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Annual Results for the year ended 31 December 2018

21 Jun 2019 07:00

RNS Number : 9613C
Edenville Energy PLC
21 June 2019
 

 

 

21 June 2019

 

EDENVILLE ENERGY PLC

 

("Edenville" or the "Company" or the "Group")

 

 

Annual Results for the year ended 31 December 2018

 

Edenville Energy plc (AIM: EDL), the company developing a coal project in southwest Tanzania, is pleased to announce its audited results for the year ended 31 December 2018.

 

2018 Highlights

 

Commercial mining and wash plant operation commenced full production phase with a variety of sized coal products being produced;  Significant plant upgrades undertaken during the year;  In 2018 approximately 75,000 tonnes of Run of Mine (ROM) coal, 15,000 tonnes of washed coal and 32,000 tonnes of fine coal produced; and Revenue recognised for the first time.

 

Post Period Highlights

 

Funding secured to advance coal production;  Coal wash plant upgraded and further optimised, including the installation of a pre-screen to remove hard to process material such as fine coal; and Completion of road access to the new Northern Mining Area, which has the potential to deliver greater yields than previously mined areas.

 

Annual Report and Notice of AGM

 

The Company's Annual Report for the year ended 31 December 2018 and Notice of Annual General Meeting will be posted to shareholders on Monday 24 June 2019 and will be available on the Company's website at: https://edenville-energy.com/annual-reports/ on 24 June 2019..

 

The Company's Annual General Meeting will be held at the offices of Womble Bond Dickinson (UK) LLP, 4 More London Riverside, London, SE1 2AU at 11.00 a.m. on Tuesday 23 July 2019.

 

 

Commenting, Jeffrey Malaihollo, Chairman of Edenville, said: "2018 was a significant, but very challenging year for the Company. We made substantial progress, becoming a revenue producing commercial coal producer for the first time, although it has taken longer than we had hoped to overcome the challenges we faced and reach the positive position we are now in.

 

"Having gone through the operational and financial challenges in 2018 and early 2019, I believe the Company is now in the best position it's been for many years. It is now a coal producing company, with a wide range of customers and monthly income. With the expected start of mining of the Northern Area in the coming weeks we remain on track to become cashflow positive within the next 10 months, targeting an initial 6,000 tonnes per month of washed coal production, which we consider to be a breakeven level, increasing to 10,000+ tonnes per month thereafter."

 

 

For further information please contact:

 

Edenville Energy Plc

Jeff Malaihollo - Chairman

Rufus Short Ð CEO

 

+44 (0) 20 3934 6630

SP Angel Corporate Finance LLP

(Nominated Adviser and Joint Broker)

David Hignell

Jamie Spotswood

Abigail Wayne

 

+44 (0) 20 3470 0470

Brandon Hill Capital Ltd

(Joint Broker)

Oliver Stansfield, Jonathan Evans

+44 20 7936 5200

 

IFC Advisory Limited

(Financial PR and IR)

Tim Metcalfe

Graham Herring

Heather Armstrong

+44 (0) 20 3934 6630

 

 

 

Chairman's Statement

 

2018 was a significant, but very challenging year for the Company. The year started with the Company fulfilling test orders for washed coal and during the year we managed to increase our production, widened our customer base and signed several long-term supply contracts. We also overcame some challenges related to an unusually heavy rainy period, lack of available transportation and a high percentage of fine coal arising from our production. We had to make modifications to increase the plant capacity and bought additional mining equipment to enable production to go up to 10,000 tonnes per month of washed coal, further details of which are outlined in the CEO's report.

 

During the year 2018 we also had to raise capital both through equity and convertible loan means to execute our plans. This was done against a background of a very tough market worldwide for junior mining companies. In early 2019 we also invited all Shareholders to support the Company through an Open Offer and subsequently undertook a placing to provide the additional capital required.

 

Having gone through the operational and financial challenges in 2018 and early 2019, I believe the Company is now in the best position for many years. It is now a coal producing company, with a wide range of customers and monthly income. We have all the equipment and manpower to bring our production to the maximum capacity of the current plant. In addition the Company now has supportive institutional shareholders.

 

Looking ahead in 2019, our short-term goal is to open the Northern Mining Area, increase our production to reach break-even point in Q3 2019 and be cash flow positive within the next 10 months.

 

In the medium term we are looking at ways to monetise the large amount of fine coal by-product being produced, which could make a significant difference to the profitability of the Company. We will also look further into the economics of having our own transportation fleet to supply selected customers.

 

In the longer term we are still pursuing the coal to power project and will always look for opportunities for additional cash-flow positive projects.

 

In closing I would like to thank all our stakeholders, including you the Shareholders, our partners, the local authorities and local communities, my fellow Directors, our employees and contractors who have collectively overcome the significant challenges of 2018. This gives me confidence that we will be able to face up to any difficulties ahead of us and make the Company as success.

 

We look forward to reporting further sales and progress from our Rukwa Mine in the coming months.

 

 

Dr Jeffrey Malaihollo

Chairman

 

 

 

Chief Executive Officer's Report

 

2018 was a year of significant progress for the Company's Rukwa coal project in southwest Tanzania (the "Project"). Following commissioning of the wash plant in late 2017, the Company started 2018 supplying test orders to several customers. This period coincided with the wet season rains and whilst access to site was sometimes challenging, deliveries continued to be dispatched. Further development of site infrastructure was carried out in January, in particular with the completion of the coal test laboratory facilities.

 

As the upper levels of the coal were mined we were greatly encouraged by the often high calorific values present, test results from washed coal as high as 6,700GCV were obtained, whilst fine coal reported over 4,700GCV in certain batches.

 

Early in the year the plant was running at a throughput of approximately 30 tonnes per hour. Challenges with water supply, operating in the wet season and a high proportion of fines in the feed contributed to this lower than modelled throughput.

 

On 23 February 2018 the Tanzanian Deputy Minister of Minerals, Mr Doto Biteko visited the Project site along with other Regional government officials. The Deputy Minister was shown the mine and the plant and it was explained how the coal could be for both third party commercial use and any future power plant development in the region. Mr Biteko was also very interested in how the Project was benefiting the local community through employment and business opportunities.

 

Early in the Project life there were challenges for customers to source transport for the collection of their product. By the second half of 2018 this was largely solved as reliable transport became more readily available. The Company has also considered having its own base fleet of trucks to make deliveries where needed, but has not yet considered this needs to be implemented.

 

In April 2018 the Company raised £740,000 (before expenses) to continue the development of the Project and provide working capital.

 

As the year progressed and the dry season arrived, coal production continued to increase and the customer base was strengthened. However, customers were keen to have extended trials before entering into long term contracts and this resulted in the first supply contract not being signed until late August 2018. This was for 5,000 tonnes of coal per month and was followed in October by two further contracts for up to 500 and 3,500 tonnes respectively. In parallel we had been looking at ways to increase throughput in the plant and had commissioned a water treatment plant to be built (the "Lamella Plant"). The Lamella Plant was completed and operational in December 2018. Several options for a pre-screening plant to take out the fine coal had been reviewed and whilst a planned initial plant purchase was not completed, construction was started on a suitable facility in country. We had planned to have this operational in Q4 2018, but substandard contractor performance meant the Company had to take over construction. The unit was subsequently completed in December 2018 and was operational from January 2019.

 

The Company's mining consultants, Sound Mining Systems (SMS) of Johannesburg completed an updated mine plan in September 2018, focused on the area to the north of the current mining operations. We have targeted significantly larger coal measures that in places have thicknesses of over 40m. It is planned the Northern Mining Area, as we refer to it, will provide feed for the Project for at least the next 10 years at a very low strip ratio of below 1:1 .

 

In November due to the requirements to expand production and meet customers' requirements the Company took out a convertible facility for US$750,000 before expenses. This was used primarily for capital purchases, including a second loader, a second excavator, completion of the pre-screen plant, in pit lighting for night shift operations and land compensation measurements and payments in the Northern Mining Area.

 

During 2018 the Project produced approximately 75,000 tonnes of Run of Mine (ROM) coal, 15,000 tonnes of washed coal and 32,000 tonnes of fine coal.

 

Coal to Power

 

During the early part of 2018 we had several productive meetings with senior management of Tanzania Electric Supply Company ("Tanesco") and were greatly encouraged by their willingness to move forward to look at solutions for coal to power implementation.

 

A very positive development occurred in June 2018 when the World Bank announced it had approved US$455 million of funding for power transmission line construction in Tanzania. This included the transmission line from Sumbawanga to Tunduma in the south, along with the associated Sumbawanga substation near to the Company's Rukwa Project area. This step forward in the development of the infrastructure needed to realise the construction of Edenville's Coal to Power Project is very significant. It is understood that the construction procurement plan is currently being implemented and we hope to have further positive news on the development of power line infrastructure to Sumbawanga in 2019.

