Registered number: 05292528
EDENVILLE ENERGY PLC
ANNUAL REPORT AND ACCOUNTS
FOR THE YEAR ENDED
31 DECEMBER 2021
EDENVILLE ENERGY PLC
COMPANY INFORMATION
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 and Company Statement of Financial Position
Group Statement of Changes in Equity
Company Statement of Changes in Equity
Group and Company Cash Flow Statement
Notes to the Group and Company Financial Statements
Page
1
2
3
6
14
16
17
19
26
33
34
35
34
38
39
EDENVILLE ENERGY PLC
COMPANY INFORMATION
Directors
Alistair Muir– Chief Executive Officer
Jeffrey Malaihollo – Non-Executive Chairman
Nicholas Von Schirnding – Non -Executive Director
Franco Caselli – Non Executive Director (appointed on 21 August 2021)
Company Secretary
Bernard Sumner
Registered Office
Nominated Adviser
Broker
Independent Auditor
Solicitors
Registrars
Aston House
Cornwall Avenue
London
N3 1LF
Strand Hanson Limited
26 Mount Row
Mayfair
London, W1K 3SQ
Tavira Securities Limited
88 Wood Street
London, EC2V 7DA
PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
Womble Bond Dickinson LLP
4 More London Riverside
London
SE1 2AU
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
1
EDENVILLE ENERGY PLC
CHAIRMAN’S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
The first half of 2021 was once again dominated by the impact of COVID across the world. The start of 2021 coincided with
the reemergence of lockdowns across much of the globe. Naturally this provided significant challenges to the Company with
the reduced demand for coal seen in 2020 continuing and the logistical issues remaining. In light of this the Company took a
number of steps to address both its financial poistion as well as its operational plans for the future.
In January 2021 we announced an oversubscribed placing raising £900,000. The placing was supported by Edenville's existing
three largest shareholder groups and specialist mining investor RAB Capital. In May 2021 we announced a further placing to
raise gross proceeds of nearly £2.5 million, including a £1 million participation from a new strategic investor, Tony
Buckingham. The Company used part of the proceeds to repay the outstanding debt to Lind Partners LLC, leaving the majority
to fund future operations..
In August 2021 Franco Caselli joined the Board as a Non-executive Director of the Company. Mr Caselli is a geologist with
more than 40 years of international operational and market experience in the energy and mining sectors.
With the Company better capitalised, and with the support of new shareholders, our focus during the year was to both monitor
the situation in Tanzania with respect to Rukwa and to look at various opportunities and new assets to inject into the Company.
We continue to explore various options and look forward to updating shareholders as soon as appropriate.
Post period end, in February 2022, the Company entered into a contract mining agreement with Nextgen Coalmine Limited
(“Nextgen”) for the operation of the Company's Rukwa Coal Project. Shortly after that both the international and domestic coal
price increased significantly. This resulted in significant demand for both Rukwa’s washed and fine coal. Therefore we were
pleased that in May 2022 the Company reached an agreement with NextGen to terminate the contract and the Company is now
again in full control of the operations at Rukwa.
Although the last few years have been difficult for the Company, we believe that the current trend of high coal prices and
increased demand, combined with the fact that the Company is better capitalised, put us in a great position to move the Company
forward significantly.
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 supported the Company throughout
this difficult period.
I believe the Company is now better positioned than it has been for some considerable time and we look forward to reporting
on the Company’s progress in the coming months.
Yours sincerely
Dr Jeffrey Malaihollo
Chairman
29 June 2022
2
EDENVILLE ENERGY PLC
CHIEF EXECUTIVE OFFICER'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
2021 was a year in which there was a significant positive change in the prospects for the Company, both with regard to the
Rukwa coal project and more widely with an improved cash position.
Funding
On 19 January 2021 we announced an oversubscribed placing raising gross proceeds of £900,000, supported by Edenville's
existing three largest shareholder groups and specialist mining investor RAB Capital. On 5 May 2021 we announced a further
placing to raise gross proceeds of £2.48 million, including a £1 million participation from a new strategic investor, Tony
Buckingham.
Mr Buckingham is well known in the natural resources market, particularly in Africa, having been CEO and major shareholder
of Heritage Oil Limited from 2006 until its acquisition by a wholly owned subsidiary of Qatari investment fund, Al Mirqab
Capital SPC, in 2014 for a consideration of US$1.6 billion.
Additionally, following the £2.48 million fund raise, we announced on 22 June 2021 that the Company had fully repaid in cash
the full outstanding amount owing to Lind Partners LLC ("Lind") under the Funding Agreement dated 6 November 2018. and
the Company had no further outstanding obligations to Lind.
The fundings undertaken through the year ensured that the Company is well capitalised, with cash resources as at 31 December
2021 of £1,229,801 (31 December 2020: £25,690) and reduced borrowings of £18,258 (31 December 2021: £440,831).
As at 27 June 2022 the Company had cash balances of approximately £515,428. Whilst this is sufficient for the Company’s
current needs, at Rukwa, where it is expected the Company will become cashflow positive later this year as production ramps
up.
Operational Review
Whilst the first half of 2021 was another period impacted by the Covid 19 pandemic and the resultant reduced demand, there
were significant changes in the demand scenario and outlook as the year progressed as international coal prices rose and local
Tanzanian producers started to switch to supplying the export market.
Prior to this uptick in coal prices and demand duringthe later part of the year the Company successfully focused on preserving
cash for possible further asset acquisitions and focussed on supplying existing customers. This translated into increasing
production in the final quarter of the year and revenue for the year as a whole of £105,228 (2020: £33,852)
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 and the local population, as well as the mine itself.
At Rukwa, wherever possible, we have sought to employ local people from the 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.
3
EDENVILLE ENERGY PLC
CHIEF EXECUTIVE OFFICER'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
Post Period Events
On 3 February 2022 we announced that the Company’s subsidiary Edenville International (Tanzania) Limited had entered into
a contract with Nextgen Coalmine Limited ("Nextgen") for the operation of the Company's Rukwa Coal Project. This
superseded the Coal Mining Agreement with Infrastructure and Logistics Tanzania Limited and the Sales and Marketing
Agreement with MarTek Global FZ-LLC, announced on 8 June 2020 and 26 August 2020 respectively. These agreements
were terminated by Edenville due to lack of progress on implementation.
Subsequent to entering into the agreement with NextGen both the international and domestic coal price increased significantly.
This coincided with heightened interest from potential customers to enter into offtake agreements for coal from Rukwa.
Additionally, the implementation of the coal mining agreement with Nextgen was, for various reasons, problematic, resulting
in very poor production figures over the period from February to May 2022 and no material revenue for the Company.
The lack of progress by Nextgen culminated in the announcement on 31 May 2022 that the Company had reached an agreement
with NextGen to terminate the contract. Following the termination of the contract all mining equipment has been brought back
into service by Edenville, whilst an additional pre-strip excavator has been added to the fleet. Up to three additional trucks have
been sourced to rapidly scale production. Our initial goal is to satisfy existing demand from local customers of 1,500 tonnes of
washed lump coal product and 500 tonnes of coal fines in the immediate future, targeting sales of 5,000 tonnes per month of
washed coal late in Q3 2022, with coal fines sales also expected to continue and possibly expand. During the first half of 2022,
9,466 tonnes of ROM coal has been mined.
We believe there is sufficient demand based on the Company’s order book and recent discussions with potential customers to
sell any coal that is produced at Rukwa. The Company is also exploring the potential of exporting its coal for the first time,
given margins would be expected to be even greater.
Much of 2021 and the first half of 2022 was spent pursuing reverse takeover and other opportunities to add assets to the
Company. During this time the Company focused on reducing cash burn on its Tanzanian project whilst it has explored these
potential new projects. One potential transaction progressed significantly, however was ultimately terminated by mutual
consent. As part of the termination it was agreed that the transaction costs incurred by the Company would be re-imbursed in
full by the potential take-over target..
Further to the Company announcements on 18 and 31 May 2022 that Upendo Group Ltd.'s current 10% economic interest in
the joint venture, which holds the licences governing the Rukwa Project, had been transferred to a 10% direct holding on the
principal production licence. The Company has sought legal advice and has been advised that the variation has been undertaken
illegally and that the holding should be reversed by the Government, This reversal has been sought. The Company will provide
a further update as appropriate..
Summary and Outlook
With Edenville now being in full control of the operations at Rukwa we are able to take advantage of the recent macro changes
that have made the economics of our Rukwa project considerably more attractive. Edenville is determined to maximise cash
returns in the current global coal environment, especially given the attractive pricing forecast over the coming years. To this
end we have already started applying a modest proportion of our existing cash resources towards expanding the Rukwa
operations to meet this heightened sales enquiries.
Additionally, with an improved cash position we continue to target additional asset acquisitions, leveraging the natural
resources and capital markets expertise of the Board, and significant shareholders.
4
EDENVILLE ENERGY PLC
CHIEF EXECUTIVE OFFICER'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
I look forward to the remainder of 2022 and beyond with confidence that there is a positive future for Edenville that can
deliver shareholder value.
