Results for the 15 month period ended 31 Dec 2021

RNS Number : 6765G

Mast Energy Developments PLC

31 March 2022

 

Mast Energy Developments PLC

(Incorporated in England and Wales)

(Registration Number: 12886458)

Share code on the LSE: MAST

ISIN: GB00BMBSCV12

("MED" or "the Company")

Results for the fifteen-month period ended 31 December 2021

Dated 31 March 2022

MAST Energy Developments PLC ('MAST' or the 'Company') (LSE: MAST), the LSE listed and UK-based multi-asset operator in the rapidly growing Reserve Power market, is pleased to announce its audited results for the fifteen-months ended 31 December 2021. A condensed set of financial statements accompanies this announcement below while the Company's full Annual Report and Financial Statements can be found at the following link on the Company's website https://med.energy/wp-content/uploads/2022/03/ANNUAL_REPORT_AND_FINANCIAL_STATEMENTS FOR_THE_15_FIFTEEN_MONTH_PERIOD_ENDED_31_DECEMBER_2021.pdf

The Company's Notice of Annual General Meeting will be announced separately in due course.

MAST Energy Developments PLC acquired the entire issued share capital of Sloane Developments Limited (the Sloane Sub-Group) with effect from 14 September 2020. Due to the relative size of the acquired operations of the Sloane Sub-Group the acquisition is seen as a capital re-organisation for financial reporting purposes.

The acquisition has been recognised utilising the common control accounting principles under the predecessor valuation method, which requires the financial information of the acquired Sloane Sub-Group to be disclosed for comparative purposes as MAST Energy Developments plc has no historic trading activities.

Further information relating to the accounting treatment of the Sloane SubGroup acquisition is included under the notes to the financial results.

Overview of key events during the period up to the date of this report

· Successful IPO and funding of £5.54 million raised in April 2021
 

· Acquisition of two reserve power project during period comprising the 9 MW Pybridge operating site and the 4.4 MW Rochdale shovel-ready site
 

· 5 MW Bordesley Project is in the construction phase and has secured a capacity market contract at a commercially attractive price of at a price of £30.59 / Kw/year for 15 years

· Debt funding terms agreed in October 2021 with merchant bank, Close Brothers for financing of Bordesley and Rochdale developments

· Three gas peaker plant pipeline projects, totalling 29 MW, at an advanced stage of acquisition and Company hopes to be able to make announcements on these shortly

This announcement contains inside information for the purposes of the UK version of the Market Abuse Regulation (EU No. 596/2014) as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR"). Upon the publication of this announcement, this inside information is now considered to be in the public domain.

ENDS

For further information please visit www.med.energy   or contact:

Louis Coetzee	info@med .energy	Mast Energy Developments plc	Non-Executive Chairman
Jonathan Critchley & Keith Swann	[phone]	Clear Capital Markets	Joint Broker
Chris Hardie & Sarah   Mather	[phone]	WH Ireland Limited	Joint Broker

 

DIRECTORS, OFFICERS AND PROFESSIONAL ADVISERS

BOARD OF DIRECTORS:       Louis Lodewyk Coetzee (Non-executive Chairman) 

                                                                                     Paulus Fillippus ('Paul') Venter (Chief Executive Officer)                                                                                       
                                                                                      Dominic Traynor (Non-Executive Director) 

REGISTERED OFFICE AND BUSINESS                    Salisbury House

ADDRESS:                                                                   London Wall

           London

                                                                                      EC2M 5PS

COMPANY SECRETARY:                                              Noel Flannan O'Keeffe

                                                                                       Salisbury House

      London Wall

                                                                                        London

                                                                                         EC2M 5PS

AUDITORS:           Crowe U.K. LLP

    55 Ludgate Hill

      London

                                                                                        EC4M 7JW

JOINT BROKERS:    Clear Capital Markets Limited 

     12th Floor

       Broadgate Tower - Office 1213

                 20 Primrose Street

      London

     EC2A 2EW

   WH Ireland Limited

        24 Martin Lane

       London

    EC4R 0DR

REGISTRAR:    Link Group

                                                                                           Unit 10

       Central Square

    29 Wellington Street

        Leeds

       LS1 4DL

SOLICITORS:                                                                       Druces LLP

                                                                                             Salisbury House

    London Wall

    London

    EC2M 5PS

PRINCIPLE BANKERS:                                                      Hellenic Bank

    Limassol International Business Centre 

      131 Arch Makarios III Avenue & Ioanni Polemi Str.

    3021 Limassol

    Cyprus

 

CHAIRMANS REPORT

I am pleased to present our first Annual Report and audited financial statements for the 15 months to 31 December 2021. This period covers the incorporation of the Company in September 2020 through to the Company's IPO and Listing on the LSE on 14 April 2021 ('the Listing') and business developments since the Listing.  As you know we raised £5.54 million through a placing of 47,150,000 Ordinary Shares (representing 25% of the Company's issued share capital on Admission) at 12.5 pence each to  retail investors to fund our aggressive expansion plans in the UK Reserve Energy market.

The Company's main activities during the last quarter of 2020 and the first quarter of 2021 covered the preparatory work for the Listing and comprised corporate structuring of MAST and its subsidiaries (together the 'Group'), negotiating agreements for the acquisition of reserve energy sites, marketing to investors and prospectus preparation, leading to our successful Listing in April 2021. Since then, we have continued to follow the business strategy articulated in the listing prospectus with the goal of becoming a leading reserve power provider in the UK electricity market. This will be achieved by sourcing, evaluating, and acquiring a portfolio of reserve energy sites and operating plants with a target of 300 MW production within 3 years of Listing. I am pleased to report that we are still working to this target and I refer you to the Operations section of our CEO Report below for the latest developments.

