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Echo Energy PLC (ECHO)

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Thursday 06 May, 2021

Echo Energy PLC

Final Results

RNS Number : 6983X
Echo Energy PLC
06 May 2021
 

6 May 2021

 

Echo Energy plc

("Echo Energy" or the "Company")

 

Final Results

 

Echo Energy plc, the Latin American focused full cycle energy Company, is pleased to announce its audited results for the financial year ended 31 December 2020.

 

2020 Highlights:

 

· Fourfold increase in revenue to US $11.1 million (2019: US $2.6 million)

 

·Favourable fiscal environment have led to the receipt of certain VAT payments, improving business cashflow.

 

· Santa Cruz Sur net daily production in 2020 totalled 1,966 boepd:

-  10.2 mmscf/d of natural gas

-  259 bbls/d of oil and condensate

 

· In 2020, Echo's net cumulative production was 0.72 MMboe:

-  3,750 mmscf of natural gas

-  94,693 bbls oil and condensate

 

· Company estimated reserves and resources as at 31 December 2020 net to Echo's 70% interest:

-  1P (Proved): 3.13 MMBoe

-  2P (Proved & Probable): 4.06 MMboe

-  Contingent Resources (High estimate): 7.20 MMboe (Best estimate 6.51 MMboe)

 

·  Adapted swiftly during the period to challenges presented by COVID-19, reorganisation along value chains enabled Echo to lower operating costs and improve efficiencies

 

Post period end

 

· Company successfully completed the restructuring of both the Company's EUR 20.0m 8.0% secured notes and the Company's EUR 5.0m 8.0% secured convertible debt facility loan. This represented a landmark step for the business by materially improving the financial outlook through the deferral of maturity until Q2 2025 and no cash interest payments prior to the maturity date. The agreement, with the support of the debt holders not only substantially strengthens the balance sheet it enables for the reinvestment of cashflow into the business to drive further growth.

 

· Secured new gas sales contracts at premium rates to the prevailing spot markets in early Q1 2021.

 

·Echo entered into a cooperation agreement with GTL International S.A. ("GTLI") to seek future opportunities in Bolivia.

 

Martin Hull, Echo's Chief Executive, commented:

 

"Echo's resilience during a very challenging year has ensured that we have been able to continue our operations efficiently and build firm foundations commercially and operationally despite the difficult external conditions. Not only have we made significant cost-saving efforts across the Company and rebalanced our financial position to provide increased flexibility, but we have also achieved tremendous operational progress across our SCS assets where we currently benefit from a favourable fiscal environment and attractive gas sales agreements with key customers. Moving forward, we are excited by the continuing expansion opportunities at our SCS assets, where we aim to maximise production potential, and we are also encouraged by the potential for new hydrocarbon and/or renewable energy prospects in neighbouring Bolivia and elsewhere in the Region. The framework for 2021 and beyond has now been set in place, and we look forward to capitalising on our various growth catalysts."

 

For further information, please contact:

 

Echo Energy

Martin Hull, Chief Executive Officer

 

via Vigo Communications

Vigo Communications (PR Advisor)

Patrick d'Ancona

Chris McMahon

 

+44 (0) 20 7390 0230

Cenkos Securities (Nominated Adviser)

Ben Jeynes

Katy Birkin

 

+44 (0) 20 7397 8900

Shore Capital (Corporate Broker)

Jerry Keen

+44 (0) 20 7408 4090

 

Note

 

The volumes included in this announcement are in accordance with SPE standards and the information contained in this announcement has been reviewed by Echo Energy's Vice President, Exploration, Dr. Julian Bessa Msc, DPhil, MBA a Fellow of the Geological Society and a President Elect of the Petroleum Exploration Society of Great Britain.

 

bbl(s) means barrel(s) of oil; bcf means billion cubic standard feet of gas; boe means barrels of oil equivalent; boepd means barrels of oil equivalent per day; MMboe means million barrels of oil equivalent; MMbbl means million barrels of oil; MMscf means million standard cubic feet of gas; MMscf/d means million standard cubic feet of gas per day;  and bopd and bbl/d means barrels of oil per day.

 

Chairman's and Chief Executive Officer's Statement

 

Similar to many businesses and the communities in which Echo Energy plc operates, the Company faced unprecedented challenges during 2020 with the global pandemic having an impact upon all aspects of the Company's operations and fundamentally changing the financial environment in which we operate. Your Company has emerged from these challenges operationally stronger, financially more robust (following the successful debt restructuring) with a renewed focus on its positive growth strategy.  This is testament to the strength of the underlying business, the combined efforts of team and partners and at times the patience of shareholders and wider stakeholders.  We are grateful for your support throughout the turbulent year.

 

2020 marked the first full year of operations at the Santa Cruz Sur ("SCS") assets following the successful integration of the acquisition completed in November 2019. The acquisition of the 70% interest in SCS was an important step in delivering against our strategy of building a full cycle Latin America focussed energy Company.

 

With its strong asset base and improved financial flexibility Echo is now very well placed to benefit from an active operational programme and is highly leveraged to improving economic and market conditions. 

 

Argentina

 

Santa Cruz Sur

 

The SCS assets provide material production, generating material cash flow from a strong reserves base. The portfolio also includes significant upside from relatively low risk production enhancement opportunities combined with exciting higher impact projects.

 

Production remained in line with expectations during 2020 after a decision was made in April 2020, to temporarily shut in the majority of oil production and focus on gas. This was a response to the significant oil price drop at the end of Q1 2020. Average daily production throughout the year net to the Company was 1,966 boepd (including 10.2 MMscf/d of gas). Total net cumulative production was 720,000 boe (including 3,750 MMscf of gas) in the year.

 

The Company estimates that as at 31 December 2020, the SCS reserves base stood at an estimated 3.13 MMboe for 1P (Proved) and 4.06 MMboe for 2P (Proved & Probable) each net to the Company's 70% non-operated working interest. The reduction in 1P (Proved) reserves from the position as at December 2019 was less than the production from the assets during the year (0.72 MMboe net to Echo) and as such demonstrated the positive impact of the activities undertaken to migrate 2P reserves (Proved & Probable) into the 1P (Proved) category during the period. As commodity prices fell in March 2020, the Company took the financially prudent decision to defer capital expenditure and postpone final investment decisions on select activities. The volumes associated with these activities (6.51 MMboe net to Echo's 70% interest) have now been reclassified into Contingent Resources from 2P reserves (Proved & Probable), but are expected to return to reserves once future investment decisions are taken, and the current commercial contingencies to development are removed.  

 

The Campo Limite exploration well ("CLi.x-1001") on the Palermo Aike concession, was successfully drilled in the early months of 2020. As a result of government restrictions imposed in response to the Covid-19 pandemic testing of this well was however interrupted. The well remains a material potential upside for the Company with the potential to increase reserves and resources in the Palermo Aike concession and open up additional commercial options. Well testing activities remain an operational priority and will resume once pandemic constraints are lifted, and within an optimised work schedule. The wider portfolio of opportunities within SCS was expanded by maturing a set of workovers and interventions to increase production. In addition, the Monte Aymond gas project was also assessed as commercially viable and, given the location near to Campo Limite, a hub development approach is being considered. These activities represent an exciting future work programme designed to expand production and generate continuing growth for the future.

 

Tapi Aike

In line with the Company's focus within its portfolio on cash generative production and on reducing costs, while maintaining upside exposure, Echo entered into an agreement with the operator of Tapi Aike to reposition the Company's 19% participating interest in Tapi Aike. This agreement enabled Echo to cease commitments to ongoing pre-drill expenditure at Tapi Aike, whilst maintaining an option for the Company to re-enter the western area of the Licence. At the end of the period, having reviewed all available data, the Company decided to continue with its production led strategy and therefore allowed the option to re-enter the Tapi Aike asset to lapse.

 

Bolivia 

The Board believes that that there remain considerable opportunities across the energy spectrum in Bolivia. Building on existing long-term relationships and to enhance business development initiatives in the country, post period Echo signed a cooperation agreement with GTL International S.A pursuant to which the parties intend to collaborate and jointly assess new opportunities across the full energy spectrum, including solar and wind in the renewables space and E&P opportunities. 

 

Finance

From Q1 2020, the Group sought to strengthen our financial position, firstly through the restructure of the unlisted debt facilities, releasing capital which could then be invested directly into the business to accelerate growth projects or support accretive optionality. 

 

2020 was the Company's first full year of operations at the SCS assets. As a result, revenue saw a more than fourfold increase over 2019 levels and at more than US $11million represented the largest annual figure in Echo's history. Despite the material increase in the business' size and associated complexities, the Board moved quickly to adapt to the realities of the difficult 2020 operating circumstances to preserve cash and reduce costs. General administrative costs, including head office costs, were reduced by approximately 15% from 2019 levels.

 

In the prior year management reported a material uncertainty in respect of going concern. Based on the post year end debt restructuring, the current level of revenue and cash generation and the sensitivities considered in respect of the cashflow forecasts, and the mitigating actions that could be taken to conserve cash in a worse- case scenario, management do not consider there to be a material uncertainty in the current year.

