
Consolidated Statements of Changes in Equity
Share capital
Share
premium
Other
reserves
Accumulated
losses
US$
US$
US$
US$
Total
US$
Equity at 1 January 2018
964,575
3,199,004
31,524,182
(32,301,682)
3,386,079
Loss for the year
Other comprehensive loss
for the year
Total comprehensive
loss for the year
Issue of shares
Share issue costs
Issue of share options
Total transactions with
shareholders
Equity at 31 December
2018
Loss for the year
Other comprehensive loss
for the year
Total comprehensive
loss for the year
Issue of shares
Issue of warrants
Issue of share options
Total transactions with
shareholders
Equity at 31 December
2019
-
-
-
59,461
-
-
-
-
-
416,223
(52,105)
(70,245)
(70,245)
-
-
-
339,367
59,461
364,118
339,367
-
(1,953,708)
(1,953,708)
-
(70,245)
(1,953,708)
-
-
-
-
(2,023,953)
475,684
(52,105)
339,367
762,946
1,024,036
3,563,122
31,793,304
(34,255,390)
2,125,072
-
-
-
-
-
-
-
(3,580,750)
(3,580,750)
(39,602)
-
(39,602)
(39,602)
(3,580,750)
(3,620,352)
79,421
46,064
-
-
(22,239)
-
-
22,239
20,766
79,421
23,825
43,005
-
-
-
-
125,485
-
20,766
146,251
1,103,457
3,586,947
31,796,707
(37,836,140)
(1,349,029)
25
Curzon Energy Plc
Other Reserves
Annual Report 2019
Share-
based
payments
reserve
Foreign
currency
translation
reserve
Warrants
reserve
Total Other
reserves
US$
US$
US$
US$
Merger
reserve
US$
Other reserves as at 1
January 2018
Other comprehensive
loss for the year
Total comprehensive
loss for the year
Issue of share options
Other reserves at 31
December 2018
Other comprehensive
loss for the year
Total comprehensive
loss for the year
Issue of warrants
Issue of share options
Other reserves at 31
December 2019
31,212,041
114,659
191,011
6,471
31,524,182
-
-
-
-
-
339,367
-
-
-
(70,245)
(70,245)
(70,245)
-
(70,245)
339,367
31,212,041
454,026
191,011
(63,774)
31,793,304
-
-
-
-
-
-
-
20,766
-
-
22,239
-
(39,602)
(39,602)
(39,602)
(39,602)
-
-
22,239
20,766
31,212,041
474,792
213,250
(103,376)
31,796,707
26
Curzon Energy Plc
Consolidated Statement of Cash Flows
Cash flow from operating activities
Loss before taxation
Adjustments for:
Finance expenses
Share-based payments charge
Impairment of exploration assets
Unrealised foreign exchange movements
Operating cashflows before working capital changes
Changes in working capital:
Increase/(decrease) in payables
Decrease in receivables
Net cash used in operating activities
Investing activities
Capitalised exploration costs
Net cash outflow from investing activities
Financing activities
Issue of ordinary shares
Costs of share issue
Proceeds from new borrowings
Net cash flow from financing activities
Annual Report 2019
Notes
2019
US$
2018
US$
(3,580,750)
(1,953,708)
7
18
112,093
42,321
20,766
339,367
2,559,000
575,316
(3,915)
(27,878)
(892,806)
(1,024,582)
309,917
(22,541)
27,084
112,461
(555,805)
(934,662)
-
-
(575,316)
(575,316)
17
104,021
-
-
(52,105)
16
362,320
466,341
100,000
47,895
Net (Decrease)/increase in cash and cash equivalents in the period
(89,464)
(1,462,083)
Cash and cash equivalents at the beginning of the period
125,621
1,595,035
Restricted cash held on deposits
12
125,000
125,440
Total cash and cash equivalents at the beginning of the period,
including restricted cash
250,621
1,720,475
Effect of the translation of cash balances into presentation currency
(7,448)
(7,331)
(Charge) on restricted cash
Cash and cash equivalents at the end of the period
-
(440)
28,709
125,621
Restricted cash held on deposits
12
125,000
125,000
Total cash and cash equivalents at the end of the period, including
restricted cash
153,709
250,621
27
Curzon Energy Plc
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
1.
General Information
Annual Report 2019
The Company is incorporated and registered in England and Wales as a public limited company. The
Company’s registered number is 09976843 and its registered office is at Kemp House, 152 City Road,
London EC1V 2NX. On 4 October 2017, the Company’s shares were admitted to the Official List (by way
of Standard Listing) and to trading on the London Stock Exchange’s Main Market.
With effect from admission, the Company has been subject to the Listing Rules and the Disclosure
Guidance and Transparency Rules (and the resulting jurisdiction of the UK Listing Authority) to the extent
such rules apply to companies with a Standard Listing pursuant to Chapter 14 of the Listing Rules.
The principal activity of the Company is that of 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 natural gas sector. The USA entities of
the Group hold leases to approximately 45,370 acres of prospective coal bed methane (“CBM”) lands in
the Coos Bay Basin.
2.
Accounting Policies
The principal accounting policies adopted are set out below.
The Group Financial statements are presented in US Dollars as the entirety of the Company’s operations
are located in the United States.
Basis of Preparation
The financial statements have been prepared in accordance with International Financial Reporting
Standards and IFRIC interpretations as endorsed by the EU (“IFRS”) and the requirements of the
Companies Act applicable to companies reporting under IFRS.
The financial statements are prepared on a going concern basis and under the historical cost convention.
The preparation of the Group financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires the Directors to exercise their judgment in the process of
applying the Group’s accounting policies. The areas involving a higher degree of judgment and
complexity, or areas where assumptions and estimates are significant to the Group financial statements
are disclosed below.
Current assets and liabilities disclosed in the notes to the accounts are those expected to be settled in
less than one year.
a) New standards, interpretations and amendments effective from 1 January 2019
There were no new standards or interpretations effective for the first time for periods beginning on or after
1 January 2019 that had a significant effect on the Curzon Group’s financial statements. The Company
adopted IFRS 16 Leases and IFRIC 23 Uncertainty over Income Tax Treatments from 1 January 2019.
Other new and amended standards and Interpretations issued by the IASB did not impact the Group as
they are either not relevant to the Group’s activities or require accounting, which is consistent with the
Group’s current accounting policies.
IFRS 16 is effective for periods beginning on or after 1 January 2019. The Group has elected to apply
paragraph C5(b) and adopt IFRS 16 retrospectively with the cumulative effect of initially applying IFRS
16 recognised at the date of initial application. Consequently, the comparative period has not been
restated. All the exploration areas land lease agreements that the Company has for its areas of interest
are outside of IFRS 16 scope.
28
Curzon Energy Plc
Annual Report 2019
b) New standards, interpretations and amendments not yet effective
At the date of authorisation of these financial statements, a number of amendments to existing standards
and interpretations, which have not been applied in these financial statements, were in issue but not yet
effective for the year presented. The Directors do not expect that the adoption of these standards will
have a material impact on the financial information of the Group in future periods.
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.
Where a party to an acquisition fails to satisfy the definition of a business, as defined by IFRS 3,
management have decided to adopt a “merger accounting” method of consolidation as the most relevant
method to be used.
The Group consistently applies it to all similar transactions in the following way:
- the acquired assets and liabilities are recorded at their existing carrying values rather than at fair value;
- no goodwill is recorded;
- all intra-group transactions, balances and unrealised gains and losses on transactions are eliminated
from the beginning of the first comparative period or inception, whichever is earlier;
- comparative periods are restated from the beginning of the earliest comparative period presented based
on the assumption that the companies have always been together;
- all the pre-acquisition accumulated losses of the legal acquirer are assumed by the Group as if the
companies have always been together;
- all the share capital and membership capital contributions of all the companies, included into the legal
acquiree sub-group less the Company’s cost of investment into these companies, are included into the
merger reserve; and
- the Company’s called up share capital is restated at the preceding reporting date to reflect the value of
the new shares that would have been issued to acquire the merged company had the merger taken place
at the first day of the comparative period. Where new shares have been issued during the current period
that increased net assets (other than as consideration for the merger), these are recorded from their
actual date of issue and are not included in the comparative statement of financial position.
