TIDMGUN
RNS Number : 9096L
Gunsynd PLC
15 January 2021
Gunsynd plc
("Gunsynd" or the "Company")
Final Results for the Year Ended 31 July 2020
Gunsynd (AIM: GUN, AQSE: GUN) is pleased to announce that its
Final Results for the year ended 31 July 2020 will be posted
shortly to shareholders and are available on the Company's website:
http://www.gunsynd.com/ .
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
The Directors of Gunsynd accept responsibility for this
announcement.
For further information please contact:
Gunsynd plc
Hamish Harris / Peter Ruse +44 (0) 78 7958 4153
Cairn Financial Advisers LLP
James Caithie / Liam Murray / Mark Rogers +44 (0) 20 7213 0880
Peterhouse Capital Limited
Lucy Williams +44 (0) 20 7469 0936
CHAIRMAN'S REPORT (INCORPORATING THE STRATEGIC REVIEW)
I am pleased to present the annual report and financial
statements for the year ended 31 July 2020.
Review of Investments
Rincon Resources Pty Ltd
The Company advised in late June 2020 that it had invested
AUD$250,000 (approximately GBP140,000) in Rincon Resources Pty Ltd
("Rincon"), an Australian gold and base metals exploration company.
At the time the Company investment represented approximately 28% of
Rincon.
Rincon Resources is a Western Australian ("WA") focused gold and
base metals company and holds the rights to three highly
prospective projects in WA, with a main focus on the South Telfer
Project, covering 50,000-hectares in the Paterson province. The
South Telfer Project is approximately 12km south of Newcrest
Limited's Telfer mine. Rincon's Laverton and Kiwirrkurra Projects
are also highly prospective gold and base metals projects.
The funds raised by Rincon were used to progress activities
including acquisition of a valuable historical magnetic database,
commence Heritage clearance activities, and final preparations for
initial drill programs at the South Telfer Project, WA.
During November, Rincon issued a convertible loan note ("CLN")
to raise AUD$400,000 to assist it in executing its proposed Initial
Public Offering ("IPO") on the Australian Securities Exchange
("ASX"). Gunsynd participated in the CLN through a further
investment of AUD$100,000 (approximately GBP55,000) which would
convert at a 30% discount to the IPO price of Rincon.
On 18 December 2020, Gunsynd announced that it had invested a
further A$800,000 (approximately GBP450,000) in Rincon as part of
Rincon's IPO on ASX, subscribing for 4 million shares at a price of
20 AUD cents per share. Rincon subsequently listed on the ASX on 21
December 2020 with 51,336,754 shares following completion of a
AUD$6 million raise as part of its IPO. Gunsynd holds 8,461,943
shares in Rincon representing circa 16.5%. Under ASX Listing Rules,
Gunsynd has been required to sign an agreement which restricts
disposal of 2,711,942 of its Rincon holding for a period of 24
months from the date of Rincon listing on ASX.
Rincon owns a 100% interest in three highly prospective copper
and gold projects in Western Australia, the South Telfer, Laverton
and Kiwirrkurra Projects. Each project has been subject to
historical exploration which has identified large outcropping
mineralised systems. Rincon intends on exploring the projects in
order to delineate copper and gold resources. They intend drilling
these three projects during the first half of 2021.
Eagle Mountain Mining Limited
The Company announced, during the 4-month period July-October
2020, that it had acquired 2,563,172 shares in Eagle Mountain
Mining Limited ("Eagle Mountain") for AUD$456,000 (approximately
GBP255,000) representing circa 1.8% of its issued capital. Eagle
Mountain is an ASX listed copper-gold exploration and development
company (ASX: EM2). This investment provides Gunsynd with exposure
to copper exploration which compliments the Company's recent
investment in gold explorer Rincon Resources.
The Company further announced on 11 August 2020 an update from
Eagle Mountain regarding the commencement of its maiden drilling
program which marked an exciting milestone for Eagle Mountain since
it finalised the acquisition of the Oracle Ridge Copper project.
Eagle Mountain had appointed Boart Longyear Limited ("Boart
Longyear") to undertake a maiden surface diamond drilling program.
Boart Longyear is a global drilling company which has previously
undertaken exploration programs at Oracle Ridge and was chosen for
its experience onsite and safety management programme which
includes stringent procedures for the management of COVID-19.
The drilling programme targeted extensions to high-grade
portions of the existing Mineral Resource Estimate ("MRE") in three
priority zones. The zones were supported by a combination of:
-- previous drilling outside the existing MRE which has
intersected mineralisation;
-- unconstrained mineral resources; and
-- a magnetic anomaly.
During November 2020, Eagle Mountain announced a further update
detailing a new broad zone of copper mineralisation identified at
Oracle Ridge following the maiden drilling programme. The copper
mineralisation was encountered in partly assayed drill hole
WT-20-05. Significant assay results included: 15.1m @ 1.72% Cu,
16.87g/t Ag, 0.38g/t Au from 313.9m including:
- 3.45m @ 1.89% Cu, 15.97g/t Ag, 0.35g/t Au from 313.9m; and
- 8.41m @ 2.46% Cu, 25.09g/t Ag, 0.56g/t Au from 321.29m
This newly identified zone of broad copper mineralisation is
more than 100m from the nearest significant assay in a sparsely
drilled area. Copper sulphide mineralisation was observed in the
recently drilled adjacent hole WT-20-10, with detailed logging and
assays pending.
In December 2020, Eagle Mountain announced a series of drilling
results from Oracle Ridge, including the discovery of high-grade
breccia mineralisation with notable assay results of 3.57m at 2.18%
Cu, 19.49g/t Ag and 0.89g/t Au from 245.43m (WT-20-06).
Intersections in hole WT-20-06 are part of a 39m thick zone
averaging >1% Cu. A 13.3m thick zone averaging 2.43% Cu, 52.6
g/t Ag and 0.94 g/t Au. 45m overall diluted mineralised zone from
317m averages 1.33% Cu, 25.0 g/t Ag and 0.38 g/t Au. Hole WT-20-10
intercepted some of the highest-grade copper, gold and silver
encountered in all drilling at Oracle Ridge. These breccia
occurrences illustrate the potential for a deeper porphyry system
below the Leatherwood granitic intrusive.
Considering these discoveries across holes WT-20-06 and WT-20-10
Eagle Mountain believes Breccia zones have the potential to run
deep and the very high-grade nature of mineralisation encountered
thus far set these breccias as priority exploration targets. Eagle
Mountain plans for drilling to resume in early January after the
festive period.
In addition to this, Eagle Mountain released its Maiden JORC
Resource Estimate for Oracle Ridge 12.2Mt at 1.51% Cu for 184kt
Contained Copper.
Rogue Baron Limited ("Rogue Baron")
The Company announced on 2 July 2020 that Rogue Baron had
completed a share exchange agreement with Human Brands, a US-based
premium spirits company in which Gunsynd had previously held a
convertible loan note.
Share exchange agreement
On 2 July 2020, Rogue Baron completed a share exchange agreement
with Human Brands to acquire the following subsidiaries: Shinju
Whiskey LLC; Shinju Spirits Inc; Mazeray Corporation; STI Signature
Spirits Group LLC and Legacy Retail Group LLC. These subsidiaries
hold the Shinju, Mazeray and Copa Imperial Brands as well as a 52%
interest in Bin 1301 wine bar in Washington DC. The consideration
for the sale was 36,247,500 ordinary shares in Rogue Baron at a
price of 7.8 pence per ordinary share.
Deed of Novation
A deed of novation was entered into which transferred Gunsynd's
convertible loan note from Human Brands to Rogue Baron. It will
accrue interest at 12% per annum, be unsecured and repayable on 31
March 2021. Gunsynd increased the convertible loan note by a
further GBP120,000 and to its current amount of approximately
GBP500,000 which can be converted at any time at the election of
Gunsynd into ordinary shares of Rogue Baron at a price per share
determined by dividing GBP1,616,304 (representing the agreed
valuation of the ordinary share capital of Rogue Baron) by the
total number of ordinary shares in Rogue Baron in issue immediately
prior to conversion. Under the novation, various future capital
raising fees payable to Gunsynd have also been transferred to Rogue
Baron.
General Update
In spite of the many challenges COVID-19 has presented in 2020,
Rogue Baron's flagship brand, Shinju Japanese Whisky ("Shinju"),
continues to grow at a rapid pace despite the unprecedented
headwinds facing the hospitality sector in particular.
