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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Kibo Energy Plc | LSE:KIBO | London | Ordinary Share | IE00B97C0C31 | ORD EUR0.0001 (CDI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.0375 | 0.035 | 0.04 | 0.0425 | 0.0375 | 0.0425 | 3,606,771 | 12:17:48 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Gold Ores | 1.04M | -9.78M | -0.0026 | -0.15 | 1.51M |
From Apr 2019 to Apr 2024
TIDMKIBO
RNS Number : 1065D
Kibo Energy PLC
24 June 2019
Kibo Energy PLC (Incorporated in Ireland)
(Registration Number: 451931)
(External registration number: 2011/007371/10)
Share code on the JSE Limited: KBO
Share code on the AIM: KIBO
ISIN: IE00B97C0C31
("Kibo" or "the Company")
Dated: 24 June 2019
Kibo Energy PLC ('Kibo' or the 'Company')
Results for the Year Ended 31 December 2018
Kibo Energy PLC ("Kibo" or the "Company"), the multi-asset, Africa focused energy company, is pleased to release its consolidated annual financial results for the year ended 31 December 2018. The Company's Annual Report, which contains the full financial statements is in the process of being prepared for dispatch to shareholders. A copy of this Annual Report will also be available from the Company's website at www.kibo.energy. Details of the date and venue for this year's AGM will be announced on posting of the full Annual Financial Results.
Overview (2018 and 2019 YTD)
-- Acquired majority interests in the Mabesekwa Coal Independent Power Project in Botswana, the Benga Power Plant Project in Mozambique, and a 60% equity interest in Mast Energy Developments Limited in the UK
-- Country diversification to help insulate the Company from sovereign risk in addition to benefitting from sub-Saharan Africa's urgent and increasing demand for reliable, sustainable and affordable electricity
-- Received confirmation from TANESCO that the Company can develop the Mbeya Coal to Power Project for the export market, subsequent to earlier notification from TANESCO that the MCPP did not qualify as one of the preferred applicants for the delivery of thermal coal power in Tanzania under a TANESCO tender round
-- Feasibility study completed and submitted to the Ministry of Mineral Resources and Energy and Electricidade de Moçambique ahead of schedule for the Benga Project in Mozambique
-- Mining Scoping Study completed for the Mabesekwa Project in Botswana with a feasibility study underway
-- In line with the Company's strategy of becoming a dedicated energy development company, Kibo successfully completed the sale of the Haneti Nickel Project to Katoro Gold PLC
Chairman's Statement
2018 was transformational for the Company as we reoriented our business and implemented our strategy to be a global energy developer with multiple power projects focused primarily on Africa. This strategy has helped us to spread country and project risk and should present us with many opportunities within the strongly growing African energy sector.
The new energy projects in which we acquired majority interests during 2018 include the Mabesekwa Coal Independent Power Project ("MCIPP" or "Mabesekwa Project") in Botswana, the Benga Power Plant Project ("BPPP" or "Benga Project") in Mozambique, and a 60% equity interest in Mast Energy Developments Limited ("MED") in the UK. The latter acquisition is expected to provide us with an opportunity for revenue streams in the short term, whilst also creating an ability to leverage MED's experience in electricity generation to develop new energy projects in Africa through introducing and developing the UK Reserve Power business model alongside our existing coal-to-power projects on the continent.
The country diversification offered by our current African project portfolio is strategically positioned to help insulate the Company from sovereign risk whilst also granting us the opportunity to participate in the opportunity arising from sub-Saharan Africa's urgent and increasing demand for reliable, sustainable and affordable electricity.
Our board and management teams have spent many years operating in the international mining and energy sectors. Currently, the energy sector is in a state of flux across the African continent: only some 700 million of its 1.3 billion population have access to an electricity supply. In Mozambique and Tanzania, this access is limited to 24.2% and 32.8% of the population respectively, while Botswana will need to add up to 500MW of committed, dispatchable electricity generating capacity by 2040, in order to keep pace with demand. Even the UK power landscape is undergoing transformational change, driven primarily by the decarbonisation, decentralisation and digitisation of the power market, which could create a GBP6 billion flexibility market by 2030.
Kibo's projects are positioned to address these concerns. To this end, we remain focused on navigating the intricate agreements needed to bring them to commercialisation and maintaining good relationships with the various governments and international organisations that are vital to their continued progress. Through our experience on the project development path for the Mbeya Coal to Power Project ("MCPP") in Tanzania, we have established and strengthened key relationships and collaboration agreements with international energy development, engineering and financial firms such as SEPCOIII, General Electric and ABSA. In 2018, we continued to develop and strengthen these relationships. We signed a Strategic Development Agreement ("SDA") with SEPCOIII in July which would place the resources of one of the world's largest energy project developers behind Kibo in enhancing its business strategy and the development of its African energy assets. This SDA was backed with a commitment for a two-stage equity investment in Kibo and while a final decision regarding the SDA has not been made, given all conditions have not been met, discussions are ongoing. The Company also expanded its existing Collaboration Agreement with General Electric in August 2018 confirming it as the preferred technology partner and supplier to Kibo across all its current and future energy projects in Africa.
Our diversification strategy proved particularly prescient in February 2019 with the disappointing news that our MCPP did not qualify as one of the preferred applicants for the delivery of thermal coal power in Tanzania under a TANESCO tender round, delaying the construction of the project. While we strongly anticipated that the MCPP would be the first of our projects to be constructed, it is now on hold as we explore alternative options for it. I would like to remind shareholders that the failed tender bid only represented one opportunity to commercialise the MCPP and that alternative options such as power export to neighbouring countries, competing in any future coal to power tenders from TANESCO and negotiating power off-take agreements with local private enterprise are all potential revenue streams. We also continue to explore non-power related options to exploit the coal resource, including export, coal to gas production or coal sales to local off-takers.
We believe that the recent award of the pre-qualification tenders appears to reflect a political decision to keep closer national control of coal to power generation and does not denigrate the high quality of Kibo's tender bid, which we still believe offers the best and most advanced option for the fast-track development of a thermal coal plant in Tanzania. We are awaiting clarification from TANESCO as to why our bid failed despite repeated assurances that the MCPP was an integral part of Tanzania's plans for increased power capacity in the country, including a signed MOU in place for the negotiation of a Power Purchase Agreement ("PPA") between TANESCO and Kibo. There is still much uncertainty on what solutions will emerge to address Tanzania's electricity shortages, but the situation is dynamic and Kibo is well placed to be part of the mix at the appropriate time. What is certain, however, is the urgent demand for electricity and particularly substantial base load power generation in the country in the short term.
However, the Company has received confirmation from TANESCO that it can develop the MCPP for the export market. TANESCO has advised the Company that it is currently implementing interconnectors through Zambia, Tanzania and Kenya enabling power trade within the Eastern African Power Pool and Southern African Power Pool member countries. TANESCO has recommended that the Company engage these Power Pools to ensure participation in the high demand export market. Furthermore, the Company also remains engaged with TANESCO, regarding potential energy supply opportunities to the domestic market.
Although we are still committed to continue working closely with Government and all other local stakeholders on our project in Tanzania to our mutual benefit, the non-qualification of the MCPP's in the tender process means that we can, for the moment, focus more on our other projects in Africa and in the UK Reserve Power market where we have already achieved much progress.
The Benga Project in Mozambique (65% interest with an option to increase to 85%) is our first pure energy project, and we are very encouraged by its rapid progress. With Government support and a feasibility study completed and submitted to the Ministry of Mineral Resources and Energy ('MIREME') and Electricidade de Moçambique ('EDM') ahead of schedule, our focus is now on finalising the coal supply agreement ("CSA") and PPA with private off-takers.
The Mabesekwa Project in Botswana (85% interest) also presents an exciting opportunity for the Company and its shareholders. With a Mining Scoping Study complete, we are now progressing a feasibility study and waiting for a Mining Licence for the Mabesekwa Coal Mine.
Our final acquisition of the year was MED in the UK (60% interest), which is looking to support the UK energy mix with much needed flexible energy projects, a growing segment of the UK energy market. Most recently, MED executed a Sale and Purchase Agreement ("SPA") to acquire Bordersley Power Limited, a key milestone as it advances on its strategy to become a key player in the UK flexible power generation market. This transaction is expected to reach completion shortly.
On the corporate front, we completed the sale of our Haneti Nickel Project during 2018 to Katoro Gold PLC. This sale represented the divestment of the Company's last non-energy projects in line with our strategy of growing Kibo as a dedicated energy development company. Currently, Kibo holds a 57.57% majority interest in Katoro which, as well as Haneti, holds gold projects in northern Tanzania.
Kibo undertook three broker sponsored placings during 2018 and raised GBP2.75 million. It also completed full settlement of funds drawn down under its forward payment facility with Sanderson Capital Partners Limited signed in 2016. I would like to welcome First Equity Limited and SVS Securities Limited who we appointed as our new AIM joint brokers during 2018. I also note the internal re-assignment of roles on our Board and our appointment of Pieter Krugel as CFO of the Company during 2018, both of which have facilitated the seamless transition of the Company to a focused energy development company.
The result for the year amounted to a loss of GBP4,036,713 for the year ended 31 December 2018 (31 December 2017: GBP4,519,813) as detailed further in the Statement of Profit or Loss and Other Comprehensive Income.
Outlook
We remain focused on delivering our objective to build a leading multi-asset energy company and realising value from our four projects, which we anticipate will play major roles in the provision of energy to a variety of power-constricted markets. With our long-established international relationships, including the project financing agreement announced post period end with Wimmer Financial, we are well positioned to rapidly move onto the construction phases once we have, amongst other things, completed our already advanced PPA discussions. Our strength lies in our diversity. Each of our four projects represent a vast opportunity; I look forward with confidence to the time that our first project crosses the line.
Finally, I would once again like to thank our Board and especially our management under the stewardship of our CEO Louis Coetzee who continue to provide the drive and commitment to making Kibo a significant player in the African energy market.
_____________________________
Christian Schaffalitzky
Chairman
21 June 2019
Review of Activities
Introduction
During 2018 Kibo Energy PLC ("Kibo" or the "Company") focused primarily on advancing its African energy projects in Tanzania, Botswana and Mozambique. It also made significant progress under the management of MED in evaluating project sites to install small scale gas fired generators to serve the UK Reserve Power Market, where the Company anticipates opportunities to avail off revenue streams in the short term.
