Annual Report & Accounts
Annual Report & Accounts
For the year ended 31 December 2010
For the year ended 31 December 2010
Contents
for the year ending 31 March 2008
Company Information
Chairman’s Statement
Review of Operations
Directors and Senior Management Biographies
Directors’ Report
Statement of Directors’ Responsibilities
Remuneration Report
Corporate Governance Report
Independent Auditors’ Report – Group
Group Statement of Comprehensive Income
Group Statement of Financial Position
Group Statement of Changes in Equity
Group Cash Flow Statement
Notes to the Group Financial Statements
Independent Auditors’ Report – Company
Company Statement of Financial Position
Company Statement of Changes in Equity
Company Cash Flow Statement
Notes to the Company Financial Statements
Notice of Annual General Meeting
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3
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58
Annual Report and Financial Statements 2010
1
Company Information
for the year ending 31 March 2008
Directors
Simon Rollason (Executive Chairman)
Mark Jonathan Pryor (Chief Executive Officer)
Rakesh Ramesh Patel (Executive Director)
Sally Joy Schofield (Non Executive Director)
Company Secretary
David Venus and Company LLP
Registered Office
Aston House
Cornwall Avenue
London N3 1LF
Registered Number
05292528
Nominated Adviser
and Broker
ZAI Corporate Finance Limited
177 Regent Street
London W1B 4JN
Bankers
Auditors
Solicitors
Registrars
Barclays Bank plc
9 High Street
Stony Stratford
Milton Keynes MK11 1HR
HW Fisher & Company
Acre House
11-15 William Road
London NW1 3ER
Harbottle & Lewis
Hanover House
14 Hanover Square
London W1S 1HP
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
2
Edenville Energy plc
Annual Report and Financial Statements 2010
2
Chairman’s Statement
for the year ended 31 December 2010
I am pleased to report on the Group’s accounts for the year ended 31 December 2010.
Chairman’s Statement
I am pleased to present the first annual financial statements for Edenville Energy plc for the period ending 31 December
2010, and report on developments of the group since re-admission of the company to trading on the AIM market of the
London Stock Exchange on 29 March 2010.
In March 2010, the Company acquired Edenville International Limited ("Edenville"), and, through its 99.5 per cent owned
subsidiary, Edenville Tanzania, owned six prospecting licences in Tanzania with a particular focus on coal and uranium.
The principal reason for the acquisition was to allow for the implementation of the Company’s strategy which is to focus
on working with local partners actively engaged in the process of exploration to develop mineral assets while maintaining
a disciplined asset and cost base. The acquisition provided access to a region displaying very viable prospects in coal and
uranium, supported by a Government that actively encourages active coal and uranium exploration. The shift towards coal
and uranium exploration and development is based on the steady global growth in demand for energy in the foreseeable
future, particularly with increasing demand from China and India, and reflects a move away from the more niche gemstone
markets to the broader appeal of energy commodities
Financial results
The financial results cover a period which included the re-admission to AIM in March 2010. The Group reported an
operating loss of £304,348 (2009: £182,483) for the year ending 31 December 2010 and had net assets at that date of
£8,026,289 (2009: £751,191).
The Group has a strong balance sheet and has sufficient cash reserves to advance its resources towards production and
away from grass roots exploration.
Financing
In March 2010, at the time of the re-admission to market, the Company raised £1,000,000 (before expenses) by way of a
Placing. In January 2011, the Company successfully raised an additional £1,500,000 through a subscription of 83,333,334
new ordinary shares in the Company.
In mid 2011, at the cessation of the heavy seasonal rains in Tanzania, the funds raised will be used to commence drilling
programmes at key coal targets such as the Rukwa coalfield project. The funds will also provide working capital to the
Company.
Corporate
In August 2010, the Group announced the successful completion of an agreement to acquire the majority interest in
multiple licences covering the Namwele, Mkomolo and Muze coal deposits of the Rukwa Coalfield in southern Tanzania.
Edenville has entered into an Acquisition and Option Agreement with Upendo Group Ltd, a Tanzanian registered
company, whereby Edenville has acquired an initial 70% interest in 2 Prospecting Licences (PL), and 66 Primary Mining
Licences (PML). Edenville additionally acquired an undivided 100% interest in a Prospecting Licence-Reconnaissance
(PLR) which surrounds the Namwele and Mkomolo PML’s.
In March 2011, the Group announced the acquisition of three additional exploration licences in south-western Tanzania
adjacent to the Kiwira-Songwe Coalfield.
3
Edenville Energy plc
Annual Report and Financial Statements 2010
3
Chairman’s Statement
for the year ended 31 December 2010
Board and management
The board structure was strengthened during the year by the appointment of Mark Pryor as Chief Executive Officer and
Sally Schofield as a Non-Executive Director.
Outlook
The outlook for the Group is positive. Drilling planned at the Rukwa Coalfield will allow us to continue with our objectives
to defining a mineral resource and advancing this project to the next stage of development. We continue to evaluate our
portfolio of assets in Tanzania and will continue to seek new opportunities for company growth through joint participation,
partnerships or ownership. The short to mid-term future for energy commodities remains positive especially for lower cost
producers and Edenville is well placed to participate in this sector.
Conclusions
On behalf of shareholders I would like to take this opportunity to thank my colleagues and employees for all their efforts
throughout the period, particularly completing the successful re-admission to the AIM and the acquisition of the coalfields
projects and we look forward to a much more rewarding 2011.
Simon Rollason
Executive Chairman
3 June 2011
4
Edenville Energy plc
Annual Report and Financial Statements 2010
4
Review of Operations
for the year ended 31 December 2010
With the continued interest in coal and coal products and the steady increase in global prices, we are greatly encouraged
that the licence base on listing in March 2010 has been augmented with additional quality licences. These include an area
around the now dormant Kiwira Coal Mine and the Rukwa Coalfields, the focus of our current exploration activity.
Initial exploration activity concentrated on the Matiri block of licences where historic airborne radiometric data indicated
elevated values of radioactive elements. Geological mapping and radiometric ground surveys were completed that
indicated elevated values of uranium over several distinct zones within the licence. Follow up work with continued
mapping and sampling of the Matiri South licence was then instigated. This work was suspended following our acquisition
of the Rukwa Coalfields and this subsequently became the focus of our operations in South-Western Tanzania.
Following the acquisition of the Rukwa Coalfields in August 2010, exploration attention was concentrated on the three
coalfields at Namwele, Mkomolo and Muze, that have an historic resource of 17.5 Million tonnes (Tanzanian Geological
Survey, 1937). Over the last 6 month period exploration in the form of historic database evaluation, follow-up geological
mapping and sampling together with the initiation of a pitting and trenching program was completed.
The historic open pit at Namwele, operated by the previous owner, had produced some 11,000 tonnes of coal for local
consumption and was the starting point for the exploration. Although 10 million tonnes of the resource had been,
historically, established at the Muze portion of the coalfield, this area was prioritised for later exploration with efforts
concentrating initially on the Namwele and Mkomolo areas where more recent mining had taken place. Pitting
commenced in October and very quickly it became evident that the coal measures were more extensive than had
previously been documented, with two further areas of coal outcrops identified and sampled approximately 3km to the
west of the known occurrences.
A scout RAB (Rotary Air Blast) drilling program was planned and initiated in early December. Following the completion of
the first nine holes it became apparent that the RAB drill machine was unable to penetrate to the planned target depths;
the maximum depth achieved 34.20m and sample recoveries were unacceptable. The RAB program was therefore
terminated and a larger diamond drilling program planned.
Drilling is now planned for Q3 2011 with an emphasis on the Mkomolo area of the Rukwa coal field. To facilitate effective
targeted drill planning the Company has undertaken a programme of geological mapping which is supported by a total of
seventy eight hand dug pits, to a maximum depth of 3metres, which were completed over a total strike length of 3kms at
Namwele and 7kms at Mkomolo.
During the year the company pursued other coal opportunities, and resulting from this was the acquisition, in 2011, of a
group of 3 licences in the Kiwira area, as well as a consolidation of the Rukwa coalfields with the surrounding prospecting
licences.
Management is currently evaluating other more advanced coal projects in Africa, Eurasia and South-East Asia.
M J Pryor
Chief Executive Officer
3 June 2011
5
Edenville Energy plc
Annual Report and Financial Statements 2010
5
Directors and Senior Management Biographies
for the year ended 31 December 2009
Simon Rollason
BSc (Hons) Geology, MIMMM,
FGS, Aged 44
Executive Chairman
Mark Pryor
BSc (Hons) Geology &
Mineralogy, FGS, FSEG,
Pr.Sci.Nat, Aged 51
Chief Executive Officer
Rakesh Patel
BA (Hons) Economics,
FCCA, CF, Aged 47
Finance Director
Simon graduated from the University of the Witwatersrand, South Africa in 1990
with a B.Sc(Hons) degree in Geology. He has gained 20 years international
experience working in both mining and geological exploration. During this time,
Simon has worked in Africa, the Middle East, Central Asia and the Far East with both
multi-nationals and junior resources companies. Simon has worked on gold, nickel,
copper, base metals, uranium and gemstone projects, ranging from grassroots to
producing assets. He has been involved with and managed operations that have
varied from exploration and evaluation projects to successful feasibility studies.
Simon moved back to the UK in 2008 to take up the role of Managing Director of
Obtala Resources Plc, and was appointed to the Board of the Company in June 2009.
Simon is a Fellow of the Geological Society and a member of the Institute of
Materials, Minerals and Mining, the Society of Economic Geologists and the Society
of Mining, Metallurgy and Exploration.
Mark Pryor is an Independent Geological Consultant working with private mining
and exploration groups, based out of the United Kingdom and holds a B.Sc (Hons)
degree from the University of Aberdeen. He has 25 years of management
experience in advanced stage exploration and mine development projects
worldwide. He is a ‘Qualified Person’ as defined by the Securities Commission and
regularly submits Independent Technical Reports for companies wishing to list on
the Stock Exchange as well as Independent Technical Reports and press releases for
quoted companies. Mark has worked for major and mid-tier mining companies and
has many contacts within the venture capital sector of the mining industry. Mark has
extensive global experience having worked in Mexico, EurAsia, China, Southern
Africa and South America, holding management positions in recognised companies
in the industry including Placer Dome, Minefinders, Monarch Resources and
Anglo American. Mark is an associate of SRK (UK) Ltd and is a Fellow of the
Geological Society, Society of Economic Geologists and is a registered Natural
Scientist (Pr. Sci. Nat).
Rakesh Patel qualified as a chartered certified accountant in 1991. From 1992, he led
the corporate finance division of Gerald Edelman, chartered accountants, dealing
with acquisitions, disposals, mergers, private placings and stock market flotations.
Rakesh was involved in the acquisition of Ryman the Stationer and left the firm in
1996 to become group financial controller of Chancerealm Limited, a group
including Ryman Limited where he was involved in the acquisition and integration of
Contessa Ladieswear Limited. Rakesh returned to Gerald Edelman in 1997 until
leaving in March 2003 to join Adler Shine LLP, chartered accountants, where he
heads the firm’s corporate finance division. Rakesh has acted in over 35 AIM
transactions as Reporting Accountant and has also acted as interim or part-time
director to a number of private and public companies. He is currently chief executive
officer of The Niche Group plc and non-executive director of Deo Petroleum plc,
both of which are quoted on AIM.
6
Edenville Energy plc
Annual Report and Financial Statements 2010
6
Directors and Senior Management Biographies
for the year ended 31 March 2009
Sally Schofield
BEng (Hons) Industrial
Geology, ACSM, FGS,
MIMMM, Aged 39
Non Executive Director
Senior Management
Javan Enock Bidogo
PG Dip. (MRM); Wits, BSc
(Geology – Hons), UDSM
Sally’s career has seen her work in commercial, technical and operational capacities
in geographically and politically diverse regions including Kazakhstan, Albania,
Central America, Brazil and Chile. She gained early exposure to the technical,
corporate and investor relations functions of the mining business before crossing
sectors to work with RMC, now part of CEMEX, the global building materials giant.
Sally returned to mining in 2003 and became a Director of AIM-listed Latitude
Resources plc, a company with copper and gold assets in Chile. As Chief Operating
Officer of that company she relocated to Santiago, Chile, in 2006 with direct
responsibility for an exploration program that developed a portfolio of exploration
projects into a saleable asset. Sally then worked for a natural resource focused fund
identifying potential investment opoortunities. Her business skills have been
recognised by several external parties, including Management Today, Courvoisier
Future 500 and HM The Queen. Sally graduated from the Camborne School of
Mines with a First Class B. Eng (Hons) Industrial Geology in 1995, is a Fellow of the
Geological Society (FGS) and a professional member of IOM3 (MIMMM).
Javan is a Tanzania-based geologist and the founder and Managing Director of Javan
Investment Company Limited, a private consultancy based in Dar es Salaam. Javan has
proven experience in successfully exploring, developing and operating Mines in Tanzania,
South Africa and Oman. He is mainly focused on uranium, gold, copper and diamond
projects, with exposure to diverse geological terrains, from archaean greenstones through
to kimberlitic and alluvial gravel deposits. Javan’s expertise includes management of
exploration, mine teams and programs, risk analysis in exploration and development, and
extensive knowledge of global mineral deposits. He has a wide exposure in mineral
resources management, exploration targeting and evaluation, ore extraction methods,
quality control practices and mine planning.
7
Edenville Energy plc
Annual Report and Financial Statements 2010
7
Directors’ Report
for the year ended 31 December 2010
The Directors present their annual report and audited Group financial statements for the year ended 31 December 2010.
Principal activity
The principal activity of the Group is the exploration and development of energy commodities predominantly coal and
uranium in Africa.
