Unaudited Interim results - 30 June 2018

Unaudited condensed consolidated interim statement of cash flow

For the six months ended 30 June 2018

 

	6 months to	6 months to	12 months to
	30 June	30 June	31 December
	2018	2017	2017
	(Unaudited)	(Unaudited)	(Audited)
	£	£	£
Loss for the period before taxation	(1,326,860)	(2,363,340)	(4,519,813)
Adjusted for:
Foreign exchange gain/(loss)	(129,425)	48,236	249,437
Depreciation on property, plant and equipment	-	2,420	2,738
Provisions	-	(115,663)	(115,663)
Shares based remuneration to directors	-	-	260,000
Deemed cost of listing	-	-	206,680
Deal cost settled in shares	-	-	155,539
Liabilities settled in shares	-	357,002	-
Operating income before working capital changes	(1,456,285)	(2,071,345)	(3,761,082)
Increase in trade and other receivables	(19,585)	(66,820)	(8,413)
Increase in trade and other payables	204,428	196,961	119,838
Net cash outflows from operating activities	(1,271,442)	(1,941,204)	(3,649,657)
Cash flows from investing activities
Purchase of property, plant and equipment	-	-	(1,175)
Net cash flow from acquisition of subsidiaries	-	2,045,418	465,408
Net cash used in investing activities	-	2,045,418	464,233
Cash flows from financing activities
Repayment of borrowings	(199,709)	-	-
Proceeds from borrowings	251,565	1,460,135	1,751,326
Proceeds from issue of share capital*	2,132,453	-	1,818,345
Net cash proceeds from financing activities	2,184,309	1,460,135	3,569,671
Net increase in cash and cash equivalents	912,867	1,564,349	384,247
Cash and cash equivalents at beginning of period	766,586	382,339	382,339
Cash and cash equivalents at end of period	1,679,453	1,946,688	766,586

 

*During the period, the Group had concluded significant non-cash transactions related to the acquisition of a 85% interest in the Mabesekwa Independent Coal to Power Project (MICPP) in the amount of £9.3mil as well as a partial settlement of the Sanderson Capital Partners Limited forward payment facility in the amount of €0.4mil. Note 6 provides further information on these transactions, and the impact thereof on the capital in issue.

Notes to the unaudited condensed consolidated interim financial statements

For the six months ended 30 June 2018

 

1. General information

 

Kibo Energy plc ("formerly Kibo Mining plc") is a public limited company incorporated in Ireland. Kibo Mining plc announced its change of name to Kibo Energy plc effective from 3 August 2018 onward. The condensed consolidated interim financial results consolidate those of the Company and its subsidiaries (together referred to as the "Group"). The Company's shares are listed on the AIM of the London Stock Exchange and the Alternative Exchange of the JSE Limited (AltX). The principal activities of the Company and its subsidiaries are related to the exploration for and development of coal and other minerals in Tanzania.

 

2. Statement of Compliance and Basis of Preparation

 

The condensed consolidated interim financial results are for the six months ended 30 June 2018, and have been prepared using the same accounting policies as those applied by the Group in its December 2017 consolidated annual financial statements, which are in accordance with the framework concepts and the recognition and measurement criteria of the  International Financial Reporting Standards and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU ("IFRS"), including the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, IAS 34 - Interim Financial Reporting, the Listings Requirements of the JSE Limited, the AIM rules of the London Stock Exchange and the Irish Companies Act 2015.

 

These condensed consolidated interim financial statements do not include all the notes presented in a complete set of consolidated annual financial statements, as only selected explanatory notes are included to explain key events and transactions that are significant to obtaining an understanding of the changes throughout the financial period, accordingly the report must be read in conjunction with the annual report for the year ended 31 December 2017.

 

The comparative amounts in the consolidated financial results include extracts from the consolidated annual financial statements for the period ended 31 December 2017.

 

These extracts do not constitute statutory accounts in accordance with the Irish Companies Acts 2015. All monetary information is presented in the presentation currency of the Company being Pound Sterling. The Group's principal accounting policies and assumptions have been applied consistently over the current and prior comparative financial period.

 

3. Use of estimates and judgements

 

Preparing the condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

 

In preparing these condensed consolidated interim financial statements, significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2017.

 

 

 

Exploration and evaluation expenditure

The Group's accounting policy for exploration and evaluation expenditure results in the capitalisation of certain intangible mineral resources which are identified through business combinations or equivalent acquisitions. This policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular whether an economically viable extraction operation can be established based on the separately identified mineral resources. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the intangible mineral resources under the policy, a judgement is made that recovery of the intangible asset is unlikely, the relevant capitalised amount will be written off to the income statement.