The UK electricity market has experienced some fundamental changes over the last few years, principally because of the increasing percentage of renewable sources, particularly wind, in the generating mix. This is having a disruptive impact on all aspects of the electricity markets from producers through transmission to distributors and consumers. New business opportunities are emerging from this disruption facilitated by the rapid development of new technologies being specifically developed to optimise the efficacy of renewables and low carbon alternatives in the transition from fossil fuels. MAST is quickly establishing itself in this market to meet the growing demand for flexible low emission solutions to support the reliance of the UK grid on renewable sources with the establishment of a portfolio of peaking power and battery storage sites. A key aspect for MAST in the developments of its sites, is the maximisation of revenues through participation in Government approved power balancing and stand-by reserve capacity schemes such as capacity market contracts and route-to-market contracts that optimise revenues from generation.

In addition to our operating and development projects, we have established an experienced technical and financial team drawing from both in-house resources, consultants, and collaboration partners both with MAST and the Kibo Energy Group to source and rapidly conduct due diligence on potential shovel ready and operating sites that meet our investment criteria. This is serving us well as we currently have a number of sites under review of which 3 sites totalling  29 MW are at an advanced stage of acquisition.

On the financial side, we remain well funded for 2022 and the revenues from our first operating site at Pyebridge are  starting to help with our cash-flows. We continue to assess new funding opportunities to support our aggressive acquisition strategy and I am pleased to reflect on the recent securing of terms for debt financing of our Bordesley and Rochdale projects in October  2021 from Close Brothers.

I would also like to draw shareholders' attention to a recent equity research note on the Company published by our joint brokers, WH Ireland on the 14 March 2022 - MAST Energy Developments: Financial model underpinned by floor mechanism; news flow positive. This provides a detailed investment analysis of the Company and the dynamic business environment in which we operate that provides attractive opportunities for value creation.

The Company is taking note of current events in Ukraine and the impact the on-going war is having on energy prices and particularly gas prices. While the depth and duration of the current energy crisis is currently unknown, I am confident that our projects are financially robust to weather any impacts. The UK currently gets less than 5% of its gas from Russia (Source: https://www.bbc.com/news/business-58637094) so the impact will mainly be one of wholesale price increases rather than a shortage of supply and ultimately this will be reflected in increased prices to power producers under existing  and future power purchase agreements. We are also actively looking at battery storage revenue models for some of our pipeline sites where gas will not be required on-site and we hope to able to make some significant announcements on this front shortly.

Finally, I would like to thank our CEO and his management Group for their on-going commitment and work in enabling the Company's strategy. I look forward to continuing to work with them as we build MAST's portfolio of energy projects and explore new opportunities in the dynamic UK electricity market.

Financial summary of the MAST Energy Developments PLC Group

The following information is included to highlight the financial performance of the Group in its inaugural period of operations.

Description		Fifteen (15) months ended 31 December 2021	Twelve (12) months ended 31 December 2020
Revenue		3,245	-
Cost of sales		(34,321)	-
Administrative expenses		(767,151)	(219,821)
Listing and capital raising fees		(352,061)	(161,743)
Project expenditure		(267,981)	(276,000)
Impairment		(300,000)	-
Other income		355,659	-
Finance costs		(46,348)	-
Loss for the period		(1,408,958)	(657,564)

The increase in the loss period-on-period, as disclosed in the table above and in the statement of comprehensive income, is mainly owing to the following reasons:

• Increase in administrative expenses is due to mainly to increased professional, legal, management and consulting services rendered during the current period;

• Increase in listing costs due to the listing being completed on 14 April 2021; and

• Impairment of the Mast Energy Projects Limited's goodwill in the current financial period, following from the acquisition of the non-controlling interest on 14 April 2021. Because the underlying projects previously held by Mast Energy Projects Limited have now been restructured into separate SPV's, controlled directly by the intermediary holding company Sloane Developments Limited, there was no prospective benefit from continued operations of Mast Energy Projects Limited therefore the goodwill was impaired.

There have been no dividends declared or paid during the current financial period (2020: £ Nil).

 

REPONSIBILITY STATEMENT

We confirm to the best of our knowledge:

a)  the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

b)  the Directors' Statement includes a fair review of the information required by the Disclosure and Transparency Rule DTR 4.2.7R (indication of important events during the fifteen months); and

c)  the Directors' Statement includes a fair review of the information required by the Disclosure and Transparency Rule DTR 4.2.8R (disclosure of related party transactions and changes therein); and

d)  this report contains certain forward-looking statements with respect to the operations, performance and financial condition of the Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated.

The forward-looking statements reflect knowledge and information available at the date of preparation of this financial report and the Company undertakes no obligation to update these forward-looking statements.

Nothing in this financial report should be construed as a profit forecast.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Group
		Fifteen months ended 31 December 2021	Twelve months ended 31 December 2020
		Audited	Audited
	Note	£	£
Revenue		3,245	-
Cost of sales		(34,321)	-
Gross loss		(31,076)	-
Administrative expenses		(767,151)	(219,821)
Listing and other corporate fees		(352,061)	(161,743)
Project expenditure		(267,981)	(276,000)
Impairment		(300,000)	-
Operating loss		(1,718,269)	(657,564)
Other income		355,659	-
Finance costs		(46,348)	-
Loss before tax		(1,408,958)	(657,564)
Taxation		-	-
Loss for the period		(1,408,958)	(657,564)
Other comprehensive income:
Items that may be classified subsequently to profit or loss:
Exchange differences on translation of foreign operations		-	-
Other Comprehensive loss for the period net of tax		-	-
Total comprehensive loss for the period		(1,408,958)	(657,564)
Loss for the period		(1,408,958)	(657,564)
Attributable to the owners of the parent		(1,312,243)	(502,194)
Attributable to the non-controlling interest		(96,715)	(155,370)
Total comprehensive loss for the period		(1,408,958)	(657,564)
Attributable to the owners of the parent		(1,312,243)	(502,194)
Attributable to the non-controlling interest		(96,715)	(155,370)
Loss Per Share
Basic loss per share(pence)		(0.80)	(0.48)
Diluted loss per share(pence)		(0.80)	(0.48)

