Qualified auditor’s report on the annual accounts and consolidated accounts 2017 of Misen Energy AB (publ)

The audit report has been published today in Swedish and English on the company’s website.

The report in whole follows below.
 

Auditor’s report

To the general meeting of the shareholders of Misen Energy AB (publ.), corporate identity number 556526-3968.

Report on the annual accounts and consolidated accounts

Disclaimer of Opinions

We were engaged to audit the annual accounts and consolidated accounts of Misen Energy AB for the year 2017. The annual accounts and consolidated accounts of the company are included on pages 3-64 in this document.

We do not express an opinion on the accompanying annual accounts and consolidated accounts. Because of the significance of the matters described in the Basis for Opinions section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the annual accounts and consolidated accounts.

Because of the matters described in the Basis for Opinion section of our report, we can neither recommend nor oppose to the general meeting of shareholders to adopt the income statement and the balance sheet.

Basis for Opinions

The group’s operations are in all material respects conducted by the Joint Activity (“JA”) between PJSC Ukrgasvydobuvannya, LLC Karpatygaz and Misen Enterprises AB which is governed by the Joint Activity Agreement No. 3, dated 10 June 2002.

As described in the administration report, the group is currently part in several significant legal processes as a consequence of disputes between the participants of the JA which are vital for the group’s future operations. As disclosed in the Auditor’s report for the Group financial statements as of 31 December 2016 all fixed assets of the group was directly or indirectly attributable to the JA by the end of 2016.

Based on the then existed and still existing multiple material uncertainties related to the legal processes described in the administration report we have not been able to obtain sufficient appropriate audit evidence on which to base an opinion on if the value of the fixed assets of the Group was correct by the beginning of 2017.

As per 31 December 2017 the Group’s share in the JA has been deconsolidated as a consequence of the parties’ agreement to terminate the JA. The motives for the deconsolidation is described in the administration report in the section “Deconsolidation of the Joint Activity”. Since the opening book value of fixed assets enter into the determination of the financial performance and cash flows, including the result from the deconsolidation, we were unable to determine whether adjustments might have been necessary in respect of the result for the year reported in the consolidated income statement and cash flows reported in the cash flow statement for the Group. Due to the uncertainty in the outcome of the arbitration we have not been able to obtain sufficient appropriate audit evidence to determine if additional liabilities should be included in the balance sheet of the Group. The result of the deconsolidation of KSEK -984,069 is considered both material and pervasive for the Group’s financial statements as a whole.

The assessment of the value of the parent company’s shares in the subsidiary Misen Enterprises AB, which amounts to KSEK 252,997, and the receivables from Misen Enterprises AB which amounts to KSEK 69,849, which together corresponds to approximately 99% of the parent company’s total assets and thereby representing a significant share of the parent company’s total assets, is also dependent on the outcome of the ongoing legal processes between the participants of the JA. Based on the material uncertainties related to the arbitration, we have not been able to obtain sufficient appropriate audit evidence on which to base an opinion on the opening value or the value as of 31 December 2017 of the parent company’s shares in Misen Enterprises AB. Since the value of the shares in subsidiaries enter into the determination of the financial performance and cash flows, we were unable to determine whether adjustments might have been necessary in respect of the result for the year reported in the parent company income statement and cash flows reported in the cash flow statement for the parent company.

We are independent of the parent company and the groupin accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.

Material Uncertainty Related to Going Concern

As described under the heading “Company’s expected future development and going concern” further financing needs may arise with regard to continuous operations of the Swedish companies in 2018. At the date of this report, such financing is not secured.

As funding for the next twelve months is not secured there is a material uncertainty that may lead to significant doubts about the group's ability to continue its operations. In a situation where going concern no longer can be assumed, there is a risk of significant write-downs of the group's assets as well as the parent company's book value of shares in subsidiaries.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consolidated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company’s and the group’s ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intend to liquidate the company, to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibility

Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. However, because of the matters described in the Basis for Opinions section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the annual accounts and consolidated accounts.