 

In parallel with this news the Company decided to extend its Memorandum of Understanding with Sinohydro Corporation of China for a further 18 months in June 2018. Whilst a feasibility study on a 120MW plant has already been carried out, the potential for a significantly larger plant of up to 300MW is now being considered and much of Sinohydro's work will continue to be focused towards this option.

 

In September 2018 Tanesco came forward with a Request for Qualification ("RFQ") for coal fired generation projects in Tanzania. The RFQ was considered the first step in a formal tender process to move forward to an eventual Power Purchase Agreement and subsequently construction and operation of a coal fired power plant. There was a very compact time schedule in which to prepare the necessary submission, this being one month from notification. The Company successfully submitted the necessary documents in October 2018 and Tanesco officially accepted these as being complete and complying with TanescoÕs requirements.

 

However, two weeks later, for reasons not given by Tanesco, the RFQ was cancelled and subsequently reinstated for a resubmission date in December 2018. Edenville resubmitted their RFQ documents in line with the criteria set forward by Tanesco, which appeared identical to the previous criteria.

 

Post Period

 

January 2019 got off to a good start with the second excavator being utilised in the mine along with our original machine. The Lamella Plant was operational and the newly constructed pre-screen plant started processing test material in January 2019 and became fully operational in February.

 

In January 2019 the Company decided to carry out an Open Offer to existing shareholders in order to raise the remaining capital needed to open up the Northern Mining Area and subsequently increase production. The Open Offer however was poorly subscribed and only approximately 10% of the planned £619,099 was eventually raised. This left the Company in a challenging situation on how to meet customers' orders and expand the operation.

 

At the time of the closing of the Open Offer on 14 February 2019 Tanesco informed the Company that it had been unsuccessful in moving through the RFQ process to supply power to Tanesco. No clear explanation has been given for this decision. As far as the Company is aware no other privately held coal projects in Tanzania progressed successfully through the process. The Company remains confident that if and when the transmission line infrastructure is built to Sumbawanga the opportunity for a power plant development at the Rukwa Coal Project will continue to move forward.

 

From February 2019, with limited funds available, the Company took measures to conserve capital and continue supply to key customers whilst seeking alternative funding arrangements. The resulting lack of working capital to complete the mine upgrade meant that production was adversely impacted in H1 2019 with approximately 19,000 tonnes of ROM coal processed to produce 3,900 washed tonnes and 9,700 fine coal tonnes between 1 January 2019 and 31 May 2019. On 29 April 2019 the Company announced a successful conditional fundraising of £510,000 and started to make preparations to apply some of this funding to the Project development. The main areas to be targeted are opening up the pit in the Northern Mining Area and small upgrades on the plant and infrastructure, such as an improved water pumping system and installation of a coal sizer prior to the plant. Following the completion of the funding the Project is now well placed to move forward in 2019 to increase production and provide a quality product to its customers.

 

The target is to firstly reach a steady state of 6,000 tonnes per month of washed coal product, which we consider will make the Tanzania operations break even. Following this the second target is to reach 10,000 tonnes of washed coal produced per month which will provide positive cash flow for the Company.

 

The fine coal is effectively produced as a by-product and to that end we are continuing discussions with the previously outlined buyers of fine coal. Other opportunities available to the Company with regards to sales of fine coal are also being assessed. These include briquetting or the introduction of secondary processing to beneficiate the coal and improve the calorific value, thereby enhancing the desirability of the product. Although this would require additional capital expenditure, the Company believes this to be modest with a short payback period. The Company's Directors expect to be able to fund any upgrades to infrastructure from free cash flow from future mining operations. As an immediate measure we are targeting areas of stockpiled fine coal that may contain economically recoverable coal to feed through the pre-screen. We also expect the pre-screen to increase the available tonnage from newly mined coal for subsequent processing through the wash plant.

 

The AFR RI-3A Tanzania - Zambia Transmission Interconnector project, which is being part financed by the World Bank, is continuing to move forward which we continue to believe could have positive implications for our planned coal to power project. The financing agreement for credit is now in place and the procurement plan is continuing to progress. As previously stated the Company's long term plan is to provide electricity to this transmission grid once it is completed and we are continuing to work towards this goal. Currently completion is stated as being in 2024.

 

Financing

 

The Company raised equity of £740,000 (before expenses) in April 2018, primarily for working capital and additional enhancements to the operations.

 

A further £586,000 was raised in November 2018 in the form of a convertible loan with Lind Partners. This was used primarily for expansion of the operation and the completion of the new items for the wash plant. Several new items of equipment were purchased including a new loader and second excavator. Land compensation for the Northern Mining Area was largely completed in 2018 using this funding.

 

Post period end in February 2019, the Company raised gross proceeds of £62,418 through the Open Offer, together with a further £15,000 following the issue of Director Subscription Shares to Jeffrey Malaihollo, the Company's Chairman. In April and May 2019 the Company raised a total of £510,000, before expenses in a placing to new and existing shareholders.

 

The Company also undertook certain cost saving measures, including the Directors only taking part of their salary entitlements in 2018 and the subsequent reduced salary arrangements and conversion of certain outstanding salaries to shares in the Company in May 2019 along with the waiving of portions of their outstanding salaries.

 

Corporate Social Responsibility

 

The Company has continued to take its corporate social responsibility very seriously and understands it social licence to operate in Tanzania is an essential part of making its projects viable in the long term. The construction of the mining Project provided several opportunities to improve infrastructure for the local community, the most visible being the construction of the road from Kipandi, past Mkomolo village and beyond, to the mine. This has opened up a major artery in the area which services farmers, the local population and communications as well as the mine itself.

 

Wherever possible we have sought to employ local people from surrounding villages. Many of the operators and management are local and are proving to be highly competent and skilled employees. The positive social benefits also overflow into the general community where enterprising individuals are providing services such as food supply for workers.

 

Now that the Project is more established we plan to carry out projects for the local population, including establishment of water wells subject to the appropriate hydrological conditions.

 

Relinquishments

 

Following the completion of mapping work carried out over the area of exploration licence PL6098/2009 at Muze, the Company decided to relinquish this licence. After geological interpretation it was concluded that all the likely economic coal measures in the Muze area are contained within the Company's primary mining licences which lie approximately 2km to the south of PL6098/2009. Relinquishment of this licence will result in an annual saving to the Company of approximately US$30,000 for licence fees and work requirements.

 

Renewals

 

PL7799 expired in April 2019 but an application had been made and fees paid, prior to the expiry date, to renew the licence. Although there is some paperwork from the Tanzanian authorities outstanding the Company understands that the licence has been renewed. The Directors do not forsee any reason why the renewal process will not be completed. Should renewal not be granted it would not affect the coal resources available to the group which are all contained within its current mining licence. The area of PL 7799 would be used to put in place mining infrastructure at a later date. The loss of PL7799 may lead to a revision of infrastructure plans.

 

Summary

 

2018 was the Rukwa Coal Project's first year of full production following construction in 2017. During the year the Company built up a number of regular orders that resulted in three long term contracts for coal supply being signed. The mine was fully opened up and supplied approximately 75,000 tonnes of raw coal during the year. The Project faced challenges, amongst them the sizing of the raw coal which contained an excess of fine material. This resulted in lower than planned throughput in the plant with consequently lower volumes of washed coal products. The plant has since been modified to deal with any fine coal and this along with the opening up of the Northern Mining Area will underpin the planned increase in production to turn the project cash flow positive within the next 10 months.

 

The coal to power project has faced challenges to its progress in the decision by Tanesco to reject it in the RFQ process. However, the Company considers the opportunity still exists to develop a power plant at the Project site as the catalyst for development, the AFR RI-3A Tanzania - Zambia Transmission Interconnector, is proceeding through its pre-construction stages with finance in place and the procurement plan moving forward. When this transmission line, which will run from Sumbawanga to Tunduma in the south, is operational it will enable power from a project at the Rukwa coal deposit to be distributed not only throughout Tanzania but also the region as a whole.

