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Crown Energy AB Interim / Quarterly Report 2021
10178_10-q_2021-11-19_3e01701c-fe80-48f6-a27d-ec7a63fc8a54.pdf
Interim / Quarterly Report
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INTERIM REPORT JANUARY-SEPTEMBER 2021
Crown Energy
THIRD QUARTER – JULY-SEPTEMBER 2021
- Revenue amounted to SEK 4,626 thousand (6,993).
- Operating loss amounted to SEK -6,787 thousand (-1,283).
- Net financial items amounted to SEK -8,095 thousand (6,679).
- Unrealised changes in property values amounted to SEK -28,802 thousand (-8,854).
- Result before tax amounted to SEK -43,684 thousand (-3,458), and result after tax amounted to SEK -38,832 thousand (-4,731), corresponding to SEK -0.08 (-0.01) per share.
NINE MONTH PERIOD – JANUARY-SEPTEMBER 2021
- Revenue amounted to SEK 15,188 thousand (24,171).
- Operating loss amounted to SEK -18,558 thousand (-7,109).
- Net financial items amounted to SEK -6,953 thousand (55,940).
- Unrealised changes in property values amounted to SEK -46,132 thousand (-17,569).
- Profit before tax amounted to SEK -71,643 thousand (31,262), and profit after tax amounted to SEK -64,244 thousand (20,303), corresponding to SEK -0.13 (0.04) per share.
KEY EVENTS DURING THE REPORTING PERIOD JANUARY-SEPTEMBER 2021
- Michail Shatkus started as the Company's CFO on 1 January.
- On 13 April, Crown Energy announced that payments had been received that exceed one-third of the contracted sale price for the C-View Smart Business Park in Luanda, Angola.
- On 15 April, the Company announced that it is relinquishing its entire five per cent working interest in the Block P licence in Equatorial Guinea.
- On 19 April, the Company announced that a memorandum of understanding had been signed with Wildcat Petroleum Plc, an oil company listed on the London Stock Exchange (LSE: WCAT).
- On 20 April, the Company announced that its partner Africa Energy Corp had received official approval to conclude its two farm-out agreements for Block 2B in South Africa.
- On 7 June, the Company announced that Andreas Forssell had informed Board of Directors that he wishes to leave his role as CEO.
- On 15 September Yoav Ben Eli was nominated as new CEO of Crown and this appointment was formalized on 22 October.
EVENTS AFTER THE REPORTING PERIOD
- On 20 October Company announced that it had entered into an Agreement for the disposal of the majority of its oil and gas assets.
- On 27 October Company confirmed receipt of the first USD 75 million down payment towards the disposal with an additional consideration of USD 105 million payable over the next five years, with a total consideration, subject to the terms of an earn out agreement, of up to USD 450 million. The effect of the payment will first appear in Year-End report.
- On 15 November the CEO announced his new vision for Crown Energy and its business going forward.
- On 15 November an EGM was called to be held on 17 December.
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
| Group
All amounts in SEK thousands | JUL-SEP 2021 | JUL-SEP 2020 | JAN-SEP 2021 | JAN-SEP 2020 | FULL YEAR 2020 |
| --- | --- | --- | --- | --- | --- |
| Operating income | 4,626 | 6,590 | 15,192 | 24,171 | 29,985 |
| Operating expenses | -11,413 | -7,873 | -33,750 | -31,280 | -46,068 |
| Operating profit/loss | -6,787 | -1,283 | -18,558 | -7,109 | -16,083 |
| Net financial items | -8,095 | 6,679 | -6,953 | 55,940 | 60,524 |
| Net profit/loss for the period.
after tax | -38,832 | -4,731 | -64,244 | 20,303 | 45,046 |
| Earnings per share | -0,08 | -0,01 | -0,13 | 0,04 | 0.09 |
| Equity per share | 1,17 | 1.25 | 1,17 | 1,25 | 1.17 |
| Change in cash and cash equivalents | 21,934 | 12,538 | 22,866 | -7,099 | -54 |
Q3
CEO statement
DEAR SHAREHOLDERS AND INVESTORS,
I am very excited to be speaking to you as the new CEO of Crown Energy. As you know I have served on the Board of the Company for the last five years. We are going into the final quarter of this year having completed a very significant and company changing transaction which took a significant time to negotiate, ending in a great result for Crown Energy and our shareholders. We now have in October an added free cash balance of USD 75 million and will be receiving a secure income of USD 105 million over the next five years, with the strong possibility of receiving considerable further milestone payments in earn-out consideration into the Company and we have no debt.
FUTURE VISION AND STRATEGY
I intend to steer and grow Crown Energy in a new, socially responsible direction and at the same time achieve a graduated but firm exit from the oil and gas industry.
The scientific consensus is that the world needs to achieve net-zero greenhouse gases emissions by mid-century to avoid the impacts of climate change. This leaves us with no other choice but to consider reducing our dependency on energy originating from fossil fuels. It's time to take a firm step towards a change. Recent industry shifts have made clear that companies must adopt stringent ESG measures if they want to adopt to the changing economic eco-system and have access to capital for growth.
We must reduce our carbon emissions to an acceptable near net zero while continuing to meet our energy needs. Evolving a solid strategy to do so is the real challenge. A strategy that focuses on the sustainable growth in the new world, on leading industries, technology in action, enhancing old businesses and transforming them to be more ESG compliant, while out-preforming with excellence for the benefit of our shareholders, to include for example:
A. Environment - The CO2 capturing world, Real-estate investments in energetically efficient projects.
B. Social - Improving healthcare technologies, Tele-medicine (the future of medical care) projects and investments, Medical-Tech projects.
In the coming months and years, it is my intention, together with our experienced Board of Directors, to drive the company to a new direction and to completely exit the oil and gas world, in a firm and responsible manner. At the same time, I intend to present the Board with new investment opportunities, as we are confident that the climate change challenges encompass many opportunities from the eco-systems described above, eco-systems we already dominate, like the real-estate, and others, for their analysis and approval, and I am sure that we can take our Company to a new era, investing wisely and responsibly, out-preforming financial projections and at the same time caring for "mother-nature".
We shall maintain a constant and open dialog, as a Company policy, with the market and shareholders, with respect to the various investments and achievements reached and strive to be the best in what we do.
ASSET DEVELOPMENT AND MANAGEMENT
I am pleased to report that we are now seeing an improving economic situation in Angola, which should bode well for 2022. The Angolan kwanza has also started to strengthen against the US dollar which will be positive for us.
During the first three quarters 2021, net sales revenue, decreased by 38 percent compared to the same period last year. On the positive side is that property costs for the reporting period decreased by 17 percent and amounted to SEK -8,236 thousand (-9,665). The period's operating result is SEK -18,558 thousand (-7,190).
The buyer of the C-View property, the Angolan Ministry of Finance, has continued to pay our subsidiary in Angola. The second instalment of a total of six payments was received in full earlier this year and after those additional payments have continued to be made. Up to September 30 this year, a total of 50 percent of the agreed purchase price has been paid.
2 Crown Energy Interim report- January-September 2021
Q3
ENERGY
The oil price has recently gone over the USD 80 per barrel mark. Despite increases in oil price, industry activity remains unsettled due to the COVID-19 pandemic, mainly resulting in overall delays to project developments. On Block 2 B in South Africa, our Operator, Azinam, and the joint venture completed a seabed survey of the well location, and the Operator is currently conducting negotiations with various rig contractors for the drilling of the Gazania-1 well. Crown Energy holds a 10 per cent interest and in accordance with an earlier farm-out agreement, the other licence partners will bear all costs associated with the next drilling within the licence area, including additional well testing.
On our other Energy assets, as previously reported on 20th October, we have successfully entered into an agreement with a buyer who has the right to acquire Crown Energy's upstream oil and gas assets, including Iraq and Madagascar, for a total consideration of up to USD 450 million before the deduction of transaction costs.
For Madagascar, the current licensing period expired in November 2019. Crown Energy has previously applied for an additional extension and is continuing to discuss this with the authorities.
EXTRAORDINARY GENERAL MEETING
We have called an EGM for Friday December 17th to approve the proposed changes to Crown Energy's Objects of Association to move us into this new commercial direction, I am also inviting our investors to join me in a Questions and Answers event, where I will be able to describe my new Vision in more detail and answer questions.
Lastly, I would like to thank Andreas Forssell for all his service to the Company over the last ten years and wish him the best in his new commercial ventures.