Going Concern
The Group financial statements have been prepared on 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 of the Company are currently being financed by funds lent to the Company by Sun Stars
Investment Group (“SSIG”). In exchange for a period of exclusivity in relation to a potential reverse
takeover transaction, SSIG has agreed to loan the Company an initial amount of £125,000 in the form of
a one-year loan note carrying an annual interest rate of 10%. In early May 2020, SSIG made available
additional funds to the Company in order to progress the transaction. SSIG has agreed to make further
funding available on a monthly basis starting on 30 June 2020 in order to further extend the period of
exclusivity if required to complete the transaction.
The Company further continues to rely on a $1,000,000 credit facility provided from a company related to
the largest shareholder that provides the Group up to $500,000 minimum funding, and an additional
$500,000 at the discretion of the lender. On 13 February 2020, the Company was notified that the entire
outstanding balance of this loan, constituting US$200,000 of principal and US$32,000 of interest was sold
to C4 Energy Ltd, a UK incorporated private entity, and was subsequently refinanced to 30 October 2020.
29
Curzon Energy Plc
Annual Report 2019
This left US$800,000 of the underlying facility undrawn with the original lender. If any amounts were to
be drawn on this facility, they would be repayable 12 months from the date of drawdown.
The Group believes that, based on the current low overhead expenditure, the proceeds from the loans
being provided by SSIG and the undrawn amount of US$800,000 remaining on the US$1,000,000 credit
facility will be sufficient for the Group to operate for a period of 12 months from the date of these financial
statements.
The Group currently has no source of revenue and is reliant on loans to continue to meet its overhead
expenditure. The Group held cash balances of US$28,709 as at 31 December 2019 and has
subsequently increased its borrowing capacity and current liquidity through the agreement with SSIG.
The Directors note that the Group will need additional funding to continue operations for the foreseeable
future and this means there is a material uncertainty as to the Group’s ability to continue as a going
concern, however the Directors are confident that the Group will be able to raise, as required, sufficient
cash or reduce its commitments to enable it to continue its operations, and to continue to meet, as and
when they fall due, its liabilities for at least the next twelve months from the date of approval of the
Group financial statements. The Group financial statements have, therefore, been prepared on the
going concern basis.
Functional Currency
Functional and presentation currency
The individual financial information of each Group entity is measured in the currency of the primary
economic environment in which the entity operates (its functional currency). The Company’s functional
currency is UK Pound Sterling (£). All other companies, belonging to the Curzon Group, have US Dollar
as their functional currency. The Group financial statements are presented in US Dollars ($).
Transactions and balances
Transactions in foreign currencies are converted into the respective functional currencies on initial
recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary
assets and liabilities at the end of the reporting period are translated at the rates ruling as of that date.
Non-monetary assets and liabilities are translated using exchange rates that existed when the values
were determined. All exchange differences are recognised in profit or loss.
On consolidation, the assets and liabilities of the Group’s Pound Sterling operations are translated into
the Group’s presentational currency (US Dollar) at exchange rates prevailing at the reporting date. Income
and expense items are translated at the average exchange rates for the period unless exchange rates
have fluctuated significantly during the year, in which case the exchange rate at the date of the transaction
is used. All exchange differences arising, if any, are recognised as other comprehensive income and are
transferred to the Group’s foreign currency translation reserve.
Rates applied in these financial statements:
Closing USD/GBP rate at 31 December
Average USD/GBP rate for the year
2019
2018
1.3116
1.2690
1.2760
1.3436
Oil and Gas Exploration and Evaluation Expenditure
Exploration and evaluation costs incurred or acquired on the acquisition of a subsidiary are accumulated
in respect of each identifiable project area. Payments to acquire the legal right to explore, together with
the directly related costs of technical services and studies, seismic acquisition, exploratory drilling and
testing are capitalised as intangible E&E assets. These costs 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
30
Curzon Energy Plc
Annual Report 2019
the area have not yet reached a stage, which permits reasonable assessment of the existence of
economically recoverable reserves (the “successful efforts’’ method).
Under the successful efforts method of accounting, all license acquisition, exploration and appraisal costs
are initially capitalised in well, field or specific exploration cost centers as appropriate, pending
determination. Expenditure, incurred during the various exploration and appraisal phases, is then written
off unless commercial reserves have been established or the determination process has not been
completed.
Tangible assets used in E&E activities (such as the Group’s drilling rigs, seismic equipment and other
property, plant and equipment used by the Company’s exploration function) are classified as property,
plant and equipment. However, to the extent that such a tangible asset is consumed in developing an
intangible E&E asset, the amount reflecting that consumption is recorded as part of the cost of the
intangible asset. Such intangible costs include directly attributable overheads, including the depreciation
of property, plant and equipment utilised in E&E activities, together with the cost of other materials
consumed during the exploration and evaluation phases.
E&E costs are not amortised prior to the conclusion of appraisal activities. The properties are currently
unproved and, therefore, capitalised costs are not amortised, but subject to impairment testing.
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. 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. At 31 December 2019 and 31 December 2018, no provisions were deemed
necessary.
Impairment
Impairment of financial assets
All financial assets are assessed at the end of each reporting period as to whether there is any objective
evidence of impairment as a result of one or more events having an impact on the estimated future cash
flows of the asset. For an equity instrument, a significant or prolonged decline in the fair value below its
cost is considered to be objective evidence of impairment.
An impairment loss in respect of financial assets carried at amortised cost is recognised in profit or loss
and is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the financial asset’s original effective interest rate.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial
31
Curzon Energy Plc
asset at the date the impairment is reversed does not exceed what the amortised cost would have been
had the impairment not been recognised.
Annual Report 2019
Impairment of non-financial assets
The carrying values of assets, other than those to which IAS 36 “Impairment of Assets” does not apply,
are reviewed at the end of each reporting period for impairment when there is an indication that the assets
might be impaired. Impairment is measured by comparing the carrying values of the assets with their
recoverable amounts. The recoverable amount of the assets is the higher of the assets' fair value less
costs to sell and their value-in-use, which is measured by reference to discounted future cash flow.
An impairment loss is recognised in profit or loss immediately.
When there is a change in the estimates used to determine the recoverable amount, a subsequent
increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss
and is recognised to the extent of the carrying amount of the asset that would have been determined (net
of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in
profit or loss immediately, unless the asset is carried at its revalued amount, in which case the reversal
of the impairment loss is treated as a revaluation increase.
Financial Instruments
Financial instruments are recognised in the statements of financial position when the Group has become
a party to the contractual provisions of the instruments.
Financial assets
The Group classifies its financial assets as financial assets carried at amortised cost, cash and cash
equivalents and restricted cash.
Financial assets are 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.
Amortised cost
These assets incorporate such types of financial assets where the objective is to hold these assets in
order to collect contractual cash flows and the contractual cash flows are solely payments of principal and
interest. They are initially recognised at fair value plus transaction costs that are directly attributable to
their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate
method, less provision for impairment. Impairment provisions receivables are recognised based on the
simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected
credit losses. During this process the probability of the non-payment of the receivables is assessed. This
probability is then multiplied by the amount of the expected loss arising from default to determine the
lifetime expected credit loss for the receivables. On confirmation that the receivable will not be collectable,
the gross carrying value of the asset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to related parties are recognised
based on a forward-looking expected credit loss model. The methodology, used to determine the amount
of the provision, is based on whether there has been a significant increase in credit risk since initial
recognition of the financial asset. For those where the credit risk has not increased significantly since
initial recognition of the financial asset, twelve month expected credit losses along with gross interest
income are recognised. For those for which credit risk has increased significantly but not determined to
be credit impaired, lifetime expected credit losses along with the gross interest income are recognised.
32
Curzon Energy Plc
For those that are determined to be credit impaired, lifetime expected credit losses along with interest
income on a net basis are recognised.
The Group's financial assets measured at amortised cost comprise other receivables and cash and cash
equivalents in the consolidated statement of financial position.
Annual Report 2019
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, bank balances, bank overdrafts, deposits with
financial institutions and short-term, highly liquid investments that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
Restricted cash
Restricted cash are funds held as a collateral related to stand-by letters of credit related to the Group’s
oil and gas properties. Such deposits are classified as non-current assets and are not classified as part
of cash and cash equivalents as these deposits are not accessible by the Company for unrestricted use
and are not accessible for more than 3 months. More details on the Group’s restricted cash are given in
the note 12.
Financial liabilities
Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the
financial instrument.
Financial instruments are classified as liabilities or equity in accordance with the substance of the
contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified
as a liability are reported as an expense or income. Distributions to holders of financial instruments
classified as equity are charged directly to equity.
