Crown Energy AB: Year-end report 2017

Fourth quarter– October-December 2017

  • Revenue amounted to SEK 24,759 thousand (40,163).
  • Operating profit excl. effect of reverse acquisition amounted to SEK 21,208 thousand (24,938), corresponding to SEK 0.05 per share (0.07), before and after dilution. 
  • Unrealised changes in Property values amounted to SEK -8,878 (0) thousand.
  • Profit after tax was SEK 7,913 thousand (51,592), corresponding to SEK 0.02 per share (0.15), before and after dilution.

Full year – January-December 2017

  • Revenue amounted to SEK 111,294 thousand (150,161).
  • Operating profit excl. effect of reverse acquisition amounted to SEK 69,332 thousand (99,191), corresponding to SEK 0.17 per share (0.28), before and after dilution.
  • The reporting period includes a one-off profit and loss item amounting to SEK -174,586 thousand. This item is a result of accounting regulation for reverse acquisitions and does not affect the cash flow. Operating loss incl. effect of reverse acquisition amounted to SEK -105,254 thousand (99,191).
  • Loss after tax was SEK -63,257 thousand (-32,803), corresponding to SEK -0.16 per share
  • (-0.09), before and after dilution.

Key events during the quarter

  • On 13 October 2017, the Company published a prospectus and new financial and other information included in the prospectus regarding the acquisition of ESI Group S.A.
  • On 30 October 2017, the Company announced the signing of a Restated and Amended PSC including extension of contract rights period, regarding the Area of the Salah ad-Din Governorate, Iraq.
  • On 6 December 2017, the Company announced Cement Fund exercising warrants to subscribe for an additional 31.5 million ordinary shares bringing SEK 63 million cash to the Company.
  • On 13 December 2017, the Company announced the signing of a two year extension for the Manja licence with flexible work program.

Fourth quarter– October-December 2017

  • Revenue amounted to SEK 24,759 thousand (40,163).
  • Operating profit excl. effect of reverse acquisition amounted to SEK 21,208 thousand (24,938), corresponding to SEK 0.05 per share (0.07), before and after dilution.
  • Unrealised changes in Property values amounted to SEK -8,878 (0) thousand.
  • Profit after tax was SEK 7,913 thousand (51,592), corresponding to SEK 0.02 per share (0.15), before and after dilution.

Full year – January-December 2017

  • Revenue amounted to SEK 111,294 thousand (150,161).
  • Operating profit excl. effect of reverse acquisition amounted to SEK 69,332 thousand (99,191), corresponding to SEK 0.17 per share (0.28), before and after dilution.
  • The reporting period includes a one-off profit and loss item amounting to SEK -174,586 thousand. This item is a result of accounting regulation for reverse acquisitions and does not affect the cash flow. Operating loss incl. effect of reverse acquisition amounted to SEK -105,254 thousand (99,191).
  • Loss after tax was SEK -63,257 thousand (-32,803), corresponding to SEK -0.16 per share
  • (-0.09), before and after dilution.

Key events during the quarter

  • On 13 October 2017, the Company published a prospectus and new financial and other information included in the prospectus regarding the acquisition of ESI Group S.A.
  • On 30 October 2017, the Company announced the signing of a Restated and Amended PSC including extension of contract rights period, regarding the Area of the Salah ad-Din Governorate, Iraq.
  • On 6 December 2017, the Company announced Cement Fund exercising warrants to subscribe for an additional 31.5 million ordinary shares bringing SEK 63 million cash to the Company.
  • On 13 December 2017, the Company announced the signing of a two year extension for the Manja licence with flexible work program.

CEO statement

DEAR SHAREHOLDERS AND INVESTORS,

2017 has been one of the most eventful years in the history for Crown Energy and the business has grown substantially with the acquisition of ESI Group, which added an entirely new business area.

The Company now has a stronger financial base as well as a new profitable and developable business with positive cash flows that further strengthens the Company’s financial and operational position.

