Annual
Report 2021
PO VALLEY ENERGY LIMITED
CONTENTS
CHAIRMANS LETTER ..................................................................................................................................................... 1
CORPORATE DIRECTORY .............................................................................................................................................. 2
DIRECTORS’ REPORT .................................................................................................................................................... 3
REMUNERATION REPORT .......................................................................................................................................... 10
AUDITOR’S INDEPENDENCE DECLARATION ............................................................................................................... 19
STATEMENT OF FINANCIAL POSITION ....................................................................................................................... 20
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ............................................................... 21
STATEMENT OF CHANGES IN EQUITY ........................................................................................................................ 22
STATEMENT OF CASH FLOWS .................................................................................................................................... 23
NOTES TO THE FINANCIAL STATEMENTS .................................................................................................................... 24
DIRECTORS’ DECLARATION ........................................................................................................................................ 63
INDEPENDENT AUDITOR’S REPORT ........................................................................................................................... 64
TECHNICAL SUMMARY .............................................................................................................................................. 68
ASX ADDITIONAL INFORMATION .............................................................................................................................. 73
PO VALLEY ENERGY LIMITED
CHAIRMAN’S LETTER
Dear fellow shareholders,
We move into 2022 with great momentum following key approvals and preparatory progress in 2021. During
2021 we received environmental approval for both Selva and Teodorico and have focused our resources on the
final approval step for both these licences which is full grant of a production concession.
Priority focus has been on Selva given that it is onshore and can be put into production and low capital costs.
In early 2022 the Ministry initiated the process for Selva to be issued an INTESA and we expect receipt in the
June 2022 quarter followed by full grant of the production concession.
Preparation for putting Selva into gas production is advanced with regulatory required monitoring systems in
place and operational and an application to connect to the SNAM Italian Energy Grid submitted.
Procurement of the required gas plant is also underway, drawing on the skills and experience of previous
suppliers to Po Valley.
The regulatory environment in Italy has substantially improved under the leadership of Mario Draghi but
remains challenging. We expect a relatively smooth process for final grant of the Selva production
concession. The Plan of Areas report issued subsequent to year end provided guidance on Po Valley portfolio
management and we have taken immediate steps to align with the new guidelines.
European and Italian gas prices are at record levels and gas supplies into Italy and the wider European
market have been greatly constrained by the Ukraine Russia conflict. At the highest levels government
there is a clear priority to get Italian natural gas fields such as Selva into production.
During the year we received strong support from existing and new shareholders in July 2021 with a successful
capital raising and rights issue of some A$10.1m.
Po Valley shareholders have been exceptionally well served by the Company’s dedicated and expert team
in Italy, led by Giorgio Bertuzzi, Daniele Marzorati, Gianluca De Rosa and Pierpaolo Poncia and supported by
our dedicated Non-Executive Directors, Sara Edmonson and Kevin Bailey. We were very pleased to welcome
Joseph Constable to the Po Valley Board and he has made a great contribution. I thank the team and the
Directors for their guidance and direction in another challenging year.
Michael Masterman
Chairman Po Valley Energy
1
Directors
Company Secretary
Registered Office
Rome Office
Share Register
Auditor
Solicitors
Bank
PO VALLEY ENERGY LIMITED
CORPORATE DIRECTORY
Michael Masterman
Kevin Bailey
Sara Edmonson
Joseph Constable
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Kevin Hart
Suite 8, 7 The Esplanade, Mt. Pleasant WA 6153 Australia
Tel: +61 8 9316 9100
Via Della Luce 58, Rome Italy
Tel: +39 06 42014968
Link Market Services Limited
Level 12, 250 St Georges Terrace, Perth WA 6000
Tel: +61 8 9211 6670
HLB Mann Judd (WA Partnership)
Level 4, 130 Stirling Street, Perth WA 6000
Steinepreis Paganin
Level 4, The Read Buildings, 16 Milligan Street, Perth WA 6000
Australia
Bankwest
108 St Georges Terrace, Perth WA 6000, Australia
Stock Exchange Listing
Po Valley Energy Limited shares are listed on the Australian Securities
Exchange (ASX) under the code PVE
Website address
www.povalley.com
2
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
The Directors present their report together with the financial report of Po Valley Energy Limited (“the
Company” or “PVE”) and of the Group, being the Company and its controlled entities (“the Group” or “Po
Valley”), for the year ended 31 December 2021.
1. Directors
The Directors of the Company at any time during or since the end of the financial year are:
Michael Masterman — Chairman, BEcHons, Age 59
Director since 22 June 1999
Michael is a co-founder of PVE. Michael first took up the position of CEO of PVE in 2002 up to October 2010
when he took up an executive position at Fortescue Metal Group until June 2014. Prior to joining PVE, Michael
was CFO and Executive Director of Anaconda Nickel (now Minara Resources), and he spent 8 years at McKinsey
& Company serving major international resource companies principally in the area of strategy and
development. He is also Chairman of W Resources Plc, an AIM listed company with tungsten and gold assets
in Spain and Portugal. Michael was appointed as Chairman of PVE on 22 April 2016 and resumed the role of
CEO on 1 November 2017. In the last three years, Michael has not been a director of any other listed company.
Kevin Bailey AM — Non-Executive Director, DipFP, Age 61
Director since 3 May 2016
Kevin was appointed as a director on 22 April 2016. He has been a shareholder of PVE since April 2008 and
brings significant business acumen and experience to the Board. Kevin is a highly successful businessman with
a range of business interests, both local and overseas. He worked for 28 years as a Certified Financial Planner
and was a founding director of Shadforth Financial Group Limited. He was a member of the Prime Minister’s
Community Business Partnership and devotes considerable time to philanthropic interests. Kevin is currently
Chairman of Parousia Media Pty Ltd and has served as director of various entities including the Investment
Advisory Board of the Timor Leste Petroleum Fund, the $17bn Sovereign Wealth Fund of Timor Leste, Outward
Looking International Pty Ltd, Halftime Australia Pty Ltd, Alpha Australia, Empart Inc, and Dads4Kids
Fatherhood Foundation. In the last three years, Kevin has not been a director of any other listed company.
Sara Edmonson — Non-Executive Director, BSBA, MBA, Age 42
Director since 23 December 2019
Sara was appointed as a director on 23 December 2019. Sara has extensive experience in natural gas, the
critical transition fuel for a low carbon future, having led PVE as CEO from July 2010 to 2017. Until recently,
Sara was the President at Associazione Energia Nazionale, an Italian association created to promote
sustainable production, transportation and use of domestic energy and is fluent in Italian, having previously
worked both in Italy and internationally for Ernst & Young Transaction Advisory Services. During her tenure at
EY Sara advised numerous blue-chip corporate clients on transactions in Russia, Romania, Turkey and the US
including the US$5 billion acquisition of DRS Technologies by Finmeccanica in 2008. She holds an MBA from St
John’s University in New York City and is completing a Masters in Sustainability Sciences at Harvard University.
Sara served on the board of Coro Energy Plc from November 2017 to October 2018 and as executive until
March 2019. In the last three years, Sara has not been a director of any other listed company.
3
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
Joseph Constable — Non-Executive Director, BA(Hons) MPhil, Age 30
Appointed 30 November 2021
Joseph was appointed as a director on 30 November 2021. Joseph is an Executive Director of Hancock & Gore
Limited (ASX: HNG), and portfolio manager at H&G Investment Management Limited and has been a long-time
shareholder of PVE personally as well as professionally via the H&G High Conviction Fund (formerly The
Supervised Fund). Joseph has a detailed understanding of the Company and its assets and his significant
financial skills will be beneficial to PVE and the board of directors. In the last three years, Joseph has not been
a director of any other listed company.
2. Company Secretary
Kevin Hart – Company Secretary, B.Comm, FCA
Appointed 17 April 2018
Kevin Hart is a Chartered Accountant and was appointed to the position of Company Secretary on 17 April
2018. He has over 25 years’ experience in accounting and the management and administration of public listed
entities in the mining and exploration industry. He is currently a partner in an advisory firm, Endeavour
Corporate, which specialises in the provision of company secretarial and accounting services to ASX listed
entities.
3. Directors’ Meetings
The number of meetings of the Board of Directors held during the financial year and the number of meetings
attended by each director are provided below:
Director
Attended
Held
Michael Masterman
Kevin Bailey
Sara Edmonson
Joseph Constable
24
24
23
2
24
24
24
2
Held: represents the number of meetings held during the time director held office.
The roles and responsibilities normally undertaken by the Audit and Risk Committee and the Remunerations
and Nominations Committee have been dealt with by the full board as part of its duly convened meetings
rather than through separate committees.
4. Principal Activities
The principal continuing activities of the Group in the course of the year were:
• The exploration for gas and oil in the Po Valley region in Italy.
• Appraisal and development of gas and oil fields.
5. Earnings per share
The basic and diluted loss per share for the Company from continuing operations was (0.07) € cents (2020:
(0.16) € cents)
4
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
6. Operating and financial review
The loss for the year from continuing operations was €595,733 (2020: €1,035,548).
Cash and cash equivalents of the Group at 31 December 2021 amounted to €1,262,151 (2020: €44,107).
PVE completed a A$10.1 million (€6.3 million) equity raise in 2021 by way of a placement of A$1 million and
an Accelerated Non-Renounceable Rights Issue (“ANREO” or “Entitlement Offer”) of A$9.1 million at $0.028
per New Share. The ANREO comprised a non-renounceable entitlement offer to institutional shareholders
(Institutional Offer) and to retail shareholders (Retail Offer). The Entitlement offer was fully underwritten by
Henslow Pty Ltd.
The Placement and Institutional Offer completed on 21 June 2021 raising approximately A$7.5 million (before
costs) (€4.7 million). Approximately A$1 million was raised through the Placement and the Institutional offer
raised approximately A$6.5 million, which included conversion of debt of approximately A$3.35 million (€2.4
million). The Retail Offer closed on 9 July with completion on 15 July 2021 raising approximately A$2.6 million
(€1.6 million) (before costs), which included a conversion of debt of approximately A$0.6 million (€0.4 million).
The capital raising will be used for the development of the Selva Malvezzi project and working capital; and has
strengthened the financial position of the Group with the retirement of existing shareholder loans, interest on
loans and convertible notes, and repayment of some convertible notes.
Strategy
Po Valley remains a northern Italy-focused energy development and exploration company with a streamlined
focus on the following assets:
• The onshore gas development at Selva Malvezzi;
• Offshore Adriatic gas development at Teodorico;
• The large-scale gas/oil condensate exploration licence at Torre del Moro; and
• Canolo and Zini gas prospects in the Cadelbosco di Sopra exploration licence.
Po Valley’s primary focus since completing the A$10.1 million capital raising in July 2021 has been to secure
approvals and expedite development of the Selva Malvezzi gas field (Selva). Since the capital raising there
have been some changes to the development plan for Selva which affected both estimated capital expenditure
as well as time of execution. At the same time there have been changes in market conditions in the Italian and
European Gas markets with an unprecedented increase in natural gas prices.
Gas prices in Italy have surged from around €0.20 per standard cubic meter to above €0.90 per standard cubic
meter (averaging €0.94 in January 2022). The increase in prices underpins strong economics for both Selva
and Teodorico. Teodorico in particular is very leveraged to the strong market conditions and Po Valley
continues to explore options to introduce joint venture partners or divest this large offshore gas field. Previous
independent valuations of Selva and Teodorico have used a base input of around €0.20 per standard cubic
meter.
COVID-19 Impact
The COVID-19 Pandemic continued to impact the operating environment. The team in Rome continue to work
in accordance with COVID-19 health and safety rules and directives. Supply chain bottlenecks associated with
the impact from COVID-19 have pushed up pipeline and equipment pricing which has caused delays in project
execution, specifically the estimated time to execute the construction of the grind pipeline necessary to tie in
the Selva Gas Field is now estimated to be significantly longer than previously forecast.
5
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
Impact of Italy’s Plan of Sustainable Energy Transition of Suitable Areas (“Pitesai”)
The Italian government recently published its plan of sustainable energy transition of suitable areas (Pitesai or
Plan). The Plan was finalised on 28 December 2021 and published on 11 February 2022 when it was adopted
by the Ministry of Ecological Transition (MiTE).
The Pitesai process started in 2019 along with a ban on new exploration and production activities. Only
production concessions, including the Selva and Teodorico preliminary awarded concessions, were allowed to
continue through the permitting process on the basis that they were projects which were well advanced. The
Plan’s purpose is to define suitable areas, onshore and offshore, where exploration and production activities
would be allowed without threatening Italy’s environmental, social and economic sustainability and was an
additional step taken by the former coalition government to delineate its regulations to align with the overall
decarbonisation goals set by the European Union. In addition to defining suitable areas, the Pitesai also
imposed a ban on new oil activities.
Po Valley has reviewed the documentation issued by MiTe and considered impacts on its assets.
The main conclusions are as follows:
1. Selva Malvezzi / Podere Maiar – this onshore gas field is unaffected. Additional gas prospects in the
concession such as Selva North, Selva South and Riccardina are unaffected. Po Valley has sought
further clarification from the Ministry on East Selva.
2. Teodorico – the offshore gas field may be affected as the existing 12-mile no development zone has
been extended due to the recent institution of environmental protected areas in proximity of the
licence. Po Valley has initiated a discussion with the Ministry in order to better understand the impact
on the basis that the concession was requested before the Pitesai process started in February 2019. It
received environmental approval last year and the gas field reserves (2P 36.5bcf) are in excess of the
5.3bcf threshold for continuation mentioned in the Pitesai.
3. Torre del Moro - Po Valley has sought clarification on how the gas condensate exploration and targeted
gas cap may be treated.
4. Cadelbosco & Grattasasso – Canolo and Zini gas prospects remain unaffected. Activity for Bagnolo and
Ravizza oil discoveries will not proceed under the new plan and Po Valley has adjusted resource and
reserve definitions accordingly. Expenditure to date on these oil discoveries has been negligible
(€30,071). Not proceeding with the Bagnolo and Ravizza projects is not considered to be material to
the Group.
Selva Gas Field (63% PVO*)
Podere Gallina Exploration Permit and Selva Malvezzi Preliminary Production concession
In the Selva gas field, north - east of Bologna, preliminary development work has continued to prepare for
maiden gas production within the first half of 2023.
Po Valley was awarded the Selva Malvezzi preliminary gas Production Concession (80.68km²) in 2019 and had
the final Environmental Impact Assessment (EIA) decree issued by Italy’s Ecological Transition Ministry (MiTE)
effective date of 29 March 2021.
The Selva development has a small footprint of less than half a hectare and will have negligible emissions.
Under the first phase of the development plan, Po Valley will install a fully automated gas plant at the existing
Selva/Podere Maiar 1dir well site and install a one-kilometre long pipeline to connect the well with the nearby
Italian National Gas Grid. Based on dynamic reservoir studies, the field development is designed to produce at
6
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
a maximum rate of up to 150,000 cubic meters/day (5.3 mmscf/day) from successfully tested C1 and C2
production levels in the Medium-Upper Pliocene sands of the Porto Garibaldi Formation (refer ASX
announcement 29 May 2018).
Po Valley holds an economic interest of 63% in the Selva gas field together with joint venture partners United
Oil & Gas Plc (United) 20% and Prospex Oil & Gas Plc (Prospex) 17%.
The Ministry (MiTE) has officially requested the INTESA (local government production agreement) from the
Emilia Romagna Region. This is the penultimate step necessary to receive the final Production Concession. The
Pitesai does not affect the Selva gas field.
Following a review of the project execution plan with particular reference to the timing of construction of the
grid connection point by pipeline operator SNAM, the estimated time to first gas has been extended to the
first half of 2023. During Q4 FY21, the team had been in close contact with the pipeline operator with the aim
to secure a faster pipeline connection. There is no certainty that this will be achieved however SNAM have
confirmed their commitment to make an effort to reduce the timetable. A deposit, as a form of bank
guarantee, was issued to SNAM for €757k in December 2021 for tie-in works to be commenced and the funds
to be returned to Po Valley on commencement of first gas.
Guidance for the capital expenditure for the project has also been adjusted to reflect the new structure for the
pipeline connection point which reduces tie-in costs with an overall increase of total capital cost due to
materials prices increase and supply chain shortages in Europe. Overall, the estimated capital cost estimate is
now in the range of €2.65M (up from €2.35M). Detailed design of the gas plant is in progress and anticipated
to be completed in the first quarter of 2022.
