Registered number: 05292528
EDENVILLE ENERGY PLC
ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR ENDED
31 DECEMBER 2019
EDENVILLE ENERGY PLC
CONTENTS
Company Information
Chairman’s Report
Chief Executive Officer’s Report
Strategic Report
Directors’ Report
Statement of Directors’ Responsibilities
Remuneration Report
Corporate Governance Report
Independent Auditor’s 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 Auditor’s Report – Company Only
Company Statement of Financial Position
Company Statement of Changes in Equity
Company Cash Flow Statement
Notes to the Company’s Financial Statements
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26
31
32
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68
73
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75
76
EDENVILLE ENERGY PLC
COMPANY INFORMATION
Directors
Alistair Muir– Chief Executive Officer
Jeffrey Malaihollo – Non-Executive Chairman
Nicolas Von Schirnding – Non -Executive Director
Company Secretary
Bernard Sumner
Registered Office
Nominated Adviser
Broker
Bankers
Auditor
Solicitors
Registrars
Aston House
Cornwall Avenue
London
N3 1LF
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London, W1S 2PP
Brandon Hill Capital Limited
1 Tudor Street
London, EC4Y 0AH
Barclays Bank Plc
9 High Street
Stony Stratford
Milton Keynes MK11 1HR
PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
Womble Bond Dickinson (UK) LLP
4 More London Riverside
London
SE1 2AU
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
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EDENVILLE ENERGY PLC
CHAIRMAN’S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
Dear Shareholder,
2019 was a challenging year for the Company, given a lack of capital and difficult market conditions against a requirement to
repay project debt, open up a new northern mining area and also further capital upgrades to the mining fleet and plant to
improve efficiencies. Throughout 2019 the Company had to balance its limited financial resources whilst continuing to
advance the Rukwa Project.
Consequently, during the year Company undertook two equity placings via its new broker Brandon Hill, who also became a
significant shareholder themselves following direct participation in both fundraises. These capital raises enabled the Company
to open up a new mining area to the north, which as expected has proven to have higher quality coal than previously mined, as
well as upgrade the wash plant and improve efficiencies. These operational developments are outlined in more detail in the
CEO’s report below.
During the second half of 2019, following a thorough review of operations, the Board of Directors took the decision to align
with a with a local Tanzanian businessman with a view of forming a strategic partnership which would address certain areas
where the Company had historically fallen short. Discussions were held in the second half of 2019 and reference to the potential
partnership was made in the Company’s announcement of 29 November 2019 .
The Board of Directors was also strengthened in September 2019 with the introduction of Alistair Muir, an experienced coal
geologist with substantial coal mining and utilisation experience. Following a short transition period, Alistair took over the role
of CEO, with Rufus Short stepping down to become a non-executive director. Arun Srinistava also departed the Board in 2019.
Post period
2020 has been dominated by the COVID-19 pandemic (the “Pandemic”) throughout the world and unsurprisingly operations
at Rukwa have naturally been affected. During the countrywide lockdown during the second quarter the Company was forced
to suspend mine operations, leaving just a skeleton security force at the site. The pandemic also caused a delay in finalising all
agreements with our strategic partnership. However the third quarter saw a recommencement of mining, processing and sales
of coal from Rukwa and also the signing of the intended three related agreements with the strategic partner, designed to address
mining, sales and the Company’s capital position. As previously reported, these agreements ensure that operational costs will
now be borne by the strategic partner and that the partner will purchase a minimum of 3,000 tonnes of washed coal per month,
at a healthy profit margin to the Company. In addition, the strategic partner intends to utilise its extensive network within
Tanzania and nearby markets to further boost sales, as the Company looks to bring monthly washed coal sales to an initial
10,000 tonnes per month, with further expansion targeted thereafter. In the current ramp up phase, a loan agreement with the
strategic partners is expected to provide the Company with additional working capital.
In June 2020, the Board further changed with the appointment of Nick von Schirnding as an Independent Non-Executive
Director who replaced Rufus Short. Nick has 25 years of experience in coal mining and natural resources including strategic
development, M&A, driving operational change.
Looking ahead, the three agreements with the strategic partner, the renegotiation of the Company’s debts, and the new Board,
means that the Company is in now in a strong position to achieve its goals. In the longer term, given the significant size of the
Rukwa deposit, we are still pursuing the coal to power project and have looked into opportunities of smaller power plants to
supply local areas.
In closing, I would like to thank all our stakeholders, including you the Shareholders, our partners, the local authorities and
local communities, my fellow Directors, our employees and contractors who have collectively overcome the significant
challenges of 2019. I would also like to thank Rufus Short for his hard work over the last few years.
We look forward to reporting further progress from our Rukwa Mine in the coming months.
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EDENVILLE ENERGY PLC
CHAIRMAN’S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
Yours sincerely
Dr Jeffrey Malaihollo
Chairman
29 September 2020
3
EDENVILLE ENERGY PLC
CHIEF EXECUTIVE OFFICER’S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
2019 Milestones
My time as Edenville CEO started in in November 2019, towards the end of this reporting period.
January 2019 got off to an encouraging start, with a second excavator being utilised in the mine alongside the existing machine.
The Lamella water clarifier plant also became fully operational and the newly constructed pre-screen plant started processing
test material in January 2019.
An open offer was undertaken in January to provide the Company with sufficient funds for further plant upgrades and more
importantly, to open up the new Northern Mining Area, which studies showed contained a better quality of coal. The open offer
was poorly subscribed, with approximately 10% of the planned £620,000 being raised. Accordingly, from February 2019, the
Company took measures to conserve capital and continue supply to key customers, whilst seeking alternative funding
arrangements. The resulting lack of working capital to complete the mine upgrade meant that production was adversely
impacted in H1 2019 with approximately 19,000 tonnes of ROM coal processed to produce 3,900 tonnes of washed tonnes and
9,700 tonnes fine coal tonnes between 1 January 2019 and 31 May 2019.
On 29 April 2019 the Company announced a successful conditional fundraising of £510,000 (before expenses) and made
preparations to apply some of this funding to the project development. The main areas targeted were opening up the pit in the
Northern Mining Area and small upgrades on the plant and infrastructure. The Northern Mining Area was duly opened in June
2019 and has and continues to yield better quality coal than previously mined at Rukwa. Plant upgrades also took place and
were completed in the third quarter. However, a lack of capital following debt service and repayment in Tanzania impacted the
Company’s ability to increase production to targeted levels, which subsequently impacted the expected sales and revenue
streams.
In September 2019 commencement of the repayment of the outstanding Lind debt began and a further capital raise of £300,000
(before expenses) at 0.05p was announced on 6 September 2019. I also joined the Board at that time initially as a non-executive
director, bringing experience as a coal geologist with strong coal mining and utilisation experience.
On 1 November, having grown increasingly comfortable with the investment potential Edenville offered, I replaced Rufus
Short as CEO. Following several weeks in Tanzania the historic issues the Company had faced became apparent and in
November 2019, the Board elected to restructure the business to ensure profitability at the Rukwa Coal Project. On 29
November 2019, the Company announced initial discussions with a Strategic Investor had commenced which were later
formalised in a Heads of Terms Agreement. Whilst the actual agreements outlined in the Heads of Terms wouldn’t be finalised
until 2020, the revised operational model ensured the Company was no longer liable for costs related to increasing production.
This had continually hampered the Company’s working capital position and thereby its ability to operate efficiently. A Contract
Coal Mining Agreement, a Sales & Marketing Agreement and a Loan Agreement have all now been entered into and are
covered in more detail below.
Industrial Consumers
Following the various upgrades to the plant, capacity is currently circa 12,500tpm of washed coal. At the present this should
be achievable at a technical level, although prior to these upgrades the plant had historically peaked at around 3,000tpm.
Total coal sales in the year of 2019 were 5,650 tonnes. The lack of washed coal in stockpiles, given liquidity and thereby mining
constraints, made it difficult to establish the Company as a reliable producer in the region in 2019, nor for it to take advantage
of the substantial contracts available in the neighbouring countries of Rwanda, Uganda, Burundi or the DRC. In December
2019 the company announced 2 contracts totalling 9,000tpm. The execution under these was impacted by the Pandemic.
However, with the agreements now in place with the strategic investor, who has also committed for a further up to 5,000tpm,
the Company hopes they can be satisfied when sufficient stockpiles have been established and combined with additional orders
expected to be generated under the Sales & Marketing Agreement.
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EDENVILLE ENERGY PLC
CHIEF EXECUTIVE OFFICER’S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
As a by-product a significant amount of fine coal product is also produced. Whilst this has a lower heating value than the
Company’s principal product (and is therefore better suited to on or near site utilisation) the Company continues to explore a
number of avenues to monetise this. The reprocessing of fines or applying different technologies would also potentially create
a higher quality and more desirable and saleable product. If the Company is successful in identifying a market for its fines
production, it expects that revenue would fall to the bottom line and boost profitability.
Coal to Power
On 14 February 2019 Tanesco informed the Company that it had been unsuccessful in moving through the Request for
Qualification process to supply power to Tanesco. To date no clear explanation has been given for this decision and as far as
the Company is aware no other privately held coal projects in Tanzania progressed successfully through the process. The
Company’s Directors remain confident that if and when the transmission line infrastructure is built to Sumbawanga, the
opportunity for a power plant development at the Rukwa Coal Project will continue to move forward. Edenville is also seeking
to advance discussions on smaller plant options to satisfy local electricity demand and possible export options into Zambia.
The AFR RI-3A Tanzania – Zambia Transmission Interconnector project, which is being part financed by the World Bank, is
continuing to move forward and could have positive implications for Edenville’s planned coal to power business model. The
financing agreement for credit is now in place and the procurement plan is continuing to progress. As previously stated, the
Company’s long term plan is to provide electricity to this transmission grid once it is completed and we are continuing to work
towards this goal. Currently completion is stated as being in 2024.
Post period (1st January 2020 to 31st August 2020)
The post reporting period has been characterised by:
- A restructuring of the operation of the Rukwa Project and closing of three agreements with a strategic partner.
- The impact of the Pandemic on Rukwa and Tanzania as a whole.
- Adverse weather events that impacted production in the early part of the year.
On the restructuring side the Company now has in place three new contracts. These agreements have been reached with 2
different companies, although both have the same principle shareholder, a Dubai-based Tanzanian with extensive experience
in logistics in east Africa. The three contracts include the Coal Mining Agreement and a US$1million Loan Agreement with
Infrastructure and Logistics Tanzania Ltd (“ILTL”), and a Sales and Marketing agreement with MarTek Ltd.
It has been difficult to assess the impact of the Pandemic as Tanzania has not tested or reported details on cases in the country.
The Company understands that the virus peaked at the same time as Europe with some lockdown and social distancing practices
in place. Although the President announced a return to “business as usual” in mid-May 2020, logistically the movement of
people in and out of Tanzania remained very difficult until the late summer.
Rukwa and the complete Western Highlands region experienced an extended weather event during the 2019-20 wet season
with extensive rains from December to April. This again impacted production in January to March, before the temporary closure
of the mine due to the Pandemic. Some production was taken from the southern pit during the first half of the year, but access
to the northern pit became problematic due to road conditions. These were resolved post the Covid-19 enforced lockdown as
advised in the Company’s announcement of 20 August 2020.
With the assistance of two rounds of funding the Company is in an improved financial position with its existing legacy UK
debt also settled. The significantly smaller outstanding Tanzanian debt will be settled with some of the proceeds from the loan
facility of US$1M from ILTL. The equity funding rounds were as follows:
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£700,000 was raised in January 2020 at a price of 0.04p per share and was subscribed for by existing major shareholders
and one new major investor.
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EDENVILLE ENERGY PLC
CHIEF EXECUTIVE OFFICER’S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
-
£500,000 was raised in June 2020 also at a price of 0.04p all the funds coming from the same existing major
shareholders.
Lind Partners LLC
In 2018, Edenville entered into a loan facility with Lind Partners LLC (“Lind”) for principal of US$750,000 to fund the final
construction parts of the mine at Rukwa. Repayment of the loan commenced in September 2019 with cash payments of
approximately US51,000 per month, though Edenville does have the option of payment through shares. Payments were made
on a regular basis to Lind between September 2019 to March 2020 inclusive, before a payment holiday was agreed with Lind
as a result of the disruption related to the Pandemic. Currently Edenville’s outstanding debt to Lind totals US$580,000.
Corporate social responsibility
The Company has continued to take its corporate and social responsibility very seriously. We understand that Edenville must
meet the social requirements of an operator in Tanzania. The construction of a mining operation at Rukwa has already provided
several opportunities to improve infrastructure for the local community, the most visible being the construction of the road
from Kipandi, past Mkomolo village and beyond, to the mine. This has opened up a major artery in the area which services
farmers, the local population and communications as well as the mine itself.
Wherever possible we have sought to employ local people from surrounding villages. Many of the operators and management
are local and are proving to be highly competent and skilled employees. The positive social benefits also overflow into the
general community where enterprising individuals are providing services such as food supply for workers.
Relinquishment of licences
There has been no new relinquishment. PL6098/2009 Muze which was identified for relinquishment last year has been released
however Government records still indicate that it is held by Edenville.
Summary
In summary 2019 was a difficult year, primarily given liquidity constraints. However, despite clear headwinds the Company
did still reach a number of milestones in terms of upgrades to the wash plant and opening the more attractive Northern Mining
Area. It also identified a strategic partner moving forward, which we expect to address previous issues that arose in the
investment case.
Accordingly, following the closing of these three agreements with the strategic partner over the summer, I believe the Company
is now well placed to take a major step forward through the adoption of this new operational structure that ensures Edenville
draws revenue from every tonne of washed coal sold.
On the operational side the Company is looking forward to seeing production increase at Rukwa and we have set ourselves an
aspirational target of securing 25% of the local market. If that can be achieved, we will be pleased to tackle the problem of
boosting production from the current wash plant or investing in additional capacity. Further with the completion of the
Presidential elections the Company will look forward to engaging with the government on potential power scenarios.
Alistair Muir
Chief Executive Officer
6
EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
The directors present their strategic report for the year ended 31 December 2019.
Principal activity
The principal activity of the Group is the production of energy commodities, predominantly coal, 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 policy
targets. Further details of the Group’s business and expected future developments and a review of operations are also set out in
the Chief Executive Officer’s Report on pages 4 to 6.
Development Approach
The Group’s principal operation is the mining of coal. Its operations are subject to all of the hazards and risks normally
encountered in mining and processing coal.
The Group follows all necessary laws and regulations and believes it has adopted world best practice standards and is not aware
of any present material issues in this regard. As is common with all mining operations, there is uncertainty and therefore risk
associated with the Group’s operating parameters and costs. These can be difficult to predict and are often affected by factors
outside the Group’s control.
.
Financial and performance review
The results of the Group for the year ended 31 December 2019 are set out on page 31.
Principal risks and uncertainties and risk management
The principal risks facing the Group are those relating to the nature of the resources, risk of new entrants, those inherent and
associated with mining,, reliance on the expertise of key Group personnel, risks connected with uncertainties of Tanzanian
political, fiscal and legal systems, including taxation and currency fluctuations, as well as those regimes in which the Group
has direct or indirect interests.
The Board and senior management regularly monitor all areas of risk, through regular meeting. reporting on a monthly basis
as well as through ad hoc communications. Senior management regularly visits operations to understand site-specific risks as
well as to assess local political, fiscal and legal risks. In this regard, the Group maintains a strict policy of compliance with
local laws and regulations, and community issues (including health and safety, community development, and environmental
responsibility) are at the forefront of strategic and operational decision-making.
The following are the key risks that face the Group:
Operational risks
Mineral extraction 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 production and extraction 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 and mining 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
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EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
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 mining and 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. We should note that to date,
no substantial adverse changes to our operations, legal, or financial status has materialised due to recent documented changes
in Tanzanian mining legislation. We continue to have regular dialogue with the authorities on how the law is applied and will
report any material areas as they occur.
The operational risks are mitigated, where possible, as follows:
-
-
-
-
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the executive director and managements visit each operation regularly, when these key risks are reviewed and actions
taken as necessary;
control procedures have been communicated to operations’ management who review local procedures for Group
compliance;
the in-country operations team submit monthly reports to head office which cover operational progress and analysis of
technical data. Results obtained from testing of mineral samples by independent laboratories are sent to the operational
team and copied directly to the UK head office. A strict quality assurance/quality control procedure, designed by a
leading independent consultancy group, is in place covering all aspects of mining and exploration and sample collection
with local staff trained to standards set by the UK head office;
the executive director and management visit each operation regularly to review local operational and technical
procedures and controls and compliance with Group procedures and report to the Board; and
the head office finance function regularly reviews local financial controls and compliance with Group procedures and
report to the board.
Production risks
The Rukwa Project is now in production supplying coal to various customers in Tanzania and the region as a whole. Any
mining operation which is producing it has all of the hazards and risks normally encountered in mining and processing coal.
These include unusual and unexpected geological formations, flooding and other conditions involved in the extraction of
material, any of which could result in damage to the mine and other producing facilities, damage to life or property.
Key considerations include geological risk, mining risk, processing risk and also employee risk and governance risk. Customer
risk also exists in relation to the ability of the customer to collect the product and to pay for it. All these areas are managed on
a daily basis by qualified professionals experienced in their particular fields. In broad terms geological risk is covered by having
well drilled out and the coal resource professionally reviewed. Mining risk is covered by having mine plan and appropriate
equipment available to mine it supervised by mining engineers. Processing risk is covered by having a proven method of
processing the coal through a system that is controlled and monitored by process plant professionals. Employee risk is managed
by having an adequately trained staff whilst governance risk is managed by following government procedures and rules on all
aspects of the operation
Environment, health and safety
The Groups operations in these areas are Government regulated by a range of legislative, regulation and policy requirements
alongside Group reporting requirements and regular official and spot mine visits. Compliance to the set of rules and regulations
underpins our approach to risk management. In support the Group adopts best practice with on-site and corporate level policies
and procedures. It has specific personnel on site to manage this area, employee focused handbooks and daily toolbox meetings.
