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Altona Energy Plc (ANR)

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Wednesday 11 March, 2020

Altona Energy Plc

Final Results

11 March 2020

ALTONA ENERGY PLC
(“Altona” or “the Company”)

Final Results

For the Year Ended 30 June 2019

Altona Energy plc (NEX: ANR.PL), a mining exploration company focused on the evaluation, development and extraction of coal assets in South Australia though the process of in-situ gasification, announces its final results for the year ended 30 June 2019.

HIGHLIGHTS

  • Non-renewal of historic Arckaringa mining tenements significantly reducing commitments
  • Leading to a one-off Impairment Charge of £11 million for the year
  • Negotiating the acquisition of new Petroleum Exploration Licence in South Australia
  • 2020 strategy to commence In-Situ Gasification project once funding is in place
  • Open Offer announced on 11 March 2020 to fund new operations

For further information, please visit www.altonaenergy.com or contact:

Altona Energy plc
Qinfu Zhang, Executive Director
Philip Sutherland, Non-Executive Director

+44 (0) 7795 168 157
+61 (0)402 440 339 
Alfred Henry Corporate Finance Ltd (NEX Corporate Adviser)
Jon Isaacs / Nick Michaels


+44 (0) 20 3772 0021
Leander (Financial PR)
Christian Taylor- Wilkinson

 

+44 (0) 7795 168 157

Company Information

Altona is an exploration company focused on the evaluation, development and extraction of coal assets in South Australia though the process of in-situ gasification. 

The Company was admitted to trading on AIM on 10 March 2005 and was subsequently admitted to NEX on 1 February 2019.  A copy of its admission documents dated 4 March 2005 can be accessed on its website, www.altonaenergy.com.  This website is where items can be inspected under Rule 75 of the NEX Rules for Issuers, from 1 February 2019.

EXECUTIVE CHAIRMAN’S STATEMENT

The year under review, to 30 June 2019, was a time of major change for the Company, as it tightened its board structure and repositioned itself closer to its historic mining roots in South Australia.

A number of initiatives which were started in 2018, were subsequently cancelled at the start of 2019, following the resignation and dismissal of a number of directors from the board, at the Annual General Meeting held on 25 January 2019. Specifically, these lapsed initiatives involved a partnership with the pyrolysis company Leinad Ltd and a possible coal project on the Willoughby seam in the Company’s Westfield tenement.

Further, the year in general was harmful for both the profile and valuation of the Company, where we saw the share price fall from 325p on 3 July 2018 (factoring in the 1000 to 1 share consolidation of 18 October 2018) to 16.5p on 31 January 2019, when the Company lost its AIM listing and moved to the NEX Exchange Growth Market. As Executive Chairman, I am the first to apologise to shareholders for the lack of any clear operational direction during 2018 and also the unfortunate association the Company had with a number of disruptive investors, all of whom are no longer shareholders of the Company.

In the first half of 2019, the board explored the possibility of an investment into an operational vanadium mining company in the Shaanxi region of China, which involved a great deal of due diligence, including an in-depth visit to the mine by the Company’s UK based director. After weighing up the changing economic and industry factors, it was decided, in October 2019, not to go ahead with the investment.

Also in the first half of 2019, the Company continued to look to further its interests in the in-situ gasification (“ISG”) sector in South Australia, where, over the years, we have collated a lot of information on the market dynamics, technological advantages and product usage. The Company has always held a strong relationship with the region’s Department for Mining and Energy, through its long-term Australian director Philip Sutherland. And, although the process to assess and ”find” the right coal-bearing tenement for Altona has been long, the Company announced on 21 November 2019, that it had entered into negotiations to acquire a Petroleum Exploration Licence Application (“PELA”) over a tenement close to its existing Exploration Licences.

Board Changes

On 24 January 2019, Nicholas Lyth and Henry Kloepper resigned with immediate effect as Chief Executive Director and a non-Executive Director, respectively. On 25 January 2019, at the Company’s AGM, the resolutions to re-appoint Robert Hales and Timothy Jones as non-Executive Officers were not passed and, subsequently both were asked to leave the board with immediate effect.

Philip Sutherland, a director of Altona since 2004 and who had resigned his position in December 2018,

was reappointed as a non-Executive Director on 1 March 2019.

On 19 November 2019, Ma Chi, the board representative of the Company’s long-term joint venture partner, Sino-Aus Energy Group Ltd, resigned as a non-Executive Officer with immediate effect, following the termination of the joint venture agreement.

