TIDMEDL
RNS Number : 4633E
Edenville Energy PLC
30 June 2023
30 June 2023
Edenville Energy Plc
("Edenville" or the "Company")
Annual Results for the year ended 31 December 2022
Edenville Energy Plc (AIM: EDL), an African focused mine
operator and developer, announces its audited results for the year
ended 31 December 2022.
For Enquiries Contact:
Edenville Energy Plc
Noel Lyons - CEO
Via IFC Advisory +44 (0) 20 3934 6630
Financial and Nominated Adviser
Strand Hanson Limited
James Harris | Richard Johnson +44 (0) 20 7409 3494
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Broker
Tavira Securities Limited
Oliver Stansfield | Jonathan
Evans +44 (0) 20 7100 5100
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Financial PR and IR
IFC Advisory Limited
Tim Metcalfe | Florence Chandler +44 (0) 20 3934 6630
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The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended by virtue of the Market Abuse
(Amendment) (EU Exit) Regulations 2019.
Caution ;
This announcement has been prepared for information purposes
only.
Certain statements in this announcement are, or may be deemed to
be, forward-looking statements. Forward looking statements are
identi ed by their use of terms and phrases such as "believe",
"could", "should" "envisage", "estimate", "intend", "may", "plan",
"potentially", "expect", "will" or the negative of those,
variations or comparable expressions, including references to
assumptions. These forward-looking statements are not based on
historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of
operations, performance, future capital, and other expenditures
(including the amount, nature and sources of funding thereof),
competitive advantages, business prospects and opportunities. Such
forward-looking statements re ect the Directors' current beliefs
and assumptions and are based on information currently available to
the Directors.
CHAIRMAN'S REPORT
For the year ending 31 December 2022, the Company experienced a
period of major transition in terms of both operations and
management and board changes. This has continued into the first
half of 2023 with a major strategic financial investment in the
Company and further management changes underway.
On 3 February 2022, the Company's coal mining subsidiary,
Edenville International (Tanzania) Limited ("EITL"), entered into a
contract with Nextgen Coalmine Limited ("Nextgen") for the
operation of the Rukwa Coal Project ("Rukwa" or the "Project") in
Tanzania. However, and disappointingly the agreement with Nextgen
was terminated within 3 months on 31 May 2022 due to a lack of
progress, allowing the Company to assume full operating control of
the Project site and explore alternative arrangements for coal
mining operations to continue at Rukwa on what management
considered were significantly improved economic terms.
The second half of 2022 was dominated by several significant
changes to the Board and management team in Tanzania undertaken
after consulting with key shareholders. These changes included the
appointments of experienced executives Noel Lyons as CEO, Paul Ryan
as Executive Director and Andre Hope as a Non-executive Director
following the resignations of Alistair Muir, Jeff Malaihollo, and
Franco Caselli . During this period of change I assumed the role of
Non-Executive Chairman .
On site in Tanzania, the changes in operational management
resulted in a more coordinated and dedicated workforce and this had
immediate benefits with the newly appointed executive team entering
into an initial 12-month agreement in August 2022 with local mine
operator and commercial and logistics specialist Brahma Energies
Limited to secure higher production and sales. This agreement
subsequently, underwent a tender process and was eventually
restructured on a more cost-effective basis, which is how the
current operations at Rukwa are now being managed.
To support the ongoing activities in Tanzania and corporate
activities, late in the year in December 2022, the Company raised
gross proceeds of GBP400,000 through the placement of 5,714,286 new
ordinary shares at a price of 7.0 pence per share.
The transformation of the Company has continued post period end
and, in June 2023, the Company entered into a major strategic
funding agreement to conditionally raise GBP1,468,000 which
involved attracting a new shareholder group, which includes Q
Global Commodities Group (QGC), a prominent independent commodity,
mining, logistics, and investment fund from South Africa, and
Gathoni Muchai Investments (GMI), an East African Mining Investment
Group. Mr. Jason Brewer from GMI has already joined the Board as an
Executive Director, and Mr. Quinton van der Burgh from QGC is
expected to join the Board in due course, as Director and
Non-Executive Chairman.s ubject to satisfactory completion of due
diligence checks by the Company's nominated adviser. , Once Mr. Van
der Burgh assumes his position, I intend to resign from the
Board..
2022 was certainly a challenging period for the Company however,
the Board has not shied away from making tough management and Board
level decisions to look at ways of delivering value to its
shareholders. We believe that the recent recapitalization of the
Company, together with planned continuing exploitation of Rukwa
with the support of the experienced our enhanced Board to determine
how to best maximise production and output which should lead to a
successful period ahead into 2023.
I would like to extend my gratitude to all our stakeholders and
former board directors, Jeff Malaihollo, Alistair Muir, and Franco
Caselli, for their contributions to the Company.
Yours Sincerely,
Nick von Schirnding
29 June 2023
CHIEF EXECUTIVE OFFICER'S REPORT
The year 2022 marked a period of significant transition in the
management and prospects of the Company, encompassing the Rukwa
coal mine and our broader vision for future growth.
Funding
On 6 December , 2022, we announced an equity placing that raised
gross proceeds of GBP400,000, supported by both new investors and
some of Edenville's existing shareholders.
The Company has transferred the long outstanding debt owed by
the Envirom GroupAB to debt collectors in Norway. We had agreed a
settlement of a lesser amount with Envirom Group AB to ensure
timely payment. However, due to their failure to honour the terms
of such settlement, we are pursuing the full amount owning of
GBP246,781.80 . This debt was inherited by the current executive
team.
We have also resolved our employee litigation relating to an
unfair dismissal claim. without any liability. During the course of
2022, at the time of the change of management in Tanzania, the
EITL's bank account was temporarily suspended while the bank
awaited confirmation of, inter alia, new directors being appointed.
This has now been fully resolved and the account is fully
operational.
Additionally, as part of our vigorous defense against the
spurious claim by Upendo Group and former local Director Mr. Kegele
Cassiano, who has claimed a right to 10% of turnover (instead of
10% of returns as per the agreements), we made a payment of
$108,000 into the Tanzanian courts of appeal which enables the
Company to defend this case going forward..
On June 6, 2023, the Company announced a placing of
GBP1,468,000. of which GBP893,000 is subject to shareholder
approval at the forthcoming AGM. As of 23 June 2023, the Company
had cash balances of approximately GBP400,000, which is likely
sufficient for its current needs at Rukwa, provided that it can
achieve cashflow positivity later this year as production
stabilizes at a consistent level.
Operational Review
The following statement is in relation to the Company's
subsidiary EITL.
Production during the year showed intermittent encouraging
signs, particularly during periods of favourable weather and when
the aged plant operated without major breakdowns or outside labour
disruptions. We have also identified strong demand with the
condition that a consistent supply can be assured having recently
signed a supply contract with Rwandan client for the supply of up
to 5,000 tonnes of washed coal per month. However, the intermittent
and unpredictable operational performance significantly strains
resources and hampers access to regular and high-margin sales.
Additionally, legacy issues, such as unmet production level
expectations set with the mining commission, jeopardize the
license, and strained relationships with local service providers,
suppliers, and advisers, all impact day-to-day operations and
require a disproportionate amount of attention and resources. Due
to the change of local management in the second half of 2022 and
the subsequent challenges, together brought with lack of certain
historic company documentation some historic expenditure was
difficult to verify and while not material in the overall review of
the Group's activities, it is noted by the local auditors and in
the auditor's report as further referenced below. The new
management team immediately enhanced all financial control
procedures on their arrival in the company and these strict
policies are adhered to throughout the company today.
Corporate Social Responsibility
The Company remains committed to fulfilling its corporate and
social responsibilities. We recognise the importance of meeting
social requirements as an operator in Tanzania. The construction of
the mining operation at Rukwa has already led to improvements in
local infrastructure, most notably the construction of a road from
Kipandi to Mkomolo village and beyond, benefiting farmers, the
local population, and the mine itself. We have also prioritised the
employment of local individuals from surrounding villages,
resulting in highly competent and skilled employees. The positive
social impact extends to the broader community, where enterprising
individuals are providing services such as food supply for
workers.
Post Period Events
Following the end of the reporting period in June 2023, the
Company entered into an agreement to conditionally raise
GBP1,468,000 as part of a larger restructuring effort. This
involved welcoming a new shareholder group, including Q Global
Commodities Group (QGC), a leading independent commodity, mining,
logistics, and investment fund from South Africa, and Gathoni
Muchai Investments (GMI), an East African Mining Investment Group.
