Registered number: 08542642
SIMBO PETROLEUM NO.2 LIMITED
ANNUAL REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
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SIMBO PETROLEUM NO.2 LIMITED
Company Information
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Andreas Forssell
(resigned
1 December 2021
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Yoav Ben Eli
(appointed
1 December 2021
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SIMBO PETROLEUM NO.2 LIMITED
Registered number:
08542642
Balance sheet
As at
31 December 2021
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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The
financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
16 September 2022
.
The notes on pages 3 to 9 form part of these financial statements.
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SIMBO PETROLEUM NO.2 LIMITED
Statement of changes in equity
For the Year Ended
31 December 2021
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Comprehensive income for the year
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Total comprehensive income for the year
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The notes on pages 3 to 9 form part of these financial statements.
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Statement of changes in equity
For the Year Ended
31 December 2020
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Comprehensive income for the year
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Total comprehensive income for the year
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The notes on pages 3 to 9 form part of these financial statements.
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SIMBO PETROLEUM NO.2 LIMITED
Notes to the financial statements
For the Year Ended 31 December 2021
Simbo Petroleum No.2 Limited is a private company limited by share capital, incorporated in the United Kingdom and registered in England and Wales, registration number 08542642. The address of the registered office is Suite A, 30 Barnes High Street, London, England, SW13 9LW.
2.
Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of
Financial Reporting Standard 102, the Financial Reporting Standard applicable in
the UK and the Republic of Ireland and the Companies Act 2006
.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies.
The following principal accounting policies have been applied:
These financial statements have been prepared on a going concern basis due to the continued support of the ultimate parent company (Crown Energy AB (publ)). Crown Energy AB (publ) has provided a letter of support to Simbo Petroleum No.2 Limited, confirming the availability of funds for a period of 12 months from the date of signing these financial statements.
The directors, having assessed the responses of the directors of the Company's ultimate parent (Crown Energy AB (publ) to their enquires, have no reason to believe that material uncertainity exists that may cast doubt about the ability of the Crown Energy group to continue as a going concern or its ability to continue with the current financing arrangements.
On the basis of their assessment of the company's financial position and of the enquires made of the directors of Crown Energy AB (publ), the company's directors have a reasonable expectation that the company will be able to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
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SIMBO PETROLEUM NO.2 LIMITED
Notes to the financial statements
For the Year Ended 31 December 2021
2.
Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is USD.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
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SIMBO PETROLEUM NO.2 LIMITED
Notes to the financial statements
For the Year Ended 31 December 2021
2.
Accounting policies (continued)
Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.
Exploration and evaluation assets are initially recognised at cost, provided that it is probable that they will generate future economic benefits. All costs for acquiring concessions, licences, or interests in production sharing contracts and for technical surveys, drilling, and development of such interests are capitalised. This includes capitalisation of future decommissioning and restoration costs.
Exploration and evaluation assets can be classified as both tangible fixed assets and intangible assets. Classification is done consistently over time. The Company currently only has intangible assets.
Amortisation
Exploration and evaluation assets classified as intangible assets are not amortised. Instead, the assets are regularly evaluated to determine whether any impairment exists. As the Company only holds intangible assets, no amortisation occurred during the reported periods.
I
mpairment
Exploration and evaluation assets are tested for impairment when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount. Examples of circumstances that may indicate an impairment exists are when the deadline for the exploration period has expired or will expire in the near future, there are no plans for further exploration, exploration and evaluation have not led to any discoveries of commercial size, or when conditions have deteriorated in terms of recovery of value from a sale. Impairment is tested for each cash generating unit, which consists of each individually acquired licence and concession right along with stakes in any oil discoveries in the
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SIMBO PETROLEUM NO.2 LIMITED
Notes to the financial statements
For the Year Ended 31 December 2021
2.
Accounting policies (continued)
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Intangible assets (continued)
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country in which the Company operate. An impairment loss is recognised when an asset or cash generating unit’s carrying amount exceeds its recoverable amount. Impairment losses are recognised in the Profit and Loss Account.
Reclassification to oil and gas assets
When the technical feasibility and commercial viability of extracting oil and gas can be proven, assets are no longer classified as exploration and evaluation assets. Instead, they are classified as an oil or gas asset. They are then reclassified.
Oil and gas assets comprise reclassified exploration and evaluation assets and capitalised development costs. Depreciation/amortization of the relevant asset beings in conjunction with the start of production. The assets are tested for impairment regularly and if it is established that they are impaired, the asset is expensed in the form of an impairment loss via the Profit and Loss Account.
Oil and gas assets are categorised as either producing or nonproducing. The Company applies the successful efforts method, which means that when the exploration of a project is completed, the project is tested to determine whether it should be transferred to producing assets or be abandoned. If the project is abandoned, all costs incurred are written off at that time. The Company does not hold any assets classified as oil and gas assets at this time.