Works for seismic and subsidence monitoring have commenced and the installation of piezometers,
settlement gauges and seismic stations completed. GPS monitoring for subsidence has been active since June
2020 and seismic and subsidence monitoring data recording started in February 2022. This environmental
monitoring program is a requirement as set forth by the prescriptions tabled by the Technical Committee of
the Italian Ministry of Ecological Transition and as a result are a legal obligation. Po Valley has proceeded with
this activity on this basis.
Teodorico Offshore Gas field development (100% PVO)
The Teodorico gas field is located in shallow east coast waters (30m) of the northern Adriatic Sea – the primary
source of domestic gas production for much of Italy – and in close proximity to existing east coast offshore gas
production facilities. Teodorico has the largest gas-in-place of all of Po Valley’s gas fields and is at an advanced
stage of assessment, ready for development.
MiTE issued the final EIA decree for Teodorico with an effective date of 29 March 2021 which paves the way
for the grant of full production concession.
The Group was informed that some environmental groups and local municipalities have filed a law suit against
the Ministry of Environment regarding the Teodorico Gas Field on the basis that they believe there was an
error in the environmental impact assessment process. The Group has sought legal advice on this matter and
may provide technical or procedural evidence in support of the Italian Ministry in its legal defence of this claim.
The Group is not a party to these claims and there are no claims against the Group.
Teodorico may be affected by the Pitesai as the existing 12-mile no development zone has been extended due
to the recent institution of environmental protected areas in proximity of the license. Po Valley has initiated a
discussion with the Ministry in order to better understand the impact on the basis that:
-
the concession was requested before the Pitesai process started in February 2019;
7
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
-
-
it received environmental approval last year; and
the gas field reserves (2P 36.5bcf) are in excess of the threshold for continuation (5.3bcf)
Torre del Moro Oil/Gas Condensate exploration (100% PVO)
Following the publication of the Pitesai, Po Valley is seeking clarification on how the gas condensate
exploration and targeted gas cap may be treated.
Cadelbosco di Sopra and Grattasasso Permits
Oil - Ravizza, Bagnolo in Piano, and Bagnolo SW Exploration (100% PVO)
Activities on Bagnolo and Ravizza oil discoveries as detailed in the table below will not proceed under the
Pitesai. Expenditure on these projects of €30,071 have been expensed.
Table: Resources related to Bagnolo and Ravizza:
Licence
Project
Contingent
Resources
Prospective
Resources
Oil MMbbl
1C
2C
3C
Low
Best
High
Cadelbosco1
Bagnolo in Piano
6.6
27.3
80.6
Bagnolo SW
22.1
54.5
112.0
Grattasasso1
Ravizza
2.8
16.1
41.6
1 Resource estimated are as reported and CPR reports dated 29 April 2019. Refer ASX announcement 29 April 2019
Gas - Canolo and Zini (100% PVO)
Po Valley retains the gas prospects of Canolo and Zini in the Cadelbosco di Sopra permit. These are not affected
by the Pitesai. Activities were halted during the Pitesai process but may now resume.
Health and safety
Paramount to Po Valley’s ability to pursue its strategic priorities is a safe workplace and a culture of safety first.
The Group regards environmental awareness and sustainability as key strengths in planning and carrying out
business activities. Po Valley’s daily operations are conducted in a way that adheres to these principles and
management are committed to their continuous improvement. Whilst growing from exploration roots, the
Group has strived to continually improve underlying safety performance. The Group has adopted an HSE
Management System which provides for a series of procedures and routine checks (including periodical audits)
to ensure compliance with all legal and regulatory requirements and best practices in this area. In 2021, the
Group maintained its outstanding occupational health safety and environmental track record with no incidents
or near misses to report.
Principle risks and uncertainties
Oil and gas exploration and appraisal involves significant risk. The future profitability of the Group and the
value of its shares are directly related to the results of exploration and appraisal activities. There are inherent
risks in these activities. No assurances can be given that funds spent on exploration and appraisal will result in
discoveries that will be commercially viable. Future exploration and appraisal activities, including drilling and
seismic acquisition may result in changes to current perceptions of individual prospects, leads and permits.
The Group identifies and assesses the potential consequences of strategic, safety, environmental, operational,
legal, reputational and financial risks in accordance with the Group’s risk management policy. PVE
management continually monitors the effectiveness of the Group’s risk management, internal compliance and
control systems which includes insurance coverage over major operational activities, and reports to the Board
on areas where there is scope for improvement. The Board as a whole is responsible for oversight of the
8
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
Group’s risk management and control system. The principal risks and uncertainties that could materially affect
PVE future performance are described below.
External risks
Exposure to gas
pricing
Changes to law,
regulations or
Government policy
Volatile oil and gas prices make it difficult to predict future price movements with
any certainty. Decline in oil or gas prices could have an adverse effect on PVE. The
Group does not currently hedge its exposures to gas price movements long term.
The profitability of the Group’s prospective gas assets will be determined by the
future market for domestic gas. Gas prices can vary significantly depending on other
European gas markets, oil and refined oil product prices, worldwide supply and the
terms under which long term take or pay arrangements are agreed.
Changes in law and regulations or government policy may adversely affect PVE’s
business. Examples include changes to land access or the introduction of legislation
that restricts or inhibits exploration and production.
Similarly changes to direct or indirect tax legislation may have an adverse impact
on the Group’s profitability, net assets and cash flow.
Uncertainty of timing
of regulatory
approvals
Delays in the regulatory process could hinder the Group’s ability to pursue
operational activities in a timely manner including drilling exploration and
development wells, to install infrastructure, and to produce oil or gas. In particular,
oil and gas operations in Italy are subject to both Regional and Federal approvals.
Operating risks
Exploration,
development and
production
Estimation of
reserves
Tenure security
The future value of PVE will depend on its ability to find, develop, and produce oil
and gas that is economically recoverable. The ultimate success or otherwise of such
ventures requires successful exploration, establishment of commercial reserves,
establishment and successful effective production and processing facilities,
transport and marketing of the end product. Through this process, the business is
exposed to a wide variety of risks, including failure to locate hydrocarbons, changes
to reserve estimates or production volumes, variable quality of hydrocarbons,
weather impacts, facility malfunctions, lack of access to appropriate skills or
equipment and cost overruns.
The estimation of oil and natural gas reserves involves subjective judgments and
determinations based on geological, technical, contractual and economic
information. It is not an exact calculation. The estimate may change because of new
information from production or drilling activities.
Exploration licences held by PVE are subject to the granting and approval by
relevant government bodies. Government regulatory authorities generally require
the holder of the licences to undertake certain proposed exploration commitments
and failure to meet these obligations could result in forfeiture. Exploration licences
are also subject to partial or full relinquishments after the stipulated period of
tenure if no alternative licence application (e.g., production concession application)
is made, resulting in a potential reduction in the Group’s overall tenure position. In
9
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
order for production to commence in relation to any successful oil or gas well, it is
necessary for a production concession to be granted.
Exploration, development and production of oil and gas involves risks which may
impact the health and safety of personnel, the community and the environment.
Industry operating risks
include fire, explosions, blow outs, pipe failures,
abnormally pressured formations and environmental hazards such as accidental
spills or leakage of petroleum liquids, gas leaks, ruptures, or discharge of toxic
gases. Failure to manage these risks could result in injury or loss of life, damage or
destruction of property and damage to the environment. Losses or liabilities arising
from such incidents could significantly impact the Group’s financial results.
Health, safety and
environmental
matters
Climate Change
PVE recognises climate-related risks and the need for these to be managed
effectively particularly across the energy industry.
Key climate-related risks and opportunities relevant to the PVEs operations
include:
• The transition to a
low carbon economy through technological
improvements and innovations that support a lower carbon energy
efficient system with decreased demand and changing community
sentiment for fossil fuels. In addition, increased uncertainty, time and cost
associated with regulatory bodies granting approvals or licences on fossil
fuel intensive projects. Transition to lower carbon economy may also give
rise to opportunity for PVE’s potential gas production assets. Natural gas is
viewed as a key element to supporting a sustainable energy transition.
Possibility to produce Blue H2 (with CCS/CCUS) and/or LNG from PVO gas
fields (utilizing access and support via Next Generation EU research
development funds)
• Physical changes caused by climate change include increased severe
weather events and chronic changes to weather patterns which may
impact demand for energy and the PVE’s development and production
assets and production capability. These events could have a financial
impact on the Group through increased operating costs, maintenance
costs, revenue generation and sustainability of production assets.
• Policy changes by governments which may result in increasing regulation
and costs which could have a material impact on the PVE’s operations.
PVE is committed to continually improve climate change related disclosures as
processes and understanding of climate change related matters improve alongside
its activities and operations.
In addition to the external and operating risks described above, the Group’s ability to successfully develop
future projects including their infrastructure is contingent on the Group’s ability to fund those projects
through operating cash flows and affordable debt and equity raisings.
7. Dividends
No dividends have been paid or declared by the Company during the year ended 31 December 2021.
10
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
8. Significant events after the balance date
As detailed in the operations review above, the Group has considered the impact of Italy’s Plan of Sustainable
Energy Transition of Suitable Areas (“Pitesai”) published in February 2022. The main conclusions are detailed
in the review above and in Note 29.
Other than the above, there were no events between the end of the financial year and the date of this report
that, in the opinion of the Directors, will affect significantly the operations of the Group, the results of those
operations, or the state of affairs of the Group in future financial years.
9. Likely Developments
The Group plans to continue to invest in its development of the Selva gas field and current exploration portfolio
through geological and geophysical studies and, subject to available finances, in its planned drilling program
for high potential gas prospects. The Group may seek a suitable farm-out partner for selected assets.
10. Environmental Regulation
The Group’s operations are subject to environmental regulations under both national and local municipality
legislation in relation to its mining exploration and development activities in Italy. Group management monitor
compliance with the relevant environmental legislation. The Directors are not aware of any breaches of
legislation during the period covered by this report.
11. Remuneration Report - audited
The Remuneration Report outlines the remuneration arrangements which were in place during the year, and
remain in place as at the date of this report, for the Directors and executives of the Group.
Remuneration Policy
The Board is responsible for reviewing and recommending compensation arrangements for the Directors, the
Chief Executive Officer and the senior executive team. The Board assesses the appropriateness of the size and
structure of remuneration of those officers on a periodic basis, with reference to relevant employment market
conditions, with the overall objective of ensuring maximum stakeholder benefit from the retention of a high
quality board and executive team.
The Group aims to ensure that the level and composition of remuneration of its Directors and executives is
sufficient and reasonable in the context of the internationally competitive industry in which the Group
operates.
All senior executives except the company secretary are based in Rome and when setting their remuneration,
the Board must have regard to remuneration levels and benefit arrangements that prevail in the European oil
and gas industry which remains highly competitive.
11
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
Consequences of performance on shareholder wealth
In considering the Group’s performance and benefits for shareholders wealth the Board has regard to the
following indices in respect of the current and previous financial years.
Indices
Production (scm’000)
Average realised gas price (€ cents per cubic metre)
2021
2020
2019
2018
2017
2016
-
-
-
-
-
-
2,799*
7,155
4,461
21*
19
21
Loss attributable to owners of the Company (€'000s)
(596)
(1,036)
(1,504)
2,780
(1,087)
(8,699)
Loss per share (€ cents per share)
(0.07)
(0.16)
(0.24)
(0.43)
(0.19)
(2.06)
Share price at year end - AU$
0.025
0.030
0.052
0.038
0.041
0.025
* production and gas prices for 2018 relates to the period prior to restructuring of the Group and deconsolidation of Coro Energy Plc (formally Saffron
Energy Plc). PVE currently does not have any producing assets.
In establishing performance measures and benchmarks to ensure incentive plans are appropriately structured
to align corporate behaviour with the long-term creation of shareholder wealth, the Board has regard for the
stage of development of the Company’s business and gives consideration to each of the indices outlined above
and other operational and business development achievements of future benefit to the Company which are
not reflected in the aforementioned financial measures.
Senior Executives and Executive Directors
The remuneration of PVE senior executives is based on a combination of fixed salary, short term incentive
bonuses which are based on performance, and in some cases a long term incentive payable in cash or shares.
Other benefits include employment insurances, accommodation and other benefits, and superannuation
contributions. In relation to the payment of annual bonuses, the board assesses the performance and
contribution of executives against a series of objectives defined at the beginning of the year. These objectives
are a combination of strategic and operational company targets which are considered critical to shareholder
value creation and objectives which are specific to the individual executive. More specifically, objectives mainly
refer to operating performance from both a financial and technical standpoint and growth and development
of the Group’s asset base. The Board exercises its discretion when determining awards and exercises discretion
having regard to the overall performance and achievements of the Group and of the relevant executive during
the year. No remuneration consultants were used during the current or previous year.
Non-Executive Directors
The remuneration of PVE Non-Executive Directors comprises cash fees. There is no current scheme to provide
performance-based bonuses or retirement benefits to Non-Executive Directors. The Board of Directors and
shareholders approved the maximum agreed remuneration pool for Non-Executive Directors at €250,000 per
annum.
12
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
Service contracts
The major provisions of the service contracts held with the directors, in addition to any performance related
bonuses and/or options are as follows:
Michael Masterman, Chairman
• Commencement Date: 22 June 1999
• Remuneration for Michael Masterman was suspended from 1 July 2020 (previously as CEO €140,000
p.a.)
• No termination benefits
Kevin Bailey, Non-Executive Director
• Commencement Date: 3 May 2016
• Remuneration for Kevin Bailey was suspended from 1 July 2020 (previously A$24,000 p.a.)
• No termination benefits
Sara Edmonson, Non-Executive Director
• Commencement Date: 23 December 2019
• Fixed remuneration for the year ended 31 December 2021: €15,682 (A$24,000)
• No termination benefits
Joseph Constable, Non-Executive Director
• Commencement Date: 30 November 2021
• Fixed remuneration for the year ended 31 December 2021: €1,600 (A$2,500 or A$30,000 p.a.)
• No termination benefits
The Non-Executive Directors are not appointed for any fixed term but rather are required to retire and stand
for re-election in accordance with the Company’s constitution and the ASX Listing Rules.
Key Management Personnel remuneration outcomes (including link to performance)
The remuneration details of each Key Management Personnel (KMP) (being the Directors) during the year is
presented in the table below.
M Masterman
Chairman
K Bailey
Non-Executive
S Edmonson
Non-Executive
J Constable
Non-Executive (appointed 30 Nov
2021)
B Pirola
Non-Executive (resigned 3 Mar 2020)
Total for Directors
2021
2020
2021
2020
2021
2020
2021
2020
2021
Salary & fees
€
Other
€
-
-
70,002
30,000
-
7,541
15,682
15,082
1,601
2,610
17,283
-
-
-
-
-
-
-
2020
95,235
30,000
Termination
payments
€
-
-
-
-
-
-
-
-
-
-
Total
€
-
100,002
-
7,541
15,682
15,082
1,601
2,610
17,283
125,235
13
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
Analysis of bonuses included in remuneration
There was no short-term incentive bonus awarded in remuneration in the current year.
Options over equity instruments granted as compensation
No options were granted as compensation to KMP during the reporting period (2020: Nil). No options vested
during 2021. (2020: Nil)
Modification of terms of equity-settled share-based payment transactions
No terms of equity-settled share-based payment transactions (including options and rights granted as
compensation to KMP) have been altered or modified during the reporting period or the prior period.
Exercise and lapse of options granted as compensation
No options over ordinary shares in the Company were held by any KMP during 2021 and no options were
exercised or lapsed during 2021.
Equity holdings and transactions
The movement during the reporting period in the number of ordinary shares of the Company, held directly
and indirectly by KMP, including their personally-related entities is as follows:
Held at
31 Dec 2020
Acquired
Issued for
Settlement
of loans and
interest
Held at
Disposals
31 Dec 2021
Directors
M Masterman
167,971,782
23,928,571
26,114,162
K Bailey
S. Edmonson
J Constable (i)
150,635,225
38,015,332
53,455,385
2,966,406
-
741,601
45,433 (i)
-
-
321,573,413
62,730,937
79,569,547
(i) (i)Holding at date of appointment 30 November 2021
(ii)
-
-
-
-
-
218,014,515
242,105,942
3,708,007
45,433
463,873,897
Held at
31 Dec 2019
Acquired
Share based
payments
Held at
Disposals
31 Dec 2020
Directors
M Masterman
167,971,782
-
K Bailey
S. Edmonson
B Pirola (i)
150,265,152
370,073
2,966,406
62,784,178
-
-
383,987,518
370,073
(i) (i)Holding at date of resignation 3 March 2020
-
-
-
-
-
-
-
-
-
167,971,782
150,635,225
2,966,406
62,784,178
384,357,591
14
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
Other transactions and balances with KMP and their related parties
The Group obtained financing through unsecured loans provided by Directors of the Group. The loan
agreements have been reached with entities associated with Michael Masterman and Kevin Bailey. During the
year, the Group received additional funds of €286,340 (AU$450,000) from entities associated with Michael
Masterman and Kevin Bailey. All loans and accumulated interest thereon were settled following related party
participation in the Institutional Offer of the Accelerated Non-renounceable Entitlement Offer (“ANREO”) in
June 2021.