Mr. Jason Brewer from GMI has joined the Board as an Executive
Director, and Mr. Quinton van der Burgh of QGC is expected to join
the Board in due course, following the completion of customary due
diligence by the Company's Nominated Adviser. It is anticipated
that Mr. Nicholas Von Schirnding will resign from the Board once
Mr. van der Burgh joins.
Audit opinion qualification
The financial statements of the group include certain costs
pertaining to the subsidiary EITL.
As noted previously, the new Executive Board instigated a number
of changes in the management of EITL. In particular, certain former
stakeholders and suppliers deemed no longer suitable were removed.
In addition, together with the replacement of on-the-ground senior
management who the Board believes were impacting progress of Rukwa,
new local advisers and personnel were recruited. However, as a
result of these significant changes, the Company and auditors have
experienced difficulty in obtaining supporting documents to
substantiate and verify some of the aforementioned
expenditures.
In addition, the financial statements of the group include a
trade payables balance of GBP58,614, consisting of supplier
balances related to EITL. As above, largely due to the
aforementioned changes, the Company has experienced difficulties in
obtaining the requisite creditor confirmations or supplier
statements necessary to confirm the accuracy or otherwise of these
balances.
Accordingly the auditor's opinion on the financial statements
have been qualified in respect of these aforementioned matters. The
Board has concluded that, following a review and an analysis of
previous years expenditure, the unverified expenses incurred in
2022 prior to new management joining, are in line with what would
be expected based on fixed overhead and production numbers.
Tanzanian Government participation in Edenville International
(Tanzania) Limited
The Company will engage with the relevant local Government
authorities to negotiate an appropriate participation of the
Government in the shareholding of EITL of up to 16%. This
shareholding will have no voting power and will simply be reflected
as a participation on behalf of the Government. There is no fixed
amount specified to be issued to Government and each company needs
to hold its own negotiations. Historically the issue of Government
participation has been unclear and subject to change frequently.
EITL is carrying significant tax losses so it will be some time,
regardless of improved performance, before profit share will be
considered. We will keep the market updated as this situation
develops.
Summary and Outlook
Despite the numerous changes in the Company during 2022, we have
emerged stronger with our new management team and valuable new
investors who bring extensive experience, finance, and expertise in
the mining business on the African continent. With their positions
on the Board, we are well-prepared for an exciting second half of
2023 and beyond. Furthermore, with an improved cash position, we
will continue to target additional asset acquisitions, leveraging
the natural resources and capital markets expertise of the Board
and significant shareholders.
I look forward to the future of Edenville, both for the
remainder of 2023 and beyond, with confidence in its potential to
generate shareholder value.
Noel Lyons
Chief Executive Officer
29 June 2023
REPORT OF THE INDEPENT AUDITORS TO THE MEMBERS OF EDENVILLE
ENERGY PLC
Qualified 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 2022 which comprise the Group Statement of
Comprehensive Income, the Group and Parent Company Statement of
Financial Position, the Group and Parent Company Statement of
Changes in Equity, the Group and Parent Company Cash Flows
Statements 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
UK-adopted international accounting standards and as regards the
parent company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
In our opinion, except for the effects of the matter described
in the Basis for qualified opinion section of our report:
-- 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 2022 and of the group's loss for the
year then ended;
-- the group financial statements have been properly prepared
in accordance with UK-adopted international accounting
standards;
-- the parent company financial statements have been properly
prepared in accordance with UK-adopted international accounting
standards and 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 qualified opinion
The financial statements of the group include direct costs
amounting to GBP423,352, other administration expenses of
GBP75,674, and other operating expenses of GBP80,961, pertaining to
the subsidiary Edenville International (Tanzania) Limited. In the
course of the audit, we were not provided with the necessary
supporting documents to substantiate these expenditures.
Consequently, we were unable to obtain sufficient appropriate audit
evidence to determine whether the amounts recorded in the statement
of comprehensive income and the statement of financial position are
materially misstated. In the absence of supporting evidence, we
were unable to evaluate the occurrence and accuracy of these
amounts. As such, we were unable to determine whether any
adjustments are necessary to the financial statements.
The financial statements of the group include a trade payables
balance of GBP58,614, consisting of supplier balances related to
the subsidiary Edenville International (Tanzania) Limited. We were
unable to obtain creditor confirmations or supplier statements
necessary to perform the required audit procedures to confirm
accuracy and existence of these balances. As such, we were unable
to determine whether any adjustments are necessary in the financial
statements.
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 listed entities,
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 qualified opinion.
Emphasis of matter
Operationalisation of up to 16% Government of Tanzania
non-dilutable free carried share interest.
We draw attention to Note 28 of the financial statements, which
highlights that the group has not completed the operationalisation
of the issuance of up to 16% non-dilutable free carried interest
shares in its subsidiary, Edenville Energy (Tanzania) Limited, as
required by the Tanzania State Participation Mining
legislation.
Our opinion is not modified in this respect.
Recoverability of Value Added Tax
We draw attention to Note 4 of the financial statements, which
describes the group's assessment over the Value Added Tax (VAT)
receivable balance of GBP279,157 in its subsidiary, Edenville
Energy (Tanzania) Limited. The group has assessed and concluded
within its critical accounting estimates that the VAT is
recoverable. The nancial 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.
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:
-- Reviewing and evaluating management's assessment of going
concern, including cash flow forecasts prepared until June 30,
2024, derived from run-of-mine forecasts for the mine's entire
lifespan;
-- Assessing the completeness of forecasted expenditures,
ensuring that all relevant information such as planned mining and
capital expenditure, has been considered;
-- Analysing cash flow forecasts and budgets until 30 June 2024,
challenging the underlying assumptions regarding estimated
quantities of coal production and sales, selling prices, and
associated expenditures, while verifying mathematical
accuracy.;
-- Verified and agreeing the cash position at the year-end and
post the year-end to bank statements, taking into account funds
raised after the year-end; and
-- Challenging management's forecasts by assessing the stress
test scenario and evaluating the financial resources available to
address this outcome, specifically examining the ability of the
group and parent company to raise funds.
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.
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 for the financial
statements as a whole applied to the group financial statements was
GBP74,000 (2021: GBP74,700) based on 1% of gross assets. We chose
gross assets as the basis for materiality because in a mining
company, the primary focus of users is the efficient utilisation
and exploitation of mining assets to generate production, making it
a key performance indicator for stakeholders. The performance
materiality for the group was set at GBP44,400 (2021: GBP44,800)
representing 60% (2021: 60%) of the overall materiality. The
materiality for the financial statements as a whole applied to the
parent company financial statements was GBP11,400 (2021: GBP12,500)
based on 2% of the expenses. We chose expenses as the basis for
materiality for the parent company financial statements because it
aligns with the key cost components associated with its
administrative and management functions, considering the parent
company primarily serves as a holding entity for the subsidiary.
The performance materiality for the parent company was GBP6,840
(2021: GBP7,500) representing 60% (2021: 60%) of the overall
materiality. Performance materiality is based at a medium risk
level of 60% considering the inherent risks in the mining industry
and the specific risks identified and disclosed in the key audit
matters. We use performance materiality to reduce to an
appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds overall
materiality. Specifically, we use performance materiality in
determining the scope of our audit and the nature and extent of our
testing of account balances, classes of transactions and
disclosures, for example in determining sample sizes.
For the component in the scope of our group audit, we allocated
a materiality that was less than our overall group materiality.
This component materiality, determined to be GBP65,800 (2021:
GBP60,900), aligns with the same benchmarks used for the group.
We agreed with those charged with governance that we would
report all differences identified during the course of our audit in
excess of GBP3,700 (2021: GBP3,735) for the group and GBP570 (2021:
GBP625) for the parent company.
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 parent 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 of 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, two components being the
London parent company and its Tanzanian subsidiary that owns the
mining license were identified as significant and material
components. We performed a full scope audit of the London parent
company's complete financial information using a team with specific
experience of auditing mining entities and publicly listed
entities, and the Tanzanian subsidiary's audit was conducted by
component auditors from a PKF network firm. Analytical procedures
were performed in respect of the remaining components of the group
because they were not significant to the group.
The subsidiary located in Tanzania was audited by a component
auditor operating under our instructions as the group auditor. The
Senior Statutory Auditor interacted regularly with the component
audit team 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's 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. In addition to
the matter described in the Basis for qualified opinion section, we
have determined the matters described below to be the key audit
matters to be communicated in our report.
Key Audit Matter How our scope addressed this
matter
Carrying value of mining assets
(Note 15)
==================================================================
The entity has capitalised mining Our audit work in this area
assets of GBP5,727,379. included:
The mining assets are being * Reviewing and challenging management's impairment
amortised on unit of production review process, including the consideration of NPV
method. Given the low mining calculations and challenging the assumptions and
levels, there is a risk that inputs used in the models. We conducted a sensitivity
the current level of amortisation analysis on key assumptions, evaluating them against
may not be appropriate, potentially third-party evidence;
leading to a need for impairment
assessment.
