Echo Energy Regulatory News (ECHO)

Echo Energy plc

("Echo Energy" or the "Company" or the "Group")

Audited results for the year ended 31 December 2016

Chairman's statement

Echo Energy plc is a London listed Latin American focused mid-cap gas company in the making. The company

is pursuing a high-value, piped, onshore gas strategy across South and Central America, commencing with a

Multi Tcf potential exploration portfolio. Select corporate transactions in the region are also under evaluation.

On 6 March 2017, after the financial year end, the company announced a carefully orchestrated relaunch which saw the re-shaping

of the Board, the introduction of a cornerstone investor in the form of Greenberry plc, an associate of Continental Investment

Partners, an open offer as well as the renaming of the company. These elements combined to fully rebrand the

company and set a platform for a new and exciting journey.

The open offer was a vital component to that relaunch providing private investors in Echo an opportunity

to access this high growth vehicle, led and backed by an experienced and successful team, on the same terms as

our cornerstone investor. The fair treatment of private investors is central to the philosophy of Echo and will remain

so going forward.

On 18 April 2017, the company announced its decision to pursue a LATAM regional exploration strategy focused

on multi Tcf, low cost, onshore gas piped to high value, growing markets. This strategy was based on a combination

of elements, which included the recently increasing growth across the region, the increasing shortage of gas in the

major markets of Brazil and Argentina and a historic period of regional underinvestment in the sector. In combination,

we believe these provide a compelling investment proposition for investors at this specific point in the cycle.

Consequently, we have planned to rapidly acquire a series of assets across the region, including potential asset

acquisitions in Bolivia, Colombia, Argentina and Brazil, leveraging existing pipeline infrastructure and processing

capability which enables new discoveries to be brought to market quickly. In addition, we intend to selectively bring

in pre-identified strategic partners to the business to fund and technically de-risk such assets.

The company is now positioned for its bold and adventurous growth strategy, with approximately GBP 26M cash

and further access to capital if required.

The Echo Energy journey is underway…

Echo Energy plc

For further information please contact:

Consolidated statement of comprehensive income

Year ended 31 December 2016

Notes

Year to 31 December 2016

Year to 31 December 2015

Continuing operations

£

£

Revenue

2

-

-

Cost of sales

-

-

Gross profit

-

-

Administrative expenses

(7,091,475)

(1,652,631)

Other operating income

-

-

Operating loss

(7,091,475)

(1,652,631)

Financial income

144

351

Financial expense

(21,133)

(3,533)

Share of post-tax losses of equity

accounted joint ventures

7

(137,906)

(156,985)

Loss before tax

(7,250,370)

(1,812,798)

Taxation

4

-

-

Loss from continuing operations

(7,250,370)

(1,812,798)

Discontinued operations

Loss after taxation for the year from

discontinued operations

3

(3,814)

(96,269)

Loss for the year

(7,254,184)

(1,909,067)

Other comprehensive income:

Other comprehensive income to be reclassified to profit

or loss in subsequent periods (net of tax)

Exchange difference on translating foreign operations

807,370

(296,126)

Total comprehensive loss for the year

(6,446,814)

(2,205,193)

Loss attributable to:

Owners of the parent

(7,254,184)

(1,909,067)

Total comprehensive loss attributable to:

Owners of the parent

(6,446,814)

(2,205,193)

Loss per share (pence)

5

Basic

(18.6)

(26.7)

Diluted

(18.6)

(26.7)

Loss per share (pence) for continuing operations

Basic

(18.6)

(25.4)

Diluted

(18.6)

(25.4)

Echo Energy plc

Consolidated statement of financial position

As at 31 December 2016

Notes

31 December 2016

31 December 2015

£

£

Non-current assets

Property, plant and equipment

3,647

11,127

Goodwill

-

-

Other intangible assets

6

432,486

5,387,018

Investments in equity-accounted

joint ventures

7

-

137,906

436,133

5,536,051

Current assets

Other receivables

303,011

488,877

Cash and cash equivalents

184,849

101,300

487,860

590,177

Assets held for distribution

3

18,892

43,179

506,752

633,356

Current liabilities

Trade and other payables

3

(428,547)

