REG - Mast Energy Dvlpmts. - Annual Financial Report
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RNS Number : 7164G Mast Energy Developments PLC 30 April 2025
Mast Energy Developments PLC
(Incorporated in England and Wales)
(Registration Number: 12886458)
Share code on the LSE: MAST
ISIN: GB00BMBSCV12
("MED" or "the Company")
Audited results for the year ended 31 December 2024
Dated 30 April 2025
MAST Energy Developments PLC ('MED' or the 'Company'), is pleased to announce
its audited results for the year ended 31 December 2024. A condensed set of
financial statements accompanies this announcement below while the Company's
full Annual Report and Financial Statements (Audited Annual Report and
Accounts for the year ended 31 December 2024) 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
· Revenue increased 77% year-on-year, which were predominantly earned
from July 2024 during the last 6 months of the year, as a result of the
comprehensive refurbishment programme started at the Pyebridge site earlier in
2024 in partnership with RiverFort Global Opportunities PCC Limited
("RiverFort"), and the successful completion of the overhaul of two engines at
the Pyebridge site.
· Loss per share improved significantly with 78% from 1.51 pence in
2023 to 0.32 pence in 2024.
· The comprehensive refurbishment programme at Pyebridge included the
overhaul of two engines at the Pyebridge site and other technical upgrades.
The overhauled engines achieved full commercial operation in July 2024 and
December 2024 respectively and are operating at optimum efficiency, providing
a combined 5.4MW of power generation capacity.
· Company successfully secured alternative funding under a loan
facility for up to £4m with RiverFort further to an agreement with MED
subsidiary Pyebridge Power Ltd ("Pyebridge") on 28 February 2024. This loan
facility on which the Company made three gross drawdowns during 2024 totalling
£2,769,297 enabled the comprehensive refurbishment at Pyebridge.
Subsequently, repayments to the value of £529,969 were made up to year-end,
and cumulative repayments to date totals £637,969.
· MED's Pyebridge site has secured uninterrupted Capacity Market
contracts to ensure minimum gross profit margin income totalling
c. £1,7m until 2029, in addition to its trading revenue generation via its
PPA with Statkraft.
· MED entered into a long-term Growth Capital Partnership with a
long-established and successful UK flexible power developer and operator,
Powertree (Holdings) Ltd ("Powertree"). As part of this Partnership, Powertree
and ADV 001 Limited (MED's special purpose vehicle ("SPV") holding the Hindlip
Project), signed a comprehensive investment agreement for the construction of
Hindlip to provide capital funding for Hindlip up to £5m, resulting in the
Hindlip site being fully funded with no further funding obligation from MED.
· Following a successful turnaround during 2024, and with the ongoing
support of its two new funding partners, RiverFort and Powertree, MED is now
well positioned to grow its portfolio of MWs in production at some pace to
achieve its target of 300+.
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
Guy Wheatley, CFA +44 (0)74 9398 9014 Fortified Securities Corporate Broker
DIRECTORS, OFFICERS AND PROFESSIONAL ADVISERS
BOARD OF DIRECTORS: Paul Venter (Non-Executive Chairman)
Pieter Krügel (Chief Executive Officer)
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 57 Berkeley Square
London
W1J 6ER
Fortified Securities
9 Dalton House
60 Windsor Avenue
London
SW19 2RR
REGISTRAR: MUFG Corporate Markets
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 2024.
The past year has seen the Company turn a corner in pursuing its business
strategy to expand its operations in the flexible power generation market in
the United Kingdom following some set-backs in 2023 beyond its expectation or
control, which saw the Company terminate the joint venture agreements with two
investors because of failure of said investors to fulfil their contractual
obligations. In early 2024, the Company successfully secured alternative
funding under a loan facility for up to £4m with institutional investor,
RiverFort Global Opportunities PCC Limited ("RiverFort") further to an
agreement signed with MED subsidiary Pyebridge Power Ltd ("Pyebridge") on 28
February 2024. This loan facility on which the Company made three gross
drawdowns during 2024 totalling £2,769,297 enabled the Company to pursue a
comprehensive refurbishment programme and successful completion of the
overhaul of two of the engines at our Pyebridge flexible power generation
site. The Company repaid the Pyebridge loan facility owing to RiverFort to the
value of £529,969 during the year, resulting in a net balance owing at
year-end amounting to £2,239,328. The results of the positive progress at
Pyebridge can clearly be seen from the Company's regular RNS announcements
throughout 2024 to date. Most notably, they report significantly improved
operating performance and enhanced revenue generation at Pyebridge. Pyebridge
also benefited from extended periods of low winds during the last quarter of
2024 which sent UK power prices to a multi-year high, with the intraday price
for electricity surging to c. £600 per MWh during December 2024.
