Registration number: 5483127
Echo Energy PLC
Annual Report and Consolidated Financial Statements
for the Year Ended 31 December 2023
Echo Energy PLC
Contents
Company Information
Strategic Report
Corporate Governance
Directors' Report
Statement of Directors' Responsibilities
Independent Auditor's Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Statement of Financial Position
Consolidated Statement of Changes in Equity
Statement of Changes in Equity
Consolidated Statement of Cash Flows
Statement of Cash Flows
Notes to the Financial Statements
3
4 to 14
15 to 26
27 to 28
29
30 to 31
32
33 to 34
35 to 36
37 to 38
39 to 40
41
42
43 to 74
2
Echo Energy PLC
Company Information
Directors
Stephen James Birrell
Martin George Michael Hull
Christian James Kurt Yates
Company secretary
Amba Secretaries Limited
Registered office
85 Great Portland Street
London
W1W 7LT
Auditors
MAH, Chartered Accountants
2nd Floor
154 Bishopsgate
London
EC2M 4LN
3
Echo Energy PLC
Strategic Report for the Year Ended 31 December 2023
Echo is a growth focussed natural resources company seeking balanced risk reward opportunities across the
resource value chain. Whilst traditionally centred on Latin America the divestment of the majority of its Argentina
production portfolio provides new opportunities to extend its reach across new geographies. The company’s future
strategy is to seek to build a sustainable asset base of production and booked reserves through transaction led
growth taking advantage of the successfully restructured balance sheet and extensive experience in executing
transactions, with a disciplined approach to delivering shareholder value.
Echo maintains its philosophy of equitable treatment and open communication with all our stakeholders and the
communities in which we operate.
4
Echo Energy PLC
Strategic Report for the Year Ended 31 December 2023
Chair’s and Chief Executive Officer’s Statement
Echo, similar to many companies in the natural resources sector, has faced exceptional challenges
during recent years, impacting many aspects of the Company’s operations and finances. The Company
announced in May 2023the partial disposal of its SCS operations, retaining just a 5% working interest.
This partial sale enabled to the Company to:
• Address its near-term funding challenges by providing near term cash, enabling the Company
to transfer to the buyers the significant in-country creditors while providing access to funding
for the Santa Cruz assets; and
• Benefit from continued exposure (both directly through the retained 5% working interest, the
contingent payments and the indirect holding in the Operator) to a well-funded SCS, with the
concessions likely to be extended as a result of the provision of guarantee.
Having restructured the Euro bond in 2022, the company restructured the Spartan loan in December,
the Spartan Loan is discussed under “Other Loans” within the accounts, and entered into a convertible
loan also in December. The convertible loan provided critical working capital to progress new projects.
These actions combined with the organisational restructuring and cost cutting exercise meant that by
November, with a new executive in place, the company was able to focus on project acquisition and
to resume its trajectory of growth. The strategy for this was to focus on projects in the natural
resources space that Echo could both afford, have the capability to manage and that would provide
early cash flow and material reserve growth.
In November 2023 James Parsons stepped down as Chair and subsequently left the Board at the AGM
on 26 June 2024. Also in November 2023, Martin Hull stepped down as CEO and became a non-
executive director. James Parsons was replaced by Christian Yates, who stepped up from non-
executive director to Chair while Martin Hull was replaced by Stephen Birrell, who had previously been
a consultant to the group. We would like to thank James and Martin for their contributions. The new
Board is focused on creating value for shareholders by delivering on the Company’s revised strategy
and focus as outlined above.
Christian Yates
Chair
Stephen Birrell
Chief Executive Officer
5
Echo Energy PLC
Strategic Report for the Year Ended 31 December 2023
Business Model
Key Resources
- Active business development focus to regrow the business leveraging deal making capability
- Asset based reduced in size
-
-
- Enhanced competence in the qualification and acquisition of new assets
Supportive institutional lenders
Prudent cost management with strong focus on safe and efficient operations
Ø Explore & Produce
Committed to targeting new assets that are affordable with no further debt requirements and that have
the capacity to deliver substantial portfolio value through the early production/revenues and that will
provide the opportunity to significantly increase our reserves and resources base.
Ø Grow
Renewed focus on business development to grow the asset base from its current position. We are
seeking new corporate and high-impact asset acquisition opportunities across the natural resource
spectrum.
Ø Monetise
The new team has the experience and competence to focus on acquiring projects that will deliver early
cashflow for low capex and build a material reserves and resource base to build shareholder value.
6
Echo Energy PLC
Strategic Report for the Year Ended 31 December 2023
Strategy and KPIs
The Key Performance Indicators (“KPIs”) are how we measure the performance of our board of directors,
executive team against the strategic objectives of the business.
Echo has strategic objectives focused on the following five areas: Growth, Asset Performance, Safety &
Environment, Funding and Corporate. How the Board has delivered against these new metrics in 2023 is
evidenced in the Performance column below.
2023 KPI
MEASURE
PERFORMANCE
1. GROWTH
Diversify asset base with further
asset or corporate acquisitions to
build on the existing Argentinian
position
Develop opportunity
pipeline and inventory
Mature longer-term opportunities in
to leverage Echo’s commercial and
technical capabilities across the
wider energy spectrum
Identify and collaborate with
suitable Partners at low cost
2. ASSET PERFORMANCE
Oil and gas production
Daily production
3. SAFETY AND ENVIRONMENT
Sustained high quality safety,
reporting and performance
4. FUNDING
Fund the development of new
business ventures and continued
operational program
Identify opportunities to monetise
assets
Successful fund raises
In light of the ongoing and increasing challenges
associated with the SCS portfolio the Board made
the decision to divest the majority of the
Argentine portfolio in return for cash funding plus
continued upside exposure through future
contingent payments
Rebuilding the growth strategy and expanding the
asset base is a priority focus post the completion
of the divestment in Argentina. The Company is
maturing multiple opportunities and hopes to be
a position to announce details shortly
Whilst consist progress was being made
throughout the year with increasing
production figures, the mounting financial
challenges driven by external factors
(Argentine inflation over 100% and currency
controls) meant that ultimately the board
decided to divest the majority of the
Argentine portfolio
Systems for HSE reporting and review of Operator
HSE systems have been implemented. All non-
routine operations are subject to a rigorous HSE
review with the Operator prior to start up
Completion of the divestment of Argentine assets
enabling the funding of the Company’s financial
commitments
Improve corporate level debt status,
allowing increased flexibility and
options.
Restructuring of other debt
Successfully completed the restructuring of the
corporate debt position in December, and took a
convertible loan to cover critical working capital
needs
7
Echo Energy PLC
Strategic Report for the Year Ended 31 December 2023
5. CORPORATE
Safety and environment
Cost control
Maintain transparent
relationship with
investors
Staff diversity
2024 KPIs
Maintain a clean safety record with no
significant incidents in periods of
production and operation under Company
operated control
Progress made with large reductions to
G&A both in the field and at corporate
level.
our investor engagement dipped in 2023
and the intention is to re-energise this
during 2024
Major cost cutting initiatives resulted in
significant cuts to staff numbers.
Regular investor engagement
The 2024 performance of the business and its staff will be measured across both financial and operational
functions and is captured in a corporate scorecard. The scorecard is made up of various KPIs and is tracked
throughout the year. The Board’s and executives’ performance are judged on the delivery of the desired outcomes
and a summary of these targets is listed below:
-
Prioritise business development opportunities to deliver growth and rebuild the asset base
- Meet future funding needs for the company with the flexible management of the balance sheet
- Maximise value from the legacy Argentine assets including the future contingent payments and back-in
rights in conjunction with operator
- Maintain cost control with expenditures appropriate to size and scale of company.
General corporate and operational objectives include HSE, sustainability, cost control, investor support, and staff
diversity.
8
Echo Energy PLC
Strategic Report for the Year Ended 31 December 2023
Sustainability Review
As a corporate citizen operating across Latin America and in the UK, Echo believes in conducting a business
that brings positive impact in the medium to long term, drives progress and respects the resources on which our
future depends.
Our Corporate and Social Responsibility (“CSR”) Objectives
Echo seeks to manage and maintain positive and respectful relationships with our stakeholders. To meet these
objectives, Echo aims to:
-
Protect the health, safety and wellbeing of our staff, contractors and the local communities our operations
impact upon;
- Manage and maintain positive and respectful relationships with the communities with which we conduct
business and in which we operate;
- Maintain a high standard of care for the natural environment and adopt appropriate environment
management systems on our contract areas; and
- Reduce our environmental footprint by efficient use of resources, management of water and energy
consumption and management of waste and emissions.
Anti-Bribery and Corruption (“ABC”)
Echo has zero tolerance for bribery, corruption or unethical conduct in our business. Our policies require
compliance with all applicable ABC laws, in particular, the UK Bribery Act, and the Argentine Foreign Corrupt
Practices Act. The majority of our operations are based in Argentina. The Transparency International’s Corruption
Perception Index (“CPI”) assesses corruption in the public sector when ranking different countries. In 2023, the
CPI ranked Argentina 98 out of 180 participating countries worldwide with a score of 37/100, as slide backwards
albeit small.. By comparison, the UK is ranked at 11 out of 180 with a score of 78/100.
Echo operates in a competitive market and faces competition in securing and maintaining licence interests,
forming partnerships, attracting, and retaining the most efficient service providers and building cooperative
relationships with all stakeholders. We are very aware of the pressures and challenges that we face. However, we
are committed to upholding the highest levels of corporate and operational behaviour and our objective is to
develop our business responsibly and with integrity at all levels. We have a system of documented ABC policies
and procedures that provide a consistent policy framework which all staff are issued with and trained in. Our
policy and training encompass anti-bribery and corruption, gifts and entertainment, third-party representatives and
whistle blowing.
Social Responsibility
Echo is committed as an organisation beyond our core business objectives, to be a responsible and ethical
participant in the global community. Placing great consideration and aim to protect the health, safety and
wellbeing of our staff, contractors, and the local communities.
Environmental Responsibility
Echo is very conscious of the natural environment in which it operates, and the Company works hard to minimise
its impact on that environment. Echo is committed to the responsible stewardship of the environment and, on the
conclusion of the Company’s operations, and to return our sites to the condition in which Echo found them. Echo
seeks to operate from compact drill sites in order to minimise disruption to the natural habitat. Echo is also
9
Echo Energy PLC
Strategic Report for the Year Ended 31 December 2023
committed to working closely with our partners and the various agencies in the jurisdictions in which it operates
to make sure that all environmental and other regulations are fully satisfied as the Company undertakes its
activities. The health and safety of our employees, contractors and partners on our sites is also paramount and
more information is available in the Health, Safety and Environment (“HSE”) review.
Diversity and Inclusion
Everyone at Echo is proud to embrace a culture of inclusivity across our organisation. Echo is an equal
opportunities employer and has a stated policy as part of its Code of Conduct to deal fairly and equitably with all
our employees in the workplace. The Company is dedicated to encouraging inclusion and diversity at all levels of
the business, acknowledging that a more diverse workforce, with the right mix of skills, experience, culture,
ethnicity, nationality, gender, and knowledge, can make a valuable contribution to the Company. Echo has made
a commitment to extend equal employment opportunities to all, irrespective of race, colour, gender, sexual
orientation, religion or belief, age, nationality, ethnicity, marital or civil partnership status, pregnancy and
maternity, or disability. In addition, the Group not only provides direct support to employees, should they have
any issues or concerns, by way of appropriate HR functions but also offers external training should it be deemed
necessary.
Echo strives to maintain high levels of ethical and business practices at all times and has implemented clearly
defined policies to assist employees with these issues. The primary aim is to protect the health, safety and
wellbeing of our staff, partners, contractors, and the local communities in which the Company operates, moreover,
Echo desires to go that one step further and invest in the future and sustainability of our business, our communities
and our environment.
10
Echo Energy PLC
Strategic Report for the Year Ended 31 December 2023
Managing Risks
Echo is dedicated to managing the risks of the business in a structured manner. Our internal risk management
system has five key steps in dealing with risks.
The five key steps in dealing with risk are:
1.
Identify
2. Assess
3. Mitigation options
4. Manage and execute
5. Review
As a result of the divestment of the discontinued business as defined in the Financial Statements the risk profile
of the Company has changed significantly. Risks identified in previous years relating to detailed operational
outcomes such as subsurface performance and Argentine gas prices no longer represent the major risks to the
business going forward. The priority risks relating to the business as identified by the board are as follows;
Funding Risk – where the Company is unable to meet its financial obligations as a result of insufficient funds.
This is a high priority and significant risk that could lead to the company not being able to continue as a going
concern. Strategies to mitigate this funding risk include the cost reduction programme already implemented and
the ongoing ability to raise new funds (potentially equity and debt) in the future
Business development risk – the Company growth strategy relies upon the successful identification, execution
and completion of acquisitions to grow the asset base. Failure to successfully complete such transactions, due to
lack of attractive opportunities or any other reasons would result in the growth strategy having failed and could
directly impact future funding potential. The Company has prioritised business development and has further
increased its internal capacity in this important area
Regulatory and reporting risk – Critical to delivering on its current strategy is the ability to meet its ongoing
regulatory and reporting requirements. As a result of the financial challenges and necessary cost reduction
programme the internal capacity in these areas has been eroded. Following the successful implementation of the
growth strategy, including funding internal resources in this specific area are intended to be strengthened
11
Echo Energy PLC
Strategic Report for the Year Ended 31 December 2023
Stakeholder Engagement
Echo considers collaborative engagement with all stakeholders as vital for our business. It remains at the core
of what we do. Stakeholders include not only our shareholders, lenders, and our partners, but also our suppliers
& customers, our workforce, governments & regulators, and the communities in which we operate. By
maintaining regular dialogue, we receive feedback on our strategy, performance and governance which can
then be factored into the Board’s decision-making process.
The table below, describes how the directors of the Company have regard for the matters set out in Section
172(1) of the Companies Act 2006 these are:
(a) the likely consequences of any decision in the long-term
(b) the interests of the Company's employees,
(c) the need to foster the Company's business relationships with suppliers, customers, and others,
(d) the impact of the Company's operations on the community and the environment,
(e) the desirability of the Company maintaining a reputation for high standards of business conduct,
and
(f) the need to act fairly as between members of the Company.