 

 

Rufus Short

Chief Executive Officer

 

Group Statement of Comprehensive Income

Year Ended 31 December 2018

 

 

Note

2018

2017

 

 

 

 

 

 

£

£

Revenue

 

337,125

-

Cost of sales

 

(1,191,312)

-

 

 

 

 

 

 

Gross loss

 

(854,187)

-

 

 

 

 

Administration expenses

6

(839,515)

(927,640)

 

 

 

 

Share based payments

25

(76,319)

(155,077)

 

 

 

 

Written off intangible assets

15

-

(104,211)

 

 

 

 

 

 

Group operating loss

 

(1,770,021)

(1,186,928)

 

 

 

 

Finance income

10

529

864

Finance costs

11

(16,212)

-

 

 

 

 

 

 

Loss on operations before taxation

 

(1,785,704)

(1,186,064)

 

 

 

 

Income tax

12

-

-

 

 

 

 

 

 

Loss for the year

 

(1,785,704)

(1,186,064)

 

 

 

 

 

 

Other comprehensive (loss)/income

 

 

 

Loss/(gain) on translation of overseas subsidiary

 

378,531

(553,211)

 

 

Total comprehensive loss for the year

 

(1,407,173)

(1,739,275)

 

 

Attributable to:

 

 

 

Equity holders of the Company

 

(1,404,725)

(1,738,557)

Non-controlling interest

 

(2,448)

(718)

 

 

Loss per Share (pence)

 

 

 

 

 

 

 

Basic and diluted loss per share

13

(0.12)

(0.11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 Statement of Financial Position AS AT 31 DECEMBER 2018 

 

Note

2018

2017

 

 

£

£

Non-current assets

 

 

 

Property, plant and equipment

14

1,139,031

1,059,583

Intangible assets

15

5,775,829

5,071,318

 

 

 

 

6,914,860

6,130,901

 

 

Current assets

 

 

 

Inventories

16

256,082

-

Trade and other receivables

17

396,671

299,666

Cash and cash equivalents

18

160,042

951,078

 

 

 

 

 

 

 

 

812,795

1,250,744

Current liabilities

 

 

 

Trade and other payables

19

(556,063)

(146,797)

Convertible loan notes

20

(288,118)

-

 

 

 

 

(844,181)

(146,797)

 

 

 

 

Current assets less current liabilities

 

(31,386)

1,103,947

 

 

 

Total assets less current liabilities

 

6,883,474

7,234,848

 

 

Non-current liabilities

 

 

 

Convertible loan notes

20

(282,076)

-

 

 

 

 

6,601,398

7,234,848

Equity

 

 

 

 

 

Called-up share capital

21

2,722,036

2,679,750

Share premium account

 

18,566,642

17,910,928

Share option reserve

 

275,463

309,943

Foreign currency translation reserve

 

933,496

554,965

Retained earnings

 

(15,884,731)

(14,212,274)

 

 

Attributable to the equity shareholders of the company

6,612,906

7,243,312

Non- controlling interests

 

(11,508)

(8,464)

 

 

Total equity

 

6,601,398

7,234,848

 

 

 

The financial statements were approved by the board of directors and authorised for issue on 21 June 2019 and signed on its behalf by:

 

Rufus Short

Director

 

Company registration number: 05292528

 

 

Group Statement of Changes in Equity

Year Ended 31 December 2018

 

 

--------------------------------------------------Equity Interests---------------------------------------

 

 

 

Share Capital

Share Premium

Retained Earnings Account

Share Option Reserve

Foreign Currency Reserve

Total

Non-controlling interest

Total

 

£

£

£

£

£

£

£

£

At 1 January 2017

2,563,325

14,250,401

(13,026,926)

108,802

1,108,176

5,003,778

4,179

5,007,957

 

 

 

 

 

 

 

 

 

Issue of share capital

116,425

3,869,091

-

-

-

3,985,516

-

3,985,516

Cost of issue

-

(162,500)

-

-

-

(162,500)

-

(162,500)

Share options/warrants charge

-

(46,064)

-

201,141

-

155,077

-

155,077

Foreign currency translation

-

-

-

-

(553,211)

(553,211)

(9,327)

(562,538)

Loss for the year

-

-

(1,185,348)

-

-

(1,185,348)

(718)

(1,186,066)

Non- controlling interest share of goodwill

-

-

-

-

-

-

(2,598)

(2,598)

 

At 31 December 2017

2,679,750

17,910,928

(14,212,274)

309,943

554,965

7,243,312

(8,464)

7,234,848

 

 

 

 

 

 

 

 

 

Issue of share capital

42,286

697,714

-

-

-

740,000

-

740,000

Cost of share issue

-

(42,000)

-

-

-

(42,000)

-

(42,000)

Share options/warrants charge

-

-

-

76,319

-

76,319

-

76,319

Cancellation of share options

-

-

110,799

(110,799)

-

-

-

-

Foreign currency translation

-

-

-

-

378,531

378,531

(746)

377,785

Loss for the year

-

-

(1,783,256)

-

-

(1,783,256)

(2,448)

(1,785,704)

Non- controlling interest share of goodwill

-

-

-

-

-

-

150

150

 

__ 

____

__

__

__

At 31 December 2018

2,722,036

18,566,642

(15,884,731)

275,463

933,496

6,612,906

(11,508)

6,601,398

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

.

 

Group Cash Flow Statements

Year Ended 31 December 2018

 

 

 

Year ended 31 December

Year ended 31 December

 

Note

2018

2017

 

 

£

£

Cash flows from operating activities

 

 

 

Operating loss

 

(1,770,021)

(1,186,928)

Impairment of tangible & intangible non-current assets

 

-

104,211

Depreciation

229,732

65,726

Amortisation

 

57,928

 

Share based payments

 

76,319

155,077

Increase in inventories

 

(256,082)

 

Increase in trade and other receivables

 

(77,196)

(149,109)

Increase in trade and other payables

 

390,069

21,905

Foreign exchange differences

 

37,584

(142,174)

 

 

Net cash outflow from operating activities

 

(1,311,667)

(1,131,292)

 

 

Cash flows from investing activities

 

 

 

Purchase of exploration and evaluation assets

 

(468,145)

(882,649)

Purchase of property, plant and equipment

 

(259,601)

(1,104,381)

Finance income

 

529

864

 

 

 

 

 

 

Net cash used in investing activities

 

(727,217)

(1,986,166)

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from issue of convertible loan notes

 

548,853

 

Proceeds from issue of ordinary shares

 

740,000

3,985,515

Share issue costs

 

(42,000)

(162,500)

 

 

 

 

 

 

Net cash inflow from financing activities

 

1,246,853

3,823,015

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

(792,031)

705,557

Cash and cash equivalents at beginning of year

 

951,078

246,120

Effect of foreign exchange rate changes on cash and cash equivalents

 

995

(599)

 

 

 

 

 

 

Cash and cash equivalents at end of year

18

160,042

951,078

 

 

 

 

 

 

 

 

 

 

Notes to the Group Financial Statements

Year Ended 31 December 2018

 

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 companyÕs 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 GroupÕs financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, IFRIC Interpretations and the parts of the Companies Act 2006 applicable to companies reporting under IFRS. The Group's financial statements have also been prepared under the historical cost convention, as modified by the revaluation of available for sale investments.

 

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group's financial statements are disclosed in Note 4.

 

The Company's financial statements continue to be prepared under IFRS. Therefore, the Company's financial statements and the associated notes, together with the auditors' report on these financial statements, are presented separately from the Group.

 

Going concern

 

At 31 December 2018 the Group had cash balances totalling £160,042. 

 

The Group meets its day to day working capital requirements through the sale of its coal resource, and monies raised in follow-on offerings. The Group's forecasts and projections indicate that the Group has sufficient cash reserves to operate within the level of its current facilities. These forecasts are based upon expected saleable levels of production.  

 

Expenditure on excavation is related to the level of orders and both head office costs and Tanzanian administration costs can be reduced if it is found that order levels together with available cash resources are insufficient to meet the Group's working capital needs. 

 

Whilst it is the Group's intention to rely on the available cash reserves, future income generated and if required reductions in its cost base, a negative variance in the forecasts and projections would make the Group's ability to continue as a going concern dependent on an additional fund raise. If the Group's forecasts are not achieved, the Directors would seek to raise the additional funds through equity issues which would be dependent upon investor appetite. After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.

 

The Company therefore continues to adopt the going concern basis in preparing both its consolidated financial statements and for its own financial statements

 

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:

 

 

 

Effective date for accounting period beginning on or after

IFRS 3, IFRS 11

Amendments resulting from Annual Improvements 2015-2017 Cycle (remeasurement of previously held interest)

1 January 2019*

IFRS 9

Amendments regarding prepayment features with negative compensation and modifications of financial liabilities

1 January 2019

IFRS 16

Leases Ð new standard

1 January 2019

IAS 12

Amendments resulting from Annual Improvements 2015Ð2017 Cycle (income tax consequences of dividends)

1 January 2019

IAS 19

Amendments regarding plan amendments, curtailments or settlements

1 January 2019

IAS 23

Amendments resulting from Annual Improvements 2015Ð2017 Cycle (intended use or sale)

1 January 2019

IAS 28

Long-term interests in associates and joint venture

1 January 2019

 

 

*Not yet endorsed by the European Union.

 

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.

 

 

The Group has applied IFRS 15 and IFRS 9 from 1 January 2018. As a result of the adoption of these standards, there has been a change to the significant accounting policies.