Alistair Muir
Chief Executive Officer
29 June 2022
5
EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
The directors present their strategic report for the year ended 31 December 2021.
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 3 to 5.
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 2021 are set out on page 33.
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
6
EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
matters. Exploration activities are also subject to various federal, provincial and local laws and regulations relating to the
protection of the environment. These laws mandate, among other things, the maintenance of air and water quality standards,
and land reclamation. These laws also set forth limitations on the generation, transportation, storage and disposal of solid and
hazardous waste.
Although the Group’s 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:
-
-
-
-
-
the executive director and management visit the 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 supplying coal to various customers in Tanzania and the region as a whole. As any mining operation,
which is producing, 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, 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.
Significant customers
During the year ended 31 December 2021 the group derived 93.5% of its revenue from two key customers. The Directors
believe that in the future they will be able expand their customer based to reduce reliance on these customers. Demand is
expected to increase as a result of the energy crisis caused by the war in Ukraine.
7
EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
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.
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.
8
EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
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.
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 some 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
9
EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
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.
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. In compliance with legislation,
and in line with other mining companies in the Tanzania, the Company has commenced the necessary steps to give the
Tanzanian Government a 16% stake in the business. We are aware that we may in the future receive further 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 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
10
EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
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, and other commodities, 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.
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; and
(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 2020 and will continue to be used by the Board to assess performance over the year to 31
December 2021.
11
EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
Financial KPIs
• Total ROM (Run of Mine) coal production 16,911 tonnes (2020: 13,632 tonnes)
• Sales £105,228(2020: £33,852)
• Total expenditure burn rates have increased by 34% to £1,560,412 from £1,163,906.
• Corporate overheads as a percentage of total expenditure has increased from 31% in 2020 to 36% in 2021, in line with
increase in production
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 3.
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 2021:
• Restructure Tanzanian operations to gain benefit from local expertise in logistics and marketing.
• Ensuring the company supported employees through the major industry down turn created by the Covid pandemic.
• Managing cash burn rates to preserve cash for possible future acquisitions.
• Optimising the production environment to reduce pressures on cash flow.
• Continuing to engage with the Tanzanian Government regarding electricity generating opportunities.
• Restructuring of debt to reduce operational constraints.
• 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.
12
EDENVILLE ENERGY PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
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 June 2022
13
EDENVILLE ENERGY PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
The Directors present their annual report and audited Group financial statements for the year ended 31 December 2021.
Dividends
The Directors do not recommend payment of a dividend for the year (2020 – 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:
Ordinary shares of
£0.01p held at
31 December 2021
Alistair Muir
Jeffrey Malaihollo
Nicholas Von Schirnding
(appointed 10 June 2020)
Franco Caselli (appointed
25 August 2021
100,000
153,125
Nil
Nil
Deferred shares
of 0.001p held at
31 December
2021
Nil
2,909,375
Nil
Nil
153,125**
Nil
Nil
N/a
Ordinary shares of
0.02p held at
31 December 2020
Deferred shares of
0.001p held at 31
December 2020
Nil
Nil
Nil
N/a
** In January 2021 the Company consolidated each existing £0.0002 to ordinary shares of £0.02 each. These were then
subdivided into ordinary shares of £0.01p each and 19,000 new deferred shares of £0.00001 each.
The Directors’ interests in share options as at 31 December 2021 are as follows:
Options at
31 December
2021
Exercise
Price
Date of grant
First date
of exercise
Final date
of exercise
Jeffrey Malaihollo
Jeffrey Malaihollo
3,333,
6,667*
£10.80
£10.80
28.03.17
28.03.17
28.03.17
N/A
27.03.22
27.03.22
*The vesting date of these share options is dependent on performance conditions being met.
The above options expired on 27 March 2022.
Share capital
Details of issues of Ordinary Share capital during the year are set out in note 23.
14
EDENVILLE ENERGY PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
Substantial shareholdings
The Company has been notified of the following voting rights of shareholders of the Company as at 12 June 2022.
Forest Nominees Ltd
ISI Nominees Limited
Pershing Nominees limited
The Bank of New York (Nominees) Limited
Aurora Nominees Ltd
JIM Nominees Limited
Vidacos Nominees Limited
Spreadex Limited
No of Ordinary Shares
% of issued
share capital
4,651,137
2,314,554
2,138,964
1,754,621
1,289,144
1,190,690
1,020,656
878,479
21.49%
10.69%
9.88%
8.11%
5.96%
5.50%
4.72%
4.06%
*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 26 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
The auditors, PKF Littlejohn LLP, 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 June 2022 and signed on its behalf.
Alistair Muir
Chief Executive Officer
15
EDENVILLE ENERGY PLC
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
FOR THE YEAR ENDED 31 DECEMBER 2021
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 UK-adopted international accounting standards.
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 UK-adopted international accounting standards, 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 2021
The remuneration committee comprised of Jeffrey Malaihollo, Nicholas Von Schirnding and Franco Caselli. 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 2021
Directors’ remuneration
Details of remuneration of the directors of the Company who served in the year ended 31 December 2021 are set out below:
Name
Executive
Rufus Short (resigned 10 June 2020)
Alistair Muir
Non-Executive
J Malaihollo
Nicholas Von Schirnding
Franco Caselli
Fees and
other
remuneration
£
Long term
Pension
2021
Total
2020
Total
£
£
£
N/a
97,500
45,000
31,500
10,000
N/a
-
814
-
-
N/a
97,500
45,814
31,500
10,000
15,360
97,500
52,693
14,000
-
184,000
814
184,814
179,553
At 31 December 2021 only one third of the options granted to the directors in March 2017 have vested. These options expired
on 27 March 2022.
Included in the above are accrued salaries of £17,750 (2020: £122,750).
18
EDENVILLE ENERGY PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
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 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 by tapping into
opportunities to leverage of the current high demand for industrial coal in Tanzania and East Africa and from the high price of
export quality coal alongside 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 that, after the the mutual termination of a second coal mining agreement this time with NextGen
Coalmine Ltd, the company has taken control of mining operations and started to use its current capital to invest in the
equipment needed to boost production towards peak wash plant capacity which has been advised is excess of 12,000 tonnes
per month.
Hand in hand with this it will focus on filling the gap for the demand for coal in Tanzania and other East African countries as
well as looking to exploit the very high coal prices for coal internationally. It has already started implementing this strategy
and secured additional excavating and trucking capacity to ramp production up towards 5,000 tonnes per month. The Company
sees a stepwise strategy to lift production in increments of 3,000-5,000 tonnes per month by progressively adding mining
capacity until it reaches maximum plant capacity of about 12,000 tonnes per month.
With the a new President in place since 2020 we are advised that there is possibly a more pragmatic view of electricity tariffing
in country and an open acknowledgement that coal fired generating capacity is needed by 2026. During 2022, the Company is
looking to pursue this option further with in-depth detailed conversations with Tanesco in the Government which hopefully
will result in a revised power plant development program. 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.
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.
19
EDENVILLE ENERGY PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
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.
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-
20
EDENVILLE ENERGY PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
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 three Non-Executive Directors (Jeffrey
Malaihollo, Nicolas Von Schirnding and Franco Caselli). Details of the qualifications, background and responsibility of each
director is provided on page 21 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.
Nicolas Von Schirnding and Franco Caselli are considered by the Board to be independent directors. Given the size of the
Company, the present level of its development and the number of directors currently,
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 55)
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.
21
EDENVILLE ENERGY PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
Alistair Muir – Chief Executive Officer (formerly Non-Executive Director)(Aged 69)
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 1 November 2019
Nicholas (Nick) von Schirnding – Non-Executive Director (Aged 59)
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.
Nick has worked and lived in both developed and emerging markets including the UK, India, SE Asia, Africa and South
America.
Franco Caselli- Non Executive Director (Age 68)
Franco Caselli has a degree in Geology from Florence University, and he is also a geoscientist professionally chartered by the
Swiss Association of Energy Geoscientists and a member of the International Geothermal Association. Mr Caselli has more
than 40 years of experience in the energy sector having previously worked with majors ENI, Fina, BP and Norsk Hydro and
with US and UK independents OXY, Hunt Oil and Heritage, gaining considerable energy business experience in Southern
Europe, Africa, Middle East, Far East and North Sea. Professional roles range from exploration leader to business developer
and general manager.
He has worked across both the hydrocarbon and renewable sectors in geothermal and solar energy and is the director of
geothermal exploration with new high temperature technologies for Geolog Green Energy. He previously worked for Enel
Green Power in deep high enthalpy projects in Italy and Latin America. He founded Terracon Resources S.R.L. which was
involved in energy and mining projects in South Europe and Africa and has also managed integrated energy projects with
international institutions and governments.
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.
22
EDENVILLE ENERGY PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
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.
Board committees
There are two board committees, namely the Audit and Remuneration committees both consisting of Jeffrey Malaihollo,
Nicholas Von Schirnding and Franco Caselli. During the year ended 31 December 2021 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.
