NEWS RELEASE
www.ncondezienergy.com
Audited Final Results for Year Ended 31 December 2018
28 June 2019: Ncondezi Energy Limited ("Ncondezi" or the “Company”) (AIM: NCCL) is pleased to
announce its audited final results for the year ended 31 December 2018.
Highlights
During the year
On 18 April 2018, the Company announced in principle support from Electricity de Mozambique
(“EDM”) and the Ministry of Mineral Resources and Energy (“MIREME”) for proposed strategic
partners, China Machinery Engineering Corporation (“CMEC”) and General Electric South
Africa (PTY) Limited (“GE”).
On 25 April 2018, updated information for the engineering, procurement, and construction
(“EPC”) and operations and maintenance (“O&M”) proposals were received from CMEC and
GE.
On 4 May 2018, the Company raised a total of £950,000 before expenses through an
oversubscribed placing of 15,200,000 ordinary shares in the Company at a price of 6.25 pence
per ordinary share.
On 25 May 2018, the Company, as part of the Company’s management incentive scheme,
granted share options in respect of 22,897,522 shares in the Company to its directors, executive
senior management team and contracted personnel representing 8.2% of the issued share
capital of the Company.
On 11 June 2018, the Company announced that the Financial Model (“FM”) and updated tariff
proposal had been accepted by CMEC and GE for submission to EDM and MIREME.
On 26 July 2018, the Company announced the formal submission of the updated tariff proposal
to the Mozambican state power utility EDM and MIREME.
On 30 September 2018, the Company announced that Christiaan Schutte had resigned as a
non-executive director of the Company, and from the board of the Company (the “Board”).
On 5 November 2018, the Company announced it had received a Letter of Support (“LoS”) for
the Project from MIREME and a signed Memorandum of Understanding (“MoU”) with EDM.
On 16 November 2018, the Company announced that a formal agreement to amend the
US$2.77 million loan facility (“Shareholder Loan”) with certain of Ncondezi’s Directors,
Management and long term shareholders (together the “Lenders”) had been reached with loan
holders
On 26 November 2018, the Company announced it had finalised the work program and
timetable for the Project with CMEC and GE and submitted it to the liaison committee (the
“Liaison Committee”) setup and chaired by the Mozambican MIREME with representatives from
EDM.
Post balance sheet events
On 28 February 2019, the Company announced that following positive meetings with the Liaison
Committee, the updated Project work programme and timetable targeting power on the grid by
2023 had been approved and the Company’s strategic partners had confirmed that the process
to conclude the Join Develop Agreement (“JDA”) could now move forward.
On 14 March 2019 a total of 1,000,000 share options nil value subscription price vested at grant
on 25 May 2018 were requested to be exercised. The equivalent to 1,000,000 new ordinary
shares of no par value were issued.
On 19 March and 1 April of 2019 a total of 1,000,000 warrants at subscription price of 5 pence
per share issued on 25 May 2018 were requested to be converted into equity. The equivalent
of 1,000,000 new ordinary shares of no par value were issued.
On 5 April 2019, the Company announced it had entered into a term sheet with GridX, an African
power developer, enabling it to enter into the JV focused on building and operating captive solar
and battery storage solutions for the African C&I sector (the “Term Sheet”).
On 5 April 2019, the Company raised a total of £1.88m (US$2.48m) before expenses, through
a conditional placing and direct subscriptions of 28,856,060 ordinary shares in the Company at
a price of 6.50 pence per ordinary share.
On 29 April 2019, the Company announced it had joined the Mozambique government
delegation in Beijing, China, for the Second Belt and Road Forum for International Cooperation.
During the visit, Ncondezi, CMEC and GE held successful meetings with His Excellency Mr
Filipe Nyusi, President of the Republic of Mozambique, the Governor of Tete and the Deputy
Minister of MIREME.
In the first half of 2019 a total of US$935,000 of loan principal, rolled up previous redemption
premiums plus interest was converted into equity equivalent to 7,193,328 ordinary shares being
issued.
The Company will post its Annual Report and Accounts for the year ended 31 December 2018 ("2018
Annual Report and Accounts”) to shareholders on 28 June 2019. A copy of the 2018 Annual Report and
Accounts will be available on the Company's website www.ncondezienergy.com.
Enquiries
For further information please visit www.ncondezienergy.com or contact:
Ncondezi Energy:
Hanno Pengilly
+27 71 362 3566
Liberum Capital Limited:
NOMAD & Broker
Novum Securities Limited
Joint Broker
Andrew Godber, Edward Thomas, Kane
Collings
+44 (0) 20 3100 2000
Colin Rowbury
+44 (0) 20 7399 9427
Note:
The information contained within this announcement is deemed by the Company to constitute
inside information as stipulated under the Market Abuse Regulation ("MAR"). Upon the
publication of this announcement via Regulatory Information Service ("RIS"), this inside
information is now considered to be in the public domain. If you have any queries on this, then
please contact Hanno Pengilly, Chief Development Officer of the Company (responsible for
arranging release of this announcement) on +27 (0) 71 362 3566.
Ncondezi Energy owns 100% of the Ncondezi Project which is strategically located in the power
generating hub of the country, the Tete Province in northern Mozambique. The Company is developing
an integrated thermal coal mine and power plant in phases of 300MW up to 1,800MW. The first 300MW
phase is targeting domestic consumption in Mozambique using reinforced existing transmission
capacity to meet current demand.
Chairman’s Statement
Dear Shareholder,
The Company’s core focus during the 2018 financial year has been to complete all necessary
milestones required to conclude a binding JDA with potential strategic partners, CMEC and GE.
Successful capital raisings in May 2018 and March 2019 through the placing of new shares raised £2.8
million before expenses, putting the Company in a position of financial strength to finalise the JDA
process with its potential partners, enter into the JV with GridX and the resources to fund the first GridX
C&I solar and battery storage project.
Operations
The Company signed a Non-Binding Offer (“NBO”) with CMEC and GE in October 2017, outlining their
desire to acquire a minimum 60% equity stake in the Project, be responsible for all EPC and O&M
services on a build own operate basis and lead project debt financing in conjunction with Ncondezi at
Financial Close (“FC”).
Large infrastructure projects like the Ncondezi Project, require access to significant capital and expertise
in construction and operation to be realised. For any developer, identifying a credible partner with these
traits represents a key project de-risking event. In CMEC and GE, Ncondezi has identified partners with
the prerequisite expertise in development, construction and financing for projects such as Ncondezi.
More specifically, CMEC and GE have existing operational experience in Mozambique and have
recently commissioned a similar 660MW integrated coal mine and power plant project in Pakistan in
early 2019, making them uniquely suited as the Company’s potential strategic partners.
Since signing the NBO, Ncondezi has successfully completed all milestones set out by CMEC and GE
to provide the necessary comfort to enter into the JDA. These included updating the Project financial
model with input from CMEC and GE, delivering an updated power tariff proposal to EDM, receiving a
LoS from MIREME for the development of the Project and sign off from the Mozambican Government
appointed Liaison Committee on the Project’s target commissioning date in 2023. As a result of this
progress, CMEC and GE confirmed in late February 2019 that they were prepared to finalise the JDA
and progress towards signature.
The JDA is currently at an advanced phase, with drafting near agreed form and CMEC and GE close to
completing their necessary internal approval processes.
From a project perspective, the Company remains confident that it has one of the most advanced and
competitive base load power projects in the region. Project optimisations during the financial year,
resulted in a more than 10% reduction in the previously agreed tariff envelope and appears to sit at the
lower end of previously agreed tariffs for operational projects in the country. The Project’s advanced
nature also puts it in the position of being one of the few, if only, projects which can deliver base load
power onto the Mozambique grid by 2023, in line with current Government and EDM generation
planning. In April 2019, the Company’s successful attendance as part of the Mozambican Government
delegation in China for the Second Belt and Road Forum for International Cooperation provided an
opportunity to raise the profile of the Project and provide the Company’s strategic partners with further
support and comfort from government. These factors in combination with quality potential strategic
partners, CMEC and GE, ensure that the project stands out as a unique opportunity for both the
Mozambican Government and future potential investors.
From a market perspective, Mozambique’s economy has benefitted from robust monetary policy
implementation, and is expected to continue to improve despite the devastating damage caused by
cyclones so far in 2019. National tariff price increases have been successfully implemented as part of
Government’s target to have cost reflective tariffs by 2021, further strengthening the financial position
of EDM, the Project’s 100% power off taker. Within the Southern African Power Pool, the average day
ahead market prices have increased by 89% since the first introductory meetings held between EDM,
CMEC, GE and the Company in February 2018, reflecting an improving export power market
environment, a key revenue sector for EDM as one of the region’s largest power exporters. All of these
act as supportive market indicators from which to develop the Project.
In addition to the main Project, in early 2019 the Company announced its intention to enter into the solar
and battery storage sector through a JV with GridX. The Company believes this represents a significant
opportunity to complement its existing large scale baseload power project and access near-term low-
risk annuity income streams which the Company believes has significant growth potential. GridX has a
pipeline portfolio of over 15 potential African C&I solar and battery storage projects, 6 of which are
considered to be at an advanced stage. Through the JV, Ncondezi will have the right (subject to certain
conditions) to fund at least 50% of GridX projects that meet minimum Key Performance Indicators
(“KPI’s”), including minimum 10% unlevered post tax internal rate of returns (“IRR”). Ncondezi has
entered into a Term Sheet with GridX and paid US$260,000 to secure exclusivity, the binding right of
first refusal to fund at least 50% of GridX’s projects, and initiate drafting of definitive agreements (the
“Definitive Agreements”) to enter into the JV. The Company expects to finalise the JV Definitive
Agreements during Q3 2019. In addition, GridX has presented the first project for investment approval,
which the Company is currently reviewing.
Financing
In May 2018, The Company raised £950,000 before expenses through placing of 15,200,000 ordinary
shares in the Company at a price of 6.25 pence per ordinary share.
On 25 May 2018, the Company granted share options in respect of 22,897,522 shares in the Company
to its directors, executive senior management team and contracted personnel. Of the options granted,
61% are performance related and linked to delivery of specific milestones, 17% are in lieu of director
remuneration and the balance of 22% is in lieu of senior management, ex-employees and consultants
remuneration.
On 28 September 2018, the Company announced the Christiaan Schutte had resigned as non-executive
director of the Company and from the Board due to a new senior role at a large power company in South
Africa that would not allow him to continue in his existing role at the Company. Christiaan was a
significant contributor to the development of the Company over the last 5 years, and his deep experience
in the southern African power sector has been invaluable. Since his resignation, the Company has
maintained close relations with Christiaan and has looked to work with him on a contracting basis for
specific work streams suited for his expertise.
On 16 November 2018, the Company announced that formal agreement to amend the Shareholder
Loan had been reached with loan holders. The amendments extended the maturity date of the
Shareholder Loan to 30 November 2019 at an interest rate of 12%. Loan holders also have an option
to swap debt for equity in full or in part at a conversion price of 10.0p per share until the 30 days before
the new maturity date of the Loan with a further conversion right based on a 30% discount to 60 day
volume weighted average price (“VWAP”) at 30 November 2019, subject to certain restrictions outlined
further on note 12. A total of US$2.8 million has been drawn down under the Shareholder Loan and the
repayment amount at maturity is now US$4.7 million as at 26 June 2019 (US$5.6 million as at 31
December 2018) as at 26 June 2019 including principal, rolled up previous redemption premiums,
interest and loan holder conversion notices of US$0.9m of principal, rolled up previous redemption
premiums and interest received since year end. The Directors are exploring a number of potential
refinancing and extension solutions for the Loan ahead of the 30 November 2019 maturity date. The
financial statements have been prepared in anticipation of a positive outcome, but it is important to
highlight that although negotiations with the new partner are at an advanced stage, there are no binding
agreements in place. The Company has also been exploring options to raise additional funding and
refinance or convert the Loan however there can be no certainty that any of these initiatives will be
successful.
In April 2019, the Company raised £1.88 million before expenses through placing of 28,856,060 ordinary
shares in the Company at a price of 6.50 pence per ordinary share.
Michael Haworth
Non-Executive Chairman
27 June 2019
Operations Review
Ncondezi is focused on the phased development of an integrated coal fired power plant and mine,
commencing with 300MW first phase. The project is located near Tete in northern Mozambique.
Ncondezi has also entered the captive solar and battery storage sector through a proposed JV with
GridX, to develop, build and operate power solutions for the African C&I sector.
Joint Development Agreement with CMEC and GE
Non-Binding Offer
On 20 October 2017, the Company announced that it had agreed in principle terms of a NBO with CMEC
and GE. On 9 November 2017, the Company announced that the NBO had been signed. The NBO was
part of a new partner process which was launched in May 2017.
The NBO sets out the terms, work programme and timetable by which the parties will work together to
execute a legally binding JDA.
The key terms of the NBO include:
CMEC and GE to acquire a minimum 60% stake in both the Power Project and Mine Project
holding companies which currently hold 100% of each project respectively.
JDA will set out the commercial terms on which the parties will complete the acquisition and
jointly develop and fund the integrated project up to and including FC.
The Power Project and the Mine Project will be developed as an integrated project, with CMEC
and GE taking full responsibility for EPC and O&M contracting.
CMEC and GE will take full responsibility for managing the EPC process for the transmission
line, which will be constructed on a Build Transfer model, subject to EDM approval.
CMEC and GE to lead project debt financing in conjunction with Ncondezi for both the Power
Project and Mine Project at FC.
Funding ratios to be adjusted should CMEC and GE take an equity stake larger than 60%.
The power plant generation technology will return to circulating fluidised-bed (“CFB”) boiler
technology from pulverized coal (“PC”) boiler technology. This provides a number of advantages
to the Project including the technical feasibility work being more advanced on a CFB solution,
reduced time required to reach FC and lower coal costs as CFB fuel requirements are more
suitable for Mozambican coal qualities.
Background to Non-Binding Offer
The NBO was signed as part of a new partner search launched in May 2017, which focused on
identifying a partner capable of providing a leadership role in the financing, construction and operation
of the Power Project, with a credible track record in both the global and African power sectors.
CMEC is a large Chinese integrated company with international reach and engineering contracting as
its core business. CMEC’s project experience, technical ability, and financing capacity, has allowed it to
undertake projects in more than 150 countries in the fields of international contracting and general
international trade. CMEC’s contracting business involves a broad range of areas such as electric power
and energy, transportation, electronic communication, water supply and treatment, housing and
architecture, manufacturing and processing plant, environmental protection, mining and resource
prospecting. As a world-renowned engineering contractor, CMEC has been ranked among China’s top
10 contractors by business turnover from overseas contracted projects by the Chinese Ministry of
Commerce for many consecutive years.
GE is a world energy leader that provides technology, solutions and services across the entire energy
value chain from the point of generation to consumption. GE’s power business is transforming the
electricity industry by uniting all the resources and scale of the world’s first digital industrial company.
GE’s customers operate in more than 150 countries, and together power more than a third of the world
to illuminate cities, build economies and connect the world.
CMEC and GE have jointly worked on numerous projects across the world and successfully completed
a number of power projects in the sub Saharan African region. Most relevant to Ncondezi, the two
parties are currently working together on the Thar Block II Power Plant project in Pakistan, which is a
660MW integrated coal fired power plant and mine which utilises two 330MW CFB boilers and due to
be commissioned in 2019.
Experience in Mozambique
Both CMEC and GE have successful track records operating in Mozambique.
CMEC has been involved in supplying and installing transmission infrastructure to EDM, improving
access to electricity for Mozambicans and new industry development. In 2015, CMEC completed a
110kV transmission line project in Nacala City in northern Mozambique and in 2017, CMEC signed an
EPC contract for a 400kV transmission line project in the same location. CMEC is also an EPC
contractor for the Moatize to Macuse railway and port project designed to provide a new coal transport
corridor from the Tete region.
GE has been present in Mozambique for over four years with offices in Maputo and over 44 employees.
GE is active in multiple sectors including the transport, health care, oil and gas and energy sectors. To
date, GE has supplied over 120 locomotives, installed ten 4.4MW power units for the Kuvaninga gas
IPP project and is to provide technology solutions and services to ENI’s US$7 billion Coral South LNG
project in the Rovuma Basin. In addition, GE is working on initiatives to improve access and quality of
basic and diagnostic services of rural healthcare and reduce infant mortality rates. This work is run in
parallel to GE’s local skills development programmes which include scholarships, funding of educational
facilities and the provision of local courses.
JDA process update
As part of the JDA process, the following milestones have been achieved:
Site visit by CMEC and GE to inspect the Ncondezi Project’s proposed development sites.
In principle support received from EDM and MIREME for CMEC and GE to act as Project
strategic partners.
Updated Project EPC and O&M proposals submitted by CMEC and GE for review.
FM updated and accepted for submission to MIREME and EDM by CMEC, GE and the
Company.
Receipt of LoS for the Project from MIREME.
Sign off on the Project work program and timetable from the Liaison Committee, setup and
chaired by MIREME.
Confirmation from CMEC and GE that all key milestones had been met to proceed with final
negotiations to conclude the JDA.
The JDA is currently at an advanced phase, with drafting near agreed form and CMEC and GE close to
completing their necessary internal approval processes.
The JDA is expected to formally set out the terms on which the Project will be developed, funded and
operated by all parties. At this stage, the Company does not expect the terms of the JDA to materially
differ from those outlined in the signed NBO. Key terms expected to be covered in the JDA include:
Project equity ownership structure
Project investment structure
Project management and budgeting process
Once executed, the Project development program will focus on delivering the key milestones to achieve
first power on the grid in 2023. This process is expected to start with the submission of a final tariff offer
to the Liaison Committee and EDM for review and approval, which the parties are looking at fast tracking
with the existing EPC and O&M proposals. Following this, the Company expects to formally enter into
Power Purchase Agreement (“PPA”) and Power Concession Agreement (“PCA”) negotiations with EDM
and MIREME respectively. The two agreements represent the final commercial negotiations before the
Project enters the project financing phase, which is followed by commencement of Project construction
at Financial Close.