 

Due to the transition methods adopted by the Group in applying these standards, comparative information throughout these financial statements has not been restated to reflect the requirements of the new standards.

 

Both of the standards did not have a significant impact on the Group's financial statements.

 

(i) IFRS 15 Revenue from Contracts with Customers

 

IFRS 15 establishes a comprehensive framework for determining , how much and when revenue is recognised. Under IFRS 15, revenue is recognised when a customer obtains control of the goods or services. Determining the timing of the transfer of control at either a point in time or over a period of time requires judgement.

 

The Group has adopted IFRS 15 using the cumulative effect method (without practical expedients), with effect on initially applying this standard on 1 January 2018. Accordingly, the information presented in 2017 has not been restated.

 

Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises revenue when it transfers control over goods to a customer.

 

The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant payment terms and related revenue recognition policies.

 

 

 

Type of product

Nature and timing of satisfaction of performance obligation including significant payment terms

Revenue recognition under IFRS 15

Revenue recognition under IAS 18

Sale of coal

Customers obtain control of coal when the goods leave the Group's premises after being checked at the weigh bridge for verification of coal tonnage (the Group does not arrange for transport). Invoices are generated at that point in time. For those specific contracts where the entity has an order to supply specific contracts, where the entity has an order to supply specific tonnage of coal per month, payments are made on account. For other one-off customers, payments are first made before coal is sold.

Revenue is recognised when coal has been loaded in the customer's truck and the delivery note has been signed by the customer's driver.

The Group started selling commercial washed coal during the year. Hence IAS 18 was not applicable in prior years.

 

 

(i) IFRS 9 Financial Instruments

 

Classification and measurement of financial instruments

 

IFRS 9 contains three principal classification categories for financial assets measured at amortised costs, FVOCI and FVTPL. The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. IFRS 9 eliminates the previous IAS 39 categories of held to maturity, loans and receivables and available for sale.

 

The following table and the accompanying notes below explain the original measurement categories under IAS 39 and the new measurement categories under IFRS 9 for each class of the Group's financial assets and financial liabilities as at 1 January 2018.

 

 

Original classification under IAS 39

New classification under IFRS 9

Original carrying value under IAS 39

New carrying value under IFRS 9

Assets

 

 

£

£

Trade receivables

Loans and receivables

Amortised cost

-

-

Other receivables

Loans and receivables

Amortised cost

288,944

288,944

Cash and cash equivalents

Loans and receivables

Amortised cost

951,078

951,078

 

 

 

 

 

Liabilities

 

 

 

 

Trade and other payables

Other financial liabilities

Amortised cost

139,795

139,795

 

 

Impairment of financial assets

 

IFRS 9 replaces the "incurred loss" model in IAS 39 with the "expected credit loss" model. The new impairment model applies to financial assets measured at amortised cost, contract assets and debt investments at FVOCI, but not investments in equity instruments. Under IFRS 9, credit losses are recognised earlier than under IAS 39.

 

There has not been a significant impact on the Group as at 1 January 2018 as a result of adopting IFRS 9.

 

Share based payments

 

The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:

 

*

including any market performance conditions;

*

excluding the impact of any service and non-market performance vesting conditions (for example, profitability,

sales growth targets and remaining an employee of the entity over a specified time period); and

*

excluding the impact of any non-vesting conditions (for example, the requirement of employees to save).

 

Assumptions about the number of options that are expected to vest include consideration of non-market vesting conditions. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

 

When the options are exercised, the Group issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised

 

Basis of consolidation

 

The Group's financial statements consolidate the financial statements of Edenville Energy Plc and all its subsidiary undertakings (Edenville International (Seychelles) Limited, Edenville International (Tanzania) Limited and Edenville Power (TZ) Limited) made up to 31 December 2018. Profits and losses on intra-group transactions are eliminated on consolidation.

 

Subsidiaries are all entities over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

 

Business combinations

 

The Group adopts the acquisition method in accounting for the acquisition of subsidiaries. On acquisition the cost is measured at the fair value of the assets given, plus equity instruments issued and liabilities incurred or assumed at the date of exchange. The assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair value at the date of acquisition. Any excess of the fair value of the consideration over the fair value of the identifiable net assets acquired is recorded as goodwill.

 

Any deficiency of the fair value of the consideration below the fair value of identifiable net assets acquired is credited to the income statement in the period of the acquisition.

 

The results of subsidiary undertakings acquired or disposed of during the year are included in the group statement of comprehensive income statement from the effective date of acquisition or up to the effective date of disposal.

 

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the group. Inter-company transactions and balances between group companies are eliminated.

 

Revenue recognition

 

Revenue from the sale of energy commodities is recognised upon delivery of goods to the customers.

 

The Group recognises sales revenue related to the transfer of goods when control of the goods passes to the customer. The amount of revenue recognised reflects the consideration to which the Group is or expects to be entitled in exchange of those goods.

 

Sales revenue is recognised on individual sales when control transfers to the customer. In most cases, control passes and sales revenue is recognised when goods leave the entity's premises after being checked at the weighbridge for verification of coal tonnage.

 

Interest income is recognised on a proportional basis taking into account the effective interest rates applicable to the financial assets.

 

Presentational and functional currency

 

This financial information is presented in pounds sterling, which is the Group's functional currency.

 

In preparing the financial statements of individual entities, transaction in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date.

 

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations (including comparatives) are expressed in pounds sterling using exchange rates prevailing at the balance sheet date. Income and expense items are translated at the average exchange rate for the period. Exchange differences arising, if any, are classified as equity and transferred to the Group's foreign currency translation reserve. Such translation differences are recognised in the income statement in the period in which the foreign operation is disposed.

 

Financial instruments

 

The Group has elected to apply the limited exemption in IFRS 9 relating to classification, measurement and impairing requirements for financial instruments, and accordingly comparative periods have not been restated and remain in line with the previous standard IAS 39 "Financial Instruments: Recognition and Measurement"; For further understanding of the impact of the transition to IFRS 9, refer to note 2.

 

Financial assets

 

Financial assets comprise investments, cash and cash equivalents and receivables. Unless otherwise indicated, the carrying amounts of the Group's financial assets are a reasonable approximation of their fair values.

 

Classification and measurement

The Group classifies its financial assets into the following categories: those to be measured subsequently at fair value (either through other comprehensive income (FVOCI) or through the income statement (FVPL) and those to be held at amortised cost.

 

Classification depends on the business model for managing the financial assets and the contractual terms of the cash flows.

Management determines the classification of financial assets at initial recognition. The Group's policy with regard to financial risk management is set out in note 3. Generally, the group does not acquire financial assets for the purpose of selling in the short term.

 

The group's business model is primarily that of "hold to collect" (where assets are held in order to collect contractual cash flows). When the group enters into derivative contracts, these transactions are designed to reduce exposures relating to assets and liabilities, firm commitments or anticipated transactions.

 

Financial Assets held at amortised cost

The classification applies to debt instruments which are held under a hold to collect business model and which have cash flows that meet the "solely payments of principal and interest" (SPPI) criteria.

 

At initial recognition, trade receivables that do not have a significant financing component, are recognised at their transaction price. Other financial assets are initially recognised at fair value plus related transaction costs, they are subsequently measured at amortised costs using the effective interest method. Any gain or loss on derecognition or modification of a financial asset held at amortised cost is recognised in the income statement

 

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.

 

Financial liabilities

Borrowings and other financial liabilities (including trade payables but excluding derivative liabilities) are recognised initially at fair value, net of transaction costs incurred, and are subsequently measured at amortised costs.

 

Impairment of financial assets

A forward looking expected credit loss (ECL) review is required for: debt instruments measured at amortised costs are held at fair value through other comprehensive income: loan commitments and financial guarantees not measured at fair value through profit or loss; lease receivables and trade receivables that give rise to an unconditional right to consideration.

 

As permitted by IFRS9, the group applies the "simplified approach" to trade receivable balances and the "general approach" to all other financial assets. The general approach incorporates a review for any significant increase in counter party credit risk since inception. The ECL reviews including assumptions about the risk of default and expected loss rates. For trade receivables, the assessment takes into account the use of credit enhancements, for example, letters of credit. Impairments for undrawn loan commitments are reflected as a provision.

 

Inventories

 

Inventories are measured at the lower of costs and net realisable value. The cost of inventory is based on the average period over the relevant period of production and includes expenditure in accumulating the inventories, production costs and other costs incurred in bringing them to their existing location and condition. Stockpiles tonnages are verified by periodic surveys.

 

Cost is based on Average costing principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition plus appropriate share of overheads based on normal operating capacity.

 

The Company performs inventory obsolescence at each reporting date. In determining whether inventories are obsolete, the Company assesses the age at which inventories held in the store in order to make an assessment of the inventory write down to net realisable value.