Yoav Ben Eli
CEO, Crown Energy
3 Crown Energy Interim report- January-September 2021
Q3
Crown Energy's position regarding COVID-19
During the first months of 2020, the world was hit by the worldwide virus COVID-19. Since March 11, 2020, the epidemic has been classified by the WHO as a pandemic, which has entailed extensive restrictions and shutdowns of communities and businesses worldwide. The pandemic has had major effects on the global world economy. Among other things, a lot of business have suffered, and oil prices and stock exchange levels around the world have fluctuated a lot. The effects are difficult to foresee at present and conditions change daily. Crown Energy is monitoring the course of events surrounding the spread of the virus and is following the recommendations of the authorities. The situation is unpredictable, especially with new variants of the virus appearing, and Crown Energy cannot currently quantify any effects that the virus has or could have on the Group's operations. Crown Energy does however not believe that the pandemic had any effect on the Group's profit during the first nine months of 2021. Below is a summary of the Group's two business areas until this Interim report is released and how the outbreak of COVID-19 has affected and may affect them.
Asset Development and Management
The business area currently only operates in Angola and according to official information there have only been limited reported cases of COVID-19. The government in Angola has imposed strict restrictions in the country in order to reduce and contain the possible spread of the COVID-19 virus. As a result of travel restrictions, and a general downturn in the global economy, there is a risk that international companies will have scaled down their operations temporarily or even longer term in Angola. Angola is a country that is highly dependent on international companies and subject to the effects of the COVID-19 outbreak on these companies, the Group's property operations could also be affected going forward. For example, the risk continues that when short-term leases expire, some current tenants may hesitate to extend them. Such a situation can affect both the Group's income and the valuation of property assets in the short and long term. Property operations are very important to the Group as that is what currently generates cash flow. If business slows as a result of the effects of COVID-19, it could possibly affect the Group's ability to raise financing.
Crown Energy has, despite the restrictions in Angola, managed to find applicable solutions to maintain full service to tenants while complying with Angolan health and safety regulations whilst at the same time continuing to provide its clients with a full suite of support and management services. Client feedback shows that satisfaction with our services remains high. There has been no disruption or interruption to our local business activities and rental and service revenues continue to be received as normal. In 2021 so far, we have not noticed any effects in the leasing due to COVID-19, but in times like these, we review our cost structure ongoing basis.
Energy
South Africa has introduced some major lockdowns as a result of COVID-19 although these are no longer in significant force. The Group so far has not been affected and the Operator, Azinam, is continuing a tendering process to engage a rig to drill the well. A site survey has now been successfully carried out over the well location.. There have been no activities really on the Madagascar license, whereby we see no direct effects here. There have been no physical on site activities on our Iraqi project, however the discussions with potential buyers/partners were delayed because of pandemic. Crown Energy has not taken any specific measures so far but will continuously review the underlying financial calculations that form the basis for the valuation of each exploration asset.
4 Crown Energy Interim report- January-September 2021
Q3
Asset Development and Management business area
THE PROPERTY MARKET AND CURRENCY IN ANGOLA
Angola's real estate market is strongly linked to the oil and gas sector. The decline during 2020, has had the effect that tenants within the office segment tend to look for office size optimisation and cost reductions, which in turn has led to some renegotians and relocations to smaller spaces. Companies are aiming more to reduce long-term commitments. This means that the landlord must offer flexible contracts; shorter duration or adjustable for immediate needs. Alternative concepts to a traditional leasing system, such as business centers, are starting to emerge in the market. In 2021 demand from the oil industry is starting to be marginally higher than 2020. This will boost the rental market and have a positive effect in the sales market, whether for the users own use or for placement on the investment market (Source: Reseach, Property Market Report 2021 Angola, Abacus).
The Angolan kwanza has been stable over the reporting period, unlike the trend from past years. The weakening of the kwanza over the past years has had consequences on the reported revenue in Swedish SEK. The graph below shows the development of revenue since the third quarter of 2019.
Annual inflation in Angola rose. From lying around 16.9 percent in December 2019, it rose to about 26.6 percent in September this year. (Source: Banco Nacional de Angola). This is the highest rate of inflation since May 2018, and it can not be ruled out that Angola will be considered a hyperinflation economy again, and that IAS 29 Financial Reporting in Hyperinflationary Economies should be applied to the financial accounts in the future.
SUMMARY OF PROPERTY-RELATED KEY RATIOS
For definitions of key ratios please see pages 20-21.
| ALL AMOUNTS IN SEK THOUSANDS | 2021-09-30 | 2021-06-30 |
|---|---|---|
| Revenue backlog, SEK thousand | 14,442 | 15,167 |
| Rent backlog, SEK thousand | 10,927 | 12,138 |
| Contracted annual rental and service revenues, SEK thousand | 20,644 | 18,341 |
| Contracted annual rental revenues, SEK thousand | 14,273 | 12,517 |
| Area occupancy rate (excl. C-View) % | 53% | 52% |
| Economic occupancy rate (excl. C-View), % | 38% | 29% |
| WAULT rent and service, months | 9.2 | 11.6 |
| Market value of portfolio (excl. C-View), SEK thousand | 143,545 | 167,972 |
| Market value C-View, SEK thousand | 291,291 | 261,545 |
5 Crown Energy Interim report- January-September 2021
Q3
SEK 14 M
Revenue backlog
9.2 months
WAULT
53%
Area occupancy rate
COMMENTS ON PROPERTY-RELATED KEY RATIOS
Changes in the third quarter of 2021
Below is a list of changes in revenue and rent backlog for the third quarter of 2021.
| ALL AMOUNTS IN SEK THOUSANDS | REVENUE BACKLOG | RENT BACKLOG |
|---|---|---|
| Backlog at 30 June 2021 | 15,167 | 12,138 |
| Changes in the third quarter 2021: | ||
| Contracted revenue | -5 052 | -3 533 |
| New/extended contracts | 1 260 | 1 042 |
| Contracts terminated early | -58 | -47 |
| Exchange rate effects | 3 125 | 1 328 |
| Backlog at 30 September 2021 | 14 442 | 10 927 |
Contracted rental value and service value of extended and new contracts amount to SEK 1,042 thousand and SEK 218 thousand, totalling SEK 1,260 thousand. One contract was terminated prematurely, which means that the revenue backlog decreased by a total of SEK -58 thousand. In total 63 lease agreements remain. Due to exchange rate effects, the Group's revenue backlog and rent backlog have increased with SEK 3,125 thousand and SEK 1,328 thousand respectively.
The distribution between USD and AOA contracts amounts to 21 and 79 per cent, respectively.
The Company's WAULT has decreased since the second quarter 2021 from 11.6 to 9.2 months. Both the area occupancy rate and economic occupancy rate have changed in third quarter 2021 respectively 53 (52) per cent and 38 (29) per cent. The decrease compared to previous periods is mainly attributable to the fact that Ocean Corner and Soho property is now available for the rental.
Crown Energy's view is that there is still low demand in the Luanda property market and that it is currently "the tenant's market". Crown Energy has continued to extend and renew contracts in recent quarters, which has resulted in that the backlog has started to increase again. However, recent exchange rate developments will affect rental levels and demand remains to be seen.
Due to continued low demand on the properties and currently low occupancy rate, Crown Energy has recorded a significant value adjustment for the investment properties. See more on page 9.
6 Crown Energy Interim report- January-September 2021
Q3
Energy business area
MARKET
At the beginning of 2020, before the COVID-19 pandemic outbreak, the price of Brent oil, the international benchmark, was around USD 60 per barrel and global demand and consumption was still very firm. The past 12 months has been shaky, and the oil price has fluctuated drastically. Since start of 2021, however, prices have stabilised in the USD 70's per barrel and gone over $80 a number of times.
EXPLORATION PROJECTS
South Africa has continued with covid restrictions.. Regulatory approvals came in for our partner Africa Energy on their farm-outs for part of their interest in Block 2B. This means that our new partners, Azinam and Panoro joined the Licence and Azinam became the new Operator. The Operator tendered for a semi-submersible rig and also completed a seabed survey of the site in preparation for drilling the "Gazania-1" well. The Operator has finalised the well plan and is currently conducting negotiations with various rig contractors to optimise the well budget and drill the Gazania-1 well prior to the expiration of the Exploration Right in November 2022, in accordance with the terms of their Farm In Agreement with Africa Energy. The Operator has estimated the prospect size at up to 349 million barrels. The well, Gazania-1, will target two prospects in relatively low-risk oil-bearing structures up-dip from the discovery A-J1 borehole drilled in 1988. Crown Energy holds a 10 per cent interest and the licence partner Africa Energy will bear all costs associated with the next drilling within the licence area, including additional well testing.
