TIDMKIBO
RNS Number : 1065D
Kibo Energy PLC
24 June 2019
Kibo Energy PLC (Incorporated in Ireland)
(Registration Number: 451931)
(External registration number: 2011/007371/10)
Share code on the JSE Limited: KBO
Share code on the AIM: KIBO
ISIN: IE00B97C0C31
("Kibo" or "the Company")
Dated: 24 June 2019
Kibo Energy PLC ('Kibo' or the 'Company')
Results for the Year Ended 31 December 2018
Kibo Energy PLC ("Kibo" or the "Company"), the multi-asset,
Africa focused energy company, is pleased to release its
consolidated annual financial results for the year ended 31
December 2018. The Company's Annual Report, which contains the full
financial statements is in the process of being prepared for
dispatch to shareholders. A copy of this Annual Report will also be
available from the Company's website at www.kibo.energy. Details of
the date and venue for this year's AGM will be announced on posting
of the full Annual Financial Results.
Overview (2018 and 2019 YTD)
-- Acquired majority interests in the Mabesekwa Coal Independent
Power Project in Botswana, the Benga Power Plant Project in
Mozambique, and a 60% equity interest in Mast Energy Developments
Limited in the UK
-- Country diversification to help insulate the Company from
sovereign risk in addition to benefitting from sub-Saharan Africa's
urgent and increasing demand for reliable, sustainable and
affordable electricity
-- Received confirmation from TANESCO that the Company can
develop the Mbeya Coal to Power Project for the export market,
subsequent to earlier notification from TANESCO that the MCPP did
not qualify as one of the preferred applicants for the delivery of
thermal coal power in Tanzania under a TANESCO tender round
-- Feasibility study completed and submitted to the Ministry of
Mineral Resources and Energy and Electricidade de Moçambique ahead
of schedule for the Benga Project in Mozambique
-- Mining Scoping Study completed for the Mabesekwa Project in
Botswana with a feasibility study underway
-- In line with the Company's strategy of becoming a dedicated
energy development company, Kibo successfully completed the sale of
the Haneti Nickel Project to Katoro Gold PLC
Chairman's Statement
2018 was transformational for the Company as we reoriented our
business and implemented our strategy to be a global energy
developer with multiple power projects focused primarily on Africa.
This strategy has helped us to spread country and project risk and
should present us with many opportunities within the strongly
growing African energy sector.
The new energy projects in which we acquired majority interests
during 2018 include the Mabesekwa Coal Independent Power Project
("MCIPP" or "Mabesekwa Project") in Botswana, the Benga Power Plant
Project ("BPPP" or "Benga Project") in Mozambique, and a 60% equity
interest in Mast Energy Developments Limited ("MED") in the UK. The
latter acquisition is expected to provide us with an opportunity
for revenue streams in the short term, whilst also creating an
ability to leverage MED's experience in electricity generation to
develop new energy projects in Africa through introducing and
developing the UK Reserve Power business model alongside our
existing coal-to-power projects on the continent.
The country diversification offered by our current African
project portfolio is strategically positioned to help insulate the
Company from sovereign risk whilst also granting us the opportunity
to participate in the opportunity arising from sub-Saharan Africa's
urgent and increasing demand for reliable, sustainable and
affordable electricity.
Our board and management teams have spent many years operating
in the international mining and energy sectors. Currently, the
energy sector is in a state of flux across the African continent:
only some 700 million of its 1.3 billion population have access to
an electricity supply. In Mozambique and Tanzania, this access is
limited to 24.2% and 32.8% of the population respectively, while
Botswana will need to add up to 500MW of committed, dispatchable
electricity generating capacity by 2040, in order to keep pace with
demand. Even the UK power landscape is undergoing transformational
change, driven primarily by the decarbonisation, decentralisation
and digitisation of the power market, which could create a GBP6
billion flexibility market by 2030.
Kibo's projects are positioned to address these concerns. To
this end, we remain focused on navigating the intricate agreements
needed to bring them to commercialisation and maintaining good
relationships with the various governments and international
organisations that are vital to their continued progress. Through
our experience on the project development path for the Mbeya Coal
to Power Project ("MCPP") in Tanzania, we have established and
strengthened key relationships and collaboration agreements with
international energy development, engineering and financial firms
such as SEPCOIII, General Electric and ABSA. In 2018, we continued
to develop and strengthen these relationships. We signed a
Strategic Development Agreement ("SDA") with SEPCOIII in July which
would place the resources of one of the world's largest energy
project developers behind Kibo in enhancing its business strategy
and the development of its African energy assets. This SDA was
backed with a commitment for a two-stage equity investment in Kibo
and while a final decision regarding the SDA has not been made,
given all conditions have not been met, discussions are ongoing.
The Company also expanded its existing Collaboration Agreement with
General Electric in August 2018 confirming it as the preferred
technology partner and supplier to Kibo across all its current and
future energy projects in Africa.
Our diversification strategy proved particularly prescient in
February 2019 with the disappointing news that our MCPP did not
qualify as one of the preferred applicants for the delivery of
thermal coal power in Tanzania under a TANESCO tender round,
delaying the construction of the project. While we strongly
anticipated that the MCPP would be the first of our projects to be
constructed, it is now on hold as we explore alternative options
for it. I would like to remind shareholders that the failed tender
bid only represented one opportunity to commercialise the MCPP and
that alternative options such as power export to neighbouring
countries, competing in any future coal to power tenders from
TANESCO and negotiating power off-take agreements with local
private enterprise are all potential revenue streams. We also
continue to explore non-power related options to exploit the coal
resource, including export, coal to gas production or coal sales to
local off-takers.
We believe that the recent award of the pre-qualification
tenders appears to reflect a political decision to keep closer
national control of coal to power generation and does not denigrate
the high quality of Kibo's tender bid, which we still believe
offers the best and most advanced option for the fast-track
development of a thermal coal plant in Tanzania. We are awaiting
clarification from TANESCO as to why our bid failed despite
repeated assurances that the MCPP was an integral part of
Tanzania's plans for increased power capacity in the country,
including a signed MOU in place for the negotiation of a Power
Purchase Agreement ("PPA") between TANESCO and Kibo. There is still
much uncertainty on what solutions will emerge to address
Tanzania's electricity shortages, but the situation is dynamic and
Kibo is well placed to be part of the mix at the appropriate time.
What is certain, however, is the urgent demand for electricity and
particularly substantial base load power generation in the country
in the short term.
However, the Company has received confirmation from TANESCO that
it can develop the MCPP for the export market. TANESCO has advised
the Company that it is currently implementing interconnectors
through Zambia, Tanzania and Kenya enabling power trade within the
Eastern African Power Pool and Southern African Power Pool member
countries. TANESCO has recommended that the Company engage these
Power Pools to ensure participation in the high demand export
market. Furthermore, the Company also remains engaged with TANESCO,
regarding potential energy supply opportunities to the domestic
market.
Although we are still committed to continue working closely with
Government and all other local stakeholders on our project in
Tanzania to our mutual benefit, the non-qualification of the MCPP's
in the tender process means that we can, for the moment, focus more
on our other projects in Africa and in the UK Reserve Power market
where we have already achieved much progress.
The Benga Project in Mozambique (65% interest with an option to
increase to 85%) is our first pure energy project, and we are very
encouraged by its rapid progress. With Government support and a
feasibility study completed and submitted to the Ministry of
Mineral Resources and Energy ('MIREME') and Electricidade de
Moçambique ('EDM') ahead of schedule, our focus is now on
finalising the coal supply agreement ("CSA") and PPA with private
off-takers.
The Mabesekwa Project in Botswana (85% interest) also presents
an exciting opportunity for the Company and its shareholders. With
a Mining Scoping Study complete, we are now progressing a
feasibility study and waiting for a Mining Licence for the
Mabesekwa Coal Mine.
Our final acquisition of the year was MED in the UK (60%
interest), which is looking to support the UK energy mix with much
needed flexible energy projects, a growing segment of the UK energy
market. Most recently, MED executed a Sale and Purchase Agreement
("SPA") to acquire Bordersley Power Limited, a key milestone as it
advances on its strategy to become a key player in the UK flexible
power generation market. This transaction is expected to reach
completion shortly.
On the corporate front, we completed the sale of our Haneti
Nickel Project during 2018 to Katoro Gold PLC. This sale
represented the divestment of the Company's last non-energy
projects in line with our strategy of growing Kibo as a dedicated
energy development company. Currently, Kibo holds a 57.57% majority
interest in Katoro which, as well as Haneti, holds gold projects in
northern Tanzania.
Kibo undertook three broker sponsored placings during 2018 and
raised GBP2.75 million. It also completed full settlement of funds
drawn down under its forward payment facility with Sanderson
Capital Partners Limited signed in 2016. I would like to welcome
First Equity Limited and SVS Securities Limited who we appointed as
our new AIM joint brokers during 2018. I also note the internal
re-assignment of roles on our Board and our appointment of Pieter
Krugel as CFO of the Company during 2018, both of which have
facilitated the seamless transition of the Company to a focused
energy development company.
The result for the year amounted to a loss of GBP4,036,713 for
the year ended 31 December 2018 (31 December 2017: GBP4,519,813) as
detailed further in the Statement of Profit or Loss and Other
Comprehensive Income.
Outlook
We remain focused on delivering our objective to build a leading
multi-asset energy company and realising value from our four
projects, which we anticipate will play major roles in the
provision of energy to a variety of power-constricted markets. With
our long-established international relationships, including the
project financing agreement announced post period end with Wimmer
Financial, we are well positioned to rapidly move onto the
construction phases once we have, amongst other things, completed
our already advanced PPA discussions. Our strength lies in our
diversity. Each of our four projects represent a vast opportunity;
I look forward with confidence to the time that our first project
crosses the line.
Finally, I would once again like to thank our Board and
especially our management under the stewardship of our CEO Louis
Coetzee who continue to provide the drive and commitment to making
Kibo a significant player in the African energy market.
_____________________________
Christian Schaffalitzky
Chairman
21 June 2019
Review of Activities
Introduction
During 2018 Kibo Energy PLC ("Kibo" or the "Company") focused
primarily on advancing its African energy projects in Tanzania,
Botswana and Mozambique. It also made significant progress under
the management of MED in evaluating project sites to install small
scale gas fired generators to serve the UK Reserve Power Market,
where the Company anticipates opportunities to avail off revenue
streams in the short term.
Mozambique - Benga Power Plant Project ("BPPP" or "Benga
Project")
Kibo operates in Mozambique through a local joint venture
company Benga Power Plant Limited ("BPPL") in which Kibo has 65%
interest. BBPL holds the Benga Project in which Kibo's 65%
beneficial interest is to be maintained by expenditure of up to
GBP1 million towards the completion of a definitive feasibility
study for the construction of a 250-300 MW coal fired thermal power
plant in the north-western Tete province. During 2018, the Company
finalised the BPPP acquisition with Termoeléctrica de Benga S.A.