This development comes as a result of a long-term strategy to expand the Company’s services and offer so we can be a stable player in several segments of the energy industry.

In our new Property Development and Services business area, major steps have already been taken to launch the ESI concept in new markets. We currently are working on an exciting pipeline of new potential projects. Some of them are in the existing Angolan market, but most of them are in new geographic markets. We count more than half a dozen projects in as many markets, some of which are being worked on in cooperation with our engineering partner Proger. This is a strong partnership which offers potential customers comprehensive and competitive services and solutions.

The existing portfolio of property assets, both leased and owned properties, is progressing according to plan and with existing contracts. However, the currency situation and the rental market in Angola has been less favourable in 2017, mainly for the housing segment. The portfolio contains some properties that lost tenants in 2017 and along with the sale of properties in the beginning of the year, this explains the decreased revenues. But then again, new tenants are signing contracts throughout the property portfolio and lease contracts have been signed for the recently completed C-view property located in the Talatona district of Luanda. Negotiations are also being held on additional new rentals in the C-view property in significant volumes.

Growth for Property Development and Services will mainly occur in new markets. The upside of the acquisition of ESI Group thus has a greater value for Crown Energy than the existing portfolio which, when acquired, was valued on existing contracts and businesses. Crown Energy now owns the entire ESI concept, with its know-how, rights and key personnel – all essential components for the expansion into new markets that is at hand. Of course, with that said, new rentals in the existing portfolio are also important, especially since the business is firmly established in Angola with its organisation and a strong history as a good reputable landlord. With an improved situation in the oil industry, we will no doubt also see an upturn in that market.

The existing portfolio of real properties and leased properties has undergone a full valuation as per year-end. The values holds well to previous reporting periods and some value changes are reflected by the change in the underlying duration of landlord and client leasing contracts.

Our Energy projects have generally developed well during 2017. Our subsidiary Crown Energy Iraq achieved significant success with the signing of an amendment to the licence agreement that the Company has had with Salah ad-Din Province in Iraq since 2013. This is a restatement revision of the production sharing agreement primarily with the extension of the contract by five years from September 2018 to September 2023. In Madagascar, we successfully negotiated a two-year extension of the licence on the same commercial terms as before. The license in South Africa has also improved significantly through an authority approval and thereby the two year phase which includes drilling has now started. In Equatorial Guinea the discussions regarding an extension and formalisation of a clear development plan is ongoing.

BUSINESS DECISIONS THAT AFFECTED THE COMPANY’S PERFORMANCE

During 2017 we acquired a well-run company that is profitable and has great growth potential. The strong cash flow also increases our ability to develop existing operations in Crown Energy, as the end market in exploration operations and in the property services business consists largely of the same companies and customers, i.e. the oil and gas industry. As a larger joint company, we see new opportunities for generating future business in both business areas.

OUTLOOK

The Company now continues its progress towards a larger and even more stable foundation to stand on. Through the merger with ESI Group, we will make use of prominent contacts in the oil industry, and future cash flows should guarantee faster development of the Company’s existing Energy assets. Growth from Property Development and Services is to be generated from new projects in new markets. Our capital and organisation are and will continue to be adapted to accommodate an exciting continuation of Crown Energy’s development efforts.

FINANCING

With the acquisition of ESI Group and its cash-flow generating operations as well as the exercising of warrants by Cement Fund in December 2017, the Company will continue to have adequate working and investment capital going forward.

We look forward to continuing our efforts to capitalise on our assets, thus continuing to create value for you, our shareholders.

Andreas Forssell

CEO, Crown Energy AB

This information is information that Crown Energy AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 09:00 AM CET on 28 February 2018.

Please contact Andreas Forssell, VD, Crown Energy AB (publ) 
+46 8 400 207 20 
+46 760 15 15 95

Crown Energy is an international company engaged in oil and gas exploration

and production and property development and management services. The

portfolio consists of assets in Africa and the Middle East. For more information please visit www.crownenergy.se