This table forms the Board’s statement on such matters as required by the Act. Further information regarding
Echo’s assessment of environmental and community issues associated with our operations, can be found in the
Sustainability Review on page 9 and in the HSE Review on page 22. Review of the key decisions and issues
discussed in Board meetings and by various committees in 2023 is contained in the Corporate Governance
Statement from page 15 to 26.
Shareholders
Lenders
Why is it important to engage?
Echo seeks to develop an investor base of long-
term holders that are aligned with our strategy.
By clearly communicating our strategy and
objectives, we maintain continued support for
what we do.
Important issues include:
• Sustainable financial and operational
performance
• Continued execution of E&P projects
By maintaining supportive relationships with
our lending group, we can ensure access to
long-term debt finance that enables us to invest
in high quality assets that generate sustainable
long-term cash flows.
Important issues include:
• Sustainable financial and operational
performance
• Capital allocation
• Refinancing plan
How do we engage?
There is regular dialogue between both institutional and
retail investors through meetings, calls, conferences,
presentations
Echo has continued to fulfil our obligations and engage
with noteholders and lenders.
Highlights in 2023 include:
• Restructuring of the Company £1m loan
• Entering into a £500k Convertible Loan Note facility
12
Echo Energy PLC
Strategic Report for the Year Ended 31 December 2023
Echo ensures that we maintain an open dialogue with
partners in the SCS licences. We seek to ensure that all
partners are aligned around common objectives for the
asset and maintain safe and efficient operations.
We maintain an ongoing open and transparent dialogue
with our customers and suppliers were relevant
During 2023, internal communications continued so
employees were kept informed of all the workstreams
across the Company and helped to raise key issues with
directors and executives.
Highlights include:
• Production & strategy updates
• All staff involvement on CSR initiatives
Management continues to work closely with the
government and regulators where relevant
Echo has engaged with all employees to choose
community projects to support. All employees are
trained in ABC standards and all counterparties
must adhere to these. Regular engagement with
operator HSE officers occurs through operational
committee meetings maintaining positive focus on
health, safety, and the environment.
Partners
Customers &
Suppliers
Workforce
Governments
& Regulators
Communities
&
Environment
Sharing of risk is a fundamental component of
our industry and by maintaining aligned and
collaborative relationships with our joint
venture partners, we can ensure that maximum
value can be extracted from our operations in a
safe and sustainable manner.
Important issues include:
• Operational performance & HSE
• Project ranking and work programmes
• Budget setting
The SCS supply chain is managed by our
partners who operate on our behalf. We have
further developed strong relationships with key
corporate suppliers.
Important issues include:
• Contract management strategy
• Uninterrupted service for customers
• Enhance value
Our current and future success is underpinned
by our ability to engage, motivate, and adapt
our workforce. Creating the right environment
for employees where their various strengths are
recognised and their contributions are valued,
helps to ensure that we can deliver our shared
objectives.
Important issues include:
• Group strategy
• Diversity of thinking
• Corporate culture
Maintaining respectful and collaborative
relationships with our host governments and
local regulatory authorities is vital to our
‘licence to operate’. We believe that the
strength of these relationships will allow us to
make a sustainable and beneficial contribution
to the regions in which we operate.
Important issues include:
• Licence attribution
• Identifying and securing new opportunities
• Providing views on upcoming legislation and
factors that are important to the industry
• CSR commitments
Minimal environmental impact in the
localities in which we operate ultimately
help Echo reach its corporate objectives as
well as just being the right thing to do.
Building and maintaining the Company’s
reputation fosters Echo’s long-term goals
and the support and commitment of all
employees.
Important issues include:
• Operating in an open and honest and
socially responsible manner
• Social responsibility initiatives
13
Echo Energy PLC
Strategic Report for the Year Ended 31 December 2023
Financial Review
Income Statement
The Group’s loss from continuing operations for the year to 31 December 2023 was US $2.8
million (2022: US $4.4 million) and total Group profit including discontinued operations was
US $6.2 million (2022: loss US $9.6 million).
For the year ended 31 December 2023, Group revenue (including within discontinued
operations) was US $3.6 million (2022: US $14.1 million).
The Group had the following costs:
• Operational costs (including within discontinued operations) of US $7.9 million
(2022: US $18.3 million).
• No exploration expenses were incurred during the year (2022: US $0.3 million)
relating to on-going business development activity in Latin America before the
decision was made to partially divest of SCS.
• Gross administration expenses were US $2.0 million (2022: US $3.0 million)
• Finance costs are largely comprised interest payable and unwinding of discount
costs of US $0.9 million (2022: US $3.0 million), and the amortisation of debt fees.
Balance Sheet
Careful management of cash balances, successful debt renegotiation and equity fund raises
supported business flexibility and stability. The Group ended the period with US $0.08 million
cash at bank compared to the prior year balance of US $1.1 million.
The balance sheet reflect the Board’s commitment in December 2023, to partially divest of
SCS. Accordingly, assets and liabilities of the operations in Argentina have been separated out
within the balance sheet and the accounts.
Post Balance Sheet
Note 29 provides more detail around some of the raising funds through share issues.
This Financial Review was approved by the Board on 27 June 2024 and signed on its behalf
by:
Stephen Birrell
Chief Executive Officer
27 June 2024
14
Echo Energy PLC
Corporate Governance Statement for the Year Ended 31 December 2023
Corporate Governance Statement
Strong corporate governance is a key building block that allows an organisation to be successful
Dear Shareholder
I was appointed as Chair of the Company in November 2023, having been a non-executive director of the
Company since January 2022 and it is my pleasure to present the Corporate Governance Statement for the year
ended 31 December 2023. I firmly believe that strong corporate governance enables an organisation to grow
successfully and to win confidence of the stakeholders. The Board is committed to good governance across the
business, at an executive level and throughout its operations. The importance of solid governance within the
organisation has been highlighted during 2022 and 2023, which have been challenging years for the business and
for the economy as a whole.
The Company has seen a number of changes since the last governance report. In November 2023 James Parsons
stood down as Chair of the Company and has since stepped down from the Board at the Annual General Meeting
on 26 June 2024. Stephen Birrell was appointed as Chief Executive Officer in November 2023 and Martin Hull,
former Chief Executive, assumed the role of non-executive director.
Following the adoption of the Quoted Companies Alliance Corporate Governance Code in 2018 (the “QCA
Code”) the Company embarked on compliance and adherence to the corporate governance practices recommended
by the QCA Code. The QCA Code requires AIM listed companies to adopt a “comply or explain” approach in
respect of the recommended guidelines and the Board maintains that the Company complies with the QCA code
in all aspects of the business.
The QCA has ten principles of corporate governance that the Company has committed to apply within the
foundations of the business. These principles are listed below and the Board and employees across the business
work to ensure that these principles are adhered to as much as the Company is able. Both within the annual report
and accounts and on the corporate website, stakeholders can see how the Company complies with these principles.
The Board not only sets expectations for the business but also works towards ensuring that strong values are set
and carried out by the directors across the business. A strong corporate culture is paramount to the success of a
business. The Board strives to ensure that the objectives of the business, the principles and risks are underpinned
by values of good governance that are fed down throughout the organisation.
The importance of engaging with our shareholders underpins the essence of the business, ensuring that there are
numerous opportunities for investors to engage with both the Board and executive team.
The Quoted Companies Alliance published a revised corporate governance code in November 2023, which will
apply to the Company for the financial year commencing on 1 January 2025. The Company will report its progress
on adopted the revised code in its 2024 Annual Report.
During the period under review, there had been no major changes to the corporate governance structure of the
Company.
Christian Yates
Chair
15
Echo Energy PLC
Corporate Governance Statement for the Year Ended 31 December 2023
The Principles of the QCA Code
The QCA Code has ten principles of corporate governance that the Company has committed to apply within the
foundations of the business. The table below sets out the principles and how the Company applies them:
QCA Code
Principle
1
2.
3.
4
5
Disclosure
Explain the Company’s business model and strategy,
including key challenges in their execution (and how
those will be addressed).
Seek to understand and meet shareholder needs and
expectations. Explain the ways in which the company
seeks to engage with shareholders.
Take
into account wider stakeholder and social
responsibilities and their implications for long-term
success. Explain how the business model identified the
key resources and relationships on which the business
relies. Explain how the Company obtains feedback from
stakeholders.
Describe how the Board has embedded effective risk
management in order to execute and deliver strategy.
This should include a description of what the board does
to identify, assess and manage risk and how it gets
assurance that the risk management and related control
systems in place are effective.
Identify those directors who are considered to be
independent; where there are grounds to question the
independence of a director, through length of service or
otherwise, this must be explained.
Describe the time commitment required from directors
(including non-executive directors).
Include the number of meetings of the Board (and any
committees) during the year, together with the
attendance record of each director.
See pages 6 to 8 of Annual Report
See website disclosures: Principle Two AIM
Rule 26
See website disclosures: Principle Three AIM
Rule 26 and section172 disclosure page 26
and pages 12.
See pages 19 of Annual Report.
Christian Yates
independent.
is considered
to be
The Chief Executive Officer is expected to
devote substantially the whole of his time to
the duties with the Company. The non-
executives have a lesser time commitment. It
is anticipated that each of the non-executives,
including the Chair will dedicate 12 days a
year.
See page 21 of Annual Report
6
Identify each director.
See pages 23 of Annual Report
Describe the relevant experience, skills and personal
qualities and capabilities that each director brings to the
board (a simple list of current and past roles is
insufficient); the statement should demonstrate how the
board as a whole contains (or will contain) the
necessary mix of experience, skills, personal qualities
(including gender balance) and capabilities to deliver
the strategy of the Company for the benefit of the
shareholders over the medium to long-term.
Explain how each director keeps his/her skillset up to
date.
16
See pages 23 of Annual Report
See page 23 of Annual Report
Echo Energy PLC
Corporate Governance Statement for the Year Ended 31 December 2023
6
7
8
9
10
Where the board or any committee has sought external
advice on a significant matter, this must be described
and explained.
Where external advisers to the Board or any of its
committees have been engaged, explain their role.
Describe any internal advisory responsibilities, such as
the roles performed by the Company secretary and the
senior independent director, in advising and supporting
the Board.
Include a high-level explanation of the Board
performance effectiveness process.
Where a board performance evaluation has taken place
in the year, provide a brief overview of it, how it was
conducted and its results and recommendations.
Progress against previous recommendations should also
be addressed.
Include in the Chair’s corporate governance statement
how the culture is consistent with the Company’s
objectives, strategy and business model in the strategic
report and with the description of principal risks and
uncertainties. The statement should explain what the
Board does to monitor and promote a healthy corporate
culture and how the board assesses the state of the
culture at present.
Maintain governance structures and processes that are
fit for purpose and support good decision making by the
board. Roles and responsibilities of the Chair, CEO and
other directors with commitments. Describe the roles of
the committees.
Describe the work of any board committees undertaken
during the year.
Include an audit committee report (or equivalent report
if such committee is not in place).
Include a remuneration committee report (or equivalent
report if such committee is not in place).
If the Company has not published one or more of the
disclosures set out under Principles 1-9, the omitted
disclosures must be identified and the reason for their
omission explained.
No such advice was sought in 2023.
The Company secretary helps keep the
Board up to date on areas of new governance
and liaises with the Nomad on areas of AIM
requirements. The Company secretary has
frequent communication with both the Chair
and the chief executive officer and is
available to other members of the Board if
required.
See page 19 of Annual Report
No such evaluation took place in 2023.
However, the Chair and the directors are
mindful of the performance of the Board as a
whole and ensure that each director works to
support the Executive team and deliver as
best they can for the business
See page 15 of Annual Report
See website disclosures Principle Eight AIM
Rule 26
See website disclosures: Principle Nine AIM
Rule 26
See pages 19 of Annual Report
See page 21 of Annual Report
See page 20 of Annual Report
See page 20 of Annual Report
N/A
17
Echo Energy PLC
Corporate Governance Statement for the Year Ended 31 December 2023
The Board
The Board comprises the independent Chair, one non-executive director, and the Chief Executive Officer
(CEO).
The Board has significant industry, financial, public markets and governance experience, possessing the
necessary mix of experience, skills, personal qualities and capabilities to deliver the strategy of the Company for
the benefit of the shareholders over the medium to long-term.
The role of the Chair and CEO are split in accordance with best practice. The Chair has the responsibility of
ensuring that the Board discharges its responsibilities and is also responsible for facilitating full and constructive
contributions from each member of the Board in determination of the Group’s strategy and overall commercial
objectives. The CEO leads the business and the executive team ensuring that strategic and commercial
objectives are met. The CEO is accountable to the Board for the operational and financial performance of the
business.
The Board as a whole is kept abreast with developments of governance and AIM regulations. The Company’s
lawyers provide updates on governance issues as required and the Company’s NOMAD provides board room
training as well as the initial training as part of a director’s onboarding.
The directors have access to the Company’s NOMAD, Company secretary, lawyers and auditors and are able to
obtain advice from other external bodies as and when required.
The 2023 performance of the business and its staff will be measured across both financial and operational
functions and is captured in a corporate scorecard. The scorecard is made up of various KPIs and is tracked
throughout the year. The Board and executives’ performance within the year was judged on the delivery of
certain desired outcomes.
Christian Yates, Chair, was appointed to the Board in January 2022 as an independent non-executive director
and then assumed the role of Chair in November 2023. Christian has experience of advising and promoting
investments in renewable energy since 2009. He brings to the Board experience within the renewables sector,
including wind, waste to energy and BESS.
Stephen Birrell, CEO, was appointed to the Board in November 2023. Stephen is a geologist and has worked in
the upstream oil and gas industry for over 35 years, with a particular focus on development across multiple
jurisdictions, additionally he has a strong base in natural resources.
Martin Hull, CEO, was appointed to the Board in October 2018, initially holding the position of chief financial
officer (“CFO”). In November 2023 Martin stepped down as CEO and assumed the role of non-executive director.
Martin has over 18 years’ experience in oil and gas investment banking at Rothschild. Martin, with his experience
on many transactions at both the corporate and asset level, including debt and equity, has the knowledge to drive
the business forward. His transaction experience and contacts in the energy sector will prove invaluable to building
the Company.
James Parsons, was appointed to Board in March 2017 and stepped down from the Board on 26 June 2024.
Originally Chair of the Company, in November 2023 James assumed the role of independent non-executive
director prior to stepped down as a director of the Company at the AGM in June 2024.