* Assessing the reasonableness of assumptions used in
Management assess annually whether the impairment model by comparing them to industry
there is any indication of impairment benchmarks and other external sources of information;
of these assets. The impairment
test involves estimation of
the recoverable amount of the * Considering the group's resources, coal processing
assets requires management to capacity, and sales margins, we assessed the carrying
make significant judgement and value of mining assets in light of market conditions,
estimation in relation to the such as changes in commodity prices or demand. This
assumptions and inputs used assessment included corroborating our findings with
in the Net Present Value (NPV) sales agreements signed post year end to gain
valuation model. insights into future revenue streams;
The carrying value of mining
assets is a key audit matter * Conducting a sensitivity analysis to evaluate the
because of the significant level impact of changes in key assumptions on the carrying
of estimation uncertainty and value of mining assets, providing insights into the
judgement involved in determining potential range of outcomes and estimation
the carrying value of these uncertainty;
assets reliably and accurately.
* Performing testing to ensure the existence and
ownership of licenses and consideration has been
given to whether a decommissioning provision is
required. ; and
* Considering whether the treatment of mining assets is
in accordance with International Accounting Standard
16 and has been correctly classified. In addition, we
evaluated the appropriateness of accounting policies
used for mining assets, including the recognition and
measurement of mineral reserves and mine development
costs.
In forming our opinion, which
is not modified, based on the
work performed, we are satisfied
that the carrying value of the
mining assets in the financial
statements is not materially
misstated. The future carrying
value of the mining assets is
dependent on the ability of
the subsidiary to fully realise
the potential of the mine and
increase the mining activities
and extraction to pre-pandemic
levels.
==================================================================
Valuation of the parent company's
investment in, and loans to,
subsidiaries (Note 14)
==================================================================
The parent company owns a significant Our audit work in this area
investment in Edenville International included:
(Tanzania) Limited of GBP18,173,697,
which includes loans to the * Reviewing and challenging management's impairment
subsidiary of GBP11,130,386. review of the investments held, including
The carrying value of this investment consideration of the NPV calculations. We challenged
is linked to the value of the the assumptions and inputs included in the models and
underlying assets held in Edenville performed a sensitivity analysis on the key
International (Tanzania) Limited. assumptions. We also challenged management's
These assets are primarily mining assumptions by obtaining corroborative evidence to
assets located in Tanzania, support the sales projections. We also considered the
and their valuation is subject reasonableness of the discount rate applied in the
to significant estimation and NPV calculations.
judgement.
Significant estimation and judgement * Reviewing the work of the component auditor around
involve determining the future the indicators of impairment in relation to the
cash flows expected to be generated Tanzania based subsidiary.
from the mining assets and comparing
this to the carrying value of
the investment in the subsidiary. * Reviewing the value of the net investment in
The estimation of future cash subsidiaries against the underlying assets and
flows is based on assumptions corroborating the estimates and judgements used by
made by management, including management to assess the recoverability of
factors such as commodity prices, investments and intercompany receivables. We assessed
production volumes, and operational the reliability of the underlying assumptions made by
costs. Hence, there is a risk management regarding the expected future cash flows
that the value in use of the from the mining assets held by the subsidiary. We
mining assets is below the carrying also performed a sensitivity analysis on the key
value of the investment, which assumptions and inputs used in the valuation and
could result in a material misstatement challenge management's estimates where necessary.
of the amounts reported, and
as such, the valuation of the
parent company's investment * Corroborating the supporting documentation provided
in loans to subsidiaries is by management, such as mineral resource reports and
a key audit matter. feasibility studies, to assess the reasonableness of
the estimates and judgements made.
In forming our opinion, which
is not modified, based on the
work performed, we are satisfied
that the value of the investment
and loans in the financial statements
are not materially misstated.
The recoverability is dependent
on the ability of the subsidiary
to fully realise the potential
of the mine and increase the
mining activities and extraction
to pre-pandemic levels.
==================================================================
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
on 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.
As described in the Basis for qualified opinion on other matters
prescribed by the Companies Act 2006 section of out report, we have
concluded that a material misstatement of the other information
exists.
Opinion 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
Except for the material misstatement described in the Basis for
qualified opinion on other matters prescribed by the Companies Act
2006 section of our report, in the light of the knowledge and
understanding of the group and parent company and their environment
obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the directors'
report.
Arising solely from the basis for qualified opinion paragraph
referred to above :
-- we have not received all the information and explanations
we require for our audit; and
-- We were unable to determine whether adequate accounting
records have not been kept by the subsidiary Edenville
International (Tanzania) Limited
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, 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
Responsibilities of directors
As explained more fully in the statement of directors'
responsibilities, 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 as well as the sector in which they operate to
identify laws and regulations that could reasonably be
expected to have a direct effect on the financial statements.
We obtained our understanding in this regard through
discussions with management, industry research, application
of our cumulative audit knowledge and experience of the
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
for Companies and Mining Act (14/2010) and various regulations
made there under applicable to subsidiary in Tanzania.
-- 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. These procedures included, but
were not limited to enquiries of management, review of
minutes and Regulatory News Service (RNS) announcements,
and review of legal and regulatory correspondence.
-- 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,
that the potential for management bias was identified
in relation to the impairment assessment of mining assets
and parent company's valuation of investments in loans
to subsidiaries. We addressed this by challenging the
assumptions and judgements made by management when evaluating
any indicators of impairment.
-- 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; 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.
-- For the significant component within the group, the audit
procedures performed by the component auditors relating
to non-compliance with laws and regulations and the posting
of journal entries was reviewed for evidence of non-compliance
or potential instances of fraud detected. As noted in
the Emphasis of matter section of our report, non-compliance
with requirement of the Government of Tanzania on operationalisation
of up to 16% non-dilutable free carried interest shares
was identified in the year.
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
29 June 2023
GROUP STATEMENT OF COMPREHENSIVE INCOME
Note 2022 2021
GBP GBP
Revenue 5 183,448 105,228
Cost of sales (896,147) (684,848)
Gross loss (712,699) (579,620)
Administration expenses 6 (1,038,384) (875,564)
Group operating loss (1,751,083) (1,455,184)
Finance income 10 68 701
Finance costs 11 (4,747) (5,842)
Loss on operations before taxation (1,755,762) (1,460,325)
Income tax 12 (917) (526)
Loss for the year (1,756,679) (1,460,851)
Attributable to:
Equity holders of the Company (1,754,011) (1,458,586)
Non-controlling interest (2,668) (2,265)
Other comprehensive loss
Item that will or may be reclassified
to the profit and loss:
Gain on translation of overseas subsidiary 691,850 87,013
Total comprehensive loss for the year (1,064,829) (1,373,838)
Attributable to:
Equity holders of the Company (1,062,161) (1,371,573)
Non-controlling interest (2,668) (2,265)
Earnings per Share (pence)
Basic and diluted loss per share 13 (7.97p) (8.04p)
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
Company Registered Number Note Group Company
05292528 31 December 31 December 31 December 31 December
2022 2021 2022 2021
GBP GBP GBP GBP
Non-current assets
Investment in subsidiaries 14 - - 17,952,478 17,197,652
Property, plant and equipment 15 5,911,876 5,451,921 749 1,000
Intangible assets 16 352,627 315,002 - -
6,264,503 5,766,923 17,953,227 17,198,652
Current assets
Inventories 17 117,766 142,721 - -
Trade and other receivables 18 347,984 415,479 282,487 225,635
