REG - EnergyPathways PLC - Final Results and Notice of AGM
06/06/2024 07:00
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RNS Number : 3165R EnergyPathways PLC 06 June 2024
6 June 2024
EnergyPathways plc
("EnergyPathways" or the "Company")
Annual Results
& Notice of AGM
EnergyPathways plc (AIM: EPP), an integrated energy transition company, is
pleased to announce the publication of its Annual Results for the year ended
31 December 2023 and Notice of Annual General Meeting.
Period and Post-Period Highlights
· Completed AIM listing in December following RTO with Dial Square
Investments Plc
· Raised £2m (before expenses) through the issue of 50,000,000 new
ordinary shares in a placing and subscription
· Progressed Front End Engineering and Design (FEED) for Marram Gas
Field Project
· Outlined longer-term strategy to develop an energy storage hub in UK
Irish Sea, incorporating other potential geo-storage reservoirs, storage
infrastructure and hydrogen production facilities to support the UK energy
market's future needs
· Formed strategic partnership with Mermaid Subsea Services and Cortez
Subsea of the MCS Group
· Awaiting outcome of out-of-round production and storage licence
applications to NSTA
Notice of AGM
The Company's Annual General Meeting ("AGM"), will be held at 09.00 a.m. on 28
June 2024, at the offices of Buchanan, 107 Cheapside, London EC2V 6DN.
To be valid, proxy votes must be received by the Company's registrar, Share
Registrars, as soon as possible and in any event no later than 09.00am on 26
June 2024.
A copy of the Notice of AGM, together with the Annual Report, will be posted
to shareholders on 6 June and will be available to view free of charge on the
website of the Company at www.energypathways.uk (http://www.energypathways.uk)
.
Commenting on the results and outlook, CEO Ben Clube said:
"2023 was a transformative period for EnergyPathways as we obtained a London
listing following the RTO with Dial Square Investments Plc. The listing
provides a strong growth platform from which we intend to deliver our focused
strategy and generate meaningful long-term value for our stakeholders. The
current fiscal year has seen good progress with our FEED workstreams for the
development of the Marram Gas Project. In tandem, we continue to progress
our engagement with the NSTA as we seek to expand our portfolio of production
and storage licences, emphasise our commitment to a sustainable development
for Marram and outline our vision for an energy storage hub in the East Irish
Sea that supports the critical factors that comprise the UK's energy
requirements. 2024 will be an active year for EnergyPathways as we seek to
achieve FID on Marram and establish the building blocks for our longer-term
growth ambitions."
Enquiries
EnergyPathways Tel: +44 (0)20 7466 5000, c/o Buchanan (Financial PR)
Ben Clube / Ben Hodges
Email : info@energypathways.uk
Cairn Financial Advisers LLP (Nominated Adviser) Tel: +44 (0)20 7213 0880
Jo Turner / Louise O'Driscoll / Sandy Jamieson
SP Angel Corporate Finance LLP (Joint Broker) Tel: +44 (0)20 3470 0470
Richard Hail / Adam Cowl
Optiva Securities Limited (Joint Broker) Tel: +44 (0)20 3137 1903
Christian Dennis / Daniel Ingram
Global Investment Strategy UK Limited (Joint Broker) Tel: +44 (0)20 7048 9000
Callum Hill / James Sheehan
Buchanan (Financial PR) Tel: +44 (0)20 7466 5000
Ben Romney / Barry Archer
For further information on EnergyPathways visit www.energypathways.uk and
@energy_pathways on X (formerly Twitter).
Chairman's Statement
I am very pleased to present an update on the Group for the year ended 31
December 2023. This is my inaugural Chairman's address, following my
appointment to the role of Chairman on 20 December 2023 upon our admission to
trading on AIM.
A Platform for Growth
It will be recalled that Dial Square Investments Plc ("Dial Square") listed on
the Main Market of the London Stock Exchange on 30 November 2022. Following
the evaluation of a number of acquisition opportunities, it announced on 10
March 2023 that it had entered into heads of terms to acquire the entire share
capital of EnergyPathways UK Holdings Ltd., a private company and the ultimate
holder of the Marram Gas Field licence in the East Irish Sea (the
"Acquisition"), with the agreement to acquire the entire share capital of
EnergyPathways UK Holdings Ltd. to be satisfied by the issue of 68,013,885
Consideration Shares at a price of 4.0p per share. The Acquisition
constituted a reverse takeover ("RTO") under the Listing Rules.
Concurrent with the Acquisition the Company raised £2m (before expenses)
through the issue of 50,000,000 new ordinary shares in a placing and
subscription at a price of 4.0p per share, as well as issuing 13,352,674 new
ordinary shares at a price of 4.0p per share to directors and management in
settlement of accrued remuneration. Dial Square formally changed its name to
EnergyPathways plc upon completion of the acquisition.
EnergyPathways plc is an integrated energy transition company, initially
targeting UK gas assets, with the aim of bringing into production, in the
near-term, low emission energy solutions to assist with the UK's transition to
Net Zero while also providing critical supply to ensure domestic energy
security.
An Active Period of Progress
I should take this opportunity to remind shareholders of the progress made
since the RTO and admission to trading on AIM.
The primary focus for the team is our flagship Marram gas field project (the
"Marram Project" or "Marram") and to progress the Front End Engineering and
Design ("FEED") as we move towards the Final Investment Decision. We are
targeting first gas in 2025.
This ongoing engineering and design work has substantially confirmed the
potential to fully electrify the Marram Project and has confirmed the
feasibility of EnergyPathways' plan to develop Marram in a way so as to
facilitate future gas storage there. The future potential for Marram
includes integrating it into a wider UK Irish Sea energy storage project,
incorporating other geo-storage reservoirs, storage infrastructure and
hydrogen production to support the UK energy market's future needs.
Our efforts to date have excited interest from renewable energy generators,
energy off-takers, debt financiers and, major engineering houses indicating
support for the Marram Project and of our planned UK Irish Sea low carbon
energy storage project.
We have formed a partnership with subsea engineering houses Mermaid Subsea
Services and Cortez Subsea of the MCS Group and the partnership is progressing
tie-back development concept engineering. In addition, the Company is
progressing supply chain engagement and scheduling of lead times for certain
long lead items including subsea controls, electro-hydraulic umbilicals,
wellheads, subsea flowlines and other major items.
The technical team is progressing engineering and design for an all-electric,
zero-emission, subsea production system with industry stakeholders, including
Verlum, Advanced Mechatronics and Proserv and has also commenced the next
phase of FEED for drilling and completions engineering with Zenith Energy.
"Out-of-Round" licence requests have been submitted to the North Sea
Transition Authority ("NSTA", the UK's oil and gas, offshore hydrogen, and gas
and carbon storage industries regulator). The "Out-of-Round" licence requests
include gas production licences for the "ready for development" Knox and Lowry
fields, and gas storage licences for the Marram, Knox and Lowry fields. If
these are won, EnergyPathways will incorporate them into its UK Irish Sea
energy storage project.
