TIDMSCIR
RNS Number : 0831O
Scirocco Energy PLC
29 September 2023
29 September 2023
Scirocco Energy plc
("Scirocco" or "the Company")
Interim Results
Scirocco Energy plc (AIM: SCIR), the AIM investing company
targeting attractive assets within the European sustainable energy
and circular economy markets, is pleased to announce its unaudited
interim results for the six months ended 30 June 2023.
Period Highlights:
-- In line with the Investing Policy approved at AGM in July
2021, the Company continued to support Energy Acquisitions Group
Limited ("EAG"), where Scirocco has a 50% ownership interest, to
identify additional investment opportunities building on the
acquisition by EAG of 100% of Greenan Generation Limited ("GGL")
and associated 0.5 MWe Anaerobic Digestion ("AD") plant located in
County Londonderry, Northern Ireland. AD is a process that creates
biogas, a renewable energy source that will help the UK deliver on
its decarbonization commitments
-- During the period, GGL has seen lower average wholesale power
prices than the same period in 2022 and experienced reduced
operational uptime driven by an intermittent fault. These effects
were partially offset by higher ROC payments linked to inflation
adjustments
-- Revenue for H1 2023 was GBP574k compared to GBP544k for the
same period in 2022, an increase of 5.5% year on year.
-- EBITDA for H1 2023 was GBP151k compared to GBP202k for the
same period in 2022 reflecting lower average wholesale prices and
operational interruptions and a general increase to the plant
service and feedstock contracts.
-- The Company continued to engage with Tanzanian government
authorities to progress the completion of the divestment of its 25%
working interest in the Ruvuma asset following the agreement with
ARA Petroleum Tanzania announced on 31(st) August 2022. The total
consideration for the sale is up to $16 million:
-- Initial consideration of US$3 million payable on completion
of the sale, which is expected during October 2023;
-- US$3 million payable upon final investment decision being
taken by the parties to the Ruvuma Asset Production Sharing
Agreement or the JOA as the case may be, which given progress made
to date at the asset is expected to be received by year end
2023;
-- Deferred consideration of up to US$8 million payable in the
form of a 25% net revenue share from the point when Ruvuma
commences delivery of gas to the gas buyer;
-- Contingent consideration of US$2 million payable on gross
production reaching a level equal to or greater than 50Bcf.
-- The Company announced on 2 March 2023 that significant
progress had been achieved by the operator APT to deliver first gas
from the Ruvuma field by the end of 2023;
-- The approval process has taken longer than originally
anticipated and the Company announced on 25 May 2023 that it had
agreed with its counterparty APT to extend the longstop date to 31
August 2023 to provide additional time to achieve the necessary
government consents;
-- The Prolific Basins financing facility outstanding balance
was settled in full during the period through cash instalments paid
in connection with the Amendment and Repayment plan announced on 11
October 2022. The facility is now fully repaid;
-- The Company disposed of part of its remaining shareholding in
Helium One realizing c. GBP142k in proceeds during the period;
-- As part of an ongoing focus on ensuring that the Company has
the correct board composition to support the implementation of the
investment policy Muir Miller and Don Nicolson submitted their
notice to step down from the board and Niall Roberts, a candidate
recommended by the Company's largest shareholder GP Jersey was
appointed to the board on 1(st) March 2023 and Matt Bower, GP
Jersey's appointed representative, was appointed to the board on
27(th) April 2023;
-- Continued the Company's focus on cost discipline and cash
preservation in order to deliver completion of Ruvuma; and
-- Held cash at 30 June 2023 of GBP295k
Post Period Highlights:
-- On 12 July 2023 the Company provided an operational update
regarding the Ruvuma asset noting the significant progress made by
the JV in the development of the Ruvuma license which provides
improved clarity regarding the timing of contingent payments under
the sale arrangements between ARA Petroleum Tanzania and
Scirocco.
-- On 3 August 2023, The Company announced that it had received
the tax clearance certificate relating to the Ruvuma transaction
from the Tanzanian Revenue Authority.
-- The company successfully recovered 1 million Helium One
shares which had been "trapped" after Pello Capital entered
administration in October 2022. These shares were sold during
August 2023 delivering net proceeds of c. GBP75k.
-- On 29 August 2023, the Company announced that whilst
significant progress had been made delivering the necessary
approvals from the relevant Tanzanian government authorities it had
agreed with its counterparty APT to extend the longstop for the
Ruvuma transaction to 30 September 2023 to allow sufficient time to
achieve the final approval from the Minster of Energy.
-- On 28 September 2023, the Company announced that whilst it
was actively engaged with Tanzanian government authorities
including the Ministry of Energy to deliver the necessary approvals
required to complete the transaction, it had agreed with its
counterparty APT to extend the longstop for the Ruvuma transaction
to 20 October 2023 to allow sufficient time to achieve the final
approval from the Minister of Energy.
Commenting on the Interim Results, Alastair Ferguson,
Non-Executive Chairman said:
The first half of 2023 has seen the Company continue to focus on
selling its legacy natural resources assets to provide capital to
invest within target assets in the European sustainable energy and
circular economy markets.
Although the sale of its legacy interest in Ruvuma has taken
longer than originally anticipated to complete, we are now focused
on delivering completion. The proceeds of the divestment - both at
completion and any future contingent payments - will be available
for reinvestment in assets which comply with the company's
investment policy.
With the imminent completion of the Ruvuma sale, the company is
expected to accrue cash resources over the coming months supporting
new investment activities.
We now look forward to engaging with stakeholders to deliver the
investment plan going forward."
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
For further information:
Scirocco Energy plc +44 (0) 20 7466
Tom Reynolds, CEO 5000
Strand Hanson Limited, Nominated Adviser +44 (0) 20 7409
Ritchie Balmer / James Spinney / Robert Collins 3494
WH Ireland Limited, Broker +44 (0) 207 220
Harry Ansell / Katy Mitchell 1666
Buchanan, Financial PR +44 (0) 20 7466
Ben Romney / Barry Archer / George Pope 5000
Chairman's statement
Introduction
I am pleased to be providing this statement in my capacity as
Non-Executive Chairman of Scirocco. At the end of 2022, the Company
had navigated a challenging year where it secured an agreement to
sell its principle legacy asset - Ruvuma - and engaged with
stakeholders about the implications of this linked to its new
investment policy. The terms of that agreement resulted in a firm
consideration for Scirocco, with contingent elements taking the
total consideration up to a potential $16m of proceeds. This was a
transformative event for the Company, realizing value from a legacy
investment that no longer fit within Scirocco's agreed investment
policy, and providing cash that could be deployed into low-risk,
cash generative opportunities in line with the stated strategy.
