REG - Mast Energy Dvlpmts. - Half-year Report
30/08/2024 07:00
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RNS Number : 2045C Mast Energy Developments PLC 30 August 2024
Mast Energy Developments PLC
(Incorporated in England and Wales)
(Registration Number: 12886458)
Share code on the LSE: MAST
ISIN: GB00BMBSCV12
("MED" or "MAST" or "the Company")
Unaudited interim results for the six-month period ended 30 June 2024
Dated 30 August 2024
MAST Energy Developments PLC ('MED' or the 'Company') the UK-based
multi-asset owner, developer and operator in the rapidly growing flexible
power market, is pleased to announce its unaudited interim results for the
six months ended 30 June 2024.
Overview of key highlights during the interim period and to date:
· Gross profit margin improved period-on-period as a result of start of optimisations at Pyebridge, including first Capacity Market contract income.
· Successful in pre-qualification to bid for additional new Capacity Market ("CM") contracts, being T-1 (2024/2025 delivery year) and T-4 (2027/2028 delivery year) for its Pyebridge site ('Pyebridge'). The Capacity Market bid auctions, which were held in February 2024, resulted in Pyebridge getting contractual clearing prices of £35.79/kW/pa for the T-1 contract, and £65.00/kW/pa for the T-4 contract respectively.
· Signed a Project Finance funding agreement with RiverFort Global Opportunities PCC Limited ("RiverFort"), with Pyebridge as the borrower, with an initial funding facility up to £4,000,000 (the "RiverFort Facility"), with a cumulative total net draw of c. £2.1m to date. Refer to RNS announcement dated 28 February 2024 for more details.
· Pyebridge was taken out of care & maintenance, and a comprehensive improvement and refurbishment works programme ("Works Programme") was executed. The Works Programme consisted of two main phases, each addressing key areas of the facility to optimise operations and income generation.
· The first phase of the Works Programme addressed the requirement to
meet the Satisfactory Performance Days ("SPD") obligation set by the
Electricity Market Reform Delivery Body ('EMR DB') for Pyebridge's existing
T-1 Capacity Market ("CM") contract. All required SPD tests were completed
successfully, which meant that Pyebridge could continue receiving the current
CM contract's associated gross profit margin income of c. £308,000 which is
paid and received monthly in arrears.
· The second phase of the Works Programme, currently in process,
focusses on the complete overhaul of each of the Pyebridge site's 3x 2.7MW
Jenbacher reciprocal turbine engines. Thus far, the first genset's overhaul
has been successfully completed, and the second genset's overhaul has
officially commenced.
· First refurbished genset achieves c. £57k revenue for July 2024 in
the first month of operation, resulting in revenue per MW month of
c. £21,000, and outperforming market with 40% margin. Refer to RNS
announcement dated 7 August 2024 for more details.
· The Company paid down £325,000 on the outstanding balance on
convertible loan notes held by RiverFort 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 for on-going working capital
purposes.
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 BUSINESS Salisbury House
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
DIRECTORS' STATEMENT
We are pleased to present our Interim Report for the six-months ending 30 June
2024.
The Company's activities during the first half of 2024 principally focused on
getting its Pyebridge site ("Pyebridge") back into operation following a
period of care and maintenance. The initial phase of these works (the "Works
Programme") was successfully completed during Q1 2024 permitting operations
and revenue generation to resume in April 2024. The second phase of the Works
Programme, which is currently in process, is focused on optimising the site
performance by overhauling each of Pyebridge's 3x 2.7MW gensets. The Company
is presently carrying out refurbishment of the second genset which is
anticipated to be completed during Q4 2024.
The Pyebridge Works Programme was enabled by an important Project Finance
funding agreement for up to £4 million signed between the Company, its wholly
owned subsidiary, Pyebridge Power Ltd ("Pyebridge Power") and RiverFort Global
Opportunities PCC Limited ("RiverFort") during February 2024, with a
cumulative total net draw of c. £2.1m to date. Refer to RNS announcement
dated 28 February 2024 for more details.
During Q1 2024, the Company announced that it had terminated its joint venture
agreement with Proventure Holdings (UK) Limited ("Proventure") for material
breach of its contractual joint venture payment obligations to MED. The
Company is now well along the path of recovery, not least assisted by the
RiverFort Project Finance agreement noted earlier.
While the focus during the period has been on the optimisation of Pyebridge to
enhance its revenue generating potential, the Company is also maintaining its
shovel-ready development projects, Bordesley, Hindlip, Rochdale and Stather in
good standing and continues to explore project financing options to expedite
construction and is also exploring alternative options that may best realise
return on investment to date by the Company on these projects.
Below follows a description of progress and activities at the respective
sites:
Pyebridge:
Apart from various T-4 CM contracts, which will all formally start in the
future, Pyebridge currently has an active T-1 CM contract, with a gross profit
income value of c. £308k. The official start date of this T-1 CM contract
was 1 October 2023, and it will end on 30 September 2024. During this period,
Pyebridge receives the annual contracted income of c. £308k per annum, paid
out monthly.
As part of the contracted CM agreement, at least three Satisfactory
Performance Days ('SPDs') must be executed before the end of April 2024, to
prove that the site can supply the agreed upon electricity export capacity
should the National Grid need it. As part of the first phase of the
Refurbishment Works Programme, Engines 1 and 2 received critical components
and the necessary servicing to be able to generate the 5.4MW required to meet
the SPD obligation, which was satisfactorily met at the end of April 2024 and
means that Pyebridge will continue to receive the CM income, paid out monthly,
until 30 September 2024.