From a timing perspective, the current development timetable has been agreed as follows:
Q4 2019 – Formal submission of final tariff
Q1 2020 – Tariff agreed, initiation of PPA and PCA negotiations
H1 2020 – PPA and PCA finalised
H1/2 2020 – Financial Close
2023 – Project commissioning – first power on the grid
Results of Integrated Financial Model
At the end of April 2018, the Company received updated and completed EPC and O&M proposals and
began a process to review and update the FM. The Company completed its review of the FM on 3 May
2018 and submitted it to its potential partners for review and acceptance. The Company’s potential
partners completed their review of the FM and approved its submission to EDM and MIREME in June
2018.
The updated FM has been completed targeting a revised tariff that the Company and its potential
partners believe will be attractive to EDM. Meetings with EDM in January 2018 indicated that the
historical tariff agreed was no longer competitive given downward pressure in regional tariff rates and
would need to be revised down. Based on benchmarking of new and competing projects in Mozambique
and the southern African region, the Company and its potential partners targeted a new tariff lower than
the previously agreed tariff envelope with EDM.
The specific tariff rate and target returns in the updated FM are commercially sensitive and still to be
negotiated with EDM. The FM is based on the Project generating a gross 300MW at a target tariff rate
in excess of 10% lower than the tariff envelope previously agreed with EDM, paid on an annual basis
for 25 years.
With the lower tariff target, it was essential that improvements were identified to protect the Project
equity IRR agreed in the previous tariff envelope. This was achieved primarily through the choice of
technology (moving from PC to CFB boiler technology), integration of the power and mine projects and
optimisation of common infrastructure capex. Of key importance was the ability to link boiler design to
the most cost effective coal product produced from the mine. This allows the Project to minimise coal
costs to the power plant which is achieved through integration of a dedicated coal supply. Ncondezi is
the only power project in Mozambique with a dedicated coal fuel source for in country power generation.
In addition to the lower proposed tariff envelope, the Project is also expected to significantly benefit
Mozambique through tax receipts and royalties over the life of the Project which are estimated to be
between US$1.1 to 1.4 billion. This is in addition to local skills development and thousands of jobs during
construction and hundreds of jobs during operation, as well as the economic multiplier effect of providing
stable cost effective power to the north of Mozambique.
The FM results are not final and subject to change based on a number of factors including the finalisation
of tariff negotiations with EDM, debt terms with commercial banks, technical and operating assumptions
and EPC and O&M contracts.
Joint Venture with GridX
On 5 April 2019, the Company announced that it entered into the Term Sheet with GridX, an African
power developer, enabling it to enter into a JV focused on building and operating captive solar and
battery storage solutions for the African C&I sector.
Background to the GridX JV
Since Ncondezi transitioned from a coal exploration business into an integrated power plant and mine
project, the Company has built up significant Sub-Saharan African power development expertise and
has been evaluating a number of alternative power projects over the last 8 months that would
complement its existing 300MW Ncondezi Project in Tete, Mozambique. This process led to the
identification of the GridX opportunity in the C&I sector, and is outlined in more detail below.
C&I Solar and Battery Storage Sector Overview
Inadequate access to electricity in Africa both in terms of connections and reliability has driven demand
in the C&I sector for self-generation (or “Captive”/”Embedded”) power solutions. Renewable energy
solutions are estimated by the International Renewable Energy Agency (IRENA) to make up nearly half
of African supply by 2030 and the Company estimates that this market could be worth up to US$34
billion a year.
Traditionally, captive power solutions have relied heavily on diesel generation. The Company Directors
believe this dynamic has the potential to change with the advent of low cost solar and battery storage.
Solar and battery storage solutions are increasingly making economic sense with potential cost savings
of 30% or more versus traditional off grid diesel generation solutions and providing a price shield against
escalating fuel and grid prices. In particular, cost effective battery storage has allowed greater solar
penetration into the market by removing its intermittent power constraints and maximising energy
generated. Solar and battery storage equipment is modular and pre-fabricated, making it easy and quick
to install and in more places. Generation regulations are also less onerous as installations typically do
not require additional licensing.
Solar and battery storage meets the growing pressure for corporate sustainability and zero emissions
from investors and consumers. It also has low maintenance costs primarily due to the lack of moving
parts compared to a diesel generator.
According to Bloomberg New Energy Finance, solar and battery storage costs have fallen 84% and
76% since 2012, and are expected to become even more cost competitive with the cost of solar PV
panels expected to fall a further 37% by 2025 and battery storage costs by a further 67% by 2030.
In addition, there are significant ancillary benefits of solar and battery storage projects, including:
Reduced fuel storage and theft risks
Reduced fuel logistics costs
Reduced emissions
Reduced noise pollution
Peak shaving – reduces peak period high cost energy demand from grid
Supply stability – backup, frequency & voltage control
Finally, increasing amounts of capital is flowing into the sector with approximately US$130 million raised
in the African captive power renewables sector (C&I and home solutions) over the last 15 months. The
World Bank has also committed over US$1 billion for investments in battery storage for developing and
middle income countries. Increasingly, smaller scale solar and battery storage projects are being
recognised for their low risk and stable returns. Growth potential and sustainability goals are also driving
major utilities and oil majors into the sector with Enel, Engie, EDF, Shell and Total all entering the sector
(mainly through acquisitions and partnerships).
Overview of GridX
GridX is a power developer focused on delivering competitive sustainable energy solutions in the African
C&I sector. GridX identifies C&I energy users who have either no or poor quality grid access and are
dependent on diesel power generation. Capital requirements per target project average between
US$0.5 million and US$2.0 million, and typically has a projected 9-12 month construction timeframe.
Each project will seek to have a 10 to 15 year US$ denominated power offtake contract. Project returns
are attractive with minimum targeted post tax unlevered equity IRR between 10% and 15%+, compared
with 6% and10% in developed economies. Ncondezi believes that these returns can be further
increased through leverage.
GridX has in-house resources to produce construction ready projects and is technology agnostic which
allows for competitive technology selection on every project.
In January 2019, GridX delivered its first project in Tanzania. The project was designed for Singita
Grumeti, a luxury game lodge, and involved the installation of a 189 kWp solar plant and 522kWh battery
storage unit from Tesla. The battery storage unit is believed to be the first Tesla installation in Tanzania.
GridX expects that the project will replace over 100,000 litres of diesel consumption annually and result
in an annual US$150,000 reduction in diesel costs.
GridX’s Directors own 70% of GridX, 15% is held by Eden Renewables, an international solar and
storage development company, currently developing projects in the US and UK, 10% by Pan African
Group, a private equity and investment banking firm focused exclusively on Sub-Saharan Africa, and
the balance of 5% is held by a private individual. GridX was founded by Executive Directors Chalker
Kansteiner and Justin Pengilly, who have both been working in the African power development sector
for a number of years. Chalker was previously at Blackstone’s large scale African energy project
developer, Black Rhino, whilst Justin previously worked at Pele Green Energy, one of South Africa’s
leading independent power producers in the renewable energy sector (and is the brother of Hanno
Pengilly, the Company’s Chief Development Officer).
GridX Pipeline
GridX’s current development pipeline includes 15 projects in various stages of development with 6
advanced stage projects projected to enter construction in the next 18 months. Potential pipeline
projects include luxury resorts, manufacturing facilities, port facilities and agri-businesses, with flexible
design solutions for either off grid or on grid requirements. The advanced stage projects have a potential
1.4MWp of solar and 8.9MWh of battery storage, and are concentrated in Mozambique, Djibouti and
Zambia. The current estimated project cost for the advanced stage projects is US$9.5 million (100%
equity basis), with the right of first refusal giving Ncondezi the right to fund a minimum of 50% of the
equity requirement.
GridX is targeting its first new project to start construction in Q3 2019 with first cash flows by the end of
Q4 2019/beginning of Q1 2020. GridX has indicated a total capital cost for the first project to be
US$1.1m, which the Company has provisionally allocated funds for from the successful April 2019
fundraising, subject to the approval of the project and relevant documentation. In addition, GridX has
presented the first project for investment approval, which the Company is currently reviewing.
Term Sheet Overview
Ncondezi has signed a Term Sheet with GridX to acquire a ROFR to fund GridX C&I projects through a
newly setup JV.
It is intended that GridX’s role under the JV will be to deliver US$20m of construction ready African C&I
projects to the JV (the “GridX Pipeline”). Each project must either meet a minimum set of KPI’s or have
the KPI’s waived by both parties before funding takes place (“Approved Project”). Ncondezi will have
the right to elect to fund a minimum of at least 50% of the Approved Projects’ equity requirement.
Funding from Ncondezi will be provided on a project by project basis. GridX will have the right to fund
up to 15% of the Approved Projects’ equity requirement as well as a right to introduce a third party
investor to fund the remaining 35%. Ncondezi will have an additional right to elect to fund any funding
shortfalls should funding from either GridX or a third party investor not materialise, in the event that
Ncondezi wishes the project to proceed.
The key KPI’s include:
projects located in approved jurisdictions;
project size between US$100,000 and US$10,000,000;
minimum post tax unlevered equity IRR of 10% to the JV;
use of proven technologies;
bankable offtake denominated in US$;
completion of credit checks on potential clients with additional credit support in place where
required;
finalised EPC and O&M contracts in place; and
all consents and permits required to start construction are in place.
The Term Sheet sets out a phased approach to setting up the JV and funding projects:
1. Phase I
Ncondezi has made an upfront payment of 2/3rds of the GridX Fee of US$390,000 to GridX on
24 April 2019 to secure an initial 120 day exclusivity and the ROFR for the GridX Pipeline to
give both parties time to agree Definitive Agreements. GridX will use funds of US$260,000 (the
“Initial Payment”) to cover third party legal, structuring and tax advice costs to setup the JV and
draft the Definitive Agreements to be entered into between the parties.
2. Phase II
Payment of the Initial Payment will give Ncondezi a ROFR to fund at least 50% of the equity
requirement of any Approved Projects. Whilst the Definitive Agreements are being finalised and
to facilitate delivery of the first projects, Ncondezi has conditionally agreed to evaluate funding
of the 6 advanced stage projects with a total funding of up to US$2.0 million on a combined
project basis. Ncondezi has the right to elect whether to fund such projects before the Definitive
Agreements are entered into (the “Initial Investments”), and has provisionally allocated US$1.1
million from the successful April 2019 fundraising towards the first project, once approved and
documentation for this project is agreed.
3. Phase III
A final payment of 1/3rd of the GridX Fee is due on the later of execution of the Definitive
Agreements or the first project reaching commercial operations. The Definitive Agreements will
create a clear framework for making future investments and the management of the portfolio of
operational projects.
The phased approach allows the Company and GridX to deliver certain projects (subject to available
funding) before finalisation of the Definitive Agreements demonstrating proof of concept, and the setup
of the appropriate investment vehicle to warehouse all of the future projects before additional funding is
considered for the rest of the portfolio.
The JV investment structure will be designed to optimise warehousing of Approved Projects in various
African jurisdictions; minimising operational costs and minimising tax leakage. GridX will be responsible
for the JV setup costs. Before the Definitive Agreements have been executed, the parties intend to
agree a simple special purpose vehicle funding structure for Approved Projects, with the intention that
these projects will be incorporated into the JV structure at a later stage.
As part of its ordinary course business as a developer, GridX is expected to be entitled to a capped
development fee for each Approved Project, included as part of the project capital cost. Ncondezi will
have a right to participate in any development fee for projects it sources that are funded through the JV.
GridX is expected to provide O&M services for each Approved Project in accordance with market-related
commercial terms for projects of a similar nature, contracting directly with the power offtaker. GridX is
also expected to be appointed to manage the JV for an annual fee of approximately 1.5%
drawn project capital. It is expected that the management agreement can be terminated by the Company
should GridX fail to meet agreed KPI’s.
Certain incentives to encourage GridX to achieve the best returns for each project, will be paid through
a profit sharing mechanism where an equity IRR hurdle of above 10% is achieved by Ncondezi.
Advantages to Ncondezi
The Company Directors believe the JV with GridX has the potential to deliver a number of advantages
for Ncondezi, namely:
1. Complementary to existing Ncondezi Project
JV provides diversification from coal baseload power generation into captive solar and battery
storage small scale renewable and energy storage projects. From a cash flow perspective the
smaller, easier to install solar and battery storage projects potentially provide near term cash
flows before the Ncondezi Project target commissioning in 2023. The smaller capital cost
requirements also negate the need for a large strategic partner.
2. JV Structure
JV structure provides minimal distraction and additional resources to the Company, as GridX
will take full responsibility for development work and costs to deliver construction ready projects
for funding review. This also minimises potential distractions from the main Ncondezi Project.
3. Strong market fundamentals
Solar and battery storage projects have become economically competitive with traditional
captive power solutions (diesel generators), and further reductions in the cost of solar and
battery storage will ensure competitiveness continues into the future. Added to this, the ancillary
benefits (noise and emission reductions etc.) and increased pressure for sustainable energy
sourcing further strengthen customer investment rational to invest in these solutions.
4. Potential low risk annuity business with significant growth potential
The JV provides an option to fund 50% of potential US$20m GridX project portfolio, with 6
projects in an advanced stage targeted to be operational over the next 18 months. These
construction ready projects with attractive US$ denominated 10 to 15 year bankable offtake
contracts significantly reduce risks. In addition, the diversified portfolio approach has de-risking
effect on portfolio level returns which is potentially attractive to external investors in the future.
5. Attractive project fundamentals and target returns
The proposed projects are low capex and generate cash flows within 12 months. The minimum
10% unlevered post tax IRR KPI sets a projected return floor for each project. These returns
represent a premium return when compared to those in more developed power markets and
can be improved further through higher delivered project IRRs and gearing.
6. First mover advantage
The African market is at an early stage of development with annuity income investors, utilities
and oil companies seeking to enter the sector but slow to move. With a diversified portfolio of
renewable C&I projects in one structure, the Company believes that the JV could ultimately
represent an attractive investment opportunity to development funding institutions, annuity
income renewable energy funds, utilities and energy companies and private equity funds.
7. Risk Mitigation
Technology risk – utilising established solar and battery technologies from leading suppliers
Regulatory risk – utilising existing land and permitting licenses
Tariff risk – negotiating unregulated tariffs directly with power consumers
Payment risk – credit checks, shareholder guarantees and termination payments
Performance risk – equipment performance guarantees from suppliers for the life of the
offtake agreement
Exclusivity and Right of First Refusal
Following payment of the Initial Payment, Ncondezi has exclusivity and a ROFR for 120 days to
conclude and execute the Definitive Agreements, subject to it electing to fund any initial projects
presented during this period which meet the KPI’s (up to a maximum of US$2.0 million in aggregate).
This is automatically extended for up to an additional 180 days if the Definitive Agreements have not
been executed and Ncondezi has elected to fund all Approved Projects as they become available for
funding during the first period of exclusivity (up to a maximum of US$2.0 million in aggregate) and
continues to fund at least 50% of all projects presented during this 180 day period which meet the KPI’s.
After this second period of exclusivity, if the Definitive Agreements remain unexecuted, but Ncondezi
continues to fund at least 50% of all projects presented during this period which meet the KPI’s,
Ncondezi has a right to match any project funding for a further 180 days.
If the Term Sheet is terminated by either party during the initial 120 day exclusivity period or in the 180
days after that, provided that the second 180 day extension to the exclusivity period is not triggered,
GridX will refund US$100,000 of the Initial Payment to Ncondezi.
Following execution of the Definitive Agreements and the first project being successfully commissioned,
it is expected that Ncondezi’s ROFR will allow it to accept or reject funding of Approved Projects,
however there are limits to the number of rejections Ncondezi can give and it will no longer have a
ROFR if it exceeds these limits over a 6 to 12 month period.
It is emphasised that notwithstanding that it has agreed the Term Sheet there can be no certainty that
Ncondezi will elect to fund any projects in order to maintain ROFR during the exclusivity period, that it
will agree the terms on which any such investments will be made or agree the definitive documentation
for the JV.
Shareholder Loan
Background
On 11 May 2016, the Company announced that it had secured the Shareholder Loan with the Lenders.
The Shareholder Loan was intended to provide the Company with bridge funding for its corporate
overheads while it completed a set of investment conditions to make a JDA effective with a previous
potential strategic partner Shanghai Electric Power Co. Ltd (“SEP”).
On 31 August 2016, Africa Finance Corporation (“AFC”) agreed to accede to the existing Shareholder
Loan and its terms, advancing Ncondezi up to US$3.0 million, with an initial tranche of US$1.0 million
(“Tranche A”) and a further tranche of US$2.0 million (“Tranche B”) with Tranche B conditional amongst
other things upon the fulfilment of certain conditions precedent, the completion of the JDA and Ncondezi
providing an appropriate security package.
Tranche A was drawn down in accordance with the existing Shareholder Loan terms (set out in the
announcement dated 11 May 2016), some of which have been amended subsequently. A catch up
advance of US$960,000 was paid to Ncondezi as an upfront payment on 2 September 2016, which was
equivalent to AFC’s pro rata payment alongside the existing drawdown from Lenders.
Tranche A was utilised to fund project development costs in accordance with an agreed budget.
Repayment of the Shareholder Loan (comprising the existing Shareholder Loan and initial US$1.0
million Tranche A from AFC) was initially payable by no later than 10 May 2017, however on 11 May
2017, the Company agreed an amendment to the repayment terms, with repayment due on 2
September 2017. On 2 September 2017, the Company entered into a formal agreement to extend the
total Shareholder Loan repayment date to 2 September 2018.