(1,164,063)

Liabilities directly associated with the

assets held for distribution

(802)

(20,968)

(429,349)

(1,185,031)

Net current assets

77,403

(551,675)

Net assets

513,536

4,984,376

Equity attributable to equity holders of the parent

Share capital

8

2,430,612

2,159,247

Share premium

9

17,621,763

16,628,623

Deferred shares

-

-

Shares to be issued

277,468

-

Warrant reserve

714,977

302,453

Share option reserve

85,515

71,718

Foreign currency translation reserve

471,680

(335,690)

Retained earnings

(21,088,479)

(13,841,975)

Total equity

513,536

4,984,376

Echo Energy plc

Statement of changes in equity

Year ended 31 December 2016

Retained

Share

Share

Shares to

Warrant

Share

Foreign

Total

earnings

capital

premium

be issued

reserve

option

currency

equity

reserve

translation

reserve

£

£

£

£

£

£

£

£

Consolidated

1 January 2015

 (11,932,908)

 1,051,434

16,302,050

-

-

25,776

(39,564)

5,406,788

Loss for the year

(1,909,067)

-

-

-

-

-

-

(1,909,067)

Exchange differences

-

-

-

-

-

-

(296,126)

(296,126)

Total comprehensive loss for the

year

(1,909,067)

-

-

-

-

-

(296,126)

(2,205,193)

New shares issued

-

 1,107,813

405,334

-

-

-

-

1,513,147

New share warrants issued

-

-

-

-

 302,453

-

-

302,453

Share issue costs

-

-

(78,761)

-

-

-

-

(78,761)

Share options lapsed

-

-

-

-

-

-

-

-

Share-based payments

-

-

-

-

-

45,942

-

45,942

31 December 2015

 (13,841,975)

 2,159,247

16,628,623

-

 302,453

71,718

(335,690)

4,984,376

1 January 2016

 (13,841,975)

 2,159,247

16,628,623

-

 302,453

71,718

(335,690)

4,984,376

Loss for the year

(7,254,184)

-

-

-

-

-

-

(7,254,184)

Exchange differences

-

-

-

-

-

-

807,370

807,370

Total comprehensive loss for the

year

(7,254,184)

-

-

-

-

-

807,370

(6,446,814)

New shares issued

-

264,065

887,329

-

-

-

-

1,151,394

New share warrants issued

-

-

-

-

 412,524

-

-

412,524

Share issue costs

-

-

(9,889)

-

-

-

-

(9,889)

Share options lapsed

7,680

-

-

-

-

(7,680)

-

-

Share-based payments

-

7,300

115,700

277,468

-

21,477

-

421,945

31 December 2016

 (21,088,479)

 2,430,612

17,621,763

277,468

 714,977

85,515

471,680

513,536

Echo Energy plc

Consolidated statement of cash flows

Year ended 31 December 2016

Year to 31 December 2016

Year to 31 December 2015

£

£

Cash flows from operating activities

Loss from continuing operations

(7,250,370)

(1,812,798)

Loss from discontinued operations

(3,814)

(96,269)

(7,254,184)

(1,909,067)

Adjustments for:

Depreciation of property, plant and equipment

5,441

5,372

Loss on disposal of property, plant and equipment

2,437

-

Impairment of intangible assets and goodwill

5,756,250

-

Share of post-tax loss of equity accounted joint ventures

137,906

156,985

Placing costs expensed

-

69,244

Share-based payments

421,945

45,942

Warrants issued

412,524

302,453

Financial income

(144)

(351)

Financial expense

21,133

3,533

(496,692)

(1,325,889)

(Increase)/decrease in other receivables

312,074

(289,826)

Decrease in net amounts held for disposal

4,121

(254,517)

Increase in trade and other payables

(731,190)

555,053

Cash used in operations

(911,687)

(1,315,179)

Income taxes received

-

-

Net cash used in operating activities

(911,687)

(1,315,179)

Cash flows from investing activities

Interest received

144

351

Interest paid

(21,133)

(3,533)

