TIDMEDL
RNS Number : 2919O
Edenville Energy PLC
27 May 2015
27 May 2015
Edenville Energy plc
("Edenville" or the "Company")
Full Year Results
Edenville Energy plc (AIM: EDL), the company focussed on
generating new sources of coal-based energy in southern Tanzania,
announces its full year results for the year ended 31 December
2014.
Financial Highlights
-- GBP8.25 million Net Assets (2013: GBP8.34 million)
-- GBP1.27 million operating loss (2013:1.70 million)
-- Placing completed of 1,428,571,428 new ordinary shares raising GBP1.0m in January 2014
-- Placing completed of 416,666,666 new ordinary shares raising GBP0.25 million
-- Placing completed of 500,000,000 new ordinary shares raising GBP0.2m in November 2014
Operational Highlights
-- Reported a JORC-compliant, Measured and Indicated Resource of
170 million tonnes of in-situ coal at its Rukwa Coal Project
-- Granting of the Environmental Impact Assessment ("EIA") certificate
-- Positive results from the first set of detailed coal sampling
and test work at the Namwele deposit, part of the Rukwa Coal
Project
-- Continued productive discussions with potential development partners
-- Appointment of Arun Srivastava as Non-Executive Director
Post period highlights
-- Encouraging results from the Lahmeyer Power Plant Feasibility
Study for its Rukwa Coal to Power Project
-- Placing completed of 625,000,000 new ordinary shares raising GBP0.25m in April 2015
-- Ready to commence the low cost exploration progamme to better
define extensions and give scope for additional coal tonnage at
Edenville's Rukwa Coal Project
-- Continued relationship with Shandong Electric Power
Construction No.2 Company ("SEPCO2") to cultivate formal
partnership
Sally Schofield, Edenville Chairman, commented: "We have been
pleased with the progress made by the Company over the year in its
focus on the Rukwa Coal Project. The results from Lahmeyer Power
Plant Feasibility Study proved a major milestone for Edenville and
underpin our belief in the successful monetisation of the Rukwa
Coal Deposit.
"The granting of the EIA certificate, a positive Power Station
Feasibility Study compiled by one of the world's leading power
consultancies demonstrating a financially and technically robust
coal to power project all combine to place Edenville in a stronger
position to find the right structure and partner on the right terms
for shareholders in the Company.
"We would like to thank our shareholders for their ongoing
support and look forward to progressing the business during the
remainder of 2015."
Contact
Edenville Energy Plc +44 (0) 20 7652
Rufus Short - CEO 9788
Cantor Fitzgerald Europe
(Nominated Advisor and Corporate
Broker)
Stewart Dickson +44 (0) 20 7894
Jeremy Stephenson 7000
IFC Advisory
(Financial PR and IR)
Tim Metcalfe +44 (0) 20 3053
Graham Herring 8671
Chairman's Statement
I am pleased to present our results for the year ended 31
December 2014.
During the past year, Edenville has continued to focus on its
most advanced project, the Rukwa Coal Project, moving the Company
through some critical early phases of development. The Board is
keenly aware of the importance of progressing the Rukwa Coal
Project in tandem with developments in the power generation sector
in Tanzania. Significant work has been carried out on the Rukwa
Coal Project over the period and key milestones achieved, which
mesh with progress at a national level regarding the planning and
roll out of the new electrical transmission grid infrastructure.
These combined developments bring the Company closer to making coal
production at Rukwa a reality.
After the 2013 upgrading of the Rukwa Coal Project to a Measured
and Indicated resource of 171 million tonnes of raw coal, with an
additional 2 million tonnes in the Inferred category, the Company's
prime focus in 2014 was the submission of the Environmental Impact
Assessment ('EIA'). June 2014 saw Edenville granted this EIA from
the National Environment Management Council, an outstanding
achievement whose importance should not be underestimated. The EIA
essentially gives environmental clearance to Rukwa, one of only
three coal deposits in the entire country with environmental
permitting in place, and is the main component for grant of a full
Mining Licence.
In possession of a full JORC-compliant Measured and Indicated
Resource and the EIA, the company significantly derisked the
project and moved closer to a commercial production scenario. To
get better understanding of the near surface coal, which would
represent the material extracted during the first few years',
Edenville commissioned a series of test pits to be dug at Namwele,
Mkomolo and Muze. These test pits, which reached a maximum of 6.7
metres depth from surface, returned results which were consistently
better than those quantified in the global resource. The coal in
these top seams is of sufficient quality not to require washing for
use in a thermal power plant, which will reduce mining and
processing costs and have a correspondingly positive impact on the
cost of power production.
The extent and consistency of this near-surface coal was another
positive revealed by detailed test pit sampling. Our estimates,
independently verified by Sound Mining Consultants of Johannesburg,
indicate that more that 40 million tonnes of Edenville's Measured
and Indicated coal resource has a very low strip ratio
(approximately 1:1), lying within the zone covered by the EIA; this
tonnage alone is sufficient to fuel a 120MW power station for the
life of project. Outside of this 40 million tonnes of near surface,
high quality coal, lies the rest of the Measured and Indicated
resource, capable of providing additional feed material for a
larger power plant if required. In addition, Edenville has
identified key exploration targets in the near area which could add
additional tonnage as the demand profile matures over time.
