Annual Report
For the year ended 31 December 2022
PO VALLEY ENERGY LIMITED
ABN 33 087 741 571
CONTENTS
CHAIRMAN’S LETTER ..............................................................................................................................................1
CORPORATE DIRECTORY ........................................................................................................................................2
DIRECTORS’ REPORT ..............................................................................................................................................3
REMUNERATION REPORT ..................................................................................................................................... 11
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 .................................................................................................................................. 66
INDEPENDENT AUDITOR’S REPORT ...................................................................................................................... 67
TECHNICAL SUMMARY .......................................................................................................................................... 71
ASX ADDITIONAL INFORMATION .......................................................................................................................... 76
PO VALLEY ENERGY LIMITED
CHAIRMAN’S LETTER
Dear Shareholder,
Welcome to the 2022 Annual Report for Po Valley Energy (PVE or the Company), as we close in on our
maiden gas production in Italy, and reflect on the achievements of our Company over the past 12 months.
The past year has marked a significant milestone for Po Valley, as we secured final approval for gas
production, began construction at our Podere Maiar-1 facility, and signed a gas offtake agreement with BP.
Construction of the Podere Maiar plant and pipeline at our 63%-owned at the Selva Malvezzi concession is
fully funded and is on track for completion and commissioning in the coming weeks.
Our top priority in 2022 has been to advance the gas production at the Podere Maiar-1 well. Meanwhile,
we have been working in the background to plan how to allocate some of the revenue generated from the
production to fund our other projects. We intend to conduct geology and geoscience (G & G) studies on the
North, South, and East Selva prospects within the Selva Malvezzi concession, with the goal of drilling these
prospects in 2024-25. We are actively looking at ways to realise value from our Tedorico our large off-shore
asset, whether it be a JV or sale.
European gas prices began rising in 2021 and skyrocketed to unprecedented levels in 2022 following
Russia’s invasion of Ukraine. This prompted numerous European nations to seek alternative or domestic
gas sources in order to bolster their supplies. Although the prices have now stabilised, they remain
considerably higher than originally estimated for project profitability. Italy and several other European
countries are actively reducing their dependence on other nations for gas as concerns of supply issues are
far from over. This has contributed to a continued improvement in Po Valley’s operating environment.
In August 2022, we received strong support from existing and new shareholders for a $4.5 million capital
raise. I would like to extend my thanks to these shareholders for their support, which has enabled us to
achieve our first gas production without incurring debt.
Finally, I would like to take the opportunity to express my appreciation of the Company's dedicated and
expert team in Italy, led by Giorgio Bertuzzi, Diego Balistreri, Gianluca De Rosa, Pierpaolo Poncia, and Daria
Fortunati, as well as our Non-Executive Directors, Sara Edmonson, Katrina O'Leary, Joseph Constable, and
Consultant Brent Bonadeo. Together, they have provided invaluable guidance and leadership throughout
this transformative year. The Board and I acknowledge Michael Masterman who retired from the Board in
May 2022. Michael was the founding Chairman and Director of Po Valley Energy and was instrumental in
the early development of the company and its resourcing from over 20 years ago as well as its original
listing on the ASX in 2004.
We are working on another busy and productive year in 2023 and look forward to keeping you updated on
our progress over the months to come.
Kevin Bailey AM
Chairman
1
PO VALLEY ENERGY LIMITED
ABN 33 087 741 571
CORPORATE DIRECTORY
Kevin Bailey AM
Sara Edmonson
Joseph Constable
Katrina O’Leary
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 Isonzo 34, Rome 00198 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
Directors
Company Secretary
Registered Office
Rome Office
Share Register
Auditor
Solicitors
Bank
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 of Po Valley Energy Limited (“the Company” or “PVE”) present their report together with the
financial report for the year ended 31 December 2022 of the Group, being the Company and its controlled
entities (“the Group” or “Po Valley”).
1. Directors
The Directors of the Company at any time during or since the end of the financial year are:
Kevin Bailey AM — Director since 22 April 2016
Non-Executive Chairman (appointed 2 May 2022)
DipFP, Age 62
Kevin was appointed as a director on 22 April 2016 and as Chairman on 2 May 2022. 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 past three years, Kevin has not been a
director of any other listed company.
Sara Edmonson — Director since 23 December 2019
Non-Executive Director
BSBA, MBA, Age 43
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 Po Valley 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 past three years, Sara has not been a director of any other listed company.
Joseph Constable — Director since 30 November 2021
Non-Executive Director
BA(Hons) MPhil, Age 31
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 Po Valley personally as well as professionally via the H&G High Conviction Limited (ASX: HCF),
of which he is an Executive Director. Joseph has a detailed understanding of the Company and its assets and
brings his significant financial skills will be beneficial to Po Valley and the board of directors. In the past three
years, Joseph has not been a director of any other listed company.
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PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
Katrina O’Leary — Appointed 2 May 2022
Non-Executive Director
BA LLB, LLM, Age 59
Katrina was appointed as a director on 2 May 2022. Katrina is an Intellectual Property and Information
Technology lawyer with experience in both commercial and litigious matters. Katrina is a strategic adviser with
international experience, and has significant experience in governance roles including for CSIRO’s Science and
Industry Endowment Fund and serving as non-executive board director on several boards. Katrina brings to
the board her strength in compliance, governance, and risk management. In the past three years, Katrina has
not been a director of any other listed company.
Michael Masterman — Resigned 2 May 2022
Chairman
BEcHons, Age 60
Michael co-founded Po Valley in 2002 and was a director, CEO and Chairman during his tenure until 2 May
2022. He remains a major shareholder. During his time at Po Valley the Company successfully discovered five
gas fields in Italy and brought three into production. Selva, which was successfully drilled in 2016, is expected
to come on stream in 2023. Michael led the IPO of Po Valley and ASX listing in 2004 and the spin-off of Saffron
Energy on the AIM in 2016 and distribution to shareholders. During this time Po Valley has had a strong safety
record and is one of the most experienced and successful new entrants into the Italian market following its
liberalisation in early 2000. In the past three years, Michael has not been a director of any other listed
company.
2. Company Secretary
Kevin Hart – Company Secretary, B.Comm, FCA
Kevin Hart is a Chartered Accountant and was appointed to the position of Company Secretary on 17 April
2018. He has more than 30 years’ experience in accounting and the management and administration of public
listed entities in the mining and exploration industry. He is currently a Director 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
Kevin Bailey AM
Sara Edmonson
Joseph Constable
Katrina O’Leary (appointed 2 May 2022)
Michael Masterman (resigned 2 May 2022)
Attended
Held
13
11
13
10
2
13
13
13
11
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.
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PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
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 Group from continuing operations was (0.09) € cents (2021:
(0.07) € cents)
6. Operating and financial review
The loss for the year from continuing operations was €983,714 (2021: €595,733).
On 2 May 2022, Non-executive Director Kevin Bailey AM was elected the new Chairman of Po Valley Energy,
replacing Founder and outgoing Chairman Michael Masterman who retired after serving more than 20 years
with the Company.
Katrina O’Leary, an Intellectual Property and Information Technology lawyer, was appointed a new
independent non-executive director.
Brent Bonadeo, an experienced oil & gas and finance executive, was appointed as consultant to Po Valley.
Under the terms of engagement, the Company issued 3,000,000 performance rights to Mr. Bonadeo (refer
Note 20 to the financial statements).
During the year Po Valley issued 62,500,000 ordinary fully paid shares on the conversion of 1,750,000
Convertible Notes, representing a total value of A$1,750,000 (€1,180,000) at a conversion price of A$0.028.
The Company completed a capital raise of A$4,500,000 (before costs) by way of a share placement of
81,818,182 ordinary shares at an issue price of A$0.055 (approximately €3,071,000). In addition to the
ordinary shares issued, Po Valley also issued to the lead manager of the placement, 7,500,000 unlisted options
with a strike price of A$0.10 expiring in June 2024 (refer Note 20 to the financial statements).
Po Valley is using funds from the capital raising to:
- Complete construction of the gas plant and pipeline which will facilitate first gas at the Podere Maiar-
1 facility (further details provided in the Selva Malvezzi Production concession disclosure below);
Progress geology and geoscience (“G&G”) work programmes on Selva North, South and East;
Explore mechanisms to realise value at Teodorico via joint-venture or asset sales; and
Progress planning for a 3D seismic programme on the greater Selva Malvezzi concession.
-
-
-
Cash and cash equivalents of the Group at 31 December 2022 amounted to €1,536,041 (2021: €1,262,151).
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 prospect at Torre del Moro; and
-
- Canolo and Zini gas prospects in the Cadelbosco di Sopra exploration licence.
The Russian/Ukraine conflict has had significant impact on European gas supplies resulting in prices
skyrocketing during the year before stabilising well above long-term average prices. This prompted the Italian
government to take action to bolster its domestic production and reduce reliance on imports from other
nations for gas. The result of this energy shortage and price hikes has been the creation of a much more
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PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
favourable regulatory, government and pricing environment. Po Valley is well positioned in these market
conditions with its development-ready gas fields and experienced team.