 

Successful debt restructuring

 

In Q1 2021 the Company successfully completed of the restructuring of both the   Company's Bonds and the Company's EUR 5.0m 8.0% secured convertible debt facility loan. This represented a landmark step for the business by materially improving the financial outlook through the deferral of maturity until Q2 2025 and no cash interest payments prior to the maturity date. The agreement, with the support of the debt holders not only substantially strengthens the balance sheet it enables for the reinvestment of cashflow into the business to drive further growth.

 

Outlook and Continuing Growth

 

Whilst 2020 brought extreme market volatility and a significant decline in commodity prices, 2021 has already seen a markedly improved market environment. As an example, Echo has recently secured gas prices averaging $2.64/mmbtu from industrial clients for the period May 2021 to April 2022 which represents an approximate 126% increase from the corresponding previous year. Similarly, the market for the Company's liquid production has now normalised with regular sales taking place and global benchmarks returning to pre pandemic levels. These factors combined with the underlying operational and financial progress make for a much-improved outlook in 2021 and beyond.

 

The Board remains committed to the Latin America energy growth strategy, and, alongside the continued expansion of the SCS portfolio, continues to consider potential growth options. The rapid and ongoing changes to the global energy mix, and the market and political response to the climate change challenge offer considerable potential for companies with the right capabilities and vision. As such Echo expects to consider investments across the energy spectrum in future and assess them against its strict operational and profitability criteria.

 

The framework for 2021 and beyond has now been established, and we look forward with renewed confidence to capitalising on the opportunities ahead.

 

James Parsons  Martin Hull

Non-Executive Chairman  Chief Executive Officer

 

Portfolio

 

The Company is well positioned to build a diversified energy portfolio with a strong cash generating E&P foundation to support value accretive activities across the energy spectrum.

 

Echo is a significant acreage holder in the basin with access to over 2,600 km2 of licences containing 12 oil and gas fields and 82 production wells. This demonstrates Echo's commitment to the future of exploration and production potential of this part of Argentina.

 

Santa-Cruz Sur is a gas dominated portfolio, and the Company's majority 70% non-operated interest provides an ability to significantly influence operational strategy. This gas focused E&P portfolio is appropriate for energy transition and, provides oil price upside. The Company is now significantly leveraged to the current increase in commodity prices and can continue to take advantage as global demand recovers from 2020. Production from SCS is revenue generating for the Company, and the portfolio of opportunities provides a flexible and range of well-balanced risk-reward upside options. This portfolio provides potential high-reward exploration upside with potential success at Campo Limite, low cost/low risk production enhancement opportunities with short payback times and the ability to increase base production as oil demand rebounds.

 

In 2020 the Company was able to partially replace the loss in 1P (Proved) reserves due to realised production (0.72 MMboe), through the technical maturity of the opportunity set within the portfolio.  1P (Proved) reserves at year end were 3.13 MMboe, which is higher than would otherwise be the case given production in the year. The original acquisition of the SCS assets in 2019 was based on proved reserves economics. Current proved reserves per December 2020 remain similar to those at acquisition, adjusted for production. As commodity prices fell in March 2020, The Company took the financially prudent approach to push back capital spending and postpone final investment decisions on some activities. The volumes associated with these activities have now been reclassified into Contingent Resources from 2P reserves (Proved and Probable), but once future investment decisions are made, these are expected to mature back into 2P (Proved and Probable) reserves. 

 

Building on existing long-term relationships in Bolivia, and to enhance business development initiatives in the country, post period, Echo signed a cooperation agreement with GTL International S.A over a five-year period. GTLI is a majority owned subsidiary of the Bolivian company UruboCorp and has interests in both the Bolivia hydrocarbon and renewables sectors. Both companies intend to collaborate and jointly assess new opportunities across the full energy spectrum, including solar and wind in the renewables space. GTLI is a leading Bolivian energy operator and holds the El Palmar operational hydrocarbon contract with the Government of Bolivia. 

 

This cooperation agreement reflects the Company's focus on growing a gas led energy portfolio in Latin America by combining the enhancement of existing assets with new growth opportunities across the energy spectrum. The process will always follow strict criteria for value accretive M&A whilst utilising the Company's M&A recognised expertise and skills for commercial innovation.

 

Average net daily production 2020  1,966 boepd

Total production net to Echo 2020  720,000 boe

Net 1P (Proved) reserves   3.12MMboe

 

Company Reserves & Resources are classified in accordance with the Society of Petroleum Engineers' PRMS 2018 update and are shown in accompanying tables as estimated by the Company as at 31 December 2020.

 

Oil & Gas - Reserves

(all figures in MMbbls or Bcf)

Gross

Net attributable (70%)

Operator

 

Proved

Proved & Probable

Proved, Probable & Possible

 

Proved

Proved & Probable

Proved, Probable & Possible

Oil & Liquids Reserves (MMbbls)

 

 

1.00

1.34

1.60

0.70

0.94

1.12

Selva Maria Oil and Gas S.A.

Gas Reserves

(Bcf)

 

 

19.51

25.00

27.79

13.66

17.50

19.45

Selva Maria Oil and Gas S.A.

Total Oil Equivalents

(MMboe)

 

4.47

5.80

6.55

3.13

4.06

4.59

Selva Maria Oil and Gas S.A

 

Oil & Gas - Contingent Resources

(all figures in MMbbls or Bcf)

Gross

Net attributable (70%)

Operator

Low Estimate

Best Estimate

High Estimate

Low Estimate

Best Estimate

High Estimate

Oil & Liquids Contingent Resources

(MMbbls)

 

 

0.00

1.70

1.90

0.00

1.19

1.33

Selva Maria Oil and Gas S.A.

Gas Contingent Resources

(Bcf)

 

 

0.00

42.69

47.13

0.00

29.88

32.99

Selva Maria Oil and Gas S.A.

Total Oil Equivalents

(MMboe)

0.00

9.30

10.28

0.00

6.51

7.20

Selva Maria Oil and Gas S.A.

 

Oil & Gas - Prospective Resources

 (all figures in MMbbls or Bcf)

Gross

Net attributable (70%)

Risk Factor

(%)

Operator

Low Estimate

Best Estimate

High Estimate

Low Estimate

Best Estimate

High Estimate

Oil & Liquids Prospective Resource (MMbbls)

Campo Limite (Springhill)

0.50

1.41

3.94

0.35

0.99

2.76

70%

Selva Maria Oil and Gas S.A.

Gas Prospective Resources (Bcf)

Campo Limite (Springhill)

13.4

34.1

97.4

9.4

23.9

68.2

70%

Selva Maria Oil and Gas S.A.

El Pedrero (Tobifera)

1.3

27.3

557.2

0.9

19.1

390.0

13%

Total Gas (Bcf)

14.7

61.4

654.6

10.3

43.0

458.2

-

 

 

 

 

 

Consolidated Statement of Comprehensive Income

Year ended 31 December 2020

 

 

 

 

 

Notes

Year to

31 December 2020

US $

Year to

31 December 2019

US $

Continuing operations

 

 

 

Revenue

3

11,126,520

2,586,069

Cost of sales

4

(13,437,010)

(3,127,542)

Gross profit

 

(2,310,490)

(541,473)

Exploration expenses

 

(215,512)

(647,546)

Administrative expenses

 

(3,240,934)

(3,797,861)

Impairment of intangible assets

 

-

-

Impairment of property, plant and equipment

 

-

-

Operating loss

 

(5,766,936)

(4,986,880)

Financial income

 

7,142

92,445

Financial expense

5

(10,174,047)

(5,475,616)

Derivative financial gain/(loss)

6

666,306

339,219

Loss before tax

 

(15,267,535)

(10,030,832)

Taxation

 

-

-

Loss from continuing operations

 

(15,267,535)

(10,030,832)

Discontinued operations

 

 

 

Profit/(loss) after taxation for the year from discontinued operations

7

(10,724,108)

(3,441,230)

Loss for the year

 

(25,991,643)

(13,472,062)

Other comprehensive income:

 

 

 

Other comprehensive income to be reclassified to profit or loss in subsequent periods (net of tax)

 

 

 

Exchange difference on translating foreign operations

 

(1,041,955)

182,478

Total comprehensive loss for the year

 

(27,033,598)

(13,289,584)

Loss attributable to:

Owners of the parent

 

 

(27,033,598)

 

(13,472,062)

Total comprehensive loss attributable to:

Owners of the parent

 

 

(27,033,598)

 

(13,289,584)

Loss per share (cents)

8

 

 

Basic

 

(3.38)

(2.61)

Diluted

 

(3.38)

(2.61)

Loss per share (cents) for continuing operations

 

 

 

Basic

 

(1.99)

(1.94)

Diluted

 

(1.99)

(1.94)

 

 

 

 

The notes form an integral part of the financial statements

 

 

 

 

Consolidated Statement of Financial Position

Year ended 31 December 2020

 

 

 

