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DJ Altona Energy Plc Final Results

 
TIDMANR 
 
11 March 2020 
 
                               ALTONA ENERGY PLC 
                          ("Altona" or "the Company") 
 
                                 Final Results 
 
                        For the Year Ended 30 June 2019 
 
Altona Energy plc (NEX: ANR.PL), a mining exploration company focused on the 
evaluation, development and extraction of coal assets in South Australia though 
the process of in-situ gasification, announces its final results for the year 
ended 30 June 2019. 
 
HIGHLIGHTS 
 
  * Non-renewal of historic Arckaringa mining tenements significantly reducing 
    commitments 
  * Leading to a one-off Impairment Charge of GBP11 million for the year 
  * Negotiating the acquisition of new Petroleum Exploration Licence in South 
    Australia 
  * 2020 strategy to commence In-Situ Gasification project once funding is in 
    place 
  * Open Offer announced on 11 March 2020 to fund new operations 
 
For further information, please visit www.altonaenergy.com or contact: 
 
Altona Energy plc 
Qinfu Zhang, Executive Director                   +44 (0) 7795 168 157 
Philip Sutherland, Non-Executive Director         +61 (0)402 440 339 
 
Alfred Henry Corporate Finance Ltd (NEX 
Corporate Adviser) 
Jon Isaacs / Nick Michaels                        +44 (0) 20 3772 0021 
 
Leander (Financial PR) 
Christian Taylor- Wilkinson                       +44 (0) 7795 168 157 
 
 
 
Company Information 
 
Altona is an exploration company focused on the evaluation, development and 
extraction of coal assets in South Australia though the process of in-situ 
gasification. 
 
The Company was admitted to trading on AIM on 10 March 2005 and was 
subsequently admitted to NEX on 1 February 2019.  A copy of its admission 
documents dated 4 March 2005 can be accessed on its website, 
www.altonaenergy.com.  This website is where items can be inspected under Rule 
75 of the NEX Rules for Issuers, from 1 February 2019. 
 
EXECUTIVE CHAIRMAN'S STATEMENT 
 
The year under review, to 30 June 2019, was a time of major change for the 
Company, as it tightened its board structure and repositioned itself closer to 
its historic mining roots in South Australia. 
 
A number of initiatives which were started in 2018, were subsequently cancelled 
at the start of 2019, following the resignation and dismissal of a number of 
directors from the board, at the Annual General Meeting held on 25 January 
2019. Specifically, these lapsed initiatives involved a partnership with the 
pyrolysis company Leinad Ltd and a possible coal project on the Willoughby seam 
in the Company's Westfield tenement. 
 
Further, the year in general was harmful for both the profile and valuation of 
the Company, where we saw the share price fall from 325p on 3 July 2018 
(factoring in the 1000 to 1 share consolidation of 18 October 2018) to 16.5p on 
31 January 2019, when the Company lost its AIM listing and moved to the NEX 
Exchange Growth Market. As Executive Chairman, I am the first to apologise to 
shareholders for the lack of any clear operational direction during 2018 and 
also the unfortunate association the Company had with a number of disruptive 
investors, all of whom are no longer shareholders of the Company. 
 
In the first half of 2019, the board explored the possibility of an investment 
into an operational vanadium mining company in the Shaanxi region of China, 
which involved a great deal of due diligence, including an in-depth visit to 
the mine by the Company's UK based director. After weighing up the changing 
economic and industry factors, it was decided, in October 2019, not to go ahead 
with the investment. 
 
Also in the first half of 2019, the Company continued to look to further its 
interests in the in-situ gasification ("ISG") sector in South Australia, where, 
over the years, we have collated a lot of information on the market dynamics, 
technological advantages and product usage. The Company has always held a 
strong relationship with the region's Department for Mining and Energy, through 
its long-term Australian director Philip Sutherland. And, although the process 
to assess and "find" the right coal-bearing tenement for Altona has been long, 
the Company announced on 21 November 2019, that it had entered into 
negotiations to acquire a Petroleum Exploration Licence Application ("PELA") 
over a tenement close to its existing Exploration Licences. 
 
Board Changes 
 
On 24 January 2019, Nicholas Lyth and Henry Kloepper resigned with immediate 
effect as Chief Executive Director and a non-Executive Director, respectively. 
On 25 January 2019, at the Company's AGM, the resolutions to re-appoint Robert 
Hales and Timothy Jones as non-Executive Officers were not passed and, 
subsequently both were asked to leave the board with immediate effect. 
 