("Termoeléctrica"), which holds the remaining 35% interest in the
joint venture and mobilised resources to advance the Definitive
Feasibility Study on the project. The Company has benefited from
significant work already completed on the project by Termoeléctrica
and its strong relationships with government agencies and other
local stakeholders in the project. The following agreements,
approvals and studies are already in place:
-- authorisation from the Ministry of Mineral Resources and
Energy to proceed with final feasibility study;
-- a Memorandum of Understanding with Electricidade de
Moçambique ("EDM"), the state-owned electricity generation and
transmission company acknowledging and providing their support for
its collaboration on the project;
-- confirmation from the Zambesi River water authority (ARA
Zambezi) that sufficient water will be available for the proposed
coal-fuelled power plant;
-- preliminary 5-year lease title over 59 hectares of land close
to the two producing coal mines in the Tete Province which is
expected to be extended to 50 years as a pre-requisite to power
plant construction; and
-- formal letters of comfort received from various power supply
off-takers for up to 150 MW and positive response from nearby coal
mines to discuss terms for the supply of coal to the proposed power
station.
Since acquiring its 65% interest and taking control of managing
the project, Kibo has commenced a Definitive Feasibility Study
("Benga DFS"), which will take the project through completion of a
pre-feasibility study, an environmental impact study, detailed
engineering and design, and a comprehensive financial model (the
Benga DFS was completed in March 2019 with a final review currently
in progress). The Benga DFS was given significant impetus towards
the end of 2018 when BPPL re-negotiated and expanded its MOU with
EDM. The expanded MOU, which already provided for collaboration on
the Benga DFS, set out both parties intention to negotiate a PPA
for EDM to be anchor off-taker for the power, assist in finalising
project financing and in negotiating related commercial contracts.
The DFS was aggressively advanced following the appointment of
STEAG, a German energy consultancy, to execute the studies, and EPC
specifications and PNO Consultants from South Africa, to conduct a
grid integration study. Other work in progress includes the
commencement of Phase 2 of the Environmental Impact Study and
completion of a topographic survey (LIDAR survey) at the proposed
power station site. In tandem with the engineering studies,
negotiations on Coal Purchase Agreements with local mines and PPA
negotiations with EDM and private power off-takers are also
progressing well.
Botswana - Mabesekwa Project ("MCIPP" or "Mabesekwa
Project")
Kibo established a strategic position in the Botswanan energy
market with its acquisition of an 85% beneficial interest in the
Mabesekwa Coal Independent Power Project in April 2018. The MCIPP
is held in Botswanan registered company Kibo Energy Botswana (Pty)
Limited in which Kibo and its joint venture partner, Sechaba
Natural Resources Limited ("Sechaba"), from which it acquired its
interest in the project, hold beneficial interests of 85% and 15%
respectively. Kibo acquired its interest in the MCIPP from Sechaba
by issuing it 153,710,030 of new Kibo shares, thereby making it a
27.13% shareholder in Kibo at the date of the transaction
(currently at 18.43%). As part of the transaction Sechaba also
retained some small royalties of US$0.5 and US$0.0225 per metric
tonne of coal sold and kilowatts per hour of power produced
respectively, payable from the assets of the project (coal mine
& power plant). Additionally, for a period of 72 months from
closure of the transaction, Kibo will have the right of first
refusal to participate in any electricity generating projects
within SADC countries that may be offered to Sechaba and on similar
terms. Conversely, Sechaba will have the right of first refusal to
participate in any coal export projects within SADC countries that
may be offered to Kibo.
As per the announcement dated 21 June 2018, the assets of the
MCIPP, in which Kibo holds its 85% attributable interest, include a
303 Mt Coal Resource and a concept study to construct a co-located
coal fed thermal power plant with capacity of up to 600 MW located
64 km south-west of Botswana's second city, Francistown. The
Company confirms that there has been no material change to the
Mabesekwa Coal Resource since the Coal Resource estimate was first
published as part of the announcement dated 21 June 2018. A
pre-feasibility study on the coal mining element together with a
scoping study for the construction of the power plant has already
been completed by Sechaba Water and land use permits and
environmental certification are also already in place at the
site.
On acquiring the project in early 2018, Kibo commissioned an
Independent Competent Person's Report ("CPR") from Gemecs (Pty)
Ltd, South Africa, on the coal deposit that will form the feed
stock to the planned thermal power plant. The CPR reported on
washability tests carried out on the coal, which indicated
potential to lower the ash content, increase the calorific value
and lower the total sulphur content in order to maximise the coal
yields for use in a thermal power plant. Additional testing of bulk
samples from drill holes across the coal deposit yielded results
which indicated that favourable coal quality for power generation
can be achieved through industry standard beneficiation
processes.
In November 2018, Kibo applied for a mining right over the Coal
Resource and this is currently being processed by the Botswanan
Department of Mines.
The Mabesekwa Project is ideally located to supply power to the
South African market where there is an urgent demand for additional
baseload power generation. The South African Government has
provided for 3,750 MW to be supplied from independent cross-border
coal to power projects in its Cross-Border Project procurement plan
announced in 2016. The Mabesekwa Project is also well located to
incorporate a solar energy component at the proposed thermal power
plant and the Company will look to explore this further as part of
the DFS.
Tanzania - Mbeya Project ("MCPP" or "Mbeya Project")
Kibo now has 100% interest in the Mbeya Project in southwest
Tanzania, on which it has completed an Integrated Bankable
Feasibility Study for the construction of a co-located coal mine
and coal fired power station. During the first half of 2018, the
Company continued to engage closely with TANESCO on finalising a
PPA as a follow-on from the MOU on the terms for negotiating a PPA
signed between the parties in February 2018. During this period,
Kibo also continued to advance all other aspects of the MCPP in
anticipation of concluding a PPA with TANESCO including the
completion of the second phase of its school building & upgrade
programme in villages close to the MCPP development site in
southern Tanzania.
The announcement in September 2018 by TANESCO that it was
issuing an open tender for companies to apply for pre-qualification
to be considered as independent coal and gas power producers, and
that companies with which it had already MOUs or was otherwise in
negotiation with should also submit tenders, was unexpected.
Following a subsequent cancellation and reinstatement of the tender
process by TANESCO, Kibo re-submitted comprehensive and detailed
documentation including its Integrated Bankable Feasibility Study
for the MCPP in support of a tender application in December 2018.
Regrettably, TANESCO informed Kibo by letter received on the 14th
February 2019 that it had not pre-qualified from the tender process
to be considered further as an independent coal to power producer.
The Company is currently seeking full clarification from TANESCO on
this decision and assessing alternative commercialisation options
for the MCPP.
Despite the non-qualification of the MCPP in the recent tender
round by TANESCO for coal generated power, the Company continues to
hold the Mbeya (formerly Rukwa) Coal Resource. In September 2018,
it received notification that the Mining Commission of Tanzania had
recommended grant of a Special Mining Licence over the Resource.
With Kibo's anticipated anchor off-taker for the power, TANESCO
being not currently in the picture, the Company continues to
investigate and develop alternative or co-existing outlets for both
power and coal comprising, inter alia, export of power, power
supply to local off takers, coal to local and export markets, and
coal to gas conversion. The Company has received confirmation from
TANESCO that it can develop the MCPP for the export market. TANESCO
has advised the Company that it is currently implementing
interconnectors through Zambia, Tanzania and Kenya enabling power
trade within the Eastern African Power Pool and Southern African
Power Pool member countries. TANESCO has recommended that the
Company engage these Power Pools to ensure participation in the
high demand export market. Furthermore, the Company also remains
engaged with TANESCO, regarding potential energy supply
opportunities to the domestic market. Kibo confirms that there has
been no material change to the Mbeya Coal Resource since the Coal
Resource estimate was first published as part of the RNS dated 11
April 2016, and the Company's attributable interest in the Resource
is still 100%.
United Kingdom - Mast Energy Developments Limited ("MED")
The Company took its first steps into the UK Reserve Power
generation market in 2018 with the acquisition of a 60% interest in
UK company MED. MED is targeting the acquisition of appropriate
sites upon which it plans to develop and operate gas fired
generators and ancillary structures, to supply power to the UK
Reserve Power generation market. The Reserve Power generation
market is a growing segment of the UK energy market primarily due
to the increasing percentage of renewable resources, particularly
wind, contributing to the total power output, which has caused
periods of under capacity on the UK electricity grid.
The acquisition was completed in October 2018 through the issue
of 5.7 million new Kibo shares to the sellers for a deemed
consideration of GBP300,000, and an agreement that the sellers
would also receive 5% of Kibo's share of gross projects' revenues
(royalties) under terms which require them to invest the royalties
by subscribing for Kibo shares on a monthly basis up to a
subscription value of GBP2.2 million. Other material terms of the
acquisition include terms for Kibo to buy out the royalties at a 6%
discount to their present value at discrete time points related to
the cumulative operating capacity reached within the asset
portfolios, and reciprocal options to buy out each other's
remaining interest in MED once the total generating capacity in the
projects reaches 150 MW.
In December 2018, Kibo announced that MED had acquired an
exclusive option to evaluate and negotiate on the acquisition of
three peaking power sites with total output capacity of 31.3MW. MED
has since completed due diligence on two of these sites with an
aggregate capacity of 25.2MW and has signed a Sale and Purchase
Agreement ("SPA") on one of them, Bordersley Power Limited
("Bordersley"), a 5 MW gas-fuelled power generation plant. This
transaction is expected to reach completion shortly. In tandem with
this, MED is evaluating potential Engineering, Construction &
Procurement ("EPC") providers for Bordersley and conditional offers
of debt financing from two financial institutions. Both sites are
planned to be operational in the last quarter of 2019 and the first
quarter of 2020 respectively (subject to completion of the second
acquisition).
Corporate
During 2018, the Company continued its strategy to divest its
non-energy assets with the sale of its remaining exploration
project, the Haneti Nickel project, to Katoro Gold PLC for a
consideration of 15,384,615 newly issued shares in Katoro at a
price per share of 1.3p valuing the project at GBP200,000. This
follows the divestment of its gold assets, the Imweru & Lubando
projects to Katoro during 2017.