Following successful pre-qualification for additional Capacity Market ("CM")
T-1 and T-4 contracts during the assessment window in August 2024, and the
implementation of a robust CM auction bid strategy, for the first time
Pyebridge has now successfully secured both contracts at its maximum
generation capacity permissible under the CM rules. The recent CM T-4 auction
cleared at £60,000 per MW/year, and the CM T-1 auction cleared at £20,000
per MW/year. This means that Pyebridge now has uninterrupted CM contracts
until 2029 with a cumulative total guaranteed gross profit income value of c.
£1.73m, over and above its trading income through the Statkraft Power
Purchase Agreement ("PPA") and Embedded Benefits.
Since the signing of the loan facility with RiverFort in February 2024, I am
glad to report that our relationship has deepened and broadened over 2024
culminating in the signing of a Project Finance Framework Agreement in
November 2024 providing for RiverFort to support MED to procure and secure
project finance funding in order to grow its portfolio of in production to
300+ MW's, and further provide MED with certain financial advisory support
services. Commensurate with the signing of the Project Finance Framework
Agreement, we also announced the sale of our greenfield Rochdale Project at a
premium to the initial acquisition cost. This sale was in line with our
refocused strategy to acquire existing constructed or advanced sites which
have a lower total investment cost and shorter time to production and income
generation than earlier stage development sites. The sale also provided
additional cashflow to the Company to expedite its refocused acquisition
strategy and for general working capital purposes.
In addition to the Rochdale sale, we have continued to examine how we can best
achieve value from our remaining three early construction and development
sites, Bordesley, Hindlip and Stather while acquiring additional more advanced
projects in line with our refocused strategy as mentioned above. In this
regard, I am pleased to reflect on MED's new Growth Capital Partnership with
long-established and successful UK flexible power developer and operator,
Powertree (Holdings) Ltd ("Powertree"), to form a long-term partnership with
MED and deploy capital into the portfolio of development flexible power
generation projects that MED owns or acquires, starting with Hindlip. As
part of this Growth Capital Partnership, Powertree and ADV 0001 Limited (MED's
SPV holding the Hindlip Project), signed an interim finance facility agreement
for an initial advance of up to £70,000 of which MED availed of the full
amount to cover some of Hindlip site's on-going development costs. Subsequent
to the signing of the finance facility MED has now entered a comprehensive
investment agreement with Powertree for the construction of Hindlip under the
terms of the Growth Capital Partnership. This comprises an investment
agreement and a revision of the existing finance facility to provide capital
funding for Hindlip up to £5m, resulting in the Hindlip site being fully
funded with no further funding obligation from MED. The Growth Capital
Partnership, which we expect will be extended to MED's other development and
pipeline projects should assist with accelerating the timeframe to our
objective to reach a 300+ MW portfolio acquiring, developing and operating
multiple small-scale flexible power generation plants across the UK. In terms
of pipeline projects, MED and its partners continue to identify potential
acquisition opportunities with the objective to grow MED's portfolio of MWs in
production at some pace.
With regard to corporate matters, following MED's successful agreement on the
reprofiling of the outstanding balances on MED's two existing loan facilities
held with RiverFort in May 2023, the Company paid down £325,000 on the
outstanding balance in May 2024 via a director loan purchase agreement and a
placing, and also secured funding of £325,000 via a new non-convertible fixed
term loan with RiverFort. The placing, which was facilitated by the company's
broker, Novum Securities, was at a price of 0.20p per share resulting in the
issue of an additional 162,500,000 shares during 2024. I am also pleased to
welcome Fortified Securities who were appointed in November 2024 as an
additional corporate broker. Together with Novum Securities. I am confident
that they will greatly assist the Company with its future funding
requirements. Towards the end of 2024 we also saw Louis Coetzee and Dominic
Traynor step-down and retire as directors of MED to pursue other business
interests, and I would like to thank them for their significant contributions
to the development of the Company while they served as directors.
I would like to extend a special word of thanks and appreciation on behalf of
the Company and its board of directors to RiverFort, which was instrumental in
ensuring MED's successful business turnaround during 2024 and continues to
provide significant support to the Group.
