REG - Kibo Energy PLC - Kibo Subsidiary MED Accounts’ Publication
30/04/2024 07:00
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RNS Number : 4901M Kibo Energy PLC 30 April 2024
Kibo Energy PLC (Incorporated in Ireland)
(Registration Number: 451931)
(External registration number: 2011/007371/10)
LEI Code: 635400WTCRIZB6TVGZ23
Share code on the JSE Limited: KBO
Share code on the AIM: KIBO
ISIN: IE00B97C0C31
('Kibo' or 'the Company')
Dated: 30 April 2024
Kibo Energy PLC ('Kibo' or the 'Company')
Kibo Subsidiary Announces MED Accounts' Publication
Kibo Energy PLC (AIM: KIBO; AltX: KBO), the renewable energy-focused
development company, announces the publication by its subsidiary, Mast Energy
Developments PLC ('MED'), a UK-based multi-asset owner, developer and operator
in the rapidly growing flexible power market, of its audited financial results
for the year end 31 December 2023.
Further details can be found in the full MED RNS Announcement, which is
available below and at med.energy (https://med.energy/?page_id=3140) .
--------------------
Results for the year ended 31 December 2023
Dated 30 April 2024
MAST Energy Developments PLC ('MED' or the 'Company') the UK-based multi-asset
owner, developer and operator in the rapidly growing flexible energy market,
is pleased to announce its audited results for the year ended 31 December
2023. A condensed set of financial statements accompanies this announcement
below while the Company's full Annual Report and Financial Statements (MED
Audited Annual Report and Financial Statements for the year ended 31 December
2023) can be found at the Company's website at www.med.energy.
The Company's Notice of Annual General Meeting will be announced separately in
due course.
Overview of key events during the period up to the date of this report
· The Company continued to pursue its business growth strategy which
was set to receive a significant boost with signing of a joint venture
agreement ('JVA') with an institutional investor-led consortium in July 2023
which provided for an initial investment injection of £5.9m. Unfortunately,
the investors could not fulfil their contractual obligations and the JVA had
to be terminated.
· Post year-end, the Company successfully secured alternative funding
under a funding facility for up to £4m with RiverFort further to an agreement
signed with MED subsidiary Pyebridge.
· Returns at Pyebridge were interrupted by technical and market related
challenges during the year. Toward the end of 2023 Pyebridge was put on care
and maintenance to prepare for significant overhaul work. The new funding
facility with RiverFort enabled re-commencement of work at Pyebridge post
year-end and subsequent achievement of its Satisfactory Performance Days
requirement.
· MED's Pyebridge site has secured Capacity Market contracts to ensure
minimum gross profit margin income totalling c. £1,125,000 until 2028, in
addition to its revenue generation via its PPA with Statkraft.
· MED continued to work with its projects' EPC contractors, gas- and
grid connection providers to ensure its existing shovel-ready sites remain in
good standing. A Certificate of Lawful Commencement was received for Hindlip
Lane and initial pre-construction work was started.
· The Company continues to source and conduct due diligence on
potential shovel-ready and operating sites that meet its investment criteria
for acquisition in order to further grow its portfolio.
This announcement contains inside information for the purposes of the UK
version of the Market Abuse Regulation (EU No. 596/2014) as it forms part of
United Kingdom domestic law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR"). Upon the publication of this announcement, this inside
information is now considered to be in the public domain.
ENDS
For further information please visit www.med.energy or contact:
Pieter Krügel info@med.energy Mast Energy Developments plc CEO
Jon Belliss +44 (0)20 7399 9425 Novum Securities Corporate Broker
DIRECTORS, OFFICERS AND PROFESSIONAL ADVISERS
BOARD OF DIRECTORS: Louis Lodewyk Coetzee (Non-Executive Chairman)
Pieter Krügel (Chief Executive Officer)
Paul Venter (Non-Executive Director)
Dominic Traynor (Non-Executive Director)
REGISTERED OFFICE AND Salisbury House
BUSINESS ADDRESS: London Wall
London
EC2M 5PS
COMPANY SECRETARY: Noel Flannan O'Keeffe
Salisbury House
London Wall
London
EC2M 5PS
PLACE OF INCORPORATION: England & Wales
AUDITORS: Crowe U.K. LLP
55 Ludgate Hill
London
EC4M 7JW
BROKERS: Novum Securities Limited
2nd Floor
7-10 Chandos Street
London
W1G 9DQ
REGISTRAR: Link Group
Unit 10
Central Square
29 Wellington Street
Leeds
LS1 4DL
SOLICITORS: Druces LLP
Salisbury House
London Wall
London
EC2M 5PS
PRINCIPLE BANKERS: Barclays Bank PLC
1 Churchill Place
Canary Wharf
London E14 5HP
STOCK EXCHANGE LISTING: London Stock Exchange: Main Market (Share code: MAST)
WEBSITE: www.med.energy
DATE OF INCORPORATION: 17 September 2020
REGISTERED NUMBER: 12886458
CHAIRMANS REPORT
I am pleased to provide a review of MAST Energy Developments PLC ('MED' or the
'Company') and its subsidiaries' (collectively, the 'Group') activities and
audited financial statements for the year ended 31 December 2023.
The last year has seen the Company continue to pursue its business strategy to
expand its operations in the flexible power market in the United Kingdom, with
the objective to reach a 300 MW portfolio within 36-58 months by acquiring,
developing and operating multiple small-scale flexible power generation plants
across Great Britain. This strategy was set to receive a significant boost
with the signing of a joint venture agreement with an institutional
investor-led consortium, led by Seira Capital Ltd ("Seira") in May 2023. The
agreement provided for an initial injection of £5.9m into the joint venture
company (JV 1) and a commitment to finalise terms on a second joint venture
(JV 2) which would inject a further £25.1m of joint venture funding.
Together JV 1 and JV 2 would comprise a total portfolio of low-carbon flexible
gas generation peaker plants with a total combined generation output of up to
c. 33 MW, to be developed and/or acquired, constructed and in production and
income generating within 18 months. Regrettably, the Company faced
unanticipated challenges in closing the joint ventures and availing of the JV
funding during 2023, as a result of non-performance, initially by Seira, and
then by Proventure Holdings limited ("Proventure") who stepped in as the
lead-investor Seira failed to fulfil their contractual obligations under JV 1.
Unfortunately, having given both Seira and Proventure every opportunity to
fulfil their contractual obligations under the joint ventures and in the
absence of no joint venture funding materialising, we were left with no choice
but to terminate both joint ventures.
The Company did however manage to successfully secure alternative funding
under a loan facility for up to £4m with institutional investor, RiverFort
Global Opportunities PLC Limited, further to an agreement signed with MED
subsidiary Pyebridge Power Ltd ("Pyebridge") on 28 February 2024. This
funding enabled the Company to take Pyebridge out of care and maintenance with
operations at Pyebridge set to re-commence later in 2024.
In spite of the funding setbacks referred to above good progress was made with
pre-development activities at the Company's remaining projects. In May 2023,
we received planning consent from the local council for Rochdale, thus
ensuring that this project now enjoys construction-ready status. During
February 2023 MED was also successful in obtaining T-1 and T-4 Capacity Market
("CM") contracts for Pyebridge at tariffs of £60/kW/pa for the T1 and a
record tariff of £63/kW/pa for the T-4. We are particularly pleased with the
fact that the T-4 contract replaced a previous T4 contract priced at
£8/kW/pa.