Kibo undertook three broker sponsored placings during 2018 and
raised GBP2.75 million through the issue of 55.742 million shares
at prices of 4.25p and 5.25p per share. The Company also issued an
additional 29.61 million shares in full settlement of funds drawn
down under its forward payment facility with Sanderson Capital
Partners Limited in the amounts of $568,712 and GBP1,115,067. On
completion of the MCIPP and MED acquisitions, the Company issued a
total of 159,424,316 consideration shares. Total new shares issued
during 2018 came to 244,776,705 issued or deemed issued at price
per share from 4.25p to 6.1p. During March 2019, Kibo has issued an
additional 126,436,782 shares to Sanderson Capital Partners Limited
("Sanderson") to acquire the residual 2.5% equity interest that
Sanderson held in the MCPP at a deemed price of 1.3p.
The Company undertook a Board re-structuring during 2018, which
included the appointment of Pieter Krugel as Chief Financial
Officer. The Company believes that this re-structuring will better
align the core skill sets of management with Kibo's new positioning
as a focused international energy project developer.
The Company also appointed First Equity Limited and SVS
Securities Limited as its new joint corporate broker during 2018 to
replace Beaufort Securities Limited. The Company changed its name
at its AGM at the end of July from Kibo Mining plc to Kibo Energy
PLC to reflect is new sole focus on energy project development and
appointed Crowe U.K. LLP as its new statutory auditors.
_______________________________
Louis Coetzee
Chief Executive Officer
21 June 2019
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
GROUP
---------------------------------
31 December 31 December
2018 2017
----------- --------------------
Audited Audited
----
Note GBP GBP
----
Revenue - -
Administrative expenses (2,045,613) (1,871,697)
Impairment of intangible assets 10 (912,892) -
Listing and Capital raising fees (336,807) (908,543)
Exploration expenditure (779,443) (1,741,018)
Operating loss (4,074,755) (4,521,258)
Investment and other income 2 38,042 1,445
Loss on ordinary activities before tax (4,036,713) (4,519,813)
Taxation 6 - -
----------- --------------------
Loss for the period (4,036,713) (4,519,813)
Other comprehensive (loss)/ gain:
Items that may be classified subsequently to
profit or loss:
Exchange differences on translation of foreign
operations (401,751) 16,985
Other Comprehensive (loss)/gain for the period
net of tax (401,751) 16,985
Total comprehensive loss for the period (4,438,464) (4,502,828)
----------- --------------------
Loss for the period (4,036,713) (4,519,813)
----------- --------------------
Attributable to the owners of the parent (3,388,778) (3,712,707)
Attributable to the non-controlling interest 18 (647,935) (807,106)
Total comprehensive loss for the period (4,438,464) (4,502,828)
----------- --------------------
Attributable to the owners of the parent (3,776,894) (3,689,196)
Attributable to the non-controlling interest (661,570) (813,632)
Loss Per Share
Basic loss per share 8 (0.006) (0.010)
Diluted loss per share 8 (0.006) (0.010)
The financial statements were approved and authorised for issue
by the Board of Directors 21 June 2019 and signed on its behalf
by:
On behalf of the Board
__________________ ________________________
Christian Schaffalitzky Noel O'Keeffe
GROUP
31 December 31 December
2018 2017
------------ ------------
Audited Audited
(Restated)
----- ------------ ------------
Note GBP GBP
----- ------------ ------------
Assets
Non--Current Assets
Property, plant and equipment 9 20,240 7,650
Intangible assets 10 26,059,525 17,596,105
Goodwill 11 300,000 -
Total non-current assets 26,379,765 17,603,755
------------ ------------
Current Assets
Trade and other receivables 12 89,349 59,046
Cash 13 654,158 766,586
Total current assets 743,507 825,632
------------ ------------
Total Assets 27,123,272 18,429,387
============ ============
Equity and Liabilities
Equity
Called up share capital 14 17,240,017 14,015,670
Share premium account 14 39,205,318 28,469,750
Control reserve 15 (18,329) (213,053)
Share based payment reserve 16 41,807 556,086
Translation reserve 17 (656,622) (268,506)
Retained deficit (29,399,788) (26,534,653)
------------ ------------
Attributable to equity holders of the parent 26,412,403 16,025,294
------------
Non-controlling interest 18 409,171 927,107
------------
Total Equity 26,821,574 16,952,401
------------
Liabilities
Current Liabilities
Trade and other payables 19 301,698 266,218
Borrowings 20 - 1,210,768
Total Current Liabilities 301,698 1,476,986
============ ============
Total Equity and Liabilities 27,123,272 18,429,387
Consolidated Statement of Financial Position
The financial statements were approved and authorised for issue
by the Board of Directors on 21 June 2019 and signed on its behalf
by:
On behalf of the Board
_____________________ ________________________
Christian Schaffalitzky Noel O'Keeffe
Company Statement of Financial Position
Company
---------------------------------
31 December 31 December
2018 2017
------------ -------------------
Audited Audited
---- ------------ -------------------
Note GBP GBP
---- ------------ -------------------
Non--Current Assets
Investments in group undertakings 21 37,890,651 3,468,224
Trade and other receivables 12 333,495 24,402,788
Total Non- current assets 38,224,146 27,871,012
------------ -------------------
Current Assets
Trade and other receivables 12 282 413
Cash 13 38,974 5,690
Total Current assets 39,256 6,103
------------ -------------------
Total Assets 38,263,402 27,877,115
============ ===================
Equity and Liabilities
Equity
Called up share capital 14 17,240,017 14,015,670
Share premium 14 39,205,318 28,469,750
Share based payment reserve 16 - 514,279
Translation reserves 17 - 14,723
Retained deficit (18,277,005) (16,434,811)
------------ -------------------
Total Equity 38,168,330 26,579,611
------------ -------------------
Liabilities
Current Liabilities
Trade and other payables 19 95,072 86,736
Borrowings 20 - 1,210,768
Total liabilities 95,072 1,297,504
============ ===================
Total Equity and Liabilities 38,263,402 27,877,115
============ ===================
The financial statements were approved and authorised for issue
by the Board of Directors on 21 June 2019 and signed on its behalf
by:
On behalf of the Board
_______________________ ________________________
Christian Schaffalitzky Noel O'Keeffe
Consolidated Statement of Changes in Equity
Share Share Share Control Foreign Retained Non-controlling Total
Capital premium based reserve currency deficit interest equity
payment (Restated) translation (Restated)
GROUP reserve reserve
------------------ ------------ ------------ ------------------------ ---------- ----------- -------------- --------------- ------------
GBP GBP GBP GBP GBP GBP GBP GBP
------------------ ------------ ------------ ------------------------ ---------- ----------- -------------- --------------- ------------
Balance as at
1 January 2017 13,603,965 27,318,262 514,279 - (285,491) (23,625,367) (1,435) 17,524,213
Loss for the
year - - - - - (3,712,707) (807,106) (4,519,813)
Adjustment arising
from change in
non-controlling
interest - - - (213,053) (302,117) 803,421 1,742,174 2,030,425
Other
comprehensive
loss - exchange
differences on
translating
foreign
operations - - - - 319,102 - (6,526) 312,576
Share options
issued during
the current
period - - 41,807 - - - - 41,807
Proceeds of share
issue of share
capital 411,705 1,151,488 - - - - - 1,563,193
411,705 1,151,488 41,807 (213,053) 16,985 (2,909,286) 928,542 (571,812)
------------ ------------ ------------------------ ---------- ----------- -------------- --------------- ------------
Balance as at
31 December 2017
(Restated - Refer
to note 26) 14,015,670 28,469,750 556,086 (213,053) (268,506) (26,534,653) 927,107 16,952,401
------------ ------------ ------------------------ ---------- ----------- -------------- --------------- ------------
Loss for the
year - - - - - (3,388,778) (647,935) (4,036,713)
Adjustment arising
from change in
non-controlling
interest - - - 194,724 - 9,364 143,634 347,722
Other
comprehensive
loss - exchange
differences on
translating
foreign
operations - - - - (388,116) - (13,635) (401,751)
Proceeds of share
issue of share
capital 3,224,347 10,735,568 - - - - - 13,959,915
Reclassification
of share based
payment reserve
on expired share
options - - (514,279) - - 514,279 - -
------------ ------------
3,224,347 10,735,568 (514,279) 194,724 (388,116) (2,865,135) (517,936) 9,869,173
------------ ------------ ------------------------ ---------- ----------- -------------- --------------- ------------
Balance as at
31 December 2018 17,240,017 39,205,318 41,807 (18,329) (656,622) (29,399,788) 409,171 26,821,574
============ ============ ======================== ========== =========== ============== =============== ============
Note 14 14 16 15 17 18
The financial statements were approved by the Board of Directors
and authorised for issue on 21 June 2019 and signed on its behalf
by
On behalf of the Board
________________________________ ________________________
Christian Schaffalitzky Noel O'Keeffe
Company Statement of Changes in Equity
Share capital Share premium Share based Foreign currency Retained deficit Total equity
payment reserve translation
COMPANY reserve
------------------ ------------- ------------- ----------------- ----------------- ---------------- ------------
GBP GBP GBP GBP GBP GBP
------------------ ------------- ------------- ----------------- ----------------- ---------------- ------------
Balance as at 1
January 2017 13,603,965 27,318,262 514,279 47,430 (13,164,891) 28,319,045
Loss for the year - - - - (3,269,920) (3,269,920)
Other
comprehensive
loss - exchange
differences on
translating
foreign
operations - - - (32,707) - (32,707)
Proceeds of issue
of share capital 411,705 1,151,488 - - - 1,563,193
411,705 1,151,488 - (32,707) (3,269,920) (1,739,434)
------------- ------------- ----------------- ----------------- ---------------- ------------
Balance as at 31
December 2017 14,015,670 28,469,750 514,279 14,723 (16,434,811) 26,579,611
============= ============= ================= ================= ================ ============
Loss for the year - - - - (2,356,473) (2,356,473)
Other
comprehensive
loss - exchange
differences on
translating
foreign
operations - - - (14,723) - (14,723)
Reclassification
of share based
payment reserve
on expired share
options - - (514,279) - 514,279 -
Proceeds of issue
of share capital 3,224,347 10,735,568 - - - 13,959,915
3,224,347 10,735,568 (514,279) (14,723) (1,842,194) 11,588,719
------------- ------------- ----------------- ----------------- ---------------- ------------
Balance as at 31
December 2018 17,240,017 39,205,318 - - (18,277,005) 38,168,330
============= ============= ================= ================= ================ ============
Note 14 14 16 17
The financial statements were approved by the Board of Directors
and authorised for issue on 21 June 2019 and signed on its behalf
by
On behalf of the Board
_______________________ ________________________
Christian Schaffalitzky Noel O'Keeffe
Consolidated Statement of Cash Flows
GROUP
--------------------------------
31 December 31 December
2018 2017
----------- -------------------
Audited Audited
-----
Notes GBP GBP
-----
Cash flows from operating activities