Oil prices at today's levels continue to stimulate the market into investing in projects such as those being initiated by Crown Energy. On 20th October Crown entered into an Agreement under which it will dispose of (or grant pre-emption rights over), its upstream oil and gas assets, covering Madagascar and Iraq and excluding Block 2 B in South Africa, for a consideration of up to $450 million, before the deduction of transaction costs. For Madagascar, the current licencing period expired in November 2019. However, discussions have been ongoing since then and an application for extension has been submitted. The Company has been informed by the general director of OMNIS that there is no interest in opposing the extension of the license for another two years and is considering how to meet Crown Energy's requests. The Company's proposed change to the licence terms and conditions to better adapt to the prevailing circumstances for oil exploration, especially for early stages. This includes extending the licence period, changing the fee structure and adjusting the conditions for undertaking the work.. The Company currently hopes that we can come to an agreement on these changes and thus renew and extend the licence. Crown Energy will await further feedback from the authorities before deciding on the best way forward for the Company regarding this licence. It should be noted that Crown is now in a much stronger financial position than before, and thus has the capacity to be able to progress with this project, subject to further agreement.
As we have informed in press release of 15 April this year, the Company is relinquishing its stake in Equatorial Guinea since we see no potential or upside in the project in relation to the costs and risks involved. This will result in a write-down of approximately SEK 5 million, which has impact on the financial statements for 2021 of 2021. We wish nothing but the best for our prior licence partners and to the Republic of Equatorial Guinea.
For a detailed description of the assets, see the 2020 Annual Report and the Company's website.
7 Crown Energy Interim report- January-September 2021
Q3
Financial overview
KEY EVENTS DURING THE REPORTING PERIOD JANUARY-SEPTEMBER 2021
Michail Shatkus started as the Company's CFO on 1 January. Michail Shatkus has been acting CFO since Jenny Björk left the Company in June 2020.
On 13 April, Crown Energy announced that payments had been received that exceed one-third of the contracted sale price for the C-View Smart Business Park in Luanda, Angola. According to the contract, the Angolan state via the Ministry of Finance is entitled to access the economic rights after achieving this milestone. However, the client has chosen not to assume the economic rights for the property yet, thus the property is still accounted for as asset held for sale.
On 15 April, the Company announced that it is relinquishing its entire five per cent working interest in the Block P licence in Equatorial Guinea. The Board has determined that the economic outlook for the project does not meet Crown Energy's expectations for potential returns compared to the estimated risk. This has resulted in a write-down of SEK 5,192 thousand.
On 19 April, the Company announced that a memorandum of understanding had been signed with Wildcat Petroleum Plc, an oil company listed on the London Stock Exchange (LSE: WCAT) that develops block chain technology and cryptocurrency for financing oil and gas projects.
On 20 April, the Company announced that its partner Africa Energy Corp had received official approval to conclude its two farm-out agreements for Block 2B in South Africa. This means that the new licence partners are Azinam Limited and Panoro Energy ASA, where Azinam Limited will also take over operatorship from Africa Energy.
On 7 June, the Company announced that Andreas Forssell had informed Board of Directors that he wishes to leave his role as CEO.
On 15 September the company has announced that Yoav Ben Eli is nominated for the role of CEO, and this was approved by SCRO on 22 October.
COMMENTS ON FINANCIAL PERFORMANCE
Operating profit/loss
During the first nine month of 2021 ("the reporting period"), net sales decreased by 38 percent compared to same period last year. The decrease is due to the depreciation of the Angolan currency in 2020. Please see more information about this in the section Asset Development and Management.
Property costs for the reporting period amounted to SEK -8,236 thousand (-9,665). A decrease of 15 percent compared to last year.
Other external costs totalled SEK -12,629 thousand (-12,791). To a large extent this cost consists of nonrecurring consulting fees and write-downs in Crown Asset Development subsidiary in Netherlands.
Net financial items
Net financial items during the reporting period amounted to SEK -6,953 thousand (55,940). The net exchange rate effects amount to SEK -10,271 thousand (48,049). The currency effects are a result of re-valuations of both internal and external balances in foreign currency. In addition, the property valuations are made in USD and recalculated into AOA, which had a negative impact on financial items in Q3.
Changes in value
Changes in value during the reporting period amount to SEK -46,132 thousand (-17,569) and refers to unrealised changes in investment property. The changes in investment property are attributable to updates of the property valuations as of 30 September 2021 and negative FX effects due to stronger kwanza. The continued low demand on the market signals a lower occupancy in near future, which effects the value of the properties in a negative way.
8 Crown Energy Interim report- January-September 2021
Q3
Other comprehensive income
Other comprehensive income includes translation differences of SEK 60,515 thousand (-126,777), which arose as a result of revaluation of the subsidiaries' assets and liabilities from local currencies to SEK.
COMMENTS ON CONSOLIDATED FINANCIAL POSITION
Assets
The carrying amount of investment properties totalled SEK 143,545 thousand. Net change since year-end 2020 totalled SEK -35,830 thousand. The change in value is mainly attributable to adjustment of Ocean Corner property and the effect of low occupancy on future cashflows. See note 3 for a summary of the period's changes.
The C-View property is classified as a property asset held for sale. C-View is reported to a fair value amounting to AOA 19,853 million, which corresponds to the agreed purchase price, discounted over the payment period of three years. This corresponds to a value of SEK 291,291 as per 30 September 2021. The increase of SEK 43,555 thousand since year-end 2020 is attributable to FX rate effects. For more information about the C-View sale and the accounting of the transaction, see note 7.
Exploration and evaluation assets totalled SEK 204,633 thousand. On 15 April, the Company announced that it is relinquishing its entire five per cent working interest in the Block P licence in Equatorial Guinea. This has resulted in a write-down of SEK -5,192 thousand. See Note 4 for a summary of the changes.
Financial assets reported at amortised costs refers to investments in Angolan government bonds indexed against the USD or Inflation.
Prepaid costs and deferred income amount to SEK 33,462 thousand and has increased by SEK 2,502 thousand since year-end 2020.
Liabilities
The Group's long-term leasing liability amounts to SEK 698 thousand and refers to the leased investment property. The Group only considers fixed rental contracts as leases.
Contract liabilities relate normally only to revenues, invoiced in advance. In December 2019, the Group started to receive payments from the Angolan finance ministry (MINFIN), for the C-View sale, which also are included in the contract liabilities. These payments are accounted for as contract liabilities, until the economic control is transferred to MINFIN, which can occur after one third of the price is fully paid. The contract liability related to the C-View sale amounts as per 30 September 2021 to SEK 160,007 thousand. For more information about the C-View sale and the accounting of this, see note 7.
COMMENTS ON CASH FLOWS
The cash flow for the period amounts to SEK 15,962 (-1,858) thousand. The positive cash flow is explained by payments for C-view property. Net investments in bonds amount to SEK -25,742 thousand.
Cash flow from financing activities refers to payments of rent to landlords and amount to SEK -3,098 (-4,574) thousand.
PARENT COMPANY
The Parent Company's revenue for the period January-September 2021 amounted to SEK 2,175 thousand (5,246). Revenue related to re-invoicing of costs and management fees to subsidiaries. The decrease is due to lower personnel and administrative costs in the parent company.
Other external expenses of SEK -2,187 thousand (-3,911) decreased from previous year. The decrease is mainly attributable to lower consulting costs.
Parent company has received dividends amounting to SEK 8,206 thousand and had cost of write off of and equity in its Dutch Subsidiary for the amount of SEK 5,411 thousand.
There were 4 persons (4) employed by the Parent Company at the end of the period.