Under the terms of the Shareholder Loan the cost of the loan was 1.5x (comprising 1.0x principal and
0.5x return) if repayment was made by 10 May 2017 and increased to 2.0x if repayment was post 10
May 2017. The cost of the Shareholder Loan was 2.0x the draw down amount (comprising 1.0x principal
and 1.0x return) as repayment was not made by 10 May 2017.
Tranche B has lapsed and is not available for drawn down as it was subject to certain conditions
precedent including the finalisation of the previous JDA with SEP.
On 23 June 2017, the Company entered into an amendment (“New Loan”) to the original Shareholder
Loan with an additional funding of US$350,000. The financing was committed by the Chairman Michael
Haworth (US$200,000) and other existing long term shareholders (US$150,000). The New Loan
received a 1.25x return at its maturity on 2 September 2017. On 2 September 2017, the Company
entered into a formal agreement to extend the New Loan repayment date to 2 September 2018.
As part of this same amendment the senior management team of the Company agreed to convert their
deferred 50% salary between November 2016 and January 2017, and a percentage of their salary since
February 2017 into the existing Shareholder Loan. The total amount is US$232,000, but this sum does
not attract any interest.
At July 2017, a total of US$2,774,545 had been drawn down under the total Shareholder Loan, this total
includes the US$232,000 deferred salaries. Refer to note 12 for further details.
Current year restructuring
On 16 November 2018, the Company announced that a formal agreement to amend the Shareholder
Loan (the “Loan”) has been reached (the “Loan Restructuring”) with loan holders the key terms of which
are detailed below.
At the date of the restructuring the Loan payable stood at US$5.1m. At 26 June 2019 the repayment
amount due on 30 November 2019 will be US$4,712,973 which includes principal, rolled up premiums
under the previous loans, interest. The Company has received loan holder conversion notices of
US$935,133 of principal and interest since year end.
Loan Restructuring Amended terms
1. Loan Repayment Date:
The Loan term has been extended from 2 September 2018 to 30 November 2019.
2.
Interest:
Interest on the outstanding Loan amount shall accrue from 15 November 2018 at the rate of
12% per annum payable in arrears on the earlier of conversion into equity or repayment of the
Loan (specific to each Lender). Interest shall be calculated on the basis of a 365-day year.
The interest rate represents a significant reduction in the effective interest rates historically
incurred on the Loan e.g. in June 2017, the Company raised an additional US$350,000 at a
1.25x return.
3. Voluntary Prepayment:
The Company may, at any time prior to 1 November 2019, prepay the whole or any part of the
Loan provided that:
(a)
(b)
the Company gives the Lenders written notice specifying the aggregate amount the
Company wishes to prepay and the specific amount to be paid; and
the lenders have 3 business days to exercise the First Conversion and give the
Company a conversion notice.
4. Debt for Equity Swap:
For so long as any part of the Loan remains outstanding:
(a)
(b)
First Conversion: Lenders shall be entitled to convert all or part of their portion of
the Loan (in multiples of US$1,000) into fully paid ordinary shares of the Company
at a 10.0p conversion price from the date of this announcement until 1 November
2019 (the “First Conversion”); and
Second Conversion: if Lenders who are owed (in aggregate) not less than 50.1%
of the outstanding principal amount of the Loan from 1 November 2019 until
maturity provide a conversion notice to the Company, all amounts outstanding
under the Loan shall convert into fully paid ordinary shares of the Company at a
conversion price the higher of the 30% discount to the 60 day VWAP at 30
November 2019 or 5.2p (the “Second Conversion”).
The First Conversion price represents a premium of 50% to the closing share price on 15 November
2018, the day before the Loan Restructuring was announced.
The maximum number of shares that can be issued under the First Conversion is 38.9 million new
shares, or a 12.1% dilution. To date, conversion notices in relation to 7,193,328 shares have been
executed since the year end, reducing the Shareholder Loan by US$935,133 of principal, rolled up
previous redemption premiums and interest.
The Second Conversion is only executable if Lenders representing no less than 50.1% of the
outstanding Loan principle at the time elect to convert. This prevents any single Lender from having
negative control over a decision to convert. The minimum conversion price represents a discount of
22% to the closing price on 15 November 2018, and restricts the maximum number of shares that can
be converted to 84.6 million, which would represent a maximum dilution of 23.1% to shareholders. The
Second Conversion has been agreed to provide Lenders and the Company with an alternative
repayment mechanism in the event that the Company has not repaid the Loan during the new term.
The US Dollar to British Pound exchange rate has been fixed for any debt for equity swap at US$1.3 to
£1.0. Refer to note 12 for further details.
Development Program to Financial Close
The Project is at an advanced level of development and will be advanced once the JDA has been
executed and the Company focusses on achieving FC. The Company expects FC to take between 12
and 18 months post JDA execution.
Financial Review
Results from operations
The Group made a loss after tax for the year of US$3.5 million compared to a loss of US$1.7 million for
the previous financial year. The basic loss per share for the year was 1.3 cents (2017: 0.7 cents).
Administrative expenses totalled US$1.5 million (2017: US$1.1 million). Administrative expenses refer
principally to staff costs, professional fees and travel costs and underlying administrative expenses,
which have increased due to restarting the processes of engaging with new strategic partners and
advancing the integrated power and mining project.
Share based payment charges totalled US$1.3 million (2017: Nil) in respect of awards granted in the
year as set out on note14 and warrants issued to a consultant.
The loss after tax includes a US$0.7 million (2017: US$0.64 million) finance cost. In 2018, the finance
cost was associated with the amortisation of the redemption premiums comprising US$1.1 million in
respect of amortised redemption premiums prior to restructuring and US$0.1m of effective interest
charges on the convertible loan host liability with US$0.3 million of fair value changes on the derivative.
Financial Position
The Group’s statement of financial position at 31 December 2018 and comparatives at 31 December
2017 are summarised below:
Non-current assets
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
2018
US$’000
18,272
478
18,750
5,508
5,508
13,242
2017
US$’000
18,313
697
19,010
4,620
4,620
14,390
Capitalised additions totalled US$0.01 million (2017: US$0.05 million) principally in respect of the Power
Project. The carrying value of the non-current assets was assessed for impairment and no impairment
was noted as detailed in note 2.
The increase in current liabilities principally relates to the Shareholder Loan, together with accrued
interest.
Cash Flows
The net cash outflow from operating activities for the year was US$1.4 million (2017: US$0.9 million).
The cash outflow principally represented administrative costs for the year with limited working capital
movements.
Net cash from investing activities was US$0.02 million (2017: US$0.08 million), mainly related to
disposal of plant and equipment in Mozambican subsidiary offset by development activities incurred on
the Power Project.
Net cash from financing activities was US$1.2 million (2017: US$1.3 million) related to the share issues
in 2018.
The resulting year end cash and cash equivalents held totalled US$0.4 million (2017: US$0.6 million).
As at 21 June 2019 the Company held cash and cash equivalents totalling US$1.9 million.
Outlook
As at 21 June 2019 the Group had cash reserves of approximately US$1.9 million. Based upon
projections, which are subject to the Shareholder Loans being converted, extended or restructured and
include corporate costs, project costs to progress the Project and planned expenditure related to first
potential C&I project presented as part of the planned GridX JV, the Group will be funded until the
beginning of December 2019 although the expenditure on the first GridX JV project is not yet binding
and in the absence of such planned expenditure the Group is funded until Q4 2020. However, the
forecasts
remain subject to the Shareholder Loan being extended or restructured. The Loan of US$4.7 million
(principal, historic redemption premium and interest) matures on 30 November 2019, and the Company
is currently evaluating options to execute a debt for equity swap or, prior to 1 November 2019, prepay
the whole or any part of the loan with the remainder subject to a debt for equity swap.
The Directors continue to explore options in respect of raising further funds to continue with the power
plant and mine development programmes. At present there are no binding agreements in place and
there can be no certainty as to the Group’s ability to raise additional funding.
In addition, notwithstanding the Loan, further funding will be required as detailed above to meet
operating cash flows under current forecasts or in the event of accelerated project advancement. The
Directors are exploring a number of funding and working capital solutions beyond the 30 November
2019 maturity of the Loan. The financial statements have been prepared on a going concern basis in
anticipation of a positive outcome but it is important to highlight that there are no binding agreements in
place and although the Company has also been exploring options to raise additional funding and
refinance or convert the Loan; there can be no certainty that any of these initiatives will be successful.
These factors indicate the existence of a material uncertainty which may cast significant doubt about
the Group’s ability to continue as a going concern. The financial statements do not include the
adjustments that would result if the Group was unable to continue as a going concern. Such
adjustments would principally be the write
Environmental and Social Responsibility
Ncondezi’s Social Development Programme has been put on hold pending positive development being
made on the JDA.
Achievements from previous years include:
The drilling of 14 boreholes in several villages within the Tete province.
Four students completed their Master’s degree in Mining Engineering at Coimbra University
benefiting from a full bursary from Ncondezi.
A 4x4 ambulance was purchased to assist villagers in more remote areas.
Ncondezi built a new primary school at Waenera village.
Upgrading of the Mameme clinic and the construction of a new maternity wing.
An Agricultural Project based on conservation farming. This included the villages of Catabua and
Canjedza as an initial model. The objective being a platform to educate the local communities in all
aspects of crop husbandry using their own resources.
Director’s Biographies
Michael Haworth / Non-Executive Chairman
Michael Haworth has over 20 years finance experience, predominantly in emerging markets and natural
resources. Mr Haworth co-founded Greenstone Resources a private equity fund specialising in the
mining and metals sector in 2013 and is a Senior Partner of Greenstone Capital LLP and a Director of
Greenstone Management Limited. Mr Haworth was previously a Managing Director at J.P. Morgan and
Head of Mining and Metals Corporate Finance in London.
Estevão Pale / Non-Executive Director
Estevão Pale has more than 30 years' experience in the mining industry. He is the Chief Executive
Officer of Companhia Moçambicana de Hidrocarbonetos S.A., a Mozambican natural gas company.
Between 1996 and 2005, Mr Pale was the National Director of Mines in the Ministry of Mineral
Resources and Energy, where he was responsible for the supervision and control of mineral activities
in Mozambique and the formulation and implementation of the mining and geological policy approved
by the government of Mozambique.
Mr Pale has been a director of numerous companies in the mining sector including Promaco SARL and
the Mining Development Company, as well as the General Director and Chief Executive of Minas Gerais
de Moçambique. Mr Pale has a postgraduate diploma in Mining Engineering from the Camborne School
of Mines in Cornwall and a masters degree in Financial Economics from the University of London
(SOAS). He completed a course in Gas Business Management in Boston at the Institute of Human
Resources Development Corporation in 2006.
Jacek Glowacki / Non-Executive Director
Jacek Glowacki has over 30 years of international experience in the power sector and is currently
Executive Director of one of the Polenergia Group subsidiaries, a Polish Independent Power Producer
one of Poland’s largest private investment companies and a subsidiary of Kulczyk Holding SARL. Mr
Jacek is a nominated Non-Executive Director by Polenergia.
During his career, he has held senior executive positions at Polenergia Group Kulczyk Investments, AEI
Corporation (USA), Trakya Elektrik (Turkey) and Prisma Energy Europe. Mr Glowacki’s operating
experience includes General Manager of Nowa Sarzyna, which was owned by ENRON and Chief
Production Engineer at Cracow Combined Heat and Power Plant, owned by EDF. He holds a degree
in engineering from the University of Mining and Metallurgy in Kracow and an MBA from the University
of Chicago.
Aman Sachdeva / Non-Executive Director
Aman Sachdeva has more than 20 years experience in the infrastructure industry, specializing in the
energy sector; ranging from project finance, management consulting, regulatory affairs, mergers and
acquisitions, power system planning, energy conservation and marketing. Mr Sachdeva is currently the
founder and Chief Executive Officer of Synergy Consulting, an independent consulting practice with a
focus on project finance, which has to date closed projects worth US$12 billion. Mr Sachdeva is also
an advisor to the World Bank, Energy Sector for Central Asia, South Asia and Africa on a variety of
projects. Mr Sachdeva is a nominated Non-Executive Director by AFC.
Director’s Report
The Directors present their annual report and the audited group financial statements headed by
Ncondezi for the year ended 31 December 2018.
Principal activities
The principal activity of the Group is the development of an integrated 300MW power plant and mine to
produce and supply electricity to the Mozambican domestic market.
Business review and future developments
Details of the Group’s business and expected future developments are set out in the Chairman’s
Statement, the Operations Review and in the Financial Review.
Principal risks and uncertainties
The Group operates in an uncertain environment that may result in increased risk, cost pressures and
schedule delays. The key risk factors that face the Group and their mitigation are set out below.
Additionally, the Group’s multi-national operations expose it to a variety of financial risks such as market
risk, foreign currency exchange rates and interest rates, liquidity risk, and credit risk. These are
considered further in notes 1 and 19.
Key performance indicators
The key performance indicators of the Group are as follows:
Mine exploration expenditure (US$’000)
Power development expenditure (US$’000)
Share price at 31 December (pence)
Cash at bank at 31 December (US$’000)
2018
7
25
5.65
424
2017
2016
3
48
3.63
614
13
249
5.3
152
Results and dividends
The results of the Group for the year ended 31 December 2018 are set out below.
The Directors do not recommend payment of a dividend for the year (2017: nil). The loss will be
transferred to reserves.
Events after the reporting date
See note 22 for further information.
Financial instruments
Details of the use of financial instruments by the Company, its subsidiary undertakings and financial risk
management are contained in note 19 of the financial statements.
Going concern
As at 21 June 2019 the Group had cash reserves of approximately US$1.9 million. At the current
average working capital burn rates the Company current cash position is sufficient to cover operating
costs and Power Project related costs until Q4 2020 subject to the Shareholder Loan being converted,
extended or restructured. Under the forecasts, which also include planned but currently non-binding
expenditure in respect of the first potential C&I project presented as part of the planned GridX JV, the
Group will be funded until the beginning of December 2019, subject to the Shareholder Loan being fully
converted, extended or restructured. However, this could be reduced in the event of accelerated Project
advancement post signing of the JDA or the Company electing to invest in further potential C&I projects
presented as part of the planned GridX JV. Details on going concern are contained in note 1 of the
financial statements.
Directors and Directors’ interests
Director Note
Michael Haworth
Jacek Glowacki
Estevão Pale
Aman Sachdeva
1
2
3
Appointment
date
01.06.12
28.10.13
03.06.10
21.05.15
Ordinary Shares held
31 December 2018
16,468,087
-
-
-
Ordinary Shares held
31 December 2017
16,468,087
-
-
-
1.
2.
Includes shares held by a trust of which Michael Haworth is a potential beneficiary.
Jacek Glowacki is Polenergia’s nominated director. The Polenergia Group holds 29,111,719 ordinary shares
representing 10.31% of the issued Ordinary Shares as at 31.12. 2018 and 9.09% as at 26.06.19.
3. Aman Sachdeva is AFC’s nominated director. AFC holds 54,988,520 ordinary shares representing 19.48% of the issued
Ordinary Shares as at 31.12.18 and 17.17% as at 26.06.19.
Annual General Meeting
Resolutions will be proposed at the forthcoming Annual General Meeting, as set out in the Formal
Notice. In accordance with the Company’s Articles of Association one third of the Directors are required
to retire by rotation. Accordingly, Estevão Pale will offer himself for re-election at the forthcoming Annual
General Meeting of the Company.
Corporate Governance
The Company’s compliance with the principles of corporate governance is explained in the corporate
governance statement are set out below.
Ordinary Share Capital
The Company’s Ordinary Shares of no par value represent 100% of its total share capital. At a meeting of
the Company every member present in person or by proxy shall have one vote for every Ordinary Share
of which he is the holder. Holders of Ordinary Shares are entitled to receive dividends.
On a winding-up or other return of capital, holders are entitled to share in any surplus assets pro rata to
the amount paid up on their Ordinary Shares. The shares are not redeemable at the option of either the
Company or the holder. There are no restrictions on the transfer of shares.
Disclosure of information to auditors
So far as each Director at the date of approval of this report is aware, there is no relevant audit
information of which the Company’s auditors are unaware and each Director has taken all steps that he
ought to have taken to make himself aware of any relevant audit information and to establish that the
auditors are aware of that information.
Auditors
BDO LLP have expressed their willingness to continue in office as auditors, and a resolution to reappoint
them will be proposed at the Annual General Meeting.
By order of the Board
Elysium Fund Management Limited
Company Secretary
27 June 2019
Risk Factors
Risk(s)
Potential Impact(s)
Mitigation Measure(s)
Financing risk
The Group will need to restructure its
existing loans by 30 November 2019 and
secure investment from strategic investors
and/or investment from co-developers to
provide sufficient working capital for the next
12 months. Failure to do so may lead to the
Group not being a going concern (see note
1). Additionally, project financing will be
required to complete the Project and failure
to secure such financing would result in
failure of the Project and/or delay in its
execution.
To achieve Financial Close of the Project,
the Group will also need to conclude some
of its on-going negotiations on key project
agreements,
Power
including
Concession Agreement (“PCA”) and the
Power Purchase Agreement (“PPA”). Failure
or delay in doing so may lead to failure of the
Project and/or delay in its execution.
the
To achieve investment in any GridX C&I
projects that meet the minimum KPIs, the
Group will need to secure investment from
strategic investors and/or investment from
co-developers. Failure to do so may lead to
loss of the Group’s ROFR on future GridX
projects.
The Project is at an advanced level of
development with the majority of technical
work completed and advanced form PPA
and PCA documents being agreed.
and
partners
strategic
Ncondezi has signed a NBO with new
potential
is
negotiating a JDA which will provide
financial support to the project both at the
developmental stages to Financial Close as
well as during construction. It is important to
highlight that there is no certainty that the
JDA will occur or additional funding will be
raised.