All financial liabilities are recognised initially at fair value less financial costs and subsequently measured
at amortised cost using the effective interest method other than those categorised as fair value through
the Statement of Comprehensive Income.
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or
expires. When an existing financial liability is replaced by another from the same party on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a de-recognition of the original liability and the recognition of a new liability, and
the difference in the respective carrying amounts is recognised in the income statement.
Financial liabilities include the following items:
- Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to
the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost
using the effective interest rate method, which ensures that any interest expense over the period to
repayment is at a constant rate on the balance of the liability carried in the consolidated statement of
financial position. For the purposes of each financial liability, interest expense includes initial transaction
costs and any premium payable on redemption, as well as any interest or coupon payable while the
liability is outstanding.
- Liability components of convertible loan notes are measured as described further below.
- Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and
subsequently carried at amortised cost using the effective interest method.
Convertible debt
The proceeds received on issue of the Group's convertible debt are allocated into their liability and equity
components. The amount initially attributed to the debt component equals the discounted cash flows using
a market rate of interest that would be payable on a similar debt instrument that does not include an option
to convert. Subsequently, the debt component is accounted for as a financial liability measured at
amortised cost until extinguished on conversion or maturity of the bond. The remainder of the proceeds
33
Curzon Energy Plc
is allocated to the conversion option and is recognised as a separate equity component within
shareholders' equity, net of income tax effects.
Annual Report 2019
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
the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions
for future financings, expected volatility, expected life, yield and risk-free interest rate.
Taxation
Income tax for each reporting period comprises current and deferred tax.
Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year
and is measured using the tax rates that have been enacted or substantively enacted at the end of the
reporting period.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the Group financial statements.
Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and
unused tax credits to the extent that it is probable that future taxable profits will be available against which
the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The
carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or
part of the deferred tax assets to be utilised.
Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from
goodwill or excess of the Group’s interest in the net fair value of the acquired Company’s identifiable
assets, liabilities and contingent liabilities over the business combination costs or from the initial
recognition of an asset or liability in a transaction which is not a business combination and at the time of
the transaction, affects neither accounting profit nor taxable profit.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period
when the asset is realised or the liability is settled, based on the tax rates that have been enacted or
substantively enacted at the end of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when the deferred income taxes relate to the same taxation
authority.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent
that it has become probable that future taxable profit will allow deferred tax assets to be recovered.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred
tax items are recognised in correlation to the underlying transactions either in other comprehensive
income or directly in equity.
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the
consolidated statement of financial position differs from its tax base, except for differences arising on the
initial recognition of goodwill, the initial recognition of an asset or liability in a transaction, which is not a
business combination and at the time of the transaction affects neither accounting or taxable profit, and
34
Curzon Energy Plc
investments in subsidiaries and joint arrangements where the Group is able to control the timing of the
reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.
Annual Report 2019
Leases
The Group holds leases to approximately 45,370 acres of prospective coalbed methane lands in the Coos
Bay Basin. These leases are outside of IFRS16 scope. The annual rental payments under these operating
leases are recognised as an expense on a straight-line basis over the lease term.
Employee Benefits
Short-term benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in
the period in which the associated services are rendered by employees of the Group.
Post-employment benefits
The Group does not currently make provision for post-employment benefits by way of pension plans or
similar arrangements.
Provisions, Contingent Liabilities and Contingent Assets
Provisions are 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 18 to the Group financial statements.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Directors’ estimate of equity instruments that will
eventually vest, with a corresponding increase in equity. Where the conditions are non-vesting, the
expense and equity reserve arising from share-based payment transactions is recognised in full
immediately on grant.
At the end of each reporting period, the Directors revise their estimate of the number of equity instruments
expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss
such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to other
reserves.
35
Curzon Energy Plc
Operating Segments
Annual Report 2019
An operating segment is a component of the Group that engages in business activities from which it may
earn revenues and incur expenses. The results of an operating segment are reviewed regularly by the
chief operating decision maker to make decisions about resources to be allocated to the segment and
assess its performance, and for which discrete financial information is available.
Summary of Critical Accounting Estimates and Judgments
The preparation of the Group financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires the Directors to exercise their judgment in the process of
applying the accounting policies, which are detailed above. These judgments are continually evaluated
by the Directors and management and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The key estimates and underlying assumptions concerning the future and other key sources of estimation
uncertainty at the 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 judgment or complexity, where assumptions and estimates
are significant to the financial statements, are as follows:
Going concern
The Group financial statements have been prepared on a going concern basis as the Directors have
assessed the Group’s ability to continue in operational existence for the foreseeable future. The
operations are currently being financed by third party loans. See Going Concern section on page 29 for
more details.
The Group is reliant on the continuing support from its shareholders and the expected support of future
shareholders.
The Group financial statements do not include the adjustments that would result if the Group were not to
continue as a going concern.
Areas of Uncertainty
On 18 March 2020, the Company announced that it had signed a letter of intent with Sun Seven Stars
Investment Group to potentially acquire a 100% interest in London Critical Metals Market, the first unified
global metals trading exchange. At this stage there can be no assurance that this transaction will be
completed.
As of H1 2020, the COVID-19 pandemic continued to cause significant economic disruption across nearly
all aspects of the global economy. While the direct material effects on Curzon Energy were not clear at
the time of writing, the potential for significant ongoing uncertainties due to the Pandemic were expected
to continue to exist for the foreseeable future.
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. Full impairment of the Company’s Coos Bay
exploration assets was made for the year ended 31 December 2019, following the Board’s concerns
regarding the midterm viability of the coal bed methane project in Oregon given the ongoing downturn in
the worldwide oil and gas sector, exacerbated by the turmoil caused by the COVID-19 pandemic, which
was further expected to depress both demand and capital available to develop projects across the sector.
36
Curzon Energy Plc
3.
Segmental Analysis
Annual Report 2019
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. At 31 December 2019 and 31
December 2018, the Directors consider there is one reportable operating segment.
Accordingly, an analysis of segment profit or loss, segment assets, segment liabilities and other material
items has not been presented.
The Group operates in one geographic area, being the USA. All intangible assets and operating assets
and liabilities are located in the USA, excluding cash and cash equivalents, which are currently kept and
managed from the UK head office. The management does not consider the UK to be a separate operating
segment. The Group has not yet commenced production and therefore has no revenue.
4.
Loss for the Year Before Taxation
Loss before tax is stated after charging / (crediting):
Impairment of exploration and evaluation expenditure
2,559,000
575,316
Auditor’s remuneration:
2019
US$
2018
US$
fees payable to the Company’s auditor for the audit of the
consolidated and Company financial statements
32,538
33,074
-
-
fees payable to the Company’s auditor for other services:
corporate finance services
Share-based payments
Foreign currency translation loss/(gain)
29,048
-
20,766
339,367
(3,916)
(27,878)
37
Curzon Energy Plc
5.
Directors and Staff
Annual Report 2019
There were no staff employed by the Group during the two years ended 31 December 2019, except for
one Director, Mr Scott Kaintz, who was employed by the Company from 27 June 2018.
Remuneration of Key Management Personnel
Directors’ emoluments and benefits as follows:
2019
John McGoldrick
Scott Kaintz
Owen May
Brian James Kinane
Total directors’
compensation
2018
John McGoldrick
Scott Kaintz
Owen May
Brian James Kinane
Thomas Wagenhofer
Thomas Mazzarisi
Stephen Schoepfer
Total directors’
compensation
Directors’
fees
US$
63,799
95,699
31,900
-
Social
security
costs
US$
-
7,800
-
-
Total cash-
compensation
US$
Share-based
Payments
(options)
US$
Total
compensation
US$
63,799
103,499
31,900
-
20,766
-
-
-
84,565
103,499
31,900
-
191,398
7,800
199,198
20,766
219,964
Directors’
fees
US$
67,178
16,148
-
-
97,407
103,333
103,333
Social
security
costs
US$
-
1,968
-
-
-
-
-
Total cash-
compensation
US$
Share-based
Payments
(options)
US$
Total
compensation
US$
67,178
18,116
-
-
37,149
-
-
104,327
18,116
-
74,891
74,891
97,407
149,828
247,235
103,333
103,333
38,750
142,083
38,750
142,083
387,399
1,968
389,367
339,368
728,735
The Directors’ emoluments are paid from Coos Bay Energy LLC and the Company.
John McGoldrick has through agreement with the Company agreed to defer payment of his 2017, 2018
and 2019 director’s compensation, which at 31 December 2019 totaled £102,500 (US$134,439).