Po Valley’s primary focus is to advance gas production at the Podere Maiar-1 well in the Selva Malvezzi
Production Concession. Construction and commissioning at the Podere Maiar-1 well is near completion with
production scheduled to commence in the second quarter of 2023, with a gas sales offtake agreement already
in place. Po Valley intends to conduct G & G studies on the North, South, and East Selva prospects, within the
Selva Malvezzi concession, with the goal of drilling these prospects in the next twelve to twenty-four months.
Teodorico is very leveraged to the current market conditions in Italy and Po Valley continues to explore options
to introduce joint venture partners or divest this large offshore gas field.
Selva Gas Field (63% PVO)
Selva Malvezzi Production concession
Selva is an onshore natural gas field in the eastern part of the Po Plain, among the Ferrara and Bologna
provinces, in the Emilia Romagna Region of Italy.
The Selva Malvezzi Production Concession granted to Po Valley’s wholly owned subsidiary, Po Valley
Operations Pty Ltd (“PVO”) in July 2022, contains the Podere Maiar-1 onshore natural gas well and the gas
prospects at Selva B North, Selva B South, East Selva, Fonda Perino and Riccardina.
The licence measures 80.68 sq. km and was originally included in the Podere Gallina Permit. Exploration
acreage in the Podere Gallina Permit which was deemed an unsuitable area was revoked by MiTE further to
Po Valley’s request. The Selva Malvezzi production concession replaces Po Valley’s right of tenure of the gas
well and prospects as listed above.
Po Valley holds an economic interest of 63% in the Selva gas field together with joint venture partners Prospex
Oil & Gas Plc (“Prospex”) of 37% (2021: PVO 63% Prospex 17% United Oil & Gas Plc (“United”) 20%). During
2022, Prospex acquired United’s 20% economic interest by virtue of the 100% acquisition of United’s Italian
subsidiary UOG Italia S.r.l. Prospex now has 37% interest through its 100% ownership of UOG Italia and its pre-
existing 17% interest. Formal notices for the transfer of the 37% quota to the joint venture partners was
submitted to the Italian Ministry in November 2022.
The Production Concession granted enabled the development of the Podere Maiar-1 well facilities to
commence. Po Valley has made significant progress on the gas plant and pipeline construction at Podere
Maiar-1. Activities undertaken include, but are not limited to:
-
-
-
-
-
-
-
completion of civil works for Podere Maiar-1 well site (concrete slabs, exit tunnel)
completion of steel frame for the water disposal tank
completion of excavation, welding, and pipe laying for 4-inch pipes
advanced works on electrical system and lightning protection for the well
completion of first phase of backfilling
completion of piping procurement, near completion of equipment procurement
advanced works on skids and equipment prefabrication
- Commencement of works to prepare tie-in to SNAM gas grid network
The cost of constructing the gas treatment plant and pipeline totals €3.45 million (~A$5 million) (net to Po
Valley: €2.2 million; ~A$3.2 million). Once installed, the gas plant capacity will be ~150,000 standard cubic
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PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
metres (scm) per day and pipeline capacity will be ~300,000 scm per day. Construction is scheduled for
completion in the second quarter of CY23.
Seismic and subsidence monitoring as prescribed by the Technical Committee of the Italian Ministry of
Ecological Transition is ongoing.
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 Energy’s gas fields and is at an
advanced stage of assessment, ready for development. The Environmental Impact Assessment (“EIA”) decree
for Teodorico was granted in March 2021 which has paved the way for the grant of a 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.
Po Valley has sought further guidance from the Italian Ministry regarding the impact of Italy’s Plan of
Sustainable Energy Transition of Suitable Areas (“Pitesai”) on Teodorico due to the recent institution of
environmental protected areas in proximity of the license particularly as:
-
-
-
the preliminary production concession was requested before the Pitesai process started in February
2019;
Po Valley received environmental approval in 2020; and
the gas field reserves (2P 36.5bcf) are in excess of the threshold for continuation (5.3bcf).
In conjunction with the above, Po Valley is exploring mechanisms to realise value at Teodorico via joint-venture
or asset sale.
Torre del Moro Oil/Gas Condensate exploration (100% PVO)
Following the publication of Italy’s Pitesai Po Valley Energy has retained the licences at Torre del Moro.
Activities were halted during the Pitesai process, but now may resume in these areas. Po Valley is seeking
clarification on how the gas condensate exploration and targeted gas cap may be treated under the current
Pitesai.
Cadelbosco di Sopra and Grattasasso Permits
Gas - Canolo and Zini (100% PVO)
Following the publication of Italy’s Pitesai, activities have resumed on the gas prospects of Canolo and Zini in
the Cadelbosco di Sopra permit.
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 is 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
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PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
Management System which provides for a series of procedures and routine checks (including periodical audits)
to ensure compliance with all legal and regulatory requirements and best practices in this area. In 2022, the
Group maintained its outstanding occupational health safety and environmental track record with no incidents
or near misses to report.
Principal 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. Po Valley
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
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
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
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PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
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
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.
Estimation of
reserves
Tenure security
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 PVE’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. 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 (utilising 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
9
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
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 2022.
8. Significant events after balance date
On 14 February 2023, Po Valley’s wholly owned subsidiary Po Valley Operations Pty Limited (PVO) signed a gas
sales agreement (GSA) with BP Gas Marketing Limited (BPGM), an indirect, wholly owned subsidiary of BP
International Limited (BPI). The GSA between PVO and BPGM relates to forecast gas production from the soon
to be completed Podere Maiar – 1 facility in the Selva Malvezzi production concession located in the Po Valley
Region of Italy. The contract term is 18-months to commence in April 2023, for the supply of an estimated
37,000,000 standard cubic metres of gas. The gas supply price will be linked to Italy’s “Heren PSV day ahead
mid” price (ASX announcement 14 February 2023).
Po Valley issued 2,000,000 shares subsequent to balance date on the exercise of 2,000,000 options by payment
of AU$0.05 per share or AU$100,000 (€63,000) (ASX announcements 20 February 2023 and 7 March 2023).
The Company also issued 3,000,000 shares on exercise of the performance rights subsequent to balance date
(ASX announcement 18 January 2023).
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 its development of the Selva gas field to bring the Podere Maiar-1 well to
production in the second quarter of 2023 and continue to invest in its 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.
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PO VALLEY ENERGY LIMITED
DIRECTORS’ 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 other Key Management Personnel 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.
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)
Profit / (Loss) attributable to owners of the
Company (€'000s)
2022
2021
2020
2019
2018
2017
-
-
-
-
-
-
-
-
2,799*
7,155
21*
19
(1,103)
(596)
(1,036)
(1,504)
2,780
(1,087)
Loss per share (€ cents per share)
(0.09)
(0.07)
(0.16)
(0.24)
(0.43)
(0.19)
Share price at year end - AU$
0.062
0.025
0.030
0.052
0.038
0.041
* 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 Po Valley’s 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
11
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
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 Po Valley’s 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.
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:
Kevin Bailey AM, Chairman
• Commencement Date: 3 May 2016
• Remuneration for the year ended 31 December 2022: €14,968 (A$22,500 pro rata of A$30,000 p.a.)
• Remuneration for Kevin Bailey was suspended from 1 July 2020 and re-instated from 1 April 2022 at
A$30,000 p.a.
• No termination benefits
Sara Edmonson, Non-Executive Director
• Commencement Date: 23 December 2019
• Fixed remuneration for the year ended 31 December 2022: €19,980 (A$30,000 p.a.)
• No termination benefits
Joseph Constable, Non-Executive Director
• Commencement Date: 30 November 2021
• Fixed remuneration for the year ended 31 December 2022: €20,023 (A$30,000 p.a.)
• No termination benefits
Katrina O’Leary, Non-Executive Director
• Commencement Date: 2 May 2022
• Fixed remuneration for the year ended 31 December 2022: €13,327 (A$20,000 Pro rata of A$30,000
p.a.)
• No termination benefits
12
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
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.
Salary & fees
€
Other
€
Termination
payments
€
Total
€
K Bailey AM
Non-Executive
S Edmonson
Non-Executive
J Constable
Non-Executive
K O’Leary
Non-Executive (appointed 2 May 2022)
M Masterman
Chairman (resigned 2 May 2022)
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
14,968
-
19,980
15,682
20,023
1,601
13,327
-
5,171*
-
Total for Directors
2022
73,469
2021
17,283
*part of settlement deed on resignation
Analysis of bonuses included in remuneration
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,968
-
19,980
15,682
20,023
1,601
13,327
5,171
-
73,469
17,283
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 (2021: Nil). There are no options
granted to KMP that vested during 2022. (2021: 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 2022 and no options were
exercised or lapsed during 2022.
