Results for the year ended 31 December 2022

Mast Energy Developments PLC

28 April 2023

 

Mast Energy Developments PLC

(Incorporated in England and Wales)

(Registration Number: 12886458)

Share code on the LSE: MAST

ISIN: GB00BMBSCV12

("MED" or "the Company")

Results for the year ended 31 December 2022

Dated 28 April 2023

MAST Energy Developments PLC ('MED' or the 'Company') the UK-based multi-asset owner and operator in the rapidly growing Flexible Energy market, is pleased to announce its audited results for the year ended 31 December 2022. A condensed set of financial statements accompanies this announcement below while the Company's full Annual Report and Financial Statements (MED Audited Annual Report and Financial Statements for the year ended 31 December 2022)can be found at the following link on the Company's website Annual & Interim Reports - MAST Energy Developments (med.energy) .

The Company's Notice of Annual General Meeting will be announced separately in due course.

Overview of key events during the period up to the date of this report

·    The Company's core activities during the first half of 2022 predominantly focused on the operational and technical optimisation of the 9 MW Pyebridge project site. In March 2022, Pyebridge became a fully operational gas-powered flexible power plant that has delivered considerable returns, including outperforming the market sales price by 88%.

·    The Company pre-qualified for two new Capacity Market contract auctions for Pyebridge The T-1 contract, which is scheduled to start on 01 October 2023, was secured at a clearing price of £60.00/kW/annum. The T-4 contract, which is scheduled to start on 01 October 2026, was secured at a clearing price of £63.00/kW/annum.

·    Construction and development of its Bordesley project continued while its 4.4 MW shovel-ready freehold site in the West Midland ('Rochdale') is at an advanced stage of planning and permitting.

·    Acquisition of two reserve power projects during period comprising the 7.5 MW Hindlip Lane site and the 2.4 MW Stather Road site. The acquisitions were funded through Credit Loan notes with an institutional investor.

This announcement contains inside information for the purposes of the UK version of the Market Abuse Regulation (EU No. 596/2014) as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR"). Upon the publication of this announcement, this inside information is now considered to be in the public domain.

ENDS

For further information please visit www.med.energy or contact:

Pieter Krügel	[e-mail]	Mast Energy Developments plc	CEO
Jonathan Critchley & Keith Swann	[phone]	Clear Capital Markets	Broker
Zainab Slemang van Rijmenant	[e-mail]	Lifa Communications	Investor and Public Relations Advisor

DIRECTORS, OFFICERS AND PROFESSIONAL ADVISERS

BOARD OF DIRECTORS:		Louis Lodewyk Coetzee (Non-Executive Chairman)
		Pieter-Schalk Krügel (Chief Executive Officer)(Appointed on 13 July 2022)
		Paulus Fillippus ('Paul') Venter (Non-Executive Director)
		Dominic Traynor (Non-Executive Director)
REGISTERED OFFICE AND		Salisbury House
BUSINESS ADDRESS:		London Wall
		London
		EC2M 5PS
COMPANY SECRETARY:		Noel Flannan O'Keeffe
		Salisbury House
		London Wall
		London
		EC2M 5PS
PLACE OF INCORPORATION:		England & Wales
AUDITORS:		Crowe U.K. LLP
		55 Ludgate Hill
		London
		EC4M 7JW
BROKERS:		Clear Capital Markets Limited
		12th Floor
		Broadgate Tower - Office 1213
		20 Primrose Street
		London
		EC2A 2EW
REGISTRAR:		Link Group
		Unit 10
		Central Square
		29 Wellington Street
		Leeds
		LS1 4DL
SOLICITORS:		Druces LLP
		Salisbury House
		London Wall
		London
		EC2M 5PS
PRINCIPLE BANKERS:		Barclays Bank PLC
		1 Churchill Place
		Canary Wharf
		London E14 5HP
STOCK EXCHANGE LISTING:		London Stock Exchange: Main Market (Share code: MAST)
WEBSITE:		www.med.energy
DATE OF INCORPORATION:		17 September 2020
REGISTERED NUMBER:		12886458

CHAIRMANS REPORT

I am pleased to provide a review of Mast Energy Developments PLC ('MED' or the 'Company') and its subsidiaries' (collectively, the 'Group') activities and audited financial statements for the year ended 31 December 2022.

The last year has seen the aggressive pursuit of the Company's business strategy to expand its operations in the flexible power market in the United Kingdom, with the objective to reach a 300 MW portfolio within 36-58 months by acquiring, developing and operating multiple small-scale flexible power generation plants across Great Britain. I am pleased to report that we remain committed to this target, with the new Chief Executive of MED, Pieter Krügel, who was appointed to the Company's Board on 13 July 2022 (see RNS date 20 May 2022), leading the charge for MED to become a significant player in the sector. Already, Krügel has achieved significant success with the acquisition of two more sites, namely a 7.5 MW gas-powered standby generation facility located in Worcester ('Hindlip') and a 2.4 MW gas-powered flexible power plant located in Scunthorpe, Lincolnshire ('Stather'). The addition of Hindlip and Stather brings the current MED portfolio in production and development to five sites with a combined energy generation capacity of c. 30 MW.

The Company's core activities during the first half of 2022 predominantly focused on the operational and technical optimisation of the 9 MW Pyebridge project site ('Pyebridge'), located in Derbyshire as well as further construction and development of the 5 MW Bordesley site ('Bordesley'), in Central Birmingham. In March 2022, Pyebridge became a fully operational gas-powered flexible power plant that has delivered considerable returns, including outperforming the market sales price by 88% and validating the Company's strategy and ability to outperform the market (see RNSs dated 19 October 2022 and 27 February 2023). This was despite the fact that Great Britain experienced warmer than usual autumn months that resulted in an oversupply of gas and a drop in the price of gas. Additionally, renewable wind and solar energy generation peaked during the same period, further lowering MED's earning potential during October and November (a detailed overview can be found in the Review of Operations section on page 5 of this report).

