REG - Mast Energy Dvlpmts. - Results for the year ended 31 December 2022
28/04/2023 07:00
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RNS Number : 7819X Mast Energy Developments PLC 28 April 2023
Mast Energy Developments PLC
(Incorporated in England and Wales)
(Registration Number: 12886458)
Share code on the LSE: MAST
ISIN: GB00BMBSCV12
("MED" or "the Company")
Results for the year ended 31 December 2022
Dated 28 April 2023
MAST Energy Developments PLC ('MED' or the 'Company') the UK-based multi-asset
owner and operator in the rapidly growing Flexible Energy market, is pleased
to announce its audited results for the year ended 31 December 2022. A
condensed set of financial statements accompanies this announcement below
while the Company's full Annual Report and Financial Statements (MED Audited
Annual Report and Financial Statements for the year ended 31 December 2022)can
be found at the following link on the Company's website Annual & Interim
Reports - MAST Energy Developments (med.energy)
(https://med.energy/?page_id=3104) .
The Company's Notice of Annual General Meeting will be announced separately in
due course.
Overview of key events during the period up to the date of this report
· The Company's core activities during the first half of 2022
predominantly focused on the operational and technical optimisation of the 9
MW Pyebridge project site. In March 2022, Pyebridge became a fully operational
gas-powered flexible power plant that has delivered considerable returns,
including outperforming the market sales price by 88%.
· The Company pre-qualified for two new Capacity Market contract
auctions for Pyebridge The T-1 contract, which is scheduled to start on 01
October 2023, was secured at a clearing price of £60.00/kW/annum. The T-4
contract, which is scheduled to start on 01 October 2026, was secured at a
clearing price of £63.00/kW/annum.
· Construction and development of its Bordesley project continued while
its 4.4 MW shovel-ready freehold site in the West Midland ('Rochdale') is at
an advanced stage of planning and permitting.
· Acquisition of two reserve power projects during period comprising
the 7.5 MW Hindlip Lane site and the 2.4 MW Stather Road site. The
acquisitions were funded through Credit Loan notes with an institutional
investor.
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
Jonathan Critchley & +44 (0)20 3869 6080 Clear Capital Markets Broker
Keith Swann
Zainab Slemang van Rijmenant zainab@lifacommunications.com Lifa Communications Investor and Public Relations Advisor
DIRECTORS, OFFICERS AND PROFESSIONAL ADVISERS
BOARD OF DIRECTORS: Louis Lodewyk Coetzee (Non-Executive Chairman)
Pieter-Schalk Krügel (Chief Executive Officer)(Appointed on 13 July 2022)
Paulus Fillippus ('Paul') Venter (Non-Executive Director)
Dominic Traynor (Non-Executive Director)
REGISTERED OFFICE AND Salisbury House
BUSINESS ADDRESS: London Wall
London
EC2M 5PS
COMPANY SECRETARY: Noel Flannan O'Keeffe
Salisbury House
London Wall
London
EC2M 5PS
PLACE OF INCORPORATION: England & Wales
AUDITORS: Crowe U.K. LLP
55 Ludgate Hill
London
EC4M 7JW
BROKERS: Clear Capital Markets Limited
12th Floor
Broadgate Tower - Office 1213
20 Primrose Street
London
EC2A 2EW
REGISTRAR: Link Group
Unit 10
Central Square
29 Wellington Street
Leeds
LS1 4DL
SOLICITORS: Druces LLP
Salisbury House
London Wall
London
EC2M 5PS
PRINCIPLE BANKERS: Barclays Bank PLC
1 Churchill Place
Canary Wharf
London E14 5HP
STOCK EXCHANGE LISTING: London Stock Exchange: Main Market (Share code: MAST)
WEBSITE: www.med.energy
DATE OF INCORPORATION: 17 September 2020
REGISTERED NUMBER: 12886458
CHAIRMANS REPORT
I am pleased to provide a review of Mast Energy Developments PLC ('MED' or the
'Company') and its subsidiaries' (collectively, the 'Group') activities and
audited financial statements for the year ended 31 December 2022.
The last year has seen the aggressive pursuit of the Company's business
strategy to expand its operations in the flexible power market in the United
Kingdom, with the objective to reach a 300 MW portfolio within 36-58 months by
acquiring, developing and operating multiple small-scale flexible power
generation plants across Great Britain. I am pleased to report that we remain
committed to this target, with the new Chief Executive of MED, Pieter Krügel,
who was appointed to the Company's Board on 13 July 2022 (see RNS date 20 May
2022), leading the charge for MED to become a significant player in the
sector. Already, Krügel has achieved significant success with the acquisition
of two more sites, namely a 7.5 MW gas-powered standby generation facility
located in Worcester ('Hindlip') and a 2.4 MW gas-powered flexible power plant
located in Scunthorpe, Lincolnshire ('Stather'). The addition of Hindlip and
Stather brings the current MED portfolio in production and development to five
sites with a combined energy generation capacity of c. 30 MW.