Since then the Company has been focused on delivering the
completion of the Ruvuma divestment and also tidying up legacy
issues such as the repayment of the Prolific Basins facility, the
recovery and sale of its remaining shares in Helium One and
evolution of the composition of the board.
With the imminent completion of Ruvuma the Company now expects
to accrue cash over the coming months as a result of contingent
payments linked to progress of the development of Ruvuma towards
first gas - transforming the balance sheet and providing liquidity
to deliver the Company's long-term growth objectives.
As I have said previously, the Board is committed to grow value
for all shareholders by the most appropriate investment of Company
resources on a risk adjusted basis. With the completion of Ruvuma I
look forward to engaging with shareholders to agree and progress
towards this objective, ensuring stakeholder alignment as we embark
on the next chapter of the Company's story.
Strategy and Business Development
With the progress made in divesting legacy assets the Board
restates Scirocco's objective to build a portfolio of cash
generative assets within the following three core areas:
-- Energy - assets which generate energy for sale through
sustainable or renewable means in the form of biogas or electrical
power;
-- Circular - assets which recover a valuable component of an
industrial, municipal or agricultural waste stream for re-use,
generally reducing the system carbon footprint in parallel; and
-- Vector - assets involved in the storage, transmission, or
delivery of energy within a low carbon context.
The Board believes it will offer Shareholders and investors
exposure to an asset portfolio with an attractive risk/reward
profile within the sustainable energy ecosystem. Over time, the
Board believes shareholder value can be delivered through
operational improvement, driving improved profitability;
reinvestment of cash flow to fund further acquisition; the periodic
refinancing of the portfolio as it grows, supporting lower cost
asset finance; and ultimately the payment of a regular
dividend.
Outlook
During the first half of 2023 the primary focus within Scirocco
has been on delivering the completion of the sale of the Company's
Ruvuma interest to APT. In addition, the team have continued to
work with EAG on the development of the AD portfolio including
support on due diligence on one asset. We believe that Scirocco's
experience of working with EAG ratifies our investment thesis and
shows how the Company can work with investee companies to grow
value.
We look forward to assessing the range of opportunities open to
the Company taking account of its expected cash position going
through the remainder of 2023 and into 2024 and engaging with
shareholders/stakeholders to agree the optimal path to creating
value.
Alastair Ferguson
Non-Executive Chairman
Date: 29 September 2023
Investment Update
Energy Acquisitions Group Limited
The Company invested in EAG in September 2021 to support the
acquisition of Greenan Generation Limited ("GGL").
Financial
In H1 2023 the revenue received for the period by GGL totalled
GBP574k (unaudited). This compares to the same period in 2022 where
revenue was GBP544k (unaudited). EBITDA for H1 2023 was
GBP151k.
The lower EBITDA level was driven by an intermittent fault with
the incoming power line causing ancillary equipment to fail. This
resulted in lower uptime, lower power export and increased costs
for repair works. The issue has now been addressed and preventative
investments made to ensure this will not re-occur.
Operational
During H1 2023, Greenan experienced a mix bag in terms of
performance, primarily due to an intermittent frequency fluctuation
issue between April and June. This had the effect of causing
failures in pumps, drives and ancillary control panels on the
Greenan plant. The incoming power supply from the DNO substation
was found to be the fault, and subsequently, Greenan has undertaken
an electrical futureproofing scheme to ensure that all of its
panels and drives are protected from frequency fluctuations in
future. This period saw substantial upgrade work to electrical
infrastructure including:
-- All incoming cable upgraded to armored cable;
-- All drives protected with voltage and frequency fluctuation devices; and
-- Upgrade and replacement of auger, pump and mixer drives in main control panel.
During H1 2023, electricity pricing to Greenan stabilized around
GBP90 per MWhr, a significant average reduction from GBP163 per
MWhr in the same period last year. Turnover for the H1 2023 was
GBP574k with corresponding EBITDA of GBP151k. April, May and June
had average operational efficiencies of 81% but otherwise
efficiencies in the period have been strong at over 95%.
Given the electrical upgrade works carried out, it is not
expected that any underperformance due to electrical failures or
complications will be repeated.
Business Development
Throughout H1 2023, EAG identified a number of investable
projects which met its investment criteria. Due to the extended
time to complete the Ruvuma divestment and the absence of a
suitable authority to issue shares to raise investment capital,
Scirocco is unable to support further investment until the
completion of Ruvuma is delivered. As a result the Company is aware
that EAG has engaged with other prospective investors who can
support further acquisitions.
Helium One
At 1 January 2023 Scirocco held 2,906,088 shares in Helium One,
1 million of which were the subject of ongoing recovery discussions
with the Pello Capital administrator, Evelyn Partners.
Within the period, 1,906,088 shares in Helium One were sold for
an average price of 7.5p/share.
After the end of the period 1,000,000 shares in Helium One were
delivered to Scirocco following consultation with Evelyn Partners
pursuant to the options exercised by the Company in 2021. These
shares were sold during August 2023 at an average price of
7.5p/share delivering net proceeds of c. GBP75,000.
Scirocco's remaining holding in Helium One is nil shares.
Tom Reynolds
Chief Executive Officer
Date: 29 September 2023
Principal risks and uncertainties
The principal risks facing the Company were set out in the
Company's Annual Report and Accounts to 31 December 2022
As the investment policy is implemented, the Company's risk
profile will continue to evolve due to its exposure to different
assets and markets, and a full statement of risks will be published
in subsequent Annual Report and Accounts.
On behalf of the board
Alastair Ferguson
Non-Executive Chairman
Date: 29 September 2023
Directors' responsibilities
The Directors are responsible for preparing the Interim Report
in accordance with applicable law and regulations.
Company law requires the Directors to prepare Company financial
statements for each financial year. Under AIM Rules for Companies
of the London Stock Exchange they are required to prepare the
Company financial statements in accordance with International
Financial Reporting Standards in conformity with the requirements
of the Companies Act 2006. Under company law the Directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period.
The Directors are also required to prepare financial statements in
accordance with the rules of the London Stock Exchange for
companies trading securities on AIM.
Company law requires the Directors to prepare Company financial
statements for each financial year. Under AIM Rules for Companies
of the London Stock Exchange they are required to prepare the
Company financial statements in accordance with International
Financial Reporting Standards (IFRSs) in conformity with the
Companies Act 2006.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable, relevant and reliable;
-- state whether they have been prepared in accordance with IFRS; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and
the financial statements are made available on the Company's
website. Financial statements are published on the Company's
website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions.
The maintenance and integrity of the Company's website is the
responsibility of the Directors. The Directors' responsibility also
extends to the ongoing integrity of the financial statements
contained therein.