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:
13
Directors
K Bailey AM
S. Edmonson
J Constable
K O’Leary (i)
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
Held at
31 Dec 2021
Acquired
Issued on
conversion
of
Convertible
notes
242,105,942
7,272,728
25,000,000
3,708,007
45,433
- (i)
-
357,142
-
10,714,286
Disposals
31 Dec 2022
Held at
-
-
-
-
-
-
274,378,670
3,708,007
402,575
-
228,728,801(ii)
507,218,053
M Masterman (ii)
218,014,515
463,873,897
7,272,728
36,071,428
(i) (i)Holding at date of appointment 2 May 2022
(ii) (ii)Holding at date of resignation 2 May 2022
(iii)
Held at
31 Dec 2020
Acquired
Issued for
Settlement of
loans and
interest
Disposals
31 Dec 2021
Held at
Directors
M Masterman
167,971,782
23,928,571
26,114,162
K Bailey AM
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
-
-
-
-
-
218,014,515
242,105,942
3,708,007
45,433
463,873,897
Other transactions and balances with KMP and their related parties
KMP and their related parties held convertible notes during the period as follows:
KMP (or their related parties)
K & C Bailey as trustee for The
Bailey Family Trust
Symmall Pty Ltd
Joseph Constable
31 Dec 2021
Movement for
the year
31 Dec 2022
No of shares
issued
A$700,000
(A$700,000)
A$300,000
(A$300,000)
A$10,000
(A$10,000)
-
-
-
25,000,000
10,714,286
357,142
The convertible notes were converted into fully paid ordinary shares of the Company at a conversion price of
A$0.028 per share, following approval on variation of terms at the Annual General Meeting, on 29 April 2022.
The conversion was completed by the issue of 36,071,428 shares to the related parties on 5 May 2022 with
interest paid on the principal amount at a rate of 8% per annum (refer note 18).
Interest paid on convertible notes with KMP and their related parties was as follows:
14
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
KMP (or their related parties)
K & C Bailey as trustee for The Bailey Family
Trust
Symmall Pty Ltd
Joseph Constable
Total
Interest
accrued at
31 Dec 2021
Interest for
period
Interest
paid in
cash
Interest
accrued at
31 Dec
2022
-
-
-
-
A$18,258
A$18,258
A$7,824
A$7,824
A$261
A$261
A$26,343
A$26,343
€17,418
€17,418
-
-
-
-
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 2021
€
62,034
Fees for the
year
€
14,968
31,053
1,600
-
206,079
300,766
19,980
20,023
13,327
5,171
73,469
Directors’
remuneration
outstanding at
31 Dec 2022
€
62,034
-
6,655
-
-
Amount paid
€
(14,968)
(51,033)
(14,968)
(13,327)
(217,274)
(311,570)
68,689
Interest
€
-
-
-
-
6,024
6,024
KMP (or their related
parties)
Kevin Bailey AM
Sara Edmonson
Joseph Constable
Katrina O’Leary
Michael Masterman*
Total
*resigned 2 May 2022
12. Directors’ interests
At the date of this report, the direct and indirect interests of the current Directors in the shares of the
Company, as notified by the Directors to the ASX in accordance with S205G (1) of the Corporations Act 2001,
are as follows:
K Bailey AM
S Edmonson
J Constable
K O’Leary
Ordinary Shares
274,378,670
3,708,007
402,575
-
15
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
13. Equity securities on issue
31 December 2022
31 December 2021
Ordinary fully paid shares
1,150,961,620
1,006,643,438
Options over unissued shares
Performance rights
12,500,000
3,000,000
5,000,000
-
Unissued shares under option and performance rights
During the year, 7,500,000 unlisted options with exercise price of A$0.10 expiring 30 June 2024 were issued
to a broker. Details relating to the valuation of these options are set out in Note 20 to the financial report.
Po Valley granted 3,000,000 performance rights during the year expiring 31 January 2023 as consideration
for services provided by a consultant. Details of the valuation of these performance rights are set out in Note
20 to the financial report.
At the date of this report the unissued ordinary shares of the Company under option or performance rights
are as follows:
Options
Date Granted
Expiry Date
Exercise Price
21 July 2021
21 July 2023
15 Aug 2022
30 June 2024
A$0.05
A$0.10
Number of
options at 31
December 2022
Number of
options at date of
report
5,000,000
3,000,000
7,500,000
7,500,000
Subsequent to the year end, 2,000,000 options with an exercise price at AU$0.05 and expiry of 21 July 2023
were exercised by the holder by payment of A$100,000 (€63,000) for 2,000,000 ordinary shares.
Performance rights
Date Granted
Expiry Date
Exercise Price
Number of rights
at 31 December
2022
Number of rights
at date of report
22 June 2022
31 January 2023
Nil
3,000,000
-
The performance rights noted above were converted into 3,000,000 ordinary shares subsequent to balance
date upon achievement of the performance milestone.
No options were cancelled during or subsequent to the financial year.
Shares issued on exercise of options
The Company did not issue any shares as a result of the exercise of options during the financial year.
Subsequent to the year end 2,000,000 options with an exercise price at AU$0.05 and expiry of 21 July 2023
were exercised by the holder by payment of A$100,000 (€63,000). 2,000,000 ordinary shares were issued
on exercise of these options.
16
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
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
Po Valley 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 Po Valley 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.
16. Indemnification of auditors
The Group has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor
of the Company or any related entity against a liability incurred by the auditor. The Group has not provided
any insurance for an auditor of the Company.
17. Non audit services
During the year HLB Mann Judd, the Group’s auditor, did not provide non-audit services. Refer to note 5 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.
17
PO VALLEY ENERGY LIMITED
DIRECTORS’ REPORT
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 2022.
This report has been made in accordance with a resolution of Directors.
Kevin Bailey AM
Chairman
31 March 2023
18
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 2022, 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 2023
L Di Giallonardo
Partner
19
PO VALLEY ENERGY LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
CONSOLIDATED
NOTES
2022
€
2021
€
9
10
11
11
14
12
13
15
17
16
18
16
17
19
19
1,536,041
434,480
476,910
2,447,431
13,178
1,120,413
155,946
11,398,598
12,688,135
1,262,151
185,369
-
1,447,520
759,078
1,108,276
7,021
8,146,546
10,020,921
15,135,566
11,468,441
741,384
22,112
4,387
-
767,883
1,450,828
117,412
1,568,240
642,552
-
3,719
1,120,170
1,766,441
-
-
-
2,336,123
1,766,441
12,799,443
9,702,000
56,632,102
1,371,895
(45,204,554)
52,719,884
1,202,956
(44,220,840)
12,799,443
9,702,000
Current Assets
Cash and cash equivalents
Trade and other receivables
Other assets
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
Convertible notes
Total Current Liabilities
Non-Current Liabilities
Provisions
Lease liabilities – non-current
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 2022
Continuing Operations
Other income
Employee benefit expenses
Depreciation expense
Corporate overheads
Share based payment expense
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
2022
€
2021
€
3
4
20
6
7
219,502
(388,623)
(8,559)
(503,520)
(61,225)
-
(742,425)
2,705
(256,131)
(253,426)
(995,851)
12,137
(983,714)
65,792
(265,688)
(4,808)
(250,114)
-
(30,071)
(484,889)
157
(272,096)
(271,939)
(756,828)
161,095
(595,733)
Other comprehensive income
-
-
Total comprehensive loss for the year
(983,714)
(595,733)
Basic and diluted loss per share (€) from
continuing operations
8
(0.09)
(0.07)
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 2022
Attributable to equity holders of the Company
Share Based
Payment
Reserve
€
Consolidated
Balance at 1 January 2021
Loss for the year
Other comprehensive income
Total comprehensive loss
Issue of securities (net of costs)
Share based payments
Balance at 31 December 2021
Balance at 1 January 2022
Loss for the year
Other comprehensive income
Total comprehensive loss
Issued capital
€
46,641,745
-
-
-
6,078,139
-
52,719,884
52,719,884
-
-
-
Issue of securities (net of costs)
3,912,218
Share based payments
-
Translation
Reserve
€
1,192,269
-
-
-
-
-
1,192,269
1,192,269
-
-
-
-
-
Accumulated
Losses
€
(43,625,107)
(595,733)
-
(595,733)
-
-
-
-
-
10,687
10,687
(44,220,840)
10,687
-
-
-
168,939
(44,220,840)
(983,714)
-
(983,714)
-
-
Total
€
4,208,907
(595,733)
-
(595,733)
6,078,139
10,687
9,702,000
9,702,000
(983,714)
-
(983,714)
3,912,218
168,939
Balance at 31 December 2022
56,632,102
1,192,269
179,626
(45,204,554)
12,799,443
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 2022
NOTES
CONSOLIDATED
2022
€
2021
€
Operating activities
Receipts from joint operation partners (operations)
Payments to suppliers and employees
Interest received
Interest paid
Net cash used in operating activities
9
209,544
(1,050,881)
2,705
(37,931)
(876,563)
-
(832,955)
157
(68,900)
(901,698)
Investing activities
Payments for resource property costs (net of joint
operation partner recoveries)
Receipt from joint operation partners’ share of
guarantee deposit for pipeline tie-in
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
Cash and cash equivalents at 31 December
9
(1,800,590)
(142,398)
280,090
-
(16,601)
(1,537,101)
3,071,153
(231,675)
-
-
-
(6,900)
2,832,578
418,914
1,262,151
(145,024)
1,536,041
-
(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
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 2022
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 2022 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 2023.
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 2022, Po Valley has recorded a loss after tax from continuing
operations of €983,714 (31 December 2021: €595,733) and at 31 December 2022 had a cash balance
of €1,536,041 (31 December 2021 €1,262,151), net current assets of €1,202,638 (31 December 2021
net liabilities of €318,921) and had net cash outflows from continuing operations of €876,563 (31
December 2021 €901,698).