23
EDENVILLE ENERGY PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
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 events 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
publication of regulatory announcements, through various media platforms such as Directors Talk, VOX Markets and Proactive
Investors.
24
EDENVILLE ENERGY PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
Going Concern
The financial statements have been prepared on a going concern basis. The Company intends to operate within its cash
resources.
Production through the later half of 2021 struggled to achieve target levels and as a result of this the Company entered into a
Coal Mining Agreement in February 2022 which failed to have impact on production rates despite the current high coal
prices. This agreement was terminated in May 2022.
The high coal prices have resulted in:
-
-
the export of coal from the traditional local coal suppliers in Tanzania, usually to India
created major demand from East Africa who would normally source their coal from South Africa but now find
pricing prohibitive.
As a result of this situation the company is receiving regular enquiries for coal supply from within Tanzania, East Africa and
Internationally, the company has therefore taken back control of the mining operations and is already investing to raise
production levels to leverage off the current demand situation.
Based on the current working capital forecast , 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 or if large export
contracts are entered into, which required additional working capital, 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 or the willingness of the banking sector to finance ongoing operations.
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 2021
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 2021 which comprise the Group Statement of Comprehensive Income, the Group and Company
Statement of Financial Position, the Group and Company Statement of Changes in Equity, the Group and Company Cash Flow
Statements and Notes to the Group and Company Financial Statements, including significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting
standards and as regards the parent company financial statements, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at
31 December 2021 and of the group loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted international accounting
standards;
the parent company financial statements have been properly prepared in accordance with UK-adopted international
accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
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 opinion.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements, under the heading ‘Going concern’ concerning the ability of the group
and parent company to continue as a going concern. The group and parent company’s forecasts and projections indicate that
the group and parent company has sufficient cash reserves to operate within the level of its current facilities. However, if there
are any material variances to the forecasts which it is unable to manage with cashflow management to continue in operation,
the group and parent company 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 and parent company to raise additional funds is dependent upon investor
appetite.
As stated in note 2, these events or conditions, along with the other matters as set forth in note 2, indicate that a material
uncertainty exists that may cast significant doubt on the group and company’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
26
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2021
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group and parent
company’s ability to continue to adopt the going concern basis of accounting included :
a) Reviewing management’s assessment of going concern.
b) Determining if all relevant information has been included in the assessment of going concern including completeness
of forecasted expenditure.
c) Analysing cash flow forecasts and budgets, reviewing the underlying assumptions in relation to expenditure and
checking mathematical accuracy.
d) Considering the cash position at and after the year end.
e) Reviewing the reasonable worst-case forecast scenario and the financial resources available to deal with this outcome
i.e. ability of the group and parent company to raise funds.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
Emphasis of matter - recoverability of value added tax
We draw attention to note 4 of the financial statements, which describes group’s assessment over the VAT receivable balance
of £279,157 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.
Emphasis of matter - recoverability of inventory
We draw your attention to Note 4 of the financial statements, which describes the group’s assessment over the inventory balance
of £142,721 in Tanzania. The group have explained their assessment over the recoverability within the critical accounting
estimates and conclude this to be recoverable. The financial statements do not include the adjustment that would result if the
group was unable to fully recover this.
Our opinion is not modified in this respect.
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 for the financial statements as a whole applied to the group financial statements was
£74,700 (2020: £67,250) based on 1% of gross assets. We based the materiality on gross assets because we consider this to be
the most relevant performance indicator for a mining group. The performance materiality for the group was £44,800 (2020:
£40,350). The materiality for the financial statements as a whole applied to the parent company financial statements was
£12,500 (2020: £37,100) based on 2% of the expenses. The performance materiality for the parent company was £7,500 (2020:
£22,260). For the component in the scope of our group audit, we allocated a materiality that was less than our overall group
materiality. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in
determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and
disclosures, for example in determining sample sizes.
We agreed with those charged with governance that we would report all differences identified during the course of our audit in
excess of £3,735 (2020: £3,363) for the group and £625 (£1,855) for the parent company.
27
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2021
Our approach to the audit
In designing our audit approach, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular we assessed the areas involving significant accounting estimates and judgements by the directors in
respect of the carrying value of the mining assets and carrying values of the parent company’s investments in and loans to
subsidiaries and considered future events that are inherently uncertain. We also addressed the risk of management override of
internal controls, including evaluation whether there was evidence of bias by the directors that represented a risk of material
misstatement due to fraud.
Of the four components of the group, a full scope audit was performed on the complete financial information of the parent and
its Tanzanian subsidiary that owns the asset. The remaining components were subject to analytical review only because they
were not significant to the group.
Of the two reporting components of the group, one is located in Tanzania and audited by a component auditor operating under
our instructions, and the audit of the remaining component was performed in London, conducted by PKF Littlejohn LLP using
a team with specific experience of auditing mining entities and publicly listed entities. The Senior Statutory Auditor interacted
regularly with the component audit team during all stages of the audit and was responsible for the scope and direction of the
audit process. This, in conjunction with additional procedures performed, gave us appropriate evidence for our opinion on the
group and parent company financial statements.
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 Material uncertainty related to going concern section we have determined the matters
described below to be the key audit matters to be communicated in our report.
Key Audit Matters
How our scope addressed these matters
Carrying value mining assets (Note 15)
The entity has capitalised mining assets of
£5,116,268. Management is required to assess
whether there is any indication of impairment
of these assets.
The carrying value and recoverability of these
assets are tested annually for impairment. The
estimated recoverable amount of this balance is
subjective due to the inherent uncertainty
in the assessment of exploration
involved
projects.
Our work in this area included but was not limited
to:
• Carried out testing to ensure existence, and
ownership
and
of mining
consideration has been given to whether a
dilapidation provision is required.
reasonableness
capitalization of the new additions;
• Ensuring
licenses;
the
the
of
• 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 and we
licenses or
28
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2021
Key Audit Matters
How our scope addressed these matters
note that the forecasted revenue and production
is higher than the actual and historical levels
• Performing sensitivity analysis
• Consideration of whether treatment of mining
assets is in accordance with IFRS 6, and has
been correctly classified
• Reviewing management's assessment of the
impairment of mining assets and challenging
their key assumptions and estimates used as a
basis to value the intangible assets.
In forming our opinion, which is not modified, our
work indicated that the value of mining assets are
fairly stated in the financial statements, but that the
future carrying value of these mining assets are
dependent on the ability of the subsidiary to fully
realise the potential of the mine and increase the
mining activities and extraction to pre-pandemic
levels. This should be supported by signing long
term sales contracts with a few customers in the
short to medium term. The financial statements do
not include the adjustments that would result if the
group was unsuccessful in increasing the production
and sales.
We have obtained and critically assessed the
directors’ impairment review of the carrying value
of the parent company’s net investment in the
subsidiaries. Our work included:
• Reviewing the valuation methodology for the
investment held and ensuring that the carrying
values were supported by sufficient and
appropriate audit evidence.
• Reviewing
and
their
challenging
key
assumptions and estimates used as a basis to
support carrying value of
investment by
levels to
comparing the forecasted mining
historic production, agreeing coal prices used in
the valuation
to prices regulated by local
government, reviewing sales plan supported by
signed contracts or under contracts under
negotiation. We note that the forecasted revenue
29
Valuation of the parent company’s investment
in and loans to subsidiaries (Note 14)
The parent company owns a significant
investment
International
(Tanzania) Limited of £17,197,652 which
includes loans to the subsidiary of £10,154,340.
Edenville
in
the assets held
The value of the investment is linked to the
value of
in Edenville
International (Tanzania) Limited. Value in use
calculation
carrying value of
investments are based on judgments and
estimates made by the management which lead
to a risk of misstatement
the
for
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2021
Key Audit Matters
How our scope addressed these matters
and production is higher than the actual and
historical levels.
• Performed sensitivity analysis and stress tests on
the valuation
• Ensuring the parent company has full title to the
investments held;
that
• Ensuring
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.
In forming our opinion, which is not modified, our
work indicated that the value of its investment and
loans are fairly stated in the financial statements, but
that the recoverability is dependent on the ability of
the subsidiary to fully realise the potential of the
mine and
the mining activities and
extraction to pre-pandemic levels. This should be
supported by signing long term sales contracts with
a few customers in the short to medium term. The
financial statements do not include the adjustments
that would result if the subsidiary was unsuccessful
in increasing the production and sales.
increase
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 contained within the annual report. 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. 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 course of 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 this gives rise to a
material misstatement in the financial statements themselves. 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.
We have nothing to report in this regard.
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.
30
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2021
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
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:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
•
the parent company financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Statement of Directors’ Responsibilities, 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 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 and 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 group and parent company 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to
which our procedures are capable of detecting irregularities, including fraud is detailed below:
• We obtained an understanding of the group and parent company and the sector in which they operate to identify laws
and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained an
understanding in this regard through discussions with management and the application of our cumulative audit
knowledge and experience of this sector.
• We determined the principal laws and regulations relevant to the group and parent company in this regard to be those
arising from Companies Act 2006, AIM Rules and mining regulations applicable to the subsidiaries.