Shinju, which was launched at the end of 2018, sold circa 1,000
cases in 2019. In the first half of 2020, even with customer
accounts shut down for nearly two months, sales of Shinju were up
57% on the same period in the prior year. Shortly after customer
accounts began reopening, Rogue Baron sold its entire remaining
stock of circa 250 cases in a matter of weeks. Even with COVID-19
related lockdowns, Rogue Baron had, by the end of September, sold
the same number of cases as in the whole of 2019. This was despite
on-premises sales being decimated across the USA and not being
totally offset by a rise in off-premises sales. Industry issues
were not just limited to sales: bottlers and distillers also shut
in many cases causing supply issues. These issues also affected
Shinju. After completely selling out of Shinju by September, Rogue
Baron's latest production run of one container (circa 1,000 cases
of six bottles) was completed on 6 December 2020. We have been
informed that pre-orders for this entire container have been made
in the USA prior to the container arriving on American soil. Rogue
Baron is now in the process of ordering additional bottles and
placing another order with its distillery. This growth is happening
despite many key states in the USA, such as
California, being in a strict lockdown.
Shinju had previously received a large boost in publicity by
being mentioned in the industry magazine www.liquor.com article
"The 10 best Japanese Whiskies to drink in 2020". To be mentioned
alongside such well known and highly regarded brands as Yamazaki
12-year-old and Hakushu 12-year is a considerable achievement for a
new brand with comparatively small sales to such behemoths from
Suntory.
https://www.liquor.com/best-japanese-whiskies-5078590
In November 2020, Rogue Baron hired Speakeasy Wine & Spirits
("Speakeasy"), which is a brand consultancy company with a
speciality in helping specifically chosen brands expand
distribution across the USA. Shinju was sold in six USA states in
2020; Washington DC, Maryland, New York, New Jersey, Florida, and
California. Starting in Q1 2021, Shinju is expected to be selling
into an additional six: Connecticut, Arizona, Texas, Illinois,
Colorado, and Nevada, including possibly some significant accounts
in Las Vegas. These twelve states account for over 47% of the USA
population.
Rogue Baron has already had indicative interest via the
Speakeasy distribution network (and not including its current
distribution network) in between 400 and 600 cases of a new
subsequent container to be delivered in early 2021.
Shinju has also just been added to two of the largest
Direct-to-Consumer outlets in the USA, ReserveBar and Drizly, which
will make Shinju available to consumers in 35 USA States. The
relaxing of liquor regulations due to COVID-19 has now made
Direct-to-Consumer liquor sales more popular than ever. Rabobank
estimates that USA online alcohol sales reached USD 2.6bn in 2019,
growing by 22% year on year. Shinju plans to take advantage of this
growth.
With respect to the tequila market, American basketball player
Lebron James has become the latest star to join the agave spirits
sector through an investment in Lobos 1707 Tequila and mezcal.
Lobos 1707 Tequila Extra Añejo is priced at US$149.99 per 750ml.
This gives an indication of the premium prices which can be charged
for quality tequila. He joins the likes of Justin Timberlake,
George Clooney, Chris North, P Diddy, AC/DC and Carlos Santana to
have invested in or promoted products in the tequila and mezcal
space. We believe this, alongside the strong growth in the tequila
sub category in the last few years, bodes well for the future
growth of the category and confirms that tequila is moving from a
student shot drink to a premium (and even super premium) sipping
drink. This trend is welcome given the intended launch of Rogue
Baron's Copa Imperial extra anejo tequila in the second half of
2021.
Peterhouse Capital has been appointed as corporate adviser and
broker for the proposed admission to trading on the Aquis Stock
Exchange Growth Market of Rogue Baron. The admission document is in
the final stages of drafting and submission to Aquis with admission
to Aquis targeted for Q1 2021.
Angold Resources Limited ("Angold")
Angold is an exploration and development company targeting
large-scale mineral systems in the proven districts of the Ontario,
Maricunga and Nevada. Angold owns a 100% interest in the South-Bay
Uchi, Dorado and Cordillera projects, and certain claims that
append the optioned Iron Butte project.
On 30 September 2020, the Company announced that it had invested
CAD$100,000 (approximately GBP58,000) into gold exploration company
Federal Gold Corp which was subsequently renamed Angold Resources
Limited following the completion of the reverse takeover of ZTR
Acquisition Corp (ZTR.H: APH) ("ZTR") in which Gunsynd had an
existing holding. On 31 December 2020, the common shares of Angold
began trading on the TSX Venture Exchange ("TSXV"), under the
ticker symbol TSXV: AAU.
Empress Royalty Corp ("Empress")
Empress is a precious metals royalty and streaming company
focussed on the creation of financing solutions for mining
companies. In October 2020, Gunsynd announced that it has invested
CAD$250,000 (approximately GBP146,000) in Empress which had an
existing portfolio of 13 gold royalties and was in the process of
conducting due diligence for the acquisition of three near-term
cash producing gold and silver investments. Empress successfully
raised C$8,000,000 in October 2020. Proceeds of the financing were
to fund the new investments mentioned above, all of which are
expected to be revenue generating within 12 months.
During November 2020, Empress announced that it had completed
the acquisition of one of the aforementioned investments,
increasing its portfolio to 14 precious metal royalties, a combined
1% Net Smelter Return ("NSR") royalty on production from the Pinos
gold and silver project in Mexico ("Pinos") for an aggregate
consideration of US$1,500,000. The acquisition was a combination of
a newly created 0.5% NSR royalty on the Pinos project from
Candelaria Mining Corp ("Candelaria") (TSXV: CAND) for
consideration of US$750,000 and the purchase of an additional 0.5%
NSR royalty on the Project from an existing royalty holder on the
same terms and conditions. Empress' royalties create a direct real
property interest in the project that will continue in perpetuity
and registered against title.
Historical records indicate over 800,000 ounces of gold have
been produced from the Pinos district. Candelaria currently has
Indicated resource of 175,697 tonnes at a grade of 4.7 grams per
tonne of gold equivalent estimated to contain 26,358 ounces of gold
equivalent and the Inferred resource a further 529,267 tonnes at a
grade of 4.6 grams per tonne gold equivalent estimated to contain
56,146 ounces of gold equivalent. The 2018 Preliminary Economic
Assessment ("PEA") plans for average yearly production of circa
12,700 ounces gold equivalent for a life of mine of seven years
with potential for growth, at both depth and along strike, and it
is estimated that 80% of the district has yet to be explored.
On 29 December 2020 Empress began trading on the TSX Venture
Exchange ("TSXV"), under the ticker symbol TSXV: EMPR.
Sunshine Minerals Limited ("Sunshine")
On 21 August 2020, the Company announced that Malachite
Resources Limited, which is listed on the ASX (renamed Pacific
Nickel Mines Limited; ASX:PNM "Pacific Nickel"), made an
announcement regarding the acquisition of the 85% of Sunshine
Minerals Limited (a private company incorporated in the Solomon
Islands) it did not already own (the "Transaction"). Pacific Nickel
had previously acquired a 15% shareholding in Sunshine.
In the announcement of 21 August 2020, Gunsynd stated it would,
subject to completion of the Transaction, receive 1,262,967 Upfront
Consideration Shares in Pacific Nickel and, subject to further
conditions, 1,641,856 Deferred Consideration Shares. Gunsynd has
now received a holding statement for the Upfront Consideration
Shares. These Upfront Consideration Shares are subject to an escrow
period which applies from completion until the earlier of: (a) the
date 12 months from completion; or (b) the date 10 business days
after the Mines Department grants Sunshine Nickel Limited a mining
lease for PL 01-18.
Kolosori Nickel Limited ("Kolosori")
As announced on 26 October 2020, Gunsynd has conditionally sold
its stake in Kolosori to Malachite Resources Limited (renamed
Pacific Nickel) and will, subject to completion of the Transaction,
receive 682,790 Upfront Consideration Shares in Pacific Nickel and,
subject to further conditions, 1,137,984 Deferred Consideration
Shares in Pacific Nickel. Conditional on issue, these shares will
be subject to escrow.
Low 6 Limited ("Low6)
Gunsynd announced on 14 December 2020 it had invested GBP200,010
in Low6, a UK-based, influencer-led, B2B pool betting platform for
franchises around the world. Low6 provides a white-labelled mobile
platform to its partners which enables them to offer a pooled
sports betting experience to their app users and allows users to
bet with each other. Under its B2B model, Low6 partners with a
sports team/franchise, such as a UK football club. The model
reduces customer acquisition costs and strengthens brand and
customer loyalty, which enhances customer retention. Low6 can
either embed its platform within its partners' apps or build the
app for its partners.