Cash and cash equivalents 19 237,300 1,229,801 159,558 1,226,235
703,050 1,788,001 442,045 1,451,870
Current liabilities
Trade and other payables 20 (402,200) (389,264) (157,764) (103,362)
Borrowings 21 (29,376) (18,258) - -
(431,576) 407,522 (157,764) (103,362)
Current assets less current
liabilities 271,474 1,380,479 284,281 1,348,508
Total assets less current
liabilities 6,535,977 7,147,402 18,237,508 18,547,160
Non-current liabilities
Borrowings 21 (67,128) - - -
Environmental rehabilitation
liability 22 (30,609) (24,632) - -
6,438,240 7,122,770 18,237,508 18,547,160
Equity
Called-up share capital 23 4,233,744 4,176,601 4,233,744 4,176,601
Share premium account 22,569,976 22,254,317 22,569,976 22,254,317
Share option reserve 277,654 453,614 277,654 453,614
Foreign currency translation
reserve 1,272,993 581,143 - -
Retained earnings (21,896,430) (20,325,577) (8,843,866) (8,337,372)
Attributable to the equity shareholders
of the Company 6,457,937 7,140,098 18,237,508 18,547,160
Non- controlling interests (19,697) (17,328) - -
Total equity 6,438,240 7,122,770 18,237,508 18,547,160
The financial statements were approved by the board of directors
and authorised for issue on 29 June 2023 and signed on its behalf
by:
Noel Lyons, Director
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
group
--------------------------------------------------Equity
Interests---------------------------------------
Share Share Retained Share Foreign Total Non-controlling Total
Capital Premium Earnings Option Currency interest
Account Reserve Translation
Reserve
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January 2021 4,041,601 19,390,849 (18,866,991) 301,174 494,130 5,360,763 (14,902) 5,345,861
Comprehensive
Income
for the year
Foreign currency
translation - - - - 87,013 87,013 - 87,013
Loss for the year - - (1,458,586) - - (1,458,586) (2,265) (1,460,851)
---------- ----------- ------------- -------- ------------ ------------ ---------------- ------------
Total
comprehensive
income for the
year - - (1,458,586) - 87,013 (1,371,573) (2,265) (1,373,838)
Transactions with
owners
Issue of share
capital 135,000 3,240,000 - - - 3,375,000 - 3,375,000
Share issue costs - (224,092) - - - (224,092) - (224,092)
Share
options/warrants
charge - (152,440) 152,440 -
---------- ----------- ------------- -------- ------------ ------------ ---------------- ------------
Total
transactions
with owners 135,000 2,863,468 - 152,440 - 3,150,908 - 3,150,908
Non- controlling
interest share
of
goodwill - - - - - - (161) (161)
At 31 December
2021 4,176,601 22,254,317 (20,325,577) 453,614 581,143 7,140,098 (17,328) 7,122,770
========== =========== ============= ======== ============ ============ ================ ============
--------------------------------------------------Equity
Interests---------------------------------------
Share Share Retained Share Foreign Total Non-controlling Total
Capital Premium Earnings Option Currency interest
Account Reserve Translation
Reserve
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January 2022 4,176,601 22,254,317 (20,325,577) 453,614 581,143 7,140,098 (17,328) 7,122,770
Comprehensive
Income
for the year
Foreign currency
translation - - - - 691,850 691,850 691,850
Loss for the year - - (1,754,011) - - (1,754,011) (2,668) (1,756,679)
---------- ----------- ------------- ------------ ------------ ------------ ---------------- ------------
Total
comprehensive
income for the
year - - (1,754,011) - 691,850 (1,062,161) (2,668) (1,064,829)
Transactions with
owners
Issue of share
capital 57,143 342,857 - - - 400,000 - 400,000
Share issue costs - (20,000) - - - (20,000) - (20,000)
Share
options/warrants
charge - (7,198) - 7,198 - - - -
Lapse of share
options/warrants - - 183,158 (183,158) - - - -
---------- ----------- ------------- ------------ ------------ ------------ ---------------- ------------
Total
transactions
with owners 57,143 315,659 183,158 (175,960) - 380,000 - 380,000
Non- controlling
interest share
of
goodwill - - - - - - 299 299
At 31 December
2022 4,233,744 22,569,976 (21,896,430) 277,654 1,272,993 6,457,937 (19,697) 6,438,240
========== =========== ============= ============ ============ ============ ================ ============
COMPANY
Retained Share
Share Capital Share Earnings Option
Premium Account Reserve Total
GBP GBP GBP GBP GBP
At 1 January 2021 4,041,601 19,390,849 (7,782,331) 301,174 15,951,293
Comprehensive Income for
the year
Total comprehensive loss
for the year - - (555,041) - (555,041)
---------------- ----------- ------------ ---------- -----------
Total comprehensive income
for the year - - (555,041) - (555,041)
Transactions with owners
Issue of share capitals 135,000 3,240,000 - - 3,375,000
Share issue costs - (224,092) - - (224,092)
Share option/warrants charge - (152,440) - 152,440 -
Total transactions with
owners 135,000 2,863,468 - 152,440 3,150,908
At 31 December 2021 4,176,601 22,254,317 (8,337,372) 453,614 18,547,160
Comprehensive Income for
the year
Total comprehensive loss
for the year - - (689,652) - (689,652)
---------------- ----------- ------------ ---------- -----------
Total comprehensive income
for the year - - (689,652) - (689,652)
Transactions with owners
Issue of share capital 57,143 342,857 - - 400,000
Share issue costs - (20,000) - - (20,000)
Share option/warrants charge - (7,198) - 7,198 -
Lapse of share options/warrants 183,158 (183,158)
Total transactions with - - - - -
owners
At 31 December 2022 4,233,744 22,569,976 (8,843,866) 277,654 18,237,508
================ =========== ============ ========== ===========
GROUP AND COMPANY CASH FLOW STATEMENTS
Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2022 2021 2022 2021
GBP GBP GBP GBP
Operating activities
Operating loss (1,751,083) (1,455,184) (699,273) (557,208)
Adjustments to reconcile profit
before tax to net cash flows:
Depreciation 324,790 264,677 251 334
Expected credit losses 242,780 - 242,780 -
Foreign exchange difference (4,614) 2,687
Working capital changes:
Decrease/ in inventories 40,903 17,799 -
Impairment of inventories - 92,150 -
Increase in trade and other
receivables (92,615) (116,768) (250,227) (217,136)
( Decrease)/Increase in trade
and other payables (26,820) (286,968) 54,401 (110,197)
------------- ------------- ------------- -------------
Net cash outflow from operating
activities (1,266,659) (1,481,607) (652,068) (884,207)
------------- ------------- ------------- -------------
Tax paid (1,319)
------------- ------------- ------------- -------------
Cash flows from investing activities
Capital introduced to subsidiaries - - (754,827) (636,035)
Purchase of property, plant (41,236) - -
and equipment
Finance income 68 701 68 2,167
Net cash (used in)/from investing
activities (41,168) 701 (754,759) (633,868)
------------- ------------- ------------- -------------
Cash flows from financing activities
Repayment of borrowings - (120,000) - (120,000)
Repayment of convertible loan
notes - (312,226) - (312,226)
Repayment of lease liabilities (22,138) (30,214) - -
Lease interest (1,793) (3,451) - -
Proceeds from issue of ordinary
shares 360,150 3,375,000 360,150 3,375,000
Share issue costs (20,000) (224,092) (20,000) (224,092)
Net cash inflow from financing
activities 316,219 2,685,017 340,150 2,718,682
------------- ------------- ------------- -------------
Net increase/(decrease) in
cash and cash equivalents 992,927 1,204,111 (1,066,677) 1,200,607
Cash and cash equivalents at
beginning of year 1,229,801 25,690 1,226,235 25,628
Effect of foreign exchange rate
changes on cash and cash equivalents 426 - -
Cash and cash equivalents at
end of year 19 237,300 1,229,801 159,558 1,226,235
============= ============= ============= =============
NOTES TO THE COMPANY'S FINANCIAL STATEMENTS
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 UK-adopted international accounting
standards ('UK adopted IAS') and as applied in accordance with the
provisions of the Companies Act 2006. The Group's financial
statements have been prepared under the historical cost
convention.
The preparation of financial statements in conformity with UK
adopted IAS 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.
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 GBP689,652 (2021: GBP555,041)
Going concern
At 31 December 2022 the Group had cash balances totalling
GBP237,300. The Group also raised GBP1,468,000 in June 2023 (see
note 31).
Following the introduction of new management in August of 2022
production improved slightly and in June of 2023 output was up on
previous year. The company has recently signed a contract to
provide up to 5,000 per month of washed coal to a Rwanda client.
This opens up the opportunities for export to neighbouring
countries who suit the location of the mine at Rukwa.
Current dramatic increases in Global coal prices have had a
major impact on the demand situation in country and the east
African region overall, with one of the major producers turning
their focus to export. As a result of this the company has received
regular coal sales enquiries and has terminated its coal mining
agreement with NextGen Coalmine Ltd and is focused on finding new
markets for its product and gearing up production. It has already
commenced the sale of fines and has regular enquiries about the
purchase of its washed coal.
Following the introduction of new management in August of 2022
production improved slightly and in June of 2023 output was up on
previous year. The company has recently signed a contract to
provide up to 5,000 per month of washed coal to a Rwanda client.
This opens up the opportunities for export to neighbouring
countries who suit the location of the mine at Rukwa.
Based on the current working capital forecast , the Group has
sufficient funds in order to allow it to continue in production and
implement planned project development and any upgrades.