Marco Fumagalli, Non-Executive Director, was appointed to the Board in March 2017 and stepped down from
the Board in January 2023.
18
Echo Energy PLC
Corporate Governance Statement for the Year Ended 31 December 2023
Board Performance
The directors consider seriously the effectiveness of the Board, committees and individual performance. The
Board meets formally five times a year with ad hoc board meetings as the business demands. There is a strong
flow of communication between the directors, in particular the relationship between the CEO and the Chair. The
agenda is set with the consultation of both the CEO and Chair, with consideration being given to both standing
agenda items and the strategic and operational needs of the business. Resulting actions are tracked for appropriate
delivery and follow up.
In addition to the above, the directors have a wide knowledge of the business and requirements of directors’
fiduciary duties. The directors have access to the Company’s NOMAD and auditors if and when required. They
are also able, at the Company’s expense, to obtain advice from external bodies if required.
During the year, the Board continuously strived to further strengthen the governance structure already in place.
Regular consultations are held with the Company’s NOMAD, Company Secretary and lawyers in respect of
compliance with the QCA Code, Companies Act and other statutory requirements, and to ensure that best practices
are followed. An effective investor relation strategy was maintained and regulatory disclosure obligations were
met, through a consistent flow of news releases to the market. All members of the Board are well acquainted and
understand global regulations on ethical business practices and ensure that adequate internal policies and a
supervisory mechanism is established in the business, through senior management. Whilst being mindful of the
size and stage of development of the Company, the Board reviews and ensures the highest level of governance is
maintained at all levels.
Matters Reserved for the Board
The directors adopted a schedule of those matters that should be reserved for the Board. Those matters include:
- Approval of the Group’s strategy and objectives;
- Approval of the Group budgets, including operating and expenditure budgets;
- Growth of activities into new business or geographical locations;
- Material changes to the Group’s structure and management; and
- Changes to the Company’s listing, governance or business processes.
Board Committees
The Board has established an audit committee, a remuneration and a nominations committee. At present, a
decision has been made not to establish an HSE committee due to the fact that the Company is non-operating and
still in the developing stage. The HSE matters are dealt with within the Board meetings.
Audit Committee Report
Current Committee membership: Martin Hull, Christian Yates
Martin Hull joined the Committee as Chair in November 2023 at which point James Parsons stepped down from
the Committee. Prior to this James had chaired the Committee since January 2023, following the departure of
Marco Fumagalli. The committee generally meets twice a year. The committee had engaged Crowe UK LLP
(Crowe) to act as external auditors and they are also invited to attend committee meetings, unless they have a
conflict of interest. The CEO also joins the Committee by invitation. Crowe stepped down as auditor in 2023
19
Echo Energy PLC
Corporate Governance Statement for the Year Ended 31 December 2023
following completion of the 2022 audit and the Committee recommended to the Board, who approved, the
engagement of MAH, Chartered Accountants.
An important part of the role of the committee is its responsibility for reviewing and monitoring the effectiveness
of the Group’s financial reporting, internal control policies, and procedures for the identification, assessment, and
reporting of risk. The audit committee is also responsible for overseeing the relationship with the external auditor.
The main functions of the audit committee include:
- Reviewing and monitoring internal financial control systems and risk management systems on which the
Company is reliant;
- Considering annual and interim accounts and audit reports; and
- Making recommendations to the Board in relation to the appointment and remuneration of the
Company’s auditor as well as annually reviewing and monitoring their independence, objectivity, and
effectiveness.
During 2023 and 2024 the audit committee:
- Met with the Company’s auditor;
- Approved the audited year end and interim financial statements;
- Recommended to the Board the appointed of MAH, Chartered Accountants as auditor of the Company
in place of Crowe;
- Reviewed the Committee’s terms of reference; and
- Consider the risk register and manual of authorities.
Remuneration Committee report
Current Committee membership: Christian Yates and Martin Hull
Following James Parsons stepping down from the Board Christian Yates re-assumed the position of Chair of the
Committee. Christian had chaired the Committee prior to November 2023 when James had taken over for the
period until his departure in June 2024. Martin Hull has recently joined the Committee as a member.
In 2023 the Remuneration Committee unusually only met once matters regarding directors’ and executive
remuneration. The Committee would usually meet at least twice but given the number of changes to the Board
and the financial position of the Company many matters were dealt with by the Board as a whole.
During the year ended 31 December 2023, the Committee met once to discuss the remuneration of the executive
team, including the executive director.
Nominations Committee report
Current Committee membership: Christian Yates and Martin Hull
Following James Parsons stepping down from the Board Christian Yates re-assumed the position of Chair of the
Committee. Christian had chaired the Committee prior to November 2023 when James had taken over for the
period until his departure in June 2024. Martin Hull has recently joined the Committee as a member.
The Nominations Committee is responsible for Board recruitment and succession planning. Keeping under review
the leadership of the organisation and ensuring that the Board has the right skill set required for the business.
During 2023 the Committee did not formally meet.
20
Echo Energy PLC
Corporate Governance Statement for the Year Ended 31 December 2023
The directors’ attendance at scheduled board meetings and board committees during 2023 is detailed in the table
below:
Director
Christian Yates (Chair)
Stephen Birrell **
Martin Hull
James Parsons
Marco Fumagalli***
Board
Meeting
5
1
5
5
-
Scheduled
Audit
-
Board Ad Hoc
Meeting *
12
3
12
12
-
-
-
-
Total meetings
5
12
2
* Ad hoc meetings:
Remuneration
1
-
-
1
-
-
1
Nominations
Committee
-
-
-
-
-
-
Additional meetings called for a specific business matter that falls outside of the Board meeting schedule or a matter generally of a more
administrative nature not requiring full Board attendance
** Mr Birrell appointed to the Board on 13 November 2023
*** Mr Fumagalli resigned on 13 January 2023
21
Echo Energy PLC
Corporate Governance Statement for the Year Ended 31 December 2023
Health and Safety Review 2023
Echo is committed to conducting its business and operations in a manner that safeguards the health of
employees, contractors and the public, and minimises the impact of operations on the environment.
The Company is committed to ensure that these objectives are achieved through:
-
Providing all employees with training of a high standard and only using equipment that is certified and
appropriate for its scope;
- Using only qualified contractors, who can work to the highest possible HSE standards;
- Ensuring near-misses and incidents, whether Echo or partner operated, are fully investigated and
improvements implemented;
-
Fostering a working culture where openness and reporting leads to standout operational and health, safety
and environmental performance; and
- Working with our operating partners to make sure that health and safety hazards and environmental
impacts have been fully assessed and appropriately mitigated.
HSE performance is reported to the Board, which ensures that appropriate resources are provided to achieve these
objectives in full. Where the Company participates in, but does not operate joint ventures, it seeks to ensure that
similar standards are adopted by its operators. These commitments are in addition to our basic obligation to
comply with applicable laws and regulations where we work.
22
Echo Energy PLC
Corporate Governance Statement for the Year Ended 31 December 2023
The Team
Board of Directors
Christian Yates
Chair
Christian joined the Company in January 2022 and was appointed Chair in November 2023. He has extensive
operational leadership experience at Chief Executive and Board level acquired during a wide-ranging career in
fund management, private equity and growth companies. Sector experience includes renewable energy (solar,
wind, BESS), real estate, alternative investments, wealth management, institutional fund management and
hospitality. He is an experienced member of Audit & Risk, Nominations and Remunerations Committees.
Christian is Chair of Gresham House Renewable Energy VCT 2 plc, one of two listed investment companies he
co-founded in 2010.
Christian is a member of the Audit, Remuneration and Nominations Committees.
Stephen Birrell
Chief Executive Officer
Stephen was appointed to the Board in November 2023. Stephen, is a geologist with a base in natural resources
and has worked in the upstream oil and gas industry for over 35 years, with a particular focus on development
across multiple jurisdictions with Britoil, BP and Elf and Sterling Resources, where he discovered and initiated
the development of the Black Sea gas field complex, Ana/Doina in Romania. Stephen has a BSc Honours in
Applied Geology and is a member of the Association of International Energy Negotiators and the Society of
Petroleum Engineers.
Stephen is also a non- executive director of Live Company Group plc, Expedez Financial Services Limited and
Ossian Energy Limited.
Martin Hull
Non-Executive Director
Martin has over 18 years’ experience in oil & gas investment banking at Rothschild & Sons in London where
he was a Managing Director in the global energy team with a focus on Latin America and Africa.
Previously he was Head of Oil & Gas, SE Asia, based out of Singapore. Martin has corporate finance expertise
across the value chain with a particular focus on the upstream sector. He has advised on numerous transactions,
including debt and equity, at both the corporate and asset level.
James Parsons
Non-Executive Director
James resigned from the Board on 26 June 2024.
Marco Fumagalli
Non-Executive Director
Marco resigned from the Board in January 2023.
23
Echo Energy PLC
Corporate Governance Statement for the Year Ended 31 December 2023
Executive Team
Stephen Birrell
Chief Executive Officer
Stephen was appointed to the Board in November 2023. Stephen has worked in the upstream oil and gas industry
for over 35 years, with a particular focus on development across multiple jurisdictions with Britoil, BP and Elf
and Sterling Resources, where he discovered and initiated the development of the Black Sea gas field complex,
Ana/Doina in Romania. Stephen has a BSc Honours in Applied Geology and is a member of the Association of
International Energy Negotiators and the Society of Petroleum Engineers.
Dr Julian Bessa
VP of Exploration
Julian left the firm in July 2023.
24
Echo Energy PLC
Corporate Governance Statement for the Year Ended 31 December 2023
Directors’ Remuneration Report
The remuneration committee, which consists of the non-executive directors, along with the Board as a whole is
committed to attracting and retaining talent within the boardroom and the wider executive group to ensure the
success of the Company. The remuneration committee works to ensure that the policies and framework are in
place to reward staff for achievements and targets met, which in turn creates value for shareholders.
The Company offers a fixed remuneration package of salary, pension and certain benefits. In addition, there is a
discretionary bonus award and EMI/share option scheme in place. As the business grows it may consider
implementing a performance related LTIP for senior executives and executive directors.
Stephen Birrell’s contract contains a six month notice period.
The bonus and option awards are presented to the remuneration committee by the CEO for approval. The bonus
awards are made to individuals taking account of their own performance and the Company’s performance as a
whole over the previous year. Members of the executive team have their level of bonus reviewed in line with their
individual scorecards that are agreed at the beginning of the financial year. The amount of bonus and options
awarded is set within a pre-agreed range for each level of staff.
Any bonus awards and options made to the CEO are agreed by the remuneration committee and are discretionary
based on individual and Company performance.
A pension scheme is provided to all employees into which, subject to certain criteria, the Company contributes
5% of the individual’s base salary.
Chair and Non-Executive Directors’ Fees
The fees paid to the Chair and non-executive directors are set at a level both in line with the market and to
appropriately reward and retain individuals of a high calibre. The fees paid reflects the level of commitment and
contribution to the Company.
Fees are paid monthly in cash and are inclusive of all committee roles and responsibilities.
Remuneration of Directors
Actual remuneration for the year in the Income Statement
2023
Cash
Bonus
award
(US $)
Executive Director
-
Pension
(US $)
Salary
(US $)
Stephen Birrell*
19,488
2,339
Taxable
benefit
(US $)
Total
2023
(US $)
Total
2022
(US $)
-
21,827
-
James Parsons
Christian Yates
Martin Hull
Marco Fumagalli
Stephen Whyte
Gavin Graham
Total all directors
67,173
45,631
198,573
-
-
-
330,885
Non-Executive Directors
-
-
6,178
-
-
-
6,178
-
-
-
-
-
-
-
-
-
5,930
-
-
-
5,930
67,173
45,631
210,681
-
-
-
345,312
92,672
48,488
343,790
52,625
18,686
3,895
560,156
Contractual entitlements not yet paid have been deferred.
25
Echo Energy PLC
Corporate Governance Statement for the Year Ended 31 December 2023
Remuneration of Directors
Contractual entitlement for the year
Salary
(US $)
Stephen Birrell*
19,488
Pension
(US $)
2023
Cash
Bonus
award
(US $)
Executive Director
-
2,339
Non-Executive Directors
James Parsons
Christian Yates
Martin Hull
Marco Fumagalli
Stephen Whyte
Gavin Graham
Total all directors
99,151
62,207
277,042
-
-
-
457,888
-
-
6,178
-
-
-
6,178
-
-
-
-
-
-
-
Taxable
benefit
(US $)
Total
2023
(US $)
-
21,827
-
-
5,930
-
-
-
5,930
99,151
62,207
289,150
-
-
-
472,699
*Stephen Birrell was awarded 238,469,000 options of shares with a valuation of $31,877
Contractual entitlements not yet paid have been deferred.
Share Options Awards
Date of
Grant
Exercisable
Date
24.10.19
19.12.19
28.01.21
28.01.21
28.01.21
21.12.23
09.03.17
09.03.17
11.12.23
20.12.22
28.01.22
28.01.23
28.01.24
21.12.26
09.03.20
09.03.20
Acquisition
Price per
share
(cents)*
7.90
3.14
0.89
0.89
0.89
0.013
1.96
1.96
Options
held at
1.1.23
000’s
12,000
23,000
8,000
8,000
8,000
-
-
-
Options held
at 31.12.23
000’s
-
23,000
8,000
8,000
8,000
238,469
-
-
Martin Hull
Martin Hull
Martin Hull
Martin Hull
Martin Hull
Stephen Birrell
James Parsons
Marco Fumagalli
Share Options Awards
*Calculated at the exchange rate of US $1 to GBP £0.8039.
No directors exercised options in the year ended 31 December 2023.
This Remuneration Report was approved by a duly authorised committee of the Board on 27 June 2024 and
signed on its behalf by:
Christian Yates
Chair
27 June 2024
26
Echo Energy PLC
Directors Report for the Year Ended 31 December 2023
Directors’ Report
The directors submit their report and accounts for the financial year ended 31 December 2023. The comparative
period is the year ended 31 December 2022.
Principal Activities
Echo Energy plc is the holding Company for a group of companies. The Group’s principal long-term focus is
developing as a full-cycle exploration led, gas focused E&P Company. The Group’s growth strategy is to deliver
shareholder value from both the existing asset portfolio and new opportunities.
