Consolidated Statement of Changes in Equity

 

 

Notes		Share capital £'000s	Share premium £'000s	Shares to be issued £'000s	Accumulated Surplus/ (deficit) £'000s	Warrant reserve £'000s	Convertible Bond reserve £'000s	Foreign currency reserves £'000s	Total equity £'000s
At 1 January 2024		19,631	20,267	374	122,443	2,071	28	1,894	166,708
Total loss for the year		-	-	-	(150,820)	-	-	-	(150,820)
Other comprehensive gain		-	-	-	-	-	-	9	9
Total comprehensive loss		-	-	-	(150,820)	-	-	9	(150,811)
Issue of share capital on conversion of bond	10	1,175	-	-	(554)	-	-	-	621
Transfer to profit and loss account on bond conversion to shares		-	-	-	554	-	-	-	554
Reclassification to profit and loss account on disposal of subsidiary		-	-	-	-	-	-	(295)	(295)
Share-based payments		-	-	-	240	-	-	-	240
At 31 December 2024		20,806	20,267	374	(28,137)	2,071	28	1,608	17,017

 

 

	Notes	Share capital £'000s	Share premium £'000s	Shares to be issued  £'000s	Accumulated surplus £'000s	Warrant reserve £'000s	Convertible Bond reserve £'000s	Foreign currency reserves £'000s	Total equity £'000s
At 1 January 2023		18,487	20,134	404	129,004	1,607	-	8,449	178,085
Total loss for the year		-	-	-	(7,160)	-	-	-	(7,160)
Other comprehensive loss		-	-	-	-	-	-	(6,555)	(6,555)
Total comprehensive loss		-	-	-	(7,160)	-	-	(6,555)	(13,715)
Issue of share capital on conversion of bond		1,000	46	-	-	-	-	-	1,046
Other share capital issues		114	87	-	-	-	-	-	201
Transfer to share capital on issue of shares		30	-	(30)	-	-	-	-	-
Fair value of warrants issued during the year		-	-	-	-	464	-	-	464
Equity component of convertible bond		-	-	-	-	-	562	-	562
Cost of issue allocated to equity component		-	-	-	-	-	(174)	-	(174)
Transfer to accumulated surplus on bond conversion to shares		-	-	-	360	-	(360)	-	-
Share-based payments		-	-	-	239	-	-	-	239
At 31 December 2023		19,631	20,267	374	122,443	2,071	28	1,894	166,708

Consolidated Statement of Cash Flows

For the year ended 31 December 2024

 

	Notes	2024 £'000s	2023 £'000s
Cash flow from operating activities Cash flow from operations		(2,352)	(1,403)
Interest received		23	42
Tax paid		-	(134)
Net cash flow from operating activities		(2,329)	(1,495)
Cash flow from investing activities Disposal of subsidiary	11	9,236	-
Capital expenditure		(4,640)	(1,600)
Exploration expenditure		(651)	(660)
Prepayment for Phase 1 the mLNG project		(143)	(820)
Receipt from interest in Badile land		-	134
Net cash flow from investing activities		3,802	(2,946)
Cash flow from financing activities
Net proceeds from borrowings		5,822	4,442
Interest payments		(1,168)	(441)
Loan repayments		(1,350)	-
Lease payments		(124)	(180)
Net cash flow from financing activities		3,180	3,821
Net increase(decrease)/increase in cash and cash equivalents		4,653	(620)
Net foreign exchange difference		226	(225)
Cash and cash equivalents at the beginning of the year		3,016	3,861
Cash and cash equivalents at the end of the year		7,895	3,016
Note to Statement of Cash Flows For the period ended 31 December 2024
		2024 £'000s	2023 £'000s
Cash flow from operations reconciliation Loss before tax for the year from continuing operation		(126,624)	(6,894)
Loss before tax for the period from discontinued operations		(24,196)	(258)
Loss for the year before tax		(150,820)	(7,152)
Finance revenue		(23)	(42)
(Increase)/decrease in drilling inventories		(260)	48
Decrease in receivables and prepayments		803	688
Increase/(decrease) in accruals and short-term payables		1,113	(343)
Impairment on development assets and exploration costs		122,042	-
Loss on disposal of subsidiary		23,438	-
Foreign currency translation loss reclassified from other comprehensive income		295	-
Impairment of interest in Badile land		-	125
Depreciation		128	194
Share-based payments charge and remuneration paid in shares		794	239
Finance expense and exchange adjustments		138	4,840
Cash flow from operations		(2,352)	(1,403)

 

Non-cash transactions during the period included the issue of 117.5 million ordinary shares, following partial conversion of accrued interest on the convertible bond.  The Group has provided collateral of $nil (2023: $1.75 million) to the Moroccan Ministry of Petroleum to guarantee the Group's minimum work programme obligations for the Anoual, and Sidi Moktar permits. The cash was held in a bank account under the control of the Company and, as the Group expects the funds to be released as soon as the commitment is fulfilled, on this basis, the amount remains included within cash and cash equivalents.