Owen May has through agreement with the Company agreed to defer payment of his 2018 and 2019
director’s compensation, which at 31 December 2019 totaled £25,000 (US$31,900).
38
Curzon Energy Plc
6.
Administrative Expenses
Staff costs
Directors’ salaries
Employers NI
Consultants
Professional services
Accounting, audit & taxation
Legal
Marketing
Other
Regulatory compliance
Standard Listing Regulatory Costs
Travel
Business development
Office and Admin
General
IT related costs
Mineral rights lease (outside of IFRS 16 scope)
Temporary storage and office rent
Insurance
Total administrative costs
7.
Finance Expense (net)
Foreign exchange loss/(gain)
Annual Report 2019
2019
US$
2018
US$
212,164
726,767
7,800
1,968
66,943
64,965
87,927
5,684
29,647
20,757
98,356
68,655
57,422
31,202
101,471
130,830
260,281
14,306
29,345
6,329
2,355
-
41,614
-
64,165
2,379
32,049
28,971
17,545
12,581
18,969
34,074
913,572
1,363,949
2019
US$
2018
US$
(3,915)
(27,878)
Interest expense on promissory notes and other short-term loans
112,093
42,321
Total finance expense
108,178
14,443
39
Curzon Energy Plc
8.
Taxation
Annual Report 2019
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 19.00% (2018: 19.00%)
Effect of non-deductible expense
Differences in overseas tax rates
Effect of tax benefit of losses carried forward
Current tax (credit)
2019
US$
2018
US$
(3,580,750)
(1,953,708)
(680,342)
(371,205)
501,265
77,384
(3,140)
(21,307)
182,217
315,127
-
-
As at 31 December 2019, the tax effects of temporary timing differences, giving rise to deferred tax assets,
was US$1,309,344 (2018: US$1,127,127).
A deferred tax asset in respect of these losses and temporary differences has not been established as
the Group has not yet generated any revenues and the Directors have therefore assessed the likelihood
of future profits being available to offset such deferred tax assets to be uncertain.
40
Curzon Energy Plc
9.
Loss Per Share
Annual Report 2019
The basic loss per share is derived by dividing the loss for the year attributable to ordinary shareholders
of the Company by the weighted average number of shares in issue.
Diluted loss per share is derived by dividing the loss for the year attributable to ordinary shareholders of
the Company by the weighted average number of shares in issue plus the weighted average number of
ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary
shares.
The following reflects the loss and share data used in the basic and diluted loss per share computations:
2019
2018
(Loss) after tax attributable to the shareholders of the parent (US$)
(3,580,750)
(1,953,708)
Weighted average number of ordinary shares of £0.01 in issue
81,185,175
74,449,821
Effect of dilutive options and warrants
Weighted average number of ordinary shares of £0.01 in issue
inclusive of outstanding dilutive options and warrants
-
-
81,185,175
74,449,821
(Loss) per share - basic and fully diluted (US$)
(0.04)
(0.03)
Options and warrants with all conditions met at the end of each respective period:
Share options granted to employees - fully vested at the end of the
respective period
Warrants given to shareholders as a part of placing equity
instruments - fully vested at the end of the respective period
Total instruments fully vested
2019
2018
Number
Number
280,854
2,386,872
5,636,531
3,630,200
5,917,385
6,017,072
At 31 December 2019, the effect was anti-dilutive as it would lead to a further reduction of loss per share,
therefore. they were not included into the diluted loss per share calculation.
Options and warrants with conditions not met at the end of the period, that could potentially dilute basic
EPS in the future, but were not included in the calculation of diluted EPS for the periods presented:
Share options granted to employees - not vested at the end of the
respective period
Total options and warrants with conditions not all met
Total number of instruments and potentially issuable instruments
(vested and not vested) not included into the fully diluted EPS
calculation
2019
2018
Number
Number
-
-
5,246,832
5,246,832
5,917,385
11,263,904
41
Curzon Energy Plc
10.
Intangible Assets
Exploration and evaluation expenditure
Cost:
At the beginning of the year
Additions – exploration costs capitalised
At the end of the year
Impairment provision:
At the beginning of the year
Provision for the year
At end of the year
Net Book Value
Annual Report 2019
2019
US$
2018
US$
24,716,316
24,141,000
-
575,316
24,716,316
24,716,316
(22,157,316)
(21,582,000)
(2,559,000)
(575,316)
(24,716,316)
(22,157,316)
-
2,559,000
The oil and gas properties are currently unproven and any additional activities will require additional
significant expenditures. These exploration activities could include formation stimulation and production
testing of wells to be drilled at the Coos Bay project. If additional exploration and development activities
on the Coos Bay Project’s unproved properties are undertaken, 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:
During the year ended 31 December 2019, the carrying value of the Company’s exploration assets at
Coos Bay was deemed to be zero and was written off in full. The Directors made this decision following
a decline in the US oil and gas industry and coming to the view that raising additional capital in the UK to
advance the project would be unlikely. As such the Directors took the view that the Coos Bay assets
should be written off in full pending an improvement to this situation.
Environmental Matters
The Group has established procedures for a continuing evaluation of its operations to identify potential
environmental exposures and to assure compliance with regulatory policies and procedures. The
Directors monitor these laws and regulations and periodically assesses the propriety of its operational
and accounting policies related to environmental issues. The nature of the Group’s business requires
routine day-to-day compliance with environmental laws and regulations. The Group has incurred no
material environmental investigation, compliance or remediation costs for each of the years ended 31
December 2019 and 31 December 2018. 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.
42
Curzon Energy Plc
11.
Subsidiary Undertakings
The Group has the following subsidiary undertakings:
Annual Report 2019
Name
Country of
incorporation
Coos Bay Energy, LLC
Westport Energy
Acquisitions, Inc.
Westport Energy, LLC
Curzon Energy, Inc.*
Rigel Energy, LLC**
USA
USA
USA
USA
USA
Issued capital
Membership
interests
Proportion held
by Group
Activity
100%
Holding company
Shares
100%
Holding company
Membership
interests
100%
Oil and gas exploration
Shares
100%
Holding company
Membership
interests
100%
Holding company
* Incorporated on 1 May 2019 and dissolved on 26 February 2020 as related transaction did not complete.
** Incorporated on 1 May 2019 and dissolved on 27 February 2020 as related transaction did not complete.
Coos Bay Energy, LLC is a limited liability corporation incorporated in Nevada, USA whose registered
office is 1370 Crowley Avenue SE, Portland, Oregon 97302, USA.
Westport Energy Acquisition, Inc., was incorporated in May 2010 in Delaware, USA. Its registered office
is located at 100 Overlook Center, 2nd Floor, Princeton Junction, NJ 08540, USA.
Westport Energy, LLC was incorporated in December 2008 in Delaware, USA. Its registered office is
located at 100 Overlook Center, 2nd Floor, Princeton Junction, NJ 08540, USA.
12.
Restricted Cash
Restricted cash includes funds held as a collateral to support stand-by letters of credit related to the
Group’s oil and gas properties. The letters of credit secure the Group’s reclamation obligations under the
leases and state law. The cash can be taken by Umpqua Bank in the event the letters of credit are drawn
on by the State of Oregon, Department of Geology & Mineral Industries (DOGAMI). The cash is held in
the form of a Certificate of Deposit.
13.
Prepayments and Other Receivables
VAT recoverable
Other debtors
Total prepayments and other receivables
2019
US$
2018
US$
4,503
23,213
26,700
12,944
31,203
36,157
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.
43
Curzon Energy Plc
14.
Cash and Cash Equivalents
Annual Report 2019
For the purpose of the statements of financial position, cash and cash equivalents comprise the following:
Cash in hand and at bank
15.
Trade and Other Payables
Trade and other payables
Accruals
2019
US$
2018
US$
28,709
125,621
2019
US$
2018
US$
508,259
370,646
327,567
127,216
Total financial liabilities, excluding loans and borrowings, classified as
financial liabilities measured at amortised cost
835,826
497,862
Other payables - tax and social security payments
Total trade and other payables
-
9,032
835,826
506,894
44
Curzon Energy Plc
16.
