Annual Results for the year ended 31 December 2020
29 June 2021
Edenville Energy Plc
("Edenville" or the "Company")
Annual Results for the year ended 31 December 2020
Edenville Energy Plc (AIM: EDL), the AIM quoted company operating the Rukwa Coal Project in southwest Tanzania ("Rukwa"), announces its audited results for the year ended 31 December 2020.
The Company's Annual Report for the year ended 31 December 2020 (the "Annual Report") will be available on the Company's website at: https://edenville-energy.com/annual-reports/ later today, pursuant to the Company's Articles of Association which allow Edenville to use electronic communications for the posting of the Annual Report.
Notice of the Company's Annual General Meeting will be announced shortly, along with information regarding how shareholders can request a hard copy of the Annual Report.
For further information please contact:
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Edenville Energy Plc Jeff Malaihollo - Chairman Alistair Muir - CEO |
+44 (0) 20 3934 6630 |
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Strand Hanson Limited (Financial and Nominated Adviser) James Harris Rory Murphy Georgia Langoulant
|
+44 (0) 02 7409 3494 |
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Brandon Hill Capital Ltd (Broker) Oliver Stansfield Jonathan Evans
|
+44 (0) 20 7936 5200 |
|
IFC Advisory Limited (Financial PR and IR) Tim Metcalfe Florence Chandler |
+44 (0) 20 3934 6630 |
CHAIRMAN'S STATEMENT
The Covid-19 pandemic dominated 2020 across the globe and unsurprisingly impacted the Company's expected operations at Rukwa. Despite this strong headwind the Company was still able to make progress, albeit not as fast as we would have liked.
During the year the Company took major steps in restructuring the business by signing three related agreements with a strategic partner, designed to address mining, sales and the Company's capital position. We also renegotiated our debts and appointed Nick von Schirnding as an Independent Non-Executive Director. Nick has 25 years of experience in coal mining and natural resources including strategic development, M&A and driving operational change.
Currently the business environment in Tanzania is improving and we are seeing inquiries from former and new customers for our coal again. We believe that as business conditions improve further the Company is well placed to take a major step forward through the adoption of this new operational structure that will ensure Edenville draws revenue from every tonne of washed coal sold.
Post Period
During the first half of 2021, the Company reached an agreement with Lind regarding its outstanding debt and in January and May 2021 we raised an aggregate £3.4 million which enabled us to pay off the full amount outstanding to Lind and move the Company forward in a stronger financial position.
Our existing major shareholders supported us throughout these fund raises, and in addition we have gained new major shareholders including RAB Capital and Mr. Anthony (Tony) Buckingham.
With a clear plan in place to deliver on operational success at Rukwa and with an improved cash position, the Company has commenced a review of additional asset acquisition opportunities, leveraging the natural resources and capital markets expertise of its Board, and significant shareholders.
I would like to thank all our stakeholders, including you the shareholders, our partners, the local authorities and local communities, my fellow directors, our employees and contractors who have collectively supported the Company throughout this difficult period.
We look forward to reporting on the Company's progress in the coming months.
Yours sincerely
Dr Jeffrey Malaihollo
Chairman
CHIEF EXECUTIVE OFFICER'S REPORT
Period Review
The period has been characterised by:
- A restructuring of the operation of the Company's Rukwa Project and closing of three agreements with a strategic partner;
- The impact of the Covid-19 pandemic on Rukwa and Tanzania as a whole; and
- Adverse weather events that impacted production in the early part of the year.
In order to appropriately progress the Company's Rukwa Project three contracts were put in place during the year. These agreements were reached with two different companies, although both have the same principal shareholder, a Dubai-based Tanzanian with extensive experience in logistics in east Africa. The three contracts comprise a coal mining agreement and a US$1million loan agreement with Infrastructure and Logistics Tanzania Ltd ("ILTL"), and a sales and marketing agreement with MarTek Ltd. The expected handover of operations under these contracts has been delayed due to the Covid-19 pandemic.
It has been difficult to quantify the overall impact of the Covid-19 pandemic on Tanzania as the country has not implemented widespread testing or reported details on cases in the country. The Company understands that the virus peaked at the same time as Europe with some lockdown and social distancing practices in place. Although the Tanzanian President announced a return to "business as usual" in mid-May 2020, logistically the movement of people in and out of Tanzania remained very difficult throughout the year.
Rukwa and the complete Western Highlands region experienced an extended weather event during the 2019-20 wet season with extensive rains from December 2019 to April 2020. This again impacted production in the first quarter of 2020, before the temporary closure of the mine due to the Covid-19 pandemic. Some production was taken from the southern pit during the first half of the year, but access to the northern pit became problematic due to road conditions. These were resolved post the Covid-19 lockdown as advised in the Company's announcement of 20 August 2020.
With the assistance of two rounds of funding during 2020, together with further funds raised post year end, the Company is in a much improved financial position with its existing legacy debt also settled post period end.. The equity funding rounds during 2020 were as follows:
- £700,000 was raised in January 2020 and was subscribed for by existing major shareholders and one new major investor.
- £500,000 was raised in June 2020 all the funds coming from the same existing major shareholders.
Lind Partners LLC
In November 2018, Edenville entered into a loan facility with Lind Partners LLC ("Lind") for a principal of US$750,000. Repayment of the loan commenced in September 2019 with cash payments of approximately US$51,000 per month, though Edenville had the option of payment through shares. Payments were made on a regular basis to Lind between September 2019 to March 2020 inclusive, before a payment holiday was agreed with Lind as a result of the disruption related to the Covid-19 pandemic.
The Company announced on 6 October 2020 that Lind had initially requested that Edenville repay the total outstanding balance of the Funding Agreement by 30 November 2020. The Company subsequently entered into discussions with Lind regarding the repayment terms of the Funding Agreement and this matter was resolved in January 2021.
Post period end on 22 June 2021 the Company announced that i t had now repaid in cash the full outstanding amount owing to Lind under the Funding Agreement and the Company has no further outstanding obligations to Lind.
Corporate Social Responsibility
The Company has continued to take its corporate and social responsibility very seriously. We understand that Edenville must meet the social requirements of an operator in Tanzania. The construction of a mining operation at Rukwa has already provided several opportunities to improve infrastructure for the local community, the most visible being the construction of the road from Kipandi, past Mkomolo village and beyond, to the mine. This has opened-up a major artery in the area which services farmers and the local population, as well as the mine itself.
At Rukwa, wherever possible, we have sought to employ local people from the surrounding villages. Many of the operators and management are local and are proving to be highly competent and skilled employees. The positive social benefits also overflow into the general community where enterprising individuals are providing services such as food supply for workers.
Summary
2020, as with 2019, was a difficult year, primarily given adverse weather events, liquidity constraints and the impact of the Covid-19 pandemic.
However, following the closing of the three agreements with the strategic partner over the 2020 summer, we believe the Company ended the year much better placed with regard to its Rukwa project. However, their implementation has been hampered by the impact of the Covid-19 pandemic. The Company has, to date, not attempted to draw down on the loan arrangement with ILTL.
As business conditions improve we believe the Company is well placed to take a major step forward through the adoption of this new operational structure that is designed to ensure Edenville draws revenue from every tonne of washed coal sold from Rukwa.
Post Period
Post period has seen a major positive change in prospects for the Company.
On 15 January 2021, the Company announced that it had raised £900,000 by way of a placing of 3,600,000 new ordinary shares of 1p each in the Company ("Ordinary Shares") at a placing price of 25p per ordinary share with new and existing shareholders (the "January Placing").
Further, it announced that it had reached agreement with Lind regarding its outstanding funding agreement in that the Company were to pay Lind US$116,000 in cash by 31 January 2021 with the remainder of US$464,000, to be repaid in monthly instalments of US$50,000 starting from the end of April 2021.
On 5 May 2021, the Company conditionally raised £2,475,000 (before expenses) by way of a placing of 9,900,000 new Ordinary Shares at a placing price of 25p per Ordinary Share (the "May Placing"). Investors also received one warrant for every Placing Share. If these warrants are exercised in full the Company will receive a further £2,475,000 for the development of the Company's business.
As part of the May Placing a new strategic investor, Anthony (Tony) Buckingham, took an 18.5% stake in the Company through an investment of £1million, with the majority of the balance coming from the Company's substantial shareholders. Mr Buckingham is well known in the natural resources market, particularly in Africa, having been CEO and major shareholder of Heritage Oil Limited from 2006 until its acquisition by a wholly-owned subsidiary of Qatari investment fund, Al Mirqab Capital SPC, in 2014 for a consideration of US$1.6 billion. His wealth of experience and broad network of relationships is expected to prove highly beneficial as Edenville looks to add additional assets into the Company.
With an improved cash position, the Company will continue to target additional asset acquisitions, leveraging the natural resources and capital markets expertise of its Board, and significant shareholders
On 22 June 2021, the Company announced that it had repaid in cash the full outstanding amount of US$373,625 owed to Lind under the Funding Agreement dated 6 November 2018.
Although the Company has faced a difficult environment over the last two years, the business' outlook is looking more positive for the remainder of 2021 and beyond, supported by the following recent developments:
- As announced on 24 June 2021, the Company has commenced the sale of coal fines and has 2 trial shipments in place which, subject to the trial, could lead to significant contracts.
- As announced 24 June 2021, the Company has recommenced discussions with the Tanzanian Government and recently been invited to submit an unsolicited proposal for the supply of coal to an on-site power station owned and operated by the Tanzanian Government. The Tanzanian Government power planning program shows the need for a base load plant by 2026.
- The overall business environment in Tanzania is increasingly positive following the appointment of a new President and subsequent demonstrated intent to support investment in the country. As a further sign of improving conditions, in recent weeks the Company has had several enquiries regarding coal supply to neighbouring East African countries.
Alistair Muir
Chief Executive Officer
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2020
Opinion
We have audited the financial statements of Edenville Energy Plc (the 'parent Company') and its subsidiaries (the 'group') for the year ended 31 December 2020 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Statement of Financial Position, the Consolidated and Parent Company Statement of Changes in Equity, the Consolidated and Parent Company Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and international accounting standards in conformity with the requirements of the Companies Act 2006 and as regards the parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
· the financial statements give a true and fair view of the state of the group's and of the parent Company's affairs as at 31 December 2020 and of the group's and parent Company's loss for the year then ended;
· the group financial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006;
· the parent Company financial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 as applied in accordance with the provisions of the Companies Act 2006; and
· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listedentities, and we have fulfilled our other 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the group's and parent Company's ability to continue to adopt the going concern basis of accounting included review of management's cashflow forecasts to June 2022. The audit team have assessed the current cash balances at the date of this report and challenged assumptions in the forecasts provided to reasonably conclude that the group has sufficient funds in order to meet its committed liabilities for the foreseeable future. This is mainly as a result of significant funds raised subsequent to the year end.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's or parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Emphasis of matter -recoverability of value added tax
We draw your attention to Note 4 of the financial statements, which describes the group's assessment over the VAT receivable balance of £292,754 in Tanzania. The group have explained their assessment over the recoverability within critical accounting estimates and conclude this to be recoverable. The financial statements do not include the adjustments that would result if the group was unable to fully recover this.
Our opinion is not modified in this respect.
Emphasis of matter - recoverability of inventory
We draw your attention to Note 4 of the financial statements, which describes the group's assessment over the inventory balance of £247,538 in Tanzania. The group have explained their assessment over the recoverability within the critical accounting estimates and conclude this to be recoverable. The financial statements do not include the adjustment that would result if the group was unable to fully recover this.
Our opinion is not modified in this respect.
Our application of materiality
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. The materiality applied to the financial statements as a whole was determined as follows:
|
|
2020 |
2019 |
Basis for materiality |
|
Group |
£67,250 |
£77,000 |
1% of gross assets |
In our professional judgement, we consider gross assets to be the principal benchmark relevant to members of the mining group, in assessing financial position and performance. Our calculated materiality levels were discussed and agreed with the audit committee.
Whilst materiality for the group financial statements as a whole was £67,250, each significant component of the group was audited to a level of materiality ranging between £37,100 - £63,800. The materiality for the financial statements as a whole applied to the parent Company financial statements was £37,100 (2019: £47,500). The performance materiality for the group was £40,350 (2019: £46,200) or 60% which is consistent with the previous year and falls within the firm's guidance for a medium risk listed audit Our assessment as a medium risk is based on a combination of the parent Company being listed (higher risk) and the operations of the Group being in Tanzania having only one resource and not being too complex. The performance materiality for the parent Company was £22,260 (2019: £28,500).
We agreed with the audit committee that we would report all individual audit differences identified during the course of our audit in excess of £3,363 (2019: £3,850), in addition to other audit misstatements below that threshold that we believe warrant reporting on qualitative grounds.
Our approach to the audit
In designing our audit approach, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular we assessed the areas involving significant accounting estimates and judgements by the directors in respect of the carrying value of the mining assets and carrying values of the Company's investments in and loans to subsidiaries and considered future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including evaluation whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
Of the four components of the group, a full scope audit was performed on the complete financial information of the parent and its Tanzanian subsidiary that owns the asset.,Thehe remaining components were subject to analytical review only because they were not significant to the group.