Business review and future developments
The purpose of this review is to show how the Group assesses and manages risk and uncertainty and adopts appropriate
policies and targets. Further details of the Group’s business and expected future developments are also set out in the
Chairman’s Statement on pages 3 and 4 and the Review of Operations on page 5.
Exploration approach
The Company actively manages geological exploration on its licences by implementing a phased strategy that
progressively increases the level of geological understanding for each licence to facilitate more focused exploration and
resource development in the longer term. All field work is conducted by citizens of Tanzania under the direct supervision
of the Edenville International (Tanzania) Limited, who in return report directly to the Board of the Company. Initial work
consists of a desk-top review involving the collection, collation and re-interpretation of all available historical data,
supplemented by regional-scale geological reconnaissance mapping and sampling. This will define the host geological
units for mineralisation and allow for progressively more focused and detailed exploration that will potentially lead into a
drilling campaign and ultimately ore body delineation and subsequent mineral resource estimations.
Principal risks and uncertainties
The Group operates in an uncertain environment that may result in increased risk, cost pressure, and schedule delays. The
following are some of the key risks that face the Group:
Exploration and development risk
The exploration for and development of mineral deposits involves significant risks which no combination of careful
evaluation, experience and knowledge can entirely eliminate. While the discovery of an ore body may result in substantial
rewards, few properties which are explored are ultimately developed into producing mines. There is no certainty that the
exploration programmes described in this document will result in the discovery of ore in commercial quantity and quality,
or result in profitable commercial mining operations. Significant capital investment is required to achieve commercial
production from successful exploration efforts.
The Group may carry out some of its exploration activities through joint ventures with others to spread the exploration risk
and to decrease the Group’s financial exposure to individual projects. There can be no guarantee that these partners will
not withdraw for their own reasons.
The commercial viability of a mineral deposit is dependent upon a number of factors. These include the attributes of the
deposit such as size, grade and proximity to infrastructures; current and future mineral prices which can be cyclical; and
government regulations, including those relating to prices, taxes, royalties, land tenure, land use, importing and exporting
of minerals and environmental protection. The effect of these factors, either alone or in combination, cannot be entirely
predicted and their impact may result in the Group not receiving an adequate return on invested capital.
Conclusions drawn during mineral exploration are subject to the uncertainties associated with all sampling techniques and
to the risk of incorrect interpretation of geological, geochemical, geophysical, drilling and other data.
8
Edenville Energy plc
Annual Report and Financial Statements 2010
8
Directors’ Report
continued
Operational risks
Mineral exploration operations generally involve a degree of physical risk. The Group’s operations are and will be subject
to all the hazards and risks normally encountered in the exploration of minerals. These include climatic conditions, hazards
of operating vehicles and plant, risks associated with operating in remote areas and security and health risks associated
with work in developing countries.
The exploration activities of the Group are subject to various federal, provincial and local laws governing prospecting,
development, production, taxes, labour standards and occupational health, mine safety, toxic substances and other
matters. Exploration activities are also subject to various federal, provincial and local laws and regulations relating to the
protection of the environment. These laws mandate, among other things, the maintenance of air and water quality
standards, and land reclamation. These laws also set forth limitations on the generation, transportation, storage and
disposal of solid and hazardous waste. Although the Group’s exploration activities are currently carried out in accordance
with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or
that existing rules and regulations will not be applied in a manner which could limit or curtail future production or
development. Amendments to current laws and regulations governing operations and activities of exploration, or future
mining and milling, or more stringent implementation thereof, could have a material adverse effect on the value of the
Group’s assets.
Licences
While the Directors have no reason to believe that the existence and extent of any of the Group’s properties are in doubt,
title to mining properties is subject to potential litigation by third parties claiming an interest in them.
The failure to comply with all applicable laws and regulations, including failures to pay taxes, meet minimum expenditure
requirements, or carry out and report assessment work, may invalidate title to portions of the properties where the mineral
rights are not held by the Group.
The Group might not be able to retain its licence interests when they come up for renewal, despite a possibility of
discovering ore bodies.
Economic risks
The value of the Group’s properties may be affected by changes in the market price of minerals which fluctuate according
to numerous factors beyond the Group’s control. Changes in interest rates and exchange rates, the rate of inflation and
world supply of and demand for mineral commodities all cause fluctuations in such prices. Such external economic factors
are in turn influenced by changes in international investment patterns, monetary systems and political conditions. Future
mineral price declines could have an adverse effect on the value of the Group’s assets and its ability to raise further funds.
Certain of the Group’s payments, in order to earn or maintain property interests, are to be made in the local currency in
the jurisdiction where the applicable property is located. As a result, fluctuations in the US dollar against the pound and
each of those currencies against local currencies in jurisdictions where properties of the Group are located could have an
adverse effect on the Enlarged Group’s financial position which is denominated and reported in sterling.
The Company has not insured against any risks. Risks not insured against and for which the Group may become subject
to liability include environmental pollution, political risk and other hazards against which the Group cannot insure or which
it may elect not to insure. The payment of such liabilities may have a material adverse effect on Group’s results of operation
and financial condition.
Political risks
A substantial portion of the assets of the Group are located in non-UK jurisdictions. As a result, it may be difficult for
investors to enforce judgments obtained against the Company if the damages awarded exceed the realisable value of the
Company’s UK assets. The political situations in African countries may introduce a degree of risk with respect to the
Group’s activities. In the countries where the Group has exploration activities, governments exercise control over such
matters as exploration and mining licensing, permitting, exporting and taxation. Changes of policy by such governments
may adversely impact the Group’s ability to carry out exploration activities.
9
Private & Commercial Finance Group plc
Annual Report and Financial Statements 2010
9
Directors’ Report
continued
Impact of law and Governmental regulations
The Group’s investments may be subject to the foreign exchange and other laws of various countries that may prevent,
materially delay or at least require governmental approval for, the full or partial repatriation of the Group’s investments.
Foreign investment in companies in emerging countries may be restricted or controlled to varying degrees. These
restrictions may, at times, limit or preclude foreign investment and increase the costs and expenses of the Group.
Additionally, under certain circumstances a country may impose restrictions on capital remittances abroad. The Group
could be adversely affected by delays in, or refusal to grant any required governmental approval for, repatriation of capital
or dividends held by the Group or their conversion into foreign currency. In addition, gains from the disposal of such
securities may be subject to withholding taxes, income tax and capital gains tax.
The Group must comply with, inter alia, the current and future Tanzanian regulations relating to mineral exploration and
production. The institution and enforcement of such regulations could have the effect of increasing the expense and
lowering the income or rate of return from, as well as adversely affecting the value of, the Group’s assets.
Dependency on a single country
The Group’s current exploration activities are situated entirely in Tanzania. The political situations in Africa may introduce
a degree of risk with respect to the Group’s activities. Risks may include, among others, labour disputes, delays or
invalidation of governmental orders and permits, corruption, uncertain political and economic environments, civil
disturbances and terrorist actions, arbitrary changes in laws or policies, foreign taxation and exchange controls, opposition
to mining from environmental or other non-governmental organisations, limitations on foreign ownership, limitations on
the repatriation of earnings, infrastructure limitations and increased financing costs. In Tanzania, the government exercises
control over exploration and mining licensing, permitting, exporting and taxation. The Board believes that the
Government of Tanzania supports the development of natural resources. However, there is no assurance that future
political and economic conditions in Tanzania will not result in the Government of Tanzania changing its political attitude
towards mining and adopting different policies respecting the exploration, development and ownership of mineral
resources. Any such changes in policy may result in changes in laws affecting ownership of assets, land tenure and mineral
licences, taxation, royalties, rates of exchange, environmental protection, labour relations, repatriation of income and
return of capital, which may affect the Group’s ability to undertake exploration and future mining operations in the
properties in respect of which it has obtained exploration and mining rights to date and may adversely impact the Group’s
ability to carry out its activities.
Competition risks
The mineral exploration and mining business is competitive in all of its phases. The Group competes and will compete with
numerous other companies and individuals, including competitors with greater financial, technical and other resources, in
the search for, and the acquisition of, attractive mineral properties. The Group’s ability to acquire properties in the future
will depend not only on its ability to develop its present properties, but also on its ability to select and acquire promising
properties or prospects for mineral exploration. There is no assurance that the Group will continue to be able to compete
successfully with its competitors in acquiring such properties or prospects.
Environmental risks
Environmental legislation is evolving in a manner that will require stricter standards and enforcement, increased fines and
penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree
of responsibility for companies and their officers, directors and employees. There can be no assurance that future changes
to environmental regulation, if any, will not adversely affect the Group’s operations or the value of its assets. Environmental
hazards may exist on the properties in which the Group holds interests that have been caused by previous or existing
owners or operators. The Group cannot guarantee that compliance with environmental reclamation, closure and other
requirements may not involve costs and other liabilities in the future.
Financing
The further development and exploration of the various mineral properties in which the Group holds interests is dependent
upon the Group’s ability to obtain financing through joint venturing projects, debt financing, equity financing or other
means. There is no assurance that the Group will be successful in obtaining the required financing. If the Group is unable
to obtain additional financing as needed some interests may be relinquished and/or the scope of the operations reduced.
10
Edenville Energy plc
Annual Report and Financial Statements 2010
10
Directors’ Report
continued
Financial risk management
The Group’s multi-national operations expose it to a variety of financial risks: market risk (foreign currency exchange rates
and interest rates), liquidity risk, and credit risk.
(i) Market risk
The market price of commodities is volatile and is affected by numerous factors beyond Edenville’s control.
(ii)
(iii)
Foreign exchange and interest rate risk
The majority of exploration costs are in United States dollars or Tanzanian schillings. Accordingly, foreign exchange
fluctuations may adversely affect the Group’s financial position and operating results.
Liquidity risk
Prudent liquidity risk management in the context of the Group implies maintaining sufficient cash in the necessary
currencies to be able to pay creditors as and when they fall due.
(iv) Credit risk
Cash balances are deposited with banks with a high credit rating.
Key performance indicators
The Company is currently a resource exploration and development entity, and consequently its assets comprise
predominantly early phase projects that are not yet at the production stage. As a result, no revenue would be generated
from these projects in the short-term and therefore the key performance indicators for the Company are linked to the
achievements of project milestones and the increase in overall enterprise value.
The Board monitors relevant KPIs which are focused on managing the exploration and appraisal operations. The KPIs
monitored by the Group on a monthly basis are as follows:
Financial KPIs
l
l
l
Shareholder return – the performance of the share price versus peer group companies.
Exploration expenditure – by type and by project.
Total expenditure burn rates.
l Corporate overheads as a percentage of total expenditure.
l Cash flow forecasts for the next 12 months.
Non financial KPIs
l Health and safety – number of reported incidents.
l
Liquidity of our shares on AIM versus our peer group.
l Operational success.
l
The movements in the price of coal and uranium.
Results and dividends
The results of the Group for the year ended 31 December 2010 are set out on page 21.
The Directors do not recommend payment of a dividend for the year (2009: nil). The loss is transferred to reserves.
11
Private & Commercial Finance Group plc
Annual Report and Financial Statements 2010
11
Directors’ Report
continued
Directors and Directors’ interests
The Directors at the date of these financial statements who served during the year and their interests in the Ordinary
Shares in the Company are as follows:
Ordinary shares of
0.02p held at
31 December 2010
Ordinary shares of
0.02p held at
31 December 2009
Simon Rollason
Mark Pryor
Rakesh Patel
Sally Schofield
The Directors’ interests in share options as at 31 December 2010 are as follows:
Simon Rollason
Mark Pryor
Rakesh Patel
Simon Rollason
Mark Pryor
Rakesh Patel
Sally Schofield
Options at
31 December 2010
7,471,265
7,471,265
7,471,265
7,471,265
7,471,265
7,471,265
nil
Exercise
price
0.87p
0.87p
0.87p
0.87p
0.87p
0.87p
n/a
On 21 February 2011, further options were granted as follows:
Simon Rollason
Mark Pryor
Rakesh Patel
Sally Schofield
Number of
options
10,000,000
5,000,000
10,000,000
5,000,000
Date of grant
29.03.10
29.03.10
29.03.10
29.03.10
29.03.10
29.03.10
n/a
Exercise
price
1.8p
1.8p
1.8p
1.8p
Share capital
Details of issues of Ordinary Share capital during the year are set out in note 20.
Nil
Nil
Nil
Nil
First date
of exercise
29.03.11
29.03.11
29.03.11
29.03.12
29.03.12
29.03.12
n/a
First date
of exercise
08.02.2012
08.02.2012
08.02.2012
08.02.2012
Nil
Nil
Nil
Nil
Final date
of exercise
29.03.20
29.03.20
29.03.20
29.03.20
29.03.20
29.03.20
n/a
Final date
of exercise
21.02.21
21.02.21
21.02.21
21.02.21
Policy and practice on payment of creditors
The Group’s policy for all suppliers is to fix terms of payment when agreeing the terms of each business transaction, to
ensure the supplier is aware of those terms and to abide by the agreed terms of payment. The creditor payment days
outstanding for the Group at 31 December 2010 were 49 days (2009: 51 days).
Financial instruments
Details of the use of financial instruments by the Company and its subsidiary undertakings are contained in note 22 of the
financial statements.
Donations
There were no charitable or political donations during the current or prior year.
12
Edenville Energy plc
Annual Report and Financial Statements 2010
12
Directors’ Report
continued
Provision of information to auditors
So far as each Director at the date of approval of this report is aware, there is no relevant audit information of which the
Company’s auditors are unaware and each Director has taken all steps that he ought to have taken to make himself aware
of any relevant audit information and to establish that the auditors are aware of that information.
Auditors
H.W. Fisher & Company have expressed their willingness to continue in office as auditors and a resolution to re-appoint
them will be proposed at the next Annual General meeting.
This report was approved by the board on 3 June 2011 and signed on its behalf.