As I write, changes in the global geopolitical environment are rapid, with the
threat of a global tariff war on the horizon as well as uncertainty on the
outcomes of conflicts in Ukraine and the Middle East and their impact on UK
and European energy markets. When added to the impact of the evolving UK
Government response to climate change and changes to the regulatory
environment, I believe we have to be prepared for volatility in energy markets
and prices for the foreseeable future. However, MED remains confident and
optimistic that our business strategy and new partner relationships will
enable the Group to deliver positive results from a growing 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 which has seen
significant positive progress during 2024 following the challenging events the
Company faced during 2023, and I look forward to supporting them as we build
towards our target of 300+ MWs of flexible power generation available to the
UK energy market.
This report was approved on 29 April 2025 by:
Paul Venter
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 2024 31 December 2023
Revenue 737,158 341,207
Cost of sales (441,541) (223,838)
Gross profit 295,617 117,369
Administrative expenses (764,441) (941,941)
Listing and capital raising fees (130,421) (464,853)
Project expenditure (340,582) (343,718)
Impairment - (1,857,604)
Disposal/de-recognition of non-current asset 87,005 -
Other income - 40,375
Finance income 18 1,117
Finance costs (244,629) (90,139)
Loss for the period (1,097,433) (3,539,394)
The decrease 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 increased 77% year-on-year due the
comprehensive refurbishment programme started at Pyebridge earlier in 2024 in
partnership with RiverFort and the successful completion of the overhaul of
two engines at the Pyebridge site. The first overhauled engine was
commissioned in July 2024, and the second during December 2024. The increase
in cost of sales is directly aligned with the increase in revenue.
• Pyebridge successfully qualified for and secured a
number of Capacity Market ("CM") contracts, the first being a T-1 CM contract
for delivery year 2023/2024 and the second CM for the delivery year 2024/2025,
contributing to increased revenue earnings compared to 2023.
• Administrative expenses reduced with 19% year-on-year,
due to concerted efforts to reduce costs.
• Listing and capital raising fees reduced with 72%
year-on-year since new shares were only issued on one occasion during 2024.
• The impairment expense in 2023 was high due the
pressure on the UK economy which influenced the assumptions used by management
for the impairment assessment. There were no impairments recognised in 2024
largely due to the current improved market conditions, most notably the
inflation and interest rate environment that have stabilised since 2023.
Possible impairment reversals were identified during the impairment assessment
performed as at year-end, but are not recognised in the accounts until it is
confirmed to be of more permanent nature. Refer to note 11 for further
details.
• A gain on disposal of the Rochdale site to the value
of c. £16k.
• The de-recognition of the Stather Road lease (c.
£70k) that was due to a Deed of Variation signed during 2024 resulting in the
lease liability and corresponding right-of-use asset being de-recognised in
terms of IFRS16. Due to the asset being impaired in 2023, it is showing as a
gain in 2024.
There have been no dividends declared or paid during the current financial
period (2023: £ 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 2024 31 December 2023
Audited Audited
Note £ £
Revenue 737,158 341,207
Cost of sales (441,541) (223,838)
Gross profit/(loss) 295,617 117,369
Administrative expenses (764,441) (941,941)
Listing and other corporate fees (130,421) (464,853)
Project expenditure (340,582) (343,718)
Impairment 7&8 - (1,857,604)
Operating loss (939,827) (3,490,747)
Other income 87,005 40,375
Finance income 18 1,117
Finance costs (244,629) (90,139)
Loss before tax (1,097,433) (3,539,394)
Taxation -
Loss for the period (1,097,433) (3,539,394)
Total comprehensive loss for the period (1,097,433) (3,539,394)
Loss for the period (1,097,433) (3,539,394)
Attributable to the owners of the parent (1,097,433) (3,539,394)
Attributable to the non-controlling interest - -
Total comprehensive loss for the period (1,097,433) (3,539,394)
Attributable to the owners of the parent (1,097,433) (3,539,394)
-
Loss Per Share
Basic loss per share(pence) 6 (0.32) (1.51)
Diluted loss per share(pence) 6 (0.32) (1.51)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2024
Group
31 December 31 December
2024 2023
Audited Audited
Note £ £
Assets
Non‑Current Assets
Property, plant and equipment 7 3,278,530 2,080,869
Intangible assets 8 247,405 397,779
Total non-current assets 3,525,935 2,478,648
Current Assets
Other receivables 364,469 122,649