After developing a comprehensive CM auction bid strategy, the Company
participated in the CM auction in March 2024 and it successfully secured a T-1
CM Contract at £35.79/kW/annum, which will generate approximately £183,000
in additional income for the site during the October 2024 - September 2025
period. Additionally, the Company also cleared a T-4 CM Contract at
£65/kW/annum, resulting in an estimated £322,000 in extra income for the
site for the period October 2027 - September 2028.
A major overhaul was successfully completed on the first of the 3x 2.7MW
gensets at Pyebridge during June 2024, and the second genset's overhaul has
officially commenced. The overhaul works will ensure that the gensets operate
at the maximum capable efficiency, and reliability. The first overhauled
genset achieved c. £57k revenue in first month of operation (inclusive of
initial ramp-up period), resulting in revenue per MW month of c. £21,000,
and outperforming market with 40% margin.
In addition to the expected enhanced revenue generation via Pyebridge's PPA
with Statkraft, the overhaul of the 2(nd) genset enables Pyebridge to apply
for its next T-1 CM contract in the upcoming CM pre-qualification assessment
window and subsequent bid auction for the 2025/2026 delivery year, at an
enhanced generation capacity. It will result in increased contractual gross
profit margin income received from that contract.
Once the work on the second genset has been completed, Pyebridge will have two
completely refurbished 2.7MW gensets operating and generating at optimum
capacity and performance, which should have a direct positive impact regarding
the site's PPA revenue generation. The plan remains to overhaul the remaining
3(rd) genset in due course, in order to maximise full reliability, efficiency
and revenue generating ability of the Pyebridge site in the most
cost-efficient manner.
The Project Finance with RiverFort has enabled the successful completion of
the first genset's overhaul, as well the commencement of the 2(nd) genset's
overhaul, and MED is appreciative of RiverFort's ongoing support as its
asset-level strategic funding partner, in order to grow the business.
MED's other existing sites
In addition to Pyebridge, MED has a portfolio of other sites that are under
development. The following MED sites, Hindlip (7.5MW), Bordesley (5MW)
and Rochdale (4.5MW) are each construction-ready, with all the requirements
for a flexible generation site in place and in good standing, most notably
fully specified EPC and O&M offers, planning consent, gas connection
offer, grid connection offer and construction management plan. Subject to
capex funding, these sites could immediately continue with their construction
phase with an expected timeline to commercial operations date of around 12
months from receipt of funding, to go into production and revenue generation.
Looking forward
MED remains committed to growing a portfolio of sites providing green focused
energy generation with a capacity of 100 MW in the short- to medium
term. This growth will be achieved through identified sites and the
acquisition of new sites, similar to Pyebridge.
Principle Risk
Refer to Note 16 of the RNS for our assessment of the Principle Risks.
Related Parties
Refer to Note 14 of the RNS for key relationships and disclosure of Related
Parties.
Financial summary of the MAST Energy Developments PLC Group
The following information is included to highlight the financial performance
of the Group for the six months ended.
Description Six (6) Six (6) Year ended 31 December 2023
months ended months ended 30 June 2023
30 June 2024
(Unaudited) (Unaudited) (Audited)
(£) (£) (£)
Revenue 202,258 198,438 341,207
Cost of sales (85,599) (125,008) (223,838)
Administrative expenses (312,600) (472,611) (941,941)
Listing and capital raising fees (79,617) (94,436) (464,853)
Project expenditure (185,487) (224,667) (343,718)
Impairments and fair value adjustments - (86,558) (1,857,604)
Other income - 128,050 40,375
Finance income - 1,117
Finance costs (31,010) (96,958) (90,139)
Loss for the period (492,055) (773,750) (3,539,394)
Group revenue is £202,258 for the six-month period ended 30 June 2024.
Revenue is mainly derived from the Pyebridge T-1 Capacity Market payments and
from electricity generation at this site. Revenue is marginally higher for the
period ended June 2024 compared to the previous interim financial reporting
period. It is due to the Pyebridge Works Programme and CM payments. As the
Company's projects and operations continue to move from development to
commercial production, the growth in revenue is expected to increase.
The overall decrease in loss period-on-period, as disclosed in the table above
and in the statement of comprehensive income, is mainly owing to the following
reasons:
• Increase in gross profit margin, due to optimisation of the
Pyebridge site, including first Capacity Market contract income.
• Decrease in administrative expenses due to stringent cost control,
including decreased directors' fees and consulting services.
• Decrease in project expenditure recognised in the Statement of
Comprehensive Income as the overhaul costs incurred by Pyebridge during the
period are of capital nature.
• Impairments/fair value adjustments were not required in the
current period.
• Finance fees were lower in 2024 due to the lower implementation
fees on external loans obtained.
There have been no dividends declared or paid during the current interim
financial period (31 December 2023: £ Nil, 30 June 2023: £ Nil).
RESPONSIBILITY STATEMENT
We confirm to the best of our knowledge that:
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 six months);
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.
The board of directors all confirm their combined agreement to this statement.