Low6 has a number of significant partnerships including Yinzcam
Inc. which has 90+ million installs of its mobile sports and events
apps world-wide and currently serves 190+ professional teams,
leagues, events and venues in the US, Canada, Spain and Australia.
Low6 has raised over GBP8 million to date and expects to raise
additional funds through a pre-IPO funding round with a view to
completing an IPO at some stage throughout 2021.
Oyster Oil and Gas Limited ("Oyster")
The Company announced on 29 November 2019 that it had entered
into a binding term sheet ("Term Sheet") with Sajawin Pty Ltd
("Sajawin") to conditionally sell all of its shares in Oyster for a
total consideration of approximately GBP260,000. Gunsynd received
GBP20,000 of the consideration.
The Company further advised in May 2020 it had agreed with
Sajawin to extend the deadline for the unmet Conditions Precedent
of the Term Sheet, through a share purchase variation agreement
term sheet from 30 April 2020 to 30 October 2020. The Conditions
Precedent have not been met as the Madagascar government has yet to
renew the licence. The investment was written down by GBP96,000 to
reflect the fall in the price oil over the last twelve months. The
Company will provide further updates as they arise.
Overview
All of our investments are minority investments. Whilst we may
offer advice to management of investee companies in this regard,
they can and sometimes do ignore such advice. Similarly, private
companies don't have the disclosure requirements of public
companies and are under no obligation to keep us constantly
updated. it should be noted that the Company does not operate its
investment projects/companies on a day-to-day basis and whilst the
Board looks to structure investments in a format where Gunsynd can
obtain a high level of oversight (including at board level) and use
legal agreements to provide control mechanisms to protect the
Company's investments, there is a risk that the operator does not
meet deadlines or budgets, fails to pursue the appropriate
strategy, does not adhere to the legal agreements in place or does
not provide accurate or sufficient information to Gunsynd.
Decisions are ultimately made by investee companies not by us.
The level of administrative costs in the year can fluctuate
significantly depending on the level of costs in the Company and
can fluctuate significantly depending on the level of activity,
both with regard to the due diligence work carried out on
acquisitions and disposals and in managing project investments.
Finance Review
The Company made a loss for the year of GBP991,000 (2019: loss
GBP558,000) after taxation, which included an impairment charge of
financial investments of GBP716,000 (2019: GBP106,000) being
GBP400,000 in respect of Brazil Tungsten Ltd; GBP220,000 (2019:
GBPnil) in respect of Sunshine Minerals and GBP96,000 (2019:
GBP6,000) write down in the Oyster investment. The Company had net
assets of GBP2,470,000 (2019: GBP2,363,000) at 31 July 2020, and
cash balances of GBP838,000 (2019: GBP568,000).
Prior Year Restatement
During the year, we have reviewed the prior year accounting
treatment of the investment in Oyster Oil & Gas Ltd, which was
classified as an investment in associate and equity accounted.
Following this review, we have concluded that, as the Company meets
the definition of an investment entity, equity accounting does not
apply and the investment should be treated as a financial asset at
fair value through profit or loss in accordance with IFRS 9.
As a result of the above, a prior year restatement in respect of
the classification of the investment in Oyster Oil & Gas Ltd
has been reflected within the financial statements. See Note 23 for
details of the impact on the financial statements. There was no
impact on profit or loss.
Outlook
The Gunsynd Board has been able to make progress in a number of
areas, not least its new investments in Rincon, Eagle Mountain and
others plus the disposal of the investments in Sunshine Minerals,
Kolosori and Bunker Hill, the latter being at a very large premium
to the cost price. The Board is also particularly pleased that
three of our private investments completed an IPO in Q4 2020 at
significant premiums to our original entry point.
Following the fundraisings announced during the year and post
year end together totalling circa GBP2.3 million before expenses,
the Company is now well funded for the foreseeable future.
The Board is conscious of the economic dislocation caused by the
COVID-19 pandemic and expect that it may have an effect on parts of
our investment portfolio at least in the short term. Having said
that, with so much liquidity in the market and a strong possibility
of a robust economic recovery as the world looks towards mass
vaccination against the COVID-19 virus we believe this is bullish
for commodities. A Biden controlled senate will possibly have major
implications for the US regulatory and tax landscape given the
Democrats' predilection towards large, even if unaffordable,
spending increases and higher business taxes. Should this occur it
would possibly be likely to lead to USD weakness which in turn
would be even more bullish for commodities. It is also often
glossed over that whilst some commodities are near all- time highs,
others like nickel are nowhere near such levels.
The Company's pivot away from a previous focus of oil and gas
towards gold, copper and nickel has, at this time, paid benefits.
Life, however, can throw up surprises. Whilst we may think a
commodity bull run may continue in the short to medium term, we
recognise this is far from a one way bet. To this end, whilst we
have a heavy portfolio weight in natural resources, we also have
diversified into other areas and have a healthy cash balance.
As Warren Buffet said : "Be fearful when others are greedy, and
greedy when others are fearful," advice we keep in mind. The utter
decimation of the hospitality industry arising from COVID-19
lockdowns is a case in point. In a volatile world we are confident
opportunities in line with our investment policy will appear and we
are in a strong position to take advantage of them.
Gunsynd continues to look at investments in line with its
investment policy. Such investment(s) if undertaken may or may not
lead to a reverse takeover .
The Board would also like to take this opportunity to thank
shareholders for their continued support in a time of stress,
uncertainty and hardship for so many in the country.
s172 Statement
The Directors continue to act in a way that they consider, in
good faith, to be most likely to promote the success of the Company
for the benefits of the members as a whole, and in doing so have
regard, amongst other matters to:
-- the likely consequences of any decision in the long term;
-- the interests of the Company's employees;
-- the need to foster the Company's business relationships with
suppliers, customers and others;
-- the impact of the Company's operations on the community as
well as the environment;
-- the need to act fairly as between members of the Company,
and
-- the desirability of the Company maintaining a reputation for
high standards of business conduct
The Board has always recognised the relationships with key
stakeholders as being central to the long-term success of the
business and therefore seeks active engagement with all stakeholder
groups, to understand and respect their views, in particular of
those with the communities in which it invests, its host
governments, employees and suppliers.
Details of the Board's decisions for the year ending 31 July
2020 to promote long-term success, and how it engaged with
stakeholders and considered their interests when making those
decisions, can be found throughout the Chairman's Statement,
Directors' Report and Corporate Governance Statements.