CONDENSED INTERIM STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Six months Six months
ended ended
Notes 30 June 2023 30 June 2022
(Unaudited) (Unaudited)
Continuing operations GBP 000 GBP 000
Administrative expenses 6 (971) (733)
Share of loss from joint venture (40) -
Loss before investment activities (1,011) (733)
Interest income 5 73 65
Gain on disposal of shares 8 16 57
Costs to sell investments (27) (30)
Exchange gain/(loss) 136 72
Fair value through profit and
loss (21) 27
------------ ------------
(Loss)/profit on ordinary activities
before taxation (834) (542)
Income tax expense
- -
------------ ------------
Total comprehensive (loss)/profit
for the period from continuing
operations (834) (542)
------------ ------------
Discontinued operations
Profit/(loss) recognised on
classification as held for sale 9 221 1,314
------------ ------------
Profit/(loss) for the period
from discontinuing operations 221 1,314
------------ ------------
Profit and total comprehensive
income for the period (613) 772
------------ ------------
Total comprehensive income
attributable to owners of the
parent (613) 772
------------ ------------
Earnings per share (pence)
Basic 10 (0.07) 0.10
Diluted 0.10
Earnings per share from continuing 10
operations
Basic (0.09) (0.07)
Diluted
10
Earnings per share from discontinued
operations
Basic 0.02 0.17
Diluted 0.02 0.17
------------ ------------
CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION
As at As at
Notes 30 June 2023 31 December
2022
(Unaudited) (Audited)
GBP 000 GBP 000
Non-current assets
Loan receivable from related party 1,522 1,448
Investment in joint venture 13 - 40
------------ -----------
Total non-current assets 1,522 1,488
Current assets
Trade and other receivables 15 134 210
Cash and cash equivalents 295 750
Financial assets at fair value
through profit or loss 11 58 273
Assets held for sale 14 11,445 10,715
------------ -----------
Total current assets 11,932 11,948
------------ -----------
Total assets 13,454 13,436
------------ -----------
Current liabilities
Trade and other payables 16 487 224
Liabilities held for sale 14 3,478 3,110
Total current liabilities 3,965 3,334
------------ -----------
Net current assets 7,967 8,614
------------ -----------
Total liabilities 3,965 3,334
------------ -----------
Net assets 9,489 10,102
============ ===========
Equity
Share capital 17 1,801 1,801
Deferred share capital 17 1,831 1,831
Share premium reserve 18 38,408 38,408
Share-based payments 19 2,071 2,071
Retained earnings (34,622) (34,009)
------------ -----------
Total equity 9,489 10,102
============ ===========
CONDENSED STATEMENT OF CHANGES IN EQUITY
Deferred Share Share-based Retained Total
Share capital share premium payments earnings
capital
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- -------------- -------------- ---------------- --------------- -----------
Balance at 31
December 2021 1,518 2,729 38,155 1,941 (29,194) 15,149
Profit for the
period - - - - 772 772
Credit to
equity for
equity-settled
share-based
payments - - - 119 - 119
------------------------- -------------- -------------- ---------------- --------------- -----------
Balance at 30
June 2022 1,518 2,729 38,155 2,060 (28,422) 16,040
------------------------- -------------- -------------- ---------------- --------------- -----------
Loss for the
period - - - - (5,587) (5,587)
Issue of share
capital 283 - 253 - - 536
Consideration
received for
shares
to be issued - (898) - - - (898)
Credit to
equity for
equity-settled
share-based
payments - - - 11 - 11
Balance at 31
December 2022 1,801 1,831 38,408 2,071 (34,009) 10,102
------------------------- -------------- -------------- ---------------- --------------- -----------
Profit for the
period - - - - (613) (613)
Balance at 30
June 2023 1,801 1,831 38,408 2,071 (34,622) 9,489
------------------------- -------------- -------------- ---------------- --------------- -----------
CONDENSED INTERIM STATEMENT OF CASH FLOWS
Six months Six months
ended ended
30 June 2023 30 June 2022
(Unaudited) (Unaudited)
GBP 000 GBP 000
Cash flows from operating activities
Cash absorbed by continuing operations
25 (487) (580)
Interest paid (20) -
Net cash outflow from operating activities (507) (580)
------------------------------ -----------------------------------
Cash flows from investing activities
Cash movements in relation to assets
held for sale (509) (381)
Proceeds from disposal of investments 193 -
Loan granted to related party - (70)
------------------------------ -----------------------------------
Net cash (outflow)/inflow from investing
activities (316) (451)
------------------------------ -----------------------------------
Cash flows from financing activities
368 -
Proceeds of long-term borrowings
------------------------------ -----------------------------------
368 -
Net cash (outflow)/inflow from financing
activities
------------------------------ -----------------------------------
Net (decrease)/increase in cash and
cash equivalents (455) (1,031)
------------------------------ -----------------------------------
Cash and cash equivalents at beginning
of period 750 2,059
------------------------------ -----------------------------------
Cash and cash equivalents at end of
period 295 1,028
============================== ===================================
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION
1 BASIS OF PREPARATION
The financial information has been prepared under the historical
cost convention and on a going concern basis and in accordance with
International Financial Reporting Standards and as applied in
accordance with the provisions of the Companies Act 2006. The
principal accounting policies adopted by the Company are set out
below.
The condensed interim financial information for the period ended
30 June 2023 has not been audited or reviewed in accordance with
the International Standard on Review Engagements 2410 issued by the
Auditing Practices Board. The figures were prepared using
applicable accounting policies and practices consistent with those
adopted in the statutory accounts for the year ended 31 December
2022. The figures for the year ended 31 December 2022 have been
extracted from these accounts, which have been delivered to the
Registrar of Companies, and contained an unqualified audit
report.
The condensed interim financial information contained in this
document does not constitute statutory accounts. In the opinion of
the Directors the financial information for this period fairly
presents the financial position, result of operations and cash
flows for this period.
This Interim Financial Report was approved by the Board of
Directors on 29 September 2023.
Statement of compliance
These condensed company interim financial statements have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union with the
exception of International Accounting Standard ('IAS') 34 - Interim
Financial Reporting. Accordingly, the interim financial statements
do not include all of the information or disclosures required in
the annual financial statements and should be read in conjunction
with the Company's 2022 annual financial statements.
2 ADOPTION OF NEW AND REVISED STANDARDS
The accounting policies adopted in the preparation of the
interim financial statements are consistent with those followed in
the preparation of the Company's annual financial statements for
the year ended 31 December 2022, except for the adoption of new
standards effective as of 1 January 2023. The Company has not early
adopted any standard, interpretation or amendment that has been
issued but is not yet effective.