Board of Directors
Louis Lodewyk Coetzee (Non-Executive Chairman)
Pieter Krügel (Chief Executive Officer)
Paul Venter (Non-Executive Director)
Dominic Traynor (Non-Executive Director)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six (6) Six (6) Year ended
months ended 30 June 2024 months ended 30 June 2023 31 December 2023
(Unaudited) (Unaudited) (Audited)
Note £ £ £
Revenue 202,258 198,438 341,207
Cost of sales (85,599) (125,008) (223,838)
Gross profit 116,659 73,430 117,369
Administrative expenses (312,600) (472,611) (941,941)
Listing and other corporate fees (79,617) (94,436) (464,853)
Project expenditure (185,487) (224,667) (343,718)
Impairments and fair value adjustments - (86,558) (1,857,604)
Operating loss (461,045) (804,842) (3,490,747)
Other income - 128,050 40,375
Finance income - - 1,117
Finance costs (31,010) (96,958) (90,139)
Loss before tax (492,055) (773,750) (3,539,394)
Taxation - - -
Loss for the period (492,055) (773,750) (3,539,394)
Other comprehensive Income/(loss)
Total comprehensive loss for the period (492,055) (773,750) (3,539,394)
Loss for the period (492,055) (773,750) (3,539,394)
Attributable to the owners of the parent (492,055) (773,750) (3,539,394)
Attributable to the non-controlling interest -
Total comprehensive loss for the period (492,055) (773,750) (3,539,394)
Attributable to the owners of the parent (492,055) (773,750) (3,539,394)
Attributable to the non-controlling interest -
Loss Per Share
Basic loss per share (pence) 6 (0.14) (0.34) (1.51)
Diluted loss per share (pence) 6 (0.14) (0.34) (1.51)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2024
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
Note £ £ £
Assets
Non‑current assets
Property, plant, and equipment 7 2,828,155 2,454,389 2,080,869
Intangible assets 8 397,779 1,795,683 397,779
Total non-current assets 3,225,934 4,250,072 2,478,648
Current assets
Trade and other receivables 131,723 78,565 122,649
Cash and cash equivalents 251,988 8,804 252
Total current assets 383,711 87,369 122,901
Total assets 3,609,645 4,337,441 2,601,549
Equity and liabilities
Equity
Called up share capital 9 426,354 232,207 263,854
Share premium account 9 13,345,777 12,745,924 13,183,277
Share reserve 81,329 - 81,329
Common control reserve 10 383,048 383,048 383,048
Warrant and share based payment reserve 10 380,741 58,424 380,741
Non-controlling interest acquired 10 (4,065,586) (4,065,586) (4,065,586)
Retained deficit (11,122,727) (7,845,528) (10,611,172)
Attributable to equity holders of the parent (571,064) 1,508,489 (384,509)
Non-controlling interest - - -
Total equity (571,064) 1,508,489 (384,509)
Liabilities
Non-current liabilities
Lease liability 407,587 292,826 405,390
Other financial liabilities 12 1,286,671 494,447 318,925
Total current liabilities 1,694,258 787,273 724,315
Current liabilities
Loans from related parties 11 880,422 1,231,535 849,253
Trade and other payables 620,172 494,100 941,688
Other financial liability 12 958,911 307,559 444,365
Lease liability 4,714 8,485 4,205
Derivative liability 12 22,232 - 22,232
Total current liabilities 2,486,451 2,041,679 2,261,743
Total liabilities 4,180,709 2,828,952 2,986,058
Total equity and liabilities 3,609,645 4,337,441 2,601,549
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Share Warrant and share based reserves Common Control Reserve Non-controlling interest acquired Retained deficit Total
Capital Premium Reserve
£ £ £ £ £ £ £ £
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 - - - - - - (773,750) (773,750)
Warrants issued during the year - - - 58,424 - - - 58,424
Partial settlement of convertible loan notes in shares 14,754 92,317 - - - - - 107,071
Balance at 30 June 2023 232,207 12,745,924 - 58,424 383,048 (4,065,586) (7,845,528) 1,508,489
Total comprehensive loss for the period - - - - - - (2,765,644) (2,765,644)
Warrants issued during the year - - - 322,317 - - - 322,317
Director's loan repayable in shares - - 81,329 - - - - 81,329
Loan with holding company settled in shares 31,647 437,353 - - - - - 469,000
Balance at 31 December 2023 263,854 13,183,277 81,329 380,741 383,048 (4,065,586) (10,611,172) (384,509)
Loss for the Period - - - - - - (492,055) (492,055)
Issued during the year 162,500 162,500 - - - - - 325,000
Share issue costs (19,500) (19,500)
426,354 13,345,777 380,741 383,048 (4,065,586) (11,122,727) (571,064)
Balance at 30 June 2024 81,329
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended
31 December
2023
(Unaudited) (Unaudited) (Audited)
£ £ £
Cash flows from operating activities
Loss for the period before taxation (492,055) (773,750) (3,539,394)
Adjustments:
Non-cash interest accrued 31,003 96,958 88,731
Depreciation 30,046 45,784 74,542
Loss on revaluation of derivatives - 86,558 86,558
Warrants issued - 58,424 -
Other non-cash items - - 369
Management and administrative fees accrued from related parties 31,170 - -
Impairment of intangible assets - - 1,397,904
Impairment of PPE - - 459,700
Implementation fee on reprofiling of convertible loan notes - - 48,950
(399,836) (486,026) (1,382,640)
Movement in working capital
Decrease in debtors (9,074) 58,236 14,152
(Decrease) / Increase in creditors (321,516) 193,775 641,363
(330,590) 252,011 655,515
Net cash outflows from operating activities (730,426) (234,015) (727,125)
Cash flows from investing activities
Property, plant and equipment acquired (777,332) - -
Net cash flows from investing activities (777,332) - -
Cash flows from financing activities
Lease liability repaid (16,433) (24,115) (39,292)
Proceeds from convertible loan notes 1,627,107 85,800 85,800
Repayments of convertible loan notes (156,681) - -
Implementation fee on CLN reprofiling - non-cash item - 48,950 -
Proceeds from director's loan - - 81,329
Proceeds from shareholders loan - - 86,615
Shares issued net of share issue costs 305,500 - 380,741
Net cash flows financing activities 1,759,493 110,635 595,193
Net increase/(decrease) in cash and cash equivalents 251,735 (123,380) (131,932)
Cash and cash equivalents at beginning of period 252 132,184 132,184
Cash and cash equivalents at end of the period 251,987 8,804 252
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR
THE SIX MONTHS ENDED 30 JUNE 2024
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 Salisbury House, London Wall, London, EC2M
5PS.