9 Crown Energy Interim report- January-September 2021
Q3
Consolidated statements of comprehensive income
| ALL AMOUNTS IN SEK THOUSANDS | NOTE | JUL-SEP 2021 | JUL-SEP 2020 | JAN-SEP 2021 | JAN-SEP 2020 | FULL YEAR 2020 |
|---|---|---|---|---|---|---|
| INCOME STATEMENT | ||||||
| Revenue, of which | 4,626 | 6,993 | 15,188 | 24,347 | 29,759 | |
| Rental revenues | 2 | 3,300 | 4,953 | 9,746 | 17,511 | 21,163 |
| Service revenues | 2 | 1,326 | 2,040 | 5,442 | 6,836 | 8,596 |
| Other operating income | 2 | - | -403 | 5 | -176 | 226 |
| Property-related expenses | -3,982 | -2,544 | -8,236 | -9,665 | -12,183 | |
| Other external costs | -4,925 | -2,788 | -12,629 | -12,791 | -21,968 | |
| Employee benefit expenses | -2,177 | -2,102 | -6,476 | -7,405 | -9,875 | |
| Depreciation | -265 | -439 | -767 | -1,419 | -1,025 | |
| Other operating expenses | -64 | - | -5,642 | - | -1,017 | |
| Operating profit/loss | -6,787 | -1,283 | -18,558 | -7,109 | -16,083 | |
| Financial income | 8,474 | 10,995 | 14,383 | 71,078 | 77,607 | |
| Financial expenses | -16,569 | -4,316 | -21,336 | -15,138 | -17,082 | |
| Net financial items | -8,095 | 6,679 | -6,953 | 55,940 | 60,524 | |
| Profit/loss before tax and changes in value | -14,882 | 5,396 | -25,511 | 48,831 | 44,441 | |
| Changes in value, of which | -28,802 | -8,854 | -46,132 | -17,569 | 2,114 | |
| Property, unrealised | 3 | -28,802 | -8,854 | -46,132 | -17,569 | 2,114 |
| Assets held for sale, unrealised | 7 | - | - | - | - | - |
| Earnings before tax | -43,684 | -3,458 | -71,643 | 31,262 | 46,554 | |
| Income tax | - | - | - | 138 | 252 | |
| Deferred tax | 4,852 | -1,273 | 7,398 | -11,098 | -1,760 | |
| Net profit/loss for the period | -38,832 | -4,731 | -64,244 | 20,303 | 45,046 | |
| Earnings per share and share related data | ||||||
| Average number of basic and diluted shares, thousands | 477,315 | 477,315 | 477,315 | 477,315 | 477,315 | |
| Basic and diluted earnings per share, SEK | -0.01 | -0.01 | -0.05 | 0.04 | 0.09 | |
| COMPREHENSIVE INCOME | ||||||
| Net profit/loss for the period | -38,832 | -4,731 | -64,244 | 20,303 | 45,046 | |
| Other comprehensive income: | ||||||
| Translation differences | 39,286 | -45,574 | 60,515 | -126,777 | -185,427 | |
| Total items that can be reclassified to profit or loss | 39,286 | -45,574 | 60,515 | -126,777 | -185,427 | |
| Other comprehensive income, net of tax | 39,286 | -45,574 | 60,515 | -126,777 | -185,427 | |
| Total comprehensive income for the year | 39,286 | -45,574 | 60,515 | -126,777 | -140,381 | |
| Comprehensive income for the period attributable to Parent Company shareholders | 455 | -50,304 | -3,729 | -106,475 | -140,381 |
10 Crown Energy Interim report- January-September 2021
Q3
Condensed consolidated statements of financial position
| ALL AMOUNTS IN SEK THOUSANDS | NOTE | 2021-09-30 | 2020-09-30 | 2020-12-31 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Investment property | 3 | 143,545 | 175,489 | 179,375 |
| Property assets held for sale | 7 | 291,291 | 287,722 | 247,736 |
| Equipment, tools, fixtures and fittings | 1,420 | 886 | 1,428 | |
| Intangible assets | 103 | 1,565 | 412 | |
| Exploration and evaluation assets | 4 | 204,633 | 211,523 | 201,774 |
| Financial assets valued at amortised cost | 36,373 | 11,474 | 3,415 | |
| Deferred tax asset | - | 5 | 1 | |
| Total non-current assets | 677,366 | 688,664 | 634,142 | |
| Current assets | ||||
| Trade receivables | 10,694 | 13,674 | 7,974 | |
| Other receivables | 5 | 37,256 | 35,854 | 39,132 |
| Prepaid expenses and accrued income | 33,462 | 40,544 | 30,960 | |
| Cash and cash equivalents | 65,388 | 35,477 | 42,522 | |
| Total current assets | 146,801 | 125,548 | 120,588 | |
| TOTAL ASSETS | 824,167 | 814,212 | 754,730 | |
| EQUITY AND LIABILITIES | ||||
| EQUITY | ||||
| Total equity attributable to Parent Company shareholders | 556,942 | 594,577 | 560,670 | |
| LIABILITIES | ||||
| Non-current liabilities | ||||
| Non-current lease liability | 698 | 323 | 3,114 | |
| Deferred tax liabilities | 81,520 | 99,211 | 77,436 | |
| Other provisions | 3,516 | 3,595 | 3,275 | |
| Total non-current liabilities | 85,734 | 103,130 | 83,826 | |
| Current liabilities | ||||
| Current lease liability | - | 3,316 | 314 | |
| Accounts payable | 7,060 | 7,311 | 7,354 | |
| Other current liabilities | 7,650 | 8,728 | 6,677 | |
| Accrued expenses and deferred income | 3,841 | 2,798 | 2,759 | |
| Contract liabilities | 162,939 | 94,353 | 93,130 | |
| Total current liabilities | 181,491 | 116,505 | 110,235 | |
| TOTAL EQUITY AND LIABILITIES | 824,167 | 814,212 | 754,730 |
11 Crown Energy Interim report- January-September 2021
Q3
Condensed consolidated statement of changes in equity
| ALL AMOUNTS IN SEK THOUSANDS | NOTE | 2021-09-30 | 2020-09-30 | 2020-12-31 |
|---|---|---|---|---|
| Reported opening balance | 560,670 | 701,051 | 701,051 | |
| Net profit/loss for the period | -64,244 | 20,303 | 45,046 | |
| Other comprehensive income, net of tax | 60,515 | -126,777 | -185,427 | |
| Comprehensive income for the period | -3,729 | -106,475 | -140,381 | |
| Closing balance attributable to parent company shareholders | 556,942 | 594,577 | 560,670 |
Condensed consolidated statements of cash flows
| ALL AMOUNTS IN SEK THOUSANDS | NOTE | JUL-SEP 2021 | JUL-SEP 2020 | JAN-SEP 2021 | JAN-SEP 2020 | FULL YEAR 2020 |
|---|---|---|---|---|---|---|
| Cash flow from operating activities before change in working capital | -2,152 | -616 | -7,020 | 61 | -16,438 | |
| Changes in working capital | 21,175 | 11,148 | 52,914 | 17,603 | 39,830 | |
| Cash flow from operating activities | 19,024 | 10,532 | 45,894 | 17,664 | 23,392 | |
| Capital expenditures on investment properties | -545 | -7,069 | -545 | -42,883 | -42,883 | |
| Capital expenditures on exploration and evaluation assets | -162 | 101 | -318 | 4 | -495 | |
| Capital expenditures on other fixed assets | -206 | -181 | -228 | -1,043 | -1,885 | |
| Investments in financial assets (government bonds) | - | 11,873 | -25,742 | 28,978 | 36,363 | |
| Paid tax on dividends | - | - | - | - | -1,230 | |
| Cash flow from investing activities | 3, 4 | -913 | 4,724 | -26,834 | -14,948 | -10,130 |
| Cash flow from financing activities | -1,215 | -974 | -3,098 | -4,574 | -3,680 | |
| Cash flow for the period | 16,896 | 14,282 | 15,962 | -1,858 | 9,582 | |
| Cash and cash equivalents at start of period | 43 454 | 22,939 | 42,522 | 42,576 | 42,576 | |
| Cash flow for the period | 16 896 | 14,282 | 15,962 | -1,858 | 9,582 | |
| Exchange losses on cash and cash equivalents | 5 038 | -1,744 | 6,094 | -5,241 | -9,636 | |
| Cash and cash equivalents at end of period | 65,388 | 35,477 | 65,388 | 35,477 | 42,522 |
12 Crown Energy Interim report- January-September 2021
Q3
Consolidated key ratios
For definitions of key ratios, see pages 22-23.