Expenditure on excavation is related to the level of orders and
both head office costs and Tanzanian administration costs can be
reduced and the Group therefore continues to adopt the going
concern basis in preparing its consolidated financial
statements.
The Company is further supported in 2023 with new investment
from experienced coal mining operators who will also join the
Board. Following a successful fundraising there is sufficient funds
in place.
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 2022, 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:
Standard Detail Effective for
annual periods
commencing on
or after
--------- -------------------------------------------------------- ----------------
IFRS Amendments regarding the expiry date of the deferral 1(st) January
4 approach 2023
IFRS Amendments to clarify how a seller-lessee subsequently 1(st) January
16 measures sale and leaseback transactions 2024
IAS 1 Amendments regarding the classification of liabilities 1(st) January
2024
IAS 1 Amendments regarding the disclosure of accounting 1(st) January
policies 2023
IAS 1 Amendments regarding the classification of liabilities. 1 January 2023
Amendments regarding the disclosure of accounting
policies
IAS 1 Amendments regarding the classification of debt 1(st) January
covenants 2024
IAS 8 Amendments regarding the definition of accounting 1(st) January
estimates 2023
IAS 12 Amendments resulting from Deferred Tax relating 1(st) January
to assets and Liabilities arising from a Single 2023
Transaction
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 (Share options and Warrants)
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 (share 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 Group also , from time to time , issues warrants, primarily
to advisors of the company in connection with placing of shares
and/or other services. There fair value of these warrants is either
recognised as an expense or as a share issue costs offset against
share premium, depending on the nature of services.
The total amount to be expensed or offset against share premium
in respect of share issue costs 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 2022 (Note 14). 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.
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses control
of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the statement of profit or loss and other comprehensive income from
the date the Group gains control until the date the Group ceases to
control the subsidiary. Where the Group's interest is less than 100
per cent, the interest attributable to outside shareholders is
reflected in non-controlling interests (NCIs).
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
Revenue comprises the fair value of the 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
The Group's consolidated financial statements are presented in
pound sterling, which is also the parent company's
functional currency.
For each entity, the Group determines the functional currency
and items included in the financial statements of each entity are
measured using that functional currency. The Group uses the direct
method of consolidation and on disposal of a foreign operation, the
gain or loss that is reclassified to profit or loss reflects the
amount that arises from using this method.
The functional currency of the Group's subsidiaries is US
Dollars.
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.
Impairment
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 weighted 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 Group performs inventory obsolescence assessment 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 25% reducing balance
equipment
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.
Coal 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 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 the Coal Production Asset in the statement
of financial position.
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.
Investments in subsidiaries
Investments in subsidiaries are measured at cost less
accumulated impairment. The Group considers long term loans to be
cost of investment in subsidiary.
Leases
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
-- leases of low value assets; and
-- leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease unless (as is typically the case) this is not readily
determinable, in which case the group's incremental borrowing rate
on commencement of the lease is used. Variable lease payments are
only included in the measurement of the lease liability if they
depend on an index or rate. In such cases, the initial measurement
of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments
are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease
liability also includes:
-- amounts expected to be payable under any residual value
guarantee;
-- the exercise price of any purchase option granted in
favour of the group if it is reasonably certain to assess
that option; and
-- any penalties payable for terminating the lease, if the
term of the lease has been estimated on the basis of
termination option being exercised.
-- Right of use assets are initially measured at the amount
of the lease liability, reduced for any lease incentives
received, and increased for:
-- lease payments made at or before commencement of the
lease;
-- initial direct costs incurred; and
-- the amount of any provision recognised where the group
is contractually required to dismantle, remove or restore
the leased asset.
Subsequent to initial measurement lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the lease or over the remaining economic life of the asset
if, rarely, this is judged to be shorter than the lease term.
When the group revises its estimate of the term of any lease
(because, for example, it re-assesses the probability of a lessee
extension or termination option being exercised), it adjusts the
carrying amount of the lease liability to reflect the payments to
make over the revised term, which are discounted at the same
discount rate that applied on lease commencement. The carrying
value of lease liabilities is similarly revised when the variable
element of future lease payments dependent on a rate or index is
revised. In both cases an equivalent adjustment is made to the
carrying value of the right-of-use asset, with the revised carrying
amount being amortised over the remaining (revised) lease term.
When the group renegotiates the contractual terms of a lease
with the lessor, the accounting depends on the nature of the
modification:
-- if the renegotiation results in one or more additional
assets being leased for an amount commensurate with the
standalone price for the additional rights-of-use obtained,
the modification is accounted for as a separate lease
in accordance with the above policy;
-- in all other cases where the renegotiated increases the
scope of the lease (whether that is an extension to the
lease term, or one or more additional assets being leased),
the lease liability is remeasured using the discount
rate applicable on the modification date, with the right-of-use
asset being adjusted by the same amount; and
-- if the renegotiation results in a decrease in the scope
of the lease, both the carrying amount of the lease liability
and right-of-use asset are reduced by the same proportion
to reflect the partial of full termination of the lease
with any difference recognised in profit or loss. The
lease liability is then further adjusted to ensure its
carrying amount reflects the amount of the renegotiated
payments over the renegotiated term, with the modified
lease payments discounted at the rate applicable on the
modification date. The right-of-use asset is adjusted
by the same amount.
For contracts that both convey a right to the group to use an
identified asset and require services to be provided to the group
by the lessor, the group has elected to account for the entire
contract as a lease, i.e. it does allocate any amount of the
contractual payments to, and account separately for, any services
provided by the supplier as part of the contract
Leased Assets
Assets obtained under hire purchase contract and finance leases
are capitalised as tangible fixed assets. Assets acquired by
finance lease are depreciated over the shorter of the lease term
and their useful lives. Assets acquired by hire purchase are
depreciated over their useful lives. Finance leases are those where
substantially all of the benefits and risks of ownership are
assumed by the Group. Obligations under such agreements are
included in creditors net of the finance charge allocated to future
periods. The finance element of the rental payment is charged to
the statement of comprehensive income so as to produce a constant
periodic rate of charge on the net obligation outstanding in each
period.
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.
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
-- Recoverability of Inventory
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.
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 27)
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.
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
recovered by an offset against VAT payable on future sales.. The
directors believe that the debtor is recoverable based on their
knowledge of the market in Tanzania.
Recoverability of Inventory (Note 17)
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.
Current dramatic increases in Global coal prices have had a
major impact on the demand situation in country and the east
African region overall, with one of the major producers turning
their focus to export. As a result of this the company has received
regular coal sales enquiries and is focused on finding new markets
for its product and gearing up production. It has already commenced
the sale of fines and has regular enquiries about the purchase of
its washed coal.
Following the introduction of new management in August of 2022
production improved slightly and in June of 2023 output was up on
previous year. The company has recently signed a contract to
provide up to 5,000 per month of washed coal to a Rwanda client.
This opens up the opportunities for export to neighbouring
countries who suit the location of the mine at Rukwa.
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
2022 Coal Other Total
Consolidated Income Statement GBP GBP GBP
Revenue - Tanzania 183,448 - 183,448
Cost of sales (excluding
depreciation and amortisation) (609,883) - (609,883)
Depreciation (240,262) - (240,262)
Depletion of development
assets (46,002) - (46,002)
Gross profit (712,699) - (712,699)
Administrative expenses (180,837) (819,022) (999,859)
Depreciation (38,274) (251) (38,525)
Group operating loss (931,810) (819,273) (1,751,083)
Finance income
Finance cost - 68 68
(4,747) ________ (4,747)
Loss on operations before
taxation (936,557) (819,205) (1,755,762)
Income tax (917) - (917)
Loss for the year (937,474) (819,205) (1,756,679)
Coal Production
Assets
2021 Coal Other Total
Consolidated Income Statement GBP GBP GBP
Revenue - Tanzania 105,228 - 105,228
Cost of sales (excluding
depreciation and amortisation) (470,780) - (470,780)
Depreciation (207,604) - (207,604)
Depletion of development
assets (6,464) - (6,464)
Gross profit (579,620) - (579,620)
Administrative expenses (183,321) (646,874) (830,195)
Depreciation (45,035) (334) (45,369)
Group operating loss (807,976) (647,208) (1,455,184)
Finance income 701 701
Finance cost (5,842) (5,842)
Loss on operations before
taxation (813,818) (646,507) (1,460,325)
Income tax (526) - (526)
Loss for the year (814,344) (646,507) (1,460,851)
By Business Segment Carrying value of Additions to non-current Total liabilities
segment assets assets and intangibles
2022 2021 2022 2021 2022 2021
GBP GBP GBP GBP GBP GBP
Coal 6,745,980 6,199,083 141,141 - 377,889 335,132
Other 221,575 1,361,402 - - 151,424 97,022
6,967,555 7,560,485 141,141 - 529,313 432,154
By Geographical
Area
GBP GBP GBP GBP GBP GBP
Africa (Tanzania) 6,745,980 6,199,083 141,141 - 377,889 335,132
Europe 221,575 1,361,402 - - 151,424 97,022
6,967,555 7,560,485 141,141 - 529,313 432,154
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 2022 or 2021. This information is not available
for 2022.