Of the two reporting components of the group, one is located in Tanzania and audited by a component auditor operating under our instructions, and the audit of the remaining components were performed in London, conducted by PKF Littlejohn LLP using a team with specific experience of auditing mining entities and publicly listed entities. The Senior Statutory Auditor interacted regularly with the component audit teams during all stages of the audit and was responsible for the scope and direction of the audit process. This, in conjunction with additional procedures performed, gave us appropriate evidence for our opinion on the group and parent Company financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
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Key Audit Matters |
How our scope addressed these matters |
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Carrying value mining assets (Note 15) |
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The entity has capitalised mining assets of £5,058,177. Management is required to assess whether there is any indication of impairment of these assets. The significance of the intangible non-current assets on the group's statement of financial position and the significant management judgement involved in the determination and the assessment of the carrying values of these assets there is increased risk of material misstatement or that the values will not be recovered. |
Our work in this area included but was not limited to: § Testing an appropriate sample of movements during the year to supporting documentation; § Ensuring the reasonableness of the capitalization of the new additions; § Considering whether there were indicators of impairment of the mining assets such as expiring concessions, licenses or rights, projections of declining coal prices and/or declining demand and projections of increased future capital costs or operating costs; § Reviewing management's assessment of the impairment of mining assets and challenging their key assumptions and estimates used as a basis to value the intangible assets. In addition, reviewing the financial statements of the joint operator; and
In forming our opinion, which is not modified, our work indicated that the value of mining assets are fairly stated in the financial statements, but that the future carrying value of these mining assets are dependent on the ability of the group to sign a significant long term contract with a few customers in the short to medium term. We note that the group are in advanced discussions with a couple of prospective clients and subject to the success of the trial shipments may lead to significant contracts being signed. This will enable the group to invest substantially in production to increase its revenue and generate profits and or returns to cover its investment in the asset. The financial statements do not include the adjustments that would result if the group was unsuccessful in obtaining a significant contracts.
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Valuation of the parent Company's investment in and loans to subsidiaries (Note 14) |
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The parent Company owns a significant investment in Edenville International (Tanzania) Limited of £16,561,617 which includes loans to the subsidiary of £9,518,305. The value of the investment is linked to the value of the assets held in Edenville International (Tanzania) Limited. There is a risk that the value in use is below the carrying value of the investment and thus the amounts reported are materially misstated. |
Our work in this area included: · Reviewing the valuation methodology for the investment held and ensuring that the carrying values were supported by sufficient and appropriate audit evidence. · Ensuring that all asset types were categorised according to the financial reporting framework, including the associated disclosures. · Ensuring the parent Company has full title to the investments held; · Ensuring that appropriate disclosures surrounding the estimates, including a review of how these estimates were arrived at, are made in respect of any valuations are included in the financial statements. We note that the loan will soon be converted into equity.
In forming our opinion, which is not modified, our work indicated that the value of its investment and loans (soon to be converted into equity) are fairly stated in the financial statements, but that the recoverability is dependent on the ability of the subsidiary to sign up significant contracts with local customers to substantially increase its revenue and ultimately returns over the medium term. The financial statements do not include the adjustments that would result if the subsidiary was unsuccessful in obtaining a significant contracts. |
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion the group and parent Company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
· the parent Company financial statements are not in agreement with the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are not made; or
· we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the group and parent Company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent Company financial statements, the directors are responsible for assessing the group and the parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
· We obtained an understanding of the group and parent Company and the sector in which it operates to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding of the group and parent Company and sector in which they operate to identify laws and regulations that would reasonably be expected to have a direct effect on the financial statements. We obtained an understanding in this regard through discussions with management and the application of our cumulative audit knowledge and experience of this sector.
· We determined the principal laws and regulations relevant to the group and parent Company in this regard to be those arising from the Companies Act 2006, AIM rules and mining regulations applicable to the subsidiaries.
· We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group and parent Company with those laws and regulations.
· We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, including the potential for management bias identified in relation to the valuation of investments and impairment of goodwill and we addressed this by challenging the assumptions and judgements made by management when auditing that significant accounting estimate.
· As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; enquiries of management, review of minutes and RNS announcements, reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
· At a significant component level, we engaged with the component auditors to ensure that they had conducted an extensive review into whether the operating subsidiary was fully compliant with laws and regulations at a local level, and reviewed their work conducted into the posting of journal entries to ensure there were no instances of fraud detected at a local level.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor's report.
Use of our report
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Zahir Khaki (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
28 June 2021
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GROUP STATEMENT OF COMPREHENSIVE INCOME year ended 31 december 2020
|
Note |
2020 |
2019 (restated) |
|
|
|
£ |
£ |
|
Revenue |
5 |
33,852 |
233,414 |
|
Cost of sales |
|
(583,876) |
(1,005,480) |
|
|
|
|
|
|
|
|
|
|
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Gross loss |
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(550,024) |
(772,066) |
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|
|
|
|
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Administration expenses |
6 |
(529,632) |
(887,555) |
|
|
|
|
|
|
Share based payments |
27 |
(50,398) |
(16,077) |
|
|
|
|
|
|
|
|
|
|
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Group operating loss |
|
(1,130,054) |
(1,675,698) |
|
|
|
|
|
|
Finance income |
10 |
112 |
113 |
|
Finance costs |
11 |
(111,503) |
(170,537) |
|
|
|
|
|
|
|
|
|
|
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Loss on operations before taxation |
|
(1,241,445) |
(11,846,122) |
|
|
|
|
|
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Income tax |
12 |
- |
- |
|
|
|
|
|
|
|
|
|
|
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Loss for the year |
|
(1,241,445) |
(1,846,122) |
|
|
|
|
|
|
|
|
|
|
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Attributable to: |
|
|
|
|
Equity holders of the Company |
|
(1,239,553) |
(1,843,654) |
|
Non-controlling interest |
|
(1,892) |
(2,468) |
|
|
|
|
|
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
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Item that will or may be reclassified to the profit and loss: |
|
|
|
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(Loss/)gain on translation of overseas subsidiary |
|
(209,935) |
(235,431) |
|
|
|
|
|
|
Total comprehensive loss for the year |
|
(1,445,380) |
(2,081,553) |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
Equity holders of the Company |
|
(1,443,488) |
(2,079,085) |
|
Non-controlling interest |
|
(1,892) |
(2,468) |
|
|
|
|
|
|
Earnings per Share (pence) |
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share |
13 |
(0.02) |
(0.05) |
|
|
|
|
|
|
|
|
|
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All operating income and operating gains and losses relate to continuing activities.
No separate statement of comprehensive income is provided as all income and expenditure is disclosed above.
GROUP AND COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 december 2020
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Company Registered Number 05292528 |
Note |
Group 31 December 2020 |
31 December 2019(restated) |
31 December 2020 |
Company 31 December 2019 |
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|
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£ |
£ |
£ |
£ |
|
||
|
Non-current assets |
|
|
|
|
|
|
||
|
Investment in subsidiaries |
14 |
- |
- |
16,561,617 |
16,160,713 |
|
||
|
Property, plant and equipment |
15 |
5,644,577 |
6,085,403 |
1,334 |
1,778 |
|
||
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Intangible assets |
16 |
311,032 |
321,368 |
- |
- |
|
||
|
|
|
|
|
|
|
|
||
|
|
|
5,955,609 |
6,406,771 |
16,562,951 |
16,162,491 |
|
||
|
|
|
|
|
|
|
|
||
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Current assets |
|
|
|
|
|
|
||
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Inventories |
17 |
251,736 |
247,538 |
- |
- |
|
||
|
Trade and other receivables |
18 |
301,251 |
365,541 |
8,499 |
48,412 |
|
||
|
Cash and cash equivalents |
19 |
25,690 |
41,110 |
25,628 |
40,845 |
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
578,677 |
654,189 |
34,127 |
89,257 |
|
||
|
Current liabilities |
|
|
|
|
|
|
||
|
Trade and other payables |
20 |
(685,809) |
(897,122) |
(213,559) |
(479,244) |
|
||
|
Borrowings |
21 |
(440,831) |
(504,444) |
(416,142) |
(481,581) |
|
||
|
|
|
|
|
|
|
|
||
|
|
|
(1,126,640) |
(1,401,566) |
(629,701) |
(960,825) |
|
||
|
|
|
|
|
|
|
|
||
|
Current assets less current liabilities |
|
(547,963) |
(747,377) |
(595,574) |
(871,568) |
|
||
|
|
|
|
|
|
|
|
||
|
Total assets less current liabilities |
|
5,407,646 |
5,659,394 |
15,967,377 |
15,290,923 |
|
||
|
|
|
|
|
|
|
|
||
|
Non-current liabilities |
|
|
|
|
|
|
||
|
Borrowings |
21 |
(39,873) |
(185,599) |
(16,084) |
(141,463) |
|
||
|
Environmental rehabilitation liability |
22 |
(21,912) |
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
5,345,861 |
5,473,795 |
15,951,293 |
15,149,460 |
|
||
|
Equity |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Called-up share capital |
23 |
4,041,601 |
3,414,935 |
4,041,601 |
3,414,935 |
|
||
|
Share premium account |
|
19,390,849 |
18,811,157 |
19,390,849 |
18,811,157 |
|
||
|
Share option reserve |
|
301,174 |
281,502 |
301,174 |
281,502 |
|
||
|
Foreign currency translation reserve |
|
494,130 |
698,065 |
- |
- |
|
||
|
Retained earnings |
|
(18,866,991) |
(17,718,347) |
(7,782,331) |
(7,358,134) |
|
||
|
|
|
|
|
|
|
|
||
|
Attributable to the equity shareholders of the Company |
5,360,763 |
5,487,312 |
15,951,293 |
15,149,460 |
|
|||
|
Non- controlling interests |
|
(14,902) |
(13,517) |
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Total equity |
|
5,345,861 |
5,473,795 |
15,951,293 |
15,149,460 |
|
||
|
|
|
|
|
|
|
|
||
The financial statements were approved by the board of directors and authorised for issue on 28 June 2021 and signed on its behalf by:
Alistair Muir, Director
GROUP STATEMENT OF CHANGES IN EQUITY
year ended 31 december 2020
group
|
|
--------------------------------------------------Equity Interests--------------------------------------- |
|
|
|||||
|
|
Share Capital |
Share Premium |
Retained Earnings Account |
Share Option Reserve |
Foreign Currency Translation Reserve |
Total |
Non-controlling interest |
Total |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
At 1 January 2019 |
2,722,036 |
18,566,642 |
(15,884,731) |
275,463 |
933,496 |
6,612,906 |
(11,508) |
6,601,398 |
|
Issue of share capital |
692,899 |
244,515 |
- |
- |
- |
937,414 |
- |
937,414 |
|
Share options/warrants charge |
- |
- |
- |
16,077 |
- |
16,077 |
- |
16,077 |
|
Cancellation of share options |
- |
- |
10,038 |
(10,038) |
- |
- |
- |
- |
|
Foreign currency translation |
- |
- |
- |
- |
(235,431) |
(235,431) |
- |
(235,431) |
|
Loss for the year |
- |
- |
(1,843,654) |
- |
- |
(1,843,654) |
(2,468) |
(1,846,122) |
|
Non- controlling interest share of goodwill |
- |
- |
- |
- |
- |
- |
459 |
459 |
|
|
_ |
|
|
|
|
|
|
|
|
At 31 December 2019 |
3,414,935 |
18,811,157 |
(17,718,347) |
281,502 |
698,065 |
5,487,312 |
(13,517) |
5,473,795 |
|
Issue of share capital |
626,666 |
648,334 |
- |
- |
- |
1,275,000 |
- |
1,275,000 |
|
Share issue costs |
- |
(68,642) |
- |
- |
- |
(68,642) |
- |
(68,642) |
|
Share option/warrants charge |
- |
- |
- |
110,581 |
- |
110,581 |
- |
110,581 |
|
Cancellation of share options |
- |
- |
90,909 |
(90,909) |
- |
- |
- |
- |
|
Foreign currency translation |
- |
- |
- |
- |
(203,935) |
(203,935) |
- |
(203,935) |
|
Loss for the year |
- |
- |
(1,239,553) |
- |
- |
(1,239,553) |
(1,892) |
(1,241,445) |
|
Non- controlling interest share of goodwill |
- |
- |
- |
- |
- |
- |
507 |
507 |
|
|
_ |
__ |
____ |
__ |
|
|
__ |
__ |
|
At 31 December 2020 |
4,041,601 |
19,390,849 |
(18,866,991) |
301,174 |
494,130 |
5,360,763 |
(14,902) |
5,345,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPANY
|
|
Share Capital |
Share Premium |
Retained Earnings Account |
Share Option Reserve |
Total |
|
|
£ |
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
|
At 1 January 2019 |
2,722,036 |
18,566,642 |
(6,508,311) |
275,463 |
15,055,830 |
|
|
|
|
|
|
|
|
Issue of share capital |
692,899 |
244,515 |
- |
- |
937,414 |
|
Share option/warrants charge |
- |
- |
- |
16,077 |
16,077 |
|
Cancellation of share options |
- |
- |
10,038 |
(10,038) |
- |
|
Total comprehensive loss for the year |
- |
- |
(859,861) |
- |
(859,861) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2019 |
3,414,935 |
18,811,157 |
(7,358,134) |
281,502 |