Underlying all our work is the determination to demonstrate clear alignment
with the NSTA's aims for:
· decarbonisation of existing infrastructure; and
· Net Zero objectives for new gas developments.
We also hope to qualify for any relevant financial incentives that may be
forthcoming from the UK Government.
Financial Results
The Group incurred a loss for the year to 31 December 2023 of £1,860,916 (31
December 2022 - loss of £1,257,193). The 2022 comparative numbers are that of
the wholly owned subsidiaries EnergyPathways UK Holdings Limited Group. Refer
to note 2.2 for further detail.
In the year to 31 December 2023, the loss mainly arose from expenses in
connection to the transaction, costs associated with the admission process
including staff remuneration and consultancy fees, along with general
administration expenses. These expenses have been met from the proceeds of the
issue of shares.
Cash used in operations totalled £372,913 (31 December 2022 - £850,004).
Business Outlook
EnergyPathways' admission to trading on AIM, in December 2023, marked a very
significant milestone for your Company and was the culmination of a long
period of concept development and determined management by our CEO, his team
and the assembled Board.
It is also the start of a new journey - one as an AIM quoted business with a
strong commitment to generating meaningful, long-term, sustainable value for
our shareholders.
Above all, we need to ensure the successful development of our foundation
asset in Marram where we are planning for first gas in 2025. Our ongoing
engineering and design work has substantially confirmed the potential to fully
electrify the Marram Project and has confirmed the feasibility of
EnergyPathways' plan to develop the Marram Project in a way so as to enable
the project for future gas storage use.
We are, and will remain, wholly focused on what we can control in terms of the
Group's corporate strategy and technical progress. However, it will be well
understood by all our shareholders, that our industry continues to face
significant headwinds.
We can assure our shareholders that we have determined and are confident that
all the investments on which we are focused can deliver strong rates of
returns and have relatively low-risk profiles and we will continue to promote
what we believe to be a differentiated and compelling investment proposition
for investors as we compete for capital in what we hope is becoming a more
favourable investment environment.
Our focus on proven "ready-to-go" developments supports our ability to attract
debt financing, which we expect to fund the large majority of any development.
We have already had positive debt finance discussions and we will continue to
build those relationships. The difference will likely come from a variety of
different sources, including industry partnership, and we continue to explore
the most accessible and least dilutive options for our shareholders.
The other major headwind is that the Oil & Gas ("O&G") industry has
attracted a great deal of negative attention for some years now. O&G
continues to be as polarising an issue as any in the public space. In recent
times, the Conservative-led government has seemed to come to its senses to
some extent, and realised that O&G, and gas in particular, is going to be
with us for a very long time to come. It seems to have realised too that, for
both commercial and environmental reasons, the UK needs to prioritise security
of supply, to develop and exploit its own resources.
With the upcoming general election in the UK in July 2024, however, the Labour
Party has alluded to even more punitive fiscal measures against producers and
is yet to announce any similar sort of change of heart or mind.
Our role is to continue to engage collaboratively with the government of
whatever colour, as well as with the NSTA to ensure alignment. We will
continue to promote the benefits of domestic gas production versus higher cost
LNG imports with a significantly larger environmental footprint. We will not
shy away either from engagement with the general public through any and all
media, if and when the occasion presents itself to do so.
Despite our initial focus on the Marram Project, it is important to emphasise
that EnergyPathways is not a traditional oil and gas company but is instead
the embodiment of a responsible Energy Transition company - producing vital
supply of a more cost effective and environmentally friendly gas supply vs
importation while progressing plans for the UK's much needed storage
potential.
EnergyPathways plc has a clear long-term vision:
· we believe the Company has an important role to play in 'joining up
the dots' that form the basis of the UK's energy policy requirements in both
Energy Security and the Energy Transition;
· we have a first mover advantage in a unique region with supportive
market dynamics;
· we are well positioned to leverage that advantage for the benefit of
our shareholders; and
· we are pragmatic about our current scale versus the size of our
ambition and so will adopt a logical pathway to achieve both our near-term and
longer-term ambitions.
This is a critical year for the Company as we seek to progress our foundation
asset to development and look forward to updating all our stakeholders on the
progress towards that key milestone.
In conclusion, I would like to thank the wider Board and management team for
their dedication and focus through what has been a very busy and complex
period for the Company - your efforts have provided a great growth platform
for EnergyPathways.
I would also like to thank all our shareholders, both old and new, for their
support and belief in the team and its strategic vision, and look forward to
rewarding that faith over time as we deliver on our strategic objectives.
Mark Steeves
Chairman and Non-Executive Director
4 June 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
FOR THE YEAR TO 31 DECEMBER 2023
2023 2022
Note £ £
Administrative expenses 5 (596,376) (621,964)
Pre-acquisition license expenses (35,048) (379,931)
Operating Loss (631,424) (1,001,895)
Net finance costs 6 (737) -
Listing costs (213,485) (255,298)
Reverse acquisition expense 4 (1,015,270) -
Loss before tax (1,860,916) (1,257,193)
Taxation 9 - -
Loss for the period (1,860,916) (1,257,193)
Other comprehensive income:
Items that will or may be reclassified to profit or loss:
Other comprehensive income - -
Total comprehensive income (1,860,916) (1,257,193)
Earnings per share (pence) basic and diluted 10 (2.55) (1.85)
All operations are continuing.
The notes form part of these financial statements.
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
Group Group Company Company
As at 31 December As at 31 December As at 31 December As at 28 February
2023 2022 2023 2023
Note £ £ £ £
Non-current assets
Intangible assets 11 729,931 318,001 - -
Loan to subsidiaries 14 - - 555,801 -
Investment in subsidiary 15 - - 2,734,160 -
729,931 318,001 3,289,961 -
Current assets
Trade and other receivables 12 1,829,279 159,270 1,819,818 20,198
Cash and cash equivalents 13 494,658 71,061 485,780 709,138
2,323,937 230,331 2,305,598 729,336
Total assets 3,053,868 548,332 5,595,559 729,336
Current liabilities
Trade and other payables 16 (1,187,788) (653,816) (515,666) (231,809)
(1,187,788) (653,816) (515,666) (231,809)
Total liabilities (1,187,788) (653,816) (515,666) (231,809)
Net assets 1,866,080 (105,484) 5,079,893 497,527
Equity
Ordinary share capital 17 1,579,166 14,333 1,579,166 265,500
Share premium 17 4,451,952 1,092,667 4,451,952 628,281
Performance share capital 17 - 1,510 - -
Share based payments reserve 18 176,000 43,200 176,000 -
Retained earnings (4,341,038) (1,257,194) (1,127,225) (396,254)
Total equity 1,866,080 (105,484) 5,079,893 497,527
EnergyPathways plc has used the exemption grated under s408 of the Companies
Act 2006 that allows for the non-disclosure of the Income Statement of the
parent company. The after-tax loss attributable to EnergyPathways plc for the
10-month period ended 31 December 2023 was £730,971 (year to 28 February
2023: £611,775).
The notes form part of these financial statements.