Mozambique - Benga Power Plant Project ("BPPP" or "Benga Project")
Kibo operates in Mozambique through a local joint venture company Benga Power Plant Limited ("BPPL") in which Kibo has 65% interest. BBPL holds the Benga Project in which Kibo's 65% beneficial interest is to be maintained by expenditure of up to GBP1 million towards the completion of a definitive feasibility study for the construction of a 250-300 MW coal fired thermal power plant in the north-western Tete province. During 2018, the Company finalised the BPPP acquisition with Termoeléctrica de Benga S.A. ("Termoeléctrica"), which holds the remaining 35% interest in the joint venture and mobilised resources to advance the Definitive Feasibility Study on the project. The Company has benefited from significant work already completed on the project by Termoeléctrica and its strong relationships with government agencies and other local stakeholders in the project. The following agreements, approvals and studies are already in place:
-- authorisation from the Ministry of Mineral Resources and Energy to proceed with final feasibility study;
-- a Memorandum of Understanding with Electricidade de Moçambique ("EDM"), the state-owned electricity generation and transmission company acknowledging and providing their support for its collaboration on the project;
-- confirmation from the Zambesi River water authority (ARA Zambezi) that sufficient water will be available for the proposed coal-fuelled power plant;
-- preliminary 5-year lease title over 59 hectares of land close to the two producing coal mines in the Tete Province which is expected to be extended to 50 years as a pre-requisite to power plant construction; and
-- formal letters of comfort received from various power supply off-takers for up to 150 MW and positive response from nearby coal mines to discuss terms for the supply of coal to the proposed power station.
Since acquiring its 65% interest and taking control of managing the project, Kibo has commenced a Definitive Feasibility Study ("Benga DFS"), which will take the project through completion of a pre-feasibility study, an environmental impact study, detailed engineering and design, and a comprehensive financial model (the Benga DFS was completed in March 2019 with a final review currently in progress). The Benga DFS was given significant impetus towards the end of 2018 when BPPL re-negotiated and expanded its MOU with EDM. The expanded MOU, which already provided for collaboration on the Benga DFS, set out both parties intention to negotiate a PPA for EDM to be anchor off-taker for the power, assist in finalising project financing and in negotiating related commercial contracts. The DFS was aggressively advanced following the appointment of STEAG, a German energy consultancy, to execute the studies, and EPC specifications and PNO Consultants from South Africa, to conduct a grid integration study. Other work in progress includes the commencement of Phase 2 of the Environmental Impact Study and completion of a topographic survey (LIDAR survey) at the proposed power station site. In tandem with the engineering studies, negotiations on Coal Purchase Agreements with local mines and PPA negotiations with EDM and private power off-takers are also progressing well.
Botswana - Mabesekwa Project ("MCIPP" or "Mabesekwa Project")
Kibo established a strategic position in the Botswanan energy market with its acquisition of an 85% beneficial interest in the Mabesekwa Coal Independent Power Project in April 2018. The MCIPP is held in Botswanan registered company Kibo Energy Botswana (Pty) Limited in which Kibo and its joint venture partner, Sechaba Natural Resources Limited ("Sechaba"), from which it acquired its interest in the project, hold beneficial interests of 85% and 15% respectively. Kibo acquired its interest in the MCIPP from Sechaba by issuing it 153,710,030 of new Kibo shares, thereby making it a 27.13% shareholder in Kibo at the date of the transaction (currently at 18.43%). As part of the transaction Sechaba also retained some small royalties of US$0.5 and US$0.0225 per metric tonne of coal sold and kilowatts per hour of power produced respectively, payable from the assets of the project (coal mine & power plant). Additionally, for a period of 72 months from closure of the transaction, Kibo will have the right of first refusal to participate in any electricity generating projects within SADC countries that may be offered to Sechaba and on similar terms. Conversely, Sechaba will have the right of first refusal to participate in any coal export projects within SADC countries that may be offered to Kibo.
As per the announcement dated 21 June 2018, the assets of the MCIPP, in which Kibo holds its 85% attributable interest, include a 303 Mt Coal Resource and a concept study to construct a co-located coal fed thermal power plant with capacity of up to 600 MW located 64 km south-west of Botswana's second city, Francistown. The Company confirms that there has been no material change to the Mabesekwa Coal Resource since the Coal Resource estimate was first published as part of the announcement dated 21 June 2018. A pre-feasibility study on the coal mining element together with a scoping study for the construction of the power plant has already been completed by Sechaba Water and land use permits and environmental certification are also already in place at the site.
On acquiring the project in early 2018, Kibo commissioned an Independent Competent Person's Report ("CPR") from Gemecs (Pty) Ltd, South Africa, on the coal deposit that will form the feed stock to the planned thermal power plant. The CPR reported on washability tests carried out on the coal, which indicated potential to lower the ash content, increase the calorific value and lower the total sulphur content in order to maximise the coal yields for use in a thermal power plant. Additional testing of bulk samples from drill holes across the coal deposit yielded results which indicated that favourable coal quality for power generation can be achieved through industry standard beneficiation processes.
In November 2018, Kibo applied for a mining right over the Coal Resource and this is currently being processed by the Botswanan Department of Mines.
The Mabesekwa Project is ideally located to supply power to the South African market where there is an urgent demand for additional baseload power generation. The South African Government has provided for 3,750 MW to be supplied from independent cross-border coal to power projects in its Cross-Border Project procurement plan announced in 2016. The Mabesekwa Project is also well located to incorporate a solar energy component at the proposed thermal power plant and the Company will look to explore this further as part of the DFS.
Tanzania - Mbeya Project ("MCPP" or "Mbeya Project")
Kibo now has 100% interest in the Mbeya Project in southwest Tanzania, on which it has completed an Integrated Bankable Feasibility Study for the construction of a co-located coal mine and coal fired power station. During the first half of 2018, the Company continued to engage closely with TANESCO on finalising a PPA as a follow-on from the MOU on the terms for negotiating a PPA signed between the parties in February 2018. During this period, Kibo also continued to advance all other aspects of the MCPP in anticipation of concluding a PPA with TANESCO including the completion of the second phase of its school building & upgrade programme in villages close to the MCPP development site in southern Tanzania.
The announcement in September 2018 by TANESCO that it was issuing an open tender for companies to apply for pre-qualification to be considered as independent coal and gas power producers, and that companies with which it had already MOUs or was otherwise in negotiation with should also submit tenders, was unexpected. Following a subsequent cancellation and reinstatement of the tender process by TANESCO, Kibo re-submitted comprehensive and detailed documentation including its Integrated Bankable Feasibility Study for the MCPP in support of a tender application in December 2018. Regrettably, TANESCO informed Kibo by letter received on the 14th February 2019 that it had not pre-qualified from the tender process to be considered further as an independent coal to power producer. The Company is currently seeking full clarification from TANESCO on this decision and assessing alternative commercialisation options for the MCPP.
Despite the non-qualification of the MCPP in the recent tender round by TANESCO for coal generated power, the Company continues to hold the Mbeya (formerly Rukwa) Coal Resource. In September 2018, it received notification that the Mining Commission of Tanzania had recommended grant of a Special Mining Licence over the Resource. With Kibo's anticipated anchor off-taker for the power, TANESCO being not currently in the picture, the Company continues to investigate and develop alternative or co-existing outlets for both power and coal comprising, inter alia, export of power, power supply to local off takers, coal to local and export markets, and coal to gas conversion. The Company has received confirmation from TANESCO that it can develop the MCPP for the export market. TANESCO has advised the Company that it is currently implementing interconnectors through Zambia, Tanzania and Kenya enabling power trade within the Eastern African Power Pool and Southern African Power Pool member countries. TANESCO has recommended that the Company engage these Power Pools to ensure participation in the high demand export market. Furthermore, the Company also remains engaged with TANESCO, regarding potential energy supply opportunities to the domestic market. Kibo confirms that there has been no material change to the Mbeya Coal Resource since the Coal Resource estimate was first published as part of the RNS dated 11 April 2016, and the Company's attributable interest in the Resource is still 100%.
United Kingdom - Mast Energy Developments Limited ("MED")
The Company took its first steps into the UK Reserve Power generation market in 2018 with the acquisition of a 60% interest in UK company MED. MED is targeting the acquisition of appropriate sites upon which it plans to develop and operate gas fired generators and ancillary structures, to supply power to the UK Reserve Power generation market. The Reserve Power generation market is a growing segment of the UK energy market primarily due to the increasing percentage of renewable resources, particularly wind, contributing to the total power output, which has caused periods of under capacity on the UK electricity grid.
The acquisition was completed in October 2018 through the issue of 5.7 million new Kibo shares to the sellers for a deemed consideration of GBP300,000, and an agreement that the sellers would also receive 5% of Kibo's share of gross projects' revenues (royalties) under terms which require them to invest the royalties by subscribing for Kibo shares on a monthly basis up to a subscription value of GBP2.2 million. Other material terms of the acquisition include terms for Kibo to buy out the royalties at a 6% discount to their present value at discrete time points related to the cumulative operating capacity reached within the asset portfolios, and reciprocal options to buy out each other's remaining interest in MED once the total generating capacity in the projects reaches 150 MW.
In December 2018, Kibo announced that MED had acquired an exclusive option to evaluate and negotiate on the acquisition of three peaking power sites with total output capacity of 31.3MW. MED has since completed due diligence on two of these sites with an aggregate capacity of 25.2MW and has signed a Sale and Purchase Agreement ("SPA") on one of them, Bordersley Power Limited ("Bordersley"), a 5 MW gas-fuelled power generation plant. This transaction is expected to reach completion shortly. In tandem with this, MED is evaluating potential Engineering, Construction & Procurement ("EPC") providers for Bordersley and conditional offers of debt financing from two financial institutions. Both sites are planned to be operational in the last quarter of 2019 and the first quarter of 2020 respectively (subject to completion of the second acquisition).
Corporate
During 2018, the Company continued its strategy to divest its non-energy assets with the sale of its remaining exploration project, the Haneti Nickel project, to Katoro Gold PLC for a consideration of 15,384,615 newly issued shares in Katoro at a price per share of 1.3p valuing the project at GBP200,000. This follows the divestment of its gold assets, the Imweru & Lubando projects to Katoro during 2017.