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.
The Group currently has five projects in its portfolio referred to as
Pyebridge, Rochdale, Bordersley, Hindlip Lane (ADV 001) and Stather Road (ARL
018).
Note 2: Statement of preparation
The condensed consolidated interim financial statements are prepared on the
historical cost basis, unless otherwise stated. The Group's accounting
policies used in the preparation of condensed consolidated interim financial
statements are consistent with those used in the annual financial statements
for the year ended 31 December 2023, except for the adoption of new or amended
standards applicable from 1 January 2024, which had no material impact on the
condensed consolidated financial statements of the Group.
The condensed consolidated interim financial statements of the Company have
been prepared in accordance with the Disclosure Guidance and Transparency
Rules of the Financial Conduct Authority and Accounting Standard IAS 34,
'Interim Financial Reporting', as adopted by the UK.
The interim report does not include all of the notes of the type normally
included in an annual financial report. Accordingly, this report is to be read
in conjunction with the annual report for the period ended 31 December 2023,
which has been prepared in accordance with UK-adopted international accounting
standards, and any public announcements made by MED PLC during the interim
reporting period.
The condensed consolidated interim financial statements of the Group are
presented in Pounds Sterling, which is the functional and presentation
currency for the Group and its related subsidiaries.
The condensed consolidated interim financial statements do not represent
statutory accounts within the meaning of section 435 of the Companies Act
2016.
The condensed consolidated interim 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 interim financial statements.
Note 3: Consolidation
The consolidated interim financial statements comprise the financial
statements of MAST Energy Developments PLC and its subsidiaries over which the
Company has control as at 30 June 2024.
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 Group applied merger accounting for the common control transaction that
occurred during the creation of the group between Kibo Mining (Cyprus)
Limited, Kibo Energy PLC and MAST Energy Projects Limited. The common control
reserve of £383,048 has not changed during the six month period ended 30 June
2024 (30 June 2023: £383,048 and 31 December 2023: £383,048.
Note 4: Going concern
The financial results have been prepared on the going concern basis of
accounting that contemplates the continuity of normal business activities and
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, 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 six-month period ended 30 June
2024 of £492,055 (six months ended 30 June 2023 of £773,750 and year ended
31 December 2023 of £3,539,394);
· Cash and cash equivalents readily available to the Group in the
amount of £251,988 in order to pay its creditors and maturing liabilities in
the amount of £2,486,451 (of which £880,422 is from related parties) 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; and
· A funding agreement with an initial funding facility up to
£4,000,000 with RiverFort Global Opportunities PCC Limited ('RiverFort") and
a total drawdown to date of £ 2,1m was advanced and received under the
facility of which £1,6m was received during the six month period ended 30
June 2024 and the remainder subsequent to period end. 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
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 the financial projections to 30 August 2025. Based on
the assumption that further drawdowns on the GBP 4m facility with RiverFort
are available to the Company as and when required, as well as the successful
electricity generation by Pyebridge, the Company will have a positive cash
balance for the period. 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 further
funding cannot be secured, the Group may experience continuous cash shortfalls
over the next 12 months. A severe but plausible financial projection was also
reviewed, whereby further drawdowns are not successful. Under this scenario
the Group experiences cash shortfalls throughout the forecast period.
In response to the net current liability position, to address future cash flow
requirements, detailed liquidity improvement initiatives have been identified
and are being pursued. Implementation is 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 have to
be adhered to.
· Successful cash generation from the Pyebridge power-generation
facilities in order to achieve net-cash positive contributions toward the
larger Group.
· 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 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 are confident that the above
matters will be successfully implemented and have a reasonable expectation
that the Group will be able to raise sufficient financing to support its
ongoing development and commercialisation activities to continue in
operational existence in the next 12 months.
Note 5: Segmental reporting
The Group discloses segmental analysis based on its different operations,
being Bordersley, Rochdale and Pyebridge.