Hamish Harris
Chairman
15 January 2021
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 31 JULY
2020
2020 2019
(restated)
Note GBP000 GBP000
--------------------------------------------------- ------ --------- ------------
Continuing operations
Income
Unrealised gain/(loss) on financial investments 11 176 (224)
Realised (loss)/gain on financial investments 11 (9) 35
167 (189)
Administrative expenses
Salaries and other staff costs 6 (186) (176)
Other costs 8 (278) (171)
Share based payment charge 19 (7) -
--------------------------------------------------- ------ --------- ------------
Total administrative expenses (471) (347)
Impairment of financial investments 11 (716) (106)
Other income 7 - 50
Finance income 29 34
(Loss) before tax (991) (558)
Taxation 9 - -
--------------------------------------------------- ------ --------- ------------
(Loss) for the period attributable to equity
shareholders of the Company (991) (558)
--------------------------------------------------- ------ --------- ------------
Other comprehensive (expenditure) for the period - -
net of tax
Total comprehensive (expenditure) for the period (991) (558)
--------------------------------------------------- ------ --------- ------------
(Loss) per ordinary share
Basic (pence) 10 (1.064) (0.931)
Diluted (pence) (1.064) (0.931)
--------------------------------------------------- ------ --------- ------------
STATEMENT OF FINANCIAL POSITION AS AT 31 JULY 2020
2020 2019
(restated)
Note GBP000 GBP000
----------------------------------------------- ------ ---------- ------------
ASSETS
Non-current assets
Financial investments 11 1,493 1,588
Trade and other receivables 12 56 -
Total non-current assets 1,549 1,588
----------------------------------------------- ------ ---------- ------------
Current assets
Trade and other receivables 12 181 333
Cash and cash equivalents 17 838 568
----------------------------------------------- ------ ---------- ------------
Total current assets 1,019 901
----------------------------------------------- ------ ---------- ------------
Total assets 2,568 2,489
----------------------------------------------- ------ ---------- ------------
Current liabilities
Trade and other payables 13 (98) (126)
Total current liabilities (98) (126)
----------------------------------------------- ------ ---------- ------------
Total liabilities (98) (126)
----------------------------------------------- ------ ---------- ------------
Net assets 2,470 2,363
----------------------------------------------- ------ ---------- ------------
Equity attributable to equity holders of the
company
Ordinary share capital 14 216 633
Deferred share capital 14 2,299 1,729
Share premium reserve 14 11,828 10,890
Share based payments reserve 192 205
Retained earnings (12,065) (11,094)
Total equity 2,470 2,363
----------------------------------------------- ------ ---------- ------------
STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31 JULY 2020
Deferred Share Share-based
Share Share premium payments Retained
capital capital reserve reserve earnings Total
GBP000 GBP 000 GBP000 GBP000 GBP000 GBP000
------------------------- --------- ---------- --------- ------------- ---------- --------
At 31 July 2018 489 1,729 10,536 234 (10,565) 2,423
------------------------- --------- ---------- --------- ------------- ---------- --------
Loss for the year - - - - (558) (558)
------------------------- --------- ---------- --------- ------------- ---------- --------
Total comprehensive
income for the period - - - - (558) (558)
Transactions with
owners:
Issue of share capital 144 - 393 - - 537
Share issue costs - - (39) - - (39)
Share options lapsed - - - (29) 29 -
At 31 July 2019 633 1,729 10,890 205 (11,094) 2,363
------------------------- --------- ---------- --------- ------------- ---------- --------
Loss for the year - - - - (991) (991)
------------------------- --------- ---------- --------- ------------- ---------- --------
Total comprehensive
income for the period - - - - (991) (991)
Transactions with
owners:
Share split (570) 570 - - - -
Issue of share capital 153 - 1,016 - - 1,169
Share issue costs - - (78) - - (78)
Share options issued - - - 7 - 7
Share options lapsed - - - (20) 20 -
At 31 July 2020 216 2,299 11,828 192 (12,065) 2,470
------------------------- --------- ---------- --------- ------------- ---------- --------
STATEMENT OF CASH FLOWS FOR THE YEARED 31 JULY 2020
2020 2019
(restated)
Note GBP000 GBP000
----------------------------------------------------------------- ------ -------- ------------
Cash flow from operating activities
(Loss) after tax (991) (558)
Tax on losses - -
Finance income net of finance costs (29) (34)
Unrealised (gain)/loss on revaluation of financial investments (176) 224
Realised loss/(gain) on sale of financial investments 9 (35)
Share based payment 7 -
Impairment provision 716 106
Foreign exchange movements 7 -
Changes in working capital:
Decrease/(increase) in trade and other receivables 45 (30)
(Decrease) in trade and other payables (28) (182)
Cash outflow from operations (440) (509)
Taxation received - -
----------------------------------------------------------------- ------ -------- ------------
Net cash outflow from operating activities (440) (509)
----------------------------------------------------------------- ------ -------- ------------
Cash flow from investing activities
Payments for financial investments 11 (509) (358)
Disposal proceeds from sale of financial investments 11 154 600
Unsecured loans to investee company (26) -
Net cash (outflow)/inflow from investing activities (381) 242
----------------------------------------------------------------- ------ -------- ------------
Cash flows from financing activities
Proceeds on issuing of ordinary shares 14 1,169 537
Cost of issue of ordinary shares (78) (39)
----------------------------------------------------------------- ------ -------- ------------
Net cash inflow from financing activities 1,091 498
----------------------------------------------------------------- ------ -------- ------------
Net increase in cash and cash equivalents 18 270 231
Cash and cash equivalents at the beginning of the year 568 337
Cash and cash equivalents at the end of the year 18 838 568
----------------------------------------------------------------- ------ -------- ------------
NOTES TO THE FINANCIAL STATEMENTS
1 Presentation of the financial statements
Description of business & Investing Policy
Gunsynd plc is public limited company domiciled in the United
Kingdom. The Company's registered office is 78 Pall Mall, London
SW1Y 5ES.
The Company's Investing Policy is to invest in and/or acquire
companies and/or projects principally within the natural resources
sector which the Board considers, in its opinion, has potential for
growth. The Company will consider opportunities in all sectors as
they arise if the Board considers there is an opportunity to
generate potential value for Shareholders. The geographical focus
will primarily be in Europe, however, investments may also be
considered in other regions to the extent that the Board considers
that valuable opportunities exist and potential value can be
achieved.
Where appropriate, the Board may seek to invest in businesses
where it may influence the business at a board level, add their
expertise to the management of the business, and utilise their
industry relationships and access to finance.
The Company's interests in an investment and/or acquisition may
range from a minority position to full ownership and may comprise
one investment or multiple investments. The investments may be in
either quoted or unquoted companies; be made by direct acquisitions
or farm-ins; and may be in companies, partnerships, earn-in joint
ventures, debt or other loan structures, joint ventures or direct
or indirect interests in assets or projects. The Board may focus on
investments where intrinsic value may be achieved from the
restructuring of investments or merger of complementary
businesses.
The Board expects that investments will typically be held for
the medium to long term, although short term disposal of assets
cannot be ruled out if there is an opportunity to generate a return
for Shareholders. The Board will place no minimum or maximum limit
on the length of time that any investment may be held. The Company
may be both an active and a passive investor depending on the
nature of the individual investment. There is no limit on the
number of projects into which the Company may invest, and the
Company's financial resources may be invested in a number of
propositions or in just one investment, which may be deemed to be a
reverse takeover under the AIM Rules. The Board intends to mitigate
risk by appropriate due diligence and transaction analysis. Any
transaction constituting a reverse takeover under the AIM Rules
will also require Shareholder approval. The Board considers that,
as investments are made and new investment opportunities arise,
further funding of the Company may also be required.
Where the Company builds a portfolio of related assets, it is
possible that there may be cross holdings between such assets. The
Company does not currently intend to fund any investments with debt
or other borrowings but may do so if appropriate. Investments in
early stage assets are expected to be mainly in the form of equity,
with debt potentially being raised later to fund the development of
such assets. Investments in later stage assets are more likely to
include an element of debt to equity gearing. The Board may also
offer New Ordinary Shares by way of consideration as well as cash,
thereby helping to preserve the Company's cash for working capital
and as a reserve against unforeseen contingencies including, for
example, delays in collecting accounts receivable, unexpected
changes in the economic environment and operational problems.
Investments may be made in all types of assets and there will be
no investment restrictions on the type of investment that the
Company might make or the type of opportunity that may be
considered. The Company may consider possible opportunities
anywhere in the world.
The Board will conduct initial due diligence appraisals of
potential business or projects and, where they believe further
investigation is warranted, intend to appoint appropriately
qualified persons to assist. The Board believes its expertise will
enable it to determine quickly which opportunities could be viable
and so progress quickly to formal due diligence. The Company will
not have a separate investment manager.
Compliance with applicable law and IFRS
The financial statements have been prepared in accordance with
the Companies Act 2006 and International Accounting Standards (IAS)
and International Financial Reporting Standards (IFRS) and related
interpretations, as adopted by the European Union.
Composition of the financial statements
The Company financial statements are drawn up in Sterling, the
functional currency of Gunsynd plc and in accordance with IFRS
accounting presentation. The level of rounding for financial
information is the nearest thousand pounds.
Accounting convention
The financial statements have been prepared using the historical
cost convention, as modified by the revaluation of certain items,
as stated in the accounting policies.
Basis of preparation - Going concern
The financial statements have been prepared on a going concern
basis, notwithstanding the loss for the year ended 31 July 2020.
This basis assumes that the company will have sufficient funding to
enable it to continue to operate for the foreseeable future and the
Directors have taken steps to ensure that they believe that the
going concern basis of preparation remains appropriate.
The Company made a loss for the year of GBP991,000 (2019: loss
GBP558,000) after taxation. The Company had net assets of
GBP2,470,000 (2019: GBP2,363,000) and cash balances of GBP838,000
(2019: GBP568,000) at 31 July 2020. The Directors have prepared
financial forecasts which cover a period of at least 12 months from
date that these financial statements are approved to 30 December
2021. These forecasts show that the Company expects to have
sufficient financial resources to continue to operate as a going
concern.
In forming the conclusion that it is appropriate to prepare the
financial statements on a going concern basis the Directors have
made the following assumptions that are relevant to the next twelve
months:
- In the event that the Company's investments require further
funding, sufficient funding can be obtained; and
- In the event that operating expenditure increases
significantly as a result of successful progress with regards to
the Company's investments, sufficient funding can be obtained.