The Company's core activities during the first half of 2022 predominantly
focused on the operational and technical optimisation of the 9 MW Pyebridge
project site ('Pyebridge'), located in Derbyshire as well as further
construction and development of the 5 MW Bordesley site ('Bordesley'), in
Central Birmingham. In March 2022, Pyebridge became a fully operational
gas-powered flexible power plant that has delivered considerable returns,
including outperforming the market sales price by 88% and validating the
Company's strategy and ability to outperform the market (see RNSs dated 19
October 2022 and 27 February 2023). This was despite the fact that Great
Britain experienced warmer than usual autumn months that resulted in an
oversupply of gas and a drop in the price of gas. Additionally, renewable wind
and solar energy generation peaked during the same period, further lowering
MED's earning potential during October and November (a detailed overview can
be found in the Review of Operations section on page 5 of this report).
As I noted in the Company's last Annual Report and Financial Statements (see
Audited Annual Report and Accounts for the year ended 31 December 2021), a key
aspect in the development of MED's sites is the maximisation of revenues by
participation in government-approved power-balancing and standby reserve
capacity schemes, notably capacity market ('CM') contracts and route-to-market
contracts that optimise revenues from energy generation. During the 2022/2023
CM bid window, MED applied for new replacement CM contracts for Pyebridge and
successfully achieved pre-qualification and, pursuant to the recent Capacity
Market Auctions and subsequent results, cleared a T-1 bid at £60/kW/pa and
T-4 bid at an historic price of £63/kW/pa. Both CM contracts will
significantly enhance Pyebridge's revenue profile and profitability.
Elsewhere, the Company continues construction and development of its Bordesley
project while its 4.4 MW shovel-ready freehold site in the West Midland
('Rochdale') is at an advanced stage of planning and permitting. The
conclusion of the Bordesley site's EPC contract optimisation with Clarke
Energy resulted in an overall financial feasibility of Bordesley when it was
discovered that replacing the currently planned 2 x 2.5 MW Jenbacher engines
with 1 x 4.5 MW Jenbacher engine would improve engine-output efficiencies as
well as provide savings in capital construction costs. The Company is now
actively exploring Capex funding options to reach financial close and
steady-state production for Bordesley by the end of Q4 2023.
The Company continues to source and conduct due diligence on potential
shovel-ready and operating sites that meet its investment criteria, with
several flexible-power site acquisition opportunities currently under review.
The financial performance of Pyebridge in August 2022 has led the Company to
believe that its strategy and objectives are poised for further success and,
therefore, we continue to assess new funding opportunities to ensure we are
able to support our aggressive acquisition strategy.
Furthermore, the effects of climate change as well as the ongoing conflict in
Ukraine are current events that will impact energy prices, specifically gas
prices, for the foreseeable future. While we remain confident that our
strategy remains sturdy and our projects are financially robust for the 12
months following this report, we will remain vigilant of environmental and
socio-economic changes as they occur and pivot our business approach
accordingly.
To conclude, I would like to thank our new CEO and his management team for
their ongoing commitment in support of the MED business strategy. Their
vivacity and drive towards achieving the Company's strategic objectives has
assisted the Company in reaching new heights and I look forward to continue
working alongside them as we explore new opportunities and establish Mast
Energy Developments PLC as a worthy contender in the UK's growing flexible
power market.
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 Fifteen (15) months ended
31 December 2022 31 December 2021
Revenue 1,036,743 3,245
Cost of sales (778,802) (34,321)
Administrative expenses (921,769) (767,151)
Listing and capital raising fees (107,676) (352,061)
Project expenditure (661,079) (267,981)
Impairment (1,288,578) (300,000)
Other income 86,558 355,659
Finance costs (98,397) (46,348)
Loss for the period (2,733,000) (1,408,958)
The increase in the loss period-on-period, as disclosed in the table above and
in the statement of comprehensive income, is mainly owing to the following
reasons:
• Revenue increased due to the electricity
generated at the Pyebridge site. This also directly resulted in the increase
in cost of sales.
• Increase in administrative expenses due mainly
to increased professional, legal, audit, management and consulting services
rendered during the current period.
• The decrease in listing costs due to the formal
listing being completed on 14 April 2021; current year costs relate to broker,
listing and registrar fees.
• Increase in impairment of the property, plant
and equipment of Bordersley Power as a result of lower value in use.
• Impairment of the Mast Energy Projects Limited's
goodwill in the prior financial period, following on from the acquisition of
the non-controlling interest on 14 April 2021. As the underlying projects
previously held by Mast Energy Projects Limited have been restructured into
separate SPVs, controlled directly by the intermediary holding company Sloane
Developments Limited, there was no prospective benefit from continued
operations of Mast Energy Projects Limited and therefore the goodwill was
impaired.