15,149,460 |
|
|
|
|
|
|
|
|
Issue of share capital |
626,666 |
648,334 |
- |
- |
1,275,000 |
|
Share issue costs |
- |
(68,642) |
- |
- |
(68,642) |
|
Share option/warrants charge |
- |
- |
- |
110,581 |
110,581 |
|
Cancellation of share options |
- |
- |
90,909 |
(90,909) |
- |
|
Total comprehensive loss for the year |
- |
- |
(515,106) |
- |
(515,106) |
|
|
|
|
|
|
|
|
At 31 December 2020 |
4,041,601 |
19,390,849 |
(7,782,331) |
301,174 |
15,941,559 |
|
|
|
|
|
|
|
GROUP AND COMPANY CASH FLOW STATEMENTS
year ended 31 december 2020
|
|
|
Group |
Company |
||
|
|
|
Year ended 31 December 2020
£ |
Year ended 31 December 2019 (restated) £ |
Year ended 31 December 2020
£ |
Year ended 31 December 2019
£ |
|
Cash flows from operating activities |
|
|
|
|
|
|
Operating loss |
|
(1,130,054) |
(1,675,698) |
(515,218) |
(859,974) |
|
Depreciation |
|
277,921 |
261,638 |
445 |
593 |
|
Interest paid |
|
(351) |
(23,000) |
100,090 |
144,824 |
|
Expected credit losses |
|
- |
26,804 |
- |
- |
|
Share based payments |
|
50,398 |
16,077 |
50,398 |
16,077 |
|
(Increase)/decrease in inventories |
|
(4,198) |
8,544 |
- |
- |
|
Increase in trade and other receivables |
|
54,984 |
26,741 |
39,912 |
(29,858) |
|
(Decrease)/Increase in trade and other payables |
|
(116,836) |
476,883 |
(189,149) |
351,132 |
|
Foreign exchange differences |
|
(34,521) |
(32,194) |
(10,482) |
(13,331) |
|
|
|
|
|
|
|
|
Net cash outflow from operating activities |
|
(902,657) |
(914,205) |
(524,004) |
(390,537) |
|
|
|
|
|
|
|
|
Cash flows from investing activities Capital introduced to subsidiaries |
|
- |
- |
(400,904) |
(547,984) |
|
Purchase of property, plant and equipment |
|
- |
(33,559) |
- |
- |
|
Finance income |
|
112 |
113 |
112 |
113 |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
112 |
(33,446) |
(400,792) |
(547,871) |
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
Borrowings |
|
180,000 |
100,000 |
180,000 |
100,000 |
|
Repayment of convertible loan notes |
|
(160,421) |
(198,644) |
(160,421) |
(198,644) |
|
Repayment of lease liabilities |
|
(17,404) |
(7,328) |
- |
- |
|
Lease interest |
|
(5,059) |
(2,711) |
- |
- |
|
Proceeds from issue of ordinary shares |
|
950,000 |
937,414 |
950,000 |
937,414 |
|
Share issue costs |
|
(60,000) |
- |
(60,000) |
- |
|
|
|
|
|
|
|
|
Net cash inflow from financing activities |
|
887,116 |
828,731 |
909,579 |
838,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(15,429) |
(118,920) |
(15,217) |
(99,638) |
|
Cash and cash equivalents at beginning of year |
|
41,110 |
160,042 |
40,845 |
140,483 |
|
Effect of foreign exchange rate changes on cash and cash equivalents |
|
9 |
(12) |
- |
- |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
19 |
25,690 |
41,110 |
25,628 |
40,845 |
|
|
|
|
|
|
|
NOTES TO THE COMPANY'S FINANCIAL STATEMENTS
year ended 31 december 2020
1. General Information
Edenville Energy Plc is a public limited Company incorporated in England and Wales. The address of the registered office is Aston House, Cornwall Avenue, London, N3 1LF. The Company's shares are listed on AIM, a market operated by the London Stock Exchange.
The principal activity of the Group is the exploration, development and mining of energy commodities predominantly coal in Africa.
2. Group Accounting Policies
Basis of preparation and statement of compliance
The Group's and Company's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, IFRIC Interpretations and the parts of the Companies Act 2006 applicable to companies reporting under IFRS. The Group's financial statements have also been prepared under the historical cost convention, except for the measurement to fair value of assets and financial instruments as described in the accounting policies set out below.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group's financial statements are disclosed in Note 4 of the 2020 Annual Report.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 from presenting the Parent Company Income Statement. The loss after tax for the Parent Company for the year was £515,106 (2019: £859,861
Going concern
At 31 December 2020 the Group had cash balances totalling £25,690.
During the countrywide lockdown during the second quarter the Company was forced to suspend mine operations, leaving just a skeleton security force at the site. The pandemic also caused a delay in finalizing and implementing all agreements with our strategic partnership. The third quarter saw a recommencement of mining, processing and sales of coal from Rukwa all be it at a reduced level and also the signing of the intended three related agreements with the strategic partner, designed to address mining, sales and the Company's capital position.
This reduced demand has continued to the middle of 2021 and only recently May/June 2021 has there been a return of consumers to the market. This has been significantly aided not only by the receding of the pandemic but by a change of sentiment in the county brought about by the appointment of the new President. Because of this ongoing situation the contracts with the strategic partner have not yet been implemented with EITL aiming to establish production of 3000 tonnes per month before it re-engages with the strategic partner.
On 15 January 2021 the Company raised £900,000 before expenses by way of placing 3,600,000 ordinary shares of 1p each.
The Company also agreed repayment terms with Lind Partners LLC whereby it agreed to repay 20% of the outstanding debt by 31 January 2021 with the balance to be paid in monthly instalments from the end of April 2021. Lind Partners LLC also agreed that no further interest is to be charged on the outstanding balance.
On 5 May 2021 the Company raised £2,475,000 before expenses by way of placing 9,900,000 new ordinary shares of 1p each in the Company at a placing price of 25p per ordinary share.
The Group meets its day to day working capital requirements through the sale of its coal resource, and monies raised in follow-on offerings. The Group's forecasts and projections indicate that the Group has sufficient cash reserves to operate within the level of its current facilities. These forecasts are based upon expected saleable levels of production.
Expenditure on excavation is related to the level of orders and both head office costs and Tanzanian administration costs can be reduced if it is found that order levels together with available cash resources are insufficient to meet the Group's working capital needs.
Whilst it is the Group's intention to rely on the available cash reserves, future income generated and if required reductions in its cost base, a negative variance in the forecasts and projections would make the Group's ability to continue as a going concern dependent on an additional fund raise. If the Group's forecasts are not achieved, the Directors would seek to raise the additional funds through equity issues which would be dependent upon investor appetite. After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. This is mainly as a result of the significant funds raised after the year end which is sufficient to cover their working capital needs over the next 12 months from the date these financial statements have been approved.
Adoption of new and revised standards and changes in accounting policies
There were no new standards or interpretations impacting the Group that will be adopted in the annual financial statements for the year ended 31 December 2020, and which have given rise to changes in the Group's accounting policies.
Standards and interpretations in issue but not yet effective or not yet relevant
At the date of authorisation of these financial statements the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:
|
|
|
Effect annual periods beginning before or after |
|
IFRS 3 |
amendments updating a reference to the Conceptual Framework |
1st January 2022 |
|
IFRS 4, 7,9,16 |
amendments regarding replacement issues in the context of the IBOR reform |
1st January 2021 |
|
IFRS 9 |
Amendments resulting from the annual improvements to IDRS Standards 2018-2020 (fees in the '10 per cent' test for derecognition of financial liabilities) |
1st January 2022 |
|
IFRS 17 |
Amendments to address concerns and implementation challenges that were identified after IFRS 17 was published |
1st January 2023 |
|
IAS 1 |
Amendments to defer the effective date of January 2020 amendments
Amendments regarding the disclosure of accounting policies |
1st January 2023 |
|
IAS 8 |
amendments regarding the definition of accounting estimates |
1st January 2023 |
|
IAS 16 |
Amendments prohibiting a Company from deducting from the cost of property, plant and equipment amounts received from selling items while the Company is preparing the asset for its intended use |
1st January 2022 |
|
IAS 37 |
Amendments regarding the costs to include when assessing whether a contract is onerous |
1st January 2022 |
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the Group's financial statements.
Share based payments
The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:
· including any market performance conditions;
· excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period); and
· excluding the impact of any non-vesting conditions (for example, the requirement of employees to save).
Assumptions about the number of options that are expected to vest include consideration of non-market vesting conditions. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
When the options are exercised, the Group issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.
Basis of consolidation
The Group's financial statements consolidate the financial statements of Edenville Energy Plc and all its subsidiary undertakings (Edenville International (Seychelles) Limited, Edenville International (Tanzania) Limited and Edenville Power (TZ) Limited) made up to 31 December 2020. Profits and losses on intra-group transactions are eliminated on consolidation.
Subsidiaries are all entities over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.
Business combinations
The Group adopts the acquisition method in accounting for the acquisition of subsidiaries. On acquisition the cost is measured at the fair value of the assets given, plus equity instruments issued and liabilities incurred or assumed at the date of exchange. The assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair value at the date of acquisition. Any excess of the fair value of the consideration over the fair value of the identifiable net assets acquired is recorded as goodwill.
Any deficiency of the fair value of the consideration below the fair value of identifiable net assets acquired is credited to the income statement in the period of the acquisition.
The results of subsidiary undertakings acquired or disposed of during the year are included in the group statement of comprehensive income statement from the effective date of acquisition or up to the effective date of disposal.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the group. Inter-company transactions and balances between group companies are eliminated.
Revenue recognition
consideration received or receivable, and represent amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. Under IFRS 15 there is a five-step approach to revenue recognition which is adopted across all revenue streams. The process is:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the contract; and
Step 5: Recognise revenue as and when the entity satisfies the performance obligation.
The Group has one revenue stream being the sale of coal and other aggregate bi-products produced by the Group. Sales are predominantly made at the Group's premises as customers collect their quantities from the mine. Such revenue is recognised at the point of contact at a pre-agreed fixed price on a per tonnage basis. For deliveries made to customer premises, revenue is recognised at the point of which the products leave the Group's premises
Presentational and functional currency
This financial information is presented in pounds sterling, which is the Group's functional currency.
In preparing the financial statements of individual entities, transaction in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations (including comparatives) are expressed in pounds sterling using exchange rates prevailing at the balance sheet date. Income and expense items are translated at the average exchange rate for the period. Exchange differences arising, if any, are classified as equity and transferred to the Group's foreign currency translation reserve. Such translation differences are recognised in the income statement in the period in which the foreign operation is disposed.
Financial instruments
Financial assets
Financial assets comprise investments, cash and cash equivalents and receivables. Unless otherwise indicated, the carrying amounts of the Group's financial assets are a reasonable approximation of their fair values.
Classification and measurement
The Group classifies its financial assets into the following categories: those to be measured subsequently at fair value (either through other comprehensive income (FVOCI) or through the income statement (FVPL) and those to be held at amortised cost.
Classification depends on the business model for managing the financial assets and the contractual terms of the cash flows. Management determines the classification of financial assets at initial recognition. The Group's policy with regard to financial risk management is set out in note 3. Generally, the group does not acquire financial assets for the purpose of selling in the short term.
The group's business model is primarily that of "hold to collect" (where assets are held in order to collect contractual cash flows). When the group enters into derivative contracts, these transactions are designed to reduce exposures relating to assets and liabilities, firm commitments or anticipated transactions.
Financial Assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset's lifetime ECL at each reporting date.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Financial Assets held at fair value through other comprehensive income (FVOCI)
The classification applies to the following financial assets:
- Debt instruments that are held under a business model where they are held for the collection of contractual cash flows and also for sale ("collect and sale") and which have cash flows that meet the SPPI criteria. An example would be where trade receivable invoices for certain customers were factored from time to time. All movements in the fair value of these financial assets are taken through comprehensive income, except for the recognition of impairment gains and losses, interest revenue (including transaction costs by applying the effective interest method), gains or losses arising on derecognition and foreign exchange gains and losses which are recognised in the income statement. When the financial asset is derecognised, the cumulative fair value gain or loss previously recognised in other comprehensive income is reclassified to the income statement.
- Equity investments where the group has irrevocably elected to present fair value gains and losses on revaluation of such equity investments, including any foreign exchange component, are recognised in other comprehensive income.