Notes

31 December 2020

US $

31 December 2019

US $

Non-current assets

 

 

 

  Property, plant and equipment

9

2,552,693

1,101,210

  Other intangibles

10

8,511,622

20,573,586

 

 

11,064,315

21,674,796

Current Assets

 

 

 

  Inventories

11

541,230

420,844

  Other receivables

12

7,229,263

8,677,279

  Cash and cash equivalents

13

682,159

1,698,012

 

 

8,452,652

10,796,135

Current Liabilities

 

 

 

  Trade and other payables

15

(13,249,146)

(7,022,255)

  Derivative financial liabilities

 

(62,477)

(728,783)

 

 

(13,311,623)

(7,751,038)

Net current assets

 

(4,858,970)

3,045,097

Total assets less current liabilities

 

6,205,345

24,719,893

Non-current liabilities

 

 

 

  Loans due in over one year

16

(27,276,015)

(20,604,302)

  Provisions

17

(2,979,956)

(2,940,000)

  Right of use liability

 

-

-

 

 

(30,255,971)

(23,544,302)

Total Liabilities

 

(43,567,594)

(31,295,340)

Net (Liability) /Assets

 

(24,050,627)

1,175,591

 

 

 

 

Equity attributable to equity holders of the parent

 

 

 

  Share capital

 

6,288,019

5,190,877

  Share premium

 

64,961,905

64,817,662

  Warrant reserve

 

11,373,966

11,142,290

  Share option reserve

 

1,417,285

1,159,580

  Foreign currency translation reserve

 

(3,319,767)

(2,277,812)

  Retained earnings

 

(104,772,035)

(78,857,006)

Total Equity

 

(24,050,627)

1,175,591

 

 

The financial statements were authorised for issue and approved by the board of directors on 5 May 2021

 

Martin Hull 

 

The notes form an integral part of the financial statements.

 

 

Consolidated Statement of Changes in Equity

Year ended 31 December 2020

 

 

 

 

 

Share capital

US $

 

 

Share

premium

US $

 

 

Warrant reserve

US $

 

Share option

reserve

US $

Foreign currency translation reserve

US $

 

 

 

Total equity

US $

1 January 2019

(65,964,357)

4,444,999

58,329,880

11,142,290

1,195,106

(2,095,334)

7,052,584

Loss for the year

(10,030,832)

-

-

-

-

-

(10,030,832)

Discontinued operations

(3,441,230)

-

-

-

-

-

(3,441,230)

Exchange Reserve

182,478

-

-

-

-

(182,478)

-

Total comprehensive loss for the year

 

(13,289,584)

 

-

 

-

 

-

 

-

 

(182,478)

 

(13,472,062)

New shares issued

-

745,878

6,924,246

-

-

-

7,670,124

Share issue costs

-

-

(436,464)

-

-

-

(436,464)

Share options lapsed

396,935

-

-

-

(396,935)

-

-

Share-based payments

-

-

-

-

361,409

-

361,409

31 December 2019

5,190,877

64,817,662

11,142,290

1,159,580

(2,277,812)

1,175,591

 

 

 

 

 

 

 

 

1 January 2020

(78,857,006)

5,190,877

64,817,662

11,142,290

1,159,580

(2,277,812)

1,175,591

Loss for the year

(15,267,535)

-

-

-

-

-

(15,267,535)

Discontinued operations

(10,724,108)

-

-

-

-

-

(10,724,108)

Exchange Reserve

-

-

-

-

-

(1,041,955)

(1,041,955)

Total comprehensive loss for the year

 

(25,991,643)

 

-

 

-

 

-

 

-

 

(1,041,955)

 

(27,033,598)

New shares issued

-

1,097,142

467,935

-

-

-

1,565,077

Warrants

-

-

(231,676)

231,676

-

-

-

Share issue costs

-

-

(92,016)

-

-

-

(92,016)

Share options lapsed

76,614

-

-

-

(76,614)

-

-

Share-based payments

-

-

-

-

334,319

-

334,319

31 December 2020

(104,772,035)

6,288,019

64,961,905

11,373,966

1,417,285

(3,319,767)

(24,050,627)

 

 

 

 

 

 

 

 

 

The notes form an integral part of the financial statements.

 

 

Consolidated Statement of Cash Flows

Year ended 31 December 2020

 

 

 

Year to

31 December 2020

US $

Year to

31 December 2019

US $

Cash flows from operating activities

 

 

 

Loss from continuing operations

 

(15,267,535)

(10,030,832)

Loss from discontinued operations

 

(10,724,108)

(3,441,230)

 

 

(25,991,643)

(13,472,062)

Adjustments for:

 

 

 

  Depreciation and depletion of property, plant and equipment

 

182,211

190,383

  Depreciation and depletion of intangible assets

 

1,874,810

369,874

  Loss on disposal of property, plant and equipment

 

10,822

22,040

  Impairment of intangible assets and goodwill

 

10,383,461

2,802,239

  Impairment of property, plant and equipment

 

-

-

  Share-based payments

 

334,319

361,409

  Right of use liability

 

(64,180)

-

  Financial income

 

(7,142)

(352,579)

  Financial expense

 

10,174,047

5,738,338

  Exchange differences

 

(2,265,180)

-

  Derivative financial gain

 

(666,306)

(339,219)

 

 

19,956,862

8,792,485

Decrease/(Increase) in inventory

 

(120,386)

381,341

Decrease/(Increase) in other receivables

 

311,275

(3,359,213)

(Decrease)/increase in trade and other payables

 

5,844,002

3,753,130

Cash used in operations

 

6,034,891

9,567,743

Net cash used in operating activities

 

112

(3,904,319)

Cash flows from investing activities

 

 

 

Purchase of intangible assets

 

(470,637)

(19,245,768)

Purchase of property, plant and equipment

 

(1,644,516)

(979,164)

Net cash used in investing activities

 

(2,115,153)

(20,224,932)

Cash flows from financing activities

 

 

 

Proceeds from debt

 

-

5,434,727

Debt issue costs

 

-

(388,852)

Interest received

 

7,142

180,648

Interest paid

 

-

(2,085,954)

Bank fees and other finance costs

 

(189,520)

-

Repayment of right of use liability

 

-

(156,269)

Issue of share capital

 

1,565,077

7,670,124

Share issue costs

 

(92,016)

(436,464)

Net cash from financing activities

 

1,290,682

10,217,960

Net (decrease)/increase in cash and cash equivalents

 

(824,360)

(13,911,291)

Cash and cash equivalents at 1 January 2020

 

1,698,012

15,609,303

Foreign exchange gains/(losses) on cash and cash equivalents

 

(191,493)

-

Cash and cash equivalents at 31 December 2020

 

682,159

1,698,012

 

 

The notes form an integral part of the financial statements.

 

 

 

Notes to the Financial Statements

Year ended 31 December 2020

 

1. Accounting Policies 

 

General Information 

 

The figures for the year ended 31 December 2020 have been extracted from the audited statutory financial statements for the year on which the auditors have issued an unqualified opinion. The financial information attached has been prepared in accordance with the recognition and measurement requirements of international financial reporting standards (IFRS) as adopted by the EU and international financial reporting interpretations committee (IFRIC) interpretations issued and effective at the time of preparing those financial statements.

 

The financial information for the year ended 31 December 2020 and 31 December 2019 does not constitute statutory financial information as defined in Section 434 of the Companies Act 2006 and does not contain all of the information required to be disclosed in a full set of IFRS financial statements. This announcement was approved by the Board of Directors and authorised for issue on 5 May 2021. The auditor's report on the financial statements for 31 December 2020 was unqualified, and did not include reference to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain a statement under either Section 498 (2) or 498 (3) of the Companies Act 2006.

 

The principal accounting policies are summarised below:   

 

(a) Basis of preparation  

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The financial statements are for the year 1 January 2020 to 31 December 2020. The comparatives shown are for the year 1 January 2019 to 31 December 2019  . 

 

New standards and interpretations not applied  

At the date of authorisation of these financial statements, a number of standards and interpretations were in issue but not yet effective. The directors do not anticipate that the adoption of these standards and interpretations, or any amendments to existing standards as a result of the annual improvements cycle, will have a material effect on the financial statements in the year of initial application.

 

(b) Basis of consolidation 

The Group financial statements consolidate the financial statements of the Company and its subsidiaries under the acquisition method. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date control ceases. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.  

 

(c) Joint Arrangements

A joint arrangement is one in which two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Certain of the Group's licence interests are held jointly with others. Accordingly, the Group accounts for its share of assets, liabilities, income and expenditure of these joint operations, classified in the appropriate statement of financial position and income statement headings.

