Crown Energy : Annual ReportJan-Dec 2021

ANNUAL REPORT 2021

CONTENTS

THE YEAR IN BRIEF	3
ABOUT CROWN ENERGY	4
CEO'S STATEMENT	5
BUSINESS AREA ASSET
DEVELOPMENT AND MANAGEMENT	7
BUSINESS AREA ENERGY	11
SUSTAINABILITY	15
BOARD OF DIRECTORS	17
MANAGEMENT	18
SHARES	19
CHAIRMAN'S STATEMENT	21
CORPORATE GOVERNANCE
REPORT	22
DIRECTORS' REPORT	28
FINANCIAL STATEMENTS	32
NOTES	40
AUDITOR'S REPORT	71
GLOSSARY	74

Crown Energy is an international group that provides customised residential and office solutions with related services and is active in oil and gas exploration in Africa and the Middle East. The Company creates value via two business areas: Asset Development and Management and Energy.

Value is created by offering international companies a one-stop-shop concept for residential and office solutions with related services and by developing assets in their early stages to be presented at a later date to suitable players in the oil and gas industry for further development and production.

Crown Energy has offices in Stockholm, London, Luxembourg and Luanda.

BUSINESS AREA -

ASSET DEVELOPMENT

AND MANAGEMENT

Crown Energy is a provider of services to the energy industry and offers customised residential and office solutions with related services to international companies, primarily in the energy industry. Crown Energy's offer covers the entire chain from needs-adapted design and construction to leasing, property management and value-added services.

READ MORE ON PAGE	7

BUSINESS AREA

- ENERGY

Crown Energy develops and explores oil assets in their early stages with a high potential for recoverable reserves. In the longer-term, the assets are presented to suitable players in the oil sector for further development and production.

READ MORE ON PAGE 11

THE YEAR IN BRIEF

During 2021, the Company has signed an agreement for the disposal of the majority of its oil and gas assets, with guaranteed payments of USD 180 million.

• Michail Shatkus started as the Company's CFO on 1 January.
• On 13 April, Crown Energy announced that payments had been received that exceed one-third of the contracted sale price for the C-View Smart Business Park in Luanda, Angola.
• On 15 April, the Company announced that it is relin- quishing its entire 5 per cent working interest in the Block P licence in Equatorial Guinea.
• On 19 April, the Company announced that a mem- orandum of understanding had been signed with Wildcat Petroleum Plc, an oil company listed on the London Stock Exchange (LSE: WCAT).
• On 20 April, the Company announced that its part- ner Africa Energy Corp had received official approv- al to conclude its two farm-out agreements for Block 2B in South Africa.
• On 7 June, the Company announced that Andreas Forssell had informed the Board of Directors that he wishes to leave his role as CEO.

• On 15 September, Yoav Ben Eli was nominated as the new CEO of Crown and this appointment was for- malised on 22 October. On 20 October, the Company announced that it had entered into an agreement for the disposal of the majority of its oil and gas assets.
• On 27 October, the Company confirmed receipt of the first USD 75 million down payment towards the disposal, with an additional consideration of USD 105 million payable over the next five years, with a total consideration, subject to the terms of an earn- out consideration, of up to USD 450 million.
• On 15 November, the CEO announced his new vision for Crown Energy and its business going forward.
• The EGM on 17 December approved the new Articles of Association.

		7
		LEASED
		PROPERTIES
ABOUT
CROWN	5	3	21
ENERGY	OWNED	ENERGY	2021
	SEK MILLION
	PROPERTIES	PROJECTS	REVENUE

Crown Energy is an international group with two current business areas - customised residential and office solutions with related services internationally and oil and gas exploration. Operations are currently conducted in Africa and the Middle East.

In the Asset Development and Management business area, Crown Energy offers international companies a one-stop-shop concept for residential and office solutions with related services. The Energy business area focuses on exploration opportunities with a high potential for recoverable reserves.

New business development, vision and mission

• going forward Crown has recognised the need to move towards a more environmentally friendly, socially responsible and carbon neutral position. Crown has identified a number of projects to focus on in the areas of:

medical device, tele-medicine and health.

carbon capture and other environments, such as forestry.

CURRENT MISSION

Crown Energy's mission is to provide customised residential and office solutions and to develop oil and gas assets through exploration and processing, initially in Africa and the Middle East. Value is created by offering international companies a one-stop- shop concept for residential and office solutions with related services and by developing early-stage assets to be presented at a later date to suitable players in the oil and gas industry for further development and production.