• We designed our audit procedures to ensure the audit team considered whether there were any indications of non-
compliance by the group and parent company with those laws and regulations. These procedures included, but were
not limited to enquiries of management, review of minutes and Regulatory News Service (RNS) announcements and
review of legal and regulatory correspondence.
• We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in
addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the
potential for management bias was identified in relation to the impairment assessment of intangible assets and valuation
31
EDENVILLE ENERGY PLC
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
FOR THE YEAR ENDED 31 DECEMBER 2021
of investments. We addressed this by challenging the assumptions and judgements made by management when
evaluating any indicators of impairment.
• As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing
audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for
evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the
normal course of business
• At a significant component level, we engaged with the component auditors to ensure that they had conducted an
extensive review into whether the operating subsidiary was fully compliant with laws and regulations at a local level,
and reviewed their work conducted into the posting of journal entries to ensure there were no instances of fraud
detected at a local level.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we
will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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.
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.
[Signature]
Zahir Khaki (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor
London E14 4HD
15 Westferry Circus
29 June 2022
32
EDENVILLE ENERGY PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 DECEMBER 2021
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
Attributable to:
Equity holders of the Company
Non-controlling interest
Other comprehensive loss
Item that will or may be reclassified to the profit and loss:
Gain/(loss) 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
2021
£
105,228
(684,848)
2020
£
33,852
(583,876)
6
27
10
11
12
(579,620)
(550,024)
(875,564)
(529,632)
-
(50,398)
(1,455,184)
(1,130,054)
701
(5,842)
112
(111,503)
(1,460,325)
(1,241,445)
(526)
-
(1,460,851)
(1,241,445)
(1,458,586)
(2,265)
(1,239,553)
(1,892)
87,013
(203,935)
(1,373,838)
(1,445,380)
(1,371,573)
(2,265)
(1,443,488)
(1,892)
13
(8.04p)
(16.66p)
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.
33
EDENVILLE ENERGY PLC
GROUP AND COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
Company Registered Number 05292528
Note
Non-current assets
Investment in subsidiaries
Property, plant and equipment
Intangible assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Borrowings
14
15
16
17
18
19
20
21
Group
31 December
2021
£
31 December
2020
£
31 December
2021
£
Company
31 December
2020
£
-
5,451,921
315,002
-
5,644,577
311,032
17,197,652
1,000
-
16,561,617
1,334
-
5,766,923
5,955,609
17,198,652
16,562,951
142,721
415,479
1,229,801
251,736
301,251
25,690
-
225,635
1,226,235
1,788,001
578,677
1,451,870
-
8,499
25,628
34,127
(389,264)
(18,258)
(685,809)
(440,831)
(103,362)
-
(213,559)
(416,142)
407,522
(1,126,640)
(103,362)
(629,701)
Current assets less current liabilities
1,380,479
(547,963)
1,348,508
(595,574)
Total assets less current liabilities
7,147,402
5,407,646
18,547,160
15,967,377
Non-current liabilities
Borrowings
Environmental rehabilitation liability
Equity
Called-up share capital
Share premium account
Share option reserve
Foreign currency translation reserve
Retained earnings
21
22
23
-
(24,632)
(39,873)
(21,912)
-
-
(16,084)
7,122,770
5,345,861
18,547,160
15,951,293
4,176,601
22,254,317
453,614
581,143
(20,325,577)
4,041,601
19,390,849
301,174
494,130
(18,866,991)
4,176,601
22,254,317
453,614
-
(8,337,372)
4,041,601
19,390,849
301,174
-
(7,782,331)
Attributable to the equity shareholders of the
Company
Non- controlling interests
(17,328)
5,360,763
(14,902)
18,547,160
-
15,951,293
-
Total equity
7,122,770
5,345,861
18,547,160
15,951,293
The financial statements were approved by the board of directors and authorised for issue on 29 June 2022 and signed on its
behalf by:
Alistair Muir, Director
34
EDENVILLE ENERGY PLC
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2021
GROUP
--------------------------------------------------Equity Interests---------------------------------------
Share
Capital
Share
Premium
Retained
Earnings
Account
Share Option
Reserve
£
3,414,935
£
18,811,157
£
(17,718,347)
£
281,502
Foreign
Currency
Translation
Reserve
£
698,065
Total
Non-
controlling
interest
Total
£
5,487,312
£
(13,517)
£
5,473,795
-
-
-
-
-
-
-
(1,239,553)
(1,239,553)
-
-
-
(203,935)
-
(203,935)
(203,935)
(1,239,553)
(1,443,488)
-
(1,892)
(1,892)
(203,935)
(1,241,445)
(1,445,380)
626,666
-
-
-
626,666
648,334
(68,642)
-
-
579,692
-
-
-
90,909
90,909
-
-
110,581
(90,909)
19,672
-
-
-
-
-
-
-
-
-
-
1,275,000
(68,642)
110,581
-
1,316,939
-
-
-
-
-
1,275,000
(68,642)
110,581
-
1,316,939
-
507
507
At 1 January 2020
Comprehensive Income for
the year
Foreign currency translation
Loss for the year
Total comprehensive
income for the year
Transactions with owners
Issue of share capital
Share issue costs
Share options/warrants
charge
Cancellation of share options
Total transactions with
owners
Non- controlling interest
share of goodwill
At 31 December 2020
4,041,601
19,390,849
(18,866,991)
301,174
494,130
5,360,763
(14,902)
5,345,861
35
EDENVILLE ENERGY PLC
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2021
--------------------------------------------------Equity Interests---------------------------------------
Share
Capital
Share
Premium
Retained
Earnings
Account
Share Option
Reserve
£
4,041,601
£
19,390,849
£
(18,866,991)
£
301,174
Foreign
Currency
Translation
Reserve
£
494,130
Total
Non-
controlling
interest
Total
£
5,360,763
£
(14,902)
£
5,345,861
-
-
-
-
-
-
-
(1,458,586)
(1,458,586)
-
-
-
87,013
-
87,013
87,013
(1,458,586)
(1,371,573)
-
(2,265)
(2,265)
87,013
(1,460,851)
(1,373,838)
135,000
-
-
3,240,000
(224,092)
(152,440)
135,000
2,863,468
-
-
-
-
-
-
-
-
152,440
152,440
-
-
-
-
-
3,375,000
(224,092)
-
3,150,908
-
-
-
3,375,000
(224,092)
3,150,908
-
(161)
(161)
At 1 January 2021
Comprehensive Income for
the year
Foreign currency translation
Loss for the year
Total comprehensive
income for the year
Transactions with owners
Issue of share capital
Share issue costs
Share options/warrants
charge
Total transactions with
owners
Non- controlling interest
share of goodwill
At 31 December 2021
4,176,601
22,254,317
(20,325,577)
453,614
581,143
7,140,098
(17,328)
7,122,770
36
EDENVILLE ENERGY PLC
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2021
COMPANY
At 1 January 2020
Comprehensive Income for the year
Total comprehensive loss for the year
Total comprehensive income for the year
Transactions with owners
Issue of share capitals
Share issue costs
Share option/warrants charge
Cancellation of share options
Total transactions with owners
Share
Capital
£
3,414,935
Share
Premium
£
18,811,157
Retained
Earnings
Account
£
(7,358,134)
Share
Option
Reserve
£
281,502
-
-
-
-
(515,106)
(515,106)
626,666
648,334
-
-
-
626,666
(68,642)
-
-
579,692
-
-
-
90,909
90,909
-
-
-
-
110,581
(90,909)
19,672
Total
£
15,149,460
(515,106)
(515,106)
1,275,000
(68,642)
110,581
-
1,316,939
At 31 December 2020
4,041,601
19,390,849
(7,782,331)
301,174
15,951,293
Comprehensive Income for the year
Total comprehensive loss for the year
Total comprehensive income for the year
-
-
-
-
(555,041)
(555,041)
-
-
(555,041)
(555,041)
Transactions with owners
Issue of share capital
Share issue costs
Share option/warrants charge
Total transactions with owners
At 31 December 2021
135,000
-
-
135,000
3,240,000
(224,092)
(152,440)
2,863,468
-
-
-
-
-
-
152,440
152,440
3,375,000
(224,092)
-
3,150,908
4,176,601
22,254,317
(8,337,372)
453,614
18,547,160
37
EDENVILLE ENERGY PLC
GROUP AND COMPANY CASH FLOW STATEMENTS
YEAR ENDED 31 DECEMBER 2020
Operating activities
Operating loss
Adjustments to reconcile profit before tax to
net cash flows:
Depreciation
Interest paid
Expected credit losses
Share based payments
Foreign exchange difference
Working capital changes:
Decrease/(Increase) in inventories
Impairment of inventories
(Decrease)/increase
in
trade and other
Group
Company
Year ended
31 December
2021
Year ended
31 December
2020
Year ended
31 December
2021
Year ended
31 December
2020
£
£
£
£
(1,455,184)
(1,130,054)
(557,208)
(515,218)
264,677
-
-
-
2,687
17,799
92,150
(116,768)
277,921
(351)
-
50,398
(34,531)
(4,198)
-
54,984
334
-
-
-
-
-
-
(217,136)
445
100,090
-
50,398
(10,482)
-
39,912
receivables
Decrease in trade and other payables
(286,968)
(116,836)
(110,197)
(189,149)
Net cash outflow from operating activities
(1,481,607)
(902,657)
(884,207)
(524,004)
Cash flows from investing activities
Capital introduced to subsidiaries
Purchase of property, plant and equipment
Finance income
Net cash used in/(from) investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of convertible loan notes
Repayment of lease liabilities
Lease interest
Proceeds from issue of ordinary shares
Share issue costs
-
-
701
701
-
-
112
112
(636,035)
-
2,167
(400,904)
-
112
(633,868)
(400,792)
-
(120,000)
(312,226)
(30,214)
(3,451)
3,375,000
(224,092)
180,000
-
(160,421)
(17,404)
(5,059)
950,000
(60,000)
-
(120,0000
(312,226)
-
-
3,375,000
(224,092)
180,000
-
(160,421)
-
-
950,000
(60,000)
Net cash inflow from financing activities
2,685,017
887,116
2,718,682
909,579
Net decrease in cash and cash equivalents
1,204,111
(15,429)
1,200,607
(15,217)
Cash and cash equivalents at beginning of
year
Effect of foreign exchange rate changes on
cash and cash equivalents
25,690
41,110
25,628
40,845
-
9
-
-
Cash and cash equivalents at end of year
19
1,229,801
25,690
1,226,235
25,628
38
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
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 and Company’s financial statements have been prepared in accordance with UK-adopted international accounting
standards, 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 UK-adopted international accounting standards requires the use of
certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the
Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the Group’s financial statements are disclosed in Note 4..