During its initial 9-month period of operation as a gas-fuelled flexible power
plant from March to November 2022, Pyebridge delivered exceptional returns,
including outperforming the market sales price by 88% and thus validating the
Company's strategy and ability to outperform the market principally as a
result of astute utilisation of trading algorithm, in conjunction with its PPA
Route-to-Market partner, Statkraft (see RNS announcement dated 27 February
2023). During 2023, continuation of the exceptional returns at Pyebridge were
interrupted by technical and market related challenges. These challenges
included the necessity for remediation work at Pyebridge following a fire
incident which resulted in a temporary suspension of operations in the period
22 November 2022 to 17 February 2023. This work was implemented to ensure that
the site continues to operate within required safety and regulatory
parameters. Pyebridge also faced some market related head winds during 2023
with the yearly average electricity prices significantly less at £94.48/MWh
(2022: 174.96 MWh). It was decided to put Pyebridge into care and
maintenance, in preparation for a significant overhaul work programme planned
for the site's engines in October 2023 and the realistic expectation at the
time, of significant investment flowing into MED that would not only have
allowed for the refurbishment of the Pyebridge site, but also the concurrent
construction and commissioning of several of MED's remaining projects not yet
in production.
During 2023 work however continued on various fronts within MED and we
continued to liaise with our EPC contractors, gas and grid connection
providers and all other stakeholders on our Bordersley, Hindlip, Rochdale and
Stather sites to ensure they remain in good standing pending resumption of
construction at Bordersley and commencement of construction at Hindlip and
Rochdale once funding is available. The Company continues to source and
conduct due diligence on potential shovel-ready and operating sites that meet
its investment criteria, with several flexible-power site acquisition
opportunities currently under review.
With regards to corporate matters, MED was able to successfully agree a
reprofiling of the outstanding balances on MED's two existing loan facilities
held through an institutional lender group during May 2023. The aggregate
balance outstanding on two existing loans amounting to £729,750 was
transferred as an initial advance on a new loan agreement (the 'Reprofiling
Agreement') and an additional advance on one of the existing loans of
£100,000 was availed to MED in conjunction with the signing of the
Reprofiling Agreement. The terms of the Reprofiling Agreement afforded MED
additional funding assistance during 2023 and was particularly welcome
considering the non-receipt of the Seira and Proventure investment. MED
also issued an additional 46,401,338 new shares during 2023 comprising
14,754,914 (value of £107,072) in respect of conversions by the institutional
investors of a portion of outstanding balance under the Reprofiling Agreement
and 31,646,424 (value of £468,999) as part payment in shares of the
outstanding balance on a loan account with MED's major shareholder, Kibo
Energy Plc.
The impact of the evolving UK Government response to climate change and
changes to the regulatory environment, as well as the ongoing conflicts in the
Ukraine and the Middle East are current events that may result in continued
volatility in energy prices for the foreseeable future. MED remains confident
and optimistic that our corporate strategy remains on point and that the
Company will be able to deliver positive results with its robust projects
portfolio over the course of the next 12 months and beyond.
In conclusion I would like to thank Pieter Krügel and his management team for
their ongoing execution of the MED business strategy in what has proved to be
an extremely challenging period during 2023, especially when considering all
the unforeseen negative external events they were challenged with. Together
with the other members of the MED board, I look forward to supporting them as
we build towards our target of 300 MW of flexible power available to the UK
energy market over the next few years.
This report was approved on 29 April 2024 and signed by:
Louis Coetzee
Non-Executive Chairman
Financial summary of the MAST Energy Developments PLC Group
The following information is included to highlight the financial performance
of the Group in its inaugural period of operations.
Description Year ended Year ended
31 December 2023 31 December 2022
Revenue 341,207 1,036,743
Cost of sales (223,838) (778,802)
Administrative expenses (941,941) (921,769)
Listing and capital raising fees (464,853) (107,676)
Project expenditure (343,718) (661,079)
Impairment (1,857,604) (1,288,578)
Other income 40,375 86,558
Finance income 1,117 -
Finance costs (90,139) (98,397)
Loss for the period (3,539,394) (2,733,000)
The increase in the loss year-on-year, as disclosed in the table above and in
the statement of comprehensive income, is mainly owing to the following
reasons:
• Revenue decreased due the Pyebridge site that
undergone fire and safety improvements and inspections following a fire
incident in 2022, and the site being put in care and maintenance toward the
end of 2023 to prepare for the planned overhauls per the JV agreements. This
also directly resulted in the decrease in cost of sales.
• The start of the Pyebridge T-1 Capacity Market
contract in October 2023 increased revenue earnings.
• Project expenses were lower in 2023 as the sites did
not require as much investment than in 2022 since the majority of sites are
awaiting funding to commence/continue construction.
• The increase in listing costs is mainly due to shares
that were issued on two separate occasions during 2023 as described in note
15.
• The impairment expense in 2022 was high due the
pressure on the UK economy which influenced the assumptions used by management
for the impairment assessment. The impairment expense in 2023 is largely due
to and reflects the current market conditions, most notably the high inflation
and interest rate environment. These conditions have already started easing
globally and in the UK and we do not expect that it will materially impact our
ability to attract future investments and capex funding for our projects.
MED's projects deliver and essential product to the UK market which is in
short supply. The impairment relates to the carrying value of the property,
plant and equipment and intangible assets related to the Bordersley site
(c.£1.6m) and Stather Road site (c. £ 208k). It should be considered that
since not all the projects are in construction, yet management had to make
judgments and estimates as described in the accounting policies. The value of
assets may increase when construction is started and estimates that are
included in the calculation can be replaced with known information.
There have been no dividends declared or paid during the current financial
period (2022: £ Nil).
REPONSIBILITY STATEMENT
We confirm to the best of our knowledge:
a) the condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting';
b) the Directors' Statement includes a fair review of the information
required by the Disclosure and Transparency Rule DTR 4.2.7R (indication of
important events during the year); and
c) the Directors' Statement includes a fair review of the information
required by the Disclosure and Transparency Rule DTR 4.2.8R (disclosure of
related party transactions and changes therein); and
d) this report contains certain forward-looking statements with respect to
the operations, performance, and financial condition of the Group. By their
nature, these statements involve uncertainty since future events and
circumstances can cause results and developments to differ materially from
those anticipated.
The forward-looking statements reflect knowledge and information available at
the date of preparation of this financial report and the Company undertakes no
obligation to update these forward-looking statements.