The Company is in discussions with the
existing loan holders regarding restructuring
of the loans, if necessary, together with
exploring funding solutions to refinance the
loans.
of
securing
The Company intends to engage with a
range of potential financing partners with the
objective
additional
development capital for the costs that will
not be covered by a new partner, including
select corporate overheads. Since October
2017, Ncondezi has had a successful track
record in raising additional capital with £2.8
million before expenses raised to cover
development costs during the year and
since year end.
The Company has allocated US$1.1 million
towards the first GridX C&I project that
meets all the KPI’s and is approved by the
Group. The Company intends to engage
with a range of potential financing partners
with the objective of securing additional
capital for future projects as the GridX
pipeline of projects becomes more
developed.
The Directors’ will monitor the monthly cash
burn rate to ensure the Group operates
within its cash resources for as long as
possible.
The Company has substantially advanced
the PPA and PCA
through previous
negotiations with EDM and MIREME. EDM
has indicated its willingness to continue
negotiations once the Company introduces
an acceptable strategic partner and a new
tariff proposal. Subsequent to signing the
NBO, the Company received in principle
support for its new partners and submitted
an updated tariff proposal in July 2018
which is more attractive than the previously
agreed
from EDM’s
perspective.
tariff envelope
Off-taker risk
In the event that the Group is unable to
renew the commercial deal with EDM or
finalise the PPA on acceptable terms, the
Group will need to secure an alternative
credible power off-taker(s) to raise finance
for the Project. There is no guarantee that, in
such circumstances, the Group will be able
to secure a credit worthy off-taker for the full
output with the plant operating at load
factors in excess of 80 per cent.
There is a shortage of power in the region,
with Mozambique currently exporting power
to South Africa, Zimbabwe, Zambia,
Botswana and Namibia. Each of these
countries could provide a potential credible
power off-taker for the Power Project either
as a substitute or as additional power off-
taker for an expanded power plant. The
Company monitors this potential closely and
has responded to a Request for Information
(‘RFI’) from the South African government
regarding potential cross border power
supply.
The Project is one of the most advanced
projects in the region, making competition
from nearby projects more difficult due to
the time they require to catch up.
Competing gas projects are mainly located
in the southern part of Mozambique and are
not able to supply the portion of the
Mozambican power grid that the Power
Project is to connect to in the north of the
country.
Additionally, being a thermal coal power
station project, the Group can implement
commissioning of the power plant faster
than competing hydroelectric projects which
typically
to
commission.
take 2-3
longer
years
Resources
Sign-off of resources by registered
Competent Person (“CP”).
Reporting resources in accordance
with the JORC code
Classification of resources into a high
level of confidence category
Conduct detailed geological modelling
utilisation
The
accredited
laboratories for the analyses of coal
samples
of
QA/QC procedures according to best
practices
Reserves
Sign-off of reserves by registered CP
Classification of reserves into proven
or probable reserves
Detailed mine design and scheduling.
Competition from
other power
stations in
Mozambique
Other power stations are being developed in
the Tete region and are competing for
offtake to EDM as well as resources such as
water and transmission line servitudes.
Estimating
mineral reserve
and resource
The estimation of mineral reserves and
mineral resources is a subjective process
and the accuracy of reserve and resource
estimates is a function of the quantity and
quality of available data and
the
assumptions used and judgements made in
interpreting engineering and geological
information.
There
in any
is significant uncertainty
reserve or resource estimate and the actual
deposits encountered and the economic
viability of mining a deposit may differ
materially from the Group's estimates.
The exploration of mineral
is
speculative in nature and is frequently
unsuccessful. The Group may therefore be
unable
to successfully discover and/or
exploit reserves.
rights
Coal risk
Coal specification developed at the pre-
feasibility study and verified during the
feasibility stage may not be representative of
coal to be used in the plant.
Further coal quality analysis will be
conducted and supplied to the boiler
supplier for finalisation of boiler design.
Not properly characterised coal resources
may lead to incorrect boiler design and plant
underperformance.
Transmission grid
constraints
Available transmission capacity is allocated
to other power generators.
A transmission agreement heads of terms
have been signed with EDM and the
transmission
Mozambican Government to ensure that
infrastructure
available
allocation is secured early and that proper
evacuation infrastructure and capacities are
available to the Project in line with the
Group’s strategy.
future
The Group will explore and develop all
transmission options
potential
including new
in
Mozambique as well as other countries
including Malawi and Zambia.
transmission capacity
The Group adopts standards of international
best practice in environmental management
and community engagement in addition to
satisfying Mozambican
focussing on
environmental
and
requirements in all stages of development.
regulations
Environmental Management and Social
Development Plans have been advanced
and are being
to satisfy
national and international best practice.
implemented
The Mine and Power Plant Environmental
Social Impact Assessment (ESIA) have
been conducted by independent,
internationally recognised consultants, and
have approved by the Mozambican
Government.
that
Mozambique is a developing country with an
energy generation mix
is heavily
dependent on hydro power generation.
Power generation from coal is seen as a key
reducing Mozambique’s
factor
in
dependence
power
on
(particularly in the north), where current
generation is vulnerable to the extreme
weather effects of climate change.
The Mozambican Government has been
stable
fosters a
beneficial climate
towards companies
exploring for resources.
for many years and
hydroelectric
The Mozambican Government is working
with donors and the IMF to restore aid to the
country, and an audit report
the
defaulting loans has been commissioned as
a first step to reaching a resolution. All
parties have committed to resolving the
issue in a reasonable and transparent
manner to restore confidence in the country.
into
Environmental
and other
regulatory
requirements
Climate Change
Risk
Foreign Country
risk
expense,
additional
Existing and possible future environmental
legislation, regulations and actions could
cause
capital
expenditures, restrictions and delays in the
activities of the Group, the extent of which
cannot be predicted. Before production can
commence on any properties, the Group
must obtain regulatory approval and there is
no assurance that such approvals will be
obtained. No assurance can be given that
new rules and regulations will not be
enacted or existing rules and regulations will
not be applied in a manner which could limit
or curtail the Group’s operations.
Increased awareness and action against
climate change will put pressure on
governments and financing organisations to
reduce exposure to fossil fuel related power
generation. This
future
Mozambican Government policy towards
coal
funding
appetite for the Project.
fired generation and
could affect
limit
The Group’s exploration licences and project
faces
are
in Mozambique. The Group
political
in
government policy or a change of governing
political party could place its
exploration licences and project in jeopardy.
risk whereby
changes
Mozambique has recently defaulted on
commercial loans resulting in donors and the
International Monetary Fund (IMF) freezing
aid
to Mozambique, which may affect
financing of the Project at Financial Close.
Corporate Governance Statement
The Directors of the Company have elected to follow the main principles of the QCA Corporate
Governance Code. The QCA Corporate Governance Code identifies ten principles that focus on the
pursuit of medium to long-term value for shareholders without stifling the entrepreneurial spirit in which
the company was created. In addition to the details provided below, governance disclosures can be
found on the Company’s website at http://www.ncondezienergy.com/corporate-governance.aspx
The Company is focused on the phased development of its large scale, long life, integrated thermal coal
mine and 300MW power plant project (the “Project”) which it believes offers the most achievable and
financeable route to production, thereby delivering value for shareholders. The key risk factors that face
the Group and their mitigation are set out above.
A statement of the Directors’ responsibilities in respect of the financial statements is set out on
Statement of the Directors’ Responsibilities. Below is a brief description of the role of the Board and its
committees, including a statement regarding the Group’s system of internal financial control.
The workings of the Board and its committees
The Board of Directors
At 31 December 2018, the Board comprised a Non-Executive Chairman (Michael Haworth), and three
further Non-Executive Directors (Aman Sachdeva, Estevão Pale, and Jacek Glowacki).
Under the UK Corporate Governance Code, (excluding the Chairman) none of the Non-Executive
Directors would be viewed as independent. However, although Estevão Pale and Aman Sachdeva
would not be viewed as independent under the UK Corporate Governance Code by virtue of the options
that they each hold in the Company and, in respect of Aman Sachdeva, his role as CEO of Synergy
Consulting (which provides consultancy services to the Company), the Directors believe that
independence is not a state of mind that can be measured objectively and, given the character,
judgement and decision making process of the individuals concerned, the Directors believe that Estevão
Pale and Aman Sachdeva can be considered independent.
The Board is satisfied that, between the Directors, it has an effective and appropriate balance of skills
and experience, including in the areas of natural resources, infrastructure and finance. For details of the
Directors past experience, please refer to ‘Director’s Biographies’ session set out below.
All Directors receive regular and timely information on the Group’s operational and financial
performance. Relevant information is circulated to the Directors in advance of meetings. As explained
above, due to the relatively small size of the Group’s operations, Directors and senior management are
very closely involved in the day-to-day running of the business and as such have less need for a detailed
formal system of financial reporting.
An agreed procedure exists for Directors in the furtherance of their duties to take independent
professional advice. With the prior approval of the Chairman, all Directors have the right to seek
independent legal and other professional advice at the Company’s expense concerning any aspect of
the Company's operations or undertakings in order to fulfil their duties and responsibilities as Directors.
If the Chairman is unable or unwilling to give approval, Board approval will be sufficient. Newly appointed
Directors are made aware of their responsibilities through the Company Secretary. The Company does
not make any provision for formal training of new Directors.
The Company has established audit and remuneration committees of the Board with formally delegated
duties and responsibilities. In 2018 Estevão Pale remains as second member of the remuneration
committee together with Michael Haworth.
Since the appointment of Michael Haworth as Non-Executive Chairman, and given that due to the size
of operations the Company does not currently have a nominations committee he has been assessing
the individual contributions of each of the members of the team to ensure that:
their contribution is relevant and effective;
that they are committed; and
where relevant, they have maintained their independence.
Over the next 12 months, the Company intends to continue to review the performance of the team as a
unit to ensure that the members of the board collectively function in an efficient and productive manner.
Conflicts of interest
The Board confirms that it has instituted a process for reporting and managing any conflicts of interest
held by Directors. Under the Company's Articles of Association, the Board has the authority to authorise,
to the fullest extent permitted by law:
a) any matter which would otherwise result in a Director infringing his duty to avoid a situation in
which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict,
with the interests of the Company and which may reasonably be regarded as likely to give rise
to a conflict of interest (including a conflict of interest and duty or conflict of duties);
b) a Director to accept or continue in any office, employment or position in addition to his office as
a Director of the Company and may authorise the manner in which a conflict of interest arising
out of such office, employment or position may be dealt with, either before or at the time that
such a conflict of interest arises provided that for this purpose the Director in question and any
other interested Director are not counted in the quorum at any board meeting at which such
matter, or such office, employment or position, is approved and it is agreed to without their
voting or would have been agreed to if their votes had not been counted.
Company materiality threshold
The Board acknowledges that assessment on materiality and subsequent appropriate thresholds are
subjective and open to change. As well as the applicable laws and recommendations, the Board has
considered quantitative, qualitative and cumulative factors when determining the materiality of a specific
relationship of Directors.
Culture
It is the Company’s policy to conduct all of its business in an honest and ethical manner. The Directors
believe that the main determinant of whether a business behaves ethically and with integrity is the
quality of its people. As the Board currently fulfils the responsibilities that might otherwise be assumed
by a nominations committee, the Directors have responsibility for ensuring that individuals employed by
the Group demonstrate the highest levels of integrity.
The Board has also instituted a process for reporting and managing any conflicts of interest held by
Directors. Under the Company's Articles of Association, the Board has the authority to authorise, to the
fullest extent permitted by law:
a) any matter which would otherwise result in a Director infringing his duty to avoid a situation in
which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict,
with the interests of the Company and which may reasonably be regarded as likely to give rise
to a conflict of interest (including a conflict of interest and duty or conflict of duties); and
b) a Director to accept or continue in any office, employment or position in addition to his office as
a Director of the Company and may authorise the manner in which a conflict of interest arising
out of such office, employment or position may be dealt with, either before or at the time that
such a conflict of interest arises provided that for this purpose the Director in question and any
other interested Director are not counted in the quorum at any board meeting at which such
matter, or such office, employment or position, is approved and it is agreed to without their
voting or would have been agreed to if their votes had not been counted.
It is our policy to conduct all of our business in an honest and ethical manner. We take a zero-tolerance
approach to bribery and corruption and are committed to acting professionally, fairly and with integrity
in all our business dealings and relationships wherever we operate, implementing and enforcing
effective systems to counter bribery.
We will uphold all laws relevant to countering bribery and corruption in all the jurisdictions in which we
operate and remain bound by the laws of the UK, including the Bribery Act 2010, in respect of our
conduct both at home and abroad.
Board meetings
Board meetings are held on average every quarter. Decisions concerning the direction and control of
the business are made by the Board. The Board is satisfied that each of the Directors are able to allocate
sufficient time to the Group to discharge their responsibilities effectively. The number of meetings held
during the year was 10 and attendance is outlined below:
Attendance by directors Board meetings
Michael Haworth
6
10
Jacek Glowacki
5
Estevão Pale
7
Aman Sachdeva
Generally, the powers and obligations of the Board are governed by the Company’s Memorandum and
Articles and the BVI Business Companies Act 2004, as amended and the other laws of the jurisdictions
in which it operates. The Board is responsible, inter alia, for setting and monitoring Group strategy,
reviewing trading performance, ensuring adequate funding, examining major acquisition opportunities,
formulating policy on key issues and reporting to the shareholders.
The Audit Committee
During 2018, the Audit Committee members were Jacek Glowacki (Committee Chairman) and Michael
Howarth.
The Committee provides a forum for reporting by the Group’s external auditors. Meetings are held on
average twice a year and are also attended, by invitation, by the Non-Executive Directors.
The Audit Committee is responsible for reviewing a wide range of financial matters including the annual
and half year results, financial statements and accompanying reports before their submission to the
Board and monitoring the controls which ensure the integrity of the financial information reported to the
shareholders. The Audit Committee meets with the Group’s auditors to review reports in respect of the
annual audit and considers the significant accounting policies, judgments and estimates involved in the
Group’s financial reporting, together with the scope of the audit and the auditor fees and independence.
The Board notes that additional information supplied by the Audit Committee has been disseminated
across the whole of this Annual Report, rather than included as separate Committee Reports. The Audit
Committee met one time in the year.
The Remuneration Committee
The Remuneration Committee comprised Michael Haworth (Committee Chairman) and Estevão Pale.
The Committee is responsible for making recommendations to the Board, within agreed terms of
reference, on the Company's framework of executive remuneration and its cost. The Remuneration
Committee determines the contract terms, remuneration and other benefits for the Executive Directors,
including performance related bonus schemes, compensation payments and option schemes. The
Board itself determines the remuneration of the Non-Executive Directors. The Remuneration Committee
met one time in the year.
A Remuneration Committee Report is set out below.
Internal financial control
The Board is responsible for establishing and maintaining the Group’s system of internal financial
controls. Internal financial control systems are designed to meet the particular needs of the Group and
the risk to which it is exposed, and by its very nature can provide reasonable, but not absolute,assurance
against material misstatement or loss.
The Directors are conscious of the need to keep effective internal financial control, particularly in view of
the cash resources of the Group. Due to the relatively small size of the Group’s operations, the Directors
and senior management are very closely involved in the day-to-day running of the business and as such
have less need for a detailed formal system of internal financial control. The Directors have reviewed the
effectiveness of the procedures presently in place and consider that they are still appropriate to the nature
and scale of the operations of the Group.
Continuous disclosure and shareholder communication
The Board is committed to the promotion of investor confidence by ensuring that trading in the
Company’s securities takes place in an efficient, competitive and informed market. The Company has
procedures in place to ensure that all price sensitive information is identified, reviewed by management
and disclosed to the market through a Regulatory Information Service in a timely manner.
All information disclosed through a Regulatory Information Service is posted on the Company’s website
http://www.ncondezienergy.com. Shareholders are forwarded documents relating to each Annual
General Meeting, being the Annual Report, Notice of Meeting and Explanatory Memorandum and Proxy
Form, and are invited to attend these meetings.
Managing business risk
The Board constantly monitors the operational and financial aspects of the Company’s activities and is
responsible for the implementation and on-going review of business risks that could affect the Company.
Duties in relation to risk management that are conducted by the Directors include but are not limited to:
Initiate action to prevent or reduce the adverse effects of risk;
Identify and record any problems relating to the management of risk;
Initiate, recommend or provide solutions through designated channels;
Control further treatment of risks until the level of risk becomes acceptable;
Verify the implementation of solutions;
Communicate and consult internally and externally as appropriate; and
Inform investors of material changes to the Company’s risk profile.
Ongoing review of the overall risk management programme (inclusive of the review of adequacy of
treatment plans) is conducted by external parties where appropriate. The Board ensures that
recommendations made by the external parties are investigated and, where considered necessary,
appropriate action is taken to ensure that the Company has an appropriate internal control environment
in place to manage the key risks identified.
Remuneration Committee Report
At the year ended 31 December 2018, the Remuneration Committee comprised Michael Haworth and
Estevão Pale.
Remuneration packages are determined with reference to market remuneration levels, individual
performance and the financial position of the Company and the Group.
The Board determines the remuneration of Non-Executive Directors within the limits set by the
Company’s Articles of Association. The Non-Executive Directors have letters of engagement with the
Company and their appointments are terminable on one months’ or three months’ written notice on
either side.