M J Pryor
Chief Executive Officer
Private & Commercial Finance Group plc
Annual Report and Financial Statements 2010
13
Statement of Directors’ Responsibilities
for the year ended 31 December 2010
The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the directors
have prepared the Group financial statements in accordance with International Financial Reporting Standards (‘IFRSs’) as
adopted by the European Union. Under company law the directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of
the Group for that year. The Directors are also required to prepare financial statements in accordance with the rules of the
London Stock Exchange for companies trading securities on the Alternative Investment Market.
In preparing these financial statements the directors are required to:
l
select suitable accounting policies and then apply them consistently;
l make judgements and estimates that are reasonable and prudent;
l
l
state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any
material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Group and
Company will continue in business.
The Directors confirm that they have complied with the above requirements in preparing the financial statements.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are
also responsible for safeguarding the assets of the Company and the Group, and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a website.
Financial statements are published on the Company’s website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions.
The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility
also extends to the ongoing integrity of the financial statements contained therein.
14
Edenville Energy plc
Annual Report and Financial Statements 2010
14
Remuneration Report
for the year ended 31 December 2010
The remuneration committee comprises the Company’s non-executive director, Sally Schofield, who is the sole member
of the committee. The Board intend appointing another non-executive director who will join Sally Schofield on this
committee. The committee is, within agreed terms of reference, responsible for making recommendations to the directors
on matters relating to the Group’s remuneration structure, including pension rights, the policy on compensation of
executive directors and their terms of employment, with the objective of attracting, motivating and retaining high quality
individuals who will contribute fully to the success of the Group’s businesses.
During the year, the Remuneration Committee did not operate and all relevant matters were dealt with by the full Board.
Remuneration policy
Salaries are reviewed annually on the basis of market comparisons with positions of similar responsibility and scope in
comparable industries. The committee takes into account both Group and personal performance in reviewing directors’
salaries.
Non-executive directors’ remuneration
Fees for non-executive directors are determined by the board on the basis of market comparisons with positions of similar
responsibility and scope in companies of a similar size in comparable industries. Non-executive directors do not have
service contracts, are not eligible for pension scheme membership and do not participate in any of the Group’s bonus
schemes. They have letters of engagement with the Company and their appointments are terminable on one month’s or
three months’ written notice on either side.
Service agreements
The Committee has adopted current best practice in respect of service agreements issued on all new appointments.
Executive Directors are employed under six month rolling service contracts.
Share options
Details of share options granted to directors are included in the Directors’ Report.
Directors’ remuneration
Details of remuneration of the directors of the Company who served in the year ended 31 December 2010 are set out
below:
Name
Executive
Simon Rollason
Rakesh Patel
Mark Pryor (appointed 26 March 2010)
David Hargreaves (resigned 21 July 2009)
Nick Eastwood (resigned 21 July 2009)
Non-Executive
Sally Joy Schofield (appointed 26 March 2010)
Fees and
other
remuneration
£
Taxable
benefits
£
Pension
contributions
£
34,583
35,000
26,250
–
–
15,000
110,833
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2010
Total
£
34,583
35,000
26,250
–
–
15,000
2009
Total
£
–
35,000
–
27,500
10,833
–
110,833
73,333
15
Private & Commercial Finance Group plc
Annual Report and Financial Statements 2010
15
Corporate Governance Report
for the year ended 31 December 2010
Compliance with the UK Corporate Governance code
Under the AIM Rules, the Company is not formally required to comply with the UK Corporate Governance Code.
Nevertheless the Company has taken steps to comply with the Code in so far as it can be applied practically, given the size
of the Company and the nature of its operations.
The Company has complied with the provisions set out in Section 1 of the FRC code as annexed to the listing rules of the
Financial Services Authority since its original admission to the Alternative Investment Market of the London Stock
Exchange in August 2003, to the extent that they are practical for a Group of its size and resources. The directors consider
that the Group is not of a size to warrant the need for a separate nominations committee or internal audit function.
Board of directors
The Board currently comprises an Executive Chairman (Simon Rollason), two further Executive Directors (Mark Pryor and
Rakesh Patel) and one Non-Executive Director (Sally Schofield). The Board considers that Sally Schofield meets the criteria
for independence included in the ASX Best Practice Recommendations and that she is independent of management and
free from any business or other relationships which could materially interfere with the exercise of her independent
judgement.
An agreed procedure exists for Directors in the furtherance of their duties to take independent professional advice. With
the prior approval of the Chairman, all Directors have the right to seek independent legal and other professional advice at
the company’s expense concerning any aspect of the company’s operations or undertakings in order to fulfil their duties
and responsibilities as Directors. If the Chairman is unable or unwilling to give approval, Board approval will be sufficient.
Newly appointed Directors are made aware of their responsibilities through the Company Secretary. The Company does
not make any provision for formal training of new Directors.
Conflicts of interest
Following the changes arising under the Companies Act 2006, the Board confirms that it has instituted a process for
reporting and managing any conflicts of interest held by Directors. Under the Company’s Articles of Association, the
Board has the authority to approve such conflicts.
Company materiality threshold
The Board acknowledges that assessment on materiality and subsequent appropriate thresholds are subjective and open
to change. As well as the applicable laws and recommendations, the Board has considered quantitative, qualitative and
cumulative factors when determining the materiality of a specific relationship of Directors.
Ethical standards
As part of the Board’s commitment to the highest standard of conduct, the Company adopts a code of conduct to guide
executives, management and employees in carrying out their duties and responsibilities. The code of conduct covers such
matters as:
l
l
l
l
l
l
responsibilities to shareholders
compliance with laws and regulations
relations with customers and suppliers
ethical responsibilities
employment practices
responsibility to the environment and the community
16
Edenville Energy plc
Annual Report and Financial Statements 2010
16
Corporate Governance Report
for the year ended 31 December 2010
Board meetings
The Board meets on average every two months. Decisions concerning the direction and control of the business are made
by the Board, and a formal schedule of matters specifically reserved for the Board is in place.
Generally, the powers and obligations of the Board are governed by the UK Companies Act 2006, and the other laws of
the jurisdictions in which it operates. The Board is responsible, inter alia, for setting and monitoring Group strategy,
reviewing trading performance, ensuring adequate funding, examining major acquisition opportunities, formulating policy
on key issues and reporting to the shareholders. These areas are set out in more detail in a formal Schedule of Matters
Reserved for the Board.
Board committees
There are two board committees, namely the Audit and Remuneration committees consisting of Sally Schofield, the Non-
Executive Director, who is the sole member. The Board are seeking an additional non-executive director who will join
these committees. During the year, the audit committee and the remuneration committee did not operate and all relevant
matters were dealt with by the full Board.
Audit committee
The Committee provides a forum for reporting by the Group’s external auditors. Meetings are held on average once a year
and are also attended, by invitation, by the executive Directors.
The Audit Committee is responsible for reviewing a wide range of financial matters including the annual and half year
results, financial statements and accompanying reports before their submission to the Board and monitoring the controls
which ensure the integrity of the financial information reported to the shareholders.
Remuneration committee
The Committee is responsible for making recommendations to the Board, within agreed terms of reference, on the
Company’s framework of executive remuneration and its cost. The Remuneration Committee determines the contract
terms, remuneration and other benefits for the Executive Directors, including performance related bonus schemes,
compensation payments and option schemes. The Board itself determines the remuneration of the Non-Executive
Directors.
Relations with shareholders
Investors are encouraged to participate in the Annual General Meeting and are regularly advised of any significant
developments in the Company. The Company expects to widen its investor base and then meet regularly with any
significant institutional shareholders, fund managers and analysts as part of an active investor relations programme to
discuss long term issues and obtain feedback.
Internal financial control
The Board is responsible for establishing and maintaining the Group’s system of internal financial controls. Internal
financial control systems are designed to meet the particular needs of the Group concerned and the risk to which it is
exposed, and by its very nature can provide reasonable, but not absolute, assurance against material misstatement or loss.
The Directors are conscious of the need to keep effective internal financial control, particularly in view of the cash
resources of the Group. Due to the relatively small size of the Group’s operations, the Directors are very closely involved
in the day-to-day running of the business and as such have less need for a detailed formal system of internal financial
control. The Directors have reviewed the effectiveness of the procedures presently in place and consider that they are still
appropriate to the nature and scale of the operations of the Group.
17
Edenville Energy plc
Annual Report and Financial Statements 2010
17
Corporate Governance Report
for the year ended 31 December 2010
Managing business risk
The Board constantly monitors the operational and financial aspects of the company’s activities and is responsible for the
implementation and ongoing review of business risks that could affect the Company. Duties in relation to risk management
that are conducted by the Directors include but are not limited to:
Initiate action to prevent or reduce the adverse effects of risk
l
l Control further treatment of risks until the level of risk becomes acceptable
Identify and record any problems relating to the management of risk
Initiate, recommend or provide solutions through designated channels
l
l
l Verify the implementation of solutions
l Communicate and consult internally and externally as appropriate
Inform investors of material changes to the company’s risk profile
l
Ongoing review of the overall risk management program (inclusive of the review of adequacy of treatment plans) is
conducted by external parties where appropriate. The Board ensures that recommendations made by the external parties
are investigated and, where considered necessary, appropriate action is taken to ensure that the Company has an
appropriate internal control environment in place to manage the key risks identified.
Going concern
During the year the Company raised approximately £850,000 net of expenses and, at 31 December 2010, the Company
had cash balances totalling approximately £626,000. In January 2011, the Company raised a further £1.5million.
These funds are sufficient for the Group to operate without the requirement to raise further capital in the foreseeable
future.
Accordingly the financial statements have been prepared on a going concern basis. The Group intends to operate within
its cash resources.
18
Edenville Energy plc
Annual Report and Financial Statements 2010
18
Independent Auditors’ Report – Group
to the members of Edenville Energy plc
We have audited the group financial statements of Edenville Energy plc for the year ended 31 December 2010 which
comprise the Group Statement of Financial Position, the Group Statement of Comprehensive Income, the Group
Statement of Changes in Equity, the Group Cash Flow Statement and related notes. The financial reporting framework that
has been applied in their preparation is applicable law and International Reporting Standards (IFRSs) as adopted by the
European Union.
This report is made solely to the Group’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the Group’s members those matters we are
required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Group and the Group’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement set out on page 14, the Directors are responsible for
the preparation of the group financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the group financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.
This includes an assessment of: whether the accounting policies are appropriate to the Group’s circumstances and have
been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the
directors and the overall presentation of the financial statements.
Opinion on financial statements
In our opinion the group financial statements:
l
l
l
give a true and fair view of the state of the Group’s affairs as at 31 December 2010 and of its loss for the year then
ended;
have been properly prepared in accordance with IFRSs as adopted by the European Union; and
have been properly prepared in accordance with the requirements of the Companies Act 2006.
19
Edenville Energy plc
Annual Report and Financial Statements 2010
19
Independent Auditors’ Report – Group
to the members of Edenville Energy plc
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the group financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you
if, in our opinion:
l
l
l
adequate accounting records have not been kept, or returns adequate for our audit have not been received from
branches not visited by us; or
the group financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
l we have not received all the information and explanations we require for our audit.
Other matters
We have reported separately on the company financial statements of Edenville Energy plc for the year ended
31 December 2010.
Gary Miller (Senior Statutory Auditor)
For and on behalf of H W Fisher & Company
Chartered Accountants
Statutory Auditor
Acre House
11-15 William Road
London NW1 3ER
United Kingdom
Date: 3 June 2011
20
Edenville Energy plc
Annual Report and Financial Statements 2010
20
Group Statement of Comprehensive Income
for the year ended 31 December 2010
Administration expenses
Group operating loss
Finance income
Finance costs
Finance income – net
Loss on operations before taxation
Corporation tax expense
Loss for the year
Other comprehensive loss
Loss on translation of overseas subsidiary
Total comprehensive loss for the year
Attributable to:
Equity holders of the Company
Non controlling Interest
Loss per Share (pence)
Basic and Diluted
Note
6
10
10
10
11
2010
£
2009
£
(304,348)
(182,481)
(304,348)
(182,481)
–
–
–
–
(2)
(2)
(304,348)
(182,483)
–
–
(304,348)
(182,483)
(265,273)
–
(569,621)
(182,483)
(569,632)
11
(182,483)
–
12
(0.01p)
(0.01p)
The accompanying notes form an integral part of these financial statements.