 

(d) Revenue

Revenue comprises the invoice value of goods and services supplied by the Group, net of value added taxes and trade discounts. Revenue is recognised in the case of oil and gas sales when goods are delivered and title has passed to the customer. This generally occurs when the product is physically transferred into a pipeline or vessel. Echo recognised revenue in accordance with IFRS 15. Our joint venture partner markets gas and crude oil on our behalf. Gas is transferred via a metred pipeline into the regional gas transportation system, which is part of national transportation system, control of the gas passes at the point at which the gas enters this network, this is the point at which gas revenue would be recognised. Gas prices vary from month to month based on seasonal demand from customer segments and, production in the market as a whole. Our partner agrees pricing with their portfolio of gas clients based on agreed pricing mechanisms in multiple contracts. Some pricing is regulated by government such as domestic supply. Oil shipments are priced in advance of a cargo and revenue is recognised at the point at which cargoes are loaded onto shipping vessel at terminal.

 

(e)  Property, plant and equipment 

Property, plant and equipment is stated at cost, or deemed cost less accumulated depreciation, and any recognised impairment loss. Land is stated at cost and is not depreciated. Depreciation is charged so as to write off the cost or valuation of assets less any residual value over their estimated useful lives, using the straight- line method, on the following bases:

 

Fixtures & fittings  12% to 33.3% straight-line   

Motor vehicles  25% straight-line 

 

Oil and gas properties are depleted on a unit of production basis commencing at the start of commercial production or depreciated on a straight-line basis over the relevant asset's estimated useful life. Expenditure is depreciated on a unit of production basis; the depletion charge is calculated according to the proportion that production bears to the recoverable reserves for each property. Depreciation will not be charged on an asset in the course of construction, depreciation commences when the asset is brought into use and will be depleted according to the proportion that production bears to the recoverable reserves for each property.

 

(f) Property right of use asset 

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right of use lease is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before commencement date plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date discounted using the incremental borrowing rate of the individual Company which is the lessee.

   

(g) Other intangible assets - exploration and evaluation costs 

Exploration and evaluation (E&E) expenditure comprises costs which are directly attributable to researching and analysing exploration data. It also includes the costs incurred in acquiring mineral rights, the entry premiums paid to gain access to areas of interest and amounts payable to third parties to acquire interests in existing projects. When it has been established that a mineral deposit has development potential, all costs (direct and applicable overhead) incurred in connection with the exploration and development of the mineral deposits are capitalised until either production commences or the project is not considered economically viable. In the event of production commencing, the capitalised costs are amortised over the expected life of the mineral reserves on a unit of production basis. Other pre-trading expenses are written off as incurred. Where a project is abandoned or is considered to be of no further interest, the related costs are written off.

 

(h) Impairment of tangible and intangible assets excluding goodwill 

At the date of each statement of financial position, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).  Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit ("CGU") to which the asset belongs.

 

The recoverable amount is the higher of fair value less costs to sell or value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

 

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (CGU) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a re-valued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. 

 

(i) Taxation

Current taxation 

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from, or paid to, the tax authorities.  The tax rates and the tax laws used to compute the amount are those that are enacted, or substantively enacted, by the balance sheet date.    

Deferred taxation 

Deferred tax is the tax expected to be payable or recoverable on differences between the current year amounts of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit.   

 

Deferred tax assets are recognised to the extent the temporary difference will reverse in the foreseeable future and it is probable that future taxable profit will be available against which the asset can be utilised.

 

Deferred tax is recognised for all deductible temporary differences arising from investments in subsidiaries, branches and associates, and interests in joint ventures, to the extent it is probable that the temporary difference will reverse in the foreseeable future. 

 

(j) Conversion of foreign currency 

Foreign currency transactions are translated at the average exchange rates over the year, material transactions are recorded at the exchange rate ruling on the date of the transaction. Assets and liabilities are translated at the rates prevailing at the balance sheet date. The Group has significant transactions and balances denominated in Euros and GBP. The year-end exchange rate to USD was US $1 to GBP £0.7319 and US $1 to €0.8178 (2019: US $1 to GBP £0.7649, US $1 to €0.8906) US $1 to ARS $86.250 and the average exchange rate during 2020 was US $1 to GBP £0.7793 (2019: US $1 to GBP £0.7822). 

 

In the Company financial statements, the income and expenses of foreign operations are translated at the exchange rates ruling at the dates of the transactions. The assets and liabilities of foreign operations, both monetary and non-monetary, are translated at exchange rates ruling at the balance sheet date. The reporting currency of the Company and group is United Stated Dollars (US $).

 

(k) Share-based payments 

The fair value of equity instruments granted to employees is charged to the income statement, with a corresponding increase in equity. The fair value of share options is measured at grant date, using the binomial option pricing model or Black-Scholes pricing model were considered more appropriate, and spread over the period during which the employee becomes unconditionally entitled to the award. The charge is adjusted to reflect the number of shares or options that vest, except where forfeiture is due to market-based criteria.

 

(l) Financial instruments 

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

 

Trade and other receivables 

Trade and other receivables are initially measured at fair value and are subsequently reassessed at the end of each accounting period.

 

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. 

 

Financial liabilities and equity 

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below. 

 

Trade payables 

Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest rate method.

 

(l) Financial instruments

Equity instruments

Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions, in accordance with IAS 32:

· They include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Group; and  

· Where the instrument will or may be settled in the Group's own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Group's own equity instruments or is a derivative that will be settled by the Group exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

To the extent that this definition is not met, the financial instrument is classified as a financial liability.

(m) Borrowings 

Borrowings are recognised initially at the fair value of the proceeds received which is determined using a discount rate which reflects the cost of borrowing to the Group. In subsequent periods borrowings are recognised at amortised costs, using an effective interest rate method. Any difference between the fair value of the proceeds costs and the redemption amount is recognised as a finance cost over the period of the borrowings.

 

(n) Inventory

Echo has chosen to value crude oil inventories, a commodity product, at net realisable value, the value is based on a discounted observable year-end market price. Other inventory items are valued at the lower of net realisable value and cost.

 

(o) Going Concern

The financial information has been prepared assuming the Group will continue as a going concern. Please see note 2 Accounting Estimates and Judgements for an extended disclosure on this issue.

 

(p) Government assistance grants

Government assistance grants such as the Coronavirus Job Retention Scheme (CJRS) which relates to staff who have been furloughed due to COVID-19 are recognised as income and have been shown in the consolidated statement of comprehensive income as other income. During 2020, the Group received grants totalling US $45,503 for furloughed staff.

 

2. Accounting Estimates and Judgements 

 

Going Concern    

The financial information has been prepared assuming the Group will continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws or regulations.

 

Despite the consolidated statement of financial position showing a negative net asset position at 31 December 2020, the outlook for the Group has materially changed post period.

 

The business market took a positive upturn from early 2021, with oil prices increasing by a significant 30% by the end of Q1 2021, in comparison to the end of Q4 2020. In January 2021. The Company achieved a key customer gas sales contract at a premium to prevailing spot market rates, and more significantly, Q2 2021 saw the conclusion of the Company's unlisted debt restructuring, materially changing Echo's business position. This restructuring reduced cash loan payment cash commitments to only £250k for 2021, allowing increased cashflow optionality. Post period, the Group is investing in its asset facility upgrades, maturing its portfolio to a level that is opportunistic to higher commodity prices and revenue growth. Due to easing of COVID 19 restrictions in Argentina, Q1 2021 saw the recommencement of VAT repayment process, with a portion of the outstanding VAT scheduled for payment in Q2 2021.

 

Considering these factors, the Company is in a materially more robust position post period. The Company confirms that operations at the SCS assets are predicted to be cash flow positive at prevailing oil and gas price levels, and have considered the impact of a fall in commodity prices or an unexpected increase in costs.

 

Use of Estimate and Judgements

The preparation of financial statements in conforming with adopted IFRSs requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities as at the balance sheet date and the reported amount of revenues and expenses during the period. Actual outcomes may differ from those estimates. The key sources of uncertainty in estimates that have a significant risk of causing

 

material adjustment to the carrying amounts of assets and liabilities, within the next financial year, are the impairment of assets and the Group's going concern assessment.

 

Amounts Capitalised to the Consolidated Statement of Financial Position

In accordance with the Group policy, expenditures are capitalised only where the Group holds a licence interest in an area. All expenditure relating to the Bolivian company has been expensed to the statement of comprehensive income, as the Group has not yet been assigned any licence interests in the country. The Group has capitalised its participation in the SCS assets. The assignment of Echo´s participation in these Argentine licences is still subject to the authorisation of the Executive Branch of Santa Cruz Province, Echo are supported in this process by their joint venture partners Interoil & IAG in the SCS assets, and the process of title transfer is proceeding as anticipated, however due to the COVID-19 pandemic, this process has been delayed.

 

Valuation of Assets

Expenditures recognised as exploration and evaluation ("E&E") assets are tested for impairment whenever facts and circumstances suggest that they may be impaired, which includes when a licence is approaching the end of its term and is not expected to be renewed, or there are no substantive plans for continued exploration or evaluation of an area, or whilst development of a licence is still likely to proceed in an area but there are indications that the E&E assets are unlikely to be recovered in full.