- When equity investment is derecognised, there is no reclassification of fair value gains or losses previously recognised in other comprehensive income to the income statement. Dividends are recognised in the income statement when the right to receive payment is established.
Financial Assets held at fair value through profit or loss (FVPL)
The classification applies to the following financial assets. In all cases, transaction costs are immediately expensed to the income statement.
- Debt instruments that do not meet the criteria of amortised costs or fair value through other comprehensive income.
- Equity investments which are held for trading or where the FVOCI election has not been applied. All fair value gains or losses and related dividend income are recognised in the income statement.
- Derivatives which are not designated as a hedging instrument. All subsequent fair value gains or losses are recognised in the income statement.
Derecognition
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.
Financial Liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group's financial liabilities include trade and other payables and loans.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss and other comprehensive income.
Trade and other payables
After initial recognition, trade and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive income.
Derecognition
A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss and other comprehensive income.
Liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit and loss or other liabilities, as appropriate.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Financial liabilities included in trade and other payables are recognised initially at fair value and subsequently at amortised cost.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the average costing method. Components of inventories consist of coal, parts and supplies, net of allowance for obsolescence. Coal inventories represent coal contained in stockpiles, coal that has been mined and hauled to the wash plant (raw coal) for processing and coal that has been processed (crushed, washed and sized) and stockpiled for shipment to customers.
The cost of raw and prepared coal comprises extraction costs, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
The Company performs inventory obsolescence at each reporting date. In determining whether inventories are obsolete, the Company assesses the age at which inventories held in the store in order to make an assessment of the inventory write down to net realisable value.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, demand deposits and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to insignificant risk of changes in value.
Convertible loan notes
The convertible loan notes issued by the Company are classified separately as financial liabilities in accordance with the substance of contractual arrangements. The convertible loan note ("CLN") is a compound financial instrument that cannot be converted to share capital at the option of the holder. As the CLN, and the accrued interest, can only be repaid as a loan, it has been recognised within liabilities. Interest is accounted for on an accruals basis and charged to the Consolidated Income Statement and added to the carrying amount of the liability component of the CLN.
Property, plant and equipment
Property, plant and equipment are stated at cost on acquisition less accumulated depreciation and accumulated impairment losses.
Depreciation is provided on all property, plant and equipment categories at rates calculated to write off the cost, less estimated residual value on a reducing balance basis over their expected useful economic life. The depreciation rates are as follows:
|
|
Basis of depreciation |
|
|
|
|
Fixtures, fittings and equipment |
25% reducing balance |
|
Plant and machinery |
5 years straight line or 25% reducing balance |
|
Office equipment |
25% reducing balance |
|
Motor vehicles |
25% reducing balance |
Costs capitalised include the purchase price of an asset and any costs directly attributable to bringing it into working condition for its intended use.
Production assets
Coal land, mine development costs, which include directly attributable construction overheads, land and coal rights are recorded at cost. Coal land and mine development are depleted and amortised, respectively, using the units of production method, based on estimated recoverable tonnage. The depletion of coal rights and depreciation of restoration costs are expensed by reference to the estimated amount of coal to be recovered over the expected life of the operation.
Coal Mine Reclamation Costs
Future cost requirements for land reclamation are estimated where surface operations have been conducted, based on the Group's interpretation of the technical standards of regulations enacted by the Government of Tanzania. These costs relate to reclaiming the pit and support acreage at surface mines and sealing portals at deep mines. Other costs include reclaiming refuse and slurry ponds as well as related termination/exit costs.
The Group records asset retirement obligations that result from the acquisition, construction or operation of long-lived assets at fair value when the liability is incurred. Upon the initial recognition of a liability, that cost is capitalised as part of the related long-lived asset and expensed over the useful life of the asset. The asset retirement costs are recorded in Land, Coal Rights and Restoration Costs.
The Group expenses reclamation costs prior to the mine closure. The establishment of the end of mine reclamation and closure liability is based upon permit requirements and requires significant estimates and assumptions, principally associated with regulatory requirements, costs and recoverable coal lands. Annually, the end of mine reclamation and closure liability is reviewed and necessary adjustments are made, including adjustments due to mine plan and permit changes and revisions of cost and production levels to optimize mining and reclamation efficiency. The amount of such adjustments is reflected in the year end reclamation provision calculation.
Stripping (waste removal) costs
As part of its mining operations, the Group incurs stripping (waste removal) costs both during the production phase of its operations. Stripping activities undertaken during the production phase of a surface mine (production stripping) are accounted for as set out below.
After the commencement of production, further development of the mine may require a phase of unusually high stripping that is similar in nature to development phase stripping. The cost of such stripping is accounted for in the same way as development stripping (as outlined above). Production stripping is generally considered to create two benefits, being either the production of inventory or improved access to the ore to be mined in the future. Where the benefits are realised in the form of inventory produced in the period, the production stripping costs are accounted for as part of the cost of producing those inventories.
Where the benefits are realised in the form of improved access to ore to be mined in the future, the costs are recognised as a non-current asset, referred to as a 'stripping activity asset', if the following criteria are met:
a) Future economic benefits (being improved access to the ore body) are probable;
b) The component of the ore body for which access will be improved can be accurately identified; and
c) The costs associated with the improved access can be reliably measured
If any of the criteria are not met, the production stripping costs are charged to profit or loss as operating costs as they are incurred.
In identifying components of the ore body, the Group works closely with the mining operations personnel for each mining operation to analyse each of the mine plans. Generally, a component will be a subset of the total ore body, and a mine may have several components. The mine plans, and therefore the identification of components, can vary between mines for a number of reasons. These include, but are not limited to: the type of commodity, the geological characteristics of the ore body, the geographical location, and/or financial considerations.
The stripping activity asset is initially measured at cost, which is the accumulation of costs directly incurred to perform the stripping activity that improves access to the identified component of ore, plus an allocation of directly attributable overhead costs. If incidental operations are occurring at the same time as the production stripping activity, but are not necessary for the production stripping activity to continue as planned, these costs are not included in the cost of the stripping activity asset.
If the costs of the inventory produced and the stripping activity asset are not separately identifiable, a relevant production measure is used to allocate the production stripping costs between the inventory produced and the stripping activity asset. This production measure is calculated for the identified component of the ore body and is used as a benchmark to identify the extent to which the additional activity of creating a future benefit has taken place. The Group uses the expected volume of waste extracted compared with the actual volume for a given volume of ore production of each component.
The stripping activity asset is accounted for as an addition to, or an enhancement of, an existing asset, being the mine asset, and is presented as part of 'Intangible assets' in the statement of financial position. This forms part of the total investment
Finance costs
Finance costs of debt, including premiums payable on settlement and direct issue costs are charged to the income statement on an accruals basis over the term of the instrument, using the effective interest method.
Income taxation
The taxation charge represents the sum of current tax and deferred tax.
The tax currently payable is based on the taxable profit for the period using the tax rates that have been enacted or substantially enacted by the balance sheet date. Taxable profit differs from the net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.
Deferred taxation
Deferred tax is recognised, using the liability method, in respect of temporary differences between the carrying amount of the Group's assets and liabilities and their tax base. Deferred tax liabilities are offset against deferred tax assets within the same taxable entity or qualifying local tax group. Any remaining deferred tax asset is recognised only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxable profits, within the same jurisdiction, in the foreseeable future against which the deductible temporary difference can be utilised. Deferred tax is determined using tax rates that are expected to apply in the periods in which the asset is realised or liability settled, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is recognised in the income statement, except when the tax relates to items charged or credited directly in equity, in which case the tax is also recognised in equity.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as deduction, net of tax, from the proceeds.
Intangible assets
Intangible assets arose as a result of the valuation placed on the original six Tanzanian licences acquired on the acquisition of Edenville (Tanzania) Limited. The allocation price was based on the price paid to acquire these the Group's licences. The licences are amortised over the life of the production asset using rates of depletion.
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief executive officer.
The Board considers that the Group's project activity constitutes one operating and reporting segment, as defined under IFRS 8.
The total profit measures are operating profit and profit for the year, both disclosed on the face of the combined income statement.
Share Capital
The Group's ordinary shares are classified as equity instruments .
Prior year restatement
Following the adoption of IFRS 16 in the prior year, Mining licences were incorrectly capitalised as these fall outside the scope of the standard. Due to the material nature of these entries, a prior year adjustment has been made to correct the error, and the previous year's figures have been restated as a result. For details see Note 32
3. Financial risk management
Fair value estimation
The carrying value less impairment provision of trade receivables and payables is assumed to approximate their fair values, due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments.
4. Critical accounting estimates and areas of judgement
The Group makes estimates and assumptions concerning the future, which by definition will seldom result in actual results that match the accounting estimate. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are those in relation to:
· the impairment of coal production assets and intangible assets;
· share based payments
· Valuation of provision for restoration costs
· Recoverability of VAT balance
Impairment - coal production assets and intangible assets (notes 15 and 16)
The Group is required to perform an impairment review, on coal production assets, for each CGU to which the asset relates. Impairment review is also required to be performed on other intangible assets when facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount. The recoverable amount is based upon the Directors' judgements and are dependent upon the ability of the Company to obtain necessary financing to complete the development and future profitable production or proceeds from the disposal, at which point the value is estimated based upon the present value of the discounted future cash flows.
In assessing whether an impairment is required for the carrying value of an asset, its carrying value is compared with its recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to sell and value in use. Given the nature of the Group's activities, information on the fair value of an asset is usually difficult to obtain unless negotiations with
potential purchasers or similar transactions are taking place. Consequently, unless indicated otherwise, the recoverable amount used in assessing the impairment charges described below is value in use.
The calculation of value in use is most sensitive to the following assumptions:
· Production volumes
· Sales volumes
· Discount rates
· Coal prices
· Operating overheads
· Inventory
Estimated production volumes are based on the production capability of the plant and estimated customer demand.
The Group generally estimates value in use using a discounted cash flow model. The future cash flows are adjusted for risks specific to the asset and discounted using a pre-tax discount rate of 10%. The Directors believe this rate to be appropriate as this is in line with the borrowing rates the Group are expected to receive if they were to obtain significant long term finance based on discussions between the Directors and prospective parties. The Directors acknowledge that the Group does have small short term finance arrangements which attract a higher rate but have chosen not to use these rates as they would not be financing the production asset using short term borrowing facilities. These short term loans were needed mostly for working capital needs and most have been paid off in 2021.
The directors have assessed the value of exploration and evaluation expenditure and development assets and intangible assets. In their opinion there has been no impairment loss to these intangible assets in the period, other than the amounts charged to the income statement.
Share based payments (note 28)
The estimate of share based payments costs requires management to select an appropriate valuation model and make decisions about various inputs into the model including the volatility of its own share price, the probable life of the options, the vesting date of options where non-market performance conditions have been set and the risk free interest rate.
Valuation of provision for restoration costs (note 15)
The Company makes full provision for the future cost of rehabilitating mine sites and related production facilities on a discounted basis at the time of developing the mines and installing and using those facilities. The rehabilitation provision represents the present value of rehabilitation costs relating to mine sites, which are expected to be incurred in the future, which is when the producing mine properties are expected to cease operations. These provisions have been created based on the Company's internal estimates and a third party estimate from an independent consultant. Assumptions based on the current economic environment have been made, which management believes are a reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to take into account any material changes to the assumptions. However, actual rehabilitation costs will ultimately depend upon future market prices for the necessary rehabilitation works required that will reflect market conditions at the relevant time. Furthermore, the timing of rehabilitation is likely to depend on when the mines cease to produce at economically viable rates. This, in turn, will depend upon future coal prices, which are inherently uncertain.
Management increases reclamation costs estimates at an annual inflation rate to the anticipated future mine closure date. This inflation rate is based on the historical rate for the industry for a comparable.
Due to limited mining activity to date, management have assessed the liability to be $29,907 which has not been adjusted for as it is immaterial.
Recoverability of VAT receivable (note 18)
The group considers the recoverability of the VAT balance in Tanzania to be a key area of judgement, as the VAT can only be claimed backed when the Company turns profitable. The directors believe that the debtor is recoverable based on their knowledge of the market in Tanzania.
Recoverability of Inventory (Note 18)
The group considers the recoverability of the inventory to be a key area of judgement, and this is held at its realisable value. The directors believe the inventory to be in good condition and the main reason why the stock has remained high in the last two years is mainly because of the Covid-19 impact which necessitated the closure of the mine. The mine has now fully reopened in May 2021 and the directors are taking making concerted efforts to sell this excess stock. They have recently identified key customers and have sold 1,000 tonnes in June 2021 with an expected commitment to purchase at a rate of 1,200 tonnes per month thereafter. They are optimistic that the remainder of the stock will be sold over the next 1-3 years on the presumption that one of the key customers will sign a long term contract. As a result of this, they have concluded no impairment is required at this stage, based on the directors' judgement of the local market and estimates regarding the timeframe in which the goods can be sold.
5. Segmental information
The Board considers the business to have one reportable segment being Coal production assets.