Kibo undertook three broker sponsored placings during 2018 and raised GBP2.75 million through the issue of 55.742 million shares at prices of 4.25p and 5.25p per share. The Company also issued an additional 29.61 million shares in full settlement of funds drawn down under its forward payment facility with Sanderson Capital Partners Limited in the amounts of $568,712 and GBP1,115,067. On completion of the MCIPP and MED acquisitions, the Company issued a total of 159,424,316 consideration shares. Total new shares issued during 2018 came to 244,776,705 issued or deemed issued at price per share from 4.25p to 6.1p. During March 2019, Kibo has issued an additional 126,436,782 shares to Sanderson Capital Partners Limited ("Sanderson") to acquire the residual 2.5% equity interest that Sanderson held in the MCPP at a deemed price of 1.3p.
The Company undertook a Board re-structuring during 2018, which included the appointment of Pieter Krugel as Chief Financial Officer. The Company believes that this re-structuring will better align the core skill sets of management with Kibo's new positioning as a focused international energy project developer.
The Company also appointed First Equity Limited and SVS Securities Limited as its new joint corporate broker during 2018 to replace Beaufort Securities Limited. The Company changed its name at its AGM at the end of July from Kibo Mining plc to Kibo Energy PLC to reflect is new sole focus on energy project development and appointed Crowe U.K. LLP as its new statutory auditors.
_______________________________
Louis Coetzee
Chief Executive Officer
21 June 2019
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Hot Features
Premium
GROUP
---------------------------------
31 December 31 December
2018 2017
----------- --------------------
Audited Audited
----
Note GBP GBP
----
Revenue - -
Administrative expenses (2,045,613) (1,871,697)
Impairment of intangible assets 10 (912,892) -
Listing and Capital raising fees (336,807) (908,543)
Exploration expenditure (779,443) (1,741,018)
Operating loss (4,074,755) (4,521,258)
Investment and other income 2 38,042 1,445
Loss on ordinary activities before tax (4,036,713) (4,519,813)
Taxation 6 - -
----------- --------------------
Loss for the period (4,036,713) (4,519,813)
Other comprehensive (loss)/ gain:
Items that may be classified subsequently to
profit or loss:
Exchange differences on translation of foreign
operations (401,751) 16,985
Other Comprehensive (loss)/gain for the period
net of tax (401,751) 16,985
Total comprehensive loss for the period (4,438,464) (4,502,828)
----------- --------------------
Loss for the period (4,036,713) (4,519,813)
----------- --------------------
Attributable to the owners of the parent (3,388,778) (3,712,707)
Attributable to the non-controlling interest 18 (647,935) (807,106)
Total comprehensive loss for the period (4,438,464) (4,502,828)
----------- --------------------
Attributable to the owners of the parent (3,776,894) (3,689,196)
Attributable to the non-controlling interest (661,570) (813,632)
Loss Per Share
Basic loss per share 8 (0.006) (0.010)
Diluted loss per share 8 (0.006) (0.010)
The financial statements were approved and authorised for issue by the Board of Directors 21 June 2019 and signed on its behalf by:
On behalf of the Board
__________________ ________________________
Christian Schaffalitzky Noel O'Keeffe
GROUP
31 December 31 December
2018 2017
------------ ------------
Audited Audited
(Restated)
----- ------------ ------------
Note GBP GBP
----- ------------ ------------
Assets
Non--Current Assets
Property, plant and equipment 9 20,240 7,650
Intangible assets 10 26,059,525 17,596,105
Goodwill 11 300,000 -
Total non-current assets 26,379,765 17,603,755
------------ ------------
Current Assets
Trade and other receivables 12 89,349 59,046
Cash 13 654,158 766,586
Total current assets 743,507 825,632
------------ ------------
Total Assets 27,123,272 18,429,387
============ ============
Equity and Liabilities
Equity
Called up share capital 14 17,240,017 14,015,670
Share premium account 14 39,205,318 28,469,750
Control reserve 15 (18,329) (213,053)
Share based payment reserve 16 41,807 556,086
Translation reserve 17 (656,622) (268,506)
Retained deficit (29,399,788) (26,534,653)
------------ ------------
Attributable to equity holders of the parent 26,412,403 16,025,294
------------
Non-controlling interest 18 409,171 927,107
------------
Total Equity 26,821,574 16,952,401
------------
Liabilities
Current Liabilities
Trade and other payables 19 301,698 266,218
Borrowings 20 - 1,210,768
Total Current Liabilities 301,698 1,476,986
============ ============
Total Equity and Liabilities 27,123,272 18,429,387
Consolidated Statement of Financial Position
The financial statements were approved and authorised for issue by the Board of Directors on 21 June 2019 and signed on its behalf by:
On behalf of the Board
_____________________ ________________________ Christian Schaffalitzky Noel O'Keeffe
Company Statement of Financial Position
Company
---------------------------------
31 December 31 December
2018 2017
------------ -------------------
Audited Audited
---- ------------ -------------------
Note GBP GBP
---- ------------ -------------------
Non--Current Assets
Investments in group undertakings 21 37,890,651 3,468,224
Trade and other receivables 12 333,495 24,402,788
Total Non- current assets 38,224,146 27,871,012
------------ -------------------
Current Assets
Trade and other receivables 12 282 413
Cash 13 38,974 5,690
Total Current assets 39,256 6,103
------------ -------------------
Total Assets 38,263,402 27,877,115
============ ===================
Equity and Liabilities
Equity
Called up share capital 14 17,240,017 14,015,670
Share premium 14 39,205,318 28,469,750
Share based payment reserve 16 - 514,279
Translation reserves 17 - 14,723
Retained deficit (18,277,005) (16,434,811)
------------ -------------------
Total Equity 38,168,330 26,579,611
------------ -------------------
Liabilities
Current Liabilities
Trade and other payables 19 95,072 86,736
Borrowings 20 - 1,210,768
Total liabilities 95,072 1,297,504
============ ===================
Total Equity and Liabilities 38,263,402 27,877,115
============ ===================
The financial statements were approved and authorised for issue by the Board of Directors on 21 June 2019 and signed on its behalf by:
On behalf of the Board
_______________________ ________________________ Christian Schaffalitzky Noel O'Keeffe
Consolidated Statement of Changes in Equity
Share Share Share Control Foreign Retained Non-controlling Total
Capital premium based reserve currency deficit interest equity
payment (Restated) translation (Restated)
GROUP reserve reserve
------------------ ------------ ------------ ------------------------ ---------- ----------- -------------- --------------- ------------
GBP GBP GBP GBP GBP GBP GBP GBP
------------------ ------------ ------------ ------------------------ ---------- ----------- -------------- --------------- ------------
Balance as at
1 January 2017 13,603,965 27,318,262 514,279 - (285,491) (23,625,367) (1,435) 17,524,213
Loss for the
year - - - - - (3,712,707) (807,106) (4,519,813)
Adjustment arising
from change in
non-controlling
interest - - - (213,053) (302,117) 803,421 1,742,174 2,030,425
Other
comprehensive
loss - exchange
differences on
translating
foreign
operations - - - - 319,102 - (6,526) 312,576
Share options
issued during
the current
period - - 41,807 - - - - 41,807
Proceeds of share
issue of share
capital 411,705 1,151,488 - - - - - 1,563,193
411,705 1,151,488 41,807 (213,053) 16,985 (2,909,286) 928,542 (571,812)
------------ ------------ ------------------------ ---------- ----------- -------------- --------------- ------------
Balance as at
31 December 2017
(Restated - Refer
to note 26) 14,015,670 28,469,750 556,086 (213,053) (268,506) (26,534,653) 927,107 16,952,401
------------ ------------ ------------------------ ---------- ----------- -------------- --------------- ------------
Loss for the
year - - - - - (3,388,778) (647,935) (4,036,713)
Adjustment arising
from change in
non-controlling
interest - - - 194,724 - 9,364 143,634 347,722
Other
comprehensive
loss - exchange
differences on
translating
foreign
operations - - - - (388,116) - (13,635) (401,751)
Proceeds of share
issue of share
capital 3,224,347 10,735,568 - - - - - 13,959,915
Reclassification
of share based
payment reserve
on expired share
options - - (514,279) - - 514,279 - -
------------ ------------
3,224,347 10,735,568 (514,279) 194,724 (388,116) (2,865,135) (517,936) 9,869,173
------------ ------------ ------------------------ ---------- ----------- -------------- --------------- ------------
Balance as at
31 December 2018 17,240,017 39,205,318 41,807 (18,329) (656,622) (29,399,788) 409,171 26,821,574
============ ============ ======================== ========== =========== ============== =============== ============
Note 14 14 16 15 17 18
The financial statements were approved by the Board of Directors and authorised for issue on 21 June 2019 and signed on its behalf by
On behalf of the Board
________________________________ ________________________ Christian Schaffalitzky Noel O'Keeffe
Company Statement of Changes in Equity
Share capital Share premium Share based Foreign currency Retained deficit Total equity
payment reserve translation
COMPANY reserve
------------------ ------------- ------------- ----------------- ----------------- ---------------- ------------
GBP GBP GBP GBP GBP GBP
------------------ ------------- ------------- ----------------- ----------------- ---------------- ------------
Balance as at 1
January 2017 13,603,965 27,318,262 514,279 47,430 (13,164,891) 28,319,045
Loss for the year - - - - (3,269,920) (3,269,920)
Other
comprehensive
loss - exchange
differences on
translating
foreign
operations - - - (32,707) - (32,707)
Proceeds of issue
of share capital 411,705 1,151,488 - - - 1,563,193
411,705 1,151,488 - (32,707) (3,269,920) (1,739,434)
------------- ------------- ----------------- ----------------- ---------------- ------------
Balance as at 31
December 2017 14,015,670 28,469,750 514,279 14,723 (16,434,811) 26,579,611
============= ============= ================= ================= ================ ============
Loss for the year - - - - (2,356,473) (2,356,473)
Other
comprehensive
loss - exchange
differences on
translating
foreign
operations - - - (14,723) - (14,723)
Reclassification
of share based
payment reserve
on expired share
options - - (514,279) - 514,279 -
Proceeds of issue
of share capital 3,224,347 10,735,568 - - - 13,959,915
3,224,347 10,735,568 (514,279) (14,723) (1,842,194) 11,588,719
------------- ------------- ----------------- ----------------- ---------------- ------------
Balance as at 31
December 2018 17,240,017 39,205,318 - - (18,277,005) 38,168,330
============= ============= ================= ================= ================ ============
Note 14 14 16 17
The financial statements were approved by the Board of Directors and authorised for issue on 21 June 2019 and signed on its behalf by
On behalf of the Board