21
Edenville Energy plc
Annual Report and Financial Statements 2010
21
Group Statement of Financial Position
as at 31 December 2010
Note
2010
£
Non-current assets
Tangible fixed assets
Intangible assets
Equity investments – available for sale
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Current assets less current liabilities
Total assets less current liabilities and net assets
Equity
Called-up share capital
Share premium account
Share option reserve
Foreign currency translation reserve
Retained earnings
13
14
15
17
18
19
20
2009
£
–
19,082
446,428
465,510
66,134
241,061
307,195
21,514
285,681
751,191
23,683
7,098,182
446,428
7,568,293
11,590
625,639
637,229
179,233
457,996
8,026,289
658,922
8,224,353
52,616
(265,273)
(644,367)
330,133
730,969
33,441
–
(343,352)
Issued capital and reserves attributable to owners of the parent company
8,026,251
751,191
Non-controlling interest
Total equity
38
–
8,026,289
751,191
The financial statements were approved by the board of directors and authorised for issue on 3 June 2011 and signed on
its behalf by:
S. Rollason
Director
Company registration number: 05292528
22
Edenville Energy plc
(formerly Gemstones of Africa Group plc)
Annual Report and Financial Statements 2010
22
Group Statement of Changes in Equity
for the year ended 31 December 2010
Share
capital
£
Share
premium
£
Retained
earnings
account
£
Share
option
reserve
£
Foreign
currency
reserve
£
Non-
controlling
interest
£
At 1 January 2009
315,847
301,327
(160,869)
33,441
Issue of share capital
Cost of shares issued
Total comprehensive loss
for the year
14,286
–
432,142
(2,500)
–
–
–
–
(182,483)
–
–
–
At 1 January 2010
330,133
730,969
(343,352)
33,441
Issue of share capital
Cost of shares issued
Transfer on exercise of options
and warrants
Share based payment charge
Foreign currency translation
Other reserves
Total comprehensive loss
for the year
328,789
–
7,650,919
(157,535)
–
–
–
–
–
–
–
–
–
–
–
–
3,344
–
–
–
–
–
(3,344)
22,519
–
–
–
–
(265,273)
–
–
–
–
–
–
–
–
Total
£
489,746
446,428
(2,500)
(182,483)
751,191
–
–
–
–
–
– 7,979,708
(157,535)
–
–
–
–
27
–
22,519
(265,273)
27
(304,359)
–
–
11
(304,348)
At 31 December 2010
658,922
8,224,353
(644,367)
52,616
(265,273)
38 8,026,289
23
Edenville Energy plc
Annual Report and Financial Statements 2010
23
Group Cash Flow Statement
for the year ended 31 December 2010
Cash flows from operating activities
Operating loss
Loss on disposal of fixed assets
Depreciation
Share based payments
Decrease/(Increase) in trade and other receivables
Increase in trade and other payables
Foreign exchange differences
Net cash outflow from operating activities
Cash flows from investing activities
Purchase of subsidiary, net of cash acquired with subsidiary
Purchase of licences
Purchase of fixed assets
Finance income
Finance costs
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue costs
Net cast inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Year ended
31 December
2010
£
Year ended
31 December
2009
£
Note
(304,348)
5,849
5,468
22,519
54,544
92,103
(5,517)
(182,481)
–
–
–
(49,744)
3,449
–
(129,382)
(228,776)
(12,846)
(290,659)
(35,000)
–
–
(338,505)
1,010,000
(157,535)
852,465
384,578
241,061
625,639
–
(19,082)
–
–
(2)
(19,084)
–
(2,500)
(2,500)
(250,360)
491,421
241,061
Cash and cash equivalents at end of year
18
Major non cash transactions
During the year, the company purchased 100% of the ordinary share capital for Edenville International Limited for
£7,033,458 by issuing shares valued at £6,969,708. The balance of the purchase consideration was in cash.
24
Edenville Energy plc
Annual Report and Financial Statements 2010
24
Notes to the Group Financial Statements
for the year ended 31 December 2010
1 General information
Edenville Energy plc is a public limited company incorporated in the United Kingdom under the Companies Act
1985. The address of the registered office is Aston House, Cornwall Avenue, London, N3 1LF. The company’s shares
are listed on AIM, a market operated by the London Stock Exchange.
The principal activity of the Group is the exploration and mining of energy commodities predominantly coal and
uranium in Africa.
2 Group accounting policies
Basis of preparation of group financial statements
The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union, IFRIC Interpretations and the parts of the Companies Act 2006 applicable
to companies reporting under IFRS. The Group’s financial statements have also been prepared under the historical
cost convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the Group’s financial statements are disclosed in Note 4.
The Company’s financial statements continue to be prepared under IFRS. Therefore the Company’s financial
statements and the associated notes, together with the auditors’ report on these financial statements, are presented
separately from the Group, starting on page 43.
Standards and interpretations in issue but not yet effective or not yet relevant
At the date of authorisation of these financial statements the following Standards and Interpretations which have not
been applied in these financial statements were in issue but not yet effective:
IFRS 1
IFRS 1
IFRS 1
IFRS 7
IFRS 9
IAS 12
First time Adoption of International Financial Reporting Standards –
Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters
First time Adoption of International Financial Reporting Standards –
Replacement of ‘fixed dates’ for certain exceptions with ‘the date of
transition to IFRSs’
First time Adoption of International Financial Reporting Standards –
Additional exemption for entities ceasing to suffer from severe hyperinflation
Financial Instruments: Disclosures – Amendments enhancing disclosures
about transfers of financial assets
Financial Instruments – Classification and Measurement
Income taxed – Limited scope amendment (recovery of underlying assets)
1AS 24
Related Party Disclosures – Revised definition of related parties
IAS 32
IFRIC 14
Financial Instruments: Presentation – Amendments relating to classification
of rights issues
IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction
Effective date
(period beginning
on or after)
1 July 2010
1 July 2011
1 July 2011
1 July 2011
1 January 2013
1 January 2012
1 January 2011
1 February 2010
1 January 2011
IFRIC 19
Extinguishing Financial Liabilities with Equity Instruments
1 July 2010
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no
material impact on the Group’s financial statements.
25
Edenville Energy plc
Annual Report and Financial Statements 2010
25
Notes to the Group Financial Statements
for the year ended 31 December 2010
2 Group accounting policies continued
Share based payments
The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives
services from employees as consideration for equity instruments (options) of the Group. The fair value of the
employee services received in exchange for the grant of options is recognised as an expense. The total amount to
be expensed is determined by reference to the fair value of the options granted:
l
l
l
including any market performance conditions;
excluding the impact of any service and non-market performance vesting conditions (for example, profitability,
sales growth targets and remaining an employee of the entity over a specified time period); and
excluding the impact of any non-vesting conditions (for example, the requirement of employees to save).
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of
options that are expected to vest based on the non-marketing vesting conditions. It recognises the impact of the
revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
When the options are exercised, the Group issues new shares. The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.
Basis of consolidation
The Group’s financial statements consolidate the financial statements of Edenville Energy plc and all its subsidiary
undertakings made up to 31 December 2010. Profits and losses on intra-group transactions and balances are
eliminated on consolidation. A separate profit and loss for the parent company, Edenville Energy plc, has been
omitted under the provisions of s408 of the Companies Act 2006.
Business combinations
The Group adopts the acquisition method in accounting for the acquisition of subsidiaries. On acquisition the cost is
measured at the fair value of the assets given, plus equity instruments issued and liabilities incurred or assumed at
the date of exchange plus any costs directly attributable to the acquisition. The assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured at their fair value at the date of acquisition.
Any excess of the fair value of the consideration over the fair value of the identifiable net assets acquired is recorded
as goodwill.
Any deficiency of the fair value of the consideration below the fair value of identifiable net assets acquired is credited
to the income statement in the period of the acquisition.
The results of subsidiary undertakings acquired or disposed of during the year are included in the group statement
of comprehensive income statement from the effective date of acquisition or up to the effective date of disposal.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies
used into line with those used by the group. Inter-company transactions and balances between group companies are
eliminated.
Revenue recognition
Revenue from the sale of energy commodities is recognised upon delivery of goods to the customers. Interest
income is recognised on a proportional basis taking into account the effective interest rates applicable to the financial
assets.
All revenue is stated net of the amount of sales tax.
Currently the group does not generate any revenue.
26
Edenville Energy plc
Annual Report and Financial Statements 2010
26
Notes to the Group Financial Statements
continued
2 Group accounting policies continued
Presentational and functional currency
This financial information is presented in pounds sterling, which is the Group’s functional currency.
In preparing the financial statements of individual entities, transaction in currencies other than the entity’s functional
currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions.
At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates
prevailing at the balance sheet date.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign
operations (including comparatives) are expressed in pounds sterling using exchange rates prevailing at the balance
sheet date. Income and expense items are translated at the average exchange rate for the period. Exchange
differences arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such translation
differences are recognised in the income statement in the period in which the foreign operation is disposed of.
Financial assets
Financial assets comprise investments, cash and cash equivalents and receivables. Unless otherwise indicated, the
carrying amounts of the Group’s financial assets are a reasonable approximation of their fair values.
Recognition and measurement
Investments are initially recognised at fair value plus transactions costs for all financial assets not carried at fair value
through profit or loss. Financial assets are derecognised when rights to receive cash flows from investments have
expired or the group has transferred substantially all the risks and rewards of ownership. Available for sale financial
assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and
receivables are subsequently carried at amortised cost.
Equity investments available for sale
Equity investments available for sale are non-derivatives that are either designated in this category or not classified
in any of the other categories. Equity investments available for sale do not have a quoted market price in an active
market and as their fair value cannot be reliably mesured, they are stated at cost. They are included in non-current
assets unless management intends to dispose of the investment within 12 months of the balance sheet date. The
Group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of
financial assets is impaired.
Trade and other receivables
Provision for impairment of trade receivables is made when there is objective evidence that the Group will not be
able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the
write-down is the difference between the receivables carrying amount and the present value of the estimated future
cash flows.
An assessment for impairment is undertaken at least annually.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, demand deposits and other short term highly liquid
investments that are readily convertible to a known amount of cash and are subject to insignificant risk of changes in
value.
27
Edenville Energy plc
Annual Report and Financial Statements 2010
27
Notes to the Group Financial Statements
continued
2 Group accounting policies continued
Property, plant and equipment
Property, plant and equipment are stated at cost on acquisition less accumulated depreciation and accumulated
impairment losses.
Depreciation is provided on all property, plant and equipment categories at rates calculated to write off the cost, less
estimated residual value on a reducing balance basis over their expected useful economic life. The depreciation rates
are as follows:
Fixtures and fittings
Office equipment
Basis of depreciation
25% reducing balance
25% reducing balance
Costs capitalised include the purchase price of an asset and any costs directly attributable to bringing it into working
condition for its intended use.
Financial liabilities
Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument.
Financial liabilities comprise only trade and other payables.
All financial liabilities are recorded at amortised cost, using the effective interest method, with interest-related
charges being recognised as an expense under finance costs in the Income Statement.
A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is
discharged, is cancelled, or expires.
Finance costs
Finance costs of debt, including premiums payable on settlement and direct issue costs are charged to the income
statement on an accruals basis over the term of the instrument, using the effective interest method.
Income taxation
The taxation charge represents the sum of current tax and deferred tax.
The tax currently payable is based on the taxable profit for the period using the tax rates that have been enacted or
substantially enacted by the balance sheet date. Taxable profit differs from the net profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible.
Deferred taxation
Deferred tax is recognised, using the liability method, in respect of temporary differences between the carrying
amount of the Group’s assets and liabilities and their tax base. Deferred tax liabilities are offset against deferred tax
assets within the same taxable entity or qualifying local tax group. Any remaining deferred tax asset is recognised
only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxable
profits, within the same jurisdiction, in the foreseeable future against which the deductible temporary difference can
be utilised. Deferred tax is determined using tax rates that are expected to apply in the periods in which the asset is
realised or liability settled, based on tax rates and laws that have been enacted or substantially enacted by the
balance sheet date. Deferred tax is recognised in the income statement, except when the tax relates to items
charged or credited directly in equity, in which case the tax is also recognised in equity.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as deduction, net of tax, from the proceeds.
28
Edenville Energy plc
Annual Report and Financial Statements 2010
28
Notes to the Group Financial Statements
for the year ended 31 December 2010
2 Group accounting policies continued
Exploration and evaluation assets
Capitalisation
Certain costs (other than payments to acquire the legal right to explore and costs which are directly attributable to
those payments) incurred prior to acquiring the rights to explore are charged directly to the income statement. All
costs incurred after the rights to explore an area have been obtained, such as geological and geophysical costs and
other direct costs of exploration and appraisal are accumulated and capitalised as intangible exploration and
evaluation (“E&E”) assets. These costs are only carried forward to the extent that they are expected to be recouped
through the successful development of the areas or where activities in the areas have not yet reached a stage which
permits reasonable assessment of the existence of economically recoverable reserves.
E&E costs are not amortised prior to the conclusion of appraisal activities.
At completion of appraisal activities, if technical feasibility is demonstrated and commercial reserves are discovered,
then, following development sanction, the carrying value of the relevant E&E asset will be reclassified as a
development and production (“D&P”) asset, but only after the carrying value of the relevant E&E asset has been
assessed for impairment, and where appropriate, its carrying value adjusted. If after completion of appraisal activities
in the area, it is not possible to determine technical feasibility and commercial viability or if the legal right to explore
expires or if the Company decides not to continue exploration and evaluation activity, then the costs of such
unsuccessful exploration and evaluation are written off to the income statement in the period the relevant events
occur.
Impairment
If and when facts and circumstances indicate that the carrying value of an E&E asset may exceed its recoverable
amount an impairment review is performed.
For E&E assets when there are such indications, an impairment test is carried out by grouping the E&E assets with
the D&P assets belonging to the same geographic segment to form the Cash Generating Unit (“CGU”) for
impairment testing. The equivalent combined carrying value of the CGU is compared against the CGU’s recoverable
amount and any resulting impairment loss is written off to the income statement. The recoverable amount of the
CGU is determined as the higher of its fair value less costs to sell and its value in use.
Going concern
After making enquiries, the directors have a reasonable expectation that the group has adequate resources to
continue in operational existence for the foreseeable future. The group therefore continues to adopt the going
concern basis in preparing its consolidated financial statements.
3
Financial risk management
Fair value estimation
The carrying value less impairment provision of trade receivables and payables is assumed to approximate their fair
values, due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by
discounting the future contractual cash flows at the current market interest rate that is available to the group for
similar financial instruments.
29
Edenville Energy plc
Annual Report and Financial Statements 2010
29
Notes to the Group Financial Statements
continued
4
Critical accounting estimates and areas judgements
The Group makes estimates and assumptions concerning the future, which by definition will seldom result in actual
results that match the accounting estimate. The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amount of assets and liabilities within the next financial year are those in relation to:
l
l
the impairment of intangible exploration and evaluation assets; and
the fair value of intangible assets acquired on the acquisition of Edenville International Limited.