The cost structure of the Company comprises a high proportion of
discretionary spend and therefore in the event that cash flows
become constrained, costs can be quickly reduced to enable the
Company to operate within its available funding. As a junior
investment exploration company, the Directors are aware that the
Company must go to the marketplace to raise cash to meet its
investment plans, and/or consider liquidation of its investments
and/or assets as is deemed appropriate. The Company has previously
constantly demonstrated its ability to raise further cash by way of
completing placings during the prior years, and are confident of
further equity fund raising should the company require such cash
injection. Therefore they are confident that existing cash
balances, along with the any new funding would be adequate to
ensure that costs can be covered.
Consequently, the Directors have a reasonable expectation that
the Company has adequate resources to continue to operate for the
foreseeable future and that it remains appropriate for the
financial statements to be prepared on a going concern basis.
Financial period
These financial statements cover the financial year from 1
August 2019 to 31 July 2020, with comparative figures for the
financial year from 1 August 2018 to 31 July 2019.
Accounting principles and policies
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
The financial statements have been prepared in accordance with
the Company's accounting policies approved by the Board and signed
on their behalf by Hamish Harris and Donald Strang, and described
in Note 2, 'Accounting principles and policies'. Information on the
application of these accounting policies, including areas of
estimation and judgement is given in Note 3, 'Key accounting
judgements and estimates. Where appropriate, comparative figures
are reclassified to ensure a consistent presentation with current
year information.
2 Accounting principles and policies
Revenue
Revenue is recognised when persuasive evidence of an arrangement
exists, delivery of products has occurred or services have been
rendered, prices are fixed or determinable and there is a
probability that economic benefits will flow to the Company.
Segment 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. Further details are set out in Note 5.
Share capital
Financial instruments issued by the Company 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.
Share-based payments
Where equity settled share options are awarded to employees, the
fair value of the options at the date of grant is charged to the
statement of comprehensive income over the vesting period.
Non-market vesting conditions are taken into account by adjusting
the number of equity instruments expected to vest at each balance
sheet date so that, ultimately, the cumulative amount recognised
over the vesting period is based on the number of options that
eventually vest.
Market vesting conditions are factored into the fair value of
the options granted. As long as all other vesting conditions are
satisfied, a charge is made irrespective of whether the market
vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition.
Prior year restatement
During the year, the prior year accounting treatment of the
investment in Oyster Oil & Gas Ltd, which was classified as an
investment in associate and equity accounted, has been revisited.
As the Company meets the definition of an investment entity, equity
accounting does not apply and the investment should be treated as a
financial asset at fair value through profit or loss in accordance
with IFRS 9. As a result, a prior year restatement in respect of
the classification of the investment in Oyster Oil & Gas Ltd
has been reflected within the financial statements. See Note 23 for
details of the impact on the financial statements.
Foreign exchange
Transactions in currencies other than Sterling are recorded at
the rates of exchange prevailing on the dates of the transactions.
At each balance sheet date, monetary assets and liabilities that
are denominated in foreign currencies are retranslated at the rates
prevailing on the balance sheet date. Gains and losses arising on
retranslation are included in the income statement for the
period.
Fair value measurement
IFRS 13 establishes a single source of guidance for all fair
value measurements. IFRS 13 does not change when an entity is
required to use fair value, but rather provides guidance on how to
measure fair value under IFRS when fair value is required or
permitted. The resulting calculations under IFRS 13 affected the
principles that the Company uses to assess the fair value, but the
assessment of fair value under IFRS 13 has not materially changed
the fair values recognised or disclosed. IFRS 13 mainly impacts the
disclosures of the Company. It requires specific disclosures about
fair value measurements and disclosures of fair values, some of
which replace existing disclosure requirements in other
standards.
Financial instruments
Financial investments
Non-derivative financial assets comprising the Company's
strategic financial investments in entities not qualifying as
subsidiaries, associates or jointly controlled entities. These
assets are classified as financial assets at fair value through
profit or loss. They are carried at fair value with changes in fair
value recognised through the income statement. Where there is a
significant or prolonged decline in the fair value of a financial
investment (which constitutes objective evidence of impairment),
the full amount of the impairment is recognised in the income
statement.
Listed investments are valued at closing bid price on 31 July
2020. For measurement purposes, financial investments are
designated at fair value through income statement. Gains and losses
on the realisation of financial investments are recognised in the
income statement for the period. The difference between the market
value of financial instruments and book value to the Company is
shown as a gain or loss in the income statement for the period.
Trade and other receivables
Trade receivables are measured at initial recognition at fair
value, and are subsequently measured at amortised cost using the
effective interest rate method. Trade and other receivables are
accounted for at original invoice amount less any provisions for
doubtful debts. Provisions are made where there is evidence of a
risk of non-payment, taking into account the age of the debt,
historical experience and general economic conditions. If a trade
debt is determined to be uncollectable, it is written off, firstly
against any provisions already held and then to the statement of
comprehensive income. Subsequent recoveries of amounts previously
provided for are credited to the statement of comprehensive
income.
Appropriate allowances for estimated irrecoverable amounts are
recognised in profit or loss in accordance with the expected credit
loss model under IFRS 9. For trade and other receivables which do
not contain a significant financing component, the Company applies
the simplified approach. This approach requires the allowance for
expected credit losses to be recognised at an amount equal to
lifetime expected credit losses. For other debt financial assets
the Company applies the general approach to providing for expected
credit losses as prescribed by IFRS 9, which permits for the
recognition of an allowance for the estimated expected loss
resulting from default in the subsequent 12-month period. Exposure
to credit loss is monitored on a continual basis and, where
material, the allowance for expected credit losses is adjusted to
reflect the risk of default during the lifetime of the financial
asset should a significant change in credit risk be identified.
The majority of the Company's financial assets are expected to
have a low risk of default. A review of the historical occurrence
of credit losses indicates that credit losses are insignificant due
to the size of the Company's clients and the nature of its
activities. The outlook for the natural resources industry is not
expected to result in a significant change in the Company's
exposure to credit losses. As lifetime expected credit losses are
not expected to be significant the Company has opted not to adopt
the practical expedient available under IFRS 9 to utilise a
provision matrix for the recognition of lifetime expected credit
losses on trade receivables. Allowances are calculated on a
case-by-case basis based on the credit risk applicable to
individual counterparties.
Trade and other payables
Trade and other payables are held at amortised cost which
equates to nominal value.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, current
balances with banks and similar institutions and liquid investments
generally with maturities of 3 months or less. They are readily
convertible into known amounts of cash and have an insignificant
risk of changes in values.
Taxation
The tax expense for the period comprises current and deferred
tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case the tax is also
recognised in other comprehensive income or directly in equity,
respectively.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the balance sheet date
in the countries where the company's subsidiaries and associates
operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation and
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the
consolidated financial statements. However, the deferred income tax
is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither
accounting nor taxable profit nor loss. Deferred income tax is
determined using tax rates (and laws) that have been enacted or
substantially enacted by the balance sheet date and are expected to
apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profit will be available against
which the temporary differences can be utilised. Deferred income
tax is provided on temporary differences arising on disallowed
expenses, expect where the timing of the reversal of the temporary
difference is controlled by the company and it is probable that the
temporary difference will not reverse in the foreseeable
future.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes assets
and liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
Impairment of non-current assets
The carrying values of all non-current assets are reviewed for
impairment when there is an indication that the assets might be
impaired. Any provision for impairment is charged to the statement
of comprehensive income in the year concerned.
Impairment losses on other non-current assets are only reversed
if there has been a change in estimates used to determine
recoverable amounts and only to the extent that the revised
recoverable amounts do not exceed the carrying values that would
have existed, net of depreciation or amortisation, had no
impairments been recognised.
3 Key accounting judgements and estimates
The preparation of financial statements in conformity with IFRSs
requires management to make judgements, 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
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources.
Actual results may differ from these estimates. 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 the revision and future periods if the
revision affects both current and future periods.
Significant estimates and assumptions that may have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities at 31 July 2020 are set out
below:
Share Based Payments
The Company issued 6.35 million options over its unissued share
capital to the directors during the year to 31 July 2020.
(2019:GBPnil)
The fair value of share based payments is calculated by
reference to Black Scholes model. Inputs into the model are based
on management's best estimates of appropriate volatility, dividend
yields, discount rate and share price. During the year, the Company
incurred GBP7,000 share based payment charge (2019: GBPnil
charge).
Unlisted investments
The Company is required to make judgments over the carrying
value of investments in unquoted companies where fair values cannot
be readily established and evaluate the size of any impairment
required. It is important to recognise that the carrying value of
such investments cannot always be substantiated by comparison with
independent markets and, in many cases, may not be capable of being
realised immediately. Management's significant judgement in this
regard is that the value of their investment represents their cost
less previous impairment. Further details relating to management's
assessment of the carrying value of unlisted investments can be
found in the Chairman's Report (incorporating the Strategic
Review).