Loss for the period before taxation (4,036,713) (4,519,813)
Adjustments for:
Impairment of intangible assets 10 912,892 -
Foreign exchange (gain)/loss 2 (270,881) 249,437
Depreciation on property, plant and equipment 9 6,805 2,738
Cost settled through the issue of shares 16 126,966 260,000
Deal cost settled in shares - 155,539
Movement in provisions - (115,663)
Deemed cost of listing - 206,680
(3,260,931) (3,761,082)
----------- -------------------
Movement in working capital
Increase in debtors 12 (30,303) (8,413)
(Decrease)/Increase in creditors 19 35,480 119,838
----------- -------------------
5,177 111,425
----------- -------------------
Net cash outflows from operating activities (3,255,754) (3,649,657)
----------- -------------------
Cash flows from financing activities
Proceeds of issue of share capital 14 3,100,000 1,817,743
Repayment of borrowings 20 (200,000) -
Proceeds from borrowings 20 251,565 1,751,928
Net cash proceeds from financing activities 3,151,565 3,569,671
----------- -------------------
Cash flows from investing activities
Net cash flow from acquisition of subsidiaries 11 - 465,408
Purchase of property, plant and equipment 9 (21,494) (1,175)
----------- -------------------
Net cash flows investing activities (21,494) 464,233
----------- -------------------
Net increase in cash (125,683) 384,247
Cash at beginning of period 766,586 382,339
Exchange movement 13,255 -
----------- -------------------
Cash at end of the period 13 654,158 766,586
=========== ===================
Company Statement of Cash Flow
COMPANY
------------------------------
31 December 31 December
2018 2017
----------- -----------------
Audited Audited
----- ----------- -----------------
Notes GBP GBP
----- ----------- -----------------
Cash flows from operating activities
Loss for the period before taxation
Adjusted for: (2,356,473) (3,269,920)
Foreign exchange movement 12,437 -
Share based payments 16 104,302 195,000
Impairment of investment in subsidiary 21 1,633,628 1,891,777
Movement in provisions - (115,663)
(606,106) (1,298,806)
----------- -----------------
Movement in working capital
(Increase) / Decrease in debtors 12 131 277
(Decrease) / Increase in creditors 19 8,336 51,733
----------- -----------------
8,467 52,010
----------- -----------------
Net cash outflows from operating activities (597,639) (1,246,796)
----------- -----------------
Cash flows from financing activities
Proceeds of issue of share capital 14 2,750,000 500,000
Repayment of borrowings 20 (200,000) -
Proceeds from borrowings 20 251,565 1,748,840
Net cash proceeds from financing activities 2,801,565 2,248,840
----------- -----------------
Cash flows from investing activities
Net cash flow from acquisition of subsidiaries (75,000) -
Cash advances to Group Companies (2,095,642) (1,018,436)
----------- -----------------
Net cash used in investing activities (2,170,642) (1,018,436)
----------- -----------------
Net increase/(decrease) in cash 33,284 (16,392)
Cash at beginning of period 5,690 22,082
Cash at end of the period 13 38,974 5,690
=========== =================
Notes to the Annual Financial Statements
1. Segment analysis
IFRS 8 requires an entity to report financial and descriptive
information about its reportable segments, which are operating
segments or aggregations of operating segments that meet specific
criteria. Operating segments are components of an entity about
which separate financial information is available that is evaluated
regularly by the Chief Operating decision maker. The Chief
Executive Officer is the Chief Operating decision maker of the
Group. Management currently identifies two divisions as operating
segments - mining and corporate. These operating segments are
monitored and strategic decisions are made based upon them together
with other non-financial data collated from exploration activities.
Principal activities for these operating segments are as
follows:
2018 Group 31 December
Mining and Exploration Corporate 2018 (GBP)
Group Group Group
Revenue - - -
Administrative cost - (2,045,613) (2,045,613)
Impairment of intangible
assets - (912,892) (912,892)
Listing and Capital raising
fees - (336,807) (336,807)
Exploration expenditure (779,443) - (779,443)
Investment and other
income 38,042 - 38,042
Tax - - -
----------------------- ------------ ------------
Loss after tax (741,401) (3,295,312) (4,036,713)
----------------------- ------------ ------------
2017 Group Mining and 31 December
Exploration Corporate 2017 (GBP)
Group Group Group
Revenue - - -
Administrative cost - (1,871,697) (1,871,697)
Capital raising fees - (908,543) (908,543)
Exploration expenditure (1,741,018) - (1,741,018)
Investment and other income 1,445 - 1,445
Tax - - -
------------- ------------ ------------
Loss after tax (1,739,573) (2,780,240) (4,519,813)
------------- ------------ ------------
2018 Group 31 December
Mining Corporate 2018 (GBP)
Group Group Group
----------- ---------- ------------
Assets
Segment assets 27,084,016 39,256 27,123,272
Liabilities
Segment liabilities 206,626 95,072 301,698
Other Significant items
Depreciation 6,805 - 6,805
2017 Group 31 December
Mining Corporate 2017 (GBP)
Group Group Group
----------- ---------- ------------
Assets
Segment assets 18,423,284 6,103 18,429,387
Liabilities
Segment liabilities 264,562 1,297,504 1,562,066
Other Significant items
Depreciation 2,738 - 2,738
Geographical segments
The Group operates in six principal geographical areas -
Corporate (Ireland, Cyprus, South Africa, Canada & United
Kingdom) and Mining (Tanzania).
Ireland, United
Kingdom, South
Africa, Cyprus 31 December 2018
Tanzania and Canada (GBP)
Group Group Group
Major Operational indicators
Carrying value of segmented
assets 27,084,016 39,256 27,123,272
Loss after tax (766,748) (3,269,966) (4,036,713)
----------- ---------------- -----------------
Ireland, United
Kingdom, South
Africa, Cyprus 31 December
Tanzania and Canada 2017 (GBP)
Group Group Group
Major Operational indicators
Carrying value of segmented
assets 18,423,284 6,103 18,429,387
Loss after tax (1,626,824) (2,892,989) (4,519,813)
------------ ---------------- ------------
2. Investment and other Income
31 December 31 December
2018 (GBP) 2017 (GBP)
Foreign exchange gains 13,948 463
Other income 24,094 982
------------ ------------
38,042 1,445
------------ ------------
3. Loss on ordinary activities before taxation
Operating loss is stated after the following key 31 December 31 December
transactions: 2018 (GBP) 2017 (GBP)
Group Group
Depreciation of property, plant and equipment of
Group financial statements 6,805 2,738
Auditors' remuneration for audit of Group and Company
financial statements 45,000 35,000
Auditors' remuneration audit of the financial statements
of the company's subsidiaries 22,000 2,500
4. Staff costs (including Directors)
Group Group Company Company
31 December 31 December 31 December 31 December
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
Wages and salaries 663,470 876,628 353,484 502,677
Share based remuneration - 260,000 - 260,000
------------- ------------- ------------- -------------
663,470 1,136,628 353,484 762,677
------------- ------------- ------------- -------------
The average monthly number of employees (including Executive
Directors) during the period was as follows:
Group Group Company Company
31 December 31 December 31 December 31 December
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
Exploration activities 10 10 1 1
Administration 6 6 1 1
------------- ------------- ------------- -------------
16 16 2 2
------------- ------------- ------------- -------------
5. Directors' emoluments
Group Group Company Company
31 December 31 December 31 December 31 December
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
Basic salary and fees 441,558 464,210 353,484 338,578
Share based payments - 195,000 - 195,000
------------- ------------- ------------- -------------
441,558 659,210 353,484 533,578
------------- ------------- ------------- -------------
The emoluments of the Chairman were GBP15,963 (2017
GBP13,135).
The emoluments of the highest paid director were GBP198,552
(2017: GBP260,210).
Directors received shares to the value of GBP NIL during the
year (2017: GBP195 000).
Key management personnel consist only of the Directors. Details
of share options and interests in the Company's shares of each
director are shown in the Directors' report. The following table
summarises the remuneration applicable to each of the individuals
who held office as a director during the reporting period:
31 December 2018
Share
Salary based
and fees payments Total
GBP GBP GBP
Christian Schaffalitzky 15,963 - 15,963
Louis Coetzee 198,552 - 198,552
Noel O'Keeffe 88,039 - 88,039
Lukas Maree 54,947 - 54,947
Wenzel Kerremans 13,272 - 13,272
Andreas Lianos 70,785 - 70,785
---------- -------------- ------------
Total 441,558 - 441,558
---------- -------------- ------------
31 December 2017
Share
Salary based
and fees payments Total
GBP GBP GBP
Christian Schaffalitzky 13,135 - 13,135
Louis Coetzee 195,210 65,000 260,210
Noel O'Keeffe 125,632 65,000 190,632
Lukas Maree 13,772 - 13,772
Wenzel Kerremans 13,115 - 13,115
Andreas Lianos 103,346 65,000 168,346
-------------- -------------- ----------
Total 464,210 195,000 659,210
-------------- -------------- ----------
GBP195,000 convertible loan notes were issued to Directors of
the Company who are also members of its Executive committee on 27
September 2017. The loan notes issued were in lieu of bonus shares
due as part of an interim award approved by the Kibo board on 24
April 2017. On 28 September 2017, these directors elected to
convert their loan notes into Kibo shares. These resultant number
of shares issued amount to 3,900,000 ordinary shares at an issue
price of GBP0.05 per share, calculated in accordance with the Note
Term Sheet.
6. Taxation
Current tax
31 December 31 December
2018 (GBP) 2017 (GBP)
Charge for the period in Ireland, Canada, - -
Republic of South Africa, Cyprus, United
Kingdom and Republic of Tanzania
------------ ------------
Total tax charge - -
------------ ------------
The difference between the total current tax shown above and the
amount calculated by applying the standard rate of Irish
corporation tax of 12.5% to the loss before tax is as follows:
2018 (GBP) 2017 (GBP)
--------------- ------------
Loss on ordinary activities before tax (4,036,713) (4,519,813)
--------------- ------------
Income tax expense calculated at 12.5% (2017:
12.5%) (504,589) (564,977)
--------------- ------------
Income which is not taxable - -
Expenses which are not deductible 114,111 97,199
Losses available for carry forward 390,478 467,778
Income tax expense recognised in the Statement - -
of Profit or Loss
--------------- ------------
The effective tax rate used for the December 2018 and December
2017 reconciliations above is the corporate rate of 12.5% payable
by corporate entities in Ireland on taxable profits under tax law
in that jurisdiction.
No provision has been made for the 2018 deferred taxation as no
taxable income has been received to date, and the probability of
future taxable income is indicative of current market conditions
which remain uncertain. At the Statement of Financial Position
date, the Directors estimate that the Group has unused tax losses
of GBP25,000,200 (2017: GBP21,876,379) available for potential
offset against future profits which equates to an estimated
potential deferred tax asset of GBP3,125,024 (2017: GBP2,734,547).