Nothing in this financial report should be construed as a profit forecast.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Group
Year ended Year ended
31 December 2023 31 December 2022
Audited Audited
Note £ £
Revenue 341,207 1,036,743
Cost of sales (223,838) (778,802)
Gross profit/(loss) 117,369 257,941
Administrative expenses (941,941) (921,769)
Listing and other corporate fees (464,853) (107,676)
Project expenditure (343,718) (661,079)
Impairment 7&8 (1,857,604) (1,288,578)
Operating loss (3,490,747) (2,721,161)
Other income 40,375 86,558
Finance income 1,117 -
Finance costs (90,139) (98,397)
Loss before tax (3,539,394) (2,733,000)
Taxation - -
Loss for the period (3,539,394) (2,733,000)
Total comprehensive loss for the period (3,539,394) (2,733,000)
Loss for the period (3,539,394) (2,733,000)
Attributable to the owners of the parent (3,539,394) (2,733,000)
Attributable to the non-controlling interest - -
Total comprehensive loss for the period (3,539,394) (2,733,000)
Attributable to the owners of the parent (3,539,394) (2,733,000)
Loss Per Share
Basic loss per share(pence) 6 (1.51) (1.36)
Diluted loss per share(pence) 6 (1.51) (1.36)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023
Group
31 December 31 December
2022 2022
Audited Audited
Note £ £
Assets
Non‑Current Assets
Property, plant and equipment 7 2,080,869 2,552,837
Intangible assets 8 397,779 1,795,683
Total non-current assets 2,478,648 4,348,520
Current Assets
Other receivables 122,649 136,801
Cash and cash equivalents 252 132,184
Total current assets 122,901 268,985
Total Assets 2,601,549 4,617,505
Equity and Liabilities
Equity
Called up share capital 10 263,854 217,453
Share premium account 10 13,183,277 12,653,607
Share reserve 81,329 -
Warrant reserve 12 380,741 -
Common control reserve 11 383,048 383,048
Non-controlling interest acquired 11 (4,065,586) (4,065,586)
Retained deficit (10,611,172) (7,071,778)
Attributable to equity holders of the parent (384,509) 2,116,744
Non-controlling interest - -
Total Equity (384,509) 2,116,744
Liabilities
Non-current Liabilities
Lease liability 7 405,390 346,674
Other financial liabilities 14 318,925 243,056
Total non-current liabilities 724,315 589,730
Current Liabilities
Loans from related parties 13 849,253 1,231,535
Trade and other payables 941,688 300,324
Other financial liabilities 14 444,365 354,805
Lease liability 7 4,205 3,980
CLN Derivative liability 14 22,232 20,386
Total current liabilities 2,261,743 1,911,030
Total Liabilities 2,986,058 2,500,760
Total Equity and Liabilities 2,601,549 4,617,505
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Share Share Reserve Common Control Reserve Warrant Reserve Non-controlling interest acquired Retained deficit Total
Capital Premium
£ £ £ £ £ £ £ £
Balance at 31 December 2021 188,717 11,682,343 - 383,048 - (4,065,586) (4,338,778) 3,849,744
Total comprehensive loss for the period - - - - - - (2,733,000) (2,733,000)
Loan with holding company settled in shares 28,736 971,264 - - - - - 1,000,000
Balance at 31 December 2022 217,453 12,653,607 - 383,048 - (4,065,586) (7,071,778) 2,116,744
Total comprehensive loss for the period - - - - - - (3,539,394) (3,539,394)
Warrants issued during the year - - - - 380,741 - - 380,741
Loans partially settled in shares 47,755 92,317 - - - - - 107,072
Director's loan repayable in shares - - 81.329 - - - - 81,329
Loan with holding company settled in shares 31,646 437,353 - - - - - 468,999
Balance at 31 December 2023 263,854 13,183,277 81,329 383,048 380,741 (4,065,586) (10,611,172) (384,509)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
Group
Year ended Year ended
31 December 31
2023 December
2022
Audited Audited
Notes £ £
Cash flows from operating activities
Loss for the period before taxation (3,539,394) (2,733,000)
Adjustments for non-cash items:
Depreciation 7 74,542 65,948
Impairment of intangible assets 8 1,397,904 1,288,578
Impairment of PPE 459,700 -
Implementation fee on reprofiling of convertible loan notes 48,950 -
Loss/(gain) on revaluation of CLN derivative liabilities 86,558 (86,558)
Non-cash interest accrued 88,731 96,828
Other non-cash items 369 (2,085)
(1,382,640) (1,370,289)
Movement in working capital
Decrease/(increase) in debtors 14,152 45,043
Increase in creditors 641,363 40,819
655,515 85,862
Net cash outflows from operating activities (727,125) (1,284,427)
Cash flows from investing activities
Deferred payment on Pyebridge paid - (555,535)
Intangible assets acquired - (338,988)
Property, plant and equipment acquired - (79,827)
Net cash outflows from investing activities - (974,350)
Cash flows from financing activities
Lease liability repaid 7 (39,292) (27,000)
Loans from related parties repaid 13 - (37,500)
Proceeds from convertible loan notes 14 85,800 650,000
Proceeds from director's loan 81,329 -
Proceeds from shareholder's loan 86,615 -
Warrants issued 380,741 -
Net cash flows financing activities 595,193 585,000
Net (decrease) / increase in cash and cash equivalents (131,932) (1,673,277)
Cash and cash equivalents at beginning of period 132,184 1,805,461
Cash and cash equivalents at end of the period 252 132,184
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Note 1: General information
MAST Energy Developments PLC ('MAST' or 'MED' or the 'Company') is
incorporated in England & Wales as a public limited company. The Company's
registered office is located at 55 Ludgate Hill, London, United Kingdom, EC4M
7JW.
The principal activity of MAST, through its subsidiaries (together the
'Group'), is to acquire and develop a portfolio of flexible power plants in
the UK and become a multi-asset operator in the rapidly growing Reserve Power
market.
Note 2: Statement of Preparation
The condensed consolidated financial statements are prepared on the historical
cost basis, unless otherwise stated. The Group's accounting policies used in
the preparation of these financial statements are consistent with those used
in the annual financial statements for the year ended 31 December 2020 of the
ultimate holding Company, except for the adoption of new or amended standards
applicable from 1 January 2021, which had no material impact on the financial
statements of the Group.
The condensed consolidated financial statements of the Company have been
prepared in compliance with the framework concepts and the measurement and
recognition requirements of IAS 34, IFRS as issued by the International
Accounting Standards Board.
The condensed consolidated financial statements of the Group is presented in
Pounds Sterling, which is the functional and presentation currency for the
Group and its related subsidiaries.
The condensed consolidated financial statements do not represent statutory
accounts within the meaning of section 435 of the Companies Act 2016.
The condensed consolidated financial statements have not been audited or
reviewed by the Group's auditors; thus, no assurance is provided therein.
The Directors acknowledge they are responsible for the fair presentation of
these condensed consolidated financial statements.
Note 3: Consolidation
The consolidated annual financial statements comprise the financial statements
of MAST Energy Developments PLC and its subsidiaries for the year ended 31
December 2023, over which the Company has control.
Control is achieved when the Company:
· has the power over the investee;
· is exposed, or has rights, to variable return from its involvement
with the investee; and
· has the ability to use its power to affect its returns.
In assessing control, potential voting rights that are currently exercisable
or convertible are taken into account. Subsidiaries are fully consolidated
from the date that control commences until the date that control ceases.
Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group. Intragroup balances
and any unrealised gains or losses or income or expenses arising from
intragroup transactions are eliminated in preparing the Group financial
statements, except to the extent they provide evidence of impairment.
The Group accounts for business combinations using the acquisition method of
accounting. The cost of the business combination is measured as the aggregate
of the fair values of assets given, liabilities incurred or assumed and equity
instruments issued. Costs directly attributable to the business combination
are expensed as incurred, except the costs to issue debt which are amortised
as part of the effective interest and costs to issue equity which are included
in equity.
The acquiree's identifiable assets, liabilities and contingent liabilities
which meet the recognition conditions of IFRS 3 Business Combinations are
recognised at their fair values at acquisition date.
Contingent liabilities are only included in the identifiable assets and
liabilities of the acquiree where there is a present obligation at acquisition
date.
Non-controlling interest arising from a business combination is measured
either at their share of the net asset value of the assets and liabilities of
the acquiree or at fair value. The treatment is not an accounting policy
choice but is selected for each individual business combination, and disclosed
in the note for business combinations.