A review of Board composition mid 2014 confirmed the need to add
a specialist with expertise on power plant development and
electricity generation. Soon after, we identified Arun Srivastava
as a prime candidate and were delighted to formally welcome him to
the Board in September 2014. Arun's appointment came at a critical
time, just as Edenville were looking to engage a consultancy group
to carry out a Power Plant Feasibility Study to validate the
commercial viability of the Rukwa Coal to Power Project. Arun was
instrumental in engaging Lahmeyer India, a division of the highly
regarded Lahmeyer International GmbH Germany, a leading
international engineering company offering a broad range of
planning and consultancy services relating primarily to
infrastructure projects including energy. The group has extensive
global experience in thermal power plant design, construction,
transmission and distribution, making them an ideal choice for the
work required by Edenville.
The results of this Feasibility Study, published post-period end
in March 2015, gave tremendously encouraging results for the
commercial viability of a coal fired power plant located at the
Rukwa Coal Project. The study recommends the power plant be
developed in two phases: Phase 1 comprising two units of 60MW each
(total 120MW), and Phase 2 comprising two units of up to 120MW each
(total 240MW), with the opportunity for rapid scale up to Phase 2
in parallel with the increasing demand profile in Tanzania.
The Feasibility Study and Financial Model consider the coal mine
and power plant as an integrated commercial entity, with profits
generated by the sale of electricity from a coal-fired power
station. The financial metrics are very encouraging; the NPV, with
a discount factor of 10%, ranges from US$220 million to US$322
million, with an estimated project cost for power plant and mine
development of US$175 million. The combined capital expenditure of
US$175 million for the power plant and mine equates to
approximately US$1.45 million per MW (median estimate), which is
considered competitive in terms of industry costs to develop the
project.
The Rukwa Coal Deposit has sufficient near surface coal, at a
strip ratio of 1:1, to feed a 120MW plant for at least 30
years.
Financing
In January 2014, Edenville completed a placing of 1,428,571,428
new ordinary shares at a price of 0.07p raising gross proceeds of
GBP 1 million.
The Directors recognise that the placing was at a significant
discount to the prevailing share price at the time. The terms of
the placing illustrate the challenges that pre-production junior
mining companies, such as Edenville, face raising finance. The
Directors did not undertake the placing without significant thought
or exploration of financing alternatives. It is a fact that raising
capital for the company was and remains a significant challenge.
.
June 2014 saw a subsequent demand led placing, at market price,
of 416,666,666 new ordinary shares at a price of 0.06p raising
gross proceeds of GBP 250,000.
In November 2014, Edenville completed a further demand-led
placing, again at market price, of 500,000,000 new ordinary shares
at 0.04 pence, providing the Company with GBP200,000 of additional
working capital. These funds were raised from a small group of
long-term, existing shareholders to sustain working capital,
advance additional test work on the coal and to fund any additional
work that may be required as we progressed through the feasibility
process.
Post period end in April 2015 saw the placing of 625,000,000 new
ordinary shares of 0.02p each. The placing price was equal to the
closing bid price of 0.04 pence prior to the placing, providing the
Company with GBP250,000 of additional funds. In addition, the
subscribers to this placing were issued with 625,000,000 warrants
excercisable for 12 months from Admission at 0.054p per warrant
into an equivalent number of ordinary shares in the Company. This
placing was undertaken with an existing long-term shareholder along
with an institution wishing to purchase Edenville stock and was the
third successive placing made at market price. The funds from the
placing brought sufficient new money into the Company to complete
the mining licence application process along with moving forward
discussions with several groups interested to partner with the
Company in the Rukwa Coal Project.
Impairment
As the Company progresses with detailed development discussions,
we continued to review our landholdings in Tanzania and took the
opportunity to rationalise where appropriate. Every hectare of
ground held by the company incurs a cost, both from License Fees
and associated work commitments, which can be significant. The
relinquishment of four non-core Prospecting Licenses in March 2014
as reported in the 2013 accounts, with a projected twelve month
saving of over more than US$1 million of committed spend, is a
demonstration of the Board's commitment to focus financial,
managerial and technical resources on the development of the Rukwa
Coal Deposit.
As part of this ongoing cost management process, the Board
elected to relinquish licence PL5420 in December 2014. This licence
has been shown not to contain significant or economic quantities of
minerals such as uranium or coal; dropping this licence reduces the
work commitments over the next 12 months by c. US$180,000. In
accordance with the Company's accounting policies and IFRS, as when
the Directors determine that it will discontinue exploration or
development on a property or when exploration rights or permits
expire or are relinquished, an impairment charge arises.
Consequently, an impairment charge of c. GBP1.3 million is in the
Statement of Comprehensive Income in the Company's financial
statements for 2014. It is a non-cash impairment.
Outlook
The absolute focus on the Rukwa Coal Project, Edenville's key
asset, better positions the Company in the lengthy and complex
discussions with potential partners as we seek the best outcome for
shareholders. Each deliverable, such as the EIA and the Feasibility
Study, de-risks the project and increases the potential value of
the Company for shareholders.