No deferred tax asset has been recognised due to the
unpredictability of the future profit streams. Losses may be
carried forward indefinitely in accordance with the applicable
taxation regulations ruling within each of the above
jurisdictions.
7. Loss of parent Company
As permitted by Section 293 of the Companies Act 2014, the
Statement of Profit or Loss of the parent Company has not been
separately disclosed in these financial statements. The parent
Company's loss for the financial period was GBP2,356,473 (2017:
GBP3,269,920).
8. 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 31 December
2018 (GBP) 2017 (GBP)
Loss for the period attributable
to equity holders of the parent (3,388,778) (3,712,707)
Weighted average number of ordinary
shares for the purposes of basic
loss per share 565,932,121 372,255,127
Basic loss per ordinary share (0.006) (0.010)
As there are no instruments in issue which have a dilutive
impact, the dilutive loss per share is equal to the basic loss per
share, and thus not disclosed separately.
9. Property, plant and equipment
GROUP
Furniture Motor Office I.T Plant & Total
and Vehicles Equipment Equipment Machinery
Fittings
Cost (GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
Opening Cost as at 1
January 2017 121,309 219,292 45,693 31,549 5,672 423,515
Additions 1,004 - - 171 - 1,175
Exchange movements (6,521) (19,326) (7,285) (5,026) 1,745 (36,413)
Closing Cost as at 31
December 2017 115,792 199,966 38,408 26,694 7,417 388,277
--------- --------- --------- --------- --------- -----------
Disposals 11 - (114,927) - - - (114,927)
Additions - 1,354 16,396 1,118 2,164 462 21,494
Exchange movements 5,837 5,340 1,419 1,658 942 15,196
Closing Cost as at 31
December 2018 122,983 106,775 40,945 30,516 8,821 310,040
--------- --------- --------- --------- --------- -----------
Furniture Motor Office I.T Plant & Total
and Vehicles Equipment Equipment Machinery
Fittings
Accumulated Depreciation (GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
("Acc Depr")
Acc Depr as at 1 January
2017 120,839 219,292 40,660 27,945 5,672 414,408
Depreciation 856 - 905 977 - 2,738
Exchange Movements (6,897) (19,326) (7,333) (4,708) 1,745 (36,519)
Acc Depr as at 31
December 2017 114,798 199,966 34,232 24,214 7,417 380,627
--------- --------- --------- --------- --------- -----------
Disposals - (114,927) - - - (114,927)
Depreciation 314 3,712 1,254 1,063 462 6,805
Exchange movements 7,075 5,341 2,032 1,905 942 17,295
Acc Depr as at 31
December 2018 122,187 94,092 37,518 27,182 8,821 289,800
--------- --------- --------- --------- --------- -----------
Furniture Motor Office I.T Plant & Total
and Vehicles Equipment Equipment Machinery
Fittings
Carrying Value (GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
--------- --------- --------- --------- --------- -----------
Carrying value as at 31
December 2017 994 - 4,176 2,480 - 7,650
--------- --------- --------- --------- --------- -----------
Carrying value as at 31
December 2018 796 12,683 3,427 3,334 - 20,240
--------- --------- --------- --------- --------- -----------
10. Intangible assets
Intangible assets consist solely of separately identifiable
prospecting and exploration assets 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 prospecting assets as at period end:
Mabesekwa Mbeya Coal Lake Victoria Total (GBP)
Coal to to Power Project
Power Project Project (GBP)
(GBP) (GBP)
Valuation as at 1 January 2017 - 15,896,105 1,700,000 17,596,105
--------------- ----------- -------------- ------------
Impairment of prospecting asset - - - -
Reversal of impairment of licences - - - -
Carrying value as at 1 January
2018 - 15,896,105 1,700,000 17,596,105
Acquisition of an 85% equity
interest in the Mabesekwa Coal
Independent Power Project 9,376,312 - - 9,376,312
Impairment of prospecting asset - - (912,892) (912,892)
Carrying value as at 31 December
2018 9,376,312 15,896,105 787,108 26,059,525
--------------- ----------- -------------- ------------
Intangible assets are not amortised, due to the indefinite
useful life which is attached to the underlying prospecting rights
and/or intellectual property acquired, until such time that active
mining operations commence, which will result in the intangible
asset being amortised over the useful life of the relevant mining
licences.
Intangible assets with an indefinite useful life are assessed
for impairment on an annual basis, against the prospective fair
value of the intangible asset. The valuation of intangible assets
with an indefinite useful life is reassessed on an annual basis
through valuation techniques applicable to the nature of the
intangible assets.
One or more of the following facts or circumstances indicate
that an entity should test exploration and evaluation assets for
impairment:
-- the period for which the entity has the right to explore the
asset has expired during the period or will expire in the
foreseeable future;
-- substantial expenditure on the asset in future is neither planned nor budgeted;
-- exploration for and evaluation of mineral resources in the
specific area have not led to the discovery of commercially viable
quantities of mineral resources and the entity has decided to
discontinue such activities in the specific area; and
-- sufficient data exist to indicate that, although a
development in the specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be
recovered in full from successful development or by sale.
In assessing whether a write-down is required in the carrying
value of a potentially impaired intangible asset, the asset's
carrying value is compared with its recoverable amount. The
recoverable amount is the higher of the asset's fair value less
costs to sell and value in use. The valuation techniques applicable
to the valuation of the abovementioned intangible assets comprise a
combination of fair market values, discounted cash flow projections
and historic transaction prices.
The following key assumptions influence the measurement of the
intangible assets' recoverable amounts, based on the value in use
calculations performed:
-- currency fluctuations and exchange movements applicable to model;
-- commodity prices related to ore reserve and forward looking statements;
-- expected growth rates in respect of production capacity;
-- cost of capital related to funding requirements;
-- applicable discounts rates, inflation and taxation implications;
-- future operating expenditure for extraction and mining of
measured mineral resources; and
-- co-operation of key project partners going forward.
Through review of the project specific financial, operational,
market and economic indicators applicable to the above intangible
assets, as well as consideration of the various elements which
contribute toward the indication of impairment of exploration and
evaluation assets, a partial impairment of the Lake Victoria Gold
intangible asset was identified, as detailed in the latter part of
this note. A summary of the assessment performed for each of the
intangible assets are detailed below.
Mbeya Coal to Power Project
The Group's flagship exploration/prospecting asset remains its
Mbeya Coal to Power Project situated in the Mbeya region of
Tanzania, which comprises the Mbeya Coal Mine, a potential 1.5Mt
p/a mining operation, and the Mbeya Power Plant, a planned 300MW
mine-mouth thermal power station. The Mbeya Coal Mine has a defined
120.8 Mt NI 43-101 thermal coal resource.
A Definitive Feasibility Study has been conducted on the project
which underpinned its value and confirmed an initial rate of return
of 69.2%. The 300MW mouth-of-mine thermal power station has long
term scalability with the potential to become a 1000MW plant. The
completed full Power Feasibility Study highlighted an annual power
output target of 1.8GW based on annual average coal consumption of
1.5Mt.
An Integrated Bankable Feasibility Study report for the entire
project indicated total potential revenues of US$ 7.5-8.5 billion
over an initial 25-year mine life, post-tax equity IRR between
21-22%, debt pay-back period of 11-12 years and a construction
period of 36 months.
During the 2018 financial period, the Group continued to pursue
various avenues in order to securing a formal binding
Power-Purchase Agreement with the Tanzania Electricity Supply
Company ("TANESCO"). Subsequent to the completion of a compulsory
tender process through TANESCO on the development of the Mbeya Coal
to Power Project, the Group was informed that its bid to secure a
Power-Purchase Agreement was unsuccessful.
Further engagement with TANESCO has subsequently culminated in
the receipt of a formal notice from TANESCO inviting the Group it
to develop the Mbeya Coal to Power Project for the export market
and thereby enabling the Company to engage with the African Power
Pools regarding potential off-take agreements.
As at year end, taking into account the various aspects listed
above, the Group concluded that none of the impairment indicators
had been met in relation to the Mbeya Coal assets.
Lake Victoria Project
During the year, the Group (through a 55.5% shareholding (as at
31 December 2018) owned in AIM-listed subsidiary Katoro Gold plc)
completed all technical aspects of the pre-feasibility study
("PFS"). However, due to changes in the Tanzanian mining
legislation and associated mining regulations the Group suspended
completion of the other elements of the PFS to conduct further
assessments to determine the extent to which the new legislation
and regulations could impact the viability of the project.
Having completed this assessment, the Group concluded that there
was still an upside in exploration and development potential for
the further development of the project, however the immediate
benefit to the Group would be through development of more advanced
projects.
As at year end, taking into consideration the decision to
suspend temporarily the further exploration of the Lake Victoria
Project, the Group re-assessed the fair value of intangible assets
with an indefinite useful life utilising an open market valuation
based on offers received on the specific resource, concluding that
there exists a potential impairment as the fair value of these
intangible assets does not exceed the carrying value.
Thus, as at year end, an impairment amounting to GBP912,892 was
recognised, in relation to the Lake Victoria Project.
Mabesekwa Coal Independent Power Project
On 3 April 2018, the Group completed the acquisition of an 85%
interest in the Mabesekwa Coal Independent Power Project, located
in Botswana. The project comprises early stage development of a
coal resource with the aim of developing a coal mine and associated
thermal power plant. This acquisition was in line with the Group's
strategy of positioning itself as a strategic regional electricity
supplier in Southern Africa and creates many synergies with the
MCPP in Tanzania.
As a result of the acquisition, 153,710,030 ordinary shares in
Kibo were issued to Sechaba Natural Resources Limited ("Sechaba").
Sechaba retained a 15% interest in the Mabesekwa Coal Independent
Power Project and were granted the right to have its managing
director (holding the role at the date of acquisition) gain a seat
on Kibo's board of directors (no Sechaba representative currently
sits on the Kibo board with Mr Mashale Phumaphi's resignation). The
intangible asset was recognised at the fair value of the
consideration paid, which emanates from the fair value of the
equity instruments issued as at transaction date, being
GBP9,376,312.
The Mabesekwa Coal Independent Power Project is located
approximately 40km east of the village of Tonata and approximately
50km southwest of Francistown, Botswana's second largest city.
Certain aspects of the Project have been advanced previously by
Sechaba Natural Resources Limited ("Sechaba"), including water and
land use permits and environmental certification. Mabesekwa
consists of a 300Mt subset of a coal deposit which contained an
insitu resource of approximately 777Mt at the time of the Kibo
acquisition (the balance of which the MCIPP holding company does
not have any interest in).