 

 

Trade and other receivables

Provision for impairment of trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is the difference between the receivables carrying amount and the present value of the estimated future cash flows.

 

An assessment for impairment is undertaken at least annually.

 

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 component parts of convertible loan notes issued by the Company are classified separately as financial liabilities and equity in accordance with the substance of contractual arrangements. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instrument's maturity date. The equity component is determined be deducting the amount of the liability component from the fair value of the convertible loan notes as a whole. This is recognised and included in equity, net of income tax effects, and is not subsequently remeasured.

 

Property, plant and equipment

Property, plant and equipment are stated at cost on acquisition less accumulated depreciation and accumulated impairment losses.

 

Depreciation is provided on all property, plant and equipment categories at rates calculated to write off the cost, less estimated residual value on a reducing balance basis over their expected useful economic life. The depreciation rates are as follows:

 

 

Basis of depreciation

 

 

Fixtures, fittings and equipment

25% reducing balance

Plant and machinery

5 years straight line or 25% reducing balance

Office equipment

25% reducing balance

Motor vehicles

25% reducing balance

 

Costs capitalised include the purchase price of an asset and any costs directly attributable to bringing it into working condition for its intended use.

 

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 GroupÕs assets and liabilities and their tax base. Deferred tax liabilities are offset against deferred tax assets within the same taxable entity or qualifying local tax group. Any remaining deferred tax asset is recognised only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxable profits, within the same jurisdiction, in the foreseeable future against which the deductible temporary difference can be utilised. Deferred tax is determined using tax rates that are expected to apply in the periods in which the asset is realised or liability settled, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is recognised in the income statement, except when the tax relates to items charged or credited directly in equity, in which case the tax is also recognised in equity.

 

Share capital

 

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as deduction, net of tax, from the proceeds.

 

Exploration and evaluation, Development and production assets

 

Capitalisation

 

Certain costs (other than payments to acquire the legal right to explore and costs which are directly attributable to those payments) incurred prior to acquiring the rights to explore are charged directly to the income statement. All costs incurred after the rights to explore an area have been obtained, such as geological and geophysical costs and other direct costs of exploration and appraisal are accumulated and capitalised as intangible exploration and evaluation ("E&E") assets. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the areas or where activities in the areas have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves.

 

E&E costs are not amortised prior to the conclusion of appraisal activities.

 

At completion of appraisal activities, if technical feasibility is demonstrated and commercial reserves are discovered, then, following development sanction, the carrying value of the relevant E&E asset will be reclassified as a development and production ("D&P") asset, but only after the carrying value of the relevant E&E asset has been assessed for impairment, and where appropriate, its carrying value adjusted. If after completion of appraisal activities in the area, it is not possible to determine technical feasibility and commercial viability or if the legal right to explore expires or if the Company decides not to continue exploration and evaluation activity, then the costs of such unsuccessful exploration and evaluation are written off to the income statement in the period the relevant events occur.

 

Impairment

 

Management consider on a regular basis the geological resources and exploration and evaluation results of each licence and based on their analysis may relinquish or abandon a particular licence area. When this occurs, the costs related to the relinquished area are written off to the income statement.

 

Where the licences will be retained an impairment review is performed when facts and circumstances indicate that the carrying value of E&E assets may exceed its recoverable amount.

 

For E&E assets when there are such indications, an impairment test is carried out by grouping the E&E assets with the D&P assets belonging to the same geographic segment to form the Cash Generating Unit ("CGU") for impairment testing. The equivalent combined carrying value of the CGU is compared against the CGU's recoverable amount and any resulting

 

Impairment loss is written off to the income statement. The recoverable amount of the CGU is determined as the higher of its fair value less costs to sell and its value in use.

 

Depletion of Development and Production Assets

 

The net carrying amount of development and production assets is depleted using the unit of production method by reference to the ration of production in the year to the related proven and probable reserves, taking into account estimated future development costs necessary to bring those reserves into production. If he useful life of the asset is less than the reserve life, in which case the asset is depreciated over its estimate life using the straight line method.

 

Future development costs are estimated taking into account the level of development required to produce the reserves. These estimates are reviewed by independent reserve engineers. Changes in factors such as estimates of reserves that affect unit of production calculations are dealt with on a prospective basis. Capital costs for assets under construction included in development and production assets are excluded from depletion until the asset is available for use, that is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

 

Development assets

 

When the technical feasibility and commercial viability of extracting a mineral resource are demonstrable, the Group:

 

*

stops capitalising E&E costs for that area

*

tests recognised E&E assets for impairment; and

*

ceases classifying any unimpaired E&E assets (tangible and intangible) as E&E.

For Evaluation and Exploration assets reclassified to development assets, the Group classifies such assets either as tangible or intangible development assets. Intangible E&E assets may be reclassified into tangible development assets or intangible development assets and vice versa. Identifiable tangible assets that cease to be classified as E&E assets are generally classified as tangible development assets. Any costs incurred in testing the assets to determine if they are functioning as intended, are capitalised, net of any proceeds received from selling any product produced while testing. Identifiable intangible E&E assets may continue to be classified as an intangible asset, or may be reclassified as a tangible asset if the intangible asset is considered to be integral to the tangible development asset and the tangible element of the asset is more significant.

 

Amortisation

On reclassification of E&E assets, an entity depreciates (amortises) the resulting tangible development assets. Intangible development assets are not depreciated until the production stage is reached at which point both tangible and intangible development assets, are depreciated using the units-of-production method is used.

 

The net carrying amount of development or production assets is depleted using the unit of production method by reference to the ratio of production in the year to the related proven and probable reserves, taking into account estimated future development costs necessary to bring those reserves into production. If the useful life of the asset is less than the reserve life, in which case the asset is depreciated over its estimated useful life using the straight-line method.

 

Future development costs are estimated taking into account the level of development required to produce the reserves. These estimates are reviewed by independent reserve engineers. Changes in factors such as estimates of reserves that affect unit-of-production calculations are dealt with on a prospective basis. Capital costs for assets under construction included in development and production assets are excluded from depletion until the asset is available for use, that is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

 

Goodwill

 

At the date of acquisition of a subsidiary undertaking, fair values are attributed to the acquired identifiable assets, liabilities and contingent liabilities. Goodwill represents the difference between the fair value of the purchase consideration and the acquired interest in the fair value of those net assets.

 

Goodwill is initially recognised at fair value. Any negative goodwill is credited to the income statement in the year of acquisition. If an undertaking is subsequently sold, the amount of goodwill carried on the balance sheet at the date of disposal is charged to the income statement in the period of disposal as part of the gain or loss on disposal.

 

Goodwill is associated with exploration and evaluation and development assets, the impairment of which is discussed in the accounting policy note for exploration and evaluation assets.

 

 

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 intangible assets;

*

classification of exploration and evaluation assets;

*

share based payments

 

Impairment Ð intangible assets

 

The Group is required to perform an impairment review, on reclassification of exploration and evaluation assets to development assets, for each CGU to which the asset relates. Impairment review is also required to be performed on goodwill annually and 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 discovery of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development and future profitable production or proceeds from the disposal until the technical feasibility and commercial viability of extracting a mineral resource becomes demonstrable, at which point the value is estimated based upon the present value of the discounted future cash flows.

 

The outcome of ongoing exploration and evaluation and development assets, and therefore whether the carrying value of exploration and evaluation and development assets will ultimately be recovered, is inherently uncertain.

 

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 assetÕs 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

*

Discount rates

*

Coal prices

*

Operating overheads

 

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 have assessed the value of exploration and evaluation expenditure and development assets and goodwill carried as 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.

 

At the reporting date, the carrying value of evaluation expenditure and/or development assets is £5,443,363 (2017: £4,757,087) and the carrying value of goodwill is £332,466 (2017: £314,231).

 

Classification of exploration and evaluation, development and production assets

 

E&E assets are reclassified from Exploration and Evaluation, to development assets, when evaluation procedures have been completed and the Directors consider commercial viability has occurred. The Directors consider commercial viability occurs when the project development reaches a stage where the mining and processing of the mineral is at commissioning stage and the project has been successfully built or developed in such a way that cash flow can be received for the product in question. Critically this point shows the project has been able to be developed for a cost that can be both quantified and also sourced in some way to allow the project to reach this stage. Commissioning is generally defined in mineral exploitation as the point at which the project can deliver products in a regular and sustainable way, be that from the mine or a processing plant.

 

When the commissioning stage has completed, it is considered that the mine has moved into the production phase of its lifecycle. The Directors considered that this stage was reached in April 2018.

 

Share based payments

 

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.

 

Depletion of Development and Production Assets

 

The net carrying amount of development and production assets is depleted using the unit of production method by reference to the ratio of production in the year to the related measured and indicated resources. Measured and indicated resources are based on a JORC compliant resource estimate carried out in 2013.