The Group is required to perform an impairment review, for each CGU to which the asset relates, when facts and
circumstances suggest that the carrying amount of the asset may exceed its recoverable amount. The recoverable
amount is based upon the Directors’ judgements and are dependent upon the discovery of economically
recoverable reserves, the ability of the Company to obtain necessary financing to complete the development and
future profitable production or proceeds from the disposal until the technical feasibility and commercial viability of
extracting a mineral resource becomes demonstrable, at which point the value is estimated based upon the present
value of the discounted future cash flows.
During the year, the Company acquired six Tanzanian prospecting licences through the acquisition of Edenville
International (Tanzania) Limited. The value of these intangible exploration assets acquired represents the fair value
of the consideration paid by Edenville Energy plc at the time of the acquisition of Edenville International Limited, the
details of which are provided in note 16 below.
The outcome of ongoing exploration and evaluation, and therefore whether the carrying value of exploration and
evaluation assets will ultimately be recovered, is inherently uncertain. The directors have assessed the value of
exploration and evaluation expenditure carried as intangible assets. In their opinion there has been no impairment
loss to intangible exploration and evaluation assets in the period.
5
Segmental information
The Directors are of the opinion that the Group operates in one primary business segment, being the exploitation of
mineral exploration licences in energy commodities such as coal and uranium predominately in Africa.
The secondary segment is geographic and the Group’s results by geographical segment are shown below. The
Group’s geographical segments are determined by the location of its operations.
Segmental information about the two geographical locations is disclosed below for 2010. The only geographical
location in 2009 was the United Kingdom.
Administrative expenses
Loss before taxation
Taxation
Loss for the year
Non-current assets
Tangible fixed assets
Intangible assets
Equity investments – available for sale
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Net assets
United Kingdom
£
(306,635)
(306,635)
–
(306,635)
23,683
36,536
446,428
506,647
10,544
616,453
626,997
Africa
£
2,287
2,287
–
2,287
–
7,061,646
–
7,061,646
1,046
9,186
10,232
Total
£
(304,348)
(304,348)
–
(304,348)
23,683
7,098,182
446,428
7,568,293
11,590
625,639
637,229
60,507
118,726
179,233
1,073,137
6,953,152
8,026,289
30
Edenville Energy plc
Annual Report and Financial Statements 2010
30
Notes to the Group Financial Statements
continued
6
Expenses by nature
Staff costs
Other expenses
Total administrative expenses on continuing operations
7 Auditors’ remuneration
Fees payable to the Company’s auditor for the audit of the
parent company and consolidated accounts
Fees payable to the Company’s auditor and its associates for
other services provided to the Company and its subsidiaries:
Tax services
8
Employees
The Company had no employees during the year (2009: nil).
9 Directors’ remuneration
Emoluments
10 Finance income and costs
Interest income on short-term bank deposits
Interest expense
2010
£
110,833
193,515
304,348
2009
£
73,333
109,148
182,481
2010
£
2009
£
15,000
9,000
–
1,500
2010
£
110,833
2009
£
73,333
2010
£
–
–
–
2009
£
–
(2)
(2)
31
Edenville Energy plc
Annual Report and Financial Statements 2010
31
Notes to the Group Financial Statements
continued
11 Taxation
No corporation tax charge arises in respect of the year due to the trading losses incurred. The Group has Corporation
Tax losses available to be carried forward and used against trading profits arising in future periods of £891,627
(2009: £574,571).
A deferred tax asset of £193,343 (2009:£120,660) has not been recognised in respect of the tax losses carried
forward due to the uncertainty that profits will arise against which the losses can be offset.
The tax assessed for the year differs from the standard rate of corporation tax in the UK as follows:
Loss on ordinary activities before tax
Expected tax credit at standard rate of Corporation Tax 21% (2009: 21%)
Disallowable expenditure
Capital allowances in excess of depreciation
Tax losses carried forward
Tax charge for the year
12 Earnings per share
2010
£
2009
£
(304,348)
(182,483)
(63,913)
4,013
(6,202)
66,102
–
(38,321)
–
–
38,321
–
The basic loss per share is calculated by dividing the loss attributable to equity shareholders by the weighted average
number of shares in issue. As the Group is loss making, there was no dilutive effect from the share options
outstanding during the year.
In order to calculate the diluted earnings per share, the weighted average number of ordinary shares in issue is
adjusted to assume conversion of all dilutive potential ordinary shares according to IAS 33. Dilutive potential
ordinary shares include share options granted to employees and Directors where the exercise price (adjusted
according to IAS 33) is less than the average market price of the Company’s ordinary shares during the year.
Net loss for the year attributable to ordinary shareholders
The weighted average number of shares in the period were:
Basic and dilutive ordinary shares
Basic and diluted loss per share
2010
£
2009
£
(304,348)
(182,483)
2010
2009
3,073,260,594
1,380,047,211
(0.01p)
(0.01p)
32
Edenville Energy plc
Annual Report and Financial Statements 2010
32
Notes to the Group Financial Statements
continued
13 Property, plant and equipment
Plant and
machinery
£
Fixtures,
fittings and
equipment
£
Cost
As at 1 January 2010
Additions
Disposals
As at December 2010
Depreciation
As at 1 January 2010
On disposals
Charge for the year
As at December 2010
Net book value
As at December 2010
As at December 2009
–
7,471
–
7,471
–
–
1,245
1,245
6,226
–
14
Intangible exploration and evaluation assets
Cost or valuation
As at 1 January 2009
Purchase of mining licences
At 31 December 2009
Accumulated amortisation and impairment
As at 1 January 2009
Impairment charge
As at 31 December 2009
Net book value
As at December 2009
Cost or valuation
As at 1 January 2010
On acquisition of subsidiary
Additions
Foreign exchange adjustment
As at 31 December 2010
Accumulated amortisation and impairment
As at 1 January 2010
Impairment charge
As at 31 December 2010
Net book value
As at December 2010
Motor
vehicles
£
–
23,376
(6,685)
16,691
–
(836)
3,531
2,695
Total
£
–
35,000
(6,685)
28,315
–
(836)
5,468
4,632
13,996
23,683
–
–
Tanzanian
Licenses
£
–
–
–
–
–
–
–
Total
£
–
19,082
19,082
–
–
–
19,082
–
7,044,399
276,983
(259,736)
19,082
7,044,399
294,437
(259,736)
7,061,646
7,098,182
–
–
–
–
–
–
4,153
–
4,153
–
–
692
692
3,461
–
Javan
Licenses
£
–
19,082
19,082
–
–
–
19,082
19,082
–
17,454
–
36,536
–
–
–
36,536
7,061,646
7,098,182
33
Edenville Energy plc
Annual Report and Financial Statements 2010
33
Notes to the Group Financial Statements
continued
14
Intangible exploration and evaluation assets continued
Javan Licences
On 27 May 2009, the Company signed an option agreement with Javan Investments Company Limited, a private
Tanzanian registered company for two prospecting licences in Tanzania. Under the terms of the option agreement,
the Company acquired an initial 25% interest in both licences for a consideration of US$15,000 per licence. The
above values of £19,082 in respect of the Javan Licences acquired represent the cash consideration paid by the
Group at the time of their acquisition.
Tanzanian Licences
The Tanzanian licenses comprise six prospecting licences held by Edenville International (Tanzania) Limited. The
Licenses cover 598km2 in Tanzania, located in a region displaying viable prospects for both uranium and coal and
occur in a country where the government’s policy for development of the mineral sector aims at attracting and
enabling the private sector to take the lead in exploration mining, development, mineral beneficiation and marketing.
The value of the assets obtained on acquisition represent the fair value of the consideration paid to Grandinex
International Corp and David Richardson (the Vendors).
There were no triggers for carrying out an impairment review in the period. The Directors have considered the
following factors:
(a) Geology and lithology on each licence as outlined in the last CPRs (independent Competent Person’s Reports
from the mining and earth resources consultancy company, Wardell Armstrong International Limited).
(b) The expected useful lives of the licences and the ability to retain the licence interests when they come up for
renewal.
(c) Comparable information for large mining and exploration companies in the vicinity of each of the licences.
(d) History of exploration success in the regions being explored.
(e)
Local infrastructure.
(f) Climatic and logistical issues.
(g) Geopolitical environment.
15 Equity investments – available for sale
Fair value
At 1 January
Additions
At 31 December
2010
£
446,428
–
446,428
2009
£
–
446,428
446,428
On 13 March 2009, the Company entered into a collaboration and option agreement on a group of emerald mining
licences in Tanzania, Africa, with Obtala Resouces Plc (“Obtala”) and Obtala’s subsidiary Mindex Invest Limited
(“Mindex”).
Under the terms of this agreement, Mindex will transfer its 75 per cent interest in certain specified licences to
Gemstones of Africa Limited. The Company has acquired 16.96 per cent of the share capital of Gemstones of Africa
Limited in exchange for issuing ordinary shares the equivalent of five per cent of the Company’s share capital to
Obtala, totalling 71,428,571 shares. This equity, which equated to a fair value of £446,428 (based on the closing
price on 12 March 2009 of 0.625p per Ordinary Shares), has been placed in Obtala treasury.
34
Edenville Energy plc
Annual Report and Financial Statements 2010
34
Notes to the Group Financial Statements
continued
16 Acquisition of subsidiary
On 29 March 2010, Edenville Energy plc acquired 100% of the issued share capital of Edenville International Limited,
a company incorporated in the Republic of the Seychelles. Edenville International Limited owns 99.5% of the issued
share capital of Edenville International (Tanzania) Limited, a company incorporated in the United Republic of
Tanzania.
Consideration for the acquisition was satisfied by the issue of 1,393,941,536 ordinary shares of 0.02p at a price of
0.5 pence per share.
The transaction has been accounted for by the purchase method of accounting. Using an exchange rate of
1.49 USD/GBP being the rate prevailing at the date of acquisition, the book values of the net assets acquired on
acquisition amounted to £2,575,275 but the directors have revalued these assets to the estimated fair values set out
below:
Intangible exploration and evaluation assets
Other receivables
Cash and cash equivalents
Other payables
Net assets acquired
Purchase consideration:
Fair value of shares issued
Direct costs related to the acquisition
Total purchase consideration
Other indirect costs of acquisition
Book value
£
2,589,959
28
50,904
(65,616)
Fair value
£
7,044,399
28
50,904
(65,616)
2,575,275
7,029,715
6,969,708
60,007
7,029,715
3,743
The estimated fair value of the net assets acquired is equal to the consideration paid and consequently there is no
goodwill on acquisition.
17 Trade and other receivables
Receivables
Prepayments
2010
£
4,754
6,836
11,590
2009
£
11,199
54,935
66,134
There was no provision for impairment of receivables at 31 December 2010 (31 December 2009: £nil).
18 Cash and cash equivalents
Cash and cash equivalents include the following for the purposes of the cash flow statement:
Cash at bank and in hand
2010
£
2009
£
625,639
241,061
35
Edenville Energy plc
Annual Report and Financial Statements 2010
35
Notes to the Group Financial Statements
continued
19 Trade and other payables
Trade and other payables
Accruals and deferred income
20 Called-up share capital
Issued and fully paid
Ordinary shares of 0.02p each
Deferred shares of 0.08p each
Ordinary shares of 0.02p each
Deferred shares of 0.08p each
2010
£
39,538
139,695
179,233
2009
£
12,514
9,000
21,514
2010
Number
2009
Number
3,037,883,072
64,179,932
1,393,941,536
64,179,932
3,102,063,004
1,458,121,468
2010
£
607,578
51,344
658,922
2009
£
278,789
51,344
330,133
The rights attaching to the deferred shares are as follows:
(a)
(b)
(c)
(d)
no dividend or other distribution shall be paid or made in respect of the deferred shares;
the holders of deferred shares shall not be entitled to receive notice of, or to attend and vote at any general
meeting of the Company;
on a return of capital, whether on a winding-up or otherwise, the holders of deferred shares shall be entitled
to receive only the amount credited as paid up on each share, but only after the holders of each ordinary share
have received the amount paid up or credited as paid up on each share, together with a payment of £10,000
per share; and
the Company may transfer the shares without making any payment to the holders thereof, to such persons as
the Company may determine, and acquire the same in accordance with the provisions of the Companies Acts
at a price of 0.08p each.
On 29 March 2010, the Company issued 1,393,941,536 ordinary shares of 0.02p each at 0.5p per share as
consideration for the purchase of Edenville International Limited.
On 29 March 2010, the Company issued for cash 200,000,000 ordinary shares of 0.02p each at 0.5p per share.
On 15 November 2010, the Company issued 50,000,000 ordinary shares of 0.02p each at par on the exercise of
50,000,000 warrants.
On 7 January 2011, the Company issued 325,000,000 ordinary shares of 0.02p each at par on the exercise of
325,000,000 warrants.
On 31 January 2011, the Company issued for cash 83,333,334 ordinary shares of 0.02p each at 1.8p per share.
36
Edenville Energy plc
Annual Report and Financial Statements 2010
36
Notes to the Group Financial Statements
continued
21 Capital management policy
The Group seeks further acquisition opportunities for exploration licences predominately in Africa and incurs costs
in respect of the exploitation of its existing exploration licences.
22 Financial instruments
The Group manages its capital to ensure its ability to continue as a going concern and to maintain an optimal capital
structure to reduce the cost of capital. The capital structure of the Group comprises equity attributable to equity
holders of the Company consisting of issued ordinary share capital, reserves and retained earnings as disclosed in
the Group statement of changes in equity and cash and cash equivalents as disclosed in Note 18.
The Group maintains or adjusts its capital structure through the payment of dividends to shareholders, issue of new
shares and buy-back of existing shares.
Categories of financial instruments
Financial assets
Investments available for sale at fair value
Receivables at amortised cost including cash and cash equivalents:
Cash and cash equivalents
Trade and other receivables
Total
Financial liabilities
Financial liabilities at amortised cost:
Trade and other payables
Net
2010
£
2009
£
446,428
446,428
625,639
11,590
1,083,657
241,061
66,134
753,623
179,233
904,424
21,514
732,109
Cash and cash equivalents
This comprises cash held by the Group and short-term deposits. The carrying amount of these assets approximates
to their fair value.