Notes to the Financial Statements for the year ended 31 December 2024

1. Accounting Policies

Sound Energy plc is a public limited Company registered and domiciled in England and Wales under the Companies Act 2006. The Company's registered office is 20 St Dunstan's Hill, London EC3R 8HL.

The consolidated financial information contained within this announcement does not constitute statutory accounts for the year ended 31 December 2024 within the meaning of Section 434 of the Companies Act 2006 but is derived from those audited accounts. The auditors reported on those accounts and their report was unqualified and did not contain any statement under section 498(2) or section 498(3) of the Companies Act 2006. The statutory accounts for the year ended 31 December 2024 will be delivered to the Registrar of Companies in due course. The annual report and statutory accounts will be sent to shareholders and will be made available to the public on the Company's website: www.soundenergyplc.com or, upon request, copies may be obtained from the Company Secretary at the registered office of Sound Energy plc 20 St Dunstan's Hill, London, EC3R 8HL.

 

a)     Basis of preparation

The financial statements of the Group and its parent Company have been prepared in accordance with UK-adopted International Accounting Standards.

The consolidated financial statements have been prepared under the historical cost convention, except to the extent that the following policies require fair value adjustments. The Group and its parent Company's financial statements are presented in sterling (£) and all values are rounded to the nearest thousand (£'000) except when otherwise indicated.

The principal accounting policies set out below have been consistently applied to all financial reporting periods presented in these consolidated financial statements and by all Group entities, unless otherwise stated. All amounts classified as current are expected to be settled/recovered in less than 12 months unless otherwise stated in the notes to these financial statements. The Group and its parent Company's financial statements for the year ended 31 December 2024 were authorised for issue by the Board of Directors on [9 April 2025].

Going concern

As at 31 March 2025, the Group's cash balance was £3.1 million. The directors have reviewed the Company's cash flow forecasts for the next 12-month period to April 2026. The Company's forecasts and projections indicate that, to fulfil its other obligations, primarily the Company's SIDI Moktar permit commitments, the Company will require additional funding. Following the sale of its subsidiary SEME, the Company's share of the financial obligations for a well commitment on each of the retained 27.5% working interests on the Grand Tendrara (up to $3.6m) and Anoual licences (up to $2.6m), is to be funded by the acquirer of SEME, as well as up to $24.5m of the pipeline led development of the Tendrara Production Concession (Concession Phase 2). The Concession Phase 2 partners are progressing towards a final investment decision and received a conditional offer for partial financing of the Phase 2 development and continue to work to satisfy the conditions precedents and other elements necessary for the taking of Phase 2 FID.

The need for additional financing indicates the existence of a material uncertainty, which may cast significant doubt about the Group and Company's ability to continue as a going concern. These financial statements do not include adjustments that would be required if the Company was unable to continue as a going concern. The Company continues to exercise rigorous cost control to conserve cash resources, and the directors believe that there are several corporate funding options available to the Company, including a farm-down on the Sidi Moktar permit, and various debt, equity and equity-linked funding options. The directors, therefore, have a reasonable expectation that the Company and the Group will be able to secure the funding required to continue in operational existence for the foreseeable future, and have made a judgement that the Group will continue to realise its assets and discharge its liabilities in the normal course of business. Accordingly, the directors have adopted the going concern basis in preparing the consolidated financial statements.

Use of estimates and key sources of estimation uncertainty

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Estimation and assumptions

The key sources of estimation uncertainty, that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year, are the impairment of intangible exploration and evaluation ("E&E") assets, impairment of development and production assets, investments, warrants, and the estimation of share-based payment costs.

E&E, development and production assets

When considering whether E&E assets are impaired, the Group first considers the IFRS 6 indicators set out in note 6. The making of this assessment involves judgement concerning the Group's future plans and current technical and legal assessments. In considering whether development and production assets are impaired, the Group considers various impairment indicators and whether any of these indicate existence of an impairment. If those indicators are met, a full impairment test is performed.

Impairment test

When value in use calculations are undertaken, management estimates the expected future cash flows from the asset and chooses a suitable discount rate to calculate the present value of those cash flows. In undertaking these value in use calculations, management is required to make use of estimates and assumptions similar to those described in the treatment of E&E assets above. Further details are given in note 6.

In June 2024, the Company signed a binding SPA with Managem for the sale of 55% interest on the Tendrara Production Concession, 47.5% interest in the Grand Tendrara licence and 47.5% interest in the Anoual licence. Following the signing of the SPA, the Company undertook an impairment test as at 30 June 2024 and updated it on completion of the sale in December 2024. A significant portion of the Group's net assets is the carrying value of the development and producing assets and disclosures relating to management's assessment of impairment for these assets and the investment in subsidiaries are included in note 5, on the basis that the recoverability of the investment in subsidiaries in the Company balance sheet is linked to the value of the development and producing assets as, ultimately, the cash flows these generate will determine the subsidiaries' ability to pay returns to the Company.