Philip Sutherland, a director of Altona since 2004 and who had resigned his 
position in December 2018, 
 
was reappointed as a non-Executive Director on 1 March 2019. 
 
On 19 November 2019, Ma Chi, the board representative of the Company's 
long-term joint venture partner, Sino-Aus Energy Group Ltd, resigned as a 
non-Executive Officer with immediate effect, following the termination of the 
joint venture agreement. 
 
The Directors appreciate that the current board make-up is smaller than many 
listed companies. With this is mind we are currently meeting with individuals 
who have a good knowledge of the mining and energy sectors, as well as those 
with connections to the capital markets in London and Australia. 
 
Financial Review 
 
During the period under review the Group made a loss before taxation of GBP 
11,657,000 (2018: loss GBP645,000). The majority of the loss before tax relates 
to the impairment of the intangibles assets of GBP11,033,000, due to the Company 
relinquishing its ownership of its three historic Exploration Licences in the 
Arckaringa Basin. These tenements cannot become an operational asset for the 
Company, due to the PELA needed to perform ISG is owned by another entity and 
it is the Board's belief that the costs to maintain them are counter-productive 
to the Company's current strategic focus. 
 
The Company has focused on reducing unnecessary costs from the business, by 
streamlining the board and closing its office in Adelaide. Further, the main 
London office has been changed to be that of its financial PR adviser and 
non-Executive Director, where no charge is being levied. The Company's 
Chairman, Qinfu Zhang has taken a reduction in salary to GBP25,000 from GBP105,000 
for a period of 12 months, effective from 1 December 2019. 
 
As at 30 June 2019, the Group was in an overdraft position of GBP96,000 (30 June 
2018: cash at bank of GBP391,000) 
 
The Company was admitted to trading on the NEX Exchange Growth Market on 1 
February 2019, following a 14-years listing on AIM. 
 
Post Balance Sheet Events - Negotiations to acquire PELA 517 
 
As mentioned above, the Company is now in exclusive talks with a third party, 
Ahava Energy PTY Ltd, to acquire a new mining licence in South Australia. This 
licence, a Petroleum Exploration Licence Application ("PELA") will allow the 
Company to commence exploration into a viable ISG project (also known as 
Underground Coal Gasification, or UCG). In 2015, when the Company was at the 
cusp of starting a similar project, it was informed that it did not own the 
necessary PELA over its three tenements, which put a halt to the project. 
 
The new tenement covered by the PELA is close to the Company's historic 
Arckaringa tenements and covers 5,000 sq kms, twice the size of the existing 
tenements. The tenement is divided into two areas; a smaller northern area 
which overlaps the Company's historic Exploration Licences at Westfield and 
Murloocoppie to the north and west, respectively, and a significantly sized 
southern area (over 4,000 sq km), of which 50% crucially sits outside the 
environmentally sensitive Great Artesian Basin, meaning issues, caused by the 
natural aquifer of the basin, will be substantially less. 
 
The more significant and potentially more rewarding southern area of the PELA, 
whilst never having been tested for deep coal deposits suitable for the ISG 
process is, however, situated between other major coal bearing tenements, 
providing enough evidence for WSP to warrant further investigation. Should this 
exploration be successful (i.e. by finding at least two coal bearing deposits 
between 100m and 1,400m - the depth most suitable for ISG), the Company will 
look to quickly move towards obtaining the necessary permits and funding to 
start a test production facility, within 2-3 years. 
 
It has been suggested by WSP Australia Pty, the Company's mining consultant, 
that the longer term plan could be for the Company to create an "Energy 
Precinct", utilising wind and solar energy to reduce costs for the extraction 
process, leading to the supply of power (as well as chemical by-products, such 
as liquid ammonia, hydrogen, ethanol and other synthetic fuels) to the South 
Australian and broader markets. 
 
The Company will need to raise funds in order to acquire the new PELA and to 
pay for the initial exploration work, as well as for general working capital 
purposes. 
 
Outlook 
 
The Company is now poised to begin new explorations on PELA 517, should a 
successful fund raising be completed and the licence acquired. The short-term 
work plan is then to appoint WSP to carry out the first stages of 
investigation, ahead of a drilling programme which could begin as soon as early 
2021. 
 