The Company 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 £555,041 (2020: £515,106)
Going concern
At 31 December 2021 the Group had cash balances totalling £1,229,801.
Production through the later half of 2021 struggled to achieve target levels and as a result of this the company entered into a
Coal Mining Agreement which failed to have impact on production rates despite the current high coal prices. This agreement
was terminated in May 2022.
The high coal prices have resulted in:
-
-
the export of coal from the traditional local coal suppliers in Tanzania, usually to India and
created major demand from East Africa who would normally source their coal from South Africa but now find
pricing prohibitive.
As a result of this situation the company is receiving regular enquiries for coal supply from within Tanzania, East Africa and
internationally, the company has therefore taken back control of the mining operations and is already investing to raise
production levels to leverage off the current demand situation.
Based on the current working capital forecast which includes previous placings, 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 or if large export contracts are entered into 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 or the willingness of the banking sector to finance ongoing operations.
39
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
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.
Adoption of new and revised standards and changes in accounting policies
There were no new standards or interpretations impacting the Group that will be adopted in the annual financial statements for
the year ended 31 December 2021, and which have given rise to changes in the Group’s accounting policies.
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:
Standard Detail
IFRS 1
Amendments resulting from Annual improvements to IFRS Standards 2018-2020
(subsidiary as a first time adopter)
IFRS 3
Amendments updating a reference to the Conceptual Framework
IFRS 9
Amendments resulting form Annual improvements to IFRS Standards 2018-2020
(fees in ‘ 10 per cent’ test for de-recognition of financial liabilities)
IFRS 17 Original issue
IAS 1
IAS 8
IAS 12
IAS 16
IAS 37
Amendments regarding the classification of liabilities.
Amendments regarding the disclosure of accounting policies
Amendments regarding the definition of accounting estimates
Amendments regarding deferred tax on leases and decommissioning obligations
Amendments prohibiting a company from deducting from 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 cost to include when assessing whether a contract is
onerous
Effective for annual
periods commencing
on or after
1 January 2022
1 January 2022
1 January 2022
1 January 2023
1 January 2023
1 January 2023
1 January 2023
1 January 2022
1 January 2022
40
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
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 (Share options and Warrants)
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 (share 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 Group also , from time to time , issues warrants, primarily to advisors of the company in connection with placing of
shares and/or other services. There fair value of these warrants is either recognised as an expense or as a share issue costs
offset against share premium, depending on the nature of services.
The total amount to be expensed or offset against share premium in respect of share issue costs 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 2021 (Note 11). 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.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses
control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are
included in the statement of profit or loss and other comprehensive income from the date the Group gains control until the date
the Group ceases to control the subsidiary. Where the Group’s interest is less than 100 per cent, the interest attributable to
outside shareholders is reflected in non-controlling interests (NCIs).
41
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
2.
Group Accounting Policies (continued)
Business combinations
The Group adopts the acquisition method in accounting for the acquisition of subsidiaries. On acquisition the cost is measured
at the fair value of the assets given, plus equity instruments issued and liabilities incurred or assumed at the date of exchange.
The assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair value
at the date of acquisition. Any excess of the fair value of the consideration over the fair value of the identifiable net assets
acquired is recorded as goodwill.
Any deficiency of the fair value of the consideration below the fair value of identifiable net assets acquired is credited to the
income statement in the period of the acquisition.
The results of subsidiary undertakings acquired or disposed of during the year are included in the group statement of
comprehensive income statement from the effective date of acquisition or up to the effective date of disposal.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into
line with those used by the group. Inter-company transactions and balances between group companies are eliminated.
Revenue recognition
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 Company’s functional currency.
The functional currency of the Groups subsidiaries is US Dollars. The financial statements are presented in pounds sterling.
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.
42
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
2.
Group Accounting Policies (continued)
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.
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.
43
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
2.
Group Accounting Policies (continued)
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.
- 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
44
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
2.
Group Accounting Policies (continued)
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.
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.
45
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
2.
Group Accounting Policies (continued)
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. The convertible loan note (“CLN”) is a compound financial instrument that cannot be
converted to share capital at the option of the holder. As the CLN, and the accrued interest, can only be repaid as a loan, it has
been recognised within liabilities. Interest is accounted for on an accruals basis and charged to the Consolidated Income
Statement and added to the carrying amount of the liability component of the CLN.
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.
46
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
2.
Group Accounting Policies (continued)
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.
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.
47
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
2.
Group Accounting Policies (continued)
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
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.
Intangible assets
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. The
licences are amortised over the life of the production asset using rates of depletion.
48
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
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.
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
• Recoverability of Inventory
Impairment – coal production assets and intangible assets (notes 15 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
49
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
4.
Critical accounting estimates and areas of judgement (continued)
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.
The calculation of value in use is most sensitive to the following assumptions:
• Production volumes
• Sales volumes
• Discount rates
• Coal prices
• Operating overheads
•
Inventory
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 believe this rate to be appropriate as
this is in line with the borrowing rates the Group are expected to receive if they were to obtain significant long term finance
based on discussions between the Directors and prospective parties. The Directors acknowledge that the Group does have
small short term finance arrangements which attract a higher rate but have chosen not to use these rates as they would not be
financing the production asset using short term borrowing facilities. These short term loans were needed mostly for working
capital needs and most have been paid off in 2021.
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 27)
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 15)
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.
50
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
4.
Critical accounting estimates and areas of judgement (continued)
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 recovered by an offset against VAT payable on future sales.. The directors believe that the debtor is recoverable based on
their knowledge of the market in Tanzania.
Recoverability of Inventory (Note 17)
The group considers the recoverability of the inventory to be a key area of judgement, and this is held at its realisable value.
The directors believe the inventory to be in good condition and the main reason why the stock has remained high in the last
two years is mainly because of the Covid-19 impact which necessitated the closure of the mine. The mine has now fully
reopened in May 2021 and the directors are taking making concerted efforts to sell this excess stock. They have recently
identified key customers and have sold 1,000 tonnes in June 2021 with an expected commitment to purchase at a rate of 1,200
tonnes per month thereafter. They are optimistic that the remainder of the stock will be sold over the next 1-3 years on the
presumption that one of the key customers will sign a long term contract. As a result of this, they have concluded no impairment
is required at this stage, based on the directors’ judgement of the local market and estimates regarding the timeframe in which
the goods can be sold.
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.
2021
Consolidated Income Statement
Revenue - Tanzania
Cost of sales (excluding depreciation and
amortisation)
Depreciation
Depletion of development assets
Gross profit
Administrative expenses
Depreciation
Group operating loss
Finance income
Finance cost
Loss on operations before taxation
Income tax
Loss for the year
Coal Production
Assets
Coal
£
105,228
(470,780)
(207,604)
(6,464)
(579,620)
(183,321)
(45,035)
(807,976)
(5,842)
Other
£
-
-
-
-
-
(646,874)
(334)
(647,208)
701
Total
£
105,228
(470,780)
(207,604)
(6,464)
(579,620)
(830,195)
(45,369)
(1,455,184)
701
(5,842)
(813,818)
(526)
(646,507)
-
(1,460,325)
(526)
(814,344)
(646,507)
(1,460,851)
51
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
5.