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm's length, for similar assets or observable market prices less incremental costs of disposing of the asset. If there is no binding sales transactions or observable market prices, the fair value is estimated using a discounted cash flow model ('DCF model''). The cash flows are derived from the latest budgets, expenditure and price data in signed gas sales agreements (for contracted gas sales volumes), market based price data (for uncontracted gas sales volumes), project contract or agreed heads of terms, and the latest management plans on project phasing. The recoverable amount is sensitive to the discount rate and gas price assumption as well as the Brent price assumption that impacts condensate sales pricing in the DCF model. The impairment test led to an impairment charge of approximately £122.0m being recognised as at 31 December 2024 for continuing operations. The key assumptions used to determine the recoverable amount of the development and production assets are disclosed in note 5.

Share-based payments

The estimation of share-based payment costs requires the selection of an appropriate valuation model, consideration as to the inputs necessary for the valuation model chosen, and the estimation of the number of awards that will ultimately vest, inputs for which arise from judgements relating to the continuing participation of key employees (note 9).

Fair value of warrants

Significant judgement and estimation is also required in the determination of the fair value of warrants.

Fair value of convertible bonds

The calculation of fair value on convertible bonds requires estimation of the discount rate to use when discounting outstanding principal and interest amounts at each reporting date. The discount rate is a significant input into the discounted cashflow model used by the Company to estimate the fair value of the convertible bonds.

Taxation

The Group seeks professional tax and legal advice to make a judgement on application of tax rules on underlying transactions within the Group or with third parties. Tax treatment adopted by the Group may be challenged by tax authorities.

Intercompany loans

The Company has funded its subsidiaries through non-interest bearing loans payable on demand. Given that the Company has no intention to call in the loans in the foreseeable future, the loans are classified as non-current investments. Other sources of estimate concern IFRS 9 on intercompany loans at parent Company level.

 

(a)   Investment in subsidiaries

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies, is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Such power, generally but not exclusively, accompanies a shareholding of more than one-half of the voting rights. The Group uses the purchase method of accounting for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of exchange. Costs of acquisition are expensed during the period they are incurred.

(b)   Foreign currency translation

 

The functional currency of the Company is GBP sterling. The Group also has subsidiaries whose functional currencies are US dollar.

Transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the income statement.

On consolidation, the assets and liabilities of foreign operations are translated into sterling at the rate of exchange ruling at the balance sheet date. Income and expenses are translated at weighted average exchange rates for the year unless this is not a reasonable approximation of the rates on the transaction dates. The resulting exchange differences are recognised in other comprehensive income and held in a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that foreign operation is recognised in the income statement.

(c)   Discontinued operations

A discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale, and:

•      Represents a separate major line of business or geographical area of operations

•      Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations.

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the statement of profit or loss. Cash flows from discontinued operations are included in the consolidated statement of cash flows and are disclosed separately in note 11. The group includes proceeds from disposal in cash flows from discontinued operations. Additional disclosures are provided in note 11. All other notes to the financial statements include amounts for continuing operations unless indicated otherwise.

(d)   Deferred consideration

Deferred consideration relates to future funding to be received by the group from the purchaser (the purchaser) of the Company's subsidiary disposed of during the year (note 11). The Company's share of its future expenditure on the Morocco licences will be funded by the purchaser up to specified amounts detailed in note 11. Deferred consideration is recognised at fair value.

 

2. Segment information

The Group categorises its operations into three business segments based on corporate, exploration and appraisal, and development and production.

In the year ended 31 December 2024, the Group's development, exploration and appraisal activities were primarily carried out in Morocco.

The Group's reportable segments are based on internal reports about components of the Group, which are regularly reviewed and used by the Board of Directors, being the Chief Operating Decision Maker ("CODM"), for strategic decision making and resource allocation, in order to allocate resources to the segment and to assess its performance.

Details regarding each of the operations of each reportable segments are included in the following tables.

Segment results for the year ended 31 December 2024:

	Corporate £'000s	Development and production £'000s	Exploration and appraisal £'000s	Total £'000s
Other income	-	-	-	-
Impairment of development assets and exploration costs	-	(122,042)	-	(122,042)
Administration expenses	(4,586)	-	-	(4,586)
Operating (loss)/profit segment result	(4,586)	(122,042)	-	(126,628)
Interest receivable	12	-	-	12
Finance expense and exchange adjustments	(8)	-	-	(8)
Loss for the year before taxation from continuing operations	(4,582)	(122,042)	-	(126,624)

 

The segments assets and liabilities at 31 December 2024 is as follows:

	Corporate £'000s	Development and production £'000s	Exploration and appraisal £'000s	Total £'000s
Non-current assets	61	28,707	18,385	47,153
Current assets	9,513	1,649	74	11,236
Liabilities attributable to continuing operations	(25,818)	(15,433)	(121)	(41,372)