There have been no dividends declared or paid during the current financial
period (2021: £ 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 Fifteen months ended
31 December 2022 31 December 2021
Audited Audited
Note £ £
Revenue 1,036,743 3,245
Cost of sales (778,802) (34,321)
Gross profit/(loss) 257,941 (31,076)
Administrative expenses (921,769) (767,151)
Listing and other corporate fees (107,676) (352,061)
Project expenditure (661,079) (267,981)
Impairment 8 (1,288,578) (300,000)
Operating loss (2,721,161) (1,718,269)
Other income 86,558 355,659
Finance costs (98,397) (46,348)
Loss before tax (2,733,000) (1,408,958)
Taxation - -
Loss for the period (2,733,000) (1,408,958)
Total comprehensive loss for the period (2,733,000) (1,408,958)
Loss for the period (2,733,000) (1,408,958)
Attributable to the owners of the parent (2,733,000) (1,312,243)
Attributable to the non-controlling interest - (96,715)
Total comprehensive loss for the period (2,733,000) (1,408,958)
Attributable to the owners of the parent (2,733,000) (1,312,243)
Attributable to the non-controlling interest - (96,715)
Loss Per Share
Basic loss per share(pence) 6 (1.36) (0.80)
Diluted loss per share(pence) 6 (1.36) (0.80)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022
Group
31 December 31 December
2022 2021
Audited Audited
Note £ £
Assets
Non‑Current Assets
Property, plant and equipment 7 2,552,837 2,897,909
Intangible assets 8 1,795,683 2,745,273
Total non-current assets 4,348,520 5,643,182
Current Assets
Other receivables 136,801 181,845
Cash and cash equivalents 132,184 1,805,461
Total current assets 268,985 1,987,306
Total Assets 4,617,505 7,630,488
Equity and Liabilities
Equity
Called up share capital 10 217,453 188,717
Share premium account 10 12,653,607 11,682,343
Common control reserve 11 383,048 383,048
Non-controlling interest acquired 11 (4,065,586) (4,065,586)
Retained deficit (7,071,778) (4,338,778)
Attributable to equity holders of the parent 2,116,744 3,849,744
Non-controlling interest - -
Total Equity 2,116,744 3,849,744
Liabilities
Non-current Liabilities
Lease liability 7 346,674 289,045
Other financial liabilities 13 243,056 -
Total non-current liabilities 589,730 289,045
Current Liabilities
Loans from related parties 12 1,231,535 2,269,035
Trade and other payables 300,325 259,505
Other financial liabilities 13 354,805 960,686
Lease liability 7 3,980 2,473
Derivative liability 13 20,386 -
Total current liabilities 1,911,031 3,491,699
Total Liabilities 2,500,761 3,780,744
Total Equity and Liabilities 4,617,505 7,630,488
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Share Common Control Reserve Capital Non-controlling interest acquired Retained deficit Non-controlling interest Total
Capital Premium Contribution Reserve
£ £ £ £ £ £ £ £
Balance at 31 December 2020 104,497 2,511,432 383,048 - - (2,999,449) (273,560) (274,032)
Total comprehensive loss for the period - - - - - (1,031,299) (34,470) (1,065,769)
Shares issued on listing 44,320 4,972,515 - - - - - 5,016,835
Expenditure settled in shares 2,983 169,727 - - - - - 172,710
Acquisition of non-controlling interest 36,917 4,028,669 - - (4,065,586) (308,030) 308,030 -
Balance at 31 December 2021 188,717 11,682,343 383,048 - (4,065,586) (4,338,778) - 3,849,744
Total comprehensive loss for the period - - - (2,733,000) - (2,733,000)
Loan with holding company settled in shares 28,736 971,264 - - - - - 1,000,000
Balance at 31 December 2022 217,453 12,653,607 383,048 - (4,065,586) (7,071,778) - 2,116,744
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
Group
Year ended Fifteen months ended
31 December 31 December
2022 2021
Audited Audited
Notes £ £
Cash flows from operating activities
Loss for the period before taxation (2,733,000) (1,408,958)
Loss for the period from incorporation to 31 December 2020 - 343,189
Loss for the period before taxation (2,733,000) (1,065,769)
Adjustments for non-cash items:
Non-cash interest accrued 96,828 21,623
Depreciation 7 65,948 9,793
Impairment of intangible assets 8 1,288,578 300,000
Loan waiver - other income - (355,397)
Cost settled through the issue of shares - 172,710
Gain on revaluation of derivatives (86,558) -
Other non-cash items (2,085) 94,192
(1,370,289) (822,848)
Movement in working capital
Decrease/(increase) in debtors 45,043 (181,845)
Increase in creditors 40,819 244,999
85,862 63,154
Net cash outflows from operating activities (1,284,427) (759,694)
Cash flows from investing activities
Property, plant and equipment acquired (79,827) (1,654,239)
Intangible assets acquired 11 (338,988) (150,271)
Deferred payment on Pyebridge paid 20 (555,535) -
Net cash outflows from investing activities (974,350) (1,804,510)
Cash flows from financing activities
Proceeds of issue of share capital - 5,016,835
Lease liability repaid 7 (27,000) (2,275)
Other financial liabilities (repaid)/received - (121,210)
Proceeds from Credit Letter Notes 13 650,000 -
Loans from related parties repaid 12 (37,500) (523,889)
Net cash flows financing activities 585,500 4,369,461
Net (decrease) / increase in cash and cash equivalents (1,673,277) 1,805,257
Cash and cash equivalents at beginning of period 1,805,461 204
Cash and cash equivalents at end of the period 132,184 1,805,461
During the financial year the Group issued shares to its shareholder Kibo
Mining (Cyprus) Limited in lieu of partial settlement of its loan account. The
issued shares amounted to £1,000,000.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
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.