Other represents unallocated expenses and assets held by the head office. Unallocated assets primarily consist of cash and cash equivalents.
|
|
|
|
Coal Production Assets |
|
|
|
2020 |
|
|
Coal |
Other |
Total |
|
Consolidated Income Statement |
|
|
£ |
£ |
£ |
|
Revenue - Tanzania |
|
|
33,030 |
- |
33,030 |
|
Revenue - other |
|
|
822 |
- |
822 |
|
Cost of sales (excluding depreciation and amortisation) |
|
|
(349,121) |
- |
(349,121) |
|
Depreciation |
|
|
(209,208) |
- |
(209,208) |
|
Depletion of development assets |
|
|
(25,547) |
- |
(25,547) |
|
|
|
|
|
|
|
|
Gross profit |
|
|
(550,024) |
- |
(550,024) |
|
Administrative expenses |
|
|
(122,780) |
(363,685) |
(486,465) |
|
Share based payment |
|
|
- |
(50,398) |
(50,398) |
|
Depreciation |
|
|
(42,722) |
(445) |
(43,167) |
|
|
|
|
|
|
|
|
Group operating loss |
|
|
(715,526) |
(414,528) |
(1,130,054) |
|
Finance income |
|
|
- |
112 |
112 |
|
Finance cost |
|
|
(10,812) |
(100,691) |
(111,503) |
|
|
|
|
|
|
|
|
Loss on operations before taxation |
|
|
(726,338) |
(515,107) |
(1,241,445) |
|
Income tax |
|
|
- |
- |
|
|
|
|
|
|
|
|
|
Loss for the year |
|
|
(726,338) |
(515,107) |
(1,241,445) |
|
|
|
|
|
|
|
|
|
|
|
Coal Production Assets |
|
|
|
2019 |
|
|
Coal |
Other |
Total |
|
Consolidated Income Statement |
|
|
£ |
£ |
£ |
|
Revenue - Tanzania |
|
|
218,953 |
- |
218,953 |
|
Revenue - other |
|
|
14,461 |
|
14,461 |
|
Cost of sales (excluding depreciation and amortisation) |
|
|
(805,059) |
- |
(805,059) |
|
Depreciation |
|
|
(173,073) |
- |
(173,073) |
|
Depletion of development assets |
|
|
(27,348) |
- |
(27,348) |
|
|
|
|
|
|
|
|
Gross profit |
|
|
(772,066) |
- |
(772,066) |
|
Administrative expenses |
|
|
(150,859) |
(675,480) |
(826,339) |
|
Share based payment |
|
|
- |
(16,077) |
(16,077) |
|
Depreciation |
|
|
(60,624) |
(593) |
(61,217) |
|
|
|
|
|
|
|
|
Group operating loss |
|
|
(983,549) |
(692,150) |
(1,675,699) |
|
Finance income |
|
|
- |
113 |
113 |
|
Finance cost |
|
|
(2,711) |
(167,825) |
(170,536) |
|
|
|
|
|
|
|
|
Loss on operations before taxation |
|
|
(986,260) |
(859,862) |
(1,846,122) |
|
Income tax |
|
|
- |
- |
- |
|
|
|
|
|
|
|
|
Loss for the year |
|
|
(986,260) |
(859,862) |
(1,846,122) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Business Segment
|
Carrying value of segment assets |
Additions to non-current assets and intangibles |
Total liabilities
|
|
|||
|
|
2020 |
2019 |
2020 |
2019 |
2020 |
2019 |
|
|
|
£ |
£ |
£ |
£ |
£ |
£ |
|
|
Coal |
6,498,828 |
6,969,925 |
17,788 |
106,509 |
548,980 |
491,219 |
|
|
Other |
35,458 |
91,035 |
- |
- |
639,445 |
1,095,946 |
|
|
|
|
|
|
|
|
|
|
|
|
6,534,286 |
7,060,960 |
17,788 |
106,509 |
1,188,425 |
1,587,165 |
|
|
|
|
|
|
|
|
|
|
|
By Geographical Area |
|
|
|
|
|
|
|
|
|
£ |
£ |
£ |
£ |
£ |
£ |
|
|
Africa (Tanzania) |
6,498,828 |
6,969,925 |
17,788 |
106,509 |
548,980 |
491,219 |
|
|
Europe |
35,458 |
91,035 |
- |
- |
639,445 |
1,095,946 |
|
|
|
|
|
|
|
|
|
|
|
|
6,534,286 |
7,060,960 |
17,788 |
106,509 |
1,188,425 |
1,587,165 |
|
|
|
|
|
|
|
|
|
|
Information about major customers
Included in revenues arising from the sale of coal are revenues which arose from sales to the Group's largest customers based in Tanzania. No other customers contributed 10% or more to the Group's revenue in either 2020 or 2019.
|
|
2020 |
2019 |
|
|
£ |
£ |
|
Customer 1 |
31,386 |
149,236 |
|
Customer 2 |
- |
39,399 |
|
Customer 3 |
- |
25,014 |
|
|
|
|
|
|
31,386 |
213,649 |
|
|
|
|
|
|
|
|
6. Expenses by nature
|
|
2020 |
2019 |
|
|
£ |
£ |
|
|
|
(restated) |
|
Staff costs |
235,557 |
198,793 |
|
Audit fees |
38,019 |
34,850 |
|
Office and other administrative services |
70,257 |
60,445 |
|
AIM related costs including investor relations |
3,220 |
37,097 |
|
Professional, legal and consultancy fees |
113,110 |
418,681 |
|
Travel, entertaining and subsistence |
7,906 |
16,456 |
|
Exchange gain |
(10,482) |
(13,584) |
|
Depreciation |
43,167 |
61,217 |
|
Provisions and expected credit losses |
1,929 |
45,332 |
|
Other costs |
26,949 |
28,268 |
|
|
|
|
|
|
529,632 |
887,555 |
|
|
|
|
|
|
|
|
7. Auditors' remuneration
|
|
2020 |
2019 |
|
|
£ |
£ |
|
Fees payable to the Company's auditor for the audit of the parent Company and consolidated accounts |
40,000 |
34,850 |
|
|
|
|
8. Employees
|
|
Group 2020 £ |
2019 £ |
2020 £ |
Company 2019 £ |
|
|
|
|
|
|
|
Wages and salaries |
325,009 |
336,448 |
179,250 |
128,202 |
|
Social security costs |
20,781 |
47,499 |
- |
5,912 |
|
Pensions |
10,071 |
40,226 |
303 |
741 |
|
|
|
|
|
|
|
|
355,861 |
424,173 |
179,553 |
134,855 |
|
|
|
|
|
|
|
|
|
|
|
|
Included within Development expenditure/Exploration and evaluation assets (note 15) are capitalised wages and salary costs of £225,891 (2019: £233,397).
The average number of employees and directors during the year was as follows:
|
|
Group 2020 |
2019 |
2020 |
Company 2019 |
|
Administration |
11 |
12 |
3 |
3 |
|
Mining , plant processing and security |
29 |
35 |
- |
- |
|
|
|
|
|
|
|
|
40 |
47 |
3 |
3 |
|
|
|
|
|
|
9. Directors' remuneration
|
|
Group 2020 |
2019 |
2020 |
Company 2019 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
Emoluments |
151,250 |
128,220 |
179,250 |
128,202 |
|
Compensation for loss of office |
28,000 |
- |
- |
- |
|
Pensions |
303 |
741 |
303 |
741 |
|
|
|
|
|
|
|
|
179,553 |
128,943 |
179,553 |
128,943 |
|
|
|
|
|
|
The highest paid director received remuneration of £97,500 (2019: £71,375).
Included in the above are accrued Director's remuneration of £122,750 (2019: £69,287)
Directors' interest in outstanding share options per director is disclosed in the directors' report on page 13.
Remuneration of key management personnel
The remuneration of the directors and other key management personnel is set out below:
|
|
2020 |
2019 |
|
|
£ |
£ |
|
|
|
|
|
Emoluments |
197,988 |
190,871 |
|
Compensation for loss of office |
28,000 |
- |
|
Pensions |
303 |
741 |
|
|
|
|
|
|
226,291 |
191,612 |
|
|
|
|
10. Finance income
|
|
2020 |
2019 |
|
|
£ |
£ |
|
|
|
|
|
Interest income on short-term bank deposits |
112 |
113 |
|
|
|
|
|
|
112 |
113 |
|
|
|
|
11. Finance Costs
|
|
2020 |
2019 |
|
|
£ |
£ |
|
|
|
(restated) |
|
Interest on convertible loan notes |
87,977 |
160,379 |
|
Convertible loan finance costs |
12,652 |
7,446 |
|
Bank interest |
61 |
- |
|
Hire purchase interest |
6,423 |
2,712 |
|
Interest on rehabilitation provision |
4,390 |
- |
|
|
|
|
|
|
111,503 |
170,537 |
|
|
|
|
12. Income tax
|
|
2020 |
2019 |
|
|
£ |
£ |
|
|
|
|
|
Current tax: |
|
|
|
Current tax on loss for the year |
- |
- |
|
|
|
|
|
Total current tax |
- |
- |
|
Deferred tax |
|
|
|
On write off/impairment on intangible assets |
- |
- |
|
|
|
|
|
Tax charge for the year |
- |
- |
|
|
|
|
No corporation tax charge arises in respect of the year due to the trading losses incurred. The Group has Corporation Tax losses available to be carried forward and used against trading profits arising in future periods of £7,313,803 (2019: £7,034,804).
A deferred tax asset of £1,389,369 (2019: £1,336,275) calculated at 19% (2019: 19%) has not been recognised in respect of the tax losses carried forward due to the uncertainty that profits will arise against which the losses can be offset.
The tax assessed for the year differs from the standard rate of corporation tax in the UK as follows:
|
|
2020 |
2019 |
|
|
£ |
£ |
|
|
|
(restated) |
|
Loss on ordinary activities before tax |
(1,241,445) |
(1,846,122) |
|
|
|
|
|
Expected tax credit at standard rate of UK Corporation Tax |
|
|
|
19% (2017: 19%) |
(235,875) |
(350,763) |
|
Disallowable expenditure |
21,116 |
30,968 |
|
Capital allowances in excess of depreciation |
(310,464) |
(326,253) |
|
Movement in deferred tax not recognised |
525,223 |
646,048 |
|
|
|
|
|
Tax charge for the year |
|
- |
|
|
|
|
|
|
|
|
13. Earnings per share
|
The basic loss per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of shares in issue.
The loss attributable to equity shareholders and weighted average number of ordinary shares for the purposes of calculating diluted earnings per ordinary share are identical to those used for basic earnings per ordinary share. This is because the exercise of warrants would have the effect of reducing the loss per ordinary share and is therefore anti-dilutive.
|
||
|
|
2020 |
2019 |
|
|
£ |
£ |
|
|
|
(restated) |
|
Net loss for the year attributable to ordinary shareholders |
(1,241,445) |
(1,846,122) |
|
|
|
|
|
|
|
|
|
Weighted average number of shares in issue |
7,452,470,072 |
3,554,665,440 |
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share |
(0.02p) |
(0.05p) |
|
|
|
|
14. Investment in subsidiaries
|
|
|
Shares in |
Loans to |
|
|
|
|
subsidiaries |
subsidiaries |
Total |
|
Company |
|
£ |
£ |
£ |
|
Cost |
|
|
|
|
|
At 1 January 2019 |
|
7,043,312 |
8,569,417 |
15,612,729 |
|
Additions |
|
- |
547,984 |
547,984 |
|
Disposal |
|
- |
- |
- |
|
|
|
_________ |
_________ |
_________ |
|
At 31 December 2019 |
|
7,043,312 |
9,117,401 |
16,160,713 |
|
|
|
|
|
|
|
Accumulated impairment |
|
|
|
|
|
As at 1 January 2019 |
|
- |
- |
- |
|
Impairment |
|
- |
- |
- |
|
|
|
_________ |
_________ |
_________ |
|
At 31 December 2019 |
|
- |
- |
- |
|
|
|
|
|
|
|
Net Book Value |
|
|
|
|
|
As at 31 December 2019 |
|
7,043,312 |
9,117,401 |
16,160,713 |
|
|
|
|
|
|
|
|
|
Shares in |
Loans to |
|
|
|
|
subsidiaries |
subsidiaries |
Total |
|
Company |
|
£ |
£ |
£ |
|
Cost |
|
|
|
|
|
At 1 January 2020 |
|
7,043,312 |
9,117,401 |
16,160,713 |
|
Additions |
|
- |
400,904 |
400,904 |
|
|
|
_________ |
_________ |
_________ |
|
At 31 December 2020 |
|
7,043,312 |
9,518,305 |
16,561,617 |
|
|
|
|
|
|
|
Accumulated impairment |
|
|
|
|
|
As at 1 January 2020 |
|
- |
- |
- |
|
Impairment |
|
- |
- |
- |
|
|
|
_________ |
_________ |
_________ |
|
At 31 December 2020 |
|
- |
- |
- |
|
|
|
|
|
|
|
Net Book Value |
|
|
|
|
|
As at 31 December 2020 |
|
7,043,312 |
9,518,305 |
16,561,617 |
|
|
|
|
|
|
The value of the Company's investment and any indications of impairment is based on the prospecting and mining licences held by its subsidiaries.