A summary of the principal loan amounts is as follows:
KMP (or their related
parties)
Kevin Bailey
Fuiloro Pty Ltd*
K & G Bailey as trustee for
The Bailey Family Trust*
Loan Amount
31 Dec 2020
A$301,676
A$424,227
Loans
advanced in
year
-
-
Loans settled
by
participation
in ANREO
A$301,676
A$424,227
A$287,404
A$225,000
A$512,404
Symmall Pty Ltd*
A$396,759
A$225,000
A$621,759
Total
€886,125
€286,340
€1,172,465
A$1,410,066
A$450,000
A$1,860,066
Loan Amount
31 Dec 2021
-
No of shares
issued
10,774,155
-
-
-
-
-
15,150,977
18,300,128
22,205,675
66,430,935
*Fuiloro Pty Ltd and K & G Bailey as trustee for The Bailey Family Trust are entities associated with Kevin Bailey, and Symmall Pty Ltd is an entity
associated with Michael Masterman.
A summary of the interest on loans is as follows:
KMP (or their related
parties)
Kevin Bailey
Interest
accrued at
31 Dec 2020
A$9,938
Interest to 24
June 2021
A$14,464
Interest
settled by
participation
in ANREO
A$24,402
Interest
accrued at 31
Dec 2021
-
Fuiloro Pty Ltd
A$14,179
A$20,340
A$34,519
K & G Bailey as trustee for
The Bailey Family Trust
A$8,151
A$19,382
A$27,533
Symmall Pty Ltd
A$11,541
A$24,187
A$35,728
Total
€27,531
€49,776
€77,601
A$43,809
A$78,373
A$122,182
-
-
-
-
-
No of shares
issued
871,491
1,232,833
983,335
1,276,002
4,363,661
The Company has on issue convertible notes with KMP and their related parties as follows:
KMP (or their related parties)
K & G Bailey as trustee for The Bailey
Family Trust
Symmall Pty Ltd
Joseph Constable
Convertible Notes at
31 Dec 2020
Movement for
the year
Convertible Notes
at 31 Dec 2021
A$700,000
A$300,000
A$10,000
-
-
-
A$700,000
A$300,000
A$10,000
15
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
The convertible notes are convertible into fully paid ordinary shares of the Company at a conversion price of
A$0.042 per share. The notes are to be converted or otherwise redeemed on or before 29 April 2022 and
interest payable on the principal amount at a rate of 8% per annum. (refer note 20)
Interest paid on convertible notes with KMP and their related parties was as follows:
Interest
accrued at
31 Dec 2020
Interest for
year
Interest
settled by
participation
in ANREO
Interest
paid in
cash
Interest
accrued at
31 Dec
2021
No of
shares
issued
KMP (or their
related parties)
K & G Bailey as
trustee for The
Bailey Family Trust
A$144,219
A$55,770
A$171,989
A$28,000
Symmall Pty Ltd
A$61,808
A$23,901
A$73,709
A$12,000
Joseph Constable
A$875
A$797
A$1,272
A$400
Total
A$206,902
A$80,468
A$246,970
A$40,400
€130,024
€51,308
€156,858
€25,860
-
-
-
-
6,142,466
2,632,485
45,433
8,820,384
No KMP have entered into a material contract, other than disclosed above, with any company in the Group.
Other balances owing to directors are as follows:
Directors’
remuneration
outstanding at
31 Dec 2020
€
227,329
62,034
15,371
-
304,734
Fees for the
year
€
-
-
15,682
1,600
17,283
Directors’
remuneration
outstanding at
31 Dec 2021
€
206,079
Amount paid
€
(21,250)
-
-
-
62,034
31,053
1,600
(21,250)
300,767
KMP (or their related parties)
Michael Masterman
Kevin Bailey
Sara Edmonson
Joseph Constable
Total
12. Directors’ interests
At the date of this report, the direct and indirect interests of the Directors in the shares and options of the
Company, as notified by the Directors to the ASX in accordance with S205G (1) of the Corporations Act 2001,
at the date of this report are as follows:
M Masterman
K Bailey
S Edmonson
J Constable
Ordinary Shares
Convertible Notes
218,014,515
242,105,942
3,708,007
45,433
300,000
700,000
-
10,000
16
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
13. Equity securities on issue
31 December 2021
31 December 2020
Ordinary fully paid shares
1,006,643,438
647,286,102
Options over unissued shares
5,000,000
-
Unissued shares under option
At the date of this report there are 5,000,000 unissued ordinary shares of the Company under option as
follows:
Date Granted
Expiry Date
Exercise Price
Number of
options at 31
December 2021
Number of
options at date of
report
21 July 2021
21 July 2023
A$0.05
5,000,000
5,000,000
During the year, 5,000,000 unlisted options were issued at A$0.05 expiring 21 July 2023 to a broker. Details
relating to the valuation of these options are set out in Note 22 to the financial report. No options were
cancelled during or subsequent to the financial year.
Shares issued on exercise of options
The Company has not issued any shares as a result of the exercise of options during or since the end of the
financial year.
Options granted to directors and executives of the Company
The Company has not granted any options over unissued ordinary shares in the Company to any directors or
specified executive during or since the end of the financial year.
14. Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of
PVE support and have adhered to the principles of sound corporate governance. The Board recognises the
recommendations of the ASX Corporate Governance Council and considers that PVE is in compliance with
those guidelines which are of importance to the commercial operation of a junior listed resource company.
The Group has elected to publish its Statement of Corporate Governance Practices on its website
www.povalley.com. In addition, each year the Key to Disclosures - Corporate Governance Council Principles
and Recommendations will be available to shareholders at the same time that the Annual Report is released.
15. Indemnification and insurance of officers
The Group has agreed to indemnify current Directors against any liability or legal costs incurred by a Director
as an officer of the Company or entities within the Group or in connection with any legal proceeding involving
the Company or entities within the Group which is brought against the Director as a result of his capacity as an
officer.
During the financial year the Group paid premiums to insure the Directors against certain liabilities arising out
of the conduct while acting on behalf of the Group. Under the terms and conditions of the insurance contract,
the nature of liabilities insured against and the premium paid cannot be disclosed.
17
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
16. Indemnification of auditors
To the extent permitted by law, the Group has agreed to indemnify its auditors, HLB Mann Judd, as part of the
terms of its audit engagement agreement against claims by third parties arising from the audit (for an
unspecified amount). No payment has been made to indemnify HLB Mann Judd during or since the financial
year.
17. Non audit services
During the year HLB Mann Judd, the Group’s auditor, did not provide non-audit services. Refer to note 6 of
the financial report for details of the auditor’s remuneration.
18. Proceedings on behalf of the Group
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the
purpose of taking responsibility on behalf of the Group for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under
section 237 of the Corporations Act 2001.
19. Lead Auditor’s independence declaration
The lead auditor’s independence declaration is set out on page 19 and forms part of the Directors’ report for
the financial year ended 31 December 2021.
This report has been made in accordance with a resolution of Directors.
Michael Masterman
Chairman
31 March 2022
18
PO VALLEY ENERGY LIMITED
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of Po Valley Energy Limited for the
year ended 31 December 2021, I declare that to the best of my knowledge and belief, there have
been no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
31 March 2022
L Di Giallonardo
Partner
19
PO VALLEY ENERGY LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
CONSOLIDATED
NOTES
2021
€
2020
€
10
11
12
15
13
14
16
18
17
19
20
21
21
1,262,151
185,369
1,447,520
759,078
1,108,276
7,021
8,146,546
10,020,921
44,107
86,617
130,724
78
947,181
11,199
7,990,040
8,948,498
11,468,441
9,079,222
642,552
-
3,719
-
1,120,170
1,766,441
1,226,182
3,091
2,797
2,067,175
1,571,070
4,870,315
1,766,441
4,870,315
9,702,000
4,208,907
52,719,884
1,202,956
(44,220,840)
46,641,745
1,192,269
(43,625,107)
9,702,000
4,208,907
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Other assets
Deferred tax assets
Property, plant & equipment
Resource property costs
Total Non-Current Assets
Total Assets
Liability
Current Liabilities
Trade and other payables
Lease liabilities
Provisions
Interest bearing loans
Convertible notes
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
The above statement of financial position should be read in conjunction with the accompanying notes to the financial statements.
20
PO VALLEY ENERGY LIMITED
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
Continuing Operations
Other income
Gain on agreement debt settlement
Employee benefit expenses
Depreciation expense
Corporate overheads
Exploration costs expensed
Loss from operating activities
Finance income
Finance expenses
Net finance expenses
Loss before tax
Income tax benefit
Loss for the year
CONSOLIDATED
NOTES
2021
€
5
3
4
7
8
65,792
-
(265,688)
(4,808)
(250,114)
(30,071)
(484,889)
157
(272,096)
(271,939)
(756,828)
161,095
(595,733)
2020
€
79,122
110,940
(510,569)
(41,622)
(344,686)
(9,000)
(715,815)
143
(319,876)
(319,733)
(1,035,548)
-
(1,035,548)
Other comprehensive income
-
-
Total comprehensive loss for the year
(595,733)
(1,035,548)
Basic and diluted loss per share (€) from
continuing operations
9
(0.07)
(0.16)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying
notes to the financial statements.
21
PO VALLEY ENERGY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Consolidated
Balance at 1 January 2020
Loss for the year
Other comprehensive income
Total comprehensive loss
Balance at 31 December 2020
Balance at 1 January 2021
Loss for the year
Other comprehensive income
Total comprehensive loss
Issued capital
€
46,641,745
-
-
-
-
-
-
Issue of securities (net of costs)
6,078,139
Share based payments
-
Attributable to equity holders of the Company
Accumulated
Option
Translation
Losses
Reserve
Reserve
€
€
€
(42,589,559)
1,192,269
(1,035,548)
-
-
Total
€
5,244,455
(1,035,548)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,687
(1,035,548)
(1,035,548)
(43,625,107)
(43,625,107)
(595,733)
-
(595,733)
-
-
4,208,907
4,208,907
(595,733)
-
(595,733)
6,078,139
10,687
46,641,745
46,641,745
1,192,269
1,192,269
Balance at 31 December 2021
52,719,884
1,192,269
10,687
(44,220,840)
9,702,000
The above statement of changes in equity should be read in conjunction with the accompanying notes to the financial statements.
22
PO VALLEY ENERGY LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTES
CONSOLIDATED
2021
€
2020
€
Operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Net cash used in operating activities
Investing activities
Receipts for resource property costs from joint
operations partners
Payments for resource property costs
Payment of guarantee deposit for pipeline tie-in
Payments for other assets
Net cash used in investing activities
Financing activities
Proceeds from the issues of shares
Payment of share issue costs
Proceeds from borrowings
Repayment of borrowings
Repayment of convertible notes
Payments of lease liabilities
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Exchange difference on cash and cash equivalents
10
18
18
19
17
Cash and cash equivalents at 31 December
10
-
(832,955)
157
(68,900)
(901,698)
15,910
(158,308)
(757,000)
(631)
(900,029)
3,597,076
(288,233)
286,340
(81,812)
(476,594)
-
3,036,777
1,235,050
44,107
(17,006)
1,262,151
25,000
(515,402)
143
(257)
(490,516)
166,667
(250,010)
-
(976)
(84,319)
-
-
609,950
-
-
(33,173)
576,777
1,942
42,165
-
44,107
The above statement of cash flows should be read in conjunction with the accompanying notes to the financial statements.
23
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 1:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.1
1.2
(a)
REPORTING ENTITY
Po Valley Energy Limited (“the Company” or “PVE”) is a company domiciled in Australia. The address
of the Company’s registered office is Suite 8, 7 The Esplanade Mt Pleasant WA 6153.
The Consolidated Financial Statements for the year ended 31 December 2021 comprise the Company
and its subsidiaries (together referred to as “the Group” and individually as “Group entities”) and the
Group’s interest in associates and jointly controlled entities and operations.
The financial statements were approved by the Board of Directors on 31 March 2022.
The Group primarily is involved in the exploration, appraisal and development of gas properties in the
Po Valley region in Italy and is a for profit entity.
BASIS OF PREPARATION
STATEMENT OF COMPLIANCE
The financial report is a general-purpose financial report which has been prepared in accordance with
Australian Accounting Standards (AASB’s) (including Australian Interpretations) adopted by the
Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated
financial report of the Group also complies with International Financial Reporting Standards (IFRS) and
interpretations issued by the International Accounting Standards Board (IASB).
(b)
BASIS OF MEASUREMENT
These consolidated financial statements have been prepared on the basis of historical cost.
(c) GOING CONCERN
The financial report has been prepared on the going concern basis, which contemplates the continuity
of normal business activity and the realisation of assets and the settlement of liabilities in the normal
course of business.
For the year ended 31 December 2021, PVE has recorded a loss after tax from continuing operations
of €595,733 (2020: €1,035,548); at 31 December 2021 had a cash balance of €1,262,151 (2020:
€44,107), net current liabilities of €318,921 (2020: €4,739,591) and had net cash outflows from
operations of €901,698 (2020: €490,516).
PVE completed a capital raising of A$10.1 million in 2021, by way of a placement of A$1 million and an
Accelerated Non-Renounceable Rights Issue (“ANREO” or “Entitlement Offer”) of A$9.1million at
$0.028 per New Share. The ANREO comprised a non-renounceable entitlement offer to institutional
shareholders (Institutional Offer) and to retail shareholders (Retail Offer). The placement and
Institutional Offer completed on 21 June 2021. The Institutional offer raised approximately A$6.5
million (€4.1 million), which included conversion of debt of approximately A$3.35 million (€2.4 million).
The Retail Offer closed on 9 July with completion on 15 July 2021 raising the remaining approximately
A$2.6 million (before costs) (€1.6 million) and included a conversion of debt of approximately A$0.6
million (€0.4 million), thereby further strengthening the financial position of the Group.
24
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
At 31 December 2021, PVE had €1,120,170 (A$1,750,000) of convertible notes outstanding. These
convertible notes are to be redeemed on or before 29 April 2022. The current terms on the
convertible notes’ conversion price is A$0.042 per share. Subject to shareholder approval at the
upcoming AGM, the Company is undertaking to vary the conversion price to A$0.028 per share with
intention from the note holders to redeem notes by conversion. This will increase the Group’s net
equity by €1,120,170.
The Group has prepared a cash flow forecast for the next twelve months from the date of signing the
financial report which demonstrates that the Group will have sufficient cash to continue as a going
concern, with the following assumptions:
• The successful completion of development of the Selva Gas Field taking into account revised cost
estimates and project execution timelines
• Conversion of convertible notes to equity
• JV Partners’ contribution to development costs of Selva and environmental monitoring costs on
grant of final production concession for Selva
The Directors recognise that the ability of PVE to continue as a going concern may become dependent
on the Group’s ability to secure additional funding through either the issue of new equity, convertible
debt, sale of operating or non-operating interests in assets or a combination of these and other
funding instruments as required to fund ongoing planned activities and for working capital. The
Directors are confident that the Group will be able to secure sufficient funding to continue as a going
concern based on demonstrated past successes in raising equity.
Should the Group not achieve the matters set out above, there is a material uncertainty that may
cast significant doubt whether the Group would continue as a going concern and therefore whether
it would realise its assets and extinguish its liabilities in the normal course of business and at the
amounts stated in the financial report. The financial report does not include adjustments relating to
the recoverability or classification of the recorded asset amounts nor to the amounts or classification
of liabilities that might be necessary should the Group not be able to continue as a going concern.
(d)
FUNCTIONAL AND PRESENTATION CURRENCY
The consolidated financial statements are presented in Euro, which is the Company’s and each of the
Group entities’ functional currency.