QUARTERLY SUMMARY – GROUP
| ALL AMOUNTS IN SEK THOUSANDS UNLESS OTHERWISE STATED | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 |
|---|---|---|---|---|---|---|---|---|
| EARNINGS | ||||||||
| Rental and service revenues | 4,626 | 5,683 | 4,879 | 5,411 | 6,993 | 8,247 | 9,108 | 9,923 |
| Other operating income | - | 5 | - | -614 | -403 | 248 | - | 1,260 |
| Operating profit/loss | -6,787 | -8,461 | -3,310 | -8,974 | -1,283 | 24 | -5,851 | -8,388 |
| Net profit/loss for the period after tax | -38,832 | -8,669 | -16,743 | 24,743 | -4,731 | 13,730 | 11,303 | 18,696 |
| PROPERTY-RELATED KEY RATIOS | ||||||||
| Rental revenues | 3,300 | 3,222 | 3,224 | 3,652 | 4,953 | 5,852 | 6,706 | 7,295 |
| Service revenues | 1,326 | 2,461 | 1,655 | 1,760 | 2,040 | 2,394 | 2,402 | 2,628 |
| Property-related expenses | -3,982 | -2,054 | -2,200 | -2,518 | -2,544 | -3,371 | -3,751 | -3,906 |
| Operating net | 644 | 3,629 | 2,679 | 2,893 | 4,449 | 4,876 | 5,357 | 6,017 |
| Operating surplus, property portfolio, % | 14% | 64% | 55% | 53% | 64% | 59% | 59% | 61% |
| Revenue backlog | 14,442 | 15,167 | 16,320 | 13,698 | 16,231 | 24,322 | 32,281 | 31,145 |
| Rent backlog | 10,927 | 12,138 | 12,127 | 10,217 | 12,421 | 18,544 | 25,323 | 25,519 |
| Contracted annual rental and service revenues | 20,644 | 18,341 | 17,037 | 17,896 | 25,076 | 29,265 | 26,070 | 34,503 |
| Contracted annual rental revenues | 14,273 | 12,517 | 11,256 | 11,846 | 17,461 | 20,857 | 36,095 | 25,302 |
| FINANCIAL KEY RATIOS | ||||||||
| EBITDA | -17,791 | -8,209 | -3,060 | -9,368 | -844 | 444 | -5,290 | -8,186 |
| EBITDA margin, % | neg. | neg. | neg. | neg. | neg. | 5% | neg. | neg. |
| RATIOS PER SHARE | ||||||||
| Basic and diluted shares outstanding, thousand | 477,315 | 477,315 | 477,315 | 477,315 | 477,315 | 477,315 | 477,315 | 477,315 |
| Average number of shares, thousand | 477,315 | 477,315 | 477,315 | 477,315 | 477,315 | 477,315 | 477,315 | 477,315 |
| Diluted earnings per share, SEK | -0.08 | -0.02 | -0.04 | 0.05 | -0.01 | 0.03 | 0.02 | 0.04 |
| EMPLOYEES | ||||||||
| Average number of employees | 17.0 | 16.5 | 17.0 | 18.0 | 18.0 | 19.0 | 19.0 | 18.3 |
13 Crown Energy Interim report- January-September 2021
Q3
PERIODIC SUMMARY – GROUP
| ALL AMOUNTS IN SEK THOUSANDS UNLESS OTHERWISE STATED | JAN-SEP 2021 | JAN-SEP 2020 | FULL YEAR 2020 | FULL YEAR 2019 | FULL YEAR 2018 | FULL YEAR 2017 |
|---|---|---|---|---|---|---|
| EARNINGS | ||||||
| Rental and service revenues | 15,188 | 24,347 | 29,759 | 48,788 | 76,633 | 110,483 |
| Other operating income | 5 | -176 | 226 | 2,728 | 214 | 811 |
| Operating profit/loss | -18,558 | -7,109 | -16,083 | -996 | 22,075 | -105,254 |
| Operating profit/loss before items affecting comparability | -18,558 | -7,109 | -16,083 | -996 | 22,075 | 69,332 |
| Net profit/loss for the period, after tax | -64,244 | 20,303 | 45,046 | 133,599 | 186,909 | -67,275 |
| PROPERTY-RELATED KEY RATIOS | ||||||
| Rental revenues | 9,746 | 17,511 | 21,163 | 34,155 | 53,349 | 67,160 |
| Service revenues | 5,442 | 6,836 | 8,596 | 14,633 | 23,284 | 43,323 |
| Property-related expenses | -8,236 | -9,665 | -12,183 | -17,121 | -23,883 | -21,089 |
| Operating net | 6,952 | 14,682 | 17,575 | 31,667 | 52,750 | 89,394 |
| Operating surplus, property portfolio, % | 46% | 60% | 59% | 65% | 69% | 81% |
| Revenue backlog | 14,442 | 16,231 | 13,698 | 31,145 | 51,222 | * |
| Rent backlog | 10,927 | 12,421 | 10,217 | 25,519 | 32,646 | * |
| Contracted annual rental and service revenues | 20,644 | 25,076 | 17,896 | 34,503 | 78,865 | * |
| Contracted annual rental revenues | 14,273 | 17,461 | 11,846 | 25,302 | 60,374 | * |
| Area occupancy rate, %*** | 53% | 71% | 71% | 73% | 55% | 73% |
| Economic occupancy rate, %*** | 38% | 50% | 47% | 60% | 44% | * |
| WAULT rent and service, months** | 9.2 | 9.4 | 10.1 | 12.1 | 6.7 | 14.3 |
| Market value of portfolio | 142,847 | 173,131 | 176,261 | 149,860 | 603,703 | 618,344 |
| Leasable area, thousands of square meters | 19.9 | 19.6 | 19.9 | 19.6 | 31.7 | 40.1 |
| Number of properties at end of period | 14 | 16 | 14 | 15 | 16 | 16 |
| FINANCIAL KEY RATIOS | ||||||
| Return on equity (ROE), % | neg. | neg. | 7.1% | 2.5% | 22% | neg. |
| Return on assets (ROA), % | neg. | neg. | 5.4% | 2.0% | 18% | neg. |
| EBITDA | -17,791 | -5,690 | -15,058 | -8,186 | 22,349 | -105,212 |
| Adjusted EBITDA | -17,791 | -5,690 | -15,058 | -8,186 | 22,349 | 69,374 |
| EBITDA margin, % | neg. | neg. | neg. | neg. | 19% | neg. |
| Adjusted EBITDA margin, % | neg. | neg. | neg. | neg. | 19% | 62% |
| Equity/assets ratio, % | 68% | 73% | 74% | 77% | 83% | 82% |
| RATIOS PER SHARE | ||||||
| Basic and diluted shares outstanding, thousand | 477,315 | 477,315 | 477,315 | 477,315 | 477,315 | 477,315 |
| Average number of basic and diluted shares, thousands | 477,315 | 477,315 | 477,315 | 477,315 | 477,315 | 401,297 |
| Basic and diluted earnings per share, SEK | -0.13 | -0.01 | 0.09 | 0.28 | 0.39 | -0.17 |
| Equity per share, SEK | 1.17 | 1.25 | 1.17 | 1.47 | 1.70 | 1.83 |
| EMPLOYEES | ||||||
| Average number of employees | 17 | 19,0 | 18.4 | 18.1 | 16.8 | 15.5 |
From the third quarter of 2018, several new key ratios were calculated and produced. The time spent and cost of producing data for periods farther back was weighed against the added value of presenting the information. The assessment is that it is more relevant for the Group to calculate these key ratios from Q3 2018 onwards and that time spent and cost were not reasonable for calculating these key ratios.
*WAULT means a weighted average unexpired lease period. For periods before Q3 2018, the average remaining contract length is not weighted. Key ratio for 2016 has not been calculated.
*** For 2019, the C-View property is not included in key ratios area/economic occupancy rate and leasable area.
14 Crown Energy Interim report- January-September 2021
Q3
Parent Company
CONDENSED INCOME STATEMENT – PARENT COMPANY
| ALL AMOUNTS IN SEK THOUSANDS | NOTE | JUL-SEP 2021 | JUL-SEP 2020 | JAN-SEP 2021 | JAN-SEP 2020 | FULL YEAR 2020 |
|---|---|---|---|---|---|---|
| Revenue | 5 | 379 | 1,139 | 2,175 | 5,246 | 6,756 |
| Other operating income | - | 13 | - | 86 | 86 | |
| Other external costs | -759 | -684 | -2,187 | -3,911 | -9,858 | |
| Employee benefit expenses | -1,309 | -1,211 | -3,935 | -4,490 | -5,975 | |
| Depreciation/amortisation | - | -18 | -18 | |||
| Other operating expenses | -22 | -76 | -49 | -61 | -3 | |
| Operating profit/loss | -1,711 | -820 | -3,996 | -3,149 | -9,012 | |
| Write-down of participations in Group companies | -5,411 | - | -5,411 | - | -923,704 | |
| Dividend from subsidiary | 8,206 | - | 8,206 | - | ||
| Interest income and similar items | 68 | - | 285 | - | -936 | |
| Interest income, intercompany | 5 | 779 | 1,006 | 2,351 | 3,121 | 3,891 |
| Interest expenses and similar items | - | -273 | -140 | -182 | - | |
| Earnings before tax | 1,931 | -89 | 1,295 | -210 | -929,761 | |
| Tax | - | - | - | |||
| Net profit/loss for the period | 1,931 | -89 | 1,295 | -210 | -929,761 |
CONDENSED BALANCE SHEET – PARENT COMPANY
| ALL AMOUNTS IN SEK THOUSANDS | NOTE | 2021-09-30 | 2020-09-30 | 2020-12-31 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Participations in Group companies | 467,320 | 1,388,088 | 466,410 | |
| Intangible assets | - | - | - | |
| Receivables from Group companies | 211,768 | 222,422 | 213,780 | |
| Total non-current assets | 679,088 | 1,610,510 | 680,189 | |
| Current assets | ||||
| Receivables from Group companies | 3,310 | 1,811 | 1,945 | |
| Current receivables | 793 | 5,270 | 716 | |
| Cash and bank balances | 6,436 | 1,400 | 6,037 | |
| Total current assets | 10,539 | 8,480 | 8,697 | |
| TOTAL ASSETS | 689,627 | 1,618,989 | 688,886 | |
| EQUITY AND LIABILITIES | ||||
| Total equity | 685,516 | 1,613,772 | 684,221 | |
| Total liabilities | 4,110 | 5,129 | 4,667 | |
| TOTAL EQUITY AND LIABILITIES | 689,626 | 1,618,900 | 688,886 |
CONDENSED STATEMENT OF CHANGES IN EQUITY – PARENT COMPANY
| ALL AMOUNTS IN SEK THOUSANDS | NOTE | 2021-09-30 | 2020-09-30 | 2020-12-31 |
|---|---|---|---|---|
| Opening equity | 684,221 | 1,613,982 | 1,613,982 | |
| Net profit/loss for the period | 1,295 | -210 | -929,761 | |
| Total result for the period | 1,295 | -210 | -929,761 | |
| Total equity | 685,516 | 1,613,772 | 684,221 |
15 Crown Energy Interim report- January-September 2021
Q3
Other information
COMPANY INFORMATION
The Parent Company, Crown Energy AB (publ), with corporate ID 556804-8598, is a limited company registered in Sweden and domiciled in Stockholm. The street address of the main office is Brahegatan 30, 114 37 Stockholm.