Cash and cash equivalents 146,446 252
Total current assets 510,915 122,901
Total Assets 4,036,850 2,601,549
Equity and Liabilities
Equity
Called up share capital 10 426,354 263,854
Share premium account 10 13,326,277 13,183,277
Share reserve - 81,329
Warrant reserve 12 400,241 380,741
Common control reserve 11 383,048 383,048
Non-controlling interest acquired 11 (4,065,586) (4,065,586)
Retained deficit (11708,605) (10,611,172)
Total Equity (1,238,271) (384,509)
Liabilities
Non-current Liabilities
Lease liability 7 341,149 405,390
Other financial liabilities 14 2,268,089 318,925
Total non-current liabilities 2,609,238 724,315
Current Liabilities
Loans from related parties 13 - 849,253
Trade and other payables 696,049 941,688
Other financial liabilities 14 1,965,967 444,365
Lease liability 7 3,867 4,205
CLN Derivative liability 14 - 22,232
Total current liabilities 2,665,883 2,261,743
Total Liabilities 5,275,121 2,986,058
Total Equity and Liabilities 4,036,850 2,601,549
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 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 14,755 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)
Total comprehensive loss for the period - - - - - - (1,097,4330) (1,097,433)
Shares issued 162,500 143,000 - - 19,500 - - 325,000
Derecognition of equity component of director's loan repayable in shares - - (81,329) - - - - (81,329)
Balance at 31 December 2024 426,354 13,326,277 - 383,048 400,241 (4,065,586) (11,708,605) (1,238,271)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
Group
Year ended Year ended
31 December 31
2024 December
2023
Audited Audited
Note £ £
Cash flows from operating activities
Loss for the period before taxation (1,097,433) (3,539,394)
Adjustments for non-cash items:
Depreciation 7 78,894 74,542
Impairment of intangible assets 8 - 1,397,904
Impairment of PPE - 459,700
Gains on disposal of non-current assets (87,005)
Implementation fee on reprofiling of convertible loan notes - 48,950
Loss/(gain) on revaluation of CLN derivative liabilities - 86,558
Non-cash interest accrued 244,629 88,731
Amounts due settled from share issue proceeds 64,500 -
Amounts due settled from Rochdale disposal proceeds 41,234 -
Other non-cash items 11,451 369
(743,730) (1,382,640)
Movement in working capital
Decrease/(increase) in debtors (241,820) 14,152
Increase in creditors (245,639) 641,363
(487,459) 655,515
Net cash outflows from operating activities (1,231,189) (727,125)
Cash flows from investing activities
Disposal of subsidiary 216,936 -
Property, plant and equipment acquired (1,636,555) -
Property, plant and equipment disposed 270,000 -
Net cash outflows from investing activities (1,149,619) -
Cash flows from financing activities
Lease liability repaid 7 (39,826) (39,292)
Loans from related parties repaid 13 -
Proceeds from convertible loan notes 14 - 85,800
Proceeds from term loan 2,839,297 -
Repayment of term loan (529,969) -
Repayments of director's loan (3,000) -
Shares issued net of share issue costs 260,500 -
Proceeds from director's loan - 81,329
Proceeds from shareholder's loan - 86,615
Warrants issued - 380,741
Net cash flows financing activities 2,527,002 595,193
Net (decrease) / increase in cash and cash equivalents 146,194 (131,932)
Cash and cash equivalents at beginning of period 252 132,184
Cash and cash equivalents at end of the period 146,446 252
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 Group and Company's financial statements have been prepared in accordance
with international accounting standards in conformity with the requirements of
the Companies Act 2006 and international financial reporting standards adopted
by the United Kingdom. The individual financial statements of the Company
("Company financial statements") have been prepared in accordance with the
Companies Act 2006 and UK adopted international financial reporting standards.
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 2024, 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.
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 activities, available information about the future, the
possible outcomes of planned events, changes in future conditions,
geopolitical events (e.g. escalation of 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 £1,097,433 compared to
£3,539,394 for the preceding 12 month-financial period;
· Cash and cash equivalents available to the Group in the amount of
£146,446 in order to partially pay its creditors and maturing liabilities
(excluding the Pyebridge facilities) in the amount of £2,558,320; and
· MED and Pyebridge has a secured funding facility of up to GBP 4
million from RiverFort, of which the Company has drawn £2,769,297. The main
focus of the facility is to overhaul the Pyebridge gensets in order to get the
site generating at its full efficiency and income potential. The current
outstanding balance is £2,131,328 following repayments totalling £637,969.