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EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
In regard to environmental management it engages third party consulting services that have an intimate knowledge of the
regulatory framework to advise on mining activities.
Despite all this structure the Group’s mining activities may result in pollution, accident or loss of life due to systems or
equipment failure.
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. Currently the focus of the Rukwa project is in mining and development with
only some effort put into exploration. There is no certainty that the operation described in this document will result in profitable
commercial mining operations or result in the discovery of ore in commercial quantity and quality. Significant capital
investment and working capital is required to achieve commercial production from successful exploration efforts and there can
be no certainty that the Company will be able to obtain the financing required to continue operations and meet its commitments
for the exploration and development programme.
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.
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.
Currently the Group is undertaking limited exploration, this being primarily focused on development within the existing mining
area and surrounding prospecting licences.
Reserve and resource estimates
The Group’s reported reserves and resources are only estimates based on JORC reports prepared in March 2013. No assurance
can be given that the estimated reserves and resources will be recovered or that they will be recovered at the rates estimated.
Reserve and resource estimates are based on sampling, interpretation and modelling and, consequently, are uncertain because
the samples may not be representative. Reserve and resource estimates may require revision (either up or down) based on
future actual production experience.
Human resources
The Group is reliant on a small team of experienced mining professionals for their success and is more than usually vulnerable
to the adverse effects of losing key personnel.
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 held by the Group.
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EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
The Group might not be able to retain its licence interests when they come up for renewal, despite a possibility of discovering
ore bodies. Under the Mining Act 2010, at the end of the initial licence term and on renewal, a company must relinquish 50%
of the land area held under licence. The dropped portion may be re-applied for; however, relinquishing 50% of the licence area
does not necessarily devalue the licence. Mineral deposits may cover areas of only a few Km2 and the process of relinquishment
is such that a company will retain the part of the licence that is considered most prospective for a mineral discovery. If the
original licence covers 40km2 the retained ground after relinquishment is more than sufficient for the discovery of a world class
deposit and does not detract from the value of the property.
While the Group has undertaken all the customary due diligence in the verification of title to its material mineral properties,
this should not be construed as a guarantee of title. Changes or modifications to the Mining Act 2010 in 2017 and 2019 have
had no adverse effect on the operation up to now. The Group’s management team has been operating in Tanzania for a number
of years and have experience in managing the title to its properties. It maintains professional relationships with the relevant
government bodies responsible for the issue and renewal of licences but if there was an indication of an issue over the title to
any of its properties it would seek advice from the Group’s lawyers.
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 Group’s financial position which is denominated and reported in sterling.
The Group 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.
The market price of commodities is volatile and is affected by numerous factors beyond the Group’s control.
Over time prices of all commodities rise and fall. There is the risk that the price earned for minerals will fall to a point where
it becomes uneconomic to extract them from the ground. The prices of these commodities are affected by a number of factors
beyond Edenville’s control which include available supply and demand along with government policy. The principal
commodity in Edenville’s portfolio is coal. Whilst global export coal prices are subject to price fluctuations depending on
market conditions this does not affect our sales into the Tanzanian market because of the continuing Tanzanian ban on coal
imports, it can affect our competitiveness in neighbouring countries markets. The impact of the price of coal on the economics
of the Edenville project is kept under close review although local and regional factors play an important part in determining the
coals economic viability.
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 or may have 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.
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EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
Edenville minimises political risk by operating in countries considered to have relatively stable political systems, established
fiscal and mining codes and a respect for the rule of law.
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.
It is noted that there were changes and amendments in 2017 and 2019 to the Mining Act 2010. To date, no significant adverse
changes to our operations, legal, or financial status has materialised due to recent documented changes in Tanzanian mining
legislation. We are aware that we may in the future receive requests from the Tanzanian Government connected to legislation.
We continue to have regular dialogue with the authorities and will report any material points as they occur.
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.
Management is actively evaluating other coal projects in the African continent in order to expand the Group’s coal resource
base and reduce dependency on Tanzania.
Competition risks
The mineral exploration and mining sectors are competitive at each phase of a company’s development. The Group competes
with 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.
Edenville is aware that it operates in an area considered highly prospective to competitive companies. The management monitor
the activities of other operators and monitor their development and future plans from information available in the public domain,
which allows the company to evaluate whether these competitors pose a threat to our market position.
11
EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
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.
Financial risks
The Group’s multi-national operations expose it to a variety of financial risks:
(i) Foreign exchange risk
The majority of exploration and development costs are in United States dollars or Tanzanian schillings. Accordingly, foreign
exchange fluctuations may adversely affect the Group’s financial position and operating results.
(ii) 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. The Group has a comprehensive system for financial reporting. The board
approves the annual budget which is revised through the year as necessary with the board’s approval. Monthly results are
reported against budgets and variances analysed. Great importance is placed on the monitoring and control of cash flows, and
cash forecasts are reported to the board;
(iii) Credit risk
Cash balances are deposited with banks with a high credit rating.
Key performance indicators
The Board monitors the activities and performance of the Group on a regular basis. The Board uses both financial and non-
financial indicators based on budget versus actual to assess the performance of the Group. The indicators set out below were
used during the year to 31 December 2018 and will continue to be used by the Board to assess performance over the year to 31
December 2019.
Financial KPIs
Total production 37,239 tonnes (2018: 75,442)
Sales £233,414 (2018: £337,125)
Total expenditure burn rates have reduced by 29% from £2,834,892 to £2,008,807
Corporate overheads as a percentage of total expenditure has decreased from 34% in 2018 to 33% in 2019.
Non-financial KPIs
Health and safety –There were no reported health and safety incidents during the year.
Operational success – Relevant information is reported in the ‘Chief Executive Officer’s Report’ on page 4.
Prior Year adjustment
During April 2018 the groups mining activities moved into the production phase. Previously these costs continued to be
classified within intangible assets. The 2018 figures have been restated to show the transfer to property, plant and equipment.
Further details are in Note 32.
12
EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
Section 172(1) Statement – Promotion of the Company for the benefit of members as a whole:
The Directors believe they have acted in the way most likely to promote the success of the Company for the benefit of its
members as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
Consider the likely consequences of any decision in the long term;
Act fairly between members of the Company;
Maintain a reputation for high standards of business conduct;
Consider the interest of the Company’s employees;
Foster the Company’s relationships with suppliers, customers and others; and
Consider the impact of the Company’s operations on the community and environment.
The application of S172 requirements can be demonstrated in relation to some of the key decisions made during 2019:
Restructure Tanzanian operations to gain benefit from local expertise in logistics and marketing.
Optimising the production environment to reduce pressures on cash flow.
Continuing to engage with the Tanzanian Government in regard to electricity generating opportunities.
Restructuring of debt to reduce operational constraints.
Continuing evaluation of existing licence areas and assessment of the project.
Adding expertise at the Board level to enhance strategic elements of the project.
As a mining exploration and development group operating in Tanzania, the Board takes seriously its ethical responsibilities to
the communities and environment in which it works. We abide by the local and relevant UK and local laws on anti-corruption
and bribery.
Wherever possible, local communities are engaged in the operations and support activities providing much needed local
employment opportunities and wider economic opportunities to the local communities. In addition, we follow both Tanzanian
regulatory requirements and international best practice on environmental aspects of our work. Our goal is to meet or exceed
standards, in order to ensure we maintain our social licence to operate from the communities with which we interact. The
health and safety of our employees are a primary consideration for the Board.
Alistair Muir
Chief Executive Officer
29 September 2020
13
EDENVILLE ENERGY PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
The Directors present their annual report and audited Group financial statements for the year ended 31 December 2019.
Dividends
The Directors do not recommend payment of a dividend for the year (2018 – nil).
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:
Arun Srivastava (resigned 25
September 2019)
Rufus Short
Alistair Muir (appointed 25
September 2019)
Jeffrey Malaihollo
Ordinary shares of
0.02p held at
31 December 2019
Nil
Deferred shares
of 0.001p held at
31 December
2019
Nil
Ordinary shares of
0.02p held at
31 December
2018
Nil
Deferred shares of
0.001p held at 31
December 2018
Nil
85,021,961
844,480,460
3,333,428
844,480,460
Nil
153,125,000
Nil
Nil
Nil
Nil
Nil
Nil
Rufus Short resigned as a Director on 10 June 2020
The Directors’ interests in share options as at 31 December 2019 are as follows:
Rufus Short
Rufus Short
Jeffrey Malaihollo
Arun Srivastava
Rufus Short
Jeffrey Malaihollo
Options at
31
December19
3,005,741
5,333,333
3,333,333
2,000,000
10,666,666*
6,666,666*
Exercise
Price
Date of grant
First date
of exercise
Final date
of exercise
5.00p
1.08p
1.08p
1.08p
1.08p
1.08p
21.10.13
28.03.17
28.03.17
28.03.17
28.03.17
28.03.17
21.10.14
28.03.17
28.03.17
28.03.17
N/A
N/A
20.10.23
27.03.22
27.03.22
27.03.22
27.03.22
27.03.22
*The vesting date of these share options is dependent on performance conditions being met. Rufus Short resigned as a Director
on 10 June 2020 as a result of which 10,666,666 share options lapsed.
Share capital
Details of issues of Ordinary Share capital during the year are set out in note 22.
14
EDENVILLE ENERGY PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
Substantial shareholdings
The company has been notified of the following voting rights of shareholders of the company as at 22 September 2020.
The Bank of New York (Nominees) Limited
JIM Nominees Limited
Spreadex Limited
Vidacos Nominees Limited
Interactive Investor Services Nominees Limited
Pershing Nominees limited
Barclays Direct Investing Nominees Limited
BNY (OCS) Nominees Limited
No of Ordinary Shares
% of issued
share capital
1,301,771,250
1,052,963,125
895,916,966
797,039,489
397,907,425
390,513,129
348,458,326
322,500,000
15.98%
12.93%
11.00%
9.78%
4.88%
4.79%
4.28%
3.96%
*Nominee shareholders represent a number of investors shareholdings
Financial instruments and other risks
Details of the use of financial instruments by the Company and its subsidiary undertakings are contained in note 25 of the
financial statements.
Details of risks and uncertainties that affect the Group’s business are given in the Strategic Report.
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
PKF Littlejohn LLP were appointed as auditors during 2020. They 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 29 September 2020 and signed on its behalf.
Alistair Muir
Chief Executive Officer
15
EDENVILLE ENERGY PLC
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
FOR THE YEAR ENDED 31 DECEMBER 2019
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 and Company 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 AIM market.
In preparing these financial statements the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
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 Group’s and
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and 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 on-going integrity of the financial statements contained therein.
16
EDENVILLE ENERGY PLC
REMUNERATION REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
The remuneration committee comprised of Jeffrey Malaihollo and Alistair Muir. The committee is, within the 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.
As the scope of operations expands the Company intend to increase the number and scope of the non-executive directors. The
Company has two non-Executive directors. 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 full Board 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 full 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 full Board 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.
17
EDENVILLE ENERGY PLC
REMUNERATION REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
Directors’ remuneration
Details of remuneration of the directors of the Company who served in the year ended 31 December 2019 are set out below:
Name
Executive
Rufus Short
Alistair Muir
Non-Executive
J Malaihollo
Arun Srivastava
Fees and
other
remuneration
£
Long
term
Pension
£
2019
Total
2018
Total
£
£
70,833
18,619
30,000
8,750
542
-
199
-
71,375
18,619
130,702
-
30,199
8,750
45,458
36,000
128,2020
741
128,943
212,160
At 31 December 2019 only one third of the options granted to the directors in March 2017 have vested.
Included in the above are accrued salaries of £69,827 (2018: £51,042). Rufus Short resigned as director on 10 June 2020 and
as part of his settlement, £12,750 of salaries accrued were waived.
18
EDENVILLE ENERGY PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
Compliance with the UK Corporate Governance code
The Quoted Companies Alliance has published a corporate governance code for small and mid-sized quoted companies, which
includes a standard of minimum best practice for AIM companies, and recommendations for reporting corporate governance
matters (the “QCA Code”). The QCA Code sets out 10 principles of Corporate Governance which should be applied in order
to deliver long-term shareholder value through good communication and an efficient, effective and dynamic management
framework.
The Directors of Edenville Group Plc (‘Edenville’, the ‘Group’ or the ‘Company’) have adopted the QCA Code. The 10
principles of the QCA Code are listed below together with a short explanation of how the Group applies each of the principles
and where the Group does not fully comply with each principle an explanation is provided as to why it does not currently do
so.
Delivering growth
1. Establish a strategy and business model which promote long-term value for shareholders
Edenville’s growth strategy is focused on the continued development of its mining operations in Tanzania and the planned
development of a mine mouth power plant at the project site which will sell electricity to Tanesco and the East Africa Power
Pool.
The near-term objectives are:
To continue commercial mining and washing operations at the Rukwa coal field. Since the year end, the Company now has in
place three new contracts. These agreements have been reached with 2 different companies, although both have the same
principle shareholder, a Dubai-based Tanzanian with extensive experience in logistics in east Africa. The three contracts include
the Coal Mining Agreement and a US$1million Loan Agreement with Infrastructure and Logistics Tanzania Ltd (“ILTL”), and
a Sales and Marketing agreement with MarTek Ltd.
2020 has been dominated by the COVID-19 pandemic (the “Pandemic”) throughout the world and unsurprisingly operations
at Rukwa have naturally been affected. During the countrywide lockdown during the second quarter the Company was forced
to suspend mine operations, leaving just a skeleton security force at the site. The pandemic also caused a delay in finalising all
agreements with our strategic partnership. However the third quarter saw a recommencement of mining, processing and sales
of coal from Rukwa and also the signing of the intended three related agreements with the strategic partner, designed to address
mining, sales and the Company’s capital position. As previously reported, these agreements ensure that operational costs will
now be borne by the strategic partner and that the partner will purchase a minimum of 3,000 tonnes of washed coal per month,
at a healthy profit margin to the Company. In addition, the strategic partner intends to utilise its extensive network within
Tanzania and nearby markets to further boost sales, as the Company looks to bring monthly washed coal sales to an initial
10,000 tonnes per month, with further expansion targeted thereafter. In the current ramp up phase, a loan agreement with the
strategic partners is expected to provide the Company with additional working capital.
To advance the Rukwa Coal to Power Project through its pre-development phase and subsequently to a point where a decision
on construction can be made. On 14 February 2019 Tanesco informed the Company that it had been unsuccessful in moving
through the Request for Qualification process to supply power to Tanesco. To date no clear explanation has been given for this
decision and as far as the Company is aware no other privately held coal projects in Tanzania progressed successfully through
the process. The Company’s Directors remain confident that if and when the transmission line infrastructure is built to
Sumbawanga, the opportunity for a power plant development at the Rukwa Coal Project will continue to move forward.
Edenville is also seeking to advance discussions on smaller plant options to satisfy local electricity demand and possible export
options into Zambia.
The AFR RI-3A Tanzania – Zambia Transmission Interconnector project, which is being part financed by the World Bank, is
continuing to move forward and could have positive implications for Edenville’s planned coal to power business model. The
19
EDENVILLE ENERGY PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
financing agreement for credit is now in place and the procurement plan is continuing to progress. As previously stated, the
Company’s long term plan is to provide electricity to this transmission grid once it is completed and we are continuing to work
towards this goal. Currently completion is stated as being in 2024.
The Group’s longer-term objective is to fully monetise the Rukwa coal deposit via development of a mine mouth coal-to-
power project providing electricity to the Tanzanian grid system. Edenville is continuing in discussions with Tanesco on all
options available to develop a coal-to-power project at the Rukwa mine site.
2. Seek to understand and meet shareholder needs and expectations
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders on a regular
basis.
All shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In
addition, all shareholders are encouraged to attend the Company’s Annual General Meeting and any other General Meetings
that are held throughout the year.
Investors have access to current information on the Company though its website, https://edenville-energy.com/, and the
Company’s financial PR advisers, IFC Advisory Limited, are also available to liaise with shareholders.
The Company intends to widen its investor base over time and already meets or talks 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.
The Company also has held and intends to periodically hold Investor events (either in person or virtually)to meet with
shareholders and provide updates on corporate developments; and at appropriate points in the future the Company will host
analyst site visits.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
The Board recognises that the long-term success of Edenville is reliant upon the relationship and good communications with
the Tanzanian authorities (the Ministries of Energy and Minerals, Tanesco, the national power company and other government
authorities such as NEMC the environmental management council), our local partner in Tanzania, the local community and the
efforts of the employees of the Group and its contractors, suppliers and regulators.
Frequent and regular communications with the authorities and our local partner is ongoing. A designated employee and a local
Tanzanian consultant is engaged to conduct regular communication with the local community.
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.
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
Principal risks
The principal risks facing the Group are those relating to the volatility of commodity prices, reliance on the expertise
of key Group personnel, risks connected with uncertainties of Tanzanian political, fiscal and legal systems, including taxation
and currency fluctuations, and meeting its financing requirements.
20
EDENVILLE ENERGY PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
Risk Management
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.
Senior management regularly visits operations to understand site-specific risks as well as to assess local political, fiscal and
legal risks. In this regard, the Group maintains a strict policy of compliance with local laws and regulations, and community
issues (including health and safety, community development, and environmental responsibility) are at the forefront of strategic
and operational decision-making.
