KIBO ENERGY PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS FOR
THE YEAR ENDED 31 DECEMBER 2019
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CONTENTS
CORPORATE DIRECTORY
CHAIRMAN’S REPORT
REVIEW OF ACTIVITIES
CORPORATE GOVERNANCE REPORT
DIRECTORS REPORT
AUDIT COMMITTEE REPORT
INDEPENDENT AUDITOR’S REPORT
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
COMPANY STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
COMPANY STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
COMPANY STATEMENT OF CASH FLOWS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS
ANNEXURE 1: HEADLINE EARNINGS PER SHARE
1
4
9
16
27
28
32
33
34
35
36
37
38
39
48
76
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CORPORATE DIRECTORY
BOARD OF DIRECTORS:
Christian Schaffalitzky
Louis Coetzee
Noel O’Keeffe
Andreas Lianos
Lukas Maree
Wenzel Kerremans
Chairman (Non-Executive Director)
Chief Executive Officer
Technical Director (Non-Executive Director)
Financial Director (Non-Executive Director)
Executive Director
Non-Executive Director
COMPANY SECRETARY:
Noel O’Keeffe
REGISTERED OFFICE:
17 Pembroke Street Upper
Dublin 2, Ireland
BUSINESS ADDRESS - IRELAND:
Gray Office Park
Galway Retail Park
Headford Road
Galway, Ireland
th
BUSINESS ADDRESS - TANZANIA:
Floor, Golden Heights
4
Chole Road, Masaki
Dar es Salaam, United Republic of Tanzania
Crowe Ireland
AUDITORS
Marine House
Clanwilliam PL
Dublin
D02 FY24
STOCK EXCHANGE LISTING:
SHARE REGISTRARS:
London Stock Exchange: AIM - (Share code: KIBO) – Primary
Johannesburg Stock Exchange: JSE Alt X - (Share Code: KBO) – Secondary
Ireland & United Kingdom
Link Registrars Ltd
2 Grand Canal Square
Dublin 2
D02 A342
South Africa
Link Market Services South Africa (Pty) Ltd
PRINCIPAL BANKERS:
JOINT BROKERS:
th
Floor
13
19 Ameshoff Street
Braamfontein
South Africa
Allied Irish Banks Plc
Tuam Road
Galway
Ireland
ETX Capital Limited
One Broadgate
London
ECM 2QS
I
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CORPORATE DIRECTORY
SOLICITORS:
As to Irish Law:
OBH Partners
17 Pembroke Street Upper
Dublin 2
Ireland
As to English Law:
Druces LLP
Salisbury House
London Wall
London EC2M 5PS
As to Tanzanian Law:
ENSafrica Tanzania Attorneys
6th floor, International House
cnr. Shaaban Robert Street and Garden Avenue
PO BOX 7495
Dar es Salaam
Tanzania
RFC Ambrian Limited
UK NOMINATED ADVISER:
JSE DESIGNATED ADVISER:
UK PUBLIC RELATIONS:
WEBSITE:
CONTACT:
Level 28, QV1 Building
250 St Georges Terrace
Pert, WA 6000
River Group
Unit 2, 211 Kloof Street
Waterkloof
Pretoria, South Africa
St. Brides Partners Ltd
3 St. Michael’s Alley
EC3V 9DS
www.kibo.energy
info@kibo.energy
DATE OF INCORPORATION:
17 January 2008
REGISTERED NUMBER:
451931
II
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CHAIRMAN’S REPORT
2019 was a year of consolidation for the Company following key acquisitions during 2018 which included the
Mabesekwa Coal Independent Power Project (“MCIPP” or “Mabesekwa Project”) in Botswana, the Benga Power Plant
Project (“BPPP” or “Benga Project”) in Mozambique, and a 60% equity interest in Mast Energy Developments Limited
(“MED”) in the UK. These projects together with our legacy Mbeya Coal to Power Project in Tanzania have positioned
the Company to be a global energy developer with a pipeline of projects which have seen steady development progress
during 2019 and early 2020. A key focus of our strategy during 2019 was to aggressively pursue options to
incorporate sustainable technologies and climate change mitigation measures in all our project development plans.
We believe that coal fired power plants that incorporate clean coal burning technologies and other greenhouse gas
emission containment measures will play a significant role in addressing Africa’s and the World’s increasing demand
for reliable, sustainable and affordable electricity in the transition away from fossil fuels. However, we do not
underestimate the urgency to transition from fossil fuels and in this context the Company is embarking on an
innovative strategy with its partners in Africa to co-locate solar generation plants and long term battery storage
capacity with its coal fired power plants in order to balance base load power output and begin the transition. Our
ultimate aim is to phase out coal fired electricity generation over the long term at our projects commensurate with
technology advances in renewable generation and energy storage.
In addition to our existing strong collaboration and partner agreements with SEPCOIII, GE and ABSA who share our
vision for the development of our coal projects with integrated sustainable technologies, we signed two further critical
collaboration agreement during 2019. The first of these is with US energy storage technology company, ESS Tech Inc.,
a leading innovator in the development of high capacity long life batteries to facilitate renewable power storage. As a
preferred technology partner, ESS will support and advise Kibo on the installation of renewable power at its African
project sites which will enhance the Company’s ability to secure funding and negotiate power purchase agreements
as well as generating new project opportunities. ESS is already partnering with USAID division, Power Africa, which
is implementing an ambitious programme to expand access to grid connectivity throughout sub-Saharan Africa. The
second collaboration agreement is with the German company, STEAG Energy Services, a major international operator
with 80 years’ experience in engineering, construction, and operation of power plants. Significantly, STEAG’s
proprietary technologies are not just focussed on coal but span renewable energy sources such as solar, wind and
battery storage. This is a significant partnership for Kibo as it puts STEAG’s proven experience in power plant
development and management at our disposal but most significantly enables the Company, in conjunction with ESS’s
battery technology, to implement sustainable energy solutions at its coal projects in line with its corporate strategy.
I will give a brief overview and assessment of Company activities during 2019 below and further details on individual
projects and corporate activity including recent developments (2020 to date) can be found in the Review of Activities
section below.
Operations
On the operations front, we are making good progress on our African project portfolio but understandably, patience
is required as we navigate the challenge of operating in three different countries with individual governments, local
and international JV partners and various collaborators. Highlights of 2019 include the securing of mining rights in
Tanzania for the coal deposit (Rukwa deposit) that underpins our Mbeya Coal to Power Project (“MCPP”), completion
of a positive definitive feasibility study, base case financial model and off-take term sheets for the Benga Project in
Mozambique and restructuring of our interest in the Mabesekwa Project in Botswana.
Our strategy in the UK for the acquisition and development of gas fired reserve generation plants, managed through
our 60% owned subsidiary Mast Energy Developments Ltd (“MED”) has progressed rapidly during 2019 with the first
of these, Bordersley Power, in development. The commissioning of Bordersley will mark Kibo’s first revenue stream
and we are confident that it represents the first of a number of other reserve power plants in the Mast pipeline which
are being developed in collaboration with key partners to come on-stream over the next 18 months. In fast-tracking
the development of Bordersley, MED has secured critical operational and collaboration agreements with Statkraft
Markets, A.B. Energy and Balance Power Projects which in addition to providing for the successful commissioning and
long term operation of Bordersley, also provide a foundation for the expedient delivery and fast track commissioning
of a pipeline of reserve power plants to achieve our target of 100 MW of reserve power in the short to medium term.
We are confident that the market model, business collaborations and experience of successfully developing these
plants in the UK can provide a template for the future introduction to the African continent to and complement our
existing coal to power projects in due course.
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KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CHAIRMAN’S REPORT
Corporate
On the corporate front we have continued to seek opportunities for funding and restructuring our asset portfolios to
ensure we have laid the financial groundwork to enable project funding of our near term development projects and
to generate a pipeline of other revenue generating opportunities. As you are no doubt acutely aware, the non-
qualification of our Tanzanian project, the MCPP, as a preferred participant in a tender process for supply of thermal
coal power in Tanzania in early 2019, was a major disappointment and the knock on effect on our share price has
made funding challenging during 2019 and into 2020. We completed an underwritten placing with warrants attached
in October 2019 that included the settlement of certain creditor invoices for a total placing subscription amount of
£1.99 million, comprising the issue of 442,222,280 shares at a price of £0.0045 each. The placing proceeds have
enabled us to continue with our project development plans and ongoing working capital requirements to date. A total
of 663,333,420 placing warrants exercisable at 0.8p and 1p were attached to the shares which we believe are
attractively priced. The warrants have exercise periods of 18 months and 36 months (date of warrant instruments is
3 December 2019) and, if exercised over these periods, can contribute to our medium term funding requirements. In
addition we issued an additional 175,022,729 shares during 2019 at prices ranging from 0.45p to 5.25p. These
comprised share issues to contractors & suppliers in lieu of payments, to Sanderson Capital Partners for buy out of
their residual interest in the MCPP and to the minority shareholder in MED as acquisition costs for 100% equity and
economic interest in Bordersley.
Thinking longer term, we signed an engagement letter with Wimmer Financial LLP for the provision and structuring
of up to USD 900 million in debt financing for our African coal and power projects in April. Discussions with Wimmer
are ongoing towards the negotiation of a definitive agreement. I am pleased to commend management on the re-
organisation of our coal assets and joint venture structure in Botswana announced in September 2019 which is a very
positive development for the Company. This is a major transaction which when fully implemented will give us
exposure to revenues from a large coal resource and from two coal to power thermal projects. This transaction is
further discussed in the review of activities section below.
We continued our investment in Katoro Gold PLC during 2019 and supported our majority holding by subscribing to
its October 2019 placing for 1.8 million shares issued at a price of 1p (£18,000) and subsequently exercising the
warrants attached to these shares in at their exercise price of 1.5p and receiving an additional 1.8 million shares in
February 2020. Our current equity interest in Katoro at the date of this report is 29.70%. We believe our investment
in Katoro is well judged considering its announcement of entering a strategic gold production agreement in South
Africa in January 2020 and the successful arrangement of a convertible loan note for £397,000 to fund the initial cost
of the project financing. We believe that this opportunity, which is focussed on the re-processing of a 1.34 million
ounce (JORC-Compliant) tailings resource, demonstrates strong economic fundamentals and are confident that it can
create considerable value for both Katoro and Kibo shareholders together, as can Katoro’s other projects in Tanzania.
(Refer to Katoro’s website www.katorogold.com for further details on all Katoro’s projects and resource statements).
The result for the reporting period amounted to a loss of £3,903,116 for the year ended 31 December 2019 (31
December 2018: £4,036,713) as detailed further in the Statement of Profit or Loss and Other Comprehensive Income.
Covid 19 Update
I am writing this Chairman’s Statement in the middle of the unprecedented COVID-19 pandemic which in addition to
the ongoing health concerns is having a major negative impact on the global economy. Kibo’s primary concern at the
moment is for the health and welfare its employees, contractors and their families across the various countries in
which it operates in this difficult period and is endeavouring to support them as much as possible at this difficult time.
Like most businesses Kibo is not immune from the economic and business disruption impact of the pandemic and has
in place a business continuity programme to ensure essential business processes and its obligations as a publicly
listed company continue to be met. Inevitably, there is disruption to normal operations and we have experienced
delays in meeting some of our anticipated project development targets, as I have outlined earlier, and this will be
further discussed in the Review of Activities section below.
I am glad to report that in recent months, lockdown restrictions and other COVID-19 related measures are slowly
being lifted and Kibo has begun to resume operations on all fronts. The Company is sensitive to the continued volatility
with respect to COVID-19 and will continue to closely monitor it in the various countries in which it operates to enable
it to prioritise the health and well-being of all its stakeholders. I believe our project portfolio remains robust and we
look forward to increasing our operations to normal levels over the remainder of 2020 and during 2021 when the
COVID pandemic abates.
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KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CHAIRMAN’S REPORT
I would like to thank our Board and especially our management under the leadership of our CEO Louis Coetzee,
particularly for their efforts in guiding the Company through this challenging period. I know that they will continue
to provide the skill and dedication to realise our strategy of becoming a successful global developer of sustainable
energy projects in this transitional phase from fossil fuels to renewable energy generation.
Christian Schaffalitzky
_____________________________
Chairman
22 September 2020
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KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
REVIEW OF ACTIVITIES
Introduction
During 2019 Kibo Energy PLC (“Kibo” or the “Company”) continued to advance its African energy projects in
Mozambique, Botswana and Tanzania. In the UK, the Company’s first small scale gas fired generator is shortly to come
on stream following fast-track development work and the securing of key partner agreements during 2019. MED is
now poised to build significantly on this first near-term production asset with the signing of an agreement with
Balance Power Limited to source and evaluate a portfolio of additional sites for reserve power generation.
Mozambique – Benga Power Plant Project (“BPPP” or “Benga Project”)
Kibo continued to make good progress on the Benga Project during 2019 by completing some key project studies and
advancing commercial documents critical to the success of the project. The Company holds a 65% interest in the
project (35% held by local company Termoeléctrica de Benga) which is located in the Tete province of Mozambique.
A definitive feasibility study (“DFS”) for the project was announced by the Company in March and presented to the
Mozambique state-owned electric utility operator EDM in May where it was well received and formed the basis for
further negotiation on power purchase agreements with both EDM and other parties. This was followed in June with
the announcement of completion of a base case financial model for the project which demonstrated its economic
viability under the Base Case DFS. The Environmental Impact Study (EIS) is currently underway.
The positive outcomes from the DFS and the base case financial model gave renewed impetus to negotiations with
potential feedstock suppliers and power off-takers for the Benga Project and this resulted in two key term sheets
being agreed with major local operator Vale Mozambique in September 2019. The first was a Power Purchase Term
Sheet for Vale to purchase 37% of the power from the phase 1 generation at the BPPP and the second comprised a
Coal Supply Term Sheet for Vale to supply 100% of the coal feedstock to the BPPP over its modelled 25 year life cycle.
These term sheets, which are non-binding, pave the way for the signing of definitive power purchase and coal supply
agreements between Kibo and Vale as well as for closer cooperation between the companies to optimise operational
synergies from their respective mining and power generation activities in Mozambique.
Kibo enjoys a strong relationship with Electricidade de Moçambique (“EDM”), the state-owned electricity generation
and transmission Company, formalised through a Memorandum of Understanding (“MoA”). This records EDM’s
support for the BPPP and commitment to collaborate on the project with Kibo as it progresses towards financial close.
Both parties’ objectives are aligned in recognising the urgency to address Mozambique’s electricity generation
overdependence on hydro power; the solution being to use its abundant coal resources in a sustainable manner to
generate base load power using the latest clean coal burning technology and modern plant design, augmented by
renewable generation capacity. In support of this the MoA provides for the negotiation of a power purchase agreement
(“PPA”) with Kibo whereby EDM would become the anchor off-taker for the power, assist in finalising project
financing and in negotiating related commercial contracts. All of these aspects of the proposed BPPP development
were further advanced in co-operation with EDM during 2019.
The momentum behind the Benga Project has been maintained during 2020 to date with the acquisition of additional
land increasing the project site by 345 hectares, the signing of a new MoU with EDM and entering binding term sheet
to negotiate a PPA with Baobab Resources Ltd (“Baobab”) to supply c.200 MW energy to its Tete Steel and Vanadium
Project in Mozambique. The increased Benga site footprint will accommodate the planned co-located renewable
energy generation and storage infrastructure planned for the site. The new MoU with EDM reflects the progress that
Kibo has made to date with the Benga project and the deepening relationship with EDM, who see the project as a key
part of its mandate to accelerate the development of electricity infrastructure in Mozambique. The Baobab term sheet
provides for exclusive negotiation with Kibo on the PPA and as these negotiations are at an advanced stage, the
Company anticipates signing of a final PPA before the end of Q3 2020. Contingent on finalisation of this PPA, Baobab
is expected to be the second electricity off-taker (with EDM) from the Benga Project.
The Company’s strategy of sustainable energy development received a major boost in July 2019 with the
announcement of a Collaboration Agreement with STEAG Energy Services (“STEAG”), a global independent power
producer with 80 years of experience in engineering, construction and operation of power plants. STEAG’s advanced
proprietary generation technologies covers not just fossil fuels; it also extends across renewables such as solar, wind
and biomass, as well as encompassing battery storage solutions. This expertise should prove invaluable to Kibo
particularly in its strategy of developing sustainable energy solutions by incorporating co-located renewable energy
generation and storage with base load coal fired generation.
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KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
REVIEW OF ACTIVITIES
The Company is actively working on incorporating renewable energy technologies, in particular around solar
generation, at the Benga Project initially, as proof of concept before extending them to other projects. It is working
closely with STEAG and its other partners to see how this can be best achieved to create an integrated fossil fuel-solar
power generation plant using the latest developments in clean coal burning technology, solar generation and battery
storage; transitioning to 100% renewable generation in the long term.
Botswana - Mabesekwa Project (“MCIPP” or “Mabesekwa Project”)
Kibo negotiated a major re-structuring and expansion of its Botswana energy asset holdings during September 2019
in collaboration with Shumba Energy Limited, of which its joint venture partner Sechaba Natural Resources is a wholly
owned subsidiary. The binding Heads of Agreement (“the Agreement”) sees Kibo re-arrange its interest in the 761 Mt
Mabesekwa Coal Resource from an 85% interest in a 303 Mt subset of the Resource to a 35% interest in the total
resource, maintain its 85% interests in the existing MCIPP project (referred to as KP 2) for the development of a 300
MW coal to power plant and participate as a 35%-40% partner with Shumba for the development of a second 300
MW power plant (referred to as KP 1)with electricity output directed solely to a petrochemical plant being developed
by Shumba and other parties. The Agreement requires various shareholder, joint development, power purchase and
coal sale agreements to be signed between Kibo, Shumba and their participating subsidiaries to finalise the
arrangement. The first of these, a shareholder agreement between Shumba and Kibo was signed in December 2019
and completes the first step in re-arranging both parties interest in joint venture company, Kibo Energy Botswana
(Pty) Limited as 65% and 35% respectively. As Kibo Energy Botswana (Pty) Ltd (“KEB”) holds the 761 Mt Mabesekwa
Coal Resource* both parties attributive interest in the resource is correspondingly split according to these
percentages also.
This restructuring of its Botswana interests provides Kibo with the opportunity to participate in three separate
revenue streams from coal sales from the Mabesekwa Coal Resource as follows:
•
•
•
Coal sales to the KP 1 power plant estimated at 1.5 million tonnes per year
Coal sales to the KP 2 power plant estimated at 1.5 million tonnes per year
Coal sales to the petrochemical plant which will require 4.5 million tonnes per year
In additional to participating in coal stream revenues Kibo will also participate in electricity sale revenues pro rata to
its 35%-40% interest in KP1 (exact interest yet to be agreed) and 85% interest in KP2.
The electricity generated from the KP1 plant will be solely dedicated towards powering a planned petrochemical plant
while electricity from the KP 2 plant (MCIPP) is anticipated for sale into the Botswana national grid and onward sale
to South Africa under power purchase agreements yet to be negotiated. The petrochemical plant which is being
developed by Shumba (80% beneficial interest) and other parties will process raw coal for the production of energy
fuels and speciality chemicals for local and international sale. Significantly, Kibo’s development cost exposure to these
power plant developments is confined to its existing commitments with regard to KP 2. Shumba will be responsible
for the full funding of a definitive feasibility study for the KP 1 plant.
Unfortunately the COVID-19 pandemic is impacting on the finalisation of the outstanding shareholder, coal sale and
power purchase agreements pertaining to the finalisation of the restructuring of Kibo’s Botswana energy assets. This
was anticipated to be completed by 20 March 2019 under the terms of the binding Heads of Agreement signed
between the Company, Shumba and their relevant subsidiaries in September 2019. By mutual consent, this long-stop
date has been extended and all parties are working diligently to complete the process.
KEB’s mining licence application over the Mabesekwa Coal Resource was submitted to the Botswana Department of
Mines in late 2018 and is still going through due process. The recent structuring has necessitated some additional
modifications to the application but the Company is working closely with the Botswana authorities and its joint
venture partner to ensure the application is progressing smoothly and in step with its overall project development
schedule.
A pre-feasibility study on the coal mining element together with a scoping study for the construction of the power
plant has already been completed by Sechaba. Water and land use permits and environmental certification are also
already in place at the site.
*The Company confirms that there has been no material change to the Mabesekwa Coal Resource since the Coal Resource estimate
5
was first published as part of the announcement dated 21 June 2018 which is available on its website www.kibo.energy
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
REVIEW OF ACTIVITIES
Tanzania – Mbeya Project (“MCPP” or “Mbeya Project”)
Following the disappointing news in February 2019 that the MCPP had not pre-qualified from a TANESCO (Tanzanian
state electrical utility) tender round to compete further for selection as an independent coal to power producer to the
domestic market, the company has quickly moved to consolidate and further explore other options for the
commercialisation of its coal asset. This asset comprises a 120 mt Coal Resource** for which a positive feasibility
study for the supply of coal to a co-located thermal power plant was completed in 2017. In March it assumed a 100%
interest in the MCPP by buying out the residual 2.5% interest held by Sanderson Capital Partners subject to retention
by Sanderson of a small royalty of 0.3% of future operating profits of any coal mine development. This royalty is
capped at a maximum of GBP 2 million and an annual coal production of 1.5 million tonnes per annum over a mine
life of 25 years. This consolidation of the project was followed In April with the announcement that TANESCO had
formally advised the company that it could develop the MCPP for the export power market to coincide with the
implementation of power connectors through Zambia, Tanzania and Kenya enabling power trade within the Eastern
African Power Pool and Southern African Power Pool member countries.
The commitment of the Tanzania authorities to the development of the MCPP was further enhanced in August when
the Company was granted seven mining rights over the coal resource that will provide feedstock to the proposed
MCPP thermal power plant and this was followed in September with the renewal of water rights thus ensuring that
the MCPP Environmental Impact Assessment certification continues to remain valid.
The Company remains committed to the development of the MCPP and will continue to work closely with the
Tanzanian Government, partners and other stakeholders to identify and investigate new commercial opportunities
both within Tanzania and regionally. Opportunities already identified include the export power market identified
above, sale of coal to local and export markets and coal to gas conversion. The Company is keeping political
developments and evolving energy policy in Tanzania under review and believes other opportunities may arise for
the MCPP to be developed to serve the domestic power market, either supplying electricity to the national grid or to
private off-takers.
**Kibo confirms that there has been no material change to the Mbeya Coal Resource since the Coal Resource estimate was first
published as part of the RNS dated 11 April 2016 which is available on its website www.kibo.energy.
United Kingdom - Mast Energy Developments Limited (“MED”)
Kibo’s 60% UK subsidiary, MED made significant progress during 2019 in the UK Reserve Power generation market
the highlight of which was the acquisition and development of the Bordersley power plant located near Birmingham.
Originally, scheduled for commissioning by the end of Q2 2020, progress has been delayed by the impact of the COVID-
19 pandemic and we now anticipate that it will come into production before the end of 2020. Kibo acquired a 100%
interest in Bordersley from MED in a corporate transaction completed in June 2019 and is now set to receive all
revenues from the plant when it comes into production (MED continues to manage the development of Bordersley on
behalf of Kibo). Bordersley comprises a 5 MW gas fired power plant supported by a five year power purchase
agreement between MED and Statkraft Markets GmbH to manage the gas input to the plant and the electricity
generated. Statkraft is a major player in the European energy trading exchanges as well as being Europe’s largest
producer of renewable energy.
Bordersley marks Kibo and MED’s first production asset in this rapidly growing segment of the UK energy market
which has emerged in recent years to help balance base load power on the UK grid due to the increasing contribution
of renewables, particularly wind, to total output power. In anticipation of increasing demand for flexible power output
from small power plants like Bordersley, MED has concluded a number of option and collaboration agreements with
various parties during 2019 towards developing a pipeline of projects similar to Bordersley’s.