The number of employees in the Group at the end of the reporting period is 17; 13 linked to the operations in Angola, four half employed in the Parent Company in Sweden.
OWNERSHIP STRUCTURE
The number of shares registered in Crown Energy AB's share register (as per Euroclear) as of publication of this report is 477,315,350 with a quotient value of SEK 0.03 per share.
The Company's ordinary shares are listed on NGM Main Regulated and are traded under the ticker name CRWN with ISN code SE0004210854.
| SHAREHOLDERS | NUMBER OF SHARES | SHARES (%) | NUMBER OF VOTES | VOTES (%) |
|---|---|---|---|---|
| Yoav Ben-Eli, via company 1) | 343,817,971 | 72.0% | 343,817,971 | 72.0% |
| Cement Fund SCSp | 63,000,000 | 13.2% | 63,000,000 | 13.2% |
| Alan Simonian, privately and via family | 3,429,521 | 0.7% | 3,429,521 | 0.7% |
| Other shareholders | 67,067,858 | 14.1% | 67,067,858 | 14.1% |
| Total number of shares | 477,315,350 | 100.0% | 477,315,350 | 100.0% |
1) The shares are owned by YBE Ventures Ltd, which is controlled by Yoav Ben-Eli.
SEASONAL VARIATIONS
We estimate that there are not any significant seasonal variations in any of the Group's business areas or in Crown Energy as an individual company.
RISKS AND UNCERTAINTIES
A detailed description of the Group's and Parent Company's risks and risk management can be found in Crown Energy's 2020 Annual Report. During 2021 and until this Interim report is released, no decisive changes to significant risks or uncertainties have occurred compared to that stated in the annual report. Regarding the development during 2020/2021 of the COVID-19 virus, this is separately described in the section Crown Energy's position regarding COVID-19 on page 3.
Notes
1 ACCOUNTING POLICIES
This interim report was prepared pursuant to IAS 34 Interim Financial Reporting, the Swedish Annual Accounts Act, and RFR 1 Supplementary Accounting Regulations for Groups. As with the 2020 annual accounts, the consolidated accounts were prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and the Swedish Annual Accounts Act. The financial statements of the Parent Company were prepared in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's RFR 2 Accounting for Legal Entities.
The same accounting policies were used during the period as were used for the 2020 financial year and as described in the 2020 Annual Report. None of the new or revised standards, interpretations, or amendments adopted by the EU have influenced the Group's earnings or position.
This interim report does not contain all the information and disclosures contained in the Annual Report, so the interim report should be read alongside the 2020 Annual Report.
16 Crown Energy Interim report- January-September 2021
Q3
Note 1 Accounting policies (continued)
OTHER
IAS 29 Financial Reporting in Hyperinflationary Economies
2018 Angola was classified as a hyper-inflationary economy. IMF data now shows that the three-year cumulative inflation rate was below 100% in 2019. Also the development during 2020, shows that the qualitative indicators suggest that Angola is no longer hyper-inflationary. Crown Energy has therefore ceased the accounting of inflation adjustments in accordance with IAS 29. The amounts reported in the financial statements in year-end 2020 are considered to be the carrying amounts for the subsequent financial statements – that is, the restated amounts are the cost bases of any non-monetary items from 1 January 2020. However, official annual inflation in Angola rose to 26 percent during 2021. This is the highest rate of inflation since May 2018, and it can not be ruled out that Angola will be considered a hyperinflation economy again, and that IAS 29 should be applied to the financial accounts in the future
2 REVENUE CATEGORIES
The Group has two revenue streams: rental revenue from leases and revenue from service contracts with tenants. Rental revenue, which makes up most of the Group's revenue, is covered by IFRS 16, Leases, which is why it is excluded from IFRS 15 and its disclosure requirements.
Regarding accounting principles and risks linked to these revenues, see the Annual Report 2020.
| REVENUE CATEGORIES, AMOUNTS IN SEK THOUSANDS | Energy | Asset Development and Management | Other and eliminations | Total |
|---|---|---|---|---|
| Q3 2021 | ||||
| Rental revenue | - | 9,746 | - | 9,746 |
| Service revenue | - | 5,442 | - | 5,442 |
| Other revenue | - | 5 | - | 5 |
| Total revenue | - | 15,192 | - | 15,192 |
| Of which revenue from contracts with customers, subject to IFRS 15 | - | 5,442 | - | 5,442 |
| Q3 2020 | ||||
| --- | --- | --- | --- | --- |
| Rental revenue | - | 17,511 | - | 17,511 |
| Service revenue | - | 6,836 | - | 6,836 |
| Other revenue | 57 | -256 | 22 | -176 |
| Total revenue | 57 | 24,092 | 22 | 24,171 |
| Of which revenue from contracts with customers, subject to IFRS 15 | - | 6,836 | - | 6,836 |
3 INVESTMENT PROPERTY
Changes in carrying amount:
| GROUP, ALL AMOUNTS IN SEK THOUSANDS | JUL-SEP 2021 | JUL-SEP 2020 | JAN-SEP 2021 | JAN-SEP 2020 | FULL YEAR 2020 |
|---|---|---|---|---|---|
| Opening carrying amount | 170 949 | 181,443 | 179 375 | 154,395 | 154,395 |
| + Capital expenditures for the period | 545 | - | 545 | 485 | 485 |
| + Acquisitions for the period | - | 7,069 | - | 42,398 | 42,398 |
| - Disposals for the period | - | - | - | - | - |
| +/- Unrealised changes in value | -29 005 | -8,269 | -45 667 | -14,600 | 6,319 |
| +/- Change leasing liability | -2 427 | -585 | -2 734 | -2,969 | -4,206 |
| Changes in leasing contracts, no effect on result | - | 641 | - | 2,157 | 2,255 |
| +/- Exchange rate effects | 3 485 | -4,808 | 12 027 | -6,377 | -22,272 |
| Closing carrying amount | 143,545 | 175,489 | 143,545 | 175,489 | 179,375 |
17 Crown Energy Interim report- January-September 2021
Q3
Note 3 Investment property (continued)
The valuation of the investment properties has been prepared internally as per 30 September 2021. Required returns were determined for housing and office premises and are set at 7 percent, before tax. The weighted average cost of capital (WACC) for the market (Luanda, Angola) was estimated at 14,1 percent for the period, after tax.
Lease costs for rights of use are included in the fair value, which means that the lease liability is reversed to avoid double counting these costs:
| GROUP, ALL AMOUNTS IN SEK THOUSANDS | 2021-09-30 | 2020-09-30 | 2020-12-31 |
|---|---|---|---|
| Fair value, investment properties | 142,847 | 173,131 | 176,261 |
| Reversal of lease costs recognised as lease liabilities | 698 | 2,358 | 3,114 |
| Carrying amount at end of reporting period | 143,545 | 175,489 | 179,375 |
4 EXPLORATION AND EVALUATION ASSETS
Changes in carrying amount:
| GROUP, ALL AMOUNTS IN SEK THOUSANDS | JUL-SEP 2021 | JUL-SEP 2020 | JAN-SEP 2021 | JAN-SEP 2020 | FULL YEAR 2020 |
|---|---|---|---|---|---|
| Opening carrying amount | 200,865 | 216,243 | 201,774 | 215,741 | 215,741 |
| Capital expenditures for the period | 162 | -101 | 318 | -4 | 495 |
| Write Down of E&E assets | - | - | -5,192 | - | - |
| Translation and revaluation effects | 3,606 | -4,619 | 7,732 | -4,215 | -14,461 |
| Closing accumulated cost of acquisition | 204,633 | 211,523 | 204,633 | 211,523 | 201,774 |
On 15 April, the Company announced that it is relinquishing its entire five per cent working interest in the Block P licence in Equatorial Guinea. The Board has determined that the economic outlook for the project does not meet Crown Energy's expectations for potential returns compared to the estimated risk. This has resulted in a write-down of SEK 5,192 thousand.