Report on other legal and regulatory requirements

Disclaimer of Opinion and Opinion

In addition to our engagement to audit the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of Misen Energy AB (publ.) for the year 2017 and been engaged to audit the proposed appropriations of the company’s profit or loss.

Because of the matters described in the Basis for Opinion section of our report, we can neither recommend nor oppose to the general meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report.

We recommend that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year.

Basis for Opinions

Because of the matters described in our Report on the annual accounts and consolidated accounts, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion if the annual accounts give a fair presentation of the financial performance and financial position of the company.

We conducted the audit of the administration of the Board of Directors and the Managing Director in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor’s Responsibilitiessection.We are independent of Misen Energy AB (publ.)in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of the Board of Directors and the Managing Director

The Board of Directors is responsible for the proposal for appropriations of the company’s profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company's and the group’s type of operations, size and risks place on the size of the parent company's and the group’s equity, consolidation requirements, liquidity and position in general.

The Board of Directors is responsible for the company’s organization and the administration of the company’s affairs. This includes among other things continuous assessment of the company’s and the group’s financial situation and ensuring that the company's organization is designed so that the accounting, management of assets and the company’s financial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Directors’ guidelines and instructions and among other matters take measures that are necessary to fulfill the company’s accounting in accordance with law and handle the management of assets in a reassuring manner.

Auditor’s responsibility

Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect:

• has undertaken any action or been guilty of any omission which can give rise to liability to the company, or
• in any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.

Our objective concerning the audit of the proposed appropriations of the company’s profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company’s profit or loss are not in accordance with the Companies Act.

A further description of our responsibility for the audit of the administration is available on Revisorsinpektionen’s website: www.revisorsinspektionen.se/revisornsansvar. This description is part of the auditor´s report.
 

Göteborg 5 April 2018

PricewaterhouseCoopers AB

Johan Palmgren
Authorized Public Accountant
 

For further information, please contact:

Göran Wolff, MD

Direct line:   +46 31 759 50 72
Mobile:        +46 709 45 48 48
E-mail:        goran@misenenergy.se
                   info@misenenergy.se
 

Misen Energy AB (publ) (formerly Svenska Capital Oil AB (publ)) is a Swedish upstream oil and gas company with operations in Ukraine. The company was founded in 2004 and its shares are traded on Nasdaq First North since 12 June 2007.In 2011, Misen Energy AB (publ) acquired Misen Enterprises AB and its Ukrainian subsidiary, LLC Karpatygaz, including the rights to 50.01% of the revenue and profit from a gas production project in Ukraine. Under IFRS rules, this transaction is classified as a reverse takeover. In consideration of the acquisition, a new share issue was carried out. The gas producing assets were acquired by production cooperation via a joint activity project governed by a Joint Activity Agreement between at that time the wholly-owned direct and indirect subsidiaries of Misen Energy AB (publ), i.e. Misen Enterprises AB and LLC Karpatygaz (together 50.01%) and PJSC Ukrgasvydobuvannya (49.99%), a subsidiary of the National Joint Stock Company Naftogaz of Ukraine. PJSC Ukrgasvydobuvannya is the largest producer of natural gas in Ukraine. The purpose of the Joint Activity Agreement is to significantly increase production of gas and oil by providing modern technologies via a large-scale investment program for the purposes of attainment of profits.
In June 2016 and in July 2017 Misen Energy AB (publ) sold respectively 37.5% and 10% of Misen Enterprises AB shares to the Hong Kong based company Powerful United Limited. In March 2018, Misen Energy AB (publ) sold 2% of Misen Enterprises AB shares to Mr. Konstantin Guenevski. Owning (the remaining) 50.5% of Misen Enterprises AB shares, Misen Energy AB (publ) maintains full control of the company and preserves a right to obtain 50.5% of the future dividends from the operations in Ukraine.
The registered office of Misen Energy AB (publ) is in Stockholm and the shares are traded on First North under identification ticker MISE. The Certified Adviser of the company at Nasdaq First North is Erik Penser Bank AB.
For further information, please visit our website www.misenenergy.se.

This information is information that Misen 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 above, at 14:45 CET on 5 April 2018.