(e)
USE OF ESTIMATES AND JUDGEMENTS
The preparation of the financial statements requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in any future periods
affected.
The estimates and judgements that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below.
25
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Impairment of non-current assets
The ultimate recoupment of the value of resource property costs and property plant and equipment
is dependent on successful development and commercial exploitation, or alternatively, sale, of the
underlying properties. The Group undertakes at least on an annual basis, a comprehensive review for
indicators of impairment of these assets. Should an impairment indicator exist, the area of interest or
CGU is tested for impairment. There is significant estimation involved in determining the inputs and
assumptions used in determining the recoverability amounts.
The key areas of estimation involved in determining recoverable amounts include:
• Recent drilling results and reserves and resources estimates
• Environmental issues that may impact the underlying licences
• The estimated market value of assets at the review date
• Fundamental economic factors such as the gas price and current and anticipated operating costs
in the industry
• Future production rates
The post-tax discount rate used for impairment purposes is 10%.
Reserve estimates
Estimation of reported recoverable quantities of Proven and Probable reserves include estimates
regarding commodity prices, exchange rates, discount rates, and production and transportation costs
for future cash flows. It also requires interpretation of complex geological and geophysical models in
order to make an assessment of the size, shape, depth and quality of reservoirs, and their anticipated
recoveries. The economic, geological and technical factors used to estimate reserves may change from
period to period.
A change in any, or a combination of, the key assumptions used to determine the reserve estimates
could have a material impact on the carrying value of the project via depreciation rates or impairment
assessments. The reserve estimates are reviewed at each reporting date and any changes to the
estimated reserves are recognised prospectively to depreciation and amortisation. Any impact of the
change in the reserves is considered on asset carrying values, and impairment losses, if any, are
immediately recognised in the profit or loss.
Recognition of deferred tax assets
The recoupment of deferred tax assets is dependent on the availability of profits in future years. The
Group undertakes a forecasting exercise at each reporting date to assess its expected utilisation of
these losses.
The key areas of estimation involved in determining the forecasts include:
• Future production rates
• Economic factors such as the gas price and current and anticipated operating costs in the industry
• Capital expenditure expected to be incurred in the future
26
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
A change in any, or a combination of, the key assumptions used to determine the estimates could
have a material impact on the carrying value of the deferred tax asset. Changes to estimates are
recognised in the period in which they arise.
1.3 SIGNIFICANT ACCOUNTING POLICIES
The Group has consistently applied the accounting policies set out in notes 1.3 (a) to 1.3 (r) to all
periods presented in the consolidated financial statements.
(a)
PRINCIPLES OF CONSOLIDATION
Subsidiaries
(i)
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. The financial statements of subsidiaries are included
in the consolidated financial statements from the date that control commences until the date that
control ceases. The accounting policies of subsidiaries have been changed when necessary, to align
them with the policies adopted by the Group. Investments in subsidiaries are carried at cost less any
impairment losses.
In the Company’s separate financial statements, investments in subsidiaries are carried at cost less
any impairment losses.
Joint arrangements
(ii)
The Group classifies its interests in joint arrangements as either joint operations or joint ventures (see
below) depending on the Group’s rights to the assets and obligation for the liabilities of the
arrangements. When making this assessment, the Group considers the structure of the arrangements,
the legal form of any separate vehicles, the contractual terms of the arrangements and other facts and
circumstances.
Joint operation - when the Group has rights to the assets, and obligations for the liabilities, relating to
an arrangement, it accounts for each of its assets, liabilities and transactions, including its share of
those held or incurred jointly, in relation to the joint operation.
Joint venture – when the Group has rights only to the net assets of the arrangement, it accounts for
its interest using the equity method adopted for associates.
Transactions eliminated on consolidation
(iii)
Intra-group balances, and any unrealised income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements.
(b)
TAXATION
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or
loss except to the extent that it relates to items recognised directly in equity, in which case it is
recognised in equity or in comprehensive income.
27
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantially enacted at the balance date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is provided using the liability method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes. The following temporary differences are not provided for: the initial recognition of
assets or liabilities that affect neither accounting nor taxable profit; and differences relating to
investments in subsidiaries to the extent that the Group is able to control the timing of the reversal of
the temporary difference and it is probable that they will not reverse in the foreseeable future. The
amount of deferred tax provided is based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities using tax rates enacted at the balance date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will
be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that
it is no longer probable that the related tax benefit will be realised.
Judgement is required to determine which arrangements are considered to be a tax on income as
opposed to an operating cost. Judgement is also required to determine whether deferred tax assets
are recognised in the statement of financial position. Deferred tax assets, including those arising from
unutilised tax losses, require management to assess the likelihood that the Group will generate
sufficient taxable earnings in future periods, in order to utilise recognised deferred tax assets.
Assumptions about the generation of future taxable profits depend on management’s estimates of
future cash flows. These estimates of future taxable income are based on forecast cash flows from
operations (which are impacted by production and sales volumes, oil and natural gas prices, reserves,
operating costs, decommissioning costs, capital expenditure, dividends and other capital management
transactions) and judgement about the application of existing tax laws in each jurisdiction. To the
extent that future cash flows and taxable income differ significantly from estimates, the ability of the
Group to realise the net deferred tax assets recorded at the reporting date could be impacted.
In addition, future changes in tax laws in the jurisdictions in which the Group operates could limit the
ability of the Group to obtain tax deductions in future periods.
(c)
IMPAIRMENT
Non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset (or CGU) may
be impaired. Management has assessed its CGUs as being an individual field, which is the lowest level
for which cash inflows are largely independent of those of other assets. If any indication exists, or
when annual impairment testing for an asset is required, the Group estimates the asset’s or CGU’s
recoverable amount. The recoverable amount is the higher of an asset’s or CGU’s fair value less costs
of disposal (FVLCD) and value in use (VIU). The recoverable amount is determined for an individual
asset, unless the asset does not generate cash inflows that are largely independent of those from
other assets or groups of assets, in which case the asset is tested as part of a larger CGU to which it
28
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
belongs. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the
asset/CGU is considered impaired and is written down to its recoverable amount.
In calculating VIU, the estimated future cash flows are discounted to their present value using an
after-tax discount rate (10%) that reflects current market assessments of the time value of money
and the risks specific to the asset/CGU.
The Group bases its impairment calculation on detailed budgets and forecasts, which are prepared
separately for each of the Group’s CGUs to which the individual assets are allocated.
These budgets and forecasts generally cover the forecasted life of the CGUs. VIU does not reflect
future cash flows associated with improving or enhancing an asset’s performance.
Impairment losses of continuing operations, including impairment of inventories, are recognised in
the statement of profit or loss and other comprehensive income in those expense categories
consistent with the function of the impaired asset.
For assets/CGUs, an assessment is made at each reporting date to determine whether there is an
indication that previously recognised impairment losses may no longer exist or may have decreased.
If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously
recognised impairment loss is reversed only if there has been a change in the assumptions used to
determine the asset’s/CGU’s recoverable amount since the last impairment loss was recognised. The
reversal is limited so that the carrying amount of the asset/CGU does not exceed either its
recoverable amount, or the carrying amount that would have been determined, net of
depreciation/amortisation, had no impairment loss been recognised for the asset/CGU in prior years.
Such a reversal is recognised in the statement of profit or loss and other comprehensive income.
(d)
PROPERTY, PLANT AND EQUIPMENT
Recognition and measurement
(i)
Items of property, plant and equipment are recorded at cost less accumulated depreciation,
accumulated impairment losses and pre-commissioning revenue and expenses.
The cost of plant and equipment used in the process of gas extraction are accounted for separately
and are stated at cost less accumulated depreciation and impairment costs.
Cost includes expenditure that is directly attributable to acquisition of the asset.
Gains and losses on disposal of an item of property, plant and equipment are determined by
comparing the proceeds from disposal with the carrying amount of property, plant and equipment
and are recognised within “other income” in profit or loss.
Subsequent expenditure
(ii)
Subsequent expenditure is capitalised only if it is probable that the future economic benefits
associated with expenditure will flow to the Group.
29
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Depreciation
(iii)
Property, plant and equipment
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of
each part of an item of property, plant and equipment. The depreciation will commence when the
asset is installed ready for use.
The estimated useful lives of each class of asset fall within the following ranges:
Office furniture & equipment
Right-of-use assets: buildings
2021
3 – 5 years
4 – 6 years
2020
3 – 5 years
4 – 6 years
The residual value, the useful life and the depreciation method applied to an asset are reviewed at
each reporting date.
(e)
FINANCIAL INSTRUMENTS
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions to the instrument. For financial assets, this is the date that the Group
commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).
Except for those trade receivables that do not contain a significant financing component and are
measured at the transaction price in accordance with AASB 15, all financial assets are initially
measured at fair value adjusted for transaction costs (where applicable), except where the
instrument is classified "at fair value through profit or loss", in which case transaction costs are
expensed to profit or loss immediately. Where available, quoted prices in an active market are used
to determine fair value. In other circumstances, valuation techniques are adopted. Trade
receivables are initially measured at the transaction price if the trade receivables do not contain a
significant financing component or if the practical expedient was applied as specified in AASB 15.63.
Classification and subsequent measurement of financial assets
Financial assets are subsequently measured at:
• amortised cost;
•
•
fair value through profit or loss.
fair value through other comprehensive income; or
Measurement is on the basis of two primary criteria:
•
•
the contractual cash flow characteristics of the financial asset; and
the business model for managing the financial assets.
A financial asset that meets the following conditions is subsequently measured at amortised cost:
•
•
the financial asset is managed solely to collect contractual cash flows; and
the contractual terms within the financial asset give rise to cash flows that are solely payments
of principal and interest on the principal amount outstanding on specified dates.
30
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
A financial asset that meets the following conditions is subsequently measured at fair value through
other comprehensive income:
•
•
the contractual terms within the financial asset give rise to cash flows that are solely payments
of principal and interest on the principal amount outstanding on specified dates;
the business model for managing the financial assets comprises both contractual cash flows
collection and the selling of the financial asset.
By default, all other financial assets that do not meet the measurement conditions of amortised cost
and fair value through other comprehensive income are subsequently measured at fair value through
profit or loss.
Classification and subsequent measurement of financial liabilities
Financial liabilities are subsequently measured at:
• amortised cost; or
•
fair value through profit or loss.
A financial liability is measured at fair value through profit and loss if the financial liability is:
• a contingent consideration of an acquirer in a business combination to which AASB 3: Business
Combinations applies;
• held for trading; or
•
initially designated as at fair value through profit or loss.
All other financial liabilities are subsequently measured at amortised cost using the effective interest
method.
The effective interest method is a method of calculating the amortised cost of a debt instrument and
of allocating interest expense in profit or loss over the relevant period. The effective interest rate is
the internal rate of return of the financial asset or liability. That is, it is the rate that exactly discounts
the estimated future cash flows through the expected life of the instrument to the net carrying amount
at initial recognition.
Derecognition
Derecognition refers to the removal of a previously recognised financial asset or financial liability from
the statement of financial position.
Derecognition of financial liabilities
A liability is derecognised when it is extinguished (i.e. when the obligation in the contract is discharged,
cancelled or expires). An exchange of an existing financial liability for a new one with substantially
modified terms, or a substantial modification to the terms of a financial liability is treated as an
extinguishment of the existing liability and recognition of a new financial liability.
The difference between the carrying amount of the financial liability derecognised and the
consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is
recognised in profit or loss.
31
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Derecognition of financial assets
A financial asset is derecognised when the holder's contractual rights to its cash flows expires, or the
asset is transferred in such a way that all the risks and rewards of ownership are substantially
transferred.
Compound financial instruments
Compound instruments (convertible notes) issued by the Group are classified as either financial
liabilities or equity in accordance with the substance of the arrangements. An option that is convertible
and that will be settled by the exchange of a fixed amount of cash or another financial asset for a fixed
number of the Group’s own equity instruments will be classified as equity.
The fair value of the liability component is estimated on date of issue. This is done by using the
prevailing market interest rate of the same kind of instrument. This amount is recognised using the
effective interest method as a liability at amortised cost until conversion or the end of life of the
instrument. The equity portion is calculated by deducting the liability amount from the fair value of
the instrument as a whole. The equity portion is not remeasured after initial recognition. Equity will
remain as such until the option is exercised. When the option is exercised a corresponding amount will
be transferred to share capital. If the option lapses without the option being exercised the balance in
equity will be recognised in profit or loss.
Costs of the transaction of the issue of convertible instruments are proportionally allocated to the
equity and liability. Transaction costs in regards to the liability are included in the carrying amount of
the liability and are amortised over its life using the effective interest method. Transaction cost in
equity is directly recognised in equity.
Impairment
The Group recognises a loss allowance for expected credit losses on financial assets that are measured
at amortised cost or fair value through other comprehensive income.
Expected credit losses are the probability-weighted estimate of credit losses over the expected life of
a financial instrument. A credit loss is the difference between all contractual cash flows that are due
and all cash flows expected to be received, all discounted at the original effective interest rate of the
financial instrument.
The Group uses the following approaches to impairment, as applicable under AASB 9: Financial
Instruments:
• the general approach
• the simplified approach
• the purchased or originated credit impaired approach; and
•
low credit risk operational simplification.
Recognition of expected credit losses in financial statements
At each reporting date, the Group recognises the movement in the loss allowance as an impairment
gain or loss in the statement of profit or loss and other comprehensive income.
32
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
The carrying amount of financial assets measured at amortised cost includes the loss allowance
relating to that asset.
Assets measured at fair value through other comprehensive income are recognised at fair value, with
changes in fair value recognised in other comprehensive income. Amounts in relation to change in
credit risk are transferred from other comprehensive income to profit or loss at every reporting
period.
For financial assets that are unrecognised (e.g., loan commitments yet to be drawn, financial
guarantees), a provision for loss allowance is created in the statement of financial position to
recognise the loss allowance.
(f)
(g)
INVENTORIES
Inventories are measured at the lower of cost and net realisable value and includes expenditure
incurred in acquiring the inventories and other costs incurred in bringing them to their existing
location and condition. Net realisable value is the estimated selling price less selling expenses.
RESOURCE PROPERTIES
Resource property costs related to drilling are accumulated in respect of each separate area of
interest.
Exploration properties
Exploration properties are carried at balance date at cost less accumulated impairment losses.
Exploration properties include the cost of acquiring resource properties, mineral rights and
exploration, evaluation expenditure incurred subsequent to acquisition of an area of interest.
Exploration properties are carried forward where right of tenure of the area of interest is current and
they are expected to be recouped through sale or successful development and exploitation of the
area of interest, or, where exploration and evaluation activities in the area of interest have not yet
reached a stage that permits reasonable assessment of the existence of economically recoverable
reserves and active and significant operations in, or in relation to, the area of interest are continuing.
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine
technically feasibility and commercial viability or facts and circumstances suggest that the carrying
value amount exceeds the recoverable amount.
Exploration and evaluation assets are tested for impairment when any of the following facts and
circumstances exist:
• The term of the exploration license in the specific area of interest has expired during the
reporting period or will expire in the near future, and is not expected to be renewed;
• Substantive expenditure on further exploration for an evaluation of mineral resources in the
specific area are not budgeted nor planned;
• Exploration for and evaluation of mineral resources in the specific area have not led to the
discovery of commercially viable quantities of mineral resources and the decision was made
to discontinue such activities in the specific area; or
33
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
• Sufficient data exists to indicate that, although a development in the specific area is likely to
proceed, the carrying amount of the exploration and evaluation asset is unlikely to be
recovered in full from successful development or by sale.
Areas of interest which no longer satisfy the above policy are considered to be impaired and are
measured at their recoverable amount, with any subsequent impairment loss recognised in the profit
and loss.
Development properties
Development properties are carried at balance date at cost less accumulated impairment losses.
Development properties represent the accumulation of all exploration, evaluation and acquisition
costs in relation to areas where the technical feasibility and commercial viability of the extraction of
gas resources in the area of interest are demonstrable and all key project permits, approvals and
financing are in place.
When there is low likelihood of the development property being exploited, or the value of the
exploitable development property has diminished below cost, the asset is written down to its
recoverable amount.
Production properties
Production properties are carried at balance date at cost less accumulated amortisation and
accumulated impairment losses. Production properties represent the accumulation of all
exploration, evaluation and development and acquisition costs in relation to areas of interest in
which production licences have been granted and the related project has moved to the production
phase.