                                                              

The geographical split of non-current assets is as follows:

	UK £'000s	Morocco £'000s
Development and production assets	-	10,485
Fixtures, fittings and office equipment	3	1
Deferred consideration	-	21,045
Software	49	8
Prepayments	-	1,522
Exploration and evaluation assets	-	14,040
Total	52	47,101

               

Segment results for the year ended 31 December 2023 were as follows:

	Corporate £'000s	Development and production £'000s	Exploration and appraisal £'000s	Total £'000s
Other income	-	-	4	4
Impairment of development assets and exploration costs	-	-	-	-
Administration expenses	(2,311)	-	-	(2,311)
Operating (loss)/profit segment result	(2,311)	-	4	(2,307)
Interest receivable	25	-	-	25
Finance expense and exchange adjustments	(4,612)	-	-	(4,612)
(Loss)/profit for the year before taxation from continuing operations	(6,898)	-	4	(6,894)

 

The segments assets and liabilities at 31 December 2023 were as follows:

	Corporate £'000s	Development and production £'000s	Exploration and appraisal £'000s	Total £'000s
Non-current assets	137	162,908	34,976	198,021
Current assets	1,959	2,897	1,341	6,197
Liabilities	(23,551)	(11,368)	(2,591)	(37,510)

 

The geographical split of non-current assets were as follows:

	UK £'000s	Morocco £'000s
Development and production assets	-	157,816
Fixtures, fittings and office equipment	4	6
Right of use assets	101	-
Software	18	8
Prepayments	-	5,092
Exploration and evaluation assets	-	34,976
Total	123	197,898

 

 

3. Taxation

 

Analysis of the tax charge for the year:	2024	2023
	£'000s	£'000s
Current tax UK Corporation Tax	-	-
Adjustment to tax expense in respect of prior years	-	(1)
Tax cases settlement (overseas tax)	-	-
Total current tax (charge)/credit	-	(1)
Deferred tax credit arising in the current year	-	-
Total tax (charge)/credit	-	(1)
(b) Reconciliation of tax charge	2024	2023
	£'000s	£'000s
Loss before tax	(126,624)	(6,894)
Tax (charge)/credit charged at UK corporation tax rate of 25% (2023: 23.5%)	31,656	1,620
Tax effect of: Expenses not deductible for tax purposes	(231)	(78)
Impairment not deductible for tax purposes	(30,511)	-
Tax losses not recognised	(924)	(1,232)
Change in UK tax rate	-	(310)
Differences in overseas tax rates	10	(1)
Total tax (charge)/credit	-	(1)

 

Deferred tax assets have not been recognised in respect of tax losses available due to the uncertainty of the utilisation of those assets. Unused tax losses as at 31 December 2024 were estimated to be approximately £6.9 million (2023: £9.8 million). The decrease in estimated losses arose following disposal of SEME.

The Group had tax cases where Morocco Tax Authority had claimed taxes relating to the Group's historical permits transfers and intragroup transactions. In May 2023, the Company entered into a settlement agreement with Morocco Tax Authority on a phased payment schedule back ended over 6 years.

The table below sets out the current and non-current tax liability and the movement during the year.

 

	2024 £'000s	2023 £'000s
Amounts due within one year	-	199
Amounts due after more than one year	-	1,410
	-	1,609
The movement during the year is as below:
As at 1 January	1,609	1,631
Change in/unwinding of discount	(165)	101
Tax payment	-	(126)
Exchange adjustment	(14)	3
Disposal of subsidiary	(1,430)	-
As at 31 December	-	1,609

 

4. (Loss)/profit per share

The calculation of basic profit/(loss) per ordinary share is based on the profit/(loss) after tax and on the weighted average number of ordinary shares in issue during the year. The calculation of diluted profit/(loss) per share is based on profit/(loss) after tax on the weighted average number of ordinary shares in issue, plus the weighted average number of shares that would be issued if dilutive options and warrants were converted into shares. Basic and diluted profit/(loss) per share is calculated as follows:

	2024 £'000s	2023 £'000s
Loss after tax from continuing operations	(126,624)	(6,895)
Loss after tax from discontinued operations	(24,196)	(265)
Total loss for the year after taxation	(150,820)	(7,160)
	2024 Million	2023 Million
Basic weighted average shares in issue	2,017	1,882
Dilutive potential ordinary shares	-	-
Diluted weighted average number of shares	2,017	1,882
	2024 Pence	2023 Pence
Basic and diluted loss per share from continuing operations	(6.28)	(0.37)
Basic and diluted loss per share from discontinued operations	(1.20)	(0.01)
Basic and diluted loss per share from continuing and discontinued operations	(7.48 )	(0.38)

Due to loss during the year, the effect of the potential dilutive shares on the earnings per share would have been anti-dilutive and therefore were not included in the calculation of the dilutive earnings per share.