Changes in the Group's interest in subsidiaries that do not result in a loss
of control are accounted for as equity transactions.
Note 4: Going concern
The financial results have been prepared on the going concern basis that
contemplates the continuity of normal business activities, the realisation of
assets and the settlement of liabilities in the normal course of business.
In performing the going concern assessment, the Board considered various
factors, including the availability of cash and cash equivalents, data
relating to working capital requirements for the foreseeable future, cashflows
from operational commencement, available information about the future, the
possible outcomes of planned events, changes in future conditions, the Ukraine
conflict, and the responses to such events and conditions that would be
available to the Board.
The Board has, inter alia, considered the following specific factors in
determining whether the Group is a going concern:
· The total comprehensive loss for the year of £3,539,394 compared to
£2,733,000 for the preceding 12 month-financial period;
· Cash and cash equivalents readily available to the Group in the
amount of £252 in order to pay its creditors and maturing liabilities in the
amount of £2,261,743 as and when they fall due and meet its operating costs
for the ensuing twelve months;
· Whether the Group has available cash resources, or equivalent short
term funding opportunities in the foreseeable future, to deploy in developing
and growing existing operations or invest in new opportunities;
· Post reporting period end, on 28 February 2024, the Company announced
a funding agreement with an initial funding facility up to £4,000,000 with
RiverFort Global Opportunities PCC Limited ('RiverFort") and a first drawdown
of £438,000 was advanced under the facility. Follow-on drawdowns are at
RiverFort's discretion and conditional on an agreed budget and restructuring
of the Company's liabilities.
The Directors have evaluated the Group's liquidity requirements to confirm
whether the Group has adequate cash resources to continue as a going concern
for the foreseeable future. Considering the net current liability position,
the Directors have reviewed two financial projections to 30 August 2025: a
base-case scenario based on the existing budget, and a severe but plausible
scenario, all of which include estimates and assumptions regarding the future
revenues and costs and timing of these. One base-case scenario includes
financial projections to include non-committed expenditure such as engine
overhauls or further development of the existing sites, the other scenario
excludes non-committed expenditure.
The base case cash flow forecast is forecasting a positive cash balance for
the full forecast period, based on the assumption that further drawdowns on
the GBP4m facility with RiverFort as disclosed in the RNS dated 28 February
2024 are available to the Company for drawdown as and when required. The
cashflow forecast is reliant on a successful drawdown on a current facility,
as well as successful electricity generation by Pyebridge. Unforeseen
challenges with either of the aforementioned cause a risk that the Company may
not be able to meet its current liabilities without another cash injection. In
the event that further funding cannot be secured, the Group may experience
continuous cash shortfalls over the next 18 months.
Under the severe but plausible scenario, the group experiences cash shortfall
throughout the forecast period starting in April 2024. The severe but
plausible cashflow projection does not provide for capital expenditure
required for significant improvements to the current sites and includes
reduced revenues from Pyebridge based on non-overhauled engines and the
guaranteed capacity market income. Thereby evaluating the impact if a further
drawdown is not successful. The directors are in negotiations with funders and
lenders to upgrade and/or develop the sites as per the business model of the
Company.
In response to the net current liability position and to address future
cashflow requirements, detailed liquidity improvement initiatives have been
identified and are being pursued, with their implementation regularly
monitored in order to ensure the Group is able to alleviate the liquidity
constraints in the foreseeable future. Cost saving measures were identified
and implemented on operational expenditure. Further, from April 2024 a
reduction in Directors' remuneration has been implemented.
The Group has identified the below options in order to address the liquidity
risk the Group faces on an ongoing basis. The ability of the Group to continue
as a going concern is dependent on the successful implementation or conclusion
of one or more of the below:
· The successful drawdown on the funding facility of £4,000,000 with
RiverFort. There are terms and conditions limiting the drawdown which has to
be adhered to.
· Raising of short- and medium-term working capital and project capex
funding, by way of capital placings.
· Successful conclusion of current funding opportunities of the Group
with strategic funders regarding the funding of specific projects and/or the
business.
· Obtaining debt funding or other funding instruments such as credit
loan notes to fund MED projects.
· Successful cash generation from the Pyebridge power-generation
facilities in order to achieve net-cash positive contributions toward the
larger Group;
· Successful subordination of the Kibo Mining (Cyprus) Limited loan,
resulting in the deferral of loans payable in the foreseeable future beyond a
12-month period after sign off of these financial statements.
Although there is no guarantee, the Directors have a reasonable expectation
that the Group will be able to raise further financing to support its ongoing
development and commercialisation activities and continue in operational
existence for the next 12 months, from date of sign off of these financial
statements. The directors have concluded that the combination of these
circumstances represents a material uncertainty that casts significant doubt
upon the Group's ability to continue as a going concern and that, therefore,
the Group may be unable to realise its assets and discharge its liabilities in
the normal course of business. As the Board is confident it would be able to
successfully implement the above responses, it has adopted the going concern
basis of accounting in preparing the consolidated financial statements.
Note 5: Segmental Reporting
The Group discloses segmental analysis based on its different operations,
being Bordersley, Rochdale . ADV 001 (Hindlip Lane), ARL 018 (Stather Road)
and Pyebridge
31 December 2023 ADV001 Hindlip Lane ARL018 Stather Road Bordersley Rochdale Pyebridge Treasury and Investment Group
(£) (£) (£) (£) (£) (£) (£)
Revenue - - - - 341,207 - 341,207
Cost of sales - - - - (223,838) - (223,838)
Administration and other expenses (14,032) (20,313) (37,736) (9,377) (46,424) (1,319,017) (1,447,169)
Impairment - (208,398) (1,649,206) - - - (1,857,604)
Project costs (38,434) (4,743) (27,972) (23,396) (173,631) - (296,176)
Other income - - - - 126,933 (86,558) 40,375
Depreciation - (2,509) (11,941) - (58,504) (1,589) (74,542)
Operating loss (52,736) (236,963) (1,726,855) (32,773) (34,257) (1,407,163) (3,490,747)
Total assets 9,163 117,215 392,155 91,134 2,020,584 28,702 2,601,549
Capital expenditure - - - - - - -
Total liabilities (25,979) (139,276) (389,225) (38,391) (174,537) (2,218,650) (2,986,058)
31 December 2022 ADV001 Hindlip Lane ARL018 Stather Road Bordersley Rochdale Pyebridge Treasury and Investment Group
(£) (£) (£) (£) (£) (£) (£)
Revenue - - - - 1,036,743 - 1,036,743
Cost of sales - - - - (778,802) - (778,802)
Administration and other expenses (22,617) (9,713) (58,663) (10,763) (177) (1,025,909) (1,127,842)
Impairment - - (1,288,578) - - - (1,288,578)
Project costs (988) (1,254) (222,296) (104,090) (255,601) (11,529) (595,758)
Depreciation - - (11,938) - (52,632) (751) (65,321)
Other income - - - - - (86,558) (86,558)
Loss before tax (23,605) (10,967) (1,581,475) (114,853) (50,469) (951,631) (2,733,000)
Total assets 265,170 210,907 1,733,554 262,043 2,082,352 63,488 4,617,505
Capital expenditure 57,962 - 17,099 - - 4,766 79,827
Total liabilities - (109,898) (296,984) (6,897) (133,650) (1,953,331) (2,500,761)
As the Group currently operates solely from the United Kingdom, consequently
there is no segmented disclosure with regard to different geographic areas of
operation.