Segmental information (continued)
2020
Consolidated Income Statement
Revenue - Tanzania
Revenue - other
Cost of sales (excluding depreciation and
amortisation)
Depreciation
Depletion of development assets
Gross profit
Administrative expenses
Share based payment
Depreciation
Group operating loss
Finance income
Finance cost
Coal Production
Assets
Coal
£
33,030
822
(349,121)
(209,208)
(25,547)
(550,024)
(122,780)
-
(42,722)
(715,526)
-
(10,812)
Other
£
-
-
-
-
-
-
(363,685)
(50,398)
(445)
(414,528)
112
(100,691)
Loss on operations before taxation
Income tax
(726,338)
-
(515,107)
-
Total
£
33,030
822
(349,121)
(209,208)
(25,547)
(550,024)
(486,465)
(50,398)
(43,167)
(1,130,054)
112
(111,503)
(1,241,445)
Loss for the year
(726,338)
(515,107)
(1,241,445)
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
2021
£
6,199,083
1,361,402
2020
£
6,498,828
35,458
7,560,485
6,534,286
£
6,199,083
1,361,402
£
6,498,828
35,458
7,560,485
6,534,286
2021
£
2020
£
17,788
-
2021
£
335,132
97,022
2020
£
548,980
639,445
-
£
-
-
-
17,788
432,154
1,188,425
£
17,788
-
£
335,132
97,022
£
548,980
639,445
17,788
432,154
1,188,425
52
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
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 2021 or 2020.
Customer 1
Customer 2
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
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
2021
£
28,507
69,886
98,393
2021
£
256,776
35,000
109,840
77,405
317,131
10,534
(1,358)
45,369
-
24,867
2020
£
31,386
-
31,386
2020
£
235,557
38,019
70,257
3,220
113,110
7,906
(10,482)
43,167
1,929
26,949
875,564
529,632
2021
£
2020
£
47,000
40,000
53
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
8.
Employees
Wages and salaries
Social security costs
Pensions
Group
2021
£
405,452
40,484
13,354
2020
£
325,009
20,781
10,071
2021
£
174,000
13,807
814
Company
2020
£
179,250
-
303
459,290
355,861
188,621
179,553
The average number of employees and directors during the year was as follows:
Administration
Mining , plant processing and security
Group
2021
8
13
21
2020
11
29
40
2021
3
-
3
Company
2020
3
-
3
Remuneration of key management personnel
The remuneration of the directors and other key management personnel is set out below:
Emoluments
Compensation for loss of office
Pensions
2021
£
272,130
-
814
2020
£
197,988
28,000
303
272,944
226,291
54
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
9.
Directors’ remuneration
Emoluments
Compensation for loss of office
Pensions
Group
2021
£
184,000
-
814
2020
£
151,250
28,000
303
2021
£
184,000
-
814
Company
2020
£
151,250
28,000
303
184,814
179,553
184,814
179,553
The highest paid director received remuneration of £97,500 (2020: £97,500).
Included in the above are accrued Director’s remuneration of £17,750 (2020: £122,750)
Directors’ interest in outstanding share options per director is disclosed in the directors’ report on page 14.
10.
Finance income
Interest income on short-term bank deposits
11.
Finance Costs
Interest on convertible loan notes
Convertible loan finance costs
Bank interest
Hire purchase interest
Interest on rehabilitation provision
2021
£
701
701
2021
£
-
-
-
3,450
2,392
5,842
2020
£
112
112
2020
£
87,977
12,652
61
6,423
4,390
111,503
55
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
12.
Income tax
Current tax:
Current tax on loss for the year
Foreign taxation
Total current tax
Deferred tax
On write off/impairment on intangible assets
Tax charge for the year
2021
£
-
542
542
-
542
2020
£
-
-
-
-
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 £7,840,335 (2020: £7,313,803).
A deferred tax asset of £1,959,833 (2020: £1,389,369) calculated at 25% (2020: 19%) has not been recognised in respect of the
tax losses carried forward due to the uncertainty that profits will arise against which the losses can be offset.
The tax assessed for the year differs from the standard rate of corporation tax in the UK as follows:
2021
£
2020
£
Loss on ordinary activities before tax
(1,460,325)
(1,241,445)
Expected tax credit at standard rate of UK Corporation Tax
19% (2020: 19%) and 30% (2020:30%) In Tanzania
Disallowable expenditure
Depreciation in excess of capital allowances
Other adjustments
Capital allowances in excess of depreciation
Movement in deferred tax not recognised
Tax charge for the year
(377,043)
4,501
79,367
(106,947)
-
400,648
526
(235,875)
21,116
(310,464)
525,223
-
On 24 May 2021, the UK Government enacted that from 1 April 2023 the corporation tax rate would increase to 25% for
companies with profits of over £250,000. A small profits rate will also be introduced for companies with profits of £50,000 or
less so that they will continue to pay corporation tax at 19%. From this date companies with profits between £50,000 and
£250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation
tax rate.
56
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
13.
Earnings per share
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.
2021
£
2020
£
Net loss for the year attributable to ordinary shareholders
(1,460,851)
(1,241,445)
Weighted average number of shares in issue
18,144,205
7,452,470
Basic and diluted loss per share
(8.04p)
(16.66p)
The earnings per share as at 31 December 2020 has been restated to reflect the consolidation of shares that took place in January
2021 (see note 23).
57
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
14.
Investment in subsidiaries
Company
Cost
At 1 January 2020
Additions
Disposal
At 31 December 2020
Accumulated impairment
As at 1 January 2020
Impairment
At 31 December 2020
Net Book Value
As at 31 December 2020
Company
Cost
At 1 January 2021
Additions
At 31 December 2021
Accumulated impairment
As at 1 January 2021
Impairment
At 31 December 2021
Net Book Value
As at 31 December 2021
Shares in
subsidiaries
£
Loans to
subsidiaries
£
Total
£
7,043,312
-
9,117,401
400,904
16,160,713
400,904
_________
7,043,312
_________
9,518,305
_________
16,561,617
-
-
_________
-
-
-
_________
-
-
-
_________
-
7,043,312
9,518,305
16,561,617
Shares in
subsidiaries
£
Loans to
subsidiaries
£
Total
£
7,043,312
-
_________
7,043,312
9,518,305
636,035
_________
10,154,340
16,561,617
636,035
_________
17,197,652
-
-
_________
-
-
-
_________
-
-
-
_________
-
7,043,312
10,154,340
17,197,652
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.
58
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
14.
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 16% reduction in the margin per ton of coal would result in an impairment of the Edenville International (Tanzania)
Limited investment by £187k.
An increase in the discount factor to 11.1% would result in an impairment of the Edenville International (Tanzania)
Limited investment by £125k.
A decrease of 16% of the EBITA would result in an impairment of the Edenville International (Tanzania) Limited
investment by £187k.
The mining licence is due to expire in 2026. Should the mining licence not be renewed this would result in an
impairment of £14.1m.
59
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
14.
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.
15.
Property, plant and equipment
Group
Coal Production
assets
Plant and
machinery
Fixtures,
fittings and
equipment Motor vehicles
Cost
As at 1 January 2020
Additions
Foreign exchange
adjustment
£
£
5,317,637
17,788
1,225,972
-
(171,033)
(39,191)
£
7,253
-
(100)
Total
£
£
197,196
-
6,748,058
17,788
(5,806)
(216,130)
As at 31 December 2020
5,164,392
1,186,781
7,153
191,390
6,549,716
Depreciation
As at 1 January 2020
Depletion/Charge for the
year
Foreign exchange
adjustment
83,342
25,547
(2,674)
482,401
6,990
89,925
662,658
224,719
(28,648)
65
(97)
27,590
277,921
(4,021)
(35,440)
As at 31 December 2020
106,215
678,472
6,958
113,494
905,139
Net book value
As at 31 December 2020
5,058,177
508,309
195
77,896
5,644,577
60
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
15.
Property, plant and equipment (continued)
Coal
Production
assets
£
Fixtures,
fittings
and
equipment
£
Plant and
machinery
£
Motor
vehicles
£
Total
£
5,164,392
1,186,781
7,153
191,390
6,549,716
65,902
15,050
38
2,230
83,220
Cost
As at 1 January 2021
Foreign exchange
adjustment
As at 31 December 2021
5,230,294
1,201,831
7,191
193,620
6,632,936
Depreciation
As at 1 January 2021
Depletion/ Charge for the
year
Foreign exchange
adjustment
106,215
678,472
6,958
113,494
905,139
6,464
1,347
238,444
8,568
49
38
19,720
264,677
1,246
11,199
As at 31 December 2021
114,026
925,484
7,045
134,460
1,181,015
Net book value
As at 31 December 2021
5,116,268
276,347
146
59,160
5,451,921
Plant and machinery depreciation amounting to £207,604 (2020: £209,208) is included within cost of sales as it relates to
mining equipment.
61
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
15.