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021

				Group
				31 December 2021	31 December 2020
				Audited	Audited
			Note	£	£
Assets
Non‑Current Assets
Property, plant and equipment				2,897,909	-
Intangible assets				2,745,273	2,595,000
Goodwill				-	300,000
Total non-current assets				5,643,182	2,895,000
Current Assets
Other receivables				181,845	-
Cash and cash equivalents				1,805,461	204
Total current assets				1,987,306	204
Total Assets				7,630,488	2,895,204
Equity and Liabilities
Equity
Called up share capital				188,717	104,497
Share premium account				11,682,343	2,511,432
Common control reserve				383,048	383,048
Non-controlling interest acquired				(4,065,586)	-.
Retained deficit				(4,338,778)	(2,999,449)
Attributable to equity holders of the parent				3,849,744	(472)
Non-controlling interest  18				-	(273,560)
Total Equity				3,849,744	(274,032)
Liabilities
Non-current Liabilities
Lease liability				289,045	-
Total Current Liabilities				289,045	-
Current Liabilities
Loans from related parties				2,269,035	2,698,730
Trade and other payables				259,505	14,506
Other financial liability				960,686	456,000
Lease liability				2,473	-
Total Current Liabilities				3,491,699	3,169,236
Total Liabilities				3,780,744	3,169,236
Total Equity and Liabilities				7,630,488	2,895,204

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Share Capital	Share Premium	Common Control Reserve	Capital Contribution Reserve	Non-controlling interest acquired	Retained deficit	Minority interest	Total
	£	£	£	£	£		£	£
Balance at 31 December 2019	104,497	627,470	-	2,540,871	-	(2,497,255)	(118,190)	657,393
Total comprehensive loss for the period up to 14 September 2021	-	-	-	-	-	(221,250)	(93,125)	(314,375)
Settled deferred vendor acquisition	-	-	-	(421,472)	-	-	-	(421,472)
Capital contribution	-	-	-	57,013	-	-	-	57,013
Capital re-organisation	-	1,883,962	383,048	(2,176,412)	-	-	-	90,598
Total comprehensive loss for the period after 14 September 2021	-	-	-	-	-	(280,944)	(62,245)	(343,189)
Balance at 31 December 2020	104,497	2,511,432	383,048	-	-	(2,999,449)	(273,560)	(274,032)
Total comprehensive loss for the period	-	-	-	-	-	(1,031,299)	(34,470)	(1,065,769)
Shares issued on listing	44,320	4,972,515	-	-	-	-	-	5,016,835
Expenditure settled in shares	2,983	169,727	-	-	-	-	-	172,710
Acquisition of non-controlling interest	36,917	4,028,669	-	-	(4,065,586)	(308,030)	308,030	-
Balance at 31 December 2021	188,717	11,682,343	383,048	-	(4,065,586)	(4,338,778)	-	3,849,744

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

		Group
		Fifteen months ended 31 December 2021	Twelve months ended 31 December 2020
		Audited	Audited
		£	£
Cash flows from operating activities
Loss for the period before taxation		(1,408,958)	(657,564)
Loss for the period from incorporation to 31 December 2020		343,189
Loss for the period before taxation		(1,065,769)	(657,564)
Adjustments for non-cash items:
Non-cash interest accrued		21,623	-
Depreciation		9,793	-
Impairment of goodwill		300,000	-
Loan waiver - other income		(355,397)	-
Cost settled through the issue of shares		172,710	-
Other non-cash items		94,192	-
		(822,848)	(657,564)
Movement in working capital
Decrease/(Increase) in debtors		(181,845)	3,843
Increase/(Decrease) in creditors		244,999	-
		63,154	3,843
Net cash outflows from operating activities		(759,694)	(653,721)
Cash flows from investing activities
Property, plant and equipment acquired		(1,654,239)	-
Intangible assets acquired		(150,271)	-
Net cash flows from investing activities		(1,804,510)	-
Cash flows from financing activities
Proceeds of issue of share capital		5,016,835	-
Lease liability repaid		(2,275)	-
Other financial liabilities repaid		(121,210)	-
Loans from related parties (repaid)/received		(523,889)	653,667
Net cash flows financing activities		4,369,461	653,667
Net increase/(decrease) in cash and cash equivalents		1,805,257	(54)
Cash and cash equivalents at beginning of period		204	258
Cash and cash equivalents at end of the period		1,805,461	204

 

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED 30 JUNE 2021

Note 1: General information

MAST Energy Developments PLC ('MAST' or 'MED' or the 'Company') is incorporated in England & Wales as a public limited company. The Company's registered office is located at 55 Ludgate Hill, London, United Kingdom, EC4M 7JW.

The principal activity of MAST, through its subsidiaries (together the 'Group'), is to acquire and develop a portfolio of flexible power plants in the UK and become a multi-asset operator in the rapidly growing Reserve Power market.

The Group has acquired its first site which will comprise a 5MW gas-fuelled power generation plant supported by a Grid Connection Offer and a Gas Connection Offer.  The second Site acquired has immediate phased in approach to operate the engines on load with 24/7 availability (subject to planned maintenance) to be synchronous with the terms of the power off-take agreement, and be installed as operational in steady state status.

The third site acquired has planning consent with the capability to be developed as a Reserve Power Gas Reciprocating facility, a hybrid Reserve Power ("RP") and battery site or preferably as a long duration battery storage site due to its unique location with access to both District Network Operator ("DNO") and Private Wire.