Note 6: Loss per share
Basic loss per share
The basic loss and weighted average number of ordinary shares used for
calculation purposes comprise the following:
Basic loss per share 31 December 2023 (£) 31 December 2022 (£)
Loss for the period attributable to equity holders of the parent (3,539,394) (2,733,000)
Weighted average number of ordinary shares for the purposes of basic loss per 234,172,196 200,919,900
share
Basic loss per ordinary share (pence) (1.51) (1.36)
The Group has no dilutive instruments in issue as at year end.
Note 7: Property, plant and equipment
Group Land Plant & Machinery Right of use assets Computer Equipment Asset under construction Total
Cost (£) (£) (£) (£) (£) (£)
Opening Cost as at 1 January 2023 602,500 1,665,429 355,883 4,766 - 2,628,578
Change in lease - - 62,274 - - 62,274
Additions - - - - -
Disposals - - - - - -
Transfer between classes - (126,800) - - 126,800 -
Closing Cost as at 31 December 2023 602,500 1,538,629 418,157 4,766 126,800 2,690,852
Accumulated Depreciation ("Acc Depr") (£) (£) (£) (£) (£) (£)
Opening Acc Depr as at 1 January 2023 - (52,632) (22,358) (751) - (75,741)
Depreciation - (58,504) (14,449) (1,589) - (74,542)
Impairment - - (381,350) - (78,350) (459,700)
Acc Depr as at 31 December 2023 - (111,136) (418,157) (2,340) (78,350) (609,983)
Carrying Value (£) (£) (£) (£) (£) (£)
Carrying value as at 31 December 2023 602,500 1,427,493 - 2,426 48,450 2,080,869
Pyebridge Plant and Machinery was found to have differing useful lives based
on its underlying components, one being the generation set and the other the
balance of plant. The genset being at the end of its useful life, pending a
significant overhaul, will be held at its residual value and the remaining
plant depreciated over the remaining life of the project. This change in
estimate resulted in a reduction of £4,656 depreciation for the year and will
remain until such time as the planned overhaul is completed.
Right of use asset 31 December 2023(£) 31 December 2022(£)
Group Group
Set out below are the carrying amounts of right-of-use assets recognised and
the movements during the period:
Opening balance 33,525 284,000
Additions - 62,090
Change in lease 62,274 -
Impairment (381,350) -
Depreciation (14,449) (12,565)
Closing balance - 333,525
Lease liability
Set out below are the carrying amounts of lease liabilities and the movements
during the period:
Opening balance 350,654 291,518
Additions - 60,005
Interest 35,959 26,131
Change in lease 62,274 -
Repayment (39,292) (27,000)
Closing balance 409,595 350,654
Split of lease liability between current and non-current portions:
Non-current 405,930 346,674
Current 4,205 3,980
Total 405,595 350,654
Future minimum lease payments fall due as follows
- within 1 year 39,826 33,960
- later than 1 year but within 5 years 159,304 135,840
- later than 5 years 851,812 756,720
Subtotal 1,050,942 926,520
- Unearned future finance charges (641,347) (575,866)
Closing balance 409,595 350,654
The Group has two lease contracts for land it shall utilise to construct
gas-fuelled power generation plants. The land is located at Bordesley,
Liverpool St. Birmingham and Stather Road, Flixborough.
The lease of the land has a lease term of 20 years, with an option to extend
for 10 years which the Group has opted to include due to the highly likely
nature of extension as at the time of the original assessment.
The Group's obligations under its leases are secured by the lessor's title to
the leased assets. The Group's incremental borrowing ranges between 8.44% and
10.38%.
Note 8: Intangible assets
Intangible assets consist of separately identifiable assets, property rights
or intellectual property (Bordersley Power) acquired either through business
combinations or through separate asset acquisitions. These intangible assets
are recognised at the respective fair values of the underlying asset acquired,
or where the fair value of the underlying asset acquired is not readily
available, the fair value of the consideration.
The following reconciliation serves to summarise the composition of intangible
assets as at period end:
Group Rochdale Power (£) Bordersley Power (£) ARL018 Stather Road (£) ADV001 Hindlip Lane (£) Total (£)
Carrying value as at 1 January 2022 150,273 2,595,000 - - 2,745,273
Acquisition of ARL018 Stather Road - - 91,482 - 91,482
Acquisition of ADV001 Hindlip Lane - - - 247,506 247,506
Impairments - (1,288,578) - - (1,288,578)
Carrying value as at 31 December 2022 150,273 1,306,422 91,482 247,506 1,795,683
Impairments - (1,306,422) (91,482) - (1,397,904)
Carrying value as at 31 December 2023 150,273 - - 247,506 397,779
Note 9: Acquisition of interests in other entities
ADV 001 Ltd - 2022
Sloane Developments (Sloane) acquired a 100% interest in ADV 001 Limited
("Hindlip Lane"), from DKE Flexible Energy Limited, for the installation of a
7.5 MW gas-peaker plant in Buildings Farm, Hindlip Lane, Hindlip, Worcester,
WR3 8SB.
The acquisition purchase price totals £262,500 of which £88,817 is utilised
to settle a shareholder's loan of the same amount and the remainder of
£173,683 is allocated towards purchasing all issued shares of the business.
The acquisition purchase price is to be paid from a credit loan obtained from
Riverfort Global Opportunities PCC Limited and Sanderson Capital Partners
Limited. A further £10,694was paid in cash by Mast Energy Developments Plc
("MED") of which £8,020 is allocated to the purchase price of Hindlip Lane.
The acquisition of land and gas-powered generation facility will be accounted
for as assets purchased at consolidated level, and not as a business
combination in accordance with IFRS 3. Therefore, the purchase price has been
allocated to the property, plant and equipment and intangible assets, as
disclosed in Note 10 and Note 11 respectively.
ARL 018 Ltd - 2022
Sloane Developments (Sloane) acquired a 100% interest in ARL 015 Limited
("Stather Road"), from DKE Flexible Energy Limited, for the installation of a
2.4 MW gas-peaker plant on Land lying on the south side of Stather Road,
Flixborough.
The acquisition purchase price totals £87,500 of which £54,882is utilised to
settle a shareholder's loan of the same amount and the remainder of £32,618
is allocated towards purchasing all issued shares of the business. The
acquisition purchase price is to be paid from a credit loan obtained from
Riverfort Global Opportunities PCC Limited and Sanderson Capital Partners
Limited. A further £10,694 was paid in cash by Mast Energy Developments Plc
("MED") of which £2,673 is allocated to the purchase price of Stather Road.
The acquisition of land and gas-powered generation facility will be accounted
for as assets purchased at consolidated level, and not as a business
combination in accordance with IFRS 3. Therefore, the purchase price has been
allocated to the property, plant and equipment and intangible assets, as
disclosed in Note 10 and Note 11 respectively.
Sloane Energy Limited - 2023
During 2023, Sloane Developments (Sloane) founded and acquired 100% equity
interest in Sloane Energy Limited. At the reporting date the company was
dormant.
Note 10: Share Capital
The called-up and fully paid share capital of the Company is as follows:
2023 2022
Allotted, issued and fully paid shares £263,854 -
(2023: 263,854,067 Ordinary shares of £0.001 each) - £217,453
(2022: 217,452,729 Ordinary shares of £0.001 each)
£263,854 £217,453
Number of Shares Ordinary Share Capital Share Premium
(£)
(£)
Balance at 31 December 2022 217,452,729 217,453 12,653,607
Institutional lender loan repaid in shares 14,754,914 14,755 92,317
Loan with holding company settled in shares 31,646,424 31,646 437,353
Balance at 31 December 2022 263,854,067 263,854 13,183,277
All ordinary shares issued have the right to vote, right to receive dividends,
a copy of the annual report, and the right to transfer ownership of their
shares.