A notable achievement in this regard was a Joint Development Agreement signed between MED and A.B. Impianti
S.R.L (“Impianti”) in October 2019 which gives MED access to Impianti’s EPC competencies, proprietary power
generation equipment and funding solutions for Impianti approved projects. AB is a subsidiary of the AB Group, a
global leader in engineering, manufacture, and after sales service of Combined Heat and Power generation solutions,
which is present in 19 countries and has installed over 1,600 MW in over 1,250 plants.
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KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
REVIEW OF ACTIVITIES
Working with Impianti, good progress towards de-risking Bordersley is being made with an agreed site work scope,
advanced Engineering, Procurement, and Construction ('EPC') and an associated financing agreement for
Bordersley's construction and commissioning all at an advanced stage. The project received a welcome boost in
October 2019 where it conditionally prequalified to participate in the recently introduced electricity Capacity Market
scheme by the UK Government. The CM scheme plans for security of UK electricity supply by providing a payment for
reliable sources of capacity, such as Bordersley, alongside their electricity revenues, to ensure they deliver energy
when needed. Should Bordersley qualify and participate in the auction phase it could be in line to win a 15-year
capacity market contract which if successful, could significantly improve the financial returns of the project.
MED’s strategy to develop a pipeline of reserve power projects towards meeting its 100 MW target received a
considerable boost in December 2019 with the signing of an agreement with Balance Power Projects Development
Limited (“Balance Power”), a UK based developer of gas-based peak power plants from whom MED already acquired
Bordersley. Balance have agreed under a site development agreement with MED to identify on its behalf suitable sites,
carry out feasibility analysis and contingent on MED’s agreement, prepare the sites for plant development. Each site
so identified for development will be placed in a Special Purpose Vehicle (“SPV”) i.e. a dedicated project company
which will be held 100% by MED.
As noted earlier, the on-set of the COVID-19 pandemic in early 2020 has impacted on-site operations at Bordersley
and delayed MED’s anticipated commissioning date for the plant by the end of Q1 2020. Operations recommenced at
Bordersley as of May 2020 albeit at a slower pace consistent with the implementation of required safety measures
and in line with the latest UK Government guidelines. During 2020 to date, notwithstanding the delay to the
Bordersley, MED has advanced discussions with a number of funding entities for multi-million investment to advance
its long term strategy to simultaneously develop in excess of 20 reserve power plants with up to 300 MW generating
capacity from its prospective “shovel ready” portfolio.
Corporate
During 2019, the Company continued its engagement with existing and potential new partners in evaluating project
funding options in anticipation of financial close on all its projects. A Strategic Development Agreement with SEPCOIII
first announced in 2018, which provided for equity investment in Kibo, was impacted by the announcement of the
non-qualification of the Company’s MCPP project to participate in a Tanzanian tender round for coal to power
generation. Completion of the SDA has been deferred by mutual agreement, but discussions are continuing. The
Company continues to have a close relationship with SEPCOIII who holds the contract for the construction of the MCPP
power plant and discussions are continuing commensurate with the Company’s efforts to develop alternative
commercialisation options for the project.
In April 2019 the Company signed an engagement letter with UK based private investment bank, Wimmer Financial
LLP, for the provision and structuring of an up to USD 900 million debt financing package for the development of all
the Company’s African coal projects save for the MCPP where Wimmer will not enjoy exclusivity on project funding.
Kibo undertook one underwriter sponsored placing during 2019 and raised £1.5 million through the issue of
333,333,333 shares at a price of £0.0045 per share. The placing was accompanied by a mutually agreed payment
arrangement with certain service providers, suppliers and other creditors which comprised the issue of a further
108,888,947 shares at the placing price in payment of outstanding invoices for a total of £490,000. Each share issued
in the Placing and the funding arrangement had two warrants attached; one warrant exercisable at 0.8p per share for
the period of 18 months from the date of issue and half a warrant exercisable at 1p per share for the period of 36
months from the date of issue. In total 663,333,420 warrants were issued.
In addition to the Placing, the Company also issued an additional 175,062,729 shares in respect of payments to
contractors (10,518,741), to Sanderson Capital Partners in respect of buy-back of its residual 2.5% interest in the
MCPP (126,436,782) and to the minority shareholder in MED, St Anderton on Vaal, in respect of payments under the
terms of the acquisition agreement for Bordersley (38,067,206). At its AGM in September 2019 resolutions were also
passed to effect a subdivision of its share capital the net effect of which was to reduce the nominal value of its ordinary
shares from €0.015 to €0.001 and create an additional class of Deferred Share (2019 Deferred Share) in the amount
of 805,053,818. The number of ordinary shares (publicly listed on AIM & the JSE) was not affected by the subdivision
save that the ceiling on the authorised share capital was raised from €1 million to €2 million.
7
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
REVIEW OF ACTIVITIES
During 2020, financing initiatives for the Kibo Group have, not surprisingly, been impacted and delayed by the on-
going COVID 19 pandemic. In June we held an EGM where we laid proposals before shareholders for a share capital
reorganisation to make the Company more attractive to funders, settle with creditors and enable funding options
being considered at the time to be implemented. While we did not receive sufficient support at the EGM for key
resolutions to allow us proceed with the proposals, we have since, following internal board discussion and discussions
with advisors and some major shareholders, proceeded to secure a £1 million facility (“the Facility”) from a
consortium of lenders. The Facility, in the form of a convertible loan note issued by Kibo, will provide sufficient
working capital to allow us proceed with reaching key development milestones, particularly for the Benga and MED
projects over the next twelve months. I am glad to report that at an EGM held on 24 August 2020, shareholders have
approved resolutions to increase the authorised share capital which we required in order to be able to fully avail of
the Facility and meet all related funding costs.
During 2020 to date, we have issued an additional 135,526,399 shares comprising 29,214,110 to contractors & service
providers for agreed invoice payments at share prices of 0.45p & 0.2p; 8,000,000 as final payment to MED with regard
to acquisition costs for Bordersley, at a share price of 5.25p; and 98,312,289 shares in payment of first drawdown
fees, legal fee, arrangement fee and issue of conversion shares with regard to the Facility at share prices ranging from
0.22p to 0.27p.
The Company appointed ETX Capital as its joint broker in November 2019 to replace SVS Securities who were placed
in Special Administration in August 2019. Following termination of First Equity Limited’s engagement with the
Company in early 2020, ETX are now the Kibo’s sole corporate broker under AIM Rule 35.
Louis Coetzee
_______________________________
Chief Executive Officer
22 September 2020
8
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CORPORATE GOVERNANCE REPORT
The Kibo board (the “Board”) aims to conform to its statutory responsibilities and industry good practice in relation
to corporate governance of Kibo Energy PLC (“Kibo” or the “Company”) and its subsidiaries (together with Kibo, the
“Group”). The Board has adopted the latest version of the QCA Corporate Governance Code (2018) (“QCA Code”) and
endeavours to follow its ten principles (“the Principles”) with due regard to the stage of development of the Company.
The Company also seeks guidance from its Nomad on recommended best corporate governance practice for AIM
companies.
In addition to my role as non-executive chairman of the Board, I am also the chairman of the Company’s Governance
Committee and retain primary responsibility for the design, implementation, articulation, review and updates of the
Company’s corporate governance policy. The Governance Committee meets at least once a year and makes
recommendations to the Board to ensure the Company’s corporate governance policy remains aligned with the
Principles as it grows.
The following are the principal ways in which the Company meets these requirements.
1. Establish a strategy and business model which promotes long-term value for shareholders
The Company has established a strategy and business model which it believes will promote long term value for
shareholders. This was updated during 2018 following the Company’s decision to change its business model from
being predominantly a mining exploration company operating exclusively in Tanzania to be an energy development
company with energy projects in different countries but primarily focused on sub-Saharan Africa. This updated
business model presents new challenges to the Group across financial, technical and operational areas as its project
portfolio expands across different jurisdictions. In response to these challenges, the Company has updated its
corporate governance policies and procedures to support its current business model. The Company believes its
current business model will deliver long term value to shareholders by providing diverse exposure to the growing
demand-led energy markets in sub-Saharan Africa and the UK. It further believes that this business model is
appropriate to protect the Company from unnecessary risk and secure its long-term future.
2. Seek to understand and meet shareholder needs and expectations
The Company seeks to understand and meet shareholder needs and expectations by engaging with them across a
range of platforms including regular investor presentations, Q&A forums, investor relations company services, social
media sites and at its Annual General Meeting where the Board encourages the active participation of shareholders
on important and relevant matters, including the Group’s strategy, financial performance, and operational and
commercial developments. The Company provides phone numbers on its RNS and SENS announcements where
shareholders can contact the appropriate senior Company representatives or advisors directly with their queries
together with a dedicated email address for shareholder feedback. The Board receives regular shareholder feedback
and provides prompt responses through all these communication channels and therefore believes it adequately meets
its shareholders expectations in this regard.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term
success
The Company firmly believes that the energy development projects that form the basis of its business model will
substantially benefit the countries and regions in which it operates. It fosters a culture of open communication with
all stakeholders who may be impacted by its activities. Its strategy and business model are designed to minimise any
negative impact of its activities on the communities where it operates and on the environment.
The Company’s project areas are located in Mozambique, Botswana, Tanzania and the UK. Staff and locally appointed
representatives at the Company’s project offices provide a first point of contact for stakeholders to receive
information on the Company’s activities and provide feedback on any issues or concerns they may have. The Company
has appointed dedicated liaison officers to communicate with stakeholder groups e.g. local & regional government
officials, central government departments, community groups and local suppliers to keep them continuously updated
on project activities and plans. Management conveys to the Board in a timely manner through formal reporting
channels and at operational review meetings any substantive concerns of stakeholders and where necessary, the
Board mandates appropriate action be taken to address these concerns.
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KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CORPORATE GOVERNANCE REPORT
In support of the Company’s social responsibility towards the local communities among which it works, it has
implemented a Corporate Social Responsibility Plan (“CSR Plan”). The first phase of this plan is already completed
through the building and refurbishment of school buildings in two local villages close to its MCPP project in southern
Tanzania. Successive phases of this CSR Plan will be implemented commensurate with and contingent on the
construction and commissioning of the MCPP that will, in addition to education, include support of health care,
employment opportunities, local business development and public infrastructure development. The Company has
now commenced replicating its stakeholder liaison model and CSR commitment in Tanzania on its other African
projects in Botswana and Mozambique.
4. Embed effective risk management, considering both opportunities and threats, throughout the
organisation
The Board has considered mechanisms by which the business and the financial risks facing the Group are managed
and reported to the Board. The principal business and financial risks have been identified and control procedures
implemented. The Board acknowledges its responsibility for reviewing the effectiveness of the systems that are in
place to manage risk and to provide reasonable but not absolute assurance on the safeguarding of the Group’s assets
against misstatement or loss.
The major risks facing the Company are clearly identified in the Directors’ Report on page 16. The Company relies on
internal and external assessments of its systems for managing risk and it believes the continuous implementation of
recommendations from these reviews provide the Board with adequate assurance that its systems for managing risks
are effective.
The Company’s Audit Committee is the primary body that is tasked with identifying, assessing and managing risk. The
principal risks identified across all aspects of the Company’s operation include, inter alia, risks associated with foreign
exchange, strategy, funding, staffing, political stability and commercial activities. The Audit Committee regularly
reviews reports from Management across all financial and operational activities enabling it to identify and assess risks
and make recommendations to the Board where appropriate for mitigation. Similarly, it also informs the Board where
it identifies business opportunities that may be beneficial to the Company. The Audit Committee’s other core function
is to review and, if in order, recommend the annual financial statement to the Board for approval. Where the
Company’s auditors have identified risks or any shortcomings in accounting procedures, the Audit Committee brings
these to the Board’s attention for mitigation and/or rectification. The Audit Committee Report on page 27 provides
further details on the committee’s activities during 2019.
To better assess and manage risks in line with the Company’s recent change in its strategy and business development
model, it has compiled a Risk Register which is updated quarterly. Henceforth, this document will be the cornerstone
of the its Risk Management Policy and will be the key tool in monitoring the effectiveness of remedial action proposed
by the Audit Committee on an on-going basis.
5. Maintain the board as a well-functioning, balanced team led by the chair
The Board regularly meets to monitor and approve the strategy and business model for the Group.
The Board comprises a non-executive chairman, two executive directors and three non-executive directors. Two of
the non-executive directors (Christian Schaffalitzky and Wenzel Kerremans), which includes the Chairman, are
considered by the Board to be independent directors. The Board considers non-executive directors to be independent
when they are independent of Management and free from any business or relationship that would materially interfere
with the exercise of independent judgment as a Board member.
The Executive directors comprise the Company’s CEO who dedicates 100% of his time to the Group and one other
director who dedicates 50% of his time. The non-executive directors dedicate as much time as is required for them to
fully carry out their duties for the Group including overseeing corporate governance arrangements and serving on
board committees. One of the non-executive directors, Noel O’Keeffe, also serves as the Company secretary. The
functions and composition of the various Board sub-committees are outlined in Section 9.
The Board alone is responsible for:
• formulating, reviewing and approving the Group’s budgets and major items of capital expenditure;
• formulating the Group’s major policies and strategy;
• monitoring and reviewing the Group’s performance and achievement of goals;
• approval of Financial Statements and Annual Report;
• major contracts and transactions;
• board and management structure and appointments (the whole Board acts as the Nominations Committee);
10
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CORPORATE GOVERNANCE REPORT
• effectiveness and integrity of internal control and management information systems; and
• overall corporate governance of the Group.
An agenda and all supporting documentation is circulated to the directors before each Board meeting. Open and timely
access to all information is provided to directors to enable them to bring independent judgement on issues affecting
the Group and facilitate them in discharging their duties. The Board met 25 times during the last financial year to 31
December 2019 with on average >90% attendance during this period.
In accordance with the Articles of Association of the Company, one third of the Board is required to retire each year
at the Company’s AGM but directors so resigning can put their name forward for re-election.
The Board sets the Group’s strategy and monitors its implementation through management and financial performance
reviews. It also works to ensure that adequate resources are available to implement strategy in a timely manner.
The Board is accountable to the shareholders for delivery of sustained value growth. In order to support its duties
and responsibilities the Board implements control procedures, such as quarterly operational review meetings, that
assess and manage risk and ensure robust financial and operational management within the Group.
6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
The Board considers that there is an appropriate balance between the Executives and non-executive directors and
that no individual or small group dominates the Board’s decision making. The Board’s members have a wide range of
expertise and experience which the Board considers to be conducive to the effective leadership of the Group and to
the optimisation of shareholder value.
The Board members’ diverse range of skills and experience span technical, financial, operational and legal areas
relevant to the management of the Company. Summary biographies of each Board member are shown on the
Company’s website and in the Directors’ Report on page 16. Directors keep their skill sets up to date by attendance
at, and participation in, various events organised by their respective industry sectors and/or by participation in
continuing professional development courses. For example, The Company secretary (also a director) successfully
completed a Certificate in Company Law and Practice in 2019 at the Law Society of Ireland to update his skills in this
area.
As the Company evolves, the Board composition will be reviewed to ensure appropriate expertise is always in place
to support its business activities. It strives to align directors’ responsibilities with their individual skills so they can
optimally contribute to its current strategy and business model. While the Board has not yet adopted any formal policy
on gender balance, ethnicity or age group, it is committed to fair and equal opportunity and fostering diversity subject
to ensuring appointees are appropriately qualified and experienced for their roles. The Company acknowledges that
as it expands its operations across different countries, it will be to its benefit to align its Board composition to reflect
balance in the ethnicity and gender of its members.
The Company retains the services of
investor relations,
technical/engineering and IT fields that are always available to the Board. These advisors provide support and
guidance to the Board and complement the Company’s internal expertise.
7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
independent advisors across
financial,
legal,
The performance of the Board and Management of the Company is evaluated on an on-going basis by the
Remuneration Committee (“Remcom”). The results of these evaluations are reflected in changes in the Executive
remuneration levels recommended by the Remcom from time to time and in awards under the Company’s Share
Option and Management Incentive Schemes where it considers such awards are warranted. Remuneration levels are
benchmarked against peer companies while performance awards are based on meeting pre-defined milestones such
as successful project acquisitions or completion of significant project development phases. As the Company grows,
the Board will develop more comprehensive human resource policies to provide both internal and external
performance evaluations of its Board, senior management and staff including the provision for upskilling where
necessary and to provide for Board member succession planning. The Company commissioned an independent
consultants report in late 2018 to consider current director and management remuneration levels and make
recommendations for adjustments. The report recommendations were implemented for 2019.
The Board considers that the corporate governance policies it has currently in place for Board performance reviews
is commensurate with the size and development stage of the Company.
11
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CORPORATE GOVERNANCE REPORT
8. Promote a corporate culture that is based on ethical values and behaviours
The Company operates across several countries including Ireland, UK, Cyprus, South Africa, Tanzania, Botswana and
Mozambique. In line with its international reach, the Company recognises the cultural diversity both internally and
among its business partners, service providers and other stakeholders. The Board promotes corporate values that
reflect its commitment to provide equal opportunity to all subject to its core principles that demand the adoption of
ethical values and conduct at all times. In this regard it has developed robust whistle-blower and anti-corruption
policies that Board, management, staff and service providers have signed up to. The Company’s Anti-Corruption policy
requires all Group personnel to declare conflicts of interest in any dealings on behalf of the Group and to excuse
themselves from any negotiation on behalf of, or with, the Company in such circumstances.
While the Company has not adopted a formal Code of Conduct at board level, management and staff behaviour is
governed by the terms of individual employment (and supplier) contracts whose terms reflect the ethics and values
of the Group. Together with other Company policies such as its whistle-blower and anti-corruption policies noted
above, these establish a high standard of values and behaviour to which all personnel working for, or on behalf, of the
Group are expected to adhere to. The Board monitors compliance with its ethical values through feedback from
Management and has disciplinary procedures in place to take corrective action where required.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making
by the board
The Company has developed and adopted a variety of plans, policies, and procedures as part of its corporate
governance framework to ensure that the Company is run in an efficient, effective and responsible manner. Key
policies include:
Board Governance Plan
The Board Governance Plan is integrated into a Corporate Procedures Manual which sets out corporate governance
structure and includes the terms of reference for the various Board Committees. In addition, the Corporate Procedures
Manual outlines:
•
•
•
•
•
•
•
high level financial controls;
information system environment;
forecasting & budget procedures;
treasury operations;
accounting policies;
financial accounting procedures; and
management reporting framework.
Securities Trading/Share Dealing Policy
The Company’s Share Dealing Code sets out the Company’s policy, procedures and restrictions for directors,
management, staff and insiders in dealings in the Company’s shares. It is compliant with AIM and FCA Rules and with
the Company’s obligations under the Market Abuse Directive (2016).
Continuous Disclosure and Market Communications Policy
The Company’s policy is governed by the AIM Rules and the JSE Rules and all applicable national financial regulation
in the UK, Ireland and South Africa.
Risk Management Policy
The Company has developed a Risk Register which will be reviewed on a quarterly basis. The Risk Register reviews
the risks around each aspect of management and operations and is scored by each Executive member of the Board in
terms of probability and impact to derive an overall risk profile for the Company. The Risk Register also records the
steps that are being taken to mitigate the major risks identified.
12
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CORPORATE GOVERNANCE REPORT
Health and Safety Policy & Procedures
All operating companies within the Group have their own Health and Safety Policy and Procedures (“HSE Policy”)
tailored to the particular jurisdiction and environment in which they are active. The Board retains overall
responsibility to ensure appropriate HSE Policy is in place at all times and reviews this at its operations’ review
meetings.
Environmental Policy
Kibo is committed to high standards of environmental protection across our business. Our goal is to protect people,
minimise harm to the environment, integrate biodiversity considerations and reduce disruption to our neighbouring
communities. We seek to achieve continuous improvement in our environmental protection performance. The
Company will significantly expand and escalate our actions to meet our commitment to environmental protection
commensurate with the start of plant construction, mining operations and energy production on our projects. The
results of environmental impact reports already completed and in progress across our projects will be used to
carefully plan for environmental risk assessments and implement mitigating measures to protect the environment in
association with relevant government bodies and local communities.
Anti-corruption and bribery Policy
The Company’s Anti-corruption and bribery policy is in place to ensure that all directors, management, staff and
suppliers to the Group conduct themselves in an honest and ethical manner at all times. It meets the requirements of
the UK Bribery Act 2010.
Whistleblowing Policy
The Company’s Whistleblowing Policy is informed by Whistleblowing Arrangements Code of Practice issued by the
British Standards Institute and Public Concern at Work. Its objectives are:
•
•
•
to encourage Group personnel to report suspected wrongdoing as soon as possible, in the knowledge that
their concerns will be taken seriously and investigated as appropriate, and that their confidentiality will be
respected;
to provide Group personnel with guidance as to how to raise those concerns; and
to reassure Group personnel that they should be able to raise genuine concerns in good faith without fear of
reprisals, even if they turn out to be mistaken.
IT, communications and systems procedures
IT, communications and systems procedures are included in the Company’s Corporate Procedures Manual and are
designed to ensure a robust, upgradeable and secure IT system, with appropriate back-up to ensure any system failure
will not be catastrophic for the continued operations of the Company.
The Chairman is responsible for providing leadership to the Board while the day-to-day management of the Group is
delegated to the Executive Committee lead by the CEO. The CEO is primarily responsible for the Group’s business
performance and manages the Group in accordance with the strategies and business plan. The independent non-
executive directors are responsible for providing independent advice and are considered by the Board to be
independent of Management.
The Board/senior officer committees are the Governance Committee, Executive Committee, Remuneration Committee
Audit Committee, and the Nomination Committee.
Governance Committee:
Comprises three non-executive directors. The Committee meets at least once a year to
review the Company’s ongoing compliance with the QCA Code and to make recommendations to the Board where it
judges that there is a requirement to update, replace or expand corporate governance policies and procedures in line
with current activities. The Governance Committee is chaired by Christian Schaffalitzky and the other members are
Noel O’Keeffe and Wenzel Kerremans.
13
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CORPORATE GOVERNANCE REPORT
Executive Committee:
Comprises two executive directors and two senior Company officers: The Committee meets
at least once a month. The Executive Committee is the core senior management team in the Company responsible for
day to day management and operations. Its terms of reference are defined in the Company’s Corporate Procedures
Manual. The Executive Committee is chaired by Louis Coetzee and the other members are Lukas Maree, Louis
Scheepers (COO) and Pieter Krugel (CFO).
Remuneration Committee:
Comprises three non-executive directors. The Committee meets at least once a year to
determine Company policy on senior executive remuneration, to make detailed recommendations to the Board
regarding the remuneration packages of the executive directors and to consider awards under the Company’s Share
Option and Management Incentive Award schemes. The Chief Executive Officer is consulted on remuneration
packages and policy but does not attend discussions regarding his own package. The remuneration and terms and
conditions of the appointment of non-executive directors are determined by the Board. The Remuneration Committee
is chaired by Christian Schaffalitzky with the other members being Andreas Lianos and Wenzel Kerremans.
Audit Committee:
Comprises three non-executive directors. The Committee meets at least twice a year to consider
the scope of the annual audit and the interim financial statements and to assess the effectiveness of the Group’s system
of internal financial controls and risk management systems. It reviews the results of the external audit, its cost
effectiveness and the objectives of the auditor. Given the size of the Group, the Audit Committee considers that an
internal audit function is not currently justified. The Audit Committee is chaired by Andrew Lianos, ACA, CA(SA),
ACMA, CIA. who serves as the Company’s non-executive Financial Director. The other members of the Audit
Committee are Christian Schaffalitzky and Wenzel Kerremans.