IFRS 17 Insurance contracts
IAS 1 and IFRS Practice Statement 2 Disclosure of accounting policies
IAS 8 (Amendments) Definition of accounting estimates
IAS 12 (Amendments) Deferred tax related to assets and
liabilities arising from a single transaction
IFRS 16 (Amendments) Liability in a Sale and Leaseback
IAS 1 (Amendments) Classification of liabilities as current or
non-current - deferral of effective date
IAS 1 (Amendments) Non-current liabilities with covenants
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Company makes estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial period are discussed below.
Share-based payments (note 17)
The Company utilised an equity-settled share-based remuneration
scheme for employees. Employee services received, and the
corresponding increase in equity, are measured by reference to the
fair value of the equity instruments at the date of grant,
excluding the impact of any non-market vesting conditions. The fair
value of share options is estimated by using Black-Scholes
valuation method as at the date of grant. The assumptions used in
the valuation are described in note 17 and include, among others,
the expected volatility, expected life of the options and number of
options expected to vest.
Recoverability of trade receivables (note 14)
The Company considers the recoverability of trade receivables to
be a key area of judgement. The Company considers trade receivables
to be credit impaired once there is evidence a loss has been
incurred. An expected credit loss is calculated on an annual basis.
The Directors believe that the debtor is still recoverable based on
their knowledge of the market in Tanzania and historical evidence
of similar receivables being paid. The Directors have recognised
the asset as they believe they are still legally entitled to
receive it. The Tanzanian Government have a history of building up
receivables with other companies and billing them at a future
date.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
4 OPERATING SEGMENTS
Based on risks and returns, the Directors consider that the
primary reporting format is by business segment. The Directors
consider that there are two business segments:
-- Head office support from the UK
-- Discontinued operations on its investments in Tanzania
Continuing Discontinued
Operations Operations
6 months to 30 June 2023 UK Tanzania Total
GBP000 GBP000 GBP000
Administrative expenses (971) - (971)
Share of loss in joint venture (40) - (40)
Interest income 73 - 73
Other gains and losses 125 221 346
Fair value through profit and
loss (21) - (21)
Profit/(loss) from operations
per reportable segment (834) 221 (613)
============ ============= =======
Additions to non-current assets 74 - 74
Reportable segment assets 1,935 11,445 13,380
Reportable segment liabilities 487 3,478 3,965
6 months to 30 June 2022 Continuing Discontinuing
Operations Operations
UK Tanzania Total
GBP000 GBP000 GBP000
Administrative expenses (733) - (733)
Interest income 65 - 65
Other gains and losses 99 1,314 1,413
Fair value through profit and
loss 27 - 27
Profit/(loss) from operations
per reportable segment (542) 1,314 772
============ ============== ========
Additions to non-current assets 27 - 27
Reportable segment assets 3,078 13,295 16,373
Reportable segment liabilities (202) (166) (368)
An operating segment is a distinguishable component of the
Company that engages in business activities from which it may earn
revenues and incur expenses, whose operating results are regularly
reviewed by the Company's chief operating decision maker to make
decisions about the allocation of resources and assessment of
performance and about which discrete financial information is
available.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
5 REVENUE
6 months 6 months
to to
30 June 30 June
2023 2022
GBP000 GBP000
Other significant
revenue
Interest income 73 65
Trade receivables accrue interest for non-payment. Outstanding
debtors accrue interest at a rate in accordance with the joint
venture agreement and are generally on terms of 30 days. In 2023,
there is a provision of GBPnil (June 2022: GBPnil) for expected
credit losses on trade receivables.
Interest income relates to interest charged on outstanding
invoices.
6 EXPENSES BY NATURE
6 months 6 months
to 30 June to 30 June
2023 2022
GBP000 GBP000
Continuing operations
Fees payable to the Company's auditor for
the audit of the Company's financial statements (31) (22)
Professional, legal, and consulting fees (430) (291)
AIM related costs including
investor relations (31) (44)
Accounting-related services (98) (73)
Travel and subsidence (2) (7)
Office and administrative
expenses (64) (9)
Other expenses (107) -
Share-based payments - (119)
Directors' remuneration (173) (133)
Wages and salaries and other related costs (35) (35)
(971) (733)
============ ============
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
7 EMPLOYEES
6 months 6 months
to to
30 June 30 June
2023 2022
Average number of employees (excluding executive
directors): 1 1
========= =========
6 months 6 months
to to
30 June 30 June
2023 2022
(unaudited) (unaudited)
GBP000 GBP000
Their aggregate remuneration comprised:
Wages and salaries 22 22
============== ==============
6 months 6 months
to to
30 June 30 June
2023 2022
(unaudited) (unaudited)
GBP000 GBP000
Directors' remuneration 173 133
============== ==============
Salary and Share-based Termination Total
fees payments payments
GBP000 GBP000 GBP000 GBP000
Period ended 30 June 2023
Alastair Ferguson 38 - - 38
Tom Reynolds 75 - - 75
Donald Nicolson 25 - - 25
Muir Miller 20 - - 20
Niall Roberts 8 - - 8
Matt Bower 7 - - 7
----------- ------------ ------------ -------
173 - - 173
=========== ============ ============ =======
Salary and Share-based Termination Total
fees payments payments
GBP000 GBP000 GBP000 GBP000
Period ended 30 June 2022
Alastair Ferguson 37 25 - 62
Tom Reynolds 75 25 - 100
Donald Nicolson 13 37 - 50
Muir Miller 8 20 - 28
Douglas Rycroft - 12 - 12
Niall Roberts - - - -
Matt Bower - - - -
----------- ------------ ------------ -------
133 119 - 252
=========== ============ ============ =======
From February 2020, the Directors opted to defer their salaries
with payments resuming from 2022. Shares in lieu of salary will be
issued for deferred amounts (note 17).
No directors received pension contributions in H1 2023 or
2022.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
8 OTHER GAINS AND LOSSES
6 months 6 months
to to
30 June 30 June
2023 2022
GBP000 GBP000
Gain on disposal of Helium One shares 16 57
16 57
========= =========
9 DISCONTINUED OPERATIONS
The Company has a 25% interest in a high-quality development
project in Tanzania which the Directors are actively seeking to
divest. This stake has been valued at $16m and operations relating
to this stake are detailed below.