Duties in relation to risk management that are conducted by the Directors include, but are not limited, to:
Initiating action to prevent or reduce the adverse effects of key risks;
•
• Controlling further treatment of risks until the level of risk becomes acceptable;
Identifying and recording any problems relating to the management of risk;
•
•
Initiating, recommending or providing solutions through designated channels;
• Verifying the implementation of solutions;
• Communicating and consulting internally and externally as appropriate; and
•
Informing investors of material changes to the Group’s risk profile.
Ongoing review of the overall risk management programme (inclusive of the review of adequacy of treatment plans) is
conducted by external parties, such as specialist consultancy groups or individuals, where appropriate. During the mine start-
up phase, the Company has regularly used consultants in both the mining and processing areas. 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.
Conflicts of interest
The Board 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.
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.
The Strategic Report provides detailed analysis of the key risks that face the Group and how those risks are managed.
5. Maintain the board as a well-functioning, balanced team led by the chair
The Board recognises that the Company‘s objective of delivering growth in long-term shareholder value requires an efficient,
effective and dynamic management framework and should be accompanied by good communication which helps to promote
confidence and trust.
The Board currently comprises one full-time Executive Director (Alistair Muir) and two Non-Executive Directors (Jeffrey
Malaihollo and Nicolas Von Schirnding). Details of the qualifications, background and responsibility of each director is
provided on pages 21 and 22 with additional information in respect of directors’ record of attendance at meetings and the
operation of the Audit Committee and Remuneration Committee provided in the Company’s annual report and accounts and
below under Principle 9.
The Board is also supported by Rakesh Patel, a partner at Adler Shine LLP, Chartered Accountants, who acts as Group financial
controller and who, together with his team at Adler Shine LLP, provide accounting, financial and reporting support to the
directors.
21
EDENVILLE ENERGY PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
Nicolas Von Schirnding is considered by the Board to be an independent director. Given the size of the Company, the present
level of its development and the number of directors currently, the Board considers it may be necessary for there to be an
additional director, either non-executive role or in a senior executive role. The Board therefore does recognise that as the
Company develops, the number of directors, including independent directors, may increase.
6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
The Board comprises of directors considered to possess the appropriate experience, skills, personal qualities and capabilities
necessary to deliver the Company’s strategy for the benefit of its shareholders and is appropriate to its present size and stage
of development.
Dr Jeffrey Malaihollo – Non-Executive Chairman (Aged 54)
Jeffrey has a PhD in Geology and over 22 years’ experience in varied roles within resource and finance having worked and
consulted for Newcrest Mining, Rio Tinto, Billiton and Loeb Aron Financial Advisors. This was followed by several years of
Chief Executive Officer and Managing Director roles with AIM-listed Central China Goldfields and Bullabulling Gold and
ASX-listed Arc Exploration. He is a non-executive director of TSXV-listed Copper Lake Resources Ltd as well as several other
private companies in the resources sector.
He is a Fellow of the AusIMM, a Fellow of the Geological Society of London, a member of the Geological Society of America
and a member of the Association of Mining Analysts.
As a Chairman Jeff is responsible to lead the Board and determine the strategic direction of the Company, review performance
of the management and ensure that the Company complies with the relevant rules and regulations. In addition, he is responsible
to ensure that the Company complies with the QCA Code for Corporate Governance.
Alistair Muir – Chief Executive Officer (formerly Non-Executive Director)(Aged 68)
Alistair has a wealth of both operational and emerging markets experience, including significant on the ground experience in
Tanzania. He has over 25 years operational experience mainly working in the coal (both thermal and coking), uranium and
iron ore sectors. He has extensive expertise in open-pit mine development, project evaluation and exploration, particularly in
the integrated coal and power generation setting.
In recent times Alistair has predominantly operated in emerging markets, as well as Tanzania he has worked in Turkey and
Central Asia. Previous roles include General Manager of UraniumSA; Managing Director and Director of Celsius Coal Ltd,
an ASX listed Company where he participated in the restructuring of the company to Celsius Resources as it migrated its
operations into the battery minerals sector; and Chief Representative for Europe & the Middle East of Azarga Resources Ltd
where he led project teams to evaluate new projects within the region.
Alistair is responsible for the daily operation and directing management of the company from 1st November 2019
Nicholas (Nick) von Schirnding – Non-Executive Director (Aged 58)
Nick has over 25 years' experience in mining and natural resources, including strategic development, M&A, restructuring,
driving operational change and the UK regulatory framework.
Nick is Executive Chairman of Arc Minerals plc, a London listed mining group with interests in Africa. Nick is also
Chairman of Fodere Group, a private company that has developed environmentally sustainable technology to extract high
value minerals from ore. In addition, Nick is a Non-Executive Director of Jangada Mines plc, which is also listed in London.
Previously Nick was CEO of Asia Resource Minerals plc (formerly Bumi plc), a FTSE listed mining company and was
instrumental in successfully restructuring their 25mtpa open pit coal mining operations. Nick was also deputy chairman of
Berau Coal, Indonesia's fourth largest listed coal company. Prior to this Nick held senior roles at both Anglo American plc and
De Beers.
22
EDENVILLE ENERGY PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
Nick has worked and lived in both developed and emerging markets including the UK, India, SE Asia, Africa and South
America.
7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement
Given the size of the Board and the stage of development, no formal assessment of the Board performance is taken. However,
requests to attend seminars, courses, conferences to improve the effectiveness of the Board are encouraged.
A yearly internal review of the performance of the Board is planned with inputs from employees and advisors.
Board members are in frequent communication with each other and the Chairman and the Chief Executive officer are in a daily
communication such that Board members are aware of the present status of the Company.
The Board conduct weekly meetings either by telephone or in person to review their goals. The CEO gets regular feedback
from operational employees on all issues.
There are periodic discussions on the future direction of the Company, augmentation of senior management team, potential
Board members and succession planning.
8. Promote a corporate culture that is based on ethical values and behaviours
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:
responsibilities to shareholders;
compliance with the Tanzanian, Seychelles and UK laws and regulations;
-
-
- Anti-corruption practices;
-
-
-
-
relations with customers and suppliers;
ethical responsibilities;
employment practices; and
responsibility to the environment and the community.
Regular meetings and communications with management and employees are conducted throughout the year to ensure such
corporate culture are instilled within the Company.
Details of these are outlined in the Annual Report under the Corporate Social Responsibility and Corporate Governance
sections.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the
board
Board meetings
The Board formally meet on average every three months, however the Chairman and the Chief Executive Officer communicate
daily and meet up on average at least once a month. 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, changes in the Board / senior management, 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.
23
EDENVILLE ENERGY PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
Board committees
There are two board committees, namely the Audit and Remuneration committees both consisting of Jeffrey Malaihollo and
Nicholas Von Schirnding. During the year ended 31 December 2019 the Audit Committee and the Remuneration Committee
met with the Chief Executive Officer and all relevant matters were dealt with by the full Board. The functions of these
committees are as follows:
Audit committee
The Committee provide a forum for reporting by the Group’s external auditors. Meetings will be held on average once a year
and the executive Director(s) will also be invited to attend.
The Audit Committee will be 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 will be 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 will determine the contract terms,
remuneration and other benefits for the Executive Directors, including performance related bonus schemes, compensation
payments and option schemes. At present, the Board itself determines the remuneration of the Non-Executive Directors.
Nominations committee
The directors consider that the Group is not currently of a size to warrant the need for a separate Nominations Committee or
internal audit function although the board has put in place internal financial control procedures as summarised below.
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 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.
10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and
other relevant stakeholders
In addition to the Chairman’s Statement and CEO report in the Company’s Annual Report and Interim Results, Shareholders
are regularly advised of any significant developments in the Company and are encouraged to participate in the Annual General
Meeting and any other General Meetings that may take place throughout the year. The Company intends to widen its investor
base over time 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.
Investors have access to current information on the Company though its website, https://edenville-energy.com/, and the
Company’s financial PR advisers, IFC Advisory Limited, are also available to liaise with shareholders.
The Company also intends to periodically hold Investor Evenings to meet with shareholders and provide updates on corporate
developments; and at appropriate points in the future the Company will host analyst site visits.
The Company has a twitter account https://twitter.com/edenvilleenergy?lang=en which contains photos and videos of the
Company’s operation in Tanzania. The Managing Director also periodically promotes the Company’s activities, following the
24
EDENVILLE ENERGY PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
publication of regulatory announcements, through various media platforms such as Directors Talk, VOX Markets and Proactive
Investors.
Going Concern
The financial statements have been prepared on a going concern basis. The Company intends to operate within its cash
resources.
During the countrywide lockdown during the second quarter the Company was forced to suspend mine operations, leaving just
a skeleton security force at the site. The pandemic also caused a delay in finalising all agreements with our strategic partnership.
However the third quarter saw a recommencement of mining, processing and sales of coal from Rukwa and also the signing of
the intended three related agreements with the strategic partner, designed to address mining, sales and the Company’s capital
position. As previously reported, these agreements ensure that operational costs will now be borne by the strategic partner and
that the partner will purchase a minimum of 3,000 tonnes of washed coal per month, at a healthy profit margin to the Company.
In addition, the strategic partner will utilise its extensive network within Tanzania and nearby markets to further boost sales, as
the Company looks to bring monthly washed coal sales to an initial 10,000 tonnes per month, with further expansion targeted
thereafter. In the current ramp up phase, a loan agreement with the strategic partners is expected to provide the Company with
sufficient working capital.
Based on the current working capital forecast which includes the recent placing, the Group has sufficient funds in order to allow
it to continue in production and implement planned project development and any upgrades. However, if there are delays in
procuring orders, then the Group may require additional funds within twelve months of the date of approval of these financial
statements. The ability of the Group to raise additional funds is dependent upon investor appetite.
Expenditure on excavation is related to the level of orders and both head office costs and Tanzanian administration costs can
be reduced if the additional funds cannot be raised and the Group therefore continues to adopt the going concern basis in
preparing its consolidated financial statements.
25
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2019
Qualified Opinion
We have audited the financial statements of Edenville Energy plc (the ‘parent company’) and its subsidiaries (the ‘group’) for
the year ended 31 December 2019 which comprise the Group Statement of Comprehensive Income, Group Statement of
Financial Position, the Group Statement of Changes in Equity, the Group Statements of Cash Flows and the notes to the
financial statements, including a summary of significant accounting policies. The financial reporting framework that has been
applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union and as regards the parent company financial statements, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion, except for the possible effects of the matters described in the basis of the qualified opinion section of our report,
the financial statements:
the financial statements give a true and fair view of the state of the group’s affairs as at 31 December 2019 and of the
group’s loss for the period then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European
Union; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for qualified opinion
We were not appointed as auditors of the group until after 31 December 2019 and thus did not observe the counting of physical
inventories at the end of the year. We were unable to satisfy ourselves by alternative means concerning the inventory quantities
held at 31 December 2019, which are included in the statement of financial position at £247,538, by using other audit
procedures. Consequently, we were unable to obtain sufficient appropriate audit evidence regarding the existence and condition
of the inventory reported in the statement of financial position or to determine whether any adjustment to the reported amount
was necessary.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the group and parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Emphasis of matter – Recoverability of VAT
We draw your attention to Note 4 of the financial statements, which describes the group’s assessment over the VAT receivable
balance of £317,129 in Tanzania. The Group have explained their assessment over the recoverability within critical accounting
estimates and conclude this to be recoverable. The financial statements do not include the adjustments that would result if the
Group was unable to fully recover this. Our opinion is not modified in this respect.
Material uncertainty relating to going concern
We draw attention to the disclosure made in Note 2 to the financial statements, under the heading “Going concern” concerning the
ability of the Group to continue as a going concern. The Group’s forecasts and projections indicate that the Group has sufficient
cash reserves to operate within the level of its current facilities. However, if there are any material variances to the forecast which it
is unable to manage with cashflow management to continue in operation, the Group would be obliged to raise additional funds
within twelve months of the date of the approval of these financial statements. The ability of the Group to raise additional funds is
dependent upon investor appetite.
These conditions, along with the other matters explained in that note, indicate the existence of a material uncertainty which
may cast significant doubt over the Group’s ability to continue as a going concern. Our opinion is not modified in this matter.
26
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2019
Our application of materiality
Materiality
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for
materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. The materiality applied
to the financial statements as a whole was determined as follows:
2019
2018
Group
£77,000 £74,000
Basis for
materiality
1% of
gross
assets
In our professional judgement, we consider gross assets to be the principal benchmark relevant to members of the group in
assessing financial position and performance. Our calculated materiality levels were discussed and agreed with the audit
committee.
Whilst materiality for the group financial statements as a whole was £77,000, each significant component of the group was
audited to a level of materiality ranging between £47,500 - £67,800.
We agreed with the audit committee that we would report all individual audit differences identified during the course of our
audit in excess of £3,850, in addition to other audit misstatements below that threshold that we believe warrant reporting on
qualitative grounds.
An overview of the scope of our audit
In designing our audit, we assessed the risks of material misstatement in the group and parent company financial statements.
In particular we considered areas involving significant accounting estimates and judgements by the directors and considered
future events that are inherently uncertain like the carrying value of mining assets. We also addressed the risk of management
override of internal controls, including among other matters consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
Of the 4 components of the group, an audit of the component financial information was performed on one component by a
component auditor operating under our instruction. The remaining components were subject to group analytical review
procedures on the basis that they were not material to the group nor was further audit evidence required for the purposes of our
group opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in
the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Basis for qualified opinion section, we have determined the matters described below
to be the key audit matters to be communicated in our report.
.
27
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2019
Key Audit Matter
Carrying Value Mining Assets
The entity has capitalised mining assets of £5,234,295.
(Note 14). Management are required to assess
whether there is any indication of impairment of
these assets.
The significance of the intangible non-current assets
on the group's statement of financial position and the
significant management judgement involved in the
determination and the assessment of the carrying
values of these assets there is increased risk of
material misstatement or that the values will not be
recovered.
How the scope of our audit responded to the key audit
matter
Our work in this area included but was not limited to:
Testing an appropriate sample of movements
during the year to supporting documentation;
Ensuring
reasonableness
capitalization of the new additions;
the
of
the
Considering whether there were indicators of
impairment of the mining assets such as
expiring concessions,
rights,
projections of declining coal prices and/or
declining demand and projections of increased
future capital costs or operating costs;
licenses or
Reviewing management's assessment of the
impairment of mining assets and challenging
their assumptions and estimates used as a basis
to value the intangible assets. We will also
review the financial statements of the joint
operator; and
Our work indicated that the carrying value of mining
assets are fairly stated in the financial statements.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our
auditor’s report thereon. The Directors are responsible for the other information. Our opinion on the group and parent company
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
As described in the Basis for qualified opinion section of our report, we were unable to obtain sufficient appropriate audit
evidence to support the carrying value of inventories. Information on cost of sales and inventories are included in the annual
report and accordingly we are unable to confirm the accuracy of that disclosure for the same reason.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
28
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2019
Matters on which we are required to report by exception
Except for the matter described in the Basis for qualified opinion section of our report, in the light of the knowledge and
understanding of the group and their environment obtained in the course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.
Arising solely from the limitation on the scope of our work relating to the carrying value of inventories referred to above:
we have not obtained all the information and explanations that we considered necessary for the purpose of our audit;
and
we were unable to determine whether adequate accounting records have been kept by the group and parent company.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the group
and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the group’s and the
parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
29
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2019
Use of our report
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 auditor’s 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.
Zahir Khaki (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
29 September 2020
30
EDENVILLE ENERGY PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 DECEMBER 2019
Revenue
Cost of sales
Gross loss
Administration expenses
Share based payments
Group operating loss
Finance income
Finance costs
Loss on operations before taxation
Income tax
Loss for the year
Other comprehensive (loss)/income
Item that will or may be reclassified to the profit and loss:
Loss/(gain) on translation of overseas subsidiary
Total comprehensive loss for the year
Attributable to:
Equity holders of the Company
Non-controlling interest
Earnings per Share (pence)
Basic and diluted loss per share
Note
5
2019
£
233,414
(982,261)
2018
£
337,125
(1,191,312)
6
26
10
11
12
(748,847)
(854,187)
(904,410)
(839,515)
(16,077)
(76,319)
(1,669,334)
(1,770,021)
113
(177,843)
529
(16,212)
(1,847,064)
(1,785,704)
-
-
(1,847,064)
(1,785,704)
(235,401)
378,531
(2,082,465)
(1,407,173)
(2,079,997)
(2,468)
(1,404,725)
(2,448)
13
(0.05)
(0.12)
All operating income and operating gains and losses relate to continuing activities.
No separate statement of comprehensive income is provided as all income and expenditure is disclosed above.