Nomination Committee:
Comprises the entire Board. The principal objectives of the Committee are to monitor and
review the Board structure, size, composition and the mix of skills and expertise to ensure that these are in line with
the Group’s strategies and to consider potential candidates for directorship. The selection criteria for selection and
recruitment of the potential candidates for directorship shall include qualifications of the individual, experience,
knowledge and achievements, credibility and background and ability of the candidates to contribute effectively to the
Board and Group. The Nomination Committee also oversees succession planning of directors, taking into account the
relative experience of each Board member in relation to the Company’s requirements given its stage of development
and strategies, with the goal of having in place an adequate and sufficiently experienced board at all times.
The Company’s Corporate Procedures Manual includes a schedule of matters that are reserved as the sole
responsibility of the Board. These matters, in addition to setting strategy for the Company, include, but are not limited
to, Board nominations and appointments, approval of acquisitions and disposals and approval of annual budgets and
financings.
10. Communicate how the company is governed and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
•
•
•
•
•
•
•
•
The Board recognises the importance of establishing and maintaining good relationship with Kibo’s shareholders and
other stakeholders. The Board is responsible for ensuring satisfactory dialogue with shareholders throughout the
year. In order to establish and maintain good relationships with the shareholders of Kibo, and to maintain
transparency and accountability to its shareholders, Kibo uses various means to continuously communicate and
disseminate timely information to shareholders and stakeholders:
market announcements on regulatory platforms (RNS and SENS);
annual and interim reports;
circulars;
annual general meetings of shareholders;
investor presentations and briefings;
Q&A forums and social media sites;
website at www.kibo.energy; and
via investor relations professionals at St. Brides Partners Ltd (contact person: Isabel de Salis / Beth Melluish
Tel: +44 (0) 207236 1177)
The Company’s Audit Committee Report is presented on page 27 and provides further details on the committee’s
activities during 2019, and while a separate report from the Remuneration Committee was not produced due to the
size of the Company, the Company intends to review this requirement on an annual basis.
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KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CORPORATE GOVERNANCE REPORT
Conclusion
The Company believes that its governance structures and practices as detailed above comply with the expectations of
the QCA Code in all material respects. It also acknowledges its obligations under the Code to continually monitor and
further develop the scope and suitability of its governance structures in line with its growth. In recent years, the
Company undertook a change in strategy from being dominantly a mineral exploration company based in Tanzania
to be an energy development company with a project portfolio spanning Tanzania, Botswana, Mozambique and the
UK. In line with these developments the Company has implemented key governance changes including a re-
assignment of Board responsibilities and the recruitment of a Chief Financial Officer to manage the increased financial
responsibilities within the Group. The Company continued to update its Plans, Policies and Procedures itemised at 9
above during 2019 to ensure it remains in compliance with the QCA Code.
Christian Schaffalitzky
___________________________
Chairman
Governance Committee
22 September 2020
15
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
DIRECTORS’ REPORT
The Board of Directors present their Annual Report together with the audited annual financial statements for the year
ended 31 December 2019 of Kibo Energy PLC (“Kibo” or “the Company”) and its subsidiaries (collectively “the
Group”).
The Board comprises a non-executive chairman, two executive directors and three non-executive directors. As the
Company evolves, the Board will be reviewed and expanded if necessary to ensure appropriate expertise is always in
place to support its business activities.
The Board is responsible for formulating, reviewing and approving the Company's strategy, budgets, major items of
capital expenditure and acquisitions. An agenda and all supporting documentation is circulated to all directors before
each Board Meeting. Open and timely access to all information is provided to all directors to enable them to bring
independent judgement on issues affecting the Company and facilitate them in discharging their duties.
At the date of this report, the board of directors comprised:
Christian Schaffalitzky - Chairman (non-executive)
Louis Coetzee - Chief Executive Officer (executive)
Andreas Lianos - Financial Director (non-executive)
Noel O’Keeffe - Technical Director (non-executive)
Lukas Maree - executive director
Wenzel Kerremans - (non-executive director)
Christian Schaffalitzky, BA (Mod), FIMMM, PGeo, CEng, Age 66 – Chairman (non-executive and independent)
Christian Schaffalitzky has over 40 years’ experience in minerals exploration and is Executive Chairman of Eurasia
Mining plc, a company trading on AIM. From 1984 to 1992, he founded and managed the international minerals
consultancy, CSA Group, now CSA Global Pty Ltd. Christian was a founder of Ivernia West plc, where he led the
exploration, discovery and development of the Lisheen zinc deposit in Ireland. More recently, he was a managing
director of Ennex International plc, an Irish quoted mineral exploration company, focused on zinc development
projects. He has also been engaged in precious and base metal mineral exploration and development in the former
Soviet Union and is a former independent director on the boards of Russian companies, Raspadskaya Coal Company
and Chelyabinsk Zinc and a director of one other listed investment company.
Louis Coetzee, BA, MBA, Age 56 – Chief Executive Officer (executive)
Louis Coetzee has over 25 years’ experience in business development, promotion and financing in both the public and
private sector. In recent years, he has concentrated on the exploration and mining arena where he has founded,
promoted and developed a number of junior mineral exploration companies based mainly on Tanzanian assets. Louis
has tertiary qualifications in law and languages, project management, supply chain management and an MBA from
Bond University (Australia) specialising in entrepreneurship, and business planning and strategy. He has worked in
various project management and business development roles mostly in the mining industry throughout his career.
Between 2007 and 2009, he held the position of Vice-President, Business Development with Canadian listed Great
Basin Gold (TSX: CBG). Mr. Coetzee is also the CEO of AIM-listed Katoro Gold PLC in which Kibo has a significant
shareholding.
Noel O’Keeffe, BSc (Hons), Geology, MBA, CG (Affiliated), Age 56 – Technical Director (non-executive) and
Company Secretary
Noel O’Keeffe has over 30 years’ experience in mineral exploration and has worked on a variety of base metal and
gold projects in Ireland, Canada, Australia and Africa. Prior to co-founding Kibo in 2008 he worked as a quality
coordinator with Boston Scientific (Ireland) Ltd, a multinational medical device company. He also worked part-time
for Irish geological services group, Aurum Exploration Ltd during 2003 and early 2004. During the mid-nineties he
was exploration manager with Ormonde Mining plc in Tanzania, a company currently listed on the Irish Stock
Exchange and on AIM. Previously Noel was a senior geological consultant with BDA Consultants Limited and worked
on both government and private sector contracts. Earlier in his career, Noel worked as a geologist for Burmin
Exploration and Development plc and for its Canadian and Australian subsidiaries. Mr. O’Keeffe is also a non-executive
director of Cyprus company, River Capital plc.
Lukas Marthinus Maree, BLC, LLB, Age 58 – (executive)
Lukas Maree is a lawyer by profession. He has served on the boards of a number of public companies including
Goldsource Mines Limited, Africo Resources Limited and Diamondworks Limited that have made significant
successful investments in exploration projects in Africa and North America.
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KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
DIRECTORS’ REPORT
More recently, he has served as the CEO of private investment companies Rusaf Gold Limited and Mzuri Capital Group
Limited, both of which have successfully developed and sold mineral projects in Russia and Tanzania. He was also a
founder principal of River Group, Designated Advisors to the Listing of Kibo on the JSE, and was responsible for its
Canadian office until he retired from the Group in 2013 to pursue personal interests. Mr. Maree is also a director of
AIM-listed Katoro Gold PLC.
Wenzel Kerremans, B. Proc, LLB, LLM, Adv. Dip. Age 61 – (non-executive and independent)
Wenzel Kerremans is a lawyer by profession with over 25 years international legal experience in mining, banking,
project finance and international tax, advising clients who have invested in exploration and mining projects in Africa.
He has also originated and successfully sold Veremo Holdings Limited, a billion ton titaniferous magnetite exploration
project for the production of iron and titanium slag. Wenzel is also the principal and director of a gold, graphite and
coal exploration project in Africa.
Andreas (Andrew) Lianos, CA(SA), ACA, ACMA, Age 53 –Financial Director (non-executive)
Andrew is a chartered accountant, certified management accountant, registered internal auditor and JSE qualified
executive who started his professional career in 1989 with Grant Thornton International. Andrew entered the
corporate finance industry in 1994 by joining Deloitte & Touche Corporate Finance. In 1996 he joined Merrill Lynch
Corporate Finance, and was part of the team that founded Labyrinth Corporate Finance during 1997. He has been
intimately involved in a number of IPO’s since the bull market of the 90’s to date, and has substantial transaction
experience in the resources, food- and leisure industries. Andrew serves on the boards of a number of public
companies and co-founded River Group in 1998. He has since been involved in a number of successful RTOs and IPOs
on the JSE, TSX, ASX and LSE, cross-border restructurings and resources transactions in Canada, the Central African
Republic, Angola, Zambia, Zimbabwe, Tanzania and South Africa.
Role of Technical Director & Financial Director
The Technical Director and Financial Director roles of Mr. O’Keeffe and Mr. Lianos respectively are not executive
functions and neither are members of the executive committee of the Company. They provide their services in these
roles on a part time consultancy basis independent of their positions as non-executive directors. They exercise these
roles in a high level advisory capacity and are not involved in the day to day management of the Company. Mr.
O’Keeffe’s services as Company secretary are also provided on a part time basis.
Review of Business Developments
As noted in the Chairman’s Report and Review of Activities, the Company consolidated its business strategy as an
energy development company with further development progress of its energy projects in Africa and the UK during
the period. To reflect this change in business strategy, the Company also changed its name from Kibo Mining PLC to
Kibo Energy PLC at its 2018 AGM. The Company also divested itself of its remaining mineral exploration project,
Haneti, in Tanzania to Katoro Gold PLC, a company in which Kibo holds a 29.70% interest as at the date of this report
(31 December 2018 – 55.53% interest). The Company continued to further its feasibility studies towards mining and
thermal coal plant development on its African projects.
While our focus remains on addressing the acute power deficits in Sub-Saharan Africa and, more recently, the UK, our
strategy has slightly altered to focus on including sustainable power options into our solutions. This has seen us build
a strong partnership with US based ESS Tech Inc. ('ESS'). We are making steady progress integrating ESS's iron flow
battery technology that offers, amongst other benefits, more than double the operating lifetime and cycle capacity of
lithium-ion battery storage systems, into the plans for our coal fired power plants. We look forward to providing
further updates on this innovative technology in due course.
In Mozambique, our Benga Power Plant Project ('BPPP'), in which we have a 65% interest and which enjoys very
strong local support and is backed by local energy company Termoeléctrica de Benga S.A, continues to make progress.
With a Definitive Feasibility Study based on a 150 MW coal-fired power plant already in place, this advanced project
is reaching an exciting stage. Not only does it have significant expansion potential, including the establishment of a
pure renewable energy project, but the off-take opportunities are escalating; notably, we continue to have
encouraging discussions with Electricidade de Moçambique ('EDM') regarding a Power Purchase Agreement. The
momentum behind the Benga Project has been maintained during 2020 to date with the acquisition of additional land
increasing the project site by 345 hectares, the signing of a new Memorandum of Understanding with EDM and
entering binding term sheet to negotiate a PPA with Baobab Resources Ltd (“Baobab”) to supply c.200 MW energy to
17
its Tete Steel and Vanadium Project in Mozambique.
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
DIRECTORS’ REPORT
Similarly, in Botswana, where we are developing the Mabesekwa Coal Independent Power Project ('MCIPP') with
major energy industry player, Shumba Energy Ltd ('Shumba'), a strategic opportunity to develop a multi-project and
accordingly multi-revenue stream programme, has been identified. This will comprise developing an established
761Mt coal deposit into a coal mine that will feed two power stations. The first of these is a 300 MW power station
envisaged to provide power to Shumba's petrochemical plant, which will first provide Botswana with up to 80% of its
domestic liquid / gas fuel requirements, and later the Southern African market at large. Kibo has a 35% interest in
this power station. The second power station with a planned capacity of 250-300 MW, in which Kibo holds an 85%
interest, is primarily focussed towards feeding the Botswana power grid.
Kibo’s Botswana subsidiary, Kibo Energy Botswana (Pty) Limited, submitted a mining licence application over the
Mabesekwa Coal Resource to the Botswana Department of Mines in late 2018 and it is still going through due process.
The recent restructuring has necessitated some additional modifications to the application but the Company is
working closely with the Botswana authorities and its joint venture partner to ensure the application is progressing
smoothly and in step with its overall project development schedule.
A pre-feasibility study on the coal mining element together with a scoping study for the construction of the power
plant has already been completed by Sechaba. Water and land use permits and environmental certification are also
already in place at the site.
Completing our African portfolio of interests is the 100% owned Mbeya Coal to Power Project ('MCPP') in Tanzania.
This project, fully developed to funding / construction ready status, with seven Mining Licences and water permits in
place, comprises a 120 Mt coal deposit and a 300-600 MW power plant. It too is making headway and remains an
exciting opportunity as highlighted by the confirmation from TANESCO that Kibo has the option to develop the project
for the severely undersupplied power export market and also remains well positioned to participate in any future
tenders from the Tanzanian Government for the supply of coal -fired electricity.
Beyond Africa, although presenting in a different shape and form, the energy crisis is just as critical. Three years ago,
engineers forecasted an unprecedented "energy gap" in the UK in a decade's time, with demand for electricity likely
to outstrip supply by more than 40%, which could lead to blackouts (recently the UK experienced four major
blackouts). Complementing its growth strategy, Kibo identified this as a strategic development opportunity and
intends to support the UK energy mix with much needed flexible energy projects by developing a portfolio of small-
scale power generation assets to support the UK power grid via its 60% interest in MAST Energy Developments
('MED') projects. To this end, one site, the shovel-ready 5 MW gas- fuelled Bordersley power generation plant has
been acquired and due diligence on several others are nearing conclusion. The development of Bordersley had been
progressing rapidly and ahead of schedule. However, as has been explained in recent communications, COVID-19 has
caused unavoidable delays to the planned construction and commissioning of the plant, which was due to take place
by the end of Q1 2020. We are doing all we can to continue to progress this and counter any further delays. AB Group,
the Italian power giant which will supply, construct and commission the Bordersley plant, continues to progress the
project remotely. Furthermore, we have utilised this temporary on-site cessation of activity as an opportunity to
consolidate our ownership of Bordersley to 100%, (see RNS dated 30 March 2020) allowing us to progress
uninterrupted with comprehensive ongoing funding discussions for MED and Bordersley (see RNS dated 17 March
2020). We remain firmly focussed on progressing this project, which offers significant near-term revenues thanks to
the power purchase agreement we have in place with Statkraft and will of course continue to provide further updates
as soon as we are in a position to do so.
We remain focused on delivering on our objective of building a leading-edge multi-asset energy company and I believe
we have the requisite quality assets, skill set, team and partners and crucially development plan to do this. Yes, the
current global backdrop has created unforeseen challenges; for starters, the various governments with whom we are
in discussions with are currently focused on the welfare of citizens rather than power projects. However, having
reacted quickly to minimise this disruption, we continue to make tangible progress across our portfolio. With an
undeniable market demand for reliable, sustainable and affordable electricity, we believe our growth prospects are
strong.
18
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
DIRECTORS’ REPORT
Post Statement of Financial Position events
Investment in Katoro Gold PLC
Following Kibo’s investment in Katoro Gold PLC during 2019 by subscribing to its October 2019 placing for 1.8
million shares issued at a price of 1p (£18,000), the Company subsequently exercised the warrants attached to these
shares at their exercise price of 1.5p and receiving an additional 1.8 million Katoro shares in February 2020. Kibo’s
equity interest in Katoro at the date of this report is 29.70%.
Issue of Convertible Loan Note
In July 2020, the Company secured a £1 million facility (“the Facility”) from a consortium of lenders. The Facility, in
the form of a convertible loan note issued by Kibo, will provide sufficient working capital to allow it proceed with
reaching key development milestones, particularly for the Benga and Mast Energy Developments Limited projects
over the next twelve months. At an EGM held on 24 August 2020, shareholders approved resolutions to increase the
authorised share capital of the Company which was required to fully avail of the Facility and meet all related funding
costs. The Company is now fully enabled to avail of the Facility. Refer to the Going Concern paragraph on page 23 for
further details.
Share Issues
During 2020 to date, as per page 8, Kibo issued an additional 135,526,399 shares comprising 29,214,110 to
contractors & service providers for agreed invoice payments at share prices of 0.45p & 0.2p; 8,000,000 as final
payment to MED with regard to acquisition costs for Bordersley, at a share price 5.25p; and 98,312,289 shares in
payment of first drawdown fee, legal fee, arrangement fee and issue of conversion shares with regard to the Facility
at share prices ranging from 0.22p to 0.27p.
Increased Investment in Mast Energy Developments and Listing of Sloane on the LSE
In August 2020, Sloane Developments Limited, a 100% owned UK Kibo subsidiary, announced that it will acquire
from St Anderton on Vaal Limited ('St Anderton') the remaining 40% interest in Mast Energy Developments Ltd ('Mast
Energy'), that it did not already hold, in exchange for 36,917,076 new Ordinary Shares in Sloane. Accordingly, Sloane
(to be renamed Mast Energy Ltd) will at completion of the share exchange transaction own a 100% interest in Mast
Energy alongside its 100% interest in Bordersley Power Ltd as it seeks to develop a portfolio of flexible power plants
in the UK. St Anderton will at completion hold 26.11% of Sloane, with Kibo holding the remaining 73.89%. Sloane has
made an application to the LSE for admission to the Standard List which will be accompanied by an IPO to raise funds
to advance Mast Energy’s energy portfolio in the UK.
Settlement and Termination of Convertible Loan Note and Placing
Kibo settled all outstanding amounts due under the Convertible Loan Note ("CLN"), announced on 25 June 2020 and
reached agreement with the holders of the CLN to terminate the CLN with immediate effect. The Company has further
undertaken a successful placing to raise GBP1,450,000 before costs through the Company's broker ETX Capital, at a
placing price of 0.2p per placing share, with 1 warrant attached for every two placing shares, exercisable at 0.4p each
over 36 months.
Principal Risks and Uncertainties
The realisation of coal mining and energy assets is dependent on the discovery and successful development of
economic mineral reserves and/or completion of positive integrated bankable feasibility studies and is subject to a
number of significant potential risks summarised as follows, and described further below:
•
•
•
•
•
•
•
•
•
•
financial instrument & foreign exchange risk;
strategic risk;
funding risk;
commercial risk;
operational risk;
staffing and key personnel risks;
speculative nature of mineral exploration and development;
political instability;
uninsurable risks; and
foreign investment risks including increases in taxes, royalties and renegotiation of contracts.
19
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
DIRECTORS’ REPORT
Financial instrument and foreign exchange risk
The Company and Group are exposed to risks arising from financial instruments held and foreign exchange
transactions entered throughout the period. These are discussed in Note 27 to the Annual Financial Statements.
Strategic risk
Significant and increasing competition exists for mineral and energy project acquisition opportunities throughout the
world. Because of this competition, the Company may be unable to acquire and exploit additional attractive projects
on terms it considers acceptable. Accordingly, there can be no assurance that the Company will acquire any interest
in additional mining and/or energy development projects that would yield commercial opportunities. The Company
expects to undertake comprehensive due diligence where warranted to help ensure opportunities are subjected to
proper evaluation.
Funding risk
In the past the Company has raised funds via equity contributions from new and existing shareholders, thereby
ensuring the Company remains a going concern until such time that revenues are earned through the sale or
development of its projects. There can be no assurance that such funds will continue to be available on reasonable
terms, or at all in future. The Directors regularly review cash flow requirements to ensure the Company can meet
financial obligations as and when they fall due.
Commercial risk
The mining industry is competitive and there is no assurance that, even if commercial quantities of minerals are
available to the Company, a profitable market will exist for the sale of such minerals. There can be no assurance that
the quality of the minerals will be such that the Company mining assets can be mined at a profit or, where applicable,
support its energy development projects. Factors beyond the control of the Company may affect the marketability of
any minerals discovered. Mineral prices are subject to volatile price changes from a variety of factors including
international economic and political trends, expectations of inflation, global and regional demand, currency exchange
fluctuations, interest rates and global or regional consumption patterns, speculative activities and increased
production due to improved mining and production methods. Ultimately, the Company expects that prior to a
development decision, a project would be the subject of a feasibility analysis to ensure there exists an appropriate
level of confidence in its economic viability.
Operational risk
Mining & energy development operations are subject to hazards normally encountered in exploration, development
and production. These include unexpected geological formations, rock falls, flooding, dam wall failure and other
incidents or conditions which could result in damage to plant or equipment or the environment and which could
impact any future production throughout. Although it is intended to take adequate precautions to minimise risk, there
is a possibility of a material adverse impact on the Company’s operations and its financial results. The Company will
develop and maintain policies appropriate to the stage of development of its various projects.
Staffing and key personnel risks
Recruiting and retaining qualified personnel is critical to the Company’s success. The number of persons skilled in the
acquisition, exploration and development of mining properties and in the development of energy projects is limited
and competition for such persons is intense. While the Company has good relations with its employees, these relations
may be impacted by changes in the scheme of labour relations which may be introduced by the relevant governmental
authorities. Adverse changes in such legislation may have a material adverse effect on the Company’s business, results
of operations and financial condition. Staff are encouraged to discuss with management matters of interest to the
employees and subjects affecting day-to-day operations of the Company.
Speculative nature of mineral exploration & energy project development
In addition to the above there can be no assurance that the current activities will result in profitable mining and energy
production.
The recoverability of the carrying value of exploration and evaluation assets is dependent on the successful discovery
of economically recoverable reserves, the achievement of profitable operations, and the ability of the Company to
raise additional financing, if necessary, or alternatively upon the Company’s ability to dispose of its interests on an
advantageous basis. Changes in market conditions could require material write downs of the carrying value of the
Company’s assets.
20
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
DIRECTORS’ REPORT
Development of the Company’s assets is, amongst others, contingent upon obtaining satisfactory feasibility results
and securing additional adequate funding. Mineral and energy project development involves substantial expenses and
a high degree of risk, which even a combination of experience, knowledge and careful evaluation may not be able to
adequately mitigate. The degree of risk reduces substantially when a Company’s properties move from the
exploration phase to the advanced feasibility phase. Management continuously assesses funding requirements against
project viability and prioritise key projects over the short to medium term.
The development of mineral deposits is dependent upon a number of factors including the technical skill of the
personnel involved. The commercial viability of a mineral deposit, once discovered, is also dependent upon a number
of factors, including the size, grade and proximity to infrastructure, metal prices and government regulations,
including regulations relating to royalties, allowable production, importing and exporting of minerals, and
environmental protection. In addition, several years can elapse from the initial phase of drilling until commercial
operations are commenced.
Political stability
The Company is conducting its operational activities in Mozambique, Botswana, Tanzania and the UK. The directors
believe that the governments of these countries support the development of natural resources and energy production
by foreign investors and actively monitor the situation. However, there is no assurance that future political and
economic conditions in these countries will not result in their governments adopting different policies regarding
foreign development and ownership of mineral resources. Any changes in policy affecting ownership of assets,
taxation, rates of exchange, environmental protection, labour relations, repatriation of income and return of capital,
may affect the Company’s ability to develop its projects.
Uninsurable risks
The Company may become subject to liability for accidents, pollution and other hazards against which it cannot insure
or against which it may elect not to insure because of prohibitive premium costs or for other reasons, such as amounts
which exceed policy limits. The company chooses to manage these risks, as best possible, through cautious business
practice, on a continuous basis.
Foreign investment risks including increases in taxes, royalties and renegotiation of contracts
The Group is subject to risk arising from the ever-changing economic environment in which its subsidiaries operate,
mainly driven by the changing regulatory environment governing corporate taxation, transfer pricing and other
investment related operational activities. The Group continues to re-assess its investment decisions to limit exposure
to the ever-changing regulatory environment in which it operates.