The Tanzanian licences comprise a mining licence and various prospecting licences. The licences are, located in a region displaying viable prospects for coal and occur in a country where the government's policy for development of the mineral sector aims at attracting and enabling the private sector to take the lead in exploration mining, development, mineral beneficiation and marketing.
During 2018 the activities of the Company's subsidiary evolved from exploration and evaluation to development and as a result the exploration and evaluation assets held by the Company's subsidiary were transferred to development expenditure. The Directors carried out an impairment review on reclassification of exploration and evaluation assets to development assets, which covered the Company's investments in, and loans to, its subsidiaries. Following the impairment reviews the Directors did not consider the Company's investments to be impaired.
In April 2019, the subsidiary moved into the production phase.
The Directors have carried out an impairment review and consider the value in use to be greater than the book value in respect of The Company's investment in its subsidiary Company Edenville International (Tanzania) Limited.
The Directors considered the recoverable amount by assessing the value in use by considering future cash flow projections of the revenue generated by its subsidiary through the sale of its coal resources.
Cash flows were based on the revenue generated to date plus expected growth from current production levels to 10,000 tons per month in the short to medium term.
In addition, the projections include future potential revenue generated from the Company's plans relating to the Rukwa Coal to Power Project. It is expected that the Project will move ahead in parallel with the transmission development which is currently in the procurement stage and the Directors understand should be completed sometime in 2024. There is no guarantee that the Company will be chosen as the successful party to develop the Power Project, and therefore there is no guarantee that revenue will be generated from this Project. Should this be the case then the Company would need to review its cash flow projections, and review the carrying value of its investment in Edenville International Tanzania Limited
However, based upon current know resources the subsidiary has significant coal resources which based upon current projections prepared by the Directors would be sufficient to support the book value in the financial statements. The Directors are of the view that this amount is adequately supported by proposed returns generated by the Power Plant Project. The Directors have applied a 10% discount rate in their forecasts. Additional factors that may affect these projections include the following: -
A 30% reduction in the margin per ton of coal would result in an impairment of the Edenville International (Tanzania) Limited investment by £736k.
An increase in the discount factor to 16% would result in an impairment of the Edenville International (Tanzania) Limited investment by £824k.
A decrease of 50% of the EBITA would result in an impairment of the Edenville International (Tanzania) Limited investment by £5.7m.
The mining licence is due to expire in 2026. Should the mining licence not be renewed this would result in an impairment of £7.043m.
Holdings of more than 20% :
The Company holds more than 20% of the share capital of the following companies:
|
Subsidiary undertaking |
Country of incorporation |
Class |
Shares held |
|
|
Edenville International (Seychelles) Limited |
Seychelles |
Ordinary |
100% |
|
|
Edenville International (Tanzania) Limited |
Tanzania |
Ordinary |
99.75%* |
|
|
Edenville Power (Tz) Limited |
Tanzania |
Ordinary |
99.9% |
|
|
Edenville (South Africa) Limited |
England |
Ordinary |
100% |
|
|
|
|
|
|
|
|
* These shares are held by Edenville International (Seychelles) Limited. |
||||
15. Property, plant and equipment
|
|
Group
Coal Production assets |
Plant and machinery |
Fixtures, fittings and equipment |
Motor vehicles |
Total |
|
|
|
|
|
|
|
|
|
£ |
£ |
£ |
£ |
£ |
|
Cost |
|
|
|
|
|
|
As at 1 January 2019 |
5,501,291 |
1,435,541 |
7,360 |
93,946 |
7,038,138 |
|
Additions |
- |
680 |
- |
105,829 |
106,509 |
|
Disposals |
- |
(168,189) |
- |
- |
(168,189) |
|
Foreign exchange adjustment |
(183,654) |
(42,060) |
(107) |
(2,579) |
(228,400) |
|
|
|
|
|
|
|
|
As at 31 December 2019 |
5,317,637 |
1,225,972 |
7,253 |
197,196 |
6,748,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
As at 1 January 2019 |
57,928 |
306,410 |
7,010 |
84,396 |
455,744 |
|
Depletion/Charge for the year |
27,348 |
226,110 |
87 |
8,093 |
261,638 |
|
Disposal |
- |
(33,638) |
- |
- |
(33,638) |
|
Foreign exchange adjustment |
(1,934) |
(16,481) |
(107) |
(2,557) |
(21,089) |
|
|
|
|
|
|
|
|
As at 31 December 2019 |
83,342 |
482,401 |
6,990 |
89,925 |
662,655 |
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
As at 31 December 2019 |
5,234,295 |
743,571 |
263 |
107,271 |
6,085,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coal Production assets |
Plant and machinery |
Fixtures, fittings and equipment |
Motor vehicles |
Total |
|
|
£ |
£ |
£ |
£ |
£ |
|
Cost |
|
|
|
|
|
|
As at 1 January 2020 |
5,317,637 |
1,225,972 |
7,253 |
197,196 |
6,748,058 |
|
Additions |
17,788 |
- |
- |
- |
17,788 |
|
Foreign exchange adjustment |
(171,033) |
(39,191) |
(100) |
(5,806) |
(216,130) |
|
|
|
|
|
|
|
|
As at 31 December 2020 |
5,164,392 |
1,186,781 |
7,153 |
191,390 |
6,549,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
As at 1 January 2020 |
83,342 |
482,401 |
6,990 |
89,925 |
662,658 |
|
Depletion/ Charge for the year |
25,547 |
224,719 |
65 |
27,590 |
277,921 |
|
Foreign exchange adjustment |
(2,674) |
(28,648) |
(97) |
(4,021) |
(35,440) |
|
|
|
|
|
|
|
|
As at 31 December 2020 |
106,215 |
678,472 |
6,958 |
113,494 |
905,139 |
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
|
As at 31 December 2020 |
5,058,177 |
508,309 |
195 |
77,896 |
5,644,577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant and machinery depreciation amounting to £209,208 (2019: £173,073) is included within cost of sales as it relates to mining equipment.
Company
|
|
Plant and machinery |
Fixtures, fittings and equipment |
Motor Vehicles |
Total |
|
|
£ |
£ |
£ |
£ |
|
Cost |
|
|
|
|
|
As at 1 January 2019 and 31 December 2019 |
7,471 |
4,153 |
16,691 |
28,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
As at 1 January 2019 |
6,847 |
3,807 |
15,290 |
25,944 |
|
Charge for the year |
156 |
87 |
350 |
593 |
|
|
|
|
|
|
|
As at 31 December 2019 |
7,003 |
3,894 |
15,640 |
26,537 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
As at 31 December 2019 |
468 |
259 |
1,051 |
1,778 |
|
|
|
|
|
|
|
|
Plant and machinery |
Fixtures, fittings and equipment |
Motor Vehicles |
Total |
|
|
£ |
£ |
£ |
£ |
|
Cost |
|
|
|
|
|
As at 1 January 2020 and 31 December 2020 |
7,471 |
4,153 |
16,691 |
28,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
As at 1 January 2020 |
7,003 |
3,894 |
15,640 |
26,537 |
|
Charge for the year |
117 |
64 |
263 |
444 |
|
|
|
|
|
|
|
As at 31 December 2020 |
7,120 |
3,958 |
15,903 |
26,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value |
|
|
|
|
|
As at 31 December 2020 |
351 |
195 |
788 |
1,334 |
|
|
|
|
|
|
|
|
|
|
|
|
16. Intangible assets
|
Group |
|
|
|
||
|
|
|
Mining Licences |
|
||
|
|
|
|
|
||
|
|
|
£ |
|
||
|
Cost or valuation |
|
|
|
||
|
As at 1 January 2019 |
|
1,572,197 |
|
||
|
Foreign exchange adjustment |
|
(52,485) |
|
||
|
|
|
|
|
||
|
At 31 December 2019 |
|
1,519,712 |
|
||
|
|
|
|
|
||
|
Accumulated depletion, amortisation and impairment |
|
|
|
||
|
As at 1 January 2019 |
|
1,239,731 |
|
||
|
Amortisation |
|
- |
|
||
|
Foreign exchange adjustment |
|
(41,387) |
|
||
|
|
|
|
|
||
|
At 31 December 2019 |
|
1,198,344 |
|
||
|
|
|
|
|
||
|
Net book value |
|
|
|
||
|
As at 31 December 2019 |
|
321,368 |
|
||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
|
|
|||
|
|
|
|
|||
|
|
|
Mining Licences |
|||
|
|
|
£ |
|||
|
Cost or valuation |
|
|
|||
|
As at 1 January 2020 |
|
1,519,712 |
|||
|
Foreign exchange adjustment |
|
(48,879) |
|||
|
|
|
|
|||
|
At 31 December 2020 |
|
1,470,833 |
|||
|
|
|
|
|||
|
Accumulated depletion, amortisation and impairment |
|
|
|||
|
As at 1 January 2020 |
|
1,198,344 |
|||
|
Foreign exchange adjustment |
|
(38,543) |
|||
|
|
|
|
|||
|
At 31 December 2020 |
|
1,159,801 |
|||
|
|
|
|
|||
|
Net book value |
|
|
|||
|
As at 31 December 2020 |
|
311,032 |
|||
|
|
|
|
|||
Mining Licences
Intangible assets arose as a result of the valuation placed on the original six Tanzanian licences acquired on the acquisition of Edenville (Tanzania) Limited. The allocation price was based on the price paid to acquire these the Group's licences.
These assets are reviewed for impairment annually alongside the coal production assets.(see note 4 for Critical accounting estimates and judgements).
17. Inventories
|
|
Group |
|
|
|
2020 |
2019 |
|
|
£ |
£ |
|
|
|
|
|
ROM stockpiles |
10,752 |
11,108 |
|
Fines |
223,480 |
230,906 |
|
Washed coal |
17,504 |
5,524 |
|
|
|
|
|
|
251,736 |
247,538 |
|
|
|
|
|
|
|
|
The cost of inventories recognised as an expense during the year in was £78,448 (2019: £329,604 restated).
All inventory as at 31 December 2019 was written off during the period.
18. Trade and other receivables
|
|
Group |
Company |
||
|
|
2020 £ |
2019 £ |
2020 £ |
2019 £ |
|
|
|
|
|
|
|
Trade Receivables |
- |
- |
- |
- |
|
Less: provision for impairment of trade receivables |
- |
- |
- |
- |
|
|
|
|
|
|
|
Trade receivables - net |
- |
- |
- |
- |
|
Other receivables |
- |
34,324 |
- |
46,328 |
|
VAT receivable |
301,251 |
329,133 |
8,499 |
- |
|
Prepayments |
- |
2,084 |
- |
2,084 |
|
|
|
|
|
|
|
|
301,251 |
365,541 |
8,499 |
48,412 |
|
|
|
|
|
|
|
|
|
|
|
|
Included within VAT receivable is VAT owed to Edenville International (Tanzania) Limited which is only recoverable against future sales made by Edenville International (Tanzania) Limited. The Group expects to recover the above VAT from sales of commercial coal.
19. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes of the cash flow statement:
|
|
Group |
Company |
||
|
|
2020 |
2019 |
2020 |
2019 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
Cash at bank and in hand |
25,690 |
41,110 |
25,628 |
40,845 |
|
|
|
|
|
|
20. Trade and other payables
|
|
Group |
Company |
||
|
|
2020 |
2019 |
2020 |
2019 |
|
|
£ |
£ |
£ |
£ |
|
|
|
|
|
|
|
Trade and other payables |
227,288 |
476,876 |
41,505 |
302,762 |
|
Amounts owed to subsidiary undertakings |
|
- |
6,340 |
6,340 |
|
Social security costs and other taxes |
10,279 |
9,713 |
10,279 |
9,714 |
|
Other creditors |
- |
- |
33,437 |
- |
|
Accruals and deferred income |
448,242 |
410,533 |
121,998 |
160,428 |
|
|
|
|
|
|
|
|
685,809 |
897,122 |
213,559 |
479,244 |
|
|
|
|
|
|
21. Borrowings
|
|
Group |
Company |
||
|
|
2020 |
2019 |
2020 |
2019 |
|
|
£ |
£ |
£ |
£ |
|
|
|
(restated) |
|
|
|
Convertible loan notes |
|
|
|
|
|
Repayable with 1 year |
416,142 |
361,581 |
416,142 |
361,581 |
|
Repayable within 2 to 5 years |
16,084 |
141,463 |
16,084 |
141,463 |
|
|
|
|
|
|
|
|
432,226 |
503,044 |
432,226 |
503,044 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loans |
|
|
|
|
|
Repayable with 1 year |
- |
120,000 |
- |
120,000 |
|
|
|
|
|
|
|
|
- |
120,000 |
- |
120,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Hire purchase finance |
|
|
|
|
|
Repayable with 1 year |
24,689 |
22,863 |
- |
- |
|
Repayable within 2 to 5 years |
23,789 |
44,136 |
- |
- |
|
|
|
|
|
|
|
|
48,478 |
66,999 |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
Repayable with 1 year |
440,831 |
504,444 |
416,142 |
481,581 |
|
Repayable within 2 to 5 years |
39,873 |
185,599 |
16,084 |
141,463 |
|
|
|
|
|
|
|
|
480,704 |
690,043 |
432,226 |
623,044 |
|
|
|
|
|
|
Convertible loan
In November 2018 $750,000 conditionally convertible loan notes were issued: the face value of these convertible securities is $900,000. A commitment fee of £37,500, which has been offset against the proceeds of issue of the convertible loan notes, was payable by the Company as well as issuing share options over 99,568,966 ordinary shares exercisable for 4 years at a conversion price on 0.29p per share. The Company is required to make repayments of $45,000 over 20 months commencing in February 2019. If repayments are made in cash, then an additional 3% is payable on the $45,000. The Company may elect to make the repayment in its shares priced at 90% of the average five day Volume Weighted Average Price (VWAP) chosen by the investor during the 20 days before issuance, or a combination of both.