 

 

5. Segmental information

 

The Board considers the business to have one reportable segment being Coal exploration and development projects.

 

Other represents unallocated expenses and assets held by the head office. Unallocated assets primarily consist of cash and cash equivalents.

 

 

 

Exploration and Development Projects

 

 

 

2018

 

 

 

Coal

 

Other

 

Total

Consolidated Income Statement

 

 

£

£

£

Revenue - Tanzania

 

 

275,226

-

275,226

Revenue - other

 

 

61,899

-

61,889

Cost of sales (excluding depreciation and amortisation)

 

 

(868,549)

-

(868,549)

Impairment of stock

 

 

(8,492)

-

(8,492)

Depreciation

 

 

(226,343)

-

(226,343)

Depletion of development assets

 

 

(87,928)

-

(87,928)

 

 

 

Gross profit

 

 

(854,187)

 

(854,187)

Administrative expenses

 

 

(131,990)

(702,930)

(834,920)

Share based payment

 

 

-

(76,319)

(76,319)

Depreciation

 

 

(3,805)

(790)

(4,595)

 

 

 

Group operating loss

 

 

(989,982)

(780,039)

(1,770,021)

Finance income

 

 

-

529

529

Finance cost

 

 

-

(16,212)

(16,212)

 

 

 

Loss on operations before taxation

 

 

(989,982)

(795,722)

(1,785,704)

Income tax

 

 

-

-

-

 

 

 

Loss for the year

 

 

(989,982)

(795,722)

(1,785,704)

 

 

 

2017

 

 

 

 

 

Consolidated Income Statement

 

 

 

 

 

Intangible assets written off

 

 

(104,210)

-

(104,210)

Share based payments

 

 

-

(155,077)

(155,077)

Other expenses

 

 

(22,702)

(735,002)

(757,704)

Write off of evaluation and exploration assets

 

 

(104,211)

-

(104,211)

Depreciation

 

 

(64,673)

(1,053)

(65,726)

 

 

 

Group operating loss

 

 

(295,796)

(891,132)

(1,186,928)

Finance income

 

 

-

864

864

 

 

 

Loss on operations before taxation

 

 

(295,796)

(890,268)

(1,186,064)

Income tax

 

 

-

-

-

 

 

 

Loss for the year

 

 

(295,796)

(890,268)

(1,186,064)

 

 

 

 

 

 

 

 

By Business Segment

 

Carrying value of segment assets

Additions to non-current assets and intangibles

Total liabilities

 

 

 

 

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

 

£

£

£

£

£

£

 

Coal

7.568,618

6,421,089

727,746

1,987,031

414,289

92,898

 

Other

159,037

960,556

-

-

711,967

53,899

 

 

 

 

7,727,655

7,381,645

727,746

1,987,031

1,126,256

146,797

 

 

 

By Geographical Area

 

 

 

 

 

 

 

 

£

£

£

£

£

£

 

Africa (Tanzania)

7,568,618

6,421,089

727,746

1,987,031

414,289

92,898

 

Europe

159,037

960,556

-

-

711,967

53,899

 

 

 

 

7,727,655

7,381,645

727,746

1,987,031

1,126,256

146,797

 

 

 

 

Information about major customers

 

Included in revenues arising from the sale of coal are revenues of £220,558 (2017: £Nil) which arose from sales to the GroupÕs largest customer based in Tanzania. No other single customer contributed 10% or more to the Group's revenue in either 2018 or 2017.

 

6. Administration expenses

 

2018

2017

 

£

£

Staff costs

232,858

356,805

Other expenses

606,657

570,835

 

 

839,515

927,640

 

 

 

 

7. AuditorsÕ remuneration

 

 

2018

2017

 

£

£

Fees payable to the CompanyÕs auditor for the audit of the parent company and consolidated accounts

 

30,000

 

30,000

 

 

 

 

 

8. Employees

 

 

2018

2017

 

£

£

Wages and salaries

212,873

221,552

Share based payments

-

113,686

Social security costs

18,825

20,732

Pensions

1,160

835

 

 

232,858

356,805

 

 

 

 

 

Included within Development expenditure/Exploration and evaluation assets (note 15) are capitalised wages and salary costs of £241,458 (2017: £212,572).

 

The average number of employees and directors during the year was as follows:

 

 

2018

2017

Administration and mining

7

5

Mining

31

5

 

 

38

10

 

 

9. Directors' remuneration

 

2018

2017

 

£

£

 

 

 

Emoluments

211,000

221,000

Shared based payments

-

113,686

Pensions

1,160

835

 

 

212,160

335,521

 

 

The highest paid director received remuneration of £130,702 (2017: £197,260).

 

Directors' interest in outstanding share options per director is disclosed in the directors' report.

 

Remuneration of key management personnel

 

The remuneration of the directors and other key management personnel is set out below:

 

 

2018

2017

 

£

£

 

 

 

Emoluments

255,935

267,583

Shared based payments

-

113,686

Pensions

1,160

835

 

 

257,095

382,104

 

 

 

10. Finance income

 

 

2018

2017

 

£

£

 

 

 

Interest income on short-term bank deposits

529

864

 

 

529

864

 

 

 

 

11. Finance Costs

 

 

 

2018

2017

 

£

£

 

 

 

Interest on convertible loan notes

11,496

-

Convertible loan finance costs

4,716

-

 

 

16,212

-

 

 

 

 

12. Income tax

 

 

2018

2017

 

£

£

 

 

 

Current tax:

 

 

Current tax on loss for the year

-

-

 

Total current tax

-

-

Deferred tax

 

 

On write off/impairment on intangible assets

-

-

 

Tax charge for the year

-

-

 

 

 

No corporation tax charge arises in respect of the year due to the trading losses incurred. The Group has Corporation Tax losses available to be carried forward and used against trading profits arising in future periods of £6,256,070 (2017: £5,550,871).

 

A deferred tax asset of £1,063,129 (2017: £943,110) calculated at 17% (2017: 17%) 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:

 

 

2018

2017

 

£

£

 

 

 

Loss on ordinary activities before tax

(1,785,704)

(1,186,064)

 

Expected tax credit at standard rate of UK Corporation Tax

 

 

19% (2017: 19%)

(339,284)

(225,352)

Disallowable expenditure

24,372

87,667

Movement in deferred tax not recognised

314,912

137,685

 

Tax charge for the year

-

-

 

 

 

 

 

13. Earnings per share

 

The basic loss per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number of shares in issue.

 

The loss attributable to equity shareholders and weighted average number of ordinary shares for the purposes of calculating diluted earnings per ordinary share are identical to those used for basic earnings per ordinary share. This is because the exercise of warrants would have the effect of reducing the loss per ordinary share and is therefore anti-dilutive.

 

 

2018

2017

 

£

£

Net loss for the year attributable to ordinary shareholders

(1,785,704)

(1,186,064)

 

 

 

 

Weighted average number of shares in issue

1,476,497,888

1,106,162,059

 

 

 

 

Basic and diluted loss per share

(0.12p)

(0.11p)

 

 

 

 

 

 

14. Property, plant and equipment

 

 

Plant and machinery

Fixtures, fittings and equipment

Motor vehicles

Total

 

£

£

£

£

Cost

 

 

 

 

As at 1 January 2017

7,471

7,473

96,683

111,627

Additions

1,104,381

-

-

1,104,381

Foreign exchange adjustment

-

(289)

(6,974)

(7,263)

 

As at 31 December 2017

1,111,852

7,184

89,709

1,208,745

 

 

 

 

 

 

Depreciation

 

 

 

 

As at 1 January 2017

6,362

6,854

79,189

92,405

Charge for the year

61,358

154

4,214

65,726

Foreign exchange adjustment

(2,847)

(289)

(5,833)

(8,969)

 

As at 31 December 2017

64,873

6,719

77,570

149,162

 

Net book value

 

 

 

 

As at 31 December 2017

1,046,979

465

12,139

1,059,583

 

 

 

 

 

 

Plant and machinery

Fixtures, fittings and equipment

Motor vehicles

Total

 

£

£

£

£

Cost

 

 

 

 

As at 1 January 2018

1,111,852

7,184

89,709

1,208,745

Additions

259,601

-

-

259,601

Foreign exchange adjustment

64,088

176

4,237

68,501

 

As at 31 December 2018

1,435,541

7,360

93,946

1,536,847

 

 

 

 

 

 

Depreciation

 

 

 

 

As at 1 January 2018

64,873

6,719

77,570

149,162

Charge for the year

226,551

115

3,066

229,732

Foreign exchange adjustment

14,986

176

3,760

18,922

 

As at 31 December 2018

306,410

7,010

84,396

397,816

 

Net book value

 

 

 

 

As at 31 December 2018

1,129,131

350

9,550

1,139,031

 

 

 

 

 

 

 

Plant and machinery depreciation amounting to £226,343 is included within cost of sales as it relates to mining equipment.