 

4. Adoption of new and revised standards

 

From 1 January 2018 the following standards, amendments and interpretations were adopted by the group:

 

-     IFRS 9: Financial instruments

-     IFRS 15: Revenue from contracts with Customers

 

The adoption of the above has not had a significant impact on the group's result for the period under review or for any comparative period presented.

 

5. Loss per share

 

Basic, dilutive and headline loss per share

 

The basic and weighted average number of ordinary shares used in the calculation of basic earnings per share is as follows:

 

	6 months to	6 months to	12 months to
	30 June	30 June	31 December
	2018	2017	2017
	£	£	£
Loss for the year attributable to equity holders of the parent	(1,250,934)	(1,900,505)	(3,712,707)
Weighted average number of ordinary shares for the purposes of basic and dilutive loss per share	496,954,459	364,254,364	372,255,127
Basic loss per share	(0.0025)	(0.0052)	(0.010)

 

 

 

	6 months to	6 months to	12 months to
Reconciliation of Headline loss per share	30 June	30 June	31 December
	2018	2017	2017
	£	£	£
Loss for the year attributable to equity holders of the parent	(1,250,934)	(1,900,505)	(3,712,707)
Deemed cost of listing	-	-	206,680
Headline loss per share	(1,250,934)	(1,900,505)	(3,506,027)
Weighted average number of ordinary shares for the purposes of headline loss per share (revised)	496,954,459	364,254,364	372,255,127
Headline loss per share	(0.0025)	(0.0052)	(0.010)

                                                                             

Headline earnings per share (HEPS) is calculated using the weighted average number of ordinary shares in issue during the period and is based on the earnings attributable to ordinary shareholders, after excluding those items as required by Circular 4/2018 issued by the South African Institute of Chartered Accountants (SAICA).

 

6. Called up share capital and share premium

 

Authorised ordinary share capital of the company is 1,000,000,000 ordinary shares of €0.015 each and 3,000,000,000 deferred shares of €0.009 each.

 

Detail of issued capital is as follows:

	Number of
	Ordinary	Share	Deferred Share	Share
	shares	Capital	Capital	Premium
		£	£	£
Balance at 31 December 2016	363,976,596	4,346,890	9,257,075	27,318,262
Shares issued in period (net of expensed for cash)	31,277,768	411,705	-	1,151,488
Balance at 31 December 2017	395,254,364	4,758,595	9,257,075	28,469,750
Shares issued in period (net of expensed for cash)	208,299,234	2,740,681	-	9,249,260
Balance at 30 June 2018	603,553,598	7,499,276	9,257,075	37,719,010

 

The company issued the following ordinary shares during the period, with regard to key transactions:

 

-     17,647,060 ordinary shares were issued on 27 February 2018 at 4.25p per share. The £750,000 raised was utilised to advance the company's strategy to create a strategic regional electricity supplier;

 

-     153,710,030 new ordinary shares in the company were issued on 3 April 2018 at £0.061 per share. The shares were issued under the agreement with Sechaba Natural Resources Limited whereby the company acquired an 85% interest in the Mabesekwa Independent Coal to Power Project, located in Botswana;

 

-     28,571,428 ordinary shares were issued on 10 April 2018 at 5.25p per share. The £1,500,000 received went towards general working capital and expediting ongoing advanced feasibility studies at the Mabesekwa Independent Coal to Power Project as well as strengthening the company's financial position ahead of the commencement of further work at the Mbeya Coal to Power Project; and

 

-     8,370,716 ordinary shares were issued on 1 May 2018 at 5p per share as a partial settlement on the balance of funds drawn down under the forward payment facility between the company and Sanderson Capital Partners Limited.

 

7. Segment analysis

 

IFRS 8 requires an entity to report financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments that meet specific criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker. The Chief Executive Officer is the Chief Operating decision maker of the Group.

 

Management currently identifies two divisions as operating segments - mining and corporate. These operating segments are monitored and strategic decisions are made based upon them together with other non-financial data collated from exploration activities. Principal activities for these operating segments are as follows:

 

30 June 2018	Mining and Exploration	Corporate	30 June 2018 (£)
	Group	Group	Group
Revenue	-	-	-
Administrative cost	-	(924,829)	(924,829)
Exploration expenditure	(402,609)	-	(402,609)
Investment and other income	578	-	578
Loss after tax	(402,031)	(924,829)	(1,326,860)

 

30 June 2017	Mining and Exploration	Corporate	30 June 2017 (£)
	Group	Group	Group
Revenue	1,001	-	1,001
Administrative cost	-	(1,730,200)	(1,730,200)
Exploration expenditure	(634,141)	-	(634,141)
Investment and other income	-	-	-
Loss after tax	-	-	-
	(633,140)	(1,730,200)	(2,363,340)