Borrowings
Annual Report 2019
Details of the notes and borrowings originated by the Group are disclosed in the table below:
Origination
date
Contractual
settlement date
Original note
value in
original
currency
Annual
interest
rate
Security
Status at 31
December
2019
C4 Energy Ltd
22 Sept 2017
1 Oct 2020
$200,000
15%
unsecured
Outstanding
Bruce Edwards
1 Sep 2017
Conversion at
RTO date
$100,000
15%
unsecured
Outstanding
HNW Investor
Group
1 July 2019*
1 Oct 2020
£200,000
13%
*Please refer to Note 36 Post Balance Sheet Events for more information
100%
interest in
Coos Bay
LLC
Outstanding
No interim payments are required under the promissory notes, as the payment terms require the original
principal amount of each note and all accrued interest thereon, to be paid in single lump payments on the
respective contractual settlement dates.
At 1 January
Received during the year
Interest accrued during the year
Exchange rate differences
Discharged during the year by issue of shares in Curzon
Short-term loans and borrowings 31 December
2019
US$
2018
US$
213,812
578,599
362,320
100,000
110,700
42,321
11,966
(31,424)
-
(475,684)
698,798
213,812
45
Curzon Energy Plc
Reconciliation of liabilities arising from financing activities
Annual Report 2019
Cash flows
Proceeds from
new
borrowings
31 Dec 2018
Non-cash flow
Forex movement
Non-cash flow
Interest accrued
31 Dec
2019
HNW Investor Group
-
262,320
C4 Energy Ltd.
Bruce Edwards
100,433
113,379
100,000
-
1,948
5,459
4,559
69,802
334,070
26,486
232,378
14,412
132,350
Total liabilities from
financing activities
213,812
362,320
11,966
110,700
698,798
Cuart
Investments
PCC, Ltd.
YA Global
Cash flows
Proceeds
from new
borrowings
Non cash flow
Forex
movement
31 Dec 2017
Non cash flow
Conversion
Non cash flow
Interest accrued
31 Dec
2018
473,667
-
(22,167)
(475,684)
24,184
-
-
100,000
(2,167)
Bruce Edwards
104,932
-
(7,090)
-
-
2,600
100,433
15,537
113,379
Total liabilities
from financing
activities
578,599
100,000
(31,424)
(475,684)
42,321
213,812
46
Curzon Energy Plc
17.
Share Capital
Authorised Share Capital
Annual Report 2019
As permitted by the Companies Act 2006, the Company does not have an authorised share capital. The
Company has one class of Ordinary shares which carry no right to fixed income. The ordinary shares
carry the right to one vote per share at General Meetings of the Company and the rights to share in any
distribution of profits or returns of capital and to share in any residual assets available for distribution in
the event of a winding up.
Issued equity share capital
2019
2018
Number
US$
Number
US$
Issued and fully paid
Ordinary shares of £0.01 each at the beginning
of the year
77,020,316
1,024,036
72,594,700
964,575
Ordinary shares of £0.01 each issued during the
year
6,012,655
79,421
4,425,616
59,460
Total ordinary shares of £0.01 each
83,032,971
1,103,457
77,020,316
1,024,036
Ordinary shares of £0.01 each,
number
At 31 December 2017
Issue of shares at £0.08 per share on loan conversion loan on 31 July 2018
At 31 December 2018
Issue of shares at £0.0158 per share via placement on 1 March 2019 for
cash
At 31 December 2019
72,594,700
4,425,616
77,020,316
6,012,655
83,032,971
47
Curzon Energy Plc
18.
Share Based Payments
Employee share options
Annual Report 2019
At 31 December 2019, the Company had outstanding options to subscribe for Ordinary shares as follows:
Option exercise price
Number of
options granted
Vesting date
Expiry date
Fair value of
individual option
£0.10
280,854
4 Oct 2018
4 Oct 2022
£0.074
Total options outstanding at
31 December 2019
280,854
2019
2018
Weighted
average
exercise
price
£
Number of
options
Weighted
average
exercise
price
£
Number of
options
Outstanding at the beginning of the period
7,633,704
0.17
4,633,704
Granted during the period
Forfeited during the period
Exercised during the period
Lapsed during the period
-
-
3,000,000
(6,089,394)
-
(1,263,456)
0.16
-
0.18
-
-
-
Outstanding at the end of the period
280,854
0.10
7,633,704
Vested and exercisable at the end of the period
280,854
0.10
2,386,872
0.18
0.15
-
-
-
0.17
0.13
During the financial year, no options (2018: 3,000,000) were granted. In the year ended 31 December
2018, 3,000,000 options were granted to the former Directors to release all other liabilities arising on the
termination of their contract. The options granted in 2018, were valued based on the value of the
discharged liabilities, which arose on the termination of the former Directors’ contracts.
The weighted average fair value of each option granted during the year was £nil (2018: £0.019).
The exercise price of options outstanding on 31 December 2019 is £0.1 (2018: ranged between £0.1 and
£0.30). Their weighted average remaining contractual life was 1.45 years (2018: 2.45 years).
No options were exercised during the reporting year (2018: nil).
Share-based remuneration expense, related to the share options granted during the comparative period
and part of the charge relating to the options granted in 2017, is included in the administration expenses
line in the consolidated income statement in the amount of US$20,766 (2018: US$339,367).
Warrants
On 31 December 2019, the following warrants were in issue:
48
Curzon Energy Plc
Annual Report 2019
Warrant exercise price
Number of
warrants granted
Expiry date
Fair value of
individual option
£0.10
£0.125
£0.0158
£0.02
130,200
4 Oct 2020
1,500,000
3,006,331
4 Oct 2020
5 Mar 2021
1,000,000
31 Dec 2020
£0.061
£0.056
£0.0056
£0.0001
Total warrants in issue at 31
December 2019
5,636,531
2019
Number of
warrants
2018
Number of
warrants
Outstanding at the beginning of the period
3,630,200
3,630,200
Granted during the period
Lapsed during the period
Exercised during the period
4,006,331
(2,000,000)
-
-
-
-
Outstanding at the end of the period
5,636,531
3,630,200
Vested and exercisable at the end of the period
5,636,531
3,630,200
The exercise price of warrants, outstanding on 31 December 2019, ranged between £0.0158 and £0.1
(2018: ranged between £0.1 and £0.125). Their weighted average remaining contractual life was 0.93
years (2018: 0.65 years).
The weighted average share price (at the date of exercise) of warrants exercised during the year was nil
(2018: nil) as no warrants were exercised.
The aggregate fair value related to the share warrants granted to shareholders acting in the capacity of
shareholders during the reporting period has been allocated to share premium as directly attributable
share issue cost in the amount of US$22,239 (2018: US$ nil).
19.
Reserves
Share premium
The share premium account represents the excess of consideration received for shares issued above
their nominal value net of transaction costs.
Foreign currency translation reserve
The translation reserve represents the exchange gains and losses that have arisen from the retranslation
of operations with a functional currency, which differs to the presentation currency.
Retained earnings
Retained earnings represent the cumulative profit and loss net of distributions to owners.
Warrants reserve
The warrants reserve represents the cumulative fair value of the warrants, granted to the investors
together with placement shares, still outstanding and not exercised.
49
Curzon Energy Plc
Annual Report 2019
Share-based payment reserve
The share-based payment reserve represents the cumulative charge for options granted, still outstanding
and not exercised.
Merger reserve
The merger reserve represents the cumulative share capital and membership capital contributions of all
the companies included into the legal acquire sub-group less cost of investments into these legal
acquirees.
20.
Financial Instruments – Risk Management
General Objectives, Policies and Processes
The overall objective of the Directors is to set policies that seek to reduce risk as far as possible without
unduly affecting the Group’s competitiveness and flexibility. Further details regarding these policies are
set out below.
The Directors review the Group’s monthly reports through which they assess the effectiveness of the
processes put in place and the appropriateness of the objectives and policies it sets.
Categories of Financial Assets and Liabilities
The Group’s activities are exposed to a variety of market risk (including currency risk) and liquidity risk.
The Group’s overall financial risk management policy focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on its financial performance.
The principal financial instruments used by the Group, from which financial instrument risk arises, are as
follows:
•
•
•
•
Other receivables;
cash and cash equivalents;
trade and other payables; and
borrowings.
Other receivables are initially measured at fair value and subsequently carried at amortised cost.
The carrying value of financial assets and financial liabilities, maturing within the next 12 months,
approximates their fair value due to the relatively short-term maturity of the financial instruments.
The Group had no financial assets or liabilities carried at fair values at the end of each reporting date.