The results of the discontinued business, which have been
included in the income statement, balance sheet and cash flow
statement, were as follows:
6 months 6 months
to to
30 June 30 June
2023 2022
GBP000 GBP000
Impairment credit on fair value revaluation 221 1,314
Net profit/(loss) attributable to discontinuation 221 1,314
========= =========
The profit after tax on disposal of the assets held for sale is
made up as follows:
GBP000
Fair value less costs to sell 7,986
Net book value of assets disposed:
Intangible assets (18,877)
Oil and gas properties (380)
Loan to ARA Petroleum 3,292
Decommissioning provision 166
Impairment on fair value revaluation at 31
December 2022 8,034
---------
(7,765)
---------
Impairment on fair value revaluation at 30
June 2023 221
=========
Earnings per share impact from discontinued operations:
6 months 6 months
to to
30 June 30 June
2023 2022
GBP000 GBP000
Basic and diluted impact (pence) 0.02 0.17
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
9 DISCONTINUED OPERATIONS (CONTINUED)
Cash flow statement
6 months 6 months
to to
30 June 30 June
2023 2022
GBP000 GBP000
Net cash flows from investing activities (509) (381)
--------- ---------
Total cash flows from discontinued operations (509) (381)
========= =========
10 EARNINGS PER SHARE
The calculation of earnings per share is based on the loss after
taxation divided by the weighted average number of shares in issue
during the period:
Six months Six months
to to
30 June 2023 30 June
2022
(Unaudited) (Unaudited)
Weighted average number of ordinary shares
for basic profit/loss per share (000) 900,496 758,790
Weighted average number of ordinary shares
for diluted profit/loss per share (000) 1,022,703 758,790
GBP000 GBP000
Earnings
Continuing operations
(Loss)/profit for the period from continued
operations (834) (542)
============ ===========
Discontinued operations
Profit/(loss) for the period from discontinued
operations 221 1,314
============ ===========
Basic earnings per share (pence)
From continuing operations (0.09) (0.07)
From discontinuing operations 0.02 0.17
------------ -----------
(0.07) 0.10
Diluted earnings per share (pence)
From continuing operations - -
From discontinuing operations 0.02 0.17
------------ -----------
As the inclusion of the potential ordinary shares would result
in a decrease in the loss per share, they are anti-dilutive and, as
such, a diluted loss per share is not included.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
11 INVESTMENTS
Quoted Equity Investments
Cost 30 June 31 December
2023 2022
GBP000 GBP000
Quoted equity investments 58 206
Unquoted equity investments - 67
------- -----------
58 273
------- -----------
The quoted investments in the current year relate to an equity
investment held in Helium One Ltd, a company incorporated in the
British Virgin Islands. Their subsidiaries hold helium mining
licenses across Tanzania.
The shares held have been valued at the mark-to-market value of
5.75p per share at 30 June 2023. During the period to 30 June 2023,
the Company disposed of 1,906,088 shares. On disposal of the shares
the investment was revalued to the mark-to-market value on the
various dates of disposal and a subsequent gain or loss
recognised.
Unquoted Equity Investments
Cost GBP000
At 1 January 2022 125
Remeasurement (58)
------
At 31 December 2022 67
Disposal
------
At 31 December and 30 June 2023 (67)
Carrying amount
At 30 June 2023 -
======
The unquoted investments in the current period relate to an
equity investment held in Corallian Energy Limited, a company
incorporated in England which holds interests in oil and gas basins
in the United Kingdom.
12 SUBSIDIARIES
Details of the company's subsidiaries at 30 June 2023 are as
follows:
Name of undertaking Registered office Principal activities Class % held
of shares Direct
held
Scirocco Energy 1 Park Row, Leeds, United Dormant Holding
International Limited Kingdom, LS1 5AB Company Ordinary 100.00
Scirocco Energy 1 Park Row, Leeds, United Investment Holding
(UK) Limited Kingdom, LS1 5AB Company Ordinary 100.00
The results of all subsidiaries are included within the
consolidated results of Scirocco Energy plc.
Under section 479A of the Companies Act 2006, Scirocco Energy
PLC agrees that Scirocco Energy (UK) Limited is exempt from audit.
Under section 479C, Scirocco Energy PLC guarantees all outstanding
liabilities for the subsidiary.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
13 JOINT VENTURES
The Group has a 50% (2022: 50%) interest in joint venture,
Energy Acquisitions Group Limited, a company incorporated in
Northern Ireland. The primary activity of Energy Acquisitions Group
Limited is to acquire and finance renewable energy assets in the
United Kingdom.
The Group's interest in EAG is accounted for using the equity
method in the consolidated financial statements. Summarized
financial information of the joint venture, and reconciliation with
the carrying amount of the investment in the consolidated financial
statements at 30 June 2022 are set out below:
Name of undertaking Registered office Principal activities Class % held
of shares Direct
held
32 Lodge Road, Coleraine, Investment in
Energy Acquisitions Northern Ireland, BT52 renewable energy
Group Limited 1NB assets Ordinary 50.00
Energy Acquisitions Group Limited consolidated summary statement
of financial position (unaudited)
2023 2022
GBP000 GBP000
Non-current assets 3,039 2,960
Current assets 493 593
Current liabilities (98) (113)
Non-current liabilities (3,290) (3,360)
The following amounts have been included
in the amounts above
Cash and cash equivalents 223 326
Current financial liabilities (98) (113)
Non-current financial liabilities (3,290) (3,360)
Net assets (100%) 144 80
Group share of net assets (50%) 72 40
Energy Acquisitions Group Limited consolidated summary profit
and loss account (unaudited)
2023 2022
GBP000 GBP000
Revenue 574 1,414
Direct costs (318) (561)
Overhead and administrative expenses (205) (297)
Interest payable and similar expenses (135) (334)
Profit for the financial year (84) 222
========================= ========
The following amounts have been included
in the amounts above
Depreciation and amortization 33 62
Interest income - -
Interest expense 135 334
Income tax expense - -
There were no dividends received from the joint venture during
the year and there are no dividends forecast.
The joint venture had no contingent liabilities or commitments
as at 30 June 2023 and 2022. The financial statements of the JV are
prepared for the same reporting period as the Group. When
necessary, adjustments are made to bring the accounting policies in
line with those of the Group. Presentation of the summarized
financial information has been made on the basis of the Joint
Venture's published financial statements.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
14 ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE
30 June 2023 31 December
2022
GBP000 GBP000
Intangible assets 11,445 10,714
Total assets classified as held for
sale 11,445 10,714
========================== ============
Loan 3,312 2,944
Decommissioning provision 166 166
-------------------------- ------------
3,478 3,110
========================== ============
At the date of authorization of these interim financial
statements, it was determined that a sale would be highly probable,
following the approval of shareholders at the general meeting on 29
June 2022.