The Lahmeyer Power Plant Feasibility Study confirms the Board's
belief that the construction of a coal fired power station at
Rukwa, to provide electricity to Tanesco and commercial end users,
is the best route to monetising the Rukwa Coal Deposit. It is a
financially robust project, with a strong investment profile, which
could bring energy to a country and region undergoing significant,
long term development of its power industry over a timescale of
several years. Edenville is better placed than ever to navigate
negotiations with potential partners The granting of the EIA
certificate, a positive Power Stations Feasibility Study compiled
by one of the world's leading power consultancies demonstrating a
financially and technically robust coal to power project all
combine to place Edenville in a stronger position to find the right
structure and partner on the right terms for shareholders in the
Company.
We thank our shareholders for ongoing support during a difficult
year and look forward to progressing the business during 2015.
Sally Schofield
Chairman
Date: 27 May 2015
CEO's Statement
2014 was my first full year as CEO of Edenville Energy plc. It
proved to be a busy time to move our flagship asset the Rukwa Coal
Project forward.
In summary the Rukwa Coal Project is uniquely placed to
contribute to the expanding electricity generation profile in
Tanzania. Its relative remoteness means other forms of significant
power generation based on diesel / HFO are prohibitively expensive
and the Government of Tanzania has a stated aim to phase these
costly power alternatives out in favour of more economic
alternatives including coal. The western power line development is
also moving closer to reality with plans to integrate this into the
East Africa Power Pool grid system over the next three years.
During 2014 we have been working with all stakeholders and groups
interested in becoming part of the project to advance the necessary
technical, regulatory and commercial milestones. As we move through
2015 the Company is confident the project, as confirmed by the
Lahmeyer Power Plant Feasibility Study, has the potential to
provide significant power over a time span of at least30 years to
the Tanzanian people.
2014 started with the Company in discussions with several
engineering and financing groups that could bring both expertise
and capital to the Rukwa Coal Project. As part of the process a
consultancy group "Aequo" was commissioned to examine the process
and options to develop a large scale mine mouth power plant located
at our coal deposit. The findings from Aequo's work were positive
and allowed us to move forward over the remainder of the year to
engage in work that would add value to the project and satisfy
potential partner's requirements prior to their involvement in the
development.
In June 2014 the Rukwa Coal Project was granted the
Environmental Impact Assessment ('EIA') Certificate from the
National Environment Management Council (NEMC). This certification
as well as giving environmental clearance to the project is also a
key requirement in the process of moving from an exploration
licence to a mining licence. The EIA covers Mkomolo and Namwele and
provides the Company with one of the pillars on which to move the
mining project towards production.
Following the granting of the EIA we took steps to refine our
knowledge of the near surface coal which would be mined at the
beginning of an operation. To further delineate and upgrade the
coal resource a series of test pits were excavated along the sub
crop of the coal in Namwele and the southern part of Mkomolo (Block
5). By opening up the seam in 8 locations this allowed detailed
examination and sampling of the coal measures.
Extremely encouraging and consistent results were obtained from
the analysis, especially considering this coal is more weathered as
it is close to surface. The coal along the length of the sub-crop
exhibits qualities that would mean beneficiation or washing would
probably not be required in order for this coal in order for it to
be fed into a thermal power plant. Typical qualities of around CV
15MJ/kg, ash <40% and sulphur < 4% were recorded along the
entire strike of the coal seams. This coal could be fed directly to
a suitably configured Circulating Fluidised Bed (CFB) plant
configuration. The test work was carried out at the ISO 9001
accredited Alfred Knight Laboratories in Scotland and included wash
analysis on the samples. These too were very encouraging and
demonstrated high CV values of 21 - 25MJ/kg along with good coal
yields generally above 40%.
Part of the financial impact of not needing to wash the coal
would be to reduce mining and processing costs. We are greatly
encouraged by this scenario. Along with further work carried out by
our mining consultants, Sound Mining Systems of Johannesburg, which
indicated over 40 million tonnes of the coal resource has a low
strip ratio of approximately 1:1 we consider the existing deposit
can provide a robust coal supply for a mine mouth coal power plant
of the size we are targeting. With exploration leaving open the
potential for significantly more coal, particularly in the Muze
area, the prospect for long term operation of the project is very
positive.
To gain greater understanding of the power generation component
of the project it was accepted we needed to increase our skills
base in the Company to include the area of power plant development
and generation. In September 2014 we commissioned Arun Srivastava,
a well-respected power consultant to assist with this. Arun
previously held the position of founding CEO in Essar Power of
India who generate approximately 3.5GW per annum of power. Arun's
input was integral in developing the next stage moving forward and
in November 2014 we were delighted when Arun joined the board of
Edenville Energy as a Non-Executive Director.
In parallel with Arun's appointment the Company commissioned
Lahmeyer International (India) Pvt Ltd ('Lahmeyer'), the Indian
subsidiary of Lahmeyer International GmbH, Germany, a leading
international engineering company offering a broad range of
planning and consultancy services relating primarily to
infrastructure projects including energy, to carry out a Power
Plant Feasibility Study. The study was focused on proving the
fundamental concept of a mine mouth power plant of greater than
100MW and expanding this with technical and commercial
analysis.
As part of the study Lahmeyer conducted a comprehensive site
visit in November 2014 with the feasibility study report released
post period end in March 2015.