Recoverability of receivables
The Company makes assumptions when implementing the
forward-looking ECL model under IFRS 9. The model is used to assess
material loans receivable for impairment. Estimates are made
regarding the credit risk and underlying probability of default in
each of the relevant credit loss scenarios. The Directors makes
judgements on the expected likelihood and outcome of each of the
scenarios and these expected values are applied to the loan
balances.
4 New accounting requirements
These financial statements have been prepared in accordance with
International Financial Reporting Standards and IFRIC
interpretations as adopted by the European Union and with those
parts of the Companies Act 2006 applicable to companies reporting
under IFRS. The financial statements have been prepared under the
historical cost convention.
Adoption of new and revised standards:
During the financial year, the Company has adopted the following
new IFRSs (including amendments thereto) and IFRIC interpretations
that became effective for the first time.
Standard Effective date, annual period beginning on or after
IFRS 16 Leases 1 January 2019
-----------------------------------------------------
IFRIC Interpretation 23 - Uncertainty over Income Tax 1 January 2019
Treatments
-----------------------------------------------------
Amendments to IFRS 9 - Prepayment Features with Negative 1 January 2019
Compensation
-----------------------------------------------------
Amendments to IAS 28 - Long-term Interests in Associates and 1 January 2019
Joint Ventures
-----------------------------------------------------
Annual improvements 2015-2017 cycle 1 January 2019
-----------------------------------------------------
Amendments to IAS 19 - Plan amendment, Curtailment or 1 January 2019
Settlement
-----------------------------------------------------
Their adoption has not had any material impact on the
disclosures or amounts reported in the financial statements.
Standards issued but not yet effective:
At the date of authorisation of these financial statements, the
following standards and interpretations relevant to the Company and
which have not been applied in these financial statements, were in
issue but were not yet effective.
Standard Effective date, annual period beginning on or after
Conceptual Framework and Amendments to References to the 1 January 2020
Conceptual Framework in IFRS Standards
-----------------------------------------------------
Amendments to IFRS 3 Business Combinations 1 January 2020
-----------------------------------------------------
Amendments to IAS 1 and IAS 8: Definition of Material 1 January 2020
-----------------------------------------------------
Reference to the Conceptual Framework (Amendments to IFRS 3 1 January 2022*
Business Combinations)
-----------------------------------------------------
Property, Plant and Equipment: Proceeds before Intended Use 1 January 2022*
(Amendments to IAS 16)
-----------------------------------------------------
Onerous Contracts - Cost of Fulfilling a Contract (Amendments 1 January 2022*
to IAS 37 Provisions, Contingent
Liabilities and Contingent Assets)
-----------------------------------------------------
Annual improvements 2018-2020 cycle 1 January 2022*
-----------------------------------------------------
Classification of Liabilities as Current or Non-Current: 1 January 2023*
Amendments to IAS 1
-----------------------------------------------------
*Not yet endorsed for use in the European Union
The adoption of these standards is not expected to have any
material impact on the financial statements of the Company.
5 Segmental analysis
Segmental analysis is not applicable as there is only one
operating segment of the continuing business - investment
activities. The performance measure of investment activities is
considered by the Board to be profitability and is disclosed on the
face of the statement of comprehensive Income. The Board will
continually review the segmental analysis of the business on an
ongoing basis and at each reporting date.
6 Information regarding Directors and employees
2020 2019
GBP000 GBP000
---------------------------------------- -------- --------
Included within continuing operations
Fees and salaries 183 174
Social security costs 3 2
Share based payment expense 7 -
---------------------------------------- -------- --------
193 176
---------------------------------------- -------- --------
2020 2019
Number Number
---------------------------------------------------- -------- --------
Average number of persons employed by the Company
(including Directors) during the year
Directors 3 3
Administrative staff 1 1
---------------------------------------------------- -------- --------
Total 4 4
---------------------------------------------------- -------- --------
The compensation of the Directors, in aggregate, 2020 2019
was as follows:
GBP000 GBP000
--------------------------------------------------- -------- --------
Wages and salaries 163 153
Social security costs 1 1
Share based payment expense 7 -
171 153
--------------------------------------------------- -------- --------
Full details of the remuneration of individual directors,
including the highest paid director, are set out below:
Fees & Share Based Total Total
salary Payments 2020 2019
GBP000 GBP000 GBP000 GBP000
----------------------- -------- ------------- -------- --------
Directors
Mr H Harris 80 - 80 72
Mr D Strang 72 - 72 72
Mr P Ruse (2) 16 7 23 -
Mr G Garnett (1 & 3) (4) - (4) 9
164 7 171 153
----------------------- -------- ------------- -------- --------
(1) appointed 16 January 2018
(2) appointed 6 November 2019
(3) resigned 26 November 2019
No Directors fees have been accrued (2019: GBP53,000) and
GBP3,000 remain unpaid at 31 July 2020 (2019: GBP7,000).
7 Other income
2020 2019
GBP000 GBP000
------------------------ --------- --------
Other fees & services - 50
Total other income - 50
------------------------ --------- --------
8 (Loss)/profit for the year
The following items have been included in operating
(loss)/profit:
2020 2019
GBP000 GBP000
------------------------------------------------- -------- --------
Fees payable to the Company's auditors:
Audit and assurance services:
- Audit of parent Company financial statements 17 10
Total auditor's fees 17 10
------------------------------------------------- -------- --------
Analysis of other costs:
Legal and professional fees 1 5
Foreign exchange (gains) 3 -
Other general overheads 274 164
278 169
------------------------------------------------- -------- --------
9 Taxation
2020 2019
Taxation charge based on losses for the year GBP000 GBP000
--------------------------------------------------------- -------- --------
UK Corporation tax - -
Deferred taxation - -
--------------------------------------------------------- -------- --------
Total tax expense - -
--------------------------------------------------------- -------- --------
Factors affecting the tax charge for the year:
(Loss)/profit on ordinary activities before taxation (991) (558)
--------------------------------------------------------- -------- --------
Loss on ordinary activities at the average UK standard
rate of 19% (2019: 19%) (188) (106)
Effect of non-deductible expenses 5 22
Unutilised losses carried forward 183 84
Other deductions for tax purposes including prior - -
year losses
--------------------------------------------------------- -------- --------
Current tax charge - -
--------------------------------------------------------- -------- --------
As set out in Note 2, the Company has not recognised a deferred
tax asset in the financial statements as there is no certainty that
taxable profits will be available against which these assets could
be utilised.
10 (Loss) per share
(Loss) attributable to ordinary shareholders 2020 2019
(Restated)
The calculation of loss per share is based on
the loss after taxation divided by the weighted
average number of shares in issue during the period:
(Loss) from operations (GBP000) (991) (558)
Total (GBP000) (991) (558)
--------- ------------
Number of shares
Weighted average number of ordinary shares for
the purposes of basic (loss)/earnings per share
(millions) 93.32 59.80
Weighted average number of ordinary shares for
the purposes of diluted (loss)/earnings per share
(millions) 103.39 63.82
Basic (loss) per share (expressed in pence) (1.064) (0.931)
Diluted (loss) per share (expressed in pence) (1.064) (0.931)
--------- ------------
As the inclusions of the potential Ordinary Shares would result
in a decrease in the loss per share, they are considered to be
anti-dilutive and not included.
11 Financial investments
Financial assets at fair value through GBP000 GBP000 GBP000 GBP000
profit or loss:
-------------------------------------------- -------- -------- -------- ---------
Level Level Level Total
1 2 3
-------------------------------------------- -------- -------- -------- ---------
Fair Value at 31 July 2018 382 - 1,716 2,098
-------------------------------------------- -------- -------- -------- ---------
Additions 675 - 260 935
Fair value changes (224) - - (224)
(Loss)/Gains on disposals (140) - 175 35
Disposal (550) - (600) (1,150)
Impairment provision - - (106) (106)
Fair Value at 31 July 2019 - restated 143 - 1,445 1,588
-------------------------------------------- -------- -------- -------- ---------
Additions 193 - 423 616
Fair value changes 176 - - 176
(Loss)/Gains on disposals (9) - - (9)
Disposal (154) - - (154)
Impairment provision - - (716) (716)
Foreign Exchange (9) - 1 (8)
Fair Value at 31 July 2020 340 - 1,153 1,493
-------------------------------------------- -------- -------- -------- ---------
The financial assets splits are as below:
Non-current assets - listed 340 - - 340
Non-current assets - unlisted - - 577 577
Non-current assets - unlisted convertible
loans - - 576 576
-------------------------------------------- -------- -------- -------- ---------
Total 340 - 1,153 1,493
-------------------------------------------- -------- -------- -------- ---------
Gains on investments held at fair value
through profit or loss
Fair value gain on investments 176 - - 176
Realised gain on disposal of investments (9) - - (9)
----- --- --- -----
Net gain on investments held at fair
value through profit or loss 167 - - 167
===== === === =====
Level 1 represents those assets, which are measured using
unadjusted quoted prices for identical assets.