 

30 June 2018	Mining	Corporate	30 June 2018 (£)
	Group	Group	Group
Assets
Segment assets	19,206,661	9,531,687	28,738,348
Liabilities
Segment liabilities	391,334	978,640	1,369,974
Other Significant items
Depreciation	-	-	-

 

31 December 2017	Mining	Corporate	31 December 2017 (£)
	Group	Group	Group
Assets
Segment assets	18,423,284	6,103	18,429,387
Liabilities
Segment liabilities	264,562	1,297,504	1,562,066
Other Significant items
Depreciation	2,738	-	2,738

 

8. Intangible assets

	6 months to	6 months to	12 months to
Composition of Intangible assets	30 June	30 June	31 December
	2018	2017	2017
	£	£	£
Mbeya Coal to Power Project	15,896,105	15,896,105	15,896,105
Lake Victoria	1,700,000	1,700,000	1,700,000
Mabesekwa Coal Independent Power Project	9,376,312	-	-
	26,972,417	17,596,105	17,596,105

Intangible assets are not amortised, due to the indefinite useful life which is attached to the underlying prospecting rights, until such time that active mining operations commence, which will result in the intangible asset being amortised over the useful life of the relevant mining licences.

 

Intangible assets with an indefinite useful life are assessed for impairment on an annual basis, against the prospective fair value of the intangible asset. The valuation of intangible assets with an indefinite useful life is reassessed on an annual basis through valuation techniques applicable to the nature of the intangible assets.

 

Refer to note 11 for more information on the Mabesekwa Coal Independent Power Project.

 

9. Borrowings

	6 months to	6 months to	12 months to
Amounts falling due within one year	30 June	30 June	31 December
	2018	2017	2017
	£	£	£
Short term borrowings	899,328	1,712,063	1,210,768
	899,328	1,712,063	1,210,768

The borrowings relate to the unsecured interest free loan facility from Sanderson Capital Partners Limited which was repayable either through the issue of cash or ordinary shares in the Company.

 

Refer also to note 6 for detail on the shares issued during the period as partial settlement of the facility.

 

 

 

 

10. Financial instruments

	6 months to	6 months to	12 months to
	30 June	30 June	31 December
	2018	2017	2017
	£	£	£
Financial assets - carrying amount Loans and receivable held at amortised cost
Trade and other receivables	78,631	117,453	59,046
Cash and cash equivalents	1,679,453	1,946,688	766,586
	1,758,084	2,064,141	825,632
Financial liabilities - carrying amount Financial liabilities held at amortised cost
Trade and other payables	470,646	343,312	266,218
Borrowings	899,328	1,712,063	1,210,768
	1,369,974	2,055,375	1,476,986

The Board of Directors considers that the fair values of financial assets and liabilities approximate their carrying values at each reporting date.

 

11. Corporate transactions

 

Kibo Nickel Disposal

The Group has entered into an agreement to dispose 100% of Kibo Nickel Limited ("Kibo Nickel"), a wholly owned subsidiary of Kibo (Cyprus) Limited, to Katoro Gold Limited ("Katoro"), also a subsidiary of the company. Consideration for the sale will be settled by the issue of 15,384,615 new ordinary shares in Katoro at a price of 1.3p per share (valued at £200,000) ("Consideration shares"). The consideration shares will be issued to Kibo upon transaction completion and will rank pari passu with the existing ordinary shares. Kibo will also retain a 2% NSR royalty in respect of the nickel or mineral concentrates produced and sold from any of Kibo Nickel's property.

 

As at interim reporting period end, the suspensive conditions had not been fulfilled, and control was not lost, thus the transaction had not become effective. As at the date of this report, the main suspensive condition, being the successful completion of a due diligence, is well advanced and, pending the outcome, it is expected that the transaction will be completed shortly.

 

Shumba Acquisition

On 3 April 2018, the Group completed the acquisition of an 85% interest in the Mabesekwa Coal Independent Power Project, located in Botswana. This acquisition is in line with the Group's strategy of positioning itself as a strategic regional electricity supplier in Southern Africa and creates many synergies with the MCPP in Tanzania.

 

As a result of the acquisition, 153,710,030 ordinary shares in Kibo were issued to Sechaba Natural Resources Limited ("Sechaba"). Sechaba retained a 15% interest in the Mabesekwa Coal Independent Power Project and gained a seat on Kibo's board of directors.