15 TRADE AND OTHER RECEVIABLES
30 June 2023 31 December
2022
GBP000 GBP000
Other receivables 91 96
Less provision for expected credit losses - -
-------------------------- ------------
91 96
VAT recoverable 32 74
Prepayments 11 40
134 210
========================== ============
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
16 TRADE AND OTHER PAYABLES
30 June 2023 31 December
2022
GBP000 GBP000
Trade payables 100 38
Accruals 384 65
Other payables 3 121
------------------------- ------------
487 224
========================= ============
The Directors consider that the carrying amount of trade
payables approximates to their fair value.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
17 SHARE CAPITAL
Number of Nominal value
shares
GBP000
a) Called up, allotted, issued and fully
paid: Ordinary shares of 0.2 pence each
As at 31 December 2021 758,787,925 1,518
24 January 2022 - placing for cash at
0.72 pence 20,465,467 40
18 March 2022 - placing for cash at 0.54
pence 28,490,028 57
6 May 2022 - placing for cash at 0.46
pence 17,459,747 35
21 July 2022 - placing for cash at 0.28
pence 30,369,291 61
27 September 2022 - placing for cash
at 0.20 pence 44,923,630 90
----------------- --------------
At 31 December 2022 and 30 June 2023 900,496,088 1,801
================= ==============
30 June 2023 31 December
GBP000 2022
GBP000
b) Deferred shares
At beginning of the period 1,831 2,729
Shares not issued moved to deferred share
capital - 19
Issue of new shares - (556)
Cash settlement of shares not issued - (180)
Reclassify shares not issued as current
liability (181)
----------------- --------------
1,831 1,831
================= ==============
c) Total share options in issue
During the period no incentive options were granted (2022: nil).
As at June 30 2022 there were 51,419,781 incentive options in issue
(2022: 51,419,781).
During the period there were no share options in lieu of salary
and/or fees due to the relevant option holders were granted (2022:
10,193.284). As at 30 June 2023 there were 54,246,990 share options
in lieu of salary and/or fees in issue (2022: 44,053,706).
d) Total warrants in issue
All warrants lapsed in the prior year and no warrants were
issued, cancelled or exercised during the period (2022: no warrants
were issued).
18 SHARE PREMIUM ACCOUNT
30 June 2023 31 December
GBP000 2022
GBP000
At beginning of the period 38,408 38,399
Issue of new shares - 253
38,408 38,408
============ ===========
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
19 SHARE BASED PAYMENT
The Company has opted to remunerate the Directors for the period
to 30 June 2022 by a grant of an option over the Ordinary Shares of
the capital of the Company as detailed in the deed of option
grants. The life of the options is 18 months. There were 3
executive directors and 2 non-executive directors who are members
of the plan. The following table summarizes the expense recognized
in the Statement of Comprehensive Income since the options were
granted.
30 June 2023 31 December
2022
GBP000 GBP000
Directors' options - 32
Incentive options - 87
Credit to equity for equity-settled share-based
payments - 119
========================= ============
During June 2020 (and the height of the Covid-19 pandemic) the
Company sought to put in place a strategy that would help to
conserve the Company's cash position in the near term and to
maximise alignment between the Board, Management team and
Shareholders.
Accordingly, the Company proposed to grant nominal cost options
over new Ordinary Shares of 0.2p (GBP0.002) to Directors and select
members of the Management Team ("the Director Options"). The award
of Director Options ceased in August 2022 and the total options
issued up to this date were 70,787,245.
In 2021, members of the Management Team were also awarded
options over Ordinary Shares with an exercise price of 1.3p
(GBP0.013) ("the Incentive Options"), which was approximately a 24%
premium to the closing mid-market price of the Company's Ordinary
Shares on 26June 2020. Each Incentive Option is ordinarily
exercisable on the 3rd anniversary of the grant date (being 30 June
2023), except in the event of specified corporate events or,
exceptionally, if the option holder leaves as a 'good leaver'. No
further Incentive Options were awarded in the period ended June
2023 or in the year ended December 2022.
The Company used the Black-Scholes model to determine the value
of the incentive options and the inputs. There were no incentive
share options for the period ended 30 June 2023. The value of the
options and the inputs for the period ended 30 June 2023 were as
follows:
Issue 30 June 2020
Incentive options
Share price at grant (pence) 1.09
Exercise price at grant (pence) 1.30
Expected volatility (%) 84.42
Expected life (years) 6
Risk free rate (%) 0.17
Expected dividends (pence) nil
Expected volatility was determined using the Company's share
price for the preceding 3 years.
The total share-based payment expense in the period for the
Company was GBPnil in relation to the issue of incentive options
(2022: GBP86,806) and GBPnil finance charges in relation to
warrants (2022: GBPnil).
The Incentive Options granted represent approximately 6.8% of
the Company's issued share capital (excluding warrants issued to
Prolific Basins LLC). The Board has retained additional headroom
for additional Incentive Options as it recognises that the future
performance of the Company will be dependent on its ability to
retain the services of key executives.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
20 FINANCIAL INSTRUMENTS
Categories of financial instruments
The following table combines information about:
-- Classes of financial instruments based on their nature and characteristics; and
-- The carrying amounts of financial instruments
30 June 2023 31 December
2022
GBP000 GBP000
Financial assets at amortised cost
Other debtors 91 96
Prepayments 11 40
Cash and cash equivalents 295 750
Loan receivable from related party 1,522 1,448
1,919 2,334
========================= =============
Book value Fair value Book value Fair value
30 June 30 June 2023 31 Dec 2022 31 Dec 2022
2023
GBP000 GBP000 GBP000 GBP000
Financial assets at fair
value
Non-current investment -
Helium One 58 58 206 206
Non-current investment -
Corallian Energy Limited - - 67 67
58 58 273 273
=========== ========================= ============= =============
30 June 2023 31 December
2022
GBP000 GBP000
Financial liabilities at amortised cost
Trade payables 100 38
Accruals 384 65
Other payables 3 121
487 224
========================= ============
The table below analyses financial instruments carried at fair
value, by valuation method.
Fair values are categorized into different levels in a fair
value hierarchy based on the inputs used in the valuation
techniques as follows:
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e., as prices) or indirectly (i.e., derived from prices).
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
The fair values for the Company's assets and liabilities are not
materially different from their carrying values in the financial
statements.
The following table presents the Company's financial assets that
are measured at fair value:
Level Level Level 3 Total
1 2
GBP000 GBP000 GBP000 GBP000
Non-current investment
- Helium One 58 - - 58
58 - - 58
======= ======= ======== =======
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
20 FINANCIAL INSTRUMENTS (CONTINUED)
The Company does not have any liabilities measured at fair
value. There have been no transfers in to or transfers out of fair
value hierarchy levels in the period.