Directors’ Interests
The interests of the directors and Company secretary (held directly and indirectly), who held office at the date of
approval of the financial statements, in the share capital of the Company are as follows:
Ordinary Shares (held directly and indirectly)
Directors & Secretary
22/09/20
31/12/19
31/12/18
Christian Schaffalitzky
Noel O’Keeffe
Louis Coetzee
Lukas Maree
Wenzel Kerremans
Andreas Lianos
Warrants (held directly and indirectly)
6,004,842
7,037,047
19,505,996
7,419,800
1,191,241
17,073,663
6,004,842
7,037,047
19,505,996
7,419,800
1,191,241
17,073,663
2,119,842
3,591,447
8,065,996
2,934,200
376,241
7,588,633
22/09/20
31/12/19
31/12/18
Directors & Secretary
Christian Schaffalitzky
Louis Coetzee
Noel O’Keeffe
Lukas Maree
Wenzel Kerremans
Andreas Lianos
5,827,500
17,160,000
5,168,400
6,728,400
1,222,500
14,227,500
5,827,500
17,160,000
5,168,400
6,728,400
1,222,500
14,227,500
21
-
-
-
-
-
-
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
DIRECTORS’ REPORT
The above warrants in issue are exercisable at a prices of £0.008 at any time up to 3 May 2021 covering 33,556,200
and £0.01 at any time up to 3 November 2022 covering 16,778,100 applicable in this ratio pro rata to each director’s
holding.
For further detail surrounding the ordinary shares, share options and warrants in issue, refer to Notes 18 and 20 of
the annual financial statements.
Transactions Involving Directors
There have been no contracts or arrangements of significance during the period in which Directors of the Company,
or their related parties, were interested other than as disclosed in Note 26 to the annual financial statements.
Directors meetings
The Company held twenty-five (25) Board meetings during the reporting period and the number of meetings attended
by each of the directors of the Company during the year to 31 December 2019 were:
Number of
Meetings
Attended
Number of
Meetings Eligible
to Attend
Director Name
Position
Christian Schaffalitzky
Louis Coetzee
Andreas Lianos
Noel O’Keeffe
Lukas Maree
Wenzel Kerremans
Chairman
Chief Executive Officer
Non-Executive Financial Director
Non-Executive Technical Director
Executive Director
Non-Executive Director
23
25
24
25
20
20
25
25
25
25
25
25
Under the Company’s Memorandum & Articles of Association, one third of directors are required to retire by rotation
from the Board on an annual basis, through resignation at the Annual General Meeting (AGM) and may put themselves
forward again for re-election at the AGM.
Committee meetings
Members of the
Audit Committee, Remuneration Committee and Governance Committee were reconstituted during
2018 to reflect changes in directors’ roles commensurate with the change in the Company’s business plan to become
an energy development company. These changes are reflected in the committee members listed hereunder.
The Company held two (2) Audit Committee meetings during the reporting period and the number of meetings
Number of
attended by each of the members during the year to 31 December 2019 were:
Meetings Eligible
to Attend
Number of
Meetings
Attended
Director Name
Position
Andreas Lianos
Christian Schaffalitzky
Wenzel Kerremans
Chairman (Non-Executive)
Non-Executive Director
Non-Executive Director
2
2
2
2
2
2
The Company held one (1) Remuneration Committee meetings during the reporting period and the number of
meetings attended by each of the members during the year to 31 December 2019 were:
Number of
Meetings
Attended
Number of
Meetings Eligible
to Attend
Director Name
Position
Christian Schaffalitzky
Andreas Lianos
Wenzel Kerremans
Chairman (Non-Executive)
Non-Executive Director
Non-Executive Director
1
1
1
1
1
1
The Company held one (1) Governance Committee meeting during the reporting period and the number of meetings
attended by each of the members during the year to 31 December 2019 were:
Number of
Meetings
Attended
Number of
Meetings Eligible
to Attend
Director Name
Position
22
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
DIRECTORS’ REPORT
Christian Schaffalitzky
Noel O’Keeffe
Wenzel Kerremans
Significant Shareholdings
Chairman (Non-executive)
Non-Executive Director
Non-Executive Director
1
1
1
1
1
1
According to the latest information available to the Company, in addition to the interests of the directors, at 31
December 2019 and at the date of this report, the following shareholders own 3% or more beneficial interest, either
direct or indirect, of the issued share capital of the Company, which is considered significant for disclosure purposes
in the annual financial statements:
Percentage of issued share capital
22/09/20
31/12/19
31/12/18
Sanderson Capital Partners Ltd
Sechaba Natural Resources Limited
(Shumba Energy Limited)
Yakoub Yakoubov
Spreadex Ltd
Subsidiary Undertakings
17.59%
-
4.88%
7.51%
13.96%
10.19%
4%
-
8.45%
24.6%
-
-
Details of the Company’s subsidiary undertakings are set out in Note 25 to the annual financial statements.
Political Donations
During the period, the Group made no charitable or political contributions (2018: £ nil).
Going Concern
The Company and Group’s ability to continue as a going concern is dependent on the sourcing of additional funding
by the directors for the foreseeable future. The future of the Company and the Group is dependent on the successful
future outcome of its short- and medium-term ability to raise new equity funding and the successful development of
its energy development assets and of the availability of further funding to bring these interests to production. All these
dependencies are subject to material uncertainty but in preparing the financial statements, the Directors consider
that they have taken into account all information that could reasonably be expected to be available. Consequently,
they consider that it is appropriate to prepare the financial statements on the going concern basis.
The directors are following an active approach to continuously reduce administrative costs in order to alleviate the
pressure on cash flow, most notably the 40% reduction in the remuneration of directors and management that were
implemented effective June 2020.
On 17 July 2020 the Company issued a convertible loan to a consortium of lenders (together “the Investor”) which
provides the facility to drawdown up to £1 million over the next 12 months with an option to extend availability
period by a further 6 months by mutual agreement. The drawdown will be in four tranches of £300,000, £300,000,
£200,000 and £200,000 and each tranche is contingent on the Company reaching certain milestones on its projects.
Repayment will be by single bullet point payment at the end of the 12 month period of the amount outstanding at that
time accompanied by the issue of a warrant to the Lenders to subscribe for 400 shares for every £1 borrowed over a
period of 36 months at an exercise price of £0.0025. The Investor has the option to convert part or all of the facility
provided to the Company, into new ordinary shares of the Company on the Investor giving notice of conversion to
the Company. The conversion price will be based on a 10% discount to the 5 day VWAP at the time of the conversion
notice or at floor price of 0.15 pence whichever is higher at the time. The fees associated with facility comprise a draw
down comprising 15% of each draw down amount , an arrangement fee of 7% of the total facility (£70,000) and a due
diligence fee of £18,000. There are also terms for a buy-back option for the Company on the amount outstanding on
the Facility at any time.
On 17 July, contemporaneous with the signing of the Facility agreement, the Company submitted a drawdown request
for the first tranche of £300,000 which it received on 05 August 2020. Coincident with receipt of funds the Company
paid the first drawdown fee and the legal due diligence fee by the issue of 28,636,363 new ordinary shares to the
Investor at a price of £0.0022.
On 24 August 2020, the Company issued 25,925,925 shares at a price per share of £0.0027 in payment of the £70,000
arrangement fee on the Facility and issued a further 43,750,000 shares at a price per share of 0.0024 to certain lenders
23
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
DIRECTORS’ REPORT
who had elected to convert their participation in the first tranche drawdown of the 05 August 2020 to Kibo shares in
accordance with the terms of the Facility.
The directors have reviewed budgets, projected cash flows and other relevant information, and on the basis of this
review, are confident that the Company and the Group will have adequate financial resources to continue in
operational existence for the foreseeable future.
Environmental responsibility
The Company recognises that its activities require it to have regard to the potential impact that it, its subsidiaries and
partners may have on the environment. Where exploration and development works are carried out, care is taken to
limit the amount of disturbance and where any remediation works are required they are carried out as and when
required.
Dividends
There have been no dividends declared or paid during the current financial period (2018: £ nil).
Corporate Governance Policy
The Board is aware of the importance to conform to its statutory responsibilities and industry good practice in relation
to corporate governance of the Group.
The Board is accountable to the shareholders for delivery of sustained value growth. In order to support its duties
and responsibilities the Board implements control procedures that assess and manage risk and ensure robust
financial and operational management within the Company. The principal risks that the Company is exposed to can
be classified under the general headings of exploration risk, commodity risk, price risk, currency risk and political
risk.
The Board also sets the Company’s core values and ethical standards of business conduct ensuring these are
effectively communicated to all staff and are monitored continuously by the Board.
The Board sets the Company’s strategy and monitors its implementation through management and financial
performance reviews. It also works to ensure that adequate resources are available to implement strategy in a timely
manner.
The Company subscribes to the values of good corporate governance at all levels and is committed to conduct business
with discipline, integrity and social responsibility. The Board of Directors is firmly committed to promoting Kibo
Energy PLC’s adherence to the principles contained in the QCA Corporate Governance Code (2018) (“QCA Code”), and
constantly reviews its performance against the QCA Code. The Directors are committed to the implementation of the
principles and non-compliance is limited to the matter listed in this report. In compliance with its statutory, AIM &
JSE listing obligations, the directors present a Corporate Governance Report on page 9.
Role of Directors
All Board members ensure that appropriate governance procedures are adhered to and there is a clear division of
responsibilities at Board level to ensure a balance of power and authority so that no one individual has unfettered
powers of decision making.
The role of Chairman and Chief Executive Officer are not held by the same director. The Chairman is a non-executive
director.
Board and Audit Committee meetings have been taking place periodically and the executive directors manage the
daily Company operations with the Board meetings taking place on a regular basis throughout the financial period.
During the current reporting period the Board met twenty five (25) times and provided pertinent information to the
Executive Committee of the Company.
The Board is responsible for effective control over the affairs of the Company, including: strategic and policy decision-
making financial control, risk management, communication with stakeholders, internal controls and the asset
management process.
Directors are entitled, in consultation with the Chairman, to seek independent professional advice about the affairs of
the Company, at the Company’s expense.
24
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
DIRECTORS’ REPORT
The composition, roles and responsibilities of the board committees established by the Company are set out in the
Corporate Governance Report.
Internal Audit
The Company does not have an internal audit function. Currently the operations of the Group do not warrant an
internal audit function, however the Board is assessing the need to establish an internal audit department considering
future prospects as the Group’s operations increase. During the period the Board has taken responsibility to ensure
effective governance, risk management and that the internal control environment is maintained.
Health, Safety and Environmental Policy
The Group is committed to high standards of Health, Safety and Environmental performance across our business. Our
goal is to protect people, minimise harm to the environment, integrate biodiversity considerations and reduce
disruption to our neighbouring communities. We seek to achieve continuous improvement in our Health, Safety and
Environmental performance.
Corporate Social Responsibility Policy (CSR)
The Group’s policy is to conduct all our business operations to best industry standards and to behave in a socially
responsible manner. Our goal is to behave ethically and with integrity and to respect cultural, national and religious
diversity.
Governance of IT
The Board is responsible for IT governance as an integral part of the Group’s governance as a whole. The IT function
is not expected to significantly change in the foreseeable future. The Board has the required policies and procedures
in place to ensure governance of IT is adhered to.
Integrated and Sustainability Reporting
Integrated Reporting is defined as a “holistic and integrated representation of the Group’s performance in terms of
both its finances and its sustainability”. The Group currently does not have a separate integrated report. The Board
and its sub-committees are in the process of assessing the principles and practices of integrated reporting and
sustainability reporting to ensure that adequate information about the operations of the Group, the sustainability
issues pertinent to its business, the financial results and the results of its operations and cash flows are disclosed in a
single report.
Statement of Directors Responsibility
The directors are responsible for preparing the Group and Company financial statements in accordance with
applicable Laws and Regulations.
Irish Company law requires the directors to prepare Group and parent Company financial statements for each
financial period. As permitted by Company law, the directors have prepared the Group financial statements in
accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU IFRS) and
have elected to prepare the Company financial statements, as applied in accordance with the provisions of the
Companies Act 2014.
The Group and Company financial statements are required by law and EU IFRS to present fairly the financial
position and performance of the Group. References in the relevant part of the Companies Act 2014 to financial
statements giving a true and fair view are provided for in the Act to mean such references to the financial
statements achieving a fair presentation. In preparing each of the Group and Company financial statements, the
directors are required to:
select suitable accounting policies and apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, 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.
25
•
•
•
•
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
DIRECTORS’ REPORT
The directors confirm they have complied with the above requirements in preparing these accounts.
Under applicable law the directors are also responsible for preparing a Directors’ Report and reports relating to
directors’ remuneration and corporate governance that comply with that law and those rules.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any
time the financial position of the Company and which enable them to ensure that its financial statements are prepared
in accordance with International Financial Reporting Standards, and comply with the Companies Act 2014, and
European Communities (Companies: Group Accounts) Regulations 1992 and all regulations to be construed as one
with those acts. They are also responsible for taking such steps as are reasonably open to them to safeguard the assets
of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Company’s website. Legislation in the Republic of Ireland governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
The Board
The Board is responsible for the supervision and control of the Company and is accountable to the shareholders. The
Board has reserved decision-making on a variety of matters, including determining strategy for the Group, reviewing
and monitoring executive management performance and monitoring risks and controls.
Accounting records
The measures taken by the directors to ensure compliance with the requirements in Sections 281 to 285 of the
Companies Act 2014, regarding proper books of account, are the implementation of necessary policies and procedures
for recording transactions, the employment of competent accounting personnel with appropriate expertise and the
provision of adequate resources to the financial function. The books of account of the Company are maintained at
Kolonakiou, 37, Linopetra, P.C. 4103, Limassol, Cyprus.
Compliance statement
The directors acknowledge that they are responsible for securing the Company's compliance with the Company's
''relevant obligations'' within the meaning of section 225 of the Companies Act 2014 (described below as the ''relevant
obligations'').
The directors confirm that they have:
•
•
drawn up a compliance policy statement setting out the Company's policies (that are, in the opinion of the
directors, appropriate to the Company) in respect of the Company's compliance with its Relevant Obligations;
put in place appropriate arrangements or structures that, in the opinion of the Directors, provide a reasonable
assurance of compliance in all material respects with the Company's Relevant Obligations; and
during the financial year to which this report relates, conducted a review of the arrangements of structures that
the directors have put in place to ensure material compliance with the Company's Relevant Obligations.
•
On behalf of the Board
Christian Schaffalitzky
Noel O’Keeffe
Date: 22 September 2020
Date: 22 September 2020
26
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
AUDIT COMMITTEE REPORT
Dear Shareholders,
I am pleased to present this report on behalf of the Audit Committee and to report on the progress made by the
Committee during the year.
Aims of the Audit Committee
Our purpose is to assist the Board in managing risk, discharging its duties regarding the preparation of financial
statements, ensure that a robust framework of accounting policies is in place and enacted and oversee the
maintenance of proper internal financial controls.
The Audit Committee consists of myself (Chairman) and two other non-executive directors, Christian Schaffalitzky
and Wenzel Kerremans. The Committee aims to meet at least once each year and its key responsibilities include
monitoring the integrity of the Group’s financial reporting and to approve and recommend the annual financial
statements to the Board. The Chief Executive Officer and Chief Financial Officer are invited to attend meetings of the
Committee.
The Audit Committee is committed to:
•
•
•
•
•
Maintaining the integrity of the financial statements of the Company and reviewing any significant reporting
matters therein;
Reviewing the Annual & Interim Report and Accounts and monitoring the accuracy and fairness of the
Company’s financial statements;
Ensuring compliance of financial statements with applicable accounting standards and the AIM & JSE Rules;
Reviewing the adequacy and effectiveness of the internal financial control environment and risk management
systems; and
Overseeing the relationship with and the remuneration of the external auditor, reviewing their performance
and advising the Board members on their appointment.
The Audit Committee met twice in 2019.
Activities of the Audit Committee during the year
On behalf of the Board, the Audit Committee has closely monitored the maintenance of internal controls and risk
management during the year. Key financial risks are reported during each Audit Committee meeting, including
developments and progress made towards mitigating these risks.
The Audit committee received and reviewed reports from the Chief Financial Officer, other members of management
and external auditors relating to the interim and annual accounts and the accounting and internal control systems in
use throughout the Group.
The external auditors attended meetings to discuss the planning and conclusions of their work and met with members
of the committee. The committee was able to call for information from management and consult with the external
auditors directly as required.
The objectivity and independence of the external auditors was safeguarded by reviewing the auditors’ formal
declarations, monitoring relationships between key audit staff and the Company and tracking the level of non-audit
fees payable to the auditors. Significant attention was given to the level of non-audit fees provided.
As noted above, the committee met twice during the year, to review the 2019 annual accounts and the interim
accounts to 30 June 2019 and audit planning for the year ended 31 December 2019. Members of the committee
reviewed with the independent auditor its judgements as to the acceptability of the Company’s accounting principles.
Since the year end the committee has met further with the auditors to consider the 2019 financial statements. In
particular, the committee discussed the significant audit risks, accounting for acquisitions and disposals during the
year and the application of the new accounting standard IFRS 16. In addition, the committee monitors the auditor
firm’s independence from Company management and the Company.
___________________________
Andreas Lianos
Chairman
Audit Committee
22 September 2020
27
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Kibo Energy Plc
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Kibo Energy Plc (“the Company”) and its subsidiaries (the
“Group”) for the year ended 31 December 2019, which comprise the Consolidated Statement of Profit or Loss and
Other Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial
Position, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity, the
Consolidated Statement of Cash Flows, the Company Statement of Cash Flows, the Summary of Significant Accounting
Policies and the related notes to the consolidated financial statements. The financial reporting framework that has
been applied in their preparation is Irish Law and International Financial Reporting Standards (“IFRSs”), as adopted
by the EU.
In our opinion, the accompanying consolidated financial statements:
•
•
•
•
give a true and fair view of the consolidated financial position of the Group as at 31 December 2019 and of
the profit or loss and cash flows of the Group for the year then ended;
give a true and fair view of the financial position of the Company as at 31 December 2019 and of the Company
cash flows for the year then ended;
have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”), as
adopted by the EU; and
have been properly prepared in accordance with the requirements of the Companies Act 2014.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (“ISAs (Ireland)”). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), and
we have fulfilled our other ethical responsibilities in accordance with the IESBA Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty relating to going concern
We draw attention to page 39 of the financial statements, which details the factors the Company has considered when
assessing the going concern position. As detailed in the relevant note on page 23, the uncertainty surrounding the
availability of funds to finance ongoing working capital requirements indicates the existence of a material uncertainty
that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in
respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
How the scope of our audit addressed the key audit matter
Key audit matter
Carrying value of indefinite life intangibles
Intangible assets with an indefinite life must be
tested for impairment on an annual basis. The
determination of their recoverable amount
requires judgement on the part of management
in both
identifying and then valuing the
relevant cash generating units especially for
projects where
there
timeframe.
is an uncertain
Our procedures to obtain comfort that the balance of the
indefinite life intangible assets is not materially misstated,
-
included:
Obtaining and reviewing documentation supporting the
ownership and rights and obligations assertions in
relation to the exploration and evaluation assets, as well
as reviewing the status of the required permits and
licenses;
Discussing and challenging management as to the status
of the project development and
future planned
exploration and development;
Considering and challenging management’s impairment
review;
28
-
-
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
INDEPENDENT AUDITOR’S REPORT
The Group has upstream and downstream
power generation and delivery projects in
Tanzania (Mbeya Coal to Power (MCPP) and in
the United Kingdom (Bordersley Power). The
intangible assets at 31 December 2019 totalled
£18.5m (2018: £26.1m). No impairment was
recognised during the year.
We considered the risk whether indicators of
impairment may exist.
Reorganisation of Kibo Energy Botswana
During the year, Kibo restructured its holding in
Kibo Energy Botswana and now holds 35%
(2018: 85%) of an enlarged resource as
disclosed in note 10 to the financial statements.
As a result, an accounting gain of £320k was
recognised and it is now accounted for as
investment in an associate at £9.7m.
There is a risk that the accounting treatment of
the transaction is not in accordance with the
applicable standards.
Acquisition of Bordersley
During the year, the Group acquired Bordersley
from a third party through a share issue. The
transaction was accounted for as an asset
acquisition and gave rise to an intangible asset
at group level.
There is a risk that the transaction is not
disclosed appropriately, that the accounting
policy selected is inappropriate and that the
assets acquired are materially misstated.
-
-
-
Ensuring that the accounting for the exploration and
evaluation assets was in accordance with IFRS 6;
Confirming that the recoverable value of the underlying
project is in excess of the carrying value of goodwill;
Assessing whether the disclosures in relation to the
intangible assets are
valuation of goodwill and
financial reporting
compliant with
requirements.
the relevant
Our findings
We have obtained sufficient comfort that the Group has
accounted for its indefinite life intangibles in accordance with
the applicable standards and that the accounting policies as set
out.
Our procedures to obtain comfort that the accounting treatment
of the transaction is in accordance with the applicable standards,
-
included:
-
Obtaining and reviewing management’s technical
accounting memo and the supporting calculations;
Confirming the details of the arrangement to supporting
documentation;
Challenging management’s methodology
to ensure
assumptions
accounting gain on disposal is appropriate;
Confirming that the resultant investment in associate is
accounted for under equity method.
and
the recognition of
that
-
-
Our findings
We have obtained sufficient comfort that the transaction was
accounted for in accordance with the applicable standards and
that the policy selected reflects the commercial reality of the
transaction.
Our procedures to obtain comfort that the accounting treatment
of the transaction is in accordance with the applicable standards,
-
included:
-
Obtaining and reviewing the documentation and
contracts evidencing the occurrence of the transaction;
Obtaining evidence to support the legal title to develop
the power generation project;
Obtaining and reviewing management’s technical
accounting memo and the supporting calculations;
Challenging management’s accounting methodology
and discussing the project directly with management to
consider developments since acquisition including
management's plans for commercialisation.
Our findings
-
-
We are satisfied that the acquisition was accounted for in
accordance with the applicable standards and that the policy
selected reflects the commercial reality of the transaction.
Our audit procedures in relation to these matters were designed in the context of out audit opinion as a whole. They
were not designed to enable us to express an opinion on these matters individually and we express no such opinion.
29
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
INDEPENDENT AUDITOR’S REPORT
Other information
The directors are responsible for the other information. The other information comprises the information included in
the Annual report, other than the financial statements and our Auditors' report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2014
Based solely on the work undertaken in the course of the audit, we report that:
•
•
in our opinion, the information given in the Directors' Report is consistent with the financial statements; and
in our opinion, the Directors' Report has been prepared in accordance with applicable legal requirements.
We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily
and properly audited, and the financial statements are in agreement with the accounting records.
Matters on which we are required to report by exception
Based on the knowledge and understanding of the Company and its environment obtained in the course of the audit,
we have not identified any material misstatements in the Directors' Report.
The Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of directors'
remuneration and transactions required by sections 305 to 312 of the Act are not made. We have nothing to report in
this regard.
Respective responsibilities and restrictions on use
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial
Statements
As explained more fully in the Directors' Responsibilities Statement on page 25, the directors are responsible for the
preparation of the consolidated 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 the consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’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 management either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated 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 (Ireland) 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 consolidated financial statements.
As part of an audit in accordance with ISAs (Ireland), we exercise professional judgment and maintain professional
30
scepticism throughout the audit. We also:
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
INDEPENDENT AUDITOR’S REPORT
•
•
•
•
•
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control;
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control;
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management;
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern;
Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation;
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company's members in accordance with Section 391 of the Companies Act 2014. Our
audit work has been undertaken so that we might state to the Company's members those matters we are required to
state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company and the Company's members for our audit work, for this
report, or for the opinions we have formed.