_______________________ ________________________ Christian Schaffalitzky Noel O'Keeffe
Consolidated Statement of Cash Flows
GROUP
--------------------------------
31 December 31 December
2018 2017
----------- -------------------
Audited Audited
-----
Notes GBP GBP
-----
Cash flows from operating activities
Loss for the period before taxation (4,036,713) (4,519,813)
Adjustments for:
Impairment of intangible assets 10 912,892 -
Foreign exchange (gain)/loss 2 (270,881) 249,437
Depreciation on property, plant and equipment 9 6,805 2,738
Cost settled through the issue of shares 16 126,966 260,000
Deal cost settled in shares - 155,539
Movement in provisions - (115,663)
Deemed cost of listing - 206,680
(3,260,931) (3,761,082)
----------- -------------------
Movement in working capital
Increase in debtors 12 (30,303) (8,413)
(Decrease)/Increase in creditors 19 35,480 119,838
----------- -------------------
5,177 111,425
----------- -------------------
Net cash outflows from operating activities (3,255,754) (3,649,657)
----------- -------------------
Cash flows from financing activities
Proceeds of issue of share capital 14 3,100,000 1,817,743
Repayment of borrowings 20 (200,000) -
Proceeds from borrowings 20 251,565 1,751,928
Net cash proceeds from financing activities 3,151,565 3,569,671
----------- -------------------
Cash flows from investing activities
Net cash flow from acquisition of subsidiaries 11 - 465,408
Purchase of property, plant and equipment 9 (21,494) (1,175)
----------- -------------------
Net cash flows investing activities (21,494) 464,233
----------- -------------------
Net increase in cash (125,683) 384,247
Cash at beginning of period 766,586 382,339
Exchange movement 13,255 -
----------- -------------------
Cash at end of the period 13 654,158 766,586
=========== ===================
Company Statement of Cash Flow
COMPANY
------------------------------
31 December 31 December
2018 2017
----------- -----------------
Audited Audited
----- ----------- -----------------
Notes GBP GBP
----- ----------- -----------------
Cash flows from operating activities
Loss for the period before taxation
Adjusted for: (2,356,473) (3,269,920)
Foreign exchange movement 12,437 -
Share based payments 16 104,302 195,000
Impairment of investment in subsidiary 21 1,633,628 1,891,777
Movement in provisions - (115,663)
(606,106) (1,298,806)
----------- -----------------
Movement in working capital
(Increase) / Decrease in debtors 12 131 277
(Decrease) / Increase in creditors 19 8,336 51,733
----------- -----------------
8,467 52,010
----------- -----------------
Net cash outflows from operating activities (597,639) (1,246,796)
----------- -----------------
Cash flows from financing activities
Proceeds of issue of share capital 14 2,750,000 500,000
Repayment of borrowings 20 (200,000) -
Proceeds from borrowings 20 251,565 1,748,840
Net cash proceeds from financing activities 2,801,565 2,248,840
----------- -----------------
Cash flows from investing activities
Net cash flow from acquisition of subsidiaries (75,000) -
Cash advances to Group Companies (2,095,642) (1,018,436)
----------- -----------------
Net cash used in investing activities (2,170,642) (1,018,436)
----------- -----------------
Net increase/(decrease) in cash 33,284 (16,392)
Cash at beginning of period 5,690 22,082
Cash at end of the period 13 38,974 5,690
=========== =================
Notes to the Annual Financial Statements
1. Segment analysis
IFRS 8 requires an entity to report financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments that meet specific criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the Chief Operating decision maker. The Chief Executive Officer is the Chief Operating decision maker of the Group. Management currently identifies two divisions as operating segments - mining and corporate. These operating segments are monitored and strategic decisions are made based upon them together with other non-financial data collated from exploration activities. Principal activities for these operating segments are as follows:
2018 Group 31 December
Mining and Exploration Corporate 2018 (GBP)
Group Group Group
Revenue - - -
Administrative cost - (2,045,613) (2,045,613)
Impairment of intangible
assets - (912,892) (912,892)
Listing and Capital raising
fees - (336,807) (336,807)
Exploration expenditure (779,443) - (779,443)
Investment and other
income 38,042 - 38,042
Tax - - -
----------------------- ------------ ------------
Loss after tax (741,401) (3,295,312) (4,036,713)
----------------------- ------------ ------------
2017 Group Mining and 31 December
Exploration Corporate 2017 (GBP)
Group Group Group
Revenue - - -
Administrative cost - (1,871,697) (1,871,697)
Capital raising fees - (908,543) (908,543)
Exploration expenditure (1,741,018) - (1,741,018)
Investment and other income 1,445 - 1,445
Tax - - -
------------- ------------ ------------
Loss after tax (1,739,573) (2,780,240) (4,519,813)
------------- ------------ ------------
2018 Group 31 December
Mining Corporate 2018 (GBP)
Group Group Group
----------- ---------- ------------
Assets
Segment assets 27,084,016 39,256 27,123,272
Liabilities
Segment liabilities 206,626 95,072 301,698
Other Significant items
Depreciation 6,805 - 6,805
2017 Group 31 December
Mining Corporate 2017 (GBP)
Group Group Group
----------- ---------- ------------
Assets
Segment assets 18,423,284 6,103 18,429,387
Liabilities
Segment liabilities 264,562 1,297,504 1,562,066
Other Significant items
Depreciation 2,738 - 2,738
Geographical segments
The Group operates in six principal geographical areas - Corporate (Ireland, Cyprus, South Africa, Canada & United Kingdom) and Mining (Tanzania).
Ireland, United
Kingdom, South
Africa, Cyprus 31 December 2018
Tanzania and Canada (GBP)
Group Group Group
Major Operational indicators
Carrying value of segmented
assets 27,084,016 39,256 27,123,272
Loss after tax (766,748) (3,269,966) (4,036,713)
----------- ---------------- -----------------
Ireland, United
Kingdom, South
Africa, Cyprus 31 December
Tanzania and Canada 2017 (GBP)
Group Group Group
Major Operational indicators
Carrying value of segmented
assets 18,423,284 6,103 18,429,387
Loss after tax (1,626,824) (2,892,989) (4,519,813)
------------ ---------------- ------------
2. Investment and other Income
31 December 31 December
2018 (GBP) 2017 (GBP)
Foreign exchange gains 13,948 463
Other income 24,094 982
------------ ------------
38,042 1,445
------------ ------------
3. Loss on ordinary activities before taxation
Operating loss is stated after the following key 31 December 31 December
transactions: 2018 (GBP) 2017 (GBP)
Group Group
Depreciation of property, plant and equipment of
Group financial statements 6,805 2,738
Auditors' remuneration for audit of Group and Company
financial statements 45,000 35,000
Auditors' remuneration audit of the financial statements
of the company's subsidiaries 22,000 2,500
4. Staff costs (including Directors)
Group Group Company Company
31 December 31 December 31 December 31 December
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
Wages and salaries 663,470 876,628 353,484 502,677
Share based remuneration - 260,000 - 260,000
------------- ------------- ------------- -------------
663,470 1,136,628 353,484 762,677
------------- ------------- ------------- -------------
The average monthly number of employees (including Executive Directors) during the period was as follows:
Group Group Company Company
31 December 31 December 31 December 31 December
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
Exploration activities 10 10 1 1
Administration 6 6 1 1
------------- ------------- ------------- -------------
16 16 2 2
------------- ------------- ------------- -------------
5. Directors' emoluments
Group Group Company Company
31 December 31 December 31 December 31 December
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
Basic salary and fees 441,558 464,210 353,484 338,578
Share based payments - 195,000 - 195,000
------------- ------------- ------------- -------------
441,558 659,210 353,484 533,578
------------- ------------- ------------- -------------
The emoluments of the Chairman were GBP15,963 (2017 GBP13,135).
The emoluments of the highest paid director were GBP198,552 (2017: GBP260,210).
Directors received shares to the value of GBP NIL during the year (2017: GBP195 000).
Key management personnel consist only of the Directors. Details of share options and interests in the Company's shares of each director are shown in the Directors' report. The following table summarises the remuneration applicable to each of the individuals who held office as a director during the reporting period:
31 December 2018
Share
Salary based
and fees payments Total
GBP GBP GBP
Christian Schaffalitzky 15,963 - 15,963
Louis Coetzee 198,552 - 198,552
Noel O'Keeffe 88,039 - 88,039
Lukas Maree 54,947 - 54,947
Wenzel Kerremans 13,272 - 13,272
Andreas Lianos 70,785 - 70,785
---------- -------------- ------------
Total 441,558 - 441,558
---------- -------------- ------------
31 December 2017
Share
Salary based
and fees payments Total
GBP GBP GBP
Christian Schaffalitzky 13,135 - 13,135
Louis Coetzee 195,210 65,000 260,210
Noel O'Keeffe 125,632 65,000 190,632
Lukas Maree 13,772 - 13,772
Wenzel Kerremans 13,115 - 13,115
Andreas Lianos 103,346 65,000 168,346
-------------- -------------- ----------
Total 464,210 195,000 659,210
-------------- -------------- ----------
GBP195,000 convertible loan notes were issued to Directors of the Company who are also members of its Executive committee on 27 September 2017. The loan notes issued were in lieu of bonus shares due as part of an interim award approved by the Kibo board on 24 April 2017. On 28 September 2017, these directors elected to convert their loan notes into Kibo shares. These resultant number of shares issued amount to 3,900,000 ordinary shares at an issue price of GBP0.05 per share, calculated in accordance with the Note Term Sheet.
6. Taxation
Current tax
31 December 31 December
2018 (GBP) 2017 (GBP)
Charge for the period in Ireland, Canada, - -
Republic of South Africa, Cyprus, United
Kingdom and Republic of Tanzania
------------ ------------
Total tax charge - -
------------ ------------
The difference between the total current tax shown above and the amount calculated by applying the standard rate of Irish corporation tax of 12.5% to the loss before tax is as follows:
2018 (GBP) 2017 (GBP)
--------------- ------------
Loss on ordinary activities before tax (4,036,713) (4,519,813)
--------------- ------------
Income tax expense calculated at 12.5% (2017:
12.5%) (504,589) (564,977)
--------------- ------------
Income which is not taxable - -
Expenses which are not deductible 114,111 97,199
Losses available for carry forward 390,478 467,778
Income tax expense recognised in the Statement - -
of Profit or Loss
--------------- ------------
The effective tax rate used for the December 2018 and December 2017 reconciliations above is the corporate rate of 12.5% payable by corporate entities in Ireland on taxable profits under tax law in that jurisdiction.