31
EDENVILLE ENERGY PLC
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
Company Registered Number 05292528
Note
14
15
16
17
18
19
20
21
21
22
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Borrowings
Current assets less current liabilities
Total assets less current liabilities
Non-current liabilities
Borrowings
Equity
Called-up share capital
Share premium account
Share option reserve
Foreign currency translation reserve
Retained earnings
Attributable to the equity shareholders of the
company
Non- controlling interests
Total equity
31 December
2019
£
6,085,403
97,727
321,368
31 December
2018
As restated
£
6,582,394
-
332,466
1 January
2018
1,059,583
-
5,071,318
6,504,498
6,914,860
6,130,901
247,538
365,541
41,110
256,082
396,671
160,042
-
299,666
951,078
654,189
812,795
1,250,744
(897,122)
(520,820)
(556,063)
(288,118)
(146,797)
-
(1,417,942
(844,181)
(146,797)
(763,753)
(31,386)
1,1103,947)
5,740,745
6,883,474
7,234,848
(284,903)
(282,076)
-
5,455,842
6,601,398
7,234,848
3,414,935
18,811,157
281,502
698,095
(17,736,330)
2,722,036
18,566,642
275,463
933,496
(15,884,731)
2,679,750
17,910,928
309,943
554,965
(14,212,274)
5,649,359
(13,517)
6,612,906
(11,508)
7,243,312
(8,464)
5,455,842
6,601,398
7,234,848
The financial statements were approved by the board of directors and authorised for issue on 29 September 2020 and signed on
its behalf by:
Alistair Muir
Director
32
EDENVILLE ENERGY PLC
GROUP STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2019
--------------------------------------------------Equity Interests---------------------------------------
Share
Capital
Share
Premium
Retained
Earnings
Account
Share Option
Reserve
At 1 January 2018
Issue of share capital
Cost of issue
Share options/warrants
charge
Cancellation of share options
Foreign currency translation
Loss for the year
Non- controlling interest
share of goodwill
At 31 December 2018
Issue of share capital
Share options/warrants
charge
Cancellation of share options
Changes on initial
application of IFRS 16
Foreign currency translation
Loss for the year
Non- controlling interest
share of goodwill
At 31 December 2019
Foreign
Currency
Translation
Reserve
£
Total
£
-
-
-
740,000
(42,000)
76,319
Non-
controlling
interest
£
-
-
-
Total
£
740,000
(42,000)
76,319
-
378,531
-
-
-
378,531
(1,783,256)
-
-
(746)
(2,448)
150
-
377,785
(1,785,704)
150
£
-
-
76,319
(110,799)
-
-
-
£
£
42,286
-
-
697,714
(42,000)
-
£
-
-
-
-
-
-
-
110,799
-
(1,783,256)
-
-
-
-
-
_
2,722,036
18,566,642
(15,884,731)
275,463
933,496
6,612,906
(11,508)
6,601,398
692,899
-
244,515
-
-
-
-
-
-
-
-
-
-
-
-
-
10,038
(17,042)
-
(1,844,595)
-
-
16,077
(10,038)
-
-
-
-
-
937,414
16,077
-
(17,042)
-
-
-
-
937,414
16,077
-
(17,042)
-
-
-
(235,401)
-
-
(235,401)
(1,844,595)
-
-
(2,468)
459
(235,401)
(1,847,063)
-
_
3,414,935
__
18,811,157
____
(17,736,330)
__
281,502
698,095
5,469,359
__
(13,517)
__
5,455,842
33
EDENVILLE ENERGY PLC
GROUP CASH FLOW STATEMENTS
YEAR ENDED 31 DECEMBER 2019
Cash flows from operating activities
Operating loss
Depreciation
Amortisation
Interest paid
Expected credit losses
Share based payments
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
Foreign exchange differences
Note
Year ended 31
December
2019
£
Year ended 31
December
2018
£
(1,669,334)
234,290
44,204
(23,000)
26,804
16,077
8,544
26,741
476,883
(32,196)
(1,770,021)
229,732
57,928
-
-
76,319
(256,082)
(77,196)
390,069
37,584
Net cash outflow from operating activities
(890,987)
(1,311,667)
Cash flows from investing activities
Purchase of exploration and evaluation assets
Purchase of property, plant and equipment
Finance income
-
(33,559)
113
(468,145)
(259,601)
529
Net cash used in investing activities
(924,433)
(727,217)
Cash flows from financing activities
Borrowings
Proceeds from issue of convertible loan notes
Repayment of convertible loan notes
Repayment of lease liabilities
Lease interest
Proceeds from issue of ordinary shares
Share issue costs
100,000
-
(198,644)
(23,241)
(10,016)
937,414
-
-
548,853
740,000
(42,000)
Net cash inflow from financing activities
805,513
1,246,853
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes on cash and cash equivalents
(118,920)
160,042
(12)
(792,031)
951,078
995
Cash and cash equivalents at end of year
19
41,110
160,042
34
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
1.
General Information
Edenville Energy Plc is a public limited company incorporated in England and Wales. 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, development and mining of energy commodities predominantly coal in
Africa.
2.
Group Accounting Policies
Basis of preparation and statement of compliance
The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union, IFRIC Interpretations and the parts of the Companies Act 2006 applicable to companies
reporting under IFRS. The Group’s financial statements have also been prepared under the historical cost convention, except
for the measurement to fair value of assets and financial instruments as described in the accounting policies set out below.
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 of the 2019 Annual Report.
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 68.
Going concern
At 31 December 2019 the Group had cash balances totalling £41,110.
Covid 19 resulted in a countrywide lockdown in Tanzania foring the Group to suspend its mining operations leaving just a
skeleton security force at the site. The pandemic also caused a delay in finalising all agreements with our strategic
partnership. Mining operations re-commenced on 3 August 2020.
The Group subsidiary Edenville International (Tanzania) Limited has entered into three related agreements with the strategic
partner, designed to address mining, sales and the groups’s capital position. These agreements ensure that operational costs
will now be borne by the strategic partner and that the partner will purchase a minimum of 3,000 tonnes of washed coal per
month, at a healthy profit margin to the Group. In addition, the strategic partner will utilise its extensive network within
Tanzania and nearby markets to further boost sales, as the Group looks to bring monthly washed coal sales to an initial
10,000 tonnes per month, with further expansion targeted thereafter. In the current ramp up phase, a loan agreement of
US$1,000,000 with the strategic partners is expected to provide the Company with sufficient working capital. The loan
agreement remains undrawn at present.
Following the year end the Group raised a further £500,000 before expenses by planning 1,250,000 ordinary share of 0.02p for
0.04p.
The Group meets its day to day working capital requirements through the sale of its coal resource, and monies raised in follow-
on offerings. The Group’s forecasts and projections indicate that the Group has sufficient cash reserves to operate within the
level of its current facilities. These forecasts are based upon expected saleable levels of production.
35
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
2.
Group Accounting Policies (continued)
Expenditure on excavation is related to the level of orders and both head office costs and Tanzanian administration costs can
be reduced if it is found that order levels together with available cash resources are insufficient to meet the Group’s working
capital needs.
Whilst it is the Group’s intention to rely on the available cash reserves, future income generated and if required reductions in
its cost base, a negative variance in the forecasts and projections would make the Group’s ability to continue as a going concern
dependent on an additional fund raise. If the Group’s forecasts are not achieved, the Directors would seek to raise the additional
funds through equity issues which would be dependent upon investor appetite. 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 Company therefore continues to adopt the going concern basis in preparing both its consolidated financial statements and
for its own financial statements
Adoption of new and revised standards and changes in accounting policies
In the current year, the following new and revised standards and interpretations have been adopted by the Group.
IFRS 9
IFRS 16
Prepayments features with negative compensation
Leases
Amendments to IFRS 9 has had not had a material impact on the Group. The impact of IFRS 16 is detailed in notes 15 and 21.
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 3
IFRS 3
IFRS 7,9,
IAS 39
IFRS
7,9,16
IFRS 16 Amendment to provide lessees with an exemption from assessing
Amendments to clarify the definition of a business
Amendments updating a reference to The Conceptual Framework
Amendments regarding pre-replacement issues in the context of IBOR
reform
Amendments regarding replacement issues in the context of the IBOR
reform
IFRS 17
IFRS 17
IAS 1
IAS 8
IAS 16
IAS 37
whether a COVID-1+ related rent concession is a lease modification
Insurance Contracts – new standard
Amendments to address the implantation challenges that were
identified after IFRS 17 was published
Amendments regarding the classification of liabilities
Amendments regarding the definition of material
Amendments prohibiting a company from deducting the cost of
property, plant and equipment amounts received from selling items
produced while the company is preparing the asset for its intended use.
Amendments regarding the costs to include when assessing whether a
contract is onerous
*Not yet endorsed by the European Union.
Effective date for
accounting period
beginning on or
after
1 January 2020
1 January 2022*
1 January 2020
1 January 2021*
1 June 2020*
1 January 2023*
I January 2023*
1 January 2023*
1 January 2020
1 January 2022*
1 January 2022*
36
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
2.
Group Accounting Policies (continued)
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact
on the Group’s financial statements.
Share based payments
The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from
employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in
exchange for the grant of options is recognised as an expense. The total amount to be expensed is determined by reference to
the fair value of the options granted:
including any market performance conditions;
excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity over a specified time period); and
excluding the impact of any non-vesting conditions (for example, the requirement of employees to save).
Assumptions about the number of options that are expected to vest include consideration of non-market vesting conditions. The
total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to
be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to
vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the
income statement, with a corresponding adjustment to equity.
When the options are exercised, the Group issues new shares. The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share premium when the options are exercised
Basis of consolidation
The Group’s financial statements consolidate the financial statements of Edenville Energy Plc and all its subsidiary
undertakings (Edenville International (Seychelles) Limited, Edenville International (Tanzania) Limited and Edenville Power
(TZ) Limited) made up to 31 December 2019. Profits and losses on intra-group transactions are eliminated on consolidation.
Subsidiaries are all entities over which the group has control. The group controls an entity when the group is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated
from the date that control ceases.
Business combinations
The Group adopts the acquisition method in accounting for the acquisition of subsidiaries. On acquisition the cost is measured
at the fair value of the assets given, plus equity instruments issued and liabilities incurred or assumed at the date of exchange.
The assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair value
at the date of acquisition. Any excess of the fair value of the consideration over the fair value of the identifiable net assets
acquired is recorded as goodwill.
Any deficiency of the fair value of the consideration below the fair value of identifiable net assets acquired is credited to the
income statement in the period of the acquisition.
The results of subsidiary undertakings acquired or disposed of during the year are included in the group statement of
comprehensive income statement from the effective date of acquisition or up to the effective date of disposal.
37
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
2.
Group Accounting Policies (continued)
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
consideration received or receivable, and represent amounts receivable for goods supplied, stated net of discounts, returns and
value added taxes. Under IFRS 15 there is a five-step approach to revenue recognition which is adopted across all revenue
streams. The process is:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the contract; and
Step 5: Recognise revenue as and when the entity satisfies the performance obligation.
The Group has one revenue stream being the sale of coal and other aggregate bi-products produced by the Group. Sales are
predominantly made at the Group’s premises as customers collect their quantities from the mine. Such revenue is recognised
at the point of contact at a pre-agreed fixed price on a per tonnage basis. For deliveries made to customer premises, revenue is
recognised at the point of which the products leave the Group’s premises
Presentational and functional currency
This financial information is presented in pounds sterling, which is the Group’s functional currency.
In preparing the financial statements of individual entities, transaction in currencies other than the entity’s functional currency
(foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date,
monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations
(including comparatives) are expressed in pounds sterling using exchange rates prevailing at the balance sheet date. Income
and expense items are translated at the average exchange rate for the period. Exchange differences arising, if any, are classified
as equity and transferred to the Group’s foreign currency translation reserve. Such translation differences are recognised in the
income statement in the period in which the foreign operation is disposed.
Financial instruments
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.
Classification and measurement
The Group classifies its financial assets into the following categories: those to be measured subsequently at fair value (either
through other comprehensive income (FVOCI) or through the income statement (FVPL) and those to be held at amortised cost.
38
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
2.
Group Accounting Policies (continued)
Classification depends on the business model for managing the financial assets and the contractual terms of the cash flows.
Management determines the classification of financial assets at initial recognition. The Group’s policy with regard to financial
risk management is set out in note 3. Generally, the group does not acquire financial assets for the purpose of selling in the
short term.
The group’s business model is primarily that of “hold to collect” (where assets are held in order to collect contractual cash
flows). When the group enters into derivative contracts, these transactions are designed to reduce exposures relating to assets
and liabilities, firm commitments or anticipated transactions.
Financial Assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through
profit or loss
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash
flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will
include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since
initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-
months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).
For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies
the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit
risk, but instead, recognises a loss allowance based on the financial asset’s lifetime ECL at each reporting date.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases,
the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is
unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the
Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and
usually occurs when past due for more than one year and not subject to enforcement activity.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial
asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the
financial asset have occurred.
Financial Assets held at fair value through other comprehensive income (FVOCI)
The classification applies to the following financial assets:
- Debt instruments that are held under a business model where they are held for the collection of contractual cash flows
and also for sale (“collect and sale”) and which have cash flows that meet the SPPI criteria. An example would be
where trade receivable invoices for certain customers were factored from time to time. All movements in the fair value
of these financial assets are taken through comprehensive income , except for the recognition of impairment gains and
losses, interest revenue (including transaction costs by applying the effective interest method), gains or losses arising
on derecognition and foreign exchange gains and losses which are recognised in the income statement. When the
financial asset is derecognised, the cumulative fair value gain or loss previously recognised in other comprehensive
income is reclassified to the income statement.
39
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
2.
Group Accounting Policies (continued)
- Equity investments where the group has irrevocably elected to present fair value gains and losses on revaluation of
such equity investments, including any foreign exchange component, are recognised in other comprehensive income.
- When equity investment is derecognised, there is no reclassification of fair value gains or losses previously recognised
in other comprehensive income to the income statement. Dividends are recognised in the income statement when the
right to receive payment is established.
Financial Assets held at fair value through profit or loss (FVPL)
The classification applies to the following financial assets. In all cases, transaction costs are immediately expensed to the
income statement.
- Debt instruments that do not meet the criteria of amortised costs or fair value through other comprehensive income.
- Equity investments which are held for trading or where the FVOCI election has not been applied. All fair value gains
or losses and related dividend income are recognised in the income statement.
- Derivatives which are not designated as a hedging instrument. All subsequent fair value gains or losses are recognised
in the income statement.
Derecognition
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the
sum of the consideration received and receivable is recognised in profit or loss.
Financial Liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and
borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial
liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable
transaction costs. The Group’s financial liabilities include trade and other payables and loans.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading
if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments
entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated
embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains
or losses on liabilities held for trading are recognised in the statement of profit or loss and other comprehensive income.
40
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
2.
Group Accounting Policies (continued)
Trade and other payables
After initial recognition, trade and other payables are subsequently measured at amortised cost using the EIR method. Gains
and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are
derecognised, as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive
income.
Derecognition
A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss
and other comprehensive income.
Liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit and loss or other liabilities,
as appropriate.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Financial liabilities included in trade and other payables are recognised initially at fair value and subsequently at amortised
cost.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the average costing method.
Components of inventories consist of coal, parts and supplies, net of allowance for obsolescence. Coal inventories represent
coal contained in stockpiles, coal that has been mined and hauled to the wash plant (raw coal) for processing and coal that has
been processed (crushed, washed and sized) and stockpiled for shipment to customers.
The cost of raw and prepared coal comprises extraction costs, direct labour, other direct costs and related production
overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling
price in the ordinary course of business, less applicable variable selling expenses
The Company performs inventory obsolescence at each reporting date. In determining whether inventories are obsolete, the
Company assesses the age at which inventories held in the store in order to make an assessment of the inventory write down to
net realisable value.
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.
Convertible loan notes
The convertible loan notes issued by the Company are classified separately as financial liabilities in accordance with the
substance of contractual arrangements.
41
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
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:
Basis of depreciation
Fixtures, fittings and equipment
Plant and machinery
Office equipment
Motor vehicles
25% reducing balance
5 years straight line or 25% reducing balance
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.
Production assets
Coal land, mine development costs, which include directly attributable construction overheads, land and coal rights are recorded
at cost. Coal land and mine development are depleted and amortised, respectively, using the units of production method, based
on estimated recoverable tonnage. The depletion of coal rights and depreciation of restoration costs are expensed by reference
to the estimated amount of coal to be recovered over the expected life of the operation.
Coal Mine Reclamation Costs
Future cost requirements for land reclamation are estimated where surface operations have been conducted, based on the
Group’s interpretation of the technical standards of regulations enacted by the Government of Tanzania. These costs relate to
reclaiming the pit and support acreage at surface mines and sealing portals at deep mines. Other costs include reclaiming refuse
and slurry ponds as well as related termination/exit costs.
The Group records asset retirement obligations that result from the acquisition, construction or operation of long-lived assets
at fair value when the liability is incurred. Upon the initial recognition of a liability, that cost is capitalised as part of the related
long-lived asset and expensed over the useful life of the asset. The asset retirement costs are recorded in Land, Coal Rights and
Restoration Costs.
The Group expenses reclamation costs prior to the mine closure. The establishment of the end of mine reclamation and closure
liability is based upon permit requirements and requires significant estimates and assumptions, principally associated with
regulatory requirements, costs and recoverable coal lands. Annually, the end of mine reclamation and closure liability is
reviewed and necessary adjustments are made, including adjustments due to mine plan and permit changes and revisions of
cost and production levels to optimize mining and reclamation efficiency. The amount of such adjustments is reflected in the
year end reclamation provision calculation.
42
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
2.
Group Accounting Policies (continued)
Stripping (waste removal) costs
As part of its mining operations, the Group incurs stripping (waste removal) costs both during the production phase of its
operations. Stripping activities undertaken during the production phase of a surface mine (production stripping) are accounted
for as set out below.
After the commencement of production, further development of the mine may require a phase of unusually high stripping that
is similar in nature to development phase stripping. The cost of such stripping is accounted for in the same way as development
stripping (as outlined above). Production stripping is generally considered to create two benefits, being either the production
of inventory or improved access to the ore to be mined in the future. Where the benefits are realised in the form of inventory
produced in the period, the production stripping costs are accounted for as part of the cost of producing those inventories.
Where the benefits are realised in the form of improved access to ore to be mined in the future, the costs are recognised as a
non-current asset, referred to as a ‘stripping activity asset’, if the following criteria are met:
a) Future economic benefits (being improved access to the ore body) are probable;
b) The component of the ore body for which access will be improved can be accurately identified; and
c) The costs associated with the improved access can be reliably measured
If any of the criteria are not met, the production stripping costs are charged to profit or loss as operating costs as they are
incurred.
In identifying components of the ore body, the Group works closely with the mining operations personnel for each mining
operation to analyse each of the mine plans. Generally, a component will be a subset of the total ore body, and a mine may have
several components. The mine plans, and therefore the identification of components, can vary between mines for a number of
reasons. These include, but are not limited to: the type of commodity, the geological characteristics of the ore body, the
geographical location, and/or financial considerations.