The Company has the option to buy back the entire outstanding face value at any time at a premium of 5%. If this right is exercised the investor has an option to convert 25% of the face value into shares at the lesser of the repayment price or 0.29p per share. The repayment price being 130% of the 10-day VWAP immediately prior to the Company entering the Convertible Agreement.
In addition to the above the investor was offered 36,000,000 collateral shares which were issued by the Company on 20 February 2019.
In April 2019, the Company agreed a repayment holiday up to September 2019 in respect of the convertible loan notes. As a condition of granting the repayment holiday the outstanding balance at the time. $855,000, was increased by 15% to $983,250
On 15 January 2021 the Company also agreed repayment terms with Lind Partners LLC whereby it agreed to repay 20% of the outstanding debt by 31 January 2021 with the balance to be paid in monthly instalments from the end of April 2021. Lind Partners LLC also agreed that no further interest is to be charged on the outstanding balance.
As announced on 22 June 2021, following two fund raises in January and May 2021, Edenville was able to pay off all outstanding obligations to Lind.
Other loans
This represents a loan of £100,000 with a fixed coupon interest rate of 20%.
22. Environmental rehabilitation liability
|
|
Group |
|
|
|
2020 |
2019 |
|
|
£ |
£ |
|
|
|
|
|
At 1 January 2020 |
- |
- |
|
Additions |
17,784 |
- |
|
Interest |
4,389 |
- |
|
Foreign exchange movement |
(261) |
- |
|
|
|
|
|
|
21,912 |
- |
|
|
|
|
The group makes full provision for the future cost of rehabilitating mine sites and related production facilities on a discounted basis at the time of developing the mines and installing and using those facilities. The rehabilitation provision represents the present value of rehabilitation costs relating to mine sites which are expected to be incurred in the future, which is when the producing mine properties are expected to cease operations. Those provisions have been created based on the Company's internal estimates. Assumptions based on the current economic environment have been made, which management believes are a reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to take into account any material changes to the assumptions. However actual rehabilitation costs will ultimately depend upon future market prices for the necessary rehabilitation costs will ultimately depend upon future market prices for the necessary rehabilitation works required that will reflect market conditions at the relevant time. Furthermore, the timing of rehabilitation is likely to depend on
when the mines cease to produce at economically viable rates. This, in turn will depend upon future coal prices, which inherently uncertain.
23. Share capital
Group and Company
|
|
No |
£ |
No |
£ |
£ |
|
|
Ordinary shares of 0.02p each |
Ordinary shares of 0.02p each |
Deferred shares of 0.001p each |
Deferred shares of 0.001p each |
Total share capital |
|
Issued and fully paid |
|
|
|
|
|
|
At 1 January 2019 |
1,547,746,369 |
309,551 |
241,248,512,346 |
2,412,485 |
2,722,036 |
|
On 20 February 2019 Ordinary shares were issued at 0.02p |
36,000,000 |
7,200 |
- |
- |
7,200 |
|
On 20 February 2019 Ordinary shares were issued at 0.12p |
64,515,192 |
12,903 |
- |
- |
12,903 |
|
On 2 May 2019 500,000 Ordinary shares at 0.02p |
500,000,000 |
100,000 |
- |
- |
100,000 |
|
On 20 May 2019 2,263,980,200 Ordinary shares at 0.02p |
2,263,980,200 |
452,796 |
- |
- |
452,796 |
|
On 11 September 2019 600,000,000 Ordinary shares at 0.05p |
600,000,000 |
120,000 |
- |
- |
120,000 |
|
|
|
|
|
|
|
|
As at 31 December 2019 |
5,012,241,761 |
1,002,450 |
241,248,512,346 |
2,412,485 |
3,414,935 |
|
|
No |
£ |
No |
£ |
£ |
|
|
Ordinary shares of 0.02p each |
Ordinary shares of 0.02p each |
Deferred shares of 0.001p each |
Deferred shares of 0.001p each |
Total share capital |
|
Issued and fully paid |
|
|
|
|
|
|
At 1 January 2020 |
5,012,241,761 |
1,002,450 |
241,248,512,346 |
2,412,485 |
3,414,935 |
|
On 9 January 2020 Ordinary shares were issued at 0.05p |
50,000,000 |
10,000 |
- |
- |
10,000 |
|
On 21 January 2020 Ordinary shares were issue at 0.04p |
1,750,000,000 |
350,000 |
- |
- |
350,000 |
|
On 8 June 2020 Ordinary shares were issued at 0.04p |
1,250,000,000 |
250,000 |
- |
- |
250,000 |
|
On 14 August 2020 Ordinary shares were issued at 0.06p |
83,333,333 |
16,666 |
- |
- |
16,666 |
|
|
|
|
|
|
|
|
As at 31 December 2020 |
8,145,575,094 |
1,629,116 |
241,248,512,346 |
2,412,485 |
4,041,601 |
|
|
|
|
|
|
|
The deferred shares have no voting rights, dividend rights or any rights of redemption. On return of assets on winding up the holders are entitled to repayment of amounts paid up after repayment to ordinary share holders
|
24. Capital and reserves attributable to shareholders |
Group |
Company |
||
|
|
2020 |
2019 |
2020 |
2019 |
|
|
£ |
£ |
£ |
£ |
|
|
|
(restated) |
|
|
|
Share capital |
4,041,601 |
3,414,935 |
4,041,601 |
3,414,935 |
|
Share premium |
19,390,849 |
18,811,157 |
19,390,849 |
18,811,157 |
|
Other reserves |
795,304 |
979,567 |
301,174 |
281,502 |
|
Retained deficit |
(18,866,991) |
(17,718,347) |
(7,782,331) |
(7,358,134) |
|
|
________ |
________ |
|
|
|
Total equity |
5,360,763 |
5,487,312 |
15,951,293 |
15,149,460 |
|
|
|
|
|
|
|
|
|
|
|
|
There have been no significant changes to the Group's capital management objectives or what is considered to be capital during the year.
25. Capital management policy
The Group's policy on capital management is to maintain a low level of gearing. The group funds its operation primarily through equity funding.
The Group defines the capital it manages as equity shareholders' funds less cash and cash equivalents.
The Group objectives when managing its capital are:
· To safeguard the group's ability to continue as a going concern.
· To provide adequate resources to fund its exploration, development and production activities with a view to providing returns to its investors.
· To maintain sufficient financial resources to mitigate against risk and unforeseen events.
The group's cash reserves are reported to the board and closely monitored against the planned work program and annual budget. Where additional cash resources are required the following factors are considered:
· the size and nature of the requirement.
· preferred sources of finance.
· market conditions.
· opportunities to collaborate with third parties to reduce the cash requirement.
26. Financial instruments
The Board of Directors determine, as required, the degree to which it is appropriate to use financial instruments to mitigate risk with the main risk affecting such instruments being foreign exchange risk, which is discussed below.
|
|
Group |
Company |
||
|
Categories of financial instruments |
2020 |
2019 |
2020 |
2019 |
|
|
£ |
£ |
£ |
£ |
|
Receivables at amortised cost including cash and cash equivalents: |
|
|
|
|
|
Investments and loans to subsidiaries |
- |
- |
16,561,617 |
16,160,173 |
|
Cash and cash equivalents |
25,690 |
41,110 |
25,628 |
40,845 |
|
Trade and other receivables |
301,251 |
363,457 |
8,498 |
46,328 |
|
Total |
326,941 |
404,567 |
16,595,743 |
16,247,346 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
Financial liabilities at amortised cost: |
|
|
|
|
|
Trade and other payables |
675,330 |
887,409 |
203,280 |
564,530 |
|
Convertible loan notes |
432,226 |
503,044 |
432,226 |
503,044 |
|
|
1,107,566 |
1,390,453 |
635,506 |
1,067,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net |
(780,625) |
(985,886) |
15,960,237 |
15,179,772 |
Cash and cash equivalents
This comprises cash held by the Group and short-term deposits. The carrying amount of these assets approximates to their fair value.
General risk management principles
The Directors have an overall responsibility for the establishment of the Group's risk management framework. A formal risk assessment and management framework for assessing, monitoring and managing the strategic, operational and financial risks of the Group is in place to ensure appropriate risk management of its operations.
The following represent the key financial risks that the Group faces:
Interest rate risk
The Group only interest-bearing asset is cash invested on a short-term basis which attracts interest at the bank's variable interest rate.
The Group is exposed to interest rate risk through its convertible loan notes, its only interest-bearing liabilities. The level of interest payable will vary depending on whether the repayments are made with shares or in cash. The effective interest rate per month is 20.78% (2019:20.78%). If repayments are made in cash then the monthly repayments increase by 3%.
Credit risk
Credit risk arises principally from the Group's trade receivables and investments in cash deposits. It is the risk that the counterparty fails to discharge its obligation in respect of the instrument.
VAT receivable is owed to Edenville International (Tanzania) Limited which is only recoverable against future sales made by Edenville International (Tanzania) Limited. The Group expects to recover the above VAT from sales of commercial coal.
The Group holds its cash balances with reputable financial institutions with strong credit ratings. There were no amounts past due at the balance sheet date.
The maximum exposure to credit risk in respect of the above at 31 December 2020 is the carrying value of financial assets recorded in the financial statements.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due.
Liquidity risk is managed through an assessment of short, medium and long-term cash flow forecasts to ensure the adequacy of working capital.
The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances to meet expected requirements for a period of one year.
Currency Risk
The Group is exposed to currency risk as the assets (see note 5) of its subsidiaries are denominated in US Dollars. The Group's policy is, where possible, to allow group entities to settle liabilities denominated in their functional currency (primarily US Dollars) with cash. The Company transfers amounts in sterling or US dollars to its subsidiaries to fund its operations. Where this is not possible the parent Company settles the liability on behalf of its subsidiaries and will therefore be exposed to currency risk.
The Group has no formal policy is respect of foreign exchange risk; however, it reviews its currency exposure on a regular basis. Currency exposures relating to monetary assets held by foreign operations are included in the Group's income statement. The Group also manages its currency exposure by retaining the majority of its cash balances in sterling, being a relatively stable currency.
The effect of a 10% rise or fall in the US dollar/Sterling exchange rate would result in an increase or decrease in the net assets of the group of £700,210.
Fair value of financial assets and liabilities
Fair value is the amount at which a financial instrument could be exchanged in an arm's length transaction between informed and willing parties, other than a forced or liquidation sale and excludes accrued interest. Where available, market values have been used to determine fair values. Where market values are not available, fair values have been calculated by discounting expected cash flows at prevailing interest rates and by applying year end exchange rates.
The Directors consider that there is no significant difference between the book value and fair value of the Group's financial assets and liabilities.