As I noted in the Company's last Annual Report and Financial Statements (see Audited Annual Report and Accounts for the year ended 31 December 2021), a key aspect in the development of MED's sites is the maximisation of revenues by participation in government-approved power-balancing and standby reserve capacity schemes, notably capacity market ('CM') contracts and route-to-market contracts that optimise revenues from energy generation. During the 2022/2023 CM bid window, MED applied for new replacement CM contracts for Pyebridge and successfully achieved pre-qualification and, pursuant to the recent Capacity Market Auctions and subsequent results, cleared a T-1 bid at £60/kW/pa and T-4 bid at an historic price of £63/kW/pa. Both CM contracts will significantly enhance Pyebridge's revenue profile and profitability.

Elsewhere, the Company continues construction and development of its Bordesley project while its 4.4 MW shovel-ready freehold site in the West Midland ('Rochdale') is at an advanced stage of planning and permitting. The conclusion of the Bordesley site's EPC contract optimisation with Clarke Energy resulted in an overall financial feasibility of Bordesley when it was discovered that replacing the currently planned 2 x 2.5 MW Jenbacher engines with 1 x 4.5 MW Jenbacher engine would improve engine-output efficiencies as well as provide savings in capital construction costs. The Company is now actively exploring Capex funding options to reach financial close and steady-state production for Bordesley by the end of Q4 2023.

The Company continues to source and conduct due diligence on potential shovel-ready and operating sites that meet its investment criteria, with several flexible-power site acquisition opportunities currently under review. The financial performance of Pyebridge in August 2022 has led the Company to believe that its strategy and objectives are poised for further success and, therefore, we continue to assess new funding opportunities to ensure we are able to support our aggressive acquisition strategy.

Furthermore, the effects of climate change as well as the ongoing conflict in Ukraine are current events that will impact energy prices, specifically gas prices, for the foreseeable future. While we remain confident that our strategy remains sturdy and our projects are financially robust for the 12 months following this report, we will remain vigilant of environmental and socio-economic changes as they occur and pivot our business approach accordingly.

To conclude, I would like to thank our new CEO and his management team for their ongoing commitment in support of the MED business strategy. Their vivacity and drive towards achieving the Company's strategic objectives has assisted the Company in reaching new heights and I look forward to continue working alongside them as we explore new opportunities and establish Mast Energy Developments PLC as a worthy contender in the UK's growing flexible power market.

Financial summary of the MAST Energy Developments PLC Group

The following information is included to highlight the financial performance of the Group in its inaugural period of operations.

Description		Year ended 31 December 2022	Fifteen (15) months ended 31 December 2021
Revenue		1,036,743	3,245
Cost of sales		(778,802)	(34,321)
Administrative expenses		(921,769)	(767,151)
Listing and capital raising fees		(107,676)	(352,061)
Project expenditure		(661,079)	(267,981)
Impairment		(1,288,578)	(300,000)
Other income		86,558	355,659
Finance costs		(98,397)	(46,348)
Loss for the period		(2,733,000)	(1,408,958)

The increase in the loss period-on-period, as disclosed in the table above and in the statement of comprehensive income, is mainly owing to the following reasons:

•              Revenue increased due to the electricity generated at the Pyebridge site. This also directly resulted in the increase in cost of sales.

•              Increase in administrative expenses due mainly to increased professional, legal, audit, management and consulting services rendered during the current period.

•              The decrease in listing costs due to the formal listing being completed on 14 April 2021; current year costs relate to broker, listing and registrar fees.

•              Increase in impairment of the property, plant and equipment of Bordersley Power as a result of lower value in use.

•              Impairment of the Mast Energy Projects Limited's goodwill in the prior financial period, following on from the acquisition of the non-controlling interest on 14 April 2021. As the underlying projects previously held by Mast Energy Projects Limited have been restructured into separate SPVs, controlled directly by the intermediary holding company Sloane Developments Limited, there was no prospective benefit from continued operations of Mast Energy Projects Limited and therefore the goodwill was impaired.

There have been no dividends declared or paid during the current financial period (2021: £ Nil).

REPONSIBILITY STATEMENT

We confirm to the best of our knowledge:

a)    the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

b)   the Directors' Statement includes a fair review of the information required by the Disclosure and Transparency Rule DTR 4.2.7R (indication of important events during the year); and

c)    the Directors' Statement includes a fair review of the information required by the Disclosure and Transparency Rule DTR 4.2.8R (disclosure of related party transactions and changes therein); and

d)   this report contains certain forward-looking statements with respect to the operations, performance, and financial condition of the Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated.

The forward-looking statements reflect knowledge and information available at the date of preparation of this financial report and the Company undertakes no obligation to update these forward-looking statements.

Nothing in this financial report should be construed as a profit forecast.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Group
		Year ended 31 December 2022	Fifteen months ended 31 December 2021
		Audited	Audited
	Note	£	£
Revenue		1,036,743	3,245
Cost of sales		(778,802)	(34,321)
Gross profit/(loss)		257,941	(31,076)
Administrative expenses		(921,769)	(767,151)
Listing and other corporate fees		(107,676)	(352,061)
Project expenditure		(661,079)	(267,981)
Impairment	8	(1,288,578)	(300,000)
Operating loss		(2,721,161)	(1,718,269)
Other income		86,558	355,659
Finance costs		(98,397)	(46,348)
Loss before tax		(2,733,000)	(1,408,958)
Taxation		-	-
Loss for the period		(2,733,000)	(1,408,958)
Total comprehensive loss for the period		(2,733,000)	(1,408,958)
Loss for the period		(2,733,000)	(1,408,958)
Attributable to the owners of the parent		(2,733,000)	(1,312,243)
Attributable to the non-controlling interest		-	(96,715)
Total comprehensive loss for the period		(2,733,000)	(1,408,958)
Attributable to the owners of the parent		(2,733,000)	(1,312,243)
Attributable to the non-controlling interest		-	(96,715)
Loss Per Share
Basic loss per share(pence)	6	(1.36)	(0.80)
Diluted loss per share(pence)	6	(1.36)	(0.80)