Therefore, I think it is fair and only right to now draw a line under the past 
18 months and start looking forward to the potential benefits of this new ISG 
project, which has the strong likelihood of increasing shareholder value, in a 
market where the end products are much in demand. 
 
Qinfu Zhang 
Executive Chairman 
Altona Energy Plc 
11 March 2020 
 
 
 
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME 
 
For the year ended 30 June 2019 
 
                                                                     Group 
 

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DJ Altona Energy Plc Final Results -2-

                                                      Notes     2019        2018 
                                                               GBP'000    GBP'000 
 
Administrative expenses                                            (624)      (645) 
 
Impairment expense                                      8       (11,033)          - 
 
Operating loss                                          4       (11,657)        (645) 
 
Loss before taxation                                            (11,657)      (645) 
 
Tax (charge) / credit                                   7              -          - 
 
Loss for the year attributable to the                           (11,657)      (645) 
equity holders of the parent 
 
Other comprehensive income 
 
Exchange differences on translating foreign                        (187)      (575) 
operations that may be subsequently reclassified to 
profit or loss 
 
Total comprehensive income attributable to the                  (11,844)    (1,220) 
equity holders of the parent 
 
Earnings per share (expressed in pence per share)              (894.84)p   (63.05)p 
- Basic attributable to the equity holders of the       6 
parent 
 
- Diluted attributable to the equity holders of the     6      (894.84)p   (63.05)p 
parent 
 
 
All of the above operations during the year are continuing. 
 
STATEMENTS OF FINANCIAL POSITION 
 
As at 30 June 2019 
 
                               Notes      Group        Group      Company    Company 
                                           2019        2018        2019        2018 
                                         GBP'000      GBP'000     GBP'000    GBP'000 
 
ASSETS 
 
Non-current assets 
 
Intangible assets                8                -      11,219           -          - 
 
Investment in subsidiaries       9                -           -           -      1,432 
 
Other receivables                10               3           3           -     11,096 
 
Total non-current assets                          3      11,222           -     12,528 
 
Current assets 
 
Trade and other receivables      10              32          38          32         37 
 
Cash and cash equivalents                         -         391           -        211 
 
Total current assets                             32         429          32        248 
 
TOTAL ASSETS                                     35      11,651          32     12,776 
 
Current liabilities 
 
Trade and other payables         11             310          91         310         84 
 
Total current liabilities                       310          91         310         84 
 
TOTAL LIABILITIES                               310          91         310         84 
 
NET ASSETS                                    (275)      11,560       (278)     12,692 
 
EQUITY ATTRIBUTABLE TO EQUITY 
HOLDERS OF THE PARENT 
 
Share capital                    12           1,431       1,427       1,431      1,427 
 
Share premium                                18,697      18,692      18,697     18,692 
 
Merger reserve                                2,001       2,001       2,001      2,001 
 
Foreign exchange reserve                      1,224       1,411           -          - 
 
Retained deficit                           (23,628)    (11,971)    (22,407)    (9,428) 
 
TOTAL EQUITY                                  (275)      11,560       (278)     12,692 
 
The loss within the parent company financial statements for the year was GBP 
12,979,000 (2018: GBP489,000). 
 
The financial statements were approved by the Board and authorised for issue on 
11 March 2020. 
 
STATEMENTS OF CASH FLOWS 
 
For the year ended 30 June 2019 
 
                                                   Group                 Company 
 
                                             2019       2018        2019        2018 
                                           GBP'000    GBP'000     GBP'000     GBP'000 
 
Cash flows from Operating 
activities 
 
(Loss)/profit for the year before           (11,657)      (645)     (12,979)      (489) 
taxation 
 
Shares issued for services                         9          -            9          - 
 
Impairment of intangibles                     11,033          -            -          - 
 
Impairment of i/c loan / investment in             -          -       12,434          - 
subsidiary 
 
(Increase)/decrease in                             6       (24)            6       (24) 
receivables 
 
Increase/(decrease) in payables                  123       (11)          129       (11) 
 
Cash used in operations                        (486)      (680)        (401)      (524) 
 
Income tax benefit received                        -          -            -          - 
 
Net cash used in operating activities          (486)      (680)        (401)      (680) 
 
Cash flows from Investing 
activities 
 
Loans (to) / from subsidiaries                     -          -           94      (324) 
 
Interest received                                  -          -            -          - 
 
Net cash generated from/(used in)                  -          -           94      (324) 
investing activities 
 