 

5. Property, Plant and Equipment

 

	Development and production assets	Fixtures, fittings and office equipment	Right-of-use assets	2024
	£'000s	£'000s	£'000s	£'000s
Cost
At 1 January 2024	157,816	644	331	158,791
Additions	5,258	2	-	5,260
Exchange adjustments	2,023	-	-	2,023
Disposal on expiry of lease	-	-	(331)	(331)
Disposal on sale of subsidiary	(30,191)	(278)	-	(30,469)
At 31 December 2024	134,906	368	-	135,274
Impairment and depreciation
At 1 January 2024	-	634	230	864
Charge for period	129,845	2	101	129,948
Exchange adjustments	2,393	-	-	2,393
Disposal on expiry of lease	-	-	(331)	(331)
Disposal on sale of subsidiary	(7,817)	(272)	-	(8,089)
At 31 December 2024	124,421	364	-	124,785
Net book amount	10,485	4	-	10,489

 

 

	Development and production assets £'000s	Fixtures, fittings and office equipment £'000s	Right-of-use assets £'000s	2023 £'000s
Cost
At 1 January 2023	163,074	656	331	164,061
Additions	2,737	2	-	2,739
Exchange adjustments	(7,995)	(14)	-	(8,009)
At 31 December 2023	157,816	644	331	158,791
Impairment and depreciation
At 1 January 2023	-	642	57	699
(Reversal)/charge for period	-	4	173	177
Exchange adjustments	-	(12)	-	(12)
At 31 December 2023	-	634	230	864
Net book amount	157,816	10	101	157,927

In June 2024, the Company entered into a binding sale and purchase agreement (SPA) with Managem SA for the disposal of SEME (Note 11). Property, plant and equipment of the disposal group were measured at the lower of their carrying amount and fair value less costs to sell and as a result, impairment loss was recognised. Similarly, for continuing operations, the Company estimated the recoverable amount by reference to the fair value of the Tendrara Production Concession (Concession) attributable to the discontinued operation and recognised an impairment loss. The transaction with Managem completed in December 2024 (note 11) and an update of the impairment test was undertaken. In calculating the fair value less cost to sell, the Company included in its valuation the consideration received and receivable from sale of SEME, which comprised; expenditure incurred on the licence from 1 January 2022 to the date of disposal (back costs), Concession Phase 2 funding of up to $24.5 million, funding for one exploration well each on the Anoual and Grand Tendrara licences of up to $2.6 million and $3.6 million, respectively and $1.5 million on achieving first gas on Concession Phase 2. The funding for Concession Phase 2 and the exploration wells is expected to be received over the period to July 2028 based on the Company's understanding of the timing of the operations. The impairment test calculations in prior year were based on a discounted cashflow model that took account of forecast and projections of various elements including, future gas prices, field production profile, development expenditure among others. In the current year, the Company has used fair value less cost to sell as explained above, as the basis for the impairment test since a recent market transaction was considered a reasonable basis use. The impairment loss has primarily arisen due the change in the impairment test method during the period.

The total impairment loss for discontinued operation recognised amounted to approximately £7.8 million and in respect of the continuing operations, approximately £124.4m (inclusive of exchange rate movements). The Company used a discount rate of 10.55% at 31 December 2024, a decrease from 11.25% at 31 December 2023 due to changes in financial market conditions and certain corporate parameters during the period. A change in the discount rate by 1% has a £0.1m impact of the impairment charge for continuing operation and a 10% reduction in amount receivable for future funding of Concession Phase 2 and the exploration wells would increase the impairment charge for continuing operations by £0.6 million.

 

6. Intangibles

		Software £'000s	Exploration & Evaluation Assets £'000s	2024 £000s
Cost
At 1 January 2024		382	45,582	45,964
Additions		53	696	749
Exchange adjustments		(1)	335	334
Disposal		(252)	(32,573)	(32,825)
At 31 December 2024		182	14,040	14,222
Impairment and depreciation
At 1 January 2024		356	10,606	10,962
Charge for the year		25	16,501	16,526
Exchange adjustments		(4)	211	207
Disposal		(252)	(27,318)	(27,570)
At 31 December 2024		125	-	125
Net book amount		57	14,040	14,097

 

 

	Software £'000s	Exploration & Evaluation Assets £'000s	2023 £'000s
Cost
At 1 January 2023	375	46,594	46,969
Additions	22	729	751
Exchange adjustments	(15)	(1,741)	(1,756)
At 31 December 2023	382	45,582	45,964
Impairment and depreciation
At the start of the year	356	10,606	10,962
Charge for the year	17	-	17
Exchange adjustments	(17)	-	(17)
At 31 December 2023	356	10,606	10,962
Net book amount	26	34,976	35,002

 

Exploration and evaluation assets

Details regarding the geography of the Group's E&E assets is contained in note 2. The directors assess for impairment when facts and circumstances suggest that the carrying amount of an E&E asset may exceed its recoverable amount. In making this assessment, the directors have regard to the facts and circumstances noted in IFRS 6 paragraph 20. In performing their assessment of each of these factors, at 31 December 2024, the directors have:

•       reviewed the time period that the Group has the right to explore the area and noted no instances of expiration, or permits that are expected to expire in the near future and not be renewed;

•       determined that further E&E expenditure is either budgeted or planned for all permits;

•       not decided to discontinue exploration activity due to there being a lack of quantifiable mineral resource; and

•       not identified any instances where sufficient data exists to indicate that there are permits where the E&E spend is unlikely to be recovered from successful development or sale.