The Group completed a capital raise in 2022 of A$4,500,000 (before costs) (approximately €3,015,000).
Po Valley is using these funds to:
• Complete construction of the gas plant and pipeline which will facilitate first gas at the Podere
Maiar-1 facility
• Progress geology and geoscience (“G&G”) work programmes on Selva North, South and East
• Explore mechanisms to realise value at Teodorico via joint-venture or asset sales
• Progress planning for a 3D seismic programme on the greater Selva Malvezzi concession
24
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Subsequent to the year end, the Group entered into a Gas Sales Agreement (GSA) with BP Gas
Marketing Limited (BPGM), an indirect, wholly owned subsidiary of BP International Limited (BPI). The
GSA between Po Valley’s wholly owned subsidiary PVO and BPGM relates to forecast gas production
from the soon to be completed Podere Maiar – 1 facility in the Selva Malvezzi production concession
located in the Po Valley Region of Italy. The contract term is 18-months to commence in April 2023,
for the supply of an estimated 37,000,000 standard cubic metres of gas. The gas supply price will be
linked to Italy’s “Heren PSV day ahead mid” price.
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 facilities the Podere Maiar-1 well site; and
the profitable and cash flow positive operation of its interest in the Selva gas field.
Critical to the forecast cash flows is the Group’s ability to achieve forecast levels of gas production at
forecast market prices and gross profit margins.
The Directors have a reasonable expectation that the Selva operation will achieve its forecast positive
cash flows, however, should the Group not achieve its cashflow forecasts as planned, the Directors are
confident that the Group will be able to secure additional funding through either the issue of new
equity, convertible debt, other funding instruments or a combination of these as required to fund
ongoing planned activities and for working capital. For these reasons the Directors have reasonable
grounds to believe that the Group is a going concern and will be able to realise its assets and discharge
its liabilities in the ordinary course of business.
Should the Selva operation not generate sufficient cash flow as forecast and, if required, the Directors
are unsuccessful in raising equity or other funding, then there would be a material uncertainty that
may cast significant doubt about the ability of the Group to continue as a going concern and to realise
its assets and discharge its liabilities in the normal course of business.
The financial report does not include any adjustments relating to the amounts or classification of
recorded assets and liabilities that might be necessary if the Group does not 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.
25
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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.
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%.
Rehabilitation provisions
The value of these provisions represents the discounted value of the present obligations to restore,
dismantle and rehabilitate each well site under development or in production.
Significant estimation is required in determining the provisions for rehabilitation and closure as there
are many transactions and other factors that will affect ultimate costs necessary to rehabilitate the
sites. The discounted value reflects a combination of management’s best estimate of the cost of
performing the work required, the timing of the cash flows and the discount rate.
A change in any, or a combination of, the key assumptions used to determine the provisions could
have a material impact on the carrying value of the provisions.
The provision recognised for each site is reviewed at each reporting date and updated based on the
facts and circumstances available at that time. Changes to the estimated future costs for operating
26
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
sites are recognised in the statement of financial position by adjusting both the restoration and
rehabilitation asset and provisions.
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
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
(i)
Subsidiaries
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
27
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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.
(ii)
Joint arrangements
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.
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.
28
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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
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.
29
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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
(i)
Recognition and measurement
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.
(ii)
Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits
associated with expenditure will flow to the Group.
(iii)
Depreciation
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
2022
3 – 5 years
6 years
2021
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.
30
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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.
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.
31
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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.
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.
32
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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.
The carrying amount of financial assets measured at amortised cost includes the loss allowance
relating to that asset.
33
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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)
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.
(g)
RESOURCE PROPERTIES
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 and 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
• 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.
34
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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.
Where a decision is made to proceed with development in respect of a particular area of interest,
the relevant exploration and evaluation asset is tested for impairment and the balance is then
reclassified to development.
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.
35
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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
in respect of the eventual abandonment of well sites in development or in production and production
fields. Increases due to additional environmental disturbances relating to the development of an
asset are capitalised and recorded in resource 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
(i)
Long-term service benefits
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.
(ii)
Wages, salaries, annual leave, sick leave and non-monetary benefits
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
36
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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.
(iii)
Superannuation
The Group contributes to defined contribution superannuation plans. Contributions are recognised
as an expense as they are due.
(k)
FOREIGN CURRENCY
(i)
Functional and presentation currency
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 Po Valley’s
functional and presentation currency (refer note 1.2 (d)).
(ii)
Foreign currency transactions
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.
(iii)
Foreign operations
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.
37
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
(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
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
38
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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.
(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.
39
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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
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 2022. 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
2022
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
40
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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.
(i)
Credit risk
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.
(ii)
Market Risk
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 22.
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.
41
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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 22.
(iii)
Capital Management
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.
(iv)
Liquidity Risk
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 22.
(v)
Climate change risk
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.
42
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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, salaries and fees
Contributions to defined contribution plans
Less: allocation to projects
NOTE 4:
CORPORATE OVERHEADS
Corporate overheads comprise:
Company administration and compliance
Professional fees
Office costs
Travel and entertainment
Other expenses
AUDITOR’S REMUNERATION
NOTE 5:
Audit and review of the Group financial statements
Auditor of the Company: HLB Mann Judd
NOTE 6:
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
CONSOLIDATED
2022
€
2021
€
454,384
83,963
(149,724)
388,623
311,605
62,949
(108,866)
265,688
140,349
233,151
55,443
26,054
48,523
503,520
84,597
117,698
60,070
3,833
(16,084)
250,114
38,807
29,808
2,705
2,705
43,472
212,659
256,131
157
157
226,626
45,470
272,096
(253,426)
(271,939)
43
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
INCOME TAX (BENEFIT) / EXPENSE
NOTE 7:
Current tax
Current year
Deferred tax
Deferred tax benefit
Total income tax benefit
CONSOLIDATED
2022
€
2021
€
-
-
(12,137)
(12,137)
(161,095)
(161,095)
Numerical reconciliation between tax expense and pre-tax accounting profit loss
Loss for the year before tax from continuing operations
(995,851)
(756,828)
Income tax benefit expense using the Company’s domestic tax rate of
26% (2021: 26%)
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 8:
Basic and diluted loss per share (€ cents)
EARNINGS PER SHARE
(258,921)
39,088
5,863
185,194
-
16,639
(196,775)
5,308
6,342
216,276
(139,082)
(53,164)
(12,137)
(161,095)
(0.09)
(0.07)
The calculation of basic and diluted loss per share from continuing operations was based on the loss for the year
of €983,714 (2021: €595,733) and a weighted average number of ordinary shares outstanding during the year of
1,076,661,499 (2021: 829,960,780).
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
Conversion of convertible notes
Placement – tranche 1
Placement – tranche 2
Placement – tranche 3
Placement
Institutional offer of ANREO
Retail offer of ANREO
Shortfall on retail offer of ANREO
No. of
days
365
243
139
58
25
191
191
170
169
Weighted
average no
2022.
1,006,643,439
41,609,590
27,003,736
1,155,667
249,067
-
-
-
-
Weighted
average no
2021.
647,286,102
-
-
-
-
18,688,846
121,228,871
29,091,873
13,665,088
Weighted average number of shares on issue at end of the year
1,076,661,499
829,960,780
44
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONSOLIDATED
2022
€
2021
€
NOTE 9: CASH AND CASH EQUIVALENTS
(a) Cash and cash equivalents
1,536,041
1,262,151
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
Share based payments
Exploration costs written off
Interest expense settled by equity
Interest on lease liabilities
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
(983,714)
(595,733)
8,559
205,308
(149,724)
61,225
-
-
5,541
(164,898)
152,609
-
668
(12,137)
4,808
64,948
(108,866)
-
30,071
166,138
-
(39,935)
(254,543)
(8,413)
922
(161,095)
Net cash outflow from operating activities
(876,563)
(901,698)
(c) Reconciliation of financing cash flows to liabilities
Proceeds from loans advanced
Loans repaid in cash
Repayment of convertible notes in cash
-
-
-
286,340
(81,812)
(476,594)
(d) Non-cash financing activities
Convertible notes converted to equity by issue of 62,500,000
shares
Loans settled by issue of shares
Interest on loans settled by issue of shares
Interest on convertible notes by issue of shares
1,180,454
-
-
-
-
2,291,215
168,178
320,591
45
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 10:
TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Sundry debtors
Indirect taxes receivable
Other deposits receivable
CONSOLIDATED
2022
€
2021
€
211,793
37,634
185,053
-
434,480
86,042
53,199
3,039
43,089
185,369
The Group’s exposure to credit and currency risks and impairment losses related to trade and other
receivables are disclosed in Note 22.
OTHER NON-CURRENT ASSETS
NOTE 11:
Current
Bank Guarantee deposit (i)
Non-current
Bank Guarantee deposit (i)
Other
476,910
-
-
13,178
757,000
2,078
759,078
(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 Group’s share of this deposit is 63% or €476,910. The joint operations partners have
reimbursed the Group for their share of the deposit during this period as the Group had advanced 100% of
the deposit in the prior year. The deposit is refundable upon commencement of first gas flow, which is
expected in the second quarter of the 2023 financial year.