2022 2021
GBP GBP
Customer 1 97,040 28,507
Customer 2 - 69,886
Customer 3 56,929
153,969 98,393
6. Expenses by nature
2022 2021
GBP GBP
Staff costs 277,251 256,776
Audit fees 55,089 35,000
Office and other administrative services 88,261 109,840
AIM related costs including investor relations 30,000 77,405
Professional, legal and consultancy fees 220,202 317,131
Travel, entertaining and subsistence 45,995 10,534
Exchange gain (1,277) (1,358)
Depreciation 38,525 45,369
Provisions and expected credit losses 267,081 -
Other costs 17,257 24,867
1,038,384 875,564
7. Auditors' remuneration
2022 2021
GBP GBP
Fees payable to the Company's auditor for the audit
of the parent Company and consolidated accounts 47,000 47,000
8. Employees
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
Wages and salaries 229,766 405,452 246,000 174,000
Social security costs 30,091 40,484 608 13,807
Pensions 12,516 13,354 6,376 814
272,373 459,290 252,984 188,621
The average number of employees and directors during the year
was as follows:
Group Company
2022 2021 2022 2021
Administration 9 8 4 3
Mining , plant processing and security 14 13 - -
23 21 4 3
Remuneration of key management personnel
The remuneration of the directors and other key management
personnel is set out below:
2022 2021
GBP GBP
Emoluments 270,267 272,130
Pensions 607 814
270,874 272,944
9. Directors' remuneration
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
Emoluments 108,000 184,000 108,000 184,000
Pensions 608 814 608 814
108,608 184,814 108,608 184,814
The highest paid director received remuneration of GBP74,250
(2021: GBP97,500).
Included in the above are accrued Director's remuneration of
GBPNil (2021: GBP17,750)
Directors' interest in outstanding share options per director is
disclosed in the directors' report on page 13.
10. Finance income
2022 2021
GBP GBP
Interest income on short-term bank deposits 68 701
68 701
11. Finance Costs
2022 2021
GBP GBP
Hire purchase interest 1,793 3,450
Interest on rehabilitation provision 2,954 2,392
4,747 5,842
12. Income tax
2022 2021
GBP GBP
Current tax:
Current tax on loss for the year -
Foreign taxation 917 542
Total current tax 917 542
Deferred tax
On write off/impairment on intangible assets - -
Tax charge for the year 917 542
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 GBP8,324,834 (2021: GBP7,840,335).
A deferred tax asset of GBP2,081,021 (2021: GBP1,959,833)
calculated at 25% (2021: 25%) 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:
2022 2021
GBP GBP
Loss on ordinary activities before tax (1,755,762) (1,460,325)
Expected tax credit at standard rate
of UK Corporation Tax
19% (2020: 19%) and 30% (2020:30%) In
Tanzania (450,409) (377,043)
Disallowable expenditure 59,444 4,501
Depreciation in excess of capital allowances 79,367
Other adjustments (18,025) (106,947)
Capital allowances in excess of depreciation (1,684,421) -
Losses carried forward 2,092,494 -
Movement in deferred tax not recognised - 400,648
Tax charge for the year 917 526
On 1 April 2023 the corporation tax rate increased to 25% for
companies with profits of over GBP250,000. A small profits rate was
introduced for companies with profits of GBP50,000 or less so that
they will continue to pay corporation tax at 19%. Companies with
profits between GBP50,000 and GBP250,000 will pay tax at the main
rate reduced by a marginal relief providing a gradual increase in
the effective corporation tax rate.
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.
2022 2021
GBP GBP
Net loss for the year attributable
to ordinary shareholders (1,756,679) (1,460,851)
Weighted average number of shares
in issue 22,036,964 18,144,205
Basic and diluted loss per share (7.97) (8.04p)
14. Investment in subsidiaries
Shares Loans to
in
subsidiaries subsidiaries Total
Company GBP GBP GBP
Cost
At 1 January 2021 7,043,312 9,518,305 16,561,617
Additions - 636,035 636,035
_________ _________ _________
At 31 December 2021 7,043,312 10,154,340 17,197,652
Accumulated impairment
As at 1 January 2021 - - -
Impairment - - -
_________ _________ _________
At 31 December 2021 - - -
Net Book Value
As at 31 December 2021 7,043,312 10,154,340 17,197,652
Shares Loans to
in
subsidiaries subsidiaries Total
Company GBP GBP GBP
Cost
At 1 January 2022 7,043,312 10,154,340 17,197,652
Additions - 754,826 754,826
_________ _________ _________
At 31 December 2022 7,043,312 10,909,166 17,952,478
Accumulated impairment
As at 1 January 2022 - - -
Impairment
_________ _________ _________
At 31 December 2022 - - -
Net Book Value
As at 31 December 2022 7,043,312 10,909,166 17,952,478
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.
The JORC compliant resource statement completed in 2013 can be
found in the operations section of the Groups website:
www.edenvile-energy.com.
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.
Current dramatic increases in Global coal prices have had a
major impact on the demand situation in Tanzania and the east
African region overall, with one of the major producers turning
their focus to export. As a result of this the company has received
regular coal sales enquiries and has terminated its coal mining
agreement with NextGen Coalmine Ltd and is focused on finding new
markets for its product and gearing up production. It has already
commenced the sale of fines and has regular enquiries about the
purchase of its washed coal. The Group has signed an agreement with
Cimerwa PLC, Kigali, Rwanda to supply up to 5,000 tonnes of washed
coal per month at a net, at the gate, price of $49 per tonne. The
company will review its current infrastructure with its new
investment/operation partners to see what is required on site to
achieve the full 5,000 per month output of washed coal.
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 21% reduction in the margin per ton of coal would result in an
impairment of the Edenville International (Tanzania) Limited
investment by GBP17k.
An increase in the discount factor to 11.5% would result in an
impairment of the Edenville International (Tanzania) Limited
investment by GBP183k.
A decrease of 21% of the EBITA would result in an impairment of
the Edenville International (Tanzania) Limited investment by
GBP17k.
The mining license is due to expire in 2026. Should the mining
license not be renewed this would result in an impairment of
GBP15m.
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) Tanzania Ordinary 99.75%*
Limited
Edenville Power (Tz) Limited Tanzania Ordinary 99.9%
Edenville (South Africa)
Limited** England Ordinary 100%
* These shares are held by Edenville International (Seychelles) Limited.
** Dissolved 17 January 2023.
15. Property, plant and equipment
Group
Fixtures,
Coal Production Plant and fittings
assets machinery and equipment Motor vehicles Total
GBP GBP GBP GBP GBP
Cost
As at 1 January
2021 5,164,392 1,186,781 7,153 191,390 6,549,716
Foreign exchange
adjustment 65,902 15,050 38 2,230 83,220
As at 31 December
2021 5,230,294 1,201,831 7,191 193,620 6,632,936
Depreciation
As at 1 January
2021 106,215 678,472 6,958 113,494 905,139
Depletion/Charge
for the year 6,464 238,444 49 19,720 264,677
Foreign exchange
adjustment 1,347 8,568 38 1,246 11,199
As at 31 December
2021 114,026 925,484 7,045 134,460 1,181,015
Net book value
As at 31 December
2021 5,116,268 276,347 146 59,160 5,451,921
Coal Production Fixtures,
assets Plant and fittings Motor
machinery and equipment vehicles Total
GBP GBP GBP GBP GBP
Cost
As at 1 January
2022 5,230,294 1,201,831 7,191 193,620 6,632,936
Additions - - - 141,141 141,141
Adjustment - - - (27,414) (27,414)
Foreign exchange
adjustment 624,725 142,660 363 21,133 788,881
As at 31 December
2022 5,855,019 1,344,491 7,554 328,480 7,535,544
Depreciation
As at 1 January
2022 114,026 925,484 7,045 134,460 1,181,015
Depletion/ Charge
for the year 46,002 259,777 37 18,974 324,790
Adjustment - - - (27,414) (27,414)
Foreign exchange
adjustment 13,614 116,659 363 14,641 145,277
As at 31 December
2022 173,642 1,301,920 7,445 140,661 1,623,668
Net book value
As at 31 December
2022 5,681,377 42,571 109 187,819 5,911,876
Plant and machinery depreciation amounting to GBP240,262 (2021:
GBP207,604) is included within cost of sales as it relates to
mining equipment.