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022

		Group
		31 December 2022	31 December 2021
		Audited	Audited
	Note	£	£
Assets
Non‑Current Assets
Property, plant and equipment	7	2,552,837	2,897,909
Intangible assets	8	1,795,683	2,745,273
Total non-current assets		4,348,520	5,643,182
Current Assets
Other receivables		136,801	181,845
Cash and cash equivalents		132,184	1,805,461
Total current assets		268,985	1,987,306
Total Assets		4,617,505	7,630,488
Equity and Liabilities
Equity
Called up share capital	10	217,453	188,717
Share premium account	10	12,653,607	11,682,343
Common control reserve	11	383,048	383,048
Non-controlling interest acquired	11	(4,065,586)	(4,065,586)
Retained deficit		(7,071,778)	(4,338,778)
Attributable to equity holders of the parent		2,116,744	3,849,744
Non-controlling interest		-	-
Total Equity		2,116,744	3,849,744
Liabilities
Non-current Liabilities
Lease liability	7	346,674	289,045
Other financial liabilities	13	243,056	-
Total non-current liabilities		589,730	289,045
Current Liabilities
Loans from related parties	12	1,231,535	2,269,035
Trade and other payables		300,325	259,505
Other financial liabilities	13	354,805	960,686
Lease liability	7	3,980	2,473
Derivative liability	13	20,386	-
Total current liabilities		1,911,031	3,491,699
Total Liabilities		2,500,761	3,780,744
Total Equity and Liabilities		4,617,505	7,630,488

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Share Capital	Share Premium	Common Control Reserve	Capital Contribution Reserve	Non-controlling interest acquired	Retained deficit	Non-controlling interest	Total
	£	£	£	£	£	£	£	£
Balance at 31 December 2020	104,497	2,511,432	383,048	-	-	(2,999,449)	(273,560)	(274,032)
Total comprehensive loss for the period	-	-	-	-	-	(1,031,299)	(34,470)	(1,065,769)
Shares issued on listing	44,320	4,972,515	-	-	-	-	-	5,016,835
Expenditure settled in shares	2,983	169,727	-	-	-	-	-	172,710
Acquisition of non-controlling interest	36,917	4,028,669	-	-	(4,065,586)	(308,030)	308,030	-
Balance at 31 December 2021	188,717	11,682,343	383,048	-	(4,065,586)	(4,338,778)	-	3,849,744
Total comprehensive loss for the period			-	-	-	(2,733,000)	-	(2,733,000)
Loan with holding company settled in shares	28,736	971,264	-	-	-	-	-	1,000,000
Balance at 31 December 2022	217,453	12,653,607	383,048	-	(4,065,586)	(7,071,778)	-	2,116,744

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

		Group
		Year ended 31 December 2022	Fifteen months ended 31 December 2021
		Audited	Audited
	Notes	£	£
Cash flows from operating activities
Loss for the period before taxation		(2,733,000)	(1,408,958)
Loss for the period from incorporation to 31 December 2020		-	343,189
Loss for the period before taxation		(2,733,000)	(1,065,769)
Adjustments for non-cash items:
Non-cash interest accrued		96,828	21,623
Depreciation	7	65,948	9,793
Impairment of intangible assets	8	1,288,578	300,000
Loan waiver - other income		-	(355,397)
Cost settled through the issue of shares		-	172,710
Gain on revaluation of derivatives		(86,558)	-
Other non-cash items		(2,085)	94,192
		(1,370,289)	(822,848)
Movement in working capital
Decrease/(increase) in debtors		45,043	(181,845)
Increase in creditors		40,819	244,999
		85,862	63,154
Net cash outflows from operating activities		(1,284,427)	(759,694)
Cash flows from investing activities
Property, plant and equipment acquired		(79,827)	(1,654,239)
Intangible assets acquired	11	(338,988)	(150,271)
Deferred payment on Pyebridge paid	20	(555,535)	-
Net cash outflows from investing activities		(974,350)	(1,804,510)
Cash flows from financing activities
Proceeds of issue of share capital		-	5,016,835
Lease liability repaid	7	(27,000)	(2,275)
Other financial liabilities (repaid)/received		-	(121,210)
Proceeds from Credit Letter Notes	13	650,000	-
Loans from related parties repaid	12	(37,500)	(523,889)
Net cash flows financing activities		585,500	4,369,461
Net (decrease) / increase in cash and cash equivalents		(1,673,277)	1,805,257
Cash and cash equivalents at beginning of period		1,805,461	204
Cash and cash equivalents at end of the period		132,184	1,805,461

During the financial year the Group issued shares to its shareholder Kibo Mining (Cyprus) Limited in lieu of partial settlement of its loan account. The issued shares amounted to £1,000,000.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

Note 1: General information

MAST Energy Developments PLC ('MAST' or 'MED' or the 'Company') is incorporated in England & Wales as a public limited company. The Company's registered office is located at 55 Ludgate Hill, London, United Kingdom, EC4M 7JW.

The principal activity of MAST, through its subsidiaries (together the 'Group'), is to acquire and develop a portfolio of flexible power plants in the UK and become a multi-asset operator in the rapidly growing Reserve Power market.

The Group has acquired two new sites which will comprise 7.5MW and 2.4MW gas-fuelled power generation plants supported by a Grid Connection Offer and a Gas Connection Offer.

Note 2: Statement of Preparation

The condensed consolidated financial statements are prepared on the historical cost basis, unless otherwise stated. The Group's accounting policies used in the preparation of these financial statements are consistent with those used in the annual financial statements for the year ended 31 December 2021 of the ultimate holding Company, except for the adoption of new or amended standards applicable from 1 January 2021, which had no material impact on the financial statements of the Group.