When considering whether E&E assets are impaired the Group first considers the IFRS 6 indicators. IFRS 6 requires an entity to assess whether E&E assets require impairment when facts and circumstance suggest that the carrying amount of the assets may exceed their recoverable amount, these include:

· The period for which the entity has the right to explore in the specific area has expired during the period or will expire in the near future and is not expected to be renewed;

· Substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither 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 entity has decided to discontinue such activities in the specific area;

· Sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the E&E assets is unlikely to be recovered in full from successful development or by sale.

 

In 2020 the Tapi Aike assets were written down, as Echo decided to leave the license and impaired the balance sheet values as at the end of 2020, the cost of subsequent licence activity was impaired in the current accounting period. The determination of recoverable amounts in any resulting impairment test requires judgement around key assumptions, such as future costs, both capital and operating. There are no indications of impairment on the SCS assets.

 

Included within receivables are amounts due in respect of VAT of US $ 2.0 million, which span Tax reclaim amounts for the period of 2020 and 2019 and current operational tax movements. The claims all comply with local tax law and are at various stages of approval and awaiting payment. The processing of these tax credits have been hindered in the past due to COVID-19 Pandemic delays, with the government tax office being officially closed since March 2020. There is no reason as to why the Group believes it will not receive the tax credits, and therefore no impairment provision required. The speed at which the tax credits are being processed is increasing, with AFIP (Argentine tax authority) notifying Echo that a portion of the owed tax will be paid in Q2 2021, and therefore the remaining credits are expected to be paid in the very near future. 

 

Determination of Discount Rates

Determination of derivative financial liabilities

Judgement is requirement when determining the classification of financial instruments in terms of liability or equity. These judgements include an assessment of whether the financial instrument include any embedded derivative features, whether they include contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party, and whether that obligation will be settled by the Company exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

 

Valuation of derivative financial liabilities

The Group has issued warrants over ordinary shares as fundraising commission in respect of debt fundraisings during the year which can be converted to share capital at the option of the holder. These warrants are accounted for as an embedded derivative which is recognised at fair value through profit or loss. The Directors estimated the fair value of the derivative component using the Black Scholes option pricing model. This required making certain estimates on the share price volatility of the Group which inevitably involved a degree of judgement and the actual outcome may vary.

 

Inter-Group Balances

In determining whether parent company investments in subsidiaries have been impaired, we review subsidiary assets and liabilities to determine whether Group investment is recoverable. The only entity where an impairment trigger might be recognised was the Bolivian entity where the Group holds no licence assets. A determination was made that because of ongoing negotiations and Company strategic intent, investment would ultimately still be recoverable.    

 

However, the Group recognises that in order to pursue organic and inorganic growth opportunities and fund on-going operations it may require additional funding. This funding may be sourced through debt finance, joint venture equity or share issues.

 

In the prior year management reported a material uncertainty in respect of going concern. Based on the post year end debt restructuring, the current level of revenue and cash generation and the sensitivities considered in respect of the cashflow forecasts to December 2022, and the mitigating actions that could be taken to conserve cash in a worse- case scenario, management do not consider there to be a material uncertainty in the current year.

 

The directors have formed a judgement based on Echo's proven success in raising capital and a review of the strategic options available to the Group, that the going concern basis should be adopted in preparing the financial statements.   

 

3. Revenue

 

Year to

31 December 2020

US $

Year to

31 December 2019

US $

 

Oil revenue

2,784,248

1,395,356

Gas revenue

8,279,416

1,190,713

Other income

62,856

-

Total Revenue

11,126,520

2,586,069

 

 

4. Cost of Sales

 

Year to

31 December 2020

US $

Year to

31 December 2019

US $

 

Production costs

10,021,578

2,794,339

Selling and distribution costs

1,567,963

311,161

Movement in stock of crude oil

(89,410)

(351,170)

Depletion

1,936,879

373,212

Total Costs

13,437,010

3,127,542

Cost of sales arising from operations in the Tapi Aike licences has been reclassified as part of discontinued operations.

 

 

5. Financial Expense

 

Year to

31 December 2020

US $

Year to

31 December 2019

US $

Interest payable

1,991,535

1,940,527

Net foreign exchange losses

4,409,732

1,247,936

Unwinding of discount on long term loan

2,936,831

1,688,536

Amortisation of loan fees

614,913

464,283

Accretion of right of use liabilities

2,293

17,401

Unwinding of abandonment provision

39,956

-

Finance cost of holding bonds

11,971

-

Bank fees and overseas transaction tax

166,816

116,933

Total

10,174,047

5,475,616

 

 

 

6.Derivative Financial Gain/Loss

 

Year to

31 December 2020

US $

Year to

31 December 2019

US $

Fair value gain

666,306

339,219

Total

666,306

339,219

 

Represents fair value gain on valuation of derivatives instruments at period end.

 

7. Discontinued Operations

On 22 December 2020 the Company announced that it had allowed the lapse of the option to re enter the Tapi Aike asset. This resulted in Echo finally withdrawing its interests and liabilities under the Tapi Aike concessions prior to the drilling of the next exploration well in the Tapi Aike Western cube.

 

The results of the discontinued operations, are presented below:

 

Year to

31 December 2020

US $

Year to

31 December 2019

US $

Revenue

-

2,838,880

Operating expenses

-

(3,478,991)

Operating loss before impairment

-

(640,111)

Administrative Expenses

-

-

Impairment of the historic cost and carrying value of intangible assets

(10,724,108)

(2,802,239)

Impairment of the historic cost and carrying value of PPE

-

-

Net current assets receivable

-

-

Loss on disposal of foreign subsidiary

-

1,120

Operating (loss)/gain after liquidation

(10,724,108)

(3,441,230)

Financial income

-

-

Financial expense

-

-

(Loss)/Gain on ordinary activities before taxation

(10,724,108)

(3,441,230)

Taxation

-

-

(Loss)/Gain for the year from discontinued operations

(10,724,108)

(3,441,230)

 

The cash flows associated with the discontinued operations are:

 

Year to

31 December 2020

US $

Year to

31 December 2019

US $

Operations 

-

(640,111)

Investing

-

-

Financing

-

-

Net cash out flow

-

(640,111)

 

 

 

8. Loss Per Share

The calculation of basic and diluted loss per share at 31 December 2020 was based on the loss attributable to ordinary shareholders. The weighted average number of ordinary shares outstanding during the year ending 31 December 2020 and the effect of the potentially dilutive ordinary shares to be issued are shown below.

 

Year to

31 December 2020

Year to

31 December 2019

Net loss for the year (US $)

(25,991,643)

(13,472,062)

Basic weighted average ordinary shares in issue during the year

768,598,277

515,840,359

Diluted weighted average ordinary shares in issue during the year

768,598,277

515,840,359

Loss per share (cents)

 

 

Basic

(3.38)

(2.61)

Diluted

(3.38)

(2.61)

 

In accordance with IAS 33 and as the entity is loss making, including potentially dilutive share options in the calculation would be anti-dilutive.

Deferred shares have been excluded from the calculation of loss per share due to their nature.

 

9. Property, Plant and Equipment

 

 

PPE - O&G

Properties

US $

CDL Licence Areas

Discontinued

 US $

 

Fixtures & Fittings

US $

Property Right-of-Use

Assets

US $

 

 

Total

US $

 

31 DECEMBER 2020

 

 

 

 

 

 

Cost

 

 

 

 

 

 

1 January 2020

979,164

-

131,122

309,804

1,420,090

 

Exchange differences

 

 

 

 

 

 

Additions

1,644,460

-

56

 

1,644,516

 

Disposals

(1,703)

-

(33,923)

(309,804)

(345,430)

 

31 December 2020

2,621,921

-

97,255

-

2,719,176

 

Depreciation

 

 

 

 

 

 

1 January 2020

3,338

-

91,366

224,176

318,880

 

Exchange differences

 

 

 

 

 

 

Charge for the year

76,603

-

19,980

  85,628

182,211

 

Impairment charge

-

-

-

-

-

 

Disposals

-

-

(24,804)

(309,804)

(334,608)

 

31 December 2020

79,941

-

86,542

-

166,483

 

Carrying amount

 

 

 

 

 

 

31 December 2020

2,541,980

-

10,713

-

2,552,693

 

31 December 2019

975,826

-

39,756

85,628

1,101,210

 

31 DECEMBER 2019

 

 

 

 

 

 

Cost

 

 

 

 

 

 

1 January 2019

-

1,270,832

156,554

334,625

1,762,011

 

Exchange differences

-

-

-

-

-

 

Additions

979,164

-

-

-

979,164

 

Disposals

-

(1,270,832)

(25,432)

(24,821)

(1,321,085)

 

31 December 2019

979,164

-

131,122

309,804

1,420,090

 

Depreciation

 

 

 

 

 

 

1 January 2019

-

1,270,832

66,400

89,167

1,426,399

 

Exchange differences

-

-

-

-

-

 

Charge for the year

3,338

-

38,279

148,766

190,383

 

Impairment charge

-

-

-

-

-

 

Disposals

-

(1,270,832)

(13,313)

(13,757)

(1,297,902)

 

31 December 2019

3,338

-

91,366

224,176

318,880

Carrying amount

 

 

 

 

 

31 December 2019

975,826

-

39,756

85,628

1,101,210

31 December 2018

-

-

90,155

245,458

335,612

 

Included within property, plant and equipment are amounts of US $745,279 (2019: US $942,976) in relation to assets in construction and as a result are not depreciation on the unit of production basis, this will commence when they are available for use.