· 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 20 March 2025, the Company
announced it has signed a binding definitive investment agreement (the
"Investment Agreement") with Powertree (Holdings) Ltd ("Powertree"). Under
the Investment Agreement, Powertree will invest up to £5,000,000 into
MED's Hindlip project (the "Investment Consideration"), resulting in the
Hindlip project being fully funded.
The Directors have evaluated the Group's liquidity requirements to confirm 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 financial projections to 30 August 2026 which include
estimates and assumptions regarding the future revenues and costs and timing
of these. The financial projection includes non-committed capex expenditure
for the overhaul of the third Pyebridge engine. Thereby projecting revenue for
up to three revenue producing Pyebridge engines during 2025. It includes the
signed capacity market contracts income.
Based on the cash flow forecast the group experiences cash shortfall
throughout the forecast period, ending with a shortfall of c. £286,000 at the
end of Aug 2026. 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. 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.
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.
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 2024 ADV001 Hindlip Lane ARL018 Stather Road Bordersley Rochdale Pyebridge Treasury and Investment Group
(£) (£) (£) (£) (£) (£) (£)
Revenue - - - - 737,158 - 737,158
Cost of sales - - - - (441,541) - (441,541)
Administrative and other expenses (36,470) (9,820) (9,248) (2,616) (73,218) (763,490) (894,862)
Depreciation - - - - (77,305) (1,589) (78,894)
Project costs (2,278) (512) (6,717) (1,171) (299,424) 48,414 (261,688)
Other income - 70,673 16,350 87,023
Finance costs (230) (3,690) (29,309) - (136,329) (75,071) (244,629)
Operating profit/(loss) (38,978) 56,651 (45,274) (3,787) (290,659) (775,386) (1,097,433)
Total assets 110,597 5,248 50,749 - 3,591,046 279,210 4,036,850
Capital expenditure - - - - 1,636,555 - 1,636,555
Total liabilities (128,077) (59,657) (398,656) - (2,595,350) (2,093,381) (5,275,121)
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) (5,743) (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 2,658,953
Total liabilities (25,979) (139,276) (389,225) (38,391) (174,537) (2,218,650) (2,986,058)
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 2024 (£) 31 December 2023 (£)
Loss for the period attributable to equity holders of the parent (1,097,433) (3,539,394)
Weighted average number of ordinary shares for the purposes of basic loss per 340,131,101 234,172,196
share
Basic loss per ordinary share (pence) (0.32) (1.51)
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 2024 602,500 1,538,629 418,157 4,766 126,800 2,690,852
Derecognition of leases - - (62,717) - - (62,717)
Additions - 1,604,340 - - 32,215 1,636,555
Disposals (90,000) (270,000) - - - (360,000)
Closing Cost as at 31 December 2024 512,500 2,872,969 355,440 4,766 159,015 3,904,690
Accumulated Depreciation ("Acc Depr") (£) (£) (£) (£) (£) (£)
Opening Acc Depr as at 1 January 2024 - (111,136) (418,157) (2,340) (78,350) (609,983)
Depreciation - (77,306) - (1,588) - (78,894)
Derecognition of leases - - 62,717 - - 62,717
Acc Depr as at 31 December 2024 - (188,442) (355,440) (3,928) (78,350) (626,160)
Carrying Value (£) (£) (£) (£) (£) (£)
Carrying value as at 31 December 2023 602,500 1,427,493 - 2,426 48,450 2,080,869
Carrying value as at 31 December 2024 512,500 2,684,527 - 838 80,665 3,278,530
During the year, the Group reassessed its property, plant and equipment's
value in use and found that the conditions that previously lead to its
impairment have improved. This has led to reversal of impairments.
Right of use asset 31 December 2024(£) 31 December 2023(£)
Group Group
Set out below are the carrying amounts of right-of-use assets recognised and
the movements during the period:
Opening balance - 333,525
Change in lease - 62,274
Impairment - (381,350)
Depreciation - (14,449)
Closing balance - -
Lease liability
Set out below are the carrying amounts of lease liabilities and the movements
during the period:
Opening balance 409,595 350,654
Interest 35,621 35,959
Change in lease (60,373) 62,274
Repayment (39,826) (39,292)
Closing balance 345,016 409,595
Split of lease liability between current and non-current portions:
Non-current 341,149 405,930
Current 3,867 4,205
Total 345,016 405,595
Future minimum lease payments fall due as follows
- within 1 year 32,866 39,826
- later than 1 year but within 5 years 159,304 159,304
- later than 5 years 690,186 851,812
Subtotal 854,516 1,050,942
- Unearned future finance charges (537,340) (641,347)
Closing balance 345,016 409,595
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 Stather Road lease
has been derecognised following deed of variations entered into with the
lessors delaying the inception date of the lease until such time that the
conditions linked to the inception date are met. There is no clear indication
of the date in which the conditions will be met.