The Group has acquired two new sites which will comprise 7.5MW and 2.4MW
gas-fuelled power generation plants supported by a Grid Connection Offer and a
Gas Connection Offer.
Note 2: Statement of Preparation
The condensed consolidated financial statements are prepared on the historical
cost basis, unless otherwise stated. The Group's accounting policies used in
the preparation of these financial statements are consistent with those used
in the annual financial statements for the year ended 31 December 2021 of the
ultimate holding Company, except for the adoption of new or amended standards
applicable from 1 January 2021, which had no material impact on the financial
statements of the Group.
The condensed consolidated financial statements of the Company have been
prepared in compliance with the framework concepts and the measurement and
recognition requirements of IAS 34, IFRS as issued by the International
Accounting Standards Board.
The condensed consolidated financial statements of the Group is presented in
Pounds Sterling, which is the functional and presentation currency for the
Group and its related subsidiaries.
The condensed consolidated financial statements do not represent statutory
accounts within the meaning of section 435 of the Companies Act 2016.
The condensed consolidated financial statements have not been audited or
reviewed by the Group's auditors, thus no assurance is provided therein.
The Directors acknowledge they are responsible for the fair presentation of
these condensed consolidated financial statements.
Note 3: Consolidation
The consolidated annual financial statements comprise the financial statements
of MAST Energy Developments PLC and its subsidiaries for the year ended 31
December 2022, 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.
During the financial year two acquisition occurred where ADV 001 Limited
(Hindlip Lane) and ARL 018 Limited were acquired and IFRS 3 recognition
conditions were applied.
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. In terms of this:
· the assets and liabilities of the acquiree are recorded at their
existing carrying amounts (not fair value);
· if necessary, adjustments are made to achieve uniform accounting
policies;
· intangible assets and contingent liabilities are recognised only to
the extent that they were recognised by the acquiree in accordance with
applicable IFRS;
· no goodwill is recognised. Any difference between the acquirer's cost
of investment and the acquiree's equity is presented separately directly in
equity as a common control reserve (CCR) on consolidation;
· any non-controlling interest is measured as a proportionate share of
the carrying amounts of the related assets and liabilities (as adjusted to
achieve uniform accounting policies); and
· any expenses of the combination are written off immediately in profit
or loss, except for the costs to issue debt which are amortised as part of the
effective interest and costs to issue equity which are recognised within
equity.
Note 4: Going concern
The financial results have been prepared on the going concern basis that
contemplates the continuity of normal business activities, the realisation of
assets and the settlement of liabilities in the normal course of business.
In performing the going concern assessment, the Board considered various
factors, including the availability of cash and cash equivalents, data
relating to working capital requirements for the foreseeable future, cashflows
from operational commencement, available information about the future, the
possible outcomes of planned events, changes in future conditions, the Ukraine
conflict, and the responses to such events and conditions that would be
available to the Board.
The Board has, inter alia, considered the following specific factors in
determining whether the Group is a going concern:
· The total comprehensive loss for the year of £2,733,000 compared to
£1,408,958 for the preceding 15 month-financial period;
· Cash and cash equivalents readily available to the Group in the
amount of £132,184 in order to pay its creditors and maturing liabilities in
the amount of £1,911,031 as and when they fall due and meet its operating
costs for the ensuing twelve months; and
· 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.
Following on from the losses incurred in the current financial period, coupled
with the net current liability position the Group finds itself in as at
December 2022, these conditions, together with those mentioned above, are
considered to indicate that a material uncertainty exists that may cast
significant doubt on the Group and Company's ability to continue as a going
concern. This is largely attributable to the short-term liquidity position
that the Group finds itself in as a result of the staggered implementation
approach regarding the underlying operations to a point where the operations
can positively contribute to the cash requirements of the larger Group.