The Consolidated Financial Statements of EnergyPathways plc were approved by
the Board of Directors and authorised for issue on 4 June 2024.
Signed on behalf of the Board of Directors by:
Ben Hodges
Director & Chief Financial Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
Ordinary Share capital Share premium Performance share capital Share based payments reserve Retained earnings Total
Note £ £ £ £ £ £
Balance as at 16 July 2021 (Unaudited) 1 - - - 1
Loss for the period and total comprehensive income - - - - (1,257,194) (1,257,194)
Issue of shares 14,332 1,092,667 1,510 - - 1,108,509
Issue of warrants - - - 43,200 - 43,200
Balance as at 31 December 2022 14,333 1,092,667 1,510 43,200 (1,257,194) (105,484)
Loss for the period and total comprehensive income - - - - (1,860,916) (1,860,916)
Transfer to retained earnings 4 (14,333) (1,092,667) (1,510) - 1,108,510 -
Recognition of EnergyPathways plc equity at reverse acquisition 17 265,500 628,281 - - 1,213,303
319,522
Issue of shares for acquisition of subsidiary 17 680,139 2,040,417 - - (2,734,160) (13,604)
Issue of shares for services 17 133,527 400,580 - - 534,107
Issue of shares - share subscription 17 500,000 1,500,000 - - - 2,000,000
Share issue costs 17 - (117,326) - 14,000 - (103,326)
Issue of warrants 18 - - - 202,000 - 202,000
Transfer between reserves 18 (83,200) 83,200 -
Balance as at 31 December 2023 1,579,166 4,451,952 - 176,000 (4,341,038) 1,866,080
The notes form part of these financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
Ordinary Share capital Share premium Share based payments reserve Retained earnings Total
Note £ £ £ £ £
Balance as at 28 February 2022 162,500 245,575 - (153,870) 254,205
Loss for the period and total comprehensive income - - - (611,775) (611,775)
Issue of shares - share subscription 103,000 412,000 - - 515,000
Share issue costs - (29,294) - - (29,294)
Share based payments - - - 369,391 369,391
Balance as at 28 February 2023 265,500 628,281 - (396,254) 497,527
Loss for the period and total comprehensive income - - - (730,971) (730,971)
Issue of shares for acquisition of subsidiary 680,139 2,040,417 - - 2,720,556
Issue of shares for services 17 133,527 400,580 - - 534,107
Issue of shares - share subscription 17 500,000 1,500,000 - - 2,000,000
Share issue costs 17 - (117,326) - - (117,326)
Issue of warrants 18 - - 176,000 - 176,000
Balance as at 31 December 2023 1,579,166 4,451,952 176,000 (1,127,225) 5,079,893
The notes form part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
2023 2022
Note £ £
Cash flows from operating activities
Loss before tax for the year (1,860,916) (1,257,193)
Adjustments for:
Share based payments 18 202,000 43,200
Compensation settled in shares 494,600 8,510
Interest income 6 (72) -
Interest expense 6 809 -
Reverse acquisition expense 1,015,270 -
(148,309) (1,205,483)
Changes in non-cash working capital accounts
(Increase) in trade and other receivables 12 (424,964) (156,454)
Increase in trade and other payables 16 200,360 511,934
Cash used in operating activities (372,913) (850,003)
Income taxes paid - -
Net cash flows from operating activities (372,913) (850,003)
Investing activities
Purchases of exploration and evaluation assets 11 (284,643) (178,936)
Acquisition of subsidiary 15 (13,605) -
Cash acquired on acquisition 4 238,320 -
Interest income 6 72 -
Net cash used in investing activities (59,856) (178,936)
Financing activities
Proceeds from issue of ordinary share capital 17 760,500 1,100,000
Share issue costs 17 (103,325) -
Interest paid 6 (809) -
Proceeds from loans and borrowings 14 200,000 -
Net cash provided by financing activities 856,366 1,100,000
Net increase in cash and cash equivalents 423,597 71,061
Cash and cash equivalents at beginning of year 13 71,061 -
Cash and cash equivalents and end of year 13 494,658 71,061
During the period to 31 December 2023 the following significant non-cash
transactions were:
· On 20 December 2023 the Company issued 68,013,885 Ordinary shares at
4 pence each for the entire issued share capital of EnergyPathways UK Holdings
Limited;
· On 20 December 2023 the Company issued 8,815,174 Ordinary shares at 4
pence each to Directors and Management in settlement of remuneration in lieu
of cash; and
· On 20 December 2023 the Company issued 4,537,500 Ordinary shares at 4
pence each to former Directors and Consultants in settlement of remuneration
in lieu of cash.
The notes form part of these financial statements.
COMPANY STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2023
10-months to 31 December Year to 28 February
2023 2023
Note £ £
Cash flows from operating activities
Loss before tax for the period (730,971) (611,775)
Adjustments for:
Share based payments 18 184,000 369,391
Compensation settled in shares 162,000 -
(384,971) (242,384)
Changes in non-cash working capital accounts
(Increase) in trade and other receivables 12 (560,120) 15,890
Increase in trade and other payables 16 283,858 142,874
Cash used in operating activities (661,233) (83,620)
Income taxes paid - -
Net cash flows from operating activities (661,233) (83,620)
Investing activities
Loan to subsidiary 14 (205,695) -
Purchases of exploration and evaluation assets 15 (13,605) -
Net cash used in investing activities (219,300) -
Financing activities
Proceeds from issue of ordinary share capital 17 760,500 451,100
Share issue costs 17 (103,325) -
Net cash provided by financing activities 657,175 451,100
Net (decrease) / increase in cash and cash equivalents (223,358) 367,480
Cash and cash equivalents at beginning of period 13 709,138 341,658
Cash and cash equivalents and end of period 13 485,780 709,138
During the period to 31 December 2023 the following significant non-cash
transactions were:
· On 20 December 2023 the Company issued 68,013,885 Ordinary shares at
4 pence each for the entire issued share capital of EnergyPathways UK Holdings
Limited;
· On 20 December 2023 the Company issued 8,815,174 Ordinary shares at 4
pence each to Directors and Management in settlement of remuneration in lieu
of cash; and
· On 20 December 2023 the Company issued 4,537,500 Ordinary shares at 4
pence each to former Directors and Consultants in settlement of remuneration
in lieu of cash.
The notes form part of these financial statements.
1. General Information
EnergyPathways plc (the "Company" or "EnergyPathways") is a company
incorporated in England and Wales under the Companies Act 2006 with the
registered number 13201653. The Company's registered office is Highdown House,
Yeoman Way, Worthing, West Sussex, BN99 3HH.
The principal activity of the Group is delivering clean, home-grown energy for
the UK. On 3 March 2022, the Group acquired a 100% interest in, and is
administrator for the Marram gas field located in the East Irish Sea, with
proven reserves 38.8 Bcf of natural gas.
The financial statements presented for Group are for the year ended 31
December 2023.
2. Summary of significant accounting policies
The principal accounting principles applied in the preparation of these
financial statements are set out below. These principles have been
consistently applied to all years presented, unless otherwise stated.