Cash flows from Financing 
activities 
 
Proceed from bank overdraft                       96          -           96          - 
 
Proceeds from issue of shares                      -      1,095            -      1,095 
 
Costs of issue                                     -       (46)            -       (46) 
 
Net cash inflow from financing                    96      1,049           96      1,049 
 
Net increase/(decrease) in cash and cash       (390)        369        (211)        201 
equivalents 
 
Cash and cash equivalents at beginning of        391         15          211         10 
the year 
 
Effect of exchange rate changes on cash          (1)          7            -          - 
and cash equivalents 
 
Cash and cash equivalents at 30 June               -        391            -        211 
 
 
STATEMENTS OF CHANGES IN EQUITY 
 
For the year ended 30 June 2019 
 
Attributable to equity holders of the parent 
 
                               Share     Share   Merger    Foreign  Retained     Total 
                             capital   Premium  reserve   exchange   deficit    equity 
                                                           reserve 
 
Group                        GBP'000   GBP'000  GBP'000    GBP'000   GBP'000   GBP'000 
 
As at 1 July 2017                892    18,178    2,001      1,986  (11,326)    11,731 
 
Profit/(loss) for the year         -         -        -          -     (645)     (645) 
 
Other comprehensive income         -         -        -      (575)         -     (575) 
 
Total comprehensive income         -         -        -      (575)     (645)   (1,220) 
 
Issue of shares                  535       560        -          -         -     1,095 
 
Cost of share issue                -      (46)        -          -         -      (46) 
 
Balance at 30 June 2018        1,427    18,692    2,001      1,411  (11,971)    11,560 
 
Profit/(loss) for the year         -         -        -          -  (11,657)  (11,657) 
 
Other comprehensive income         -         -        -      (187)         -     (187) 
 
Total comprehensive income         -         -        -      (187)  (11,657)  (11,844) 
 
Issue of shares                    4         5        -          -         -         9 
 
Cost of share issue                -         -        -          -         -         - 
 
Balance at 30 June 2019        1,431    18,697    2,001      1,224  (23,628)     (275) 
 
 
 
Company                       GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
 
Balance at 1 July 2017            892    18,178     2,001         -   (8,939)    12,132 
 
Loss for the year                   -         -         -         -     (489)     (489) 
 
Other comprehensive income          -         -         -         -         -         - 
 
Total comprehensive income          -         -         -         -     (489)     (489) 
 
Issue of shares                   535       560         -         -         -     1,095 
 
Cost of share issue                 -      (46)         -         -         -      (46) 
 
Balance at 30 June 2018         1,427    18,692     2,001         -   (9,428)    12,692 
 
Loss for the year                   -         -         -         -  (12,979)  (12,979) 
 
Other comprehensive income          -         -         -         -         -         - 
 
Total comprehensive income          -         -         -         -  (12,979)  (12,979) 
 
Issue of shares                     4         5         -         -         -         9 
 
Cost of share issue                 -         -         -         -         -         - 
 
Balance at 30 June 2019         1,431    18,697     2,001         -  (22,407)     (278) 
 
The following describe the nature and purpose of each reserve within owners' 
equity: 
 
Reserve            Description and Purpose 
 
Share capital      Amount subscribed for share capital at nominal value 
 
Share premium      Amount subscribed for share capital in excess of nominal value. 
 
Merger reserve     Reserve created on issue of shares on acquisition of subsidiaries 
                   in prior years. 
 
Foreign exchange   Cumulative translation differences of net assets of subsidiaries. 
reserve 
 
Retained deficit   Cumulative net gains and losses recognised in the consolidated 
                   statement of comprehensive income 
 
NOTES TO PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2019 
 
 1. The financial information set out above does not constitute statutory 
    accounts for the purpose of Section 434 of the Companies Act 2006.The 
    financial information has been extracted from the statutory accounts of 
    Altona energy Plc and is presented using the same accounting policies, 
    which have not yet been filed with the Registrar of companies, and on which 
    the auditors gave an adverse opinion on 11 March 2020. 
 
    Below we have reproduced the qualification contained with the audit report. 
 