Acquisition of equity accounted joint venture

-

(294,891)

Purchase of intangible assets

-

(73,013)

Purchases of property, plant and equipment

(396)

(3,486)

Net cash used in investing activities

(21,385)

(374,572)

Cash flows from financing activities

Issue of share capital

1,026,510

1,513,147

Share issue costs

(9,889)

(148,005)

Net cash from financing activities

1,016,621

1,365,142

Net decrease in cash and cash equivalents

83,549

(324,609)

Cash and cash equivalents at 1 January 2016

101,300

425,909

Cash and cash equivalents at 31 December 2016

184,849

101,300

1

Basis of preparation

The company's functional currency is the Euro, and presentational currency is Great British Pounds Sterling.

The financial information has been prepared in accordance with International Financial Reporting Standards

("IFRS"), IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies preparing

their accounts under IFRS, as adopted by the European Union, and the Companies Act 2006. The financial

information has been prepared under the historical cost convention, as modified by revaluations of financial assets

and financial liabilities at fair value through the statement of comprehensive income. Details of the accounting

policies applied are set out in the financial statements for the year ended 31 December 2015 and have not

changed for the year ended 31 December 2016.

The financial information set out in this announcement does not constitute audited financial statements for the year

ended 31 December 2016. The financial information for the year ended 31 December 2015 is derived from the

statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on

those accounts: their report was qualified in respect of a limitation of scope in relation to financial information of the group's 25 per cent.

working interest in the East Ghazalat production licence (detailed below). The auditor's report for that year also included an emphasis of

matter in respect of the valuation of the group's development and exploration intangible asset and in relation to the group's ability to

continue as a going concern.

The financial information for the year ended 31 December 2016 is derived from the financial statements, but does not

constitute the group's financial statements. The company's auditors have reported on the statutory financial

statements for the year ended 31 December 2016 and their report is qualified, as follows:

Basis for qualified opinion on financial statements

The scope of our work was limited as a result of the following matter. As disclosed in Note 17 a dispute has arisen in relation

to the operation of the joint venture arrangements relating to the group's 25 per cent. working interest in the East Ghazalat

production licence, held through Independent Resources (Egypt) Limited, in which the group holds a 50 per cent interest (the

'Joint Venture'). During the reporting period the Joint Venture was served with notice of default in relation to cash calls raised

by North Petroleum International S.A. ("North Petroleum") the operator of East Ghazalat. The Joint Venture has rebutted the

claims from North Petroleum but the breakdown in relations has meant that operator North Petroleum has continued to refuse

to furnish financial information to allow a proper determination of licence costs and an audit of licence revenues to be

completed. As a consequence of the lack of access to primary accounting records we have been unable to obtain sufficient

appropriate audit evidence in relation to the group and company financial statements concerning:

•

the carrying value of £Nil of the group's investments in equity-accounted joint ventures as at 31 December 2016;

•

the carrying value of £85,565 of the company's investments in equity accounted joint ventures as at 31

December 2016; and

•

the group's share of any profit or loss attributable to the group's underlying interests in the East Ghazalat

licence for the period from 1 July 2015 to 31 December 2016.

2.

Business segments

The group has adopted IFRS 8 Operating segments. Per IFRS 8, operating 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. The group's reportable operating segments are as follows:

a.

Parent company

b.

Rivara

c.

Ksar Hadada

The previously reported segment of Ribolla Basin CBM assets has been classified as a discontinued operation and has been

excluded from the analysis below.

The CODM monitors the operating results of each segment for the purpose of performance assessments and

making decisions on resource allocation. Performance is based on assessing progress made on projects and

the management of resources used. Segment assets and liabilities are presented inclusive of inter-segment

balances.

The group did not generate any revenue during the year to 31 December 2016 nor in the year to 31 December 2015.

Information regarding each of the operations of each reportable segment within continuing operations is included in

the following table.