No provision has been made for the 2018 deferred taxation as no taxable income has been received to date, and the probability of future taxable income is indicative of current market conditions which remain uncertain. At the Statement of Financial Position date, the Directors estimate that the Group has unused tax losses of GBP25,000,200 (2017: GBP21,876,379) available for potential offset against future profits which equates to an estimated potential deferred tax asset of GBP3,125,024 (2017: GBP2,734,547). No deferred tax asset has been recognised due to the unpredictability of the future profit streams. Losses may be carried forward indefinitely in accordance with the applicable taxation regulations ruling within each of the above jurisdictions.
7. Loss of parent Company
As permitted by Section 293 of the Companies Act 2014, the Statement of Profit or Loss of the parent Company has not been separately disclosed in these financial statements. The parent Company's loss for the financial period was GBP2,356,473 (2017: GBP3,269,920).
8. Loss per share
Basic loss per share
The basic loss and weighted average number of ordinary shares used for calculation purposes comprise the following:
Basic Loss per share 31 December 31 December
2018 (GBP) 2017 (GBP)
Loss for the period attributable
to equity holders of the parent (3,388,778) (3,712,707)
Weighted average number of ordinary
shares for the purposes of basic
loss per share 565,932,121 372,255,127
Basic loss per ordinary share (0.006) (0.010)
As there are no instruments in issue which have a dilutive impact, the dilutive loss per share is equal to the basic loss per share, and thus not disclosed separately.
9. Property, plant and equipment
GROUP
Furniture Motor Office I.T Plant & Total
and Vehicles Equipment Equipment Machinery
Fittings
Cost (GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
Opening Cost as at 1
January 2017 121,309 219,292 45,693 31,549 5,672 423,515
Additions 1,004 - - 171 - 1,175
Exchange movements (6,521) (19,326) (7,285) (5,026) 1,745 (36,413)
Closing Cost as at 31
December 2017 115,792 199,966 38,408 26,694 7,417 388,277
--------- --------- --------- --------- --------- -----------
Disposals 11 - (114,927) - - - (114,927)
Additions - 1,354 16,396 1,118 2,164 462 21,494
Exchange movements 5,837 5,340 1,419 1,658 942 15,196
Closing Cost as at 31
December 2018 122,983 106,775 40,945 30,516 8,821 310,040
--------- --------- --------- --------- --------- -----------
Furniture Motor Office I.T Plant & Total
and Vehicles Equipment Equipment Machinery
Fittings
Accumulated Depreciation (GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
("Acc Depr")
Acc Depr as at 1 January
2017 120,839 219,292 40,660 27,945 5,672 414,408
Depreciation 856 - 905 977 - 2,738
Exchange Movements (6,897) (19,326) (7,333) (4,708) 1,745 (36,519)
Acc Depr as at 31
December 2017 114,798 199,966 34,232 24,214 7,417 380,627
--------- --------- --------- --------- --------- -----------
Disposals - (114,927) - - - (114,927)
Depreciation 314 3,712 1,254 1,063 462 6,805
Exchange movements 7,075 5,341 2,032 1,905 942 17,295
Acc Depr as at 31
December 2018 122,187 94,092 37,518 27,182 8,821 289,800
--------- --------- --------- --------- --------- -----------
Furniture Motor Office I.T Plant & Total
and Vehicles Equipment Equipment Machinery
Fittings
Carrying Value (GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
--------- --------- --------- --------- --------- -----------
Carrying value as at 31
December 2017 994 - 4,176 2,480 - 7,650
--------- --------- --------- --------- --------- -----------
Carrying value as at 31
December 2018 796 12,683 3,427 3,334 - 20,240
--------- --------- --------- --------- --------- -----------
10. Intangible assets
Intangible assets consist solely of separately identifiable prospecting and exploration assets acquired either through business combinations or through separate asset acquisitions. These intangible assets are recognised at the respective fair values of the underlying asset acquired, or where the fair value of the underlying asset acquired is not readily available, the fair value of the consideration.
The following reconciliation serves to summarise the composition of intangible prospecting assets as at period end:
Mabesekwa Mbeya Coal Lake Victoria Total (GBP)
Coal to to Power Project
Power Project Project (GBP)
(GBP) (GBP)
Valuation as at 1 January 2017 - 15,896,105 1,700,000 17,596,105
--------------- ----------- -------------- ------------
Impairment of prospecting asset - - - -
Reversal of impairment of licences - - - -
Carrying value as at 1 January
2018 - 15,896,105 1,700,000 17,596,105
Acquisition of an 85% equity
interest in the Mabesekwa Coal
Independent Power Project 9,376,312 - - 9,376,312
Impairment of prospecting asset - - (912,892) (912,892)
Carrying value as at 31 December
2018 9,376,312 15,896,105 787,108 26,059,525
--------------- ----------- -------------- ------------
Intangible assets are not amortised, due to the indefinite useful life which is attached to the underlying prospecting rights and/or intellectual property acquired, until such time that active mining operations commence, which will result in the intangible asset being amortised over the useful life of the relevant mining licences.
Intangible assets with an indefinite useful life are assessed for impairment on an annual basis, against the prospective fair value of the intangible asset. The valuation of intangible assets with an indefinite useful life is reassessed on an annual basis through valuation techniques applicable to the nature of the intangible assets.
One or more of the following facts or circumstances indicate that an entity should test exploration and evaluation assets for impairment:
-- the period for which the entity has the right to explore the asset has expired during the period or will expire in the foreseeable future;
-- substantial expenditure on the asset in future is neither planned nor budgeted;
-- exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; and
-- sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.
In assessing whether a write-down is required in the carrying value of a potentially impaired intangible asset, the asset's carrying value is compared with its recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to sell and value in use. The valuation techniques applicable to the valuation of the abovementioned intangible assets comprise a combination of fair market values, discounted cash flow projections and historic transaction prices.
The following key assumptions influence the measurement of the intangible assets' recoverable amounts, based on the value in use calculations performed:
-- currency fluctuations and exchange movements applicable to model; -- commodity prices related to ore reserve and forward looking statements; -- expected growth rates in respect of production capacity; -- cost of capital related to funding requirements; -- applicable discounts rates, inflation and taxation implications;
-- future operating expenditure for extraction and mining of measured mineral resources; and
-- co-operation of key project partners going forward.
Through review of the project specific financial, operational, market and economic indicators applicable to the above intangible assets, as well as consideration of the various elements which contribute toward the indication of impairment of exploration and evaluation assets, a partial impairment of the Lake Victoria Gold intangible asset was identified, as detailed in the latter part of this note. A summary of the assessment performed for each of the intangible assets are detailed below.
Mbeya Coal to Power Project
The Group's flagship exploration/prospecting asset remains its Mbeya Coal to Power Project situated in the Mbeya region of Tanzania, which comprises the Mbeya Coal Mine, a potential 1.5Mt p/a mining operation, and the Mbeya Power Plant, a planned 300MW mine-mouth thermal power station. The Mbeya Coal Mine has a defined 120.8 Mt NI 43-101 thermal coal resource.
A Definitive Feasibility Study has been conducted on the project which underpinned its value and confirmed an initial rate of return of 69.2%. The 300MW mouth-of-mine thermal power station has long term scalability with the potential to become a 1000MW plant. The completed full Power Feasibility Study highlighted an annual power output target of 1.8GW based on annual average coal consumption of 1.5Mt.
An Integrated Bankable Feasibility Study report for the entire project indicated total potential revenues of US$ 7.5-8.5 billion over an initial 25-year mine life, post-tax equity IRR between 21-22%, debt pay-back period of 11-12 years and a construction period of 36 months.
During the 2018 financial period, the Group continued to pursue various avenues in order to securing a formal binding Power-Purchase Agreement with the Tanzania Electricity Supply Company ("TANESCO"). Subsequent to the completion of a compulsory tender process through TANESCO on the development of the Mbeya Coal to Power Project, the Group was informed that its bid to secure a Power-Purchase Agreement was unsuccessful.
Further engagement with TANESCO has subsequently culminated in the receipt of a formal notice from TANESCO inviting the Group it to develop the Mbeya Coal to Power Project for the export market and thereby enabling the Company to engage with the African Power Pools regarding potential off-take agreements.
As at year end, taking into account the various aspects listed above, the Group concluded that none of the impairment indicators had been met in relation to the Mbeya Coal assets.
Lake Victoria Project
During the year, the Group (through a 55.5% shareholding (as at 31 December 2018) owned in AIM-listed subsidiary Katoro Gold plc) completed all technical aspects of the pre-feasibility study ("PFS"). However, due to changes in the Tanzanian mining legislation and associated mining regulations the Group suspended completion of the other elements of the PFS to conduct further assessments to determine the extent to which the new legislation and regulations could impact the viability of the project.
Having completed this assessment, the Group concluded that there was still an upside in exploration and development potential for the further development of the project, however the immediate benefit to the Group would be through development of more advanced projects.
As at year end, taking into consideration the decision to suspend temporarily the further exploration of the Lake Victoria Project, the Group re-assessed the fair value of intangible assets with an indefinite useful life utilising an open market valuation based on offers received on the specific resource, concluding that there exists a potential impairment as the fair value of these intangible assets does not exceed the carrying value.
Thus, as at year end, an impairment amounting to GBP912,892 was recognised, in relation to the Lake Victoria Project.
Mabesekwa Coal Independent Power Project
On 3 April 2018, the Group completed the acquisition of an 85% interest in the Mabesekwa Coal Independent Power Project, located in Botswana. The project comprises early stage development of a coal resource with the aim of developing a coal mine and associated thermal power plant. This acquisition was in line with the Group's strategy of positioning itself as a strategic regional electricity supplier in Southern Africa and creates many synergies with the MCPP in Tanzania.
As a result of the acquisition, 153,710,030 ordinary shares in Kibo were issued to Sechaba Natural Resources Limited ("Sechaba"). Sechaba retained a 15% interest in the Mabesekwa Coal Independent Power Project and were granted the right to have its managing director (holding the role at the date of acquisition) gain a seat on Kibo's board of directors (no Sechaba representative currently sits on the Kibo board with Mr Mashale Phumaphi's resignation). The intangible asset was recognised at the fair value of the consideration paid, which emanates from the fair value of the equity instruments issued as at transaction date, being GBP9,376,312.