    "Adverse Opinion 
 

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    We have audited the Financial Statements of Altona Energy Plc (the 'Parent 
    Company') and its subsidiaries ('the Group') for the year ended 30 June 
    2019 which comprise the Statement of Consolidated Comprehensive Income, the 
    Consolidated and Parent Company Statements of Financial Position, the 
    Consolidated and Parent Company Statements of Cash Flows, the Consolidated 
    and Parent Company Statements of Changes in Equity and the related notes to 
    the Financial Statements, including a summary of significant accounting 
    policies. The financial reporting framework that has been applied in their 
    preparation is applicable law and International Financial Reporting 
    Standards (IFRSs) as adopted by the European Union and as regards the 
    Parent Company Financial Statements, as applied in accordance with the 
    provisions of the Companies Act 2006. 
 
    In our opinion, because of inappropriate use of the going concern basis for 
    the preparation of the financial statements referred to in the Basis for 
    adverse opinion section of our report, the financial statements: 
 
 2. do not give a true and fair view of the state of the Group's and the Parent 
    Company's affairs as at 30 June 2019 and of the Group's and Parent 
    Company's loss for the year then ended; 
 
 3. have not been prepared in accordance with IFRSs as adopted by the European 
    Union; and 
 
 4. have not been prepared in accordance with the requirements of the Companies 
    Act 2006. 
 
Basis for adverse opinion 
 
As explained in the Material uncertainty related to going concern paragraph, at 
the date of signing of these accounts, the Group does not have sufficient 
resources to continue trading for the foreseeable future. The Company is 
currently at the ceiling of its overdraft facility with its current bankers and 
the facility is due for renewal in June 2020, where the Company may have to 
settle the liability. The Group's ability to continue as a going concern is 
dependent on obtaining additional equity to fund current and future working 
capital requirements, and repayment of the current debt finance. The financial 
statements do not contain the adjustments that may be necessary to reflect that 
the fact that the company is not a going concern. Consequently, we are of the 
belief that the use of the going concern basis for the preparation of the 
financial statements is inappropriate. 
 
We conducted our audit in accordance with International Standards on Auditing 
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards 
are further described in the Auditor's responsibilities for the audit of the 
Financial Statements section of our report. We are independent of the Group and 
Parent Company in accordance with the ethical requirements that are relevant to 
our audit of the Financial Statements in the UK, including the FRC's Ethical 
Standard, and we have fulfilled our other ethical responsibilities in 
accordance with these requirements. We believe that the audit evidence we have 
obtained is sufficient and appropriate to provide a basis for our opinion. 
 
Other matter 
 
The financial statements of the Group and the Company for the year ended 30 
June 2018 were audited by another auditor who expressed an unqualified opinion 
on those statements on 28 December 2018. 
 
Material uncertainty related to going concern 
 
 We draw attention to note 1 in the Financial Statements, which identifies 
conditions that may cast significant doubt on the Group's and Company's ability 
to continue as a going concern. The Group incurred a net loss of GBP11.6 million 
during the year ended 30 June 2019, relating to a one-off Impairment Charge due 
to the cancellation of its historic mining licences at Arckaringa. At 30 June 
2019 the Group had net current liabilities of GBP278k. The Financial Statements 
have been prepared on the going concern basis which is reliant on the 
successful fundraise by the Group to fund its operations for the foreseeable 
future. The going concern assessment of the Group is also reliant on the 
successful acquisition of PELA 517 by the Group which it is currently in 
negotiations to buy. This new mining licence is expected to contain minimum 
expenditure requirements and the ability to meet these will be dependent on the 
continued ability to raise new funds. As stated in note 1, these events or 
conditions, along with the other matters as set forth in note 17, indicate that 
a material uncertainty exists that may cast significant doubt on the ability of 
the Group and Company to continue as a going concern." 
 
The preliminary announcement of the results for the year ended 30 June 2019 was 
approved by the board of directors on 11 March 2020. 
 
2.      EARNINGS PER SHARE 
 
The loss for the year attributed to shareholders is GBP11,657,000 (2018: loss GBP 
645,000). 
 
This is divided by the weighted average number of Ordinary shares outstanding 
calculated to be 1.602 million (2018: 1.023 million) to give a basic loss per 
share of 894.84 pence (2018: basic loss per share of 63.05 pence). 
 
In the current and prior year there were no potentially dilutive ordinary 
shares at the year end because the share price at year end was below the strike 
price of the potentially dilutive options and warrants.  The potential future 
share issues that may dilute the profit/(loss) per share relate to options in 
issue disclosed at note 16. 
 
                                    -ends- 
 
 
 
END 
 

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