50
Curzon Energy Plc
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
Accruals
Short-term borrowings
Credit Risk
Annual Report 2019
2019
US$
2018
US$
28,708
125,621
1,245
-
125,000
125,000
508,259
370,646
327,567
127,216
698,798
213,812
The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from notes and
other receivables. The Directors manage the Group’s exposure to credit risk by the application of
monitoring procedures on an ongoing basis. For other financial assets (including cash and bank
balances), the Directors minimise credit risk by dealing exclusively with high credit rating counterparties.
Credit Risk Concentration Profile
The Group’s receivables do not have significant credit risk exposure to any single counterparty or any
group of counterparties having similar characteristics. The Directors define major credit risk as exposure
to a concentration exceeding 10% of a total class of such asset.
The Company maintains its cash reserves in Barclays Bank UK PLC, which maintains the following credit
ratings:
Credit Agency
Standard and Poor’s
Moody’s
Fitch
R&I
Long Term
A/Stable
A1/Stable A+
A-/Stable
Short Term
A-1
P-1
F1
Unsupported Group Credit /Baseline
bbb+
baa3
a
Credit Assessment/Viability Rating
N/A
N/A
51
Curzon Energy Plc
Exposure to Credit Risk
Annual Report 2019
The Group is exposed to the credit risk of the US Specialty Insurance Company, currently holding a
$125,000 bond on behalf of the Company’s Coos Bay Energy LLC subsidiary.
Market Risk - Interest Rate Risk
Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Directors’ policy is
to maintain a majority of the Group’s borrowings in fixed rate instruments. The Directors have analysed
the Group’s interest rate exposure on a dynamic basis. This takes into consideration refinancing, renewal
of existing positions and alternative financing. Based on these considerations, the Directors believe the
Group’s exposure to cash flow and fair value interest rate risk is not significant.
Market Risk - Currency Risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign
exchange rates. Currency risk arises when future commercial transactions and recognised assets and
liabilities are denominated in a currency that is not the Group’s measurement currency. The Group is
exposed to foreign exchange risk arising from currency exposures primarily with respect to the UK Pound
Sterling (£). The Directors monitor the exchange rate fluctuations on a continuous basis and act
accordingly. The following sensitivity analysis shows the effects on loss before tax of 10%
increase/decrease in the exchange rates of the US$ versus closing exchange rates of UK Pound Sterling
as at 31 December 2019:
Loss before tax
+10%
US$
-10%
US$
Increase in loss by
US$86,476
Decrease in loss by
US$86,476
Assets and liabilities by currency of
denomination, al numbers are presented in US$
US$
£
2019
2019
2019
Total
US$
2018
2018
2018
US$
£
Total
US$
Financial assets
Cash and cash equivalents
118
28,590
28,708
810 124,811
125,621
Other receivables
Restricted cash
Financial liabilities
Trade payables
Accruals
-
1,245
1,245
-
125,000
-
125,000 125,000
-
-
-
125,000
210,577 297,682
508,259 210,577 160,069
370,646
29,721 297,846
327,567
14,485 112,731
127,216
Short-term borrowings
364,727 334,071
698,798 213,812
-
213,812
Liquidity Risk
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 and all amounts outstanding fall due in
one year or less.
52
Curzon Energy Plc
Capital Management
Annual Report 2019
The Group defines capital as the total equity of the Group. The Directors’ objectives when managing
capital are to safeguard its ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
To meet these objectives, the Directors review the budgets and projections on a regular basis to ensure
there is sufficient capital to meet the needs of the Group through to profitability and positive cash flow.
The capital structure of the Group consists of shareholders’ equity as set out in the consolidated statement
of changes in equity. All working capital requirements are financed from existing cash resources and
borrowings.
Whilst the Group does not currently have distributable profits, it is part of the capital strategy to provide
returns for shareholders and benefits for members in the future.
Capital for further development of the Group’s activities will, where possible, be achieved by share issues
or other finance as appropriate.
In order to maintain or adjust the capital structure, the Directors may return capital to shareholders, issue
new shares or sell assets to reduce debt. It also ensures that distributions to shareholders do not exceed
working capital requirements.
Fair Value Hierarchy
All the financial assets and financial liabilities recognised in the Group financial statements are shown at
the carrying value, which also approximates the fair values of those financial instruments. Therefore, no
separate disclosure for fair value hierarchy is required.
21.
Operating Leases
All the Group’s leases are short-term leases, which are month-to-month obligations (i.e., US
administrative storage operating lease). There are no future minimum lease payments under non-
cancellable operating leases to disclose.
All operating land lease agreements for the mineral exploration areas are outside of the scope of IFRS16.
Coos County annual lease payment is US$28,971 and is payable bi-annual instalments with payment due
in April and October.
53
Curzon Energy Plc
22.
Related Party Transactions
Annual Report 2019
Balances and transactions between the Company and its subsidiaries, Coos Bay Energy LLC, Westport
Energy Acquisition, Inc., and Westport Energy LLC are eliminated on consolidation and are not disclosed
in this note. Balances and transactions between the Group and other related parties are disclosed below.
Promissory notes
During the year ended 31 December 2019, US$100,000 of promissory notes were issued to YA Global
Investments LP, a company that is also the majority shareholder of the business, see note 16 for further
information.
On 13 February 2020, the Company announced that it had been informed by YA Global Investments LP
of the sale of its outstanding debt due to YA Global to C4 Energy Ltd, a UK incorporated private Company.
The balance of the loan agreement at that time was US$200,000, with approximately US$32,000 of
accrued interest.
Remuneration of Directors
The remuneration of the senior Executive Management Committee members, who are the key
management personnel of the Group, is set out in aggregate for each of the categories specified in IAS
24 “Related Party Disclosures” in note 5.
23.
Events After the Reporting Period
Sale of Corporate Debt and Corporate Update
On 13 February 2020, the Company announced that it had been informed by YA Global Investments LP
of the sale of its outstanding debt due to YA Global to C4 Energy Ltd, a UK incorporated private Company.
The balance of the loan agreement at that time was US$200,000, with approximately US$32,000 of
accrued interest. The Company further announced that it had terminated discussions with Pared Energy
around a potential oil and gas transaction in Texas and that the Company would be exploring opportunities
outside of the oil and gas sector.
Letter of Intent Executed on Potential RTO
On 18 March 2020, the Company announced that it had executed a letter of intent with the Sun Seven
Stars Investment Group ("SSSIG") to potentially acquire a 100% interest in London Critical Metals Market
("LCMM"), the first unified global metals trading exchange for critical metals that have few or no direct
investment or trading options elsewhere in the World. The Company indicated that it would now enter an
initial period of exclusivity with SSSIG during which each party would conduct due diligence on the
other. The parties have agreed that during this period they will work towards the execution and delivery
of a definitive purchase agreement, contemplating a reverse takeover of Curzon by LCMM ("RTO"),
including receipt of the required regulatory approvals from the FCA and its primary market functions. The
due diligence period was expected to last approximately 1 month. For providing SSSIG with an initial
period of exclusivity lasting through to 30 June 2020, SSSIG will lend the Company an initial amount
of £125,000 in the form of a one-year loan note carrying an annual interest rate of 10% per annum,
convertible at the price of any subsequent share issue in the contemplated RTO transaction. After 30
April 2020, further loan funds may be made available by SSSIG to the Company if the envisaged
transaction continues to progress, or in order to extend the initial period of exclusivity beyond 30 June
2020.
Notice of General Meeting
On 17 April 2020, the Company announced that it would be holding a general meeting on Wednesday 6
May 2020.
54
Curzon Energy Plc
Loan Facilities Refinanced
Annual Report 2019
On 1 May 2020, the Company announced that it had agreed to refinance its outstanding secured loan
notes of £216,553 and its unsecured loan notes of US$200,000.
As previously announced on 13 February 2020, the Company has further agreed with the Secured Note
lenders to capitalize the amounts due to date into a new principal amount of £263,265 as of 1 April
2020. The interest rate is to remain the same at 13% per annum. The maturity date of the Secured Loan
notes has been extended and is now the sooner of the completion of a reverse takeover, or 1 October
2020.
As previously announced on 13 February 2020, the Company has agreed with the Unsecured Note
lenders to refinance by extending the existing balance to 1 October 2020. The interest rate is to remain
is
the same at 15% per annum, and
approximately US$238,918.
total outstanding principal and
interest
the
Results of General Meeting and Share Reorganization
On 6 May 2020, the Company announced that at the General Meeting held earlier, all resolutions were
passed unanimously on a show of hands.