Results and Dividends
Turnover for the year, all in the discontinued operations, was US $3.6 million (2022: US $14.1 million), and the
loss before tax from continued operations was US $2.8 million (2022: US $4.4 million). The directors have not
declared any, dividend in respect of the year ended 31 December 2023 (2022: US $Nil).
Future Developments
Having completed in June 2023 the sale of all but 5% of its interest in the SCS activities, the Board’s focus has
moved to securing new energy generation projects.
Directors
The directors who served during the period were as follows:
Christian Yates
Stephen Birrell (appointed 13 November 2023)
Martin Hull
James Parsons (resigned 26 June 2024)
Marco Fumagalli (resigned 13 January 2023)
Directors’ Insurance
The Group has taken out an insurance policy to indemnify the directors and officers of the Group against liability
when acting for the Group.
Auditor
Each person who is a director at the date of approval of this annual report confirms to the best of their knowledge
that:
-
so far as the director is aware, there is no relevant audit information of which the Company’s auditor is
unaware; and
the director has taken all steps that he ought to have taken as a director to make himself aware of any
relevant audit information and to establish that the auditor is aware of that information.
-
- This information is given and should be interpreted in accordance with the provisions of s418 of the
Companies Act 2006.
A resolution to reappoint the auditor MAH, Chartered Accountants will be proposed at the next General Meeting
at which these accounts are laid.
27
Echo Energy PLC
Directors Report for the Year Ended 31 December 2023
Directors’ Shareholding and Interests in Shares
Directors and connected persons
Christian Yates
Stephen Birrell
Martin Hull
James Parsons (resigned 26 June 2024)
No. of shares at 31 December 2023
-
-
600,000
-
Subsequent Events
Events which have occurred since 31 December 2023 are included in Note 29 to the attached financial statements.
The financial information for the year to 31 December 2023 has been prepared assuming the Group will continue
as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business
for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading or seeking
protection from creditors pursuant to laws or regulations.
Information Set Out in the Strategic Report
The directors have chosen to set out the following information relating to the assessment of financial risk on both
page 14 of the Strategic Report, and in Note 22 of the Financial Statements.
Signed by order of the directors
Stephen Birrell
Chief Executive Officer
27 June 2024
28
Echo Energy PLC
Statement of Directors' Responsibilities
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 the
directors have elected to prepare the financial statements in accordance with UK-adopted international accounting
standards and applicable law. Under Company law the directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of
the profit or loss of the Company and 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 judgements and accounting estimates that are reasonable and prudent;
-
State whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements; 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 to 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 are also
responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities. They are further responsible for ensuring that the Strategic Report,
the Directors’ Report, other information included in the Annual Report and Financial Statements are prepared in
accordance with applicable laws in the United Kingdom. The maintenance and integrity of the Company’s website
is the responsibility of the directors: the work carried out by the auditor does not involve the consideration of these
matters and accordingly, the auditor accepts no responsibility for any changes that may have occurred in the
accounts since they were initially presented on the website. Legislation in the United Kingdom governing the
preparation and dissemination of the accounts and the other information included in the Annual Report may differ
from legislation in other jurisdictions.
We confirm to the best of our knowledge:
- The Financial Statements, prepared in accordance with the relevant financial reporting framework, give
a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the
undertaking included in the consolidation taken as a whole.
- The Strategic Report includes a fair review of the development and performance of the business and the
position of the Company and the undertakings included in the consolidation taken as a whole, together
with a description of the principal risks and uncertainties that they face.
The Annual Report and Financial Statements, taken as a whole, are fair, balanced, understandable and provide the
information necessary for shareholders to assess the Company’s performance, business model and strategy.
Stephen Birrell
Chief Executive Officer
29
Echo Energy PLC
Independent Auditor's Report to the Members of Echo Energy PLC
Disclaimer of opinion
We were engaged to audit the financial statements of Echo Energy PLC (the parent company) and its subsidiaries
(the “group”) for the year ended 31 December 2023, which comprise the Consolidated Statement of
Comprehensive Income, the Consolidated and Parent Statements of Financial Position, the Consolidated and
Parent Statements of Changes in Equity, the Consolidated and Parent Statements of Cash Flows and notes to the
financial statements, including a summary of significant accounting policies. The financial reporting framework
that has been applied in the preparation of the group financial statements is applicable law and UK-adopted
international accounting standards and as regards the parent as applied in accordance with the provisions of the
Companies Act 2006.
We do not express an opinion on the accompanying group and parent company financial statements. Because of
the significance of the matters described in the basis for disclaimer of opinion section of our report which we
consider to be both material and pervasive, we have not been able to obtain sufficient appropriate audit evidence
to provide a basis for an audit opinion on these financial statements.
Basis for disclaimer of opinion
We were not provided with a complete set of accounting records for the company’s wholly-owned subsidiaries
Eco Energy CDL Op Limited and Eco Energy TA Op Limited as the relevant records were held in Argentina and
maintained by a separate finance team locally. The subsidiaries have now completed their sale of the Santa Cruz
operations in Argentina as described in Note 10 and management no longer have access to the underlying records.
We were unable to satisfy ourselves by alternative means with regard to the transactions in these entities due to
the lack of records available.
We have been unable to obtain sufficient audit evidence over the results from discontinued operations, the gain
on disposal and the related disclosures.
The profit from discontinued operations in the statement of comprehensive income amounts to $9m and includes
a profit on disposal of $18m.
As a result of these matters which together we consider material and pervasive, we were unable to determine
whether any adjustments might have been necessary in the financial statement line items in the Consolidated
Statement of Comprehensive Income, the Consolidated and Parent Statements of Financial Position, the
Consolidated Statement of Changes in Equity and the Consolidated and Parent Statements of Cash Flows.
We do not express an opinion on the appropriateness of the going concern basis of preparation due to the
disclaimer of opinion.
Opinion on other matter prescribed by the Companies Act 2006
Because of the significance of the matters described in the basis for disclaimer of opinion section of our report,
we have been unable to form an opinion, whether based on the work undertaken in the course of the audit:
-
-
the information given in the strategic report and directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
30
Echo Energy PLC
Consolidated Statement of Comprehensive Income for the
Year Ended 31 December 2023
Continuing operations
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Other losses
Operating loss
Finance income
Finance costs
Net finance income/(cost)
Loss before tax
Taxation
Loss for the year from continuing operations
Discontinued operations
Profit/(loss) for the year after taxation from
discontinued operations
Profit/(loss) for the year
Other comprehensive income
Other comprehensive income to be reclassified
to profit or loss in subsequent periods (net of
tax)
Exchange difference on translating foreign
operations
Total comprehensive income for the year
Profit/(loss) attributable to:
Owners of the company
Profit/(loss) per share (US cents)
Basic
Diluted
Profit/(loss) per share (US cents) for
continuing operations
Basic
Diluted
Note
4
6
7
12
10
13
13
2023
US $
-
-
-
-
2022
US $
86
-
86
(1,218,489)
(2,951,806)
(2,298)
(1,220,787)
203,371
(1,792,337)
(1,588,966)
(2,809,753)
-
(2,809,753)
-
(2,951,720)
1,618,844
(2,981,409)
(1,362,565)
(4,314,285)
(68,142)
(4,382,427)
9,055,875
6,246,122
(5,204,409)
(9,586,836)
1,634,560
7,880,682
-
-
7,880,682
(9,586,836)
0.13
0.13
(0.06)
(0.06)
(0.50)
(0.50)
(0.27)
(0.27)
The notes on pages 43 to 74 form an integral part of these financial statements
32
Echo Energy PLC
(Registration number: 5483127)
Consolidated Statement of Financial Position as at 31 December 2023
Note
31 December
2023
US $
31 December
2022
US $
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Right of use asset
Current assets
Trade and other receivables
Equity accounted investments
Cash and cash equivalents
Assets of disposal group held for sale
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Capital contribution reserve
Foreign currency translation reserve
Warrant reserve
Share option reserve
Retained earnings
Equity attributable to owners of the company
Non-current liabilities
Loans and borrowings
Current liabilities
Current portion of lease liabilities
Trade and other payables
Liabilities of disposal group held for sale
Total liabilities
Total equity and liabilities
15
16
17
20
19
21
24
25
23
23
33
1
-
41,958
41,959
94,459
283,422
83,127
461,008
-
502,967
(19,796,814)
(84,123,447)
(7,212,492)
1,846,481
(510,732)
(676,294)
118,094,311
7,621,013
2,299
-
-
2,299
769,550
-
1,132,616
1,904,466
18,739,291
20,643,756
(19,893,386)
(83,790,504)
(7,212,492)
3,481,041
(1,433,428)
(644,560)
125,263,129
15,769,800
(7,281,149)
(7,281,149)
(5,463,301)
(5,463,301)
(44,078)
(798,753)
-
(842,831)
(8,123,980)
(502,967)
-
(1,329,991)
(29,620,264)
(30,950,255)
(36,413,556)
(20,643,756)
Echo Energy PLC
(Registration number: 5483127)
Consolidated Statement of Financial Position as at 31 December 2023
Approved by the board on 27 June 2024 and signed on its behalf by:
.........................................
Stephen Birrell
Director
The notes on pages 43 to 74 form an integral part of these financial statements
34
Echo Energy PLC
(Registration number: 5483127)
Statement of Financial Position as at 31 December 2023
31 December
2023
US $
31 December
2022
US $
Note
15
16
17
18
19
20
21
24
25
23
23
1
-
41,958
-
41,959
283,422
94,459
82,357
460,238
502,197
1
-
-
1,562,321
1,562,322
-
234,178
146,928
381,106
1,943,428
(19,796,814)
(84,123,447)
(7,212,492)
2,531,799
(510,732)
(676,294)
117,674,141
(19,893,386)
(83,790,504)
(7,212,492)
2,228,569
(1,433,428)
(644,560)
115,210,043
7,886,161
4,464,242
(7,281,149)
(264,378)
(7,545,527)
(5,463,301)
-
(5,463,301)
(44,078)
(798,753)
-
(944,369)
(8,388,358)
(6,407,670)
(502,197)
(1,943,428)
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Right of use assets
Investments in subsidiaries and joint ventures
Current assets
Current investments
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Capital contribution reserve
Foreign currency translation reserve
Warrant reserve
Share option reserve
Retained earnings
Total equity
Non-current liabilities
Loans and borrowings
Other non-current financial liabilities
Current liabilities
Current portion of lease liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
35
Echo Energy PLC
(Registration number: 5483127)
Statement of Financial Position as at 31 December 2023
The company has not presented its own profit and loss account. Its loss for the year was US $3,386,794 (2022:
US $30,909,889).
Approved by the board on 27 June 2024 and signed on its behalf by:
.........................................
Stephen Birrell
Director
The notes on pages 43 to 74 form an integral part of these financial statements
36
At 1 January 2023
Loss for the year
Discontinued operations
Exchange reserve
Total comprehensive income
New share capital subscribed
Warrants issued
Warrants lapsed
Share-based payments
At 31 December 2023
Consolidated Statement of Changes in Equity for the Year Ended 31 December 2023
Echo Energy PLC
Share
capital
US $
19,795,863
-
-
-
Share
Shares to be
premium
issued
US $
US $
97,523 83,790,504
-
-
-
-
-
-
Capital
contribution
reserve
US $
7,212,492
-
-
-
-
951
-
-
-
-
(97,523)
-
-
-
-
332,943
-
-
-
-
-
-
-
-
Foreign
currency
translation
reserve
US $
(3,481,041)
-
-
1,634,560
1,634,560
-
-
-
Share option
reserve
US $
644,560
-
-
-
-
-
-
-
Warrant
reserve
US $
1,433,428
-
-
-
-
-
(36,756)
(885,940)
Retained earnings
US $
(125,263,129)
(2,809,753)
Total equity
US $
(15,769,800)
(2,809,753)
9,055,875
-
6,246,122
-
36,756
885,940
9,055,875
1,634,560
7,880,682
236,371
-
-
-
31,734
-
-
31,734
19,796,814
- 84,123,447
7,212,492
(1,846,481)
676,294
510,732
(118,094,311)
(7,621,013)
37
At 1 January 2022
Loss for the year
Discontinued operations
Exchange reserve
Total comprehensive
income
New share capital
subscribed
Cash received for shares
not issued
Warrants issued
Warrants lapsed
Share options lapsed
Share based payments
Capital contributions on
debt restructuring
At 31 December 2022
Consolidated Statement of Changes in Equity for the Year Ended 31 December 2022
Echo Energy PLC
Share
capital
US $
7,209,086
-
-
-
-
12,586,777
-
-
-
-
-
-
Shares to
be issued
US $
Share
premium
US $
- 64,977,243
-
-
-
-
-
-
Capital
contribution
reserve
US $
-
-
-
-
-
-
-
7,521,415
97,523
-
- 11,291,846
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,212,492
Foreign
currency
translation
reserve
US $
(3,531,587)
-
-
50,546
50,546
-
-
-
-
-
-
-
Share
option
reserve
US $
1,522,499
-
-
-
-
-
Warrant
reserve
US $
12,177,786
-
-
-
Retained
earnings
US $
(116,164,503)
(4,382,425)
(5,204,409)
-
Total equity
US $
(33,809,476)
(4,382,425)
(5,204,409)
50,546
-
-
(9,586,834)
(9,536,288)
-
20,108,192
-
-
-
(1,035,696)
157,757
-
-
(11,291,846)
547,488
-
-
-
-
-
(547,488)
1,035,696
-
-
97,523
-
-
-
157,757
7,212,492
19,795,863
97,523 83,790,504
7,212,492
(3,481,041)
644,560
1,433,428
(125,263,129)
(15,769,800)
38
Echo Energy PLC
Statement of Changes in Equity for the Year Ended 31 December 2023
At 1 January 2023
Loss for the year
Exchange reserve
Total comprehensive income
New share capital subscribed
Share-based payments
Warrants issued
Warrants lapsed
Share capital
US $
19,795,863
-
-
-
951
-
-
At 31 December 2023
19,796,814
Shares to be
issued
US $
97,523
-
-
(97,523)
-
-
-
Share
premium
US $
83,790,504
-
-
-
332,943
-
-
Capital
contribution
reserve
US $
7,212,492
-
-
-
-
-
-
Foreign
currency
translation
reserve
US $
(2,228,569)
-
(303,230)
(303,230)
-
-
Share option
reserve
US $
644,560
-
-
-
-
31,734
Warrant
Reserve
US $
Retained
earnings
US $
Total
US $
1,433,428 (115,210,043) (4,464,242)
(3,386,794) (3,386,794)
(303,230)
-
-
-
(3,386,794) (3,690,024)
-
236,371
31,734
-
-
(36,756)
(885,940)
36,756
885,940
-
-
84,123,447
7,212,492
(2,531,799)
676,294
510,732 (117,674,141) (7,886,161)
39
Echo Energy PLC
Statement of Changes in Equity for the Year Ended 31 December 2022
Shares to
be issued
US $
-
Share
premium
US $
64,977,243
-
-
-
Capital
contribution
reserve
US $
-
-
-
-
Foreign
currency
translation
reserve
US $
(2,255,402)
-
-
26,833
Share
option
reserve
US $
1,522,499
-
-
-
Warrant
Reserve
US $
12,177,786
-
-
-
-
Retained
earnings
US $
(84,788,362)
(30,115,152)
(794,736)
-
Total
US $
(1,157,150)
(30,115,152)
(794,736)
26,833
(30,909,889)
(30,883,056)
-
20,108,192
-
7,521,415
-
11,291,846
-
-
-
-
-
-
-
-
-
-
-
7,212,492
-
-
-
-
-
-
97,523
-
-
-
-
-
26,833
-
-
-
-
-
-
-
-
-
-
(1,035,696)
157,757
-
-
(11,291,846)
547,488
-
-
-
(547,488)
1,035,696
-
-
-
-
97,523
-
-
-
157,757
7,212,492
19,795,863
97,523
83,790,504
7,212,492
(2,228,569)
644,560
1,433,428 (115,210,043)
(4,464,242)
Share
capital
US $
7,209,086
-
-
-
-
12,586,777
At 1 January 2022
Loss for the year
Discontinued operations
Exchange reserve
Total comprehensive
income
New share capital subscribed
Cash received for shares not
issued
Warrants issued
Warrants lapsed
Share options lapsed
Share-based payments
Capital contribution on debt
restructuring
At 31 December 2022
Share premium represents the amounts subscribed for share capital in excess of the nominal value of the shares issued, net of cost of issue.