 

 

15. Intangible assets

 

 

 

 

Evaluation and Exploration Assets

 

 

 

 

Tanzanian

Development

 

 

 

Licences

Expenditure

Goodwill

Total

 

£

£

£

£

Cost or valuation

 

 

 

 

As at 1 January 2017

4,358,669

-

1,641,351

6,000,020

Additions

882,649

-

-

882,649

Foreign exchange adjustment

(380,020)

-

(143,106)

(523,126)

Written off

(104,211)

-

-

(104,211)

Change in minority interest

-

-

(12,280)

(12,280)

Transfer to development expenditure

(4,757,087)

4,757,087

-

-

 

At 31 December 2017

-

4,757,087

1,485,965

6,243,052

 

Accumulated amortisation and impairment

 

 

 

 

As at 1 January 2017

-

-

1,294,260

1,294,260

Charge for the year

-

-

-

-

Change in minority interest

-

-

(9,683)

(9,683)

Foreign exchange adjustment

-

-

(112,843)

(112,843)

 

At 31 December 2017

-

-

1,171,734

1,171,734

 

Net book value

 

 

 

 

As at 31 December 2017

-

4,757,087

314,231

5,071,318

 

 

 

 

 

 

 

 

 

 

 

 

Development and Production

 

 

 

 

Expenditure

Goodwill

Total

 

 

£

£

£

Cost or valuation

 

 

 

 

As at 1 January 2018

 

4,757,087

1,485,965

6,243,052

Additions

 

468,145

-

468,145

Foreign exchange adjustment

 

276,059

86,232

362,291

 

 

At 31 December 2018

 

5,501,291

1,572,197

7,073,488

 

 

Accumulated depletion, amortisation and impairment

 

 

 

 

As at 1 January 2018

 

-

1,171,734

1,171,734

Depletion of development and production assets

 

57,928

-

57,928

Foreign exchange adjustment

 

-

67,997

67,997

 

 

At 31 December 2018

 

57,928

1,239,731

1,297,659

 

 

Net book value

 

 

 

 

As at 31 December 2018

 

5,443,363

332,466

5,775,829

 

 

 

Tanzanian Licences and Goodwill

The Tanzanian licences comprise a mining licence and various prospecting licences. The licences are located in a region displaying viable prospects for both uranium and 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.

 

Goodwill arose as a result of the valuation placed on the original six Tanzanian licences acquired on the acquisition of Edenville (Tanzania) Limited. The allocation of the Goodwill was based on the valuation of the Group's licences and has been allocated between coal and uranium licences.

 

In 2015 as the Group focused firmly on the development of the Rukwa Coal to Power Project the directors have looked at rationalisation of other licences which will allow available funds to be focussed on the development of the Group's core asset at Rukwa.

During 2016 the Group wrote off the last of its uranium licences and associated goodwill; the licence was subsequently relinquished in February 2017.

During 2017 the Company evolved from an exploration company to a development company, as a result its exploration and evaluation assets were transferred to development expenditure.

During 2018 the Company transitioned from development to production on its Mkomolo licence ML562/2016.

The Directors carried out an impairment review on reclassification of exploration and evaluation assets to development and production assets.

Development and production assets have a finite useful economic life. These assets are depleted on the unit of production method based on measured and indicated resources as described in note 2.

Goodwill has a finite life and is reviewed for impairment annually.

16. Inventories

 

 

2018

2017

 

£

£

 

 

 

ROM stockpiles

11,493

-

Fines

238,881

-

Washed coal

5,708

-

 

 

256,082

-

 

 

 

 

 

The cost of inventories recognised as an expense during the year in was £853,388 (2017: £Nil).

 

Inventory of washed coal has been reduced by £8,492 as a result of write-downs to net realisable value. This write down is recognised as an expense during the year.

 

 

17. Trade and other receivables

 

2018

2017

 

£

£

Trade Receivables

53,941

7,163

Less: provision for impairment of trade receivables

(27,900)

-

 

Trade receivables - net

26,041

7,163

Other receivables

77

70

VAT receivable

368,579

281,711

Prepayments

1,974

10,722

 

 

396,671

299,666

 

 

 

 

 

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.

 

 

 

 

18. Cash and cash equivalents

 

Cash and cash equivalents include the following for the purposes of the cash flow statement:

 

2018

2017

 

£

£

 

 

 

Cash at bank and in hand

160,042

951,078

 

19. Trade and other payables

 

2018

2017

 

£

£

 

 

 

Trade and other payables

366,175

22,398

Social security costs and other taxes

6,980

7,002

Accruals and deferred income

182,908

117,397

 

 

556,063

146,797

 

20. Convertible loan notes

 

 

2018

2017

 

£

£

Current liabilities

 

 

Convertible loan notes

288,118

-

 

 

 

Non Ð current liabilities

 

 

Convertible loan notes

282,076

-

 

 

570,194

-

 

 

 

In November 2018 $750,000 conditionally convertible loan notes were issued: the face value of these convertible securities is $900,000. A commitment fee of £37,500 , which has been offset against the proceeds of issue of the convertible loan notes, was payable by the Company as well as issuing share options over 99,568,966 ordinary shares exercisable for 4 years at a conversion price on 0.29p per share. The Company is required to make repayments of $45,000 over 20 months commencing in February 2019. If repayments are made in cash then an additional 3% is payable on the $45,000. The company may elect to make the repayment in its shares priced at 90% of the average five day Volume Weighted Average Price (VWAP) chosen by the investor during the 20 days before issuance, or a combination of both.The Company has the option to buy back the entire outstanding face value at any time at a premium of 5%. If this right is exercised the investor has an option to convert 25% of the face value into shares at the lesser of the repayment price or 0.29p per share. The repayment price being 130% of the 10 day VWAP immediately prior to the company entering the Convertible Agreement.

 

In addition to the above the investor was offered 36,000,000 collateral shares which were issued by the Company on 20 February 2019.

 

 

 

 

21. Share capital

 

 

No

£

No

£

£

 

Ordinary shares of 0.02p each

Ordinary shares of 0.02p each

Deferred shares of 0.001p each

Deferred shares of 0.001p each

Total share capital

Issued and fully paid

 

 

 

 

 

At 1 January 2017

754,202,898

150,840

241,248,512,346

2,412,485

2,563,325

On 26 January 2017 the company issued the following ordinary shares

 

 

 

 

 

Ordinary shares issued at 0.83p in lieu of consultancy services

963,855

193

 

 

 

Ordinary shares issued at 0.77p in lieu of consultancy services

1,948,051

390

 

 

 

Ordinary shares issued on exercise of warrants at 0.80p

1,375,000

275

 

 

 

Ordinary shares issued on exercise of warrants at 0.60p

5,555,555

1,111

 

 

 

Ordinary shares issued on exercise of warrants at 0.54p

34,699,778

6,940

 

 

 

On 31 January 2017 Ordinary shares issued on exercise of warrants at 0.80p

3,304,167

661

 

 

 

On 6 February 2017Ordinary shares issued on exercise of warrants at 0.80p

612,500

122

 

 

 

On 7 February 2017 Ordinary shares issued on exercise of warrants at 0.80p

6,625,002

1,325

 

 

 

On 7 February 2017 Ordinary shares issued on exercise of warrants at 0.60p

14,999,780

3,000

 

 

 

On 23 February 2017 the company issued shares at 0.80p each

22,781,732

4,557

 

 

 

On 17 March 2017 the company issued shares at 0.80p each

227,218,268

45,443

 

 

 

20 March 2017 Ordinary shares issued on exercise of warrants at 0.60p

10,000,000

2,000

 

 

 

29 March 2017 Ordinary shares issued on exercise of warrants at 0.60p

2,777,778

556

 

 

 

On 16 June 2017 Ordinary shares issued on exercise of warrants at 0.60p

14,722,442

2,945

 

 

 

On 23 June 2017 Ordinary shares issued on exercise of warrants at 0.54p

4,273,505

855

 

 

 

On 26 September 2017 Ordinary shares issued on exercise of warrants at 0.54p

21,924,153

4,385

 

 

 

On 9 October 2017 Ordinary shares issued on exercise of warrants at 0.60p

208,333,333

41,667

 

 

 

As at 31 December 2017

1,336,317,797

267,265

241,248,512,346

2,412,485

2,679,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

No

£

No

£

£

 

Ordinary shares of 0.02p each

Ordinary shares of 0.02p each

Deferred shares of 0.001p each

Deferred shares of 0.001p each

Total share capital

Issued and fully paid

 

 

 

 

 

At 1 January 2018

1,336,317,797

267,265

241,248,512,346

2,412,485

2,679,750

On 3 May 2018 Ordinary shares issued at 0.35p

211,428,572

42,286

-

-

42,286

 

 

 

 

 

 

As at 31 December 2018

1,547,746,369

309,551

241,248,512,346

2,412,485

2,722,036

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22. Capital and reserves attributable to shareholders

2018

2017

 

£

£

Share capital

2,722,036

2,679,750

Share premium

18,566,642

17,910,928

Other reserves

1,208,959

864,908

Retained deficit

(15,884,876)

(14,212,274)

 

________

________

Total equity

6,612,761

7,243,312

 

 

 

 

There have been no significant changes to the Group's capital management objectives or what is considered to be capital during the year.