30 June 2024 Bordersley Rochdale Pyebridge ADV001 Hindlip Lane ARL018 Stather Road Treasury and Investment Group
(£) (£) (£) (£) (£) (£) (£)
Revenue - - 202,258 - - - 202,258
Cost of sales - - (85,599) - - - (85,599)
Depreciation - - (29,252) - - (794) (30,046)
Profit/ (Loss) before tax (20,704) (5,966) (84,614) (16,566) (6,317) (357,888) (492,055)
Total assets 50,167 91,264 3,285,219 43,418 1,999 137,578 3,609,645
Total liabilities (390,477) (43,424) (1,577,113) (61,022) (138,460) (1,970,213) (4,180,709)
30 June 2023 Bordersley Rochdale Pyebridge ADV001 Hindlip Lane ARL018 Stather Road Treasury and Investment Group
(£) (£) (£) (£) (£) (£) (£)
Revenue - - 198,438 - - - 198,438
Cost of sales - - (125,008) - - - (125,008)
Depreciation (3,918) - (39,817) (1,254) - (795) (45,784)
Profit/ (Loss) before tax (46,200) (19,893) 18,330 (12,603) (29,698) (683,686) (773,750)
Total assets 286,958 92,808 2,050,929 127,858 13,345 1,765,543 4,337,441
Total liabilities (256,806) (25,731) (145,668) (127,398) (30,012) (2,243,337) (2,828,952)
31 December 2023 Bordersley Rochdale Pyebridge ADV001 Hindlip Lane ARL018 Stather Road Treasury and Investment Group
(£) (£) (£) (£) (£) (£) (£)
Revenue - - 341,207 - - - 341,207
Cost of sales - - (223,838) - - - (223,838)
Administrative and other (37,736) (9,377) (46,424) (14,302) (20,313) (1,319,017) (1,447,169)
expenses
Impairment (1,649,206) - - - (208,398) - (1,857,604)
Depreciation (11,941) - (58,504) - (2,509) (1,588) (74,542)
Project costs (27,972) (23,396) (173,631) (38,434) (5,743) - (269,176)
Other income 126,933 (86,558) 40,375
Loss before tax (1,726,855) (32,773) (34,257) (52,736) (236,963) (1,407,163) (3,490,747)
Total assets 392,155 91,134 2,020,584 9,163 117,215 28,702 2,601,549
Capital expenditure - - - - - - -
Total liabilities (389,225) (38,391) (174.537) (25,979) (139,276) (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 30 June 2024 (£) 30 June 2023 (£) 31 December 2023 (£)
Loss for the period attributable to equity holders of the parent (492,055) (773,750) (3,539,394)
Weighted average number of ordinary shares for the purposes of basic loss per 340,131,101 226,629,075 234,172,196
share
Basic loss per ordinary share (pence) (0.14) (0.34) (1.51)
The Group has no dilutive instruments in issue as at period end.
Note 7: Property, plant and equipment
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 - - (52,664) - - (52,664)
Additions - - - - - -
Transfer between - - - - - -
classes
Closing Cost as at 30 June 2023 602,500 1,665,429 303,219 4,766 - 2,575,914
Change in lease - - 114,938 - 114,938
Transfer between - (126,800) - - 126,800 -
classes
Change in lease
Closing Cost as at 31 December 2023 602,500 1,538,629 418,157 4,766 126,800 2,690,852
Additions 745,117 32,215 777,332
Closing Cost as at 30 June 2024 602,500 2,283,746 418,157 4,766 159,015 3,468,185
Accumulated Depreciation ("Acc Depr") (£) (£) (£) (£) (£) (£)
Opening Acc Depr as at 1 January 2023 - (52,632) (22,358) (751) - (75,741)
-
Depreciation - (39,817) (5,173) (794) - (45,784)
- -
Closing Acc Depr as at 30 June 2023 - (92,449) (27,531) (1,545) - (121,525)
Depreciation - (18,687) (9,276) (795) - (28,758)
Impairment - - (381,350) - (78,350) (459,700)
Closing Acc Depr as at 31 December 2023 - (111,136) (418,157) (2,340) (609,983)
(78,350)
Depreciation - (29,252) - (794) - (30,046)
Closing Acc Depr as at 30 June 2024 - (140,388) (418,158) (3,134) (78,350) (640,030)
Carrying Value (£) (£) (£) (£) (£) (£)
as at:
30 June 2023 602,500 1,572,980 275,688 3,221 - 2,454,389
31 December 2023 602,500 1,427,493 - 2,426 48,450 2,080,869
30 June 2024 602,500 2,143,358 - 1,632 80,665 2,828,155
The Group has a lease contract for land it shall utilise to construct a 5MW
gas-fuelled power generation plant. The land is located at Bordersley,
Liverpool St. Birmingham.
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 has another lease contract for land where it shall construct a 2.4MW
gas-fuelled power generation plant. The land is located at Stather Road,
Flixborough. The lease term is 25 years.
The Group's obligations under its leases are secured by the lessor's title to
the leased assets. The Group's incremental borrowing rate ranges between 8.44%
and 10.38%.
Note 8: Intangible assets
Intangible assets consist of separately identifiable assets 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
Carrying value as at 30 June 2023 150,273 1,306,422 91,482 247,506 1,795,683
Impairment - (1,306,422) (91,482) - (1,397,904)
Carrying value as at 31 December 2023 150,273 - - 247,506 397,779
Carrying value as at 30 June 2024 150,273 - - 247,506 397,779
Intangible assets are amortised once commercial production commences over the
remaining useful life of the project, which is estimated to be 20 years,
depending on the unique characteristics of each project.
Until such time as the underlying operations commence production, the Group
performs regular impairment reviews to determine whether any impairment
indicators exist.
One or more of the following facts or circumstances indicate that an entity
should test an intangible asset for impairment:
• The period for which the entity has the right to develop the asset
has expired during the period or will expire in the foreseeable future;
• The substantial expenditure on the asset in future is neither
planned nor budgeted.
• Sufficient data exists to indicate that, although a development in
the specific area is likely to proceed, the carrying amount of the development
asset is unlikely to be recovered in full from successful development or by
sale.