Capital contribution reserve represents a contribution to group made as part of the 2022 debt restructuring, through forgiveness of debt.
Warrant reserve represents the cumulative fair value of share warrants granted which are not lapsed, cancelled or exercised.
Share options reserve represents the cumulative fair value of share options granted.
Foreign currency translation reserve arises on the retranslation of the prior period results and financial position of foreign operations into presentation currency.
Retained earnings represents the cumulative net gains and losses recognised in the income statement.
The notes on pages 43 to 74 form an integral part of these financial statements
40
Echo Energy PLC
Consolidated Statement of Cash Flows for the Year Ended 31 December 2023
Note
2023
US $
2022
US $
Cash flows from operating activities
Profit/(loss) for the year on continued operations
Profit/(loss) for the year on discontinued operations
Adjustments to cash flows from non-cash items
Depreciation and amortisation
Depreciation and depletion of intangible assets
Impairment of intangible assets and goodwill
Loss from sales of tangible assets
Fair value losses of current investments
Finance income
Finance costs
Exchange differences
Share based payment transactions
Loss on disposal of investments
Total adjustments
Decrease/(increase) in inventory
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Total working capital movement
Net cash flow from operating activities
Cash flows from investing activities
Interest received
Acquisitions of property plant and equipment
Acquisitions of intangible assets
Net cash flows from investing activities
Cash flows from financing activities
Issue of share capital
Loans received
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Foreign exchange gains/(losses) on cash and cash equivalents
Cash and cash equivalents at 31 December
7
7
20
23
7
(2,809,753)
9,055,875
6,246,122
27,972
-
(372,433)
2,298
226,522
(3,450)
916,292
649,523
31,735
(8,232,617)
(6,754,158)
-
675,092
(1,538,208)
(863,116)
(1,371,152)
3,450
-
-
3,450
235,463
82,750
318,213
(1,049,489)
1,132,616
-
83,127
(4,382,425)
(5,204,409)
(9,586,834)
16,537
1,419,193
506,818
-
-
2,980,994
(1,582,441)
157,757
-
3,498,858
863,196
978,778
2,150,092
3,992,066
(2,095,910)
-
(61,233)
(217,578)
(278,811)
2,714,574
-
2,714,574
339,853
742,339
50,424
1,132,616
The notes on pages 43 to 74 form an integral part of these financial statements
41
Echo Energy PLC
Statement of Cash Flows for the Year Ended 31 December 2023
Note
2023
US $
2022
US $
Cash flows from operating activities
Profit/(loss) for the year from continuing operations
Profit/(loss) for the year from discontinuing operations
Adjustments to cash flows from non-cash items
Depreciation and amortisation
Impairment charges
Exchange differences
Fair value loss
Profit from disposals of investments
Finance income
Finance costs
Share based payment transactions
Total adjustments
Decrease/(increase) in amounts owing by subsidiary undertakings
(Increase)/decrease in trade and other receivables
(Decrease)/increase in trade and other payables
6
6
20
23
6
Net cash flow from operating activities
Cash flows from investing activities
Interest received
Purchase of intangible assets
Purchase of investments
Net cash flows from investing activities
Cash flows from financing activities
Issue of share capital
Loans received
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
(3,386,794)
-
(5,081,487)
-
27,972
1,562,322
2,176
506,818
649,523
(1,582,441)
226,522
(734,470)
-
916,292
31,735
2,679,896
139,719
180,943
-
-
-
2,980,994
157,757
2,065,304
454,680
(61,589)
78,673
(386,236)
(2,544,419)
3,450
-
-
3,450
235,463
82,750
318,213
(64,573)
146,930
82,357
-
(61,233)
-
(61,233)
2,715,574
-
2,715,574
109,922
37,008
146,930
The notes on pages 43 to 74 form an integral part of these financial statements
42
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
1 General information
These financial statements are for Echo Energy plc (“the Company”) and subsidiary undertakings (“the Group”).
The company is a public company limited by share capital, incorporated and domiciled in England and Wales.
The company was incorporated under the Companies Act 2006.
The Company's functional current is the United States dollar (US $). Transactions arising in currencies other than
the US $ are translated at average exchange rates for the relevant accounting period, with material transactions
being accounted for at the rate of exchange on the date of the transaction.
The Group presents its financial information in US $. The results and position of subsidiary undertakings that
have a different functional currency to US $ are treated as follows:
- Assets and liabilities for each financial reporting date presented are translated at the closing rate of that
financial reporting period.
- Income and expenses for each income statement (including comparatives) is translated at exchange
rates at the dates of transactions. For practical reasons, the Company applies straight average exchange
rates for the period.
- All resulting changes are recognised as a separate component of equity.
- Equity items are translated at exchange rates at the date of transactions.
2 Accounting policies
Statement of compliance
The group financial statements have been prepared in accordance with International Financial Reporting Standards
and its interpretations adopted by the UK ("UK adopted IFRSs").
Summary of material accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with adopted IFRSs and under historical cost
rules.
accounting
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the group's accounting
policies.
43
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
2 Accounting policies (continued)
Going concern
The financial information has been prepared assuming the Group will continue as a going concern. Under the
going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with
neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant
to laws or regulations.
The consolidated statement of financial position at 31 December 2023 shows a negative net asset position.
Moreover, after persistent difficulties, the board made the difficult decision in late 2022 to divest of its operating
assets in Argentina. This decision came to fruition in June 2023 when, apart from a small 5% retention holding,
Echo Energy sold its interest in the SCS assets to its joint venture partner and obtained a full, 100%, indemnity
against any future costs arising from those SCS operations.
The cash received from that sale was sufficient to partly, but not fully, pay down backlog creditors.
The directors have held positive discussions with potential investors and also are in advanced negotiations to
acquire a number of natural resource projects with a range of inferred, indicated and measured resources to replace
the SCS assets.
Consequently, the directors consider the going concern assumption continues to be appropriate although there
remain material uncertainties as to;
1. Successfully raising sufficient funds.
2. Finding an appropriate investment within a suitable timescale
3. That investment being sufficiently cash-positive to fund the Group going forwards.
Basis of consolidation
The group financial statements consolidate the financial statements of the company and its subsidiary undertakings
drawn up to 31 December 2023.
A subsidiary is an entity controlled by the company. Control is achieved where the company has the power to
govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the income statement from the
effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments
are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by
the group.
The purchase method of accounting is used to account for business combinations that result in the acquisition of
subsidiaries by the group. The cost of a business combination is measured as the fair value of the assets given,
equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly
attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess
of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities recognised is recorded as goodwill.
Inter-company transactions, balances and unrealised gains on transactions between the company and its
subsidiaries, which are related parties, are eliminated in full.
Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the
consolidated financial statements.
44
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
2 Accounting policies (continued)
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the group. Non-controlling interests in the net assets of consolidated subsidiaries are identified
separately from the group’s equity therein. Non-controlling interests consist of the amount of those interests at the
date of the original business combination and the non-controlling shareholder’s share of changes in equity since
the date of the combination. Total comprehensive income is attributed to non-controlling interests even if this
results in the non-controlling interests having a deficit balance.
A joint arrangement is one in which two or more parties have joint control. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities require the
unanimous consent of the parties sharing control. Certain of the Group’s licence interests are held jointly with
others. Accordingly, when the company holds a majority stake, the Group accounts for its share of assets,
liabilities, income and expenditure of these joint operations, classified in the appropriate statement of financial
position and income statement headings.
Where the Group’s interest is in a minority, relinquishing control and having only a right to profits, with an
indemnity against future costs, the Group account on an investment basis, only recognising income on receipt of,
effectively, dividend income .
Changes in accounting policy
None of the standards, interpretations and amendments effective for the first time from 1 January 2023 have had
a material effect on the financial statements.
None of the standards, interpretations and amendments which are effective for periods beginning after 1 January
2023 and which have not been adopted early, are expected to have a material effect on the financial statements.
Revenue recognition
Revenue comprises the invoice value of goods and services supplied by the Group, net of value added taxes and
trade discounts. Revenue is recognised in the case of oil and gas sales when goods are delivered and title has
passed to the customer. This generally occurs when the product is physically transferred into a pipeline or vessel.
Echo recognised revenue in accordance with IFRS 15. Our joint venture partner markets gas and crude oil on our
behalf. Gas is transferred via a metred pipeline into the regional gas transportation system, which is part of national
transportation system, control of the gas passes at the point at which the gas enters this network, this is the point
at which gas revenue would be recognised. Gas prices vary from month to month based on seasonal demand from
customer segments and, production in the market as a whole. Our partner agrees pricing with their portfolio of
gas clients based on agreed pricing mechanisms in multiple contracts. Some pricing is regulated by government
such as domestic supply. Oil shipments are priced in advance of a cargo and revenue is recognised at the point at
which cargoes are loaded onto a shipping vessel at terminal.
45
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
2 Accounting policies (continued)
Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from, or paid to, the tax authorities. The tax rates and the tax laws used to compute the amount are those
that are enacted, or substantively enacted, by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the current year amounts of
assets and liabilities in the financial statements and the corresponding tax basis used in the computation of
taxable profit.
Deferred tax assets are recognised to the extent the temporary difference will reverse in the foreseeable future
and it is probable that future taxable profit will be available against which the asset can be utilised.
Deferred tax is recognised for all deductible temporary differences arising from investments in subsidiaries,
branches and associates, and interests in joint ventures, to the extent it is probable that the temporary difference
will reverse in the foreseeable future.
Property, plant and equipment
Property, plant and equipment is stated in the statement of financial position at cost, less any subsequent
accumulated depreciation and subsequent accumulated impairment losses.
The cost of property, plant and equipment includes directly attributable incremental costs incurred in their
acquisition and installation.
Oil and gas properties are depleted on a unit of production basis commencing at the start of commercial production
or depreciated on a straight-line basis over the relevant asset's estimated useful life. Expenditure is depreciated on
a unit of production basis; the depletion charge is calculated according to the proportion that production bears to
the recoverable reserves for each property. Depreciation will not be charged on an asset in the course of
construction, depreciation commences when the asset is brought into use and will be depleted according to the
proportion that production bears to the recoverable reserves for each property.
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over
their estimated useful lives, as follows:
Asset class
Fixtures & fittings
Depreciation method and rate
12% to 33.3% straight line
Property right of use asset
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right of use
lease is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before commencement date plus any initial direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset. The right-of-use asset is subsequently depreciated using the straight-
line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the
end of the lease term. The lease liability is initially measured at the present value of the lease payments that are
not paid at the commencement date discounted using the incremental borrowing rate of the individual Company
which is the lessee.
46
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
2 Accounting policies (continued)
Other intangible assets - exploration and evaluation costs
Exploration and evaluation (E&E) expenditure comprises costs which are directly attributable to researching and
analysing exploration data. It also includes the costs incurred in acquiring mineral rights, the entry premiums paid
to gain access to areas of interest and amounts payable to third parties to acquire interests in existing projects.
When it has been established that a mineral deposit has development potential, all costs (direct and applicable
overhead) incurred in connection with the exploration and development of the mineral deposits are capitalised
until either production commences or the project is not considered economically viable. In the event of production
commencing, the capitalised costs are amortised over the expected life of the mineral reserves on a unit of
production basis. Other pre-trading expenses are written off as incurred. Where a project is abandoned or is
considered to be of no further interest, the related costs are written off.
Impairment of tangible and intangible assets excluding goodwill
At the date of each statement of financial position, the Group reviews the carrying amounts of its tangible and
intangible assets to determine whether there is any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of
the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset,
the Group estimates the recoverable amount of the cash-generating unit (“CGU”) to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell or value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the
current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount
of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset is reduced
to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset
is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognised for the asset (CGU) in prior years. A
reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a
re-valued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Business combinations
Business combinations are accounted for using the purchase method. The consideration for each acquisition is
measured at the aggregate of the fair values at acquisition date of assets given, liabilities incurred or assumed, and
equity instruments issued by the group in exchange for control of the acquired, plus any costs directly attributable
to the business combination. When a business combination agreement provides for an adjustment to the cost of
the combination contingent on future events, the group includes the estimated amount of that adjustment in the
cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.