Note 2: Statement of Preparation

The condensed consolidated financial statements are prepared on the historical cost basis, unless otherwise stated. The Group's accounting policies used in the preparation of these financial statements are consistent with those used in the annual financial statements for the year ended 31 December 2020 of the ultimate holding Company, except for the adoption of new or amended standards applicable from 1 January 2021, which had no material impact on the financial statements of the Group.

The condensed consolidated financial statements of the Company have been prepared in compliance with the framework concepts and the measurement and recognition requirements of IAS 34, IFRS as issued by the International Accounting Standards Board.

The condensed consolidated financial statements of the Group is presented in Pounds Sterling, which is the functional and presentation currency for the Group and its related subsidiaries.

The condensed consolidated financial statements do not represent statutory accounts within the meaning of section 435 of the Companies Act 2016.

The condensed consolidated financial statements have not been audited or reviewed by the Group's auditors, thus no assurance is provided therein.

The Directors acknowledge they are responsible for the fair presentation of these condensed consolidated financial statements.

Note 3: Consolidation

On 14 September 2020, the Company became the legal parent of Sloane Developments Limited following completion of the Acquisition. The comparative results for the year ended 31 December 2020 represent the consolidated position of Sloane Developments Limited and its Subsidiaries (the Sloane SubGroup) prior to the Acquisition.

The Acquisition of the Sloane SubGroup by MAST Energy Developments PLC is deemed to be outside the scope of IFRS 3 and not considered a business combination as the Acquisition is seen as a common control transaction, following from the fact that Kibo Energy PLC continues to retain control over the Sloane SubGroup subsequent to the disposal of the Sloane SubGroup to MAST Energy Developments PLC.

On this basis, the Directors have developed an accounting policy for the Acquisition, applying the principles set out in IAS 8.10-12, in that the policy adopted is:

· relevant to the users of the financial information;

· more representative of the financial position, performance and cash flows of the Group;

· reflects the economic substance of the transaction, not merely the legal form; and

· free from bias, prudent and complete in all material aspects.

As MAST Energy Developments PLC is only an investment holding company, incorporated for the purposes of raising capital funding for its investee projects, and the majority shareholder before and after the Acquisition continue to be Kibo Energy PLC, the transaction is considered to be a common control transaction, outside the scope of IFRS 3, seen as a capital reorganisation, where predecessor valuation accounting was applied with regard to the incorporation of historic financial information.

Accordingly, the following accounting treatment and terminology has been applied in respect of the acquisition:

· the assets and liabilities of the legal subsidiary the Sloane SubGroup are recognised and measured in the Group financial statements at the pre-combination carrying amounts, without reinstatement to fair value;

· the retained earnings recognised in the Group financial statements reflect the retained earnings of the Sloane SubGroup immediately before the Acquisition, being 17 September 2020, are those of the Sloane SubGroup.

· However, the equity structure appearing in the Group financial statements reflects the equity structure of the legal parent (MAST Energy Developments PLC), including the equity instruments issued under the share for share exchange to effect the Acquisition.

· Comparative financial results include are those of Sloane Developments Limited and its Subsidiaries for the 12 month period ended 31 December 2020, as these results are considered the most comparable in nature to the operations of MAST Energy Developments PLC post acquisition.

Note 4: Going concern

The financial results have been prepared on the going concern basis which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the normal course of business.

In performing the going concern assessment, the Board considered various factors, including the availability of cash and cash equivalents; data relating to working capital requirements for the foreseeable future; cash-flows from operational commencement, available information about the future, the possible outcomes of planned events, changes in future conditions, the current global economic situation due to the Covid-19 pandemic and Ukraine conflict and the responses to such events and conditions that would be available to the Board.

The Board has, inter alia, considered the following specific factors in determining whether the Group is a going concern:

· The total comprehensive loss for the fifteen-month financial period of £1,408,958 compared to £657,564 for the preceding 12 month-financial period;

· Cash and cash equivalents readily available to the Group in the amount of £1,805,461 in order to pay its creditors and maturing liabilities in the amount of £3,491,699 as and when they fall due and meet its operating costs for the ensuing twelve months; and

· Whether the Group has available cash resources, or equivalent short term funding opportunities in the foreseeable future, to deploy in developing and growing existing operations or invest in new opportunities.

Following from the losses incurred in the current financial period, coupled with the net current liability position the Group finds itself in as at December 2021, these conditions, together with those mentioned above are considered to indicate that a material uncertainty exists which may cast significant doubt on the Groups ability to continue as a going concern.

This is largely attributable to its short-term liquidity position the Group finds itself in as a result of the staggered implementation approach with regard to the underlying operations, to a point where they can positively contribute to the cash requirements of the larger Group.

The Directors have evaluated the Groups liquidity requirements to confirm whether the Group has adequate cash resources to continue as a going concern for the foreseeable future, taking into account the net current liability position, and consequently prepared a cash flow forecast covering a period of 12 months from the date of these financial statements, concluding that the Group would be able to continue its operations as a as a going concern.

In response to the net current liability position, to address future cash flow requirements, detailed liquidity improvement initiatives have been identified and are being pursued, with their implementation regularly monitored in order to ensure the Group is able to alleviate the liquidity constraints in the foreseeable future.

Therefore, the ability of the Group to continue as a going concern is dependent on the successful implementation or conclusion of the below noted matters in order to address the liquidity risk the Group faces on an ongoing basis;

· Successful conclusion of funding requirements of the Group in order to complete construction of the remaining sites by the Group;

· Successful commissioning of the remaining power generation facilities in order to achieve net-cash positive contributions toward the larger Group; and

· Successful negotiations with Kibo Mining (Cyprus) Limited relating to the potential deferral of loans payable in the foreseeable future beyond a 12 month period after year end.

As the Board is confident it would be able to successfully implement the above matters, it has adopted the going concern basis of accounting in preparing the consolidated financial statements.

Note 5: Segmental Reporting

The Group discloses segmental analysis based on its different operations, being Bordesley, Rochdale and Pyebridge.