General risk management principles
The Directors have an overall responsibility for the establishment of the Group’s risk management framework.
A formal risk assessment and management framework for assessing, monitoring and managing the strategic
operational and financial risks of the Group is in place to ensure appropriate risk management of its operations.
The following represent the key financial risks that the Group faces:
Interest rate risk
The Group is not exposed to significant interest rate risks as it does not have any interest bearing liabilities and its
only interest-bearing asset is cash invested on a short-term basis which attracts interest at the bank’s variable interest
rate.
37
Edenville Energy plc
Annual Report and Financial Statements 2010
37
Notes to the Group Financial Statements
continued
22 Financial instruments continued
Credit risk
Credit risk arises principally from the Group’s trade receivables and investments in cash deposits. It is the risk that
the counterparty fails to discharge its obligation in respect of the instrument.
The Group holds its cash balances with reputable financial institutions with strong credit ratings.
There were no amounts past due at the balance sheet date.
The maximum exposure to credit risk in respect of the above at 31 December 2010 is the carrying value of financial
assets recorded in the financial statements.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due.
Liquidity risk is managed through an assessment of short, medium and long-term cash flow forecasts to ensure the
adequacy of working capital.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, it seeks to maintain cash balances to meet expected requirements for a period of
one year.
Currency risk
The Group is exposed to currency risk as the assets of its subsidiaries are denominated in US Dollars. The Group’s
policy is, where possible, to allow group entities to settle liabilities denominated in their functional currency
(primarily US Dollars) with cash. The Company transfers amounts in sterling or US dollars to its subsidiaries to fund
its operations. Where this is not possible the parent company settles the liability on behalf of its subsidiaries and will
therefore be exposed to currency risk.
The Group has no formal policy is respect of foreign exchange risk; however, it reviews its currency exposure on a
regular basis. Currency exposures relating to monetary assets held by foreign operations are included in the Group’s
income statement. The Group also manages its currency exposure by retaining the majority of its cash balances in
sterling, being a relatively stable currency.
Fair value of financial assets and liabilities
Fair value is the amount at which a financial instrument could be exchanged in an arm’s length transaction between
informed and willing parties, other than a forced or liquidation sale and excludes accrued interest. Where available,
market values have been used to determine fair values. Where market values are not available, fair values have been
calculated by discounting expected cash flows at prevailing interest rates and by applying year end exchange rates.
The directors consider that there is no significant difference between the book value and fair value of the Group’s
financial assets and liabilities.
38
Edenville Energy plc
Annual Report and Financial Statements 2010
38
Notes to the Group Financial Statements
continued
23 Equity-settled share-based payments
The following options and warrants over ordinary shares have been granted by the Company:
Date
30 September 2008
29 March 2010
Exercise price
Exercise period
0.02p
0.87p
5 Years
10 Years
Number of options
and warrants
500,000,000
44,827,587
At the date of grant, the options and warrants were valued using the Black-Scholes option pricing model. The fair
value per option granted and the assumptions used in the calculation were as follows:
Date of grant
Expected volatility
Expected life
Risk-free interest rate
Expected dividend yield
Possibility of ceasing employment before vesting
Fair value per option
30 September 2008
54%
1 year
2.88%
–
–
0.012p
29 March 2010
40%
2 years
4.00%
–
–
0.133p
The charge to the income statement for share based payments for the year ended 31 December 2010 was £22,519
(2009: £nil).
Movements in the number of options outstanding and their related weighted average exercise prices are as follows:
At 1 January
Granted
Forfeited
Exercised
Expired
At 31 December
2010
2009
Number of
options and
warrants
500,000,000
44,827,587
–
(50,000,000)
–
494,827,587
Weighted
average
exercise price
per share
pence
0.02
0.87
–
0.02
–
0.87
Number of
options and
warrants
500,000,000
–
–
–
–
500,000,000
Weighted
average
exercise price
per share
pence
0.02
–
–
–
–
0.02
On 7 January 2011, 325 million warrants were exercised at an exercise price of 0.02p each.
24 Reserves
The following describes the nature and purpose of each reserve:
Share Capital
Share Premium
Share Option Reserve
Foreign currency translation reserve
represents the nominal value of equity shares
amount subscribed for share capital in excess of the nominal value
fair value of the employee equity settled share option scheme as
accrued at the balance sheet date
Gains/losses arising on retranslating the net assets of overseas
operations into pounds sterling
Retained earnings
Cumulative net gains and losses less distributions made
39
Edenville Energy plc
Annual Report and Financial Statements 2010
39
Notes to the Group Financial Statements
continued
25 Related party transactions
During the year ended 31 December 2010, the Group paid £35,000 (2009: £35,000) to Adler Shine LLP for the
services of Rakesh Patel, director. Rakesh Patel is a partner in Adler Shine LLP. The Group also paid £14,210
(2009: £8,250) to Adler Shine LLP for accounting services provided in the year.
During the year ended 31 December 2010, the Group paid the following amounts to Obtala Resources plc, a
company of which Simon Rollason is a director:
Purchase of field equipment and other equipment
Secretarial support
Loan of field equipment and machinery
£
35,000
6,000
10,000
The Group has an equity investment (note 15) in Mindex Invest Limited, a subsidiary of Obtala Resources Plc.
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling activities of the Group, and are all directors of the company. For details of their compensation please refer
to the Remuneration report.
26 Events after the reporting date
Exercise of Warrants
On 7 January 2011, warrants in respect of 325 million ordinary shares were exercised at an exercise price of
0.02p per share.
£1.5 million placing
On 31 January 2011, the Company raised £1,500,000 through a subscription of 83,333,334 new ordinary shares of
0.02p each at a price of 1.8p each.
Issue of share options
On 21 February 2011, the following number of share options exercisable at 1.8p were granted to the directors:
Simon Rollason
Rakesh Patel
Mark Pryor
Sally Schofield
The vesting date for these options is 8 February 2012.
27 Ultimate controlling party
The Group considers that there is no ultimate controlling party.
10,000,000
10,000,000
5,000,000
5,000,000
40
Edenville Energy plc
Annual Report and Financial Statements 2010
40
Independent Auditors’ Report – Company
to the members of Edenville Energy plc
We have audited the parent company financial statements of Edenville Energy plc for the year ended 31st December 2010
which comprise the Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and related
notes. The financial reporting framework that has been applied in their preparation is applicable law and International
Reporting Standards (IFRSs) as adopted by the European Union and as applied in accordance with the provisions of the
Companies Act 2006.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body,
for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement set out on page 14, the Directors are responsible for
the preparation of the parent company financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.
This includes an assessment of: whether the accounting policies are appropriate to the Parent Company’s circumstances
and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates
made by the directors and the overall presentation of the financial statements.
Opinion on financial statements
In our opinion the parent company financial statements:
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give a true and fair view of the state of the Company’s affairs as at 31 December 2010;
have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006; and
have been properly prepared in accordance with the requirements of the Companies Act 2006.
41
Edenville Energy plc
Annual Report and Financial Statements 2010
41
Independent Auditors’ Report – Company
to the members of Edenville Energy plc
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
l
the information given in the Directors’ Report for the financial year for which the financial statements are prepared is
consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you
if, in our opinion:
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adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
l we have not received all the information and explanations we require for our audit.
Other matters
We have reported separately on the group financial statements of Edenville Energy plc for the year ended 31 December
2010.
Gary Miller (Senior Statutory Auditor)
For and on behalf of H W Fisher & Company
Chartered Accountants
Statutory Auditor
Acre House
11-15 William Road
London NW1 3ER
United Kingdom
Date: 3 June 2011
42
Edenville Energy plc
Annual Report and Financial Statements 2010
42
Company Statement of Financial Position
as at 31 December 2010
Note
2010
£
Non-current assets
Intangible assets
Investment in subsidiaries
Equity investments – available for sale
Tangible fixed assets
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Current assets less current liabilities
Total assets less current liabilities and net assets
Equity
Called-up share capital
Share premium account
Share option reserve
Profit and loss account
Total equity
4
5
7
8
9
10
11
12
2009
£
19,082
100
446,428
–
465,610
66,234
241,061
307,295
21,614
285,681
751,291
36,536
7,033,558
446,428
23,683
7,540,205
193,199
616,453
809,652
60,507
749,145
8,289,350
658,922
8,224,353
52,616
(646,541)
330,133
730,969
33,441
(343,252)
8,289,350
751,291
The financial statements were approved by the board of directors and authorised for issue on 3 June 2011 and signed on
its behalf by:
S. Rollason
Director
Company registration number: 05292528
43
Edenville Energy plc
Annual Report and Financial Statements 2010
43
Company Statement of Changes in Equity
for the year ended 31 December 2010
At 1 January 2009
Issue of share capital
Cost of shares issued
Total comprehensive loss for the year
At 31 December 2009
Issue of share capital
Cost of shares issued
Transfer on exercise of warrants
Share based payment charge
Total comprehensive loss for the year
At 31 December 2010
Share
capital
£
315,847
14,286
–
–
330,133
328,789
–
–
–
–
658,922
Share
premium
£
301,327
432,142
(2,500)
–
730,969
7,650,919
(157,535)
–
–
–
8,224,353
Retained
earnings
account
£
(160,766)
–
–
(182,486)
(343,252)
–
–
3,344
–
(306,633)
(646,541)
Share
option
reserve
£
33,441
–
–
–
33,441
–
–
(3,344)
22,519
–
Total
£
489,849
446,428
(2,500)
(182,486)
751,291
7,979,708
(157,535)
–
22,519
(306,633)
52,616
8,289,350
44
Edenville Energy plc
Annual Report and Financial Statements 2010
44
Company Cash Flow Statement
for the year ended 31 December 2010
Cash flows from operating activities
Operating loss
Loss on disposal of fixed assets
Depreciation
Share based payments
Increase in trade and other receivables
Increase in trade and other payables
Year ended
31 December
2010
£
Year ended
31 December
2009
£
Note
(306,635)
5,849
5,468
22,519
(127,065)
38,995
(182,481)
–
–
–
(49,744)
3,449
Net cash outflow from operating activities
(360,869)
(228,776)
Cash flows from investing activities
Purchase of subsidiary
Purchase of licences
Purchase of fixed assets
Finance income
Finance costs
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue costs
Net cast inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
10
(63,750)
(17,454)
(35,000)
–
–
(116,204)
1,010,000
(157,535)
852,465
375,392
241,061
616,453
–
(19,082)
–
–
(2)
(19,084)
–
(2,500)
(2,500)
(250,360)
491,421
241,061
Major non cash transactions
During the year the company purchased 100% of the ordinary share capital for Edenville International Limited for
£7,033,458 by issuing shares valued at £6,969,708. The balance of the purchase consideration was in cash.
45
Edenville Energy plc
Annual Report and Financial Statements 2010
45
Notes to the Company Financial Statements
for the year ended 31 December 2010
1 Accounting policies
Basic of preparation of company financial statements
The Company financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union, IFRC interpretations and the parts of the Companies Act 2006
applicable to companies reporting under IFRS. The Company has elected to take the exemption under section 408
of the Companies Act 2006 from presenting the Parent Company Income Statement. The loss after tax for the Parent
Company for the year was £306,633 (2009: £182,486).
The following accounting policies have been applied consistently in dealing with items which are considered material
in relation to the financial statements.
Standards and interpretations in issue but not yet effective or not yet relevant
At the date of authorisation of these financial statements the following Standards and Interpretations which have not
been applied in these financial statements were in issue but not yet effective:
IFRS 1
IFRS 1
IFRS 1
IFRS 7
IFRS 9
IAS 12
First time Adoption of International Financial Reporting Standards –
Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters
First time Adoption of International Financial Reporting Standards –
Replacement of ‘fixed dates’ for certain exceptions with ‘the date
of transition to IFRSs’
First time Adoption of International Financial Reporting Standards –
Additional exemption for entities ceasing to suffer from severe hyperinflation
Financial Instruments: Disclosures – Amendments enhancing
disclosures about transfers of financial assets
Financial Instruments – Classification and Measurement
Income taxed – Limited scope amendment (recovery of underlying assets)
1AS 24
Related Party Disclosures – Revised definition of related parties
IAS 32
IFRIC 14
Financial Instruments: Presentation – Amendments relating to
classification of rights issues
IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction
Effective date
(period beginning
on or after)
1 July 2010
1 July 2011
1 July 2011
1 July 2011
1 January 2013
1 January 2012
1 January 2011
1 February 2010
1 January 2011
IFRIC 19
Extinguishing Financial Liabilities with Equity Instruments
1 July 2010
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no
material impact on the Company’s financial statements.
46
Edenville Energy plc
Annual Report and Financial Statements 2010
46
Notes to the Company Financial Statements
for the year ended 31 December 2010
1 Accounting policies continued
Share based payments
The Company operates a number of equity-settled, share-based compensation plans, under which the entity
receives services from employees as consideration for equity instruments (options) of the Company. The fair value
of the employee services received in exchange for the grant of options is recognised as an expense. The total
amount to be expensed is determined by reference to the fair value of the options granted:
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including any market performance conditions;
excluding the impact of any service and non-market performance vesting conditions (for example, profitability,
sales growth targets and remaining an employee of the entity over a specified time period); and
excluding the impact of any non-vesting conditions (for example, the requirement of employees to save).
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of
options that are expected to vest based on the non-marketing vesting conditions. It recognises the impact of the
revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares. The proceeds received net of any directly
attributable transaction costs are credited to share capital (nominal value) and share premium when the options are
exercised.
Segmental reporting
The Company does not have separately identifiable business or geographical segments which are material to
disclose.