490,088
NOTE 12:
PROPERTY PLANT & EQUIPMENT
Office Furniture & Equipment:
At cost
Accumulated depreciation
Right-of-use asset: Building (Note 17)
At Cost
Accumulated depreciation
39,707
(18,775)
20,932
140,884
(5,870)
135,014
23,108
(16,087)
7,021
83,317
(83,317)
-
Total property plant & equipment
155,946
7,021
46
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 12:
PROPERTY PLANT & EQUIPMENT (continued)
Reconciliations:
Reconciliation of the carrying amounts of each class property, plant &
equipment are set out below:
Office furniture & equipment
Carrying amount at beginning of year
Additions office furniture & equipment
Depreciation expense
Carrying amount at end of year
Right-of-use assets
Carrying amount at beginning of year
Additions right-of-use assets
Depreciation expense
Carrying amount at end of year
NOTE 13:
RESOURCE PROPERTY COSTS
Resource Property costs
Exploration and evaluation phase
Development phase
CONSOLIDATED
2022
€
2021
€
7,021
16,600
(2,689)
20,932
-
140,884
(5,870)
135,014
155,946
7,775
630
(1,384)
7,021
3,424
-
(3,424)
-
7,021
4,661,672
8,146,546
6,736,926
-
11,398,598
8,146,546
Reconciliation of carrying amount of resource properties
Exploration and Evaluation Phase
Carrying amount at beginning of year
8,146,546
7,990,040
Exploration expenditure
Exploration written off
Transfer to development phase
Carrying amount at end of year
430,021
-
(3,914,895)
186,577
(30,071)
-
4,661,672
8,146,546
47
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 13:
RESOURCE PROPERTY COSTS (continued)
Development Phase
Carrying amount at beginning of year
Transfer from exploration and evaluation phase
Development expenditure
Restoration and rehabilitation asset
Carrying amount at end of year
CONSOLIDATED
2022
€
2021
€
-
3,914,895
1,371,203
1,450,828
6,736,926
-
-
-
-
-
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.
Resource property costs in the development phase have reached the stage of reasonable assessment of
economically recoverable reserves and have attained required permits and approvals to develop into a
producing field. Development of gas plant, pipeline and required infrastructure have commenced and in
progress.
The Group reviewed the carrying value of its assets and cash generating units using a Value in Use CGU
valuation. In particular, the valuations of the Selva and Teodorico projects are considered to determine the
recoverable amount of each of these fields. The valuation of the Selva project was also carried out upon the
reclassification of that project from its exploration and evaluation phase to the development phase during the
year.
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.
Independent valuations were performed for the purposes of estimating the reserves of these projects by CGG
Services (UK) Limited (“CGG”). Valuations performed by CGG were based on the gas prices with reference to
48
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 13:
RESOURCE PROPERTY COSTS (continued)
the Dutch TTF forward curve. (The Dutch TTF is considered a suitable proxy for the spot gas price in Italy),
discount factor of 10% and cost/price inflation of 7% in 2022 reducing to 2% over the next three years.
The recoverable amount determined by the CGG report of Selva and Teodorico was €32.7 million (Net to PVE))
and €57.4 million respectively (refer the CGG report of 26 July 2022).
The carrying value of these assets for the Selva and Teodorico projects at 31 December 2022 were €6.7 million
and €2.99 million respectively. As a result of this assessment, with the recoverable amount exceeding the
carrying value of these assets, no impairment was required on the carrying value of these material projects.
NOTE 14:
DEFERRED TAX ASSETS AND LIABILITIES
Recognised deferred tax assets
Deferred tax assets have been recognised in respect of the following items:
Tax losses (Italy)
Accrued expenses and liabilities
Recognised deferred tax assets
CONSOLIDATED
2022
€
2021
€
1,093,161
1,041,718
27,252
66,558
1,120,413
1,108,276
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 (Australia)
Deductible temporary differences
Unrecognised deferred tax assets
Deferred tax benefit will only be obtained if:
3,187,541
3,005,368
93,572
63,891
3,281,113
3,069,259
(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.
49
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 14:
DEFERRED TAX ASSETS AND LIABILITIES (continued)
Movement in recognised temporary differences during the year
Balance 1
January
2021
€
Profit and
loss
€
Equity
€
Balance
31
December
2021
€
Profit and
loss
€
Equity
€
848,694
193,024
98,487
(31,929)
947,181
161,095
-
-
-
1,041,718
51,443
66,558
(39,306)
1,108,276
12,137
Balance 31
December
2022
€
1,093,161
27,252
1,120,413
-
-
-
Consolidated
Tax losses
Accrued expenses
and liabilities
Total recognised
deferred tax asset
NOTE 15:
TRADE AND OTHER PAYABLES
Trade payables and accruals
Other payables
CONSOLIDATED
2022
€
741,384
-
741,384
2021
€
622,756
19,796
642,552
The Group’s exposure to currency and liquidity risks related to trade and other payables are disclosed in
note 22.
NOTE 16:
PROVISIONS
Current:
Employee leave entitlements
Non-current:
Rehabilitation and restoration provision
Reconciliation of rehabilitation and restoration provision:
Opening balance
Provision for rehabilitation and restoration costs
Closing balance
CONSOLIDATED
2022
€
2021
€
4,387
3,719
1,450,828
-
1,450,828
1,450,828
-
-
-
-
50
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 16:
PROVISIONS (continued)
Provision has been made based on the net present value of the estimated cost of restoring the
environmental disturbances and abandonment of the Podere Maiar- 1 well site in the Selva Malvezzi
production concession. The estimated net present value at 31 December 2022 is €1,450,828 (net 63% to
the Group) based on an undiscounted total future liability of €1,701,000 (net) using a discount factor, being
the risk-free interest rate, of 4.75% p.a. and inflation rate of 3.64% p.a. Payments of these costs are expected
at end of life of the field in approximately 14 years. The provision will be adjusted at the end of each
reporting period to reflect the passage of time and changes in the estimated future cash flows underlying
the obligation. Increases in the provision due to the passage of time will be recognised as a finance cost
whereas increases/decreases due to changes in estimated future cash flows are capitalised where there is
a future economic benefit associated with the asset. Actual costs incurred upon settlement of the
rehabilitation and restoration obligation are charged against the provision to the extent the provision has
been established.
NOTE 17: LEASES
Leases as lessee
The Group leases office facilities in Rome under a new lease agreement. The lease runs for a period of six
years from the start of the lease in October 2022.
Information about leases for which the Group is a lessee is presented below.
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 & equipment (see Note 12).
Buildings
Balance at 1 January
Additions to right-of-use assets (new leases)
Depreciation
Total
Amounts recognised in profit and loss:
Interest on lease liabilities
Amounts recognised in statement of cash flows:
Payment of lease liabilities
Lease liabilities:
CONSOLIDATED
2022
€
2021
€
-
140,884
(5,870)
135,014
5,541
6,900
3,424
-
(3,424)
-
-
-
Lease liabilities are presented in the statement of financial position separately withing liabilities as follows:
Lease liabilities – current
Lease liabilities – non-current
22,112
117,412
139,524
-
-
-
51
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 17: LEASES (continued)
Lease liabilities are for the main operation office in Rome Italy. Future minimum lease payments at 31
December were as follows:
Lease payments
Finance charges
Net Present values
Within one
year
One to five
years
27,600
(5,488)
22,112
110,400
(12,904)
97,496
After 5 years
20,700
(784)
19,916
Total
158,700
(19,176)
139,524
Lease payments not recognised as a liability
The Group has elected not to recognise a lease liability for short term leases (leases with an expected term
of 12 months or less) or for leases of low value assets. Payments made under such leases are expensed on a
straight-line basis.
NOTE 18: CONVERTIBLE NOTES
The Company issued convertible notes equivalent to A$2,500,000 in 2018. A$750,000 was repaid in 2021, the
balance of A$1,750,000 was converted into fully paid ordinary shares in the current year at a conversion price
A$0.028 per share. The conversion price variation was approved at the Annual General Meeting on 29 April
2022, and the note holders elected to convert on the maturity date. 62,500,000 shares were issued to note
holders on conversion. Interest on the principal amount at a rate of 8% per annum was paid up to redemption
date.
A reconciliation of the movement in convertible notes for the year is as follows:
Convertible Notes
Balance at beginning of the year
Shares issued on conversion at A$0.028 per share
Repayment
Effect of exchange rate
Balance at end of the year
CONSOLIDATED
2022
€
2021
€
1,120,170
1,571,070
(1,180,454)
-
-
(476,594)
60,284
25,694
-
1,120,170
52
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 19:
CAPITAL AND RESERVES
Share Capital
Opening balance - 1 January
Shares issued during the reporting period:
Conversion of convertible notes
Placement at A$0.055
Placement at A$0.028
Institutional offer of ANREO at A$0.028
Retail offer of ANREO at A$0.028
Shortfall on retail offer of ANREO at A$0.028
Ordinary Shares
CONSOLIDATED
2022
Number
2021
Number
2022
€
2021
€
1,006,643,438
647,286,103
52,719,884
46,641,745
62,500,000
81,818,182
-
-
-
-
-
-
35,714,285
231,667,735
62,461,961
29,513,354
1,180,454
3,071,153
-
-
-
-
-
-
635,126
4,119,684
1,101,689
520,560
Share issue costs
-
-
(339,389)
(298,920)
Closing balance – 31 December
1,150,961,620
1,006,643,438
56,632,102
52,719,884
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.