Amortisation of costs is provided on the unit-of-production basis, separate calculations being
performed for each area of interest. The unit-of-production base results in an amortisation charge
proportional to the depletion of economically recoverable reserves.
Amortisation of resource properties commences from the date when commercial production
commences. When the value of the exploitable production property has diminished below cost, the
asset is written down to its recoverable amount.
The Group reviews the recoverable amount of resource property costs at each reporting date to
determine whether there is any indication of impairment. If any such indication exists then the
asset’s recoverable amount is estimated (refer Note 1.3 (c)).
(h)
PROVISIONS
Restoration and rehabilitation costs
Long term environmental obligations are based on the Group’s environmental and rehabilitation
plans, in compliance with current environmental and regulatory requirements.
Full provision is made based on the net present value of the estimated cost of restoring the
environmental disturbances that have occurred up to the date of the statement of financial position
and abandonment of well sites and production fields. Increases due to additional environmental
disturbances, relating to the development of an asset, are capitalised and recorded in resource
34
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
property costs, and amortised over the remaining useful lives of the areas of interest. The net present
value is determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and risks specific to the liability.
Annual increases in the provision relating to the unwinding of the discount rate are accounted for in
the statement of profit or loss and other comprehensive income as finance expense.
The estimated costs of rehabilitation are reviewed annually and adjusted against the relevant
rehabilitation asset, as appropriate for changes in legislation, technology or other circumstances
including drilling activity and are accounted for on a prospective basis. Cost estimates are not
reduced by potential proceeds from the sale of assets.
(i)
FINANCE INCOME AND EXPENSES
Finance income comprises interest income on funds invested and foreign currency gains. Interest
income is recognised as it accrues in profit or loss, using the effective interest method.
Finance expenses comprise interest expense on borrowings or other payables and unwinding of the
discount of provisions and changes in the fair value of financial assets through profit and loss.
Borrowing costs that are not directly attributable to the acquisition, construction or production of
qualifying assets are recognised in profit or loss using the effective interest method.
Foreign currency gains and losses are reported as net amounts.
(j)
EMPLOYEE BENEFITS
Long-term service benefits
(i)
The Group’s net obligation in respect of long-term service benefits is the amount of future benefit
that employees have earned in return for their service in the current and prior periods. The
obligation is calculated using expected future increases in wage and salary rates including on-costs
and expected settlement dates, and is discounted using the rates attached to the Government bonds
at the balance date which have maturity dates approximating to the terms of the Group’s obligations.
Wages, salaries, annual leave, sick leave and non-monetary benefits
(ii)
Liabilities for employee benefits for wages, salaries, annual leave and sick leave that are expected to
be settled within 12 months of the reporting date represent present obligations resulting from
employees services provided to reporting date, are calculated at undiscounted amounts based on
remuneration wage and salary rates that the Group expects to pay as at reporting date including
related on-costs, such as workers compensation insurance and payroll tax.
Superannuation
(iii)
The Group contributes to defined contribution superannuation plans. Contributions are recognised
as an expense as they are due.
35
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(k)
FOREIGN CURRENCY
Functional and presentation currency
(i)
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (“the functional
currency”). The consolidated financial statements are presented in Euro, which is PVE’s functional
and presentation currency (refer note 1.2 (d)).
Foreign currency transactions
(ii)
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in profit or loss as finance
income or expense.
Non-monetary assets and liabilities denominated in foreign currencies are translated at the date of
transaction or the date fair value was determined, if these assets and liabilities are measured at fair
value. Foreign currency differences arising on retranslation are recognised in profit and loss, except
for differences arising on the retranslation of available-for-sale equity instruments, a financial liability
designated as a hedge of the net investment in a foreign operation, or qualifying cash flow hedges,
which are recognised directly in equity.
Foreign operations
(iii)
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising
on consolidation are translated to Euro at foreign exchange rates ruling at the date of the statement
of financial position. The revenues and expenses of foreign operations are translated to Euro at rates
approximating the foreign exchange rates ruling at the dates of the transactions. Foreign exchange
differences arising on retranslation are recognised directly in a separate component of equity.
Foreign exchange gains and losses arising from monetary items receivable from or payables to a
foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are
considered to form part of a net investment in a foreign operation and are recognised directly in
equity in the foreign currency translation reserve.
(l)
EARNINGS/LOSS PER SHARE
Basic earnings/loss per share (“EPS”) is calculated by dividing the net profit/loss attributable to
members of the parent entity for the reporting period, after excluding any costs of servicing equity
(other than ordinary shares and converting preference shares classified as ordinary shares for EPS
calculation purposes), by the weighted average number of ordinary shares of the Company, adjusted
for any bonus issue.
Diluted EPS is calculated by dividing the net profit attributable to members of the parent entity,
adjusted by the after tax effect of financing costs associated with dilutive potential ordinary shares
and the effect on revenues and expenses of conversion to ordinary shares associated with dilutive
36
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
potential ordinary shares, by the weighted average number of ordinary shares and dilutive potential
ordinary shares adjusted for any bonus issue.
(m)
OTHER INDIRECT TAXES
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST) and
value added tax (VAT) except where the amount of GST or VAT incurred is not recoverable from the
taxation authority. In these circumstances, the GST or VAT is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST or VAT included. The net amount of
GST or VAT recoverable from, or payable to, the relevant taxation authority is included as a current
asset or liability in the statement of financial position.
Cash flows are included in the statement of cash flows on a net basis. The GST and VAT
components of cash flows arising from investing and financing activities which are recoverable
from, or payable to, the relevant taxation authority are classified as operating cash flows.
(n)
SEGMENT REPORTING
The Group determines and presents operating segments based on the information that internally is
provided to the CEO, who is the Group’s chief operating decision maker.
An operating segment is a component of the Group that engages in business activities from which it
may earn revenues and incur expenses, including revenues and expenses that relate to transactions
with any of the Group’s other components. An operating segment’s operating results are reviewed
regularly by the CEO to make decisions about resources to be allocated to the segment and assess
its performance, and for which discrete financial information is available.
Segment results that are reported to the CEO include items directly attributable to a segment as well
as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate
assets and income tax assets and liabilities. Segment capital expenditure is the total cost incurred
during the period to acquire property, plant and equipment and resource property costs.
(o)
REVENUE
Revenue is measured at the fair value of the consideration received or receivable, net of the amount
of value added tax (“VAT”) payable to the taxation authority. Revenue is recognised when the
significant risks and rewards of ownership have been transferred to the buyer, recovery of the
consideration is probable, the associated costs can be estimated reliably, there is no continuing
management involved with the goods, and the amount of revenue can be measured reliably.
Sale of gas
Gas sales revenue is recognised when control of the gas passes at the delivery point. Proceeds
received in advance of control passing are recognised as unearned revenue.
37
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
(p)
LEASES
The Group as a lessee
For any new contracts, the Group considers whether a contract is, or contains a lease. A lease is
defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying
asset) for a period of time in exchange for consideration’. To apply this definition the Group assesses
whether the contract meets three key evaluations which are whether:
•
•
•
the contract contains an identified asset, which is either explicitly identified in the contract or
implicitly specified by being identified at the time the asset is made available to the Group
the Group has the right to obtain substantially all of the economic benefits from use of the
identified asset throughout the period of use, considering its rights within the defined scope of
the contract
the Group has the right to direct the use of the identified asset throughout the period of use.
The Group assess whether it has the right to direct ‘how and for what purpose’ the asset is used
throughout the period of use.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the
statement of financial position. The right-of-use asset is measured at cost, which is made up of the
initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate
of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made
in advance of the lease commencement date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease 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 Group also assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease
payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is
readily available or the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments
(including in substance fixed), variable payments based on an index or rate, amounts expected to be
payable under a residual value guarantee and payments arising from options reasonably certain to
be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased
for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in
in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use
asset, or profit and loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the
practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in
38
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease
term.
On the statement of financial position, right-of-use assets have been included in property, plant and
equipment (except those meeting the definition of investment property) and lease liabilities have
been disclosed separately under current and non-current liabilities.
(q)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand, deposits held at call with financial institutions,
other short-term, highly liquid investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes
in value.
(r)
CHANGES IN ACCOUNTING POLICIES, DISCLOSURES, STANDARDS AND INTERPRETATIONS
(i) New and revised Standards and Interpretations on issue not yet adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended
but are not yet effective have not been early adopted by the Group for the annual reporting period
ended 31 December 2021. The Directors do not believe that these new and revised Standards
and Interpretations will have a material effect on the Group.
(ii) New Standards and Interpretations applicable for the annual reporting period ended 31 December
2021
The Directors have reviewed all the new and revised Standards and Interpretations issued by the
AASB that are relevant to the Group and effective for the current reporting period. As a result of
this review, the Directors have determined that there is no material impact of the new and revised
Standards and Interpretations on the Group and, therefore, no material change is necessary to
the Group accounting policies.
NOTE 2:
FINANCIAL RISK MANAGEMENT
Exposure to credit, market and liquidity risks arise in the normal course of the Group’s business.
This note presents information about the Group’s exposure to each of the above risks, their objectives,
policies and processes for measuring and managing risk, and the management of capital. Further
quantitative disclosures are included throughout this financial report.
Risk recognition and management are viewed as integral to the Group's objectives of creating and
maintaining shareholder value, and the successful execution of the Group's strategies in gas
exploration and development. The Board as a whole is responsible for oversight of the processes by
which risk is considered for both ongoing operations and prospective actions. Management is
responsible for establishing procedures which provide assurance that major business risks are
identified, consistently assessed and appropriately addressed.
39
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Credit risk
(i)
The Group invests in short term deposits and trades with recognised, creditworthy third parties.
Cash and short-term deposits are made with institutions that have a credit rating of at least A1 from
Standard & Poor’s and A from Moody's.
Management has a credit policy in place whereby credit evaluations are performed on all customers
and parties the Group and its subsidiaries deal with. The group monitors receivable balances on an
ongoing basis and as a result believes its exposure to bad debts is not significant.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset.
Market Risk
(ii)
Interest rate risk
The Group is primarily exposed to interest rate risk arising from its cash and cash equivalents and
borrowings. The Group does not hedge its exposure to movements in market interest rates. The Group
adopts a policy of ensuring that as far as possible it maintains excess cash and cash equivalents in bank
accounts earning interest. The Group’s exposure to interest rate risk and sensitivity analysis is
disclosed in note 24.
Currency risk
The Group is exposed to foreign currency risk on purchases that are denominated in a currency other
than the respective functional currencies of consolidated entities. The currency giving rise to this risk
is primarily Australian dollars.
In respect to monetary assets held in currencies other than Euro, the Group ensures that the net
exposure is kept to an acceptable level by minimising their holdings in the foreign currency where
possible by buying or selling foreign currencies at spot rates where necessary to address short term
imbalances. The Group’s exposure to currency risk and sensitivity analysis is disclosed in note 24.
Capital Management
(iii)
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. Capital consists of issued share capital
plus accumulated losses/earnings. The Board monitors accumulated losses/earnings.
The Board seeks to encourage all employees of the Group to hold ordinary shares.
The Board seeks to maintain a balance between the higher returns that might be possible with higher
levels of borrowings and the advantages and security afforded by a sound capital position from
shareholders.
The Group does not have a defined share buy-back plan and there were no changes in the Group’s
approach to capital management during the year. There are no externally imposed restrictions on
capital management.
40
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Liquidity Risk
(iv)
The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due. Management prepares regular cash flow forecasts
taking into consideration debt facility obligations. Capital expenditures are planned around cash flow
availability. The Group’s contractual maturities of financial liabilities, including estimated interest
payments are disclosed in Note 24.
Climate change risk
(v)
Key climate-related risks and opportunities relevant to the Group’s operations include:
• The transition to a low carbon economy through technological improvements and innovations
that support a lower carbon energy efficient system with decreased demand and changing
community sentiment for fossil fuels, increased uncertainty time and cost associated with
regulatory bodies granting approvals or licences on fossil fuel intensive projects. Transition to
lower carbon economy also gives rise to opportunity for the Group’s gas production assets.
Natural gas is viewed as a key element to supporting a sustainable energy transition.
• Physical changes caused by climate change include increased severe weather events and chronic
changes to weather patterns which may impact demand for energy and the Group’s production
assets and production capability. These events could have a financial impact on the Group
through increased operating costs, maintenance costs, revenue generation and sustainability of
its production assets.
• Policy changes by governments which may result in increasing regulation and costs which could
have a material impact on the Group’s operations.
Due to the nature of the uncertainties relating to the above risks, the financial impact has not been
quantified for the financial year.
The Group is committed to continually improve climate change related disclosures as processes and
understanding of climate change related matters improve alongside the Group's activities and
operations.
NOTE 3:
EMPLOYEE BENEFIT EXPENSES
Wages and salaries
Contributions to defined contribution plans
Less: allocation to projects
CONSOLIDATED
2021
€
2020
€
311,605
62,949
(108,866)
265,688
429,114
81,455
-
510,569
41
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 4:
CORPORATE OVERHEADS
Corporate overheads comprise:
Company administration and compliance
Professional fees
Office costs
Travel and entertainment
Other expenses
CONSOLIDATED
2021
€
2020
€
84,597
117,698
60,070
3,833
(16,084)
250,114
69,382
164,290
54,349
24,261
32,404
344,686
NOTE 5:
GAIN ON AGREEMENT DEBT SETTLMENT
In the prior year, the Group reached an agreement with Apennine Energy S.p.A (formerly Northsun Italia S.p.A
(NSI)) to settle a disputed amount in relation to charges made to Po Valley Operations Pty Ltd (PVO) for costs
in relation to intercompany costs incurred in 2017/2018 prior to restructuring of the group. The final agreed
amount to settle all claims between the companies was €120,000. This has resulted in a net gain to PVO of
€110,940 for the financial year to 31 December 2020.
AUDITOR’S REMUNERATION
NOTE 6:
Audit and review of the Group financial statements
Auditors of the Company: HLB Mann Judd
Auditors of the Company: Bentleys NSW Audit Pty Ltd
NOTE 7:
FINANCE INCOME AND EXPENSE
Recognised in profit and loss:
Interest income
Finance income
Interest expense
Foreign exchange (gains) / losses (net)
Finance expense
Net finance expense
29,808
-
23,461
4,804
157
157
226,626
45,470
272,096
143
143
283,208
36,668
319,876
(271,939)
(319,733)
42
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
INCOME TAX (BENEFIT) / EXPENSE
NOTE 8:
Current tax
Current year
Deferred tax
Deferred tax benefit
Total income tax benefit
CONSOLIDATED
2021
€
2020
€
-
(161,095)
(161,095)
-
-
-
Numerical reconciliation between tax expense and pre-tax accounting profit loss
Loss for the year before tax from continuing operations
(756,828)
(1,035,548)
Income tax benefit expense using the Company’s domestic tax rate of
26% (2020: 27.5%)
Permanent differences
Effect of tax rates in foreign jurisdictions
Current year losses and temporary differences for which no deferred
tax asset was recognised
Prior year losses for which deferred tax asset was recognised
Changes in temporary differences
Income tax benefit
NOTE 9:
EARNINGS PER SHARE
Basic and diluted loss per share (€ cents)
(196,775)
5,308
6,342
216,276
(139,082)
(53,164)
(161,095)
(284,775)
(26,468)
21,023
241,130
-
49,090
-
(0.07)
(0.16)
The calculation of basic and diluted loss per share from continuing operations was based on the loss
attributable to shareholders of €595,733 (2020: €1,035,548) and a weighted average number of ordinary
shares outstanding during the year of 829,960,780 (2020: 647,286,102).
Diluted loss per share is the same as basic loss per share.
The number of weighted average shares is
calculated as follows:
Number of shares on issue at beginning of the year
Placement
Institutional offer of ANREO
Retail offer of ANREO
Shortfall on retail offer of ANREO
No. of days
365
191
191
170
169
Weighted
average no.
647,286,102
18,688,846
121,228,871
29,091,873
13,665,088
829,960,780
Weighted
average no.