In addition the groups obligations under finance leases (see
note 21) are secured by the assets purchased under hire purchase
ncluded in motor vehicles are assets with a net book value of
GBP138,200 (2021: GBPNil).
Company
Fixtures,
Plant and fittings Motor Vehicles
machinery and equipment Total
GBP GBP GBP GBP
Cost
As at 1 January 2021 and 31
December 2021 7,471 4,153 16,691 28,315
Depreciation
As at 1 January 2021 7,120 3,958 15,903 26,981
Charge for the year 88 49 197 334
As at 31 December 2021 7,208 4,007 16,100 27,315
Net book value
As at 31 December 2021 263 146 591 1,000
Fixtures,
Plant and fittings Motor Vehicles
machinery and equipment Total
GBP GBP GBP GBP
Cost
As at 1 January 2022 and 31
December 2022 7,471 4,153 16,691 28,315
Depreciation
As at 1 January 2022 7,208 4,007 16,100 27,315
Charge for the year 66 37 148 251
As at 31 December 2022 7,274 4,044 16,248 27,566
Net book value
As at 31 December 2022 197 109 443 749
16. Intangible assets
Group
Mining Licences
GBP
Cost or valuation
As at 1 January 2022 1,489,604
Foreign exchange adjustment 177,926
At 31 December 2022 1,667,530
Accumulated depletion, amortisation
and impairment
As at 1 January 2022 1,174,602
Amortisation
Foreign exchange adjustment 140,301
At 31 December 2022 1,314,903
Net book value
As at 31 December 2022 352,627
Group
Mining Licences
GBP
Cost or valuation
As at 1 January 2021 1,470,833
Foreign exchange adjustment 18,771
At 31 December 2021 1,489,604
Accumulated depletion, amortisation
and impairment
As at 1 January 2021 1,159,801
Amortisation
Foreign exchange adjustment 14,801
At 31 December 2021 1,174,602
Net book value
As at 31 December 2021 315,002
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
2022 2021
GBP GBP
ROM stockpiles 498 453
Fines 158,106 134,756
Washed coal 6,594 7,512
Less; Impairment (47,432) -
117,766 142,721
The cost of inventories recognised as an expense during the year
in was GBP363,877 (2021: GBP158,296).
.
18. Trade and other receivables
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
Trade receivables 84,441 - - -
Less : Expected credit loss allowance (79,692) - - -
---------- -------- ---------- --------
Net Trade receivables 4,749 - - -
Other receivables 314,709 128,281 283,464 126,127
Less : Expected credit loss allowance (271,202) - (242,780) -
---------- -------- ---------- --------
43,507 128,281 40,684 126,127
Amounts due from related parties - 221,220 91,467
VAT receivable 298,798 287,198 19,653 8,041
Prepayments 930 - 930 -
347,984 415,479 282,487 225,635
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
2022 2021 2022 2021
GBP GBP GBP GBP
Cash at bank and in hand 237,300 1,229,801 159,558 1,226,235
20. Trade and other payables
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
Trade and other payables 252,666 308,043 1,890 15,801
Amounts owed to subsidiary undertakings - - 6,340 6,340
Accruals and deferred income 149,534 81,221 149,534 81,221
402,200 389,264 157,764 103,362
21. Borrowings
Group Company
2022 2021 2022 2021
GBP GBP GBP GBP
Hire purchase finance
Repayable within 1 year 29,376 18,258 - -
Repayable within 2 to 5 years 67,128 - - -
96,504 18,258 - -
Total
Repayable within 1 year 29,376 18,258 - -
Repayable within 2 to 5 years 67,128 - - -
96,504 18,258 - -
22. Environmental rehabilitation liability
Group
2022 2021
GBP GBP
At 1 January 2021 24,632 21,912
Additions -
Interest 2,954 2,392
Foreign exchange movement 3,023 328
30,609 24,623
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 GBP No GBP GBP
Ordinary Ordinary Ordinary Deferred Deferred Total
shares shares of shares shares of shares share
of 1p each 0.02p each of 0.02p/1p 0.001p each of 0.001p capital
each each
Issued and fully
paid
At 1 January 2021 - 8,145,575,094 1,629,116 241,248,512,346 2,412,485 4,041,601
On 5 January the
company consolidated
and then subdivided
the brought forward
shares* 8,145,575 (8,145,575,094) (1,547,659) 154,765,925,000 1,547,659 -
On 21 January
the company issued
3,600,000 1p shares
at 0.25p 3,600,000 - 36,000 - - 36,000
On 26 May the
company issued
9,900,000 1p shares
at 0.25p 9,900,000 - 99,000 - - 99,000
As at 31 December
2021 21,645,575 - 216,457 396,014,437,346 3,960,144 4,176,601
============ ================ ============= ================ =========== ==========
Group and Company
No No GBP No GBP GBP
Ordinary Ordinary Ordinary Deferred Deferred Total
shares shares of shares shares of shares share
of 1p each 0.02p each of 0.02p/1p 0.001p each of 0.001p capital
each each
Issued and fully
paid
At 1 January 2022 21,645,575 - 216,457 396,014,437,346 3,960,144 4,176,601
On 7 December
2022 the company
issued 5,714,286
Ordinary 1p shares
at 7p each 5,714,286 - 57,143 - - 57,143
As at 31 December
2022 27,359,861 - 273,600 396,014,437,346 3,960,144 4,233,744
============ ============ ============= ================ =========== ==========
*On 5 January 2021 the Company reduced the number of issued
ordinary shares of GBP0.0002 each in the Company by a multiple of
1,000 (the "Consolidation"), Following the Consolidation the
Company sub-divided each consolidated ordinary share of GBP0.20
each in the capital of the Company, into 1 ordinary share of
GBP0.01 each in the capital of the Company and 19,000 new deferred
shares of GBP0.00001 each in the capital of the Company.
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
2022 2021 2022 2021
GBP GBP GBP GBP
Share capital 4,233,744 4,176,601 4,233,744 4,176,601
Share premium 22,569,976 22,254,317 22,569,976 22,254,317
Other reserves 1,550,647 1,034,757 277,654 453,614
Retained deficit (21,896,430) (20,325,577) (8,843,866) (8,337,372)
Total equity 6,457,937 7,140,098 18,237,508 18,547,160
============= ============= ============ ============
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 2022 2021 2022 2021
GBP GBP GBP GBP
Receivables at amortised cost including
cash and cash equivalents:
Investments and loans to subsidiaries - - 10,909,166 10,154,340
Cash and cash equivalents 237,300 1,229,801 159,558 1,226,235
Trade and other receivables 347,054 415,479 282,847 225,635
-------- ---------- ----------- -----------
Total 584,354 1,645,280 11,351,571 11,606,210
-------- ---------- ----------- -----------
Financial liabilities
Financial liabilities at amortised
cost:
Trade and other payables 402,200 389,264 157,764 103,362
402,200 389,264 157,764 103,362
-------- ---------- ----------- -----------
Net 182,154 1,256,016 11,93,807 11,502,848
======== ========== =========== ===========
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.
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 as
at 31 December 2022 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% strengthening of sterling against the US
dollar would result in an increase the net assets of the group of
GBP702,613, whist a 10% weaking would result in a fall in net
assets of the group of GBP638,739.
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
2021
Less than 1- 2 years 2-5 years
1 year
Trade payables 308,043 - -
Accruals 81,221 - -
Borrowings 18,258 - -
---------- ---------------- ----------
407,522 - -
========== ================ ==========
2022
Less than 1- 2 years 2-5 years
1 year
Trade payables 252,666 - -
Accruals 149,534 - -
Borrowings 29,376 67,128 -
========== ================== ==========
431,576 67,128 -
========== ================== ==========
Company
2021
Less than 1-2 years 2-5 years
1 year
Convertible loan notes (current - -
and non - current) -
Trade payables 15,801 - -
Other payables 6,340 - -
Accruals 81,221 - -
---------- --------------- ----------
103,362 - -
========== =============== ==========
2022
Less than 1-2 years 2-5 years
1 year
Convertible loan notes (current
and non - current) - - -
Trade payables 1,890 - -
Other payables 6,340 - -
Accruals 149,534 - -
---------- --------------- ----------
157,764 - -
========== =============== ==========
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 As at Granted Lapsed As at
price* 1 January 31 December
2022 2022
28 March 27 March
2017 2022 GBP10.80 23,333 - (23,333) -
7 November 6 November
2018 2022 GBP2.90 99,569 - (99,569) -
9 May 2019 8 May 2023 GBP2.60 100,000 - - 100,000
3 April 2020 2 April 2025 GBP3.00 270,000 - - 270,000
----------- -------- ---------- -------------
492,902 - (122,902) 370,000
=========== ======== ========== =============
The following warrants over ordinary shares have been granted by
the Company:
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 28 March 5 November 26 April 17 April
2017 2018 2019 2020
Expected volatility 131% 70% 101% 72%
Expected life 3 years 4 years 3.5 years 3 years
Risk-free interest
rate 0.37% 0.96% 0.75% 0.11%
Expected dividend - - - -
yield
Possibility of ceasing - - - -
employment before
vesting
Fair value per option 0.56p/0.42p/0.28p 0.08p 0.02p 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 GBPNil (2021: GBPNil).