Note 9: Share Capital
The called-up and fully paid share capital of the Company is as follows:
30 June 30 June 31 December 2023 (£)
2024 2023
(£) (£)
Allotted, issued and fully paid shares
(Jun 2024: 426,354,067 Ordinary shares of £0.001 each) 426,354 - -
(Jun 2023: 232,207,643 Ordinary shares of £0.001 each) - 232,207 -
(Dec 2023: 263,854,067 Ordinary shares of £0.001 each) - - 263,854
426,354 232,207 263,854
Number of Shares Ordinary Share Capital Share Premium
(£)
(£)
Balance at 31 December 2022 217,452,729 217,453 12,653,607
Partial settlement of outstanding shareholder loan 14,754,914 14,755 92,317
Balance at 30 June 2023 232,207,643 232,208 12,745,924
Partial settlement of outstanding shareholder loan 31,646,424 31,646 437,353
Balance at 31 December 2023 263,854,067 263,854 13,183,277
Issue of shares 162,500,000 162,500 162,500
Balance at 30 June 2024 426,354,067 426,354 13,345,777
During the six months ended 30 June 2024 the Company paid down £325,000 on
the outstanding balance on convertible loan notes held by RiverFort via a
director loan purchase agreement and a placing. No shares were issued in lieu
of payment of outstanding amounts (30 June 2023: £107,071 and 31 December
2023: £576,071).
Note 10: Reserves
Common control reserve
On 17 September 2020, the Company became the legal parent of Sloane
Developments Limited following completion of the acquisition of the entire
issued share capital of Sloane Developments Limited from Kibo Mining Cyprus
Limited, a wholly owned subsidiary of Kibo Energy PLC. Following the
completion of the acquisition, the ultimate holding company, being Kibo Energy
PLC, retained control over Sloane Developments Limited.
As MED is only an investment holding company, incorporated for the purposes of
raising capital funding for its investee projects, and the majority
shareholder before and after the acquisition continues to be Kibo Energy PLC,
the transaction is considered to be a common control transaction, outside the
scope of IFRS 3, and seen as a capital reorganisation, where predecessor
valuation accounting was applied with regard to the incorporation of historic
financial information.
The common control reserve is the result of the predecessor valuation
accounting which 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 will pay 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 completion of the IPO on 14 April 2021, the Group acquired the
remaining equity interest in MAST Energy Projects Limited 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, 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 special purpose
vehicles (SPVs).
Warrant and share based payment reserve
On 7 May 2024, MAST Energy Developments PLC entered into warranty agreements
with financial institutions as part of convertible loan note financial
instruments.
The following warrants were in issue as at 30 June 2024:
Date of grant Issue date Expiry date Exercise price Number Granted Warrants exercisable
18/05/2023 18/05/2023 18/05/2026 2.00p 2,255,656 2,255,656
18/05/2023 18/05/2023 18/05/2026 2.00p 2,255,656 2,255,656
18/05/2023 18/05/2023 18/05/2027 0.89p 20,575,813 20,575,813
18/05/2023 18/05/2023 18/05/2027 1.77p 20,575,813 20,575,813
18/05/2023 18/05/2023 18/05/2027 0.89p 20,575,812 20,575,812
18/05/2023 18/05/2023 18/05/2027 1.77p 20,575,812 20,575,812
29/05/2024 29/05/2024 29/05/2027 0.2p 9,750,000 9,750,000
96,564,562 96,564,562
Group Group
30 June 2024 30 June 2024
Quantity (£)
Opening balance as at 1 January 2023 - -
New warrants issued 86,814,562 58,424
Closing balance as at 30 June 2023 86,814,562 58,424
Adjustment of warrants - 322,317
Closing balance as at 31 December 2023 86,814,562 380,741
New warrants issued 9,750,000 -
Closing balance as at 30 June 2024 96,564,562 380,741
Note 11: Loan from related parties
Group Group Group
30 June 30 June 31 December 2023 (£)
2024 (£) 2023 (£)
Amounts falling due within one year:
Kibo Mining (Cyprus) Limited 849,253 1,231,535 849,253
Kibo Energy PLC - Management and administration services accrued 31,169 - -
880,422 1,231,535 849,253
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 12: Other financial liabilities
Group Group Group
30 June
30 June
31 December 2023 (£)
2024 (£) 2023 (£)
Amounts falling due within one year:
Convertible loan notes 774,890 307,559 444,100
Derivative liability 22,232 - 22,232
Director's loan accrued interest 265 - 265
RiverFort Global Advance 183,756
981,143 307,559 466,597
Amounts falling due between one year and five years:
Convertible loan notes - 494,447 318,925
RiverFort Global Advance 1,286,671
1,286,671 494,447 318,925
2,267,814 802,006 785,522
Convertible loan notes
Short-term loans relate to two unsecured loan facilities from the
institutional investor, which are repayable either through the issue of
ordinary shares or payment of cash by the Company.
These facilities have repayment periods of between 12 and 24 months.
Derivatives
The derivative liability is derived from the convertible loan notes. The
convertible feature within the convertible loan notes enables the noteholders
to convert the notes into a fixed number of shares at the Fixed Premium
Payment Price ('FPPP'). This price does have variability, although the FPPP is
set at the reference Price. In the event that a share placing occurs at below
the reference Price, the FPPP will be the share placing price (round down -
feature). The conversion includes an embedded derivative as its value moves in
relation to the share price (through a placing price) and it is not related to
the underlying host instrument, the debt. The effect is that the embedded
derivative is accounted for separately at fair value.
Note 13: 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
Other entities over which Directors/Key Management or their close family have
control or significant influence:
Kibo Energy PLC: Kibo Energy PLC is a significant shareholder of MAST Energy Developments PLC.