The stripping activity asset is initially measured at cost, which is the accumulation of costs directly incurred to perform the
stripping activity that improves access to the identified component of ore, plus an allocation of directly attributable overhead
costs. If incidental operations are occurring at the same time as the production stripping activity, but are not necessary for the
production stripping activity to continue as planned, these costs are not included in the cost of the stripping activity asset.
If the costs of the inventory produced and the stripping activity asset are not separately identifiable, a relevant production
measure is used to allocate the production stripping costs between the inventory produced and the stripping activity asset. This
production measure is calculated for the identified component of the ore body and is used as a benchmark to identify the extent
to which the additional activity of creating a future benefit has taken place. The Group uses the expected volume of waste
extracted compared with the actual volume for a given volume of ore production of each component.
The stripping activity asset is accounted for as an addition to, or an enhancement of, an existing asset, being the mine asset,
and is presented as part of ‘Intangible assets’ in the statement of financial position. This forms part of the total investment
Right of use assets
In the previous period, the Group only recognised lease assets and lease liabilities in relation to leases that were classified as
“finance leases” under IAS 17 “Leases”. The assets were presented in property, plant and equipment and the liabilities as part
of the Group’s borrowings. For adjustments recognised on adoption of IFRS 16 on 1 January 2019, please refer to note 15.
Right-of-use assets are measured at cost, which is made up of the initial measurement of the lease liability adjusted for any
lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to
dismantle and remove the asset at the end of the lease, less any lease incentives received.
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the
end of the useful life of the right-of-use asset or the end of the lease term.
43
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
2.
Group Accounting Policies (continued)
The Group also assesses the right-of-use asset for impairment when such indicators exist.
The right-of-use assets are included in a separate line within non-current assets on the Consolidated Balance Sheet
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.
Goodwill
At the date of acquisition of a subsidiary undertaking, fair values are attributed to the acquired identifiable assets, liabilities and
contingent liabilities. Goodwill represents the difference between the fair value of the purchase consideration and the acquired
interest in the fair value of those net assets.
Goodwill is initially recognised at fair value. Any negative goodwill is credited to the income statement in the year of
acquisition. If an undertaking is subsequently sold, the amount of goodwill carried on the balance sheet at the date of disposal
is charged to the income statement in the period of disposal as part of the gain or loss on disposal.
Goodwill is associated with exploration and evaluation and development assets, the impairment of which is discussed in the
accounting policy note for exploration and evaluation assets.
44
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
2.
Group Accounting Policies (continued)
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief executive officer.
The Board considers that the Group’s project activity constitutes one operating and reporting segment, as defined under IFRS
8.
The total profit measures are operating profit and profit for the year, both disclosed on the face of the combined income
statement.
Share Capital
The Group’s ordinary shares are classified as equity instruments.
3.
Financial risk management
Fair value estimation
The carrying value less impairment provision of trade receivables and payables is assumed to approximate their fair values,
due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the
future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments
4.
Critical accounting estimates and areas of judgement
The Group makes estimates and assumptions concerning the future, which by definition will seldom result in actual results that
match the accounting estimate. The estimates and assumptions that have a significant risk of causing a material adjustment to
the carrying amount of assets and liabilities within the next financial year are those in relation to:
the impairment of coal production assets and intangible assets;
share based payments
Valuation of provision for restoration costs
Recoverability of VAT balance
Impairment – coal production assets and intangible assets (notes 14 and 16)
The Group is required to perform an impairment review, on coal production assets, for each CGU to which the asset relates.
Impairment review is also required to be performed on other intangible assets 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 ability of the Company to obtain necessary financing to complete the development and
future profitable production or proceeds from the disposal , at which point the value is estimated based upon the present value
of the discounted future cash flows.
In assessing whether an impairment is required for the carrying value of an asset, its carrying value is compared with its
recoverable amount. The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use. Given the
nature of the Group’s activities, information on the fair value of an asset is usually difficult to obtain unless negotiations with
potential purchasers or similar transactions are taking place. Consequently, unless indicated otherwise, the recoverable amount
used in assessing the impairment charges described below is value in use.
45
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
4.
Critical accounting estimates and areas of judgement (continued)
The calculation of value in use is most sensitive to the following assumptions:
Production volumes
Sales volumes
Discount rates
Coal prices
Operating overheads
Estimated production volumes are based on the production capability of the plant and estimated customer demand.
The Group generally estimates value in use using a discounted cash flow model. The future cash flows are adjusted for risks
specific to the asset and discounted using a pre-tax discount rate of 10%.
The directors have assessed the value of exploration and evaluation expenditure and development assets and intangible assets.
In their opinion there has been no impairment loss to these intangible assets in the period, other than the amounts charged to
the income statement.
Share based payments (note 26)
The estimate of share based payments costs requires management to select an appropriate valuation model and make decisions
about various inputs into the model including the volatility of its own share price, the probable life of the options, the vesting
date of options where non-market performance conditions have been set and the risk free interest rate.
Valuation of provision for restoration costs (note 14)
The company makes full provision for the future cost of rehabilitating mine sites and related production facilities on a
discounted basis at the time of developing the mines and installing and using those facilities. The rehabilitation provision
represents the present value of rehabilitation costs relating to mine sites, which are expected to be incurred in the future, which
is when the producing mine properties are expected to cease operations. These provisions have been created based on the
company's internal estimates and a third party estimate from an independent consultant. Assumptions based on the current
economic environment have been made, which management believes are a reasonable basis upon which to estimate the future
liability. These estimates are reviewed regularly to take into account any material changes to the assumptions. However, actual
rehabilitation costs will ultimately depend upon future market prices for the necessary rehabilitation works required that will
reflect market conditions at the relevant time. Furthermore, the timing of rehabilitation is likely to depend on when the mines
cease to produce at economically viable rates. This, in turn, will depend upon future coal prices, which are inherently uncertain.
Management increases reclamation costs estimates at an annual inflation rate to the anticipated future mine closure date. This
inflation rate is based on the historical rate for the industry for a comparable.
Due to limited mining activity to date, management have assessed the liability to be $21,868 which has not been adjusted for
as it is immaterial.
Recoverability of VAT receivable (note 18)
The group considers the recoverability of the VAT balance in Tanzania to be a key area of judgement, as the VAT can only
be claimed backed when the Company turns profitable. The directors believe that the debtor is recoverable based on their
knowledge of the market in Tanzania.
46
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
5.
Segmental information
The Board considers the business to have one reportable segment being Coal production assets.
Other represents unallocated expenses and assets held by the head office. Unallocated assets primarily consist of cash and cash
equivalents.
Coal Production
Assets
2019
Consolidated Income Statement
Revenue - Tanzania
Revenue - other
Cost of sales (excluding depreciation and
amortisation)
Impairment of stock
Depreciation
Depletion of development assets
Gross profit
Administrative expenses
Share based payment
Depreciation
Group operating loss
Finance income
Finance cost
Loss on operations before taxation
Income tax
Loss for the year
Coal
£
218,953
14,461
(781,840)
-
(173,073)
(27,348)
(748,847)
(201,351)
-
(26,986)
(977,184)
-
(10,018)
Other
£
-
-
-
-
-
-
(675,480)
(16,077)
(593)
(692,150)
113
(167,825)
Total
£
218,953
14,461
(781,840)
-
(173,073)
(27,348)
(748,847)
(876,831)
(16,077)
(27,579)
(1,669,334)
113
(177,843)
(987,202)
-
(859,862)
-
(1,787,064)
-
(987,902)
(859,862)
(1,787,064)
47
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
5.
Segmental information (continued)
2018
Consolidated Income Statement
Revenue - Tanzania
Revenue - other
Cost of sales (excluding depreciation and
amortisation)
Impairment of stock
Depreciation
Depletion of development assets
Gross profit
Administrative expenses
Share based payment
Depreciation
Group operating loss
Finance income
Finance cost
Loss on operations before taxation
Income tax
Loss for the year
Coal Production
Assets
275,226
61,899
(868,549)
(8,492)
(226,343)
(87,928)
(854,187)
(131,990)
-
(3,805)
(989,982)
-
-
-
-
-
-
-
-
(702,930)
(76,319)
(790)
(780,039)
529
(16,212)
275,226
61,889
(868,549)
(8,492)
(226,343)
(87,928)
(854,187)
(834,920)
(76,319)
(4,595)
(1,770,021)
529
(16,212)
(989,982)
-
(795,722)
-
(1,785,704)
-
(989,982)
(795,722)
(1,785,704)
By Business Segment
Carrying value of segment
assets
Additions to non-current
assets and intangibles
Total liabilities
Coal
Other
By Geographical Area
Africa (Tanzania)
Europe
2019
£
7,067,652
91,035
2018
£
7.568,618
159,037
2019
£
106,509
-
2018
£
727,746
-
2019
£
606,900
1,095,945
2018
£
414,289
711,967
7,158,687
7,727,655
106,509
727,746
1,702,845
1,126,256
£
7,067,652
91,035
£
7,568,618
159,037
£
106.509
-
£
727,746
-
£
606,900
1,095,945
£
414,289
711,967
7,158,687
7,727,655
106,509
727,746
1,702,845
1,126,256
48
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
5.
Segmental information (continued)
Information about major customers
Included in revenues arising from the sale of coal are revenues which arose from sales to the Group’s largest customers based
in Tanzania. No other customers contributed 10% or more to the Group’s revenue in either 2019 or 2018.
Customer 1
Customer 2
Customer 3
6.
Expenses by nature
Staff costs
Audit fees
Office and other administrative services
AIM related costs including investor relations
Professional, legal and consultancy fees
Travel, entertaining and subsistence
Exchange gain
Depreciation
Amortisation
Provisions and expected credit losses
Other costs
7.
Auditors’ remuneration
Fees payable to the Company’s auditor for the audit of the parent company and
consolidated accounts
2019
£
149,236
39,399
25,014
2018
£
-
-
220,600
213,649
220,600
2019
£
198,793
34,850
60,445
37,097
418,681
16,456
(13,584)
61,217
16,856
45,332
28,267
2018
£
232,858
30,000
46,741
36,721
384,668
29,681
5,129
4,595
-
26,680
42,442
904,410
839,515
2019
£
2018
£
34,850
30,000
49
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
8.
Employees
Wages and salaries
Social security costs
Pensions
2019
£
194,488
3,356
741
198,585
2018
£
212,873
18,825
1,160
232,858
Included within Development expenditure/Exploration and evaluation assets (note 16) are capitalised wages and salary costs
of £233,397 (2018: £241,458).
The average number of employees and directors during the year was as follows:
Administration and security
Mining and security
9.
Directors’ remuneration
Emoluments
Pensions
The highest paid director received remuneration of £ 71,375 (2018: £130,702).
Directors’ interest in outstanding share options per director is disclosed in the directors’ report.
Remuneration of key management personnel
The remuneration of the directors and other key management personnel is set out below:
Emoluments
Pensions
2019
12
35
47
2019
£
128,220
741
2018
7
31
38
2018
£
211,000
1,160
128,943
212,160
2019
£
190,871
741
2018
£
255,935
1,160
191,612
257,095
50
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
10.
Finance income
Interest income on short-term bank deposits
11.
Finance Costs
Interest on convertible loan notes
Convertible loan finance costs
Hire purchase interest
Lease liability interest
12.
Income tax
Current tax:
Current tax on loss for the year
Total current tax
Deferred tax
On write off/impairment on intangible assets
Tax charge for the year
2019
£
113
113
2019
£
160,379
7,446
2,712
7,306
177,843
2018
£
529
529
2018
£
11,496
4,716
-
-
16,212
2019
£
2018
£
-
-
-
-
-
-
-
-
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 £7,034,804 (2018: £6,256,070).
A deferred tax asset of £1,336,275 (2018: £1,063,129) calculated at 19% (2018: 17%) 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.
51
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
12.
Income tax (continued)
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
(1,847,064)
(1,785,704)
2019
£
2018
£
Expected tax credit at standard rate of UK Corporation Tax
19% (2017: 19%)
Disallowable expenditure
Capital allowances in excess of depreciation
Movement in deferred tax not recognised
Tax charge for the year
13.
Earnings per share
(350,942)
31,147
(326,253)
646,048
(339,284)
24,372
-
314,912
-
-
The basic loss per share is calculated by dividing the loss attributable to equity shareholders by the weighted average number
of shares in issue.
The loss attributable to equity shareholders and weighted average number of ordinary shares for the purposes of calculating
diluted earnings per ordinary share are identical to those used for basic earnings per ordinary share. This is because the
exercise of warrants would have the effect of reducing the loss per ordinary share and is therefore anti-dilutive.
Net loss for the year attributable to ordinary shareholders
2019
£
(1,847,064)
2018
£
(1,785,704)
Weighted average number of shares in issue
3,554,665,440
1,476,497,888
Basic and diluted loss per share
(0.05p)
(0.12p)
52
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
14.
Property, plant and equipment
Coal
Production
assets
As restated
£
Fixtures,
fittings
and
equipment
Plant and
machinery
Motor
vehicles
£
£
£
Cost
As at 1 January 2018
Transfer from intangible asses
Additions
Foreign exchange adjustment
-
5,225,232
276,059
1,111,852
-
259,601
64,088
As at 31 December 2018
5,501,291
1,435,541
Depreciation
As at 1 January 2018
Depletion/Charge for the year
Foreign exchange adjustment
-
57,928
-
64,873
226,551
14,986
As at 31 December 2018
57,928
306,410
7,184
-
-
176
7,360
6,719
115
176
7,010
89,709
-
-
4,237
93,946
77,570
3,066
3,760
84,396
Total
£
1,208,745
5,225,232
259,601
344,560
7,038,138
149,162
287,660
18,922
455,744
Net book value
As at 31 December 2018
5,443,363
1,129,131
350
9,550
6,582,394
53
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
14.
Property, plant and equipment (continued)
Cost
As at 1 January 2019
Additions
Disposal
Foreign exchange adjustment
Coal
Production
assets
£
5,501,291
(183,654)
Plant and
machinery
£
1,435,541
680
(168,189)
(42,060)
Fixtures,
fittings and
equipment
£
7,360
-
-
(107)
Motor
vehicles
£
93,946
105,829
-
(2,579)
Total
£
7,038,138
106,509
(168,189)
(228,400)
As at 31 December 2019
5,317,637
1,225,972
7,253
197,196
6,748,058
Depreciation
As at 1 January 2019
Depletion/ Charge for the year
Disposal
Foreign exchange adjustment
57,928
27,348
-
(1,934)
306,410
226,110
(33,638)
(16,481)
As at 31 December 2019
83,342
482,401
7,010
87
-
(107)
6,990
84,396
8,093
-
(2,557)
455,744
261,638
(33,638)
(21,089)
89,925
662,655
Net book value
As at 31 December 2019
5,234,295
743,571
263
107,271
6,085,403
Plant and machinery depreciation amounting to £173,073 (2018I £226,343) is included within cost of sales as it relates to
mining equipment.
54
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
15.
Right of use assets
Cost
As at 1 January 2019
Recognised on adoption of IFRS 16
Foreign exchange adjustment
As at 31 December 2019
Amortisation
As at 1 January 2019
Charge for the year
Foreign exchange adjustment
As at 31 December 2019
Net book value
As at 31 December 2019
16.
Intangible assets
Cost or valuation
As at 1 January 2018
Additions
Transfer to property, plant and equipment
Foreign exchange adjustment
At 31 December 2018
Accumulated depletion, amortisation and
impairment
As at 1 January 2018
Amortisation
Foreign exchange adjustment
At 31 December 2018
Net book value
As at 31 December 2018
Mining asset
leases
£
-
114,016
-
114,016
-
16,856
(567)
16,289
97,727
Total
£
6,243,052
468,145
(5,225,232)
86,232
Development
and Production
Expenditure
As restated
£
4,757,087
468,145
(5,225,232)
-
Mining
Licences
£
1,485,965
-
-
86,232
-
-
-
-
-
-
1,572,197
1,572,197
1,171,734
-
67,997
1,171,734
-
67,997
1,239,731
1,239,731
332,466
332,466
55
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
16.
Intangible assets (continued)
Cost or valuation
As at 1 January 2019
Foreign exchange adjustment
At 31 December 2019
Accumulated depletion, amortisation and
impairment
As at 1 January 2019
Depletion of development and production assets
Foreign exchange adjustment
At 31 December 2019
Net book value
As at 31 December 2019
Mining
Licences
£
1,572,197
(52,485)
Total
£
1,572,197
(52,485)
1,519,712
1,519,712
1,239,731
-
(41,387)
1,239,731
-
(41,387)
1,198,344
1,198,344
321,368
321,368
Mining Licences
Intangible assets arose as a result of the valuation placed on the original six Tanzanian licences acquired on the acquisition of
Edenville (Tanzania) Limited. The allocation price was based on the price paid to acquire these the Group’s licences.
These assets are reviewed for impairment annually alongside the coal production assets
17.
Inventories
ROM stockpiles
Fines
Washed coal
2019
£
11,108
230,906
5,524
247,538
2018
£
11,493
238,881
5,708
256,082
The cost of inventories recognised as an expense during the year in was £697,405 (2018: £853,388).
Inventory of washed coal has been reduced by £nil (2018: ££8,492) as a result of write-downs to net realisable value. This write
down is recognised as an expense during the year.
56
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
18.
Trade and other receivables
Trade Receivables
Less: provision for impairment of trade receivables
Trade receivables - net
Other receivables
VAT receivable
Prepayments
2019
£
-
-
-
34,324
329,133
2,084
365,541
2018
£
53,941
(27,900)
26,041
77
368,579
1,974
396,671
Included within VAT receivable is VAT owed to Edenville International (Tanzania) Limited which is only recoverable against
future sales made by Edenville International (Tanzania) Limited. The Group expects to recover the above VAT from sales of
commercial coal.