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 is 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 2023 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
Disposal of Rochdale Power (150,273) - - - (150,273)
Modification - - - (101) (101)
Carrying value as at 31 December 2024 - - - 247,405 247,405
Note 9: Acquisition of interests in other entities
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.
Rochdale Power Limited - 2024
During 2024, Sloane disposed of its interest in Rochdale Power Limited for an
amount of £258,170. The proceeds were applied against amounts due by Rochdale
with the remainder of £216,936 paid to the Group. The net asset value of the
project assets and liabilities at disposal date was £200,603. The group
recognised a profit on disposal of £16,333.
Note 10: Share Capital
The called-up and fully paid share capital of the Company is as follows:
2024 2023
Allotted, issued and fully paid shares
(2024: 426,354,067 Ordinary shares of £0.001 each) £426,354 -
(2023: 263,854,067 Ordinary shares of £0.001 each) - £263,854
£426,354 £263,854
Number of Shares Ordinary Share Capital Share Premium
(£)
(£)
Balance at 31 December 2023 263,854,067 263,854 13,183,277
Issue of shares 162,500,000 162,500 143,000
Balance at 31 December 2024 426,354,067 426,354 13,326,277
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.
The group and company issued the following ordinary shares during the period,
with regard to key transactions:
• 162,500,000 new MED Shares of £0.001 each were issued on 7 May 2024 at a
deemed issue price of £0.002 for £325,000 of which £64,500 was applied
against share issue costs and accrued brokers fees.
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. The common control reserve amounts to £383,048 (2023:
£383,048).
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 Bordersley 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
warrant reserve as at period end for the Company:
Group and Company (£)
2024 2023
Opening balance of warrant reserve 380,741 -
Issue of warrants 19,500 380,741
400,241 380,741
The following reconciliation serves to summarise the quantity of warrants in
issue as at period end:
Group and Company (£)
(number of warrants)
2024 2023
Opening balance 86,814,562 -
New warrants issued 9,750,000 86,814,562
96,564,562 86,814,562
The weighted average fair value of the warrants is 0.41p per warrant (2023:
£0.44p)
At 31 December 2024 the Group had 96,564,562 warrants outstanding:
Warrants
Date of Grant Issue date Expiry date Exercise price Number granted Exercisable as at 31 December 2024
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
29 May 2024 29 May 2024 29 May 2027 0.2p 9,750,000 9,750,000
96,564,562 96,564,562
Total contingently issuable shares 96,564,562 96,564,562
Note 13: Loan from related parties
Group 2024 (£) Group 2023 (£) Company 2024 (£) Company 2023 (£)
Amounts falling due within one year:
Kibo Mining (Cyprus) Limited - 849,253 - -
Pyebridge Power Limited - - 375,047 -
- 849,253 375,047 -
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 Liable group company Group 2024(£) Group 2023(£) Company 2024 (£) Company 2023 (£)
Amounts falling due within one year:
Convertible loan notes MED 854,594 444,100 854,594 444,100
CLN Derivative liability MED - 22,232 - 22,232
Loan - RiverFort Sloane Developments 849,253 - - -
Term loan - Powertree Hindlip 70,230 - - -
Term loan - RiverFort Pyebridge 107,563 - - -
Accrued interest on director's loan MED 5,998 265 5,998 265
Director's loan MED 78,329 - 78,329 -
1,965,967 466,597 938,921 466,597
Amounts falling due between one year and five years:
Convertible loan notes MED - 318,925 - 318,925
Term loan - RiverFort Pyebridge 2,268,089 - - -
2,268,089 785,522 - 785,522
4,234,056 785,522 938,921 785,522
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.
Term loans
The term loans are from institutional lenders. The interest accrues at 10% to
12% per annum.
· The "Term loan - Powertree" is payable by the Hindlip project
SPV. The loan was used to pay the Capacity Market deposit. This loan is
payable in full during the 2025 financial year and bears interest at 10% per
annum. The term loan has been rolled up into the investment agreement after
year-end. Refer to note 16.