Madagascar, the current licencing period expired in November 2019. However, discussions have been ongoing since then and an application for extension has been submitted.
Crown Energy will await further feedback from the authorities before deciding on the best way forward for the Company regarding this licence. The current value of the Madagascar asset is SEK 90,818 thousand.
5 TRANSACTIONS WITH RELATED PARTIES
PURCHASES AND SALES WITHIN THE GROUP
Of the Parent Company's revenue for the nine months 2021, 100 per cent (100) represents re-invoicing and management fees to other companies within the Group. Of the Parent Company's total interest income, 100 per cent (100) relates to other entities within the Group.
PURCHASE OF SERVICES
Since 1 February 2021, Yoav Ben-Eli, Board member and largest shareholder in the Company, is remunerated by the Group's subsidiary in Angola through a consulting agreement. The agreement amounts to EUR 20,000 per month, which corresponds to SEK 2,342 thousand for the period February-September 2021. Yoav Ben-Eli received a salary of SEK 50 thousand for January 2021 from the Group subsidiary in the Netherlands.
Peter Mikkelsen works in his management position under a consultancy agreement. The services are purchased on normal commercial terms and work performed is invoiced regularly. Invoicing from Peter Mikkelsen amounts to SEK 37 thousand during the nine month of 2021.
The Company's principal shareholder Yoav Ben-Eli owns 100 per cent of ESI Angola Lda and according to a service contract, ESI Angola Lda provides property management and other services
18 Crown Energy Interim report- January-September 2021
Q3
Note 5 transactions with related parties (continued)
to YBE Imobiliária Angola Lda. The Group's purchases of services from ESI Angola Lda amounted to SEK 5,210 thousand during the reporting period.
ESI Angola
In addition to these ongoing purchases of services, Crown Energy has a receivable from ESI Angola Lda. For more information about the receivable, please see the Annual Report 2020. At 30 September 2021, this receivable amounted to the equivalent of SEK 33,645 thousand including interest.
All transactions are performed on normal commercial terms.
6 OPERATING SEGMENTS
| OPERATING SEGMENTS, SEK THOUSANDS | Energy Q3 2021 | Asset Development and Management Q3 2021 | Other and eliminations Q3 2021 | Total Q3 2021 |
|---|---|---|---|---|
| Operating income | - | 4,626 | - | 4,626 |
| Operating expenses | -73 | -9,253 | -2,088 | -11,413 |
| Operating profit/loss | -73 | -4,627 | -2,088 | -6,787 |
| Net financial items | 2,151 | -10,338 | 92 | -8,095 |
| Profit/loss before tax and changes in value | 2,078 | -14,964 | -1,996 | -14,882 |
| Changes in value | ||||
| Property, unrealised | - | -28,802 | - | -28,802 |
| Earnings before tax | 2,078 | -43,766 | -1,996 | -43,684 |
| Income tax | - | - | - | - |
| Deferred tax | - | 4,853 | 0 | 4,852 |
| Net profit/loss for the period | 2,078 | -38,913 | -1,997 | -38,832 |
| Non-current assets at end of period | 204,633 | 472,630 | 103 | 677,366 |
| OPERATING SEGMENTS, SEK THOUSANDS | Energy Q3 2020 | Asset Development and Management Q3 2020 | Other and eliminations Q3 2020 | Total Q3 2020 |
| --- | --- | --- | --- | --- |
| Operating income | 36 | 6,619 | -65 | 6,590 |
| Operating expenses | -167 | -5,867 | -1,839 | -7,873 |
| Operating profit/loss | -131 | 753 | -1,905 | -1,283 |
| Net financial items | -2,523 | 9,529 | -326 | 6,679 |
| Profit/loss before tax and changes in value | -2,654 | 10,281 | -2,231 | 5,396 |
| Changes in value | ||||
| Property, unrealised | - | -8,854 | - | -8,854 |
| Earnings before tax | -2,654 | 1,427 | -2,231 | -3,458 |
| Income tax | - | - | - | - |
| Deferred tax | - | -1,274 | 1 | -1,273 |
| Net profit/loss for the period | -2,654 | 153 | -2,230 | -4,731 |
| Non-current assets at end of period | 211,523 | 475,571 | 1,570 | 688,664 |
19 Crown Energy Interim report- January-September 2021
Q3
Note 6 Operating segments (continued)
| OPERATING SEGMENTS, SEK THOUSANDS | Energy JAN-SEP 2021 | Asset Development and Management JAN-SEP 2021 | Other and eliminations JAN-SEP 2021 | Total JAN-SEP 2021 |
|---|---|---|---|---|
| Operating income | - | 15,192 | - | 15,192 |
| Operating expenses | -5,413 | -22,173 | -6,164 | -33,750 |
| Operating profit/loss | -5,413 | -6,981 | -6,163 | -18,558 |
| Net financial items | 4,609 | -11,754 | 192 | -6,953 |
| Profit/loss before tax and changes in value | -804 | -18,735 | -5,971 | -25,511 |
| Changes in value | ||||
| Property, unrealised | - | -46,132 | - | -46,132 |
| Earnings before tax | -804 | -64,867 | -5,971 | -71,643 |
| Income tax | - | - | - | - |
| Deferred tax | - | 7,399 | -1 | 7,398 |
| Net profit/loss for the period | -804 | -57,468 | -5,971 | -64,244 |
| Non-current assets at end of period | 204,633 | 472,630 | 103 | 677,366 |
| OPERATING SEGMENTS, SEK THOUSANDS | Energy JAN-SEP 2020 | Asset Development and Management JAN-SEP 2020 | Other and eliminations JAN-SEP 2020 | Total JAN-SEP 2020 |
| --- | --- | --- | --- | --- |
| Operating income | 57 | 24,092 | 22 | 24,171 |
| Operating expenses | -1,148 | -23,566 | -6,566 | -31,280 |
| Operating profit/loss | -1,091 | 525 | -6,542 | -7,109 |
| Net financial items | -2,027 | 58,208 | -241 | 55,940 |
| Profit/loss before tax and changes in value | -3,118 | 58,734 | -6,784 | 48,831 |
| Changes in value | ||||
| Property, unrealised | - | -17,569 | - | -17,569 |
| Earnings before tax | -3,118 | 41,165 | -6,784 | 31,262 |
| Income tax | - | 138 | - | 138 |
| Deferred tax | - | -11,100 | 2 | -11,098 |
| Net profit/loss for the period | -3,118 | 30,203 | -6,782 | 20,303 |
| Non-current assets at end of period | 211,523 | 475,571 | 1,570 | 688,664 |
7 SALE OF THE C-VIEW PROPERTY
Background
On 30 April 2019 Crown Energy concluded an agreement for the sale of the C-View property in Angola. Buyer is the Angolan State via the Ministry of Finance ("MINFIN"). The transaction is made in Angolan kwanza and will be paid over three years. The payments will be adjusted with an official inflation rate. The inflation compensation will be determined before the last instalment. For more information about the transaction and how it will be accounted for, please see Note 30 Sale of the C-View Property in the Annual Report 2020.
Accounting during 2021
C-View will, up until the economic control is transferred to the buyer, continues to be managed by Crown Energy, which means that it was classified as an asset held for sale. The asset is valued at fair value (in accordance with IAS 40), which corresponds to the agreed purchase price, discounted over the repayment period of three years. Transaction costs will be accounted as a part of the net realised result of the transaction, in connection with the transfer of the economic control. The client as of 30 September 2021 did not take over economic control of the property, despite reaching the required threshold of $1/3$ of purchase price in April 2021, thus the property is still accounted as an asset held for sale.
20 Crown Energy Interim report- January-September 2021
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Note 7 Sale of the C-View property (continued)
The payments from MINFIN are accounted for as a prepaid revenue (classified as contractual liability), until the economic control is transferred to MINFIN. The contract liability related to the C-View sale amounts as per 30 September 2021 to 160,007 SEK thousand, which in local currency corresponds to 50 percent of the total sales price. Based on initial exchanges rates at the time of the signing in April 2019 of the amounts to be received, this would have corresponded to approx. SEK 321,305 thousand, but due to the devaluation of the Angolan kwanza.
8 EVENTS AFTER THE END OF THE REPORTING PERIOD
On 20 October Crown announced that it had entered into an Agreement for the disposal of the majority of its oil and gas assets.
On 27 October Crown confirmed receipt of the first USD 75 million down payment towards the disposal with an additional consideration of USD 105 million payable over the next five years, with a total consideration, subject to the terms of an earn out agreement, of up to USD 450 million.
On 15 November the CEO announced his new vision for Crown and its business going forward.