The Mabesekwa Coal Independent Power Project is located approximately 40km east of the village of Tonata and approximately 50km southwest of Francistown, Botswana's second largest city. Certain aspects of the Project have been advanced previously by Sechaba Natural Resources Limited ("Sechaba"), including water and land use permits and environmental certification. Mabesekwa consists of a 300Mt subset of a coal deposit which contained an insitu resource of approximately 777Mt at the time of the Kibo acquisition (the balance of which the MCIPP holding company does not have any interest in).
A pre-feasibility study on a coal mine and a scoping study on a coal fired thermal power plant has been completed. Kibo is in possession of a Competent Persons Report on the project, which includes a SAMREC-compliant Maiden Resource Statement on the excised 300 Mt portion of the Mabesekwa coal deposit.
Kibo has furthermore, submitted a formal full mining right application to the Botswana's Department of Mines.
As at year end, taking into account the progress made in relation to the Mabesekwa Coal Independent Power Project since acquisition, the Group concluded that none of the impairment indicators had been met in relation to the Mabesekwa Coal assets.
11. Acquisition and Disposal of interests in other entities
Mabesekwa Coal Independent Power Project
On 3 April 2018, the Group completed the acquisition of an 85% interest in the Mabesekwa Coal Independent Power Project, located in Botswana. This acquisition was in line with the Group's strategy of positioning itself as a strategic regional electricity supplier in Southern Africa and creates many synergies with the MCPP in Tanzania.
As a result of the acquisition, 153,710,030 ordinary shares in Kibo were issued to Sechaba Natural Resources Limited ("Sechaba"). Sechaba retained a 15% interest in the Mabesekwa Coal Independent Power Project and were granted the right to have its managing director (holding the role at the date of acquisition) gain a seat on Kibo's board of directors (no Sechaba representative currently sits on the Kibo board with Mr Mashale Phumaphi's resignation). The intangible asset was recognised at the fair value of the consideration paid, which emanates from the fair value of the equity instruments issued as at transaction date, being GBP9,376,312.
MAST Energy Development Limited
The Group acquired a 60% equity interest in MAST Energy Development Limited for GBP300,000, settled through the issue of 5,714,286 ordinary shares in Kibo effective on 19 October 2018. The acquisition of MAST Energy Development Limited falls within the ambit of IFRS 3: Business Combinations. The net assets acquired were valued at Nil, with the resultant purchase price being allocated to Goodwill on date of acquisition.
Benga Power Project
Kibo entered into a Joint Venture Agreement with Mozambique energy company Termoeléctrica de Benga S.A. to participate in the further assessment and potential development of the Benga Independent Power Project ('BIPP'). The assets associated with the acquisition were transferred into a newly incorporated entity in which Kibo and Termoeléctrica hold initial participation interests of 65% and 35% respectively, which Kibo obtained for no consideration on commencement. As disclosed in the significant judgement section of the financial results, Kibo is not able to exercise control over the operations of the newly incorporated entity, therefore the investment is recognised as a Joint Venture for financial reporting purposes, which requires the recognition of the participants interest in the net revenue of the Joint Venture's operations.
In order to maintain its initial participation interest Kibo is required to ensure funding of a maximum amount of GBP1 million towards the completion of a Definitive Feasibility Study.
Kibo Nickel Limited
The Group disposed of its entire interest in Kibo Nickel Ltd and its wholly owned subsidiary, Eagle Exploration Ltd (hereinafter referred to as "Kibo Nickel Group"), to Katoro Gold Plc for the purchase consideration of GBP200,000, settled through the issue of 15,384,615 ordinary shares in Katoro Gold Plc, effective from 3 December 2018.
The Group retained an indirect controlling equity interest (55.53%) in the Kibo Nickel Group, through its directly held subsidiary, Katoro Gold PLC. As the change in Kibo's equity interest in the Kibo Nickel Group did not result in a loss of control, the transaction was recognised as a transaction with owners in their capacity as owners.
12. Trade and other receivables
Group
2018 Group Company Company
(GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
Amounts falling due over
one year:
Amounts owed by group undertakings - - 333,495 24,402,788
Amounts falling due within
one year:
Other debtors 89,349 59,046 282 413
89,349 59,046 333,777 24,403,201
------- ------------ ------------ ------------
The nature of amounts owed by Group undertakings is such that the expected recovery thereof is in excess of one year, and is thus classified as amounts falling due after one year.
The carrying value of current trade and other receivables approximates their fair value.
Amounts owed by Group undertakings represent inter-company loans between the Company and its subsidiaries. They have no fixed repayment terms, bear no interest and are unsecured, resulting in the recognition of the receivable as a non-current asset due to settlement being extended beyond 12 months.
During the period the Board resolved to capitalise inter-company loans and convert the respective loans owed by subsidiaries into share capital in order to adhere to international transfer pricing regulation and this resulted in a corresponding decrease in amounts owed by group undertakings.
Trade and other receivables pledged as security
None of the above stated trade and other receivables were pledged as security at period end. Credit quality of trade and other receivables that are neither past due nor impaired can be assessed by reference to historical repayment trends of the individual debtors.
13. Cash
Group (GBP) Company (GBP)
Cash consists of: 2018 2017 2018 2017
------- ------- -------- -----
Short term convertible cash reserves 654,158 766,586 38,974 5,690
654,158 766,586 38,974 5,690
======= ======= ======== =====
Cash has not been ceded, or placed as encumbrance toward any liabilities as at year end.
14. Share capital - Group and Company
2018 2017
Authorised equity
1,000,000,000 (2017: 1,000,000,000) Ordinary
shares of EUR0.015 each
3,000,000,000 Deferred shares of EUR0.009 EUR15,000,000 EUR15,000,000
each EUR27,000,000 EUR27,000,000
EUR42,000,000 EUR42,000,000
Allotted, issued and fully paid shares
(2018: 640,031,069 Ordinary shares of EUR0.015 GBP7,982,942 -
each)
(2017: 395,254,364 Ordinary shares of EUR0.015 - GBP4,758,595
each)
(1,291,394,535 Deferred shares of EUR0.009 GBP9,257,075 GBP9,257,075
each)
--------------- ---------------
GBP17,240,017 GBP14,015,670
Deferred
Ordinary Share Treasury
Number of Share Capital Capital Share Premium shares
Shares (GBP) (GBP) (GBP) (GBP)
Balance at 31 December
2017 395,254,364 4,758,595 9,257,075 28,469,750 -
------------ --------------- ---------- -------------- ---------
Shares issued during
the period 244,776,705 3,224,347 - 10,735,568 -
Balance at 31 December
2018 640,031,069 7,982,942 9,257,075 39,205,318 -
------------ --------------- ---------- -------------- ---------
All ordinary shares issued have the right to vote, right to receive dividends, a copy of the annual report, and the right to transfer ownership of their shares.
The Deferred Shares will not entitle holders to receive notice of, or attend or vote at any general meeting of the Company or to receive a dividend or other distribution or to participate in any return on capital on a winding up other than the nominal amount paid following a substantial distribution to the holders of the Ordinary Shares in the Company. Accordingly, for all practical purposes the
Deferred Shares will be valueless, and it is the board's intention at the appropriate time, to purchase the Deferred Shares at an aggregate consideration of EUR1.
15. Control reserve
The transaction with Opera Investments PLC in 2017 represented a disposal without loss of control. Under IFRS this constitutes a transaction with equity holders and as such is recognised through equity as opposed to recognising goodwill. The control reserve represents the difference between the purchase consideration and the book value of the net assets and liabilities acquired in the transaction with Opera Investments.
16. Share based payments
Share based payment reserve
The following reconciliation serves to summarise the composition of the share based payment reserve as at period end:
Group (GBP)
---------------------------------
2018 2017
---------- ---------------------
Opening balance of share based payment reserve 556,086 514,279
Issue of share options and warrants - 41,807
Reclassification of share based payment reserve (514,279) -
on expired share options
---------- ---------------------
41,807 556,086
---------- ---------------------
Share options and warrants in the current year relate to 1,208,333 ordinary shares in Katoro Gold PLC Group, issued to directors of Katoro Gold Plc. The fair value of the warrants issued have been determined using the Black-Scholes option pricing model. The fair value at the date of the grant per warrant was GBP0.06.
Company (GBP)
--------------------
2018 2017
---------- --------
Opening balance of share based payment reserve 514,279 514,279
Reclassification of share based payment reserve (514,279) -
on expired share options
---------- --------
- 514,279
---------- --------
Expenses settled through the issue of shares
The Group recognised the following expense related to equity settled share based payment transactions:
2018 (GBP) 2017 (GBP)
Geological expenditure settled* 22,616 13,194
Listing and capital raising fees 104,302 908,543
----------- -----------
126,918 921,737
----------- -----------
* The Group issued 779,878 (2017: 277,768) ordinary shares of EUR0.010 (2017: EUR0.015) par value each in the capital of the Company to exploration service providers in settlement of invoices for a total amount of GBP22,616 (2017: GBP13,194). The shares issued were in respect of invoices for geological and investor relations services by Katoro Gold PLC (2017: Kibo Energy PLC).
The Company recognised the following expense related to equity settled share based payment transactions:
2018 (GBP) 2017 (GBP)
Listing and capital raising fees 104,302 195,000
104,302 195,000
----------- -----------
At 31 December 2018 the Company had Nil options and Nil warrants outstanding. The previously issued Options and Warrants, as listed below, had all expired, with the corresponding share based payment charge being reclassified through equity in the Group & Company Statement of Changes in Equity.
Exercisable
Exercise as at
Date of start Expiry Exercise 31 December
Grant date date Price Number Granted 2018
02 Jun 02 Jun 1 Jun
Options 15 15 18 5p 14,399,333 -
---------- ---------- -------- --------- --------------- -------------
20 Feb 24 Mar 23 Mar
Warrants 15 15 18 9p 10,000,000 -
Total Contingently Issuable shares -
=============
Reconciliation of the quantity of share options in issue:
Group Company
-------------------------- --------------------------
2018 2017 2018 2017
------------- ----------- ------------- -----------
Opening balance 14,399,333 14,399,333 14,399,333 14,399,333
Expiration of share options (14,399,333) - (14,399,333) -
------------- ----------- ------------- -----------
- 14,399,333 - 14,399,333
------------- ----------- ------------- -----------
Reconciliation of the quantity of warrants in issue:
Group Company
-------------------------- --------------------------
2018 2017 2018 2017
------------- ----------- ------------- -----------
Opening balance 10,000,000 10,000,000 10,000,000 10,000,000
Warrants lapsed (10,000,000) - (10,000,000) -
------------- ----------- ------------- -----------
- 10,000,000 - 10,000,000
------------- ----------- ------------- -----------
17. Translation reserves
The foreign exchange reserve relates to the foreign exchange effect of the retranslation of the Group's overseas subsidiaries on consolidation into the Group's financial statements, taking into account the financing provided to subsidiary operations is seen as part of the Group's net investment in subsidiaries.