2.1. Basis of preparation
The financial statements have been prepared in accordance with UK adopted
International Accounting Standards (IAS).
The financial statements have been prepared under the historical cost
convention.
2.2. Basis of Consolidation
The financial statements consolidate the financial information of the Company
and its subsidiaries EnergyPathways UK Holdings Ltd and EnergyPathways Irish
Sea Limited (together "the Subsidiaries") at the reporting date. Subsidiaries
are consolidated into the Group when control is achieved, defined as where the
Company has the power to govern the financial and operating policies of an
investee entity, has the rights to variable returns from its involvement with
the investee and has the ability to use its power to affect its returns. The
results of the Subsidiaries included in the financial information are from the
effective date of acquisition. All intra-Group transactions, balances, income
and expenses are eliminated on consolidation. The financial statements of all
Group companies are adjusted, where necessary, to ensure the use of consistent
accounting policies.
The Company has two subsidiaries as follows:
Company Country of Incorporation Incorporated Interest
EnergyPathways UK Holdings Ltd United Kingdom 16 July 2021 100%
EnergyPathways Irish Sea Limited United Kingdom 11 August 2021 100%
EnergyPathways plc has used the exemption granted under s408 of the Companies
Act 2006 that allows for the non-disclosure of the Income Statement of the
parent company. The after-tax loss attributable to EnergyPathways plc for the
10-month period ended 31 December 2023 was £730,971 (year to 28 February
2023: £611,775).
2.3. Going concern
The Group meets its working capital requirements from its cash and cash
equivalents. The Group is pre-revenue, and to date has raised finance for its
activities through the issue of equity. The Directors have prepared a
detailed forecast for the 12 months following the date of signing this report
based on forecasted expenditure, including all required spend to meet short
term licence requirements. This forecast has been stress tested by Management.
However the Group's ability to meet future operational objectives through to
first production of gas from the Marram Gas Project will be reliant on raising
further finance.
The Directors are confident that further funds can be raised and it is
appropriate to prepare the financial statements on a going concern basis,
however there can be no certainty that any financing will complete. These
conditions indicate existence of a material uncertainty related to events or
conditions that may cast significant doubt about the Group's ability to
continue as a going concern, and, therefore, that it may be unable to realise
its assets and discharge its liabilities in the normal course of business. The
auditors have made reference to this material uncertainty within their audit
report. These financial statements do not include the adjustments that would
be required if the Group could not continue as a going concern.
2.4. Changes in accounting policies
2.4.1. New standards, amendments to standards and interpretations
i) New and amended standards adopted by the Group
The International Accounting Standards Board (IASB) issued various amendments
and revisions to International Financial Reporting Standards and IFRIC
interpretations. A number of amendments and revisions were applicable for the
period ended 31 December 2023 but did not result in any material changes to
the financial statements of the Group.
Of the other IFRS and IFRIC amendments, none are expected to have a material
effect on the future Group Financial Statements.
ii) New and amended standards not yet adopted by the Group
The Directors do not believe that the implementation of new standards, amended
standards and interpretations issued but not yet effective and have not been
early adopted early will have a material impact once implemented in future
periods.
2.5. Foreign currency
2.5.1. Functional and presentation currency
Items in the Company's financial statements are measured in the currency of
the primary economic environment in which the entity operates (functional
currency). The functional currency of the Company is Pounds sterling (£),
which is also the presentation currency for these financial statements.
Monetary amounts in these financial statements are rounded to the nearest £.
2.5.2.Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation where items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement, except when
deferred in other comprehensive income as qualifying cash flow hedges and
qualifying net investment hedges. Foreign exchange gains and losses that
relate to borrowings and cash and cash equivalents are presented in the income
statement within 'finance income or costs.' All other foreign exchange gains
and losses are presented in the income statement within 'Other
(losses)/gains.'
2.6. Taxation
Tax is recognised in the Consolidated Statement of Comprehensive Loss, except
to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity respectively. Deferred tax
assets are not brought to account in the Consolidated Statement of Financial
Position until there is a reasonable expectation that these assets will be
realised.
2.7. Intangible assets
Exploration and evaluation expenditures (E&E)
The Group applies the successful efforts method of accounting for oil and gas
assets, having regard to the requirements of IFRS 6 'Exploration for and
Evaluation of Mineral Resources'. Costs incurred prior to obtaining the legal
rights to explore an area are expensed immediately to the Statement of
Comprehensive Income.
All licence acquisitions, exploration and evaluation costs are capitalised, a
share of administration costs is capitalised insofar as they relate to
exploration, evaluation and development activities. These costs are written
off unless commercial reserves have been established or the determination
process has not been completed and there are no indications of impairment. If
a project is deemed commercial, all of the attributable costs are transferred
into Property, Plant and Equipment. These costs are then depreciated from the
commencement of production on a unit of production basis.
2.8. Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that
an asset may be impaired. If any such indication exists, or when annual
impairment testing for an asset is required, the Group makes an estimate of
the asset's recoverable amount.
An asset's recoverable amount is the higher of its fair value less costs to
sell and its value in use.
In assessing value in use, estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
2.9. Financial Instruments
2.9.1 Initial recognition
A financial asset or financial liability is recognised in the statement of
financial position of the Group when it arises or when the Group becomes a
party to the contractual terms of the financial instrument.
2.9.2 Classification
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of the following
conditions are met:
(1) the asset is held within a business model whose objective is to collect
contractual cash flows; and
(2) the contractual terms of the financial asset generating cash flows at
specified dates only pertain to capital and interest payments on the balance
of the initial capital.
Financial assets which are measured at amortised cost, are measured using the
Effective Interest Rate Method (EIR) and are subject to impairment. Gains and
losses are recognised in profit or loss when the asset is derecognised,
modified or impaired.
Financial liabilities at amortised cost
Financial liabilities measured at amortised cost using the effective interest
rate method include current trade and other payables that are short term in
nature. Financial liabilities are derecognised if the Group's obligations
specified in the contract expire or are discharged or cancelled.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the effective
interest rate ("EIR"). The EIR amortisation is included as finance costs in
profit or loss. Trade payables other payables are non-interest bearing and are
stated at amortised cost using the effective interest method.
2.9.3. Derecognition
A financial asset is derecognised when:
(1) the rights to receive cash flows from the asset have expired, or
(2) the Group has transferred its rights to receive cash flows from the
asset or has undertaken the commitment to fully pay the cash flows received
without significant delay to a third party under an arrangement and has either
(a) transferred substantially all the risks and the assets of the asset or (b)
has neither transferred nor held substantially all the risks and estimates of
the asset but has transferred the control of the asset.
2.9.4 Impairment
The Group recognises a provision for impairment for expected credit losses
regarding all financial assets. Expected credit losses are based on the
balance between all the payable contractual cash flows and all discounted cash
flows that the Group expects to receive. Regarding trade receivables, the
Group applies the IFRS 9 simplified approach in order to calculate expected
credit losses. Therefore, at every reporting date, provision for losses
regarding a financial instrument is measured at an amount equal to the
expected credit losses over its lifetime without monitoring changes in credit
risk. To measure expected credit losses, trade receivables and contract assets
have been grouped based on shared risk characteristics.