The condensed consolidated financial statements of the Company have been prepared in compliance with the framework concepts and the measurement and recognition requirements of IAS 34, IFRS as issued by the International Accounting Standards Board.

The condensed consolidated financial statements of the Group is presented in Pounds Sterling, which is the functional and presentation currency for the Group and its related subsidiaries.

The condensed consolidated financial statements do not represent statutory accounts within the meaning of section 435 of the Companies Act 2016.

The condensed consolidated financial statements have not been audited or reviewed by the Group's auditors, thus no assurance is provided therein.

The Directors acknowledge they are responsible for the fair presentation of these condensed consolidated financial statements.

Note 3: Consolidation

The consolidated annual financial statements comprise the financial statements of MAST Energy Developments PLC and its subsidiaries for the year ended 31 December 2022, over which the Company has control.

Control is achieved when the Company:

·    has the power over the investee;

·    is exposed, or has rights, to variable return from its involvement with the investee; and

·    has the ability to use its power to affect its returns.

In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Intragroup balances and any unrealised gains or losses or income or expenses arising from intragroup transactions are eliminated in preparing the Group financial statements, except to the extent they provide evidence of impairment.

The Group accounts for business combinations using the acquisition method of accounting. The cost of the business combination is measured as the aggregate of the fair values of assets given, liabilities incurred or assumed and equity instruments issued. Costs directly attributable to the business combination are expensed as incurred, except the costs to issue debt which are amortised as part of the effective interest and costs to issue equity which are included in equity.

The acquiree's identifiable assets, liabilities and contingent liabilities which meet the recognition conditions of IFRS 3 Business Combinations are recognised at their fair values at acquisition date.

During the financial year two acquisition occurred where ADV 001 Limited (Hindlip Lane) and ARL 018 Limited were acquired and IFRS 3 recognition conditions were applied.

The Group applied merger accounting for the common control transaction that occurred during the creation of the group between Kibo Mining (Cyprus) Limited, Kibo Energy Plc and MAST Energy Projects Limited. In terms of this:

·    the assets and liabilities of the acquiree are recorded at their existing carrying amounts (not fair value);

·    if necessary, adjustments are made to achieve uniform accounting policies;

·    intangible assets and contingent liabilities are recognised only to the extent that they were recognised by the acquiree in accordance with applicable IFRS;

·    no goodwill is recognised. Any difference between the acquirer's cost of investment and the acquiree's equity is presented separately directly in equity as a common control reserve (CCR) on consolidation;

·    any non-controlling interest is measured as a proportionate share of the carrying amounts of the related assets and liabilities (as adjusted to achieve uniform accounting policies); and

·    any expenses of the combination are written off immediately in profit or loss, except for the costs to issue debt which are amortised as part of the effective interest and costs to issue equity which are recognised within equity.

Note 4: Going concern

The financial results have been prepared on the going concern basis that contemplates the continuity of normal business activities, the realisation of assets and the settlement of liabilities in the normal course of business.

In performing the going concern assessment, the Board considered various factors, including the availability of cash and cash equivalents, data relating to working capital requirements for the foreseeable future, cashflows from operational commencement, available information about the future, the possible outcomes of planned events, changes in future conditions, the Ukraine conflict, and the responses to such events and conditions that would be available to the Board.

The Board has, inter alia, considered the following specific factors in determining whether the Group is a going concern:

·    The total comprehensive loss for the year of £2,733,000 compared to £1,408,958 for the preceding 15 month-financial period;

·    Cash and cash equivalents readily available to the Group in the amount of £132,184 in order to pay its creditors and maturing liabilities in the amount of £1,911,031 as and when they fall due and meet its operating costs for the ensuing twelve months; and

·    Whether the Group has available cash resources, or equivalent short term funding opportunities in the foreseeable future, to deploy in developing and growing existing operations or invest in new opportunities.

Following on from the losses incurred in the current financial period, coupled with the net current liability position the Group finds itself in as at December 2022, these conditions, together with those mentioned above, are considered to indicate that a material uncertainty exists that may cast significant doubt on the Group and Company's ability to continue as a going concern. This is largely attributable to the short-term liquidity position that the Group finds itself in as a result of the staggered implementation approach regarding the underlying operations to a point where the operations can positively contribute to the cash requirements of the larger Group.

The Directors have evaluated the Group's liquidity requirements to confirm whether the Group has adequate cash resources to continue as a going concern for the foreseeable future. By considering the net current liability position, and consequently preparing a cash flow forecast covering a period of 12 months from the date of approval of these financial statements, the Directors have concluded that the Group would be able to continue its operations as a going concern.

In response to the net current liability position and to address future cashflow requirements, detailed liquidity improvement initiatives have been identified and are being pursued, with their implementation regularly monitored in order to ensure the Group is able to alleviate the liquidity constraints in the foreseeable future.

Therefore, the ability of the Group to continue as a going concern is dependent on the successful implementation or conclusion of the below noted matters in order to address the liquidity risk the Group faces on an ongoing basis:

·    Successful conclusion of funding requirements of the Group in order to complete construction of the Group's remaining sites;

·    Successful commissioning of the remaining power-generation facilities in order to achieve net-cash positive contributions toward the larger Group;

·    Successful negotiations with Kibo Mining (Cyprus) Limited, relating to the potential deferral of loans payable in the foreseeable future beyond a 12-month period after year-end.

As the Board is confident it would be able to successfully implement the above matters, it has adopted the going concern basis of accounting in preparing the consolidated financial statements.