Christopher Magill F.C.A
Crowe Ireland
for and on behalf of
Chartered Accountants and Statutory Audit Firm
Marine House
Clanwilliam Place
Dublin 2
Date:
22 September 2020
31
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
All figures are stated in Sterling
Continuing operations
Revenue
Administrative expenses
Impairment of intangible assets
Listing and capital raising fees
Operating loss
Exploration expenditure
Loss before tax
Investment and other income
for the period
Loss
Taxation
Other comprehensive loss:
Items that may be classified subsequently to profit or loss:
Other Comprehensive loss for the period net of tax
Exchange differences on translation of foreign operations
Total comprehensive loss for the period
Loss for the period
Attributable to the owners of the parent
Attributable to the non-controlling interest
Total comprehensive loss for the period
Attributable to the owners of the parent
Attributable to the non-controlling interest
Loss Per Share
GROUP
31 December
2019
Note
Audited
£
31 December
2018
Audited
£
-
(2,922,927)
-
(729,072)
(4,549,038)
(897,039)
-
(2,045,613)
(912,892)
(336,807)
(4,074,755)
(779,443)
(3,903,116)
645,922
(4,036,713)
38,042
(3,903,116)
-
(4,036,713)
-
2
3
6
86,098
86,098
(3,817,018)
(401,751)
(401,751)
(4,438,464)
(3,903,116)
(4,036,713)
(3,500,004)
(403,112)
(3,817,018)
(3,388,778)
(647,935)
(4,438,464)
(3,415,653)
(401,365)
(3,776,894)
(661,570)
Basic loss per share
Diluted loss per share
8
8
(0.004)
(0.004)
(0.006)
(0.006)
All activities derive from continuing operations.
The Group has no recognised gains or losses other than those dealt with in the Statement of Profit or Loss and Other
Comprehensive Income.
The accompanying notes on pages 49-75 form an integral part of these financial statements.
The financial statements were approved and authorised for issue by the Board of Directors on 22 September 2020
and signed on its behalf by:
On behalf of the Board
Christian Schaffalitzky
________________________
Noel O’Keeffe
________________________
32
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
All figures are stated in Sterling
Assets
Non-Current Assets
Property, plant and equipment
Intangible assets
Investments in associates
Other financial assets
Total non-current assets
Goodwill
Current Assets
Trade and other receivables
Total current assets
Cash
Total Assets
Assets classified as held for sale
Equity and Liabilities
Equity
Called up share capital
Share premium account
Control reserve
Share based payment reserve
Translation reserve
Attributable to equity holders of the parent
Retained deficit
GROUP
31 December
2019
Audited
£
Note
31 December
2018
Audited
£
9
10
11
12
14
15
16
17
18
18
19
20
21
20,240
26,059,525
-
-
28,589,854 26,379,765
300,000
64,405
18,491,105
9,696,683
37,661
300,000
380,693
472,327
91,634
89,349
743,507
654,158
794,074
-
29,856,255 27,123,272
17,240,017
39,205,318
19,532,350
42,750,436
(18,329)
(18,329)
41,807
1,504,513
(656,622)
(872,942)
28,270,074
26,412,403
(34,625,954) (29,399,788)
Total Equity
Non-controlling interest 22
28,297,147
27,073
26,821,574
409,171
Liabilities
Current Liabilities
Trade and other payables
Total Current Liabilities
Borrowings
Total Equity and Liabilities
Liabilities directly associated with assets held for sale
23
24
17
1,024,126
1,547,851
523,725
301,698
301,698
-
11,257
-
29,856,255 27,123,272
The accompanying notes on pages 49-75 form an integral part of these financial statements.
The financial statements were approved by the Board of Directors on 22 September 2020 and signed on its behalf by:
On behalf of the Board
Christian Schaffalitzky
________________________
Noel O’Keeffe
________________________
33
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
COMPANY STATEMENT OF FINANCIAL POSITION
All figures are stated in Sterling
Non-Current Assets
Investments in group undertakings
Total Non- current assets
Trade and other receivables
Current Assets
Trade and other receivables
Total Current assets
Cash
Total Assets
Equity and Liabilities
Equity
Called up share capital
Share premium
Share based payment reserves
Total Equity
Retained deficit
Liabilities
Current Liabilities
Trade and other payables
Total liabilities
Borrowings
Total Equity and Liabilities
Company
31 December
2019
Audited
£
31 December
2018
Audited
£
43,318,643
43,318,643
-
37,890,651
38,224,146
333,495
361,467
392,856
31,389
282
39,256
38,974
43,711,499
38,263,402
19,532,350
42,750,436
977,575
43,150,817
(20,109,544)
17,240,017
39,205,318
-
38,168,330
(18,277,005)
25
15
15
16
18
18
20
23
24
265,727
560,682
294,955
43,711,499
95,072
95,072
-
38,263,402
Equity includes a loss for the year of the parent company of £1,832,539 (2018: £2,356,473).
The accompanying notes on pages 49-75 form integral part of these financial statements.
The financial statements were approved by the Board of Directors on 22 September 2020 and signed on its behalf
by:
On behalf of the Board
Christian Schaffalitzky
____________________________
Noel O’Keeffe
________________________
34
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
GROUP
All figures are stated in Sterling
Balance as at 1 January 2018
Share
Capital
Share
premium
Share based
payment
reserve
Control
reserve
Foreign
currency
translation
reserve
Retained deficit Non-controlling
Total equity
interest
£
£
£
£
£
£
£
14,015,670
28,469,750
556,086
(213,053)
(268,506)
(26,534,653)
927,107
16,952,401
Loss for the year
Adjustment arising from change in non-controlling interest
Other comprehensive income - exchange differences on translating
foreign operations
-
-
-
-
-
-
-
-
-
-
194,724
-
-
(3,388,778)
(647,935)
(4,036,713)
-
(388,116)
9,364
-
143,634
(13,635)
347,722
(401,751)
Proceeds of share issue of share capital
Reclassification of share based payment reserve on expired share
options
Balance as at 31 December 2018
3,224,347
-
3,224,347
17,240,017
10,735,568
-
10,735,568
39,205,318
-
(514,279)
-
-
-
-
41,807
(514,279)
(18,329)
194,724
(656,622)
(388,116)
-
514,279
(2,865,135)
(29,399,788)
-
-
(517,936)
409,171
13,959,915
-
9,869,173
26,821,574
Loss for the year
Adjustment arising from change in non-controlling interest
Other comprehensive income - exchange differences on translating
foreign operations
Disposal of subsidiary
Proceeds of share issue of share capital
Deferred vendor liability – equity settled
Share options and warrants issued during the year
Balance as at 31 December 2019
Note
-
-
-
-
-
-
-
-
2,292,333
3,545,118
-
2,292,333
-
19,532,350
-
3,545,118
-
42,750,436
-
-
-
-
-
-
-
-
-
-
-
-
84,351
(3,500,004)
(1,726,162)
-
(403,112)
19,267
1,747
(3,903,116)
(1,706,895)
86,098
(300,671)
-
-
-
-
-
421,471
1,462,706
1,041,235
1,504,513
-
-
-
(18,329)
-
(216,320)
-
(872,942)
-
(5,226,166)
-
(34,625,954)
-
(382,098)
-
27,073
(300,671)
5,837,451
421,471
1,475,573
1,041,235
28,297,147
The notes on pages 49-75 form part of the financial statements.
The financial statements were approved by the Board of Directors on 22 September 2020 and signed on its behalf by:
On behalf of the Board
18
18
20
19
21
22
_____________________________
Christian Schaffalitzky
____________________________
Noel O’Keeffe
35
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
COMPANY STATEMENT OF CHANGES IN EQUITY
COMPANY
All figures are stated in Sterling
Balance at 1 January 2018
Share capital
Share premium Share based
payment
reserve
Foreign
currency
translation
reserve
Retained deficit Total equity
£
£
£
£
£
£
14,015,670
28,469,750
514,279
14,723
(16,434,811)
26,579,611
Loss for the year
Other comprehensive loss - exchange differences on translating foreign operations
Reclassification of share based payment reserve on expired share options
Proceeds of issue of share capital
Balance at 31 December 2018
-
-
-
3,224,347
3,224,347
17,240,017
-
-
-
10,735,568
10,735,568
39,205,318
-
-
(514,279)
-
(514,279)
-
-
(14,723)
-
-
(14,723)
-
(2,356,473)
-
514,279
-
(1,842,194)
(18,277,005)
(2,356,473)
(14,723)
-
13,959,915
11,588,719
38,168,330
Loss for the year
Share options and warrants issued during the year
Proceeds of issue of share capital
Balance at 31 December 2019
Note
-
2,292,333
2,292,333
19,532,350
-
3,545,118
3,545,118
42,750,436
977,575
977,575
-
977,575
(1,832,539)
-
(1,832,539)
-
(20,109,544)
(1,832,539)
977,575
4,982,477
5,837,451
43,150,807
-
-
-
-
17
17
19
20
The accompanying notes on pages 49-75 form an integral part of these financial statements.
The financial statements were approved by the Board of Directors on 22 September 2020 and signed on its behalf by:
On behalf of the Board
Christian Schaffalitzky
________________________
Noel O’Keeffe
________________________
36
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
CONSOLIDATED STATEMENT OF CASH FLOWS
All figures are stated in Sterling
Cash flows from operating activities
Loss for the period before taxation
Adjustments for:
Impairment of intangible assets
Foreign exchange( gain)/loss
Profit from the loss of control of subsidiary
Profit from the disposal of subsidiary
Investments acquired not for cash
Warrants and Options issued
Depreciation on property, plant and equipment
Cost settled through the issue of shares
Movement in working capital
Increase in debtors
Increase in creditors
Net cash outflows from operating activities
Cash flows from financing activities
Proceeds of issue of share capital
Repayment of borrowings
Net cash proceeds from financing activities
Proceeds from borrowings
Cash flows from investing activities
Cash forgone on disposal of subsidiary
Net cash flows investing activities
Purchase of property, plant and equipment
Net decrease in cash
Cash at beginning of period
Cash at end of the period
Exchange movement
Continuing operations
Assets classified as held for sale
GROUP
31 December
2019
Audited
£
Notes
31 December
2018
Audited
£
(3,903,116)
(4,036,713)
-
-
(320,349)
(270,639)
(37,661)
1,041,235
20,596
(2,748,379)
721,555
912,892
(270,881)
-
-
-
-
6,805
(3,260,931)
126,966
(402,661)
355,884
758,545
(2,392,495)
(30,303)
5,177
35,480
(3,255,754)
981,708
-
1,934,173
952,465
3,100,000
(200,000)
3,151,565
251,565
(8,329)
-
(8,329) (21,494)
(21,494)
-
(466,651)
(125,683)
654,158 766,586
654,158
98,600
13,255
(88,907)
91,634
6,966
654,158
-
12
20
9
15
23
18
24
24
9
16
The accompanying notes on pages 49-75 form an integral part of these financial statements.
37
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
COMPANY STATEMENT OF CASH FLOWS
All figures are stated in Sterling
Cash flows from operating activities
Loss for the period before taxation
Adjusted for:
Foreign exchange movement
Share based payments
Expenses settled in shares
Impairment of investment in subsidiary
Movement in working capital
(Increase) / Decrease in debtors
Increase in creditors
Net cash outflows from operating activities
Cash flows from financing activities
Proceeds of issue of share capital
Repayment of borrowings
Net cash proceeds from financing activities
Proceeds from borrowings
Cash flows from investing activities
Net cash flow from acquisition of subsidiaries
Net cash used in investing activities
Cash advances to Group Companies
Net (decrease)/increase in cash
Cash at end of the period
Cash at beginning of period
COMPANY
31 December
2019
Audited
£
Notes
31 December
2018
Audited
£
(1,832,539)
(2,356,473)
-
977,575
211,788
(633,175)
-
12,437
104,302
(606,106)
1,633,628
(27,690)
142,965
170,655
(490,210)
131
8,467
8,336
(597,639)
981,708
-
1,526,663
544,955
2,750,000
(200,000)
2,801,565
251,565
15
23
18
24
24
-
(1,044,038)
(1,044,038)
(75,000)
(2,170,642)
(2,095,642)
25
(7,585)
38,974
31,389
33,284
5,690
38,974
16
The accompanying notes on pages 49-75 form an integral part of these financial statements.
38
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General Information
Kibo Energy PLC (“the Company”) is a Company incorporated in Ireland. The Group financial statements consolidate
those of the Company and its subsidiaries (together referred to as the “Group”).
The principal activities of the Company and its subsidiaries are related to the exploration for and development of
multi-asset energy projects in Sub Saharan Africa, and the United Kingdom.
The individual financial statements of the Company (“Company financial statements”) have been prepared in
accordance with the Companies Act 2014 which permits a Company that publishes its Company and Group financial
statements together, to take advantage of the exemption in Section 293 of the Companies Act 2014, from presenting
to its members its Company Income Statement and related notes that form part of the approved Company financial
statements.
Statement of Compliance
As permitted by the European Union, the Group financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) and their interpretations issued by the International Accounting
Standards Board (IASB) as adopted by the EU (IFRS).
The IFRS adopted by the EU as applied by the Company and the Group in the preparation of these financial statements
are those that were effective at 31 December 2019.
Statement of Accounting Policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated
financial statements, other than the adoption of IFRS 16 in the current financial period.
Basis of Preparation
The Group and Company financial statements are prepared on the historical cost basis. The accounting policies have
been applied consistently by Group entities, except for the adoption of new standards and interpretations which
became effective in the current year. The Group and Company financial statements have been prepared on a going
concern basis as explained in the notes to the financial statements.
The individual financial information of each Group entity is measured and presented in the currency of the primary
economic environment in which the entity operates (its functional currency). The consolidated financial information
of the Group is presented in Pounds Sterling, which is the presentation currency for the Group. The functional
currency of each of the Group entities is the local currency of each individual entity.
Going Concern
The Group currently generates no revenue and had net assets of £28,297,147 (2018: £26,821,574) as at 31 December
2019.
The Directors have reviewed budgets, projected cash flows and other relevant information, and on the basis of this
review and the below, they are confident that the Company and the Group will have adequate financial resources to
continue in operational existence for the foreseeable future.
In the event that the Company is not able to raise further funding, and before any mitigating actions are taken, the
Company has sufficient funds for its present working capital requirements through to the end of February 2021. The
Directors though continue to review the Group’s options to secure additional funding for its general working capital
requirements, alongside its ongoing review of potential acquisition targets and corporate development needs. The
Directors are confident in this light that such funding will be available, although there is no guarantee as to the terms
of such funding or that such funding will be available. In addition, any equity funding may be subject to shareholder
approvals in line with legal and regulatory requirements as appropriate. As a result, the Directors continue to monitor
and manage the Company’s cash and overheads carefully in the best interests of its shareholders.
39
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Whilst the Directors continue to consider it appropriate to prepare the financial statements on a going concern basis
the above constitutes a material uncertainty that shareholders should be aware of.
Use of Estimates and Judgements
The preparation of financial statements in conformity with EU IFRS requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are
believed to be reasonable under the circumstances, the results of which form the basis of making judgements about
carrying values of assets and liabilities that are not readily apparent from other sources.
In particular, there are significant areas of estimation, uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the amounts recognised in the financial statements.
•
The following key areas of estimation uncertainty exist:
•
Valuation of mining licence and intangible assets; and
Valuation of investment in associate.
•
The following key areas of judgement exist:
•
•
Recognition and measurement of exploration and evaluation expenditure;
Share based payment transactions;
Fair value determination of unlisted investments measured at fair value through other comprehensive income;
and
Consolidation of Joint Venture interest.
Valuation of mining licence and intangible assets– significant estimate concerning valuation
•
The Group holds a number of mining rights and intangible assets. These assets are considered unique and a fair market
price is not easily obtainable. In instances where these assets were acquired by means of shares issued, management
has applied the provisions of IFRS 2 to value the assets based on the fair value of the instruments granted.
Valuation of investment in associate– significant estimate concerning valuation
Following the disposal of the controlling interest held in Mabesekwa Coal during the current financial period, the
remaining interest in the Mabesekwa Coal indicated the existence of significant influence, thus the remaining equity
investment is recognised as an investment in associate. The principal asset held by Mabesekwa Coal comprises a
mining licence for a prospective coal asset where previous work had identified an indicative resource. The asset is
considered to be unique and a fair market price is not easily obtainable. The overall value of the investment in
associate, however, was separately reviewed by the independent directors, as announced to the market on various
occasions.
Exploration and evaluation expenditure – significant judgement concerning the choice of accounting policy
In line with the Group’s accounting policy, all the exploration and evaluation expenditure has been charged to profit
or loss, as in the judgement of the Directors the commercial viability of the mineral deposits had not been established.
If a policy of capitalisation of exploration expenditure had been adopted an amount of £897,039 would have been
capitalised in the current year (2018: £779,443).
Share- based payments – significant judgment concerning the method of valuation and key inputs applied
In order to calculate the charge for share-based payments as required by IFRS 2, the Group makes estimates
principally relating to the assumptions used in its option-pricing model. Refer to Note 20 for details on valuation of
share-based payments, including options granted and warrants granted.
Fair value determination of unlisted investments measured at fair value through other comprehensive income
The fair value of financial instruments that are not traded in an active market has been determined using the cost
approach, being the amount that would be required to replace the asset.
40
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation of Joint Venture interest
In the prior year Kibo entered into a Joint Venture Agreement (“JV”) acquiring a 65% equity interest in the Benga
Power Plant Project (“BPPP”). Although the agreement refers to the existence of a 65% equity stake, and Kibo’s ability
to appoint three of five management committee members, all decisions presented in front of the management
committee requires absolute agreement by all committee members before it stands, failing which it would result in a
decision to be made between the two respective CEO’s of the participating entities in the JV. Furthermore, the
participating interest only allows to partake in the net revenue of the JV.
Consolidation
The consolidated annual financial statements comprise the financial statements of Kibo Energy Plc and its subsidiaries
for the year ended 31 December 2019, over which the Company has control.
•
Control is achieved when the Company:
•
has the power over the investee;
•
is exposed, or has rights, to variable return from its involvement with the investee; and
has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstance indicate that there are
changes to one or more of the three elements of control listed above.
In assessing control, potential voting rights that are currently exercisable or convertible are taken into account.
Subsidiaries are fully consolidated from the date that control commences until the date that control ceases.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
Intragroup balances and any unrealised gains or losses or income or expenses arising from intragroup transactions
are eliminated in preparing the Group financial statements, except to the extent they provide evidence of impairment.
The Group accounts for business combinations using the acquisition method of accounting. The cost of the business
combination is measured as the aggregate of the fair values of assets given, liabilities incurred or assumed and equity
instruments issued. Costs directly attributable to the business combination are expensed as incurred, except the costs
to issue debt which are amortised as part of the effective interest and costs to issue equity which are included in
equity.
The acquiree's identifiable assets, liabilities and contingent liabilities which meet the recognition conditions of IFRS
3 Business Combinations are recognised at their fair values at acquisition date.
Contingent liabilities are only included in the identifiable assets and liabilities of the acquiree where there is a present
obligation at acquisition date.
Non-controlling interest arising from a business combination is measured either at their share of the fair value of the
assets and liabilities of the acquiree or at fair value. The treatment is not an accounting policy choice but is selected
for each individual business combination, and disclosed in the note for business combinations.
Changes in the Group’s interest in subsidiaries that do not result in a loss of control are accounted for as equity
transactions.
Upon the loss of control, the Company derecognises the assets and liabilities of the subsidiary, any non-controlling
interests and the other components of equity related to the subsidiary. Any resulting gain or loss is recognised in
profit or loss. If the Company retains any interest in the previous subsidiary, such interest is measured at fair value at
the date that control is lost.
Any gain from the acquisition of a subsidiary or gain/loss from the disposal of subsidiary will be recognised through
profit and loss in the current financial period.
41
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business combinations involving entities under common control
Business combinations involving entities under common control comprise business combinations where both entities
remain under the ultimate control of the holding company before and after the combination, and that control is not
transitory. The group applies merger accounting for all its common control transactions from the date that it obtains
•
control. In terms of this:
•
•
the assets and liabilities of the acquiree are recorded at their existing carrying amounts (not fair value);
if necessary, adjustments are made to achieve uniform accounting policies;
intangible assets and contingent liabilities are recognised only to the extent that they were recognised by the
acquiree in accordance with applicable IFRS;
no goodwill is recognised. Any difference between the acquirer’s cost of investment and the acquiree’s equity is
presented separately directly in equity as a common control reserve (CCR) on consolidation;
any non-controlling interest is measured as a proportionate share of the carrying amounts of the related assets
and liabilities (as adjusted to achieve uniform accounting policies); and
any expenses of the combination are written off immediately in profit or loss, except for the costs to issue debt
which are amortised as part of the effective interest and costs to issue equity which are recognised within equity.
•
•
•
When control is lost, resulting in the common control of entities, the balance of CCR recognised in respect of that
acquisition is realised directly to retained earnings on the effective date when control is lost.
Intangible Assets
An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no
foreseeable limit to the period over which the asset is expected to generate net cash inflows. Amortisation is not
provided for these intangible assets but they are tested for impairment annually or more frequently if events or
changes in circumstances indicate that the carrying value may be impaired, and it is subsequently carried at cost less
accumulated impairment losses. Intangible assets comprise the acquisition of rights to explore in relation to the
Group’s exploration and evaluation activities. Intangible assets comprise fair value allocated to exploration projects
purchased through business combination for which no useful life has been accurately determined.
Irrespective of whether there is any indication of impairment, the Group also tests intangible assets not yet available
for use for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test
is performed during the annual period and at the same time every period.
Investments in associates
Associates are all entities over which the group has significant influence but not control, generally accompanying a
shareholding between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity
method of accounting.
Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or
decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of
the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.
The group’s share of post-acquisition profit or loss is recognised in the statement of profit or loss, and its share of
post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a
corresponding adjustment to the carrying amount of the investment. When the group’s share of losses in an associate
equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognise
further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
The group determines at each reporting date whether there is any objective evidence that the investment in the
associate is impaired. If this is the case, the group calculates the amount of the impairment as the difference between
the recoverable amount of the associate and its carrying value and recognises the amount adjacent to share of
profit/(loss) of associates in the statement of comprehensive income.
42
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Exploration & Evaluation Assets
Exploration and evaluation activity involves the search for mineral resources, the determination of technical
feasibility and the assessment of commercial viability of an identified resource. Exploration and evaluation activity
•
includes:
•
•
•
•
•
researching and analysing historical exploration data;
gathering exploration data through topographical, geochemical and geophysical studies;
exploratory drilling, trenching and sampling;
determining and examining the volume and grade of the resource;
surveying transportation and infrastructure requirements; and
conducting market and finance studies.
Exploration and evaluation expenditure is charged to the Statement of Profit or Loss as incurred except in the
following circumstances, in which case the expenditure may be capitalised:
• In respect of minerals activities:
-
-
the exploration and evaluation activity is within an area of interest which was previously acquired as an asset
acquisition or in a business combination and measured at fair value on acquisition; or
the existence of a commercially viable mineral deposit has been established.
Capitalised exploration and evaluation expenditure considered to be tangible is recorded as a component of property,
plant and equipment at cost less impairment charges. Otherwise, it is recorded as an intangible.
Intangible assets all relate to exploration and evaluation expenditure which are carried at cost with an indefinite
useful life and therefore are reviewed for impairment annually and when there are indicators of impairment. Where
a potential impairment is indicated, assessment is performed for each area of interest in conjunction with the group
of operating assets (representing a cash generating unit) to which the exploration is attributed. Exploration areas at
which reserves have been discovered but require major capital expenditure before production can begin, are
continually evaluated to ensure that commercial quantities of reserves exist or to ensure that additional exploration
work is under way or planned.
Impairment
Non-financial assets
Assets are reviewed for impairment at each reporting date or whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash generating units).