The Directors have evaluated the Group's liquidity requirements to confirm
whether the Group has adequate cash resources to continue as a going concern
for the foreseeable future. By considering the net current liability position,
and consequently preparing a cash flow forecast covering a period of 12 months
from the date of approval of these financial statements, the Directors have
concluded that the Group would be able to continue its operations as a going
concern.
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.
Therefore, the ability of the Group to continue as a going concern is
dependent on the successful implementation or conclusion of the below noted
matters in order to address the liquidity risk the Group faces on an ongoing
basis:
· Successful conclusion of funding requirements of the Group in order
to complete construction of the Group's remaining sites;
· Successful commissioning of the remaining power-generation facilities
in order to achieve net-cash positive contributions toward the larger Group;
· Successful negotiations with Kibo Mining (Cyprus) Limited, relating
to the potential deferral of loans payable in the foreseeable future beyond a
12-month period after year-end.
As the Board is confident it would be able to successfully implement the above
matters, 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 2022 Bordersley Rochdale Pyebridge ADV001 Hindlip Lane ARL018 Stather Road Treasury and Investment Group
(£) (£) (£) (£) (£) (£) (£)
Revenue - - 1,036,743 - - - 1,036,743
Cost of sales - - (778,802) - - - (778,802)
Impairment (1,288,578) - - - - - (1,288,578)
Depreciation (11,938) - (52,632) - - (751) (65,321)
Loss before tax (1,581,475) (114,853) (50,469) (23,605) (10,967) (951,631) (2,733,000)
Total assets 1,733,554 262,043 2,082,352 265,170 210,907 63,488 4,617,505
Capital expenditure 17,099 57,962 4,766
Total liabilities (296,984) (6,897) (133,650) - (109,898) (1,953,331) (2,500,761)
31 December 2021 Bordersley Rochdale Pyebridge Treasury and Investment Group
(£) (£) (£) (£) (£)
Revenue - - 3,245 - 3,245
Cost of sales - - (34,321) - (34,321)
Impairment - - - (300,000) (300,000)
Depreciation (9,793) - - - (9,793)
Loss before tax 65,821 (15,906) (88,527) (1,370,346) (1,408,958)
Total assets 3,087,261 261,454 2,491,666 1,790,107 7,630,488
Total liabilities (107,542) (5,570) (50,240) (3,617,410) (3,780,762)
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 2022 (£) 31 December 2021 (£)
Loss for the period attributable to equity holders of the parent (2,733,000) (1,312,243)
Weighted average number of ordinary shares for the purposes of basic loss per 200,919,900 164,622,838
share
Basic loss per ordinary share (pence) (1.36) (0.80)
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 Total
Cost (£) (£) (£) (£) (£)
Opening Cost as at 1 January 2021 602,500 2,011,409 293,793 - 2,907,702
Additions - 75,061 62,090 4,766 141,917
Derecognition as a result of waiver of deferred payment. (Refer Note 20) - (421,041) - (421,041)
Closing Cost as at 31 December 2022 602,500 1,665,429 355,883 4,766 2,628,578
Accumulated Depreciation ("Acc Depr") (£) (£) (£) (£) (£)
Opening Acc Depr as at 1 January 2021 - - (9,793) - (9,793)
Depreciation - (52,632) (12,565) (751) (65,948)
Acc Depr as at 31 December 2022 - (52,632) (22,358) (751) (75,741)
Carrying Value (£) (£) (£) (£) (£)
Carrying value as at 31 December 2022 602,500 1,612,797 333,525 4,015 2,552,837
Right of use asset 31 December 2022(£) 31 December 2021(£)
Group Group
Set out below are the carrying amounts of right-of-use assets recognised and
the movements during the period:
Opening balance 284,000 -
Additions 62,090 293,793
Depreciation (12,565) (9,793)
Closing balance 333,525 284,000
Lease liability
Set out below are the carrying amounts of lease liabilities and the movements
during the period:
Opening balance 291,518 -
Additions 60,005 293,793
Interest 26,131 24,725
Repayment (27,000) (27,000)
Closing balance 350,654 291,518
Split of lease liability between current and non-current portions:
Non-current 346,674 289,045
Current 3,980 2,473
Total 350,654 291,518
31 December 2022(£) 31 December 2021(£)
Group Group
Future minimum lease payments fall due as follows
- within 1 year 33,960 27,000
- later than 1 year but within 5 years 135,840 108,000
- later than 5 years 756,720 648,000
Subtotal 926,520 783,000
- Unearned future finance charges (575,866) (491,481)
Closing balance 350,654 291,519
The Group has two lease contracts for land it shall utilise to construct
gas-fuelled power generation plants. The land is located at Bordesley,
Liverpool St. Birmingham and Stather Road, Flixborough.
The lease of the land has a lease term of 20 years, with an option to extend
for 10 years which the Group has opted to include due to the highly likely
nature of extension as at the time of the original assessment.
The Group's obligations under its leases are secured by the lessor's title to
the leased assets. The Group's incremental borrowing ranges between 8.44% and
10.38%.