Revenue recognition
Revenue from the sale of energy commodities is recognised upon delivery of goods to the customers. Interest
income is recognised on a proportional basis taking into account the effective interest rates applicable to the financial
assets.
All revenue is stated net of the amount of sales tax.
Currently the Company does not generate any revenue.
Presentational and functional currency
This financial information is presented in pounds sterling, which is the Company’s functional currency.
Financial assets
Financial assets comprise investments, cash and cash equivalents and receivables. Unless otherwise indicated, the
carrying amounts of the Company’s financial assets are a reasonable approximation of their fair values.
Equity investments available for sale
Equity investments available for sale are non-derivatives that are either designated in this category or not classified
in any of the other categories. Equity investments available for sale do not have a quoted market price in an active
market and as their fair value cannot be reliably measured, they are stated at cost. They are included in non-current
assets unless management intends to dispose of the investment within 12 months of the balance sheet date. The
Group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of
financial assets is impaired.
47
Edenville Energy plc
Annual Report and Financial Statements 2010
47
Notes to the Company Financial Statements
for the year ended 31 December 2010
1 Accounting policies continued
Financial assets continued
Trade and other receivables
Provision for impairment of trade receivables is made when there is objective evidence that the Group will not be
able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the
write-down is the difference between the receivables carrying amount and the present value of the estimated future
cash flows.
An assessment for impairment is undertaken at least annually.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand. demand deposits and other short term highly liquid
investments that are readily convertible to a known amount of cash and are subject to insignificant risk of changes in
value.
Property, plant and equipment
Property, plant and equipment are stated at cost on acquistion less accumulated depreciation and accumulated
impairment losses.
Depreciation is provided on all property, plant and equipment categories at rates calculated to write off the cost, less
estimated residual value on a reducing balance basis over their expected useful economic life. The depreciation rates
are as follows:
Fixtures and fittings
Office equipment
Basis of depreciation
25% reducing balance
25% reducing balance
Costs capitalised include the purchase price of an asset and any costs directly attributable to bringing it into working
condition for its intended use.
Financial liabilities
Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument.
Financial liabilities comprise only trade and other payables.
All financial liabilities are recorded at amortised cost, using the effective interest method, with interest-related
charges being recognised as an expense under finance costs in the Income Statement.
A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is
discharged, is cancelled, or expires.
Finance costs
Finance costs of debt, including premiums payable on settlement and direct issue costs are charged to the income
statement on an accruals basis over the term of the instrument, using the effective interest method.
Income taxation
The taxation charge represents the sum of current tax and deferred tax.
The tax currently payable is based on the taxable profit for the period using the tax rates that have been enacted or
substantially enacted by the balance sheet date. Taxable profit differs from the net profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible.
48
Edenville Energy plc
Annual Report and Financial Statements 2010
48
Notes to the Company Financial Statements
for the year ended 31 December 2010
1 Accounting policies continued
Deferred taxation
Deferred tax is recognised, using the liability method, in respect of temporary differences between the carrying
amount of the Group’s assets and liabilities and their tax base. Deferred tax liabilities are offset against deferred tax
assets within the same taxable entity or qualifying local tax group. Any remaining deferred tax asset is recognised
only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxable
profits, within the same jurisdiction, in the foreseeable future against which the deductible temporary difference can
be utilised. Deferred tax is determined using tax rates that are expected to apply in the periods in which the asset is
realised or liability settled, based on tax rates and laws that have been enacted or substantially enacted by the
balance sheet date. Deferred tax is recognised in the income statement, except when the tax relates to items
charged or credited directly in equity, in which case the tax is also recognised in equity.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as deduction, net of tax, from the proceeds.
Exploration and evaluation assets
Capitalisation
Certain costs (other than payments to acquire the legal right to explore and costs which are directly attributable to
those payments) incurred prior to acquiring the rights to explore are charged directly to the income statement. All
costs incurred after the rights to explore an area have been obtained, such as geological and geophysical costs and
other direct costs of exploration and appraisal are accumulated and capitalised as intangible exploration and
evaluation (“E&E”) assets. These costs are only carried forward to the extent that they are expected to be recouped
through the successful development of the areas or where activities in the areas have not yet reached a stage which
permits reasonable assessment of the existence of economically recoverable reserves.
E&E costs are not amortised prior to the conclusion of appraisal activities.
At completion of appraisal activities, if technical feasibility is demonstrated and commercial reserves are discovered,
then, following development sanction, the carrying value of the relevant E&E asset will be reclassified as a
development and production (“D&P”) asset, but only after the carrying value of the relevant E&E asset has been
assessed for impairment, and where appropriate, its carrying value adjusted. If after completion of appraisal activities
in the area, it is not possible to determine technical feasibility and commercial viability or if the legal right to explore
expires or if the Company decides not to continue exploration and evaluation activity, then the costs of such
unsuccessful exploration and evaluation are written off to the income statement in the period the relevant events
occur.
Impairment
If and when facts and circumstances indicate that the carrying value of an E&E asset may exceed its recoverable
amount an impairment review is performed.
For E&E assets when there are such indications, an impairment test is carried out by grouping the E&E assets with
the D&P assets belonging to the same geographic segment to form the Cash Generating Unit (“CGU”) for
impairment testing. The equivalent combined carrying value of the CGU is compared against the CGU’s recoverable
amount and any resulting impairment loss is written off to the income statement. The recoverable amount of the
CGU is determined as the higher of its fair value less costs to sell and its value in use.
Investment in subsidiaries
Fixed asset investments in subsidiary undertakings held by the company (see note 5) are shown at cost less provision
for impairment. The cost of acquisition includes directly attributable professional fees and other expenses connected
with the acquisition.
49
Edenville Energy plc
Annual Report and Financial Statements 2010
49
Notes to the Company Financial Statements
for the year ended 31 December 2010
1 Accounting policies continued
Impairment
The carrying amounts of non-current assets are reviewed for impairment if events or changes in circumstances
indicate the carrying value may not be recoverable. If there are indicators of impairment, an exercise is undertaken
to determine whether the carrying values are in excess of their recoverable amount. Such a review is undertaken on
an asset by asset basis, except where such assets do not generate cash flows independent of other assets, in which
case the review is undertaken at the cash generating unit level.
If the carrying amount of an asset or its cash generating unit exceeds the recoverable amount, a provision is recorded
to reflect the asset or cash generating unit at the lower amount.
Going concern
After making enquiries, the directors have a reasonable expectation that the company has adequate resources to
continue in operational existence for the foreseeable future. The company therefore continues to adopt the going
concern basis in preparing its consolidated financial statements.
2
Critical accounting estimates and areas judgements
The Company makes estimates and assumptions concerning the future, which by definition will seldom result in actual
results that match the accounting estimate. The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amount of assets and liabilities within the next financial year are those in relation to:
l
the impairment of intangible exploration and evaluation assets.
The Company is required to perform an impairment review, for each CGU to which the asset relates, when facts and
circumstances suggest that the carrying amount of the asset may exceed its recoverable amount. The recoverable
amount is based upon the Directors’ judgements and is dependent upon the discovery of economically recoverable
reserves, the ability of the Company to obtain necessary financing to complete the development and future
profitable production or proceeds from the disposal until the technical feasibility and commercial viability of
extracting a mineral resource becomes demonstrable, at which point the value is estimated based upon the present
value of the discounted future cash flows.
During the year, the Company acquired six Tanzanian prospecting licences through the acquisition of Edenville
International (Tanzania) Limited. The value of these intangible exploration assets acquired represents the fair value
of the consideration paid by Edenville Energy plc at the time of the acquisition of Edenville International Limited, the
details of which are provided in note 16 to the group accounts.
The outcome of ongoing exploration and evaluation, and therefore whether the carrying value of exploration and
evaluation assets will ultimately be recovered, is inherently uncertain. The directors have assessed the value of
exploration and evaluation expenditure carried as intangible assets. In their opinion there has been no impairment
loss to intangible exploration and evaluation assets in the period.
3
Staff costs
The Company had no employees during the year (2009: nil).
Directors’ remuneration
The aggregate directors’ emoluments, including compensation for loss of office, in the year were £110,833
(2009: £73,333).
50
Edenville Energy plc
Annual Report and Financial Statements 2010
50
Notes to the Company Financial Statements
for the year ended 31 December 2010
4
Intangible exploration and evaluation assets
Cost at 1 January 2010
Additions
Cost at 31 December 2010
Licenses
£
19,082
17,454
36,536
Total
£
19,082
17,454
36,536
Licences
On 27 May 2009, the Company signed an option agreement with Javan Investments Company Limited, a private
Tanzanian registered company for two prospecting licences in Tanzania. Under the terms of the option agreement,
the Company acquired an initial 25% interest in both licences for a consideration of US$15,000 per licence.
The above values of £19,082 represent the cash and non-cash consideration paid by the Group at the time of their
acquisition.
There were no triggers for carrying out an impairment review in the period. The Directors have considered the
following factors:
(a) Geology and lithology on each licence as outlined in the most recent CPR’s (independent Competent Person’s
Reports from the mining and earth resources consultancy company, Wardell Armstrong International Limited).
(b)
The expected useful lives of the licences and the ability to retain the licence interests when they come up for
renewal.
(c) Comparable information for large mining and exploration companies in the vicinity of each of the licences.
(d) History of exploration success in the regions being explored.
(e)
(f)
Local infrastructure.
Climatic and logistical issues.
(g) Geopolitical environment.
The Directors consider that there has been no impairment loss to intangible exploration and evaluation assets in the
period.
5
Investment in subsidiaries
Fair value
At 1 January
Additions
At 31 December
Investment in
subsidiaries
£
100
7,033,458
7,033,558
Holdings of more than 20%
The Company holds more than 20% of the share capital of the following companies:
Subsidiary undertaking
Country of incorporation
Class
Shares held
GOA Tanzania Limited
Edenville International (Seychelles) Limited
Edenville International (Tanzania) Limited
UK
Seychelles
Tanzania
*These shares are held by Edenville International (Seychelles) Limited
Ordinary
Ordinary
Ordinary
100%
100%
99.5%*
51
Edenville Energy plc
Annual Report and Financial Statements 2010
51
Notes to the Company Financial Statements
for the year ended 31 December 2010
6 Acquisition of subsidiary
On 29 March 2010 Edenville Energy plc acquired 100% of the issued share capital of Edenville International Limited,
a company incorporated in the Republic of the Seychelles. Edenville International Limited owns 99.5% of the issued
share capital of Edenville International (Tanzania) Limited, a company incorporated in the United Republic of
Tanzania.
Consideration for the acquisition was satisfied by the issue of 1,393,941,536 ordinary shares of 0.02p at a price of
0.5 pence per share.
The transaction has been accounted for by the purchase method of accounting. Using an exchange rate of
1.49 USD/GBP being the rate prevailing at the date of acquisition, the book values of the net assets acquired
amounted to £2,575,275 but the directors have revalued these to the estimated fair values stated below:
Intangible exploration and evaluation assets
Other receivables
Cash and cash equivalents
Other payables
Net assets acquired
Purchase consideration:
Fair value of shares issued
Direct costs related to the acquisition
Total purchase consideration
Other indirect costs of acquisition
7
Equity investments – available for sale
Company
Fair value
At 1 January
Additions
At 31 December 2009
Book value
£
2,589,959
28
50,904
(65,616)
Fair value
£
7,044,399
28
50,904
(65,616)
2,575,275
7,029,715
6,969,708
60,007
7,029,715
3,743
2010
£
2009
£
446,428
–
446,428
–
446,428
446,428
Under the terms of the collaboration and option agreement on a group of emerald mining licences in Tanzania,
Africa, with Obtala Resources Plc (“Obtala”) and Obtala’s subsidiary Mindex Invest Limited (“Mindex”), Mindex
agreed to transfer 75 per cent interest in certain specified licences to Gemstones of Africa Limited. The Company
has acquired 16.96 per cent of the share capital of Gemstones of Africa Limited in exchange for issuing ordinary
shares the equivalent of five per cent of the Company’s share capital to Obtala, totalling 71,428,571 shares. This
equity, which equated to a fair value of £446,428 (based on the closing price on 12 March 2009 of 0.625p per
Ordinary Shares), has been placed in Obtala treasury.
52
Edenville Energy plc
Annual Report and Financial Statements 2010
52
Notes to the Company Financial Statements
for the year ended 31 December 2010
8
Property, plant and equipment
Plant and
machinery
£
Fixtures,
fittings and
equipment
£
Cost
As at 1 January 2010
Additions
Disposals
As at December 2010
Depreciation
As at 1 January 2010
On disposals
Charge for the year
As at December 2010
Net book value
As at December 2010
As at December 2009
9
Trade and other receivables
Other receivables
Prepayments
Receivables from related parties
–
7,471
–
7,471
–
–
1,245
1,245
6,226
–
–
4,153
–
4,153
–
–
692
692
3,461
–
Motor
vehicles
£
–
23,376
(6,685)
16,691
–
(836)
3,531
2,695
Total
£
–
35,000
(6,685)
28,315
–
(836)
5,468
4,632
13,996
23,683
–
–
2010
£
4,753
5,790
182,656
193,199
2009
£
11,199
55,035
–
66,234
10 Cash and cash equivalents
Cash and cash equivalents include the following for the purposes of the cash flow statement:
Cash at bank and in hand
11 Trade and other payables
Trade and other payables
Accruals and deferred income
2010
£
2009
£
616,453
241,061
2010
£
43,007
17,500
60,507
2009
£
12,614
9,000
21,614
53
Edenville Energy plc
Annual Report and Financial Statements 2010
53
Notes to the Company Financial Statements
for the year ended 31 December 2010
12 Share capital
Issued and fully paid
Ordinary shares of 0.02p each (2009 0.02p each)
Deferred shares of 0.08p each (2009 0.08p each)
Ordinary shares of 0.02p each (2009 0.02p each)
Deferred shares of 0.08p each (2009 0.08p each)
2010
Number
2009
Number
3,037,883,072
64,179,932
1,393,941,536
64,179,932
3,102,063,004
1,458,121,468
2010
£
607,578
51,344
658,922
2009
£
278,789
51,344
330,133
The only rights attached to the deferred shares are as follows:
(a)
(b)
(c)
(d)
no dividend or other distribution shall be paid or made in respect of the Deferred Shares;
the holders of deferred shares shall not be entitled to receive notice of, or to attend and vote at any general
meeting of the Company;
on a return of capital, whether on a winding-up or otherwise, the holders of deferred shares shall be entitled
to receive only the amount credited as paid up on each share, but only after the holders of each ordinary share
have received the amount paid up or credited as paid up on such share, together with a payment of £10,000
per share; and
the Company may transfer the shares without making any payment to the holders thereof, to such persons as
the Company may determine, and acquire the same in accordance with the provisions of the Companies Acts
at a price of 0.08p each.