19.
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
20.
Trade and other payables
Trade and other payables
Social security costs and other taxes
Accruals and deferred income
2019
£
2018
£
41,110
160,042
2019
£
476,876
9,713
410,535
897,124
2018
£
366,175
6,980
182,908
556,063
57
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
21.
Borrowings
Convertible loan notes
Repayable with 1 year
Repayable within 2 to 5 years
Other loans
Repayable with 1 year
Hire purchase finance
Repayable with 1 year
Repayable within 2 to 5 years
Lease liability
Repayable with 1 year
Repayable within 2 to 5 years
Total
Repayable with 1 year
Repayable within 2 to 5 years
Lease liabilities
At 1 January 2019
Interest expense
Lease payments
Foreign exchange movement
2019
£
361,581
141,463
503,044
120,000
120,000
22,863
44,136
66,999
16,376
99,304
115,680
520,820
284,903
805,723
2018
£
288,118
282,076
570,194
-
-
-
-
-
-
-
-
288,118
282,076
570,194
Mining licence
leases
2019
£
135,584
(22,437)
7,306
(4,773)
66,917
58
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
21.
Borrowings (continued)
Convertible loan
In November 2018 $750,000 conditionally convertible loan notes were issued: the face value of these convertible securities is
$900,000. A commitment fee of £37,500, which has been offset against the proceeds of issue of the convertible loan notes, was
payable by the Company as well as issuing share options over 99,568,966 ordinary shares exercisable for 4 years at a conversion
price on 0.29p per share. The company is required to make repayments of $45,000 over 20 months commencing in February
2019. If repayments are made in cash, then an additional 3% is payable on the $45,000. The company may elect to make the
repayment in its shares priced at 90% of the average five day Volume Weighted Average Price (VWAP) chosen by the investor
both.
issuance,
during
combination
before
days
the
20
of
or
a
The company has the option to buy back the entire outstanding face value at any time at a premium of 5%. If this right is
exercised the investor has an option to convert 25% of the face value into shares at the lesser of the repayment price or 0.29p
per share. The repayment price being 130% of the 10-day VWAP immediately prior to the company entering the Convertible
Agreement.
In addition to the above the investor was offered 36,000,000 collateral shares which were issued by the company on 20 February
2019.
In April 2019, the company agreed a repayment holiday up to September 2019 in respect of the convertible loan notes. As a
condition of granting the repayment holiday the outstanding balance at the time. $855,000, was increased by 15% to $983,250
Other loans
This represents a loan of £100,000 with a fixed coupon interest rate of 20%.
22.
Share capital
No
Ordinary
shares of 0.02p
each
£
Ordinary
shares of
0.02p
each
No
Deferred shares
of 0.001p each
£
Total share
capital
£
Deferred
shares of
0.001p
each
1,336,317,797
211,428,572
267,265
42,286
241,248,512,346
-
2,412,485
-
2,679,750
42,286
Issued and fully paid
At 1 January 2018
On 3 May 2018 Ordinary shares
issued at 0.35p
As at 31 December 2018
1,547,746,369
309,551
241,248,512,346
2,412,485
2,722,036
59
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
22.
Share capital (continued)
No
Ordinary shares
of 0.02p each
£
Ordinary
shares of
0.02p
each
No
Deferred shares
of 0.001p each
£
Deferred
shares of
0.001p each
£
Total
share
capital
1,547,746,369
309,551
241,248,512,346
2,412,485
2,722,036
36,000,000
7,200
64,515,192
12,903
500,000,000
100,000
2,263,980,200
452,796
600,000,000
120,000
-
-
-
-
-
-
-
-
-
-
7,200
12,903
100,00
452,796
120,000
Issued and fully paid
At 1 January 2019
On 20 February 2019 Ordinary
shares were issued at 0.02p
On 20 February 2019 Ordinary
shares were issued at 0.12p
On 2 May 2019 500,000
Ordinary shares at 0.02p
On 20 May 2019 2,263,980,200
Ordinary shares at 0.02p
On
2019
September
600,000,000 Ordinary shares at
0.05p
11
As at 31 December 2019
5,012,241,761
1,002,450
241,248,512,346
2,412,485
3,414,935
The deferred shares have no voting rights, dividend rights or any rights of redemption. On return of assets on winding
up the holders are entitled to repayment of amounts paid up after repayment to ordinary share holders
23.
Capital and reserves attributable to shareholders
Share capital
Share premium
Other reserves
Retained deficit
Total equity
2019
£
3,414,935
18,811,157
979,597
(17,736,330)
________
5,649,359
2018
£
2,722,036
18,566,642
1,208,959
(15,884,876)
________
6,612,761
There have been no significant changes to the Group’s capital management objectives or what is considered to be capital during
the year.
60
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
24.
Capital management policy
The Group’s policy on capital management is to maintain a low level of gearing. The group funds its operation primarily
through equity funding.
The Group defines the capital it manages as equity shareholders’ funds less cash and cash equivalents.
The Group objectives when managing its capital are:
To safeguard the group’s ability to continue as a going concern.
To provide adequate resources to fund its exploration, development and production activities with a view to
providing returns to its investors.
To maintain sufficient financial resources to mitigate against risk and unforeseen events.
The group’s cash reserves are reported to the board and closely monitored against the planned work program and annual
budget. Where additional cash resources are required the following factors are considered:
the size and nature of the requirement.
preferred sources of finance.
market conditions.
opportunities to collaborate with third parties to reduce the cash requirement.
25.
Financial instruments
The Board of Directors determine, as required, the degree to which it is appropriate to use financial instruments to mitigate risk
with the main risk affecting such instruments being foreign exchange risk, which is discussed below.
Categories of financial instruments
Financial assets
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
Convertible loan notes
Net
2019
£
2018
£
41,110
363,457
404,567
160,042
394,697
554,739
887,411
503,044
549,082
570,194
1,390,455
1,119,276
(985,888)
(565,537)
61
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
25.
Financial instruments (continued)
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 only interest-bearing asset is cash invested on a short-term basis which attracts interest at the bank’s variable interest
rate.
The Group is exposed to interest rate risk through its convertible loan notes, its only interest-bearing liabilities. The level of
interest payable will vary depending on whether the repayments are made with shares or in cash. The effective interest rate
based on repayments of $49,162 (2018:$45,000) per month is 20.78% (2018:17.93%). If repayments are made in cash then the
monthly repayments increase by 3%.
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.
VAT receivable is owed to Edenville International (Tanzania) Limited which is only recoverable against future sales made by
Edenville International (Tanzania) Limited. The Group expects to recover the above VAT from sales of commercial coal.
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 2019 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.
62
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
25.
Financial instruments (continued)
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.
The effect of a 10% rise or fall in the US dollar/Sterling exchange rate would result in an increase or decrease in the net assets
of the group of £753,111.
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.
The tables below summarise the maturity profit of the combined Group’s non-derivative financial liabilities at each financial
year end based on contractual undiscounted payments
2018
Convertible loan notes (current and non –
current)
Trade payables
Other payables
Accruals
2019
Trade payables
Other payables
Accruals
Borrowings
Less than 1
year
288,118
333,940
39,215
182,908
844,181
Less than 1
year
466,645
10,232
410,535
520,820
1,408,232
1- 2 years
2-5 years
282,076
-
-
-
-
282,076
-
-
-
1- 2 years
2-5 years
-
-
-
284,903
284,903
-
-
-
-
63
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
26.
Equity-settled share-based payments
The following options over ordinary shares have been granted by the Company:
Grant Date
Exercise price
21 October 2013
28 March 2017
5 November 2018
26 April 2019
of
Number
outstanding
December 2018
options
31
at
6,011,481
42,000,000
99,568,966
100,000,000
5.00p
1.08p
0.29p
0.26p
The options granted on 21 October 2013 are exercisable from 21 October 2014. The options are valid for a period of
10 years from the date of grant. There are no vesting conditions.
Of the 46,000,000 issued on 28 March 2017, 32,000,000 were issued to the Directors and a member of senior
management and 8,000,000 to two engineers, 4,000,000 of which lapsed during the year.
The 38,000,000 options issued to the Directors and a member of senior management will vest one third immediately,
one third upon production of in excess of 5,000 tonnes of commercial coal per month over three consecutive months
and one third upon completion of the Bankable Feasibility Study for the Rukwa Power Plant.
8,000,000 of the options of which 4,000,000 have lapsed during the year were granted to two engineers, will vest one
half upon production of in excess of 5,000 tonnes of commercial coal per month over three consecutive months and
one half upon production of in excess of 10,000 tonnes of commercial coal per month over three consecutive months.
The options are exercisable for a 5-year period from 27 March 2017.
During the year on the issue of convertible loan notes (see note 21), 99,568,966 options were issued to the investor.
These options are exercisable over a 4-year period at an exercise price of 0.29p
On 26 April 2019, 100,000,000 options were issued to an investor, on variation of an agreement. These options are
exercisable over a 4- year period at an exercise price of 0.26p
At the date of grant, the options 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
21 October
2013
85%
4 years
1.23%
-
-
28 March 2017
131%
3 years
0.37%
-
-
5 November
2018
70%
4 years
0.96%
-
-
26 April
2019
101%
3.5 years
0.75%
-
-
0.09p
0.56p/0.42p/0.28p
0.08p
0.02
Volatility was determined by reference to the standard deviation of daily share prices for one year prior to the date of
grant.
The charge to the income statement for share-based payments for the year ended 31 December 2019 was £16,077
(2018: £76,319).
64
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
26.
Equity-settled share-based payments (continued)
Movements in the number of options outstanding and their related weighted average exercise prices are as follows:
2019
2018
Number of
options
Weighted average
exercise price per
share
pence
Number of
options
Weighted average
exercise price per
share
pence
At 1 January
Granted
Exercised
Cancelled
147,580,477
100,000,000
-
(7,005,741)
At 31 December
240,574,706
0.71
0.26
-
2.76
0.46
52,011,481
99,568,966
-
(4,000,000)
147,580,447
1.53
0.29
-
1.08
0.71
Exercisable
year end
at
215,241,373
118,247,114
The weighted average remaining contractual life of options as at 31 December 2019 was 2.78 years (2018: 3.73years).
Warrants
Movements in the number of warrants outstanding and their related weighted average exercise prices are as follows:
2019
Number of
options
Weighted average
exercise price per
share
pence
Number of
options
2018
Weighted average
exercise price per
share
pence
At 1 January
Granted
Exercised
Cancelled/expired
-
127,500,000
-
-
At 31 December
127,500,000
-
0.02
-
-
0.02
241,666,667
-
-
(241,666,667)
241,666,667
0.96
-
-
(0.96)
0.96
The weighted average remaining contractual life of warrants as at 31 December 2019 was 2.42 years (2018: Nil years).
127,500,000 warrants were issued to the company’s broker on at an exercise price of 0.02p. The warrants expire on 31
May 2022.
65
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
27.
Contingent liabilities
Edenville Internaitional (Tanzania) Limited has a dispute with a third party and arises from an Acquisition and Option
Agreement signed in August 2010 (and its variation made in 2015) (“Agreement”). The third party is seeking financial
compensation and other costs in addition to a dispute over certain mining licenses granted in the name of Edenville
International (Tanzania) Limited. In the opinion of the directors and after taking appropriate legal advice, they have
concluded that the case has no merit.
28.
Reserves
The following describes the nature and purpose of each reserve:
Share Capital
Share Premium
Share Option Reserve
Retained Earnings
represents the nominal value of equity shares
amount subscribed for share capital in excess of the nominal value
fair value of the employee and key personnel equity settled share option scheme and
broker warrants as accrued at the balance sheet date.
cumulative net gains and losses less distributions made
29.
Related Party Transactions
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.
During the year the Company paid £547,984 (2018: £1,435,463) to or on behalf of its wholly owned subsidiary,
Edenville International (Tanzania) Limited. The amount due from Edenville International (Tanzania) Limited at year
end was £9,117,401(2018: £8,565,706). This amount has been included within loans to subsidiaries.
Also included in trade creditors is an amount of £3,584 (2018: £13,500) owed to Aaridhi Consultants in respect of
Directors fees for Arun Srivastava.
At the year end the Company was owed £3,712 (2018: £3,712) by its subsidiary Edenville International (Seychelles)
Limited.
At the year end the Company was owed £ (2018: £6,340) by its subsidiary Edenville Power Tz Limited.
At the year end the Company was owed £6,340 (2018: £6,340) by its subsidiary Edenville Power Tz Limited.
At the year end Edenville International (Tanzania) limited was owed $41,677 by Edenville Power Tz Limited and
$9,517 was owed to JICL Consultants.
66
EDENVILLE ENERGY PLC
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
30.
Events after the reporting date
On 9 January 2020 the company issued 50,000,000 ordinary shares of 0.02p each at 0.05p, in settlement of invoices.
On 21 January 2020 the company issued 1,750,000,000 ordinary shares of 0.02p each at 0.04p.
On 8 June 2020 the company issued 1,250,000 ordinary shares of 0.02p for 0.04p raising gross proceeds of £500,000.
In June 2020 the group’s subsidiary Edenville International (Tanzania) Limited (“EITL”) entered into a Coal Mining
Agreement (the “Agreement”) with Infrastructure and Logistics Tanzania Limited (“ILTL”).
Under the terms of the Agreement ILTL are expected to also become a customer of Edenville. It is envisaged under
the Agreement that ILTL will enter into a long-term Coal Supply Agreement, which would see ILTL provide an anchor
tenancy at the Company’s Rukwa coal project (“Rukwa” or the “Project’) by initially purchasing 3,000 tonnes of
washed coal per month at standard market rates, before increasing this to 5,000 tonnes a month over a 12 month period.
ILTL are also expected to use their logistics network and expertise with respect to existing and potential customers.
In July 2020 EITL entered into a US$1 million Loan Agreement (the “Loan Agreement”) with ILTL. The loan shall
attract interest at a rate of 9% per annum only on funds drawn. At present no amounts have been drawn.
In August 2020 EITL entered into a Sales and Marketing Agreement with MarTek Global FZ-LLC (“MarTek”).
MarTek is a Dubai-based sister company to Infrastructure and Logistics Tanzania Limited (“ILTL”), with both having
the same principal shareholder.
In August 2020, 83,333,333 warrants were exercised at a price of 0.06p per share
EITL’s mining operations ceased during the COVID 19 lockdown in Tanzania, recommencing again on 3 August
2020.
31.
Financial commitments
The group has future aggregate minimum lease payments under non- cancellable operating leases of $Nil (2018:
$43,472) and required expenditure of $Nil (2017: $Nil) in respect of its licences for the forthcoming year.
32.
Ultimate Controlling Party
The Group considers that there is no ultimate controlling party.
33.
Prior year adjustment
During April 2018 the groups mining activities moved into the production phase. At this stage costs of £5,225,232.
Previously these costs continued to be classified within intangible assets to together with a fair value gain less depletion
in the period. The 2018 figures have been restated to show the transfer of £5,225,232 to property, plant and equipment
on completion of the development of the asset. The foreign exchange gain and depletion of the asset are now shownwith
property , plant and equipment. This adjustment has no impact on Group Statement of Comprehensive Income or on
the Group Statement of Changes in Equity.
67
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
YEAR ENDED 31 DECEMBER 2019
Qualified Opinion
We have audited the financial statements of Edenville Energy plc for the year ended 31 December 2019 which comprise the
Statement of Financial Position, Statement of Changes in Equity, Statements of Cash Flows and the notes to the financial
statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in
their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union
and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act
2006.
In our opinion, except for the possible effects of the matters described in the basis of the qualified opinion section of our report,
the financial statements:
the financial statements give a true and fair view of the state of the Company’s affairs as at 31 December 2019 and of
their loss for the period then ended;
the financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for qualified opinion
We were not appointed as auditors of the Company until after 31 December 2019 and thus did not observe the counting of
physical inventories at the end of the year. We were unable to satisfy ourselves by alternative means concerning the inventory
quantities held at 31 December 2019, which are included in the consolidated statement of financial position at £247,538, by
using other audit procedures. Consequently, we were unable to obtain sufficient appropriate audit evidence regarding the
existence and condition of the inventory reported in the consolidated statement of financial position or to determine whether
any adjustment to the reported amount was necessary.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the group and parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Material uncertainty relating to going concern
We draw attention to the disclosure made in Note 2 to the financial statements, under the heading “Going concern” concerning the
ability of the Company and Group to continue as a going concern. The Company and Group’s forecasts and projections indicate
that the Company and Group has sufficient cash reserves to operate within the level of its current facilities. However, if there are
any material variances to the forecast which it is unable to manage with cashflow management to continue in operation, the
Company and Group would be obliged to raise additional funds within twelve months of the date of the approval of these financial
statements. The ability of the Company and Group to raise additional funds is dependent upon investor appetite.
These conditions, along with the other matters explained in that note, indicate the existence of a material uncertainty which
may cast significant doubt over the Company and Group’s ability to continue as a going concern. Our opinion is not modified
in this matter.
68
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
YEAR ENDED 31 DECEMBER 2019
Our application of materiality
Materiality
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for
materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. The materiality applied
to the financial statements as a whole was determined as follows:
2019
2018
Basis for materiality
Company £47,500
£74,000
1% of gross assets
In our professional judgement, we consider gross assets to be the principal benchmark relevant to members of the group in
assessing financial position and performance. Our calculated materiality levels were discussed and agreed with the audit
committee.
We use a different level of materiality (‘performance materiality’) to determine the extent of our testing for the audit
of the financial statements. Performance materiality is set based on the audit materiality as adjusted for the
judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the
internal control environment.
Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party
transactions and directors’ remuneration.
We agreed with the audit committee that we would report all individual audit differences identified during the course of our
audit in excess of £2,375, in addition to other audit misstatements below that threshold that we believe warrant reporting on
qualitative grounds.
An overview of the scope of our audit
In designing our audit, we assessed the risks of material misstatement in the group and parent company financial statements.
In particular we considered areas involving significant accounting estimates and judgements by the directors and considered
future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including
among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due
to fraud.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in
the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Basis for qualified opinion section, we have determined the matters described below
to be the key audit matters to be communicated in our report.
.
69
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
YEAR ENDED 31 DECEMBER 2019
Key Audit Matter
How the scope of our audit responded to the key audit
matter
Valuation of the parent company’s investments in,
and loans to, subsidiaries
As disclosed in 4, the parent company holds a
significant investment in Edenville International
(Tanzania) Limited of £16,160,713, which includes
loans to the subsidiary of £8,569,417.
The value of the investment is linked to the value of
the assets held in Edenville International (Tanzania)
limited. There is a risk that the value in use is below
the carrying value of the investment and thus the
amounts reported are materially misstated.
Our work in this area included;
Reviewing the valuation methodology for the
investment held and ensuring that the carrying
values were supported by sufficient and
appropriate audit evidence;
Ensuring that all asset types were categorised
according to the financial reporting framework,
including the associated disclosures;
Ensuring that the parent company has full title
to the investments held;
Ensuring
that
appropriate
disclosures
surrounding the estimates, including a review of
how these estimates were arrived at, are made in
respect of any valuations are included in the
financial statements; and
.
Our work indicated that the investments are fairly
stated in the financial statements.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our
auditor’s report thereon. The Directors are responsible for the other information. Our opinion on the group and parent company
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
As described in the Basis for qualified opinion section of our report, we were unable to obtain sufficient appropriate audit
evidence to support the carrying value of inventories. Information on cost of sales and inventories are included in the annual
report and accordingly we are unable to confirm the accuracy of that disclosure for the same reason.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
70
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
YEAR ENDED 31 DECEMBER 2019
Matters on which we are required to report by exception
Except for the matter described in the Basis for qualified opinion section of our report, in the light of the knowledge and
understanding of the group and their environment obtained in the course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.
Arising solely from the limitation on the scope of our work relating to the carrying value of inventories referred to above:
we have not obtained all the information and explanations that we considered necessary for the purpose of our audit;
and
we were unable to determine whether adequate accounting records have been kept by the group and parent company.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the group
and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the group’s and the
parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
71
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
YEAR ENDED 31 DECEMBER 2019
Use of our report
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 auditor’s 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.
Zahir Khaki (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
29 September 2020
72
EDENVILLE ENERGY PLC
COMPANY STATEMENT OF FINANCIAL POSITION
YEA
Non-current assets
Investment in subsidiaries
Property, plant & equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Borrowings
Note
2019
£
2018
£
4
5
6
7
8
9
16,160,713
1,778
15,612,729
2,371
16,162,491
15,615,100
48,412
40,845
89,257
479,244
481,581
960,825
18,553
140,483
159,036
148,112
288,118
436,230
Current assets less current liabilities
(871,569)
(277,194)
Total assets less current liabilities
15,290,923
15,337,906
Non-Current liabilities
Borrowings
Net Assets
Equity
Called-up share capital
Share premium account
Share option reserve
Profit and loss account
Total equity
9
141,463
282,076
15,149,460
15,055,830
10
3,414.935
18,811,157
281,502
(7,358,134)
2,722,036
18,566,642
275,463
(6,508,311)
15,149,460
15,055,830
The financial statements were approved by the board of directors and authorised for issue on 29 September 2020 and signed on
its behalf by:
Alistair Muir
Director
Company registration number: 05292528
73
ENDED 31 DECEMBER 2019
COMPANY STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2019
Share
Capital
£
Share
Premium
£
Retained
Earnings
Account
£
Share
Option
Reserve
£
Total
£
At 1 January 2018
2,679,750
17,910,928
(5,823,387)
309,943
15,077,234
Issue of share capital
Cost of issue
Share option/warrants charge
Cancellation of share options
Total comprehensive loss for the year
42,286
-
-
-
-
697,714
(42,000)
-
-
-
-
-
-
110,799
(795,723)
-
-
76,319
(110,799)
-
740,000
(42,000)
76,319
-
(795,723)
At 31 December 2018
2,722,036
18,566,642
(6,508,311)
275,463
15,055,830
Issue of share capital
Share option/warrants charge
Cancellation of share options
Total comprehensive loss for the year
692,899
244,515
-
-
-
-
-
10,038
(859,861)
-
16,077
(10,038)
-
937,414
16,077
-
(859,861)
At 31 December 2019
3,414,935
18,811,157
(7,358,134)
281,502
15,149,460
74
EDENVILLE ENERGY PLC
COMPANY CASH FLOW STATEMENT
YEAR ENDED 31 DECEMBER 2019
Cash flows from operating activities
Operating loss
Depreciation
Share based payments
Finance costs
Foreign exchange losses
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Net cash outflow from operating activities
Cash flows from investing activities
Finance income
Capital introduced to subsidiaries
Note
Year ended 31
December
2019
£
Year ended 31
December
2018
£
(859,974)
593
16,077
144,824
(13,331)
(29,858)
351,132
(351,137)
113
(547,984)
(796,250)
790
76,319
16,212
5,127
3,097
87,877
(606,828)
529
(1,438,977)
Net cash outflow from investing activities
(547,871)
(1,438,448)
Cash flows from financing activities
New borrowings
Proceeds from the issue of convertible loan notes
Repayment of convertible loan notes
Proceeds from issue of ordinary shares
Share issue costs
Net cash inflow from financing activities
Net decrease in cash equivalents
Cash and cash equivalents at beginning of year
100,000
-
(198,643)
937,414
-
838,770
(99,638)
140,483
-
548,853
-
740,000
(42,000)
1,246,853
(798,423)
938,906
Cash and cash equivalents at end of year
7
40,845
140,483
75
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
1.
Accounting policies
Basic of preparation and statement of compliance
The Company financial statements are prepared under the historical cost convention, except for the measurement to
fair value of assets and financial instruments, and 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 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 £859,861 (2018: £795,723).
Going concern
At 31 December the Company had cash balances of £40,845. Following the year end the company raised a further
£500,000 before expenses by planning 1,250,000 ordinary share of 0.02p for 0.04p
The Company meets its day to day working capital requirement from its own cash reserves and monies raised in follow
on offerings. The Company’s forecast and projections indicate that the Company has sufficient cash reserves to operate
within the level of its current facilities until such time as its subsidiary company is profitable from the sale of its coal
resources thereby allowing it to fund the Company’s operations.
The Company’s costs can be reduced if it is found that the subsidiary company’s levels of orders together with available
cash resources are insufficient to meet its working capital needs.
Whilst it is the Company’s intention to rely on it’s available cash reserves, and future income generated from its
subsidiary, and if required a reduction in its cost base, a negative variance in the Company and the Groups forecasts
and projections would make the Company’s ability to continue as a going concern dependent on an additional fund
raise. If the Company’s and Group’s forecasts are not achieved, the Directors would seek to raise the additional funds
through equity issues which would be dependent upon investor appetite. 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 own financial statements.
76
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
1.
Accounting policies (continued)
Adoption of new and revised standards and changes in accounting policies
In the current year, the following new and revised standards and interpretations have been adopted by the Group. The
adoption of these standards has had no impact on the current period. However they may have an effect in future periods.
IFRS 9
IFRS 16
Prepayments features with negative compensation
Leases
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 3
IFRS 3
IFRS 7,9,
IAS 39
IFRS
7,9,16
IFRS 16 Amendment to provide lessees with an exemption from assessing
Amendments to clarify the definition of a business
Amendments updating a reference to The Conceptual Framework
Amendments regarding pre-replacement issues in the context of IBOR
reform
Amendments regarding replacement issues in the context of the IBOR
reform
IFRS 17
IFRS 17
IAS 1
IAS 8
IAS 16
IAS 37
whether a COVID-1+ related rent concession is a lease modification
Insurance Contracts – new standard
Amendments to address the implantation challenges that were
identified after IFRS 17 was published
Amendments regarding the classification of liabilities
Amendments regarding the definition of material
Amendments prohibiting a company from deducting the cost of
property, plant and equipment amounts received from selling items
produced while the company is preparing the asset for its intended use.
Amendments regarding the costs to include when assessing whether a
contract is onerous
Effective date for
accounting period
beginning on or
after
1 January 2020
1 January 2022*
1 January 2020
1 January 2021*
1 June 2020*
1 January 2023*
I January 2023*
1 January 2023*
1 January 2020
1 January 2022*
1 January 2022*
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
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:
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).
77
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
1.
Accounting policies (continued)
Assumptions about the number of options that are expected to vest include consideration of non-market vesting
conditions. The total expense is recognised over the vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number
of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision
to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
When the options are exercised, the 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.
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 Group’s financial assets are a reasonable approximation of their fair values.
Classification and measurement
The Group classifies its financial assets into the following categories: those to be measured subsequently at fair value
(either through other comprehensive income (FVOCI) or through the income statement (FVPL) and those to be held
at amortised cost.
Classification depends on the business model for managing the financial assets and the contractual terms of the cash
flows. Management determines the classification of financial assets at initial recognition. The Group’s policy with
regard to financial risk management is set out in note 3. Generally, the group does not acquire financial assets for the
purpose of selling in the short term.
The group’s business model is primarily that of “hold to collect” (where assets are held in order to collect contractual
cash flows). When the group enters into derivative contracts, these transactions are designed to reduce exposures
relating to assets and liabilities, firm commitments or anticipated transactions.
Financial Assets held at amortised cost
The classification applies to debt instruments which are held under a hold to collect business model and which have
cash flows that meet the “solely payments of principal and interest” (SPPI) criteria.
At initial recognition, trade receivables that do not have a significant financing component, are recognised at their
transaction price. Other financial assets are initially recognised at fair value plus related transaction costs, they are
subsequently measured at amortised costs using the effective interest method.
New impairment requirements use an ‘expected credit loss’ (‘ECL’) model to recognise an allowance. Impairment is
measured using a 12- month ECL method unless the credit risk on a financial instrument has increased significantly
since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to
78
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
1.
Accounting policies (continued)
measuring expected credit losses using a lifetime expected loss allowance is available and has been adopted by the
Group. During this process the probability of the non-payment of the trade receivables is assessed. This probability is
then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss
for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate
provision account with the loss being recognised within administrative expenses in the consolidated statement of
comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of
the asset is written off against the associated provision.
Financial Assets held at fair value through other comprehensive income (FVOCI)
The classification applies to the following financial assets:
- Debt instruments that are held under a business model where they are held for the collection of contractual cash flows
and also for sale (“collect and sale”) and which have cash flows that meet the SPPI criteria. An example would be
where trade receivable invoices for certain customers were factored from time to time. All movements in the fair value
of these financial assets are taken through comprehensive income , except for the recognition of impairment gains and
losses, interest revenue (including transaction costs by applying the effective interest method), gains or losses arising
on derecognition and foreign exchange gains and losses which are recognised in the income statement. When the
financial asset is derecognised, the cumulative fair value gain or loss previously recognised in other comprehensive
income is reclassified to the income statement.
- Equity investments where the group has irrevocably elected to present fair value gains and losses on revaluation of
such equity investments, including any foreign exchange component, are recognised in other comprehensive income.
When equity investment is derecognised, there is no reclassification of fair value gains or losses previously recognised
in other comprehensive income to the income statement. Dividends are recognised in the income statement when the
right to receive payment is established.
Financial Assets held at fair value through profit or loss (FVPL)
The classification applies to the following financial assets. In all cases, transaction costs are immediately expensed to the
income statement.
- Debt instruments that do not meet the criteria of amortised costs or fair value through other comprehensive income.
- Equity investments which are held for trading or where the FVOCI election has not been applied. All fair value gains
or losses and related dividend income are recognised in the income statement.
- Derivatives which are not designated as a hedging instrument. All subsequent fair value gains or losses are recognised
in the income statement.
Financial liabilities
Borrowings and other financial liabilities (including trade payables but excluding derivative liabilities) are recognised
initially at fair value, net of transaction costs incurred, and are subsequently measured at amortised costs.
Impairment of financial assets
A forward looking expected credit loss (ECL) review is required for: debt instruments measured at amortised costs are held
at fair value through other comprehensive income: loan commitments and financial guarantees not measured at fair value
through profit or loss; lease receivables and trade receivables that give rise to an unconditional right to consideration.
79
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
1.
Accounting policies (continued)
As permitted by IFRS9, the group applies the “simplified approach” to trade receivable balances and the “general approach”
to all other financial assets. The general approach incorporates a review for any significant increase in counter party credit
risk since inception. The ECL reviews including assumptions about the risk of default and expected loss
rates. For trade receivables, the assessment takes into account the use of credit enhancements, for example, letters of credit.
Impairments for undrawn loan commitments are reflected as a provision
Investment in subsidiaries
Fixed asset investments in subsidiary undertakings held by the Company (see note 4) are shown at cost less provision for
impairment. The cost of acquisition includes directly attributable professional fees and other expenses connected with the
acquisition. In addition, investment in subsidiaries includes long term loans made to the subsidiaries where the loan is
either considered to be recoverable in the long term, as the company’s subsidiary Edenville International (Tanzania)
Limited generates sufficient revenue from its coal assets in order to repay the loan, or it is expected to be capitalised.
Investment in subsidiaries- 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.
Trade and other receivables
Provision for impairment of trade receivables is made when there is objective evidence that the Company 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.
Convertible loan notes
The component parts of convertible loan notes issued by the Company are classified separately as financial liabilities
and equity in accordance with the substance of contractual arrangements. At the date of issue, the fair value of the
liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This
amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon
conversion or at the instrument’s maturity date. The equity component is determined be deducting the amount of the
liability component from the fair value of the convertible loan notes as a whole. This is recognised and included in
equity, net of income tax effects, and is not subsequently remeasured.
80
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
1.
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
Motor vehicles
Basis of depreciation
25% reducing balance
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.
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 Company’s assets and liabilities and their tax base. Deferred tax liabilities are offset against deferred tax assets
within the same taxable entity. 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 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.
81
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
2.
Critical accounting estimates and areas of judgement
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:
Investments
Share based payments
Investments
The Company is required to perform an impairment review on its subsidiary undertakings as a group when facts and
circumstances suggest that the carrying amount of the asset may exceed its recoverable amount. The Company’s main
subsidiary is Edenville (Tanzania) Limited who hold various mining licences in Tanzania. As such, the carrying amount
of the investments 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.
At the reporting date, the carrying value of the company’s investments in, and loans to, its subsidiary undertakings
amounted to £16,160,713 (2018: £15,612,729)
Share based payments
The estimate of share based payments costs requires management to select an appropriate valuation model and make
decisions about various inputs into the model including the volatility of its own share price, the probable life of the
options, the vesting date of options where non-market performance conditions have been set and the risk free interest
rate.
Environmental rehabilitation liability
The company makes full provision for the future cost of rehabilitating mine sites and related production facilities on
a discounted basis at the time of developing the mines and installing and using those facilities. The rehabilitation
provision represents the present value of rehabilitation costs relating to mine sites, which are expected to be incurred
in the future, which is when the producing mine properties are expected to cease operations. These provisions have
been created based on the company's internal estimates. Assumptions based on the current economic environment
have been made, which management believes are a reasonable basis upon which to estimate the future liability.
These estimates are reviewed regularly to take into account any material changes to the assumptions. However,
actual rehabilitation costs will ultimately depend upon future market prices for the necessary rehabilitation works
required that will reflect market conditions at the relevant time. Furthermore, the timing of rehabilitation is likely to
depend on when the mines cease to produce at economically viable rates. This, in turn, will depend upon future coal
prices, which are inherently uncertain. Management have reviewed the potential liability and have concluded that this
is immaterial to include in the financial statements.
82
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
3.
Staff costs
Wages and salaries
Social security costs
Pension costs
The average number of employees and directors during the year was as follows:
Administration
Directors’ remuneration
2019
£
128,202
5,912
741
2018
£
212,873
18,825
1,160
134,855
232,858
2019
3
2018
3
The aggregate directors’ emoluments, including compensation for loss of office, in the year were:
Emoluments
Pension costs
128,202
741
211,000
1,160
128,943
212,160
The highest paid director received remuneration of £70,833 (2018: £130,702).
Included in the above are accrued Director’s remuneration of £69,827 (2018: £58,085)
Directors’ interest in outstanding share options per director is disclosed in the directors’ report.
83
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
4.
Investment in subsidiaries
Company
Cost
At 1 January 2018
Additions
Disposal
At 31 December 2018
Accumulated impairment
As at 1 January 2018
Impairment
At 31 December 2018
Net Book Value
As at 31 December 2018
Company
Cost
At 1 January 2019
Additions
At 31 December 2019
Accumulated impairment
As at 1 January 2019
Impairment
At 31 December 2019
Net Book Value
As at 31 December 2019
Shares in
subsidiaries
£
Loans to
subsidiaries
£
Total
£
7,043,312
-
-
_________
7,043,312
7,130,440
1,438,977
-
_________
8,569,417
14,173,752
1,438,977
-
_________
15,612,729
-
-
_________
-
-
-
_________
-
-
-
_________
-
7,043,312
8,569,417
15,612,729
Shares in
subsidiaries
£
Loans to
subsidiaries
£
Total
£
7,043,312
-
_________
7,043,312
8,569,417
547,984
_________
9,117,401
15,612,729
547,984
_________
16,160,713
-
-
_________
-
-
-
_________
-
-
-
_________
-
7,043,312
9,117,401
16,160,713
The value of the company’s investment and any indications of impairment is based on the prospecting and mining
licences held by its subsidiaries.