· The "Term loan - RiverFort" is payable by the Pyebridge SPV. The
funding was used to overhaul the two engines at the Pyebridge site. The loan
consists of three separate drawdowns all repayable during the 2026 financial
year and bear interest at 12% per annum.
· The "Loan - Riverfort" is the historic shareholder loan owing by
the Company to its former parent company, Kibo Energy PLC ("Kibo"), which Kibo
sold to RiverFort during 2024. This loan has no fixed repayment terms and is
repayable on demand and bears no interest.
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 cash. 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 (up to July 2024)
Dominic Traynor Druces LLP (up to Nov 2024)
Pieter Krügel Chief Executive Officer
Noel 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 (Up to September 2024).
Ultimate shareholder Kibo Energy PLC (Up to September 2024).
Significant shareholders: PSCD Power 1 Ltd
Associated by fellow directorship: Katoro Gold PLC (Up to June 2024)
Kibo Mining (Cyprus) Limited (Up to July 2024)
MAST Energy Developments PLC is a shareholder of the following companies and
as such are considered related parties:
Directly held subsidiaries: Sloane Developments Limited
Bordersley Power Limited
Pyebridge Power Limited
ADV 001 Limited
ARL 018 Limited
Sloane Energy Limited
Balances
Name Amount (£) Amount (£)
2024 2023
Kibo Mining (Cyprus) Limited - Loan from related parties owing - 849,253
Paul Venter - Director's loan owing (share reserve) - 81,329
Paul Venter - Director's loan owing (liability) 78,329 -
Paul Venter - Director's loan owing accrued interest 5,733 265
Kibo Energy PLC - Management and administration services accrued 31,170 32,130
Katoro Gold PLC - Receivable for management services paid on Katoro's behalf 4,246 21,140
Paul Venter - Director's remuneration due 43,500 18,371
Louis Coetzee - Director's remuneration due 47,550 27,000
Dominic Traynor- Director's remuneration due 48,018 17,644
Pieter Krügel - Director's remuneration due 43,844 49,844
Noel O'Keeffe -Professional services remuneration due 4,500 9,000
Druces LLP - Supplier balance for professional services 52,675 143,732
Transactions
Name Amount (£)
2024
Paul Venter - interest on loan 5,733
Druces LLP - Professional services 84,500
As announced in the RNS dated 7 May 2024 the Company has entered into a
partial settlement deed, in relation to the Reprofiled Balance due under the
Reprofiling Agreement. Under the terms of the settlement deed Pieter Krügel,
a director of the Company, purchased from Riverfort £325,000 (the
"Capitalised Balance") of the Reprofiled Balance due, in consideration,
Riverfort was paid £325,000 in cash (the "Acquisition"). The Capitalised
Balance was converted into 162,500,000 new MED ordinary shares of 0.1p (the
"Subscription Shares") at a conversion price of 0.20p per share by Mr. Pieter
Krügel. Following admission of the Subscription Shares, Pieter Krügel has
agreed to sell the Subscription Shares to new investors arranged by the
Company's broker at the same price per share as the Conversion, being 0.20p
for a gross consideration of £325,000.
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: Events after reporting period
Following successful pre-qualification for additional Capacity Market ("CM")
T-1 and T-4 contracts during the assessment window in August 2024, and the
implementation of a robust CM auction bid strategy, for the first time
Pyebridge has now successfully secured both contracts at its maximum
generation capacity permissible under the CM rules. The recent CM T-4 auction
cleared at £60,000 per MW/year, and the CM T-1 auction cleared at £20,000
per MW/year. This means that Pyebridge now has uninterrupted CM contracts
until 2029 with a cumulative total guaranteed gross profit income value of c.
£1.73m, over and above its PPA trading income and Embedded Benefits.
The Company has signed a binding definitive investment agreement (the
"Investment Agreement") with Powertree (Holdings) Ltd ("Powertree"). Under
the Investment Agreement, Powertree will invest up to £5,000,000 into
MED's Hindlip project (the "Investment Consideration"), resulting in the
Hindlip project being fully funded. The Investment Consideration will consist
of £500,000 for 75% of the fully diluted ordinary equity of the Hindlip
SPV, ADV 001 Ltd and, up to £4,500,000 will be by way of secured loan
(the "Investor Loan") entered into between Powertree (as the lender) and
the Hindlip SPV (as the borrower). MED shall retain 25% of the fully diluted
ordinary equity of the Hindlip SPV with no further funding obligations. The
closing of the Investment Agreement is subject to customary closing
conditions.