Long Term Incentive Plan (“LTIP”) and unapproved share option scheme
The Company adopted an LTIP and unapproved share option scheme which are administered by the
Committee. These are discretionary and the Committee will decide whether to make share awards
under the LTIP or unapproved share option scheme at any time. As at 31 December 2018 the following
awards to Director/previous Director remained in place:
Non-Executives
Date of grant
Number
granted
Exercise
price
Estevão Pale
Estevão Pale
Estevão Pale
Christiaan Schutte
Christiaan Schutte
Christiaan Schutte
Christiaan Schutte
Christiaan Schutte
Christiaan Schutte
Christiaan Schutte
Aman Sachdeva
Jacek Glowacki
25 May 2018
25 May 2018
25 May 2018
25 May 2018
25 May 2018
25 May 2018
25 May 2018
25 May 2018
25 May 2018
25 May 2018
25 May 2018
25 May 2018
75,000
1,000,000
300,000
75,000
1,000,000
1,568,627
593,783
1,187,566
593,783
593,783
1,000,000
1,000,000
8.625p
6.25p
nil
8.625p
6.25p
Nil
5.0p
7.5p
10.0p
15.0p
6.25p
6.25p
Expiry
7 years
10 years
10 years
7 years*
10 years*
10 years*
10 years*
10 years*
10 years*
10 years*
10 years
10 years
Refer to note 16 for details of the vesting conditions attached to certain of the awards.
* as considered a good leaver Christiaan Schutte has 30 months from 30.09.18 to exercise these
options.
Grant of Share Awards
During 2018 22,897,522 share options were issued to the Company’s directors, executive senior
management and contracted personnel (2017: nil).
Directors’ Options
During 2018 8,987,542 share options were issued to the Company’s Directors (2017: nil), included
within the 22,897,522 options above.
Directors’ service agreements
None of the Directors have a service contract which is terminable on greater than one year’s notice.
Non-Executive Directors’ fees
The Company has adopted a standard level of fees for Non-Executive directors of £40,000 per annum,
and £70,000 for the Chairman. The current Chairman has waived all fees since his original appointment.
In addition, Jacek Glowacki and Aman Sachdeva have waived their Directors fees since 1 April 2015
and Christiaan Schutte and Estevao Pale since 1 April 2017.
Directors’ remuneration
The following table sets out an analysis of the pre-tax remuneration for the year ended 31 December
2018 for individual directors who held office in the Company during the period.
Director
Michael Haworth
Christiaan Schutte
Estevão Pale
Jacek Glowacki
Aman Sachdeva
Total
Base
Salary/fee
US$’000
Benefits
US$’000
Share
based
payments*
US$’000
Total
2018
US$’000
Total
2017
US$’000
-
27
-
-
-
27
-
-
-
-
-
-
-
369
110
81
81
641
-
396
110
81
81
668
-
60
12
-
-
72
*These relate to the share options charge recognised in the year.
On behalf of the Board
Michael Haworth
Non-Executive Chairman
27 June 2019
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Directors' report and the financial statements for the
Group. The Directors have prepared the financial statements for each financial year which present fairly
the state of affairs of the Group and of the profit or loss of the Group for that year.
The Directors have chosen to use the International Financial Reporting Standards (“IFRS”) as adopted
by the European Union in preparing the Group‘s financial statements.
The Directors are responsible for keeping proper accounting records which disclose with reasonable
accuracy at any time the financial position of the Group, for safeguarding the assets, for taking
reasonable steps for the prevention and detection of fraud and other irregularities and for the preparation
of financial statements.
International Accounting Standards require that financial statements present fairly for each financial
year the company’s financial position, financial performance and cash flows. This requires the faithful
representation of the effects of transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, income and expenses set out in the International
Accounting Standards Board’s ‘Framework for the preparation and presentation of financial statements’.
In virtually all circumstances a fair presentation will be achieved by compliance with all applicable IFRS
as adopted by the European Union. The Directors are also required to prepare financial statements in
accordance with the rules of the London Stock Exchange for companies trading securities on AIM.
A fair presentation also requires the Directors to:
consistently select and apply appropriate accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
make judgements and accounting estimates that are reasonable and prudent;
provide additional disclosures when compliance with the specific requirements in IFRS as
adopted by the European Union is insufficient to enable users to understand the impact of
particular transactions, other events and conditions on the entity’s financial position and
financial performance;
state that the Group has complied with IFRS as adopted by the European Union, subject to any
material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the company will continue in business.
The Directors are responsible for ensuring the annual report and the financial statements are made
available on a website. In addition to being mailed to shareholders, financial statements are published
on the company's website in accordance with legislation in the United Kingdom governing the
preparation and dissemination of financial statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the
Directors. The Directors' responsibility also extends to the on-going integrity of the financial statements
contained therein.
Independent audit report to the members of Ncondezi Energy Limited
Opinion
We have audited the financial statements of Ncondezi Energy Limited (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 31 December 2018 which comprise the consolidated
statement of profit or loss and consolidated statement of other comprehensive income, consolidated
statement of financial position, consolidated statement of changes in equity, consolidated statement
of cash flows and notes to the financial statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied in the preparation of the financial
statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
In our opinion the financial statements:
•
•
give a true and fair view of the state of the group’s affairs as at 31 December 2018 and its loss
for the year ended; and
have been prepared in accordance with IFRSs as adopted by the European Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
group and the parent company in accordance with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going concern
We draw attention to Note 1 to the financial statements concerning the group’s ability to continue as a
going concern which states that the group will need to extend, refinance or settle existing loans by their
maturity date of 30 November 2019 and raise further funds to enable the group to meet its liabilities as
they fall due for a period of at least 12 months form the date of signing these financial statements.
The matters explained in note 1 indicate that a material uncertainty exists 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.
Given the conditions and uncertainties noted above we considered going concern to be a Key Audit
Matter.
We performed the following procedures in respect of this key audit matter:
We obtained management’s cash flow forecasts to 30 June 2020 and critically assessed the
key assumptions. In doing so, we compared the cash flows to historical operating expenditure
and reviewed the group’s licences, board minutes and market announcements for indications
of additional cash requirements. We confirmed that the cash flows included in respect of the
proposed first GridX JV project are consistent with the draft agreements with GridX and market
announcements.
We considered management’s judgment that they had a reasonable expectation of refinancing
or settling the loans in equity and securing additional financing to meet working capital
requirements. In doing so, we made specific inquiries of the Board, considered the group’s
history of ability to raise funds through equity placings and obtained written representations
from the Board.
Our assessment also included making enquiries of management of the future financing plans and
options, and evaluating the adequacy of the disclosure made in the financial statements in respect of
going concern to confirm that they are consistent with the relevant accounting framework and set out
the material risks and uncertainties.
Key audit matters
In addition to the matter described in the material uncertainty related to going concern section, key audit
matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
Matter identified
Carrying value of the group’s mining and power assets
The group’s mining and power assets represent
its most significant assets as at 31 December
2018 as detailed in note 7. The mining assets
are held at their recoverable value which is
below cost following previous impairment.
How we addressed the matter
We assessed the appropriateness management’s
conclusion that the mining and power assets
represented one cash generating unit, against the
relevant accounting framework.
Management are required to assess whether
they consider there are any indications that the
group’s mining and power assets may be
impaired as at 31 December 2018 and whether
any reversals of historic impairments are
appropriate. Management determined that the
mine and power assets represent one cash
generating unit as detailed in note 2.
an
further
performed
impairment
Management
assessment for the mining and power assets
and concluded that no impairment of the power
or
impairment mine assets was
necessary and that no reversal of impairment
on the mining assets was required as detailed
in note 2, which sets out the key judgments and
estimates
impairment
assessment.
involved
the
in
that
We obtained the integrated power and mine asset
financial model, prepared by an external
the model
consultant, and confirmed
demonstrated significant headroom over
the
carrying value. In respect of key inputs we
confirmed that the project costs were consistent
with quotes and supporting information, compared
the discount rate to relevant third party rates and
performed sensitivity analysis. We noted that the
project development is dependent on the electricity
tariff which remains subject to agreement with the
Government. Management confirmed that the tariff
rate represented their best estimate of the rate
required by the Government based on verbal
discussions they had held and we obtained specific
written representation to that effect. We reviewed
market reports and internal correspondence to
confirm that they were consistent with the tariff
used in
to
documents submitted to the Government.
the model and agreed
the rate
The appropriateness of the carrying value of
mining and power assets represented a key
audit matter given the significant judgements
required in the impairment assessment.
We reviewed the agreements with the project
partners and obtained supporting documents
demonstrating progress against the conditions
precedent and the continued feasibility of the
project at this time. We obtained correspondence
demonstrating the review and approval of the
financial models and key assumptions by the
project partners.
the
assessed
appropriateness
We
of
management’s conclusion that no reversal of
impairment was required in respect of the mining
assets, notwithstanding the headroom derived from
the integrated model when compared to the power
and mining assets as a whole. We discussed this
judgment with the Audit Committee, which included
consideration of factors which may indicate a
change
the
underlying mining asset that gave rise to the
original impairment on the mining assets and
in circumstances
respect of
in
uncertainties that remain in the absence of a
binding Joint Development Agreement or electricity
tariff.
We reviewed the disclosures in note 2 against the
requirements of the relevant accounting framework
and considered whether
they appropriately
reflected the key judgments and estimates.
found management’s assessment and
to be
financial statement
the
in
We
disclosures
appropriate.
Accounting for debt instruments
As detailed in notes 2 and 12, the group holds
a number of loan instruments which were
restructured in the year with the term extended,
addition of a 12% interest coupon and the
addition of equity conversion rights.
Management have treated the restructuring as
a modification to the loans and de-recognised
the previous loan instruments and recorded at
new instrument.
Management bifurcated the convertible loan
into an embedded derivative reflecting the
conversion option and a host debt liability. The
initial recognition of the embedded derivative
and host debt at fair value and subsequent
revaluation of the embedded derivative at year
to exercise
end
judgment and estimate
in selecting an
appropriate valuation methodology and the
inputs to the valuation model.
required management
for
these
instruments
The accounting
is
complex and required estimation and judgment
in determining the fair value of the host debt
and embedded derivative at initial recognition
and the embedded derivative at year end.
Accordingly, we considered this area to be a
key audit matter.
reviewed
We
loan agreements and
amendments to those agreements to assess the
key changes to the terms and underlying impact.
the
We assessed the accounting treatment adopted by
management for the loan modifications against the
relevant accounting requirements.
We assessed the accounting treatment adopted by
management for the equity conversion rights
included within the loan against the relevant
accounting requirements.
We obtained management’s assessment of the fair
value of the embedded derivative and host debt
liability at initial recognition and the fair value of the
embedded derivative at year end and evaluated the
methodology adopted and considered whether the
inputs were reasonable. In doing so, we used our
valuations team to recalculate the fair values and
compared
to management’s
calculations.
results
the
We recalculated the effective interest charges and
change in fair value of the derivative.
We found the accounting treatment adopted by
management to be appropriate and the fair value of
the instrument at initial recognition and, in respect
of the derivative, at year end to be within an
acceptable range.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the
effect of misstatements. We consider materiality to be the magnitude by which misstatements, including
omissions, could influence the economic decisions of reasonable users that are taken on the basis of
the financial statements. Importantly, misstatements below these levels will not necessarily be evaluated
as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
The materiality for the financial statements as a whole was set at US$0.28 million (2017: US$0.28
million). This was based on 1.5% (2017: 1.5%) of total assets which we consider to be an appropriate
benchmark due to the focus of stakeholders being on the assets of the group.
Whilst materiality for the financial statements as a whole was US$0.28 million (2017: US$0.28million),
the significant components of the group were audited to a lower materiality of US$0.15millon to
US$0.17million (2017: US$0.1 million to US$0.17million).Performance materiality is the application of
materiality at the individual account or balance level set at an amount to reduce to an appropriately low
level the probability that the aggregate of uncorrected and undetected misstatements exceeds
materiality for the financial statements as a whole. Performance materiality was set at US$0.20million
(2017: US$0.20million) which represents 70% of the above materiality levels.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in
excess of US$14,000 (2017: US$6,000), which was set at 5% of materiality, as well as differences below
that threshold that, in our view, warranted reporting on qualitative grounds. We evaluated any
uncorrected misstatements against both quantitative measures of materiality discussed above and in
light of other relevant qualitative considerations when forming our opinion.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the group and its environment, as well as
assessing the risks of material misstatement in the financial statements at group level.
In approaching the audit, we considered how the group is organised and managed. We completed a full
scope audit on the group’s financial information and the components we deemed significant. The group
comprises five components of which we identified two to be significant, being the parent company and
one subsidiary based in Mozambique. BDO UK performed a full scope audit on these significant
components as accounting records are maintained in the UK and management are based in the UK.
The non-significant components were subject to analytical review procedures undertaken by BDO LLP.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report and financial statements, other than the financial statements and our
auditor’s 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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on Statement of Directors
Responsibility below, the directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the
parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no realistic alternative but to
do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Use of our report
This report is made solely to the Parent company’s members, as a body, in accordance with our
engagement letter dated 17 April 2019. Our audit work has been undertaken so that we might state to
the Parent company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent company and the Parent company’s members as a body,
for our audit work, for this report, or for the opinions we have formed.
BDO LLP
Chartered Accountants
55 Baker Street
London
W1U 7EU
United Kingdom
27 June 2019
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
Consolidated statement of profit or loss
for the year ended 31 December 2018
Other administrative expenses
Share-based payment charge
Total administrative expenses and loss
from operations
Finance expense
Loss for the year before taxation
Taxation
Loss for the year attributable to
equity holders of the parent company
Loss per share expressed in cents
Basic and diluted
Note
3
3
4
5
6
2018
2017
US$’000
US$’000
(1,461)
(1,297)
(2,758)
(722)
(3,480)
-
(1,051)
-
(1,051)
(644)
(1,695)
-
(3,480)
(1,695)
(1.3)
(0.7)
Consolidated statement of other comprehensive income
for the year ended 31 December 2018
Loss after taxation
Other comprehensive income:
Exchange differences on translating foreign
operations*
Total comprehensive loss for the year
attributable to equity holders of the parent
company
2018
US$’000
2017
US$’000
(3,480)
(1,695)
-
6
(3,480)
(1,689)
*Items that may be reclassified to profit or loss subject to certain future events.
The notes form part of these financial statements.
Consolidated statement of financial position
as at 31 December 2018
Note
2018
US$’000
2017
US$’000
Assets
Non-current assets
Property, plant and equipment
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Loans and borrowings
Derivative financial liability
Total current liabilities
Total liabilities
Capital and reserves attributable to
shareholders
Share capital
Accumulated losses
Total capital and reserves
Total equity and liabilities
7
9
10
11
12
13
14
18,272
18,272
18,313
18,313
54
424
478
18,750
481
4,182
845
5,508
5,508
83
614
697
19,010
1,018
3,495
107
4,620
4,620
88,796
(75,554)
13,242
18,750
87,384
(72,994)
14,390
19,010
The financial statements were approved and authorised for issue by the Board of Directors on 27 June
2019 and were signed on its behalf by:
Michael Haworth
Non-Executive Chairman
The notes form part of these financial statements.
Consolidated statement of changes in equity
for the year ended at 31 December 2018
At 1 January 2018
Loss for the year
Other comprehensive loss for the year
Total comprehensive loss for the year
Issue of shares
Costs associated with issue of shares
Exercise of share options
Equity settled share-based payments
At 31 December 2018
At 1 January 2017
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Issue of shares
Costs associated with issue of shares
Equity settled share-based payments
At 31 December 2017
The notes form part of these financial statements.
Foreign
Currency
Translation
reserve
US$'000
Accumulated
Losses
US$'000
Total
US$'000
-
-
-
-
-
-
-
(3,480)
-
(3,480)
-
-
(306)
1,226
(72,994) 14,390
(3,480)
-
(3,480)
1,310
(204)
-
1,226
(75,554) 13,242
Foreign
Currency
Translation
reserve
US$'000
(6)
6
6
-
-
-
-
Total
US$'000
Accumulated
Losses
US$'000
(71,299) 15,252
(1,695)
(1,695)
6
-
(1,689)
(1,695)
987
-
(160)
-
-
-
(72,994) 14,390
Share
capital
US$'000
87,384
-
-
-
1,310
(204)
306
-
88,796
Share
capital
US$'000
86,557
-
-
-
987
(160)
-
87,384
Consolidated statement of cash flows
for the year ended at 31 December 2018
Cash flow from operating activities
Loss before taxation
Adjustments for:
Finance expense
Share based payment charge
Unrealised foreign exchange movements
Gain on disposal of property plant and equipment
Deferred payroll costs capitalised to Shareholder Loan
Depreciation and amortisation
Net cash flow from operating activities before
changes in working capital
Decrease in inventory
Increase/(decrease) in payables
Decrease in receivables
Net cash flow from operating activities before tax
Income taxes refunded
Net cash flow from operating activities after tax
Investing activities
Sales of property plant and equipment
Power development costs capitalised
Mine development costs capitalised
Net cash flow from investing activities
Financing activities
Issue of ordinary shares
Cost of share issue
Bank charges
Short term loan
Net cash flow from financing activities
Net (decrease)/increase in cash and cash
equivalents in the year
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
The notes form part of these financial statements.
2018
US$’000
2017
US$’000
(3,480)
(1,695)
722
1,297
2
(44)
-
68
(1,435)
-
(25)
29
(1,431)
-
(1,431)
47
(25)
(7)
15
1,310
(84)
-
-
1,226
(190)
614
424
644
-
3
(89)
132
78
(927)
2
13
5
(907)
-
(907)
133
(48)
(3)
82
987
(50)
-
350
1,287
462
152
614
Notes to the consolidated financial statements
1. Principal accounting policies.
General
The Company is a limited liability company incorporated on 30 March 2006 in the British Virgin Islands.
The address of its registered office is Ground Floor, Coastal Building, Wickham's Cay II, PO Box 2136,
Road Town, Carrot Bay, VG1130 Tortola, British Virgin Islands.