Key indicative values for the project include:
An estimated project capital cost of USD175M, An estimated
project payback of 9 to 10 years, Sufficient near-surface coal
supplies at a strip ratio of 1:1 to feed the 120MW plant for at
least 30 years, an estimated base case Pre Tax NPV(10%) of USD220M,
with an IRR of 23.1% increasing to USD322M and an IRR of 27.8% by
including commercial power sales.
As the power demand profile increases over time, there also
exists the possibility to expand the project into a second phase
which could take the output to greater than 300MW.
This study and report is a pivotal point around which
discussions and negotiations with financing groups, EPC contractors
and potential project partners can take place. It also satisfies
requirements by the Tanzanian authorities to allow the project to
move along the development process within the framework of the
Power System Master Plan. In the second half of 2014 we engaged in
several rounds of development talks with the Tanzanian authorities
along with submitting the Public Private Partnership ( PPP )
Concept document as required by Tanzanian regulations.
Additionally as part of the preparation for the next phase of
planning and development a detailed topographical survey was
carried in out December 2014 over the area in Namwele and Mkomolo
most likely to be mined first stage.
Although our primary focus was on the coal deposit at Rukwa we
did continue to review and carry out work on our other licences in
Tanzania. Ultimately we took the decision to relinquish certain
licences that showed a low likelihood of economic mineralization.
These licences were PL 5002/2008, PL 6180/2011, 6124/2009 and
6393/2011 in March 2014 (reported and impaired in the 2013 , all in
the Kyela Runwe area, along with PL 5420/2011 at Mwitikila in
October 2014. The cost savings have been and will continue to be
utilised to contribute to the progress of the Rukwa coal
development.
Post Period Events and Outlook
With a positive Power Plant Feasibility Study the project can
now progress through the next stages of development in 2015. The
list of tasks is comprehensive and will include submission of the
application for the Mining Licence, establishing a relationship
with a suitable partner to the project, sourcing and examining
financing for the project development and advancing talks and
regulatory requirements with the Tanzanian authorities. We are
examining and moving forward on all possible avenues to increase
value and create revenue from the project whether that is in the
form of a power plant development or from sales to other end users
for the coal in region should the opportunity arise.
CSR
Throughout the year the Company has endeavoured wherever
possible to employ local personnel to carry out work needed at the
project site. The latest round of exploration work allowed us to
employ local geology assistants and support staff over a period of
several months. We will continue to apply our policy of utilising
local resources wherever possible.
R V Short
Chief Executive Officer
Date: 27 May 2015
GROUP STATEMENT OF COMPREHENSIVE INCOME
year ended 31 december 2014
Note 2014 2013
GBP GBP
Administration expenses (895,305) (638,868)
Share based payments (147,977) (39,797)
Impairment of intangible asset (1,271,482) (1,687,494)
Group operating loss (2,314,764) (2,366,159)
Finance income 1,037 9
Loss on operations before taxation (2,313,727) (2,366,150)
Income tax 234,794 284,111
Loss for the year (2,078,933) (2,082,039)
Other comprehensive income/(loss)
Loss on translation of overseas
subsidiary 446,690 (143,057)
Total comprehensive loss for
the year (1,632,243) (2,225,096)
Attributable to:
Equity holders of the Company (1,629,217) (2,220,883)
Non-controlling interest (3,026) (4,213)
Loss per Share (pence)
Basic and diluted loss per share (0.04p) (0.05p)
All operating income and operating gains and losses relate to
continuing activities.
No separate statement of comprehensive income is provided as all
income and expenditure is disclosed above.
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 31 december 2014
2014 2013
GBP GBP
Non-current assets
Property, plant and
equipment 28,676 38,538
Intangible assets 8,234,083 8,828,849
Equity investments - -
- available for sale
8,262,759 8,867,387
Current assets
Trade and other receivables 180,912 176,277
Cash and cash equivalents 641,830 303,908
822,742 480,185
Current liabilities
Trade and other payables (88,311) (81,213)
Current assets less
current liabilities 734,431 398,972
Total assets less
current liabilities 8,997,190 9,266,359
Non-current liabilities
Provision for deferred
tax (746,922) (930,167)
8,250,268 8,336,192
Equity
Called-up share capital 1,488,728 1,019,680
Share premium account 13,215,320 12,286,868
Share option reserve 183,713 39,797
Foreign currency
translation reserve (353,694) (800,384)
Retained earnings (6,296,761) (4,224,915)
Attributable to the equity
shareholders of the company 8,237,306 8,321,046
Non- controlling
interests 12,962 15,146
Total equity 8,250,268 8,336,192
GROUP STATEMENT OF CHANGES IN EQUITY
year ended 31 december 2014
-----------------------------------------Equity
Interests-----------------------------
Share Share Retained Share Foreign Total Non-controlling Total
Capital Premium Earnings Option Currency interest
Account Reserve Reserve
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January
2013 965,588 11,913,686 (2,474,073) 326,984 (657,327) 10,074,858 19,744 10,094,602
Issue of
share
capital 54,092 456,536 - - - 510,628 - 510,628
Cost of issue - (83,354) - - - (83,354) - (83,354)
Exercise of - - - - - - - -
warrants
Cancellation
of share
options - - 326,984 (326,984)
Share based
payment
charge - - - 39,797 39,797 - 39,797
Foreign
currency
translation - - - - (143,057) (143,057) (385) (143,442)
Loss for the
year - - (2,077,826) - - (2,077,826) (4,213) (2,082,039)
At 31
December
2013 1,019,680 12,286,868 (4,224,915) 39,797 (800,384) 8,321,046 15,146 8,336,192
Issue of
share
capital 469,048 980,952 - - - 1,450,000 - 1,450,000
Cost of issue - (52,500) - - - (52,500) - (52,500)
Exercise of
warrants
Cancellation
of share
options - - 4,061 (4,061) - - - -
Share based
payment
charge - - - 147,977 - 147,977 - 147,977
Foreign
currency
translation - - - - 446,690 446,690 842 447,532
Loss for the
year - - (2,075,907) - - (2,075,907) (3,026) (2,078,933)
At 31
December
2014 1,488,728 13,215,320 (6,296,761) 183,713 (353,694) 8,237,306 12,962 8,250,268
.