Kibo Energy PLC
Ultimate shareholder:
Significant shareholders: PSCD Power 1 Ltd
Kibo Mining (Cyprus) Limited (a wholly owned subsidiary of Kibo Energy PLC)
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
Rochdale Power Limited
ARL 018 Limited
ADV 001 Limited
Sloane Energy Ltd
Balances and transactions
Name Balance at Balance at Balance at
30 June 30 June 31 December 2023 (£)
2024 (£) 2023 (£)
Kibo Energy PLC - Loan from related parties owing 849,253 1,231,535 849,253
Kibo Energy PLC - Management and administration services accrued 31,170 32,130
Paul Venter - Director's loan owing (share reserve) 81,329 81,329
Paul Venter - Director's loan owing accrued interest 265 265
Katoro Gold PLC - Receivable for management services paid on Katoro's behalf 2,721 21,140
Druces LLP - Supplier balance for professional services 86,315 143,732
Note 14: Post Statement of Financial Position events
The Company has completed its Second Phase work programme regarding the
refurbishment of the first of the Pyebridge site's three Jenbacher gensets,
within budget and expected timeline. The refurbished genset commenced
commercial operational running on 1 July 2024 and is generating revenue via
the Pyebridge site's PPA with Statkraft. The MED management team in
conjunction with its O&M contractor is monitoring the performance of the
refurbished genset carefully to ensure optimal performance. Pyebridge has 3x
2.7MW gensets in operation (thus 8.1MW total), although, only one of which has
been fully refurbished and is operating at optimum capacity. The next step in
the 2nd Phase work programme is to perform the overhaul of the 2nd of the
site's gensets, and Pyebridge signed an engineering works contract with the
Pyebridge site's O&M contractor in August 2024, regarding the full
long-block overhaul of the 2nd genset, and certain further essential
improvements to the site.
Note 15: Commitments and contingencies
The Group does not have identifiable material commitments and contingencies as
at the reporting date.
Note 16: Principle 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 risks;
• Regulatory risks;
• Commodity risks;
• Development and construction risks;
• Staffing and key personnel risks; and
• Information technology risks.
Funding risks
There can be no assurance that 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. Any equity funding may be subject to shareholder approvals in line
with legal and regulatory requirements as appropriate. Refer to note 4 for a
detailed description around funding risks in the going concern assessment.
Regulatory risks
The United Kingdom power sector has undergone a number of 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 Risks
The assets that the Group manages and owns will receive revenue from the sale
of energy to 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. 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 will have a considerable impact on revenues and returns.
Development and Construction Risks
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 Groups 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 Group's 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 to the employees 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 to
mitigate the risk of data loss or business interruption.
Note 17: 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 investments in subsidiaries, 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.
A cash-generating unit (CGU) is defined as the smallest identifiable group of
assets that generates cash inflows that are largely independent of the cash
inflows from other assets or groups of assets.
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.
During the period no impairments have been identified.
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.
Environmental rehabilitation provisions
The Company recognises that its activities require it to have regard to the
potential impact that it, its subsidiaries and partners may have on the
environment. Where energy development projects are undertaken, care is taken
to limit the amount of disturbance and where any remediation works are
required, they are carried out as and when required.
Once commercial production is undertaken, the Group ensures adequate
provisions or rehabilitation, and decommissioning is made in accordance with
the relevant laws and regulations.
Fair value estimation of financial instruments
The determination of fair value for financial instruments involves significant
judgment and estimation, particularly where observable market data is not
available. The fair value measurements are categorized within a three-level
hierarchy based on the observability of the inputs used in the valuation. For
financial instruments classified within Level 3 of the fair value hierarchy,
where unobservable inputs are significant, the valuation process involves the
use of assumptions about market participant behavior, including estimates of
future cash flows, discount rates, and other factors that may vary with
economic conditions. Management regularly reviews these estimates and
assumptions to ensure that they reflect current market conditions and are
reasonable and supportable. Only Level 1 and 2 inputs were provided for the
financial instrument for the six month periods ended 30 June 2024 and 30 June
2023 and the year ended 31 December 2023
Warrants
For such grants of share options or warrants qualifying as equity-settled
share-based payments, the fair value as at the date of grant is calculated
using the Black-Scholes option pricing model, taking into account the terms
and conditions upon which the options or warrants were granted. The amount
recognised as an expense is adjusted to reflect the actual number of share
options or warrants that are likely to vest, except where forfeiture is only
due to market-based conditions not achieving the threshold for vesting.
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 30 June 2024,
which contributes significantly to the material uncertainty related to the
going concern assumption applied in preparation of the financial statements.
In determining whether or not the Group is able to continue as a going concern
for the foreseeable future, management applies judgement in identifying the
matters that give rise to the existence of the material uncertainty and in
developing responses thereto in order to address the risk of material
uncertainty. Refer Note 4.
Note 18: Financial instruments - Fair value and risk management
The Group's principal financial instruments comprise cash. The main purpose of
these financial instruments is to provide finance for the Group's operations.
The Group has various other financial assets and liabilities such as other
receivables and trade payables, which arise directly from its operations.
It is, and has been throughout the 2024 and 2023 financial period, the Group's
policy not to undertake trading in derivatives. The Group may however
recognise derivative liabilities arising from convertible instruments.
The main risks arising from the Group's financial instruments are credit risk,
liquidity risk, interest rate risk and capital risk. Management reviews and
agrees policies for managing each of these risks which are summarised below.
Financial instruments are: Balance at Balance at Balance at
30 June 2024 30 Jun 2023 31 Dec 2023
(£) (£) (£)
Financial assets at amortised cost
Trade and other receivables 131,723 78,565 122,649
Cash 251,988 8,804 252
Total financial assets 383,711 87,369 122,901
Financial liabilities at amortised cost
Loans from related parties (880,422) (1,231,535) (849,253)
Trade payables (620,172) (494,100) (941,688)
Lease liability (412,301) (301,311) (409,595)
Other financial liabilities (1,470,692) - -
Financial liabilities at fair value through profit or loss
Other financial liabilities (774,890) (802,006) (763,290)
CLN Derivative liabilities (22,232) - (22,232)
Total financial liabilities (4,180,709) (2,828,952) (2,986,058)
Total financial instruments (3,796,998) (2,741,583) (2,863,157)
Fair value measurement and fair value hierarchy
Credit risk refers to the risk that a counter party will default on its
contractual obligations resulting in financial loss to the Group. As the Group
has minimal sales to third parties, this risk is limited.