Going concern
As at 21 June 2019 the Group had cash reserves of approximately US$1.9 million. Based upon
projections, which include corporate costs, project costs to progress the project and planned
expenditure related to first potential C&I project presented as part of the planned GridX JV, the Group
will be funded until the beginning of December 2019 although the expenditure on the first GridX JV
project is not yet binding and in the absence of such planned expenditure the Group is funded until Q4
2020. However, the forecasts remain subject to the Shareholder Loan being extended or restructured.
The Shareholder Loan of US$4.7 million (principal, historic redemption premium and interest) matures
on 30 November 2019, and the Company is currently evaluating options to execute a debt for equity
swap or, prior to 1 November 2019, prepay the whole or any part of the loan with the remainder subject
to a debt for equity swap.
The Directors continue to explore options in respect of raising further funds to continue with the power
plant and mine development programmes. At present there are no binding agreements in place and
there can be no certainty as to the Group’s ability to raise additional funding.
In addition, notwithstanding the Shareholder Loan, further funding will be required as detailed above to
meet operating cash flows under current forecasts or in the event of accelerated project advancement.
The Directors are exploring a number of funding and working capital solutions beyond the 30 November
2019 maturity of the Shareholder Loan. The financial statements have been prepared on a going
concern basis in anticipation of a positive outcome but it is important to highlight that there are no binding
agreements in place. The Company has also been exploring options to raise additional funding and
refinance or convert the Shareholder Loan however there can be no certainty that any of these initiatives
will be successful.
These factors indicate the existence of a material uncertainty which may cast significant doubt about
the Group’s ability to continue as a going concern. The financial statements do not include the
adjustments that would result if the Group was unable to continue as a going concern. Such adjustments
would principally be the write down of the Group’s non-current assets.
Basis of preparation
The principal accounting policies adopted in the preparation of these consolidated financial statements
are set out below. The policies have been consistently applied to all the years presented, unless
otherwise stated.
These financial statements have been prepared in accordance with International Financial Reporting
Standards, International Accounting Standards and Interpretations (collectively “IFRS”) issued by the
International Accounting Standards Board (“IASB”) as adopted by the European Union (“adopted
IFRS”).
The preparation of financial statements in conformity with IFRS requires management to make
judgments, estimates and assumptions that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and associated assumptions are based on
historical experience and factors that are believed to be reasonable under the circumstances, the results
of which form the basis of making judgments about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates. The areas involving
a higher degree of judgment or complexity, or where assumptions and estimates are significant to the
consolidated financial statements, are disclosed in note 2.
The Group financial information is presented in United States dollars (US$) and values are rounded to
the nearest thousand dollars (US$’000).
Loss from operations is stated after charging and crediting all operating items excluding finance income
and expenses.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision only affects that
period or in the period of revision and future periods if the revision affects both current and future
periods.
New and amended standards which are effective for these Financial Statements
IFRS 9 has replaced IAS 39 Financial Instruments: Recognition and Measurement. The Group’s
principal financial assets comprise cash and other receivables. All of these financial assets continue to
be classified and measured at amortised cost. The Group’s principal financial liabilities comprise trade
and other payables, loans and derivatives. There has been no change to the accounting classification
and treatment of financial liabilities, noting that previous modifications to loans were treated as
significant modifications with the previous loan extinguished and replaced with a new loan and any gain
or loss recorded in the income statement. The Group’s financial assets held at amortised cost are
subject to provisioning assessments under the expected credit loss model. The only material financial
assets held are cash. The level of credit risk that the Group is exposed to has not given rise to any
allowances within the expected credit loss model.
IFRS 15 became effective for all periods beginning on or after 1 January 2018. IFRS 15 does not impact
the Group as it is not currently revenue generating.
Standards in issue but not yet effective
The following standards, amendments and interpretations which have been recently issued or revised
and are mandatory for the Group’s accounting periods beginning on or after 1 January 2019 or later
periods have not been adopted early:
Standard
IFRS 16
Description
Leases
Annual Improvements
2015 – 2017 Cycle
IFRIC 23
IFRS 3
IAS 1 and IAS 8
Uncertainty over Income Tax treatments
Amendments to IFRS 3 Business
Combinations – Definition of a business
Definition of Material
Effective date
1 Jan 2019
1 Jan 2019
1 Jan 2019
1 Jan 2020*
1 Jan 2020*
*Not yet endorsed by the EU.
The Group does not have any leases as at 31 December 2018. It is not considered that the impact of
IFRS16 will be material.
Basis of consolidation
Subsidiaries
Subsidiaries are all entities over which the Group has control. The group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Group. They are deconsolidated from the date that control
ceases. Where necessary, adjustments are made to the financial statements of subsidiaries to bring
their accounting policies into line with those used by other members of the Group. All intra-Group
transactions, balances, income and expenses are eliminated on consolidation.
Business combinations
The acquisition method of accounting is used to account for business combinations by the Group. The
consideration transferred for the acquisition of a business is the fair value of the assets transferred,
liabilities incurred and the equity interests issued by the Group. The consideration transferred includes
the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition
related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition
date.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker has been identified as the Board of
Directors.
Share-based payments
Equity-settled share-based payments to employees and Directors are measured at the fair value of the
equity instrument. The fair value of the equity-settled transactions with employees and Directors is
recognised as an expense over the vesting period. The fair value of the equity instrument is determined
at the date of grant, taking into account market based vesting conditions.
The fair value of the equity instrument is measured using the Black-Scholes model. The expected life
used in the model is adjusted, based on management’s best estimate, for the effects of non-
transferability, exercise restrictions and behavioural considerations.
When grant of equity instruments is cancelled or settled during the vesting period the cancellation is
accounted for as an acceleration of vesting and the amount that otherwise would have been recognised
for services received over the remainder of the vesting period is immediately expensed.
When equity instruments are modified, if the modification increases the fair value of the award, the
additional cost must be recognised over the period from the modification date until the vesting date of
the modified award.
If, after the vesting date, fully vested options lapse or are not exercised the previously recognised share
based payment charge is not reversed.
Property, plant and equipment
Property, plant and equipment are stated at cost on acquisition less depreciation. Depreciation is
provided on a straight-line basis at rates calculated to write off the cost less the estimated residual value
of each asset over its expected useful economic life. The residual value is the estimated amount that
would currently be obtained from disposal of the asset if the asset were already of the age and in the
condition expected at the end of its useful life.
The annual rate of depreciation for each class of depreciable asset is:
Plant and equipment
Other
Buildings
25%
20%-33%
10%
The carrying value of property plant and equipment is assessed annually and any impairment is charged
to the profit or loss.
Power project costs
Power project expenditure is expensed until it is probable that future economic benefits associated with
the project will flow to the Group and the cost of the project can be measured reliably. When it is
probable that future economic benefits will flow to the Group, all costs associated with developing the
300MW power project are capitalised as power project expenditure within property, plant and equipment
category of tangible non-current assets. The capitalised expenditure includes appropriate technical an
administrative expenses but not general overheads. Power project assets are not depreciated until the
asset is ready and available for use.
Exploration and evaluation assets
Exploration and evaluation assets include all costs associated with exploring and evaluating prospects
within licence areas, including the initial acquisition of the licence are capitalised on a project-by-project
basis. Costs incurred include appropriate technical and administrative expenses but not general
overheads. Where a licence is relinquished, a project is abandoned, or is considered to be of no further
commercial value to the Group, the related costs will be written off.
The recoverability of exploration and evaluation assets is dependent upon the discovery of economically
recoverable reserves, the ability of the Group to obtain necessary financing to complete the development
of reserves and future profitable production or proceeds from the disposition of recoverable reserves.
Mining assets
When the technical feasibility of the exploration project is determined, mining licence concession is
obtained and a decision is made to proceed to development stage the related exploration and evaluation
assets are assessed for potential impairment and then transferred to non-current mining assets and
included within property, plant and equipment.
Mining properties are depleted over the estimated life of the reserves on a ‘unit of production’ basis.
Commercial reserves are proven and probable reserves. Changes in commercial reserves affecting unit
of production calculations are dealt with prospectively over the revised remaining reserves.
Impairment
The carrying amounts of non-current assets are reviewed for impairment if events or changes in
circumstances indicate the carrying value may not be recoverable. If there are indicators of impairment,
an exercise is undertaken to determine whether the carrying values are in excess of their recoverable
amount. Such review is undertaken on an asset by asset basis, except where such assets do not
generate cash flows independent of other assets, in which case the review is undertaken at the cash
generating unit level.
A previously recognised impairment loss is reversed if the recoverable amount increases as a result of
a reversal of the conditions that originally resulted in the impairment. This reversal is recognised in the
statement of profit or loss and is limited to the carrying amount that would have been determined, net
of depreciation, had no impairment loss been recognised in the prior years.
The recoverable amount of assets is the greater of their value in use and fair value less costs to sell. In
assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. For an asset that does not generate cash inflows largely independent of those from
other assets, the recoverable amount is determined for the cash-generating unit to which the asset
belongs. The Group’s cash-generating units are the smallest identifiable groups of assets that generate
cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
Impairments are recognised in the statement of profit or loss to the extent that the carrying amount
exceeds the assets recoverable amount. The revised carrying amounts are amortised in line with the
Group's accounting policies.
The Group has one cash generating unit being the integrated coal mining asset and the power plant
project. This changes from prior year where there were two cash generating units. Following the non-
binding agreement and progress towards a binding JDA with CMEC and GE, the new strategic partners,
the development strategy has changed to an integrated project and as such power and mine projects
are now considered together as a single cash generating unit reflecting the economics of the project.
Foreign currency
The individual financial statements of each group entity are presented in the currency of the primary
economic environment in which the entity operates (its functional currency). For the purpose of the
consolidated financial statements, the results of overseas group entities are translated into US$, which
is the functional currency of the Company and its primary operating subsidiaries and presentation
currency for the consolidated financial statements, at rates approximating to those ruling when the
transactions took place, all assets and liabilities of overseas group entities are translated at the rate
ruling at the reporting date. Exchange differences arising on translating the opening net assets at
opening rate and the results of overseas operations with a non US$ functional currency at actual rate
are recognised in other comprehensive income and accumulated in the foreign exchange translation
reserve.
In preparing the financial statements of the individual entities, transactions in currencies other than the
entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the
dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing on the reporting date.
Exchange differences arising on the settlement of monetary items and on the retranslation of monetary
items are included in the statement of profit or loss.
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of economic resources will result and that outflow can be
reliably measured.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as
reported in the profit or loss because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Group’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by
the reporting date.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred
tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised
to the extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting
date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged
or credited to the statement of profit or loss, except when it relates to items charged or credited directly
to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities
are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group
intends to settle its current tax assets and liabilities on a net basis.
Financial instruments
Financial assets and liabilities are recognised when the Group becomes party to the contractual
provisions of the instrument.
Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending on the
purpose for which the asset was acquired. The Group did not have any financial assets designated at
fair value through profit or loss. Unless otherwise indicated, the carrying amounts of the Group's financial
assets are a reasonable approximation of their fair values.
The Group's accounting policy for each category is as follows:
Loans and receivables
Loans and receivables (including trade receivables) are measured on initial recognition at fair value and
subsequently measured at amortised cost using the effective interest rate method.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand, deposits and other short-term highly
liquid investments that are readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Impairment of Financial Assets
The Group recognizes a loss allowance for expected credit losses (“ECL”) on financial assets that are
measured at amortised cost which comprise mainly of receivables. The amount of expected credit
losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the
respective financial instrument. Impairment provisions for other receivables are recognised based on a
forward looking expected credit loss model. The methodology used to determine the amount of the
provision is based on whether there has been a significant increase in credit risk since initial recognition
of the financial asset. For those where the credit risk has not increased significantly since initial
recognition of the financial asset, twelve month expected credit losses along with gross interest income
are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses
along with the gross interest income are recognised. For those that are determined to be credit impaired,
lifetime expected credit losses along with interest income on a net basis are recognised.
Financial liabilities
Financial liabilities held at amortised cost
Financial liabilities refer to trade and other payables and loans and borrowings (including the host debt
in a convertible instrument) and are initially recognised at fair value net of any transaction costs directly
attributable to the issue of the instrument. Such liabilities are subsequently measured at amortised cost
using the effective interest rate method, which ensures that any interest expense over the period to
repayment is at a constant rate on the balance of the liability carried in the statement of financial position.
Where loans and borrowings include a redemption premium, the estimated premium is included in the
calculation of the effective interest rate.
Where there is a modification to a financial liability, the financial original liability is de-recognised and a
new financial liability is recognised at fair value in accordance with the Group’s policy.
Convertible loan
Convertible loan notes are assessed in accordance with IAS 32 Financial Instruments: Presentation to
determine whether the conversion element meets the fixed-for-fixed criterion. Where this is met, the
instrument is accounted for as a compound financial instrument with appropriate presentation of the
liability and equity components.
Where the fixed-for-fixed criterion is not met, the conversion element is accounted for separately as an
embedded derivative which is measured at fair value through profit or loss. On issue of a convertible
borrowing, the fair value of embedded derivative is determined and the residual is recorded as a host
liability initially at fair value and subsequently at amortised cost.
Issue costs are apportioned between the components based on their respective carrying amounts when
the instrument was issued.
The finance costs recognised in respect of the convertible borrowings includes the accretion of the
liability.
Financial liabilities at fair value through profit or loss
This category comprises warrants instruments classified as derivative financial liability due to the
warrant resulting in the issue of a variable number of shares and the embedded derivative within the
Shareholders Loan. They are carried in the consolidated statement of financial position at fair value with
changes in fair value recognised in the consolidated statement of profit or loss. Other than these
derivative financial instruments, the Group does not have any liabilities held for trading nor has it
designated any other financial liabilities as being at fair value through profit or loss.
Fair value measurement hierarchy
The Group classifies its financial liabilities measured at fair value using a fair value hierarchy that reflects
the significance of the inputs used in making the fair value measurement (note 19). The fair value
hierarchy has the following levels:
a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
b) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2);
c) Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(Level 3).
The level in the fair value hierarchy within the financial liability is determined on the basis of the lowest
level input that is significant to the fair value measurement.
Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet
the definition of a financial liability. The Company’s ordinary shares are classified as equity instruments.
The Company considers its capital to be total equity. The Company is not subject to any externally
imposed capital requirements.
Non-current assets held for sale and disposal groups
Non-current assets and disposal groups are classified as held for sale when: they are available for
immediate sale subject only to customer conditions; management is committed to a plan to sell; it is
unlikely that significant changes to the plan will be made or that the plan will be withdrawn; an active
programme to locate a buyer has been initiated; the asset or disposal group is being marketed at a
reasonable price in relation to its fair value; and a sale is expected to complete within 12 months fro m
the date of classification.
Non-current assets and disposal groups classified as held for sale are measured at the lower of: their
carrying amount immediately prior to being classified as held for sale in accordance with the Group's
accounting policy; and fair value less costs to sell. Following their classification as held for sale, non-
current assets (including those in a disposal group) are not depreciated.
2. Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future, which by definition will seldom
result in actual results that match the accounting estimate. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amount of assets and liabilities within
the next financial year are discussed below.
Accounting judgements and estimates
(i) Impairment of power and mining assets
The carrying value of the power plant and mining assets in note 7 are dependent on the success of the
power plant project. Management’s judgement is that no indicators of impairment have occurred during
the year. This has included consideration of the potential sources of impairment indicators prescribed
under IAS 36. Management have considered key milestones, signing of the NBO, risks and de-risking
events and determined that it is more likely than not that the power plant will be developed given the
progress to date. The carrying value of the assets and feasibility of the project is supported by the
current integrated financial model. However, the Government have indicated that a more competitive
tariff is required compared to the previous tariff envelope agreed in principle. The integrated financial
model is based on an approximate 10% reduction in the previous tariff which management anticipate
being acceptable to the Government following benchmarking and discussions with EDM to date.
However, negotiations are continuing and should an acceptable tariff not be agreed or other cost
efficiencies realised the project may not proceed and the power assets may not be recoverable.
Following the NBO with CMEC and GE and the new integrated strategy the power and mining projects
are now considered as one cash generating unit. This required judgment and factors considered
included the integrated nature of the development project versus the previous development plans, the
interdependent nature of the assets and project economics and the extent to which the assets could
feasibly be developed independently.
(ii) Asset classified as held for sale
Management have considered whether the NBO with CMEC and GE was such that the power and
mining assets met the criteria of IFRS 5. Having considered the non-binding status of the proposals at
31 December 2018 and associated risks and uncertainties, the extent of progress made towards
finalising the JDA and subsequent financial closure and the period of time to final completion of a
transaction and concluded that the criteria were not met.
(iii) Amendments to shareholder loans and fair value assessments
Judgement and estimate was required in accounting for the Group’s shareholder loans which were
restructured during the current and prior year.
In 2017 the extensions were treated as the extinguishment of the originals loans and recognition of new
loans with the maturity having been extended without additional redemption premiums. Judgement was
required in assessing whether the holders were acting principally in their capacity as debt holders or
shareholders with gains on modification recorded in the income statement under the former or equity
under the latter. Management concluded that the holders were acting principally in their capacity as
debt holders based on assessment of the size of their shareholdings, the financial position of the Group
at the time which was considered to be such that the holders accepted the terms to maximise their
potential for eventual recovery of the loans (including premium) and other facts and circumstances.
Judgement and estimation was required in determining the market rate of return to apply in calculating
the fair value of the loan instruments on extension in May 2017 and September 2017. Management
estimated the market rate of return and this was applied to arrive at the fair value of the loan instruments.
In 2018 the restructuring of the loans was treated as the extinguishment of the originals loans and
recognition of new loans. Judgement and estimation was required in determining the fair value of liability
and derivative components of the loan notes. Management estimated the fair value of the derivative
with the residual portion considered the debt component. The estimation of fair value required estimates
including factors such as future share price volatility and the market rates of return for a loan instrument
without conversion rights. The loan note derivative is considered level 2 for IFRS 13 disclosure
purposes. Refer to note 13 and 19.