47
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
2 Accounting policies (continued)
Investments
Investments in securities are classified on initial recognition as available-for-sale and are carried at fair value,
except where their fair value cannot be measured reliably, in which case they are carried at cost, less any
impairment.
Unrealised holding gains and losses other than impairments are recognised in other comprehensive income. On
maturity or disposal, net gains and losses previously deferred in accumulated other comprehensive income are
income.
recognised
in
Interest income on debt securities, where applicable, is recognised in income using the effective interest method.
Dividends on equity securities are recognised in income when receivable.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits.
Trade receivables
Trade receivables are amounts due from customers for goods or services performed in the ordinary course of
business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer),
assets.
they
as non-current
are presented
classified
If not,
current
assets.
they
are
as
Trade receivables are recognised initially at the transaction price. They are subsequently measured at amortised
cost using the effective interest method, less provision for impairment. A provision for the impairment of trade
receivables is established when there is objective evidence that the group will not be able to collect all amounts
due according to the original terms of the receivables.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or
less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at the transaction price and subsequently measured at amortised cost using
the effective interest method.
Borrowings
All borrowings are initially recorded at the amount of proceeds received, net of transaction costs. Borrowings are
subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the
amount due on redemption being recognised as a charge to the income statement over the period of the relevant
borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in finance costs.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting date.
48
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
2 Accounting policies (continued)
Conversion of foreign currency
Foreign currency transactions are translated at the average exchange rates over the year, material transactions are
recorded at the exchange rate ruling on the date of the transaction. Assets and liabilities are translated at the rates
prevailing at the balance sheet date. The Group has significant transactions and balances denominated in Euros
and GBP. The year-end exchange rate to USD was US $1 to GBP £0.7855 and US $1 to €0.9060 (2022: US $1 to
GBP £0.8292, US $1 to €0.8869) US $1 to ARS $810.819 (2022: US $1 to ARS $147.423) and the average
exchange rate during 2023 was US $1 to GBP £0.8039 (2022: US $1 to GBP £0.8019).
In the Company financial statements, the income and expenses of foreign operations are translated at the exchange
rates ruling at the dates of the transactions. The assets and liabilities of foreign operations, both monetary and
non-monetary, are translated at exchange rates ruling at the balance sheet date. The reporting currency of the
Company and group is United Stated Dollars (US $).
Share-based payments
The fair value of equity instruments granted to employees is charged to the income statement, with a
corresponding increase in equity. The fair value of share options is measured at grant date, using the binomial
option pricing model or Black-Scholes pricing model were considered more appropriate, and spread over the
period during which the employee becomes unconditionally entitled to the award. The charge is adjusted to reflect
the number of shares or options that vest.
The group operates an equity-settled, share-based compensation plan, under which the entity receives services
from employees as consideration for equity instruments (options) of the entity. The fair value of the employee
services received is measured by reference to the estimated fair value at the grant date of equity instruments
granted and is recognised as an expense over the vesting period. The estimated fair value of the option granted is
calculated using the Black Scholes option pricing model. The total amount expensed is recognised over the vesting
period, which is the period over which all of the specified vesting conditions are to be satisfied.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value)
and share premium when the options are exercised.
Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the
contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An
equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of
its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out
below.
Inventory
Echo has chosen to value crude oil inventories, a commodity product, at net realisable value, the value is based
on a discounted observable year-end market price. Other inventory items are valued at the lower of net realisable
value and cost.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other
resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred
and the time value of money is material, the initial measurement is on a present value basis.
49
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
2 Accounting policies (continued)
Financial instruments
Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a
party to the contractual provisions of the instrument.
Equity instruments
Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two
conditions, in accordance with IAS 32:
- They include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange
financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the
Group; and
- Where the instrument will or may be settled in the Group’s own equity instruments, it is either a non-derivative
that includes no obligation to deliver a variable number of the Group’s own equity instruments or is a derivative
that will be settled by the Group exchanging a fixed amount of cash or other financial assets for a fixed number
of its own equity instruments.
To the extent that this definition is not met, the financial instrument is classified as a financial liability.
Use of estimates and judgements
The preparation of financial statements in conforming with adopted IFRSs requires management to make
judgements, estimates and assumptions that affect the reported amounts of assets and liabilities as well as the
disclosure of contingent assets and liabilities as at the balance sheet date and the reported amount of revenues and
expenses during the period. Actual outcomes may differ from those estimates. The key sources of uncertainty in
estimates that have a significant risk of causing material adjustment to the carrying amounts of assets and
liabilities, within the next financial year, are the impairment of assets and the Group’s going concern assessment.
Amounts capitalised to the consolidated statements of financial position
In accordance with the Group policy, expenditures are capitalised only where the Group holds a licence interest
in an area. All expenditure relating to the Bolivian company has been expensed to the statement of comprehensive
income, as the Group has not yet been assigned any licence interests in the country. The Group has capitalised its
participation in the SCS assets.
Prior to the decision to dispose of the majority of its SCS interest, expenses incurred in the UK relating to SCS
were capitalised. All such capitalised UK costs were then impaired to nil value following the disposal decision.
Valuation of assets
In line with the requirements of IFRS 5, management have considered impairment in the assets held for sale by
comparing the expected fair value less costs to sell (which was agreed in {June 2023] and the carrying value of
the disposal group. On the basis the fair value less costs to sell were in excess of the carrying value of the disposal
group no impairments were considered necessary.
The parent company’s investment in subsidiary has been written down to the fair value less costs to sell as the
value achieved is indicative of the value at the balance sheet date and the majority of the activity of the subsidiaries
is linked to the discontinued operations.
Management have previously impaired $506,818 of intangible assets which were costs associated with asset
capitalised in the parent company. This intangible has not been disposed of but is linked to the activities of the
discontinued operations and therefore have been fully impaired at 31 December 2023.
50
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
2 Accounting policies (continued)
Functional currency
The groups principal activities, prior to the criteria of discontinued operation being met, are undertaken in
Argentina. Judgement is required to assess to the functional currency of the groups subsidiaries. Consistent with
previous years, management have determined that the functional currency is USD on the basis that revenues, a
portion of the cost base and financing activities are denominated in USD. If a different judgement was made and
if Argentine Peso was considered the functional currency management would need to consider the impacts of IAS
29. On the basis the activities have been discontinued this judgement will not impact the group significantly in
future accounting periods.
Settlement of financial liabilities
As detailed in note 26, during the year the company renegotiated and / or settled certain financial liabilities. These
were on favourable terms to the group. Judgement is required to assess whether the counterparties to the liabilities
were acting in their capacity as shareholders to the group. On the basis of the favourable terms management have
determined they were acting in their capacity as shareholders and have accounted for the renegotiation or
settlement accordingly as detailed in note 26.
Carrying value of investment subsidiaries
An impairment provisions has been made on the carrying value of investment in subsidiaries, writing them down
to the disposal value achieved on the sale of the underlying SCS interests in June 2023.
Business segments
The Group has adopted IFRS 8 Operating Segments. Per IFRS 8, operating segments are regularly reviewed and
used by the board of directors being the chief operating decision maker for strategic decision-making and
resources allocation, in order to allocate resources to the segment and assess its performance.
At the balance sheet date, there is only one business segment, being the company, its activity disclosed in within
continuing operations.
Activity in Argentina, being the Santa Cruz Sur operations are set out within discontinued operations within note
10.
3 Discontinued operations
Disposal of SCS
On 30 June 2023, the group disposed of SCS, which formed part of the group operations. Cash flows and
operations that relate to a major component of the business or geographical region that has been sold are shown
operations.
separately
continuing
from
Assets and businesses classified as held for sale are measured at the lower of carrying amount and fair value less
is charged on assets and businesses classified as held for sale.
costs
to sell. No depreciation
Assets and businesses are classified as held for sale if their carrying amount will be recovered or settled principally
through a sale transaction rather than through continuing use. This condition is regarded as being met only when
the sale is highly probable and the assets or businesses are available for immediate sale in their present condition.
Management must be committed to the sale, which should be expected to qualify for recognition as a completed
classification.
sale
within
from
year
date
one
the
of
Finance income or costs are included in discontinued operations only in respect of financial assets or liabilities
classified as held for sale or derecognised on sale.
51
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
4 Revenue
The analysis of the group's revenue for the year from continuing operations is as follows:
Sale of oil and gas
2023
US $
-
2022
US $
-
Revenue for 2023 all derives from discontinued operations held for resale and is shown in Note 10.
5 Other operating income
The analysis of the group's other operating income for the year is as follows:
Other operating income
6 Other losses
Other losses
Loss on disposal of fixed asset
7 Finance income and costs
Finance income
Other finance income
Foreign exchange gains
Sale of option
Other operating income
Net foreign exchange gain
Finance costs
Fair value losses
Foreign exchange losses
Interest on bank overdrafts and borrowings
Interest expense on other financing liabilities
Total finance costs
Net finance income/(costs)
2023
US $
-
2022
US $
86
2023
US $
2,298
2023
US $
3,450
-
25,462
174,459
203,371
(226,522)
(649,523)
-
(916,292)
(1,792,337)
2022
US $
-
2022
US $
622
1,618,222
-
-
1,618,844
-
-
(415)
(2,980,994)
(2,981,409)
(1,588,966)
(1,362,565)
52
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
8 Expenses and auditors’ remuneration
Depreciation of property, plant and equipment
Fees payable to the company’s auditor
Fees payable to the overseas auditor and its associates
9 Staff costs
The aggregate payroll costs (including directors' remuneration) were as follows:
Wages and salaries
Social security costs
Pension costs, defined contribution scheme
Share-based payment expenses
Remuneration of Key Personnel is set out in the table below:
Wages and salaries
Social security costs
Pension costs, defined contribution scheme
Private health insurance
Share-based payment expenses
2023
US $
27,972
31,827
-
2022
US $
92
60,587
10,502
2023
US $
558,049
62,791
25,743
31,735
678,318
2023
US $
330,865
40,103
8,517
5,930
31,735
417,150
2022
US $
1,159,651
147,922
37,574
157,757
1,502,904
2022
US $
541,915
61,098
12,239
5,963
157,757
778,972
The average number of persons employed by the group (including directors) during the year, analysed by category
was as follows:
Administration and support
2023
No.
8
2022
No.
10
53
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
10 Discontinued operations
In November 2022 the company committed to selling virtually all of its interest in the SCS oil and gas operations
in Argentina (SCS) to its joint-venture partner Interoil. A term of the sale was for Echo to relinquish any
management and accounting in respect of the joint venture, instead receiving a profit share in proportion to the
income.
remaining
The sale was completed on 27 June 2023, satisfied by £825,000 in cash, shares to the value of £400,000 in Interoil
and £75,000 investment in Echo Energy PLC shares by Interoil. At 31 December 2022 the Argentinian operations
were classified as a disposal group held for sale and as discontinued operations.
The results of the Argentinian operations for the period are presented below:
investment
effectively
venture,
holding
joint
5%
the
as
in
Revenue
Oil and Gas Revenue
Total revenue
Cost of sales
Production costs
Depletion
Total cost of sales
Gross loss
Exploration expenses
Impairment of plant and equipment
Administrative expense
Operating loss from discontinued operations
Finance expense
Foreign exchange gain
Profit on disposal
Profit/(Loss) for the year before taxation from discontinued
operations
Deferred tax asset write-off
Profit/(Loss) for the year after taxation from discontinued
operations
2023
US $
3,632,393
3,632,393
(7,912,008)
-
(7,912,008)
(4,279,615)
-
-
(803,530)
(5,083,145)
(4,157,561)
(34,792)
18,331,373
9,055,875
-
2022
US $
14,114,331
14,114,331
(16,933,985)
(1,419,193)
(18,353,178)
(4,238,847)
(287,919)
(506,818)
(578,011)
(5,611,595)
(788,847)
1,208,083
-
(5,192,359)
(12,050)
9,055,875
(5,204,409)
11 Joint arrangements
As described in both the strategic and governance reports, in particular in the Financial Review, Echo had joint
arrangements within the SCS concessions. Previously, the Group accounted for its share of assets, liabilities,
income and expenditure of these joint operations in accordance with its equity interest in each, being 70% of the
SCS working interest. Joint venture assets and liabilities were separately disclosed throughout the financial
statements.
As set out in Note 10, in December 2022 to the decision was made to divest of the SCS concessions, following
which, in June 2023 that interest was reduced to a 5% holding and the joint arrangement thereby has been treated
in the accounts as discontinued operations.
54
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
12 Taxation
Tax on profit on ordinary activities
Taxation charged based on profits for the period
UK corporation tax based on the results for the period
Deferred tax asset write-off in Bolivian subsidiary
Total tax expense in income statement
Year to
31 December
2023
US $
Year to
31 December
2022
US $
-
-
-
-
-
-
68,142
68,142
Reconciliation of the tax expenses
The tax assessed for the year is different from the standard rate of corporation tax in the UK of 19% - 25% (2022:
19%). The references are explained below:
Loss on ordinary activities before taxation
Profit / (loss) from discontinued operations
Profit / (loss) for the year before tax
Profit / (loss) on ordinary activities multiplied by standard rate of
corporation tax in the UK of 19%
Effects of:
Expenses disallowed for tax purposes
Disposal of investments
Deferred tax not provided – tax losses carried forward
Deferred tax asset in Bolivian subsidiary written off
Total current tax
Year to
31 December
2023
US $
(2,809,753)
9,055,875
6,246,122
1,186,763
5,315
(1,720,616)
528,538
-
-
Year to
31 December
2022
US $
(4,382,425)
(5,204,409)
(9,586,834)
(1,821,498)
92
1,821,406
68,142
68,142
The parent entity has tax losses available to be carried forward, and further tax losses are available in certain
subsidiaries. With anticipated substantial lead times for the Group’s projects, and the possibility that these may
expire before their use, it is not considered appropriate to anticipate an asset value for them. The amount of tax
losses carried forward for which a deferred tax asset has not been recognised is US $51million (2022: US
$50million)
No amounts have been recognised within tax on the results of the equity-accounted joint ventures.
55
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
13 Loss per share
The calculation of basic and diluted loss per share at 31 December 2023 was based on the loss attributable to
ordinary shareholders. The weighted average number of ordinary shares outstanding during the year ending 31
December 2023 and the effect of the potentially dilutive ordinary shares to be issued are shown below.