2.10. Trade and other receivables
Trade and other receivables are initially recognised at fair value when
related amounts are invoiced then carried at this amount less any allowances
for doubtful debts or provision made for impairment of these receivables.
2.11. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and are subject to
an insignificant risk of changes in value.
2.12. Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
2.13. Share premium
Share premium account represents the excess of the issue price over the par
value on shares issued. Incremental costs incurred directly, or warrants
issued in connection with the issue of new ordinary shares or are shown in
equity as a deduction, net of tax, from the proceeds.
2.14. Trade payables
These financial liabilities are all non-interest bearing and are initially
recognised at the fair value of the consideration payable.
2.15. Finance income and finance costs
Finance income comprises interest income on bank funds. Interest income is
recognised as it accrues in profit or loss, using the effective interest
method. Finance costs comprise interest expense on borrowings. Borrowing costs
are recognised in profit or loss in the period in which they are incurred.
2.16. Earnings per share
Basic Earnings per share is calculated as profit attributable to equity
holders of the parent for the period divided by the weighted average number of
ordinary shares, adjusted for any bonus element.
2.17. Operating segments
The Chief Operating Decision Maker (CODM) is considered to be the Board of
Directors. They consider that the Group operates in a single segment, that of
natural gas exploration, appraisal and development, in a single geographical
location, the East Irish Sea of the United Kingdom. As a result, the financial
information of the single segment is the same as set out in the Consolidated
Statement of Comprehensive Loss, Consolidated Statement of Financial Position,
Consolidated Statement of Changes in Equity and Consolidated Statement of
Cashflows.
2.18. Share Based Payments
Where options or warrants are awarded for services, the fair value, at the
grant date, of equity-settled share awards is charged to income or loss over
the period for which the benefits of employees and others providing similar
services are expected to be received. The corresponding accrued entitlement
is recorded in the share based payments reserve. The amount recognised as an
expense is adjusted to reflect the number of share options or warrants
expected to vest. The fair value of options and warrants awards is calculated
using the Black-Scholes option pricing model which considers the following
factors:
· Exercise price · Current market price of the underlying shares
· Expected life of the award · Risk-free interest rate
· Expected volatility
When equity instruments are modified, if the modification increases the fair
value of the award, the additional cost must be recognised over the period
from the modification date until the vesting date of the modified award.
3. Significant accounting estimates and judgements, estimates and
assumptions
The preparation of financial statements using accounting policies consistent
with IFRS requires the Directors to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities and the reported amounts of income and expenses. The
preparation of financial statements also requires the Directors to exercise
judgement in the process of applying the accounting policies. Changes in
estimates, assumptions and judgements can have a significant impact on the
financial statements.
Recoverable value of intangible assets (refer to note 11)
As at 31 December 2023, the Group held gas development intangible assets of
£729,931 (2022: £318,001). The carrying values of intangible assets are
assessed for indications of impairment, as set out in IFRS 6, on an annual
basis. As part of this impairment assessment, the recoverable value of the
intangible assets is required to be estimated.
When estimating the recoverable value of the intangibles Management consider
the proved, probable and potential resources per the latest CPR, likely
production costs and the forecasted gas prices.
As a result of the budget development costs, the licence being valid and the
assessed recoverable value of the intangibles being in excess of the carrying
value, Management do not consider that any intangible assets are impaired as
at 31 December 2023.
These estimates and assumptions are subject to risk and uncertainty and
therefore a possibility that changes in circumstances will impact the
assessment of impairment indicators.
There was only one critical judgement identified, being the determination on
impairment of intangible assets, apart from those involving estimations (which
are dealt with separately above) that the Directors have made in the process
of applying the Group's accounting policies and that have the most significant
effect on the amounts recognised in the financial statements.
Fair value of share based payments
The Company has made awards of Director and Management options and warrants
over its unissued share capital.
The valuation of these options and warrants involves making a number of
critical estimates relating to price volatility, future dividend yields,
expected life of the options and forfeiture rates. The key judgement
involved the determination of an appropriate of volatility, which has been
estimated based on the average historic volatility of the share prices of a
selection of three peer companies for a period equal to the expected term from
the grant date. Further detail on the assumptions has been described in more
detail in note 18 to these Group Financial Statements.
4. Reverse acquisition and admission to AIM
On 20 December 2023, the Company acquired the entire issued share capital of
EnergyPathways UK Holdings Ltd, a private company incorporated in the United
Kingdom, by way of a share for share exchange.
Although the transaction resulted in EnergyPathways UK Holdings Ltd becoming a
wholly owned subsidiary of the Company, the transaction constitutes a reverse
acquisition in as much as the shareholders of EnergyPathways UK Holdings Ltd
own a substantial majority of the outstanding ordinary shares of the Company
and all 6 members of the Board of Directors of the Company are EnergyPathways
UK Holdings Ltd shareholders and management.
In substance, the shareholders of EnergyPathways UK Holdings Ltd acquired a
controlling interest in the Company and the transaction has therefore been
accounted for as a reverse acquisition ("RTO"). As the Company previously
discontinued its investment activities and was engaged in acquiring
EnergyPathways UK Holdings Ltd and raising equity financing to provide the
required funding for the operations of the acquisition and admission of the
Company's shares to trading on the AIM market of the London Stock Exchange
("AIM"), it did not meet the definition of a business according to the
definition in IFRS 3. Accordingly, this reverse acquisition does not
constitute a business combination and was accounted for in accordance with
IFRS 2 Share-based payment and IFRIC guidance, with the difference between the
equity value given up by the EnergyPathways UK Holdings Ltd shareholders and
the share of the fair value of net assets gained by the EnergyPathways UK
Holdings Ltd shareholders charged to the statement of comprehensive income as
the cost of admission to AIM.
Following the completion of the transaction the Company changed its name to
EnergyPathways plc.
4. Reverse acquisition and admission to AIM (continued)
In accordance with reverse acquisition accounting principles, these
consolidated financial statements represent a continuation of the consolidated
financial statements of EnergyPathways UK Holdings Ltd and include:
a. The assets and liabilities of EnergyPathways UK Holdings Ltd at their
pre-acquisition carrying amounts and the results for both periods; and
b. The assets and liabilities of the Company as at 31 December 2023 and its
results from 20 December 2023 to 31 December 2023,
On 20 December 2023, the Company issued 68,013,885 shares for all 143,333,324
ordinary shares, 15,100,000 performance shares and 20,000,000 warrants of
EnergyPathways UK Holdings Ltd.
As of 20 December 2023, the last quoted share price of Dial Square Investments
Plc (renamed EnergyPathways PLC upon completion of the transaction) was
£0.0325 and therefore this valued the investment in EnergyPathways UK
Holdings Ltd at £862,875.