group cash flow STATEMENTS
year ended 31 december 2014
Year ended Year ended
31 December 31 December
2014 2013
GBP GBP
Cash flows from operating activities
Operating loss (2,314,764) (2,366,159)
Impairment of tangible & intangible
non-current assets 1,271,482 1,704,644
Depreciation 11,475 12,258
Share based payments 147,977 39,797
Decrease/(increase) in trade and
other receivables 3,774 78,422
(Decrease)/increase in trade and
other payables 4,677 (83,073)
Foreign exchange differences 19,065 (3,457)
Net cash outflow from operating
activities (856,314) (617,568)
Cash flows from investing activities
Purchase of exploration and evaluation
assets (204,520) (289,889)
Purchase of fixed assets - (550)
Investment in subsidiaries (22) -
Finance income 1,037 9
Net cash used in investing activities (203,505) (290,430)
Cash flows from financing activities
Proceeds from issue of ordinary
shares 1,450,000 510,628
Share issue costs (52,500) (83,354)
Net cash inflow from financing
activities 1,397,500 427,274
Net increase/(decrease) in cash
and cash equivalents 337,681 (480,724)
Cash and cash equivalents at beginning
of year 303,908 784,072
Effect of foreign exchange rate
changes on cash and cash equivalents 241 560
Cash and cash equivalents at end
of year 641,830 303,908
NOTES TO THE GROUP FINANCIAL STATEMENTS
year ended 31 december 2014
1. General Information
Edenville Energy Plc is a public limited company incorporated in
the United Kingdom. The address of the registered office is Aston
House, Cornwall Avenue, London, N3 1LF. The company's shares are
listed on AIM, a market operated by the London Stock Exchange.
The principal activity of the Group is the exploration and
mining of energy commodities predominantly coal and uranium in
Africa.
2. Group Accounting Policies
Basis of preparation and statement of compliance
The Group's financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union, IFRIC Interpretations and the
parts of the Companies Act 2006 applicable to companies reporting
under IFRS. The Group's financial statements have also been
prepared under the historical cost convention, as modified by the
revaluation of available for sale investments.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Group's financial
statements are disclosed in Note 4.
The Company's financial statements continue to be prepared under
IFRS. Therefore the Company's financial statements and the
associated notes, together with the auditors' report on these
financial statements, are presented separately from the Group.
Standards and interpretations in issue but not yet effective or
not yet relevant
At the date of authorisation of these financial statements the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet
effective:
Effective
date (period
beginning
on or after)
IFRS Amendments resulting from 1 February
2,3,8, Annual Improvements 2010-2012 2015, earlier
IAS 16,24,38 cycle adoption
is permitted
IFRS Amendments resulting from 1 January
3,13, Annual Improvements 2011-2013 2015, early
IAS 40 cycle application
is permitted
IFRS Amendments resulting from 1 January
5,7, September 2014 Annual improvements 2016
IAS 19,34 to IFRSs
IFRS Deferral of mandatory effective 1 January
7 date of IFRS 9 and amendments 2015
to transition disclosures
IFRS Deferral of mandatory effective 1 January
9 date of IFRS 9 and amendments 2015
to transition disclosures
IFRS Finalised version, incorporating 1 January
9 requirements for classification 2018
and measurement, impairment,
general hedge accounting
and de-recognition
IFRS Amendments regarding the 1 January
10 sale or contribution of 2016
assets between an investor
and its associate or joint
venture
IFRS Amendments regarding the 1 January
10 application of the consolidation 2016
exception
IFRS Amendments regarding the 1 January
11 accounting for acquisitions 2016
of an interest in joint
operation
IFRS Amendments regarding the 1 January
12 application of the consolidation 2016
exception
IAS 1 Amendments resulting from 1 January
the disclosure initiative 2016
IAS 16 Amendments regarding the 1 January
clarification of acceptable 2016
methods of depreciation
and amortisation
IAS 16 Amendments bring bearer 1 January
plants into scope of IAS 2016
16
IAS 19 Amendments to clarify the 1 February
requirements that relate 2015, earlier
to how contributions from application
employees or third parties is permitted
that are linked to service
should be attributed to
periods of service
IAS 27 Amendments reinstating the 1 January
equity method as an accounting 2016
option for investments in
subsidiaries, joint ventures
and associated in an entity's
separate financial statements
IAS 28 Amendments regarding the 1 January
sale or contribution of 2016
assets between an investor
and its associate joint
venture
IAS 28 Amendments regarding the 1 January
application of the consolidation 2016
exception
IAS 38 Amendments regarding the 1 January
clarification of acceptable 2016
methods of depreciation
and amortisation
IAS 41 Amendments bring bearer 1 January
plants into scope of IAS 2016
16
The Directors anticipate that the adoption of these Standards
and Interpretations in future periods will have no material impact
on the Group's financial statements.