Note 5: Segmental Reporting

The Group discloses segmental analysis based on its different operations, being Bordersley, Rochdale . ADV 001 (Hindlip Lane), ARL 018 (Stather Road) and Pyebridge

31 December 2022	Bordersley	Rochdale	Pyebridge	ADV001 Hindlip Lane	ARL018 Stather Road	Treasury and Investment	Group
	(£)	(£)	(£)	(£)	(£)	(£)	(£)
Revenue	-	-	1,036,743	-	-	-	1,036,743
Cost of sales	-	-	(778,802)	-	-	-	(778,802)
Impairment	(1,288,578)	-	-	-	-	-	(1,288,578)
Depreciation	(11,938)	-	(52,632)	-	-	(751)	(65,321)
Loss before tax	(1,581,475)	(114,853)	(50,469)	(23,605)	(10,967)	(951,631)	(2,733,000)
Total assets	1,733,554	262,043	2,082,352	265,170	210,907	63,488	4,617,505
Capital expenditure	17,099			57,962		4,766
Total liabilities	(296,984)	(6,897)	(133,650)	-	(109,898)	(1,953,331)	(2,500,761)
31 December 2021			Bordersley	Rochdale	Pyebridge	Treasury and Investment	Group
			(£)	(£)	(£)	(£)	(£)
Revenue			-	-	3,245	-	3,245
Cost of sales			-	-	(34,321)	-	(34,321)
Impairment			-	-	-	(300,000)	(300,000)
Depreciation			(9,793)	-	-	-	(9,793)
Loss before tax			65,821	(15,906)	(88,527)	(1,370,346)	(1,408,958)
Total assets			3,087,261	261,454	2,491,666	1,790,107	7,630,488
Total liabilities			(107,542)	(5,570)	(50,240)	(3,617,410)	(3,780,762)

As the Group currently operates solely from the United Kingdom, consequently there is no segmented disclosure with regard to different geographic areas of operation.

Note 6: Loss per share

Basic loss per share

The basic loss and weighted average number of ordinary shares used for calculation purposes comprise the following:

Basic loss per share		31 December 2022 (£)	31 December 2021 (£)
Loss for the period attributable to equity holders of the parent		(2,733,000)	(1,312,243)
Weighted average number of ordinary shares for the purposes of basic loss per share		200,919,900	164,622,838
Basic loss per ordinary share (pence)		(1.36)	(0.80)

The Group has no dilutive instruments in issue as at year end.

Note 7: Property, plant and equipment

Group	Land	Plant & Machinery	Right of use assets	Computer Equipment	Total
Cost	(£)	(£)	(£)	(£)	(£)
Opening Cost as at 1 January 2021	602,500	2,011,409	293,793	-	2,907,702
Additions	-	75,061	62,090	4,766	141,917
Derecognition as a result of waiver of deferred payment. (Refer Note 20)	-	(421,041)		-	(421,041)
Closing Cost as at 31 December 2022	602,500	1,665,429	355,883	4,766	2,628,578
Accumulated Depreciation ("Acc Depr")	(£)	(£)	(£)	(£)	(£)
Opening Acc Depr as at 1 January 2021	-	-	(9,793)	-	(9,793)
Depreciation	-	(52,632)	(12,565)	(751)	(65,948)
Acc Depr as at 31 December 2022	-	(52,632)	(22,358)	(751)	(75,741)
Carrying Value	(£)	(£)	(£)	(£)	(£)
Carrying value as at 31 December 2022	602,500	1,612,797	333,525	4,015	2,552,837

Right of use asset	31 December 2022(£) Group	31 December 2021(£) Group
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
Opening balance	284,000	-
Additions	62,090	293,793
Depreciation	(12,565)	(9,793)
Closing balance	333,525	284,000
Lease liability
Set out below are the carrying amounts of lease liabilities and the movements during the period:
Opening balance	291,518	-
Additions	60,005	293,793
Interest	26,131	24,725
Repayment	(27,000)	(27,000)
Closing balance	350,654	291,518
Split of lease liability between current and non-current portions:
Non-current	346,674	289,045
Current	3,980	2,473
Total	350,654	291,518

	31 December 2022(£) Group	31 December 2021(£) Group
Future minimum lease payments fall due as follows
- within 1 year	33,960	27,000
- later than 1 year but within 5 years	135,840	108,000
- later than 5 years	756,720	648,000
Subtotal	926,520	783,000
- Unearned future finance charges	(575,866)	(491,481)
Closing balance	350,654	291,519

The Group has two lease contracts for land it shall utilise to construct gas-fuelled power generation plants. The land is located at Bordesley, Liverpool St. Birmingham and Stather Road, Flixborough.

The lease of the land has a lease term of 20 years, with an option to extend for 10 years which the Group has opted to include due to the highly likely nature of extension as at the time of the original assessment.

The Group's obligations under its leases are secured by the lessor's title to the leased assets. The Group's incremental borrowing ranges between 8.44% and 10.38%.

Note 8: Intangible assets

Intangible assets consist of separately identifiable assets, property rights or intellectual property (Bordersley Power) acquired either through business combinations or through separate asset acquisitions. These intangible assets are recognised at the respective fair values of the underlying asset acquired, or where the fair value of the underlying asset acquired is not readily available, the fair value of the consideration.

The following reconciliation serves to summarise the composition of intangible assets as at period end:

Group	Rochdale Power (£)	Bordersley Power (£)	ARL018 Stather Road (£)	ADV001 Hindlip Lane (£)	Total (£)
Carrying value as at 1 January 2021	-	2,595,000	-	-	2,595,000
Acquisition of Rochdale Power Ltd	150,273	-	-	-	150,273
Carrying value as at 31 December 2021	150,273	2,595,000	-	-	2,745,273
Acquisition of ARL018 Stather Road	-	-	91,482	-	91,482
Acquisition of ADV001 Hindlip Lane	-	-	-	247,506	247,506
Impairments		(1,288,578)			(1,288,578)
Carrying value as at 31 December 2022	150,273	1,306,422	91,482	247,506	1,795,683

Sloane Developments Limited (Sloane) acquired a direct 100% equity interest in two projects namely ARL 018 Ltd and ADV 001 Ltd during the financial year. The purchase was treated as an acquisition of assets in terms of IFRS 3 - Business Combinations.