On the basis of the above assessment, the directors are not aware of any facts or circumstances that would suggest the carrying amount of the E&E asset may exceed its recoverable amount. Included in the charge for the year is approximately £16.5 million impairment following the measurement of intangible assets at the lower of their carrying amount and fair value less costs to sell on signing of the SPA with Managem SA (note 11).

7. Deferred consideration

	2024 £'000s	2023 £'000s
At 1 January	-	-
Fair value of consideration receivable	20,696	-
Exchange adjustments	349	-
At 31 December	21,045	-

Deferred consideration relates to future funding to be received by the group from the purchaser (the purchaser) of the Company's subsidiary disposed of during the year (note 11). The Company's share of its future expenditure on the Tendrara Production Concession Phase 2 development (Phase 2 development) will be funded by the purchaser up to $24.5 million, the purchaser will also fund the drilling of one exploration well on each of the Anoual and Grand Tendrara licences for up to $2.6 million and $3.6 million, respectively, and pay to the group $1.5 million upon achieving first gas on the Phase 2 development. The Company has calculated the deferred consideration after taking account of the expected timing of receipt of the various elements of the deferred consideration based on current estimates of the timing of the operations and applied a discount rate of 10.55% (note 5).

 

8. Capital and Reserves

 

		2024 Number of shares		£'000s	2023 Number of shares		£'000s
	Ordinary shares - 1p	2,080,622,679		20,806	1,963,122,679		19,631
			2024 Number of shares			2023 Number of shares
At 1 January			1,963,122,679			1,848,702,674
Issued during the year for cash			-			-
Non-cash share issue			117,500,000			114,420,005
At 31 December			2,080,622,679			1,963,122,679

The share issues described below were all non-cash transactions.

Share issues

In April 2024, the Company issued 30,000,000 shares following a partial accrued interest conversion amounting to £300,000 by the holders of the Company's convertible bonds.

In July 2024, the Company issued 50,000,000 shares following a partial accrued interest conversion amounting to £500,000 by the holders of the Company's convertible bonds.

In October 2024, the Company issued 37,500,000 shares following a partial accrued interest conversion amounting to £375,000 by the holders of the Company's convertible bonds.

Reserves

In 2018, the Company sought, and was granted, a court order approving a capital reduction following the cancellation of the share premium account. This resulted in the transfer of £277.7 million to distributable reserves.

 

9. Share based payments

 

	2024	2023
	£'000s	£'000s
Expense arising from equity settled LTIP	240	239
	240	239

 

LTIP Awards

The Company has a long term incentive plan (the ''LTIP''), designed to reward, incentivise and retain the Company's Executives and senior management to deliver sustainable growth for shareholders.

The maximum number of awards that may be issued under the LTIP from time to time will be limited to 3% of the Company's issued share capital on the date of grant of awards, and, together with all other options issued by the Company under any employee share scheme from time to time, will not exceed an aggregate of 15% of the Company's issued ordinary share capital in a rolling ten year period. Awards granted under the LTIP will, generally, be subject to a three-year vesting period from the date of grant, the number of awards, ultimately, vesting dependent on the grantee's continued service and on additional performance conditions set by the Remuneration Committee.

The Company issued 48,875,515 options to subscribe for new ordinary shares under the LTIP, out of which 31,769,085 options were allocated to qualifying Executives and senior management and the balance of 17,106,430 was retained for future allocations. The LTIP awards are exercisable at 2.4 pence per share and expire ten years after the grant.

The fair value of LTIP awards granted was estimated at the date of grant using a Black-Scholes model, taking account of the terms and conditions upon which the awards were granted. The expected life of the LTIP award is based on the maximum award period and is not necessarily indicative of exercise patterns that may occur. Expected volatility was determined by reference to the historical volatility of the Company's share price over a five-year period. The expected volatility reflects the assumption that historical volatility is indicative of future trends, which may not necessarily be the actual outcome.

No LTIP awards were granted during 2024 or 2023. The remaining contractual life of the LTIP awards outstanding at 31 December 2024 is 7.3 years. If all the 31,769,085 LTIP awards were exercisable immediately, new ordinary shares equal to approximately 1.5% (2023: 1.6%) of the shares currently in issue, would be created

Nil cost options

The Company has outstanding nil-cost options that were granted to employees in previous years in settlement of bonus awards. The nil-cost options vested immediately and expire 5 years from the grant date.