Reserves
Translation Reserve
Share based payment Reserve
CONSOLIDATED
2021
€
2022
€
1,192,269
1,192,269
179,626
10,687
1,371,895
1,202,956
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.
Share based payment Reserve
The share based payment reserve of €179,626 comprises the fair value of vested options and performance
rights issued as consideration.
Share based payment reserve reconciliation for the period:
Opening balance
Issue of options during the period (refer Note 20)
Vesting of performance rights during the period (refer Note 20)
Closing balance
10,687
107,714
61,225
179,626
Dividends
No dividends were paid or declared during the current year (2021: Nil).
-
10,687
-
10,687
53
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 20:
SHARE BASED PAYMENTS
Performance rights:
During the year, the Group granted 3,000,000 performance rights (2021: nil) as consideration for services
provided by a consultant.
The performance rights vest on 31 December 2022 and expire on 31 January 2023. The performance rights
are subject to a performance milestone of the Company achieving a volume weighted average share price
over 30 consecutive days of at least A$0.06 by 31 December 2022 or earlier.
The fair value of the performance rights of $0.0309 per right is calculated at the date of grant using the
Parisian Barrier1 valuation Model and allocated to the reporting period over the period from grant date to
vesting date. The following valuation assumptions have been used:
Issue price at grant date
Exercise price
Expiry
Volatility
Risk-free rate
Dividend yield
A$0.055
Nil
31 Jan 2023
76%
2.6%
Nil
An expense of €61,225 has been recognised in the consolidated statement of profit or loss and other
comprehensive income for the year in respect of performance rights vested.
Performance rights on issue at balance date
The number of performance rights issued and outstanding over unissued ordinary shares at 31 December
2022 is as follows:
Grant date
Exercise price
Expiry date
Balance at 31
December
2022
Vested and
Exercisable at 31
December 2022
31 December
2021
22 June 22
Nil
31 Jan 2023
3,000,000
3,000,000
-
Performance rights subsequent to balance date
Subsequent to balance date no performance rights were issued or cancelled.
3,000,000 performance rights were converted into 3,000,000 ordinary shares, upon achievement of the
performance milestone.
Options granted during the year:
During the year, the Group granted 7,500,000 options (2021: 5,000,000) 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
15 Aug 2022
7,500,000
Exercise price
Expiry date
Volatility1
Interest
rate
Value €
AU$0.10
(€0.068)
30 Jun 2024
89.07%
2.78%
107,714
1 Historical volatility has been used as the basis for determining expected share price volatility.
54
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 20:
SHARE BASED PAYMENTS (continued)
The value of €107,714 in respect of these options are recognised as a share issue cost associated with
broker fees for the placement completed in the year.
Options exercised during the year:
During the year the Company issued no shares (2021: nil) on the exercise of unlisted options.
Options cancelled during the year:
During the year no unlisted options (2021: nil) were cancelled upon termination of employment, or on the
expiry of the exercise period.
Options on issue at balance date
The number of options issued and outstanding over unissued ordinary shares at 31 December 2022 is as
follows:
Grant date
Exercise price
Expiry date
Balance at 31
December
2022
Vested and
Exercisable at 31
December 2022
31 December
2021
21 Jul 2021
15 Aug 2022
AU$0.05
(€0.031)
AU$0.10
(€0.068)
21 Jul 2023
5,000,000
5,000,000
5,000,000
30 Jun 2024
7,500,000
7,500,000
-
Options subsequent to balance date
Subsequent to balance date no unlisted options were issued or cancelled.
2,000,000 options with exercise price at AU$0.05 and expiry of 21 July 2023 were exercised by the holder
by payment of A$100,000. 2,000,000 ordinary shares were issued on exercise of these options.
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
2022
No.
5,000,000
7,500,000
12,500,000
WAEP
(€ cents)
0.031
0.068
0.053
(AU$0.08)
2021
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 13 months.
55
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 21:
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 Board reviews internal management
reports on a monthly basis.
Exploration and evaluation
2022
2021
Development
2022
2021
External revenues
115,628
49,660
103,874
Segment loss before tax
70,545
(130,402)
71,432
Reportable segment assets:
Resource property costs
4,661,672
8,146,546
6,736,926
Receivables
Other assets
-
-
86,042
211,437
759,000
484,470
4,661,672
8,991,588
7,432,833
Capital expenditure
430,021
186,577
1,371,203
Reportable segment liabilities:
Rehabilitation and restoration provis
Other liabilities
-
-
-
-
(1,450,828)
(191,178)
(452,896)
(191,178)
(1,903,724)
Total
2022
€
2021
€
219,502
49,660
141,977
(130,402)
11,398,598
8,146,546
211,437
86,042
484,470
759,000
12,094,505
8,991,588
1,801,224
186,577
(1,450,828)
-
(452,896)
(191,178)
(1,903,724)
(191,178)
-
-
-
-
-
-
-
-
-
-
56
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 21:
FINANCIAL REPORTING BY SEGMENTS (continued)
Reconciliation of reportable segment profit or loss, assets
and liabilities
2022
€
2021
€
CONSOLIDATED
Profit or loss:
Total profit loss for reportable segments
141,977
(130,402)
Unallocated amounts:
Net finance expense
Other corporate expenses
Consolidated loss before income tax
Assets:
Total assets for reportable segments
Other assets
Consolidated total assets
Liabilities:
Total liabilities for reportable segments
Other liabilities
Consolidated total liabilities
NOTE 22:
FINANCIAL INSTRUMENTS
(a) Interest Rate Risk Exposures
(256,131)
(881,697)
(995,851)
(271,939)
(354,487)
(756,828)
12,094,505
3,041,061
8,991,588
2,476,853
15,135,566
11,468,441
(1,903,724)
(191,178)
(432,399)
(1,575,263)
(2,336,123)
(1,766,441)
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
2022
€
2021
€
1,536,041
-
1,536,041
1,262,151
-
1,262,151
-
-
-
-
(1,120,170)
(1,120,170)
57
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 22:
FINANCIAL INSTRUMENTS (continued)
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 2021.
Effect in €’s
31 December
Variable rate instruments
Profit or loss
Equity
2022
2021
2022
2021
7,680
6,311
-
-
(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.
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
9
10
CONSOLIDATED
Carrying Amount
2022
€
1,536,041
434,480
490,088
2,460,609
2021
€
1,262,151
185,369
759,078
2,206,598
58
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 22:
FINANCIAL INSTRUMENTS (continued)
(c)
Liquidity risk
The following are the contractual maturities of financial liabilities, including estimated interest
payments:
Consolidated
31 December 2022
€
Trade and other
payables
Lease liabilities
31 December 2021
€
Trade and other
payables
Lease liabilities
Carrying
amount
Contractual
cash flows
6 months
or less
6 to 12
months
1 – 2 Years
2 – 5 Years
(741,384)
(741,384)
(741,384)
-
-
-
(139,524)
(158,700)
(13,800)
(13,800)
(27,600)
(103,500)
(880,908)
(900,084)
(755,184)
(13,800)
(27,600)
(103,500)
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)
-
-
-
Convertible notes
(1,120,170)
(1,120,170)
(1,120,170)
(1,762,722)
(1,762,722)
(1,762,722)
-
-
-
-
-
-
-
-
-
-
-
-
(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).
59
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 22:
FINANCIAL INSTRUMENTS (continued)
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 are not other financial assets and liabilities at fair value.
(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 – convertible notes
Net exposure
CONSOLIDATED
2022
€
1,473,921
(17,484)
-
1,456,437
2021
€
1,195,116
(28,866)
(1,120,170)
46,080
The following significant exchange rates applied during the year:
Australian Dollar ($)
Average rate
Reporting date spot rate
2022
0.659
2021
0.635
2022
0.636
2021
0.640
Sensitivity Analysis
A 5% 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 2021 was prepared using the same
basis.
31 December 2022
Australian Dollar to Euro (€)
31 December 2021
Australian Dollar to Euro (€)
CONSOLIDATED
Profit or loss
€
72,822
Equity
€
2,304
-
-
A 5% 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.
60
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 23:
COMMITMENTS AND CONTINGENCIES
Contractual Commitments and contingencies
The table below summarises material commitments for the Group
Construction of gas plant and pipeline – Podere
Maiar 1 – PVE 63% share
Leases (refer note 17)
Within one year
One to five
years
After 5 years
978,075
27,600
1,005,675
-
110,400
110,400
-
20,700
20,700
The Group entered into an agreement for the construction of gas plant and pipeline for the Podere Maiar -1
well. The contract is at a fixed price of €3,450,000 (100%). Po Valley has an 63% economic interest in the
development. The commitment shown in the table above is Po Valley’s 63% share. Under the payment terms
of the contract, €1,035,000 of the total costs (100%) (63% to Po Valley of €652,050) will be payable after the
commencement of production which is anticipated in the second quarter of 2023.