Property, plant and equipment (continued)
Company
Cost
As at 1 January 2020 and 31 December 2020
Plant and
machinery
£
Fixtures,
fittings and
equipment
£
Motor
Vehicles
£
Total
£
7,471
4,153
16,691
28,315
Depreciation
As at 1 January 2020
Charge for the year
As at 31 December 2020
Net book value
As at 31 December 2020
7,003
117
7,120
3,894
64
3,958
15,640
263
15,903
26,537
444
26,981
351
195
788
1,334
Cost
As at 1 January 2021 and 31 December 2021
Plant and
machinery
£
Fixtures,
fittings and
equipment
£
Motor
Vehicles
£
Total
£
7,471
4,153
16,691
28,315
Depreciation
As at 1 January 2021
Charge for the year
As at 31 December 2021
Net book value
As at 31 December 2021
7,120
88
7,208
3,958
49
4,007
15,903
197
16,100
26,981
334
27,315
263
146
591
1,000
62
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
16.
Intangible assets
Group
Cost or valuation
As at 1 January 2020
Foreign exchange adjustment
At 31 December 2020
Accumulated depletion, amortisation and
impairment
As at 1 January 2020
Amortisation
Foreign exchange adjustment
At 31 December 2020
Net book value
As at 31 December 2020
Cost or valuation
As at 1 January 2021
Foreign exchange adjustment
At 31 December 2021
Accumulated depletion, amortisation and
impairment
As at 1 January 2021
Foreign exchange adjustment
At 31 December 2021
Net book value
As at 31 December 2021
Mining Licences
£
1,519,712
(48,879)
1,470,833
1,198,344
(38,543)
1,159,801
311,032
Mining
Licences
£
1,470,833
18,771
1,489,604
1,159,801
14,801
1,174,602
315,002
63
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
16.
Intangible assets (continued)
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.(see note 4 for Critical accounting
estimates and judgements).
17.
Inventories
ROM stockpiles
Fines
Washed coal
Group
2021
£
453
134,756
7,512
2020
£
10,752
223,480
17,504
142,721
251,736
The cost of inventories recognised as an expense during the year in was £158,296 (2020: £78,448 restated).
.
18.
Trade and other receivables
Other receivables
Amounts due from related parties
VAT receivable
Prepayments
Group
2021
£
128,281
-
287,198
-
2020
£
-
301,251
-
Company
2021
£
126,127
91,467
8,041
-
415,479
301,251
225,635
2020
£
-
8,499
-
8,499
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.
64
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
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
1,229,801
25,690
1,226,235
25,628
Group
2021
£
2020
£
Company
2021
£
2020
£
20.
Trade and other payables
Trade and other payables
Amounts owed to subsidiary undertakings
Social security costs and other taxes
Other creditors
Accruals and deferred income
Group
2021
£
308,043
-
-
-
81,221
2020
£
227,288
10,279
-
448,242
Company
2021
£
15,801
6,340
-
-
81,221
2020
£
41,505
6,340
10,279
33,437
121,998
389,264
685,809
103,362
213,559
65
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
21.
Borrowings
Convertible loan notes
Repayable within 1 year
Repayable within 2 to 5 years
Hire purchase finance
Repayable within 1 year
Repayable within 2 to 5 years
Total
Repayable within 1 year
Repayable within 2 to 5 years
Convertible loan
Group
2021
£
-
-
-
2020
£
(restated)
416,142
16,084
432,226
18,258
-
24,689
23,789
18,258
48,478
18,258
-
440,831
39,873
18,258
480,704
Company
2021
2020
£
-
-
-
-
-
-
-
-
-
£
416,142
16,084
432,226
-
-
-
416,142
16,084
432,226
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
or
of
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
66
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
21.
Borrowings (continued)
On 15 January 2021 the Company also agreed repayment terms with Lind Partners LLC whereby it agreed to repay 20% of the
outstanding debt by 31 January 2021 with the balance to be paid in monthly instalments from the end of April 2021. Lind
Partners LLC also agreed that no further interest is to be charged on the outstanding balance.
As announced on 22 June 2021, following two fund raises in January and May 2021, Edenville was able to pay off all
outstanding obligations to Lind.
22.
Environmental rehabilitation liability
Group
At 1 January 2020
Additions
Interest
Foreign exchange movement
2021
£
21,912
-
2,392
318
24,623
2020
£
-
17,784
4,389
(261)
21,912
The group 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. Those 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 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 inherently
uncertain.
67
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
23.
Share capital
Group and Company
Issued and fully paid
At 1 January 2020
On 9 January 2020 Ordinary shares
were issued at 0.05p
On 21 January 2020 Ordinary
shares were issue at 0.04p
On 8 June 2020 Ordinary shares
were issued at 0.04p
On 14 August 2020 Ordinary shares
were issued at 0.06p
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
5,012,241,761
50,000,000
1,002,450
10,000
241,248,512,346
-
2,412,485
-
3,414,935
10,000
1,750,000,000
350,000
1,250,000,000
250,000
83,333,333
16,666
-
-
-
-
-
-
350,000
250,000
16,666
As at 31 December 2020
8,145,575,094
1,629,116
241,248,512,346
2,412,485
4,041,601
No
Ordinary
shares of
1p each
No
Ordinary shares
of 0.02p each
No
Deferred shares
of 0.001p each
£
Ordinary
shares of
0.02p/1p
each
£
Deferred
shares of
0.001p
each
£
Total
share
capital
-
8,145,575,094
1,629,116
241,248,512,346
2,412,485
4,041,601
8,145,575
(8,145,575,094)
(1,547,659)
154,765,925,000
1,547,659
-
Issued and fully paid
At 1 January 2021
On 5 January the company
and
consolidated
then
subdivided
the brought
forward shares*
the
21
On
company issued 3,600,000
1p shares at 0.25p
On 26 May the company
issued 9,900,000 1p shares
at 0.25p
January
3,600,000
9,900,000
As at 31 December 2021
21,645,575
-
-
-
36,000
99,000
-
-
-
-
36,000
99,000
216,457
396,014,437,346
3,960,144
4,176,601
*On 5 January 2021 the Company reduced the number of issued ordinary shares of £0.0002 each in the Company by a multiple
of 1,000 (the "Consolidation"), Following the Consolidation the Company sub-divided each consolidated ordinary share of
£0.20 each in the capital of the Company, into 1 ordinary share of £0.01 each in the capital of the Company and 19,000 new
deferred shares of £0.00001 each in the capital of the Company.
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
68
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
24.
Capital and reserves attributable to shareholders
Share capital
Share premium
Other reserves
Retained deficit
Total equity
Group
2021
£
2020
£
Company
2021
£
2020
£
4,176,601
22,254,317
1,034,757
(20,325,577)
4,041,601
19,390,849
795,304
(18,866,991)
4,176,601
22,254,317
453,614
(8,337,372)
4,041,601
19,390,849
301,174
(7,782,331)
7,140,098
5,360,763
18,547,160
15,951,293
There have been no significant changes to the Group’s capital management objectives or what is considered to be capital during
the year.
25.
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.
69
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
26.
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
Receivables at amortised cost including cash and cash
equivalents:
Investments and loans to subsidiaries
Cash and cash equivalents
Trade and other receivables
Total
Group
2021
£
2020
£
Company
2021
£
2020
£
-
1,229,801
415,479
1,645,280
-
25,690
301,251
326,941
10,154,340
1,226,235
225,635
11,606,210
9,518,305
25,628
8,498
9,552,431
Financial liabilities
Financial liabilities at amortised cost:
Trade and other payables
Convertible loan notes
389,264
-
389,264
675,330
432,226
1,107,566
103,362
-
103,362
203,280
432,226
635,506
Net
1,256,016
(780,625)
18,546,160
15,960,237
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.
In 2020 , the Group was 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 per month is 20.78%. If repayments are made in cash then the monthly repayments increase by 3%. These convertible loan
notes were repaid during the year.
70
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
26.
Financial instruments (continued)
Credit risk
Credit risk arises principally from the Group’s trade receivables and investments in cash deposits. It is the risk that the
counterparty fails to discharge its obligation in respect of the instrument.
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 2020 is the carrying value of financial assets
recorded in the financial statements.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due.
Liquidity risk is managed through an assessment of short, medium and long-term cash flow forecasts to ensure the adequacy
of working capital.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due.
To achieve this aim, it seeks to maintain cash balances to meet expected requirements for a period of one year.
Currency Risk
The Group is exposed to currency risk as the assets (see note 5) 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 £650,958.
71
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
26.
Financial instruments (continued)
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.
Group
2020
Trade payables
Other payables
Accruals
Borrowings
2021
Trade payables
Accruals
Borrowings
Less than 1
year
227,288
10,279
448,242
440,831
1,126,640
Less than 1
year
308,043
81,221
18,258
407,522
1- 2 years
2-5 years
-
-
-
39,873
39,873
-
-
-
-
-
1- 2 years
2-5 years
-
-
-
-
-
-
-
-
72
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
26.
Financial instruments (continued)
Company
2020
Convertible loan notes (current and non –
current)
Trade payables
Other payables
Accruals
2021
Convertible loan notes (current and non –
current)
Trade payables
Other payables
Accruals
Less than 1
year
416,142
41,505
39,777
121,998
619,422
Less than 1
year
-
15,801
6,340
81,221
103,362
1-2 years
2-5 years
16,084
-
-
-
16,084
-
-
-
-
-
1-2 years
2-5 years
-
-
-
-
-
-
-
-
-
-
27.