 

			Number	Number
			2024	2023
Nil cost options outstanding at the start of the year Granted during the year Exercised during the year			13,796,793 - -	16,812,583 - (3,015,790)
Expired during the year			-	-
Nil cost options outstanding at the end of the year			13,796,793	13,796,793

The weighted average share price at the date of vesting of the RSU awards was n/a (2022: 2.5 pence).

Warrants

As at 31 December 2024, the Company had the following outstanding warrants to subscribe to the Company's ordinary shares.

2024	Exercise price Pence	Expiry date	Number at 1 January	Granted /(exercised)	Expired	Number at 31 December
2023 Warrants	2.25	13 June 2026	40,476,190	-	-	40,476,190
2022 Warrants	2.75	13 June 2025	7,056,875	-	-	7,056,875
2021 Warrants	2.75 21	December 2027	99,999,936	-	-	99,999,936
			147,533,001	-	-	147,533,001

 

2023	Exercise price Pence	Expiry date	Number at 1 January	Granted /(exercised)	Expired	Number at 31 December
2023 Warrants	2.25	13 June 2026	-	40,476,190	-	40,476,190
2022 Warrants	2.75	13 June 2025	7,056,875	-	-	7,056,875
2021 Warrants	2.75 21	December 2027	99,999,936	-	-	99,999,936
			107,056,811	40,476,190	-	147,533,001

 

 

10. Loans and borrowings          

		Secured Bonds £'000s					Loan note-  Afriquia £'000s					Convertible Bonds £'000s				Short-term loan  £'000s			2024 Total £'000s
Current liabilities
At 1 January		-					-					-				-			-
Gross amount of loan drawn down		-					-					-				1,100			1,100
Accrued interest		-					-					-				133			133
Principal loan and interest repayment		-					-					-				(1,233)			(1,233)
At 31 December		-					-					-				-			-
Non-current liabilities
At 1 January			21,980					10,276				1,029			-				33,285
Gross amount of loan drawdown during the year			-					4,722			-				-				4,722
Amortised finance charges			1,422					816			-				-				2,238
Unwinding of discount			-					-			166				-				166
Interest payments			(430)					(605)			-				-				(1,035)
Debt conversion to equity			-					-			(621)				-				(621)
Principal loan repayment			-					-			(250)				-				(250)
Exchange adjustments			(1,022)					224			-				-				(798)
At 31 December			21,950					15,433			324				-				37,707
				Secured Bonds £'000s					Loan note- Afriquia £'000s				Convertible Bonds £'000s				2023 Total £'000s
	Current liabilities
	At 1 January			1,121					-				-				1,121
	Reclassification to non-current liability			(1,121)					-				-				(1,121)
	At 31 December			-					-				-				-
Non-current liabilities
At 1 January						20,855				8,213				-				29,068
Gross amount of loan drawdown during the year						-				2,017				2,500				4,517
Amortised finance charges						890				532				-				1,422
Unwinding of discount						-				-				137				137
Interest payments						(441)				-				-				(441)
Gross equity component at date of issue						-				-				(562)				(562)
Debt conversion to equity						-				-				(1,046)				(1,046)
Exchange adjustments						(445)				(486)				-				(931)
Reclassification from current liabilities						1,121				-				-				1,121
At 31 December						21,980				10,276				1,029				33,285

 

The Company has €25.32 million secured bonds (the "Secured Bonds"). The Secured Bonds mature on 21 December 2027. The Secured Bonds bear 2% cash interest paid per annum until maturity and a 3% interest per annum to be paid at redemption. The Company issued to the Bondholders 99,999,936 warrants to subscribe for new ordinary shares in the Company at an exercise price of 2.75 pence per share. The warrants expire on 21 December 2027. The Bonds are secured on the issued share capital of Sound Energy Morocco South Limited. After taking account of the terms of the Bonds, the effective interest is approximately 6.5%.

The Company has a $18.0 million 6% secured loan note facility with Afriquia Gaz maturing in December 2033 (the ''Loan''). The drawn down principal bears 6% interest per annum payable quarterly, but was deferred and capitalised semi-annually, until the second anniversary of the issue of Notice to Proceed. Repayment of interest that is not deferred commenced in Q2 2024. The principal and deferred interest will be repayable annually in equal instalments commencing December 2028. The Loan is secured on the issued share capital of Sound Energy Meridja Limited. The weighted effective interest on the drawdowns made is approximately 6.2%.