The acquired assets included an intangible asset relating to the property rights for the location where the gas generation peaker plants are planned to be constructed.

The directors performed value in use assessments on each of the projects. The basis for the assessments is the view that each of the projects are distinctive cash generating units. A cash-generating unit or CGU is defined as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

The assessment of the value in use of the intangible assets resulted in an impairment of £1,288,578 being recognised relating to the Bordersley Project. The most significant contributor to the impairment required was the increase of the weighted average cost of capital due to increase in market interest rates.

Note 9: Acquisition of interests in other entities

ADV 001 Ltd - 2022

Sloane Developments (Sloane) acquired a 100% interest in ADV 001 Limited ("Hindlip Lane"), from DKE Flexible Energy Limited, for the installation of a 7.5 MW gas-peaker plant in Buildings Farm, Hindlip Lane, Hindlip, Worcester, WR3 8SB.  

The acquisition purchase price totals £262,500 of which £88,817 is utilised to settle a shareholders loan of the same amount and the remainder of £173,683 is allocated towards purchasing all issued shares of the business. The acquisition purchase price is to be paid from a credit loan obtained from Riverfort Global Opportunities PCC Limited and Sanderson Capital Partners Limited. A further £10,694was paid in cash by Mast Energy Developments Plc ("MED") of which £8,020 is allocated to the purchase price of Hindlip Lane.

The acquisition of land and gas-powered generation facility was accounted for as an asset acquisition at  consolidated level, and not as a business combination in accordance with IFRS 3. Therefore the purchase price has been allocated to assets and liabilities acquired based on their respective fair values as at the date of acquisition.

ARL 018 Ltd - 2022

Sloane Developments (Sloane) acquired a 100% interest in ARL 015 Limited ("Stather Road"), from DKE Flexible Energy Limited, for the installation of a 2.4 MW gas-peaker plant on Land lying on the south side of Stather Road, Flixborough.

The acquisition purchase price totals £87,500 of which £54,882is utilised to settle a shareholders loan of the same amount and the remainder of £32,618 is allocated towards purchasing all issued shares of the business. The acquisition purchase price is to be paid from a credit loan obtained from Riverfort Global Opportunities PCC Limited and Sanderson Capital Partners Limited. A further £10,694 was paid in cash by Mast Energy Developments Plc ("MED") of which £2,673 is allocated to the purchase price of Stather Road.

The acquisition of land and gas-powered generation facility was accounted for as an asset acquisition at  consolidated level, and not as a business combination in accordance with IFRS 3. Therefore the purchase price has been allocated to assets and liabilities acquired based on their respective fair values as at the date of acquisition.

Note 10: Share Capital

The called-up and fully paid share capital of the Company is as follows:

			2022		2021
Allotted, issued and fully paid shares
(2022: 217,452,729 Ordinary shares of £0.001 each)			£217,453		-
(2021: 188,717,097 Ordinary shares of £0.001 each)			-		£188,717
			£217,453		£188,717
	Number of Shares	Ordinary Share Capital (£)		Share Premium (£)
Balance at 31 December 2021	188,717,097	188,717		11,682,343
Partial Settlement of Outstanding Shareholder Loan	28,735,632	28,736		971,264
Balance at 31 December 2022	217,452,729	217,453		12,653,607

All ordinary shares issued have the right to vote, right to receive dividends, a copy of the annual report, and the right to transfer ownership of their shares.

During the year the Company issued shares in partial settlement of shareholders loan in the amount of £1,000,000.

Note 11: Reserves

Common control reserve

The common control reserve is the result of the capital reorganisation between the company, its holding and ultimate holding company during the 2020 financial year. As the reorganisation was outside the scope of IFRS 3, predecessor valuation accounting was applied as a result of the common control transaction.

Non-controlling interest acquired

On 31 July 2020, Sloane Developments Limited, MAST Energy Projects Limited and St. Anderton on Vaal Limited entered into the Share Exchange Agreement relating to the acquisition by Sloane Developments Limited of the remaining 40% of the issued share capital of MAST Energy Projects Limited. Under the Share Exchange Agreement, the Company paid St Anderton on Vaal Limited the sum of £4,065,586 payable by the issue of 36,917,076 ordinary shares of £0.001 each in the Company. Completion of the Share Exchange Agreement was subject to and conditional upon the Admission of Mast Energy Developments Limited to the London Stock Exchange.

Following completion of the IPO on 14 April 2021, the Group acquired the remaining equity interest in MAST Energy Projects Ltd for the consideration equal to 36,917,076 shares at a total value of £4,065,586.

As the controlling stake in the entity had already been acquired, the transaction was seen as a transaction with owners, and the financial impact recognised directly in equity of £4,065,586.

The rationale for the transaction was to acquire the remaining equity within MAST Energy Projects Limited in order to have the exclusive see-through equity interest in the Borderley project, held in the form of royalty and revenue agreements between MAST Energy Projects Limited and Bordersley Power Limited, from which MED could restructure the Group through its SPV's.

Note 12: Loan from related parties

	Group 2022 (£)	Group 2021 (£)
Amounts falling due within one year:
Kibo Mining (Cyprus) Limited	1,231,535	2,269,035
	1,235,535	2,269,035

The loan is unsecured, carries interest at 0%, and is repayable on demand. The carrying value of loans from related parties equals their fair value due mainly to the short term nature of the liability. The loan from Kibo Mining (Cyprus) Ltd was partially settled to the value of £1,000,000 by way of share issue.

Note 13: Other financial and derivative liabilities

Description	Group 2022 (£)	Group 2021 (£)	Company 2022 (£)	Company 2021 (£)
Amounts falling due within one year:
Convertible loan notes	354,805	-	354,805	-
Deferred vendor liability	-	960,686	-	-
Derivative liability	20,386	-	20,386	-
Amounts falling due between one year and five years:
Convertible loan notes	243,056	-	243,056	-
	618,247	960,686	618,247	-

Deferred vendor liability

The deferred vendor liability was settled during the year by mutual agreement between the seller of Pyebridge and MED plc. The settlement took place following agreed costs incurred by MED on behalf of the seller and the eventual waiver of the remaining amounts due in the amount of £421,041.