 

 

10. Other Intangible Assets

 

 

 

SCS Production Assets US $

 

TA License Areas Discontinued

US$

 

CDL Licence Areas

Discontinued

US $

 

Ksar Hadada

Exploration Acreage

US $

 

 

Total

US $

31 DECEMBER 2020

 

 

 

 

 

Cost

 

 

 

 

 

1 January 2020

10,802,524

10,140,936

-

-

20,943,460

Additions

228,112

242,525

-

-

470,637

Disposals

-

(10,383,461)

-

-

(10,383,341)

Decommissioning Asset

-

-

-

-

-

Transfers

(274,330)

-

-

-

(274,330)

31 December 2020

10,756,306

-

-

-

  10,756,306

Impairment and depletion

 

 

 

 

 

1 January 2020

369,874

-

-

-

369,874

Disposals

-

(10,383,461)

-

-

(10,383,461)

Depletion

1,752,310

-

-

-

1,752,310

Depreciation decommissioning assets

122,500

-

-

-

122,500

Impairment charge for the year

-

10,383,461

-

-

10,383,461

31 December 2020

2,244,684

-

-

-

2,244,684

Carrying amount

 

 

 

 

 

31 December 2020

8,511,622

-

-

-

8,511,622

31 December 2019

20,573,586

-

-

-

20,573,586

31 DECEMBER 2019

 

 

 

 

 

Cost

 

 

 

 

 

1 January 2019

1,559,930

-

14,148,371

2,043,430

17,751,731

Additions

16,443,530

-

2,802,239

-

19,245,769

Disposals

-

-

(16,950,610)

(2,043,430)

(18,994,040)

Decommissioning Asset

2,940,000

-

-

-

2,940,000

31 December 2019

20,943,460

-

-

-

20,943,460

Impairment and depletion

 

 

 

 

 

1 January 2019

-

-

14,148,371

2,043,430

16,191,801

Disposals

-

-

(16,950,610)

(2,043,430)

(18,994,040)

Depletion

369,874

-

-

-

369,874

Impairment charge for the year

-

-

2,802,239

-

2,802,239

31 December 2019

369,874

-

-

-

369,874

Carrying amount

 

 

 

 

 

31 December 2019

20,573,586

-

-

-

20,573,586

31 December 2018

1,559,931

-

-

-

1,559,931

 

All intangible assets relate to oil & gas activities. The Group's oil and gas assets were assessed for impairment at 31 December 2020. One CGU's is recognised: the SCS licence concession.

 

Impairment assessments are prepared on the basis of comparing the present value of discounted cash flows with the carrying value of the assets.

 

 

11. Inventories

 

31 December 2020

31 December 2019

 

Group

US $

Company

US $

Group

US $

Company

US $

Crude oil

510,254

-

420,844

-

Parts and supplies

30,976

-

-

-

Total

541,230

-

420,844

-

Crude oil inventories are measured at Net Realisable Value, other inventory items are measured at the lower of cost and net realisable value. These crude oil inventories are held in the SCS asset.

 

 

12. Other Receivables

 

31 December 2020

31 December 2019

 

Group

US $

Company

US $

Group

US $

Non-current

 

 

 

 

Amounts owing by subsidiary undertakings

-

12,504,108

-

12,893,354

Amounts provided against

-

-

-

(870,268)

Total

-

12,504,108

-

12,023,086

Current

 

 

 

 

Trade receivables

1,218,350

-

1,002,295

-

Accrued income

573,842

-

1,181,838

-

Other receivables

5,163,981

84,791

6,056,470

142,910

Prepayments

273,090

71,243

436,676

100,764

Total

7,229,263

156,034

8,677,279

243,674

Other receivables in the Group and the Company principally comprise recoverable Value Added Tax and joint venture receivables. The directors consider that the carrying amount of trade and other receivables approximated their fair value.

 

13. Cash and Cash Equivalents

 

31 December 2020

31 December 2019

 

Group

US $

Company

US $

Group

US $

Company

US $

Cash held by joint venture partners

27,479

-

300,746

-

Cash and cash equivalents

654,680

437,230

1,397,266

1,259,468

Total

682,159

437,230

1,698,012

1,259,468

Echo have advanced cash to our joint venture partners; this cash is held by our partners in a ring-fenced account. We recognise our equity share of the balance held.

 

 

14 Financial Instruments and Treasury Risk Management

Fair Value of Financial Assets and Liabilities

The carrying values of financial assets and liabilities are considered to be material equivalent to their fair values.

 

Treasury Risk Management

The Group manages a variety of market risks, including the effects of changes in foreign exchange rates, liquidity and counterparty risk.

 

Credit Risk

The Group's principal financial assets are bank balances and cash and other receivables.

 

The credit risk on liquid funds is limited because the counterparties are UK, Argentine and Bolivian banks with high credit ratings. The Group operates with positive cash and cash equivalents as a result of issuing share capital in anticipation of future funding requirements. The Group's policy is therefore one of achieving high returns with minimal risks. In order to provide a degree of certainty, the Group primarily invests in short-term fixed-interest treasury deposits giving a low risk profile to these assets.

 

In Echo's SCS assets, acquired in November 2019, operating partner Interoil markets our hydrocarbon, primarily to well established utilities. Echo carries a marginally higher credit risk exposure as Echo deals directly with counterparties for payment, however as the Group's principle customers are substantial oil and gas utility companies and refiners, as such credit risk is considered to be low. There is no history of credit loss, non-payment or default by the inherited counterparties and the calculated amount of the potential 12-month credit risk loss is not material. The Company has low credit risk in respect of receivables as a result of supplying reputable oil and gas purchasers. All receivables have been recovered in full since 1 January 2020. The group has applied the expected credit loss model as required by the adoption of IFRS 9. Given current contractual arrangements where pricing has already been determined at the point where receivables from hydrocarbon sales are recognised as revenue, and the fact that contract counterparties are large corporate entities or utilities no provision was made for losses as any potential losses would be immaterial.

 

The maximum exposure due to credit risk for the Group on other receivables and amounts due from equity accounted joint operations during the year was US $3,253,335 (2019: US $6,928,450). No collateral is held in respect of these amounts.

 

The maximum exposure due to credit risk for the Company on intercompany receivables and other receivables during the year was US $28,509,152 (2019: US $28,028,144). No collateral is held in respect of these amounts. Intergroup funding is assessed for indications of impairment on a periodic basis. Investments and subsidiaries and intergroup loans in the amount of US $14,516,604 (2019: US $14,516,586) are considered to be impaired and have been provided against in full. All other amounts are expected to be received in full.  

 

Currency Risk   

The Group's operations are primarily located in the South America, and the United Kingdom, with the main exchange risk being between the US Dollar and the Argentine Peso. The Argentine Peso has devalued by approximately 9% (2019: 37%) over the year. The Group addressed this risk by minimising exposure to the currency. The majority of Group revenues for the year were denominated in US Dollars but certain liabilities and revenues were denominated in Argentine Pesos. In certain instances the counterparty for settlement of pesos income and expenditure was the same. In these instances pesos balances were offset. Balances were held in dollars until settlement was due, and where short-term pesos balances were held these were placed on overnight deposit.

 

The Group does hold substantial receivable VAT balances denominated in pesos and have sought to expedite recovery to mitigate devaluation losses.

 

 

At year end the Group held the following cash and cash equivalent balances:

 

31 December 2020

US $

31 December 2019

US $

US Dollars

5,835

731,351

GBP Sterling

435,986

393,637

Euro

-

181,742

Argentine Peso

237,776

384,470

Bolivian Boliviano

2,562

6,812

Total

682,159

1,698,012

 

The consolidated statement of comprehensive income would be affected by US $43,599 (2019: US $44,730) if the exchange rate between US $ and GBP changed by 10%. If the exchange rate between the US $ and the Euro changed by 10% there would be a profit or loss of US $nil (2019: US $30,972). There would be a loss of US $21,617 if the exchange rate between the Argentine Peso to the US Dollar weakened by 10%.

 

The Group has exposure to the Euro, Echo hold €25million bond notes, the Group held Euro denominated funds at the beginning of the period to cover servicing of debt during the accounting year. The primary source of funds for the Group in the period was equity raised in GBP, these funds were immediately translated into USD to fund exploration and acquisition activity in Argentina. No hedging products were used during this accounting period, but management actively review currency requirements to assess the suitability of hedging products. The Group consolidated statement of income would be affected by approximately US $2,692,605 (2019: US $2,318,139) by a reasonably possible 10 percentage points fluctuation in the exchange rate between US Dollars and Euros.