In June 2023, the Company issued £2.5 million convertible bonds (the ''Bonds'') from a senior unsecured convertible bond facility of up to £4.0 million. The £2.5 million Bonds have a fixed conversion price of 2.25 pence per ordinary share. The term of the Bonds is 5 years from drawdown date, with interest of 15% per annum payable bi-annually in cash or capitalised to the principal, at the Company's election. The Company issued 33,333,333 warrants to subscribe for new ordinary shares in the Company at an exercise price of 2.25 pence per ordinary share with a term of 3 years. During the year, the Company issued 117.5 million new shares following the conversion of £1,175,000 of accrued interest on the Bonds, leaving £0.6 million accrued interest outstanding. The Company repaid £250,000, being the principal amount that was outstanding. The fair value of the debt converted to equity was £0.6 million which when compared to the par value of the shares issued of £1.2 million, resulted in a difference of £0.6 million that was first recorded in equity and subsequently transferred to the profit and loss account. The carrying amount of the Bonds is stated at fair value and is measured using the discounted cashflow method. A discount rate of 17.7% was used to discount the outstanding capitalised interest over the outstanding term of the Bonds.

In Q3 2024, the Company entered into a short-term bridge loan with a high-net-worth investor for up to £1.5 million, available for three months and any amount drawn down attracted interest of 15% per quarter. The Company made downs amounting to £1.1 million which attracted interest of £133,000. The principal and interest amounts were repaid in December 2024.

 

Reconciliation of liabilities arising from financing activities

 

Non-cash changes

	1 January 2024	Cash flows	Finance charges	Exchange adjustments	Convertible Bonds non- cash movements	31 December 2024
2024	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Long-term borrowings	33,285	3,304	2,537	(798)	(621)	37,707
Leases	121	(124)	3	-	-	-
Total liabilities from financing activities	33,406	3,180	2,540	(798)	(621)	37,707

 

Non-cash changes

	1 January 2023	Cash flows	Finance charges	Exchange adjustments	Convertible Bonds non- cash movements	31 December 2023
2023	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Long-term borrowings	30,189	4,001	1,559	(931)	(1,533)	33,285
Leases	283	(180)	18	-	-	121
Total liabilities from financing activities	30,472	3,821	1,577	(931)	(1,533)	33,406

 

Reconciliation of finance expense

					2024	2023
					£'000s	£'000s
Amortised finance charges					2,371	1,422
Unwinding of discount					169	256
Bond issue costs expensed					-	601
Less capitalised interest					(238)	(285)
Total finance expense for the year					2,302	1,994

 

11. Discontinued operations

 

On 14 June 2024, the Company announced that it had entered into a binding sale and purchase agreement with Managem SA for the disposal of SEME that owns:

•       55% interest in the Tendrara Production Concession, including the liability for payments arising from the Schlumberger net profit interest (NPI) agreement (pursuant to the acquisition of Schlumberger Silk Route Services Limited in 2021);

•       47.5% interest in the Grand Tendrara licence; and

•       47.5% interest in the Anoual licence.

 

The consideration included:

•       Back costs (expenditure on licences) from 1 January 2022 to completion date, net of working capital and other adjustments, $13.1 million;

•       Tendrara Production Concession Phase 2 carry of up to $24.5 million;

•       Anoual licence carry on one well, $2.6 million;

•       Grand Tendrara licence carry on one well, $3.6 million;

•       On achieving Phase 2 first gas, $1.5 million.

 

The transaction was completed in December 2024 and the Company received $13.1 million cash with the other elements of the consideration remaining as deferred consideration.

 

The results of the discontinued operations are presented below.

 

		2024* £'000s	2023 £'000s
Other income		-	38
Impairment of tangible and intangible assets		-	-
Gross loss		-	38
Administrative expenses		(563)	(85)
Operating loss from discontinued operations		(563)	(47)
Finance revenue		11	17
Foreign exchange loss		(76)	(127)
Finance costs recovery/expense)		165	(101)
Foreign currency translation loss reclassified from other comprehensive income		(295)	-
Loss on disposal of subsidiary		(23,438)	-
Loss for the period before taxation from discontinued operations		(24,196)	(258)
Tax expense		-	(7)
Loss for the period after taxation from discontinued operations		(24,196)	(265)

·    Represents the results for the period to divestment date on 10 December 2024.

 

The net cash flows of the discontinued operations were as follows:

		2024 £'000s	2023 £'000s
Net cash flow from operating activities		(816)	189
Net cash flow from investing activities		9,236	-
Net cash flow from financing activities		-	-
Net cash inflow/(outflow)		8,420	189

The calculation of loss on disposal of subsidiary is shown below:

		2024 £'000s	2023 £'000s
Consideration
Cash consideration received on completion		10,240	-
Fair value of deferred consideration		20,696	-
Total consideration on disposal		30,936	-
Carrying amount of net assets disposed		(28,807)	-
Impairment and other expenses on disposal		(25,567)	-
Loss on disposal of subsidiary		(23,438)	-

 

12. Post Balance Sheet Events

In February 2025, the Company announced the resignation of its Chief Operating Officer as a director of the Company who left full-time employment of the Group in March 2025.

In March 2025, the Company announced the mLNG project main contractor, Italfluid, and the operator of the Tendrara Production Concession had agreed to amend their contractual arrangement by terminating the vendor financed lease agreement entered into in 2020 and entering into an engineering, procurement and Construction (EPC) contract.