A pre-feasibility study on a coal mine and a scoping study on a
coal fired thermal power plant has been completed. Kibo is in
possession of a Competent Persons Report on the project, which
includes a SAMREC-compliant Maiden Resource Statement on the
excised 300 Mt portion of the Mabesekwa coal deposit.
Kibo has furthermore, submitted a formal full mining right
application to the Botswana's Department of Mines.
As at year end, taking into account the progress made in
relation to the Mabesekwa Coal Independent Power Project since
acquisition, the Group concluded that none of the impairment
indicators had been met in relation to the Mabesekwa Coal
assets.
11. Acquisition and Disposal of interests in other entities
Mabesekwa Coal Independent Power Project
On 3 April 2018, the Group completed the acquisition of an 85%
interest in the Mabesekwa Coal Independent Power Project, located
in Botswana. This acquisition was in line with the Group's strategy
of positioning itself as a strategic regional electricity supplier
in Southern Africa and creates many synergies with the MCPP in
Tanzania.
As a result of the acquisition, 153,710,030 ordinary shares in
Kibo were issued to Sechaba Natural Resources Limited ("Sechaba").
Sechaba retained a 15% interest in the Mabesekwa Coal Independent
Power Project and were granted the right to have its managing
director (holding the role at the date of acquisition) gain a seat
on Kibo's board of directors (no Sechaba representative currently
sits on the Kibo board with Mr Mashale Phumaphi's resignation). The
intangible asset was recognised at the fair value of the
consideration paid, which emanates from the fair value of the
equity instruments issued as at transaction date, being
GBP9,376,312.
MAST Energy Development Limited
The Group acquired a 60% equity interest in MAST Energy
Development Limited for GBP300,000, settled through the issue of
5,714,286 ordinary shares in Kibo effective on 19 October 2018. The
acquisition of MAST Energy Development Limited falls within the
ambit of IFRS 3: Business Combinations. The net assets acquired
were valued at Nil, with the resultant purchase price being
allocated to Goodwill on date of acquisition.
Benga Power Project
Kibo entered into a Joint Venture Agreement with Mozambique
energy company Termoeléctrica de Benga S.A. to participate in the
further assessment and potential development of the Benga
Independent Power Project ('BIPP'). The assets associated with the
acquisition were transferred into a newly incorporated entity in
which Kibo and Termoeléctrica hold initial participation interests
of 65% and 35% respectively, which Kibo obtained for no
consideration on commencement. As disclosed in the significant
judgement section of the financial results, Kibo is not able to
exercise control over the operations of the newly incorporated
entity, therefore the investment is recognised as a Joint Venture
for financial reporting purposes, which requires the recognition of
the participants interest in the net revenue of the Joint Venture's
operations.
In order to maintain its initial participation interest Kibo is
required to ensure funding of a maximum amount of GBP1 million
towards the completion of a Definitive Feasibility Study.
Kibo Nickel Limited
The Group disposed of its entire interest in Kibo Nickel Ltd and
its wholly owned subsidiary, Eagle Exploration Ltd (hereinafter
referred to as "Kibo Nickel Group"), to Katoro Gold Plc for the
purchase consideration of GBP200,000, settled through the issue of
15,384,615 ordinary shares in Katoro Gold Plc, effective from 3
December 2018.
The Group retained an indirect controlling equity interest
(55.53%) in the Kibo Nickel Group, through its directly held
subsidiary, Katoro Gold PLC. As the change in Kibo's equity
interest in the Kibo Nickel Group did not result in a loss of
control, the transaction was recognised as a transaction with
owners in their capacity as owners.
12. Trade and other receivables
Group
2018 Group Company Company
(GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
Amounts falling due over
one year:
Amounts owed by group undertakings - - 333,495 24,402,788
Amounts falling due within
one year:
Other debtors 89,349 59,046 282 413
89,349 59,046 333,777 24,403,201
------- ------------ ------------ ------------
The nature of amounts owed by Group undertakings is such that
the expected recovery thereof is in excess of one year, and is thus
classified as amounts falling due after one year.
The carrying value of current trade and other receivables
approximates their fair value.
Amounts owed by Group undertakings represent inter-company loans
between the Company and its subsidiaries. They have no fixed
repayment terms, bear no interest and are unsecured, resulting in
the recognition of the receivable as a non-current asset due to
settlement being extended beyond 12 months.
During the period the Board resolved to capitalise inter-company
loans and convert the respective loans owed by subsidiaries into
share capital in order to adhere to international transfer pricing
regulation and this resulted in a corresponding decrease in amounts
owed by group undertakings.
Trade and other receivables pledged as security
None of the above stated trade and other receivables were
pledged as security at period end. Credit quality of trade and
other receivables that are neither past due nor impaired can be
assessed by reference to historical repayment trends of the
individual debtors.
13. Cash
Group (GBP) Company (GBP)
Cash consists of: 2018 2017 2018 2017
------- ------- -------- -----
Short term convertible cash reserves 654,158 766,586 38,974 5,690
654,158 766,586 38,974 5,690
======= ======= ======== =====
Cash has not been ceded, or placed as encumbrance toward any
liabilities as at year end.
14. Share capital - Group and Company
2018 2017
Authorised equity
1,000,000,000 (2017: 1,000,000,000) Ordinary
shares of EUR0.015 each
3,000,000,000 Deferred shares of EUR0.009 EUR15,000,000 EUR15,000,000
each EUR27,000,000 EUR27,000,000
EUR42,000,000 EUR42,000,000
Allotted, issued and fully paid shares
(2018: 640,031,069 Ordinary shares of EUR0.015 GBP7,982,942 -
each)
(2017: 395,254,364 Ordinary shares of EUR0.015 - GBP4,758,595
each)
(1,291,394,535 Deferred shares of EUR0.009 GBP9,257,075 GBP9,257,075
each)
--------------- ---------------
GBP17,240,017 GBP14,015,670
Deferred
Ordinary Share Treasury
Number of Share Capital Capital Share Premium shares
Shares (GBP) (GBP) (GBP) (GBP)
Balance at 31 December
2017 395,254,364 4,758,595 9,257,075 28,469,750 -
------------ --------------- ---------- -------------- ---------
Shares issued during
the period 244,776,705 3,224,347 - 10,735,568 -
Balance at 31 December
2018 640,031,069 7,982,942 9,257,075 39,205,318 -
------------ --------------- ---------- -------------- ---------
All ordinary shares issued have the right to vote, right to
receive dividends, a copy of the annual report, and the right to
transfer ownership of their shares.
The Deferred Shares will not entitle holders to receive notice
of, or attend or vote at any general meeting of the Company or to
receive a dividend or other distribution or to participate in any
return on capital on a winding up other than the nominal amount
paid following a substantial distribution to the holders of the
Ordinary Shares in the Company. Accordingly, for all practical
purposes the
Deferred Shares will be valueless, and it is the board's
intention at the appropriate time, to purchase the Deferred Shares
at an aggregate consideration of EUR1.
15. Control reserve
The transaction with Opera Investments PLC in 2017 represented a
disposal without loss of control. Under IFRS this constitutes a
transaction with equity holders and as such is recognised through
equity as opposed to recognising goodwill. The control reserve
represents the difference between the purchase consideration and
the book value of the net assets and liabilities acquired in the
transaction with Opera Investments.
16. Share based payments
Share based payment reserve
The following reconciliation serves to summarise the composition
of the share based payment reserve as at period end:
Group (GBP)
---------------------------------
2018 2017
---------- ---------------------
Opening balance of share based payment reserve 556,086 514,279
Issue of share options and warrants - 41,807
Reclassification of share based payment reserve (514,279) -
on expired share options
---------- ---------------------
41,807 556,086
---------- ---------------------
Share options and warrants in the current year relate to
1,208,333 ordinary shares in Katoro Gold PLC Group, issued to
directors of Katoro Gold Plc. The fair value of the warrants issued
have been determined using the Black-Scholes option pricing model.
The fair value at the date of the grant per warrant was
GBP0.06.
Company (GBP)
--------------------
2018 2017
---------- --------
Opening balance of share based payment reserve 514,279 514,279
Reclassification of share based payment reserve (514,279) -
on expired share options
---------- --------
- 514,279
---------- --------
Expenses settled through the issue of shares
The Group recognised the following expense related to equity
settled share based payment transactions:
2018 (GBP) 2017 (GBP)
Geological expenditure settled* 22,616 13,194
Listing and capital raising fees 104,302 908,543
----------- -----------
126,918 921,737
----------- -----------
* The Group issued 779,878 (2017: 277,768) ordinary shares of
EUR0.010 (2017: EUR0.015) par value each in the capital of the
Company to exploration service providers in settlement of invoices
for a total amount of GBP22,616 (2017: GBP13,194). The shares
issued were in respect of invoices for geological and investor
relations services by Katoro Gold PLC (2017: Kibo Energy PLC).
The Company recognised the following expense related to equity
settled share based payment transactions:
2018 (GBP) 2017 (GBP)
Listing and capital raising fees 104,302 195,000
104,302 195,000
----------- -----------
At 31 December 2018 the Company had Nil options and Nil warrants
outstanding. The previously issued Options and Warrants, as listed
below, had all expired, with the corresponding share based payment
charge being reclassified through equity in the Group & Company
Statement of Changes in Equity.
Exercisable
Exercise as at
Date of start Expiry Exercise 31 December
Grant date date Price Number Granted 2018
02 Jun 02 Jun 1 Jun
Options 15 15 18 5p 14,399,333 -
---------- ---------- -------- --------- --------------- -------------
20 Feb 24 Mar 23 Mar
Warrants 15 15 18 9p 10,000,000 -
Total Contingently Issuable shares -
=============
Reconciliation of the quantity of share options in issue:
Group Company
-------------------------- --------------------------
2018 2017 2018 2017
------------- ----------- ------------- -----------
Opening balance 14,399,333 14,399,333 14,399,333 14,399,333
Expiration of share options (14,399,333) - (14,399,333) -
------------- ----------- ------------- -----------
- 14,399,333 - 14,399,333
------------- ----------- ------------- -----------
Reconciliation of the quantity of warrants in issue:
Group Company
-------------------------- --------------------------
2018 2017 2018 2017
------------- ----------- ------------- -----------
Opening balance 10,000,000 10,000,000 10,000,000 10,000,000
Warrants lapsed (10,000,000) - (10,000,000) -
------------- ----------- ------------- -----------
- 10,000,000 - 10,000,000
------------- ----------- ------------- -----------
17. Translation reserves
The foreign exchange reserve relates to the foreign exchange
effect of the retranslation of the Group's overseas subsidiaries on
consolidation into the Group's financial statements, taking into
account the financing provided to subsidiary operations is seen as
part of the Group's net investment in subsidiaries.