 

 

23. 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 groupÕs 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.

 

 

24. 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.

 

Categories of financial instruments

2018

 

2017

 

£

 

£

Financial assets

 

 

 

 

 

 

 

Receivables at amortised cost including cash and cash equivalents:

 

 

 

Cash and cash equivalents

160,042

 

951,078

Trade and other receivables

394,697

 

288,944

Total

554,739

 

1,240,022

 

 

 

 

Financial liabilities

 

 

 

Financial liabilities at amortised cost:

 

 

 

Trade and other payables

549,082

 

139,795

Convertible loan notes

570,194

 

-

 

 

 

 

 

1,119,276

 

139,795

 

 

 

 

Net

(565,537)

 

1,100,227

 

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 bankÕs variable interest rate.

The Group is exposed to interest rate risk through its convertible loan notes, its only interest bearing liabilities. The level of interest payable will vary depending on whether the repayments are made with shares or in cash. The effective interest rate based on repayments of $45,000 per month is 17.93%. If repayments are made in cash then the monthly repayments increase by 3% giving an effective interest rate of 20.95%, excluding transaction costs.

Credit risk

Credit risk arises principally from the Group's trade receivables and investments in cash deposits. It is the risk that the counterparty fails to discharge its obligation in respect of the instrument.

 

VAT receivable is owed to Edenville International (Tanzania) Limited which is only recoverable against future sales made by Edenville International (Tanzania) Limited. The Group expects to recover the above VAT from sales of commercial coal.

 

The Group holds its cash balances with reputable financial institutions with strong credit ratings. There were no amounts past due at the balance sheet date.

The maximum exposure to credit risk in respect of the above at 31 December 2018 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 of its subsidiaries are denominated in US Dollars. The GroupÕs 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 GroupÕs income statement. The Group also manages its currency exposure by retaining the majority of its cash balances in sterling, being a relatively stable currency.

 

The effect of a 10% rise or fall in the US dollar/Sterling exchange rate would result in an increase or decrease in the net assets of the group of £715,195.

 

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

 

2017

 

 

 

 

Less than 1 year

1- 2 years

2-5 years

Borrowings (current and non Ð current)

-

-

-

Trade payables

12,394

-

-

Other payables

17,006

-

-

Accruals

117,397

-

-

 

146,797

 

 

 

 

2018

 

 

 

 

Less than 1 year

1- 2 years

2-5 years

Convertible loan notes (current and non Ð current)

288,118

282,076

-

Trade payables

333,940

-

-

Other payables

39,215

-

-

Accruals

182,908

-

-

 

844,181

282,076

 

 

25. Equity-settled share-based payments

 

The following options over ordinary shares have been granted by the Company:

 

Grant Date

Exercise price

Number of options outstanding at 31 December 2018

21 October 2013

5.00p

6,011,481

28 March 2017

1.08p

42,000,000

5 November 2018

0.29p

99,568,966

 

The options granted on 21 October 2013 are exercisable from 21 October 2014. The options are valid for a period of 10 years from the date of grant. There are no vesting conditions.

 

Of the 46,000,000 issued on 28 March 2017, 32,000,000 were issued to the Directors and a member of senior management and 8,000,000 to two engineers, 4,000,000 of which lapsed during the year.

 

The 38,000,000 options issued to the Directors and a member of senior management will vest one third immediately, one third upon production of in excess of 5,000 tonnes of commercial coal per month over three consecutive months and one third upon completion of the Bankable Feasibility Study for the Rukwa Power Plant.

 

8,000,000 of the options of which 4,000,000 have lapsed during the year were granted to two engineers, will vest one half upon production of in excess of 5,000 tonnes of commercial coal per month over three consecutive months and one half upon production of in excess of 10,000 tonnes of commercial coal per month over three consecutive months.

 

The options are exercisable for a 5-year period from 27 March 2017.

 

During the year on the issue of convertible loan notes (see note 20), 99,568,966 options were issued to the investor. These options are exercisable over a 4 year period at an exercise price of 0.29p

 

At the date of grant, the options were valued using the Black-Scholes option pricing model. The fair value per option granted and the assumptions used in the calculation were as follows:

 

Date of grant

21 October 2013

28 March 2017

5 November 2018

Expected volatility

85%

131%

70%

Expected life

4 years

3 years

4

Risk-free interest rate

1.23%

0.37%

0.96%

Expected dividend yield

-

-

-

Possibility of ceasing employment before vesting

-

-

-

Fair value per option

0.09p

0.56p/0.42p/0.28p

0.08p

 

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 2018 was £76,319 (2017: £155,077).

 

Movements in the number of options outstanding and their related weighted average exercise prices are as follows:

 

 

2018

2017

 

Number of options

Weighted average exercise price per share

pence

 

Number of options

Weighted average exercise price per share

pence

At 1 January

52,011,481

1.53

6,011,481

5.00

Granted

99,568,966

0.29

46,000,000

1.08

Exercised

-

-

-

-

Cancelled

(4,000,000)

1.08

-

-

 

At 31 December

147,580,447

0.71

52,011,481

1.53

 

 

 

 

 

 

Exercisable at year end

 

118,247,114

 

 

18,678,148

 

 

 

 

 

The weighted average remaining contractual life of options as at 31 December 2018 was 3.42 years (2017: 4.42 years).

 

 

Warrants

 

Movements in the number of warrants outstanding and their related weighted average exercise prices are as follows:

 

 

2018

2017

 

Number of options

Weighted average exercise price per share

pence

 

Number of options

Weighted average exercise price per share

pence

At 1 January

241,666,667

0.96

142,286,325

0.62

Granted

-

-

241,666,667

0.96

Exercised

-

-

(120,869,661)

0.59

Cancelled/expired

(241,666,667)

(0.96)

(21,416,664)

0.80

 

At 31 December

-

-

241,666,667

0.96

 

 

The weighted average remaining contractual life of warrants as at 31 December 2018 was Nil years (2017: 0.69 years).

 

The charge in respect of the 12,500,000 Broker warrants granted in 2017 was £46,064 and is included in share premium as cost of issuing shares in the year ended 31 December 2017.

 

 

26. 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

 

 

27. 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 £1,435,463 (2017: £2,413,192) 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 £8,565,706 (2017: £7,130,243). This amount has been included within loans to subsidiaries.

 

Included in trade creditors at year end is an amount of £Nil (2017:£1,639) owed to Rufus Short, a director, in respect of expenses incurred on behalf of the company.

 

Also included in trade creditors is an amount of £13,500 (2017: £Nil) owed to Aaridhi Consultants in respect of Directors fees for Arun Srivasrava.

 

 

At the year end the Company was owed £3,712 (2017: £3,712) by its subsidiary Edenville International (Seychelles) Limited.

 

At the year end the Company was owed £6,340 (2017: £6,340) by its subsidiary Edenville Power Tz Limited.

 

28. Events after the reporting date

 

On 20 February 2019 the Company issued 36,000,000 ordinary shares of 0.02p each at par, being collateral shares issued to the investor for advancing funds (see note 20)

 

On 20 February 2019 the Company issued 64,515,192 ordinary shares of 0.02p for 0.12p each. Of these shares 8,333,333 and 12,500,000 were issued to the Directors Rufus Short and Jeffrey Malaihollo respectively.

 

On 29 April 2019 the Company raised £100,000 by issuing 500,000,000 new ordinary shares of 0.02p each and has conditionally raised a further £410,000 before expenses by conditionally placing 2,050,000,000 new ordinary shares at 0.02p each.

 

In April 2019, the Company agreed a repayment holiday up to September 2019 in respect of the convertible loan notes disclosed in note 20 to the accounts. As a condition of granting the repayment holiday the repayment due at the time, US$855,000, was increased by 15% to US$983,250.

 

In May 2019, the Company issued 213,980,200 to the Directors at 0.02p each in lieu of unpaid salary.

 

 

29. Financial commitments

 

The Group has future aggregate minimum lease payments under non- cancellable operating leases of $43,472 (2017: $35,257) and required expenditure of $Nil (2017: $16,125) in respect of its licences for the forthcoming year.

 

 

30. Ultimate Controlling Party

 

The Group considers that there is no ultimate controlling party.

 

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
FR FMMPTMBMTBFL
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