647,286,102
-
-
-
-
647,286,102
43
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONSOLIDATED
2021
€
2020
€
NOTE 10: CASH AND CASH EQUIVALENTS
(a) Cash and cash equivalents
1,262,151
44,107
Reconciliation of cash flows from operating activities
(b)
Loss for the year
Adjustment for non-cash items:
Depreciation and amortisation
Unrealised foreign exchange losses related to financing activities
Employee benefit costs capitalised
Exploration costs written off
Interest expense settled by equity
Interest capitalised to loans / borrowings
Interest on lease liabilities
Gain on agreement debt settlement
Change in operating assets and liabilities:
Decrease/(increase) in receivables
(Decrease)/Increase in trade and other payables
(Decrease) / Increase in interest accrual net of settlement by equity
Increase in provisions
Increase in deferred tax assets
(595,733)
(1,035,548)
4,808
64,948
(108,866)
30,071
166,138
-
-
-
(39,935)
(254,543)
(8,413)
922
(161,095)
41,622
29,220
-
-
-
161,695
664
(110,940)
(39,595)
462,366
-
-
-
Net cash outflow from operating activities
(901,698)
(490,516)
(c) Reconciliation of financing cash flows to liabilities
Proceeds from loans advanced (refer Note 19)
Loans repaid in cash (refer Note 19)
Repayment of convertible notes in cash (refer Note 20)
286,340
(81,812)
(476,594)
609,950
-
-
(d) Non-cash financing activities
Loans settled by issue of shares (refer Note 19)
Interest on loans settled by issue of shares (refer Note 19)
Interest on convertible notes by issue of shares (refer Note 20)
2,291,215
168,178
320,591
129,025,096 shares were issued in settlement of Loans and 9,456,939 shares for interest on loans.
70,794,596 of the loan and interest shares were issued to related parties (refer Note 26). 18,027,398
shares were issued in settlement of interest on convertible notes of which 8,820,384 were issued to
related parties (refer Note 26).
-
-
-
44
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 11:
TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Sundry debtors
Indirect taxes receivable
Other deposits receivable
CONSOLIDATED
2021
€
2020
€
86,042
53,199
3,039
43,089
30,821
10,302
27,994
17,500
185,369
86,617
The Group’s exposure to credit and currency risks and impairment losses related to trade and other
receivables are disclosed in Note 24.
OTHER NON-CURRENT ASSETS
NOTE 12:
Bank Guarantee deposit (i)
Other
-
78
78
(i)A bank guarantee deposit of €757,000 has been issued to Snam Rete Gas S.p.A (“SNAM”) for the
construction of the tie-in point to the Italian National Gas Grid for the Selva gas plant and pipeline
construction. The deposit is refundable upon commencement of first gas.
757,000
2,078
759,078
NOTE 13:
PROPERTY PLANT & EQUIPMENT
Office Furniture & Equipment:
At cost
Accumulated depreciation
Right-of-use asset: Building (Note 17)
At Cost
Accumulated depreciation
Total property plant & equipment
Reconciliations:
Reconciliation of the carrying amounts for each class of property,
plant & equipment are set out below:
Carrying amount at beginning of year
Additions
Adjustment of right-of-use assets
Depreciation expense
23,108
(16,087)
7,021
83,317
(83,317)
-
7,021
11,199
630
-
(4,808)
22,478
(14,703)
7,775
83,317
(79,893)
3,424
11,199
105,145
975
(53,299)
(41,622)
Carrying amount at end of year
7,021
11,199
45
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 14:
RESOURCE PROPERTY COSTS
Resource Property costs
Exploration and Evaluation
Reconciliation of carrying amount of resource properties
Exploration and Evaluation Phase
Carrying amount at beginning of period
Exploration expenditure
Exploration written off
Carrying amount at end of period
CONSOLIDATED
2021
€
2020
€
8,146,546
7,990,040
7,990,040
7,876,926
186,577
(30,071)
113,114
-
8,146,546
7,990,040
Resource property costs in the exploration and evaluation phase have not yet reached a stage which permits a
reasonable assessment of the existence of or otherwise of economically recoverable reserves. The ultimate
recoupment of resource property costs in the exploration phase is dependent upon the successful
development and exploitation, or alternatively sale, of the respective areas of interest at an amount greater
than or equal to the carrying value. Where exploration permits have expired or not renewed, the costs
previously capitalised are expensed to the statement of profit and loss.
The Group reviewed the carrying value of its assets and cash generating units using a Value in Use CGU
valuation, in particular a valuation on Selva and Teodorico projects was calculated to determine the recoverable
amount of each of these fields.
The recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal (FVLCD) and value
in use (VIU). In calculating VIU, the estimated future cash flows are discounted to their present value using an
after-tax discount rate (10%) that reflects current market assessments of the time value of money and the risks
specific to the assets.
The Group bases its calculation on detailed budgets and forecasts, which are prepared separately for each of
the Group’s CGUs to which the individual assets are allocated. These budgets and forecasts generally cover the
forecasted life of the CGUs. VIU does not reflect future cash flows associated with improving or enhancing an
asset’s performance. Furthermore, independent valuations were performed for the purposes of estimating
the reserves of these projects by CGG Services (UK) Limited (“CGG”). The recoverable amount determined by
the CGG report of Selva and Teodorico was €18.2 million and €17.8 million respectively.
Valuations performed by CGG were done at a gas price of €0.20 per standard cubic meter. With the prices in
Italy have surging from around €0.20 per standard cubic meter to above €0.90 per standard cubic meter, the
Group has performed an internal valuation in comparison to the above independent valuations taking into
account conservative change in price and updated costs and project execution timeline. The Group’s internal
valuations are €24 million (Selva) and €46.3 million (Teodorico).
46
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 14:
RESOURCE PROPERTY COSTS (continued)
Key inputs for the internal valuations include a starting gas price of €0.25 per standard cubic meter, escalating
by 2% each year, and an after-tax discount rate of 10%.
The carrying value of these assets are €4.4 million and €2.9 million respectively. As a result of this assessment,
with the recoverable amount exceeding the carrying value of these assets, no impairment was required on
Selva and Teodorico.
DEFERRED TAX ASSETS AND LIABILITIES
NOTE 15:
Recognised deferred tax assets
Deferred tax assets have been recognised in respect of the following items:
Tax losses
Accrued expenses and liabilities
Recognised deferred tax assets
CONSOLIDATED
2021
€
1,041,718
66,558
1,108,276
2020
€
848,694
98,487
947,181
The tax losses in both Italy and Australia do not expire. The deductible temporary differences do not expire
under current tax legislation. Deferred tax assets have been recognised in respect of these items because it is
probable that future taxable profit will be available against which the Group can utilise the benefits therefrom.
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
Tax losses
Deductible temporary differences
Unrecognised deferred tax assets
Deferred tax benefit will only be obtained if:
3,005,368
1,104,444
63,891
1,897,340
3,069,259
3,001,784
(i)
(ii)
(iii)
The relevant company derives future assessable income of a nature and of an amount sufficient to
enable the benefit from the deductions for the losses to be realised;
The relevant company continues to comply with the conditions for deductibility imposed by tax
legislation; and
No changes in tax legislation adversely affect the relevant company in realising the benefit from the
deductions for the losses.
47
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 15:
DEFERRED TAX ASSETS AND LIABILITIES (continued)
Movement in recognised temporary differences during the year
Balance 1
January
2020
€
848,694
98,487
947,181
Consolidated
Tax losses
Accrued expenses
and liabilities
Total recognised
deferred tax asset
Profit and
loss
€
Equity
€
Balance
31
December
2020
€
Profit and
loss
€
Equity
€
-
-
-
-
-
-
848,694
193,024
98,487
(31,929)
947,181
161,095
Balance 31
December
2021
€
1,041,718
66,558
1,108,276
-
-
-
NOTE 16:
TRADE AND OTHER PAYABLES
Trade payables and accruals
Other payables
CONSOLIDATED
2021
€
622,756
19,796
2020
€
1,185,894
40,288
642,552
1,226,182
The Group’s exposure to currency and liquidity risks related to trade and other payables are disclosed in
note 24.
PROVISIONS
NOTE 17:
Current:
Employee leave entitlements
NOTE 18: LEASES
3,719
2,797
The Group leased office facilities in Rome. The lease was for a period of six years from the start of the lease
in June 2016, but reduced by mutual agreement to terminate early in January 2021.
The Group leases office equipment under short term contracts for low-value items and as such the Group
has elected not to recognise right-of use assets and lease liabilities for these leases. Payments made under
such leases are expensed on a straight-line basis.
Information about leases for which the Group is a lessee is presented below.
48
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 18: LEASES (continued)
Right-of-use assets
Right-of-use assets related to leased properties that do not meet the definition of investment property and
are presented as property, plant and equipment (see Note 13).
Buildings
Balance at 1 January (on adoption of AASB16)
Reduction in term lease
Depreciation
Total
NOTE 19:
INTEREST BEARING LOANS
CONSOLIDATED
2021
€
2020
€
3,424
-
(3,424)
-
96,631
(53,299)
(39,908)
3,424
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings,
which are measured at amortised cost. For more information about the Group’s exposure to interest rate, foreign
currency and liquidity risk, see note 24.
Current liabilities
CONSOLIDATED
2020
€
2021
€
Loans
Loans were repaid during the year. Lenders who participated in the capital raising through ANREO in June
2021 had loans and interest settled by the issue of shares (refer note 26). Lenders that did not participate in
the capital raising had loans repaid in cash.
2,067,175
-
The Group’s exposure to currency, interest and liquidity risk related to interest bearing loans are disclosed in
note 24.
A reconciliation of the movement in loans for the year is as follows:
Loans
Balance at beginning of the year
Loans advanced
Loans settled by issue of shares
Loans repaid in cash
Interest capitalised to loans
Effect of exchange rate
Balance at end of the year
2,067,175
1,272,676
286,340
609,950
(2,291,215)
(81,812)
-
19,512
-
-
161,695
22,854
-
2,067,175
49
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 19:
INTEREST BEARING LOANS (continued)
A reconciliation of the movement in interest accrued on loans for the year is as follows:
Accrued Interest
Balance at beginning of the year
Interest for the year
Interest settled by issue of shares
Interest paid in cash
Interest capitalised to loans
Effect of exchange rate
Balance at end of the year
CONSOLIDATED
2021
€
77,001
110,256
(168,178)
(20,172)
2020
€
76,484
161,549
-
-
-
(161,695)
1,093
-
663
77,001
129,025,096 ordinary shares were issued under the ANREO in settlement of these loans and 9,456,939
shares were issued in settlement of interest on these loans at repayment date.
NOTE 20: CONVERTIBLE NOTES
The Company issued convertible notes equivalent to A$2,500,000 in 2018. During the year, A$750,000 was
repaid with a balance A$1,750,000 outstanding at 31 December 2021 (2020: A$2,500,000) The Euro value of
these convertible notes at 31 December 2021 is €1,120,170 (2020: €1,571,070).
A reconciliation of the movement in convertible notes for the year is as follows:
Loans
Balance at beginning of the year
Convertible notes repaid in cash
Effect of exchange rate
Balance at end of the year
1,571,070
(476,594)
25,694
1,563,183
-
7,887
1,120,170
1,571,070
A reconciliation of the movement in interest accrued on convertible notes for the year is as follows:
Accrued Interest
Balance at beginning of the year
254,883
128,206
Interest for the year
Interest settled by issue of shares
Interest paid in cash
Effect of exchange rate
Balance at end of the year
107,797
(320,591)
(44,806)
2,717
-
120,740
-
-
5,937
254,883
18,027,398 ordinary shares were issued under the ANREO in settlement of interest on convertible notes to
30 June 2021.
50
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 20: CONVERTIBLE NOTES (continued)
The convertible notes are convertible into fully paid ordinary shares of the Company at a conversion price of
A$0.042 per share. The notes have a maturity date of 29 April 2022 (repayment date) and interest payable on
the principal amount at a rate of 8% per annum. Subject to shareholder approval, the company has undertaken
to vary the conversion price to A$0.028 per share.
Subject to shareholder approval, if required, the noteholder may, before the maturity date, convert the
convertible note into shares by providing the Company with written notice of the conversion.
The Company has the right to elect to redeem any unconverted convertible notes by giving 30-day notice to
the noteholder.
Redemption of the notes occurs on:
a) The repayment date;
b) Within 10 business days on the occurrence of an event of default which has not been remedied within
the prescribed period; or
c) On a change in control of the Company (including a takeover) or the sale of the Company’s main
undertaking unless the noteholder elects to convert the Convertible Notes into shares.
The redemption amount is the outstanding facility amount with respect to each note plus any unpaid interest.
NOTE 21:
CAPITAL AND RESERVES
Share Capital
Opening balance - 1 January
Ordinary Shares
2021
Number
2020
Number
2021
€
2020
€
647,286,103
647,286,103
46,641,745
46,641,745
Shares issued during the reporting period:
Placement
Institutional offer of ANREO
Retail offer of ANREO
Shortfall on retail offer of ANREO
Share issue costs
35,714,285
231,667,735
62,461,961
29,513,354
-
-
-
-
-
-
635,126
4,119,684
1,101,689
520,560
(298,920)
-
-
-
-
-
Closing balance – 31 December
1,006,643,438
647,286,103
52,719,884
46,641,745
All ordinary shares are fully paid and carry one vote per share and the right to dividends. In the event of
winding up the Company, ordinary shareholders rank after creditors. Ordinary shares have no par value.
51
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 21:
CAPITAL AND RESERVES (continued)
Reserves
Translation Reserve
Options Reserve
CONSOLIDATED
2020
€
2021
€
1,192,269
1,192,269
10,687
-
1,202,956
1,192,269
Translation Reserve
The translation reserve of €1,192,269 comprises all foreign currency differences arising from the translation of
the financial statements of foreign operations. The historical balance comprises of translation differences prior
to change in functional currency of a foreign operation.
Options Reserve
The options reserve of €10,687 comprises the fair value of vested options issued as consideration (refer Note
22).
Dividends
No dividends were paid or declared during the current year (2020: Nil).
NOTE 22:
SHARE BASED PAYMENTS
Options granted during the year:
During the year, the Group granted 5,000,000 options (2020: nil) as consideration for services provided by
broker. The options have been valued as follows using the Black-Scholes valuation model and included in the
financial statements as share issue costs.
Grant date
Options
issued
21 Jul 2021
5,000,000
Exercise price
Expiry date
Volatility1
Interest
rate
Value €
AU$0.05
(€0.031)
21 Jul 2023
53%
0.13%
10,687
1 Historical volatility has been used as the basis for determining expected share price volatility.
Options exercised during the year:
During the year the Company issued no shares (2020: nil) on the exercise of unlisted options.
Options cancelled during the year:
During the year no unlisted options (2020: nil) were cancelled upon termination of employment, or on the
expiry of the exercise period.
52
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 22:
SHARE BASED PAYMENTS (continued)
Options on issue under the plan at balance date
The number of options issued under the Plan and outstanding over unissued ordinary shares at 31
December 2021 is 5,000,000 as follows.
Grant date
Exercise price
Expiry date
Balance at 31
December 2021
Vested and
Exercisable at 31
December 2021
21 Jul 2021
AU$0.05 (€0.031)
21 Jul 2023
5,000,000
5,000,000
Subsequent to balance date
Subsequent to balance date no unlisted options were issued, exercised or cancelled.
Reconciliation of movement of options
Set out below is a summary of options granted:
Options outstanding at the
start of the year
Options granted during the
year
Options outstanding at the end
of the year
2021
2020
No.
WAEP
(€ cents)
No.
WAEP
(€ cents)
-
-
5,000,000
5,000,000
0.031
0.031
(AU$0.05)
-
-
-
-
-
-
Weighted average contractual life
The weighted average contractual life for un-exercised options is 24 months.
NOTE 23:
FINANCIAL REPORTING BY SEGMENTS
The Group reportable segments as described below are the Group’s strategic business units. The strategic
business units are classified according to field licence areas which are managed separately. All strategic
business units are in Italy. For each strategic business unit, the CEO reviews internal management reports on
a monthly basis. Currently the Group only has exploration and evaluation operating segment.
53
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 24:
FINANCIAL INSTRUMENTS
(a) Interest Rate Risk Exposures
Profile
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
Variable rate instruments
Financial assets
Financial liabilities
Fixed rate instruments
Financial assets
Financial liabilities
CONSOLIDATED
2021
€
2020
€
1,262,151
-
1,262,151
44,107
-
44,107
-
(1,120,170)
(1,120,170)
-
(3,638,245)
(3,638,245)
Cash flow sensitivity analysis for variable rate instruments:
A strengthening of 50 basis points in interest rates at the reporting date would have increased /
(decreased) equity and profit and loss by the amounts shown below. This analysis assumes that all other
variables, in particular foreign currency rates, remain constant. The analysis is performed on the same
basis for 2020.