Financial instruments in level 1
The fair value of financial instruments traded in active markets
is based on quoted market prices at the reporting date. A market is
regarded as active if quoted prices are readily and regularly
available from an exchange, dealer, broker, industry group, pricing
service, or regulatory agency, and those prices represent actual
and regularly occurring market transactions on an arm's length
basis. The quoted market price used for financial assets held by
the Company is the current bid price.
Financial instruments in level 2
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. These
valuation techniques maximize the use of observable market data
where it is available and rely as little as possible on entity
specific estimates. If all significant inputs required to fair
value an instrument are observable, the instrument is included in
level 2. No investments are valued using level 2 inputs in the
period.
Financial instruments in level 3
If one or more of the significant inputs is not based on
observable market data, the instrument is included in level 3.
Following the guidance of IFRS 9, these financial instruments have
been assessed to determine the fair value of the instrument. In
their assessment, the Directors have considered both external and
internal indicators to decide whether an impairment charge must be
made or whether there needs to be a fair value uplift on the
instrument.
The carrying value of the Company's financial assets and
liabilities measured at amortised cost are approximately equal to
their fair value. The Company is exposed through its operations to
one or more of the following financial risks:
-- Fair value or cash flow interest rate risk
-- Foreign currency risk
-- Liquidity risk
-- Credit risk
-- Market risk
-- Expected credit losses
Policy for managing these risks is set by the Board. The policy
for each of the above risks is described in more detail below.
Fair value and cash flow interest rate risk
Generally, the Company has a policy of holding debt at a
floating rate. The Directors will revisit the appropriateness of
this policy should the Company's operations change in size or
nature. Operations are not permitted to borrow long-term from
external sources locally.
Foreign currency risk
Foreign exchange risk arises because the Company has operations
located in various parts of the world whose functional currency is
not the same as the functional currency in which the Company's
investments are operating. The Company's net assets are exposed to
currency risk giving rise to gains or losses on retranslation into
sterling. Only in exceptional circumstances will the Company
consider hedging its net investments in overseas operations as
generally it does not consider that the reduction in volatility in
net assets warrants the cash flow risk created from such hedging
techniques.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
20 FINANCIAL INSTRUMENTS (CONTINUED)
The Company's exposure to foreign currency risk at the end of
the reporting period is summarized below.
30 June 2023 31 December
2022
$000 $000
USD USD
Trade and other receivables 115 116
Cash and cash equivalents 372 878
Trade and other payables - -
Net exposure 487 994
============= ============
Sensitivity analysis
As shown in the table above, the Company is primarily exposed to
changes in the GBP:USD exchange rate through its cash balance held
in USD and trading balances. The table below shows the impact in
GBP on pre-tax profit/loss of a 10% increase/decrease in the
GBP:USD exchange rate, holding all other variables constant.
30 June 2023 31 December
2022
GBP000 GBP000
GBP:USD exchange rate increases 10% 32 136
GBP:USD exchange rate decreases 10% (30) (69)
Liquidity risk
The liquidity risk of each entity is managed centrally by the
treasury function. Each operation has a facility with treasury, the
amount of the facility being based on budgets. The budgets are set
locally and agreed by the Board annually in advance, enabling the
cash requirements to be anticipated. Where facilities of the Group
need to be increased, approval must be sought from the finance
Director. Where the amount of the facility is above a certain
level, agreement of the Board is needed.
All surplus cash is held centrally to maximize the returns on
deposits through economies of scale. The type of cash instrument
used, and its maturity date will depend on the forecast cash
requirements.
The table below analyses the Company's financial liabilities
into relevant maturity groupings based on their contractual
maturities. The amounts presented are the undiscounted cash
flows.
Less than 6 to 12 Between Between
6 months months 1 and 2 years 2 and 5 years
GBP000 GBP000 GBP000 GBP000
30 June 2023
Trade and other payables 487 - - -
Total 487 - - -
========== ======== =============== ===============
31 December 2022
Trade and other payables 224 - - -
Total 224 - - -
====
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
20 FINANCIAL INSTRUMENTS (CONTINUED)
Credit risk
The Company is mainly exposed to credit risk from credit sales.
It is Company policy, implemented locally, to assess the credit
risk of new customers before entering contracts. Such credit
ratings are taken into account by local business practices.
The Company does not enter into complex derivatives to manage
credit risk, although in certain isolated cases may take steps to
mitigate such risks if it is sufficiently concentrated.
Market risk
As the Company invests in listed companies, the market risk will
be that of finding suitable investments for the Company to invest
in and the returns that those investments will yield given the
markets in which investments are made.
Expected credit losses
Allowances are recognized as required under the IFRS 9
impairment model and continue to be carried until there are
indicators that there is no reasonable expectation of recovery.
For trade and other receivables which do not contain a
significant financing component, the Company applies the simplified
approach. This approach requires the allowance for expected credit
losses to be recognized at an amount equal to lifetime expected
credit losses. For other debt financial assets, the Company applies
the general approach to providing for expected credit losses as
prescribed by IFRS 9, which permits for the recognition of an
allowance for the estimated expected loss resulting from default in
the subsequent 12-month period. Exposure to credit loss is
monitored on a continual basis and, where material, the allowance
for expected credit losses is adjusted to reflect the risk of
default during the lifetime of the financial asset should a
significant change in credit risk be identified.
Most the Company's financial assets are expected to have a low
risk of default. A review of the historical occurrence of credit
losses indicates that credit losses are insignificant due to the
size of the Company's clients and the nature of the services
provided. The outlook for the oil and gas industry is not expected
to result in a significant change in the Company's exposure to
credit losses. As lifetime expected credit losses are not expected
to be significant the Company has opted not to adopt the practical
expedient available under IFRS 9 to utilize a provision matrix for
the recognition of lifetime expected credit losses on trade
receivables. Allowances are calculated on a case-by-case basis
based on the credit risk applicable to individual
counterparties.
Exposure to credit risk is continually monitored to identify
financial assets which experience a significant change in credit
risk. In assessing for significant changes in credit risk the
Company makes use of operational simplifications permitted by IFRS
9. The Company considers a financial asset to have low credit risk
if the asset has a low risk of default; the counterparty has a
strong capacity to meet its contractual cash flow obligations in
the near term; and no adverse changes in economic or business
conditions have been identified which in the longer term may, but
will not necessarily, reduce the ability of the counterparty to
fulfil its contractual cash flow obligations. Where a financial
asset becomes more than 30 days past its due date additional
procedures are performed to determine the reasons for non-payment
to identify if a change in the exposure to credit risk has
occurred.