The Directors appreciate that the current board make-up is smaller than many listed companies. With this is mind we are currently meeting with individuals who have a good knowledge of the mining and energy sectors, as well as those with connections to the capital markets in London and Australia.

Financial Review

During the period under review the Group made a loss before taxation of £11,657,000 (2018: loss £645,000). The majority of the loss before tax relates to the impairment of the intangibles assets of £11,033,000, due to the Company relinquishing its ownership of its three historic Exploration Licences in the Arckaringa Basin. These tenements cannot become an operational asset for the Company, due to the PELA needed to perform ISG is owned by another entity and it is the Board’s belief that the costs to maintain them are counter-productive to the Company’s current strategic focus.

The Company has focused on reducing unnecessary costs from the business, by streamlining the board and closing its office in Adelaide. Further, the main London office has been changed to be that of its financial PR adviser and non-Executive Director, where no charge is being levied. The Company’s Chairman, Qinfu Zhang has taken a reduction in salary to £25,000 from £105,000 for a period of 12 months, effective from 1 December 2019.

As at 30 June 2019, the Group was in an overdraft position of £96,000 (30 June 2018: cash at bank of £391,000)

The Company was admitted to trading on the NEX Exchange Growth Market on 1 February 2019, following a 14-years listing on AIM.

Post Balance Sheet Events – Negotiations to acquire PELA 517

As mentioned above, the Company is now in exclusive talks with a third party, Ahava Energy PTY Ltd, to acquire a new mining licence in South Australia. This licence, a Petroleum Exploration Licence Application (“PELA”) will allow the Company to commence exploration into a viable ISG project (also known as Underground Coal Gasification, or UCG). In 2015, when the Company was at the cusp of starting a similar project, it was informed that it did not own the necessary PELA over its three tenements, which put a halt to the project.

The new tenement covered by the PELA is close to the Company’s historic Arckaringa tenements and covers 5,000 sq kms, twice the size of the existing tenements. The tenement is divided into two areas; a smaller northern area which overlaps the Company’s historic Exploration Licences at Westfield and Murloocoppie to the north and west, respectively, and a significantly sized southern area (over 4,000 sq km), of which 50% crucially sits outside the environmentally sensitive Great Artesian Basin, meaning issues, caused by the natural aquifer of the basin, will be substantially less.

The more significant and potentially more rewarding southern area of the PELA, whilst never having been tested for deep coal deposits suitable for the ISG process is, however, situated between other major coal bearing tenements, providing enough evidence for WSP to warrant further investigation. Should this exploration be successful (i.e. by finding at least two coal bearing deposits between 100m and 1,400m – the depth most suitable for ISG), the Company will look to quickly move towards obtaining the necessary permits and funding to start a test production facility, within 2-3 years.

It has been suggested by WSP Australia Pty, the Company’s mining consultant, that the longer term plan could be for the Company to create an “Energy Precinct”, utilising wind and solar energy to reduce costs for the extraction process, leading to the supply of power (as well as chemical by-products, such as liquid ammonia, hydrogen, ethanol and other synthetic fuels) to the South Australian and broader markets.

The Company will need to raise funds in order to acquire the new PELA and to pay for the initial exploration work, as well as for general working capital purposes.

Outlook

The Company is now poised to begin new explorations on PELA 517, should a successful fund raising be completed and the licence acquired. The short-term work plan is then to appoint WSP to carry out the first stages of investigation, ahead of a drilling programme which could begin as soon as early 2021.

Therefore, I think it is fair and only right to now draw a line under the past 18 months and start looking forward to the potential benefits of this new ISG project, which has the strong likelihood of increasing shareholder value, in a market where the end products are much in demand.

Qinfu Zhang
Executive Chairman
Altona Energy Plc
11 March 2020


 

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME

For the year ended 30 June 2019

Group
Notes 2019
GBP’000
2018
GBP’000
Administrative expenses (624) (645)
Impairment expense 8 (11,033) -
Operating loss 4 (11,657) (645)
Loss before taxation (11,657) (645)
Tax (charge) / credit 7 - -
Loss for the year attributable to the
equity holders of the parent
(11,657) (645)
Other comprehensive income
Exchange differences on translating foreign operations that may be subsequently reclassified to profit or loss (187) (575)
Total comprehensive income attributable to the equity holders of the parent (11,844) (1,220)
Earnings per share (expressed in pence per share)
- Basic attributable to the equity holders of the parent

6
(894.84)p (63.05)p
- Diluted attributable to the equity holders of the parent 6 (894.84)p (63.05)p

All of the above operations during the year are continuing.