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised in the Statement of Profit or Loss immediately.
Property, Plant and Equipment
Property, Plant and Equipment is stated at cost, less accumulated depreciation.
Cost includes expenditure that is directly attributable to the acquisition of the items of property, plant and equipment.
The cost of self-constructed items of property, plant and equipment includes the cost of materials and direct labour,
any other costs directly attributable to bringing the items of property, plant and equipment to a working condition
for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are
located.
43
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items (major components) of property, plant and equipment.
Depreciation is provided at rates calculated to write off the cost less residual value of each asset over its expected
useful life, as follows:
-
-
-
-
-
-
Office equipment between 12.5% to 37.5% straight line;
Plant & machinery at 20% straight line;
Furniture & fixtures at 12.5% straight line;
Motor vehicles at 25% straight line;
Right of Use assets straight line over the lease term; and
I.T. Equipment at 20% straight line
Depreciation methods, useful lives and residual values are reviewed at each reporting date. Useful lives are affected
by technology innovations, maintenance programmes and future economic benefits. Residual value assessments
consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
On disposal of property, plant and equipment the cost and the related accumulated depreciation and impairments are
removed from the financial statements and the net amount, less any proceeds, is taken to the Statement of
Comprehensive Income.
Right-of-use assets
The Group has adopted IFRS 16 for the first time during the period ended 31 December 2019.
IFRS 16 replaces IAS 17 Leases (IAS 17), IFRIC 4 Determining whether an Arrangement contains a Lease (IFRIC 4),
SIC 15 Operating Leases-Incentives and SIC 27 Evaluating the Substance of Transactions Involving the Legal Form of
a Lease. The standard establishes a new definition and criteria to identify whether a contract is, or contains, a lease
as well as principles for the recognition, measurement, presentation and disclosure of leases. For lessee accounting, a
single accounting model is introduced that requires lessees to recognise assets and liabilities for all leases.
The Group has elected to apply the modified retrospective approach, where the Right of Use assets equal the lease
liabilities, classified as part of trade and other payables, on transition. There is no restatement of comparative
information and the cumulative effect of initially applying IFRS 16 is recognised as an adjustment to the opening
balance of retained earnings.
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified
as operating leases under the principles of IAS 17 Leases. These liabilities were measured at the present value of the
remaining lease payments, discounted using the lessee’s weighted average incremental borrowing rate as of 1 January
2019. The weighted average incremental borrowing rate applied to the lease liabilities on 1 January 2019 ranged from
10.25% to 11.5% per annum.
The associated Right of Use assets for the property leases were measured on a modified retrospective basis, with the
new rules applied effective 1 January 2019. The right of use assets were measured at the amount equal to the lease
liability on adoption date.
•
•
•
In applying IFRS 16 for the first time, the group applied the following practical expedients permitted by the standard:
the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January as
short term leases;
the exclusion of initial direct costs for the measurement of the right-of-use asset at transition date;
the use of hindsight in determining the lease term where the contract contains options to extend or terminate
the lease.
Income Tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the Income Statement
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
44
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial
recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they probably
will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to
the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by
the reporting date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against
which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax benefit will be realised.
Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions
to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods
during which related services are rendered by employees. Pre-paid contributions are recognised as an asset to the
extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan
that are made more than 12 months after the end of the period in which the employees render the service are
discounted to their present value.
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related
service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonuses or profit-sharing plans if
the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by
the employee and the obligation can be estimated reliably.
Foreign Currencies
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (“the functional currency”). The consolidated annual
financial statements are presented in Sterling, which is the Group’s presentation currency. This is also the functional
currency of the Company and is considered by the Board also to be appropriate for the purposes of preparing the
Group financial statements.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in the Statement of Profit or Loss.
Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
•
monetary assets and liabilities for each Statement of Financial Position presented are presented at the closing
rate at the date of that Statement of Financial Position. Non-monetary items are measured at the exchange
rate in effect at the historical transaction date and are not translated at each Statement of Financial Position
date;
45
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
•
•
income and expenses for each Statement of Profit or Loss are translated at average exchange rates (unless
this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the dates of the transaction): and
all resulting exchange differences are recognised as a separate component of equity. On consolidation,
exchange differences arising from the translation of monetary items receivable from foreign subsidiaries for
which settlement is neither planned nor likely to occur in the foreseeable future are taken to shareholders
equity. When a foreign operation is sold, such exchange differences are recognised in the Statement of Profit
or Loss as part of the gain or loss on sale.
Finance income and expense
Finance income comprises interest income on funds invested, dividend income, gains on the disposal of available-for-
sale financial assets, and changes in the fair value of financial assets at fair value through profit or loss. Interest income
is recognised as it accrues in profit or loss, using the effective interest method. Dividend income is recognised in profit
or loss on the date that the Group’s right to receive payment is established, which in the case of listed securities is the
ex-dividend date.
Finance expenses comprise interest expense on borrowings, unwinding of discount on provisions, changes in the fair
value of financial assets at fair value through profit or loss, impairment losses recognised on financial assets and losses
on forward exchange contracts that are recognised in profit or loss. All borrowing costs are recognised in profit or
loss using the effective interest method.
Foreign currency gains and losses are reported on a net basis.
Earnings per Share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of
ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable
to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all
dilutive potential ordinary shares.
Financial Instruments
Recognition
Financial instruments comprise loans receivable, trade and other receivables, cash and cash equivalents, trade and
other payables, other financial liabilities and bank overdrafts.
Financial assets and liabilities are recognised in the Group’s statement of financial position when the Group becomes
a party to the contractual provisions of the instruments.
Classification
The Group classifies financial assets on initial recognition as measured at amortised cost as the Group’s business
model and objective is to hold the financial asset in order to collect the contractual cash flow and the contractual terms
allows for cash flows on specified dates for the payment of the principal amounts outstanding.
Financial liabilities are classified at amortised cost.
Financial assets
Classification
Loans to Group Companies
Trade and other receivables
Cash and Cash Equivalents
Financial liabilities
Loans from Group Companies
Trade and other payables
Borrowings
Bank overdraft
Financial assets at amortised cost
Financial assets at amortised cost
Financial assets at amortised cost
Classification
Financial liabilities at amortised cost
Financial liabilities at amortised cost
Financial liabilities at amortised cost
Financial liabilities at amortised cost
46
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial assets are classified as current if expected to be realised or settled within 12 months from the reporting
date; if not, they are classified as non-current. Financial liabilities are classified as non-current if the Group has an
unconditional right to defer payment for more than 12 months from the reporting date.
Measurement on Initial recognition
All financial assets and liabilities are initially measured at fair value, including transaction costs.
Subsequent measurement
Financial assets held at amortised cost are subsequently measured at amortised cost using the effective interest
method, less any impairment losses.
Foreign exchange gains and losses and impairments are recognised in profit or loss. Any gain or loss on de-recognition
is recognised in profit or loss.
Financial liabilities are subsequently measured at amortised cost using the effective interest method.
De-recognition
Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have been
transferred and the group has transferred substantially all risks and rewards of ownership.
Financial liabilities are derecognised when the obligations specified in the contracts are discharged, cancelled or
expire.
On de-recognition of a financial asset/liability, any difference between the carrying amount extinguished and the
consideration paid is recognised in profit or loss.
Impairment of Financial Assets not carried at Fair value
Under IFRS 9 the Group calculates its allowance for credit losses as expected credit losses (ECLs) for financial assets
measured at amortised cost. ECLs are a probability weighted estimate of credit losses.
To calculate ECLs the Group groups trade receivables and loans to Group companies by customer type and ageing.
The Group applies the standard ECL approach to determine the ECL for trade receivables loans to Group companies.
This results in calculating lifetime expected credit losses for trade receivables and loans to Group companies.
Share based payments
For such grants of share options qualifying as equity-settled share based payments, the fair value as at the date of
grant is calculated using the Black-Scholes option pricing model, taking into account the terms and conditions upon
which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of
share options that are likely to vest, except where forfeiture is only due to market based conditions not achieving the
threshold for vesting.
Share capital
Incremental costs directly attributable to the issue of ordinary shares are recognised directly in equity.
Segment reporting
The Group determines and presents operating segments based on the information that is internally provided to the
Chief Executive Officer, who is the chief operating decision maker. A segment is a distinguishable component of the
Group that is engaged either in providing related products or services (business segment), or in providing products
or services within a particular economic environment (geographical segment), which is subject to risks and returns
that are different from those of the other segments. The Group’s primary format for segment reporting is based on
business segments. The business segments are determined based on the reporting business units.
47
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
NEW STANDARDS AND INTERPRETATIONS
Standards issued but not yet effective:
At the date of authorisation of these financial statements, the following standards and interpretations relevant to the
Group and which have not been applied in these financial statements, were in issue but were not yet effective. In some
cases these standards and guidance have not been endorsed for use in the European Union.
Standard
Effective date,
annual period
beginning on or
after
IAS 1 Presentation of Financial Statements
Definition of Material: The amendments clarify and align the definition of ‘material’ and
provide guidance to help improve consistency in the application of that concept whenever it is
used in IFRS Standards.
1 January 2020
Classification of Liabilities as Current or Noncurrent: Narrow-scope amendments to IAS 1 to
clarify how to classify debt and other liabilities as current or non-current.
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
1 January 2023
Definition of Material: The amendments clarify and align the definition of ‘material’ and
provide guidance to help improve consistency in the application of that concept whenever it is
used in IFRS Standards.
1 January 2020
The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no
material impact on the financial statements of the Group.
The Group expects to adopt all relevant standards and interpretations as and when they become effective.
Standards and interpretations which are effective in the current period (Changes in accounting policies):
The Group has adopted all new accounting standards that became effective in the current reporting period. IFRS 16
Leases (“IFRS 16”) is the only new standard which is applicable to the Group’s operations at this stage.
IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all
leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise
a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its
obligation to make lease payments. A lessee measures right-of-use assets similarly to other non-financial assets (such
as property, plant and equipment) and lease liabilities similarly to other financial liabilities. As a consequence, a lessee
recognizes depreciation of the right-of-use asset and interest on the lease liability, and also classifies cash repayments
of the lease liability into a principal portion and an interest portion and presents them in the statement of cash flows.
The group leases, as lessee, offices in South Africa and Tanzania. The table below shows the financial impact of
associated with the recognition and measurement of the Right to Use Asset and corresponding Lease liabilities at 1
January 2019:
Right of use asset recognised
Lease liability recognised
Depreciation expensed
Effect of discounting using the weighted average incremental borrowing rate at 1 January 2019
11,011
(11,011)
1,943
(601)
48
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
1. Segment analysis
IFRS 8 requires an entity to report financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments
that meet specific criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the Chief
Operating decision maker. The Chief Executive Officer is the Chief Operating decision maker of the Group.
2019 Group
Management currently identifies individual projects as operating segments. These operating segments are monitored and strategic decisions are made based upon their
individual nature, together with other non-financial data collated from exploration activities. Principal activities for these operating segments are as follows:
31 December
2019 (£)
Group
Mabesekwa
Independent
Power
Mbeya Coal to
Power
Mast Energy
Development
Lake
Victoria
Gold
Benga
Power
Corporate
Haneti
Administrative cost
Listing and Capital raising fees
Exploration expenditure
Loss after tax
Investment and other income
2018 Group
(88,396)
-
(16,252)
(104,648)
-
Benga Power
(37,384)
-
(17,393)
(54,777)
-
Mabesekwa
Independent
Power
(272,399)
-
(456,205)
(724,425)
4,179
(32,467)
-
(306,000)
(338,458)
9
(8,670)
-
(46,799)
(55,469)
-
Mbeya Coal to
Power
Mast Energy
Development
Administrative cost
Impairment of intangible assets
Listing and Capital raising fees
Exploration expenditure
Profit/ (Loss) after tax
Investment and other income
(18,247)
-
-
(1,347)
(19,594)
-
(21,612)
-
-
-
(21,612)
-
(231,919)
-
-
(700,356)
(913,597)
18,678
(20,000)
-
-
-
(20,000)
-
49
(228,770)
-
(54,390)
(281,511)
1,649
Lake
Victoria
Gold
(308,082)
-
-
(67,577)
(375,659)
(2,683,616)
(300,297)
-
(2,343,828)
640,085
Corporate
(3,351,702)
(300,297)
(897,039)
(3,903,116)
645,922
31 December
2018 (£)
Group
(1,433,551)
(912,892)
(336,807)
-
(2,682,557)
693
(2,045,612)
(912,892)
(336,807)
(779,443)
(4,036,714)
38,042
Haneti
(12,202)
-
-
(10,163)
(3,694)
18,671
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
2019 Group
Assets
Segment assets
Liabilities
Benga Power
Mabesekwa
Independent
Power
Mbeya
Coal to
Power
Mast Energy
Development
Haneti
Lake
Victoria Gold
Corporate
31
December
2019 (£)
Group
835
9,697,694 15,965,122
3,129,305
3,938
23,745
1,035,616 29,856,255
Segment liabilities
Other Significant items
36,195
8,940
206,421
234,175
Depreciation
2018 Group
Assets
Segment assets
Liabilities
-
-
35,093
1,459,755
1,980,579
-
-
20,596
655
-
19,941
-
Benga Power
Mabesekwa
Independent
Power
Mbeya Coal
to Power
Mast Energy
Development
Haneti
Lake Victoria
Gold
Corporate
31
December
2018 (£)
Group
1,378
9,364,008
16,110,495
300,100
355
98,521
1,248,415 27,123,272
Segment liabilities
Other Significant items
9,559
6,411
104,730
8,000
8,378
123,869
40,751
301,698
Depreciation
681
-
6,124
-
-
-
-
6,805
50
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Geographical segments
The Group operates in six principal geographical areas – Corporate (Ireland, Cyprus, South Africa & United Kingdom) and Mining (Tanzania, and Botswana).
Carrying value of segmented assets
Loss after tax
69,017
(515,746)
9,377,323
(18,220)
15,868
(1,029,079)
Tanzania
Botswana
Cyprus
Tanzania
Botswana
Cyprus
Ireland, United
Kingdom, South
Africa
31 December 2019 (£)
20,394,047
(2,340,071)
Ireland, United
Kingdom, South
Africa
29,856,255
(3,903,116)
31 December 2018
(£)
Carrying value of segmented assets
Loss after tax
260,448
(664,948)
-
-
9,365,454
(88,294)
17,497,370
(3,283,471)
27,123,272
(4,036,713)
51
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
2. Investment and other Income
Foreign exchange gains
Other income
Profit on disposal of subsidiaries
31 December
2019 (£)
31 December
2018 (£)
-
54,862
645,922
591,060
13,948
24,094
38,042
-
Profit on disposal of subsidiaries in the amount of £591,060 comprises £320,371 on the disposal of 50% equity
interest held in Kibo Energy Botswana (Pty) Ltd, which includes the impact associated with the de-recognition of the
intangible assets relating to the Mabesekwa Coal to Power Project and subsequent recognition of the remaining equity
interest in the Mabesekwa Coal to Power Project at its fair value, together with £270,689 on the disposal of 95% equity
interest held in Mzuri Exploration Services Ltd (Tanzania).
3. Loss on ordinary activities before taxation
Operating loss is stated after the following key transactions:
31
December
2019 (£)
Group
31
December
2018 (£)
Group
Depreciation of property, plant and equipment of Group financial statements
Auditors’ remuneration for audit of Group and Company financial statements
Auditors’ remuneration audit of the financial statements of the company’s
subsidiaries
4. Staff costs (including Directors)
20,596
45,000
140,765
6,805
45,000
22,000
Group
31 December
2019 (£)
Group
31 December
2018 (£)
Company
31 December
2019 (£)
Company
31 December
2018 (£)
Wages and salaries
Share based remuneration
644,903
1,050,248
405,345
663,470
663,470
-
273,632
475,692
202,060
353,484
353,484
-
The average monthly number of employees (including executive Directors) during the period was as follows:
Group
31 December
2019 (£)
Group
31 December
2018 (£)
Company
31 December
2019 (£)
Company
31 December
2018 (£)
Exploration activities
Administration
5. Directors’ emoluments
10
16
6
10
16
6
1
2
1
1
2
1
Group
31 December
2019 (£)
Group
31 December
2018 (£)
Company
31 December
2019 (£)
Company
31 December
2087 (£)
Basic salary and fees – paid in cash
Share based payments
323,306
548,488
225,182
441,558
441,558
-
273,632
475,692
202,060
353,484
353,484
-
The emoluments of the Chairman were £43,588 (2018: £15,963).
The emoluments of the highest paid director were £245,291 (2018: £198,552).
Directors received shares in the value of £151,003 during the year (2018: £ NIL) in lieu of settlement of salaries not
settled in cash due to the cash flow constraints experienced during the reporting period.
52
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Share warrants to the value of £74,179 (2018: £Nil) were issued to directors during the year.
Key management personnel consist only of the Directors. Details of share options and interests in the Company’s
shares of each director are shown in the Directors’ report. The following table summarises the remuneration
applicable to each of the individuals who held office as a director during the reporting period:
31 December 2019
Christian Schaffalitzky
Louis Coetzee
Noel O’Keeffe
Lukas Maree
Wenzel Kerremans
Total
Andreas Lianos
31 December 2018
Christian Schaffalitzky
Louis Coetzee
Noel O’Keeffe
Lukas Maree
Wenzel Kerremans
Total
Andreas Lianos
6. Taxation
Current tax
Salary and
fees
settled in
cash
£
Salary and
fees settled
in shares
£
17,517
168,522
49,674
57,626
11,333
323,306
18,634
Salary and
fees
settled in
cash
£
15,963
198,552
88,039
54,947
13,272
441,558
70,785
17,483
51,480
15,505
20,185
3,667
151,003
42,683
Salary and
fees settled
in shares
£
-
-
-
-
-
-
-
Warrants
issued
£
8,588
25,289
7,616
9,915
1,801
74,179
20,970
Warrants
issued
£
-
-
-
-
-
-
-
Total
£
43,588
245,291
72,796
87,726
16,801
548,488
82,287
Total
£
15,963
198,552
88,039
54,947
13,272
441,558
70,785
31 December
2019 (£)
31 December
2018 (£)
Charge for the period in Ireland, Republic of South Africa, Cyprus,
Total tax charge
United Kingdom and Republic of Tanzania
-
-
-
-
The difference between the total current tax shown above and the amount calculated by applying the standard rate
2018 (£)
of Irish corporation tax of 12.5% to the loss before tax is as follows:
(4,036,713)
2019 (£)
(3,903,116)
Loss on ordinary activities before tax
Income tax expense calculated at 12.5% (2018: 12.5%)
(487,890)
(504,589)
Income which is not taxable
Expenses which are not deductible
Losses available for carry forward
Income tax expense recognised in the Statement of Profit or Loss
(80,740)
-
568,630
-
-
114,111
390,478
-
The effective tax rate used for the December 2019 and December 2018 reconciliations above is the corporate rate of
12.5% payable by corporate entities in Ireland on taxable profits under tax law in that jurisdiction.
53
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
No provision has been made for the 2019 deferred taxation as no taxable income has been received to date, and the
probability of future taxable income is indicative of current market conditions which remain uncertain. At the
Statement of Financial Position date, the Directors estimate that the Group has unused tax losses of £28,903,316
(2018: £25,000,200) available for potential offset against future profits which equates to an estimated potential
deferred tax asset of £3,612,915 (2018: £3,125,024). No deferred tax asset has been recognised due to the
unpredictability of the future profit streams. Losses may be carried forward indefinitely in accordance with the
applicable taxation regulations ruling within each of the above jurisdictions.
7. Loss of parent Company
As permitted by Section 293 of the Companies Act 2014, the Statement of Profit or Loss of the parent Company has
not been separately disclosed in these financial statements. The parent Company’s loss for the financial period was
£1,832,539 (2018: £2,356,473).
8. Loss per share
Basic loss per share
The basic loss and weighted average number of ordinary shares used for calculation purposes comprise the following:
Basic Loss per share
31 December
2019 (£)
31 December
2018 (£)
Loss for the period attributable to equity holders of the
parent
(3,500,004)
(3,388,778)
Weighted average number of ordinary shares for the
purposes of basic loss per share
849,795,672
(0.004)
565,932,121
(0.006)
Basic loss per ordinary share (GBP)
As there are no instruments in issue which have a dilutive impact, the dilutive loss per share is equal to the basic loss
per share, and thus not disclosed separately.
54
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
9. Property, plant and equipment
GROUP
Cost
Opening Cost as at 1 January 2018
Disposals
Additions
Exchange movements
Closing Cost as at 31 December 2018
Furniture and
Fittings
(£)
Motor Vehicles
(£)
Office
Equipment
(£)
I.T Equipment
(£)
Plant &
Machinery
(£)
Right of use
assets
(£)
Total
(£)
115,792
199,966
38,408
26,694
-
1,354
5,837
122,983
(114,927)
16,396
5,340
106,775
-
1,118
1,419
40,945
-
2,164
1,658
30,516
7,417
-
462
942
8,821
-
-
-
2,441
11,262
-
-
-
-
-
388,277
(114,927)
21,494
15,196
310,040
11,011
-
56,930
-
67,941
11,011
(253,669)
56,930
(7,422)
116,890
Opening cost at 1 January 2019
Disposals
Additions
Exchange movements
Closing Cost as at 31 December 2019
-
(112,286)
-
(8,162)
2,535
-
(82,615)
-
924
25,084
-
(34,255)
-
(1,619)
5,071
-
(24,514)
-
(1,005)
4,997
Accumulated Depreciation (“Acc Depr”)
Acc Depr as at 1 January 2018
Disposals
Depreciation
Exchange Movements
Acc Depr as at 31 December 2018
Disposals
Depreciation
Exchange movements
Acc Depr as at 31 December 2019
Furniture and
Fittings
(£)
Motor Vehicles
(£)
Office
Equipment
(£)
I.T Equipment
(£)
Plant &
Machinery
(£)
Right of use
assets
(£)
Total
(£)
114,798
199,966
34,232
24,214
-
314
7,075
122,187
(114,927)
3,712
5,341
94,092
-
1,254
2,032
37,518
-
1,063
1,905
27,182
7,417
-
462
942
8,821
-
-
-
-
-
380,627
(114,927)
6,805
17,295
289,800
(111,482)
99
(8,269)
2,535
(82,615)
5,553
1,172
18,202
55
(31,851)
1,119
(2,395)
4,391
(22,552)
605
(1,880)
3,355
(116)
481
2,077
11,263
-
12,739
-
12,739
(248,616)
20,596
(9,295)
52,485
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Carrying Value
Carrying value as at 31 December 2018
Carrying value as at 31 December 2019
Furniture and
Fittings
(£)
796
-
Motor Vehicles
(£)
12,683
6,882
Office
Equipment
(£)
3,427
680
I.T Equipment
Plant &
Machinery
(£)
Right of use
assets
(£)
Total
(£)
-
-
-
55,202
20,240
64,405
(£)
3,334
1,641
The Group leases various offices in the United Kingdom, Cyprus, South Africa and Tanzania. Lease contracts vary between 3 years and 4 years. Leases are re-negotiated on an
individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants on the Group.
Leased assets may not be used as security for borrowing purposes.
financial
impact associated with
The
the
adoption of IFRS 16: Leases on the Statement of
Profit or Loss in the current financial period is as
follows:
Group
31 December
2019 (£)
Company
31 December
2019 (£)
Depreciation
Interest expense
Lease expenses
.
12,739
858
(7,818)
5,779
-
-
-
-
56
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
10. Intangible assets
Intangible assets consist of separately identifiable prospecting and exploration assets or intellectual property
(Bordersley Power) acquired either through business combinations or through separate asset acquisitions. These
intangible assets are recognised at the respective fair values of the underlying asset acquired, or where the fair value
of the underlying asset acquired is not readily available, the fair value of the consideration.