Note 8: Intangible assets
Intangible assets consist of separately identifiable assets, property rights
or intellectual property (Bordersley Power) acquired either through business
combinations or through separate asset acquisitions. These intangible assets
are recognised at the respective fair values of the underlying asset acquired,
or where the fair value of the underlying asset acquired is not readily
available, the fair value of the consideration.
The following reconciliation serves to summarise the composition of intangible
assets as at period end:
Group Rochdale Power (£) Bordersley Power (£) ARL018 Stather Road (£) ADV001 Hindlip Lane (£) Total (£)
Carrying value as at 1 January 2021 - 2,595,000 - - 2,595,000
Acquisition of Rochdale Power Ltd 150,273 - - - 150,273
Carrying value as at 31 December 2021 150,273 2,595,000 - - 2,745,273
Acquisition of ARL018 Stather Road - - 91,482 - 91,482
Acquisition of ADV001 Hindlip Lane - - - 247,506 247,506
Impairments (1,288,578) (1,288,578)
Carrying value as at 31 December 2022 150,273 1,306,422 91,482 247,506 1,795,683
Sloane Developments Limited (Sloane) acquired a direct 100% equity interest in
two projects namely ARL 018 Ltd and ADV 001 Ltd during the financial year. The
purchase was treated as an acquisition of assets in terms of IFRS 3 - Business
Combinations.
The acquired assets included an intangible asset relating to the property
rights for the location where the gas generation peaker plants are planned to
be constructed.
The directors performed value in use assessments on each of the projects. The
basis for the assessments is the view that each of the projects are
distinctive cash generating units. A cash-generating unit or 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.
The assessment of the value in use of the intangible assets resulted in an
impairment of £1,288,578 being recognised relating to the Bordersley Project.
The most significant contributor to the impairment required was the increase
of the weighted average cost of capital due to increase in market interest
rates.
Note 9: Acquisition of interests in other entities
ADV 001 Ltd - 2022
Sloane Developments (Sloane) acquired a 100% interest in ADV 001 Limited
("Hindlip Lane"), from DKE Flexible Energy Limited, for the installation of a
7.5 MW gas-peaker plant in Buildings Farm, Hindlip Lane, Hindlip, Worcester,
WR3 8SB.
The acquisition purchase price totals £262,500 of which £88,817 is utilised
to settle a shareholders loan of the same amount and the remainder of
£173,683 is allocated towards purchasing all issued shares of the business.
The acquisition purchase price is to be paid from a credit loan obtained from
Riverfort Global Opportunities PCC Limited and Sanderson Capital Partners
Limited. A further £10,694was paid in cash by Mast Energy Developments Plc
("MED") of which £8,020 is allocated to the purchase price of Hindlip Lane.
The acquisition of land and gas-powered generation facility was accounted for
as an asset acquisition at consolidated level, and not as a business
combination in accordance with IFRS 3. Therefore the purchase price has been
allocated to assets and liabilities acquired based on their respective fair
values as at the date of acquisition.
ARL 018 Ltd - 2022
Sloane Developments (Sloane) acquired a 100% interest in ARL 015 Limited
("Stather Road"), from DKE Flexible Energy Limited, for the installation of a
2.4 MW gas-peaker plant on Land lying on the south side of Stather Road,
Flixborough.
The acquisition purchase price totals £87,500 of which £54,882is utilised to
settle a shareholders loan of the same amount and the remainder of £32,618 is
allocated towards purchasing all issued shares of the business. The
acquisition purchase price is to be paid from a credit loan obtained from
Riverfort Global Opportunities PCC Limited and Sanderson Capital Partners
Limited. A further £10,694 was paid in cash by Mast Energy Developments Plc
("MED") of which £2,673 is allocated to the purchase price of Stather Road.
The acquisition of land and gas-powered generation facility was accounted for
as an asset acquisition at consolidated level, and not as a business
combination in accordance with IFRS 3. Therefore the purchase price has been
allocated to assets and liabilities acquired based on their respective fair
values as at the date of acquisition.
Note 10: Share Capital
The called-up and fully paid share capital of the Company is as follows:
2022 2021
Allotted, issued and fully paid shares
(2022: 217,452,729 Ordinary shares of £0.001 each) £217,453 -
(2021: 188,717,097 Ordinary shares of £0.001 each) - £188,717
£217,453 £188,717
Number of Shares Ordinary Share Capital Share Premium
(£)
(£)
Balance at 31 December 2021 188,717,097 188,717 11,682,343
Partial Settlement of Outstanding Shareholder Loan 28,735,632 28,736 971,264
Balance at 31 December 2022 217,452,729 217,453 12,653,607
All ordinary shares issued have the right to vote, right to receive dividends,
a copy of the annual report, and the right to transfer ownership of their
shares.
During the year the Company issued shares in partial settlement of
shareholders loan in the amount of £1,000,000.