 

Benga Power Joint Venture

The Company concluded the Joint Venture Agreement (the 'Benga Power Joint Venture' or 'JV') with Mozambique energy company Termoeléctrica de Benga S.A. ('Termoeléctrica') to participate in the further assessment and potential development of the Benga Independent Power Project ('BIPP'), including the right to construct and operate a 150-300MW coal fired power station. Kibo and Termoeléctrica shall hold initial Participation Interests in the unincorporated joint venture of 65% and 35% respectively. In order to maintain this 65% interest, Kibo must fund a maximum of £1 million towards the completion of a Definitive Feasibility Study for the BIPP. As at 30 June 2018, operations of the Joint Venture had not yet commenced, and as such expenditure incurred to this date is insignificant.

 

12. Unaudited results

 

These condensed consolidated interim financial results have not been audited or reviewed by the Group's auditors.

 

13. Dividends

 

No dividends were declared during the interim period.

 

14. Board of Directors

 

 Mr. Tinus Maree, previously non-executive director, joined the executive committee ("EXCO") of Kibo. Mr. Maree has a robust and complete understanding of the Company and Kibo will continue to benefit from Mr. Maree's extensive experience as a corporate lawyer as he will continue to provide internal legal advice and review in his new position. Mr. Noel O'Keefe and Mr. Andreas Lianos transitioned to a non-executive role with the Company. Mr. O'Keefe shall continue to provide the Company with invaluable technical advice and oversight and Mr. Lianos will be instrumental in the Company's financial oversight as non-executive Financial Director (see RNS dated 10 April 2018).

15. Subsequent events

 

Share placements

Subsequent to the interim reporting date, the company has raised the following share placement:

 

·    £500,000 in the placement of 9,523,810 ordinary Kibo shares at 5.25p per share (see RNS dated 30 July 2018).

 

Strategic Development Agreement with SEPCOIII

The company has signed a Strategic Development Agreement (SDA) with China based SEPCOIII, one of the world's largest power EPC contractors, to work with Kibo towards enhancing its strategy and the development of its portfolio of energy projects. As part of the SDA, SEPCOIII has committed to a two-stage equity investment into Kibo, endorsing the company's strategy and its position in the African power market (see RNS dated 3 July 2018).

 

Full settlement of the Sanderson Capital Partners Limited Facility

On 9 July 2018, Kibo and Sanderson Capital Partners Limited settled the outstanding balance of GBP 1,115,067.17 on the forward payment facility agreed on 20 December 2016. Sanderson will be issued 21,239,375 new ordinary Kibo shares of par value £0.015 each, at a price of 5.25p per Kibo share, a 13% premium to the closing price of 4.65p on Friday 6 July 2018 (see RNS dated 9 July 2018).

 

Acquisition of 60% Interest in UK Project Development Company

A Memorandum of Understanding ("MOU") for the acquisition of a 60% equity interest in Mast Energy Developments ("MED"), a private UK registered company targeting the development and operation of flexible power plants to service the Reserve Power generation market. Under the terms of the MOU, the company can acquire a 60% shareholding in MED for a consideration of £300,000 payable to existing MED shareholders in new Kibo shares and a share of future project revenue royalties, which will be reinvested in the company in the short term to an amount of £2.2 million (see RNS dated 15 August 2018). 

 

 

16. Going concern

 

The condensed consolidated interim financial results are prepared in accordance with the going concern principle under the historical cost basis as modified by the fair value accounting of certain assets and liabilities where required or permitted by IFRS in the EU.

 

17. Commitments and contingencies

 

There are no material commitments, contingent assets or contingent liabilities as at 30 June 2018.

 

14 September 2018

 

By order of the board:

 

Christian Schaffalitzky                            Chairman (Non-Executive)

Louis Coetzee                                          Chief Executive Officer (Executive)

Noel O'Keeffe                                          Technical Director (Executive)

Andreas Lianos                                        Chief Financial Officer (Executive)

Lukas Maree                                            Non-Executive Director

Wenzel Kerremans                                   Non-Executive Director

 

Company Secretary:                                Noel O'Keeffe

 

Auditors:                                                 Crowe U.K. LLP

                                                                                                  

Brokers:                                                   SVS Securities Limited

                                                                 20 Ropemaker Street

                                                                 London EC2Y 9AR

                                                                 United Kingdom

                                                             

                                                                 Novum Securities Limited

                                                                 London SW1W ODH

 

UK Nominated Adviser:                         RFC Ambrian Limited

                                                                Level 28, QV1 Building

                                                                250 St Georges Terrace

                                                                Perth WA 6000

 

 

JSE Designated Adviser:                        River Group

                                                                211 Kloof Street

                                                                Waterkloof

                                                                Pretoria, South Africa

 

Johannesburg

14 September 2018

Corporate and Designated Adviser

River Group