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 2022.
NOTE 24:
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
CONSOLIDATED
2022
€
73,469
-
-
-
2021
€
17,283
-
-
-
73,469
17,283
CONVERTIBLE NOTES
The table below summarises the Convertible notes held by related parties during the year. The convertible
notes were held by directors Michael Masterman, Kevin Bailey and Joseph Constable or their associated
entities. The convertible notes were converted to fully paid ordinary shares on maturity following
shareholder approval on 29 April 2022 of the variation of the conversion price from AU$0.042 to AU$0.028
61
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 24:
RELATED PARTIES (continued)
K & C Bailey as trustee for The Bailey Family Trust
Symmall Pty Ltd
Joseph Constable
Ida Constable *
* A Related party by virtue of being a parent of Joseph Constable
CONSOLIDATED
2022
2021
-
-
-
-
-
A$700,000
A$300,000
A$10,000
A$240,000*
A$1,250,000
Related Party
K & C Bailey as trustee for The Bailey
Family Trust
Symmall Pty Ltd
Joseph Constable
Ida Constable*
Convertible Notes at
31 Dec 2021
Converted to
Equity
Convertible Notes
at 31 Dec 2022
A$700,000
A$300,000
A$10,000
A$240,000
A$1,250,000
€800,121
A$700,000
A$300,000
A$10,000
A$240,000
A$1,250,000
€800,121
-
-
-
-
-
* A Related party by virtue of being a parent of Joseph Constable
A summary of the interest on convertible notes is as follows:
Interest
accrued at
31 Dec 2021
€
Interest for
year
€
Interest paid
in cash
€
Interest
accrued at 31
Dec 2022
€
Related Party
K & C Bailey as trustee for The
Bailey Family Trust
Symmall Pty Ltd
Joseph Constable
Ida Constable*
Total
* A Related party by virtue of being a parent of Joseph Constable
-
-
-
-
-
12,072
5,174
172
4,139
21,557
(12,072)
(5,174)
(172)
(4,139)
(21,557)
-
-
-
-
-
62
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 24:
OTHER
RELATED PARTIES (continued)
Other balances owing to directors are as follows:
Related Party
Kevin Bailey AM
Sara Edmonson
Joseph Constable
Katrina O’Leary
Michael Masterman
Total
Directors’
remuneration
outstanding at
31 Dec 2021
€
62,034
31,053
1,600
-
206,079
300,766
Fees for the
year
€
14,968
19,980
20,023
13,327
5,171
73,469
NOTE 25:
PARENT ENTITY DISCLOSURES
Interest
€
-
-
-
-
6,024
6,024
Amount paid
€
(14,968)
(51,033)
(14,968)
(13,327)
(217,274)
(311,570)
Directors’
remuneration
outstanding at
31 Dec 2022
€
62,034
-
6,655
-
-
68,689
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
2022
€
2021
€
1,559,240
11,443,468
13,002,708
1,245,438
9,976,252
11,221,690
203,265
-
203,265
1,405,888
-
1,405,888
12,799,443
9,815,802
56,632,102
179,626
(44,012,285)
52,719,884
10,687
(42,914,769)
12,799,443
9,815,802
(1,097,516)
-
(1,097,516)
(439,444)
-
(439,444)
63
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NOTE 26:
INTERESTS IN OTHER ENTITIES AND JOINT OPERATIONS
The Group’s interest in joint arrangements at 31 December 2022 are as follows:
Joint Operation
Manager
Company’s
Interest
Principal Activity
(Exploration)
Selva Malvezzi Field
Po Valley Operations
63%*
Gas
The Group received the Selva Malvezzi Production concession in July 2022.
The farm-out agreement and Joint Operations Agreement (“JOA”) provided United Oil and Gas Plc (“United”)
a 20% economic interest and Prospex Oil and Gas Plc (“Prospex”) a 17% economic interest. In exchange for
their respective interests United and Prospex covered 74% of the completed Podere Maiar-1 well drilling
costs. During the year, Prospex acquired the interest held by United through the acquisition of the wholly
owned United Italian subsidiary (UOG Italia S.r.l) that holds the 20% interest in this field. Prospex now has a
37% interest in the Selva Gas field through its 100% ownership of UOG Italia and its pre-existing 17% interest.
*The Group as operator has 100% title to the Production concession moving to 63% with the notices to
transfer the joint operation partner title quotas sent to the Italian Ministry in November 2022. Development
of gas plant and pipeline commenced in the year has been under taken under the terms of the JOA with 37%
contribution being made by the JOA partners.
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
2022
Investment
€
2021
Investment
€
Holding
%
Australia
Ordinary
3,843,419
3,843,419
100
NOTE 27:
SUBSEQUENT EVENTS
On 14 February 2023, Po Valley’s wholly owned subsidiary Po Valley Operations Pty Limited (PVO) signed a gas
sales agreement (GSA) with BP Gas Marketing Limited (BPGM), an indirect, wholly owned subsidiary of BP
International Limited (BPI). The GSA between PVO and BPGM relates to forecast gas production from the
soon to be completed Podere Maiar – 1 facility in the Selva Malvezzi production concession located in the Po
Valley Region of Italy. The contract term is 18-months to commence in April 2023, for the supply of an
estimated 37,000,000 standard cubic metres of gas. The gas supply price will be linked to Italy’s “Heren PSV
day ahead mid” price.
64
PO VALLEY ENERGY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Po Valley issued 2,000,000 shares subsequent to balance date on the exercise of 2,000,000 options by payment
of AU$0.05 per share or AU$100,000 (€63,000). The Company also issued 3,000,000 shares on exercise of the
performance rights subsequent to balance date.
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.
65
PO VALLEY ENERGY LIMITED
DIRECTORS’ DECLARATION
1. In the opinion of the directors of Po Valley Energy Limited (“the Company”):
i)
the financial statements and notes, as set out on pages 20 to 65, 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 2022 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 2022.
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.
Kevin Bailey AM
Chairman
31 March 2023
66
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 2022, 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 2022 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.
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.
67
Key Audit Matter
How our audit addressed the key audit matter
Reclassification of Podere Maiar-1 exploration
expenditure to development asset
Refer to Note 13
During the year, the Group made the decision to
transition the Podere Maiar-1 natural gas project
from the exploration phase to the development
phase. As such, the Group reclassified €3.9
million from exploration and evaluation assets to
development assets.
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, when an
exploration and evaluation asset transitions to
the development phase, there is a requirement to
test the balance for recoverability.
The evaluation of the recoverable amount on
transition is considered a key audit matter as it
was based upon a value-in-use model (‘the
model’) which required significant judgement and
estimation. In addition, the balance is material to
the users of the financial statements and the
matter involved the most communication with
management.
Our audit procedures included but were not
limited to the following:
• Critically
management’s
methodology used in the model and the
basis for key assumptions.
evaluating
• Reviewing the mathematical accuracy of the
model.
• Performing sensitivity analyses around the
key inputs used in the model such as
operating
costs,
production estimates and selling prices.
construction
costs,
• Considering
the appropriateness of
the
discount rate used.
• Comparing the net present value of the
the exploration
to development
transferred
cashflows
to
future
expenditure
assets.
• Assessing
the appropriateness of
the
disclosures included in the relevant notes to
the financial report.
• Ensuring
that development expenditure
incurred subsequent to the date of transition
was appropriately capitalised,
including
testing a sample of those additions.
Recoverability of capitalised exploration expenditure
Refer to Note 13
In accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources, the Group’s
accounting policy is to capitalise exploration and
evaluation expenditure. As at 31 December
2022 the Group had $4.66 million of capitalised
exploration and evaluation costs.
Our audit focused on the Group’s assessment
of the carrying amount of the capitalised
exploration and evaluation asset, as this is one
of the most significant assets of the Group. 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 that the carrying amount of the
exploration and evaluation assets may exceed
their recoverable amounts.
Our procedures included but were not limited to
the following:
• We obtained an understanding of the key
processes associated with management’s
review of the carrying values of each area of
interest.
• We verified a sample of amounts capitalised.
• We considered management’s assessment
of potential indicators of impairment.
• We obtained evidence that the Group has
current rights to tenure of its areas of
interest.
• We examined the exploration budget for the
year ending 31 December 2023 and
discussed with management the nature of
planned activities.
• We enquired with management, reviewed
ASX announcements and reviewed minutes
of Directors’ meetings to ensure that the
68
Group had not resolved to discontinue
exploration and evaluation at any of its areas
of interest.
• 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 2022, 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.
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.
69
-
-
-
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.
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 2022.
In our opinion, the Remuneration Report of Po Valley Energy Limited for the year ended 31
December 2022 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 2023
L Di Giallonardo
Partner
70
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 2022, the Group’s core portfolio includes 1 awarded production concession (Selva
Malvezzi), 1 preliminary awarded production concession with environmental approval granted
(Teodorico), 3 onshore Exploration Permits and 1 offshore Exploration Permit as detailed in Table 1.