Equity-settled share-based payments
The following options over ordinary shares have been granted by the Company:
Grant Date
Expiry date
28 March 2017
7 November
2018
9 May 2019
3 April 2020
27 March
2022**
6 November
2022
8 May 2023
2 April 2025
Number of options
Lapsed
Granted
1
Exercise
price*
at
As
January
2021
£10.80
23,333
£2.90
99,569
£2.60
£3.00
100,000
270,000
492,902
-
-
-
-
-
-
As at 31
December
2021
23,333
99,569
100,000
270,000
492,902
-
-
-
-
The following warrants over ordinary shares have been granted by the Company:
*The brought forward outstanding share options have been divided a factor of 1,000 and the related exercise price
has been multiplied by 1,000 to account for the share consolidation that took place on 5 January 2021 (see note 23)
** These options were not exercised and have expired post year end.
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:
73
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
28.
Equity-settled share-based payments (continued)
Date of grant
28 March 2017
Expected volatility
Expected life
Risk-free interest rate
Expected dividend yield
Possibility
employment before vesting
Fair value per option
of
ceasing
5 November
2018
70%
4 years
0.96%
-
-
26 April
2019
101%
3.5 years
0.75%
-
-
17 April
2020
72%
3 years
0.11%
-
-
131%
3 years
0.37%
-
-
0.56p/0.42p/0.28p
0.08p
0.02p
0.02p
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 2020 was £Nil (2020:
£50,398).
On 6 June 2020 85,900,800 warrants were issued to settle liabilities of £51,540.
The following warrants over ordinary shares have been granted by the Company:
Grant Date
Expiry date
2 May 2019
23 January 2020
6 June 2020
6 June 2020
14 January 2021
26 May 2021
26 May 2021
26 May 2021
31 May 2022**
22
January 2022**
5 June 2023
5 June 2023
13 January 2024
25 May 2024
25 May 2024
25 May 2024
Exercise
price
20p*
60p*
40p*
60p*
25p
25p
25p
35p
As at 1
January
2021
127,500
791,667
125,000
85,901
-
-
-
-
1,130,068
Number of Warrants
Exercised
Granted
-
-
-
-
180,000
9,900,000
495,000
117,459
10,692,459
31
at
As
December
2021
127,500
791,667
125,000
85,901
180,000
9,900,000
495,000
117,459
11,822,526
-
-
-
-
-
-
-
-
-
*The brought forward outstanding share options have been divided a factor of 1,000 and the related exercise price
has been multiplied by 1,000 to account for the share consolidation that took place on 5 January 2021 (see note 23).
** These warrants were not exercised and have expired post year end.
At the date of grant, those warrants that came under the scope of IFRS 2 Share based payment 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:
74
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
28.
Equity-settled share-based payments (continued)
Date of grant
Expected volatility
Expected life
Risk-free interest rate
Expected dividend yield
Possibility of ceasing employment before vesting
Fair value per option
Volatility was determined by reference to the standard deviation of daily share prices for one year prior to the date of
grant.
69%
3 years
0.14%
-
-
£0.2241p £0.1571/£0.1892
26 May 2021
14 January
2021
81%
3 years
(0.06)%
-
-
The charge to £152,440 was made against share premium in respect of share issue costs. (2020: £Nil).
Movements in the number of options outstanding and their related weighted average exercise prices are as follows:
2021
2020
Number of
options
Weighted
average exercise
price per share
pence
Number of
options
Weighted average
exercise price per
share
pence
At 1 January
Granted
Cancelled
At 31 December
492,901
-
-
492,901
327
-
-
327
Exercisable at year end
482,235
240,574
270,000
(17,672)
492,902
482,235
46
30
1750
327
The weighted average remaining contractual life of options as at 31 December 2021 was 2.15 years (2020: 3.15 years).
75
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
28.
Equity-settled share-based payments (continued)
Warrants
Movements in the number of warrants outstanding and their related weighted average exercise prices are as follows:
2021
2020
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
1,130,067
10,692,459
-
At 31 December
11,822,526
53.27
25.11
-
27.80
127,500
1,085,900
(83,333)
1,130,067
20.00
60.00
60.22
53.27
The 2020 outstanding warrants have been divided a factor of 1,000 and the related exercise price has been multiplied
by 1,000 to account for the share consolidation that took place on 5 January 2021 (see note 23)
The weighted average remaining contractual life of warrants as at 31 December 2021 was 2.20 years (2020: 1.36 years).
29.
Contingent liabilities
Edenville International (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. Further to the Company announcements on 18 and 31 May 2022 that Upendo Group Ltd.'s current 10%
economic interest in the joint venture, which holds the licences governing the Rukwa Project, had been transferred to a 10%
direct holding on the principal production licence. The Company has sought legal advice and has been advised that the variation
has been undertaken illegally and that the holding should be reversed by the Government, This reversal has been sought. The
Company will provide a further update as appropriate.
30.
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
76
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
31.
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 £636,035 (2020: £400,904) 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
£10,154,340 (2020: £9,518,305). This amount has been included within loans to subsidiaries. The company also
invoiced Edenville International (Tanzania) Limited £90,000 (2020: Nil) in respect of management fees. This remained
outstanding at the year end.
At the year end the Company was owed £3,712 (2020: £3,712) by its subsidiary Edenville International (Seychelles)
Limited.
At the year end the Company was owed £6,340 (2020: £6,340) by its subsidiary Edenville Power Tz Limited.
At the year end Edenville International (Tanzania) limited was owed $41,677 (2020: $41,677) by Edenville Power Tz
Limited and $9,517 (2020: $9,517) was owed to JICL Consultants.
32.
Events after the reporting date
Subsequent to the year end, the Directors confirmed their intention to convert the loan of £10,154,340 between the
Company and its subsidiary into equity. This process will commence soon and it is anticipated that the conversion will
be completed before 31 December 2022.
On 3 February 2022 we announced that the Company’s subsidiary Edenville International (Tanzania) Limited had
entered into a contract with Nextgen Coalmine Limited ("Nextgen") for the operation of the Company's Rukwa Coal
Project. This superseded the Coal Mining Agreement with Infrastructure and Logistics Tanzania Limited and the Sales
and Marketing Agreement with MarTek Global FZ-LLC, announced on 8 June 2020 and 26 August 2020 respectively.
These agreements were terminated by Edenville due to lack of progress on implementation.
Subsequent to entering into the agreement with NextGen both the international and domestic coal price increased
significantly. This coincided with heightened interest from potential customers to enter into offtake agreements for
coal from Rukwa. Additionally, the implementation of the coal mining agreement with Nextgen was, for various
reasons, problematic, resulting in very poor production figures over the period from February to May 2022 and no
material revenue for the Company.
The lack of progress by Nextgen culminated in the announcement on 31 May 2022 that the Company had reached an
agreement with NextGen to terminate the contract. Following the termination of the contract all mining equipment
has been brought back into service by Edenville, whilst an additional pre-strip excavator has been added to the fleet.
Up to three additional trucks have been sourced to rapidly scale production. Our initial goal is to satisfy existing
demand from local customers of 1,500 tonnes of washed lump coal product and 500 tonnes of coal fines in the
immediate future, targeting sales of 5,000 tonnes per month of washed coal late in Q3 2022, with coal fines sales also
expected to continue and possibly expand. During the first half of 2022, 9,466 tonnes of ROM coal has been mined.
We believes there is sufficient demand based on the Company’s order book and recent discussions with potential
customers to sell any coal that is produced at Rukwa. The Company is also exploring the potential of exporting its coal
for the first time, given margins would be expected to be even greater.
Much of 2021 and the first half of 2022 was spent pursuing reverse takeover and other opportunities to add assets to
the Company. During this time the Company focused on reducing cash burn on its Tanzanian project whilst it has
77
EDENVILLE ENERGY PLC
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2021
32.
Events after the reporting date (continued)
explored these potential new projects. One potential transaction progressed significantly, however was ultimately
terminated by mutual consent. As part of the termination it was agreed that the transaction costs incurred by the
Company would be re-imbursed in full by the potential take-over target..
Further to the Company announcements on 18 and 31 May 2022 that Upendo Group Ltd.'s current 10% economic
interest in the joint venture, which holds the licences governing the Rukwa Project, had been transferred to a 10%
direct holding on the principal production licence. Tthe Company has sought legal advice and has been advised that
the variation has been undertaken illegally and that the holding should be reversed by the Government, This reversal
has been sought. The Company will provide a further update as appropriate.
33.
Commitments
License commitments
Edenville owns a coal mining exploration licences in Tanzania. These licences includes commitments to pay annual licence
fees and minimum spend requirements.
As at 31 December 2021 these are as follows:
Group
Not later than one year
Later than one year and no later than five years
Total
34.
Ultimate Controlling Party
The Group considers that there is no ultimate controlling party.
2021
£
21,993
65,979
87,972
2020
£
23,089
72,619
95,708
78