On 29 March 2010, the Company issued 1,393,941,536 ordinary shares of 0.02p each at 0.5p per share as
consideration for the purchase of Edenville International Limited.
On 29 March 2010, the Company issued for cash 200,000,000 ordinary shares of 0.02p each at 0.5p per share.
On 15 November 2010, the Company issued 50,000,000 ordinary shares of 0.02p each at par on the exercise of
50,000,000 warrants.
On 7 January 2011, the Company issued 325,000,000 ordinary shares of 0.02p each at par on the exercise of
325,000,000 warrants.
On 31 January 2011, the Company issued for cash 83,333,334 ordinary shares of 0.02p each at 1.8p per share.
13 Deferred taxation
A deferred tax asset of £187,241 (2009: £120,659) has not been recognised in respect of the tax losses carried
forward due to the uncertainty that profits will arise against which the losses can be offset.
54
Edenville Energy plc
Annual Report and Financial Statements 2010
54
Notes to the Company Financial Statements
for the year ended 31 December 2010
14 Financial instruments
The Company manages its capital to ensure its ability to continue as a going concern and to maintain an optimal
capital structure to reduce the cost of capital. The capital structure of the Company comprises equity attributable to
equity holders of the Company consisting of issued ordinary share capital, reserves and retained earnings.
The Company maintains or adjusts its capital structure through the payment of dividends to shareholders, issue of
new shares and buy-back of existing shares.
Categories of financial instruments
Financial assets
Investments available for sale at fair value
Receivables at amortised cost including cash and cash equivalents:
Cash and cash equivalents
Other receivables
Total
Financial liabilities
Financial liabilities at amortised cost:
Trade and other payables
Net
2010
£
2009
£
446,428
446,428
616,453
193,199
1,256,080
60,507
1,195,573
241,061
66,134
753,623
21,514
732,109
Cash and cash equivalents
This comprises cash held by the Company and short-term deposits. The carrying amount of these assets approximates
to their fair value.
General risk management principles
The Directors have an overall responsibility for the establishment of the Company’s risk management framework.
A formal risk assessment and management framework for assessing, monitoring and managing the strategic
operational and financial risks of the Company’s is in place to ensure appropriate risk management of its operations.
The following represent the key financial risks that the Company faces:
Interest rate risk
The Company is not exposed to significant interest rate risks as it does not have any interest bearing liabilities and its
only interest-bearing asset is cash invested on a short-term basis which attract interest at the banks variable rate.
Credit risk
Credit risk is the risk that the counterparty will default on its contractual obligations, resulting in financial loss. Credit risk
arises from cash and cash equivalents and credit exposures on outstanding receivables and committed transactions.
There were no amounts past due at the balance sheet date.
The company has loaned its subsidiaries an amount of £182,656 which was outstanding at the year end. The directors
will keep this exposure under review and provide against it if they believe the amount will not be recovered.
The maximum exposure to credit risk in respect of the above at 31 December 2010 is the carrying value of financial
assets recorded in the financial statements.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as and when they fall due.
Liquidity risk is managed through an assessment of short, medium and long-term cash flow forecasts to ensure the
adequacy of working capital.
Fair value of financial assets and liabilities
The directors consider that there is no significant difference between the book value and fair value of the Company’s
financial assets and liabilities.
55
Edenville Energy plc
Annual Report and Financial Statements 2010
55
Notes to the Company Financial Statements
for the year ended 31 December 2010
15 Equity-settled share-based payments
The following options and warrants over ordinary shares have been granted by the Company:
Date
30 September 2008
29 March 2010
Exercise price
Exercise period
0.02p
0.87p
5 Years
10 Years
Number of options
and warrants
500,000,000
44,827,587
At the date of grant, the options and warrants were valued using the Black-Scholes option pricing model. The fair
value per option granted and the assumptions used in the calculation were as follows:
Date of grant
Expected volatility
Expected life
Risk-free interest rate
Expected dividend yield
Possibility of ceasing employment before vesting
Fair value per option
30 September 2008
54%
1 year
2.88%
–
–
0.012p
29 March 2010
40%
2 year
4.00%
–
–
0.133p
The charge to the income statement for share based payments for the year ended 31 December 2010 was £22,519
(2009: £nil).
Movements in the number of options outstanding and their related weighted average exercise prices are as follows:
At 1 January
Granted
Forfeited
Exercised
Expired
At 31 December
2010
2009
Number of
options and
warrants
500,000,000
44,827,587
–
(50,000,000)
–
494,827,587
Weighted
average
exercise price
per share
pence
0.02
0.87
–
0.02
–
0.87
Number of
options and
warrants
500,000,000
–
–
–
–
500,000,000
Weighted
average
exercise price
per share
pence
0.02
–
–
–
–
0.02
On 7 January 2011, 325 million warrants were exercised at an exercise price of 0.02p each.
16 Reserves
The following describes the nature and purpose of each reserve:
Share Capital
Share Premium
Share Option Reserve
represents the nominal value of equity shares
amount subscribed for share capital in excess of the nominal value
fair value of the employee equity settled share option scheme as
accrued at the balance sheet date
Retained earnings
Cumulative net gains and losses less distributions made
56
Edenville Energy plc
Annual Report and Financial Statements 2010
56
Notes to the Company Financial Statements
for the year ended 31 December 2010
17 Related party transactions
During the year ended 31 December 2010, the Company paid £35,000 (2009: £35,000) to Adler Shine LLP for the
services of Rakesh Patel, director. Rakesh Patel is a partner in Adler Shine LLP. The Company also paid £14,210
(2009: £8,250) to Adler Shine LLP for accounting services provided in the year.
During the year ended 31 December 2010, the Company paid the following amounts to Obtala Resources plc, a
company of which Simon Rollason is a director:
Purchase of field equipment and other equipment
Secretarial support
Loan of field equipment and machinery
£
35,000
6,000
10,000
The Group has an equity investment in Mindex Invest Limited, a subsidiary of Obtala Resources Plc.
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling activities of the Company, and are all directors of the company. For details of their compensation please
refer to the Remuneration report.
Edenville International (Tanzania) Limited owed £179,840 to the Company as at 31st December 2010. This amount
represents loans made by the Company in order to meet the exploration and operating costs of its Tanzanian
subsidiary.
Edenville International Limited (Seychelles) owed £2,816 to the Company as at 31st December 2010. This amount
represented payments made by the Company in respect of various legal fees paid throughout the year on behalf of
its subsidiary.
18 Events after the reporting date
Exercise of Warrants
On 7 January 2011, warrants in respect of 325 million ordinary shares were exercised at an exercise price of
0.02p per share.
£1.5 million placing
On 31 January 2011, the Company raised £1,500,000 through a subscription of 83,333,334 new ordinary shares of
0.02p each at a price of 1.8p each.
Issue of share options
On 21 February 2011, the following number of share options exercisable at 1.8p were granted to the directors:
Simon Rollason
Rakesh Patel
Mark Pryor
Sally Schofield
The vesting date for these options is 8 February 2012.
10,000,000
10,000,000
5,000,000
5,000,000
57
Edenville Energy plc
Annual Report and Financial Statements 2010
57
Notice of Annual General Meeting
for the year ended 31 March 2009
Notice is hereby given that the 2011 Annual General Meeting of the Company will be held at Acre House, 11-15 William
Road, London, NW1 3ER on Thursday 30 June 2011 at 5.00 p.m. to consider and, if deemed fit, to approve the following
resolutions, of which 1 to 4 (inclusive) will be proposed as ordinary resolutions and 5 will be proposed as a special
resolution:
Ordinary Business
1.
2.
3.
To receive the accounts of the Company for the year ended 31 December 2010 together with the reports thereon of
the directors and the auditors of the Company.
To reappoint Simon Rollason as a director who is retiring in accordance with article 91.2 of the Company’s articles of
association (the ‘articles’) and, being eligible, offers himself for re-appointment.
To reappoint HW Fisher & Company as auditors of the Company in accordance with Section 489 of the Companies
Act 2006, until the conclusion of the next general meeting of the Company at which audited accounts are laid before
members and to authorise the directors to determine their remuneration.
Special Business
4.
That the directors of the Company be and they are hereby authorised generally and unconditionally pursuant to and
in accordance with section 551 of the Companies Act 2006 (“the Act”) to exercise all the powers of the Company to
allot equity securities (as defined by section 560 of the Act) other than the issue of Warrants pursuant to the
Subscription Warrant Instrument dated 10 September 2008, up to an aggregate nominal amount of £200,000
provided that this authority shall expire at the conclusion of the Company’s next Annual General Meeting save that
the Company may, pursuant to this authority, make offers or agreements before the expiry of this authority which
would or might require relevant securities to be allotted after such expiry and the directors may allot relevant
securities in pursuance of such offers or agreements as if the authority conferred by this resolution had not expired.
5.
That:
(a)
the directors be and they are hereby empowered pursuant to section 570 of the Act to allot equity securities
(within the meaning of section 560 of the Act) for cash pursuant to the authority conferred by resolution 4
above as if section 561(1) of the Act did not apply to such allotment, provided that this power shall be limited
to the allotment of equity securities:
(i)
(ii)
(iii)
in connection with an offer of equity securities by way of rights to the holders of ordinary shares in
proportion (as nearly as may be) to their respective holdings of ordinary shares on a record date fixed by
the directors but subject to such exclusions or other arrangements as the directors may consider
necessary or expedient to deal with problems under the laws of any territory or the requirements of any
regulatory body or any stock exchange in any territory or in connection with fractional entitlements or
otherwise howsoever; or
the issue of Warrants pursuant to the Subscription Warrant Instrument dated 10 September 2008; or
(other than pursuant to paragraph (i) and (ii) above) having (in the case of equity securities (as defined
in section 560 Act)) a nominal amount or (in the case of any other equity securities) giving the right to
subscribe for or convert into relevant shares having a nominal amount, not exceeding in aggregate
£200,000;
58
Edenville Energy plc
Annual Report and Financial Statements 2010
58
Notice of Annual General Meeting
for the year ended 31 March 2009
The power conferred by paragraph (a) above shall expire at the conclusion of the Company’s next Annual General
Meeting save that the Company may, before the expiry of such power, make offers or agreements which would or
might require equity securities to be allotted in pursuance of such offers or agreements as if the power conferred
hereby had not expired.
By order of the board
David Venus & Company LLP
Secretary
Date: 3 June 2011
Registered Office
Aston House
Cornwall Avenue
London N3 1LF
Notes
1.
A member entitled to attend and vote at the meeting is entitled to appoint more than one proxy, to exercise all or any
of his rights to attend, speak and vote in his place on a show of hands or on a poll provided that each proxy is
appointed to a different share or shares. Such proxy need not be a member of the Company.
2.
3.
To be valid, the completed and signed form of proxy must be returned to the Company’s registrars Capita Registrars
at PXS, 34 Beckenham Road, Beckenham, BR3 4TU not less than 48 hours before the time fixed for the meeting.
Lodging a form of proxy does not preclude a member from attending and voting at the meeting.
Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those
shareholders of the Company on the register at 6.00 p.m. on the 28 June 2011 be entitled to attend or vote at the
meeting in respect of shares registered in their name at the time. Changes to the register after that time will be
disregarded in determining the rights of any person to attend or vote at the meeting.
59
Edenville Energy plc
Annual Report and Financial Statements 2010
59
Notice of Annual General Meeting
continued
Explanatory notes on the resolutions
Resolution 1
The directors must present to members the accounts and the reports of the directors and auditors in respect of each
financial year.
Resolution 2
In accordance with Article 91.2 of the Company’s articles of association at the annual general meeting in every year one
third of the directors retire by rotation. If the number to retire is not a multiple of three the number will be rounded down
to the nearest whole number.
Resolution 3
HW Fisher & Company are being proposed as the auditors of the Company until the conclusion the next general meeting
at which accounts are presented. The directors are to be given authority to fix their remuneration.
Resolution 4
The Company’s power to issue additional securities is exercised by the directors. The directors must be authorised by
ordinary resolution of the shareholders to exercise that power.
Resolution 5
Under the Company’s articles of association any new shares to be issued must first be offered to existing shareholders in
proportion to the number of shares already held by them. The shareholders may by special resolution waive this right and
permit the directors to issue additional shares without first offering them to existing shareholders. Authority is being
sought to allow the directors to issue up to an additional nominal amount of £200,000 and is in addition to the authority
granted in respect of the issue of Warrants pursuant to the Subscription Warrant Agreement dated 10 September 2008.
This authority will lapse at the conclusion of the Company’s next Annual General Meeting.
60
Edenville Energy plc
Printed by Michael Searle & Son Limited
60
Aston House
Cornwall Avenue
London N3 1LF
United Kingdom
www.edenville-energy.com