Effect in €’s
31 December
Variable rate instruments
Profit or loss
Equity
2021
2020
2021
2020
6,311
221
-
-
(b) Credit Risk
Exposure to credit risk
The Group is not exposed to significant credit risk. Credit risk with respect to cash is held with
recognised financial intermediaries with acceptable credit ratings.
The Group has limited its credit risk in relation to its receivables. Receivables from joint operations
partners fall under the Joint Operations Agreement for the development of the Selva project. Other
receivables from Government agencies have limited credit risk as these are either offset against other
indirect taxes or payroll taxes payable first with any remainder receivable within a 12-month period.
54
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 24:
FINANCIAL INSTRUMENTS (continued)
The carrying amount of the Group’s financial assets represents the maximum credit exposure and is shown in
the table below. No receivables are considered past due nor were any impairment losses recognised during
the period.
Cash and cash equivalents
Receivables – Current
Other assets
Note
10
11
CONSOLIDATED
Carrying Amount
2021
€
1,262,151
185,369
759,078
2,206,598
2020
€
44,107
86,617
78
130,802
(c)
Liquidity risk
The following are the contractual maturities of financial liabilities, including estimated interest
payments:
Consolidated
31 December 2021
In €
Trade and other
payables
Lease liabilities
Interest bearing loans
Convertible notes
31 December 2020
In €
Trade and other
payables
Carrying
amount
Contractual
cash flows
6 months
or less
6 to 12
months
1 – 2 Years
2 – 5 Years
(642,552)
(642,552)
(642,552)
-
-
-
-
-
-
(1,120,170)
(1,120,170)
(1,120,170)
(1,762,722)
(1,762,722)
(1,762,722)
Carrying
amount
Contractual
cash flows
6 months
or less
6 to 12
months
(1,226,182)
(1,226,182)
(1,161,837)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 – 2 Years
2 – 5 Years
(64,345)
-
(2,273,893)
Lease liabilities
(3,091)
(3,525)
(3,525)
Interest bearing loans
(2,067,175)
(2,273,893)
-
Convertible notes
(1,571,070)
(1,633,913)
(490,174)
(163,391)
(980,348)
(4,867,518)
(5,137,513)
(1,655,536)
(163,391)
(3,318,586)
-
-
-
-
-
55
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 24:
FINANCIAL INSTRUMENTS (continued)
(d)
Net Fair Values of financial assets and liabilities
The carrying amounts of financial assets and liabilities as disclosed in the statement of financial
position equate to their estimated net fair value.
Financial assets and financial liabilities measured at fair value in the statement of financial position
are grouped into three levels of a fair value hierarchy.
The three levels are defined based on the observability of significant inputs to the measurement, as
follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (derived from prices); and
• Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
Current receivables, current payables and cash & cash equivalents are not measured at fair value.
Due to their short- term nature, the carrying amount of current receivables, current payables and
cash and cash equivalents is assumed to approximate their fair value.
The table below summarises financial assets and liabilities at fair value at each level of measurement:
At 31 December 2021
Level 1
$
Level 2
$
Level 3
$
Total
$
Convertible Notes (refer note 20)
-
1,120,170
-
1,120,170
(e)
Foreign Currency Risk
The Group is exposed to foreign currency risk on purchases and borrowings that are denominated in
a currency other than Euro. The currencies giving rise to this risk is primarily Australian Dollars.
Amounts receivable/(payable) in foreign currency other than
functional currency:
Cash
Current – Payables
Current – Interest bearing loans
Current – Convertible notes
Net Exposure
CONSOLIDATED
2021
€
1,195,116
(28,866)
-
(1,120,170)
46,080
2020
€
5,340
(110,346)
(2,067,175)
(1,571,070)
(3,743,251)
56
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 24:
FINANCIAL INSTRUMENTS (continued)
The following significant exchange rates applied during the year:
Australian Dollar ($)
Sensitivity Analysis
Average rate
Reporting date spot rate
2021
0.635
2020
0.605
2021
0.640
2020
0.628
A 5 percent strengthening of the Australian dollar against the Euro (€) at 31 December would have increased
(decreased) equity and profit and loss by the amounts shown below. This analysis assumes that all other
variables, in particular interest rates, remain constant. The analysis for 2019 was prepared using the same
basis.
31 December 2021
Australian Dollar to Euro (€)
31 December 2020
Australian Dollar to Euro (€)
CONSOLIDATED
Profit or loss
€
2,304
Equity
€
(184,926)
-
-
A 5 percent weakening of the Australian dollar against the Euro (€) at 31 December would have the equal but
opposite effect on the above currencies to the amounts shown above, on the basis that all other variables
remain constant.
NOTE 25:
COMMITMENTS AND CONTINGENCIES
Contractual Commitments and contingencies
The Group has considered its obligations for restoration and rehabilitation of the well development planned
for the Selva field. The Group estimates that the cost of restoration of the well development will be €2,065,119
to be incurred once production ceases at the end of estimated production life estimated to be 15 years.
A provision for these restoration costs will be recognised once the final production concession is granted and
development has commenced as anticipated in the first half of 2022.
Other than the above, there are no other material commitments or contingent liabilities not provided for in
the financial statements of the Group as at 31 December 2021.
57
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 26:
RELATED PARTIES
KEY MANAGEMENT PERSONNEL COMPENSATION
The key management personnel compensation included in employee benefit expenses (see note 3) is as
follows:
Short-term employee benefits
Termination benefits
Other long term benefits
Post-employment benefits
INTEREST BEARING LOANS
CONSOLIDATED
2021
€
17,283
-
-
-
2020
€
125,235
-
-
-
17,283
125,235
The Group obtained financing through unsecured loans provided by Directors of the Group. The loan
agreements have been reached with entities associated with Michael Masterman and Kevin Bailey. During
the year, the Group received additional funds of €286,340 (AU$450,000) from entities associated with Michael
Masterman and Kevin Bailey. All loans and accumulated interest thereon were settled following related party
participation in the Institutional Offer of the ANREO in June 2021.
A summary of the principal loan amounts is as follows:
Related Party
Kevin Bailey
Loan Amount
31 Dec 2020
A$301,676
Fuiloro Pty Ltd*
A$424,227
Loans
advanced in
year
-
-
Loans settled
by
participation
in ANREO
A$301,676
A$424,227
K & G Bailey as trustee
for The Bailey Family
Trust*
A$287,404
A$225,000
A$512,404
Symmall Pty Ltd*
A$396,759
A$225,000
A$621,759
A$1,410,066
A$450,000
A$1,860,066
Loan
Amount 31
Dec 2021
-
-
-
-
No of shares
issued
10,774,155
15,150,977
18,300,128
22,205,675
Total
€886,125
€286,340
€1,172,465
-
66,460,935
*Fuiloro Pty Ltd and K & G Bailey as trustee for The Bailey Family Trust are entities associated with Kevin Bailey, and Symmall Pty Ltd is an entity
associated with Michael Masterman.
58
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 26:
A summary of the interest on loans is as follows:
RELATED PARTIES (continued)
Related Party
Kevin Bailey
Fuiloro Pty Ltd
K & G Bailey as trustee
for The Bailey Family
Trust
Symmall Pty Ltd
Total
Interest
accrued at
31 Dec 2020
Interest to 24
June 2021
Interest
settled by
participation
in ANREO
Interest
accrued at 31
Dec 2021
A$9,938
A$14,464
A$24,402
A$14,179
A$20,340
A$34,519
A$8,151
A$19,382
A$27,533
A$11,541
A$43,809
€27,531
A$24,187
A$78,373
€49,776
A$35,728
A$122,182
€77,601
-
-
-
-
-
No of shares
issued
871,491
1,232,833
983,335
1,276,002
4,363,661
CONVERTIBLE NOTES
The table below summarises the Convertible notes held by related parties at 31 December 2021. The
convertible notes are held by directors Michael Masterman, Kevin Bailey and Joseph Constable or their
associated entities. Refer note 20 for details on the terms of the convertible notes.
Symmall Pty Ltd
K & G Bailey as trustee for The Bailey Family Trust
Joseph Constable*
Ida Constable **
*Related party from date of appointment as director on 30 November 2021
** A Related party by virtue of being a parent of Joseph Constable
CONSOLIDATED
2021
€
A$300,000
A$700,000
A$10,000*
A$240,000**
2020
€
A$300,000
A$700,000
A$10,000*
A$490,000**
A$1,250,000
A$1,500,000
Related Party
K & G Bailey as trustee for The Bailey
Family Trust
Symmall Pty Ltd
Joseph Constable*
Ida Constable**
Convertible Notes at
31 Dec 2020
Repaid during the
year
Convertible Notes
at 31 Dec 2021
A$700,000
A$300,000
A$10,000
A$490,000
A$1,500,000
€942,642
-
-
-
A$250,000
A$250,000
€158,865
A$700,000
A$300,000
A$10,000
A$240,000
A$1,250,000
€800,121
*Related party from date of appointment as director on 30 November 2021
** A Related party by virtue of being a parent of Joseph Constable
59
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 26:
RELATED PARTIES (continued)
A summary of the interest on convertible notes is as follows:
Related Party
K & G Bailey as
trustee for The
Bailey Family Trust
Symmall Pty Ltd
Joseph Constable*
Ida Constable**
Total
Interest
accrued at
31 Dec 2020
Interest for
year
Interest
settled by
participation
in ANREO
Interest
paid in
cash
Interest
accrued at
31 Dec
2021
No of
shares
issued
A$144,219
A$55,770
A$171,989
A$28,000
A$61,808
A$23,901
A$73,709
A$12,000
A$875
A$797
A$1,272
A$400
A$65,645
A$272,547
A$29,039
A$109,507
A$85,054
A$246,970
A$9,600
A$40,400
€171,277
€69,799
€210,896
€32,005
-
-
-
-
-
6,142,466
2,632,485
45,433
3,038,716
11,859,100
*Related party from date of appointment as director on 30 November 2021
** A Related party by virtue of being a parent of Joseph Constable
OTHER
Other balances owing to directors are as follows:
Related Party
Michael Masterman
Kevin Bailey
Sara Edmonson
Joseph Constable
Total
Directors’
remuneration
outstanding at
31 Dec 2020
€
227,329
62,034
15,371
-
304,734
Fees for the
year
€
-
-
15,682
1,600
17,283
Directors’
remuneration
outstanding at
31 Dec 2021
€
206,079
Amount paid
€
(21,250)
-
-
-
62,034
31,053
1,600
(21,250)
300,767
60
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 27:
PARENT ENTITY DISCLOSURES
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial Performance
Loss
Other comprehensive loss
Total Comprehensive loss
COMPANY
2021
€
2020
€
1,245,438
9,976,252
11,221,690
14,773
7,887,829
7,902,602
1,405,888
-
1,405,888
3,735,896
-
3,735,896
9,815,802
4,166,706
52,719,884
10,687
(42,914,769)
9,815,802
46,641,745
-
(42,475,039)
4,166,706
(439,444)
-
(439,444)
(444,083)
-
(444,083)
NOTE 28:
INTERESTS IN OTHER ENTITIES AND JOINT OPERATIONS
The Group’s interest in joint arrangements at 31 December 2021 are as follows:
Joint Operation
Manager
Company’s Interest
Principal Activity
(Exploration)
Selva Malvezzi Field
Po Valley Operations
63%*
Gas
The Group has a farm-out agreement and Joint Operations Agreement (“JOA”) with United Oil and Gas Plc
(“United”) (20% economic interest) and Prospex Oil and Gas Plc (“Prospex”) (17% economic interest). In
exchange for their respective interests United and Prospex covered 74% of the completed Podere Maiar-1
well cost. The Group received preliminary award of the Selva Production concession in January 2019.
Development of the production well and field connection pipework will be undertaken under the terms of
the JOA with United and Prospex.
*The Group holds 63% quota on the Podere Galina Exploration licence and the quota for 100% of Selva Production Concession Licences.
United and Prospex have 20% and 17% economic interests in the production concession and formal transfer of their quota in the production
concession will be requested on the granting of the final concession.
61
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTE 28:
INTERESTS IN OTHER ENTITIES AND JOINT OPERATIONS (continued)
Subsidiaries
The parent and ultimate controlling party of the Group is Po Valley Energy Limited. The investments held in
controlled entities are included in the financial statements of the parent at cost less any impairment losses.
Set out below is a list of the significant subsidiaries of the Group.
Name:
Po Valley Operations Pty
Limited (“PVO”)
Country of
Incorporat
ion
Class of
Shares
2021
Investment
€
2020
Investment
€
Holding
%
Australia
Ordinary
3,843,419
2,544,225
100
NOTE 29:
SUBSEQUENT EVENTS
As detailed in the Operating and financial review in the Directors’ Report, the Group has considered the impact
of Italy’s Plan of Sustainable Energy Transition of Suitable Areas (“Pitesai”) published in February 2022. The
main conclusions from the review are summarised below:
1. Selva Malvezzi / Podere Maiar – this onshore gas field is unaffected. Additional gas prospects in the
concession such as Selva North, Selva South and Riccardina are unaffected. Po Valley has sought
further clarification from the Ministry on East Selva.
2. Teodorico – the offshore gas field may be affected as the existing 12-mile no development zone has
been extended due to the recent institution of environmental protected areas in proximity of the
licence. Po Valley has initiated a discussion with the Ministry in order to better understand the impact
on the basis that the concession was requested before the Pitesai process started in February 2019. It
received environmental approval last year and the gas field reserves (2P 36.5bcf) are in excess of the
5.3bcf threshold for continuation mentioned in the Pitesai.
3. Torre del Moro - Po Valley has sought clarification on how the gas condensate exploration and
targeted gas cap may be treated.
4. Cadelbosco & Grattasasso – Canolo and Zini gas prospects remain unaffected. Activity for Bagnolo and
Ravizza oil discoveries will not proceed under the new plan and Po Valley has adjusted resource and
reserve definitions accordingly. Expenditure to date on these oil discoveries has been negligible
(€30,071). Not proceeding with the Bagnolo and Ravizza projects is not considered to be material to
the Group.
Other than the above, there were no events between the end of the financial year and the date of this report
that, in the opinion of the Directors, will affect significantly the operations of the Group, the results of those
operations, or the state of affairs of the Group, in future financial years.
62
PO VALLEY ENERGY LIMITED
DIRECTORS’ DECLARATION
1. In the opinion of the directors of PVE (“the Company”):
i)
the financial statements and notes, as set out on pages 20 to 62, and the remuneration disclosures
that are contained in the Remuneration report in the Directors’ report, are in accordance with
the Corporations Act 2001, including:
a.
b.
giving a true and fair view of the Group’s financial position as at 31 December 2021 and of
its performance, for the financial year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001;
ii)
subject to the matters disclosed in Note 1.2(c), there are reasonable grounds to believe that the
Company will be able to pay its debts as and when they become due and payable.
2. The directors have been given the declarations required by 295A of the Corporations Act 2001 for the
financial year ended 31 December 2021.
3. The Directors draw attention to Note 1.2(a) to the Financial Statements which includes a statement of
compliance with International Financial Reporting Standards.
This declaration is made in accordance with a resolution of directors.
Michael Masterman
Chairman
31 March 2022
Kevin Bailey
Non-Executive Director
31 March 2022
63
PO VALLEY ENERGY LIMITED
INDEPENDENT AUDITOR’S REPORT
To the members of Po Valley Energy Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Po Valley Energy Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 31
December 2021, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
a) giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its
financial performance for the year then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
auditor independence requirements of the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1.2(c) in the financial report, which indicates that a material uncertainty
exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
Emphasis of matter
We draw attention to Note 29 in the financial report, which describes the Group’s consideration of
the impact of Italy’s Plan of Sustainable Energy Transition of Suitable Areas (“Pitesai”) published
in February 2022. Our opinion is not modified in respect of this matter.
64
PO VALLEY ENERGY LIMITED
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter described in the Material
Uncertainty Related to Going Concern section, we have determined the matters described below
to be the key audit matters to be communicated in our report.
Key Audit Matter
How our audit addressed the key audit
matter
Carrying value of resource property costs
Refer to Note 13.
exploration
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Group
capitalises
evaluation
expenditure and as at 31 December 2021 had a
deferred exploration and evaluation expenditure
costs”) balance of
(“resource property
€8,146,546.
and
Exploration and evaluation expenditure was
determined to be a key audit matter as it is the
most significant asset of the Group and was an
area which involved the most audit effort and
communication with
those charged with
governance.