Level 2 applies inputs other than quoted prices that are
observable for the assets either directly (as prices) or indirectly
(derived from prices).
Level 3 applies inputs, which are not based on observable market data.
The Directors carried out an impairment review as at 31 July
2020, and determined a further impairment charge of GBP716,000
(2019: GBP106,000) was required. GBP400,000 (2019: GBP100,000) in
respect of Brazil Tungsten Ltd; GBP220,000 (2019: GBPnil) in
respect of Sunshine Minerals and GBP96,000 (2019: GBP6,000) was
required with regard to its investment in Oyster Oil & Gas Ltd
, as a result of the valuation implied by Oyster's proposed
disposal to Sajawin Pty Limited ("Sajawin"). More details regarding
the companies' progress are detailed within the strategic
review.
Financial investments comprise investments in listed and
unlisted Companies, of which the listed investments are traded on
stock markets throughout the world, and are held by the Company as
a mix of strategic and short term investments. The listed
investments have been valued at bid price, as quoted on their
respective Stock Exchanges, at 31 July 2020. The market value of
the listed investments at 30 November 2020 was circa
GBP515,000.
Fair value hierarchy of financial assets at fair value through
profit or loss.
12 Trade and other receivables
2020 2019
Non current assets GBP000 GBP000
-------------------------- -------- --------
Loan to Investee Company 56 -
56 -
-------------------------- -------- --------
2020 2019
Current assets GBP000 GBP000
-------------------- -------- --------
Other receivables 157 196
Prepayments 24 137
-------------------- -------- --------
181 333
-------------------- -------- --------
The carrying value of receivables approximates their fair
value.
13 Trade and other payables
2020 2019
Amounts due within one year GBP000 GBP000
------------------------------- -------- --------
Trade payables 52 46
Other creditors 26 9
Accruals and deferred income 20 71
98 126
------------------------------- -------- --------
14 Share capital and share premium account
Number Ordinary Deferred Share
of shares share share premium
capital capital
Share capital issued and fully GBP000 GBP000 GBP000
paid
At 31 July 2018 4,882,924,490 489 1,729 10,536
--------------------------------- --------------- ---------- ---------- ---------
Issue of new ordinary shares
on 10 June 2019 1,351,351,351 134 - 366
Less: costs of share placing - - - (39)
Issue of new ordinary shares
on 21 June 2019 100,000,000 10 - 27
At 31 July 2019 6,334,275,841 633 1,729 10,890
--------------------------------- --------------- ---------- ---------- ---------
Share Split - - - -
Share Consolidation (1 for 85) 74,520,893 (570) 570 -
Issue of new ordinary shares
on 5 June 2020 74,520,893 63 - 421
Issue of new ordinary shares
on 1 July 2020 17,786,799 15 - 101
Issue of new ordinary shares
on 6 July 2020 71,538,462 61 - 404
Issue of new ordinary shares
on 7 July 2020 16,000,000 14 - 90
Less: costs of share placing - - - (78)
--------------------------------- --------------- ---------- ---------- ---------
At 31 July 2020 254,367,047 216 2,299 11,828
--------------------------------- --------------- ---------- ---------- ---------
15 Movements in equity
Share capital represents the nominal value of the amount
subscribed for shares. Share premium represents the amount
subscribed for shares in excess of their nominal value less costs
of subscription. Ordinary shares carry the rights to one vote per
share at general meetings of the Company and the rights to share in
any distributions of profits or returns of capital and to share in
any residual assets available for distribution in the event of a
winding up.
The share-based payment reserve represents amounts arising from
the requirement to expense the fair value of share-based
remuneration in accordance with IFRS 2 'Share-based Payments'.
Retained earnings are the cumulative net losses recognised in
the income statement and other comprehensive income.
Movements on these reserves are set out in the statement of
changes in equity.
16 Related party transactions
The Company had the following transactions with related
parties:
Name of related Relationship Nature of Transactions with Amounts owed from
party transaction related party related party
At 31 At 31 At 31 At 31
July July July July
2020 2019 2020 2019
GBP000 GBP000 GBP000 GBP000
-------------------------- ------------------- ---------------- ---------- --------- ---------- ---------
Horse Hill Developments Investee Company Cash call - (190) - -
Ltd ("HHDL") Loan to HHDL
Short term
Rogue Baron Investee Company Loan 56 - 56 -
-------------------------- ------------------- ---------------- ---------- --------- ---------- ---------
Terms and conditions of transactions with related parties
Outstanding balances that relate to trading balances are
unsecured, interest free and settlement occurs in cash. There have
been no guarantees provided or received for any related party
receivables or payables.
The Company has the outstanding amounts due as at 31 July 2020
as disclosed in the table above. The loans outstanding are included
within trade and other receivables, Note 12.
The loan to HHDL was made in accordance with the terms of the
investment agreement whereby it accrued interest daily at the Bank
of England base rate and was repayable out of future cashflows. On
disposal of the Company's interest in HHDL, the shareholder loan
was novated to the acquiring company, and no further loan balance
is repayable.
Compensation of key management personnel of the Company
The Company considers the directors to be its key management
personnel. Full details of the remuneration of the directors are
shown in Note 6.
17 Reconciliation of net cash flow to movement in net funds
2020 2019
GBP000 GBP000
------------------------------------- -------- --------
Net funds at beginning of the year 568 337
Increase in cash 270 231
Net funds at end of the year 838 568
------------------------------------- -------- --------
Analysis of changes in net funds
At 31 At 31
July Cash July
2019 Flow 2020
GBP000 GBP000 GBP000
---------------------------- -------- -------- --------
Cash and cash equivalents 568 270 838
Net funds 568 270 838
---------------------------- -------- -------- --------
Significant non-cash transactions
During the year the significant non-cash transactions during the
year were as follows:
-- GBP400,000 impairment provision in regards to Brazil Tungsten
Holdings Limited was expensed through the income statement.
-- GBP220,000 impairment provision in regards to Sunshine
Minerals Limited was expensed through the income statement
-- GBP96,000 impairment provision in regards to Oyster Oil &
Gas Ltd was expensed through the income statement
-- GBP217,000 of unrealised gains in movement in the market
value of the Company's listed financial investments were revalued
through the income statement
18 Financial instruments and related disclosures
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Company's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Company's finance function. The Board receives monthly reports
through which it reviews the effectiveness of the processes put in
place and the appropriateness of the objectives and policies it
sets.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Company's competitiveness and flexibility.
The Company reports in Sterling. Internal and external funding
requirements and financial risks are managed based on policies and
procedures adopted by the Board of Directors. The Company does not
use derivative financial instruments such as forward currency
contracts, interest rate and currency swaps or similar instruments.
The Company does not issue or use financial instruments of a
speculative nature.
Capital management
The Company's objectives when maintaining capital are:
-- to safeguard the entity's ability to continue as a going
concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
-- to provide an adequate return to shareholders.
18 Financial instruments and related disclosures continued
Capital management
The capital structure of the Company consists of total
shareholders' equity as set out in the 'Statement of changes in
equity'. All working capital requirements are financed from
existing cash resources.
Capital is managed on a day to day basis to ensure that all
entities in the Company are able to operate as a going concern.
Operating cash flow is primarily used to cover the overhead costs
associated with operating as an AIM and NEX-listed company.
Liquidity risk
Liquidity risk arises from the Company's management of working
capital. It is the risk that the Company will encounter difficulty
in meeting its financial obligations as they fall due.
The Directors consider that there is no significant liquidity
risk faced by the Company. The Company maintains sufficient
balances in cash to pay accounts payable and accrued expenses.
The Board receives forward looking cash flow projections at
periodic intervals during the year as well as information regarding
cash balances. At the balance sheet date the Company had cash
balances of GBP838,000 and the financial forecasts indicated that
the Company expected to have sufficient liquid resources to meet
its obligations under all reasonably expected circumstances and
will not need to establish overdraft or other borrowing
facilities.
Interest rate risk
As the Company has no borrowings, it only has limited interest
rate risk. The impact is on income and operating cash flow and
arises from changes in market interest rates. Cash resources are
held in current, floating rate accounts.