	Bordesley 31 December 2021 (£)	Rochdale 31 December  2021 (£)	Pyebridge 31 December 2021 (£)	Treasury and Investment 31 December 2021(£)	Group 31 December  2021 (£)
Revenue	-	-	3,245	-	3,245
Cost of sales	-	-	(34,321)	-	(34,321)
Impairment	-	-	-	(300,000)	(300,000)
Depreciation	(9,793)	-	-	-	(9,793)
Loss before tax	65,821	(15,906)	(88,527)	(1,370,346)	(1,408,958)
Total assets	3,087,261	261,454	2,491,666	1,790,107	7,630,488
Total liabilities	(107,542)	(5,570)	(50,240)	(3,617,410)	(3,780,762)

	Bordesley 31 December 2020 (£)	Rochdale 31 December  2020 (£)	Pyebridge 31 December 2020 (£)	Treasury and Investment 31 December 2020(£)	Group 31 December  2020 (£)
Loss before tax	(276,000)	-	-	(381,564)	(657,564)
Total assets	2,895,000	-	-	204	2,895,204
Total liabilities	(149,700)	-	-	(3,019,536)	(3,169,236)

As the Group currently operates solely from the United Kingdom, consequently there is no segmented disclosure with regard to different geographic areas of operation.

Note 6: Loss per share

Basic loss per share

The basic loss and weighted average number of ordinary shares used for calculation purposes comprise the following:

Basic loss per share		31 December 2021 (£)	31 December 2020 (£)
Loss for the period attributable to equity holders of the parent		(1,312,243)	(502,194)
Weighted average number of ordinary shares for the purposes of basic loss per share		164,622,838	104,496,960
Basic loss per ordinary share (pence)		(0.80)	(0.48)

The Group has no dilutive instruments in issue as at year end.

Note 7: Property, plant and equipment

Group Land Plant & Machinery Right of use assets Total Cost (£) (£) (£) (£) Opening Cost as at 1 January 2020 - - - - Additions 602,500 2,011,409 293,793 2,907,702 Closing Cost as at 31 December 2021 602,500 2,011,409 293,793 2,907,702 Land Plant & Machinery Right of use assets Total Accumulated Depreciation ("Acc Depr") (£) (£) (£) (£) Opening  Acc Depr as at 1 January 2020  - - - - Depreciation - - (9,793) (9,793) Acc Depr as at 31 December 2021 - - (9,793) (9,793) Land Plant & Machinery Right of use assets Total Carrying Value (£) (£) (£) (£) Carrying value as at 31 December 2021 602,500 2,011,409 284,000 2,897,909

The Group has one lease contract for land it shall utilise to construction a 5MW gas-fuelled power generation plant. The land is located at Bordesley, Liverpool St. Birmingham.

The lease of the land has a lease term of 20 years, with an option to extend for 10 years which the Group has opted to include due to the highly likely nature of extension as at the time of the original assessment.

The Group's obligations under its leases are secured by the lessor's title to the leased assets. The Group's incremental borrowing is 8.44%.

Note 8: Intangible assets

Intangible assets consist of separately identifiable assets or intellectual property (Bordesley Power) acquired either through business combinations or through separate asset acquisitions. These intangible assets are recognised at the respective fair values of the underlying asset acquired, or where the fair value of the underlying asset acquired is not readily available, the fair value of the consideration.

The following reconciliation serves to summarise the composition of intangible assets as at period end:

Group	Rochdale Power (£)	Bordesley Power (£)	Total (£)
Carrying value as at  1 January 2020	-	-	-
Acquisition of Bordersley Power Ltd	-	2,595,000	2,595,000
Carrying value as at 1 January 2021	-	2,595,000	2,595,000
Acquisition of Rochdale Power Ltd	150,273	-	150,273
Carrying value as at 31 December 2021	150,273	2,595,000	2,745,273

Sloane Developments Limited (Sloane) initially acquired a direct 100% equity interest in shovel-ready reserve power generation project, Bordesley, which will comprise a 5MW gas-fuelled power generation plant for the consideration of £175,000 settled through the issue of shares.

Thereafter, Sloane acquired all of St. Anderton on Vaal's direct and indirect interests (Royalty Agreements) in the Bordesley power project described above giving it a 100% economic and 100% equity interest in Bordesley (the 'Acquisition').  Consideration for the Acquisition consists of the allotment and issue of 46,067,206 ordinary shares in the capital of Kibo Energy plc (Kibo) to St' Anderton at an issue price of £0.0525 per share and payable in five tranches ('Consideration Shares') such that the full consideration is only payable in the event that Bordesley is progressively derisked.

The issue price of the Consideration Shares and the associated number to be issued to St' Anderton was determined by using the methodology set out in the original MED vendor agreement as guidance, and was calculated as c. 2,420,000 comprising:

· 100% of the net present value of the Project Royalties (being the royalty equal to 5% of the gross revenue less gas and trading costs) amounting to c. 370,000; and

· 40% of the net present value of the Project Revenue (being net profit before tax) flowing to St' Anderton from Bordesley through MED amounting to c. 2,050,000.

 

Note 9: Acquisition of interests in other entities

Bordersley Power Ltd - 2019

MAST Energy PLC initially acquired an indirect 100% equity interest in shovel-ready reserve power generation project, Bordesley, which will comprise a 5MW gas-fuelled power generation plant for the consideration of £175,000 settled through the issue of shares.

Thereafter,  MAST acquired all of St' Anderton's direct and indirect interests (Royalty Agreements) in the Bordesley power project described above giving it a 100% economic and 100% equity interest in Bordesley (the 'Acquisition').  Consideration for the Acquisition consists of the allotment and issue of 46,067,206 ordinary shares in the capital of MAST to St' Anderton at an issue price of £0.0525 per share and payable in five tranches ('Consideration Shares') such that the full consideration is only payable in the event that Bordesley is progressively derisked.