Share based payments
The Group operates a number of equity-settled, share-based
compensation plans, under which the entity receives services from
employees as consideration for equity instruments (options) of the
Group. The fair value of the employee services received in exchange
for the grant of options is recognised as an expense. The total
amount to be expensed is determined by reference to the fair value
of the options granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity over a
specified time period); and
-- excluding the impact of any non-vesting conditions (for
example, the requirement of employees to save).
Assumptions about the number of options that are expected to
vest include consideration of non-market vesting conditions. The
total expense is recognised over the vesting period, which is the
period over which all of the specified vesting conditions are to be
satisfied. At the end of each reporting period, the entity revises
its estimates of the number of options that are expected to vest
based on the non-market vesting conditions. It recognises the
impact of the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
When the options are exercised, the Group issues new shares. The
proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium when the options are exercised.
Basis of consolidation
The Group's financial statements consolidate the financial
statements of Edenville Energy Plc and all its subsidiary
undertakings (GOA Tanzania Limited, Edenville International
(Seychelles) Limited and Edenville International (Tanzania)
Limited) made up to 31 December 2014. Profits and losses on
intra-group transactions are eliminated on consolidation.
Subsidiaries are all entities over which the group has control.
The group controls an entity when the group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the group. They are deconsolidated
from the date that control ceases.
Business combinations
The Group adopts the acquisition method in accounting for the
acquisition of subsidiaries. On acquisition the cost is measured at
the fair value of the assets given, plus equity instruments issued
and liabilities incurred or assumed at the date of exchange. The
assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured at their fair value at the
date of acquisition. Any excess of the fair value of the
consideration over the fair value of the identifiable net assets
acquired is recorded as goodwill.
Any deficiency of the fair value of the consideration below the
fair value of identifiable net assets acquired is credited to the
income statement in the period of the acquisition.
The results of subsidiary undertakings acquired or disposed of
during the year are included in the group statement of
comprehensive income statement from the effective date of
acquisition or up to the effective date of disposal. Where
necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with
those used by the group. Inter-company transactions and balances
between group companies are eliminated.
Revenue recognition
Revenue from the sale of energy commodities is recognised upon
delivery of goods to the customers. Interest income is recognised
on a proportional basis taking into account the effective interest
rates applicable to the financial assets.
All revenue is stated net of the amount of sales tax.
Currently the group does not generate any revenue.
Presentational and functional currency
This financial information is presented in pounds sterling,
which is the Group's functional currency.
In preparing the financial statements of individual entities,
transaction in currencies other than the entity's functional
currency (foreign currencies) are recorded at the rates of exchange
prevailing on the dates of the transactions. At each balance sheet
date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at the balance sheet date.
For the purposes of presenting consolidated financial
statements, the assets and liabilities of the Group's foreign
operations (including comparatives) are expressed in pounds
sterling using exchange rates prevailing at the balance sheet date.
Income and expense items are translated at the average exchange
rate for the period. Exchange differences arising, if any, are
classified as equity and transferred to the Group's foreign
currency translation reserve. Such translation differences are
recognised in the income statement in the period in which the
foreign operation is disposed of.
Financial assets
Financial assets comprise investments, cash and cash equivalents
and receivables. Unless otherwise indicated, the carrying amounts
of the Group's financial assets are a reasonable approximation of
their fair values.
Recognition and measurement
Investments are initially recognised at fair value plus
transactions costs for all financial assets not carried at fair
value through profit or loss. Financial assets are derecognised
when rights to receive cash flows from investments have expired or
the group has transferred substantially all the risks and rewards
of ownership. Available for sale financial assets and financial
assets at fair value through profit or loss are subsequently
carried at fair value. Loans and receivables are subsequently
carried at amortised cost.
Equity investments available for sale
Equity investments available for sale are non-derivatives that
are either designated in this category or not classified in any of
the other categories. Equity investments available for sale do not
have a quoted market price in an active market. They are included
in non-current assets unless management intends to dispose of the
investment within 12 months of the balance sheet date. Investments
are initially classified at fair value. Gains and losses arising
from changes in fair value are recognised directly in equity, until
the security is disposed of or is determined to be impaired. The
Group assesses at each balance sheet date whether there is
objective evidence that a financial asset or a group of financial
assets is impaired. If any such evidence exists the cumulative
loss, measured as the difference between the acquisition cost and
the current fair value, less any impairment loss previously
recognised in statement of comprehensive income, is removed from
equity and recognised in the statement of comprehensive income.
Where the fair value cannot be reliably measured as a result of
a lack of an active market and/or reliable estimates could not be
made the equity investments are measured at cost.