 

The VAT regime in Argentina differs from international practise as VAT investment activities are not immediately recoverable but must be offset against revenue streams. The Company made substantial investments in Argentina in 2018,2019 and 2020 and has accordingly built up a material VAT receivable balance. A new mechanism has been approved by government through Law No. 27430 and Decree 813/2018. The mechanism will allow Technical VAT credits associated with the purchase of capital assets from 1 January 2018 to be recovered through application if the Company has not been able to recover the VAT within six months. Echo submitted an application for the recovery of historic VAT balances as soon as the legislation permitted.

 

The Group used Blue Chip Swaps during the year to repatriate funds from Argentina to the UK. A Blue-Chip Swap is when a domestic investor purchases a foreign asset and then transfers the purchased asset to an offshore entity. The Group's Argentine subsidiary purchased shares in highly stable and liquid companies that are traded on both domestic and offshore stock exchanges. These shares were held for a fixed period in accordance with Argentinian regulation. Following the end of the fixed period the shares were sold offshore and the resulting funds were then repatriated to the parent company. This type of transaction is therefore exposed to stock price volatility during the hold period and incurs transaction fees. During the year, the Group swapped 12,259,250 Pesos into $70,851 net of transaction fees and forex losses

 

Interest Rate Risk

 

The Group holds debt instruments that were issued at a fixed rate. As part of the Group's policy to maximise returns on cash held cash held in placed in interest bearing accounts where possible. During the course of 2020, Echo invested cash into operations and did not hold significant cash balances for prolonged periods of time. The consolidated statement of comprehensive income would be affected by US $71 (2019: US $925) by a 1% point change floating interest rate on a full-year basis.

 

The Group's actively manages its working capital to ensure the Group has sufficient funds for operations and planned activities. Operational cash flow represents receipts from revenue, together with on-going direct operational support costs, exploration, appraisal, administration and business development costs. The Group manages its liquidity requirements by the use of both short-term and long-term cash flow forecasts. The Group's policy is to ensure facilities are available as required, to issue equity share capital and form strategic alliances in accordance with long-term cash flow forecasts. The Group currently has no undrawn committed facilities as at 31 December 2020.

 

The Group's financial liabilities are primarily obligations under joint operations, trade payables and operational costs. All amounts are due for payment in accordance with agreed settlement terms with suppliers or statutory deadlines and all within one year.

 

Liquidity Risk

The Group holds Euro denominated long-term debt. See Note 16.

 

The Group does not currently use derivative financial instruments to hedge currency and commodity price risk as it is not considered necessary. Should the Group identify a requirement for the future use of such financial instruments, a comprehensive set of policies and systems as approved by the directors will be implemented.

 

In accordance with IFRS 9, "Financial instruments: recognition and measurement", the Group has reviewed all contracts for embedded derivatives that are required to be separately accounted for if they meet specific requirements set out in the standard.

 

Commodity Price Risk  

 

The Group is now exposed to the risk of fluctuations on prevailing commodity market prices. The Group does not use commodity forward contracts and futures to hedge against price risk in commodities as current volumes and market conditions mean they are not yet appropriate for Echo.

 

A 10% increase in the price of Gas would have increased revenue by approximately US $827,942.

A 10% increase in the price of Oil would have increased revenue by approximately US $278,425 .

 

Capital management 

The Group's legacy strategy has led to its capital structure being a mixture of debt and equity. The directors will reassess the future capital structure when projects under development are sufficiently advanced and restructure accordingly.

 

The Group's financial strategy is to utilise its resources to further appraise and test the Group's projects, forming strategic alliances for specific projects where appropriate together with assessing target acquisitions. The Group keeps investors and the market informed of its progress with its projects through regular announcements and raises additional equity finance at appropriate times.

 

Categories of financial instruments 

All of the Group's financial assets are carried at amortised cost. The Group's embedded derivative is classified at fair value through profit or loss, the remaining Group's financial liabilities are classified as financial liabilities at amortised cost.

 

 

15. Trade and Other Payables

 

31 December 2020

31 December 2019

 

Group

US $

Company

US $

Group

US $

Company

US $

Trade payables

398,121

329,216

398,216

112,701

Taxation and social security costs

354,308

246,549

253,439

128,834

Non-trade payables

362,878

362,878

9,156

-

Accruals

108,223

68,925

92,386

54,501

Right of Use Liability

-

-

64,180

64,180

Other loans

2,298,638

2,298,638

1,290,963

1,290,963

Joint venture payables

9,726,978

-

4,913,915

-

Total

13,249,146

3,306,206

7,022,255

1,651,179

 

 

 

16. Loans Due in Over One Year

 

 

 

 

31 December

2020

US $

31 December

2019

US $

Five-year secured bonds

 

 

 

(22,167,419)

(16,388.586)

Additional net funding

 

 

 

(5,766,544)

(4,215,716)

Other loans

 

 

 

(1,640,693)

-

Total

 

 

 

(29,574,656)

(20,604,302)

 

Balance a at

31 December 2019

US $

Reclassified from short term loans

US$

 

Amortised

finance charges

US $

 

Exchange

adjustments

US $

 

31 December

2020

US $

€20 million five-year secured bonds

 

17,396,519

 

-

 

3,682,625

 

1,757,001

 

22,836,146

€5 million Lombard Odier secured convertible debt facility

 

 

4,583,289

 

 

-

 

 

943,434

 

 

461,078

 

 

5,987,801

Other loans

-

1,290,963

293,867

55,863

1,640,693

Loan fees

(1,007,933)

-

443,650

(104,443)

(668,726)

Incremental loan fees

(367,573)

-

171,263

(24,947)

(221,257)

Total

20,604,302

1,290,963

5,534,839

2,144,552

29,574,656

 

US$27,276,018 of the total loan balance is shown in non-current liabilities and US $2,298,638 is shown in current liabilities (see Note 15) 

 

In March 2020, to ensure the business is robustly positioned in the event of continued downward pressure on oil demand and prices driven by recent global events, and as part of its programme to conserve cash, the Company announced that it would enter negotiations with holders of its debt to extend the loans or defer all cash interest during 2020.

 

€20 million five-year secured bonds

On 22 May 2017 the Company announced that Nusakan plc ("Nusakan") subscribed for five-year non-amortising secured bonds with an aggregate issue value of €20million ("€20m Bond"). Alongside the €20m Bond, the Company issued 169,402,469 warrants to subscribe for new ordinary shares in the Company at an exercise price of 15.1875 pence per ordinary share and an exercise period of  approximately five years, concurrent with the terms of the €20m Bond to Nusakan ("the Warrants"). The €20m Bond are secured over the share capital of Echo Energy Limited. The €20m Bond have an 8% coupon and were issued at a 20% discount to par value. A total cash fee of GBP £1.7 million (€2 million) was payable by the Company.

 

The Warrants were recorded within equity at fair value on the date of issuance and the proceeds of the notes net of issue costs were recorded as non-current liability. The coupon rate for the Bonds ensures that the Company's on-going cash out-flow on interest payments remains low, conserving the Company's cash resources. The effective interest rate is approximately 21.55%. The five-year secured Bonds are due in May 2022.

 

Debt Renegotiation

On 22 May 2020, the Company announced that at a meeting of the holders of the €20m Bond (the "Noteholders"), the Noteholders gave their consent to waive the event of default in relation to the non-payment by the Company of the quarterly interest due on 31 March 2020. Furthermore, the Company obtained consent to defer quarterly interest payments which would otherwise be due on 31 March 2020, 30 June 2020, 30 September 2020 and 31 December 2020 (the "2020 Interest Payments") such that the 2020 Interest Payments will be payable by the Company on maturity of the bonds in May 2022. The Company will continue to be required to make quarterly interest payments on the €20m Bond in 2021 and 2022. In addition, the Company granted security in the form of a share charge over 100% of the shares in Echo Argentina Holdings Limited. Such security will be shared pari passu between the Noteholders and Lombard Odier in its capacity as lender under the Company's €5m Loan. Further restructuring of these Bonds occurred post period. Please refer to note 18.

 

€5 million Lombard Odier secured convertible debt facility

As part of the acquisition of the SCS assets, the Company announced on 21 October 2019 that it had entered into a secured convertible debt facility with Lombard Odier Asset Management (Europe) Ltd ("Lombard Odier") for a five-year non-amortising €5.0 million 8.0% secured convertible debt facility (the "€5m Loan") maturing in 2022. Of the €5million received, as described in Note 16, €0.97m (US $1.1m) has been allocated to the warrants which were issued alongside the €5m Loan and are recorded as a financial liability and held at fair value through the profit or loss.

 

Debt Renegotiation

The terms of the €5m Loan were amended in 2020. In order to provide parties with the time to conclude an amendment to the €5m Loan, the holder Lombard Odier waived default rights under  

the €5m Loan for non-payment of the 31 March 2020 interest. On 1 December 2020 the Company concluded an agreement (subject to conditions that were subsequently met post period see note 18) with Lombard Odier to:

 

· Extend the maturity by 3 years such that the debt facility will mature on the last business day of April 2025.

· make no more cash interest payments until the maturity date. Interest will be rolled up and added to the then outstanding debt facility principle.