The fair value of financial instruments is determined using the following fair
value hierarchy, which categorizes the inputs used in valuation techniques
into three levels:
· Level 1: Quoted prices (unadjusted) in active markets for identical
assets or liabilities that the entity can access at the measurement date.
· Level 2: Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or indirectly. This
includes:
o Quoted prices for similar assets or liabilities in active markets.
o Quoted prices for identical or similar assets or liabilities in markets
that are not active.
o Inputs other than quoted prices that are observable for the asset or
liability (e.g., interest rates, yield curves, credit spreads).
o Market-corroborated inputs.
· Level 3: Unobservable inputs for the asset or liability. This level
applies to fair value measurements where observable inputs are not available,
requiring the use of significant judgment or estimation. These inputs reflect
the entity's own assumptions about the assumptions market participants would
use in pricing the asset or liability.
The fair value hierarchy has been applied to the financial instruments as
follows:
Financial instruments are: Balance at Balance at Balance at
30 June 2024 30 Jun 2023 31 Dec 2023
(£) (£) (£)
Financial assets at amortised cost
Level 2 inputs 383,711 87,369 122,901
Total financial assets 383,711 87,369 122,901
Financial liabilities at amortised cost
Level 2 inputs (3,383,587) (2,026,946) (2,200,536)
Financial liabilities at fair value through profit or loss
Level 1 inputs (797,122) (802,006) (785,522)
Total financial liabilities (4,180,709) (2,828,952) (2,986,058)
Total financial instruments (3,796,998) (2,741,583) (2,863,157)
Credit risk
Credit risk refers to the risk that a counter party will default on its
contractual obligations resulting in financial loss to the Group. As the Group
has minimal sales to third parties, this risk is limited.
The Group's financial assets comprise receivables and cash and cash
equivalents. The credit risk on cash and cash equivalents is limited because
the counterparties are banks with high credit-ratings assigned by
international credit rating agencies. The Group's exposure to credit risk
arise from default of its counterparty, with a maximum exposure equal to the
carrying amount of cash and cash equivalents in its consolidated statement of
financial position.
The Group does not have any significant credit risk exposure to any single
counterparty or any Group of counterparties having similar characteristics.
The Group defines counterparties as having similar characteristics if they are
connected or related entities.
The expected credit losses for the Group are £Nil for the six-month period
ended 30 June 2023 (June and December 2023: £Nil).
Financial assets exposed to credit risk at period end were as follows:
Financial assets are: Balance at Balance at Balance at
30 June 2024 30 Jun 2023 31 Dec 2023
(£) (£) (£)
Trade and other receivables 131,723 78,565 122,649
Cash 251,988 8,804 252
Total financial assets 383,711 87,369 122,901
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of
Directors, which has built an appropriate liquidity risk management framework
for the management of the Group's short, medium and long-term funding and
liquidity management requirements.
The Group manages liquidity risk by maintaining adequate reserves and by
continuously monitoring forecast and actual cash flows and matching the
maturity profiles of financial assets and liabilities. Cash forecasts are
regularly produced to identify the liquidity requirements of the Group.
The Group's financial liabilities' contractual cashflows as at 30 June 2024
were:
Group (£) Within 1 year Later than 1 year but within 5 years Later than 5 years
At 30 June 2024
Loans from related parties - - -
Trade and other payables 620,172 - -
Other financial liabilities 958,911 1,286,671 -
Lease Liabilities 39,826 159,304 835,379
1,579,083 1,445,975 835,379
At 30 June 2023
Loans from related parties - - -
Trade and other payables 494,100 - -
Other financial liabilities 307,559 494,447 -
Lease Liabilities 39,826 159,304 866,989
841,485 653,751 866,989
At 31 December 2023
Loans from related parties - - -
Trade and other payables 941,688 - -
Other financial liabilities 318,925 444,365 -
Lease Liabilities 39,826 159,304 851,812
1,300,439 603,669 851,812
Interest rate risk
The Group and Company does not have significant exposure to the risk of
changes in market interest rates relating to holdings of cash and short term
deposits.
It is the Group and Company's policy as part of its management of the
budgetary process to place surplus funds on short term deposit in order to
maximise interest earned.
Group Sensitivity Analysis:
Currently no significant impact exists due to possible interest rate changes
on the Company's interest bearing instruments.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be
able to continue as a going concern while maximising the return to
stakeholders through the optimisation of the debt and equity balance.
The Group manages its capital structure and makes adjustments to it, in light
of changes in economic conditions. To maintain or adjust its capital
structure, the Group may adjust or issue new shares or raise debt. No changes
were made in the objectives, policies or processes during the six-moth period
ended 30 June 2024. The capital structure of the Group consists of equity
attributable to equity holders of the parent, comprising issued capital,
reserves and retained losses as disclosed in the consolidated statement of
changes in equity.
Fair values
The carrying amount of the Group and Company's financial assets and financial
liabilities recognised at amortised cost in the financial statements
approximate their fair value. For those assets held at fair value (such as CLN
derivative liabilities), they are remeasured at the reporting date.
Hedging
At 30 June 2023, the Group had no outstanding contracts designated as hedges.
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