PETRO MATAD LIMITED

Earnings Release • Aug 17, 2020

National Storage Mechanism | Additional information

RNS Number : 2519W

Petro Matad Limited

17 August 2020

Petro Matad Limited

('Petro Matad' or the 'Company')

Interim results for the six months ended 30 June 2020

LONDON, 17 August 2020: Petro Matad Limited, the AIM quoted Mongolian oil company, is pleased to announce its unaudited interim results for the six months ended 30 June 2020.

Financial Summary

The Group posted a loss of USD 2.35 million for the six-month period ended 30 June 2020, which compares to a loss of USD 4.41 million for the comparable period in 2019. The Company's cash balance at 30 June 2020 was USD 2.08 million (USD 2.07 million in cash and USD 0.01 million in Financial Assets), which compares to a cash balance of USD 16.12 million (USD 3.79 million in cash and USD 12.33 million in Financial Assets) on 30 June 2019.

The Company has strategically put in place cost saving measures without sacrificing its operational capability, which in the absence of new sources of financing, will enable it to remain in an operationally ready state until mid-2021. Meanwhile the Company is pursuing a number of options to fund the next stage of its activities.

Operational Update

·   The Block XX Exploitation Licence (EL) application continues to progress through the government's approval processes. A key component is approval of the Company's reserve report for its Heron 1 oil discovery. The report has been reviewed by auditors appointed by the Ministry of Mining and Heavy Industry (MMHI) and forwarded for final review and approval to the Mineral Resource Professional Council (MRPC). We are pushing for the council to meet and we are hopeful that it will do so before the end of the third quarter.

·    Once the reserves report has been approved, the EL award process requires the development area to be agreed with industry regulator Mineral Resources and Petroleum Authority of Mongolia (MRPAM) and then the Plan of Development must be reviewed and approved by MRPAM and MMHI. The Plan of Development has been completed save for any minor modifications which may result from the ongoing review of the reserves report and it will be submitted to the relevant bodies as soon as the reserves report approval is in hand.

·    The Covid-19 pandemic combined with the Mongolian parliamentary election which was held in June 2020 have caused some delays in the EL approval processes but the previously announced one-year moratorium obtained for Block XX ensures that the PSC remains in good standing as the EL award process progresses.

·    In parallel with the EL the Company is also working with MRPAM to progress the issues of land access which caused some delay and disruption to operations in 2019. MRPAM advises that they expect the issues, which arose as a result of new legislation (Reg 287 of 2017), will be resolved by the adoption of the conclusions of a working group. Those conclusions are currently progressing through the government's approval processes.

·   Mongolia continues to manage the Covid-19 pandemic with the strict application of in-country measures as well as maintaining border closures to all but essential travel. To date, community spread has successfully been prevented in Mongolia and the impact on the Company's activities has been limited with its office and those of MRPAM and MMHI functioning as normal throughout.

Further operational updates will be provided in due course.

- Ends -

Further information please contact:

Petro Matad Limited
Mike Buck, CEO	+97 670 141 099 / +97 675 751 099
Shore Capital (Nominated Adviser and Broker)
Toby Gibbs Jerry Keen John More	+44 (0) 20 7408 4090
FTI Consulting (Communications Advisory Firm)
Sara Powell Ben Brewerton	+44 (0) 20 3727 1000

About Petro Matad

Petro Matad is the parent company of a group focussed on oil exploration, as well as future development and production in Mongolia. At the current time, Petro Matad holds 100% working interest and the operatorship of three Production Sharing Contracts with the Government of Mongolia. Block XX has an area of 10,367 square kilometres in the far eastern part of the country and Blocks IV and V have an area of 29,062 square kilometres and 21,143 square kilometres, respectively, in the central western part of the country.

Petro Matad Limited is incorporated in the Isle of Man under company number 1483V. Its registered office is at Victory House, Prospect Hill, Douglas, Isle of Man, IM1 1EQ.

STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF-YEAR ENDED 30 JUNE 2020

		Consolidated
		30 Jun 2020	30 Jun 2019
		$'000	$'000
Continuing Operations
Revenue
Interest Income		15	508
Other Income		20	2
		35	510
Expenditure
Consultancy fees		(38)	(62)
Depreciation and amortisation		(63)	(101)
Employee benefits expenses		(1,323)	(1,510)
Exploration expenditure		(293)	(2,152)
Other expenses		(670)	(1,091)
Profit/(Loss) from continuing operations before income tax		(2,352)	(4,406)
Income tax expense		-	-
Profit/(Loss) from continuing operations after income tax		(2,352)	(4,406)
Net Loss		(2,352)	(4,406)
Other comprehensive income/(loss)
Exchange rate differences on translating foreign operations		(12)	(1)
Other comprehensive income/(loss), net of income tax		(12)	(1)
Total comprehensive loss		(2,364)	(4,407)
Profit/(Loss) attributable to owners of the parent		(2,352)	(4,406)
Total comprehensive income/(loss) attributable to owners of the parent		(2,364)	(4,407)
Earnings/(loss) per share (cents per share)
-       Basic and diluted earnings/(loss) per share		(0.35)	(0.67)

STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2020

	Consolidated
	30 Jun 2020	31 Dec 2019	30 Jun 2019
	$'000	$'000	$'000
ASSETS
Current Assets
Cash and cash equivalents	2,069	2,815	3,790
Trade and other receivables	8	23	42
Prepayments	160	155	220
Financial assets	10	1,510	12,334
Inventory	225	226	205
Total Current Assets	2,472	4,729	16,591
Non-Current Assets
Exploration and evaluation	15,275	15,275	15,275
Property, plant and equipment	203	260	319
Total Non-Current assets	15,478	15,535	15,594
TOTAL ASSETS	17,950	20,264	32,185
LIABILITIES
Current liabilities
Trade and other payables	246	502	477
Total Current Liabilities	246	502	477
TOTAL LIABILITIES	246	502	477
NET ASSETS	17,704	19,762	31,708
EQUITY
Issued capital	143,721	143,174	143,174
Reserves	2,809	3,062	2,579
Accumulated losses	(128,826)	(126,474)	(114,045)
TOTAL EQUITY	17,704	19,762	31,708

CONDENSED CASH FLOW STATEMENT

FOR THE HALF-YEAR ENDED 30 JUNE 2020

	Consolidated
	30 Jun 2020	30 Jun 2019
	$'000	$'000
Cash flows from operating activities
Payments to suppliers and employees	(2,349)	(5.568)
Interest received	15	508
Net cash flows from/(used in) operating activities	(2,334)	(5,060)
Cash flows from operating activities
Purchase of property, plant and equipment	(10)	(87)
Proceeds of financial assets	1,500	6,827
Proceeds from the disposal of plant and equipment	-	-
Net cash flows from/(used in) investing activities	1,490	6.740
Cash flows from financing activities
Proceeds from issue of shares	110	-
Capital raising costs	-	-
Net cash flows from/(used in) financing activities	110	-
Net increase/(decrease) in cash and cash equivalents	(734)	1.680
Net foreign exchange differences	(12)	(1)
Cash and cash equivalents at beginning of period	2,815	2,111
Cash and cash equivalents at end of period	2,069	3,790

STATEMENT OF CHANGES IN EQUITY

FOR THE HALF-YEAR ENDED 30 JUNE 2020

	Consolidated
	Attributable to equity holders of the parent
	Issued Capital $'000	Accumulated Losses $'000	Other Reserves $'000	Total $'000
As at 1 January 2019	143,174	(109,809)	2,660	36,025
Income/(Loss) for the period	-	(4,406)	-	(4,406)
Other comprehensive income	-	-	(1)	(1)
Total comprehensive income/(loss) for the period	143,174	(114,215)	2,659	31,618
Transactions with owners in their capacity as owners
Issue of share capital	-	-	-	-
Cost of capital raising	-	-	-	-
Share based payments	-	170	(80)	90
As at 30 June 2019	143,174	(114,045)	2,579	31,708
As at 1 January 2020	143,174	(126,474)	3,062	19,762
Income/(Loss) for the period	-	(2,352)	-	(2,352)
Other comprehensive income	-	-	(12)	(12)
Total comprehensive income/(loss) for the period	143,174	(128,826)	3,050	17,398
Transactions with owners in their capacity as owners
Issue of share capital	121	-	-	121
Cost of capital raising	-	-	-	-
Share based payments	426	-	(241)	185
As at 30 June 2020	143,721	(128,826)	2,809	17,704

1.   CORPORATE INFORMATION

The financial report covers the consolidated entity of Petro Matad Limited and its controlled entities.