Group Company
------------------------ -------------------------
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
----------- ----------- ----------- ------------
Opening balance (268,506) (285,491) 14,723 47,430
Movement during the period (388,116) 16,985 (14,723) (32,707)
----------- ----------- ----------- ------------
Closing balance (656,622) (268,506) - 14,723
----------- ----------- ----------- ------------
18. Non-controlling interest
The non-controlling interest carried forward relates to the 2.5%
interest held by Sanderson Capital Partners Limited in the Mbeya
Coal Development Limited and its subsidiaries and 44.47% equity in
Katoro Gold PLC and its subsidiaries.
Group
-------------------------
2018 (GBP) 2017 (GBP)
(Restated)
----------- ------------
Opening balance 927,107 (1,435)
Disposal of interest in subsidiary without
loss of control (9,364) 1,742,174
Additional capital raised 152,998 -
Loss for the year allocated to non-controlling
interest (661,570) (813,632)
----------- ------------
Closing balance of non-controlling interest 409,171 927,107
----------- ------------
The summarised financial information for significant
subsidiaries in which the non-controlling interest has an
influence, namely the Katoro Gold Group as at ended 31 December
2018, is presented below:
Katoro plc Katoro plc
Group Group
2018 (GBP) 2017 (GBP)
----------- ------------
Statement of Financial position
Total assets 622,231 566,658
Total liabilities (175,499) (175,284)
Statement of Profit or Loss
Revenue for the period - -
Loss for the period (479,205) (1,888,464)
Statement of Cash Flow
Cash flows from operating activities (465,669) (1,230,170)
Cash flows from investing activities - -
Cash flows from financing activities 313,560 1,783,753
19. Trade and other payables
Group Group Company Company
2018 (GBP) 2017 (GBP) 2018 (GBP) 2017 (GBP)
------------ ------------ ------------ ------------
Amounts falling due within one year:
Trade payables 301,698 266,218 95,072 86,736
301,698 266,218 95,072 86,736
------------ ------------ ------------ ------------
The carrying value of current trade and other payables equals
their fair value due mainly to the short term nature of these
receivables.
20. Borrowings
Group 2018 Group 2017 Company Company
(GBP) (GBP) 2018 (GBP) 2017 (GBP)
Amounts falling due within one year:
Short term loans - 1,210,768 - 1,210,768
- 1,210,768 - 1,210,768
------------ ----------- ------------ ------------
Group 2018 Group 2017 Company Company
(GBP) (GBP) 2018 (GBP) 2017 (GBP)
Reconciliation of borrowings:
Opening balance 1,210,768 251,928 1,210,768 251,928
Raised during the year 251,565 1,748,840 251,565 1,748,840
Repaid during the year (200,000) (200,000)
Settled through the issue of shares (1,262,333) (790,000) (1,262,333) (790,000)
Closing balance - 1,210,768 - 1,210,768
------------ ----------- ------------ ------------
During the current period the Group entered into a settlement
agreement with Sanderson Capital Partners Limited ('Sanderson') in
order to settle the outstanding balance owed on the forward payment
facility (the "Facility") agreed on 20 December 2016. Accordingly,
Sanderson was issued 8,370,716 and 21,239,375 new ordinary Kibo
shares (the 'Conversion Shares') of par value EUR0.015 each, at a
price of GBP0.05 and GBP0.0525 per Kibo share on 1 May 2018 and 6
July 2018 respectively, in order to settle the outstanding balance
owed to Sanderson.
21. Investment in group undertakings
Breakdown of Investments as at 31 December Subsidiary
2018 undertakings
(GBP)
Kibo Mining (Cyprus) Limited 37,406,177
Sloane Developments Limited -
Katoro Gold PLC 484,474
--------------
Investments at Cost 37,890,651
--------------
Breakdown of Investments as at 31 December Subsidiary
2017 undertakings
(GBP)
Kibo Mining (Cyprus) Limited 1,700,000
Sloane Developments Limited -
Katoro Gold PLC 1,768,224
--------------
Investments at Cost 3,468,224
--------------
Subsidiary
undertakings
(GBP)
Reconciliation of Investments at Cost
--------------
At 1 January 2017 1,700,000
--------------
Additions in Katoro Gold PLC 3,710,000
Provision for impairment (1,941,776)
At 31 December 2017 3,468,224
--------------
Additions in Kibo Mining Cyprus Limited 35,706,177
Additions in Katoro Gold PLC 349,878
Provision for impairment (1,633,628)
At 31 December 2018 37,890,651
--------------
At 31 December the Company had the following undertakings:
Subsidiary,
associate Incorporated Interest Interest
or Joint and Registered held held
Description Venture Activity in (2018) (2017)
------------------------------ --------------- --------------------- ----------------- --------- ---------
Directly held subsidiaries
Sloane Developments
Limited Subsidiary Holding Company United Kingdom 100% 100%
Kibo Mining (Cyprus)
Limited Subsidiary Treasury Function Cyprus 100% 100%
Katoro Gold Plc Subsidiary Mineral Exploration United Kingdom 55.53% 57%
Indirectly held subsidiaries
MAST Energy Development Subsidiary Power Generation United Kingdom 60% -
Limited
Kibo Gold Limited Subsidiary Holding Company Cyprus 55.53% 57%
Savannah Mining Limited Subsidiary Mineral Exploration Tanzania 55.53% 57%
Reef Miners Limited Subsidiary Mineral Exploration Tanzania 55.53% 57%
Kibo Nickel Limited Subsidiary Holding Company Cyprus 55.53% 100%
Eagle Exploration Limited Subsidiary Mineral Exploration Tanzania 55.53% 100%
Mzuri Energy Limited Subsidiary Holding Company Canada 100% 100%
Mbeya Holdings Limited Subsidiary Holding Company Cyprus 97.5% 97.5%
Mbeya Development Limited Subsidiary Holding Company Cyprus 97.5% 97.5%
Mbeya Mining Company
Limited Subsidiary Holding Company Cyprus 97.5% 97.5%
Mbeya Coal Limited Subsidiary Mineral Exploration Tanzania 100% 100%
Mzuri Power Limited Subsidiary Holding Company Cyprus 100% 100%
Mbeya Power Tanzania
Limited Subsidiary Power Generation Tanzania 97.5% 97.5%
Kibo Mining South Africa
(Pty) Ltd Subsidiary Treasury Function South Africa 100% 100%
Kibo Exploration (Tanzania)
Limited Subsidiary Treasury Function Tanzania 100% 100%
Kibo MXS Limited Subsidiary Holding Company Cyprus 100% 100%
Tourlou Limited Subsidiary Holding Company Cyprus 100% 100%
Mzuri Exploration Services Exploration
Limited Subsidiary Services Tanzania 100% 100%
Exploration
Protocol Mining Limited Subsidiary Services Tanzania 100% 100%
Jubilee Resources Limited Subsidiary Mineral Exploration Tanzania 100% 100%
Kibo Energy Botswana
Limited Subsidiary Holding Company Cyprus 100% 100%
Kibo Energy Mozambique
Limited Subsidiary Holding Company Cyprus 100% 100%
Pinewood Resources
Limited Subsidiary Mineral Exploration Tanzania 100% 100%
Makambako Resources
Limited Subsidiary Mineral Exploration Tanzania 100% 100%
Benga Power Plant Ltd Joint Venture Power Generation Mozambique 65% -
In the current period, the Group applied the approach whereby
loans to Group undertakings and trade receivables from Group
undertakings were capitalised to the cost of the underlying
investments. The capitalisation would result in a decrease in the
exchange fluctuations between Group companies operating from
various locations.
22. Related party transactions
Name Relationship (Directors of:)
Andreas Lianos River Group, Boudica Group, and Namaqua Management
Limited
Related parties of the Group comprise subsidiaries, joint
ventures, significant shareholders, the Board of Directors and
related parties in terms of the listing requirements. Transactions
between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation.
Other entities over which directors/key management or their
close family have control or significant influence:
River Group River Group provide corporate advisory services
and is the Company's Designated Advisor.
Boudica Group Boudica Group provides secretarial services
to the Group.
Kibo Energy PLC is a shareholder of the following companies and
as such are considered related parties:
Directly held subsidiaries: Sloane Developments Limited
Kibo Mining (Cyprus) Limited
Katoro Gold Plc
Indirectly held subsidiaries: Kibo Gold Limited
Kibo Mining South Africa Proprietary
Limited
Savannah Mining Limited
Reef Miners Limited
Kibo Nickel Limited
Eagle Exploration Limited
Mzuri Energy Limited
Rukwa Holdings Limited
Mbeya Development Company Limited
Mbeya Mining Company Limited
Mbeya Coal Limited
Mbeya Power Limited
Kibo Exploration (Tanzania) Limited
Mbeya Power (Tanzania) Limited
Kibo MXS Limited
Mzuri Exploration Services Limited
Katoro Cyprus Limited
Kibo Energy Mozambique Limited
Pinewood Resources Limited
Makambako Resources Limited
Jubilee Resources Limited
Kibo Energy Botswana Limited
MAST Energy Developments Limited
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 to/ from group companies do not have fixed repayment
terms and are unsecured.
The following transactions have been entered into with related
entities, by way of common directorship, throughout the financial
period.
River Group was paid GBP46,145 (2017: GBP78,294) for designated
advisor services, corporate advisor services and corporate finance
fees during the year settled through cash. No fees are payable to
River Group as at year end. The expenditure was recognised in the
Company as part of administrative expenditure.
During the year, Namaqua Management Limited or its nominees, was
paid GBP629,293 (2017: GBP573,438) for the provision of
administrative and management services. GBP NIL was payable at the
year-end (2017: GBP48,824).
The Boudica Group was paid GBP38,038 (2017: GBP59,358) in cash
for corporate services during the current financial period. No fees
are payable to Boudica Group at year end.
23. Financial Instruments and Financial Risk Management
The Group and Company's principal financial instruments
comprises cash at hand and in bank. The main purpose of these
financial instruments is to provide finance for the Group and
Company's operations. The Group has various other financial assets
and liabilities such as trade receivables and trade payables, which
arise directly from its operations.
It is, and has been throughout the 2018 and 2017 financial
period, the Group and Company's policy not to undertake trading in
derivatives.
The main risks arising from the Group and Company's financial
instruments are foreign currency risk, credit risk, liquidity risk,
interest rate risk and capital risk. Management reviews and agrees
policies for managing each of these risks which are summarised
below.