Market risk
Market price risk arises from uncertainty about the future
valuations of financial instruments held in accordance with the
Company's investment objectives. These future valuations are
determined by many factors but include the operational and
financial performance of the underlying investee companies, as well
as market perceptions of the future of the economy and its impact
upon the economic environment in which these companies operate.
This risk represents the potential loss that the Company might
suffer through holding its financial investment portfolio in the
face of market movements, which was a maximum of GBP1,233,000
(2019: GBP1,238,000).
The investments in equity of quoted companies that the Company
holds are less frequently traded than shares in more widely traded
securities. Consequently, the valuations of these investments can
be more volatile.
Market price risk sensitivity
The table below shows the impact on the return and net assets of
the Company if there were to be a 20% movement in overall share
prices of the financial investments held at 31 July 2020.
2020 2019
----------------------------------------------------- --------------------- ---------------------
Other comprehensive Other comprehensive
income and income and
Net assets Net assets
(restated)
GBP000 GBP000
----------------------------------------------------- --------------------- ---------------------
Decrease if overall share price falls by 20%, with
all other variables held constant (68) (29)
Decrease in other comprehensive earnings and net
asset value per Ordinary share (in pence) (0.073)p (0.048)p
Increase if overall share price rises by 20%, with
all other variables held constant 68 29
Increase in other comprehensive earnings and net
asset value per Ordinary share (in pence) 0.073p 0.048p
----------------------------------------------------- --------------------- ---------------------
The impact of a change of 20% has been selected as this is
considered reasonable given the current level of volatility
observed, and assumes a market value is attainable for the
Company's unlisted investments.
Currency risk
The Directors consider that there is no significant currency
risk faced by the Company. The only current foreign currency
transactions the Company enters into are denominated in US$ in
relation to transactions with or relating to its loan to Human
Brands Inc., and no balances at 31 July 2020 are denominated in
foreign currencies.
Credit risk
Credit risk is the risk that a counterparty will fail to
discharge an obligation or commitment that it has entered into with
the Company. The Company's maximum exposure to credit risk is:
2020 2019
GBP000 GBP000
-------------------- -------- --------
Cash at bank 838 568
Other receivables 252 333
1,090 901
-------------------- -------- --------
The Company's cash balances are held in accounts with Barclays
Bank plc, and with its Investment Broker accounts.
Fair value of financial assets and liabilities
Financial assets and liabilities are carried in the Statement of
Financial Position at either their fair value (financial
investments) or at a reasonable approximation of the fair value
(trade and other receivables, trade and other payables and cash at
bank).
The fair values are included at the amount at which the
instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale.
Trade and other receivables
The following table sets out the fair values of financial assets
within Trade and other receivables.
2020 2019
Financial assets (Note 12) GBP000 GBP000
----------------------------------------------------- -------- --------
Trade and other receivables - Non interest earning 181 217
Loan to investee company - Non interest earning 56 -
Loan to investee company - interest earning @ 12%
p.a. - 116
There are no financial assets which are past due and for which
no provision for bad or doubtful debts has been made.
Trade and other payables
The following table sets out financial liabilities within Trade
and other payables. These financial liabilities are predominantly
non-interest bearing. Other liabilities include tax and social
security payables and provisions which do not constitute
contractual obligations to deliver cash or other financial
assets.
2020 2019
Financial liabilities (Note 13) GBP000 GBP000
---------------------------------- -------- --------
Trade and other payables 98 126
19 Share schemes
The Company has a share option scheme for all employees
(including Directors). Options are exercisable at a price agreed at
the date of grant. The vesting period is usually between zero and
five years. The exercise of options is dependent upon eligible
employees meeting performance criteria. The options are settled in
equity once exercised.
If the options remain unexercised after their expiry date, the
options expire. Options lapse if the employee leaves the Company
before the options vest.
Options issued, cancelled, & outstanding for the
year ended 31 July 2020
Weighted
average
exercise
Number price
--------------------------------------------------- --------------- ----------
At 31 July 2018 342,650,840 0.11p
--------------------------------------------------- --------------- ----------
Options lapsed (1,031,990) 0.0865p
--------------------------------------------------- --------------- ----------
At 31 July 2019 341,618,850 0.08p
--------------------------------------------------- --------------- ----------
Options lapsed (10,000,000) 0.22p
Consolidation (1 for 85) (327,717,451)
Issued 6,350,000 1.00p
--------------------------------------------------- --------------- ----------
At 31 July 2020 10,251,399 3.06p
--------------------------------------------------- --------------- ----------
Range of exercise prices 1.00p - 446.25p
--------------------------------------------------- ---------------------------
Weighted average remaining contractual life 2.60 years
--------------------------------------------------- ---------------------------
Options outstanding & exercisable at
31 July 2020
Exercise Expiry
Date of grant Number price (p) date
--------------------------------------- ------------ ----------- ------------
1 December 2010 19,046 446.25 30/11/2020
7 August 2017 3,529,412 4.25 30/06/2022
12 February 2018 352,941 4.25 11/02/2023
29 July 2020 6,350,000 1.00 29/07/2023
--------------------------------------- ------------ ----------- ------------
Total 10,251,399
--------------------------------------- ------------ ----------- ------------
A modified Black-Scholes model has been used to determine the
fair value of the share options on the date of grant. The fair
value is expensed to the income statement on a straight-line basis
over the vesting period, which is determined annually. The model
assesses a number of factors in calculating the fair value. These
include the market price on the date of grant, the exercise price
of the share options, the expected share price volatility of the
Company's share price, the expected life of the options, the
risk-free rate of interest and the expected level of dividends in
future periods.
For those options granted where IFRS 2 "Share-Based Payment" is
applicable, the fair values were calculated using the Black-Scholes
model. The inputs into the model were as follows:
Risk free rate Share price volatility Expected life Share price at date of grant
29 July 2020 0.1% 30.54% 3 years GBP0.00790
---------------- ------------------------ --------------- ------------------------------
Expected volatility was determined by calculating the historical
volatility of the Company's share price for 12 months prior to the
date of grant. The expected life used in the model is the term of
the options.
Charges to the statement of comprehensive income
2020 2019
GBP000 GBP000
----------------------------- -------- --------
Share based payment charges 7 -
----------------------------- -------- --------
Warrants issued, cancelled, & outstanding for the
year ended 31 July 2020
Weighted
average
exercise
Number price
---------------------------------------------------- ------------ ----------
At 31 July 2019 - -
---------------------------------------------------- ------------ ----------
Issued 62,717,950 1.30p
---------------------------------------------------- ------------ ----------
At 31 July 2020 62,717,950 1.30p
---------------------------------------------------- ------------ ----------
Range of exercise prices 1.30p
---------------------------------------------------- ------------------------
Weighted average remaining contractual life 1.47 years
---------------------------------------------------- ------------------------
Warrants outstanding & exercisable at 31 July 2020
Exercise Expiry
Date of grant Number price (p) date
------------------------------ ----------------------- ----------- ------------
30 June 2020 33,538,462 1.30 30/06/2022
13 July 2020 29,179,488 1.30 13/07/2021
------------------------------ ----------------------- ----------- ------------
Total 62,717,950
------------------------------ ----------------------- ----------- ------------
20 Commitments and contingencies
The Directors have confirmed that there were no contingent
liabilities or capital commitments which should be disclosed at 31
July 2020.
21 Ultimate controlling party
There is not considered to be an ultimate controlling party of
the company.
22 Events after the end of the reporting period
On 26 August 2020, the Company announced it had awarded 8
million options each to Hamish Harris and Donald Strang, directors
of the company and 3 million options to company consultants. These
options vest immediately, have an exercise price of 1p and expire 3
years from date of grant.
On 13 November 2020, the Company announced it had raised
GBP1,130,000 from a share placing involving the issue of 113
million new ordinary shares at 1 pence per share. Of the 113
million placing shares, 56,393,211 shares were issued immediately
and the balance of 56,393,211 shares were conditional on approval
at a general meeting of shareholders which was obtained on 2
December 2020. Subscribers to this placing also received 56,500,000
Placing warrants exercisable at 2 pence expiring on the 18 month
anniversary of the date of issue.
On 15 December 2020, the Company announced it had received
warrant exercise notices to subscribe for 3,589,743 new ordinary
shares in the Company at an exercise price of 1.3 pence per share
totalling GBP46,667.
23 Prior year restatement
The impact of the prior year restatement in respect of the
classification of the investment in Oyster Oil & Gas Ltd is as
follows:
2019 - As Restatement 2019 - As
presented restated
Investment in associate 350 (350) -
Financial investments (Oyster) - 350 350
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