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.
• Successful refinancing of the historic shareholder loan amounting
to £849,253 owing by the Company to its former parent company, Kibo Energy
PLC ("Kibo"), which Kibo sold to RiverFort during 2024, resulting in the
deferral of loans payable in the foreseeable future beyond a 12-month period
after sign off of these financial statements.
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. During
2024, the Company continued to avail of loan facilities under a facility
agreement with RiverFort on which £2,769,297 has been drawn down to date, and
£637,969 has been repaid. Funds from a broker sponsored placing of £350,000
were raised and funds from a second loan facility with RiverFort on which
£350,000 was drawn down coincident with a partial re-settlement of the same
amount on the outstanding balance on the May 2023 reprofiled loan.
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 £737,158 (2023: £341,207) for the period
ended 31 December 2024 and had a net liability position of £1,238,271 (2023:
£384 509) as at 31 December 2024. As at year end, the Group had liquid
assets in the form of cash and cash equivalent and other receivables of
£146,446 and £364,469 (year to 31 December 2023: £122,901), 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 are reliant on continued successful
drawdowns on current loan facilities, as well as continued operation of
Pyebridge and its anticipated revenue generation from electricity production.
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 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. To monitor
compliance with evolving UK government energy regulations, the Company
subscribes to relevant environmental and energy regulation bodies' updates
which management reviews on a regular basis. It 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. Volatility 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 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.
Climate risk
The Board considers Climate Risk to be a principal risk that may threaten the
business viability of the Company insofar as it informs greater regulatory
involvement by the UK Government in the structure of the UK power market as
discussed under Regulatory Risk above. As the Company currently relies on
the availability and permitted use of natural gas to fuel its current and
planned reserve power sites, accelerated climate change, and associated
adverse weather events may prompt further restrictions on the use of natural
gas by UK regulators including its phasing out within a shorter period than
the Company currently anticipates. In order to mitigate this risk, in
addition to keeping itself informed of any pending regulatory risk that may
threaten the economic viability of its projects, the Company will ensure that
the engineering design and location of its projects are amenable to the use of
alternative electricity generating fuels to natural gas e.g. green Hydrogen or
biofuel and at minimum conversion costs should it be required. The Company
will also plan to incorporate alternative renewable energy projects in its
project pipeline such as solar, wind, waste-to-energy or long-duration storage
(battery) do diversify its project portfolio in response to any accelerated
phasing out of natural gas as an electricity generating fuel. As well as
Climate Risk, the Company also recognises Climate Opportunity and more details
on both are discussed under the Strategy heading in the Task Force on
Climate-related Financial Disclosures (TCFD) section of this report. The TCFD
section, in addition to providing the information required under the TCFD
Framework in compliance with the Listing Rules also includes the Group's
Climate Related Financial Disclosures (CFD)as required under s414C, s414CA and
s414CB of the Companies Act 2006 (the Act).
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, terrorism, 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.
Estimation uncertainty in the valuation of share-based instruments in issue
Share-based instruments issued, such as warrants or options, or payments made
require significant judgment and estimate concerning the method of valuation
applied and key inputs applied respectively. In order to calculate the charge
for share based warrants issued or payments as required by IFRS 9 and IFRS 2
respectively, the Group makes estimates principally relating to the
assumptions used in its option-pricing model. Refer to Note 12 for details on
valuation of share-based transactions, including options and warrants granted.
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.
Estimation uncertainty in the accrual for variable revenue in relation to
electricity generation
The group's revenue is dependent on the sale of electricity through an offtake
partner based on the quantity of variable units generated over the course of
the year. The utilisation rate is determined by the offtake partner who in
turn relies on on-demand electricity request from the applicable service area.
The group estimates its accrued revenue based on preliminary data received
from the offtake partner which is obtained daily from the portal. Upon receipt
of the final monthly invoice, which is usually in time for year-end reporting
purposes, the estimates are updated to the actual values. No estimation
uncertainties exist over fixed amount contracts for management fees and
capacity market revenues.
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 liabilities exceed its assets as at 31 December 2024, mainly due to
the loan from the former ultimate holding company ceded to institutional
investments and convertible loan notes of £849,253 and £854,594 respectively
(2023: loans from related parties £849,253) 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. Refer to note 4 for further
information on the going concern assessment.
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 not carry any derivative liabilities in the statement of
financial position at fair value at 31 December 2024.
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