STATEMENTS OF FINANCIAL POSITION

As at 30 June 2019

Notes Group
2019
GBP’000
Group
2018
GBP’000
Company
2019
GBP’000
Company
2018
GBP’000
ASSETS
Non-current assets
Intangible assets 8 - 11,219 - -
Investment in subsidiaries 9 - - - 1,432
Other receivables 10 3 3 - 11,096
Total non-current assets 3 11,222 - 12,528
Current assets
Trade and other receivables 10 32 38 32 37
Cash and cash equivalents - 391 - 211
Total current assets 32 429 32 248
TOTAL ASSETS 35 11,651 32 12,776
Current liabilities
Trade and other payables 11 310 91 310 84
Total current liabilities 310 91 310 84
TOTAL LIABILITIES 310 91 310 84
NET ASSETS (275) 11,560 (278) 12,692
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital 12 1,431 1,427 1,431 1,427
Share premium 18,697 18,692 18,697 18,692
Merger reserve 2,001 2,001 2,001 2,001
Foreign exchange reserve 1,224  1,411  - -
Retained deficit (23,628) (11,971) (22,407) (9,428)
TOTAL EQUITY (275) 11,560 (278) 12,692

The loss within the parent company financial statements for the year was £12,979,000 (2018: £489,000).

The financial statements were approved by the Board and authorised for issue on 11 March 2020.

STATEMENTS OF CASH FLOWS

For the year ended 30 June 2019

Group Company
2019
GBP’000
2018
GBP’000
2019
GBP’000
2018
GBP’000
Cash flows from Operating activities
(Loss)/profit for the year before taxation (11,657) (645) (12,979) (489)
Shares issued for services 9 - 9 -
Impairment of intangibles 11,033 - - -
Impairment of i/c loan / investment in subsidiary - - 12,434 -
(Increase)/decrease in receivables 6 (24) 6 (24)
Increase/(decrease) in payables 123 (11) 129 (11)
Cash used in operations (486) (680) (401) (524)
Income tax benefit received - - - -
Net cash used in operating activities (486) (680) (401) (680)
Cash flows from Investing activities
Loans (to) / from subsidiaries - - 94 (324)
Interest received - - - -
Net cash generated from/(used in) investing activities - - 94 (324)
Cash flows from Financing activities
Proceed from bank overdraft 96 - 96 -
Proceeds from issue of shares - 1,095 - 1,095
Costs of issue - (46) - (46)
Net cash inflow from financing 96 1,049 96 1,049
Net increase/(decrease) in cash and cash equivalents (390) 369 (211) 201
Cash and cash equivalents at beginning of the year 391 15 211 10
Effect of exchange rate changes on cash and cash equivalents (1) 7 - -
Cash and cash equivalents at 30 June - 391 - 211

STATEMENTS OF CHANGES IN EQUITY

For the year ended 30 June 2019

Attributable to equity holders of the parent

Share capital Share
Premium
Merger reserve Foreign exchange reserve Retained deficit Total equity
Group GBP’000 GBP’000 GBP’000 GBP’000 GBP’000 GBP’000
As at 1 July 2017 892 18,178 2,001 1,986 (11,326) 11,731
Profit/(loss) for the year - - - - (645) (645)
Other comprehensive income - - - (575) - (575)
Total comprehensive income - - - (575) (645) (1,220)
Issue of shares 535 560 - - - 1,095
Cost of share issue - (46) - - - (46)
Balance at 30 June 2018 1,427 18,692 2,001 1,411 (11,971) 11,560
Profit/(loss) for the year - - - - (11,657) (11,657)
Other comprehensive income - - - (187) - (187)
Total comprehensive income - - - (187) (11,657) (11,844)
Issue of shares 4 5 - - - 9
Cost of share issue - - - - - -
Balance at 30 June 2019 1,431 18,697 2,001 1,224 (23,628) (275)

   

Company GBP’000 GBP’000 GBP’000 GBP’000 GBP’000 GBP’000
Balance at 1 July 2017 892 18,178 2,001 - (8,939) 12,132
Loss for the year - - - - (489) (489)
Other comprehensive income - - - - - -
Total comprehensive income - - - - (489) (489)
Issue of shares 535 560 - - - 1,095
Cost of share issue - (46) - - - (46)
Balance at 30 June 2018 1,427 18,692 2,001 - (9,428) 12,692
Loss for the year - - - - (12,979) (12,979)
Other comprehensive income - - - - - -
Total comprehensive income - - - - (12,979) (12,979)
Issue of shares 4 5 - - - 9
Cost of share issue - - - - - -
Balance at 30 June 2019 1,431 18,697 2,001 - (22,407) (278)