 

Other loans

On 6 March 2020, Echo announced that it had agreed a two-year extension of the Company's existing £1.0m Loan originally provided to the Company in March 2017 and now held by Spartan Class O, a sub fund of Spartan Fund Limited SAC ("Spartan"). The interest rate of the £1m Loan remains unchanged.

 

The Company agreed that the extended Loan will now be repayable as follows: (a) £100,000 on 30 November 2020; (b) four quarterly instalments of £50,000 on the last business day of the relevant month commencing in March 2021; and (c) the balance of £700,000 on 8 March 2022. In connection with the extension of the Loan, Spartan was issued with 3,571,428 warrants to subscribe for new ordinary shares in the Company at a price of 1.4 pence per new share and with an expiry date of 9 March 2022.

 

On 1 April 2020, the Company further announced entry of an amendment to the Company's £1m Loan facility such that interest payment due 31 March 2020 was postponed and no interest payments were required prior to 31 March 2021. With effect from 1 January 2020, interest on the £1m Loan will now accrue at an unchanged annual interest rate of 12.0% and, at the end of each quarterly interest period, be added to the aggregate principal amount owing under the £1m Loan, for payment on maturity. The Company agreed that, as amended, the £1m Loan will now be repayable as follows: (a) £100,000 in March 2021; (b) three quarterly instalments of £50,000 on the last business day of the relevant month commencing in June 2021; and (c) the balance of £750,000, together with accrued interest, on 8 March 2022. The other terms of the £1m Loan remain unchanged.

 

  Maturity Analysis

Contractual undiscounted cash flows:

 

 

31 December 2020

US $

 

31 December 2019

US $

Amounts due within one year

2,293,290

1,396,157

Amounts due between one and five years

35,628,948

33,291,406

Amounts due over five years

-

-

 

37,922,238

34,687,563

 

17. Provisions

 

 

31 December 2020

US $

 

31 December 2019

US $

 

 

-

Assessment of decommissioning provision

2,979,956

2,940,000

 

2,979,956

2,940,000

 

Provision has been made for the discounted future cost of abandoning wells and restoring sites to a condition acceptable to the relevant authorities. It is likely that some abandonments will occur in 2021. The provisions are based on Operators' internal estimate at 31 December 2020, and the movement from the prior year relates to the unwinding of the provision. Assumptions are based on the current experience from decommissioning wells. The estimates are reviewed regularly to take account of any material changes to the assumptions. Actual decommissioning costs will ultimately depend upon future costs for decommissioning which will reflect market conditions and regulations

at that time. Furthermore, the timing of decommissioning is uncertain and is likely to depend on when the fields cease to produce at economically viable rates. This, in turn, will depend on factors such as future oil and gas prices, which are inherently uncertain.

 

18. Subsequent Events

 

New gas contract at premium to prevailing spot pricing

 

On 6 January 2021, the Company secured a further gas sales contract at a premium to prevailing spot market rates, supplying a key customer with approximately 1.4MMscf/d gross (1.0 MMscf net to Echo) of natural gas. The price negotiated represented a significant 28% premium to the prevailing local spot price of Q4 2020.

 

On 28 January 2021, the Company granted 35,750,000 options to its employees as part of an initiative to retain and incentivise staff, with all options issued with a price of 0.66 pence per Ordinary share. 24,000,000 of the options have been awarded to Martin Hull, the Company's Chief Executive Officer. The options awarded to Martin Hull will vest in three equal tranches on the first, second and third anniversaries of grant, conditional upon the Echo Remuneration Committee being satisfied that vesting of each tranche is warranted, based on the Chief Executives performance and/or share price growth over the year prior to vesting. These director options will be exercisable anytime thereafter until expiry on the fifth anniversary date on which the options were granted. The options issued to employees will vest on the third anniversary of the date of grant, and will be exercisable anytime thereafter until expiry on the fifth anniversary on which the options were granted.

 

On 24 March 2021, Echo secured two new sales contracts at significant premium to both prevailing spot market rates (39%) and 2020 contracted rates (126%).

 

Issue of shares in relation to 22 December 2020 fund raise

 

On 11 January 2021, 167,842,138 shares at 0.51p issued to satisfy the £856,00 gross proceeds fund raise announced on the 22 December 2020. In addition, 167,843,138 warrants were issued, with half of these exercisable at 0.7p and the remainder at 0.75p. Of these, 50% were issued on admission, and the other 50% conditional on the necessary issuance authorities at the Company's 2021 annual general meeting.

 

Bolivia: Cooperation Agreement and Exclusivity

 

On 8 January 2021, the Company announced that it has signed a cooperation agreement with GTLI, a majority owned subsidiary of the Bolivian company UruboCorp focused on energy production and supply in Bolivia and with interests in both the hydrocarbon and renewables sectors.

 

Echo and GTLI will collaborate to jointly promote their business development initiatives in Bolivia, through joint efforts to identify and assess new business development opportunities across the full

energy spectrum, in relation to which the parties have granted each other a six-month period of

exclusivity. The cooperation agreement will enable a portfolio of opportunities to be matured in a cost-effective way across the Bolivian energy space.

 

GTLI is a leading Bolivian Energy Operator and holds the El Palmar operational hydrocarbon contract with the Government of Bolivia and is a subsidiary within a larger investment group known as UruboCorp that includes mining (gold), real estate and energy, and with interests in both the hydrocarbon and renewables sectors.

 

Cooperation between the Company and GTLI on any specific projects identified remains subject to, inter alia, the negotiation and entry of binding agreements and Echo will focus on any opportunities that meet its stringent profitability and positive cashflow criteria. The grant of a period of Exclusivity is the only binding term of the Cooperation Agreement. The Cooperation Agreement has an initial term of 5 years and may be terminated by either party without penalty on providing 6 months' notice.

 

Bond restructuring

On 22 February 2021, Echo announced further to the Company's announcement of 1 December 2020, its proposals in respect of a restructuring of  the Company's Bonds, It proposed to

 

·E xtend the maturity of the Bonds by three years to 15 May 2025 (the "Maturity Date"); and

 

· Remove all cash interest payments on the Notes prior to the Maturity Date.

 

On approval, all interest on the Bonds accruing from 31 December 2019 shall be paid in cash on the Maturity Date save that Noteholders will be provided with the ability, from 30 September 2021, to elect to receive Bond interest payments in respect of the immediately preceding quarter in new ordinary Shares in the Company ("Elections"), subject inter alia to the Company having the required share issuance authorities in place from time to time to satisfy elections and to Noteholders holding

at least 50 per cent of the Bonds having made Elections in respect of the relevant quarter. Any new ordinary shares issued as a result of elections would be issued at an effective issue price equal to the volume weighted average price of an Echo ordinary share for the 10 Business Days before the relevant interest conversion date.

 

As part of the Proposals, the Company agreed, subject to Bondholder approval of the Proposals at the Noteholder Meeting, that it will not, without the prior consent of Noteholders by way of a simple majority of those Noteholders then voting, drill an exploration well with a budgeted cost to the Company of in excess of EUR 5.0 million for so long as the Bonds are outstanding and that it will not, in the last 18 months prior to the Maturity Date, make an acquisition of an interest in an oil and gas property, lease or licence if the cash consideration for such acquisition exceeds EUR 10.0 million.

 

A payment of EUR 100,000, payable to Bondholders voting in favour of the Proposals at the Bondholder Meeting pro rata to votes cast at the Noteholder Meeting, will be  satisfied by the issue of new ordinary shares in the Company at an issue price equal to the average mid-market closing price per Echo ordinary share for the five days ending, and including, 18 February 2021.

Subsequently on 30 March 2021, a requisite majority of Bondholders approved the Debt restructuring proposals. Echo issued a total of 11,473,929 new ordinary shares in the Company (representing c.0.9% of the Company's current issued ordinary share capital) to Bondholders.

Facilities upgrade

On 24 February 2021, Echo announced agreement with the SCS partners to upgrade existing liquid pipelines in the SCS assets. 

 

Capital expenditure net to Echo's 70% working interest of around US$ 275,000 will be injected by the Company to replace and upgrade parts of the infrastructure primarily in the Chorillos, Campo Molino and Cerro Convento fields with installation expected to take approximately 45 days from conclusion of successful procurement. Ten individual upgrade projects will be completed to enable the upgrade of around 23 km of pipeline.

 

It is anticipated that once the pipelines are fully operational, gross daily liquids production will be restored to levels of between 480 bopd - 600 bopd (336 - 420 bopd net Echo).

 

Exercise of Warrants

On 12 April 2021, the Company received notice for the exercise of 74,200,000 warrants to subscribe for new ordinary shares in the Company at an exercise price of 0.3 pence per share. As a result, an application has been made for 74,200,000 new ordinary shares in the Company (to be admitted to trading on AIM.

 

The admission of the new ordinary shares, rank pari passu with the Company's existing ordinary shares. Following Admission on the 16 April, the Company's issued ordinary share capital will comprise 1,293,567,987.

 

 

 

 

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