Trade and other receivables
Provision for impairment of trade receivables is made when there
is objective evidence that the Group will not be able to collect
all amounts due to it in accordance with the original terms of
those receivables. The amount of the write-down is the difference
between the receivables carrying amount and the present value of
the estimated future cash flows.
An assessment for impairment is undertaken at least
annually.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand,
demand deposits and other short term highly liquid investments that
are readily convertible to a known amount of cash and are subject
to insignificant risk of changes in value.
Property, plant and equipment
Property, plant and equipment are stated at cost on acquisition
less accumulated depreciation and accumulated impairment
losses.
Depreciation is provided on all property, plant and equipment
categories at rates calculated to write off the cost, less
estimated residual value on a reducing balance basis over their
expected useful economic life. The depreciation rates are as
follows:
Basis of depreciation
Fixtures and fittings 25% reducing balance
Office equipment 25% reducing balance
Motor Vehicles 25% reducing balance
Costs capitalised include the purchase price of an asset and any
costs directly attributable to bringing it into working condition
for its intended use.
Financial liabilities
Financial liabilities are recognised when the Group becomes a
party to the contractual provisions of the instrument. Financial
liabilities comprise only trade and other payables.
All financial liabilities are recorded at amortised cost, using
the effective interest method, with interest-related charges being
recognised as an expense under finance costs in the Income
Statement.
A financial liability is derecognised only when the obligation
is extinguished, that is, when the obligation is discharged, is
cancelled, or expires.
Finance costs
Finance costs of debt, including premiums payable on settlement
and direct issue costs are charged to the income statement on an
accruals basis over the term of the instrument, using the effective
interest method.
Income taxation
The taxation charge represents the sum of current tax and
deferred tax.
The tax currently payable is based on the taxable profit for the
period using the tax rates that have been enacted or substantially
enacted by the balance sheet date. Taxable profit differs from the
net profit as reported in the income statement because it excludes
items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or
deductible.
Deferred taxation
Deferred tax is recognised, using the liability method, in
respect of temporary differences between the carrying amount of the
Group's assets and liabilities and their tax base. Deferred tax
liabilities are offset against deferred tax assets within the same
taxable entity or qualifying local tax group. Any remaining
deferred tax asset is recognised only when, on the basis of all
available evidence, it can be regarded as probable that there will
be suitable taxable profits, within the same jurisdiction, in the
foreseeable future against which the deductible temporary
difference can be utilised. Deferred tax is determined using tax
rates that are expected to apply in the periods in which the asset
is realised or liability settled, based on tax rates and laws that
have been enacted or substantially enacted by the balance sheet
date. Deferred tax is recognised in the income statement, except
when the tax relates to items charged or credited directly in
equity, in which case the tax is also recognised in equity.
Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as deduction, net of tax, from the proceeds.
Exploration and evaluation assets
Capitalisation
Certain costs (other than payments to acquire the legal right to
explore and costs which are directly attributable to those
payments) incurred prior to acquiring the rights to explore are
charged directly to the income statement. All costs incurred after
the rights to explore an area have been obtained, such as
geological and geophysical costs and other direct costs of
exploration and appraisal are accumulated and capitalised as
intangible exploration and evaluation ("E&E") assets. These
costs are only carried forward to the extent that they are expected
to be recouped through the successful development of the areas or
where activities in the areas have not yet reached a stage which
permits reasonable assessment of the existence of economically
recoverable reserves.
E&E costs are not amortised prior to the conclusion of
appraisal activities.
At completion of appraisal activities, if technical feasibility
is demonstrated and commercial reserves are discovered, then,
following development sanction, the carrying value of the relevant
E&E asset will be reclassified as a development and production
("D&P") asset, but only after the carrying value of the
relevant E&E asset has been assessed for impairment, and where
appropriate, its carrying value adjusted. If after completion of
appraisal activities in the area, it is not possible to determine
technical feasibility and commercial viability or if the legal
right to explore expires or if the Company decides not to continue
exploration and evaluation activity, then the costs of such
unsuccessful exploration and evaluation are written off to the
income statement in the period the relevant events occur.
Impairment
Management consider on a regular basis the geological resources
and exploration and evaluation results of each licence and based on
their analysis may relinquish or abandon a particular licence area.
When this occurs the costs related to the relinquished area are
written off to the income statement.
Where the licences will be retained an impairment review is
performed when facts and circumstances indicate that the carrying
value of E&E assets may exceed its recoverable amount.
For E&E assets when there are such indications, an
impairment test is carried out by grouping the E&E assets with
the D&P assets belonging to the same geographic segment to form
the Cash Generating Unit ("CGU") for impairment testing. The
equivalent combined carrying value of the CGU is compared against
the CGU's recoverable amount and any resulting impairment loss is
written off to the income statement. The recoverable amount of the
CGU is determined as the higher of its fair value less costs to
sell and its value in use.
Goodwill
At the date of acquisition of a subsidiary undertaking, fair
values are attributed to the acquired identifiable assets,
liabilities and contingent liabilities. Goodwill represents the
difference between the fair value of the purchase consideration and
the acquired interest in the fair value of those net assets.