Total acreage position of the Group at 31 December 2022 is 733,73 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 2022
71
PO VALLEY ENERGY LIMITED
TECHNICAL SUMMARY
PRODUCTION
CONCESSIONS
AWARDED
PREL.
AWARDED
Tenement
Location
Interest held
Selva Malvezzi (1)
Italy, Emilia Romagna
100% Po Valley(1)
Teodorico (d.40.AC-PY)
Italy, Adriatic Offshore
100% Po Valley
EXPLORATION
PERMITS(2)
GRANTED
Table 1: Tenements at 31 December 2022
AR94PY
Italy, Adriatic Offshore
100% Po Valley
Cadelbosco di Sopra
Italy, Emilia Romagna
100% Po Valley
Grattasasso
Italy, Emilia Romagna
100% Po Valley
Torre del Moro
Italy, Emilia Romagna
100% Po Valley
(1) Net to PVE is 63%, transfer request of JV partners’ 37% quotas in Selva Malvezzi submitted in November 2022.
(2) Following application of Pitesai legislation relating to areas deemed unsuitable for exploration, the Podere Gallina
exploration permit containing such areas was revoked in September 2022. Areas deemed suitable that were previously
held under the Podere Gallina Permit are now held under the Selva Malvezzi Production Concession.
As at 31 December 2022 all tenements are 100% owned. PVO currently holds 100% of the title in the
Selva Malvezzi production concession but has a 63% economic interest together with joint venture
partners Prospex Oil & Gas Plc (“Prospex”) of 37% (2021: PVO 63% Prospex 17% United Oil & Gas Plc
(“United”) 20%). During 2022, Prospex acquired United’s 20% economic interest by virtue of the 100%
acquisition of United’s Italian subsidiary UOG Italia S.r.l. Prospex now has 37% interest through its
100% ownership of UOG Italia and its pre-existing 17% interest. Formal notices for the transfer of the
37% quota to the joint venture partners was submitted to the Italian Ministry in November 2022.
2)
RESERVES AND RESOURCES STATEMENT
The following tables summarise the status of the Group’s Reserves & Resources as at 31 December
2022.
Group Reserves
Reserves as at
Reserves as at
Gas, Italy (bcf)
Developed
31 December 2022
31 December 2021
1P
2P
1P
2P
Selva Malvezzi (Podere Maiar) [net]1
2.60
8.40
-
-
Undeveloped
Teodorico
Selva Malvezzi (Podere Maiar) [net]
272
-
372
-
26.7
2.60
36.5
8.40
Total Reserves
29.60
45.4
29.30
44.90
Table 2: Total Group Reserves (as per CPR dated 25 July 2022 ASX announcement 26 July 2022)
1. Development of Selva Malvezzi commenced in 2022 and is due to be completed in the second quarter of 2023.
2. Reserve estimate for Teodorico in 2022 are rounded up from 26.7bcf and 36.5bcf as reported in 2021. There has not been
a material change in the Reserve estimate.
72
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
31 December 2022
31 December 2021
1C
2C
1C
2C
Gas (bcf)
13.1
26.9
13.1
26.9
Table 3: Total Group Contingent Resources (as per CPR dated 25 July 2022 ASX announcement 26 July 2022)
There have been no changes in contingent resources since the prior year.
Where reported, aggregated reserves and contingent resources are aggregated by arithmetic
summation by category.
Table 4 of this technical summary shows detailed estimates of reserves and resources for each field.
Following Italian legislative changes under the Pitesai, contingent and prospective resources relating
to Oil prospects are no longer reported on the reserve and resource statement. This adjustment was
already reported in the 2021 Reserve and Resource table of estimates.
Areas previously held under Podere Gallina exploration licence which are deemed suitable for
exploration (under the Pitesai) are now held under the Selva Malvezzi production concession, these
include the contingent and prospective resources at Selva North, Selva South, East Selva, Fonda Perino
and Riccardina. Areas in the remaining acreage in the Podere Gallina licence were deemed unsuitable
for exploration and at the Group’s request the remainder of the Podere Gallina exploration licence
was revoked by the Italian Ministry on 29 September 2022.
Current estimates of contingent and prospective resources by licence are shown in Table 4. Any gas
prospective resources for areas that were deemed unsuitable under the Pitesai are no longer included
in the table of estimates. These changes were not material to the Group’s Resource position. There
were no changes to contingent resources
In reference to the reserve and resources estimation process, the Group commits to a regular
independent audit in order to obtain a certified update of its Reserves and Resources portfolio. The
last review took place in July 2022 (refer Competent Persons Report dated 25 July 2022 ASX
announcement 26 July 2022).
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 and reviewed in July 2022 (ASX announcement 26 July 2022). All figures have been
determined using a deterministic method except Teodorico which was estimated using a probabilistic
method.
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 announcement
73
PO VALLEY ENERGY LIMITED
TECHNICAL SUMMARY
26 July 2022 “Revised and updated Competent Persons report on PVE assets” together with a
Competent Persons Report issued by CGG(UK) Services Ltd dated 25 July 2022. All estimates are based
on independent evaluations in accordance with the Petroleum Resource Management System PRMS
(2007/2011) as published by the Society of Petroleum Engineers (SPE).
Licence
Project
Reserves
1P
27
2P
37
3P
48
2.6
8.4
18.8
AR94PY
Teodorico
Teodorico
PL3-C
Selva (Podere Maiar1)
Selva level A South
Selva Malvezzi Selva level B North
Selva level B South
[Net]
Fondo Perino
East Selva
Riccardina
Zini (Qu-B)
Canolo (Qu-A)
Canolo (Plioc)
Zini (Qu-A)
Cadelbosco
di Sopra
Torre del Moro Torre del Moro
Contingent
Resources
Gas Bcf
Prospective
Resources
1C
2C
3C
Low
Best
High
7.4
10.6
14.0
7.9
15.9
25.0
0.7
2.2
0.6
1.1
0.7
0.4
1.1
5.6
2.2
2.7
1.1
3.6
2.3
11.2
5.9
4.6
1.7
10.5
6.4
18.3
8.2
9.2
21.9
24.4
12.9
25.6
81.2
0.6
420.7
1.4
502
2.4
596.1
Table 4: Gas Reserves and Resources by Field at 31 December 2022 (as per CPR dated 25 July 2022 ASX announcement 26
July 2022)
Prospective Resources are the estimated quantities of petroleum 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
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.
The Group 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
74
PO VALLEY ENERGY LIMITED
TECHNICAL SUMMARY
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 25 July 2022 which was lodged with the ASX on 26 July 2022. 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.
75
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 28 March 2023.
ORDINARY SHAREHOLDERS
1. TOP TWENTY SHAREHOLDERS
Details of the 20 largest shareholders of quoted fully paid ordinary shares by registered shareholding
are:
Name
Bond Street Custodians Limited
Fuiloro Pty Ltd
Lambert Blue Chip Investments Pty Ltd
H&G High Conviction Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
1 Mr Kevin Bailey & Mr Christopher Bailey
2
Symmall Pty Ltd
3 Michael Masterman
4
5
6
7
8
9
10 Quo Vadis Pty Ltd
11 Kevin Bailey & Christopher Bailey
12 P&N Platinum Investments Pty Ltd
13
14 Mr Kevin Christopher Bailey
15 Mr Laurie Mark Macri
16 Mr Laurie Mark Macri & Mrs Chirstine Simone Macri
17 Dr Ida Constable
18 Donus Australia Foundation Limited
19 Beronia Investments Pty Ltd
20 Beronia Investments Pty Ltd
Total
2. SUBSTANTIAL SHAREHOLDERS
Number
135,879,916
132,964,794
86,234,079
85,694,960
55,281,743
54,150,000
48,815,048
36,673,986
36,126,556
30,799,806
25,000,000
24,129,460
22,648,931
19,645,646
16,772,270
%
11.75
11.50
7.46
7.41
4.78
4.68
4.22
3.17
3.13
2.66
2.16
2.09
1.96
1.70
1.45
14,674,624
1.27
14,071,429
12,400,000
10,359,110
10,121,549
872,443,907
1.22
1.07
0.90
0.88
75.46
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 AM
Michael Masterman
Beronia Investments Pty Ltd
Number
274,378,670
228,728,801
118,990,777
%
23.84
19.87
11.82
76
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 1,155,961,620 held by 740 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
95
21
56
308
260
%
12.84
2.83
7.57
41.62
35.14
Fully paid Ordinary Shares
8,937
60,556
452,266
13,718,721
1,141,721,140
%
0.00
0.01
0.04
1.19
98.76
740
100.00
1,155,961,620
100.00
6. UNMARKETABLE PARCEL OF SHARES
The number of shareholders holding less than a marketable parcel of ordinary shares is 152 based
on the Po Valley Energy Limited closing share price of AU$0.072 on 28 March 2023.
7. ON MARKET BUY-BACK
There is no current on market buy-back.
8. UNQUOTED SECURITIES
Po Valley Energy Limited has the following unquoted securities on issue:
Category
Number
Number of holders
Unlisted Options exercise price AU$0.05
expiry 21 Jul 2023
Unlisted Options exercise price AU$0.10
expiry 30 Jun 2024
3,000,000
7,500,000
1
1
77