Note 11: Reserves
Common control reserve
The common control reserve is the result of the capital reorganisation between
the company, its holding and ultimate holding company during the 2020
financial year. As the reorganisation was outside the scope of IFRS 3,
predecessor valuation accounting was applied as a result of the common control
transaction.
Non-controlling interest acquired
On 31 July 2020, Sloane Developments Limited, MAST Energy Projects Limited and
St. Anderton on Vaal Limited entered into the Share Exchange Agreement
relating to the acquisition by Sloane Developments Limited of the remaining
40% of the issued share capital of MAST Energy Projects Limited. Under the
Share Exchange Agreement, the Company paid St Anderton on Vaal Limited the sum
of £4,065,586 payable by the issue of 36,917,076 ordinary shares of £0.001
each in the Company. Completion of the Share Exchange Agreement was subject to
and conditional upon the Admission of Mast Energy Developments Limited to the
London Stock Exchange.
Following 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, the
transaction was seen as a transaction with owners, and the financial impact
recognised directly in equity of £4,065,586.
The rationale for the transaction was to acquire the remaining equity within
MAST Energy Projects Limited in order to have the exclusive see-through equity
interest in the Borderley project, held in the form of royalty and revenue
agreements between MAST Energy Projects Limited and Bordersley Power Limited,
from which MED could restructure the Group through its SPV's.
Note 12: Loan from related parties
Group Group
2022 (£) 2021 (£)
Amounts falling due within one year:
Kibo Mining (Cyprus) Limited 1,231,535 2,269,035
1,235,535 2,269,035
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. The loan from Kibo Mining
(Cyprus) Ltd was partially settled to the value of £1,000,000 by way of share
issue.
Note 13: Other financial and derivative liabilities
Description Group Group Company 2022 (£) Company 2021 (£)
2022 (£) 2021 (£)
Amounts falling due within one year:
Convertible loan notes 354,805 - 354,805 -
Deferred vendor liability - 960,686 - -
Derivative liability 20,386 - 20,386 -
Amounts falling due between one year and five years:
Convertible loan notes 243,056 - 243,056 -
618,247 960,686 618,247 -
Deferred vendor liability
The deferred vendor liability was settled during the year by mutual agreement
between the seller of Pyebridge and MED plc. The settlement took place
following agreed costs incurred by MED on behalf of the seller and the
eventual waiver of the remaining amounts due in the amount of £421,041.
The settlement was reached as a result of the seller not reaching certain
contractual milestones originally agreed to in the purchase agreement of
Pyebridge. The deferred payment liability for the purchase was linked to the
seller reaching these milestones.
The resulting waiver is treated as price adjustment to the underlying assets
for the Company and Group respectively as the fair value of the consideration
paid for the assets were reduced by the waiver.
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 18 and 24 months respectively for
each drawdown from the facility. The facilities may be converted at the option
of the note holders once certain milestones have been met. At the financial
year end 31 December 2022, none of these milestones have been met and no
conversion may take place. The earliest conversion may occur during October
2023.
Derivatives
The derivative liability is derived from the convertible credit note loans.
The convertible feature within the credit notes enable the noteholders to
convert 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 and embedded derivative, as its value moves
in relation 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 14: 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 St Anderton on Vaal Limited
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:
St Anderton on Vaal Limited: St Anderton on Vaal Limited provides consulting services to the Group. The
Directors of St Anderton on Vaal Limited are also Directors of Mast Energy
Developments PLC.
Kibo Mining (Cyprus) Limited: Kibo Mining (Cyprus) Limited is the controlling shareholder of Mast Energy
Developments PLC.
Ultimate shareholder Kibo Energy PLC
Significant shareholders: St Anderton on Vaal Limited
Kibo Mining (Cyprus) Limited
Associated by fellow directorship: Katoro Gold 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
MAST Energy Projects Limited (dissolved on 24 May 2022)
Bordersley Power Limited
Pyebridge Power Limited
Rochdale Power Limited
ADV 001 Limited
ARL 018 LImited
Balances and transactions
Name Amount Amount
2022(£) 2021(£)
Kibo Mining (Cyprus) Limited - Loan from related parties owing 1,231,535 2,269,035
St Anderton on Vaal Limited - Consulting services - 161,000
Kibo Energy PLC - Management and administration services - 87,000
St Anderton on Vaal Limited - Purchase of Non-Controlling interest - 4,065,586
Kibo Mining (Cyprus) Limited was issued shares in exchange for partial
settlement of £1,000,000 of its loan with the MED Group.
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation. The transactions during the
period between the Company and its subsidiaries included the settlement of
expenditure to/from subsidiaries, working capital funding, and settlement of
the Company's liabilities through the issue of equity in subsidiaries. The
loans from related parties do not have fixed repayment terms and are
unsecured.