Group Company
------------------------ -------------------------
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
----------- ----------- ----------- ------------
Opening balance (268,506) (285,491) 14,723 47,430
Movement during the period (388,116) 16,985 (14,723) (32,707)
----------- ----------- ----------- ------------
Closing balance (656,622) (268,506) - 14,723
----------- ----------- ----------- ------------
18. Non-controlling interest
The non-controlling interest carried forward relates to the 2.5% interest held by Sanderson Capital Partners Limited in the Mbeya Coal Development Limited and its subsidiaries and 44.47% equity in Katoro Gold PLC and its subsidiaries.
Group
-------------------------
2018 (GBP) 2017 (GBP)
(Restated)
----------- ------------
Opening balance 927,107 (1,435)
Disposal of interest in subsidiary without
loss of control (9,364) 1,742,174
Additional capital raised 152,998 -
Loss for the year allocated to non-controlling
interest (661,570) (813,632)
----------- ------------
Closing balance of non-controlling interest 409,171 927,107
----------- ------------
The summarised financial information for significant subsidiaries in which the non-controlling interest has an influence, namely the Katoro Gold Group as at ended 31 December 2018, is presented below:
Katoro plc Katoro plc
Group Group
2018 (GBP) 2017 (GBP)
----------- ------------
Statement of Financial position
Total assets 622,231 566,658
Total liabilities (175,499) (175,284)
Statement of Profit or Loss
Revenue for the period - -
Loss for the period (479,205) (1,888,464)
Statement of Cash Flow
Cash flows from operating activities (465,669) (1,230,170)
Cash flows from investing activities - -
Cash flows from financing activities 313,560 1,783,753
19. Trade and other payables
Group Group Company Company
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
------------ ------------ ------------ ------------
Amounts falling due within one year:
Trade payables 301,698 266,218 95,072 86,736
301,698 266,218 95,072 86,736
------------ ------------ ------------ ------------
The carrying value of current trade and other payables equals their fair value due mainly to the short term nature of these receivables.
20. Borrowings
Group 2018 Group 2017 Company Company
(GBP) (GBP) 2018 (GBP) 2017 (GBP)
Amounts falling due within one year:
Short term loans - 1,210,768 - 1,210,768
- 1,210,768 - 1,210,768
------------ ----------- ------------ ------------
Group 2018 Group 2017 Company Company
(GBP) (GBP) 2018 (GBP) 2017 (GBP)
Reconciliation of borrowings:
Opening balance 1,210,768 251,928 1,210,768 251,928
Raised during the year 251,565 1,748,840 251,565 1,748,840
Repaid during the year (200,000) (200,000)
Settled through the issue of shares (1,262,333) (790,000) (1,262,333) (790,000)
Closing balance - 1,210,768 - 1,210,768
------------ ----------- ------------ ------------
During the current period the Group entered into a settlement agreement with Sanderson Capital Partners Limited ('Sanderson') in order to settle the outstanding balance owed on the forward payment facility (the "Facility") agreed on 20 December 2016. Accordingly, Sanderson was issued 8,370,716 and 21,239,375 new ordinary Kibo shares (the 'Conversion Shares') of par value EUR0.015 each, at a price of GBP0.05 and GBP0.0525 per Kibo share on 1 May 2018 and 6 July 2018 respectively, in order to settle the outstanding balance owed to Sanderson.
21. Investment in group undertakings
Breakdown of Investments as at 31 December Subsidiary
2018 undertakings
(GBP)
Kibo Mining (Cyprus) Limited 37,406,177
Sloane Developments Limited -
Katoro Gold PLC 484,474
--------------
Investments at Cost 37,890,651
--------------
Breakdown of Investments as at 31 December Subsidiary
2017 undertakings
(GBP)
Kibo Mining (Cyprus) Limited 1,700,000
Sloane Developments Limited -
Katoro Gold PLC 1,768,224
--------------
Investments at Cost 3,468,224
--------------
Subsidiary
undertakings
(GBP)
Reconciliation of Investments at Cost
--------------
At 1 January 2017 1,700,000
--------------
Additions in Katoro Gold PLC 3,710,000
Provision for impairment (1,941,776)
At 31 December 2017 3,468,224
--------------
Additions in Kibo Mining Cyprus Limited 35,706,177
Additions in Katoro Gold PLC 349,878
Provision for impairment (1,633,628)
At 31 December 2018 37,890,651
--------------
At 31 December the Company had the following undertakings:
Subsidiary,
associate Incorporated Interest Interest
or Joint and Registered held held
Description Venture Activity in (2018) (2017)
------------------------------ --------------- --------------------- ----------------- --------- ---------
Directly held subsidiaries
Sloane Developments
Limited Subsidiary Holding Company United Kingdom 100% 100%
Kibo Mining (Cyprus)
Limited Subsidiary Treasury Function Cyprus 100% 100%
Katoro Gold Plc Subsidiary Mineral Exploration United Kingdom 55.53% 57%
Indirectly held subsidiaries
MAST Energy Development Subsidiary Power Generation United Kingdom 60% -
Limited
Kibo Gold Limited Subsidiary Holding Company Cyprus 55.53% 57%
Savannah Mining Limited Subsidiary Mineral Exploration Tanzania 55.53% 57%
Reef Miners Limited Subsidiary Mineral Exploration Tanzania 55.53% 57%
Kibo Nickel Limited Subsidiary Holding Company Cyprus 55.53% 100%
Eagle Exploration Limited Subsidiary Mineral Exploration Tanzania 55.53% 100%
Mzuri Energy Limited Subsidiary Holding Company Canada 100% 100%
Mbeya Holdings Limited Subsidiary Holding Company Cyprus 97.5% 97.5%
Mbeya Development Limited Subsidiary Holding Company Cyprus 97.5% 97.5%
Mbeya Mining Company
Limited Subsidiary Holding Company Cyprus 97.5% 97.5%
Mbeya Coal Limited Subsidiary Mineral Exploration Tanzania 100% 100%
Mzuri Power Limited Subsidiary Holding Company Cyprus 100% 100%
Mbeya Power Tanzania
Limited Subsidiary Power Generation Tanzania 97.5% 97.5%
Kibo Mining South Africa
(Pty) Ltd Subsidiary Treasury Function South Africa 100% 100%
Kibo Exploration (Tanzania)
Limited Subsidiary Treasury Function Tanzania 100% 100%
Kibo MXS Limited Subsidiary Holding Company Cyprus 100% 100%
Tourlou Limited Subsidiary Holding Company Cyprus 100% 100%
Mzuri Exploration Services Exploration
Limited Subsidiary Services Tanzania 100% 100%
Exploration
Protocol Mining Limited Subsidiary Services Tanzania 100% 100%
Jubilee Resources Limited Subsidiary Mineral Exploration Tanzania 100% 100%
Kibo Energy Botswana
Limited Subsidiary Holding Company Cyprus 100% 100%
Kibo Energy Mozambique
Limited Subsidiary Holding Company Cyprus 100% 100%
Pinewood Resources
Limited Subsidiary Mineral Exploration Tanzania 100% 100%
Makambako Resources
Limited Subsidiary Mineral Exploration Tanzania 100% 100%
Benga Power Plant Ltd Joint Venture Power Generation Mozambique 65% -
In the current period, the Group applied the approach whereby loans to Group undertakings and trade receivables from Group undertakings were capitalised to the cost of the underlying investments. The capitalisation would result in a decrease in the exchange fluctuations between Group companies operating from various locations.
22. Related party transactions
Name Relationship (Directors of:)
Andreas Lianos River Group, Boudica Group, and Namaqua Management
Limited
Related parties of the Group comprise subsidiaries, joint ventures, significant shareholders, the Board of Directors and related parties in terms of the listing requirements. Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.
Other entities over which directors/key management or their close family have control or significant influence:
River Group River Group provide corporate advisory services
and is the Company's Designated Advisor.
Boudica Group Boudica Group provides secretarial services
to the Group.
Kibo Energy PLC is a shareholder of the following companies and as such are considered related parties:
Directly held subsidiaries: Sloane Developments Limited
Kibo Mining (Cyprus) Limited
Katoro Gold Plc
Indirectly held subsidiaries: Kibo Gold Limited
Kibo Mining South Africa Proprietary
Limited
Savannah Mining Limited
Reef Miners Limited
Kibo Nickel Limited
Eagle Exploration Limited
Mzuri Energy Limited
Rukwa Holdings Limited
Mbeya Development Company Limited
Mbeya Mining Company Limited
Mbeya Coal Limited
Mbeya Power Limited
Kibo Exploration (Tanzania) Limited
Mbeya Power (Tanzania) Limited
Kibo MXS Limited
Mzuri Exploration Services Limited
Katoro Cyprus Limited
Kibo Energy Mozambique Limited
Pinewood Resources Limited
Makambako Resources Limited
Jubilee Resources Limited
Kibo Energy Botswana Limited
MAST Energy Developments Limited
The transactions during the period between the Company and its subsidiaries included the settlement of expenditure to/from subsidiaries, working capital funding, and settlement of the Company's liabilities through the issue of equity in subsidiaries. The loans to/ from group companies do not have fixed repayment terms and are unsecured.
The following transactions have been entered into with related entities, by way of common directorship, throughout the financial period.
River Group was paid GBP46,145 (2017: GBP78,294) for designated advisor services, corporate advisor services and corporate finance fees during the year settled through cash. No fees are payable to River Group as at year end. The expenditure was recognised in the Company as part of administrative expenditure.
During the year, Namaqua Management Limited or its nominees, was paid GBP629,293 (2017: GBP573,438) for the provision of administrative and management services. GBP NIL was payable at the year-end (2017: GBP48,824).
The Boudica Group was paid GBP38,038 (2017: GBP59,358) in cash for corporate services during the current financial period. No fees are payable to Boudica Group at year end.
23. Financial Instruments and Financial Risk Management
The Group and Company's principal financial instruments comprises cash at hand and in bank. The main purpose of these financial instruments is to provide finance for the Group and Company's operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.
It is, and has been throughout the 2018 and 2017 financial period, the Group and Company's policy not to undertake trading in derivatives.