At the General Meeting of the Company held on 6 May 2020, the Company sought shareholder approval
for the subdivision and re-designation of the 83,032,971 Existing Ordinary Shares ("Existing Ordinary
Shares") of £0.01 each in the capital of the Company into (i) 83,032,971 New Ordinary Shares ("New
Ordinary Shares") of £0.0001 each and (ii) 83,032,971 Deferred Shares ("Deferred Shares")
of £0.0099 each in the capital of the Company, and to amend the Company's Articles of Association
accordingly.
The proposed share capital reorganisation was passed at the General Meeting and amendments will be
made to the Company's Articles of Association in respect of the Deferred Shares and the subdivision and
re-designation of the Existing Ordinary Shares.
Each New Ordinary Share will carry the same rights in all respects under the amended Articles of
Association as each Existing Ordinary Share does at present under the existing Articles of Association,
including the rights in respect of voting and the entitlement to receive dividends.
Each Deferred Share will have very limited rights and will effectively be valueless. CREST accounts of
Shareholders will not be credited in respect of any entitlement to Deferred Shares and the Company will
not issue any share certificates in respect of Deferred Shares. The Deferred Shares shall have the rights
and restrictions as set out in the amended Articles of Association and shall not entitle the holder thereof
to receive notice of or attend and vote at any General Meeting of the Company or to receive a dividend
or other distribution.
55
Curzon Energy Plc
Company Statement of Financial Position
as at 31 December 2019
Assets
Non-current assets
Property, plant and equipment
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 2019
Note
2019
£
2018
£
28
29
30
31
32
33
34
34
521
-
-
-
2,800,275
1,602,227
521
4,402,502
23,790
21,888
45,678
28,490
98,991
127,481
46,199
4,529,983
454,048
222,087
532,783
168,486
986,831
390,573
830,330
770,203
2,693,194
2,675,156
2,800,000
2,800,000
160,777
355,269
143,942
338,995
(2,588,886)
(996,104)
(5,191,316)
(1,592,782)
(940,632)
4,139,410
46,199
4,529,983
The financial statements were approved by the Board of Directors and authorised for issue on 18 May
2020 and are signed on its behalf by:
John McGoldrick
Director
The notes to the Company statement of financial position form part of these financial statements.
56
Curzon Energy Plc
Company Statement of Changes in Equity
Annual Report 2019
Share
capital
£
Share
Premium
£
Merger
relief
reserve
£
Share-
based
payments
reserve
£
Share
warrants
reserve
£
Accumulated
loss
£
Total
£
Equity at 1 January 2018
725,947
2,404,144
2,800,000
86,405
143,942
(996,104)
5,164,334
770,203
2,675,156
2,800,000
338,995
143,942
(2,588,886)
4,139,410
Loss for the year
Other comprehensive loss
for the year
Total comprehensive loss
for the year
-
-
-
-
-
-
Issue of shares
44,256
309,793
Share issue and fundraising
costs
Issue of share options
Total transactions with
shareholders
Equity at 31 December
2018
-
-
(38,781)
-
44,256
271,012
Loss for the year
Other comprehensive loss
for the year
Total comprehensive loss
for the year
-
-
-
-
-
-
Issue of shares
60,127
34,873
Issue of warrants
Issue of share options
Total transactions with
shareholders
Equity at 31 December
2019
-
-
(16,835)
-
60,127
18,038
-
-
-
-
-
-
-
-
-
-
-
-
252,590
252,590
-
-
-
-
-
-
-
(1,592,782)
(1,592,782)
-
-
(1,592,782)
(1,592,782)
-
-
-
-
354,049
(38,781)
252,590
567,858
-
-
-
-
-
-
-
-
-
-
-
-
16,274
-
-
-
-
16,835
-
16,274
16,835
(5,191,316)
(5,191,316)
-
-
(5,191,316)
(5,191,316)
-
-
-
-
95,000
-
16,274
111,274
830,330
2,693,194
2,800,000
355,269
160,777
(7,780,202)
(940,632)
57
Curzon Energy Plc
Company Statement of Cash Flows
for the Year Ended 31 December 2019
Annual Report 2019
Notes
2019
£
2018
£
Cash flow from operating activities
Loss before taxation
Adjustments for:
Finance expense
Finance income
Share-based payments charge
Impairment of loans and receivables
Impairment of investments in subsidiaries
Unrealised foreign exchange movements
Operating cashflows before working capital changes
Changes in working capital:
Increase/(decrease) in payables
Decrease in receivables
Net cash used in operating activities
Financing activities
Issue of ordinary shares
Cost of share issue
Proceeds from new borrowings
Advances granted to subsidiaries
Net cash flow from financing activities
Net (decrease)/increase in cash and cash equivalents in the
period
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
(5,191,316)
(1,592,782)
87,849
31,499
(39,368)
(39,368)
16,274
252,590
1,713,317
3,174
2,800,275
933,424
(3,069)
4,856
(616,038)
(406,607)
233,718
(13,993)
20,649
68,262
(361,671)
(352,338)
78,750
-
-
(38,782)
277,540
77,208
(71,722)
(342,201)
284,568
(303,775)
(77,103)
(656,113)
98,991
755,104
21,888
98,991
58
Curzon Energy Plc
Notes to the Company Financial Statements
24.
Significant Accounting Policies
Annual Report 2019
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
£5,191,316 (2018: £1,592,782). The Company’s total comprehensive loss for the financial year was
£5,191,316 (2018: £1,592,782).
Investments in Subsidiaries
Investments in subsidiaries are carried at cost and are regularly reviewed for impairment if there are any
indications that the carrying value may not be recoverable.
Receivables from Subsidiaries
Impairment provisions for receivables from related parties and loans to related parties are recognised
based on a forward-looking expected credit loss model. The methodology used to determine the amount
of the provision is based on whether there has been a significant increase in credit risk since initial
recognition of the financial asset. For those where the credit risk has not increased significantly since
initial recognition of the financial asset, twelve month expected credit losses along with gross interest
income are recognised. For those for which credit risk has increased significantly but not determined to
be credit impaired, lifetime expected credit losses along with the gross interest income are recognised.
For those that are determined to be credit impaired, lifetime expected credit losses along with interest
income on a net basis are recognised.
Critical Accounting Judgments and Key Sources of Estimation Uncertainty
The Company’s financial statements, and in particular its investments in and receivables from
subsidiaries, are affected by the critical accounting judgments and key sources of estimation uncertainty
in respect of the recoverability of exploration and evaluation assets which are described in note 2 to the
consolidated financial statements.
25.
Auditor’s Remuneration
The auditor’s remuneration for audit and other services is disclosed in note 4 to the consolidated financial
statements.
59
Curzon Energy Plc
26.
Directors and Staff
Annual Report 2019
Scott Kaintz, Executive Director of the Company, has been the only employee of the Company in the
reporting year after he was employed on 5 November 2018 and to date.
Key management remuneration is disclosed in note 5 to the consolidated financial statements.
27.
Administrative Expenses
Staff costs
Share based payments
Standard Listing Regulatory Costs
Professional and consultancy fees
Other general administrative expenses
Total
28.
Investments
Investment in subsidiaries
Costs at beginning of the year
Additions
Impairment
Total investments in subsidiaries
2019
£
2018
£
166,113
137,650
16,274
252,590
203,985
-
103,121
153,857
142,819
118,275
632,312
662,372
2019
£
2018
£
2,800,275
3,733,699
-
-
(2,800,275)
(933,424)
-
2,800,275
During the year ended 31 December 2019, the Board took a view that in light of a paucity of capital
available for midterm oil and gas development, particularly for coal bed methane projects in the United
States, the investment in Coos Bay should be written off in full.
The impairment figure of £933,424, recognised in the year ended 31 December 2018, was calculated
based on DCF and qualitative analysis of the Company’s investment in Coos Bay Energy LLC.
60
Curzon Energy Plc
29.
Receivables from Subsidiaries and Related Party Transactions
Loans to subsidiaries
Total loans to subsidiaries
Annual Report 2019
2019
£
-
-
2018
£
1,602,227
1,602,227
The Group (comprising Coos Bay Energy LLC and its directly and indirectly wholly owned subsidiaries
Westport Energy Acquisition, Inc. and Westport Energy LLC) is a related party through common control.
During the year ended 31 December 2019, the Company recognised expected credit losses in relation to
the intercompany loans in the amount of £1,713,317. This relates to the write-off of the Company’s Coos
Bay coal bed methane project in full due primarily to the lack of capital available to advance the project in
declining US oil and gas markets.