Parent

Rivara

 Ksar Hadada

 Consolidation

 Total

company

£

£

 £

 £

 £

Year to 31 December 2016

Interest revenue

57,331

1

-

(57,188)

144

Interest expense

(23,739)

(54,582)

-

57,188

(21,133)

Depreciation

5,431

10

-

-

5,441

Impairment of

intangible assets

-

5,756,250

-

-

 5,756,250

Income tax

-

-

-

-

-

Loss before tax

(4,487,164)

(5,820,694)

(34,752)

3,092,240

(7,250,370)

Assets

1,579,091

1,596,601

433,226

(2,684,925)

923,993

Liabilities

(411,350)

(3,193,325)

(1,079,688)

4,255,816

(428,547)

Year to 31 December 2015

Interest revenue

92,800

7,107

-

(99,556)

351

Interest expense

(5,142)

(59,780)

-

61,389

(3,533)

Depreciation

5,335

37

-

-

5,372

Impairment of

intangible assets

-

-

-

-

-

Income tax

-

-

-

-

-

Loss before tax

(1,938,281)

(96,672)

(95,412)

317,567

(1,812,798)

Assets

4,763,050

6,352,843

442,739

(5,432,404)

 6,126,228

Liabilities

(1,084,119)

(2,717,707)

(1,054,449)

3,692,212

(1,164,063)

Consolidation adjustments in respect of the loss before tax includes the loss of £137,906 (2015:£156,985) in relation to

equity accounted joint ventures.

Consolidation adjustments in respect of assets includes the loss of £294,891 (2015: £156,985) in relation to equity

accounted joint ventures.

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

 United

 Overseas

 Total

 Kingdom

 £

 £

 £

31 December 2016

Intangible assets

-

432,486

432,486

Goodwill

-

-

-

Property, plant and equipment

3,647

-

3,647

31 December 2015

Intangible assets

-

5,387,018

 5,387,018

Goodwill

-

-

-

Property, plant and equipment

11,119

8

11,127

3.

Discontinued operations

The group was unable to find an investment partner for the coal bed methane opportunities at Fiume Bruna and Casoni,

in Italy, therefore, these opportunities will no longer be pursued. As a result the directors decided, prior to 31 December 2014,

to significantly reduce its activities in Italy and to discontinue the activities within Independent Energy Solutions srl which

dealt solely with these opportunities. With Independent Energy Solutions srl classified as discontinued operations, the

Ribolla Basin CBM assets segment is no longer presented in the segment note. The results of Independent Energy

Solutions srl, incorporating consolidation adjustments, are presented below:

Year to 31 December 2016

Year to 31 December 2015

£

£

Revenue

-

-

Administrative expenses

(3,814)

(96,272)

Operating loss before impairment

(3,814)

(96,272)

Impairment of the historic cost and carrying value of intangible

assets

-

-

Impairment of goodwill arising on acquisition of Independent Energy

Solutions srl - consolidation adjustment

-

-

Operating loss after impairment

(3,814)

(96,272)

Financial income

-

3

Financial expense

-

-

Loss on ordinary activities before taxation

(3,814)

(96,269)

Taxation

-

-

Loss for the year from discontinued operations

(3,814)

(96,269)

The major classes of assets and liabilities of Independent Energy Solutions srl classified as held for distribution to equity

holders of the parent as at 31 December 2016 are as follows:

31 December 2016

31 December 2015

£

£

Assets

Intangible assets - fully impaired

-

-

Property, plant and equipment

-

-

Other receivables

18,883

35,107

Cash and cash equivalents

9

8,072

Assets held for distribution

18,892

43,179

Liabilities

Trade and other payables

(802)

(20,968)

Liabilities directly associated with the assets held for distribution

(802)

(20,968)

Net assets directly associated with disposal group

18,090

22,211

The net cash flows incurred by Independent Energy Solutions srl are as follows:

Year to 31 December 2016

Year to 31 December 2015

£

£

Operating

(8,063)

(53,092)

Investing

-

3

Financing

-

-

Net cash (outflow)/inflow

(8,063)

(53,089)

4.