3. Administrative expenses
Staff costs
Professional and consultancy
Office expenses
Travel and accommodation
Other expenses
Gain on disposal of PPE
Depreciation
Foreign exchange
Total administrative expenses
Auditors’ remuneration
Group auditors’ remuneration
- audit of the Group’s accounts
- audit of the Group’s subsidiaries
Other services
- interim review
Auditors’ remuneration is included within professional and consultancy costs.
Staff costs (including Directors)
2018
US$’000
2017
US$’000
41
1,149
78
32
34
(44)
68
103
1,461
167
763
75
12
57
(89)
78
(12)
1,051
2018
US$’000
2017
US$’000
60
-
3
63
48
-
3
51
Wages and salaries
Share based payment
Social security costs
2017
US$’000
188
-
1
189
The share based payment charge of US$1,226,000 (2017:US$nil) excludes share based payments in
respect of warrants issued to consultant of US$71,000 (2017:US$nil).
2018
US$’000
40
1,226
-
1,266
2018 US$nil (2017: US$21,561) included within wages and salaries have been capitalised to the power
project asset.
The average monthly number of employees (including executive Directors) of the Group were:
Operational
Administration
Key management compensation:
Salary
Fees
Social security costs
Share based payment
2018
Number
1
3
4
2017
Number
1
3
4
2018
US$’000
-
268
-
921
1,189
2017
US$’000
72
23
-
-
95
Key management personnel are considered to be Directors and senior management of the Group.
The average monthly number of employees (including executive Directors) of the Group were:
Operational
Administration
4. Finance expense
Interest on loan (note 12)
Fair value adjustment on the warrants (note 13)
Fair value adjustment on the loan derivative (note 13)
2018
Number
1
3
4
2017
Number
8
5
13
2018
US$’000
2017
US$’000
1,170
(157)
(291)
722
648
(4)
-
644
5. Taxation
The Group entities subject to corporate income tax are Ncondezi Coal Company Mozambique Limitada
and Ncondezi Power Company S.A. which are subject to tax at the rate of 32% (2017: 32%) on their
profits in Mozambique. No tax charge/ (credit) arose in the current or prior year for Ncondezi Coal
Company Mozambique Limitada and Ncondezi Power Company S.A.
Current tax
Group loss on ordinary activities before tax
Effects of:
Reconcile to Mozambique corporation tax rate of 32%
(2017: 32%)
Differences arising from different tax rates
Taxable losses utilised not previously recognised
Under/over provision from previous period
Foreign exchange effect originating in overseas companies
Unrecognised taxable losses in subsidiaries
Total tax for the year
2018
US$’000
-
(3,480)
(1,113)
1,044
26
-
14
29
-
2017
US$’000
-
(1,695)
(542)
499
(77)
-
95
25
-
During the exploration and development stages, the Group will accumulate tax losses which may be
carried forward. As at 31 December 2018, no deferred tax asset has been recognised for tax losses of
US$4,253,000 (2017: USD$7,978,000) carried forward within the Group’s overseas subsidiaries, as the
recovery of this benefit is dependent on the future profitability, the timing and certainty of which cannot be
reasonably foreseen.
Tax losses in Mozambique are available for use over a five year period. Of the total available Mozambican
subsidiary tax credits, US$77,000 will be available until 31 December 2023, US$52,000 will be available
until 31 December 2022, US$1,129,000 will be available until 31 December 2021, US$760,000 will be
available until 31 December 2020, and US$1,269,000 will be available until 31 December 2019.
6. Loss per share
Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the year.
Due to the losses incurred during the year a diluted loss per share has not been calculated as this would
serve to reduce the basic loss per share. Out of 25,097,522 (2017: 7,525,000) share incentives
outstanding at the end of the year 13,071,906 (2017: 6,775,000) had already vested, which if exercised
could potentially dilute basic earnings per share in the future.
2018
Weighted
average
number of
shares
(thousands)
Per share
amount
(cents)
Loss
US$'000
2017
Weighted
average
number of
shares
(thousands)
Loss
US$'000
Per share
amount
(cents)
(3,480) 276,187
(1.3)
(1,695)
253,349
(0.7)
Basic and
diluted EPS
7. Property, plant and equipment
Cost (less impairment)
At 1 January 2017
Additions
Disposals
Reclassified from non-current
assets held for sale
At 1 January 2018
Additions
Disposals
At 31 December 2018
Depreciation
At 1 January 2017
Depreciation charge
Disposals
At 1 January 2018
Depreciation charge
Disposals
At 31 December 2018
Net Book value 2018
Net Book value 2017
Power
assets
US$’000
Mining
assets
US$’000
Buildings
US$’000
Plant and
equipment
US$’000
Other
US$’000
Total
US$’000
-
48
-
9,389
9,437
25
-
9,462
-
-
-
-
-
-
-
9,462
9,437
7,651
3
-
-
7,654
7
-
7,661
-
-
-
-
-
-
-
7,661
7,654
1,736
-
(337)
-
1,399
-
(122)
1,277
432
70
(312)
190
67
(118)
139
1,138
1,209
446
-
(404)
-
42
-
(7)
35
406
8
(385)
29
1
(6)
24
11
13
718
-
-
-
718
-
-
718
718
-
-
718
-
-
718
-
-
10,551
51
(741)
9,389
19,250
32
(129)
19,153
1,556
78
(697)
937
68
(124)
881
18,272
18,313
Power assets relate to the development of a 300MW power plant. In 2018, the Power assets remains
classified as Property, plant and equipment as detailed in note 2.
Mine assets relate to the initial acquisition of the licences and subsequent expenditure incurred in
evaluating the Ncondezi mine project. These were transferred from intangible assets on receipt of the
mining concession in 2013.
8. Subsidiaries
The Group has the following subsidiary undertakings:
%
interest
2018
100
‘ZECH1’
%
interest
2017
100 Mauritius
Country of
incorporation
Zambezi Energy Corporation
Holdings 1 Limited
Zambezi Energy Corporation
Holdings 2 Limited
Ncondezi Coal Company
Mozambique Limitada
‘ZECH2’
100
100 Mauritius
‘NCCML’
100
100 Mozambique
Ncondezi Power Holdings 2
Limited
Ncondezi Power Company SA
‘NPH2L’
100
100
UAE
‘NPCSA’
100
100 Mozambique
Activity
Holding
company
Holding
company
Mining
exploration and
development
Holding
company
Energy company
Ncondezi Coal Company Mozambique Limitada is owned by Zambezi Energy Corporation Holdings 1
Limited and Zambezi Energy Corporation Holdings 2 Limited. Ncondezi Power Holdings 2 Limited is
owned by Ncondezi Energy Limited. Ncondezi Power Company SA is owned by Ncondezi Energy Limited,
Zambezi Energy Corporation Holdings 1 Limited and Ncondezi Power Holdings 2 Limited.
9. Trade and other receivables
Current assets:
Other receivables
Total trade and other receivables
2018
US$'000
2017
US$'000
54
54
83
83
During the year no impairments were recognised (2017: US$Nil). The Directors consider that the
carrying amount of other receivables approximates their fair value.
10. Cash and cash equivalents
Cash at bank and in hand
2018
US$'000
424
424
2017
US$'000
614
614
The Group’s cash and cash equivalents balances may be analysed by currency as follows:
US Dollars
Great British Pounds
Mozambique Meticais
2018
US$'000
67
354
3
424
2017
US$'000
77
535
2
614
Where possible cash is deposited in floating rate deposit accounts at reputable financial institutions
with high credit ratings.
11. Trade and other payables
Other payables
Other taxation and social security
Accruals
2018
US$'000
189
-
292
481
2017
US$'000
212
1
805
1,018
Accruals includes US$nil million (2017: US$0.5 million) of interest in respect of the loans in note 12. The
fair value of payables is not significantly different from their carrying value.
12. Short term loan
Short term loan (unsecured)
Unamortised related costs
Total Short term loan
2018
US$’000
4,182
-
4,182
2017
US$’000
3,495
-
3,495
On 11 May 2016, the Group entered into a US$1.32 million loan facility (“Shareholder Loan”) with certain
of Ncondezi’s Directors, Management and long term shareholders. On 31 August 2016, AFC acceded
to the existing loan facility agreement, providing a facility of US$3.0 million, with an initial tranche of
US$1.0 million (“Tranche A”) and a further tranche of US$2.0 million (“Tranche B”) which was conditional
amongst other things upon the fulfilment of certain conditions precedent, the completion of the JDA and
Ncondezi providing an appropriate security package. Tranche B was never drawn and lapsed.
The repayment terms of the Shareholder Loan were as follows:
if the SEP JDA became effective before December 2016 the full drawn down amount was
repayable on 10 May 2017 and a 0.5 times return on the drawn down amount was repayable 6
months from 10 May 2017
if the SEP JDA became effective after December 2016 the full drawn down amount and the 0.5
times return was repayable on 10 May 2017
if the repayment occurred after 10 May 2017, then an additional return of 0.5 times the total
drawings is repayable in addition to the 1.5 times of the full drawn down amount
The Shareholder Loan was initially recorded at fair value, being the proceeds received, and
subsequently at amortised cost. The estimated repayment premium of 0.5x capital was recognised over
the period of the loan through the effective interest rate.
Repayment of the Shareholder Loan (comprising the existing Shareholder Loan and initial US$1.0
million Tranche A from AFC) was initially payable by no later than 10 May 2017. On 11 May 2017, the
Company agreed an amendment to the repayment terms, with repayment of the principal and
redemption premium on 2 September 2017. Subsequently on 2 September 2017 the Company was
able to agree an amendment to the repayment terms of the Shareholder Loan, with repayment now due
on 2 September 2018.
On 23 of June 2017 the Company entered into an amendment (“New Loan”) to the original Shareholder
Loan with an additional funding of US$350,000. The financing was committed by the Chairman Michael
Haworth (US$200,000) and other existing long term shareholders (US$150,000). The New Loan would
receive a 1.25x return and was due to mature on 2 September 2017. The loan was subsequently
extended to 2 September 2018 with no additional return.
As part of this same amendment the senior management team of the Company agreed to convert their
deferred 50% salary between November 2016 and January 2017, and a percentage of their salary since
February 2017 into the existing Shareholder Loan. The total amount of US$232,000 was initially due to
mature 2 September 2017 without interest. The maturity date was subsequently extended to 2
September 2018 with no additional return.
At the date of the extensions the loans, held at principal plus redemption premiums, were extinguished
and replaced with the amended loans discounted at market rates of return (see note 2). The difference
between the carrying value of the previous loan and the fair value of the amended loan was taken to
finance costs as a gain. The discount was then accreted to the date of maturity with charges recorded
in finance costs.
Finance costs in 2017 of US$0.6 million comprise US$2.7 million of finance charges and US$2.1 million
of gains on significant modification of the loans. The finance charges included the redemption premiums
amortised to original maturity together with the additional redemption premium on the 2016 loan for non-
payment, amortisation of the amended Shareholder Loan discount between 11 May 2017 and 2
September 2017 and amortisation of the discount of each loan from 3 September 2017 to 31 December
2017.
On 16 November 2018 the Shareholder Loan was modified with the maturity date extended to 30
November 2019 and an interest coupon of 12%. Under the terms the lenders have the right to convert
the loan into equity as follows:
a) First Conversion: lenders shall be entitled to convert all or part of their portion of the Loan (in
multiples of $US1,000) into fully paid ordinary shares of the Company at a 10.0p conversion
price from the date of this announcement until 1 November 2019; and
b) Second Conversion: if Lenders who are owed (in aggregate) not less than 50.1% of the
outstanding principal amount of the Loan from 1 November 2019 until maturity provide a
conversion notice to the Company, all amounts outstanding under the Loan shall convert into
fully paid Ordinary Shares of the Company at a conversion price the higher of the 30% discount
to the 60 day VWAP at 30 November 2019 or 5.2p.
At the date of the restructuring the carrying value of the previous loans was US$5.1 million and the loan
was extinguished and replaced with the convertible loan notes. The fair value of the new instrument
was determined to be equivalent to the fair value of the old instrument, with no gain or loss being
recognised on extinguishment. The potential issuance of a variable number of shares meant the
instrument was treated as a host debt liability with a separate embedded derivative (note 13)
representing the conversion right. The embedded derivative was valued at US$1.0m and the residual
attributed to the host debt liability. Subsequently the host debt liability has been recorded at amortised
cost and interest recorded at the effective interest rate and the embedded derivative recorded at fair
value through profit and loss.
Net financial cost for the year totalled in relation to short term loan was US$1.2m (2017: US$0.6m)
comprising US$1.1m in respect of amortised redemption premiums prior to restructuring and US$0.1m
of effective interest charges on the convertible loan host liability with US$0.3m of fair value changes on
the derivative.
In the prior year, interest accrued on the short term loan was recognised as a separate payable in accruals
as detailed in note 11. However since the date of the restructuring, the interest accrued is being recognised
within the short term loan balance itself.
13. Derivative financial liability
Warrants
Loan derivative (note 12)
Warrants
2018
US$'000
138
707
845
2017
US$'000
107
-
107
During the year ended 31 December 2018, 1,520,000 warrants at subscription price of 6.25 pence per
share, were granted to Novum Securities Limited as part of the placing agreement entered in May 2018
and 1,000,000 warrants at subscription price of 5 pence per share to a contractor. The warrants have an
exercise period of 2 years from 11 June and 25 May 2018 respectively. The warrants are classified at fair
value through profit and loss as the functional currency of the Company is US Dollars and the exercise
price is set in GBP.
The fair value on the grant date and reporting date were determined using the Black Scholes Model.
The fair value was based on the following assumptions:
Share Price (£)
Expected volatility
Options life (years)
Expected dividends
Risk free rate
0.0625 and 0.05
119%
2
0
0.74%
The fair value of the 1,520,000 warrants on the grant date was US$119,345. On initial recognition the
warrants’ cost was deducted from share capital balance as it represents the cost of issuing shares.
Subsequent changes in the fair value of the warrants are recognised through profit or loss. The warrants
were valued at US$60,597 at the year end with the change of fair value of US$58,748 recognised through
profit or loss.
The fair value of the 1,000,000 warrants on the grant date was US$71,083 which has been recognised on
the consolidated statement of profit or loss. Subsequent changes in the fair value of the warrants are
recognised through profit or loss. The warrants were valued at US$42,748 at the year end with the change
of fair value of US$28,335 recognised through profit or loss.
The warrants have been deemed to be Level 2 liabilities under the fair value hierarchy.
Loan derivative
The loan derivative, measured at fair value through profit or loss, has been deemed to be Level 2 liabilities
under the fair value hierarchy, based on the valuation method used. The Monte Carlo model was used in
arriving at the fair value of the derivative at inception and year end respectively. Refer to note 12 and 19
for further details.
14. Share capital
Number of shares
Allotted, called up and fully paid
Ordinary shares of no par value
At 1 January 2018
Issue of shares
Issue of shares (exercised share awards)
Issue costs
At 31 December 2018
At 1 January 2017
Issue of shares
Issue costs
At 31 December 2017
15. Reserves
2018
2017
282,299,844 265,299,844
Shares
Issued
Number
265,299,844
15,200,000
1,800,000
-
282,299,844
Shares
Issued
Number
250,299,844
15,000,000
-
265,299,844
Share
capital
US$’000
87,384
1,310
306
(204)
88,796
Share
capital
US$’000
86,557
987
(160)
87,384
The following describes the nature and purpose of each reserve within owners’ equity.
Share capital
Retained earnings
Amount subscribed for share capital, net of costs of issue
Cumulative net gains and losses less distributions made, together
with share based payment equity increases
16. Share-based payments
Share awards are granted to employees and Directors on a discretionary basis and the Remuneration
Committee will decide whether to make share awards under the LTIP or unapproved share option
scheme at any time.
Long term incentive plan and unapproved share option scheme
Exercise price
per share
Grant
date
Outstanding
at start of
year
Granted
during the
year
Exercised
during the
year
Lapsed/
cancelled
during
the year
Outstanding
at year end
2018
Nil
25c
17.25p (26.3c)
Nil
6.5p (10.8c)
Nil*
Nil**
5p (6.7c)**
8.625p
(11.5c)*
6.25p (8.4c)*
7.5p (10c)**
10p (13.4c)**
15p (20.1c)**
Total
27.05.10
27.05.10
26.04.13
31.01.14
31.01.14
25.05.18
25.05.18
25.05.18
25.05.18
25.05.18
25.05.18
25.05.18
25.05.18
WAEP (cents)
2,400,000
800,000
1,775,000
1,800,000
750,000
-
-
-
-
-
-
-
-
-
2,568,627
750,000
2,790,779
1,625,000
-
-
-
-
4,000,000
5,581,558
2,790,779
2,790,779
7,525,000 22,897,522
8.77
9.94
-
-
-
(1,575,000)
-
(700,000)
(675,000)
-
-
-
-
-
-
(2,950,000)
-
-
-
(1,625,000)
-
(750,000)
-
-
-
-
-
-
-
-
(2,375,000)
2.03
2,400,000
800,000
150,000
225,000
-
1,868,627
75,000
2,790,779
1,625,000
4,000,000
5,581,558
2,790,779
2,790,779
25,097,522
9.73
Exercise price
per share
Grant
date
Outstanding
at start of
year
Granted
during
the year
Exercised
during the
year
Exercised
during
the year
Outstanding
at year end
2017
Nil
25c
30.5p (47.8c)
17.25p (26.3c)
Nil
6.5p(10.8c)
Total
27.05.10
27.05.10
19.06.12
26.04.13
31.01.14
31.01.14
WAEP (cents)
2,400,000
800,000
500,000
4,600,000
1,800,000
3,450,000
13,550,000
14.92
* Vest on grant date
** Vest upon delivery of specific milestones
-
-
-
-
-
-
-
-
-
-
(500,000)
(2,825,000)
-
(2,700,000)
(6,025,000)
21.2
2,400,000
800,000
-
1,775,000
1,800,000
750,000
7,525,000
9.94
Final
exercise
date
26.05.20
26.05.20
25.04.23
30.06.20
30.06.20
24.05.28
31.01.24
25.05.28
05.02.25
25.05.28
25.05.28
25.05.28
25.05.28
Final
exercise
date
26.05.20
26.05.20
18.06.22
25.04.23
30.06.20
30.06.20
The Company’s mid-market closing share price at 31 December 2018 was 5.65p (31 December 2017:
3.63p). The highest and lowest mid-market closing share prices during the year were 9.45p (2017: 9.87p)
and 3.87p (2017: 1.75p) respectively.