Petro Matad Limited, a company incorporated in the Isle of Man on 30 August 2007 has four wholly owned subsidiaries, including Capcorp Mongolia LLC and Petro Matad LLC (both incorporated in Mongolia), Central Asian Petroleum Corporation Limited ("Capcorp") and Petromatad Invest Limited (both incorporated in the Cayman Islands).  Its major shareholder is Petrovis Matad Inc.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The half-year financial report does not include all of the notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

The half-year financial report should be read in conjunction with the annual Financial Report of Petro Matad Limited as at 31 December 2019. The half-year consolidated financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 31 December 2019.

It is also recommended that the half-year financial report is considered together with any public announcements made by Petro Matad Limited and its controlled entities during the half-year ended 30 June 2020.

(a)      Basis of Preparation

The half-year consolidated financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ('IASB'). The half-year financial report has been prepared on a historical cost basis, except where stated.

The financial report is presented in US dollars and all values are rounded to the nearest thousand dollars ($'000).

For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.

(b)      Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group as at 31 December each year.

Subsidiaries are entities controlled by the Group.  Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.  In assessing control, potential voting rights that presently are exercisable or convertible are taken into account.  The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist.

A change in the ownership interest of a subsidiary that does not result in a loss of control is accounted for as an equity transaction.

All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full.  Unrealised losses are eliminated unless costs cannot be recovered.

3.   CONTRIBUTED EQUITY

			CONSOLIDATED
					30 Jun 2020		31 Dec 2019
					$'000		$'000
Ordinary shares (i) 674,289,306 shares issued and fully paid (31 Dec 2019: 662,196,306)				143,721		143,174
				143,721		143,174

(i) Ordinary shares

Fully paid ordinary shares carry one vote per share and carry the right to dividends.

4.   RESERVES

A detailed breakdown of the reserves of the Group is as follows:

	Merger reserve	Equity benefits reserve	Foreign currency translation	Total
Consolidated	$'000	$'000	$'000	$'000
As at 1 July 2019	831	2,938	(1,190)	2,579
Currency translation differences	-	-	(13)	(13)
Share based payments	-	496	-	496
As at 31 December 2019	831	3,434	(1,203)	3,062
Currency translation differences	-	-	(12)	(12)
Share based payments	-	(241)	-	(241)
As at 30 June 2020	831	3,193	(1,215)	2,809

5.   EARNINGS/(LOSS) PER SHARE

The following reflects the income and share data used in the total operations basic and diluted earnings/(loss) per share computations:

	CONSOLIDATED
	30 Jun 2020	30 Jun 2019
Basic earnings/(loss) per share
Total basic earnings/(loss) per share (US$ cents per share) (note a)	(0.35)	(0.67)
Diluted earnings/(loss) per share
Total diluted earnings/(loss) per share (US$ cents per share) (note b)	(0.35)	(0.67)
(a)  Basic earnings/(loss) per share
The profit/(loss) and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:
Net profit/(loss) attributable to ordinary shareholders (US$'000)	(2,352)	(4,406)
Weighted average number of ordinary shares for the purposes of basic earnings per share ('000)	672,429	662,196
(b)  Diluted earnings/(loss) per share
The profit/(loss) and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows:
Net profit/(loss) attributable to ordinary shareholders (US$'000)	(2,352)	(4,406)
Weighted average number of ordinary shares for the purposes of basic earnings per share ('000)	672,429	662,246

Share Options and Conditional Share Awards could potentially dilute basic loss per share in the future, however they have been excluded from the calculation of diluted loss per share because they are anti-dilutive for both years presented.

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