Net loss for the year (US $) before exchange on translating foreign
operations
Net loss on continuing operations
Basic weighted average ordinary shares in issue during the year
Diluted weighted average ordinary shares in issue during the year
Loss per share (cents)
Basic and diluted (cents)
Loss per share on continuing operations (cents)
Basic and diluted (cents)
Year to
31 December
2023
6,246,122
Year to
31 December
2022
(9,586,834)
(2,809,753)
4,867,580,788
4,867,580,788
(4,382,425)
1,909,205,746
1,909,205,746
0.13
(0.06)
(0.50)
(0.23)
In accordance with IAS 33 and as the entity is loss making, including potentially dilutive share options in the
calculation would be anti-dilutive.
Deferred shares have been excluded from the calculation of loss per share due to their nature. Please see Note 24
for details of their rights.
14. Loss of the parent company
The parent company is not required to produce its own profit and loss account (or IFRS equivalent) because of
the exemption provision in Section 408 of the Companies Act 2006.
56
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
15 Property, plant and equipment
Group
31 December 2023
Cost or valuation
At 1 January 2023
Disposals
At 31 December 2023
Depreciation
At 1 January 2023
Charge for year
Disposals
At 31 December 2023
Carrying amount
At 31 December 2023
At 31 December 2022
31 December 2022
Cost or valuation
At 1 January 2022
Additions
Assets of disposal held for sale
At 31 December 2022
Depreciation
At 1 January 2022
Charge for year
Disposals
At 31 December 2022
Carrying amount
At 31 December 2022
At 31 December 2021
PPE – O&G
Properties
US $
Fixtures & Fittings
US $
-
-
-
-
-
-
-
-
-
98,210
(2,991)
95,219
95,911
-
(693)
95,218
1
2,299
Total
US $
98,210
(2,991)
95,219
95,911
-
(693)
95,218
1
2,299
PPE – O&G
Properties
US $
Fixtures &
Fittings
US $
Total
US $
2,873,147
-
(2,873,147)
-
202,718
12,047
(214,765)
-
-
2,670,429
95,397
2,813
-
98,210
91,421
4,490
-
95,911
2,968,544
2,813
(2,873,147)
98,210
294,139
16,537
(214,765)
95,911
2,299
3,976
2,299
2,674,405
57
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
15 Property, plant and equipment (continued)
Company
31 December 2023
Cost or valuation
At 1 January 2023
Additions
At 31 December 2023
Depreciation
At 1 January 2023
Charge for year
Disposals
At 31 December 2023
Carrying amount
At 31 December 2023
At 31 December 2022
31 December 2022
Cost or valuation
At 1 January 2022
Additions
Assets of disposal held for sale
At 31 December 2022
Depreciation
At 1 January 2022
Charge for year
Disposals
At 31 December 2022
Carrying amount
At 31 December 2022
At 31 December 2021
Fixtures & Fittings
US $
Total
US $
92,903
-
92,903
92,902
-
-
92,902
1
1
92,903
-
92,903
92,902
-
-
92,902
1
1
Fixtures & Fittings
US $
Total
US $
92,903
-
-
92,903
90,726
2,176
-
92,902
1
2,177
92,903
-
-
92,903
90,726
2,176
-
92,902
1
2,177
58
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
16
Intangible assets
Group
31 December 2023
At 1 January 2023
Additions
At 31 December 2023
Depletion and impairment
At 1 January 2023
Depletion
Impairment
At 31 December 2023
Carrying amount
At 31 December 2023
At 31 December 2022
31 December 2022
At 1 January 2022
Additions
Assets of disposal held for sale
At 31 December 2022
Depletion and impairment
At 1 January 2022
Depletion
Impairment
Assets of disposal held for sale
At 31 December 2022
Carrying amount
At 31 December 2022
At 31 December 2021
SCS Production assets
US $
-
-
Total
US $
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
SCS Production assets
US $
10,875,022
61,233
(10,429,437)
506,818
3,743,115
1,419,193
506,818
(5,162,308)
506,818
-
7,131,907
Total
US $
10,875,022
61,233
(10,429,437)
506,818
3,743,115
1,419,193
506,818
(5,162,308)
506,818
-
7,131,907
All intangible assets relate to oil & gas activities. The Group’s oil & gas assets were assessed for impairment at
31 December 2022. The intangibles are held within one CGU, the SCS licence concession.
In 2022, the SCS operations were reclassified as Discontinued operations held for sale. No further general
impairment was considered necessary as the proceeds of the sale exceed the net liabilities of the discontinued
operations. However, in exception, the value of UK costs capitalised up to the time of the decision to sell of
$506,818 was assessed as irrecoverable and has been fully impaired in 2022.
59
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
16
Intangible assets (continued)
Company
31 December 2023
At 1 January 2023
Additions
At 31 December 2023
Depletion and impairment
At 1 January 2023
Depletion
Impairment
At 31 December 2023
Carrying amount
At 31 December 2023
At 31 December 2022
31 December 2022
At 1 January 2022
Additions
At 31 December 2022
Depletion and impairment
At 1 January 2022
Depletion
Impairment
At 31 December 2022
Carrying amount
At 31 December 2022
At 31 December 2021
Argentina production
assets
US $
-
-
Total
US $
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Argentina production
assets
US $
445,585
61,233
506,818
-
-
506,818
506,818
-
445,585
Total
US $
445,585
61,233
506,818
-
-
506,818
506,818
-
445,585
60
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
17 Right of use assets
Group and Company
31 December 2023
At 1 January 2023
Additions
At 31 December 2023
Depreciation
At 1 January 2023
Charge for the year
Impairment
At 31 December 2023
Carrying amount
At 31 December 2023
At 31 December 2022
31 December 2022
At 1 January 2022
Additions
At 31 December 2022
Depreciation
At 1 January 2022
Charge for the year
Impairment
At 31 December 2022
Carrying amount
At 31 December 2022
At 31 December 2021
Office lease
US $
-
69,930
69,930
-
27,972
-
27,972
41,958
-
Office lease
US $
-
-
-
-
-
-
-
-
-
Total
US $
-
69,930
69,930
-
27,972
-
27,972
41,958
-
Total
US $
-
-
-
-
-
-
-
-
-
The office lease was agreed during 2021 but it is not considered to be material to restate 2022 and 2021 for the
right of use asset and lease liability.
Depreciation of $27,972 (2022: $Nil) and interest on lease liabilities of $6,993 (2022: $Nil) are recognised in
the statement of comprehensive income.
61
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
18
Interest in subsidiary undertakings
Cost or valuation
At 1 January
Additions
At 31 December
Impairment
At 1 January
Impairment
At 31 December
Carrying amount
At 31 December
Year to
31 December 2023
US $
Year to
31 December 2022
US $
30,521,648
-
30,521,648
28,959,327
1,562,321
30,521,648
30,521,648
-
30,521,648
14,516,604
14,442,723
28,959,327
-
1,562,321
Details of the subsidiaries are as follows:
Subsidiary
Class of
share
%
owned
Country of
registration
Nature of business
Echo Energy Holdings (UK) Limited
Ordinary
100% England & Wales Holding company
Echo Energy Argentina Holdings Limited Ordinary
100% England & Wales Holding company
Echo Energy Tapi Aike Limited
Ordinary
100% England & Wales Holding company
Eco Energy TA Op Limited
Ordinary
100% England & Wales Holder of Argentinian branch assets
Echo Energy C D & LLC Limited
Ordinary
100% England & Wales Holding company
Eco Energy CDL Op Limited
Ordinary
100% England & Wales Holder of Argentinian branch assets
Echo Energy Bolivia (Hold Co 1) Limited Ordinary
Echo Energy Bolivia (Op Co 1) Limited Ordinary
Echo Energy Bolivia (Hold Co 2) Limited Ordinary
100% England & Wales Holding company
100% England & Wales Holder of Bolivian branch assets
100% England & Wales Holding company
Echo Energy Bolivia (Op Co 2) Limited Ordinary
100% England & Wales Dormant
The registered address for all of the above subsidiaries is: 85 Great Portland Street, London, W1W 7LT
19
Current investments
Financial assets at fair value through profit and
loss:
Equity securities
Total
Year to
31 December 2023
US $
283,422
283,422
Year to
31 December 2022
US $
-
-
During the year, the Company received £400,000 worth of shares in Interoil Exploration and Production ASA (a
company listed on the Oslo stock exchange in Norway) as part of the agreements entered into by the Group to
dispose of its SCS operations. The fair values of quoted equity securities are determined through Level 1 inputs
from quoted market prices.
62
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
19
Current investments (continued)
The Group also retained a 5% non-operated working interest in the SCS assets and was due to receive $174,459,
however this is not considered to be recoverable and has been fully impaired as at 31 December 2023.
20 Trade and other receivables
Current
Trade receivables
Prepayments
Other receivables
Non-current
Amounts owing by
subsidiaries
Impairment in year
Group
Company
31 December
2023
US $
-
72,589
21,870
94,459
31 December
2022
US $
531,815
176,493
61,243
769,550
31 December
2023
US $
-
72,589
21,870
94,459
31 December
2022
US $
-
176,493
57,685
234,178
-
-
-
-
-
-
11,358,845
(11,358,845)
-
11,358,845
(11,358,845)
-
The group's exposure to credit and market risks, including maturity analysis, relating to trade and other receivables
is disclosed in note 22 "Financial risk review". The directors consider that the carrying amount of trade and other
receivables approximated to their fair value.
21
Cash and cash equivalents
Cash at bank
Group
Company
31
December
2023
US $
83,127
83,127
31 December
2022
US $
1,132,616
1,132,616
31 December
2023
US $
82,357
82,357
31 December
2022
US $
146,928
146,928
63
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
22
Financial Instruments and treasury risk management
Fair value of financial assets and liabilities
The carrying values of financial assets and liabilities are considered to be materially equivalent to their fair values,
with the expectation of the Eurobond loan which is calculated at present value as disclosed in note 25. The fair
value is approximately $6.7m higher due to the impact of using a market rate interest.
Treasury risk management
The Group manages a variety of market risks, including the effects of changes in foreign exchange rates, liquidity
and counterparty risk.
Credit risk
The Groups’ principle financial assets are bank balances and cash and other receivables. The credit risk on liquid
funds is limited because the counterparties are UK, Argentine and Bolivian banks with high credit ratings. The
Group operates with positive cash and cash equivalents as a result of using share capital in anticipate of future
funding requirements. The Group’s policy is therefore one of achieving higher returns with minimal risks. In order
to provide a degree of certainty, the Group looks, when appropriate, to invest in short-term fixed-interest treasury
deposits giving a low risk profile to these assets.
Currency risk
The Group’s operations are now primarily located in the United Kingdom, with the main exchange risk being
between the US Dollar and Pound Sterling for general operations and US Dollar and Euro for borrowings.
Previously the Group was exposed to currency risk from its operations in Argentina, but these have now been
discontinued.
At year end the Group held the following cash and cash equivalent balances:
US Dollars
GBP Sterling
Euro
Argentine Peso
Bolivian Boliviano
Total
Year to
31 December 2023
US $
Year to
31 December 2022
US $
565
82,570
(8)
-
-
83,127
46
146,903
(19)
985,436
250
1,132,616
The consolidated statement of comprehensive income would be affected by US $8,257 (2022: US $14,690) if the
exchange rate between the US $ and GBP changed by 10%. There would be a loss of US $Nil (2022: US $98,543)
if the exchange rate between the Argentine Peso and the US Dollar weaken by 10%.
The Group has exposure to the Euro, Echo hold €5.5million (2022: €3.9million) bond notes, the Group held Euro-
denominated funds at the beginning of the period to cover servicing of debt during the accounting year. The
primary source of funds for the Group in the period was equity raised in GBP, these funds are predominately
translated into USD to fund exploration, acquisition and production activity in Argentina. No hedging products
were used during this accounting period, but management actively reviewed currency requirements to access the
suitability of hedging products. The Groups consolidated statement of income would be affected by approximately
US $605,385 (2022: US $417,009) by a reasonably possible 10 percentage points fluctuation in the exchange rate
between US Dollars and Euros.
64
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
22
Financial Instruments and treasury risk management (continued)
Currency risk (continued)
The Group used Blue-Chip Swaps during the year to repatriate funds from Argentina to the UK. A Blue-Chip
Swap is when a domestic investor purchases a foreign asset and then transfers the purchased asset to an offshore
entity. The Group’s Argentine subsidiary purchased shares in highly stable and liquid companies that are traded
on both domestic and offshore stock exchanges. These shares were held for a fixed period in accordance with
Argentinian regulation. Following the end of the fixed period the shares were sold offshore and the resulting funds
were then repatriated to the parent company. This type of transactions is therefore exposed to stock price volatility
during the hold period and incurs transaction fees.
At year end the Group held the following cash and cash equivalent balances:
US Dollars
GBP Sterling
Euro
Argentine Peso
Bolivian Boliviano
Total
Year to
31 December 2023
US $
Year to
31 December 2022
US $
565
82,570
(8)
-
-
83,127
46
146,903
(19)
985,436
250
1,132,616
The consolidated statement of comprehensive income would be affected by US $8,257 (2022: US $14,690) if the
exchange rate between the US $ and GBP changed by 10%. There would be a loss of US $Nil (2022: US $98,543)
if the exchange rate between the Argentine Peso and the US Dollar weaken by 10%.
The Group has exposure to the Euro, Echo hold €5.5million (2022: €3.9million) bond notes, the Group held Euro-
denominated funds at the beginning of the period to cover servicing of debt during the accounting year. The
primary source of funds for the Group in the period was equity raised in GBP, these funds are predominately
translated into USD to fund exploration, acquisition and production activity in Argentina. No hedging products
were used during this accounting period, but management actively reviewed currency requirements to access the
suitability of hedging products. The Groups consolidated statement of income would be affected by approximately
US $605,385 (2022: US $417,009) by a reasonably possible 10 percentage points fluctuation in the exchange rate
between US Dollars and Euros.
The Group used Blue-Chip Swaps during the year to repatriate funds from Argentina to the UK. A Blue-Chip
Swap is when a domestic investor purchases a foreign asset and then transfers the purchased asset to an offshore
entity. The Group’s Argentine subsidiary purchased shares in highly stable and liquid companies that are traded
on both domestic and offshore stock exchanged. These shares were held for a fixed period in accordance with
Argentinian regulation. Following the end of the fixed period the shares were sold offshore and the resulting funds
were then repatriated to the parent company. This type of transactions is therefore exposed to stock price volatility
during the hold period and incurs transaction fees.