During the year the Company issued shares in partial settlement of
shareholders loan in the amount of £576,071 (2022: £1,000,000).
Furthermore, the Company borrowed £81,329 from a director Mr PF Venter in
December 2023. The terms of the loan state that the loan is to be settled in
shares by the longstop date of 14 December 2024. A share reserve was created
for the pending share issue.
Note 11: Reserves
Common control reserve
The common control reserve is the result of the capital reorganisation between
the company, its holding and ultimate holding company during the 2020
financial year. As the reorganisation was outside the scope of IFRS 3,
predecessor valuation accounting was applied as a result of the common control
transaction.
Non-controlling interest acquired
On 31 July 2020, Sloane Developments Limited, MAST Energy Projects Limited and
St. Anderton on Vaal Limited entered into the Share Exchange Agreement
relating to the acquisition by Sloane Developments Limited of the remaining
40% of the issued share capital of MAST Energy Projects Limited. Under the
Share Exchange Agreement, the Company paid St Anderton on Vaal Limited the sum
of £4,065,586 payable by the issue of 36,917,076 ordinary shares of £0.001
each in the Company. Completion of the Share Exchange Agreement was subject to
and conditional upon the Admission of Mast Energy Developments Limited to the
London Stock Exchange.
Following the completion of the IPO on 14 April 2021, the Group acquired the
remaining equity interest in MAST Energy Projects Ltd for the consideration
equal to 36,917,076 shares at a total value of £4,065,586. As the controlling
stake in the entity had already been acquired and was under control of MED,
the transaction was seen as a transaction with owners, and the financial
impact recognised directly in equity of £4,065,586.
The rationale for the transaction was to acquire the remaining equity within
MAST Energy Projects Limited in order to have the exclusive see-through equity
interest in the Borderley project, held in the form of royalty and revenue
agreements between MAST Energy Projects Limited and Bordersley Power Limited,
from which MED could restructure the Group through its SPV's.
Note 12: Warrants
The following reconciliation serves to summarise the value attributable to the
share-based payment reserve as at period end for the Company:
Group and Company (£)
2023 2022
Opening balance of warrant reserve - -
Issue of warrants 380,741 -
380,741 -
The following reconciliation serves to summarise the quantity of warrants in
issue as at period end:
Group and Company (£)
2023 2022
Opening balance - -
New warrants issued 86,814,562 -
86,814,562 -
The weighted average fair value of the warrants are 0.44p per option (2022:
Nil)
At 31 December 2023 the Group had 86,814,562 warrants outstanding:
Warrants
Date of Grant Issue date Expiry date Exercise price Number granted Exercisable as at 31 December 2023
18 May 2023 18 May 2023 18 May 2026 2p 2,255,656 2,255,656
18 May 2023 18 May 2023 18 May 2026 2p 2,255,656 2,255,656
18 May 2023 18 May 2023 18 May 2027 0.89p 20,575,813 20,575,813
18 May 2023 18 May 2023 18 May 2027 1.8p 20,575,813 20,575,813
18 May 2023 18 May 2023 18 May 2027 0.89p 20,575,812 20,575,812
18 May 2023 18 May 2023 18 May 2027 1.8p 20,575,812 20,575,812
86,814,562 86,814,562
Total contingently issuable shares 86,814,562 86,814,562
Note 13: Loan from related parties
Group 2023 (£) Group 2022 (£)
Amounts falling due within one year:
Kibo Mining (Cyprus) Limited 849,253 1,231,535
849,253 1,231,535
The loan is unsecured, carries interest at 0%, and is repayable on demand. The
carrying value of loans from related parties equals their fair value due
mainly to the short-term nature of the liability.
Note 14: Other financial and derivative liabilities
Description Group 2023(£) Group 2022 (£) Company 2023 (£) Company 2022 (£)
Amounts falling due within one year:
Convertible loan notes 444,100 354,805 444,100 354,804
CLN Derivative liability 22,232 20,386 22,232 20,386
Accrued interest on director's loan 265 - 265 -
Amounts falling due between one year and five years:
Convertible loan notes 318,925 243,056 318,925 243,056
785,522 618,247 785,522 618,247
Convertible loan notes
Convertible loan notes consist of a facility from institutional lenders which
reprofiled the outstanding convertible loan notes held during the previous
financial year. The interest accrues at 9.5% to 10% per annum based on the
terms applied for each advance of the facility. The convertible loan notes
have embedded derivative liabilities which were recognised at fair value.
Accrued interest on director's loan
The director's loan consists of interest payable on a director's loan which is
to be settled in shares (refer note 15). The interest is accrued at 7% per
annum.
Note 15: Related Parties
Related parties of the Group comprise subsidiaries, significant shareholders
and the Directors.
Relationships
Board of Directors/ Key Management
Name Relationship (Directors of:)
Paul Venter PSCD Power 1 Ltd
Louis Coetzee Kibo Energy PLC and Katoro Gold PLC
Dominic Traynor Druces LLP
Pieter Krügel Chief Executive Officer
Noe; O'Keeffe Director of subsidiaries ADV001 Ltd, ARL018 Ltd and Sloane Energy Limited
Other entities over which Directors/key management or their close family have
control or significant influence:
PSCD Power 1 Ltd: The Director of PSCD Power 1 Ltd is also a Director of Mast Energy
Developments PLC.
Kibo Mining (Cyprus) Limited: Kibo Mining (Cyprus) Limited is the controlling shareholder of Mast Energy
Developments PLC.
Ultimate shareholder Kibo Energy PLC
Significant shareholders: PSCD Power 1 Ltd
Associated by fellow directorship: Katoro Gold PLC
Kibo Mining (Cyprus) Limited
MAST Energy Developments PLC is a shareholder of the following companies and
as such are considered related parties:
Directly held subsidiaries: Sloane Developments Limited
MAST Energy Projects Limited (dissolved on 24 May 2022)
Bordersley Power Limited
Pyebridge Power Limited
Rochdale Power Limited
ADV 001 Limited
ARL 018 LImited
Balances
Name Amount (£) Amount (£)
2023 2022
Kibo Mining (Cyprus) Limited - Loan from related parties owing 849,253 1,231,535
Paul Venter - Director's loan owing (share reserve) 81,329 -
Paul Venter - Director's loan owing accrued interest 265 -
Kibo Energy PLC - Management and administration services accrued 32,130 -
Katoro Gold PLC - Receivable for management services paid on Katoro's behalf 21,140 -
Paul Venter - Director's remuneration due 18,371 -
Louis Coetzee - Director's remuneration due 27,000 -
Dominic Traynor- Director's remuneration due 17,644 -
Pieter Krügel - Director's remuneration due 49,844 -
Noel O'Keeffe - Professional services remuneration due 9,000 -
Druces LLP - Supplier balance for professional services 143,732 -
Transactions
Name Amount (£)
2023
Kibo Mining (Cyprus) Limited - loan repayment in shares 469,000
Kibo Mining (Cyprus) Limited - increase in loan 86,615
Paul Venter - loan received from director 81,329
Kibo Mining (Cyprus) Limited - management and admin services 30,892
Katoro Gold PLC - management and admin services 21,140
Noel O'Keeffe - professional services 36,000
Druces LLP - professional services rendered 143,732
Kibo Mining (Cyprus) Limited was issued shares in exchange for partial
settlement of £468,999 (2022: £1,000,000) of its loan with the MED Group.