Should a significant change in the exposure to credit risk be
identified the allowance for expected credit losses is increased to
reflect the risk of expected default in the lifetime of the
financial asset. The Company continually monitors for indications
that a financial asset has become credit impaired with an allowance
for credit impairment recognised when the loss is incurred. Where a
financial asset becomes more than 90 days past its due date,
additional procedures are performed to determine the reasons for
non-payment to identify if the asset has become credit
impaired.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
20 FINANCIAL INSTRUMENTS (CONTINUED)
The Company considers an asset to be credit impaired once there
is evidence that a loss has been incurred. In addition to
recognizing an allowance for expected credit loss, the Company
monitors for the occurrence of events that have a detrimental
impact on the recoverability of financial assets. Evidence of
credit impairment includes, but is not limited to, indications of
significant financial difficulty of the counterparty, a breach of
contract or failure to adhere to payment terms, bankruptcy or
financial reorganization of a counterparty or the disappearance of
an active market for the financial asset. A financial asset is only
written off when there is no reasonable expectation of
recovery.
The Company employs the simplified approach to make an estimate
of ECL. There are no outstanding balances as at 30 June 2023
resulting in an ECL of GBPnil in the current year.
21 RELATED PARTY TRANSACTIONS
The only transactions between the Company and related parties
are between the parent and its subsidiaries, relating to a loan
from parent to Scirocco (UK) limited, and interest charged on this
loan. Details of Director's remuneration, being key personnel, are
given in note 7. The company did not enter into any other
transactions with entities having shared or related directors
during the periods presented.
22 ULTIMATE CONTROLLING PARTY
In the opinion of the Directors there is no controlling
party.
23 COMMITMENTS
As at 30 June 2023, the Company had no material commitments (31
December 2022: GBPnil).
24 RETIREMENT BENEFIT SCHEME
The Company operates only the basic pension plan required under
UK legislation, contributions thereto during the period amounted to
GBPnil (31 December 2022: nil).
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
25 CASH GENERATED BY OPERATIONS
30 June 2023 30 June 2022
GBP000 GBP000
Profit/(loss) for the period from continuing
operations (834) (542)
Profit/(loss) for the period for discontinuing
operations 221 1,314
Adjustments for:
Finance costs - -
Exchange movement 2 -
Revaluation of investments to mark-to-market
value 22 (81)
(Profit)/loss on fair value revaluation
of available for sale assets (221) (1,314)
Interest accrued on loan to related party (73) (65)
Equity settled share-based payment expense - 119
Share of loss in joint venture 40
Movements in working capital:
(Increase)/decrease in trade and other
receivables 76 (35)
Increase in trade and other payables 280 24
Cash absorbed by operations (487) (580)
========================= ===================
26 EVENTS AFTER THE REPORTING DATE
Ruvuma Operations Update
On 12 July 2023 the Company provided an operational update
regarding the Ruvuma asset noting the significant progress made by
the JV in the development of the Ruvuma license which provides
improved clarity regarding the timing of contingent payments under
the sale arrangements between ARA Petroleum Tanzania and
Scirocco.
Highlights:
-- Following analysis of the results of the initial 3D seismic
processing and interpretation, the JV partners have chosen a new
optimal target location of the Chikumbi-1 well ("CH-1"). The
Tanzanian authorities have given provisional approval of the new
CH-1 well pad location and final written approval is expected
imminently.
-- The full processing of the 3D seismic data is now complete.
Given the vast volume of data acquired, interpretation is now due
to be completed in Q4 2023, which may result in a full revision of
gas reserve and resource potential for the field.
-- A well-workover of the Ntorya-1 well ("NT-1"), to enable
rapid tie-in to the gas production facilities and bring the well
into early production requires the use of a drilling rig and
remains scheduled to run after the drilling of CH-1.
-- The Gas Sales Agreement ("GSA") in respect of the Ntorya Gas
Field has now been agreed among the JV partners and the Tanzania
Petroleum Development Corporation ("TPDC"). Signing of the GSA will
take place upon approval by the Attorney General's Office.
-- The Field Development Plan ("FDP") for the development of the
Ntorya Area has now been approved by all parties.
-- The Development Licence for the Ntorya Area has been approved
by all relevant Tanzanian authorities and has been submitted to the
Cabinet of Ministers for final authorisation.
NOTES TO CONDENSED INTERIM FINANCIAL INFORMATION (CONTINUED)
26 EVENTS AFTER THE REPORTING DATE (CONTINUED)
-- The Tanzanian authorities have continued with the necessary
workstreams to progress the construction of the export pipeline
from Ntorya to the Madimba Gas Plant to accommodate gas, according
to recent public reports, by December 2023.
-- APT recently received the first shipment of long lead items,
including tubulars, required for the spudding of the CH-1 well.
-- The two-week well-testing programme on the Ntorya-2 well
("NT-2"), designed to provide additional information required for
the design of in-field processing facilities, and originally
scheduled for late March 2023, is now expected to run in the coming
months.
Ruvuma Transaction Update - Tax Clearance Received
On 3 August 2023, The Company announced that it had received
confirmation from the Tanzania Revenue Authority ("TRA") of the
assessed tax liability of c. GBP150k, which was in line with the
Company's expectations, and which has now been paid by the Company.
The TRA issued a Tax Clearance Certificate to Scirocco on 3rd
August 2023 representing a major milestone towards final
completion.
Scirocco then wrote to the Tanzanian Minister for Energy to
obtain the final approval of the transfer of the licence interest
to APT. On receipt of this approval, all conditions precedent to
the transaction will be satisfied and Scirocco and its counterparty
ARA Petroleum Tanzania can proceed to complete the transaction by
the amended long stop date.
Ruvuma Transaction Update - longstop date extension
On 29 August 2023, the Company announced that whilst significant
progress had been made delivering the necessary approvals from the
relevant Tanzanian government authorities it had agreed with its
counterparty APT to extend the longstop for the Ruvuma transaction
to 30 September 2023 to allow sufficient time to achieve the final
approval from the Minister of Energy.
Helium One Shares Recovered and Sold
During August 2023, the Company successfully recovered 1 million
Helium One shares which had been "trapped" after Pello Capital
entered administration in October 2022. These shares were sold
during August 2023 delivering net proceeds of c. GBP75k.
Ruvuma Transaction Update - longstop date extension
On 28 September 2023, the Company announced that whilst
significant progress had been made delivering the necessary
approvals from the relevant Tanzanian government authorities it had
agreed with its counterparty APT to extend the longstop for the
Ruvuma transaction to 20 October 2023 to allow sufficient time to
achieve the final approval from the Minister of Energy.
27 A COPY OF THIS INTERIM STATEMENT IS AVAILABLE ON THE
COMPANY'S WEBSITE: www.sciroccoenergy.com.
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END
IR FFFVIAEITFIV
(END) Dow Jones Newswires
September 29, 2023 02:00 ET (06:00 GMT)
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