65
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
22
Financial Instruments and treasury risk management (continued)
Interest rate risk
The Group holds debt instruments there were issued at a fixed rate. As party of the Group’s policy to maximise
returns on cash held, cash held is placed in interest-bearing accounts where possible. During the course of 2023,
Echo invested cash into operations and did not hold significant cash balances for prolonged periods of time. The
consolidated statement of comprehensive income would be affected by US $Nil (2022: US $6) by a one percentage
point change floating interest rate on a full-year basis.
Liquidity risk
The Group actively manages its working capital to ensure the Group has sufficient funds for operations and
planned activated. Operation cash flow represents receipts from revenue, together with on-going direct operational
support costs, exploration, appraisal, administration and business development costs. The Group manages its
liquidity requirements by the use of both short-term and long-term cash flow forecasts. The Group’s policy is to
ensure facilities are available as required, to issue equity share capital and from strategic alliances in accordance
with long-term cash flow forecasts. The Group has no undrawn committed facilities as at 31 December 2023.
The Group’s financial liabilities are primarily obligations under joint operations, trade payables and operational
costs. All amounts are due for payment in accordance with agreed settlement terms with suppliers or statutory
deadlines and all within one year.
The Group hold Euro-denominated long-term debt, see note 25. Other than long-term debts, all financial liabilities
are due for settlement within 12 months. The Group held cash balances of US $83,127 (2022: US $1,132,616).
The Group does not currently use derivatives financial instruments to hedge currency and commodity price risk
as it not considered necessary. Should the Group identify a requirement for the future use of such financial
instruments, a comprehensive set of policies and systems as approved by the directors will be implemented.
Commodity Price Risk
The Group is no longer exposed to significant risks of fluctuations on prevailing commodity market prices due to
the disposal of its Argentina operations.
Capital management
The Group’s legacy strategy has led to its capital structure being a mixture of debt and equity. The directors will
reassess the future capital structure when new projects are sufficiently advances and restructure accordingly.
The Group’s financial strategy is to utilise its resources to further appraise and test the Group’s projects, forming
strategic alliances for specific projects where appropriate together with assessing target acquisitions. The Group
keeps investors and the market informed of progress with its projects through regular announcements and raises
additional equity finance at appropriate times.
66
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
22
Financial Instruments and treasury risk management (continued)
Categories of financial instruments
All of the Group’s financial assets are carried at amortised cost apart from the listed equities held at fair value,
as disclosed in note 19. The Group’s financial liabilities are classified as financial liabilities at amortised cost.
23 Trade and other payables
Current
Trade payables
Social security and other taxes
Accruals
Other payables
Group
Company
31 December
2023
US $
488,777
26,737
283,239
-
798,753
31 December
2022
US $
657,923
388,422
163,401
120,245
1,329,991
31 December
2023
US $
488,777
26,737
283,239
-
798,753
31 December
2022
US $
556,536
105,121
162,468
120,244
944,369
Lease liabilities
44,078
Non-current
Amounts owing to
subsidiaries
-
-
-
44,078
264,378
-
-
The lease liabilities relate to the right of use asset in note 17, there were lease payments of £32,845 during the
year (2022: $Nil).
24
Share capital
Issued, Called Up and Fully Paid
6,285,526,975 0.31¢ (2022 5,527,427,674 0.31¢) ordinary shares.
1 January
Equity shares issued
Group
Company
31 December
2023
US $
19,795,863
951
19,796,814
31 December
2022
US $
7,209,086
12,586,777
19,795,863
31 December
2023
US $
19,795,863
951
19,796,814
31 December
2022
US $
7,209,086
12,586,777
19,795,863
The holders of the 0.31¢ (0.25p) ordinary shares are entitled to receive dividends from time to time and are
entitled to one vote per share at meetings of the Company.
67
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
24
Share capital (continued)
Shares were issued during the year as follows:
1 January 2023
Exercise of warrants
Shares issued
Shares issued
Shares issued
31 December 2023
Date
02/01/2023
28/06/2023
29/09/2023
29/12/2023
Shares
5,527,427,674
33,190,876
115,384,615
285,714,286
323,809,524
6,285,526,975
Price
pence
Price
(US ¢)
Nominal Value
(US $)
0.265
0.065
0.028
0.011
0.338
0.083
0.036
0.013
19,795,863
42
147
348
414
19,796,814
Pursuant to the exercise of share warrants, on 22 December 2022 the company received cash of £87,977
(US$97,523), but the 33,190,876 ordinary shares were not issued until 2 January 2023. These were shown
within shareholders’ funds as ‘cash received on shares to be issued’ in the previous year.
The 115,384,615 shares issued on 28 June 2023 were issued to Interoil Exploration and Production ASA as part
of the agreements entered into by the Group to dispose of its SCS operations.
The other shares were issued to raise funds or settle liabilities owed to suppliers.
(A) Share options
The Group has a share option scheme established to reward and incentivise the executive management team and
staff for delivering share price growth. The share option scheme is administered by the remuneration committee.
The expected life of the options is based on the expected time through to exercise and is not necessarily
indicative of the exercise patterns.
Share options are valued using the stochastic Black-Scholes model. The inputs to the model are the market price
at the date of grant, the exercise price set out in the option agreement, expected life, the risk-free rate of return
and the expected volatility. A 10-year gift rate is used as an equivalent to risk-free rate and the expected
volatility was determined with reference to the Company’s share price.
The expected life used in the model has been adjusted, based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations. The cost of options is amortised to the
statement of comprehensive income over the service period of the option.
On 21 December 2023 the Company issued 238,468,698 options to Stephen Birrell over new Ordinary shares in
the Company. The options have an exercise price of 0.0105 pence per new Ordinary share, being the price equal
to the closing price per Ordinary share on 21 December 2023, and will vest on the third anniversary of the date
of grant and will be exercisable anytime thereafter until expiry on the fifth anniversary of the date on which the
Options were granted.
68
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
24
Share capital (continued)
Details of the tranches of share options outstanding at the year-end are as follows:
Share options
Outstanding at 1 January
Granted during the year
Forfeited during the period
Cancelled during the year
Options outstanding as at 31
December
Exercisable at 31 December
*Weighted Average Exercise Price (WAEP)
Number
31/12/202
71,266,483
238,468,698
(23,070,755)
(1,195,728)
285,468,698
39,000,000
WAEP*
(¢)
31/12/2023
3
0.013
3
3
Number
31/12/2022
120,254,120
-
(8,987,636)
(40,000,001)
0.3
2.3
71,266,483
33,266,483
WAEP*
(¢)
31/12/2022
3
-
2
3
3
4
The fair values on the grant date and each reporting date were determined using the Black-Scholes option
pricing model. The following key assumptions were used in determining the derivative’s fair value at the
reporting date:
Options
Market stock price
Option strike price
Volatility
Expiration of the option
Risk free rate
Future value
Expense
22/12/2023
0.0105p
0.0105p
70%
5 years
3.3%
$31,877
$2,363
The weighted average outstanding life of vested share options is 1 year. The price for outstanding options ranges
between 0.013¢ and 3¢ (0.0105p and 2.6p). The outstanding options are not subject to any share performance-
related vesting conditions, but vesting is conditional upon continuity of service.
The Group recognised total expenses of US $31,735 (2022: US $157,757) related to equity-settled, share based
payment transactions during the year.
A deferred taxation asset has not been recognised in relation to the charge for share-based payments due to
availability of tax losses to be carried forward.
69
Notes to the Financial Statements for the Year Ended 31 December 2023
Echo Energy PLC
24
Share capital (continued)
(B) Warrants over ordinary shares
The Company issued warrants over ordinary shares to subscribers of new ordinary shares and as fundraising
commission in respect of debt restructuring completed during the year to 31 December 2023.
Details of the tranches of warrants outstanding at the year-end are as follows:
Warrants
Outstanding at 1 January
Granted during the year
Exercised during the period
Lapsed in year
Outstanding as at 31 December
*Weighted Average Exercise Price (WAEP)
Number
31/12/2023
565,016,300
-
(33,190,876)
(162,598,040)
369,227,384
WAEP*
(¢)
31/12/2023
1
-
1
Number
31/12/2022
551,716,990
402,418,260
-
1
0.5
(389,118,950)
565,016,300
WAEP*
(¢)
31/12/2022
9
1
-
8
1
Warrants values are calculated using the Black-Scholes option pricing model using the following inputs:
The exercise price for outstanding warrants as at 31 December 2023 ranges between 0.32¢ and 0.83¢ (0.25p and
0.65p). The residual weighted average contractual life for warrants is less than 1 year.
(C) Share premium account
31 December 2023
Group
US $
Share options
1 January
Premium arising on issue of equity shares
Warrants lapsed
Warrants issued
Transaction costs
83,790,504
332,943
-
-
-
Company
US $
83,790,504
332,943
31 December 2022
Group
US $
64,977,243
7,521,415
-
11,291,846
-
83,790,504
Company
US $
64,977,243
7,521,415
-
11,291,846
-
83,790,504
-
-
-
31 December
84,123,447
84,123,447
Warrants and options which lapsed, expired or were exercised in the period have been transferred between the
warrant or option reserve and retained earnings.
70
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
25
Loans due in over one year
Five-year secured bonds
Other loans
Total
31 December 2023
US $
6,053,854
1,227,292
31 December 2022
US $
4,170,086
1,293,215
7,281,146
5,463,301
31
December
2022
US $
4,170,086
1,293,215
5,463,301
Funds
raised
US $
-
82,750
82,750
Amortised
finance
charges
US $
Exchange
adjustments
US $
1,227,296
(311,004)
916,292
656,472
162,331
818,803
31 December 2023
US $
6,053,854
1,227,292
7,281,146
€20 million five-year
secured bonds
Other loans
Total
renegotiation
Euro-bond
On 2 December 2022, a partial (50%) settlement of the principle and accrued interest was agreed on the existing
Euro-secured denominated bonds, $11.3m of the debt being settled by the issue of 2,436,938 ordinary shares. On
the basis the settlement of the loan was on favourable terms to the group management considered the counterparty
was acting in their capacity as shareholders of the Group and therefore the criteria in IFRIC 19 – Extinguishment
of financial liabilities with Equity Instruments did not apply. Therefore the value of the shares issued has been
deemed to be the same as the carrying value of the loan.
In addition and at the same time, the repayment date for the remaining bonds was moved back from 2024 until
2032 and the interest rate reduced from 8% to 2%. This is a substantial modification to the loan terms, management
calculated the present value of the new loan and compared to the carrying value. The difference has been recorded
as a capital contribution to the group of $7.2m.
The Euro bondholders are also considered to be Related Parties by virtue of them being shareholders.
Maturity analysis
Contractual undiscounted cashflows:
Amounts due within one year
Amounts due between one and five years
Amounts due over five years
Total
31 December 2023
US $
-
82,750
7,198,396
7,281,146
31 December 2022
US $
-
1,293,215
4,170,086
5,463,301
71
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
26
Related party transactions
Inter-Group balances
In order for individual subsidiary companies to carry out the objectives of the group, amounts are loaned to them
on an unsecured basis. At the year-end the following amounts were outstanding:
Amounts owed to Echo Energy plc
from:
Echo Energy Bolivia Op Co 1 Limited
Eco Energy CDL Op Limited
Eco Energy TA Op Limited
31 December 2023
US $
31 December 2022
US $
-
-
-
-
562,130
1,156,518
9,640,324
11,358,972
The loans are fully impaired and are not considered to be recoverable, so have been written down to $Nil.
At the year end the Company owed $68,222 to Ossian Energy Ltd, a company controlled by the director
Stephen Birrell, for professional fees invoiced prior to his appointment as a director.
The Directors’ emoluments, shareholding and options are disclosed in the Directors’ Remuneration Report and
the Directors’ Report. As at the year end the Company owed the directors $233,770 in respect of accrued and
deferred salaries.
27
Controlling party
The directors do not consider there to be a controlling party.
28
Commitments
Echo had no committed expenditure at the end of 31 December 2023.
29
Post balance sheet events
Shares were issued post 31 December 2023 as follows:
Shares issued
Shares issued
Shares issued
Shares issued
Shares issued
Date
26/01/2024
29/01/2024
29/01/2024
07/02/2024
04/04/2024
Shares
1,111,111,111
333,333,333
5,555,555,556
3,742,222,222
1,658,974,359
Prices (US $)
63,565
19,048
317,475
212,538
81,884
72
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
Warrants were issued post 31 December 2023 as follows:
Date
29/01/2024
08/02/2024
Warrants
Strike price
363,555,556
224,533,333
0.0080
0.0080
Term
5 years
5 years
Expiry date
29/01/2029
07/02/2029
Other post balance sheet events occurred as follows:
07/02/2024
09/05/2024
06/06/2024
26/06/2024
Cancellation of USD$631,050 (GBP £500,000) unsecured convertible loan note funding facility
Decision made to broaden the Company's acquisition strategy towards a wider range of natural resources
projects
Company entered into a USD$639,450 (GBP £500,000) unsecured conditional convertible loan note,
details of which are in the RNS dated 6 June 2024
Mr James Parsons resigned from the Board
73
Echo Energy PLC
Notes to the Financial Statements for the Year Ended 31 December 2023
Shareholder Information
AIM Rule 26 information
Dealing information
Country of incorporation
England & Wales (Registered number 5483127)
Main country of operation
Argentina
Trading information
Shares in Echo Energy plc are only traded on AIM, a market operated by the London Stock Exchange Plc, and
the Company has not applied or agreed to have any of its securities admitted or traded to any other exchange
platform.
There are no restrictions on the transfer of ordinary shares.
Address
Echo Energy Plc
85 Great Portland Street
First Floor
London
W1W 7LT
Nominated advisor and Brokers
WH Ireland Limited
24 Martin Lane
London
EC4R 0DR
Registrars
Link Group
10th Floor, Central Square
29 Wellington Street
Leeds
LS1 4DL
Auditors
MAH, Chartered Accountants
2nd Floor
154 Bishopsgate
London
EC2M 4LN
Company Secretary
AMBA Secretaries Limited
400 Thames Valley Park Drive
Reading, Berkshire
RG6 1PT
Solicitors
Fieldfisher
Riverbank House
London
W15 4JU
74