The following reconciliation serves to summarise the composition of intangible assets as at period end:
Mabesekwa
Coal to
Power
Project (£)
-
Mbeya Coal
to Power
Project (£)
Lake
Victoria
Project (£)
Bordersely
Power (£)
Total (£)
15,896,105
1,700,000
- 17,596,105
Valuation as at 1 January 2018
Acquisition of the Mabesekwa Coal
Project
Carrying value as at 1 January 2019
Impairment of prospecting asset
the Mabesekwa Coal
Disposals of
Project
Acquisition of Bordersley Power Ltd
Carrying value as at 31 December
Assets classified as held for sale
2019
9,376,312
9,376,312
-
-
15,896,105
-
-
787,108
(912,892)
9,376,312
-
- 26,059,525
-
(912,892)
(9,376,312)
-
-
-
(9,376,312)
-
-
-
-
15,896,105
-
-
-
(787,108)
2,595,000
2,595,000
2,595,000 18,491,105
(787,108)
Intangible assets are not amortised, due to the indefinite useful life which is attached to the underlying prospecting
rights and/ or intellectual property acquired, until such time that active mining operations/ power generation
commence, which will result in the intangible asset being amortised over the useful life of the relevant project.
Intangible assets with an indefinite useful life are assessed for impairment on an annual basis, against the prospective
fair value of the intangible asset. The valuation of intangible assets with an indefinite useful life is reassessed on an
annual basis through valuation techniques applicable to the nature of the intangible assets.
•
One or more of the following facts or circumstances indicate that an entity should test an intangible asset for
impairment:
•
•
•
the period for which the entity has the right to explore or develop the asset has expired during the period or
will expire in the foreseeable future;
substantial expenditure on the asset in future is neither planned nor budgeted;
exploration for and evaluation of mineral resources in the specific area have not led to the discovery of
commercially viable quantities of mineral resources and the entity has decided to discontinue such activities
in the specific area; and
sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the
carrying amount of the development asset is unlikely to be recovered in full from successful development or
by sale.
In assessing whether a write-down is required in the carrying value of a potentially impaired intangible asset, the
asset’s carrying value is compared with its recoverable amount. The recoverable amount is the higher of the asset’s
fair value less costs to sell and value in use. The valuation techniques applicable to the valuation of the
abovementioned intangible assets comprise a combination of fair market values, discounted cash flow projections
and historic transaction prices.
The following key assumptions influence the measurement of the intangible assets’ recoverable amounts, through
utilising the value in use calculation performed:
currency fluctuations and exchange movements applicable to model;
•
•
•
•
commodity prices related to ore reserve and forward looking statements;
expected growth rates in respect of production capacity;
cost of capital related to funding requirements;
applicable discounts rates, inflation and taxation implications;
57
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
•
•
future operating expenditure for extraction and mining of measured mineral resources; and
co-operation of key project partners going forward.
Through review of the project specific financial, operational, market and economic indicators applicable to the above
intangible assets, as well as consideration of the various elements which contribute toward the indication of
impairment of exploration and evaluation assets, it was concluded no impairment was necessary in the 2019 financial
period. A summary of the assessment performed for each of the intangible assets are detailed below.
Mbeya Coal to Power Project
The Mbeya Coal to Power Project situated in the Mbeya region of Tanzania, which comprises the Mbeya Coal Mine, a
potential 1.5Mt p/a mining operation, and the Mbeya Power Plant, a planned 300MW mine-mouth thermal power
station. The Mbeya Coal Mine has a defined 120.8 Mt NI 43-101 thermal coal resource.
A Definitive Feasibility Study has been conducted on the project which underpinned its value and confirmed an initial
rate of return of 69.2%. The 300MW mouth-of-mine thermal power station has long term scalability with the potential
to become a 1000MW plant. The completed full Power Feasibility Study highlighted an annual power output target of
1.8GW based on annual average coal consumption of 1.5Mt.
An Integrated Bankable Feasibility Study report for the entire project indicated total potential revenues of US$ 7.5-
8.5 billion over an initial 25-year mine life, post-tax equity IRR between 21-22%, debt pay-back period of 11-12 years
and a construction period of 36 months.
Subsequent to the completion of a compulsory tender process through TANESCO on the development of the Mbeya
Coal to Power Project, the Group was informed that its bid to secure a Power-Purchase Agreement was unsuccessful
in February 2019.
Further engagement with TANESCO has subsequently culminated in the receipt of a formal notice from TANESCO
inviting the Group it to develop the Mbeya Coal to Power Project for the export market and thereby enabling the
Company to engage with the African Power Pools regarding potential off-take agreements.
As at year end, taking into account the various aspects listed above, the Group concluded that none of the impairment
indicators had been met in relation to the Mbeya Coal assets.
Lake Victoria Project
The Group entered into an agreement during August 2019 with Lake Victoria Gold Limited (“LVG”) covering the
proposed disposal of 100% of the equity interest held by Katoro in its wholly owned subsidiary, Reef Miners Limited
(“Reef”), which owns the Imweru gold project and the Lubando gold project in northern Tanzania.
As at year end, the conditions precedent relating to the disposal had not been completed, and the project has thus
been classified as assets classified as held for sale (refer also Note 17).
Mabesekwa Coal Independent Power Project
On 3 April 2018, the Group completed the acquisition of an 85% interest in the Mabesekwa Coal Independent Power
Project, located in Botswana. This acquisition was in line with the Group’s strategy of positioning itself as a strategic
regional electricity supplier in Southern Africa and creates many synergies with the MCPP in Tanzania.
As a result of the acquisition, 153,710,030 ordinary shares in Kibo were issued to Sechaba Natural Resources Limited
(“Sechaba”). Sechaba retained a 15% interest in the Mabesekwa Coal Independent Power Project. The intangible asset
was recognised at the fair value of the consideration paid, which emanates from the fair value of the equity
instruments issued as at transaction date, being £9,376,312.
The Mabesekwa Coal Independent Power Project (“MCIPP”) is located approximately 40km east of the village of
Tonata and approximately 50km southeast of Francistown, Botswana’s second largest city. Certain aspects of the
Project have been advanced previously by Sechaba Natural Resources Limited (“Sechaba”), including water and land
use permits and environmental certification. Mabesekwa consists of a 300Mt subset of the current insitu 777Mt Coal
Resource.
58
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
A pre-feasibility study on a coal mine and a scoping study on a coal fired thermal power plant has been completed.
Kibo is in possession of a Competent Persons Report on the project, which includes a SAMREC-compliant Maiden
Resource Statement on the excised 300 Mt portion of the Mabesekwa coal deposit.
In September 2019, Kibo and Shumba Energy Limited (“Shumba”) signed a binding Heads of Agreement to reorganise
the arrangements for the MCIPP and its associated coal asset in Botswana.
Under the reorganisation the MCIPP retained assets will be consolidated back into KEB and Kibo’s interest in KEB will
be reduced to 35% to maintain Kibo’s look-through interest in the MCIPP resource and make sundry adjustments to
recognise Kibo’s project expenditure. A variety of shareholders’ and joint development agreements govern the
management of the various entities, including minority interest protections, with details of Kibo’s final interests in
these entities and the MCIPP resource to be advised upon completion of the reorganisation.
In exchange for the increase in the equity interest held by Shumba, Shumba would forego the previous claim it had
against a portion of the MCIPP coal resources, thereby increasing the value of the interest held by KEB.
The transaction became effective on 5 December 2019 when Kibo concluded a shareholders agreement with KEB and
Shumba whereby Kibo, through its wholly owned subsidiaries, Kibo Mining Cyprus Limited and Kibo Energy
Botswana Limited would decrease their equity interest in KEB from 85% to 35%, effectively halving their interest in
the MCIPP project.
As a result of the reorganisation, Kibo lost control of KEB and therefore derecognised the intangible asset previously
recorded and simultaneously recognised an investment in associate equal to the fair value of the remaining interest
retained in KEB (refer Note 11).
Bordersley Power Ltd
Kibo Energy PLC initially acquired an indirect 100% equity interest in shovel-ready reserve power generation project,
Bordersley, which will comprise a 5MW gas-fuelled power generation plant for the consideration of £175,000 settled
through the issue of shares.
Thereafter, Kibo acquired all of St' Anderton's direct and indirect interests (Royalty Agreements) in the Bordersley
in Bordersley
power project described above giving
(the 'Acquisition'). Consideration for the Acquisition consists of the allotment and issue of 46,067,206 ordinary
shares in the capital of Kibo to St' Anderton at an issue price of £0.0525 per share and payable in five tranches
('Consideration Shares') such that the full consideration is only payable in the event that Bordersley is progressively
derisked.
it a 100% economic and 100% equity
interest
The issue price of the Consideration Shares and the associated number to be issued to St' Anderton was determined
by using the methodology set out in the original MED vendor agreement as guidance, and was calculated as
c. £2,420,000 comprising:
•
100% of the net present value of the Project Royalties (being the royalty equal to 5% of the gross revenue
less gas and trading costs) amounting to c. £370,000; and
•
40% of the net present value of the Project Revenue (being net profit before tax) flowing to St' Anderton from
Bordersley through MED amounting to c. £2,050,000.
11. Investment in associate
Balance at the beginning of the year
Balance at the end of the year
Associate acquired during the period
Group (£)
Company (£)
2019
2018
2019
2018
-
9,696,683
9,696,683
-
-
-
-
-
-
-
-
-
The Group retained a 35% equity interest in Kibo Energy Botswana (Pty) Ltd as a result the reorganisation of its
59
interests in the Mabesekwa Coal Independent Power Plant as disclosed in Note 10.
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
The value of the remaining equity interest in Kibo Energy Botswana (Pty) Ltd was determined based on the fair value
of the proportionate equity interest retained in the in the enlarged resource following the restructuring.
Summarised financial information of the associate is set out below:
Group (£)
2019
Group (£)
2018
Non-Current assets
Current assets
Loss for the year
9,376,312
1,011
(18,220)
Kibo Energy Botswana (Pty) Ltd’s principal place of business is Plot 2780, Extension 9, Gaborone, Botswana.
12. Other financial assets
At fair value through other comprehensive income
Group (£)
Company (£)
2019
2018
2019
2018
Lake Victoria Gold Limited
37,661
37,661
-
-
-
-
-
-
-
-
-
The investment represents 700,000 ordinary shares in Lake Victoria Gold Limited, incorporated in Australia, with a
value of AUS$70,000. The shares were issued to subsidiary Katoro Gold Plc in recognition of the company granting
the extension to receipt of the first tranche of monies due under the term sheet. The shares were issued on 15 October
2019 and recorded using the spot rate between the British pound and Australian dollar at that date.
As the shares were received for no consideration, other income of £37,661 was recognised when accounting for this
transaction.
13. Acquisition and Disposal of interests in other entities
Mabesekwa Coal Independent Power Project
In September 2019, Kibo and Shumba Energy Limited (“Shumba”) signed a binding Heads of Agreement to reorganise
the arrangements for the MCIPP and its associated coal asset in Botswana.
Under the reorganisation the MCIPP retained assets will be consolidated back into Kibo Energy Botswana (Pty) Ltd
(“KEB”) and Kibo’s interest in KEB will be reduced to 35% to maintain Kibo’s look-through interest in the MCIPP
resource and make sundry adjustments to recognise Kibo’s project expenditure. A variety of shareholders’ and joint
development agreements govern the management of the various entities, including minority interest protections,
with details of Kibo’s final interests in these entities and the MCIPP resource to be advised upon completion of the
reorganisation.
In exchange for the increase in the equity interest held by Shumba, Shumba would forego the previous claim it had
against a portion of the MCIPP coal resources, thereby increasing the value of the interest held by KEB.
The transaction became effective on 5 December 2019 when Kibo concluded a shareholders agreement with KEB and
Shumba whereby Kibo, through its wholly owned subsidiaries, Kibo Mining Cyprus Limited and Kibo Energy
Botswana Limited would decrease their equity interest in KEB from 85% to 35%, effectively halving their interest in
the MCIPP project.
As a result of the reorganisation, Kibo lost control of KEB and therefore derecognised the intangible asset previously
recorded and simultaneously recognised an investment in associate equal to the fair value of the remaining interest
retained in KEB (refer Note 11).
60
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
The financial impact associated with the disposal of Mabesekwa Coal Independent Power Project (“MCIPP”):
Group (£)
2019
2018
Opening balance as at January
Acquisition of 85% interest in MCIPP
Fair value re-measurement of remaining equity interest held in MCIPP
Closing balance as at December
recognised as part of profit on disposal of subsidiary
9,376,312
-
9,696,683
320,371
-
9,376,312
9,376,312
-
Benga Power Plant Project
Kibo entered into a Joint Venture Agreement with Mozambique energy company Termoeléctrica de Benga S.A. to
participate in the further assessment and potential development of the Benga Independent Power Project (‘BIPP’).
The assets associated with the acquisition were transferred into a newly incorporated entity in which Kibo and
Termoeléctrica hold initial participation interests of 65% and 35% respectively, which Kibo obtained for no
consideration on commencement. As disclosed in the significant judgement section of the financial results, Kibo is not
able to exercise control over the operations of the newly incorporated entity, therefore the investment is recognised
as a Joint Venture for financial reporting purposes, which requires the recognition of the participants’ interest in the
net revenue of the Joint Venture’s operations.
In order to maintain its initial participation interest Kibo is required to ensure funding of a maximum amount of £1
million towards the completion of a Definitive Feasibility Study.
Bordersley Power Ltd
Kibo Energy PLC initially acquired an indirect 100% equity interest in shovel-ready reserve power generation project,
Bordersley, which will comprise a 5MW gas-fuelled power generation plant for the consideration of £175,000 settled
through the issue of shares.
Thereafter, Kibo acquired all of St' Anderton's direct and indirect interests (Royalty Agreements) in the Bordersley
power project described above giving
in Bordersley
(the 'Acquisition'). Consideration for the Acquisition consists of the allotment and issue of 46,067,206 ordinary
shares in the capital of Kibo to St' Anderton at an issue price of £0.0525 per share and payable in five tranches
('Consideration Shares') such that the full consideration is only payable in the event that Bordersley is progressively
derisked.
it a 100% economic and 100% equity
interest
As there were no separately identifiable assets and/or liabilities acquired, the purchase price was allocated toward
the Intellectual Property acquired, in the amount of £2,595,000, as disclosed in Note 10.
Mzuri Exploration Services Ltd (Tanzania)
Kibo entered into a sale of share agreement whereby Kibo disposed of 95% of its equity interest in Mzuri Exploration
Services Limited (“MXS”) and its subsidiary Protocol Mining & Exploration Limited (“Protocol”) to the current senior
management of Mzuri Exploration Services Limited for no consideration.
The financial impact associated with the disposal of Mzuri Exploration Services Ltd:
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents
Foreign currency translation reserve
Trade and other payables
Net equity on date of disposal
Taxation payable
Profit on disposal of subsidiary
Net proceeds on disposal
61
2019
3,187
111,317
8,329
(300,671)
(68,352)
(270,689)
(24,499)
(270,689)
-
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
14. Goodwill
MAST Energy Development Limited
In the previous financial period the Group acquired a 60% equity interest in MAST Energy Development Limited for
£300,000, settled through the issue of 5,714,286 ordinary shares in Kibo effective on 19 October 2018. The acquisition
of MAST Energy Development Limited falls within the ambit of IFRS 3: Business Combinations. The net assets acquired
were valued at Nil, with the resultant purchase price being allocated to Goodwill on date of acquisition.
Various “shovel ready” sites have already been identified in the UK, capable of sustaining gas fired power generators
and ancillary structures from 20MW upwards. Financial modelling indicates projected IRRs of 13-16% and NPVs of
GBP16-19 million for the initial assets.
Goodwill is assessed for impairment on an annual basis, against the recoverable amount of underlying Cash
Generating Unit (“CGU”). The recoverable amount of the CGU, is the higher of its fair value less cost to sell and its value
in use. The valuation techniques applicable to the valuation of the abovementioned CGU comprise a combination of
fair market values, discounted cash flow projections and historic transaction prices.
Through review of the project specific financial, operational, market and economic indicators applicable to the above
CGU, as well as consideration of the various elements which contribute toward the indication of impairment of similar
projects, it was concluded no impairment was necessary in the 2019 financial period.
15. Trade and other receivables
Group
2019 (£)
Group
2018 (£)
Company
2019 (£)
Company
2018 (£)
Amounts falling due over one year:
Amounts owed by group undertakings
Amounts falling due within one year:
-
-
-
333,495
Other debtors
380,693
380,693
89,349
89,349
361,467
361,467
333,777
282
Included in other debtors is an amount of £354,688 relating to amounts not received by year end in connection with
a share placing in October 2019. Subsequent to year end, this full amount outstanding has been received and settled.
The nature of amounts owed by Group undertakings is such that the expected recovery thereof is in excess of one
year, and is thus classified as amounts falling due after one year.
The carrying value of current trade and other receivables approximates their fair value.
Amounts owed by Group undertakings represent inter-company loans between the Company and its subsidiaries.
They have no fixed repayment terms, bear no interest and are unsecured, resulting in the recognition of the receivable
as a non-current asset due to settlement being extended beyond 12 months.
During the period the Board resolved to capitalise inter-company loans and convert the respective loans owed by
subsidiaries into share capital in order to adhere to international transfer pricing regulation and this resulted in a
corresponding decrease in amounts owed by group undertakings.
Trade and other receivables pledged as security
None of the above stated trade and other receivables were pledged as security at period end. Credit quality of trade
and other receivables that are neither past due nor impaired can be assessed by reference to historical repayment
trends of the individual debtors.
62
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
16. Cash
Cash consists of:
Short term convertible cash reserves
Group (£)
Company (£)
2019
2018
2019
2018
91,634 654,158
91,634 654,158
31,389
31,389
38,974
38,974
Cash has not been ceded, or placed as encumbrance toward any liabilities as at year end.
17. Assets classified as held for sale
On 22 August 2019, the Group entered into a term sheet with Lake Victoria Gold Limited (“LVG”) covering the disposal
of 100% of the equity interest held by subsidiary Katoro Gold Plc in its wholly owned subsidiary, Reef Miners Limited
(“Reef”), which owns the Imweru gold project and the Lubando gold project in northern Tanzania. Although the sale
and purchase agreement with LVG has not been entered into to date, and LVG have requested extensions on the
payment tranches to be made in accordance with the term sheet, the Board feels that the sale of Reef is in the best
interest of the Company at this time and the directors are of the opinion that the sale is highly probable. The assets,
together with the associated liabilities of Reef have therefore been classified as held for sale.
The proceeds of the disposal are expected to exceed the net carrying amount of the relevant assets and liabilities, and
accordingly no impairment loss has been recognised on the assets classified as held for sale.
The major classes of assets and liabilities in the disposal group classified as held for sale are as follows:
Assets
Intangible assets
Cash and cash equivalents
Liabilities
Trade and other payables
18. Share capital - Group and Company
Authorised equity
1,000,000,000 Ordinary shares of €0.015 each
2,000,000,000 Ordinary shares of €0.001 each
1,000,000,000 deferred shares of €0.014 each
3,000,000,000 deferred shares of €0.009 each
Allotted, issued and fully paid shares
787,108
6,966
794,074
11,257
2019
2018
-
€2,000,000
€14,000,000
€43,000,000
€27,000,000
€15,000,000
-
€42,000,000
€27,000,000
(2019: 1,257,276,078 Ordinary shares of €0.001 each)
(2018: 640,031,069 Ordinary shares of €0.015 each)
1,291,394,535 Deferred shares of €0.009 each
805,053,798 Deferred shares of €0.014 each
£326,468
-
-
£9,257,075
£19,532,350
£9,948,807
£7,982,942
£9,257,075
£17,240,017
-
63
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Number of
Shares
Ordinary
Share
Capital
(£)
Deferred
Share
Capital
(£)
Share
Premium
(£)
Treasury
shares
(£)
Balance at 31 December 2018
640,031,069
7,982,942
9,257,075
39,205,318
Shares issued during the period
Capital re-organisation
Balance at 31 December 2019
1,257,276,078
-
9,948,807
326,468 19,205,882
3,545,118
-
42,750,436
617,245,009
-
2,292,333
(9,948,807)
-
-
-
-
All ordinary shares issued have the right to vote, right to receive dividends, a copy of the annual report, and the right
to transfer ownership of their shares.
During the year, the Company resolved to reduce the nominal value of the ordinary shares in issue from €0.015 to
€0.001, whilst retaining the same number of shares. Under the capital re-organisation, each ordinary share was
converted into one new deferred share of €0.014 each and one new ordinary share of €0.001 each.
The Deferred Shares will not entitle holders to receive notice of, or attend or vote at any general meeting of the
Company or to receive a dividend or other distribution or to participate in any return on capital on a winding up other
than the nominal amount paid following a substantial distribution to the holders of the Ordinary Shares in the
Company. Accordingly, for all practical purposes the Deferred Shares will be valueless, and it is the board’s intention
at the appropriate time, to purchase the Deferred Shares at an aggregate consideration of €1.
19. Control reserve
The transaction with Opera Investments PLC in 2017 represented a disposal without loss of control. Under IFRS this
constitutes a transaction with equity holders and as such is recognised through equity as opposed to recognising
goodwill. The control reserve represents the difference between the purchase consideration and the book value of the
net assets and liabilities acquired in the transaction with Opera Investments.
20. Share based payments reserve
The following reconciliation serves to summarise the composition of the share based payment reserve as at period
end:
Group (£)
Opening balance of share based payment reserve
Issue of share options and warrants
Deferred vendor liability settled through the issue of shares
Reclassification of share based payment reserve on expired share options
Opening balance of share based payment reserve
Issue of share options and warrants
Reclassification of share based payment reserve on expired share options
2019
41,807
2018
556,086
1,041,235
421,471
1,504,513
-
-
41,807
(514,279)
Company (£)
2019
-
-
977,575
977,575
2018
514,279
-
-
(514,279)
64
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Share options and Warrants
Share Options
During the current year, Katoro Gold Plc, a subsidiary of Kibo, implemented a share option plan whereby the Board
and Management of the Company were issued 14,944,783 Ordinary shares, being 10% of the Company’s issued share
capital on 8 February 2019, at 1.3 pence per share. The options have an expiry date of the seventh anniversary date
of the date of grant, with 50% vesting on issue and the remaining 50% vesting in one year.
The fair value of the share options issued have been determined using the Black-Scholes option pricing model.
The inputs to the Black-Scholes model were as follows:
Description of key input
Share Options granted
Stock price
Exercise price
Risk free rate
Volatility
Expiry Date
Weighted average remaining contractual life
Key
Assumptions
14,944,783
1.3p
1.3p
0.4%
82%
7 years
6 years
Expected volatility was determined using the historic average volatility in the company’s share price over the past 2
years.
Warrants
The Group has the following warrants over its Ordinary Shares:
•
•
•
1,208,333 warrants to Beaufort’s (Beaufort Securities Limited, the former broker to the Group) in respect of
the placing fees. Each warrant shall entitle Beaufort to subscribe for one new Ordinary Share and shall be
exercisable at 6 pence per share for up to five years;
10,000,000 warrants to African Battery Metals Plc in respect of the Nickel project facilitation fees. The
warrants were issued over 2 tranches. The first tranche of 2,500,000 warrants were issued upon signature
of the Option Agreement between the parties on 15 March 2019, with the remaining 7,500,000 issued on 15
May 2019. These warrants are exercisable within 3 years of issue date at a price of 1.25 pence per share.
663,333,420 warrants were issued with the share placing completed on 21 October 2019. Each share issued
for this placing includes one warrant exercisable at 0.8 pence per share for the period of 18 months and half
a warrant exercisable at 1.0 pence per share for the period of 36 months from the date of issue.
The fair value of the warrants issued have been determined using the Black-Scholes option pricing model.