During the year ended 31 December 2019, the maximum amount owed by the Group to the Company
was £1,713,317 (2018: £1,602,227). The related party loans are unsecured and are repayable on 31
December 2020. Interest is receivable at a rate of 9%. At 31 December 2019, £39,368 (2018: £39,368)
was accrued and included in the above balance. Please also see note 35.
The remuneration of the senior Executive Management Committee members, who are the key
management personnel of the Group, is set out in aggregate for each of the categories specified in IAS
24 “Related Party Disclosures” in note 5.
30.
Prepayments and Other Receivables
VAT recoverable
Prepayments
Other debtors
Total prepayments and other receivables
2019
2018
£
3,433
19,408
949
£
18,292
10,198
-
23,790
28,490
The fair value of receivables and deposits approximates their carrying amount, as the impact of
discounting is not significant. The receivables are not impaired and are not past due.
31.
Cash and Cash Equivalents
For the purpose of the statements of cash flows, cash and cash equivalents comprise the following:
Cash in hand and at bank
2019
£
2018
£
21,888
98,991
61
Curzon Energy Plc
32.
Current Liabilities
Trade and Other Payables
Trade and other payables
Accruals
Total trade and other payables
33.
Short-Term Borrowings
Annual Report 2019
2019
£
2018
£
226,962
133,254
227,086
88,833
454,048
222,087
At 31 December 2019, the Company had an outstanding promissory notes and loans of £532,783 (2018:
£168,486), please refer to note 16.
Cash flows
Proceeds from
new
borrowings, £
Non-cash flow
Forex movement,
£
31 Dec 2018, £
Non-cash flow
Interest accrued, £
31 Dec
2019, £
HNW Investor Group
-
200,000
C4 Energy Ltd
Bruce Edwards
79,143
89,343
77,540
-
Total liabilities from
financing activities
168,486
277,540
-
-
-
-
54,705
254,705
20,488
177,171
11,564
100,907
86,757
532,783
Cash flows
Proceeds
from new
borrowings,
£
31 Dec 2017,
£
Non-cash flow
Conversion, £
Non-cash flow
Forex
movement, £
Non-cash flow
Interest
accrued, £
31 Dec
2018, £
Cuart Investments
PCC, Ltd.
YA Global
351,098
-
(369,098)
-
77,208
-
-
Bruce Edwards
77,779
-
Total liabilities
from financing
activities
428,877
77,208
(369,098)
-
-
-
-
18,000
-
1,935
79,143
11,565
89,343
31,499
168,486
34.
Share Capital
The movements in the share capital account are disclosed in note 17 to the financial statements.
62
Curzon Energy Plc
35.
Financial Instruments – Risk Management
Annual Report 2019
The Company’s strategy and financial risk management objectives are described in note 20.
Principal Financial Instruments
The principal financial instruments used by the Company from which risk arises are as follows:
Financial assets
Cash and cash equivalents
Other receivables
Loans due from subsidiaries
Financial liabilities
Trade payables
Accruals
Short-term borrowings
Credit Risk
2019
£
2018
£
21,888
98,991
949
-
-
1,602,227
226,961
126,136
227,086
88,833
532,783
168,486
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the Company.
In addition to the risks described in note 20, which affect the Group, the Company is also subject to credit
risk on the balances receivable from subsidiaries, see note 29. In the year ended 31 December 2019,
credit losses were recognised in full in relation to all the balances receivable from subsidiaries.
Market Risk - Currency Risk
The Group is exposed to foreign exchange risk arising from currency exposures primarily with respect to
the US Dollar (US$). The Directors monitor the exchange rate fluctuations on a continuous basis and act
accordingly.
Assets and liabilities by currency of
denomination, al numbers are presented in £
2019
US$
2019
£
2019
Total
£
2018
US$
2018
£
2018
Total
£
Financial assets
Cash and cash equivalents
Other receivables
Financial liabilities
Trade payables
Accruals
90
21,798
21,888
639
98,352
98,991
-
949
949
-
-
-
- 226,961
226,961
- 126,136
126,136
- 227,086
227,086
-
88,833
88,833
Short-term borrowings
278,078 254,705
532,783 168,486
-
168,486
63
Curzon Energy Plc
36.
Events After the Reporting Period
Sale of Corporate Debt and Corporate Update
Annual Report 2019
On 13 February 2020, the Company announced that it had been informed by YA Global Investments LP
of the sale of its outstanding debt due to YA Global to C4 Energy Ltd, a UK incorporated private Company.
The balance of the loan agreement at that time was US$200,000, with approximately US$32,000 of
accrued interest. The Company further announced that it had terminated discussions with Pared Energy
around a potential oil and gas transaction in Texas and that the Company would be exploring opportunities
outside of the oil and gas sector.
Letter of Intent Executed on Potential RTO
On 18 March 2020, the Company announced that it had executed a letter of intent with the Sun Seven
Stars Investment Group ("SSSIG") to potentially acquire a 100% interest in London Critical Metals Market
("LCMM"), the first unified global metals trading exchange for critical metals that have few or no direct
investment or trading options elsewhere in the World. The Company indicated that it would now enter an
initial period of exclusivity with SSSIG during which each party would conduct due diligence on the
other. The parties have agreed that during this period they will work towards the execution and delivery
of a definitive purchase agreement, contemplating a reverse takeover of Curzon by LCMM ("RTO"),
including receipt of the required regulatory approvals from the FCA and its primary market functions. The
due diligence period was expected to last approximately 1 month. For providing SSSIG with an initial
period of exclusivity lasting through to 30 June 2020, SSSIG will lend the Company an initial amount
of £125,000 in the form of a one-year loan note carrying an annual interest rate of 10% per annum,
convertible at the price of any subsequent share issue in the contemplated RTO transaction. After 30
April 2020, further loan funds may be made available by SSSIG to the Company if the envisaged
transaction continues to progress, or in order to extend the initial period of exclusivity beyond 30 June
2020.
Notice of General Meeting
On 17 April 2020, the Company announced that it would be holding a general meeting on Wednesday 6
May 2020.
Loan Facilities Refinanced
On 1 May 2020, the Company announced that it had agreed to refinance its outstanding secured loan
notes of £216,553 and its unsecured loan notes of US$200,000.
As previously announced on 13 February 2020, the Company has further agreed with the Secured Note
lenders to capitalise the amounts due to date into a new principal amount of £263,265 as of 1 April
2020. The interest rate is to remain the same at 13% per annum. The maturity date of the Secured Loan
notes has been extended and is now the sooner of the date of completion of a reverse takeover, the date
of completion of a refinancing, or 1 October 2020.
As previously announced on 13 February 2020, the Company has agreed with the Unsecured Note
lenders to refinance by extending the existing balance to 1 October 2020. The interest rate is to remain
the same at 15% per annum, and
is
approximately US$238,918.
total outstanding principal and
interest
the
Results of General Meeting and Share Reorganization
On 6 May 2020, the Company announced that at the General Meeting held earlier, all resolutions were
passed unanimously on a show of hands.
At the General Meeting of the Company held on 6 May 2020, the Company sought shareholder approval
for the subdivision and re-designation of the 83,032,971 Existing Ordinary Shares ("Existing Ordinary
Shares") of £0.01 each in the capital of the Company into (i) 83,032,971 New Ordinary Shares ("New
Ordinary Shares") of £0.0001 each and (ii) 83,032,971 Deferred Shares ("Deferred Shares")
of £0.0099 each in the capital of the Company, and to amend the Company's Articles of Association
accordingly.
64
Curzon Energy Plc
Annual Report 2019
The proposed share capital reorganisation was passed at the General Meeting and amendments will be
made to the Company's Articles of Association in respect of the Deferred Shares and the subdivision and
re-designation of the Existing Ordinary Shares.
Each New Ordinary Share will carry the same rights in all respects under the amended Articles of
Association as each Existing Ordinary Share does at present under the existing Articles of Association,
including the rights in respect of voting and the entitlement to receive dividends.
Each Deferred Share will have very limited rights and will effectively be valueless. CREST accounts of
Shareholders will not be credited in respect of any entitlement to Deferred Shares and the Company will
not issue any share certificates in respect of Deferred Shares. The Deferred Shares shall have the rights
and restrictions as set out in the amended Articles of Association and shall not entitle the holder thereof
to receive notice of or attend and vote at any General Meeting of the Company or to receive a dividend
or other distribution.
37.
Controlling Party
At 31 December 2019, the Company did not have an ultimate controlling party.
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