Taxation

Year to 31 December 2016

Year to 31 December 2015

£

£

Tax on profit on ordinary activities

Taxation charged based on profits for the period

UK corporation tax based on the results for the period

-

-

Total tax expense in income statement

-

-

Reconciliation of the tax expense

The tax assessed for the year is different from the standard rate of corporation tax in the UK of 20% (2015: 20.25%). The differences are

explained below:

Year to 31 December 2016

Year to 31 December 2015

£

£

Loss on ordinary activities before taxation

(7,250,370)

(1,812,798)

Loss on ordinary activities multiplied by standard rate

of corporation tax in the UK of 20% (2015: 20.25%)

(1,450,074)

(367,092)

Effects of:

Expenses disallowed for tax purposes

1,281,268

29,283

Deferred tax not provided - tax losses carried forward

168,806

337,809

Total current tax

-

-

The group has tax losses available to be carried forward in certain subsidiaries and the parent. With anticipated

substantial lead times for the group's projects, and the possibility that these may therefore expire before their use, it is

not considered appropriate to anticipate an asset value for them.

No amounts have been recognised within tax on the results of the equity accounted joint ventures.

5.

Loss per share

The calculation of basic and diluted loss per share at 31 December 2016 was based on the loss attributable to ordinary

shareholders of £7,254,184 The weighted average number of ordinary shares outstanding during the year ending

31 December 2016 and the effect of the potentially dilutive ordinary shares to be issued are shown below.

Year to 31 December 2016

Year to 31 December 2015

 £

 £

Net loss for the year

(7,254,184)

(1,909,067)

Basic weighted average ordinary shares

in issue during the year

38,962,494

7,149,778

Diluted weighted average ordinary shares

in issue during the year

38,962,494

7,149,778

Loss per share (pence)

Basic

(18.6)

(26.7)

Diluted

(18.6)

(26.7)

The company has consolidated all of the existing ordinary shares as at close of business on 22 May 2017 into ordinary shares

of 0.25 pence on the basis of one consolidated share for every 25 existing ordinary shares. As this consolidation happened

after the year end date but before the approval of the financial statements the weighted average number of ordinary shares

shown above has been adjusted for both years to reflect this change and the prior year loss per share figure has been re-stated.

In accordance with IAS 33 and as the average share price in the year is lower than the exercise price, the share options

do not have a dilutive impact on earnings per share for the year ending 31 December 2016.

Deferred shares have been excluded from the calculation of loss per share due to their nature. Please see note 8 for details

of their rights.

6.

Other intangible assets (group)

Development and exploration

Rivara gas

Ribolla Basin

Ksar Hadada

Total

storage

CBM assets

exploration

facility

acreage

£

£

£

£

31 December 2016

Cost

1 January 2016

4,950,206

3,870,839

1,517,641

10,338,686

Exchange differences

806,044

630,291

-

1,436,335

Disposals

-

-

(4,326)

(4,326)

31 December 2016

5,756,250

4,501,130

1,513,315

11,770,695

Impairment

1 January 2016

-

3,870,839

1,080,829

4,951,668

Exchange differences

-

630,291

-

630,291

Impairment charge for the year

5,756,250

-

-

5,756,250

31 December 2016

5,756,250

4,501,130

1,080,829

11,338,209

Carrying amount

31 December 2016

-

-

432,486

432,486

31 December 2015

4,950,206

-

436,812

5,387,018

31 December 2015

Cost

1 January 2015

5,239,353

4,096,939

1,444,628

10,780,920

Exchange differences

(289,147)

(226,100)

-

(515,247)

Additions

-

-

73,013

73,013

31 December 2015

4,950,206

3,870,839

1,517,641

10,338,686

Impairment

1 January 2015

-

4,096,939

1,080,829

5,177,768

Exchange differences

-

(226,100)

-

(226,100)

Impairment charge for the period

-

-

-

-

31 December 2015

-

3,870,839

1,080,829

4,951,668

Carrying amount

31 December 2015

4,950,206

-

436,812

5,387,018

31 December 2014

5,239,353

-

363,799

5,603,152

The primary intangible assets are all internally generated.

For the purpose of impairment testing of intangible assets, recoverable amounts have been determined based

upon the value in use of the group's three projects.