As there were no separately identifiable assets and/or liabilities acquired, the purchase price was allocated toward the Intellectual Property acquired, in the amount of £2,595,000.

Pyebridge Power Ltd - 2021

Sloane Developments (Sloane) acquired a 100% equity interest in Pyebridge Power Limited ("Pyebridge") for £2,500,000 in cash which is settled as follows:

· An initial £1,485,500 to be paid in cash at completion date on the 10th of August 2021;

· Repayment of the loan outstanding of £14,500 by Sloane to Pyebridge;

· Deferred consideration of £1,000,000 to be paid in two tranches 8 months and 12 months respectively from the date of completion.

The acquisition of PyeBridge comprise of the following:

·  An installed and commissioned synchronous gas-powered standby generation facility; and

· The land on which the gas-powered facility stands. 

The acquisition of land and gas-powered generation facility will be accounted for as assets purchased at  consolidated level, and not as a business combination in accordance with IFRS 3. Therefore the purchase price has been allocated between land and the PPE based on their respective fair values as at the date of acquisition, as disclosed in Note 8.

Rochdale Power Ltd - 2021

Sloane Developments (Sloane) acquired a 100% interest in Rochdale Power Limited ("Rochdale"), from Balance Power Projects Limited, for the installation of a 4.4 MW flexible gas power project in Dig Gate Lane, Rochdale, OL 16 4NR.The acquisition purchase price totals £239,523 of which the freehold site amounts to £90,750 excluding VAT and the property rights amount to £150,273. The acquisition purchase price is to be paid in cash. The freehold site purchased is the property at Dig Gate Lane, Kingsway Business Park, Rochdale, OL16 4NR.

The acquisition of land and gas-powered generation facility will be accounted for as assets purchased at  consolidated level, and not as a business combination in accordance with IFRS 3. Therefore the purchase price has been allocated to the property, plant and equipment and intangible assets, as disclosed in Note 8 and Note 10 respectively.

 

Note 10: Share Capital

The called-up and fully paid share capital of the Company is as follows:

			2021		2020
Allotted, issued and fully paid shares
(2021: 188,717,097 Ordinary shares of £0.001 each)			£188,717		-
(2020: 104,496,950 Ordinary shares of £0.001 each)			-		£104,497
			£188,717		£104,497
	Number of Shares	Ordinary Share Capital (£)		Share Premium (£)
Balance at 31 December 2020	104,496,960	104,497		2,511,432
Shares issued on listing	44,320,000	44,320		4,972,515
Expenditure settled in shares	2,983,061	2,983		169,727
Acquisition of Non-controlling interest	36,917,076	36,917		4,028,669
Balance at 31 December 2021	188,717,097	188,717		11,682,343

All ordinary shares issued have the right to vote, right to receive dividends, a copy of the annual report, and the right to transfer ownership of their shares.

During the year the Company issues shares as settlement of professional expenses in the amount of £172,710.

Note 11: Reserves

Common control reserve

On 17 September 2020, the Company became the legal parent of Sloane Developments Limited following completion of the acquisition of the entire issued share capital of Sloane Developments Limited, from Kibo Mining Cyprus Limited, a wholly owned subsidiary of Kibo Energy PLC. Following the completion of the acquisition, the ultimate holding Company, being Kibo Energy PLC, retained control over Sloane Developments Limited.

As MED is only an investment holding company, incorporated for the purposes of raising capital funding for its investee projects, and the majority shareholder before and after the Acquisition continue to be Kibo Energy PLC, the transaction is considered to be a common control transaction, outside the scope of IFRS 3, seen as a capital reorganisation, where predecessor valuation accounting was applied with regard to the incorporation of historic financial information.  

The common control reserve is the result of the predecessor valuation accounting which was applied as a result of the common control transaction.

Non-controlling interest acquired

On 31 July 2020, the Sloane Developments Limited,  MAST Energy Projects Limited and St. Anderton on Vaal Limited entered into the Share Exchange Agreement relating to the acquisition by Sloane Developments Limited of the remaining 40% of the issued share capital of MAST Energy Projects Limited. Under the Share Exchange Agreement, the Company will pay St Anderton on Vaal Limited the sum of £4,065,586 payable by the issue of 36,917,076 ordinary shares of £0.001 each in the Company. Completion of the Share Exchange Agreement was subject to and conditional upon the Admission of Mast Energy Developments Limited to the London Stock Exchange.

Following completion of the IPO on 14 April 2021, the Group acquired the remaining equity interest in MAST Energy Projects Ltd for the consideration equal to 36,917,076 shares at a total value of £4,065,586.

As the controlling stake in the entity had already been acquired, the transaction was seen as a transaction with owners, and the financial impact recognised directly in equity of £4,065,586.

The rationale for the transaction was to acquire the remaining equity within MAST Energy Projects Limited in order to have the exclusive see-through equity interest in the Bordesley project, held in the form of royalty and revenue agreements between MAST Energy Projects Limited and Bordesley Power Limited, from which MED could restructure the Group through its SPV's.

Note 12: Loan from related parties

	Group 2021 (£)	Group 2020 (£)
Amounts falling due within one year:
Kibo Mining (Cyprus) Limited	2,269,035	2,698,730
	2,269,035	2,698,730

The loan is unsecured, carries interest at 0%, and is repayable on demand. The carrying value of loans from related parties equals their fair value due mainly to the short term nature of the liability.

Note 13: Other financial liabilities

	Group 2021 (£)	Group 2020 (£)
Amounts falling due within one year:
Short term loans	-	456,000
Deferred vendor liability	960,686	-
	960,686	456,000

Deferred vendor liability

The amount due to vendors represents the balance of the purchase consideration owing in respect of the acquisition of Pyebridge Power Limited. The liability will be settled in cash as follows:

· £500,000 payable within 8 months after the signing of the SPA represents: and

· £500,000 payable within 12 months after the signing of the SPA represents.