OBJECTIVES

Crown Energy's objective is to generate the highest possible return for its shareholders. The Company aims to have an established service business through property concepts in several geographic markets, together with a balanced portfolio of development and exploration assets.

VISION

To be an established player and a preferred partner in the international energy market, both in exploration and development and in customised residential and office solutions with value-added services.

ADVANTAGES OF COMBINED OPERATIONS

The combination of the two business areas - Asset Development and Management and Energy - offers several advantages. Together the operations become more diversified, leading to lower risk. Furthermore, the cash flow generated through the service operations can be used for further development of the exploration assets. By building customer relationships with some of the world's leading energy companies in the Asset Development and Management area, Crown Energy has also been able to optimise a number of opportunities to capitalise on the existing exploration assets. Crown Energy is able to provide potential energy partners with related services in the form of customised housing and offices close to the assets.

STRATEGY

Crown Energy's strategy is based on the overall objective of generating the highest possible return for the shareholders with a well-balanced risk awareness.

• To establish service operations in more markets with a need for residential and office solutions for the oil and gas industry
• To carefully select exploration areas where the potential for oil and gas discovery is high
• To exploit synergies between the two business areas and reinvest part of the cash flow from service operations for further development of the exploration assets
• To provide exploration and extraction partners with custom- ised housing and offices close to the assets
• To pursue farm-out opportunities and divestments as a capitalisation and thereby maximise asset values
• To create a good spread of risks through several parallel projects

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CEO's Statement

DEAR SHAREHOLDERS AND INVESTORS,

This is now my third report to you as the new CEO of Crown Energy. We have been able to devote a lot of time in the final quarter of 2021 to the pursuit of the new projects I outlined in my address to our shareholders and in the secure knowledge that we have completed, after a long period of negotiation, a very large transaction and provided a great result for Crown Energy and our shareholders. From the end of October, we have had a free cash balance of over USD 70 million. Over the next five years, we will be receiving a secure income of USD 105 million, with the strong possibility of receiving considerable further milestone payments in earn-out consideration into the Company and also very im- portantly, we have no debt. Under IFRS accounting rules, we are treating the sums we have received as deferred income.

FUTURE VISION AND STRATEGY

Crown Energy is now moving in a new and more socially responsible direction, with our focus being on the medical device industry and on improving our green footprint by way of expanding into carbon capture opportunities, while at the same time, recognising the strong increases in the oil price. It is my continued aim to manage our oil and gas assets with a view to achieving a graduated and economically beneficial but firm exit from the oil and gas industry for our company in due course.

We are all aware that the world needs to achieve net-zero greenhouse gas emissions by mid-century to avoid the impacts of climate change. As a company, we have, therefore, decided to act to reduce our exposure to and dependency on energy originating from fossil fuels and to take active steps to help bring down carbon levels in our atmosphere. We will also adopt more stringent ESG measures in order to grow our company in this new direction.

Through new projects, we will work towards reducing our carbon emissions to an acceptable near net zero while continuing to meet our energy needs. Our strategy focuses on sustainable growth in the new world, on leading industries, technology in action, enhancing old businesses and transforming them to be more ESG compliant while, at the same time, we achieve excellent benefits for our shareholders. This strategy includes, for example:

1. Environment - the growing multi-billion dollar market for CO2 capture, land and real-estate and forestry investments in ener- gy efficient projects for the purposes of carbon capture.
2. Social - improving healthcare technologies, growth in tele-med- icine projects and investments (which we view as a very important part of the future of healthcare) and medical device projects.

I am presenting the Board with new and exciting investment opportunities in the areas I have described above, as we continue to be confident that new areas of investment provide great growth and financially rewarding opportunities for Crown

As I said previously, we shall maintain a constant and open dia- log, as a Company policy, with the market and shareholders, with respect to the various investments and achievements reached and strive to be the best in what we do.

ASSET DEVELOPMENT AND MANAGEMENT

I am pleased to report that we are continuing to see an improving economic situation in Angola, which should continue during 2022. The Angolan kwanza has remained stronger against the US dollar, which is positive for us.

During 2021, net sales revenue decreased by 30 per cent compared to the same period last year. One positive is that property costs for the reporting period decreased by 10 per cent and amounted to SEK -10,982(-12,692) thousand. The period's operating result is SEK -27,089 thousand (-16,083).

The buyer of the C-View property, the Angolan Ministry of Finance, has continued to pay our subsidiary in Angola. The second instalment of a total of six payments was received in full earlier this year and, after that, additional payments have continued to be made. By the end of this year, a total of 58 per cent of the agreed purchase price will have been paid.

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