Of the total number of options outstanding at year end 13,071,906 (2017: 6,775,000) had vested and were
exercisable. The weighted average exercise price for the exercisable options at year end was 7.40p
(2017: 8.86p).
The weighted average contractual life of the options outstanding at the year-end was six years (2017: six
years).
In respect of 22,897,522 shares in the Company granted to its directors, executive senior management
team and contracted personnel 61% are performance related and linked to delivery of specific
milestones, 17% are in lieu of director remuneration and the balance of 22% is in lieu of senior
management, ex-employees and consultants remuneration. Out of the total options granted in the year,
8,193,627 vested at grant date.
The fair value of the share awards granted under the Group’s unapproved share option scheme has been
calculated using the Black-Scholes model and spread over the vesting period. The following principal
assumptions were used in the valuation in the current and prior year:
Grant
dated
date
25.05.18
25.05.18
25.05.18
25.05.18
25.05.18
25.05.18
25.05.18
Exercise price
per share
Share
price at
date of
grant
5.50c
(nil)
5.50c 11.54c(8.625p)
6.69c(5p)
5.50c
10.04c(7.5p)
5.50c
13.38c(10p)
5.50c
20.07c(15p)
5.50c
8.36c(6.25p)
5.50c
Volatility
113.33%
113.33%
113.33%
113.33%
113.33%
113.33%
133.33%
Period
likely to
exercise
over
5 years
5 years
5 years
5 years
5 years
5 years
5 years
Risk-free
investmen
Fair
value
t rate
0.7%
0.7%
0.7%
0.7%
0.7%
0.7%
0.7%
5.50c
4.30c
4.46c
4.40c
4.20c
4.00c
4.50c
The volatility rates have been calculated using the share price of a similar company with coal assets in
Mozambique for share options granted in 2012 and analysis of historic Company share price volatility
thereafter.
Based on the above fair values, the expense arising from equity-settled share options made to employees
and Directors was US$1.2m for the year (2017: nil).
17. Segmental analysis
In 2017 the Group had three reportable segments, following the NBO with CMEC and GE the new
integrated strategy the power and mining projects are now considered as one segment:
Power Project and Mine Project - this segment is involved in the exploration for coal and
development of coal mine and the development of a 300MW integrated power plant next to the
Group’s coal mine concession areas in Mozambique
Corporate - this comprises head office operations and the provision of services to Group
companies
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker has been identified as the Board of
Directors.
The operating results of each of these segments are regularly reviewed by the Group's chief operating
decision-maker in order to make decisions about the allocation of resources and assess their
performance. The Group’s mine and power activities are interrelated and each activity is dependent on
the other. Accordingly, all significant operating decisions are based upon analysis of the mine and power
activities as one segment and corporate as one segment.
The segment results for the year ended 31 December 2018 are as follows:
Income statement
For the year ended 31 December 2018
Segment result after allocation of central
costs
Finance expense
Finance income
Loss before taxation
Taxation
Loss for the year
Power &
Mine
project
US$’000
Corporate
US$’000
Group
US$’000
(559)
(2,199)
(2,758)
-
-
(559)
-
(559)
(722)
-
(2,921)
-
(2,921)
(722)
-
(3,480)
-
(3,480)
The segment results for the year ended 31 December 2017 are as follows:
Income statement
For the year ended 31 December 2017
Segment result after allocation of central
costs
Finance expense
Finance income
Loss before taxation
Taxation
Loss for the year
Power
project
US$’000
Mine
project
US$’000
Corporate
US$’000
Group
US$’000
(615)
-
-
(615)
-
(615)
44
-
-
44
-
44
(480)
(1,051)
(644)
-
(1,124)
-
(1,124)
(644)
-
(1,695)
-
(1,695)
Other segment items included in the Income statement are as follows:
Income statement
For the year ended 31 December 2018
Depreciation charged to the income statement
Share based payment
Power &
Mine
project
US$’000
Corporate
US$’000
Group
US$’000
(68)
-
-
(68)
(1,297)
(1,297)
Income statement
For the year ended 31 December 2017
Power
project
US$’000
Mine
project
US$’000
Corporate
US$’000
Group
US$’000
Depreciation charged to the income statement
-
(78)
-
(78)
The segment assets and liabilities at 31 December 2018 and capital expenditure for the year then
ended are as follows:
Statement of financial position
At 31 December 2018
Segment assets
Segment liabilities
Segment net assets
Property plant and equipment capital
expenditure
Power &
Mine
project
US$’000
Corporate
US$’000
Group
US$’000
18,032
(224)
17,808
718
(5,284)
(4,566)
18,750
(5,508)
13,242
32
-
32
The segment assets and liabilities at 31 December 2017 and capital expenditure for the year then ended
are as follows:
Statement of financial position
At 31 December 2017
Segment assets
Segment liabilities
Segment net assets
Property plant and equipment capital
expenditure
Power
project
US$’000
Mine
project
US$’000
Corporate
US$’000
Group
US$’000
9,439
(210)
9,229
8,643
(11)
8,632
928
(4,399)
(3,471)
19,010
(4,620)
14,390
48
3
-
51
18. Reconciliation of liabilities arising from financing activities
At 1 January 2018
Cash flows
Non cash finance charges
Restructuring of loan
Non cash change in accruals
FV of warrants issued
FV of loan derivative
Change in fair value
At 31 December 2018
At 1 January 2017
Cash flows
Deferred payroll costs capitalised to
shareholder loan
Non cash finance charges net of modification
gains
Non cash change in accruals
FV of warrants issued
Change in fair value
At 31 December 2017
Accrued
interest
Short term
loan
US$’000
510
-
-
1,050
(1,560)
-
-
-
-
-
US$’000
3,495
-
-
124
1,560
-
-
(997)
-
4,182
Derivative
financial
liability
US$’000
107
-
-
-
-
-
189
997
(448)
845
Accrued
interest
Short term
loan
Derivative
financial liability
Total
US$’000
4,112
-
-
1,174
-
-
189
-
(448)
5,027
Total
US$’000
610
-
-
US$’000
2,169
350
232
US$’000
-
-
-
US$’000
2,779
350
232
-
744
-
744
(100)
-
-
510
-
-
-
3,495
-
110
(3)
107
(100)
110
(3)
4,112
19. Financial instruments
The Group is exposed to risks that arise from its use of financial instruments. This note describes the
Group’s objectives, policies and processes for managing those risks and the methods used to measure
them. Further quantitative information in respect of these risks is presented throughout these financial
statements.
The significant accounting policies regarding financial instruments are disclosed in note 1.
There have been no substantive changes in the Group’s objectives, policies and processes for
managing those risks or the methods used to measure them from previous periods unless otherwise
stated in this note.
Principal financial instruments
The principal financial instruments used by the Group from which financial instrument risk arises, are
as follows:
Loans and receivables at amortised cost
Trade and other receivables
Cash and cash equivalents
Financial liabilities held at amortised cost
Trade and other payables
Loans and borrowings
Financial liabilities at fair value through profit or loss
Derivative financial liability
2018
US$’000
2017
US$’000
16
424
481
4,182
44
614
1,018
3,495
845
107
For details of the fair value hierarchy and valuation techniques relating to the determination of the fair
value of the derivative financial liability, refer to note 13.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s risk management objectives
and policies and retains ultimate responsibility for them.
The overall objective of the Board is to set polices that seek to reduce risk as far as possible without
unduly affecting the Group’s competitiveness and flexibility. Further details regarding these policies
are set out below:
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will
encounter difficulty in meeting its financial obligations as they fall due.
The Board receives cash flow projections on a monthly basis as well as information on cash balances.
2018
in 1
on
month
demand
US$’000 US$’000 US$’000
Total
Between 1
and 6
months
US$’000
Between 6
and 12
months
US$’000
Between 1
and 3
years
US$’000
Trade and other payables
Loans and borrowings
481
5,661
-
-
112
-
-
-
369
5,661
-
-
2017
on
demand
US$’000 US$’000
Total
in 1
month
US$’000
Between 1
and 6
months
US$’000
Between 6
and 12 months
US$’000
Between 1
and 3
years
US$’000
Trade and other payables
Loans and borrowings
1,018
5,100
-
-
228
-
265
-
525
5,100
-
-
The Group endeavours to match the maturity of its current assets with its current liabilities to mitigate
liquidity risk. Refer to note 1 for the material uncertainty regards going concern.
Borrowing facilities
The Group had no undrawn and unconditional committed borrowing facilities available at 31 December
2018 (2017: Nil).
Market risk
The Group does not currently sell any coal or electricity. As such there is no specific market risk at the
date of this report. However, there is a risk that the Group is unable to secure a credit worthy off-taker
for the full output of the power plant, with the plant operating at load factors in excess of 80%.
Currency risk
The Group is exposed to currency risk through its activities due to certain costs arising in Mozambique
Meticais and cash held in GBP, whilst the functional currency is US dollars. The Group has no formal
policy in respect of foreign exchange risk, however, it reviews its currency exposures on a monthly
basis. Currency exposures relating to monetary assets held by foreign operations are included within
the Group statement of profit or loss. The Group also manages its currency exposure by retaining the
majority of its cash balances in US dollars, being a relatively stable currency.
A 5% appreciation in the value of the US dollar against the Meticais and GB pounds will increase net
assets by US$16,069 (2017: decreased net assets by US$20,803).
Currency exposures
As at 31 December the Group’s net exposure to foreign exchange risk was as follows:
2018
US$’000
Assets/(liabilities) held
GBP
MZN Total
323
323
1
1
324
324
2017
US$’000
Assets/(liabilities)
held
GBP MZN Total
485
485
39
39
524
524
US dollars
The Group is exposed to foreign exchange risk arising from various currency exposures primarily with
respect to the Mozambican Meticais and Sterling, but these are not significant as most of the
transactions are in USD.
20. Related party transactions
Parties are considered to be related if one party has the ability to control the other party, is under
common control, or can exercise significant influence over the other party in making financial and
operational decisions. In considering each possible related party relationship, attention is directed to the
substance of the relationship, not merely the legal form.
In relation to the Shareholder Loan as at 31 December 2018 there was no drawn (2017: US$671,591)
by a Trust of which Non-Executive Chairman, Michael Haworth is a potential beneficiary. $nil drawn by
Director, Christiaan Schutte (2017: US$185,864), and $nil drawn from Director, Estevão Pale (2017:
US$55,011). Refer to note 11 for details of the terms and conditions. Refer to note 12 for details of the
terms and conditions.
Christiaan Schutte – Former Non-Executive Director of Ncondezi Limited, resigned on 30
September 2018 - Director of CPS Consulting
During the year US$27,100 (2017: US$23,400) was paid by the Company to CPS Consulting in respect
of services provided by Christiaan Schutte. There was no outstanding balance at 31 December 2018
(2017: Nil).
CPS provides technical oversight and due diligence for independent power producers and related
projects. Working directly with O&M and EPC contracts on behalf of the Company on the Power Project.
Aman Sachdeva –Non-Executive Director of Ncondezi Energy Limited - CEO of Synergy
Consulting Inc.
During the year US$160,278 (2017: US$200,876) was paid by the Company to Synergy Consulting Inc.
in respect of services provided by Synergy. At 31 December 2018 the outstanding balance was
US$41,105 (2017: US$45,000).
As announced on 15 February 2019 the Company identified that this related party relationship had not
been previously disclosed, although amounts due or paid under the Contracts have been appropriately
recorded in the preparation of the Company’s audited financial statements for relevant periods.
Accordingly the disclosure of the comparative information was omitted from the prior year disclosure.
During 2016 US$133,457 was paid by the Company. At 31 December 2016 the outstanding balance
was US$20,363. There were no transactions prior to 2016.
Synergy has been providing advice to the Company in connection with the Ncondezi 300MW coal fired
power plant, and other potential opportunities in the African power sector.
In May 2016, the Company engaged Synergy to provide financial and transaction advisory services
relating to the Project and a potential transaction with a strategic partner. Towards the middle of 2017
the service scope expanded to provide transaction advisory services to identify a new strategic partner
which ended up with the signing of the NBO with CMEC and GE, and subsequent process on the JDA.
In November 2018, the Company and Synergy entered into an agreement for due diligence and
transaction advisory services relating to the evaluation of the GridX investment opportunity and Term
Sheet.
Synergy is a global independent consultancy specialising in infrastructure advisory and project finance,
and has experience in achieving financial closure for deals worth approx. US$25bn and M&A advisory
for deals worth US$5bn.
Details of Key Management Remuneration are contained in Note 3.
21. Commitments
Social development programme
In December 2012 a Memorandum of Understanding was signed with the Mozambican Ministry of
Mineral Resources and Energy in respect of a Social Development Programme, with a committed spend
of US$2m following an agreed programme. By December 2016 half of this budget has been successfully
spent in various initiatives. During the year there were no expenditure related to social development
programmes (2017:nil). Further to an Addendum, the program was postponed to be completed during
the mining phase. In addition, upon receiving the mining concession in 2013 a further US$5m was
committed. The expenditure programme is still to be negotiated with the Ministry of Mineral Resources
and Energy.
Environmental licence fee
An environmental licence fee of 0.2% of the capital cost of construction is payable before commencement
of construction.
EMEM 5% investment in NCCML
Along with the issuance of the Mining Concession, Ncondezi’s local subsidiary NCCML also concluded
an Addendum to Mine Framework Agreement (“MFA”) with Mozambican Ministry of Mineral Resources
and Energy. Under the terms of the Addendum to the MFA, it has been agreed that the Government
owned Mozambican Mining Exploration Company (“EMEM”) will be granted a 5% free carry in the share
capital of NCCML up to the start of the Ncondezi mine’s construction. However, from the
commencement of construction EMEM will be required to pay, through an agreed funding mechanism,
for its share of any future equity funding obligations that may be required from the shareholders of
NCCML including its share of the construction and commissioning costs of bringing the Ncondezi mine
into commercial operation.
22. Events after the reporting date
Power project update
On 28 February 2019, following positive meetings with the Liaison Committee, the updated Project work
program and timetable targeting power on the grid by 2023 was approved and the Company’s Strategic
Partners confirmed that the process to conclude the JDA could now move forward.
Shareholders Loan conversions
In the first half of 2019 a total of US$935,000 of loan principal plus interest was converted into equity
equivalent to 7,193,328 ordinary shares being issued.
Share Options executed
On 14 March 2019 a total of 1,000,000 share options nil value subscription price vested at grant on 25
May 2018 were requested to be exercised. The equivalent to 1,000,000 new ordinary shares of no par
value were issued.
Warrants conversions
On 19 March and 1 April of 2019 a total of 1,000,000 warrants at subscription price of 5 pence per share
issued on 25 May 2018 were requested to be converted into equity. The equivalent of 1,000,000 new
ordinary shares of no par value were issued.
GridX JV
In March 2019, the Company entered into a term sheet with GridX, an African power developer, enabling
it to enter into a JV focused on building and operating captive solar and battery storage solutions for
the African Commercial and Industrial (“C&I”) sector (the “Term Sheet”). Justin Pengilly one of the
Directors of GridX is the brother of Hanno Pengilly, the Company’s Chief Development Officer and is
included as a member of key management under IFRS definitions by the Company.
The above transaction is not considered to represent a disclosable related party transaction under the
AIM Rules following assessment by the Board and its advisors.
Placing
On 5 April 2019, the Company raised a total of £1.88m (US$2.48m) before expenses, through a
conditional placing and direct subscriptions of 28,856,060 ordinary shares in the Company at a price of
6.50 pence per ordinary share.
Project Development
On 29 April 2019, the Company joined the Mozambique government delegation in Beijing, China, for
the Second Belt and Road Forum for International Cooperation. During the visit, Ncondezi, CMEC and
GE held successful meetings with His Excellency Mr Filipe Nyusi, President of the Republic of
Mozambique, the Governor of Tete and the Deputy Minister of MIREME.
Company Information
Directors
Company Secretary
Registered Office
Michael Haworth (Non-Executive Chairman)
Estevão Pale (Non-Executive Director)
Jacek Glowacki (Non-Executive Director)
Aman Sachdeva (Non-Executive Director)
Elysium Fund Management Limited
PO Box 650, 1st Floor, Royal Chambers
St Julian’s Avenue
St Peter Port
Guernsey
GY1 3JX
Ground Floor, Coastal Building
Wickham's Cay II
PO Box 2136, Carrot Bay
VG1130
Road Town
Tortola
British Virgin Islands
Company number
1019077
Nominated Advisor and Corporate Broker
Auditors
Registrar
Liberum Capital Limited
Ropemaker Place
Level 12
25 Ropemaker Street
London
EC2Y 9AR
BDO LLP
55 Baker Street
London
W1U 7EU
Computershare Investor Services (BVI) Limited
Woodbourne Hall
PO Box 3162
Road Town
Tortola
British Virgin Islands
Legal advisor to the Company
as to BVI law
Ogier LLP
41 Lothbury
London
EC2R 7HF
Legal advisor to the Company
as to English law
Bryan Cave Leighton Paisner LLP
Adelaide House
London Bridge
London
EC4R 9HA