2018 (GBP) 2017 (GBP)
Financial instruments of Loans and Financial Loans and Financial
the Group are: receivables liabilities receivables liabilities
------------------------------- ------------- ------------- ------------- -------------
Financial assets at amortised
cost
Trade and other receivables 89,349 - 59,046 -
Cash 654,158 - 766,586 -
Financial liabilities at
amortised cost
Trade payables - 301,698 - 266,218
Borrowings - - - 1,210,768
------------- ------------- ------------- -------------
743,507 301,698 825,632 1,476,986
============= ============= ============= =============
2018 (GBP) 2017 (GBP)
Financial instruments of Loans and Financial Loans and Financial
the Company are: receivables liabilities receivables liabilities
------------------------------- ------------- ------------- ------------- -------------
Financial assets at amortised
cost
Trade and other receivables
- non current 333,495 - 24,402,788 -
Trade and other receivables
- current 282 - 413 -
Cash 38,975 - 5,690 -
Financial liabilities at
amortised cost
Trade payables - current - 95,072 - 86,736
Borrowings - - - 1,210,768
------------- ------------- ------------- -------------
372,752 95,072 24,408,891 1,297,504
============= ============= ============= =============
Foreign currency risk
The Group undertakes certain transactions denominated in foreign
currencies and exposures to exchange rate fluctuations therefore
arise. Exchange rate exposures are managed by continuously
reviewing exchange rate movements in the relevant foreign
currencies. The exposure to exchange rate fluctuations is limited
as the Company's subsidiaries operate mainly with Sterling, Euros,
South African Rand, US Dollar and Tanzanian Shillings.
At the period ended 31 December 2018, the Group had no
outstanding forward exchange contracts.
Exchange rates used for conversion of foreign subsidiaries
undertakings were:
2018 2017
------ ------
ZAR to GBP (Spot) 0.0545 0.0599
ZAR to GBP (Average) 0.0593 0.0593
USD to GBP (Spot) 0.7871 0.7411
USD to GBP (Average) 0.7499 0.7755
EURO to GBP (Spot) 0.0095 0.8877
EURO to GBP (Average) 0.8848 0.8699
CAD to GBP (Spot) 0.5782 0.5903
CAD to GBP (Average) 0.5786 0.5964
The Executive management of the Group monitor the Group's
exposure to the concentration of fair value estimation risk on a
monthly basis.
Group Sensitivity Analysis
If the GBP:EURO/ EURO:USD exchange rate was to increase/decrease
by 10%, the effect on foreign currency translation would be GBPNil
(2017: GBP2.2 million) and GBPNil (2017: GBP0.48 million)
respectively. During the current period the Group capitalised the
advances to/(from) group companies as part of the cost of the
underlying investments, thereby significantly decreasing the
potential impact from foreign currency fluctuations
significantly.
Credit risk
Credit risk refers to the risk that a counter party will default
on its contractual obligations resulting in financial loss to the
Group. As the Group does not, as yet, have any sales to third
parties, this risk is limited.
The Group and Company's financial assets comprise receivables
and cash and cash equivalents. The credit risk on cash and cash
equivalents is limited because the counterparties are banks with
high credit-ratings assigned by international credit rating
agencies. The Group and Company's exposure to credit risk arise
from default of its counterparty, with a maximum exposure equal to
the carrying amount of cash and cash equivalents in its
consolidated statement of financial position. Expected credit
losses were not measured on a collective basis. The various
financial assets owed from group undertakings were evaluated
against the underlying asset value of the investee, taking into
account the value of the various projects undertaken during the
period, thus validating, as required the credit loss recognised in
relation to amounts owed by group undertakings.
The Group does not have any significant credit risk exposure to
any single counterparty or any Group of counterparties having
similar characteristics. The Group defines counterparties as having
similar characteristics if they are connected or related
entities.
Financial assets exposed to credit risk at period end were as
follows:
Financial instruments Group (GBP) Company (GBP)
2018 2017 2018 2017
----------- ---------- --------- ------------
Trade & other receivables 89,349 59,046 333,777 24,403,201
Cash 654,158 766,586 38,974 5,690
----------- ---------- --------- ------------
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which has built an appropriate liquidity
risk management framework for the management of the Group and
Company's short, medium and long-term funding and liquidity
management requirements. The Group manages liquidity risk by
maintaining adequate reserves and by continuously monitoring
forecast and actual cash flows and matching the maturity profiles
of financial assets and liabilities. Cash forecasts are regularly
produced to identify the liquidity requirements of the Group.
The Group and Company's financial liabilities as at 31 December
2018 were all payable on demand, other than the trade payables to
other Group undertakings.
Less than Greater than
Group (GBP) 1 year 1 year
At 31 December 2018
Trade and other payables 301,698 -
At 31 December 2017
Trade and other payables 266,218 -
Borrowings 1,210,768 -
Company (GBP)
At 31 December 2018
Trade and other payables 95,072 -
At 31 December 2017
Trade and other payables 86,736 -
Borrowings 1,210,768 -
Interest rate risk
The Group and Company's exposure to the risk of changes in
market interest rates relates primarily to the Group and Company's
holdings of cash and short term deposits.
It is the Group and Company's policy as part of its management
of the budgetary process to place surplus funds on short term
deposit in order to maximise interest earned.
Group Sensitivity Analysis:
Currently no significant impact exists due to possible interest
rate changes on the Company's interest bearing instruments.
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the debt and
equity balance.
The Group manages its capital structure and makes adjustments to
it, in light of changes in economic conditions. To maintain or
adjust its capital structure, the Group may adjust or issue new
shares or raise debt. No changes were made in the objectives,
policies or processes during the period ended 31 December 2018. The
capital structure of the Group consists of equity attributable to
equity holders of the parent, comprising issued capital, reserves
and retained losses as disclosed in the consolidated statement of
changes in equity.
Fair values
The carrying amount of the Group and Company's financial assets
and financial liabilities recognised at amortised cost in the
financial statements approximate their fair value.
Hedging
At 31 December 2018, the Group had no outstanding contracts
designated as hedges.
24. Post Statement of Financial Position events
Conversion of Sanderson Minority Interest in Mbeya Development
Company Limited into Kibo Energy PLC Shares and Continuation of
Forward Payment Facility
Kibo Energy PLC ("Kibo" or the "Company") signed a binding term
sheet with Sanderson Capital Partners where Kibo issued 126,436,782
new Ordinary Shares of par value EUR0.015 (the "Conversion Shares")
to Sanderson in conversion of its 2.5% minority interest in Mbeya
Development Company Limited into equity directly in Kibo Energy PLC
effective from 11 March 2019 onward. Furthermore, the agreement
provides for the continuation of Kibo's USD2,940,000 Forward
Payment Facility (the "Facility") signed between Kibo and Sanderson
entered into during 2016. The Facility was available for a first
immediate draw by Kibo, amounting to GBP100,000 and a second draw
on or any time before 15 March 2019 amounting to no more than
GBP400,000 with the first draw completed and the second draw up to
GBP320,000 leaving GBP80,000 available under the second specified
draw. Any additional draw-downs of the balance of the USD2,940,000
limit are to be agreed between Kibo and Sanderson on a case by case
basis, and all draw-down amounts will be subject to a facilitation
and implementation fee of GBP5,000 per GBP100,000 drawn down. Kibo
is not obliged to draw down any of the Facility and the initial fee
payment of USD732,036 of ordinary shares in Kibo, made to Sanderson
under the original Facility arrangement, was a one-off payment and
is not required to be paid again.
Mbeya Coal to Power Project
The Tanzania Electricity Supply Company ("TANESCO"), informed
the Company during February 2019, without providing any reasons or
explanation, that it did not qualify to compete in the next stage
of the bidding process. TANESCO announced the tender during Q3 2018
and called for tender qualification applications by interested
parties, to develop some of the planned Coal Power Projects with a
total capacity of 600MW.
Kibo subsequently received formal notice from TANESCO inviting
it to develop the Mbeya Coal to Power Project for the export market
and thereby enabling the Company to engage with the African Power
Pools regarding off-take agreements.
25. Commitments and Contingencies
Benga Power Project
Kibo entered into a Joint Venture Agreement (the 'Benga Power
Joint Venture' or 'JV') with Mozambique energy company
Termoeléctrica de Benga S.A. to participate in the further
assessment and potential development of the Benga Independent Power
Project ('BIPP'). In order to maintain its initial participation
interest Kibo is required to ensure funding of a maximum amount of
GBP1 million towards the completion of a Definitive Feasibility
Study, however this expenditure is still discretionary.
Mabesekwa Coal Independent Power Project
Under the terms of the agreement, Sechaba, a subsidiary of
Shumba Energy Limited, will retain the benefit of the following
royalties from MCIPP should it go into production:
-- USD0.50 from revenue received per metric tonne of coal sold
from the area covered by the MCIPP coal resource; and
-- USD0.0225 from revenue received per kilowatt hour produced
and sold by any power plant owned by Kibo Energy Ltd (Botswana),
the entity holding the MCIPP in Botswana or using coal procured
from the area covered by the MCIPP coal resource.
It should be noted that these royalties are not payable by Kibo,
but by the joint venture, in which Kibo holds its 85% interest.
Other than the commitments and contingencies noted above, the
Group does not have identifiable material commitments and
contingencies as at the reporting date. Any contingent rental is
expensed in the period in which it is incurred.
26. Correction of prior period error
Kibo incorrectly allocated the minorities' share of the net
asset acquired relating to the Katoro Gold PLC acquisition in the
2017 financial period. The impact affected classification within
equity with no impact on the reported result for the prior period,
cash flows or net assets. There was no impact on the balance sheet
at the beginning of the comparative period.
The error has been corrected by restating each of the affected
financial statement line items for the prior period as follows:
Balance as Restatement Restated
at 31 December balance as
2017 at 31 December
Group (GBP) 2017
Control reserve 2,097,442 (2,310,495) (213,053)
Non-controlling interest (1,383,388) 2,310,495 927,107
--------------- ----------- ---------------
Annexure 1: Headline Loss Per Share
Accounting policy
Headline earnings per share (HEPS) is calculated using the
weighted average number of ordinary shares in issue during the
period and is based on the earnings attributable to ordinary
shareholders, after excluding those items as required by Circular
4/2018 issued by the South African Institute of Chartered
Accountants (SAICA).
+
Reconciliation of Headline earnings per share
Headline loss per share
Headline loss per share comprises the following:
Reconciliation of headline loss per share: 31 December 31 December
2018 (GBP) 2017 (GBP)
Loss for the period attributable to normal
shareholders (3,388,778) (3,712,707)
Adjustments:
Impairment of the Intangible Assets 912,892 -
Deemed cost of listing - 206,680
Headline loss for the period attributable
to normal shareholders (2,475,886) (3,506,027)
Headline loss per ordinary share (0.004) (0.010)
In order to accurately reflect the weighted average number of
ordinary shares for the purposes of basic earnings, dilutive
earnings and headline earnings per share as at year end, the
weighted average number of ordinary shares was adjusted retrospectively.
24 June 2019
Sponsor and Corporate Advisor
River Group
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END
FR PGUUUQUPBUBW
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