The following warrants over ordinary shares have been granted by
the Company:
Number of Warrants
Grant Date Expiry date Exercise As at Granted Exercised As at 31
price 1 January December
2022 2022
2 May 2019 31 May 2022 20p 127,500 - (127,500) -
23 January 22
2020 January 2022 60p 791,667 - (791,667) -
6 June 2020 5 June 2023 40p 125,000 - - 125,000
6 June 2020 5 June 2023 60p 85,901 - - 85,901
14 January 13 January
2021 2024 25p 180,000 - - 180,000
26 May 2021 25 May 2024 25p 9,900,000 - - 9,900,000
26 May 2021 25 May 2024 25p 495,000 - - 495,000
26 May 2021 25 May 2024 35p 117,459 - - 117,459
09 December 8 December
2022 2025 7p - 285,714 - 285,714
=========== ======== ========== ===========
11,822,527 285,714 (919,167) 11,189,074
=========== ======== ========== ===========
At the date of grant, those warrants that came under the scope
of IFRS 2 Share based payment 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 14 January 26 May 2021 9 December
2021 2022
Expected volatility 81% 69% 66%
Expected life 3 years 3 years 3 years
Risk-free interest rate (0.06)% 0.14% 3.33%
Expected dividend yield - - -
Possibility of ceasing employment before - - -
vesting
Fair value per option GBP0.2241p GBP0.1571/GBP0.1892 GBP0.03
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 GBP7,198 was made against share premium in respect
of share issue costs. (2021: GBP152,440).
Movements in the number of options outstanding and their related
weighted average exercise prices are as follows:
2022 2021
Number of Weighted Number of Weighted average
options average exercise options exercise price
price per per share
share pence
pence
At 1 January 492,901 327 492,901 327
Granted - - - -
Lapsed (122,901) 440 - -
At 31 December 370,000 289 492,901 327
Exercisable at
year end 370,000 482,235
The weighted average remaining contractual life of options as at
31 December 2022 was 1.74 years (2021: 2.15 years).
Warrants
Movements in the number of warrants outstanding and their
related weighted average exercise prices are as follows:
2022 2021
Number of Weighted average Number of Weighted average
options exercise price options exercise price
per share per share
pence pence
At 1 January 11,822,526 27.80 1,130,067 53.27
Granted 285,714 7.00 10,692,459 25.11
Lapsed (919,167) (54.45) - -
At 31 December 11,189,073 25.08 11,822,526 27.80
The weighted average remaining contractual life of warrants as
at 31 December 2022 was 1.42 years (2021: 2.20 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
from Edenville International (Tanzania) Limited. Further to the
Company announcements on 18 and 31 May 2022 that Upendo Group
Ltd.'s current 10% economic interest in the joint venture, which
holds the licences governing the Rukwa Project, had been
transferred to a 10% direct holding on the principal production
licence. The Company has sought legal advice and has been advised
that the variation has been undertaken illegally and that the
holding should be reversed by the Government, This reversal has
been sought. The Company will provide a further update as
appropriate.
As of the time of signing of these financial statements, the
Group had not finalised the operationalisation of the issuance of
up to 16% non-dilutable free carried interest shares to the
Government of Tanzania as per the requirements of the State
Participation Government Notice No. 939 of 30 October 2020 which
require the Government of Tanzania to acquire up to 16% of the non
dilutable free carried interest shares in the capital of a mining
company or any other person holding a mining license or special
mining license.
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 GBP754,829 (2021: GBP636,035)
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 GBP10,905,454
(2021: 10,150,628). This amount has been included within loans to
subsidiaries.
A further amount of GBP221,220 (2021: GBP91,446) is due from
Edenville International (Tanzania) Limited included in trade and
other receivables ins respect of management fees and interest
receivable.
The company also invoiced Edenville International (Tanzania)
Limited GBP120,000 (2021: 90,000) and GBP9,554 (2021: GBP1,466) in
respect of management fees and interest respectively . This
remained outstanding at the year end.
At the year end the Company was owed GBP3,712 (2021: GBP3,712)
by its subsidiary Edenville International (Seychelles) Limited.
At the year end the Company was owed GBP6,340 (2021: GBP6,340)
by its subsidiary Edenville Power Tz Limited.
At the year end Edenville International (Tanzania) limited was
owed $41,677 (2021: $41,677) by Edenville Power Tz Limited.
31. Events after the reporting date
On 1 June 2023 the Company entered into an agreement to
conditionally raise GBP1,468,000 in two tranches through the issue
in aggregate of a total of 29,360,000 new ordinary shares of 1
pence each in the Company at the Issue Price of 5p each.
Firm subscriptions for GBP575,000 have been received and will
result in the issue of 11,500,000 new Ordinary Shares at the Issue
Price ("Firm Subscriptions"). The Firm Subscriptions have been
undertaken under the Company's existing share issuance
authorities.
A further GBP893,000 has been subscribed by way of conditional
subscriptions for 17,860,000 new Ordinary Shares at the Issue
Price, to be issued subject to shareholder approval at a General
Meeting of the Company to be convened shortly ("Conditional
Subscription").
Fundraise Warrants are also to be issued to both Q Global
Commodities Group ("QGC") and Gathoni Muchai Investments Limited
("GMI") under the Capital Raising, with QGC to be issued with
3,265,555 warrants at an exercise price of 25 pence exercisable
until 25 May 2024, and GMI with 2,186,136 warrants on the same
terms.
QGC is one of South Africa's leading independent commodity,
logistics and investment funds and has a broad global network in
the mining finance sectors and the marketing and sales of
commodities. QGC has 12 thermal coal mines currently under
management and is actively expanding its metal mining interests
throughout Southern and East Africa through direct equity
investments and partnership and co-development agreements with a
number of emerging mining and exploration companies.
QGC is led by Quinton van der Burgh, one of South Africa's
leading mining entrepreneurs, who has almost 20 years of mining
experience and has developed over 47 projects to mining stage,
including two large-scale mining companies.
As part of the Capital Raising, QGC, through Dubai based AUO
Commercial Brokerage LLC, is subscribing for a total 17,586,598 new
Ordinary Shares and will, subject to shareholder approval at the
GM, invest GBP879,330 in the Company to become its single largest
shareholder with a 29.95% interest.
GMI is a Nairobi-based investment firm focused on mining,
property and retail sectors and headed up by Jason Brewer and
Jackline Muchai. GMI have existing investments in four East African
countries, including Tanzania and are a major shareholder in
London-listed and battery metals focused mining company Marula
Mining plc, and new uranium mine development company Neo Energy
Metals Limited, which is in the process of coming to market by way
of a reverse takeover of London Stock Exchange listed Stranger
Holdings plc.
Jason Brewer has been appointed Executive Director of the
Company, on 30 May 2023.
GMI is subscribing for a total 11,773,402 new Ordinary Shares
under the Capital Raising and will, subject to shareholder approval
at the GM, invest GBP588,670 in the Company to become its second
largest shareholder with a 20.05% interest.
On 2 June 2023 the Company proposed to change its name to Shuka
Resources Plc as the Directors believe that the change of name
better reflects the Company's key focus in Africa, values of
environmental sustainability, community engagement and responsible
mining practices.
Subsequent to the year end, the Directors confirmed their
intention to convert the loan of GBP10,154,340 between 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 2023.
32. 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 2022 these are as follows:
Group 2022 2021
GBP GBP
------- -------
Not later than one year 24,620 21,993
Later than one year and no later than five years 49,240 65,979
------- -------
Total 73,860 87,972
======= =======
33. Ultimate Controlling Party
The Group considers that there is no ultimate controlling
party.
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END
FR FLMLTMTBTBLJ
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June 30, 2023 02:00 ET (06:00 GMT)
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