The inputs to the Black-Scholes model were as follows:
Description of key input
Key
Assumptions
Beaufort
Key
Assumptions
African
Battery
Metals Plc
Key
Assumptions
Kibo Energy
Plc October
2019 placing
Key
Assumptions
Kibo Energy
Plc October
2019 placing
Date issued
Warrants granted
Stock price
Exercise price
Risk free rate
Volatility
Expiry Date
Weighted average remaining contractual life
April 2017
1,208,333
6p
6p
0.1%
70%
5 years
2.3 years
65
May 2019 October 2019 October 2019
221,111,140
0.5p
1p
0.4%
99%
3 years
2.75 years
442,222,280
0.45p
0.8p
0.4%
99%
18 months
1.25 years
10,000,000
1.3p
1.25p
0.4%
82%
3 years
2.3 years
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Expected volatility was determined using the historic average volatility in the company’s share price over the past 2
years.
Expenses settled through the issue of shares
The Group recognised the following expense related to equity settled share based payment transactions:
2019 (£)
2018 (£)
Geological expenditure settled
Listing and capital raising fees
Statutory fees
Shares and warrants issued to directors and staff
100,559
252,854
144,013
902,771
405,345
22,616
104,302
-
126,918
-
Exercisable
as at 31
December
2019
At 31 December 2019 the Group had 14,944,783 share options and 663,333,420 warrants outstanding.
Date of
Grant
Exercise start
date
Expiry date
Exercise
Price
Number
Granted
Options
Warrants
8 Feb 2019
8 Feb 2019 (50%)
8 Feb 2020 (50%)
7 Feb 2026
1.3p
14,944,783
7,472,392
04 Nov
2019
04 Nov
2019
04 Nov 2019
03 May 2021
0.8p
442,222,280
442,222,280
04 Nov 2019
03 Nov 2022
1.0p
221,111,140
221,111,140
Total Contingently Issuable shares
663,333,420 663,333,420
Reconciliation of the quantity of share options in issue:
Opening balance
New share options issued
Expiration of share options
Reconciliation of the quantity of warrants in issue:
Group
Company
2019
-
2018
14,399,333
-
2019
14,944,781
14,944,781
-
-
(14,399,333)
2018
14,399,333
-
-
(14,399,333)
-
-
-
-
Opening balance
New warrants issued
Warrants lapsed
Group
Company
2019
2018
10,000,000
2019
2018
10,000,000
-
663,333,420
663,333,420
-
-
663,333,420
- 663,333,420
-
(10,000,000)
-
-
(10,000,000)
66
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Deferred vendor liability
The amount due to vendors represents the balance of the purchase consideration owing in respect of the acquisition
of Bordersley Power Limited from St’ Anderton on Vaal Limited. The liability will be settled through the issue of
ordinary shares in the Company, in four equal tranches of 6,000,000 at an issue price of £0.0525 each, as the project
•
is progressively derisked, as detailed below:
•
•
•
Upon receiving confirmation from Mast Energy Development that a preliminary notice to proceed with
construction of the Bordersley power site has been issued by the Owners Engineer for the construction and
commissioning of the Bordersley site;
Upon receiving confirmation from Mast Energy Development that a final notice to proceed with construction of
the Bordersley power site has been issued by the Owners Engineer for the construction and commissioning of the
Bordersley site;
Upon receiving confirmation from Mast Energy Development that the Owners Engineer for the construction and
commissioning of the Bordersley site has commenced with commissioning of the Bordersley power plant; and
Upon receiving confirmation from Mast Energy Development that the Owners Engineer for the construction and
commissioning of the Bordersley site has confirmed steady state production at the Bordersley power plant.
The fair value of the deferred vendor liability is calculated in accordance with the anticipated purchase consideration
payable, at the fair value of the shares on the date of the transaction.
The amount payable has been settled subsequent to year end.
21. Translation reserves
The foreign exchange reserve relates to the foreign exchange effect of the retranslation of the Group’s overseas
subsidiaries on consolidation into the Group’s financial statements, taking into account the financing provided to
subsidiary operations is seen as part of the Group’s net investment in subsidiaries.
Company
Group
Opening balance
Movement during the period
Closing balance
22. Non-controlling interest
2019 (£)
(656,622)
2018 (£)
(268,506)
2019 (£)
-
2018 (£)
14,723
(872,942)
(216,320)
(656,622)
(388,116)
-
-
-
(14,723)
The non-controlling interest carried forward relates to the minority equity attributable to Katoro Gold PLC and its
subsidiaries.
Group
2019 (£)
2018 (£)
Opening balance
Change of interest in subsidiary without loss of control
Additional capital raised
Loss for the year allocated to non-controlling interest
Closing balance of non-controlling interest
409,171
927,107
19,267
-
27,073
(401,365)
(9,364)
152,998
409,171
(661,570)
The summarised financial information for significant subsidiaries in which the non-controlling interest has an
influence, namely Katoro Gold PLC as at ended 31 December 2019, is presented below:
Katoro plc Group
2019 (£)
Katoro plc Group
2018 (£)
Statement of Financial position
Total assets
Statement of Profit and Loss
Total liabilities
Revenue for the period
Loss for the period
295,116
(117,402)
-
(668,659)
622,231
(175,499)
-
(479,205)
67
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Statement of Cash Flow
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
(580,727)
-
202,934
(465,669)
-
313,560
In March 2019 the Company entered into an agreement, whereby it would reacquire the residual 2.5% interest held
by Sanderson Capital Partners for the amount of £1,706,895. As the transaction was a change in the Group’s ownership
interest in a subsidiary that did not result in the Group losing control of the subsidiary, the impact of the transaction
was recognised directly in equity.
23. Trade and other payables
Amounts falling due within one year:
Group
2019 (£)
Group
2018 (£)
Company
2019 (£)
Company
2018 (£)
Trade payables
1,024,126
1,024,126
301,698
301,698
265,727
265,727
95,072
95,072
The carrying value of current trade and other payables equals their fair value due mainly to the short term nature of
these receivables.
24. Borrowings
Amounts falling due within one year:
Short term loans
Reconciliation of borrowings:
Opening balance
Raised during the year
Repaid during the year
Settled through the issue of shares
Closing balance
Short term loans
Group 2019
(£)
Group 2018
(£)
Company
2019 (£)
Company
2018 (£)
523,725
523,725
-
-
294,955
294,955
-
-
Group 2019
(£)
Group 2018
(£)
Company
2019 (£)
Company
2018 (£)
-
1,613,715
-
(1,090,000)
523,725
1,210,768
251,565
(200,000)
(1,262,333)
-
-
544,955
-
(250,000)
294,955
1,210,768
251,565
(200,000)
(1,262,333)
-
Short term loans relate to the unsecured interest free loan facility from Sanderson Capital Partners Limited which is
repayable either through the issue of ordinary shares of payment of cash in the Company.
25. Investment in group undertakings
Breakdown of investments at 31 December 2019
Kibo Mining (Cyprus) Limited
Sloane Developments Limited
Total cost of investments
Katoro Gold Plc
68
Subsidiary
undertakings
(£)
40,048,442
2,643,558
43,318,643
626,643
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Breakdown of investments at 31 December 2018
Kibo Mining (Cyprus) Limited
Sloane Developments Limited
Total cost of investments
Katoro Gold Plc
Investments at Cost
At 1 January 2018
Additions in Kibo Mining (Cyprus) Limited
Additions in Katoro Gold PLC
Provision for impairment
At 31 December 2018 (£)
Additions in Kibo Mining Cyprus Limited
Additions in Sloane Developments Limited
Additions in Katoro Gold PLC
Provision for impairment
At 31 December 2019 (£) *
At 31 December 2019 the Company had the following undertakings:
Subsidiary,
associate
or Joint
Venture
Activity
Incorporated in
Description
Directly held Investments
Subsidiary
undertakings
(£)
37,406,177
-
37,890,651
484,474
Subsidiary
undertakings
(£)
3,468,224
35,706,177
349,878
(1,633,628)
37,890,651
2,642,265
2,643,558
142,169
-
43,318,643
Interest
held
(2019)
Interest
held
(2018)
Sloane Developments Limited
Kibo Mining (Cyprus) Limited
Katoro Gold Plc
Indirectly held Investments
Holding Company
Subsidiary
Subsidiary
Treasury Function
Subsidiary Mineral Exploration
United Kingdom
Cyprus
United Kingdom
100%
100%
55.53%
100%
100%
57%
MAST Energy Development Limited
Bordersley Power Limited
Kibo Gold Limited
Savannah Mining Limited
Reef Miners Limited
Kibo Nickel Limited
Eagle Exploration Limited
Mbeya Holdings Limited
Mbeya Development Limited
Mbeya Mining Company Limited
Mbeya Coal Limited
Mzuri Power Limited
Mbeya Power Tanzania Limited
Kibo Mining South Africa (Pty) Ltd
Kibo Exploration Limited
Kibo MXS Limited
Tourlou Limited
Mzuri Exploration Services Limited
Power Generation
Subsidiary
Power Generation
Subsidiary
Subsidiary
Holding Company
Subsidiary Mineral Exploration
Subsidiary Mineral Exploration
Subsidiary
Holding Company
Subsidiary Mineral Exploration
Holding Company
Subsidiary
Holding Company
Subsidiary
Subsidiary
Holding Company
Subsidiary Mineral Exploration
Holding Company
Subsidiary
Power Generation
Subsidiary
Treasury Function
Subsidiary
Treasury Function
Subsidiary
Subsidiary
Holding Company
Holding Company
Subsidiary
69
Investment Exploration Services
United Kingdom
United Kingdom
Cyprus
Tanzania
Tanzania
Cyprus
Tanzania
Cyprus
Cyprus
Cyprus
Tanzania
Cyprus
Tanzania
South Africa
Tanzania
Cyprus
Cyprus
Tanzania
60%
100%
55.53%
55.53%
55.53%
55.53%
55.53%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
4.78%
60%
-
57%
57%
57%
100%
100%
97,5%
97,5%
97,5%
100%
100%
97,5%
100%
100%
100%
100%
100%
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Protocol Mining Limited
Jubilee Resources Limited
Kibo Energy Botswana Limited
Kibo Energy Botswana (Pty) Ltd
Kibo Energy Mozambique Limited
Pinewood Resources Limited
Makambako Resources Limited
Investment Exploration Services
Subsidiary Mineral Exploration
Subsidiary
Holding Company
Associate Mineral Exploration
Subsidiary
Holding Company
Subsidiary Mineral Exploration
Subsidiary Mineral Exploration
Tanzania
Tanzania
Cyprus
Botswana
Cyprus
Tanzania
Tanzania
4.78%
100%
100%
35%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
The Group has applied the approach whereby loans to Group undertakings and trade receivables from Group
undertakings were capitalised to the cost of the underlying investments. The capitalisation results in a decrease in the
exchange fluctuations between Group companies operating from various locations.
26. Related party transactions
Related parties of the Group comprise subsidiaries, joint ventures, significant shareholders, the Board of Directors
and related parties in terms of the listing requirements.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on
consolidation.
Board of Directors/ Key Management
Name
Relationship (Directors of:)
A. Lianos
Other entities over which directors/key management or their close family have control or significant
influence:
River Group, Boudica Group and Namaqua Management Limited
River Group
River Group provide corporate advisory services and is the Company’s
Designated Advisor.
Boudica Group
Boudica Group provides secretarial services to the Group.
St Anderton on Vaal Limited
Kibo Mining Plc is a shareholder of the following companies and as such are considered related parties:
St Anderton on Vaal Limited provides consulting services to the Group. The
directors of St Anderton on Vaal Limited are also directors of Mast Energy
Developments Limited.
Directly held subsidiaries:
Indirectly held subsidiaries:
Sloane Developments Limited
Kibo Mining (Cyprus) Limited
Katoro Gold Plc
Kibo Gold Limited
Kibo Mining South Africa Limited
Savannah Mining Limited
Reef Mining Limited
Kibo Nickel Limited
Eagle Exploration Mining Limited
Mzuri Energy Limited
Rukwa Holdings Limited
Mbeya Development Company Limited
Mbeya Mining Company Limited
Mbeya Coal Limited
Mzuri Power Limited
Kibo Exploration Limited
Mbeya Power Tanzania Limited
Kibo MXS Limited
Kibo Energy Mozambique Limited
70
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Pinewood Resources Limited
Makambako Resources Limited
Jubilee Resources Limited
Kibo Energy Botswana Limited
MAST Energy Developments Limited
Bordersley Power Limited
The transactions during the period between the Company and its subsidiaries included the settlement of expenditure
to/from subsidiaries, working capital funding, and settlement of the Company’s liabilities through the issue of equity
in subsidiaries. The loans to/ from group companies do not have fixed repayment terms and are unsecured.
The following transactions have been entered into with related entities, by way of common directorship, throughout
the financial period.
River Group was paid £35,384 (2018: £46,145) for designated advisor services, corporate advisor services and
corporate financer fees during the year settled through cash. No fees are payable to River Group as at year end. The
expenditure was recognised in the Company as part of administrative expenditure.
St Anderton on Vaal Limited was paid £297,000 (2018: £nil) during the year for consulting services rendered to Mast
Energy Developments Limited.
During the year, Namaqua Management Limited or its nominees, was paid £472,153 (2018: £629,293) for the
provision of administrative and management services. £247,836 was payable at the year-end (2018: £NIL).
The Boudica Group was paid £32,400 (2018: £38,038) for corporate services during the current financial period. No
fees are payable to Boudica Group at year end.
27. Financial Instruments and Financial Risk Management
The Group and Company’s principal financial instruments comprises cash at hand and in bank. The main purpose of
these financial instruments is to provide finance for the Group and Company’s operations. The Group has various
other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its
operations.
It is, and has been throughout the 2019 and 2018 financial period, the Group and Company’s policy not to undertake
trading in derivatives.
The main risks arising from the Group and Company’s financial instruments are foreign currency risk, credit risk,
liquidity risk, interest rate risk and capital risk. Management reviews and agrees policies for managing each of these
risks which are summarised below.
2019 (£)
2018 (£)
Financial instruments of the Group are:
Financial assets at amortised cost
Loans and
receivables
Financial
liabilities
Loans and
receivables
Financial
liabilities
Trade and other receivables
Cash
Financial liabilities at amortised cost
380,693
91,634
-
-
89,349
654,158
-
-
Trade payables
Borrowings
-
472,327
-
1,024,126
1,547,851
523,725
-
743,507
-
301,698
301,698
-
71
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
2019 (£)
2018 (£)
Loans and
receivables
Financial
liabilities
Loans and
receivables
Financial
liabilities
Financial instruments of the Company are:
Financial assets at amortised cost
Trade and other receivables – non current
Trade and other receivables – current
Cash
Financial liabilities at amortised cost
-
361,467
31,389
-
-
-
333,495
282
38,975
-
-
-
Trade payables – current
Borrowings
Foreign currency risk
-
392,856
-
227,237
522,192
294,955
-
372,752
-
95,072
95,072
-
The Group undertakes certain transactions denominated in foreign currencies and exposures to exchange rate
fluctuations therefore may arise. Exchange rate exposures are managed by continuously reviewing exchange rate
movements in the relevant foreign currencies. The exposure to exchange rate fluctuations for the Group/Company is
limited to foreign currency translation of subsidiaries, which is not material, as the Group/Company does not hold
any significant foreign denominated monetary assets or liabilities.
At the period ended 31 December 2019, the Group had no outstanding forward exchange contracts.
Exchange rates used for conversion of foreign subsidiaries undertakings were:
2019
2018
ZAR to GBP (Spot)
ZAR to GBP (Average)
USD to GBP (Spot)
USD to GBP (Average)
EURO to GBP (Spot)
EURO to GBP (Average)
0.0542
0.0543
0.7623
0.7837
0.8537
0.8772
0.0545
0.0593
0.7871
0.7499
0.0095
0.8848
The executive management of the Group monitor the Group's exposure to the concentration of fair value estimation
risk on a monthly basis.
Group Sensitivity Analysis
As the Group/Company has no material monetary assets denominated in foreign currencies, the impact associated
with a change in the foreign exchange rates is not expected to be material to the Group/Company.
Credit risk
Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss
to the Group. As the Group does not, as yet, have any sales to third parties, this risk is limited.
The Group and Company’s financial assets comprise receivables and cash and cash equivalents. The credit risk on
cash and cash equivalents is limited because the counterparties are banks with high credit-ratings assigned by
international credit rating agencies. The Group and Company’s exposure to credit risk arise from default of its
counterparty, with a maximum exposure equal to the carrying amount of cash and cash equivalents in its consolidated
statement of financial position. Expected credit losses were not measured on a collective basis. The various financial
assets owed from group undertakings were evaluated against the underlying asset value of the investee, taking into
account the value of the various projects undertaken during the period, thus validating, as required the credit loss
recognised in relation to amounts owed by group undertakings.
The Group does not have any significant credit risk exposure to any single counterparty or any Group of
counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if
they are connected or related entities.
72
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Financial assets exposed to credit risk at period end were as follows:
Financial instruments
Group (£)
Company (£)
2019
2018
2019
2018
Trade & other receivables
Cash
Liquidity risk management
380,693
91,634
89,349
654,158
361,467
31,389
333,777
38,974
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate
liquidity risk management framework for the management of the Group and Company’s short, medium and long-term
funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves
and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets
and liabilities. Cash forecasts are regularly produced to identify the liquidity requirements of the Group.
The Group and Company’s financial liabilities as at 31 December 2019 were all payable on demand.
Group (£)
At 31 December 2019
Less than 1
year
Greater than 1
year
Trade and other payables
Borrowings
At 31 December 2018
Trade and other payables
Company (£)
At 31 December 2019
Trade and other payables
Borrowings
At 31 December 2018
Trade and other payables
Interest rate risk
-
-
-
-
-
-
1,024,126
523,725
301,698
265,727
294,955
95,072
The Group and Company’s exposure to the risk of changes in market interest rates relates primarily to the Group and
Company’s holdings of cash and short term deposits.
It is the Group and Company’s policy as part of its management of the budgetary process to place surplus funds on
short term deposit in order to maximise interest earned.
Group Sensitivity Analysis:
Currently no significant impact exists due to possible interest rate changes on the Company’s interest bearing
instruments.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To
maintain or adjust its capital structure, the Group may adjust or issue new shares or raise debt. No changes were made
in the objectives, policies or processes during the period ended 31 December 2019. The capital structure of the Group
consists of equity attributable to equity holders of the parent, comprising issued capital, reserves and retained losses
as disclosed in the consolidated statement of changes in equity.
73
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Fair values
The carrying amount of the Group and Company’s financial assets and financial liabilities recognised at amortised cost
in the financial statements approximate their fair value.
Hedging
At 31 December 2019, the Group had no outstanding contracts designated as hedges.
28. Post Statement of Financial Position events
Investment in Katoro Gold PLC
Following Kibo’s investment in Katoro Gold PLC during 2019 by subscribing to its October 2019 placing for 1.8
million shares issued at a price of 1p (£18,000), the Company subsequently exercised the warrants attached to these
shares at their exercise price of 1.5p and receiving an additional 1.8 million Katoro shares in February 2020. Kibo’s
equity interest in Katoro at the date of this report is 29.70%.
Issue of Convertible Loan Note
In July 2020, the Company secured a £1 million facility (“the Facility”) from a consortium of lenders. The Facility, in
the form of a convertible loan note issued by Kibo, will provide sufficient working capital to allow it proceed with
reaching key development milestones, particularly for the Benga and Mast Energy Developments Limited projects
over the next twelve months. At an EGM held on 24 August 2020, shareholders approved resolutions to increase the
authorised share capital of the Company which was required to fully avail of the Facility and meet all related funding
costs. The Company is now fully enabled to avail of the Facility. Refer to the Going Concern paragraph on page 24 for
further details.
Share Issues
During 2020 to date, Kibo issued an additional 135,526,399 shares comprising 29,214,110 to contractors & service
providers for agreed invoice payments at share prices of 0.45p & 0.2p; 8,000,000 as final payment to MED with regard
to acquisition costs for Bordersley, at a share price 5.25p; and 98,312,289 shares in payment of first drawdown fee,
legal fee, arrangement fee and issue of conversion shares with regard to the Facility at share prices ranging from
0.22p to 0.27p.
Increased Investment in Mast Energy Developments and Listing of Sloane on the LSE
In August 2020, Sloane Developments Limited, a 100% owned UK Kibo subsidiary, acquired from St Anderton on
Vaal Limited ('St Anderton') the remaining 40% interest in Mast Energy Developments Ltd ('Mast Energy'), that it
did not already hold, in exchange for 36,917,076 new Ordinary Shares in Sloane. Accordingly, Sloane (to be
renamed Mast Energy Ltd) will at completion of the share exchange transaction own a 100% interest in Mast Energy
alongside its 100% interest in Bordersley Power Ltd as it seeks to develop a portfolio of flexible power plants in the
UK. St Anderton will at completion hold 26.11% of Sloane, with Kibo holding the remaining 73.89%. Sloane has
made an application to the LSE for admission to the Standard List which will be accompanied by an IPO to raise
funds to advance Mast Energy’s energy portfolio in the UK.
Settlement and Termination of Convertible Loan Note and Placing
Kibo settled all outstanding amounts due under the Convertible Loan Note ("CLN"), announced on 25 June 2020 and
reached agreement with the holders of the CLN to terminate the CLN with immediate effect. The Company has
further undertaken a successful placing to raise GBP1,450,000 before costs through the Company's broker ETX
Capital, at a placing price of 0.2p per placing share, with 1 warrant attached for every two placing shares,
exercisable at 0.4p each over 36 months.
74
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
29. Commitments and Contingencies
Benga Power Project
Kibo entered into a Joint Venture Agreement (the ‘Benga Power Joint Venture’ or ‘JV’) with Mozambique energy
company Termoeléctrica de Benga S.A. to participate in the further assessment and potential development of the
Benga Independent Power Project (‘BIPP’). In order to maintain its initial participation interest Kibo is required to
ensure funding of a maximum amount of £1 million towards the completion of a Definitive Feasibility Study, however
this expenditure is still discretionary.
Other than the commitments and contingencies noted above, the Group does not have identifiable material
commitments and contingencies as at the reporting date. Any contingent rental is expensed in the period in which it
is incurred.
75
KIBO ENERGY PLC
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
Accounting policy
Headline earnings per share (HEPS) is calculated using the weighted average number of ordinary shares in issue
during the period and is based on the earnings attributable to ordinary shareholders, after excluding those items as
required by Circular 1/2019 issued by the South African Institute of Chartered Accountants (SAICA).
Reconciliation of Headline earnings per share
Headline loss per share
Headline loss per share comprises the following:
Reconciliation of headline loss per share:
Loss for the period attributable to normal shareholders
Adjustments
Impairment of the Intangible Assets
Profit on disposal of subsidiaries
Headline loss for the period attributable to normal shareholders
31 December
2019 (£)
(3,500,004)
31 December
2018 (£)
(3,388,778)
-
(4,091,064)
(591,060)
912,892
(2,475,886)
-
Headline loss per ordinary share
(0.005)
(0.004)
Weighted average number of shares in issue:
849,795,672
565,932,121
Headline loss per share, on a per-share basis:
Reconciliation of headline loss per share:
Loss for the period attributable to normal shareholders
Adjustments
Impairment of the Intangible Assets
Profit on disposal of subsidiaries
Headline loss for the period attributable to normal shareholders
31 December
2019 (£)
(0.0041)
31 December
2018 (£)
(0.0059)
-
(0.0048)
(0.0007)
0.0016
(0.0043)
-
Headline loss per ordinary share
(0.005)
(0.004)
In order to accurately reflect the weighted average number of ordinary shares for the purposes of basic
earnings, dilutive earnings and headline earnings per share as at year end, the weighted average number of
ordinary shares was adjusted retrospectively.
76