The following describe the nature and purpose of each reserve within owners’ equity:

Reserve Description and Purpose
Share capital Amount subscribed for share capital at nominal value
Share premium Amount subscribed for share capital in excess of nominal value.
Merger reserve Reserve created on issue of shares on acquisition of subsidiaries in prior years.
Foreign exchange reserve Cumulative translation differences of net assets of subsidiaries.
Retained deficit Cumulative net gains and losses recognised in the consolidated statement of comprehensive income

NOTES TO PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2019

  1. The financial information set out above does not constitute statutory accounts for the purpose of Section 434 of the Companies Act 2006.The financial information has been extracted from the statutory accounts of Altona energy Plc and is presented using the same accounting policies, which have not yet been filed with the Registrar of companies, and on which the auditors gave an adverse opinion on 11 March 2020.

    Below we have reproduced the qualification contained with the audit report.

    Adverse Opinion

    We have audited the Financial Statements of Altona Energy Plc (the ‘Parent Company’) and its subsidiaries (‘the Group’) for the year ended 30 June 2019 which comprise the Statement of Consolidated Comprehensive Income, the Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent Company Statements of Cash Flows, the Consolidated and Parent Company Statements of Changes in Equity and the related notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as regards the Parent Company Financial Statements, as applied in accordance with the provisions of the Companies Act 2006.

    In our opinion, because of inappropriate use of the going concern basis for the preparation of the financial statements referred to in the Basis for adverse opinion section of our report, the financial statements:

  2. do not give a true and fair view of the state of the Group’s and the Parent Company’s affairs as at 30 June 2019 and of the Group’s and Parent Company’s loss for the year then ended;

  3. have not been prepared in accordance with IFRSs as adopted by the European Union; and

  4. have not been prepared in accordance with the requirements of the Companies Act 2006.

Basis for adverse opinion

As explained in the Material uncertainty related to going concern paragraph, at the date of signing of these accounts, the Group does not have sufficient resources to continue trading for the foreseeable future. The Company is currently at the ceiling of its overdraft facility with its current bankers and the facility is due for renewal in June 2020, where the Company may have to settle the liability. The Group’s ability to continue as a going concern is dependent on obtaining additional equity to fund current and future working capital requirements, and repayment of the current debt finance. The financial statements do not contain the adjustments that may be necessary to reflect that the fact that the company is not a going concern. Consequently, we are of the belief that the use of the going concern basis for the preparation of the financial statements is inappropriate.

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Statements section of our report. We are independent of the Group and Parent Company in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other matter

The financial statements of the Group and the Company for the year ended 30 June 2018 were audited by another auditor who expressed an unqualified opinion on those statements on 28 December 2018.

Material uncertainty related to going concern

 We draw attention to note 1 in the Financial Statements, which identifies conditions that may cast significant doubt on the Group’s and Company’s ability to continue as a going concern. The Group incurred a net loss of £11.6 million during the year ended 30 June 2019, relating to a one-off Impairment Charge due to the cancellation of its historic mining licences at Arckaringa. At 30 June 2019 the Group had net current liabilities of £278k. The Financial Statements have been prepared on the going concern basis which is reliant on the successful fundraise by the Group to fund its operations for the foreseeable future. The going concern assessment of the Group is also reliant on the successful acquisition of PELA 517 by the Group which it is currently in negotiations to buy. This new mining licence is expected to contain minimum expenditure requirements and the ability to meet these will be dependent on the continued ability to raise new funds. As stated in note 1, these events or conditions, along with the other matters as set forth in note 17, indicate that a material uncertainty exists that may cast significant doubt on the ability of the Group and Company to continue as a going concern.”

The preliminary announcement of the results for the year ended 30 June 2019 was approved by the board of directors on 11 March 2020.

2.  EARNINGS PER SHARE

The loss for the year attributed to shareholders is £11,657,000 (2018: loss £645,000).

This is divided by the weighted average number of Ordinary shares outstanding calculated to be 1.602 million (2018: 1.023 million) to give a basic loss per share of 894.84 pence (2018: basic loss per share of 63.05 pence).

In the current and prior year there were no potentially dilutive ordinary shares at the year end because the share price at year end was below the strike price of the potentially dilutive options and warrants.  The potential future share issues that may dilute the profit/(loss) per share relate to options in issue disclosed at note 16.

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