Because the legal subsidiary, EnergyPathways UK Holdings Ltd, was treated as
the accounting acquirer and the legal Parent Company, Dial Square Investments
Plc, was treated as the accounting subsidiary, the fair value of the shares
deemed to have been issued by EnergyPathways UK Holdings Ltd was calculated at
£1,213,303 based on an assessment of the purchase consideration for an 100%
holding in EnergyPathways plc.
The fair value of net assets of Dial Square Investments plc was as
follows:
£
Cash and cash equivalents 238,320
Other assets 205,545
Liabilities (245,832)
Net assets 198,033
The difference between the deemed cost and the fair value of the net assets
acquired of £1,015,270 has been expensed in accordance with IFRS 2, Share
based payments, reflecting the economic cost to the EnergyPathways UK Holdings
Ltd shareholders of acquiring a quoted entity.
The transfers to retained earnings that arose pursuant to the RTO are as
follows:
Year Ended 31 December 2023
£
As at start of year -
Pre-acquisition losses of EnergyPathways plc (1) (695,748)
EnergyPathways UK Holdings Ltd issued capital at acquisition(2) 1,108,510
Investment in EnergyPathways UK Holdings Ltd (3) (2,734,160)
Reverse acquisition expense(4) 1,015,270
Total (1,306,128)
4. Reverse acquisition and LSE listing (continued)
The movements within retained earnings relating to the RTO are as follows:
1) These consolidated financial statements present the legal capital structure
of the Company. However, under reverse acquisition accounting rules, the
Company was not acquired until 20 December 2023 and therefore the entry above
is required to eliminate the initial retained losses of the Company.
2) EnergyPathways UK Holdings Ltd had issued share capital of equivalent to
£1,108,510 as at 20 December 2023. As these financial statements present the
capital structure of the parent entity, the issue of equity by EnergyPathways
UK Holdings Ltd has been transferred to this reserve.
3) The Company issued 68,013,885 shares at 4 pence each, totalling
£2,720,555 for the entire issued capital of EnergyPathways UK Holdings Ltd,
as well as stamp duty of £13,605. The above entry is required to eliminate
the balance sheet impact of this transaction.
4) The reverse acquisition accounting is described in detail in note 4. The
entry above represents the difference between the value of the equity issued
by the Company, and the deemed consideration given by EnergyPathways UK
Holdings Ltd to acquire the Company.
5. Administrative expenses
Group Group
2023 2022
£ £
Consultants and advisors 228,393 234,684
Insurance 15,832 2,021
Other 10,812 11,557
Professional fees 35,833 170,176
Share based payments 202,000 43,200
Travel (3,121) 67,341
Wages & salaries 105,363 87,738
Foreign Exchange 1,264 5,247
596,376 621,964
6. Finance income & finance costs
Group Group
2023 2022
£ £
Finance income
Interest received 72 -
Finance costs
Interest expense (809) -
Net finance costs (737) -
7. Auditor's Remuneration
Group Group
2022 2022
£ £
Audit of the financial statements 30,000 -(1)
30,000 -
(1) The comparatives are of the Group comprised of EnergyPathways UK Holdings
Limited and EnergyPathways Irish Sea Limited which was exempt from statutory
audit prior to the Reverse Take Over.
8. Staff numbers and costs
Group Group
2023 2022
Staff costs (including directors) £ £
Consultancy fees 219,431 165,787
Wages and salaries 105,363 87,738
Share based payments 40,000 32,313
364,794 285,838
The average number of persons (including directors) employed by the Company
during the 10-month period to 31 December 2023 was:
Group and Company 10-month period to 31 December 2023 Year to 28 February 2023
Directors 2 3
2 3
Group
Group
2023 2022
Director emoluments Note £ £
Wages and salaries 89,289 42,000
Share based payments 18 29,000 -
118,289 42,000
The number of Directors that are members of a defined contribution pension
scheme is 1 (2022: nil). Pension contributions paid to a defined contribution
scheme in respect of the highest paid Director amounted to £nil (2022:
£nil).
9. Taxation
Analysis of charge for the period:
Group Group
2023 2022
£ £
Current income tax charge - -
Deferred tax charge - -
Total taxation credit/(charge) - -
9.1 Taxation reconciliation
The below table reconciles the tax charge for the period to the theoretical
charge based on the result for the year and the corporation tax rate.
2023 2022
£
£
Loss before income tax (1,860,916) (1,257,193)
Tax at the applicable rate of 19% (2022: 19%) (353,574) (238,867)
Effects of:
Expenses not deducted for tax purposes 113,959 9,445
Tax losses not recognised 239,615 229,422
Total income tax credit / (expense) - -
As at 31 December 2023, the Group had unused tax losses of £1,323,416 (2022:
£893,255) for which no deferred tax asset has been recognised. This is due to
uncertainty over the availability of future taxable profits to offset these
losses against.
10. Earnings per share
The calculation of the Basic and fully diluted earnings per share is
calculated by dividing the loss for the year from continuing operations of
£1,860,916 (2022: £1,257,193) for the Group by the weighted average number
of ordinary shares in issue during the year of 72,773,014 (2022: 68,013,885).
The weighted average number of shares is adjusted for the impact of the
reverse acquisition as follows:
- Prior to the reverse takeover, the number of shares is based on
EnergyPathways UK Holdings Ltd, adjusted using the share exchange ratio
arising on the reverse takeover; and
- From the date of the reverse takeover, the number of share is based on the
Company.
There is no difference between the basic and diluted earnings per share as
there were no securities in issue as at 31 December 2023 that would have a
dilutive effect on earnings per share. Refer to note 18 for details on details
of warrants on issue as at 31 December 2023, that can be converted into
ordinary shares and thus would have a dilutive effect on earnings per share.
2023 2022
£
£
Loss for the purposes of basic earnings per share being net loss attributable (1,860,916) (1,257,193)
to the owners
Weighted average number of Ordinary Shares 72,773,014 68,013,885
Loss per share - pence (2.55) (1.85)
11. Intangible assets
Gas development assets
£
As at 16 July 2021
Additions 318,001
As at 31 December 2022 318,001
Additions 411,930
As at 31 December 2023 729,931
The carrying value of the prospecting and exploration rights is supported by
the estimated resource and current market values as contained in the Competent
Person's Report date 20 November 2023 which was prepared by Risk Advisory Pty
Ltd and included in the Company's AIM admission document which is available on
the Company's website.
12. Trade and other receivables
Group Group Company Company
As at 31 December As at 31 December As at 31 December As at 28 February
2023 2022 2023 2023
£ £ £ £
Other receivables 1,714,645 137,455 1,714,645 -
Prepayments 56,050 21,815 56,050 4,352
VAT receivable 58,584 - 49,123 15,846
1,829,279 159,270 1,819,818 20,198
The fair value of other receivables is the same as their carrying values as
stated above.
The maximum exposure to credit risk of Other receivables at the reporting date
is the carrying value. The entire amount of £1,714,645 has been received as
at the date of signing this report.