The tables below summarise the maturity profit of the combined Group's non-derivative financial liabilities at each financial year end based on contractual undiscounted payments.
|
Group
2019 |
|
|
|
|
|
Less than 1 year |
1- 2 years |
2-5 years |
|
|
|
(restated |
|
|
Trade payables |
466,645 |
- |
- |
|
Other payables |
10,232 |
- |
- |
|
Accruals |
410,535 |
- |
- |
|
Borrowings |
504,444 |
185,599 |
- |
|
|
1,391,856 |
185,599 |
- |
|
2020 |
|
|
|
|
|
Less than 1 year |
1- 2 years |
2-5 years |
|
Trade payables |
227,288 |
|
|
|
Other payables |
10,279 |
|
|
|
Accruals |
448,242 |
|
|
|
Borrowings |
440,831 |
39,873 |
- |
|
|
1,126,640 |
39,873 |
- |
|
Company
2019 |
|
|
|
|
|
Less than 1 year |
1-2 years |
2-5 years |
|
Convertible loan notes (current and non - current) |
361,581 |
141,463 |
- |
|
Trade payables |
277,762 |
- |
- |
|
Other payables |
136,054 |
- |
- |
|
Accruals |
160,428 |
- |
- |
|
|
935,825 |
141,463 |
- |
|
2020 |
|
|
|
|
|
Less than 1 year |
1-2 years |
2-5 years |
|
Convertible loan notes (current and non - current) |
416,142 |
16,084 |
- |
|
Trade payables |
41,505 |
- |
- |
|
Other payables |
39,777 |
- |
- |
|
Accruals |
121,998 |
- |
- |
|
|
619,422 |
16,084 |
- |
27. Equity-settled share-based payments
The following options over ordinary shares have been granted by the Company:
|
|
|
|
Number of options |
|||
|
Grant Date |
Expiry date |
Exercise price |
As at 1 January 2020 |
Granted |
Lapsed |
As at 31 December 2020 |
|
21 October 2013 |
20 October 2023 |
5.00p |
3,005,740 |
|
(3,005,740) |
- |
|
28 March 2017 |
27 March 2022 |
1.08p |
38,000,000 |
|
(14,666,666) |
23,333,334 |
|
7 November 2018 |
6 November 2022 |
0.29p |
99,568,966 |
|
|
99,568,966 |
|
9 May 2019 |
8 May 2023 |
0.26p |
100,000,000 |
|
|
100,000,000 |
|
3 April 2020 |
2 April 2025 |
0.30p |
- |
270,000,000 |
|
270,000,000 |
|
|
|
|
240,574,706 |
270,000,000 |
(17,672,406) |
492,903,300 |
The following warrants over ordinary shares have been granted by the Company:
|
|
|
|
Number of Warrants |
|||
|
Grant Date |
Expiry date |
Exercise price |
As at 1 January 2020 |
Granted |
Exercised |
As at 31 December 2020 |
|
2 May 2019 |
31 May 2022 |
0.02p |
127,500,000 |
- |
- |
127,500,000 |
|
23 January 2020 |
22 January 2022 |
0.06p |
- |
875,000,000 |
(83,333,333) |
791,666,667 |
|
6 June 2020 |
5 June 2023 |
0.04p |
- |
125,000,000 |
- |
125,000,000 |
|
6 June 2020 |
5 June 2023 |
0.06p |
- |
85,900,800 |
- |
85,900,800 |
|
|
|
|
127,500,000 |
1,085,900,800 |
(83,333,333) |
1,130,067,467 |
At the date of grant, the options were valued using the Black-Scholes option pricing model. The fair value per option granted and the assumptions used in the calculation were as follows:
|
Date of grant |
21 October 2013 |
28 March 2017 |
5 November 2018 |
26 April 2019 |
17 April 2020 |
|
Expected volatility |
85% |
131% |
70% |
101% |
72% |
|
Expected life |
4 years |
3 years |
4 years |
3.5 years |
3 years |
|
Risk-free interest rate |
1.23% |
0.37% |
0.96% |
0.75% |
0.11% |
|
Expected dividend yield |
- |
- |
- |
- |
- |
|
Possibility of ceasing employment before vesting |
- |
- |
- |
- |
- |
|
Fair value per option |
0.09p |
0.56p/0.42p/0.28p |
0.08p |
0.02 |
0.02p |
Volatility was determined by reference to the standard deviation of daily share prices for one year prior to the date of grant.
The charge to the income statement for share-based payments for the year ended 31 December 2020 was £50,398 (2019: £16,077).
On 6 June 2020 85,900,800 warrants were issued to settle liabilities of £51,540.
Movements in the number of options outstanding and their related weighted average exercise prices are as follows:
|
|
2020 |
2019 |
||
|
|
Number of options |
Weighted average exercise price per share pence
|
Number of options |
Weighted average exercise price per share pence |
|
At 1 January |
240,574,707 |
0.46 |
147,580,448 |
0.71 |
|
Granted |
270,000,000 |
0.30 |
100,000,000 |
0.26 |
|
Exercised |
- |
- |
- |
- |
|
Cancelled |
(17,672,407) |
1.75 |
(7,005,741) |
2.76 |
|
|
|
|
|
|
|
At 31 December |
492,902,300 |
0.33 |
240,574,707 |
0.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at year end |
482,235,632 |
|
215,241,373 |
|
|
|
|
|
|
|
The weighted average remaining contractual life of options as at 31 December 2020 was 3.15 years (2019: 2.78 years).
Warrants
Movements in the number of warrants outstanding and their related weighted average exercise prices are as follows:
|
|
2020 |
2019 |
||
|
|
Number of options |
Weighted average exercise price per share pence
|
Number of options |
Weighted average exercise price per share pence |
|
At 1 January |
127,500,000 |
0.02 |
- |
- |
|
Granted |
1,085,900,800 |
0.06 |
127,500,000 |
0.02 |
|
Exercised |
(83,333,333) |
0.06 |
- |
- |
|
Cancelled/expired |
- |
- |
- |
- |
|
|
|
|
|
|
|
At 31 December |
1,130,067,467 |
0.05 |
127,500,000 |
0.02 |
|
|
|
|
|
|
The weighted average remaining contractual life of warrants as at 31 December 2020 was 1.36 years (2019: 2.42 years).
28. Contingent liabilities
Edenville International (Tanzania) Limited has a dispute with a third party and arises from an Acquisition and Option Agreement signed in August 2010 (and its variation made in 2015) ("Agreement"). The third party is seeking financial compensation and other costs in addition to a dispute over certain mining licenses granted in the name of Edenville International (Tanzania) Limited. In the opinion of the directors and after taking appropriate legal advice, they have concluded that the case has no merit. The Directors remain optimistic for a positive outcome and await a decision from the judge which is currently scheduled for the end of June 2021.
29. Reserves
The following describes the nature and purpose of each reserve:
|
Share Capital |
represents the nominal value of equity shares |
|
Share Premium |
amount subscribed for share capital in excess of the nominal value |
|
Share Option Reserve |
fair value of the employee and key personnel equity settled share option scheme and broker warrants as accrued at the balance sheet date. |
|
Retained Earnings |
cumulative net gains and losses less distributions made |
30. Related Party Transactions
Key management personnel are those persons having authority and responsibility for planning, directing and controlling activities of the Company, and are all directors of the Company. For details of their compensation please refer to the Remuneration report.
During the year the Company paid £400,904 (2019: £547,984) to or on behalf of its wholly owned subsidiary, Edenville International (Tanzania) Limited. The amount due from Edenville International (Tanzania) Limited at year end was £9,518,305 (2019: £9,117,401). This amount has been included within loans to subsidiaries.
Included in trade creditors is an amount of £Nil (2019: £3,584) owed to Aaridhi Consultants, in respect of Directors fees for Arun Srivastava and £4,000 owed to Nicholas Von Schirnding, in respect of Directors fees.
At the year end the Company was owed £3,712 (2019: £3,712) by its subsidiary Edenville International (Seychelles) Limited.
At the year end the Company was owed £6,340 (2019: £6,340) by its subsidiary Edenville Power Tz Limited.
At the year end Edenville International (Tanzania) limited was owed $41,677 (2019: $41,677) by Edenville Power Tz Limited and $9,517 (2019: $9,517) was owed to JICL Consultants.
31. Prior year restatement
Edenville Energy Plc have identified an error relating to mining licences capitalised under IFRS 16 in the prior year, which fall outside the scope of the standard. As a result of the error, the prior year financial statements had to be restated. Items previously incorrectly capitalised as Right of use assets and lease liabilities have all been reversed.
The following tables show the adjustments recognised for each individual line item. The adjustments are explained in more detail below.
|
|
|
2019 |
Restatement |
2019 |
|
|
|
As previously stated |
|
Restated |
|
|
|
£ |
|
£ |
|
Revenue |
|
233,414 |
|
233,414 |
|
Cost of sales |
|
(982,261) |
(23,219) |
(1,005,480) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross loss |
|
(748,847) |
(23,219) |
(772,066) |
|
|
|
|
|
|
|
Administration expenses |
|
(904,410) |
16,855 |
(887,555) |
|
|
|
|
|
|
|
Share based payments |
|
(16,077) |
|
(16,077) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group operating loss |
|
(1,669,334) |
(6,364) |
(1,675,698) |
|
|
|
|
|
|
|
Finance income |
|
113 |
|
113 |
|
Finance costs |
|
(177,843) |
7,306 |
(170,537) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on operations before taxation |
|
(1,847,064) |
|
(1,846,122) |
|
|
|
|
|
|
|
Income tax |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
|
(1,847,064) |
|
(1,846,122) |
|
|
|
|
|
|
|
|
|
|
31 December 2019 |
Restatement |
31 December 2019 |
|
|
|
|
|
As previously stated |
|
Restated |
|
|
|
|
|
£ |
£ |
£ |
|
|
Non-current assets |
|
|
|
|
|
|
|
Investment in subsidiaries |
|
|
- |
|
- |
|
|
Property, plant and equipment |
|
|
6,085,403 |
|
6,085,403 |
|
|
Right of use assets |
|
|
97,727 |
(97,727) |
|
|
|
Intangible assets |
|
|
321,368 |
|
321,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
6,504,498 |
|
6,406,771 |
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Inventories |
|
|
247,538 |
|
247,538 |
|
|
Trade and other receivables |
|
|
365,541 |
|
365,541 |
|
|
Cash and cash equivalents |
|
|
41,110 |
|
41,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
654,189 |
|
654,189 |
|
|
Current liabilities |
|
|
|
|
|
|
|
Trade and other payables |
|
|
(897,122) |
|
(897,122) |
|
|
Borrowings |
|
|
(520,820) |
16,376 |
(504,444) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,417,942) |
|
(1,401,566) |
|
|
|
|
|
|
|
|
|
|
Current assets less current liabilities |
|
|
(763,753) |
16,376 |
(747,377) |
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities |
|
|
5,740,745 |
|
5,659,394 |
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
Borrowings |
|
|
(284,903) |
99,304 |
(185,599) |
|
|
Environmental rehabilitation liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,455,842 |
|
5,473,795 |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Called-up share capital |
|
|
3,414,935 |
|
3,414,935 |
|
|
Share premium account |
|
|
18,811,157 |
|
18,811,157 |
|
|
Share option reserve |
|
|
281,502 |
|
281,502 |
|
|
Foreign currency translation reserve |
|
|
698,095 |
(30) |
698,065 |
|
|
Retained earnings |
A |
|
(17,736,330) |
17,983 |
(17,718,347) |
|
|
|
|
|
|
|
|
|
|
|
|
5,469,359 |
|
5,487,312 |
|
|
|
Non- controlling interests |
|
|
(13,517) |
|
(13,517) |
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
5,455,842 |
|
5,473,795 |
|
|
|
|
|
|
|
|
|
A. This is related to reversal of the initial application of IFRS 16 of £17,042 plus transition adjustment of £941 as a result of the reversal of previously recognized depreciation, interest, and rental payments relating to the rent payable in respect of the mining licences. A third balance sheet for the earliest comparative period as required under IFRS 1 is not presented as there was no impact to the opening figures at 1 January 2019 as the error only relates to transactions occurred in the year to 31 December 2019.
32. Events after the reporting date
Following the year end the Company consolidated each existing £0.0002 to ordinary shares of £0.02 each. These were then subdivided into ordinary shares of £0.01p each and 19,000 new deferred shares of £0.00001 each.
On 15 January 2021 the Company raised £900,000 before expenses by way of placing 3,600,000 ordinary shares of 1p each.
On 15 January the Company granted warrants over 180,000 ordinary shares as a result if the above placing. The warrants have a 3 year life and an exercise price of 25p per share.
The Company also agreed repayment terms with Lind Partners LLC whereby it agreed to repay 20% of the outstanding debt by 31 January 2021 with the balance to be paid in monthly instalments from the end of April 2021. Lind Partners LLC also agreed that no further interest was to be charged on the outstanding balance. In June 2021, following two fund raises in January and May 2021, all outstanding obligations to Lind were settled.
On 5 May 2021 the Company raised £2,475,000 before expenses by way of placing 9,900,000 new ordinary shares of 1p each in the Company at a placing price of 25p per ordinary share. Investors in the placing also received one warrant for every placing share. The warrants have an exercise price of 25p per share and will be exercisable for a period of three years from the date of grant.
Subsequent to the year end, the Directors confirmed their intention to convert the loan of £16,551,565 bfetween the Company and its subsidiary into equity. This process will commence soon and it is anticipated that the conversion will be completed before 31 December 2021.
33. Commitments
License commitments
Edenville owns a coal mining exploration licences in Tanzania. These licences includes commitments to pay annual licence fees and minimum spend requirements.
As at 31 December 2020 these are as follows:
|
|
|
|
|
Group |
License fees £ |
Total £ |
|
Not later than one year |
23,089 |
23,089 |
|
Later than one year and no later than five years |
72,619 |
72,619 |
|
Total |
95,708 |
95,708 |
34. Ultimate Controlling Party
The Group considers that there is no ultimate controlling party.
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