We planned our work to address the audit risk
that the capitalised expenditure may no longer
meet the recognition criteria of the standard. In
addition, we considered it necessary to assess
whether facts and circumstances existed to
suggest
the
exploration and evaluation expenditure asset
may exceed its recoverable amount.
the carrying amount of
that
Our procedures included but were not
limited to the following:
processes
- We obtained an understanding of the
associated with
key
management’s review of the carrying
value of exploration and evaluation
expenditure;
- We
considered
the Directors’
assessment of potential indicators of
impairment in addition to making our
own assessment;
- We obtained evidence that the Group
has current rights to tenure of its areas
of interest;
- We considered the nature and extent
of planned ongoing activities;
- We enquired with management,
reviewed ASX announcements and
reviewed minutes
of Directors’
meetings to ensure that the Group had
not resolved to discontinue exploration
and evaluation at any of its areas of
interest;
- We substantiated a sample of
expenditure by agreeing to supporting
documentation; and
- We examined the disclosures made in
the financial report.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 31 December 2021, but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report, or our knowledge obtained in the audit or otherwise appears to be materially misstated.
65
PO VALLEY ENERGY LIMITED
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
-
-
- Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
-
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
66
PO VALLEY ENERGY LIMITED
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors’ report for the year ended
31 December 2021.
In our opinion, the Remuneration Report of Po Valley Energy Limited for the year ended 31
December 2021 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards
HLB Mann Judd
Chartered Accountants
Perth, Western Australia
31 March 2022
L Di Giallonardo
Partner
67
PO VALLEY ENERGY LIMITED
TECHNICAL SUMMARY
The following information is provided in order to comply with Chapter 5 of the ASX Listing Rules and
include general requirements applicable to the public reporting of petroleum resources and specific
information to be included in the oil and gas exploration:
1)
TENEMENTS
Po Valley Energy Limited (the “Company”, “Po Valley Energy” or “PVE”) holds 100% of Po Valley
Operations Pty Ltd (“PVO”) together the Group. PVO holds the titles to all exploration permits and
preliminary awarded production concessions and its operations are located entirely in the north of Italy.
As at 31 December 2021, the Group’s core portfolio includes a total of 4 onshore Exploration Permits and
1 offshore Exploration Permit and two preliminary awarded production concessions with environmental
approval granted.
Total acreage position of the Group at 31 December 2021 is 1,690 km2.
For an illustration of each asset’s location please refer to the map in Figure 1 and Table 1.
Figure 1: Licences map at 31 December 2021
68
PREL.
AWARDED (EIA
GRANTED)
PREL.
AWARDED (EIA
GRANTED)
PRODUCTION
CONCESSIONS
EXPLORATION
PERMITS
GRANTED
PO VALLEY ENERGY LIMITED
TECHNICAL SUMMARY
Tenement
Location
Interest held
Teodorico (d.40.AC-PY)
Italy, Adriatic Offshore
100% Po Valley
Selva Malvezzi (1)
Italy, Emilia Romagna
100% Po Valley
AR94PY
Italy, Adriatic Offshore
100% Po Valley
Cadelbosco di Sopra
Italy, Emilia Romagna
100% Po Valley
Grattasasso
Italy, Emilia Romagna
100% Po Valley
Podere Gallina
Italy, Emilia Romagna
63% Po Valley
Torre del Moro
Italy, Emilia Romagna
100% Po Valley
Table 1: Tenements at 31 December 2021
Notes:
1. Transfer approval for United (20%) and PROSPEX (7%) quotas in Selva Malvezzi to be formally requested as soon as Concession is awarded.
As at 31 December 2021 all tenements are 100% owned with exception of the Podere Gallina Licence at
63% with joint venture partners United Oil & Gas Plc (United) 20% and Prospex Oil & Gas Plc (Prospex)
17%. PVO holds 100% of the quota in the Selva Malvezzi preliminary awarded production concession but
holds a 63% economic interest together with joint venture partners United Oil & Gas Plc (United) 20%
and Prospex Oil & Gas Plc (Prospex) 17%. United and Prospex continue to hold their respective economic
interests in the Selva Malvezzi preliminary production concession and transfer of these quota’s will be
formally requested to be transferred once final Production Concession is awarded.
2)
RESERVES AND RESOURCES STATEMENT
The following tables summarise the status of the Group’s Reserves & Resources as at 31 December 2021.
Group Reserves
Reserves as at
Reserves as at
Gas, Italy (bcf)
Developed
Undeveloped
Teodorico
31 December 2021
31 December 2020
1P
2P
1P
2P
-
-
-
-
26.70
36.50
26.70
36.50
Selva Malvezzi (Podere Maiar) [net]
2.60
8.40
2.60
8.40
Total Reserves
29.30
44.90
29.30
44.90
Table 2: Total Group Reserves
69
PO VALLEY ENERGY LIMITED
TECHNICAL SUMMARY
The Group does not have unconventional petroleum Resources in its portfolio. The Group does not have
any material concentration of Undeveloped Reserves in Oil & Gas projects that remained undeveloped
for more than 5 years from the date they were initially reported.
Group Contingent Resources
Contingent Resources as at Contingent Resources as at
Gas (bcf)
Oil (MMbbls)
Table 3: Total Group Contingent Resources
31 December 2021
31 December 2020
1C
2C
1C
2C
13.1
-
26.9
-
12.8
9.4
25.8
43.4
1C
2C
Gas (bcf)
Contingent resources at 1 January 2021
No changes in the year
Contingent resources at 31 December 2021
Oil (MMbbls)
Contingent resources at 1 January 2021
Reduced due to impact of Pitesai
Contingent resources at 31 December 2021
Table 4: Reconciliation of changes in Contingent Resources
13.1
-
13.1
9.4
(9.4)
-
26.9
-
26.9
43.4
(43.4)
-
The tables on the following page of the Technical Summary shows the detailed estimate for each field.
Following the Italian Government’s recently published the plan of sustainable energy transition of suitable
areas (“Pitesai”) the Group has concluded that activity for oil discoveries at Bagnolo and Ravizza will no
longer proceed, and therefore has reduced its contingent oil reserves relating to these two fields as
indicated in Table 4 above. There have been no material changes to any other Reserves and Resource
estimates since the prior year.
In reference to the Reserves and Resources estimation process, the Group commits to an independent
audit in order to obtain a certified update of its Reserves & Resources portfolio. The last review took
place in April 2019.
The reserves and resources estimates of the gas fields Teodorico and Selva were independently evaluated
by the geological and petroleum reservoir consultancy firm CGG (UK) Services Ltd in 2018 and 2019. The
two oil discoveries (Bagnolo in Piano and Ravizza) were initially evaluated by CGG (UK) Services Ltd in
2013 and reviewed in 2019. All figures have been determined using a deterministic method except
Teodorico which was estimated using a probabilistic method.
70
PO VALLEY ENERGY LIMITED
TECHNICAL SUMMARY
Estimates of the recoverable volumes for each field and a detailed explanation of how this review was
carried out as required under the Chapter 5 ASX Listing Rules are provided in the ASX media releases
entitled “Po Valley Upgrades Selva Resources” and “Po Valley Oil Resource Update” dated 26 April 2019
together with a Competent Persons Report issued by CGG(UK) Services Ltd covering all Po Valley assets
dated 24 April 2019. All estimates are based on independent evaluations in accordance with
SPE/WPC/AAPG/SPEE Petroleum Resource Management System (2007/2011).
Licence
Project
Reserves
Contingent
Resources
Gas Bcf
Prospective
Resources
1P
2P
3P
1C
2C
3C
Low
Best
High
Teodorico inside 12 miles*
26.7
36.5
47.5
AR94PY
Teodorico Inside 12 miles
PL3-C
7.4
10.6
14.0
7.9
15.9
25.0
Selva (Podere Maiar1)
2.6
8.4
18.8
Selva level A South
Podere Gallina
Selva level B North
[Net]
Selva level B South
Cembalina
Fondo Perino
East Selva
Riccardina
Zini (Qu-B)
Cadelbosco
Canolo (Qu-A)
di Sopra
Canolo (Plioc)
Zini (Qu-A)
0.7
2.2
0.6
1.1
5.6
2.2
2.3
11.2
5.9
1.1
0.7
0.4
2.7
1.1
3.6
4.6
1.7
10.5
1.3
6.4
18.3
8.2
2.1
9.2
21.9
24.4
3.0
12.9
25.6
81.2
0.6
1.4
2.4
Table 4: Gas Reserves and Resources by Field at 31 December 2021 (As Per CPR Dated 24 April 2019)
*the Reserves and Resources for Teodorico lie within extended 12 mile development zone under the Pitesai, treatment of this
is currently under discussion with the Ministry.
Licence
Project
Reserves
Contingent
Resources
Oil /Condensate MMbbl
Prospective
Resources
Torre del Moro
Torre del Moro
65.0
106.0
240.0
Table 5: Oil Reserves and Resources by Field at 31 December 2021 (As Per CPR Dated 24 April 2019)
1P
2P
3P
1C
2C
3C
Low
Best
High
Qualified Petroleum Reserves and Resources Evaluator:
Statements in this Annual Report regarding estimates of petroleum Reserves and Contingent and
Prospective Resources are based on the technical work carried out by Po Valley Technical Team
validated/certified by the geological and petroleum reservoir consultancy firm CGG (UK) Services Ltd.
CGG (UK) Services Ltd has approved the Reserves statement as a whole and has consented to:
(a) the inclusion of the estimated petroleum Reserves and Contingent and Prospective Resources and
supporting information in this Annual Report in the form and context in which they are presented;
and
(b) the inclusion of the Reserves statement in this Annual Report in the form and context in which it
appears.
71
PO VALLEY ENERGY LIMITED
TECHNICAL SUMMARY
The Company confirms that it is not aware of any new information or data that materially affects the
information included in the original market announcement and, in the case of estimates of oil and gas
reserves that all material assumptions and technical parameters underpinning the estimates in the
relevant market announcement continue to apply and have not materially changed.
The Reserves and Resources Statement is based on, and fairly represents, information and supporting
documentation prepared by or under the supervision of Andrew Webb, Manager of Petroleum Reservoir
and Economics of CGG Services (UK) Limited (“CGG”) Reference no. 8P512. CGG compiled these estimates
to confirm with the definitions or the Petroleum Resources Management Systems (2007 and 2011) as
published by the Society of Petroleum Engineers (SPE). These estimates were prepared as part of a CPR
dated 24 April 2019 which was lodged with the ASX on 26 April 2019. Mr. Webb is qualified in accordance
with the requirements of ASX Listing Rule 5.41 and consents to the inclusion of the information in this
report of the matters in the form and context in which it appears.
RESERVES are those quantities of hydrocarbon anticipated to be commercially recoverable by application
of development projects to known accumulations from a given date forward under defined conditions.
Proved Reserves are those quantities of hydrocarbon, which, by analysis of geoscience and engineering
data, can be estimated with reasonable certainty to be commercially recoverable, from a given date
forward, from known reservoirs and under defined economic conditions, operating methods, and
government regulations (1P).
Probable Reserves are those additional reserves which analysis of geoscience and engineering data
indicate are less likely to be recovered than proved reserves but more certain to be recovered than
possible reserves. It is equally likely that actual remaining quantities recovered will be greater than or less
than the sum of the estimated Proved plus Probable Reserves (2P).
Possible Reserves are those additional reserves which analysis of geoscience and engineering data
suggest are less likely to be recoverable than probable reserves. The total quantities ultimately recovered
from the project have a low probability to exceed the sum of proved plus probable plus possible (3P)
Reserves, which is equivalent to the high estimate scenario.
CONTINGENT RESOURCES are those quantities of hydrocarbon estimated, as of a given date, to be
potentially recoverable from known accumulations, but the applied project(s) are not yet considered
mature enough for commercial development due to one or more contingencies.
PROSPECTIVE RESOURCES are those quantities of hydrocarbon that may potentially be recovered by the
application of a future development project(s) relate to undiscovered accumulations. These estimates
have both an associated risk of discovery and a risk of development. Further exploration appraisal and
evaluation is required to determine the existence of a significant quantity of potentially moveable
hydrocarbons.
For Contingent Resources, the general cumulative terms low/best/high estimates are denoted as
1C/2C/3C respectively. For Prospective Resources, the general cumulative terms low/best/high estimates
still apply. No specific terms are defined for incremental quantities within contingent and Prospective
Resources.
72
PO VALLEY ENERGY LIMITED
ASX ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange Limited Listing Requirements
and not disclosed elsewhere in this report is set out below.
Information regarding share holdings is current as at 25 March 2022.
ORDINARY SHAREHOLDERS
1. TOP TWENTY SHAREHOLDERS
Details of the 20 largest shareholders of quoted fully paid ordinary shares by registered shareholding
are:
Name
J P Morgan Nominees Australia Pty Limited
CS Third Nominees Pty Limited
Fuiloro Pty Ltd
Beronia Investments Pty Ltd
Beronia Investments Pty Ltd
1 Mr Kevin Bailey & Mrs Grace Bailey
2
Symmall Pty Ltd
3 Michael Masterman
4
5
6
7
8
9 Quo Vadis Pty Ltd
10 Mr Laurie Mark Macri
11 Beronia Investments Pty Ltd
12 HSBC Custody Nominees (Australia) Limited
13 P & N Dairies Pty Ltd
14 Mr Kevin Christopher Bailey
15 Mr Laurie Mark Macri
16 Beronia Investments Pty Ltd
17 Lambert Blue Chip Investments Pty Ltd
18 Donus Australia Foundation Limited
19 Brispot Nominees Pty Ltd
20 Mr Paul Kenneth Lambert and Mrs Nadine Alison Lambert
Total
Number
135,879,916
128,488,783
86,234,079
69,044,569
48,230,467
48,009,015
46,006,164
31,077,326
30,799,806
30,466,011
29,802,620
25,032,630
24,042,460
19,645,646
14,674,624
12,104,667
12,012,720
11,500,000
11,117,246
10,850,921
825,019,670
%
13.50
12.76
8.57
6.86
4.79
4.77
4.57
3.09
3.06
3.03
2.96
2.49
2.39
1.95
1.46
1.20
1.19
1.14
1.10
1.08
81.96
2. SUBSTANTIAL SHAREHOLDERS
The following table shows holdings of 5% or more of voting rights as disclosed in substantial holding
notices given to the Company or, in the case of directors, information available to the Company and
disclosed to ASX in Directors Interest Notices:
Fully paid Ordinary Shares
Name
Kevin Bailey
Michael Masterman
Beronia Investments Pty Ltd
Number
242,105,942
218,014,515
118,990,777
%
24.05
21.66
11.82
73
PO VALLEY ENERGY LIMITED
ASX ADDITIONAL INFORMATION
3. NUMBER OF SECURITY HOLDERS AND SECURITIES ON ISSUE
Total number of fully paid ordinary shares on issue is 1,006,643,438 held by 414 shareholders.
4. VOTING RIGHTS
The voting rights attached to ordinary shares are that on a show of hand, every member present, in
person or proxy, has one vote and upon a poll, each share shall have one vote.
5. DISTRIBUTION OS SECURITY HOLDERS
Quoted Securities
Category
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,000 and over
Total
Holders
92
18
12
150
142
%
22.22
4.35
2.90
36.23
34.30
Fully paid Ordinary Shares %
10,536
49,041
91,745
6,740,015
999,752,101
0.00
0.00
0.01
0.67
99.32
414
100.00
1,006,643,438
100.00
6. UNMARKETABLE PARCEL OF SHARES
The number of shareholders holding less than a marketable parcel of ordinary shares is 148
based on the Po Valley Energy Limited closing share price of AU$0.028 on 25 March 2022.
7. ON MARKET BUY-BACK
There is no current on market buy-back.
UNQUOTED SECURITIES
Po Valley Energy Limited has the following unquoted securities on issue:
Category
Convertible Notes
Unlisted Options exercise price AU$0.05
expiry 21 Jul 2023
Number
1,750,000
5,000,000
Number of holders
5
1
Convertible notes on issue have a maturity date of 29 April 2022 and interest payable of 8% p.a.
Convertible notes are convertible into 41,666,667 ordinary fully paid shares based on the
conversion price of AU$0.042 per fully paid ordinary share.
74