13. Cash and cash equivalents
Group Group Company Company
As at 31 December As at 31 December As at 31 December As at 28 February
2023 2022 2023 2023
£ £ £ £
Cash at bank and in hand 494,658 71,061 485,780 709,138
494,658 71,061 485,780 709,138
There is no material difference between the fair value of cash and cash
equivalents and their book value.
14. Loan to subsidiaries
Company:
EPL EPISL Total
£ £ £
As at 1 March 2023 - -
Loan drawdowns 200,000 375,961 575,961
Repayments - (20,160) (20,160)
As at 31 December 2023 200,000 355,801 555,801
EnergyPathways plc made a loan to EnergyPathways UK Holdings Limited ("EPL")
of £200,000 on 10 March 2023. The loan is interest free and will be repaid
when EPL's operational cash flow allows. Management has undertaken an
impairment assessment of the loan as at 31 December 2023, and has determined
that that there was no impairment required. The interest rate and impairment
assessment are reviewed on an annual basis.
EnergyPathways plc has made net cumulative loans to EnergyPathways IrishSea
Limited ("EPISL") of £355,801 as at 31 December 2023. The loan is interest
free and will be repaid when EPISL's operational cash flow allows. Management
has undertaken an impairment assessment of the loan as at 31 December 2023,
and has determined that that there was no impairment required. The interest
rate and impairment assessment are reviewed on an annual basis.
15. Investment in subsidiaries
Company Country of Incorporation Incorporated Interest
Registered address
EnergyPathways UK Holdings Ltd United Kingdom 16 July 2021 Highdown House, Yeoman House, Worthing, West Sussex, BN99 3HH 100%
EnergyPathways Irish Sea Limited United Kingdom 11 August 2021 Highdown House, Yeoman House, Worthing, West Sussex, BN99 3HH 100%
The acquisition of EnergyPathways UK Holdings Ltd took place on 20 December
2023. Refer to note 4 for further details.
£
As at 1 March 2023 -
Additions 2,734,160
As at 31 December 2023 2,734,160
16. Trade and other payables - due within one year
Group Group Company Company
As at 31 December As at 31 December As at 31 December As at 28 February
2023 2022 2023 2023
£ £ £ £
Trade payables 782,647 284,825 397,585 73,200
Accruals 405,141 368,991 118,081 158,609
1,187,788 653,816 515,666 231,809
The carrying values of trade and other payables are considered to be a
reasonable approximation of the fair value and are considered by the Directors
as payable within one year.
17. Ordinary share capital and share premium
Group
Issued Number of shares Ordinary share capital Share Performance shares
£ premium £
£
As at 31 December 2021 (Unaudited) 158,433,324 14,333 1,092,667 1,510
As at 31 December 2022 158,433,324 14,333 1,092,667 1,510
Transfer of EPL paid up capital to Reverse acquisition reserve 20 Dec 2023
(158,433,324) (14,333) (1,092,667) (1,510)
Issued capital of plc at acquisition 20 Dec 2023 26,550,000 265,500 628,281 -
Issue of shares for acquisition of subsidiary
68,013,885 680,139 2,040,417 -
Issue of shares for services 13,352,674 133,527 400,580 -
Issue of shares - share subscription 50,000,000 500,000 1,500,000 -
Share issue costs - - (117,326) -
As at 31 December 2023 157,916,559 1,579,166 4,451,952 -
The issued capital of the Group for the period 31 December 2021 to 20 December
2023 is that of EnergyPathways UK Holdings Ltd. ("EPL"). Upon completion of
the acquisition the share capital of EPL was transferred to the Reverse
acquisition reserve (see note 4) and the share capital of EnergyPathways plc
was brought to account.
Company
Issued Number of shares Ordinary share capital Share
£ premium
£
As at 28 February 2023 26,550,000 265,500 628,281
Issue of shares for acquisition of subsidiary
68,013,885 680,139 2,040,417
Issue of shares for services 13,352,674 133,527 400,580
Issue of shares - share subscription 50,000,000 500,000 1,500,000
Share issue costs - - (117,326)
As at 31 December 2023 157,916,559 1,579,166 4,451,952
The ordinary shares have a nominal value of 0.01 pence per share and confer
the right to vote at general meetings of the Company, to a repayment of
capital in the event of liquidation or winding up and certain other rights as
set out in the Company's articles of association.
On 20 December 2023, 68,013,885 ordinary shares were issued at 4.0 pence each
for the entire issued share capital of EPL.
On 20 December 2023, 13,352,674 ordinary shares were issued at 4.0 pence each
to directors & management in settlement of accrued remuneration.
On 20 December 2023, 50,000,000 ordinary shares were issued to subscribers at
4.0 pence each.
17. Ordinary share capital and share premium (continued)
The following describes the nature and purpose of each reserve within equity:
Equity and Reserve Description and purpose
Ordinary share capital Represents the nominal value of shares issued
Share premium account Amount subscribed for share capital in excess of nominal value
Share based payments reserve Represents the value of warrants issued
Reverse acquisition reserve Reserve created in accordance with the acquisition of EnergyPathways UK
Holdings Ltd on 20 December 2023, in accordance with IFRS 2.
Retained earnings Cumulative net gains and losses recognised in the Consolidated Statement of
Comprehensive Income
18. Warrants
EnergyPathways Plc
As at 28 February 2023 As at 31 December 2023
Exercise price - pence
Granted Cancelled Expiry date
Founder 7,500,000 - - 7,500,000 5.0 30 November 2027
Broker: 437,500 - - 437,500 4.0 30 November 2025
75,000 - - 75,000 5.0 30 November 2025
- 915,000 - 915,000 4.0 20 December 2026
Broker performance: 500,000 - - 500,000 5.0 3 years after vesting
- 1,250,000 - 1,250,000 4.0 3 years after vesting
Advisor - 1,579,165 - 1,579,165 4.0 20 December 2028
Management - 6,000,000 - 6,000,000 4.0 20 December 2030
Warrants as at 31 December 8,512,500 9,744,165 - 18,256,665
Weighted average exercise price - pence 4.0 4.0 - 4.0 4.0
The number of options exercisable at 31 December 2023 was 16,506,665 (28
February 2023: 8,012,500), these had a weighted average exercise price of 4.0
pence (2022: 5.0 pence).
The weighted average remaining contractual life of share options outstanding
at 31 December 2023 was 4.79 years (28 February 2023: 3.25 years).
18. Warrants (continued)
The inputs into the Black-Scholes pricing model are as follows:
Grant date 28 Nov 2022 28 Nov 2022 28 Nov 2022 20 Dec 2023 20 Dec 2023 20 Dec 2023
Type Founder Broker Broker Management Broker Advisor
Number 7,500,000 75,000 437,500 6,000,000 915,000 1,579,165
Exercise price 5.0 pence 5.0 pence 4.0 pence 4.0 pence 4.0 pence 4.0 pence
Expected life 5 years 3 years 3 years 7 years 3 years 5 years
Expected volatility 50% 50% 50% 50% 50% 50%
Risk free rate of interest 3.20% 3.17% 3.17% 3.39% 3.68% 3.38%
Dividend yield Nil Nil Nil Nil Nil Nil
Fair value of option 4.38 pence 3.80 pence 4.30 pence 2.20 pence 1.50 pence 1.90 pence
For a newly quoted company with a limited or no trading history it is common
for management to make an estimate of expected volatility. The Directors
consider a volatility of 50% to be a reasonable estimate given the stage of
development of the Company and the lack of trading history as at the date of
issue.