Goodwill is initially recognised at fair value. Any negative
goodwill is credited to the income statement in the year of
acquisition. If an undertaking is subsequently sold, the amount of
goodwill carried on the balance sheet at the date of disposal is
charged to the income statement in the period of disposal as part
of the gain or loss on disposal.
Goodwill is associated with exploration and evaluation assets,
the impairment of which is discussed in the accounting policy note
for exploration and evaluation assets.
Going concern
At 31 December 2014, the Group had cash balances totalling
GBP641,830 and in April 2015 the company placed 625,000,000 new
ordinary shares of 0.02p each for a placing price of 0.04p,
providing the company with GBP250,000 of additional funds. In
addition, the subscribers to the placing were issued with
625,000,000 warrants exercisable for 12 months from Admission at
0.054p per warrant into an equivalent number of ordinary shares in
the company. Based on the current working capital forecast, the
Group is likely to need additional funds within twelve months of
the date of approval of these financial statements in order to
maintain its proposed work programme and levels of expenditure. The
ability of the Group to raise additional funds is dependent upon
investor appetite. A large element of the expenditure on the
licences is discretionary and both head office costs and Tanzanian
administration costs can be reduced if the additional funds cannot
be raised and the Group therefore continues to adopt the going
concern basis in preparing its consolidated financial
statements.
3. Financial risk management
Fair value estimation
The carrying value less impairment provision of trade
receivables and payables is assumed to approximate their fair
values, due to their short-term nature. The fair value of financial
liabilities for disclosure purposes is estimated by discounting the
future contractual cash flows at the current market interest rate
that is available to the group for similar financial
instruments
4. Critical accounting estimates and areas of judgement
The Group makes estimates and assumptions concerning the future,
which by definition will seldom result in actual results that match
the accounting estimate. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amount of assets and liabilities within the next financial year are
those in relation to:
-- the impairment of intangible exploration and evaluation assets;
-- the fair value of intangible assets acquired on the
acquisition of Edenville International Limited.
-- Share based payments
Impairment - intangible exploration and evaluation assets
The Group is required to perform an impairment review, for each
CGU to which the asset relates, when facts and circumstances
suggest that the carrying amount of the asset may exceed its
recoverable amount. The recoverable amount is based upon the
Directors' judgements and are dependent upon the discovery of
economically recoverable reserves, the ability of the Company to
obtain necessary financing to complete the development and future
profitable production or proceeds from the disposal until the
technical feasibility and commercial viability of extracting a
mineral resource becomes demonstrable, at which point the value is
estimated based upon the present value of the discounted future
cash flows.
Fair value of intangible assets
The Company holds Tanzanian prospecting licences through its
subsidiary, Edenville International (Tanzania) Limited. The value
of these intangible exploration assets acquired represents the fair
value of the consideration paid by Edenville Energy plc at the time
of the acquisition of Edenville International Limited.
The outcome of ongoing exploration and evaluation, and therefore
whether the carrying value of exploration and evaluation assets
will ultimately be recovered, is inherently uncertain. The
directors have assessed the value of exploration and evaluation
expenditure carried as intangible assets. In their opinion there
has been no impairment loss to intangible exploration and
evaluation assets in the period, other than the amounts charged to
the income statement.
Share based payments
The estimate of share based payments costs requires management
to select an appropriate valuation model and make decisions about
various inputs into the model including the volatility of its own
share price, the probable life of the options and the risk free
interest rate.
Deferred Taxation
The deferred taxation liability is based on the fair value
adjustment to the cost of the prospecting licences held by the
Company's subsidiary, Edenville International (Tanzania) Limited on
the date of acquisition.
The outcome of on going exploration and evaluation, and
therefore whether the carrying value of exploration and evaluation
assets will ultimately be recovered, is inherently uncertain. The
directors have assessed the value of exploration and evaluation
expenditure carried as intangible assets. In their opinion there
has been no change to the fair value of the prospecting licenses
originally acquired. Any change in the value of these prospecting
licences will result in a change in the deferred tax liability.
5. Directors' remuneration
2014 2013
GBP GBP
Emoluments 365,981 258,609
Share based payment charge 147,977 39,797
513,958 298,406
The highest paid director received remuneration
of GBP129,910 (2013: GBP65,000).
Directors' interest in outstanding share options
per director is disclosed in the directors'
report.
6. Related party transactions
During the year ended 31 December 2014 the Group paid GBP30,300
(2013: GBP18,303) to Adler Shine LLP for accounting services
provided in the year. Rakesh Patel is a partner in Adler Shine
LLP.
During the year the Directors, Rufus Short, Sally Schofield and
Rakesh Patel were each paid GBP5,000 in respect of the share
issues.
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling activities
of the Group, and are all directors of the company. For details of
their compensation please refer to the Remuneration report.
7. Events after the reporting date
In April 2015 the company placed 625,000,000 new ordinary shares
of 0.02p each for a placing price of 0.04p, providing the company
with GBP250,000 of additional funds. In additions, the subscribers
to the placing were issued with 625,000,000 warrants exercisable
for 12 months from Admission at 0.054p per warrant into an
equivalent number of ordinary shares in the company.
The audited Annual Report and Financial Statements for the 12
months ended 31 December 2014 and notice of AGM will shortly be
sent to shareholders and published at:
http://www.edenville-energy.com/.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR KMGZKNVKGKZM
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