Rivara gas storage facility

The Group holds a 100% interest in Rivara Gas Storage srl. Intangible assets include an amount of £5,756,000 with

respect to project expenditure. The regional council, Regione Emilia Romagna, where the project is located is

currently denying authorisation for project development. However authorisation has been granted by the national

government. As a result Rivara Gas Storage srl has appealed against this decision to the Emilia Romagna Bologna

Administrative Court.

Whilst the Group has obtained third party legal opinions regarding the appeal and believe that they would be successful in

their appeal it has been decided, for strategic reasons, to close its Italian operations and therefore this asset has been

impaired in full during the year.

7.

Investments in equity-accounted joint ventures

Year to 31 December 2016

£

Cost

1 January 2016

294,891

Additions in year

-

31 December 2016

294,891

Impairment

1 January 2016

-

Impairment recognised in parent company

209,326

31 December 2016

209,326

Share of post-tax losses of equity accounted joint ventures

1 January 2016

156,985

Share of post-tax losses of equity accounted joint ventures for the year

137,906

31 December 2016

294,891

Carrying amount - Group

31 December 2016

-

31 December 2015

137,906

Carrying amount - Company

31 December 2016

85,565

31 December 2015

294,891

The group has a 50 per cent. interest in Independent Resources (Egypt) Limited a company incorporated in England &

Wales, whose purpose is to invest in the oil and gas exploration and production activities in the Arab Republic of Egypt.

The other shareholder in Independent Resources (Egypt) Limited (the "Joint Venture") is Nostra Terra Oil and Gas Company

plc ("Nostra Terra") a UK resident company whose shares are traded on the AIM market of the London Stock Exchange.

In October 2015 the Joint Venture acquired a 50 per cent. working interest in the East Ghazalat production licence located

in the Western Desert, Egypt from TransGlobe Energy Corporation through the acquisition of the entire share capital of

Trans Globe (GOS) Inc. a wholly-owned subsidiary of TransGlobe Energy Corporation ("TransGlobe). In December 2015,

the name of the acquired company was changed to Sahara Resources (GOS) Inc.

The total consideration for the transaction was $3.5 million of which $2.5 million had been deferred as a vendor loan

repayable by the Joint Venture on 30 September 2017. The loan note accrued interest at 10 per cent annum on the

principal sum, payable semi-annually. Nostra Terra and Echo Energy plc are joint and severally liable for the repayment of the

loan note.

The final loan note principal and semi-annual interest payable to Trans Globe have been settled during the year.

As a non-monetary long-term asset, the consideration for acquiring the share capital of Trans Globe GOS Inc. has been

recorded at the prevailing exchange rate at the time of completion of the acquisition but has not been retranslated at the

prevailing year-end exchange rate.

In January 2016 the Joint Venture was served with notice of default in relation to cash calls raised by North Petroleum

International S.A. ("North Petroleum") the operator of East Ghazalat.

The Joint Venture has rebutted the claims from North Petroleum but the current breakdown in relations has meant that

operator North Petroleum has been unwilling to furnish financial information to allow a proper determination of licence costs

and an audit of licence revenues to be completed.

In light of this lack of access to primary accounting records the results of the Joint Venture for the years ended 31

December 2015 and 31 December 2016 reflect the investment in Sahara Resources GOS Inc. at historical cost and the loan

note consideration payable to Trans Globe and the accrued costs of completing the related acquisition but do not

consolidate any share of profits or losses attributable to Sahara Resources GOS Inc. underlying interests in the East

Ghazalat licence for the period since 1 July 2015, the effective date of the transaction. The investment is reflected at its

estimated recoverable amount at the company level. In determining the group carrying value of the interest in

equity-accounted joint ventures, and consistent with IFRS 11, this has been written down to £nil by limiting the loss relating

to the group share of total comprehensive loss to £137,906.

The current liabilities of the Joint Venture at 31 December 2016 primarily reflects amounts due to Echo Energy

plc in respect of costs incurred by it to third parties in relation to the acquisition by the Joint Venture of Sahara Resources

GOS Inc.

Summarised financial information in relation to the joint venture is presented below:

31 December 2016

31 December 2015

£

£

As at 31 December

Current assets

943,026