The inputs into the Monte Carlo pricing model are as follows:
Grant date 28 Nov 2022 20 Dec 2023
Type Broker performance Broker performance
Number 500,000 1,250,000
Exercise price 5.0 pence 4.0 pence
Expected life 3 years 3 years
Expected volatility 50% 50%
Risk free rate of interest 3.17% 3.68%
Dividend yield Nil Nil
Fair value of option 3.80 pence 1.50 pence
The estimated value of the Broker Performance Warrants was calculated using a
Monte Carlo model which considered market vesting condition requirements.
18. Warrants (continued)
The total fair value of the warrants issued during the year was calculated as
£176,000, with £162,000 being recognised as an expense in the Consolidated
Statement of Comprehensive Loss, and £14,000 incurred in connection with
share placements which has been included in share issue costs debited to Share
Premium (refer to note 17).
Other share based payments
EnergyPathways UK Holdings Ltd As at 31 December 2022 Cancelled As at 31 December 2023 Exercise price - pence
Directors & Management 20,000,000 (20,000,000) - 2.0
Warrants as at 31 December - -
Weighted average exercise price - pence 2.0 2.0 - -
Exercisable at 31 December 2023 - - - -
On 20 December 2023, as a part of the reverse takeover transaction (refer to
note 4) the warrants were cancelled and converted in to 2,000,000 Ordinary
shares in EnergyPathways plc.
The fair value of warrants is valued using the Black-Scholes pricing model. An
expense of £40,000 has been recognised in the year in respect of share
warrants granted. Upon cancellation the cumulative share-based payments
reserve of EPL of £83,200 was transferred to retained losses.
Fair value of equity settled transactions: 2023 2022
£
£
Director fees and salaries settled in shares recognised in profit and loss 97,282 -
Consultancy and advisor services settled in shares recognised in profit and 397,318 8,510
loss
Share based payments expense recognised in profit and loss 202,000 49,710
Share based payment expense recognised against share premium 14,000 -
Consultancy and advisor services settled in shares recognised capitalised to 39,505 -
intangible assets
19. Related Party Transactions
19.1 Group
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are disclosed in this part
of the note.
19.2. Key management personnel
Key management are those persons having authority and responsibility for
planning, controlling and directing the activities of the Group. In the
opinion of the Board, the Group's key management are the Directors of
EnergyPathways plc. Information regarding their compensation is given in note
8 for each of the categories specified in IAS 24 Related Party Disclosures.
All emoluments given in note 8 relate to short-term employee benefits and
there are no post-employment or other long-term benefits.
19.3. Company
Transactions between the Parent Company and its subsidiaries during the year
were as follows:
The amounts due from subsidiaries at the balance sheet date were as follows:
As at 31 December 2023 As at 28 February 2023
£ £
Amount due from subsidiaries 555,801 -
20. Financial instruments
The Company holds the following financial instruments:
Financial assets
Financial assets at amortised cost: Group Group Company Company
As at 31 December As at 31 December As at 31 December As at 28 February
2023 2022 2023 2023
£ £ £ £
Cash at bank and in hand 494,658 71,061 485,780 709,138
Other receivables 1,714,645 - 1,714,645 -
2,209,303 71,061 2,200,425 709,138
The maximum exposure to credit risk at the end of the reporting period is the
carrying amount of each class of financial assets mentioned above.
20. Financial instruments (continued)
Financial liabilities
Financial liabilities at amortised cost: Group Group Company Company
As at 31 December As at 31 December As at 31 December As at 28 February
2023 2022 2023 2023
£ £ £ £
Trade payables 782,647 284,825 397,585 73,200
782,647 284,825 397,585 73,200
21. Financial risk management
21.1. Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk,
credit risk and liquidity risk. The Group's overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance.
Risk management is carried out by the executive management team.
a) Market risk
The Group is exposed to market risk, primarily relating to interest rate,
foreign exchange and commodity prices. The Group does not hedge against market
risks as the exposure is not deemed sufficient to enter into forward
contracts. The Group has not sensitised the figures for fluctuations in
interest rates, foreign exchange or commodity prices as the Directors are of
the opinion that these fluctuations would not have a significant impact on the
Financial Statements at the present time. The Directors will continue to
assess the effect of movements in market risks on the Group's financial
operations and initiate suitable risk management measures where necessary.
b) Credit risk
Credit risk arises from cash and cash equivalents as well as outstanding
receivables. To manage this risk, the Group periodically assesses the
financial reliability of customers and counterparties.
The amount of exposure to any individual counter party is subject to a limit,
which is assessed by the Board.
The Group considers the credit ratings of banks in which it holds funds in
order to reduce exposure to credit risk. The Company seeks to keep its
holdings of cash with institutions which have a minimum credit rating of 'A'.
21. Financial risk management (continued)
c) Liquidity risk
The Group's continued future operations depend on the ability to raise
sufficient working capital through the issue of equity share capital or debt.
The Directors are reasonably confident that adequate funding will be
forthcoming with which to finance operations. Controls over expenditure are
carefully managed.
The following table summarises the Group's significant remaining contractual
maturities for financial liabilities at 31 December 2023 and 31 December 2022.
Contractual maturity analysis as at 31 December 2023
Less than 12
Months 1 - 5 Total
£ Year £
£
Accounts payable 782,647 - 782,647
Accrued liabilities 405,141 - 405,141
1,187,788 - 1,187,778
Contractual maturity analysis as at 31 December 2022
Less than 12
Months 1 - 5 Total
£ Year £
£
Accounts payable 284,825 - 284,825
Accrued liabilities 368,991 - 368,991
653,816 - 653,816
21.2. Capital risk management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern, in order to enable the Group to
continue its exploration and development of oil and gas resources. In order to
maintain or adjust the capital structure, the Group may adjust the issue of
shares or sell assets to reduce debts.
The Group defines capital based on the total equity and reserves of the Group.
The Group monitors its level of cash resources available against future
planned operational activities and may issue new shares in order to raise
further funds from time to time.
22. Capital Commitments & Contingent Liabilities
The Group has no other capital commitments or contingent liabilities as at 31
December 2023.
23. Ultimate controlling party
The Directors have determined that there is no controlling party as no
individual shareholder holds a controlling interest in the Company.
24. Events after the reporting period
On 14 March 2024 the Company issued 625,000 ordinary shares at 4.0 pence each
in full settlement of fees to a third-party advisor.
On 15 April 2024 the Company issued 579,486 ordinary shares at 2.8 pence each
in settlement of consultancy fees to a member of the Marram Project management
team.
25. Copies of the Annual Report
Copies of the annual report will be available on the Company's website at
https://energypathways.uk/results-centre
(https://energypathways.uk/results-centre) .
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