Jointly owned assets in the form of licences
The Company’s interests in jointly controlled assets in the form of licences, are based on the proportion of the licence held. At 31 December 2021, the Company’s only asset, Block 2B in South Africa, is jointly owned and the working is 10 per cent. Simbo Petroleum No.2 Limited is not the operator. Exploration and evaluation are mostly managed by the operator. A budget for the licence is set annually, which all partners must approve. Based on these projected expenditures, the operator then performs the agreed upon work. The expenditures for this work are charged to the other partners based on each partner’s working interest. The Company capitalises these expenditures as exploration and evaluation assets.
Farm-outs
The Company recognizes cash payments directly against the asset and retains the recognized share of the asset less cash payments received. As a result, no revenue is recognised in conjunction with farm-outs unless the cash payment exceeds the carrying amount of the farmed-out asset. Future payments are not recognised at the transaction date.
If a farm-out involves oil and gas assets, the Company then derecognises the carrying amount of the asset in proportion to the share of ownership farmed out and recognises any future payments in the balance sheet.
Once a payment received, which is part of a transaction, has been recognised, a capital gain or loss is recognised in the Profit and Loss Account. After completion of the transaction, the Company assesses whether the cash-generating units are impaired. Impairment losses impact the Profit and Loss Account.
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
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SIMBO PETROLEUM NO.2 LIMITED
Notes to the financial statements
For the Year Ended 31 December 2021
2.
Accounting policies (continued)
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Intangible assets (continued)
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All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours.
Short-term creditors are measured at the transaction price.
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Profit or loss account.
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The average monthly number of employees, including directors, during the year was 2
(2020 -
2
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SIMBO PETROLEUM NO.2 LIMITED
Notes to the financial statements
For the Year Ended 31 December 2021
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Intangible fixed assets represent after a farm-out in October 2016 a 10% interest in the licence Block 2B in South Africa. The farm-out transaction has not had any valuation impact on the exploration and evaluation asset. Cash payment recieved from Africa Energy Corporation has been recognised directly against the asset and the recognised share of the asset has been retained less the cash payment received. No revenue was recognised in conjunction with the farm-out as the cash payment did not exceed the carrying amount. Future payments were not recognised at the transaction date. No amortisation is taken during the exploration and development phase.
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Exploration and evaluation
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Creditors: Amounts falling due within one year
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Taxation and social security - foreign
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Accruals and deferred income
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SIMBO PETROLEUM NO.2 LIMITED
Notes to the financial statements
For the Year Ended 31 December 2021
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Creditors: Amounts falling due after more than one year
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Amounts owed to group undertakings
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Amounts owed to group undertakings comprise loans and interest. Intercompany loans consist of loans to parent company Crown Energy Ventures Corporation and ultimate parent company Crown Energy AB (publ). The amounts outstanding are unsecured. No guarantees have been given or recieved. Amounts repayable to group companies carry interest of STIBOR (6 months) + 2% per cent per annum charged on the outstanding loan balances.
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First time adoption of FRS 102
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The company transitioned to FRS 102 reporting from FRS 101 ‘Reduced Disclosure Framework’ for these financial statements.
There are no changes to the previously reported profit/(loss) and equity as a result of the conversion.
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Post balance sheet events
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On 10 January 2022 Eco (Atlantic) Oil and Gas Limited signed a Share Purchase Agreement to acquire 100% of the Operator of Block 2B Azinam Group Limited. The acquisition of Azinam was completed on 11 March 2022. In this way Eco has become the Operator of the Joint Venture on Block 2B South Africa.
On 3 March 2022, Eco on behalf of the Joint Venture announced that it had entered into a drilling contract for the Island Innovator semi-submersible rig with Island Drilling Company AS for the upcoming drilling of the Gazania-1 well on Block 2B.
On 12 August the Island Innovator rig was mobilised from its base in Bergen Norway and is now en route to South Africa. It is expected that drilling activities will commence early September 2022.
The ultimate controlling party and the ultimate parent undertaking is Crown Energy AB (publ). Crown Energy AB (publ) is a public company at NGM Equity in Stockholm, incorporated in Sweden. The largest and smallest group of undertakings for which group financial statements are drawn up and of which the Company is a member is Crown Energy AB (publ). Simbo Petroleum No.2 Limited is included within these consolidated group financial statements which are publicly available from Skeppargatan 27, 114 52 Stockholm, Sweden or at webpage www.crownenergy.se.
The auditors' report on the financial statements for the year ended 31 December 2021 was unqualified.
The audit report was signed on
16 September 2022
by
Andrew Burch
(Senior statutory auditor) on behalf of
Sayers Butterworth LLP
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