Note 15: Subsequent events
As at the date of this report, no significant post statement of financial
position events or conditions were identified which required further
disclosure or adjustment to the financial results.
Note 16: Commitments and contingencies
The Group does not have identifiable material commitments and contingencies as
at the reporting date.
Note 17: Principal risks
The realisation of the various projects is dependent on the successful
completion of technical assessments, project development and project
implementation and is subject to a number of significant potential risks
summarised as follows, and described further below:
• Funding risk;
• Regulatory risk;
• Commodity risk;
• Development and construction risk;
• Staffing and key personnel risk; and
• Information technology risk.
Funding risk
The Group generated revenue of £1,036,743 for the period ended 31 December
2022 and had net assets of £2,116,744 as at 31 December 2022 (31 December
2021: £3,849,744). As at the year end, the Group had liquid assets in the
form of cash and cash equivalent and other receivables of £268,985 (31
December 2021: £1,987,306).
The Directors have reviewed budgets, projected cash flows and other relevant
information, and on the basis of 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 Group has sufficient funds for its present working capital requirements
for the foreseeable future due to the successful initial public offering and
capital raising completed during the year.
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 revenue generation from existing operations, potential acquisition targets
and corporate development needs.
The Directors are confident in this light that such funding will be available,
although there is no guarantee as to the terms of such funding. In addition,
any equity funding may be subject to shareholder approvals 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 will remain a going concern for the foreseeable
future.
Regulatory risk
The United Kingdom ("UK") 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 marker 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.
Commodity Risk
The assets that the Group manages and owns will receive revenue from the sale
of energy onto the wholesale market or to end users at a price linked to the
wholesale power market price. Fluctuations in power prices going forward will
affect the profitability of the underlying reserve power assets. 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 the revenues and
returns.
Development and Construction Risk
The Group will continue to develop new project sites which 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 could impair
our 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 our 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 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 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 for detailed sensitivity analysis related to a
potential change in the key estimation uncertainties inherent in the
impairment assessment.
Useful life of Intangible assets
Amortisation is charged on a systematic basis over the estimated useful lives
of the assets after taking into account the estimated residual values of the
assets. Useful life is either the period of time over which the asset is
expected to be used or the number of production or similar units expected to
be obtained from the use of the asset.
Leases - Estimating the incremental borrowing rate
The Group cannot readily determine the interest rate implicit in the lease,
therefore, it uses its incremental borrowing rate (IBR) to measure lease
liabilities. The IBR is the rate of interest that the Group would have to pay
to borrow over a similar term, and with a similar security, the funds
necessary to obtain an asset of a similar value to the right-of-use asset in
a similar economic environment. The IBR therefore reflects what the Group
'would have to pay', which requires estimation when no observable rates are
available or when they need to be adjusted to reflect the terms and conditions
of the lease. The Group estimates the IBR using observable inputs (such as
market interest rates) when available and is required to make certain
entity-specific estimates.
Useful life of Property, plant and Equipment
The depreciable amounts of assets are allocated on a systematic basis over
their useful lives. In determining the depreciable amount, management makes
assumptions in respect of the residual value of assets based on the expected
estimated amount that the entity would currently obtain from disposing the
asset, after deducting the estimated costs of disposal. If an asset is
expected to be abandoned, the residual value is estimated at nil. In
determining the useful lives of assets, management considers the expected
period of use of assets, expected physical wear and tear, legal or similar
limits of assets such as rights, condition and location of the asset as well
as obsolescence.
Decommissioning and Environmental Rehabilitation Provisions
The Company has set-up a decommissioning provision for the removal of the
plant and equipment installed at the Bordersley Site in Liverpool St.
Birmingham., the cost of which is based on estimates.
Environmental Rehabilitation Provisions
Estimates are made in determining the present liability of environmental
rehabilitation provisions consisting of a restoration provision,
decommissioning provision and a residual impact provision. Each of these
provisions are based on an estimate of closure costs on reporting date,
inflation and discount rates relevant to the calculation and the expected date
of closure of operating activities in determining the present value of the
total environmental rehabilitation liability.
Critical judgements:
Information about critical judgements that may have the most significant
effect on recognition and measurement on assets, liabilities and expenses is
provided below:
Going Concern
The Groups current liabilities exceed its current assets as at 31 December
2022, mainly due to the loans from related parties in the amount of
£1,231,535 (31 December 2021: £2,269,035) 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.
Note 17: Financial instruments - Fair value and Risk Management
The carrying amount of all financial assets and liabilities approximates the
fair value. Directors consider the carrying value of financial instruments of
a short-term nature, that mature in 12 months or less, to approximate the fair
value of such assets or liability classes.
The carrying values of longer-term assets are considered to approximate their
fair value as these instruments bear interest at interest rates appropriate to
the risk profile of the asset or liability class.
The Group does carries derivative liabilities measured in the statement of
financial position at fair value at 31 December 2022.
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