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation. The transactions during the
period between the Company and its subsidiaries included the settlement of
expenditure to/from subsidiaries, working capital funding, and settlement of
the Company's liabilities through the issue of equity in subsidiaries. The
loans from related parties do not have fixed repayment terms and are
unsecured.
Note 16: Subsequent events
New Strategic Funding Partner & Funding Agreement
The company has signed a funding agreement ("Funding Agreement") with an
initial funding facility up to £4,000,000 with RiverFort Global Opportunities
PCC Limited ('RiverFort"). The Funding Agreement was arranged by Fortified
Securities and will see RiverFort joining MED as its strategic funding partner
to provide and facilitate funding to develop and construct MED's existing c.
30 MW portfolio of assets and new acquisitions to achieve MED's strategic goal
of building an enlarged 300 MW portfolio of flexible power assets.
New Capacity Market Contracts
MED applied for and was successful in pre-qualification to bid for new CM
contracts for its Pyebridge Site, in addition to the Site's existing CM
contracts (see RNS dated 27 February 2023), being a T-1 CM contract and a T-4
CM contract. Following the preparation of a robust CM Auction bid strategy,
MED is pleased to announce that pursuant to the recent Capacity Market
Auctions and subsequent results, its T-1 bid cleared at £35.79/kW/annum,
which equates to an additional c. £183k of income to the Site, and its T-4
bid cleared at £65/kW/annum, which equates to an additional c. £322k of
income to the Site. The Site's existing and new CM contracts are all fixed
one-year contracts. The plan and intention is to apply for the maximum 15-year
term and capacity T-4 CM contract in due course once the Site's planned
overhaul work programme as referred to above has been completed, which is
expected to provide further enhanced and longer term guaranteed income to the
Site.
Termination of Proventure JVA
During the financial year the JVA with Proventure was terminated due to
non-performance by the counterparty. MED retains its right to pursue legal
action as a result thereof. The directors are currently considering its
options in this regard.
Pyebridge and Hindlip Update
The group has successfully completed the initial work programme ahead of
schedule at its Pyebridge 9 MW flexible power generation asset ("Pyebridge"),
with the site now officially back into operation.
Resultingly, MED was able to schedule and perform the minimum 3x separate
generation runs ahead of schedule to meet its Satisfactory Performance Days
("SPD") requirements that are due by the end of April 2024 under its existing
T-1 Capacity Market contract (the "CM Contract"). It is expected that
Pyebridge will pass its next SPD test, and retain the CM Contract's associated
annual gross profit margin income of c. £308,000 which is paid and received
monthly in arrears.
Furthermore, initial pre-construction work completed at MED's 7.5 MW Hindlip
Lane flexible power generation project ("Hindlip"), and Certificate of Lawful
Commencement granted.
Note 17: Commitments and contingencies
The Group does not have identifiable material commitments and contingencies as
at the reporting date.
Note 18: Principal risks
The realisation of the various projects is dependent on the successful
completion of technical assessments, project development and project
implementation and is subject to a number of significant potential risks
summarised as follows, and described further below:
• Funding risk;
• Regulatory risk;
• Commodity risk;
• Development and construction risk;
• Staffing and key personnel risk; and
• Information technology risk.
Funding risk
Following the successful conclusion of an Initial Public Offering ('IPO') on
14 April 2021, the Group was able to raise £5.54 million in cash, which was
utilised to further advance the various projects of the Group to date. During
2022, the Group raised a further £650 000 for acquisitions and general
working capital purposes and availed of a further £100,000 during 2023 under
the reprofiled loan with institutional investors agreed in May 2023.
There can be no assurance that such funds will continue to be available on
reasonable terms, or at all in future, and that projects will be completed
within the anticipated timeframes to supplement cashflows through operational
activities. This risk was realised to a significant extent during 2023 where
anticipated funding from the Seira and subsequently, Proventure joint venture
agreements, did not materialise and has delayed the Company's anticipated
timeframes for project completion.
The Group generated revenue of £341,207 for the period ended 31 December 2023
and had net a liability position of £384 509 as at 31 December 2023 (31
December 2022: net assets of £2,116,744)). As at year end, the Group had
liquid assets in the form of cash and cash equivalent and other receivables of
£252 and £122,649 (year to 31 December 2022: £268,985), respectively.
The Directors have reviewed budgets, projected cash flows and other relevant
information, and based on this review and the rationale set out below, they
are confident that the Group will have adequate financial resources to
continue in operational existence for the foreseeable future.
The budgets and projected cash flows is reliant on a successful drawdown on a
current facility, as well as bringing Pyebridge back into production no later
than 30 April 2024 and successful electricity generation thereafter.
Unforeseen challenges with either of the aforementioned cause a risk that the
Company may not be able to meet its current liabilities without another cash
injection. The directors have concluded that the combination of these
circumstances represents a material uncertainty that casts significant doubt
upon the Group's ability to continue as a going concern and that, therefore,
the Group may be unable to realise its assets and discharge its liabilities in
the normal course of business.
The Directors continue to review the Group's options to secure additional
funding for its general working capital requirements as well as project
financing for commercial production-ready sites, alongside its ongoing review
of anticipated revenue generation from existing sites, potential acquisition
targets and corporate development needs. The Directors are confident that such
funding will be available, although there is no guarantee of such funding. In
addition, any equity funding may be subject to shareholder approvals and in
line with legal and regulatory requirements as appropriate.
As a result, the Directors continue to monitor and manage the Group's cash and
overheads carefully in the best interests of its shareholders and believe that
the Company and the Group and by successfully implementing the above responses
it will remain a going concern for the foreseeable future.
Regulatory risk
The United Kingdom power sector has undergone several considerable regulatory
changes over the last few years and is now at a state of transition from large
fossil-fuel plants to a more diverse range of power-generation sources,
including renewables, small, distributed plants and new nuclear. As a result,
there is greater regulatory involvement in the structure of the UK power
market than has been the case over the last 20 years. Therefore, there remains
a risk that future interventions by Ofgem or Government could have an adverse
impact on the underlying assets that the Group manages and/or owns. The
Company continually monitors this risk and, where possible, acts proactively
to anticipate and mitigate any regulatory changes that may have an adverse
impact on the ongoing financial viability of its projects. In order to monitor
compliance with evolving UK government energy regulations, the Company
subscribes to relevant environmental and energy regulation bodies updates
which management reviews and makes recommendations to the Board in terms of
mitigation that may be required should it become aware of any pending
regulatory changes that may threaten the economic viability of its projects.
Commodity Risk
The assets that the Group manages and owns will receive revenue from the sale
of energy onto the wholesale market or to end users at a price linked to the
wholesale power market price. Fluctuations in power prices going forward will
affect the profitability of the underlying reserve power assets. For example,
the significant reduction in wholesale electricity prices from 2022 to 2023
resulted in lower electricity prices received from sales at Pyebridge during
the period that it was in operation during 2023. The Group will also use its
skills, capabilities and knowledge of the UK power market in order to optimise
these wholesale revenues. The Group's ability to effectively manage price risk
and maximise profitability through trading and risk management techniques with
the assistance of its electricity off-taker and trading platform provider,
Statkraft, will have a considerable impact on the revenues and returns.