The settlement was reached as a result of the seller not reaching certain contractual milestones originally agreed to in the purchase agreement of Pyebridge. The deferred payment liability for the purchase was linked to the seller reaching these milestones.

The resulting waiver is treated as price adjustment to the underlying assets for the Company and Group respectively as the fair value of the consideration paid for the assets were reduced by the waiver.

Convertible loan notes

Short term loans relate to two unsecured loan facilities from the institutional investor which are repayable either through the issue of ordinary shares or payment of cash by the Company.

These facilities have repayment periods of 18 and 24 months respectively for each drawdown from the facility. The facilities may be converted at the option of the note holders once certain milestones have been met. At the financial year end 31 December 2022, none of these milestones have been met and no conversion may take place. The earliest conversion may occur during October 2023.

Derivatives

The derivative liability is derived from the convertible credit note loans. The convertible feature within the credit notes enable the noteholders to convert into a fixed number of shares at the Fixed Premium Payment Price (FPPP). This price does have variability, although the FPPP is set at the Reference price, in the event that a share placing occurs at below the Reference price, the FPPP will be the share placing price ("round down" feature). The conversion includes and embedded derivative, as its value moves in relation the share price (through a placing price) and it is not related to the underlying host instrument, the debt. The effect is that the embedded derivative is accounted for separately at fair value.

Note 14: Related Parties

Related parties of the Group comprise subsidiaries, significant shareholders and the Directors.

Relationships

Board of Directors/ Key Management

Name	Relationship (Directors of:)
Paul Venter	St Anderton on Vaal Limited
Louis Coetzee	Kibo Energy PLC and Katoro Gold PLC
Dominic Traynor	Druces LLP
Pieter Krügel	Chief Executive Officer

Other entities over which Directors/key management or their close family have control or significant influence:

St Anderton on Vaal Limited:	St Anderton on Vaal Limited provides consulting services to the Group. The Directors of St Anderton on Vaal Limited are also Directors of Mast Energy Developments PLC.
Kibo Mining (Cyprus) Limited:	Kibo Mining (Cyprus) Limited is the controlling shareholder of Mast Energy Developments PLC.
Ultimate shareholder	Kibo Energy PLC
Significant shareholders:	St Anderton on Vaal Limited
	Kibo Mining (Cyprus) Limited
Associated by fellow directorship:	Katoro Gold PLC

MAST Energy Developments PLC is a shareholder of the following companies and as such are considered related parties:

Directly held subsidiaries:	Sloane Developments Limited
	MAST Energy Projects Limited (dissolved on 24 May 2022)
	Bordersley Power Limited
	Pyebridge Power Limited
	Rochdale Power Limited
	ADV 001 Limited
	ARL 018 LImited

Balances and transactions

Name	Amount 2022(£)	Amount 2021(£)
Kibo Mining (Cyprus) Limited - Loan from related parties owing	1,231,535	2,269,035
St Anderton on Vaal Limited - Consulting services	-	161,000
Kibo Energy PLC - Management and administration services	-	87,000
St Anderton on Vaal Limited - Purchase of Non-Controlling interest	-	4,065,586

Kibo Mining (Cyprus) Limited was issued shares in exchange for partial settlement of £1,000,000 of its loan with the MED Group.

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. The transactions during the period between the Company and its subsidiaries included the settlement of expenditure to/from subsidiaries, working capital funding, and settlement of the Company's liabilities through the issue of equity in subsidiaries. The loans from related parties do not have fixed repayment terms and are unsecured.

Note 15: Subsequent events

As at the date of this report, no significant post statement of financial position events or conditions were identified which required further disclosure or adjustment to the financial results.

Note 16: Commitments and contingencies

The Group does not have identifiable material commitments and contingencies as at the reporting date.

Note 17: Principal risks

The realisation of the various projects is dependent on the successful completion of technical assessments, project development and project implementation and is subject to a number of significant potential risks summarised as follows, and described further below:

•     Funding risk;

•     Regulatory risk;

•     Commodity risk;

•     Development and construction risk;

•     Staffing and key personnel risk; and

•     Information technology risk.

Funding risk

The Group generated revenue of £1,036,743 for the period ended 31 December 2022 and had net assets of £2,116,744 as at 31 December 2022 (31 December 2021: £3,849,744). As at the year end, the Group had liquid assets in the form of cash and cash equivalent and other receivables of £268,985 (31 December 2021: £1,987,306).

The Directors have reviewed budgets, projected cash flows and other relevant information, and on the basis of this review and the rationale set-out below, they are confident that the Group will have adequate financial resources to continue in operational existence for the foreseeable future.  

The Group has sufficient funds for its present working capital requirements for the foreseeable future due to the successful initial public offering and capital raising completed during the year.

The Directors continue to review the Group's options to secure additional funding for its general working capital requirements as well as project financing for commercial production ready sites, alongside its ongoing review of revenue generation from existing operations, potential acquisition targets and corporate development needs. 

The Directors are confident in this light that such funding will be available, although there is no guarantee as to the terms of such funding. In addition, any equity funding may be subject to shareholder approvals in line with legal and regulatory requirements as appropriate.

As a result, the Directors continue to monitor and manage the Group's cash and overheads carefully in the best interests of its shareholders and believe that the Company and the Group will remain a going concern for the foreseeable future.

Regulatory risk

The United Kingdom ("UK") power sector has undergone a number of considerable regulatory changes over the last few years and is now at a state of transition from large fossil-fuel plants to a more diverse range of power generation sources including renewables, small distributed plants and new nuclear. As a result, there is greater regulatory involvement in the structure of the UK power marker than has been the case over the last 20 years. Therefore, there remains a risk that future interventions by Ofgem or Government could have an adverse impact on the underlying assets that the Group manages and/or owns.