On 15 November an EGM was called to be held on 17th December.
The Board and CEO hereby certify that this interim report gives a fair overview of the Parent Company's and Group's operations, position, and earnings, and describes significant risks and uncertainty factors to which the Group and its companies are exposed.
This Swedish interim report was reviewed by the Company's auditors. The English interim report is a translation of the Swedish Interim Report.
Stockholm, 19 November 2021
Pierre-Emmanuel Weil
Chairman of the Board
Yoav Ben-Eli
Board member;CEO
Jean Benaim
Board member
Alan Simonian
Board member, COO
REPORTING DATES
- Year-End Report 2021 25 February 2022
- Annual Report 2021 15 April 2022
- Annual General Meeting 2022 18 May 2022
- Three-month report 2022 20 May 2022
- Half Year Report 2022 19 August 2022
- Nine-month report 2022 18 November 2022
21 Crown Energy Interim report- January-September 2021
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PUBLICATION
This information is information as Crown Energy AB (publ) is required to disclose under the EU Market Abuse Regulation. The information was submitted for publication at 13:00 CET, on 19 November 2021.
FINANCIAL INFORMATION
All financial information is posted at www.crownenergy.se as soon as it is released. Shareholders, other players in the stock market, and the public are free to subscribe to the Company's press releases and financial reports through Cision's news service, at http://news.cision.com/se/crown-energy.
For additional information, contact:
Yoav Ben-Eli, CEO +46 (0)8 400 207 20
ADDRESS
Crown Energy AB (publ)
Brahegatan 30
SE-114 37 Stockholm, Sweden
www.crownenergy.se
Glossary and definitions
ALTERNATIVE PERFORMANCE MEASURES
The Company applies the European Securities and Markets Authority's (ESMA) guidelines on alternative performance measures. The alternative key financial performance indicators are defined as financial measures of historical or future earnings trends, financial position, financial performance or cash flows that are not defined or specified in the applicable regulations for financial reporting, IFRS and the Annual Accounts Act. These measures should not be regarded as a substitute for measures defined in accordance with IFRS.
If an alternative performance measure cannot be identified directly from the financial statements, a reconciliation is required.
All indicators are alternative unless stated otherwise.
DEFINITIONS OF KEY RATIOS
Financial key ratios
Adjusted EBITDA
Earnings before financial items, tax, depreciation/amortisation and impairment, adjusted for effects of reverse acquisition. EBITDA is used to measure earnings from operating activities, independently of depreciation, amortisation and impairment losses.
Average assets
Calculated as opening balance assets + closing balance assets divided by two. Used to calculate return on capital employed.
Average capital
Calculated as opening capital employed + closing capital employed divided by two. Used to calculate return on equity.
Average equity
Calculated as opening balance equity + closing balance equity divided by two. Used to calculate return on equity.
EBITDA
Earnings before interest, taxes, depreciation and amortisation. EBITDA is used to measure earnings from operating activities, independently of depreciation, amortisation and impairment losses.
EBITDA margin
Measurement of a company's operating profitability as a percentage of its total revenue. The EBITDA margin is used to compare EBITDA in relation to revenue.
Equity, SEK
Equity at end of period.
Equity/assets ratio, %
Equity including the minority as a percentage of total assets. Used to highlight the Company's interest rate sensitivity and financial stability.
22 Crown Energy Interim report- January-September 2021
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Operating profit/loss excl. effect from reverse acquisition
Earnings before financial income and expenses and taxes, adjusted for the effect of the reverse acquisition. Used to measure operating profitability.
Operating profit/loss incl. effect of reverse acquisition
Earnings before financial income and expenses and taxes. Used to measure operating profitability.
Return on assets (ROA), %
This ratio measures profitability relative to total assets. Return on assets is used to highlight a company's ability to generate profit on the group's assets, unaffected by the group's financing.
Return on equity (ROE), %
The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.
Total assets
Total assets at the end of the period. Total assets are a measure of the value of assets at the end of the period.
Ratios per share
Earnings per share, SEK*
Earnings after tax divided by average number of shares for the period. Used to show the shareholders share of the Group's earnings per share.
Equity per share, SEK
Equity at end of period divided by number of shares at end of period. Used to highlight the shareholders' portion of the company's total assets per share.
Total number of shares outstanding*
Number of shares outstanding at end of period.
Weighted average number of shares*
Weighted number of shares outstanding during the year.
Employees
Average number of employees**
Average number of employees during the period.
PROPERTY-RELATED DEFINITIONS AND GLOSSARY
Area occupancy rate**
Leased area in relation to total leasable area at the end of the period.
Economic occupancy rate**
Calculated by dividing contracted annual rental revenue in relation to the rental value. This figure is used to help facilitate the assessment of rental revenue in relation to the total value of available, unleased area. Note that this calculation does not include service revenues. Relates to contracted annual rent plus assessed market rent for vacant premises.
Leasable area, sqm**
Leased area plus leasable vacant area.
Operating net
Total revenue less property costs.
Rent backlog**
Outstanding rental revenues during remaining contract period. Rent backlog is used to highlight the Group's remaining contract value for rental revenues to be invoiced to the tenant, at a given point in time. Cannot be derived from the Company's financial reporting.
Rental revenue*
Billed rents, rent surcharges and rental guarantees less rent discounts.
Revenue backlog**
Outstanding rental and service revenues during remaining contracted contract period. Revenue backlog is used to highlight the Group's total remaining contract value to be invoiced to the tenant, at a given point in time. Cannot be derived from the Company's financial reporting.
Service revenue*
Service in accordance with client contract. Service may, depending on how the contract is designed, include everything from operating costs to Internet and catering costs.
Surplus ratio**
Operating net divided by total revenue.
Weighted average unexpired lease term (WAULT)**
Used to illustrate the average lease term until expiry for the entire property portfolio, weighted after total contractually agreed rental and service revenues. Calculated by dividing contracted revenue (rent and service) until expiry by annual contracted rents and service. Expressed in months.
*Key ratio defined by IFRS/IAS.
**Key ratio not covered by ESMA's guidelines for alternative performance measures (physical, non-financial or not based on information from the financial reports).
Crown Energy Interim report- January-September 2021
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Auditor's report
This is a literal translation of the Swedish original document
Crown Energy AB (publ) org. nr. 556804-8598
Introduction
We have reviewed the condensed interim financial information (interim report) of Crown Energy as of 30 September 2021 and the nine-month period then ended. The board of directors and the CEO are responsible for the preparation and presentation of the interim financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
Scope of Review
We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Stockholm, 19 november 2021
Öhrlings PricewaterhouseCoopers AB
Bo Lagerström
Authorised Public Accountant
24 Crown Energy Interim report- January-September 2021
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About Crown Energy
Crown Energy is an international group providing customised solutions for housing, offices and associated services, as well as oil and gas exploration in Africa and the Middle East. The Company creates value via two business areas: Asset Development and Management and Energy.
In the Asset Development and Management business area, the Company offers a one-stop-shop concept for housing, offices and associated services to international companies. Crown Energy's offering covers the entire chain from needs-adapted design and construction, to leasing, property management and value-added services.
The Energy business area focuses on exploration opportunities with high potential for recoverable reserves. Value is created by developing assets in early stages and then introducing suitable oil and gas industry players to the projects for further development and production.
VISION
To be an established player and an obvious partner in the international energy market, both in exploration and in development of customised residential and office solutions and value-added services.
GOALS
Crown Energy's objective is to generate the highest possible return for shareholders with a balanced risk awareness. The Company aims to have an established service business through property concepts in several geographic markets as well as a balanced portfolio of development and exploration assets.
STRATEGY
Crown Energy's strategy is based on the overall objective of generating the highest possible return for shareholders with a balanced risk awareness. This includes:
- Establishing service operations in more markets requiring residential and office solutions in the oil and gas industry
- Carefully selecting exploration areas where the chance of oil and gas discoveries is high
- Exploiting synergies between the two business areas and reinvesting some of the cash flow from service operations to further develop the exploration assets
- Offering exploration and production partners tailored residential premises and offices in proximity to the assets
- Pursuing farm-out opportunities as exit strategies to capitalise as much as possible on the assets
- Creating a good risk spread through several parallel projects
ADVANTAGES OF COMBINED OPERATIONS
Several advantages are created by the combination of the Asset Development and Management business areas, and the Energy business area. Together, the business becomes more diversified, which means reduced risk. The cash flow generated within the service business can be used to further develop exploration assets. Establishing customer relationships with some of the world's leading energy companies in Asset Development and Management also increases Crown Energy's opportunities to capitalise on existing exploration assets. Crown Energy can also offer exploration and extraction partners related services in the form of customised residential properties and offices close to the assets.
25 Crown Energy Interim report- January-September 2021