The Tanzanian licences comprise a mining licence and various prospecting licences. The licences are, located in a
region displaying viable prospects for 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.
84
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
4.
Investment in subsidiaries (continued)
During 2018 the activities of the company’s subsidiary evolved from exploration and evaluation to development and
as a result the exploration and evaluation assets held by the company’s subsidiary were transferred to development
expenditure. The Directors carried out an impairment review on reclassification of exploration and evaluation assets
to development assets, which covered the company’s investments in, and loans to, its subsidiaries. Following the
impairment reviews the Directors did not consider the company’s investments to be impaired.
In April 2019, the subsidiary moved into the production phase.
The Directors have carried out an impairment review and consider the value in use to be greater than the book value
in respect of The Company’s investment in its subsidiary company Edenville International (Tanzania) Limited.
The Directors considered the recoverable amount by assessing the value in use by considering future cash flow
projections of the revenue generated by its subsidiary through the sale of its coal resources.
Cash flows were based on the revenue generated to date plus expected growth from current production levels to 10,000
tons per month in the short to medium term.
In addition, the projections include future potential revenue generated from the Company’s plans relating to the Rukwa
Coal to Power Project. It is expected that the Project will move ahead in parallel with the transmission development
which is currently in the procurement stage and the Directors understand should be completed sometime in
2024. There is no guarantee that the company will be chosen as the successful party to develop the Power Project, and
therefore there is no guarantee that revenue will be generated from this Project. Should this be the case then the
Company would need to review its cash flow projections, and review the carrying value of its investment in Edenville
International Tanzania Limited
However, based upon current know resources the subsidiary has significant coal resources which based upon current
projections prepared by the Directors would be sufficient to support the book value in the financial statements. The
Directors are of the view that this amount is adequately supported by proposed returns generated by the Power Plant
Project. The Directors have applied a 10% discount rate in their forecasts. Additional factors that may affect these
projections include the following: –
A 30% reduction in the margin per ton of coal would result in an impairment of the Edenville International (Tanzania)
Limited investment by £736k
An increase in the discount factor to 16% would result in an impairment of the Edenville International (Tanzania)
Limited investment by £824k.
A decrease of 50% of the EBITA would result in an impairment of the Edenville International (Tanzania) Limited
investment by £5.7m.
The mining licence is due to expire in 2026. Should the mining licence not be renewed this would result in an
impairment of £7.037m.
85
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
4.
Investment in subsidiaries (continued)
Holdings of more than 20%:
The Company holds more than 20% of the share capital of the following companies:
Subsidiary undertaking
Edenville International (Seychelles) Limited
Edenville International (Tanzania) Limited
Edenville Power (Tz) Limited
Edenville (South Africa) Limited
Country of incorporation
Seychelles
Tanzania
Tanzania
England
Class
Ordinary
Ordinary
Ordinary
Ordinary
Shares held
100%
99.75%*
99.9%
100%
* These shares are held by Edenville International (Seychelles) Limited.
5.
Property, plant and equipment
Cost
As at 1 January 2018 and 31 December 2018
Depreciation
As at 1 January 2018
Charge for the year
As at 31 December 2018
Net book value
As at 31 December 2018
Cost
As at 1 January 2019 and 31 December 2019
Depreciation
As at 1 January 2019
Charge for the year
As at 31 December 2019
Net book value
As at 31 December 2019
Plant and
machinery
£
Fixtures,
fittings and
equipment
£
Motor
Vehicles
£
7,471
4,153
16,691
6,639
208
6,847
3,692
115
3,807
14,823
467
15,290
Total
£
28,315
25,154
790
25,944
624
346
1,401
2,371
Plant and
machinery
£
Fixtures,
fittings and
equipment
£
Motor
Vehicles
£
Total
£
7,471
4,153
16,691
28,315
6,847
156
7,003
3,807
87
3,894
15,290
350
15,640
25,944
593
26,537
468
259
1,051
1,778
86
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
6.
Trade and other receivables
Current
Other receivables
Prepayments
7.
Cash and cash equivalents
2019
£
46,328
2,084
48,412
Cash and cash equivalents include the following for the purposes of the cash flow statement:
Cash at bank and in hand
8.
Trade and other payables
Trade payables
Amounts owed to subsidiary undertakings
Social security costs and other taxes
Accruals and deferred income
2019
£
40,845
2019
£
302,762
6,340
9,714
160,428
2018
£
16,578
1,975
18,553
2018
£
140,483
2018
£
34,207
6,340
6,980
100,585
479,244
148,112
87
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
9.
Borrowings (continued)
Convertible loan notes
Repayable with 1 year
Repayable within 2 to 5 years
Other loans
Repayable with 1 year
Total
Repayable with 1 year
Repayable within 2 to 5 years
2019
£
361,581
141,463
503,044
120,000
120,000
481,581
141,463
623,044
2018
£
288,118
282,076
570,194
-
-
288,118
282,076
570,194
In November 2018 $750,000 conditionally convertible loan notes were issued: the face value of these convertible
securities is $900,000. A commitment fee of £37,500 which has been offset against the proceeds of issue of the
convertible loan notes, was payable by the Company as well as issuing share options over 99,568,966 ordinary
shares exercisable for 4 years at a conversion price on 0.29p per share. The company is required to make repayments
of $45,000 over 20 months commencing in February 2019. If repayments are made in cash then an additional 3% is
payable on the $45,000. The company may elect to make the repayment in its shares priced at 90% of the average
five day Volume Weighted Average Price (VWAP) chosen by the investor during the 20 days before issuance, or a
combination of both.
The company has the option to buy back the entire outstanding face value at any time at a premium of 5%. If this
right is exercised the investor has an option to convert 25% of the face value into shares at the lesser of the
repayment price or 0.29p per share. The repayment price being 130% of the 10 day VWAP immediately prior to the
company entering the Convertible Agreement.
In addition to the above the investor was offered 36,000,000 collateral shares which were issued by the company on
20 February 2019.
In April 2019, the company agreed a repayment holiday up to September 2019 in respect of the convertible loan
notes. As a condition of granting the repayment holiday the outstanding balance at the time. $855,000, was increased
by 15% to $983,250.
Other loans
This represents a loan of £100,000 with a fixed coupon interest rate of 20%.
88
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
10.
Share capital
No
Ordinary
shares of 0.02p
each
£
Ordinary
shares of
0.02p
each
No
Deferred shares
of 0.001p each
£
Deferred
shares of
0.001p
each
£
Total
share
capital
1,336,317,797
211,428,572
267,265
42,286
241,248,512,346
-
2,412,485 2,679,750
42,286
-
Issued and fully paid
At 1 January 2018
On 3 May 2018 Ordinary shares
issued at 0.35p
As at 31 December 2018
1,547,746,369
309,551
241,248,512,346
2,412,485 2,722,036
No
Ordinary
shares of 0.02p
each
£
Ordinary
shares of
0.02p
each
No
Deferred shares
of 0.001p each
£
Deferred
shares of
0.001p
each
£
Total
share
capital
1,547,746,369
309,551
241,248,512,346
2,412,485
2,722,036
36,000,000
7,200
64,515,192
12,903
500,000,000
100,000
2,263,980,200
452,796
600,000,000
120,000
-
-
-
-
-
-
-
-
-
-
7,200
12,903
100,00
452,796
120,000
Issued and fully paid
At 1 January 2019
On 20 February 2019 Ordinary
shares were issued at 0.02p
On 20 February 2019 Ordinary
shares were issued at 0.12p
On 2 May 2019 500,000 Ordinary
shares at 0.02p
On 20 May 2019 2,263,980,200
Ordinary shares at 0.02p
On 11 September 2019 600,000,000
Ordinary shares at 0.05p
As at 31 December 2019
5,012,241,761
1,002,450
241,248,512,346
2,412,485
3,414,935
The deferred shares have no voting rights, dividend rights or any rights of redemption. On return of assets on winding
up the holders are entitled to repayment of amounts paid up after repayment to ordinary share holders
11.
Deferred Taxation
A deferred tax asset of £1,336,275 (2018: £1,063,129) calculated at 19% (2018: 17%) 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.
89
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
12.
Capital management policy
The Company’s policy on capital management is to maintain a low level of gearing. The Company funds its
operation through equity funding.
The Company defines the capital it manages as equity shareholders’ funds less cash and cash equivalents.
The Company’s objectives when managing its capital are:
To safeguard the Company’s ability to continue as a going concern.
To provide adequate resources to fund its exploration, development and production activities with a view to
providing returns to its investors.
To maintain sufficient financial resources to mitigate against risk and unforeseen events.
The Company’s cash reserves are reported to the board and closely monitored against the planned work program and
annual budget. Where additional cash resources are required the following factors are taken into account
The size and nature of the requirement.
Preferred sources of finance.
Market conditions.
Opportunities to collaborate with third parties to reduce the cash requirement.
13.
Financial instruments
The Board of Directors determine, as required, the degree to which it is appropriate to use financial instruments to
mitigate risks with the main risk affecting such instruments being foreign exchange risk, which is discussed below.
Categories of financial instruments
Financial assets
Receivables at amortised cost including cash and cash equivalents:
Investments and loans to subsidiaries
Cash and cash equivalents
Other receivables
Total
2019
£
2018
£
16,160,173
40,845
46,328
16,247,346
15,612,729
140,480
16,578
15,769,787
Financial liabilities
Financial liabilities at amortised cost
Trade and other payables
Convertible loan notes
Net
564,530
503,044
1,067,574
141,132
570,194
711,326
15,179,772
15,058,461
90
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
13.
Financial instruments (continued)
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 only interest-bearing asset is cash invested on a short-term basis which attracts interest at the bank’s
variable interest rate.
The Company is exposed to interest rate risk through its convertible loan notes, its only interest-bearing liabilities. The
level of interest payable will vary depending on whether the repayments are made with shares or in cash. The effective
interest rate based on repayments of $45,000 per month is 17.93%. If repayments are made in cash then the monthly
repayments increase by 3% giving an effective interest rate of 20.95%, excluding transaction costs.
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 maximum exposure to credit risk in respect of the above at 31 December 2019 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.
The Company’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they
become due. To ensure this aim, it seeks to maintain cash balances to meet expected requirements for a period of one
year.
91
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
13.
Financial instruments (continued)
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.
The tables below summarise the maturity profit of the combined Group’s non-derivative financial liabilities at each
financial year end based on contractual undiscounted payments
2018
Convertible loan notes (current and non –
current)
Trade payables
Other payables
Accruals
2019
Convertible loan notes (current and non –
current)
Trade payables
Other payables
Accruals
Less than 1
year
288,118
34,207
13,320
100,585
436,230
Less than 1
year
361,581
277,762
136,054
160,428
935,825
1-2 years
2-5 years
282,076
-
-
-
-
282,076
-
-
-
1-2 years
2-5 years
141,463
-
-
-
141,463
-
-
-
-
-
14.
Equity-settled share-based payments
The following options over ordinary shares have been granted by the Company:
Grant Date
Exercise price
21 October 2013
28 March 2017
5 November 2018
26 April 2019
of
Number
outstanding
December 2019
options
31
at
3,005,740
42,000,000
99,568,966
100,000,000
5.00p
1.08p
0.29p
0.26p
The options granted on 21 October 2013 are exercisable from 21 October 2014. The options are valid for a period of
10 years from the date of grant. There are no vesting conditions.
Of the 46,000,000 issued on 28 March 2017, 38,000 were issued to the Directors and a member of senior
management and 8,000,000 to two engineers, 4,000,000 of which lapsed during the year.
92
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
14.
Equity-settled share-based payments (continued)
The 38,000,000 options issued to the Directors and a member of senior management will vest one third immediately,
one third upon production of in excess of 5,000 tonnes of commercial coal per month over three consecutive months
and one third upon completion of the Bankable Feasibility Study for the Rukwa Power Plant.
8,000,000 of the options of which 4,000,000 lapsed during the year were granted to two engineers and will vest one
half upon production of in excess of 5,000 tonnes of commercial coal per month over three consecutive months and
one half upon production of in excess of 10,000 tonnes of commercial coal per month over three consecutive months.
The options are exercisable for a 5-year period from 27 March 2017.
During 2018, on the issue of contingently convertible loan notes (see note 14), 99,568,966 options were issued to the
investor. These options are exercisable over a 4-year period at an exercise price of 0.29p.
On 26 April 2019, 100,000,000 options were issued to an investor, on variation of an agreement. These options are
exercisable over a 4- year period at an exercise price of 0.26p
At the date of grant, the options 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
21 October
2013
85%
4 years
1.23%
-
-
28 March 2017
131%
3 years
0.37%
-
-
5 November
2018
70%
4 years
0.96%
-
-
26 April
2019
101%
3.5 years
0.75%
-
-
0.09p
0.56p/0.42p/0.28p
0.08p
0.02
Volatility was determined by reference to the standard deviation of daily share prices for one year prior to the date of
grant.
The charge to the income statement for share-based payments for the year ended 31 December 2019 was £16,077
(2018: £76,319).
93
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
14.
Equity-settled share-based payments (continued)
Movements in the number of options outstanding and their related weighted average exercise prices are as follows:
2019
2018
Number of
options
Weighted average
exercise price per
share
pence
Number of
options
Weighted average
exercise price per
share
pence
At 1 January
Granted
Exercised
Cancelled
147,580,447
100,000,000
-
(7,005,741)
At 31 December
240,574,706
0.71
0.26
-
2.76
0.46
52,011,481
99,568,966
-
(4,000,000)
147,580,447
1.53
0.29
-
1.08
0.71
Exercisable
year end
at
215,241,373
118,247,114
The weighted average remaining contractual life of options as at 31 December 2019 was years 2.78 (2018: 3.73 years).
The weighted average remaining contractual life of exercisable options as at 31 December 2019 was years 2.84 (2018:
3.85 years).
Warrants
Movements in the number of warrants outstanding and their related weighted average exercise prices are as follows:
2019
Number of
options
Weighted average
exercise price per
share
pence
Number of
options
2018
Weighted average
exercise price per
share
pence
At 1 January
Granted
Exercised
Cancelled/expired
-
127,500,000
-
-
At 31 December
127,500,000
-
0.02
-
-
0.02
241,666,667
-
-
(241,666,667)
-
0.96
-
-
(0.96)
-
The weighted average remaining contractual life of warrants as at 31 December 2019 was years 2.42 years (2018: Nil
years).
127,500,000 warrants were issued to the company’s broker on at an exercise price of 0.02p. The warrants expire on 31
May 2022.
94
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
15.
Reserves
The following describes the nature and purpose of each reserve:
Share Capital
Share Premium
Share Option Reserve
Retained Earnings
represents the nominal value of equity shares
amount subscribed for share capital in excess of the nominal value
fair value of the employee and key personnel equity settled share option scheme and
broker warrants as accrued at the balance sheet date.
cumulative net gains and losses less distributions made
16.
Related Party Transactions
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.
During the year the Company paid £547,984 (2018: £1,438,977) to or on behalf of its wholly owned subsidiary,
Edenville International (Tanzania) Limited. The amount due from Edenville International (Tanzania) Limited at year
end was £9,117,401 (2018: £8,565,706). This amount has been included within loans to subsidiaries.
Also included in trade creditors is an amount of £3,584 (2018: £13,500) owed to Aaridhi Consultants in respect of
Directors fees for Arun Srivastava.
At the year end the Company was owed £3,712 (2018: £3,712) by its subsidiary Edenville International (Seychelles)
Limited.
At the year end the Company was owed £6,340 (2018: £6,340) by its subsidiary Edenville Power Tz Limited.
At the year end Edenville International (Tanzania) limited was owed $41,677 by Edenville Power Tz Limited and
$9,517 was owed to JICL Consultants.
17.
Events after the reporting date
On 9 January 2020 the company issued 50,000,000 ordinary shares of 0.02p each at 0.05p, in settlement of invoices.
On 21 January 2020 the company issued 1,750,000,000 ordinary shares of 0.02p each at 0.04p.
On 8 June 2020 the company issued 1,250,000 ordinary shares of 0.02p for 0.04p raising gross proceeds of £500,000.
In June 2020 the company’s subsidiary Edenville International (Tanzania) Limited (“EITL”) entered into a Coal
Mining Agreement (the “Agreement”) with Infrastructure and Logistics Tanzania Limited (“ILTL”).
Under the terms of the Agreement ILTL are expected to also become a customer of Edenville. It is envisaged under
the Agreement that ILTL will enter into a long-term Coal Supply Agreement, which would see ILTL provide an anchor
tenancy at the Company’s Rukwa coal project (“Rukwa” or the “Project’) by initially purchasing 3,000 tonnes of
washed coal per month at standard market rates, before increasing this to 5,000 tonnes a month over a 12 month period.
ILTL are also expected to use their logistics network and expertise with respect to existing and potential customers.
In July 2020 the company’s subsidiary EITL entered into a US$1 million Loan Agreement (the “Loan Agreement”)
with ILTL. The loan shall attract interest at a rate of 9% per annum only on funds drawn. At present no amounts have
been drawn.
95
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2019
17.
Events after the reporting date (continued)
In August 2020 the company’s subsidiary EITL entered into a Sales and Marketing Agreement with MarTek Global
FZ-LLC (“MarTek”). MarTek is a Dubai-based sister company to Infrastructure and Logistics Tanzania Limited
(“ILTL”), with both having the same principal shareholder.
In August 2020, 83,333,333 warrants were exercised at a price of 0.06p per share
EITL’s mining operations ceased during the COVID 19 lockdown in Tanzania, recommencing again on 3 August
2020.
18.
Ultimate controlling party
The Company considers that there is no ultimate controlling party
96