The main risks arising from the Group and Company's financial instruments are foreign currency risk, credit risk, liquidity risk, interest rate risk and capital risk. Management reviews and agrees policies for managing each of these risks which are summarised below.
2018 (GBP) 2017 (GBP)
Financial instruments of Loans and Financial Loans and Financial
the Group are: receivables liabilities receivables liabilities
------------------------------- ------------- ------------- ------------- -------------
Financial assets at amortised
cost
Trade and other receivables 89,349 - 59,046 -
Cash 654,158 - 766,586 -
Financial liabilities at
amortised cost
Trade payables - 301,698 - 266,218
Borrowings - - - 1,210,768
------------- ------------- ------------- -------------
743,507 301,698 825,632 1,476,986
============= ============= ============= =============
2018 (GBP) 2017 (GBP)
Financial instruments of Loans and Financial Loans and Financial
the Company are: receivables liabilities receivables liabilities
------------------------------- ------------- ------------- ------------- -------------
Financial assets at amortised
cost
Trade and other receivables
- non current 333,495 - 24,402,788 -
Trade and other receivables
- current 282 - 413 -
Cash 38,975 - 5,690 -
Financial liabilities at
amortised cost
Trade payables - current - 95,072 - 86,736
Borrowings - - - 1,210,768
------------- ------------- ------------- -------------
372,752 95,072 24,408,891 1,297,504
============= ============= ============= =============
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currencies and exposures to exchange rate fluctuations therefore arise. Exchange rate exposures are managed by continuously reviewing exchange rate movements in the relevant foreign currencies. The exposure to exchange rate fluctuations is limited as the Company's subsidiaries operate mainly with Sterling, Euros, South African Rand, US Dollar and Tanzanian Shillings.
At the period ended 31 December 2018, the Group had no outstanding forward exchange contracts.
Exchange rates used for conversion of foreign subsidiaries undertakings were:
2018 2017
------ ------
ZAR to GBP (Spot) 0.0545 0.0599
ZAR to GBP (Average) 0.0593 0.0593
USD to GBP (Spot) 0.7871 0.7411
USD to GBP (Average) 0.7499 0.7755
EURO to GBP (Spot) 0.0095 0.8877
EURO to GBP (Average) 0.8848 0.8699
CAD to GBP (Spot) 0.5782 0.5903
CAD to GBP (Average) 0.5786 0.5964
The Executive management of the Group monitor the Group's exposure to the concentration of fair value estimation risk on a monthly basis.
Group Sensitivity Analysis
If the GBP:EURO/ EURO:USD exchange rate was to increase/decrease by 10%, the effect on foreign currency translation would be GBPNil (2017: GBP2.2 million) and GBPNil (2017: GBP0.48 million) respectively. During the current period the Group capitalised the advances to/(from) group companies as part of the cost of the underlying investments, thereby significantly decreasing the potential impact from foreign currency fluctuations significantly.
Credit risk
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group. As the Group does not, as yet, have any sales to third parties, this risk is limited.
The Group and Company's financial assets comprise receivables and cash and cash equivalents. The credit risk on cash and cash equivalents is limited because the counterparties are banks with high credit-ratings assigned by international credit rating agencies. The Group and Company's exposure to credit risk arise from default of its counterparty, with a maximum exposure equal to the carrying amount of cash and cash equivalents in its consolidated statement of financial position. Expected credit losses were not measured on a collective basis. The various financial assets owed from group undertakings were evaluated against the underlying asset value of the investee, taking into account the value of the various projects undertaken during the period, thus validating, as required the credit loss recognised in relation to amounts owed by group undertakings.
The Group does not have any significant credit risk exposure to any single counterparty or any Group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are connected or related entities.
Financial assets exposed to credit risk at period end were as follows:
Financial instruments Group (GBP) Company (GBP)
2018 2017 2018 2017
----------- ---------- --------- ------------
Trade & other receivables 89,349 59,046 333,777 24,403,201
Cash 654,158 766,586 38,974 5,690
----------- ---------- --------- ------------
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group and Company's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Cash forecasts are regularly produced to identify the liquidity requirements of the Group.
The Group and Company's financial liabilities as at 31 December 2018 were all payable on demand, other than the trade payables to other Group undertakings.
Less than Greater than
Group (GBP) 1 year 1 year
At 31 December 2018
Trade and other payables 301,698 -
At 31 December 2017
Trade and other payables 266,218 -
Borrowings 1,210,768 -
Company (GBP)
At 31 December 2018
Trade and other payables 95,072 -
At 31 December 2017
Trade and other payables 86,736 -
Borrowings 1,210,768 -
Interest rate risk
The Group and Company's exposure to the risk of changes in market interest rates relates primarily to the Group and Company's holdings of cash and short term deposits.
It is the Group and Company's policy as part of its management of the budgetary process to place surplus funds on short term deposit in order to maximise interest earned.
Group Sensitivity Analysis:
Currently no significant impact exists due to possible interest rate changes on the Company's interest bearing instruments.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust its capital structure, the Group may adjust or issue new shares or raise debt. No changes were made in the objectives, policies or processes during the period ended 31 December 2018. The capital structure of the Group consists of equity attributable to equity holders of the parent, comprising issued capital, reserves and retained losses as disclosed in the consolidated statement of changes in equity.
Fair values
The carrying amount of the Group and Company's financial assets and financial liabilities recognised at amortised cost in the financial statements approximate their fair value.
Hedging
At 31 December 2018, the Group had no outstanding contracts designated as hedges.
24. Post Statement of Financial Position events
Conversion of Sanderson Minority Interest in Mbeya Development Company Limited into Kibo Energy PLC Shares and Continuation of Forward Payment Facility
Kibo Energy PLC ("Kibo" or the "Company") signed a binding term sheet with Sanderson Capital Partners where Kibo issued 126,436,782 new Ordinary Shares of par value EUR0.015 (the "Conversion Shares") to Sanderson in conversion of its 2.5% minority interest in Mbeya Development Company Limited into equity directly in Kibo Energy PLC effective from 11 March 2019 onward. Furthermore, the agreement provides for the continuation of Kibo's USD2,940,000 Forward Payment Facility (the "Facility") signed between Kibo and Sanderson entered into during 2016. The Facility was available for a first immediate draw by Kibo, amounting to GBP100,000 and a second draw on or any time before 15 March 2019 amounting to no more than GBP400,000 with the first draw completed and the second draw up to GBP320,000 leaving GBP80,000 available under the second specified draw. Any additional draw-downs of the balance of the USD2,940,000 limit are to be agreed between Kibo and Sanderson on a case by case basis, and all draw-down amounts will be subject to a facilitation and implementation fee of GBP5,000 per GBP100,000 drawn down. Kibo is not obliged to draw down any of the Facility and the initial fee payment of USD732,036 of ordinary shares in Kibo, made to Sanderson under the original Facility arrangement, was a one-off payment and is not required to be paid again.
Mbeya Coal to Power Project
The Tanzania Electricity Supply Company ("TANESCO"), informed the Company during February 2019, without providing any reasons or explanation, that it did not qualify to compete in the next stage of the bidding process. TANESCO announced the tender during Q3 2018 and called for tender qualification applications by interested parties, to develop some of the planned Coal Power Projects with a total capacity of 600MW.
Kibo subsequently received formal notice from TANESCO inviting it to develop the Mbeya Coal to Power Project for the export market and thereby enabling the Company to engage with the African Power Pools regarding off-take agreements.
25. Commitments and Contingencies
Benga Power Project
Kibo entered into a Joint Venture Agreement (the 'Benga Power Joint Venture' or 'JV') with Mozambique energy company Termoeléctrica de Benga S.A. to participate in the further assessment and potential development of the Benga Independent Power Project ('BIPP'). In order to maintain its initial participation interest Kibo is required to ensure funding of a maximum amount of GBP1 million towards the completion of a Definitive Feasibility Study, however this expenditure is still discretionary.
Mabesekwa Coal Independent Power Project
Under the terms of the agreement, Sechaba, a subsidiary of Shumba Energy Limited, will retain the benefit of the following royalties from MCIPP should it go into production:
-- USD0.50 from revenue received per metric tonne of coal sold from the area covered by the MCIPP coal resource; and
-- USD0.0225 from revenue received per kilowatt hour produced and sold by any power plant owned by Kibo Energy Ltd (Botswana), the entity holding the MCIPP in Botswana or using coal procured from the area covered by the MCIPP coal resource.
It should be noted that these royalties are not payable by Kibo, but by the joint venture, in which Kibo holds its 85% interest.
Other than the commitments and contingencies noted above, the Group does not have identifiable material commitments and contingencies as at the reporting date. Any contingent rental is expensed in the period in which it is incurred.
26. Correction of prior period error
Kibo incorrectly allocated the minorities' share of the net asset acquired relating to the Katoro Gold PLC acquisition in the 2017 financial period. The impact affected classification within equity with no impact on the reported result for the prior period, cash flows or net assets. There was no impact on the balance sheet at the beginning of the comparative period.
The error has been corrected by restating each of the affected financial statement line items for the prior period as follows:
Balance as Restatement Restated
at 31 December balance as
2017 at 31 December
Group (GBP) 2017
Control reserve 2,097,442 (2,310,495) (213,053)
Non-controlling interest (1,383,388) 2,310,495 927,107
--------------- ----------- ---------------
Annexure 1: Headline Loss Per Share
Accounting policy
Headline earnings per share (HEPS) is calculated using the weighted average number of ordinary shares in issue during the period and is based on the earnings attributable to ordinary shareholders, after excluding those items as required by Circular 4/2018 issued by the South African Institute of Chartered Accountants (SAICA).
+
Reconciliation of Headline earnings per share
Headline loss per share
Headline loss per share comprises the following:
Reconciliation of headline loss per share: 31 December 31 December
2018 (GBP) 2017 (GBP)
Loss for the period attributable to normal
shareholders (3,388,778) (3,712,707)
Adjustments:
Impairment of the Intangible Assets 912,892 -
Deemed cost of listing - 206,680
Headline loss for the period attributable
to normal shareholders (2,475,886) (3,506,027)
Headline loss per ordinary share (0.004) (0.010)
In order to accurately reflect the weighted average number of
ordinary shares for the purposes of basic earnings, dilutive
earnings and headline earnings per share as at year end, the
weighted average number of ordinary shares was adjusted retrospectively.
24 June 2019
Sponsor and Corporate Advisor
River Group
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 PGUUUQUPBUBW
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June 24, 2019 02:00 ET (06:00 GMT)
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