Commodity Risk

The assets that the Group manages and owns will receive revenue from the sale of energy onto the wholesale market or to end users at a price linked to the wholesale power market price. Fluctuations in power prices going forward will affect the profitability of the underlying reserve power assets. The Group will also use its skills, capabilities and knowledge of the UK power market in order to optimise these wholesale revenues. The Group's ability to effectively manage price risk and maximise profitability through trading and risk management techniques will have a considerable impact on the revenues and returns.

Development and Construction Risk

The Group will continue to develop new project sites which includes obtaining planning permission, securing land (under option to lease or freehold), and obtaining gas and grid connections. The Group will also oversee the construction of these projects where needed.

Risks to project delivery include damage or disruption to suppliers or to relevant manufacturing or distribution capabilities due to weather, natural disaster, fire, terrorism, pandemic, strikes, or other reasons could impair our ability to deliver projects on time.

Failure to take adequate steps to mitigate the likelihood or potential impact of development and construction setbacks, or to effectively manage such events if they occur, could adversely affect our business or financial results. There are inherent risks that the Group may not ultimately be successful in achieving the full development and construction of every site and sunk costs could be lost. However, the risk is mitigated as the Group targets shovel ready sites that adhere to specific requirements, coupled with experienced senior management team.

Staffing and Key Personnel Risks

Personnel are our only truly sustainable source of competitive advantage and competition for key skills is intense, especially around science, technology, engineering and mathematics (STEM) disciplines. While the Group has good relations with its employees, these relations may be impacted by various factors. The Group may not be successful in attracting, retaining, developing, engaging and inspiring the right people with the right skills to achieve our growth ambitions, which is why staff are encouraged to discuss with management matters of interest to the employees and subjects affecting day-to-day operations of the Group.

Information Technology Risks

The Group relies on IT in all aspects of its business. Any significant disruption or failure, caused by external factors, denial of service, computer viruses or human error could result in a service interruption, accident or misappropriation of confidential information. Process failure, security breach or other operational difficulties may also lead to revenue loss or increased costs, fines, penalties, or additional insurance requirements. The Group continues to implement more cloud-based systems and processes, and improve cyber security protocols and facilities in order to mitigate the risk of data loss or business interruption.

Note 18: Use of Estimates and Judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources.

In particular, there are significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements.

Estimation uncertainty:

Information about estimates and assumptions that may have the most significant effect on recognition and measurement on assets, liabilities and expenses is provided below:

Impairment assessment of property plant and equipment and intangible assets

In applying IAS 36, impairment assessments are performed whenever events or changes in circumstances indicate that the carrying amount of an asset or CGU may not be recoverable. Estimates are made in determining the recoverable amount of assets which includes the estimation of cash flows and discount rates used. In estimating the cash flows, management bases cash flow projections on reasonable and supportable assumptions that represent management's best estimate of the range of economic conditions that will exist over the remaining useful life of the assets. The discount rates used reflect the current market assessment of the time value of money and the risks specific to the assets for which the future cash flow estimates have not been adjusted. Refer to Note 11 for detailed sensitivity analysis related to a potential change in the key estimation uncertainties inherent in the impairment assessment.

Useful life of Intangible assets

Amortisation is charged on a systematic basis over the estimated useful lives of the assets after taking into account the estimated residual values of the assets. Useful life is either the period of time over which the asset is expected to be used or the number of production or similar units expected to be obtained from the use of the asset.

Leases - Estimating the incremental borrowing rate

The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the  right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group 'would have to pay', which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease. The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates.

Useful life of Property, plant and Equipment

The depreciable amounts of assets are allocated on a systematic basis over their useful lives. In determining the depreciable amount, management makes assumptions in respect of the residual value of assets based on the expected estimated amount that the entity would currently obtain from disposing the asset, after deducting the estimated costs of disposal. If an asset is expected to be abandoned, the residual value is estimated at nil. In determining the useful lives of assets, management considers the expected period of use of assets, expected physical wear and tear, legal or similar limits of assets such as rights, condition and location of the asset as well as obsolescence.

Decommissioning and Environmental Rehabilitation Provisions

The Company has set-up a decommissioning provision for the removal of the plant and equipment installed at the Bordersley Site in Liverpool St. Birmingham., the cost of which is based on estimates.

Environmental Rehabilitation Provisions

Estimates are made in determining the present liability of environmental rehabilitation provisions consisting of a restoration provision, decommissioning provision and a residual impact provision. Each of these provisions are based on an estimate of closure costs on reporting date, inflation and discount rates relevant to the calculation and the expected date of closure of operating activities in determining the present value of the total environmental rehabilitation liability.

Critical judgements:

Information about critical judgements that may have the most significant effect on recognition and measurement on assets, liabilities and expenses is provided below:

Going Concern

The Groups current liabilities exceed its current assets as at 31 December 2022, mainly due to the loans from related parties in the amount of £1,231,535 (31 December 2021: £2,269,035) which contributes significantly to the material uncertainty related to the going concern assumption applied in preparation of the financial statements. Management applies judgement in determining whether or not the Group is able to continue as a going concern for the foreseeable future, in identifying the matters which give rise to the existence of the material uncertainty, and in developing responses thereto in order to address the risk of material uncertainty.

Note 17: Financial instruments - Fair value and Risk Management

The carrying amount of all financial assets and liabilities approximates the fair value. Directors consider the carrying value of financial instruments of a short-term nature, that mature in 12 months or less, to approximate the fair value of such assets or liability classes.

The carrying values of longer-term assets are considered to approximate their fair value as these instruments bear interest at interest rates appropriate to the risk profile of the asset or liability class.

The Group does carries derivative liabilities measured in the statement of financial position at fair value at 31 December 2022.

 

END