Development and Construction Risk
The Group will continue to develop new project sites that includes obtaining
planning permission, securing land (under option to lease or freehold), and
obtaining gas and grid connections. The Group will also oversee the
construction of these projects where needed.
Risks to project delivery include damage or disruption to suppliers or to
relevant manufacturing or distribution capabilities due to weather, natural
disaster, fire, pandemic, strikes or other reasons that could impair the
Company's ability to deliver projects on time.
Failure to take adequate steps to mitigate the likelihood or potential impact
of development and construction setbacks, or to effectively manage such events
if they occur, could adversely affect the business or financial results. There
are inherent risks that the Group may not ultimately be successful in
achieving the full development and construction of every site and sunk costs
could be lost. However, the risk is mitigated as the Group targets
shovel-ready sites that adhere to specific requirements, coupled with an
experienced senior management team.
Staffing and Key Personnel Risks
Personnel are our only truly sustainable source of competitive advantage and
competition for key skills is intense, especially around science, technology,
engineering and mathematics ('STEM') disciplines. While the Group has good
relations with its employees, these relations may be impacted by various
factors. The Group may not be successful in attracting, retaining, developing,
engaging and inspiring the right people with the right skills to achieve our
growth ambitions, which is why staff are encouraged to discuss with management
matters of interest and subjects affecting day-to-day operations of the Group.
Information Technology Risks
The Group relies on information technology ('IT') in all aspects of its
business. Any significant disruption or failure, caused by external factors,
denial of service, computer viruses or human error could result in a service
interruption, accident or misappropriation of confidential information.
Process failure, security breach or other operational difficulties may also
lead to revenue loss or increased costs, fines, penalties or additional
insurance requirements. The Group continues to implement more cloud-based
systems and processes and improve cyber security protocols and facilities in
order to mitigate the risk of data loss or business interruption.
Note 18: Use of Estimates and Judgements
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to
be reasonable under the circumstances, the results of which form the basis of
making judgements about carrying values of assets and liabilities that are not
readily apparent from other sources.
In particular, there are significant areas of estimation, uncertainty and
critical judgements in applying accounting policies that have the most
significant effect on the amounts recognised in the financial statements.
Estimation uncertainty:
Information about estimates and assumptions that may have the most significant
effect on recognition and measurement on assets, liabilities and expenses is
provided below:
Impairment assessment of property plant and equipment and intangible assets
In applying IAS 36, impairment assessments are performed whenever events or
changes in circumstances indicate that the carrying amount of an asset or CGU
may not be recoverable. Estimates are made in determining the recoverable
amount of assets which includes the estimation of cash flows and discount
rates used. In estimating the cash flows, management bases cash flow
projections on reasonable and supportable assumptions that represent
management's best estimate of the range of economic conditions that will exist
over the remaining useful life of the assets. The discount rates used reflect
the current market assessment of the time value of money and the risks
specific to the assets for which the future cash flow estimates have not been
adjusted. Refer to Note 11 of the annual report for detailed sensitivity
analysis related to a potential change in the key estimation uncertainties
inherent in the impairment assessment.
Useful life of Intangible assets
Amortisation is charged on a systematic basis over the estimated useful lives
of the assets after taking into account the estimated residual values of the
assets. Useful life is either the period of time over which the asset is
expected to be used or the number of production or similar units expected to
be obtained from the use of the asset.
Leases - Estimating the incremental borrowing rate
The Group cannot readily determine the interest rate implicit in the lease,
therefore, it uses its incremental borrowing rate (IBR) to measure lease
liabilities. The IBR is the rate of interest that the Group would have to pay
to borrow over a similar term, and with a similar security, the funds
necessary to obtain an asset of a similar value to the right-of-use asset in a
similar economic environment. The IBR therefore reflects what the Group 'would
have to pay', which requires estimation when no observable rates are available
or when they need to be adjusted to reflect the terms and conditions of the
lease. The Group estimates the IBR using observable inputs (such as market
interest rates) when available and is required to make certain entity-specific
estimates.
Useful life of Property, plant and Equipment
The depreciable amounts of assets are allocated on a systematic basis over
their useful lives. In determining the depreciable amount, management makes
assumptions in respect of the residual value of assets based on the expected
estimated amount that the entity would currently obtain from disposing the
asset, after deducting the estimated costs of disposal. If an asset is
expected to be abandoned, the residual value is estimated at nil. In
determining the useful lives of assets, management considers the expected
period of use of assets, expected physical wear and tear, legal or similar
limits of assets such as rights, condition and location of the asset as well
as obsolescence.
Decommissioning and Environmental Rehabilitation Provisions
The Company has set-up a decommissioning provision for the removal of the
plant and equipment installed at the Bordersley Site in Liverpool St.
Birmingham., the cost of which is based on estimates.
Environmental Rehabilitation Provisions
Estimates are made in determining the present liability of environmental
rehabilitation provisions consisting of a restoration provision,
decommissioning provision and a residual impact provision. Each of these
provisions are based on an estimate of closure costs on reporting date,
inflation and discount rates relevant to the calculation and the expected date
of closure of operating activities in determining the present value of the
total environmental rehabilitation liability.
Critical judgements:
Information about critical judgements that may have the most significant
effect on recognition and measurement on assets, liabilities and expenses is
provided below:
Going Concern
The Groups current liabilities exceed its current assets as at 31 December
2023, mainly due to the loans from related parties in the amount of £849,253
(31 December 2022: £1,231,535) which contributes significantly to the
material uncertainty related to the going concern assumption applied in
preparation of the financial statements. Management applies judgement in
determining whether or not the Group is able to continue as a going concern
for the foreseeable future, in identifying the matters which give rise to the
existence of the material uncertainty, and in developing responses thereto in
order to address the risk of material uncertainty. Also refer to note 4.
Note 19: Financial instruments - Fair value and Risk Management
The carrying amount of all financial assets and liabilities approximates the
fair value. Directors consider the carrying value of financial instruments of
a short-term nature, that mature in 12 months or less, to approximate the fair
value of such assets or liability classes.
The carrying values of longer-term assets are considered to approximate their
fair value as these instruments bear interest at interest rates appropriate to
the risk profile of the asset or liability class.
The Group does carries derivative liabilities measured in the statement of
financial position at fair value at 31 December 2023.
_________________________
**ENDS**
For further information please visit www.kibo.energy (http://www.kibo.energy/)
or contact:
Louis Coetzee info@kibo.energy (mailto:info@kibo.energy) Kibo Energy PLC Chief Executive Officer
James Biddle +44 207 628 3396 Beaumont Cornish Limited Nominated Adviser
Roland Cornish
Claire Noyce +44 20 3764 2341 Hybridan LLP Joint Broker
Damon Heath +44 207 186 9952 Shard Capital Partners LLP Joint Broker
Beaumont Cornish Limited ('Beaumont Cornish') is the Company's Nominated
Adviser and is authorised and regulated by the FCA. Beaumont Cornish's
responsibilities as the Company's Nominated Adviser, including a
responsibility to advise and guide the Company on its responsibilities under
the AIM Rules for Companies and AIM Rules for Nominated Advisers, are owed
solely to the London Stock Exchange. Beaumont Cornish is not acting for and
will not be responsible to any other persons for providing protections
afforded to customers of Beaumont Cornish nor for advising them in relation to
the proposed arrangements described in this announcement or any matter
referred to in it.
Johannesburg
30 April 2024
Corporate and Designated Adviser
River Group
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