The fair value of the deferred vendor liability is based on the anticipated purchase consideration payable, at the fair value thereof on the date of the transaction. The carrying value of current other financial liability equals their fair value due mainly to the short-term nature of these payables.

Short term loans

Short term loans relate to the unsecured interest free loan facility from Sanderson Capital Partners Limited which is repayable either through the issue of ordinary shares or payment of cash by the Company.

 

Note 14: Related Parties

Related parties of the Group comprise subsidiaries, significant shareholders and the Directors.

Relationships

Board of Directors/ Key Management

Name	Relationship (Directors of:)
Paul Venter	St Anderton on Vaal Limited
Louis Coetzee	Kibo Energy PLC and Katoro Gold PLC
Dominic Traynor	Druces LLP

Other entities over which Directors/key management or their close family have control or significant influence:

St Anderton on Vaal Limited: Kibo Energy PLC: Ultimate shareholder:	St Anderton on Vaal Limited provides consulting services to the Group. The Directors of St Anderton on Vaal Limited are also Directors of Mast Energy Developments PLC. Kibo Energy PLC is the controlling shareholder of Mast Energy Developments PLC. Kibo Energy PLC
Significant shareholders: Associated by fellow directorship:	St Anderton on Vaal Limited Kibo Mining (Cyprus) Limited Katoro Gold PLC

MAST Energy Developments PLC is a shareholder of the following companies and as such are considered related parties:

Directly held subsidiaries:    Sloane Developments Limited

  MAST Energy Projects Limited

 Bordesley Power Limited

Pyebridge Power Limited

Rochdale Power Limited

Balances and transactions

Name	Amount (£) 2021	Amount (£) 2020
Kibo Energy PLC - Loan from related parties owing	2,269,035	2,698,730
St Anderton on Vaal Limited - Consulting services	161,000	456,000
Kibo Energy PLC - Management and administration services	87,000	174,000
St Anderton on Vaal Limited - Purchase of Non-Controlling interest	4,065,586	-

St Anderton on Vaal Limited was paid £169,603 (2020: £Nil) during the year for the settlement of the amounts owing by MAST Energy Projects Limited for consulting services rendered, which resulted in an other income on the debt write-off of £355,397.

 

On 31 July 2020, the Sloane Developments Limited, Mast Energy Projects Limited and St. Anderton on Vaal Limited entered into the Share Exchange Agreement relating to the acquisition by Sloane Developments Limited of the remaining 40% of the issued share capital of Mast Energy Projects Limited. Under the Share Exchange Agreement, the Company will pay St Anderton on Vaal Limited the sum of £4,065,586 payable by the issue of 36,917,076 ordinary shares of £0.001 each in the Company. Completion of the Share Exchange Agreement was subject to and conditional upon the Admission of Mast Energy Developments Limited to the London Stock Exchange. Following completion of the IPO on 14 April 2021, the Group acquired the remaining equity interest in Mast Energy Projects Ltd for the consideration equal to 36,917,076 shares at a total value of £4,065,586.

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. The transactions during the period between the Company and its subsidiaries included the settlement of expenditure to/from subsidiaries, working capital funding, and settlement of the Company's liabilities through the issue of equity in subsidiaries. The loans from related parties do not have fixed repayment terms and are unsecured.

Note 15: Subsequent events

As at the date of this report, no significant post statement of financial position events or conditions were identified which required further disclosure or adjustment to the financial results.

Note 16: Commitments and contingencies

The Group does not have identifiable material commitments and contingencies as at the reporting date.

Note 17: Principal risks

The realisation of the various projects is dependent on the successful completion of technical assessments, project development and project implementation and is subject to a number of significant potential risks summarised as follows, and described further below:

• Funding risk;

• Regulatory risk;

• Commodity risk;

• Development and construction risk;

• Staffing and key personnel risk; and

• Information technology risk.

Funding risk

Following the successful conclusion of an Initial Public Offering ("IPO") on 14 April 2021, the Group was able to raise £5.54 million in cash resources which has been utilised to further advance the various projects of the Group for the period to date.

There can be no assurance that such funds will continue to be available on reasonable terms, or at all in future, and that projects will be completed within the anticipated timeframes to supplement cashflows through operational activities.

The Group generated revenue of £3,245 for the period ended 31 December 2021 and had net assets of £3,849,744 as at 31 December 2021 (31 December 2020: (£274,032)). As at the year end, the Group had liquid assets in the form of cash and cash equivalent and other receivables of £1,805,461 (31 December 2020: £204) and £181,845 (31 December 2020: £-) respectively.

The Directors have reviewed budgets, projected cash flows and other relevant information, and on the basis of this review and the rationale set-out below, they are confident that the Group will have adequate financial resources to continue in operational existence for the foreseeable future. 

The Group has sufficient funds for its present working capital requirements for the foreseeable future due to the successful initial public offering and capital raising completed during the year.

The Directors continue to review the Group's options to secure additional funding for its general working capital requirements as well as project financing for commercial production ready sites, alongside its ongoing review of revenue generation from existing operations, potential acquisition targets and corporate development needs. 

The Directors are confident in this light that such funding will be available, although there is no guarantee as to the terms of such funding. In addition, any equity funding may be subject to shareholder approvals in line with legal and regulatory requirements as appropriate.

As a result, the Directors continue to monitor and manage the Group's cash and overheads carefully in the best interests of its shareholders and believe that the Company and the Group will remain a going concern for the foreseeable future.

Regulatory risk

The United Kingdom ("UK") power sector has undergone a number of considerable regulatory changes over the last few years and is now at a state of transition from large fossil-fuel plants to a more diverse range of power generation sources including renewables, small distributed plants and new nuclear. As a result, there is greater regulatory involvement in the structure of the UK power marker than has been the case over the last 20 years. Therefore, there remains a risk that future interventions by Ofgem or Government could have an adverse impact on the underlying assets that the Group manages and/or owns.

Commodity Risk

The assets that the Group manages and owns will receive revenue from the sale of energy onto the wholesale market or to end users at a price linked to the wholesale power market price. Fluctuations in power prices going forward will affect the profitability of the underlying reserve power assets. The Group will also use its skills, capabilities and knowledge of the UK power market in order to optimise these wholesale revenues. The Group's ability to effectively manage price risk and maximise profitability through trading and risk management techniques will have a considerable impact on the revenues and returns.

Development and Construction Risk

The Group will continue to develop new project sites which includes obtaining planning permission, securing land (under option to lease or freehold), and obtaining gas and grid connections. The Group will also oversee the construction of these projects where needed.

Risks to project delivery include damage or disruption to suppliers or to relevant manufacturing or distribution capabilities due to weather, natural disaster, fire, pandemic, strikes, or other reasons could impair our ability to deliver projects on time.

Failure to take adequate steps to mitigate the likelihood or potential impact of development and construction setbacks, or to effectively manage such events if they occur, could adversely affect our business or financial results. There are inherent risks that the Group may not ultimately be successful in achieving the full development and construction of every site and sunk costs could be lost. However, the risk is mitigated as the Group targets shovel ready sites that adhere to specific requirements, coupled with experienced senior management team.

Staffing and Key Personnel Risks

Personnel are our only truly sustainable source of competitive advantage and competition for key skills is intense, especially around science, technology, engineering and mathematics (STEM) disciplines. While the Group has good relations with its employees, these relations may be impacted by various factors. The Group may not be successful in attracting, retaining, developing, engaging and inspiring the right people with the right skills to achieve our growth ambitions, which is why staff are encouraged to discuss with management matters of interest to the employees and subjects affecting day-to-day operations of the Group.

 

Information Technology Risks

The Group relies on IT in all aspects of its business. Any significant disruption or failure, caused by external factors, denial of service, computer viruses or human error could result in a service interruption, accident or misappropriation of confidential information. Process failure, security breach or other operational difficulties may also lead to revenue loss or increased costs, fines, penalties, or additional insurance requirements. The Group continues to implement more cloud-based systems and processes, and improve cyber security protocols and facilities in order to mitigate the risk of data loss or business interruption.

Note 18: Use of Estimates and Judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.

In particular, there are significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements.

Estimation uncertainty:

Information about estimates and assumptions that may have the most significant effect on recognition and measurement on assets, liabilities and expenses is provided below:

Impairment assessment of non-financial assets

In applying IAS 36, impairment assessments are performed whenever events or changes in circumstances indicate that the carrying amount of an asset or CGU may not be recoverable. Estimates are made in determining the recoverable amount of assets which includes the estimation of cash flows and discount rates used. In estimating the cash flows, management bases cash flow projections on reasonable and supportable assumptions that represent management's best estimate of the range of economic conditions that will exist over the remaining useful life of the assets. The discount rates used reflect the current market assessment of the time value of money and the risks specific to the assets for which the future cash flow estimates have not been adjusted. Refer to Note 11 for detailed sensitivity analysis related to a potential change in the key estimation uncertainties inherent in the impairment assessment.

Useful life of Intangible assets

Amortisation is charged on a systematic basis over the estimated useful lives of the assets after taking into account the estimated residual values of the assets. Useful life is either the period of time over which the asset is expected to be used or the number of production or similar units expected to be obtained from the use of the asset.

Leases - Estimating the incremental borrowing rate

The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the  right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group 'would have to pay', which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease. The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates.

Useful life of Property, plant and Equipment

The depreciable amounts of assets are allocated on a systematic basis over their useful lives. In determining the depreciable amount, management makes assumptions in respect of the residual value of assets based on the expected estimated amount that the entity would currently obtain from disposing the asset, after deducting the estimated costs of disposal. If an asset is expected to be abandoned, the residual value is estimated at nil. In determining the useful lives of assets, management considers the expected period of use of assets, expected physical wear and tear, legal or similar limits of assets such as rights, condition and location of the asset as well as obsolescence.

Decommissioning and Environmental Rehabilitation Provisions

The Company has set-up a decommissioning provision for the removal of the plant and equipment installed at the Bordesley Site in Liverpool St. Birmingham., the cost of which is based on estimates.

Environmental Rehabilitation Provisions

Estimates are made in determining the present liability of environmental rehabilitation provisions consisting of a restoration provision, decommissioning provision and a residual impact provision. Each of these provisions are based on an estimate of closure costs on reporting date, inflation and discount rates relevant to the calculation and the expected date of closure of operating activities in determining the present value of the total environmental rehabilitation liability.

Critical judgements:

Information about critical judgements that may have the most significant effect on recognition and measurement on assets, liabilities and expenses is provided below:

Going Concern

The Groups current liabilities exceed its current assets as at 31 December 2021, mainly due to the loans from related parties in the amount of £2,269,035 which contributes significantly to the material uncertainty related to the going concern assumption applied in preparation of the financial statements. Management applies judgement in determining whether or not the Group is able to continue as a going concern for the foreseeable future, in identifying the matters which give rise to the existence of the material uncertainty, and in developing responses thereto in order to address the risk of material uncertainty.

Note 17: Financial instruments - Fair value and Risk Management

The carrying amount of all financial assets and liabilities approximates the fair value. Directors consider the carrying value of financial instruments of a short-term nature, that mature in 12 months or less, to approximate the fair value of such assets or liability classes.

The carrying values of longer-term assets are considered to approximate their fair value as these instruments bear interest at interest rates appropriate to the risk profile of the asset or liability class.

The Group does not carry any financial instruments measured in the statement of financial position at fair value at 31 December 2021.

 

END

 

 

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