TIDMGUN
RNS Number : 2937T
Gunsynd PLC
23 November 2021
Gunsynd plc
("Gunsynd" or the "Company")
Final Results for the Year Ended 31 July 2021
Gunsynd (AIM: GUN, AQSE: GUN) is pleased to announce that its
Final Results for the year ended 31 July 2021 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 the UK Market Abuse Regulation.
The Directors of the Company are responsible for the release of
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 +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 2021. The Company made a
profit for the year to 31 July 2021 of GBP2,012,000 (2020: loss
GBP991,000) after taxation. The Company had net assets of
GBP6,303,000 (2020: GBP2,470,000) at 31 July 2021, and cash
balances of GBP1,071,000 (2020: GBP838,000).
Review of Investments
Low 6 Limited ("Low6")
During the period, the Company made an investment in Low6, an
influencer-led B2B gamification company for sports franchises
around the world. Low6 raised an additional GBP6.5 million in July
2021 in an over-subscribed pre-IPO fund raising. Its user base
continues to increase and it now has over 250,000 users. Low6 is
also actively progressing its IPO. Gunsynd holds 6,667 shares (for
approximately GBP200,000) representing approximately 1% of Low6's
issued share capital together with a GBP65,000 convertible loan
note.
Rincon Resources Pty Ltd ("Rincon")
Rincon is a Western Australian ("WA") focused gold and base
metals exploration company quoted on ASX. It holds the rights to
three highly prospective gold and copper projects in WA, with a
main focus on the South Telfer Project, covering 50,000-hectares in
Paterson province.
The South Telfer Project is approximately 12km south of Newcrest
Mining Limited (ASX:NCM) Telfer mine which has produced 27 million
ounces of gold since it began operations in 1977. Geophysical and
geochemical programmes have been completed, identifying over 40
targets within the asset portfolio. Rincon's committed exploration
programme is for a minimum 10,000 drill metres targeting high
priority targets. As at 30 September, Rincon had cash of
A$3.4m.
Gunsynd holds 8.9 million shares representing 17.34% of Rincon's
issued share capital.
Eagle Mountain Mining Limited ("Eagle Mountain")
Gunsynd holds 2.5 million shares in Eagle Mountain representing
approximately 1% of its issued share capital.
Eagle Mountain Mining Limited (ASX:EM2), is a copper focused
exploration and development Company with a key objective of
becoming a low emission producer at its high-grade Oracle Ridge
project in Arizona, USA, to supply the rapidly growing green energy
market.
Eagle Mountain remains well funded following the completion of a
A$16m capital raising completed in September 2021. This new capital
combined with existing cash will see the Oracle Ridge project
comfortably funded to meet all its objectives over the next 12
months.
Rogue Baron Limited ("Rogue Baron")
Rogue Baron PLC (AQSE: SHNJ) is a leading company in the premium
spirit sector which listed on the Access segment of the AQSE Growth
Market on 12 March 2021. Gunsynd currently holds 21,543,563
ordinary shares in Rogue Baron, representing approximately 25% of
the issued share capital. Gunsynd also retains a balance of
GBP111,464 of Convertible Loan Notes consisting of accrued
interest.
Rogue Baron announced in June that it had commenced trading on
OTCQB Venture Market in the United States. It also announced that
month the opening of a new location, called De Rhum Spot, which is
three floors with an outdoor patio and is roughly three times the
size of Rogue Baron's existing bar, Bin 1301. Bin saw a record
sales month during June 2021 which has eased off slightly since
then. The Bar produced circa USD 95,000 (approx. GBP73,000) in
unaudited sales over the month. This total was roughly 32% higher
than any month ever before Covid.
Rogue Baron's key brand, Shinju Whisky, has seen its
distribution footprint expand substantially in 2021. Sales are
anticipated to hit over 5,000 cases this calendar year (compared to
circa 2,000 in 2020 and 1,000 in 2019). Shinju was also voted best
whisky at the 2021 Sante' International Spirit Competition being
awarded double gold.
Empress Royalty Corp ("Empress")
On 23 October 2020, Gunsynd invested C$250,000 (approximately
GBP146,000) into Empress for 1,000, 000 ordinary shares
representing approximately 1.4% of the share capital at that
time.
During the year, Gunsynd disposed of 786,000 Empress shares for
CAD$344,000 (GBP201,000) and at year end held 214,000 shares which
were subsequently disposed in September 2021 for approx. CAD$67,000
(GBP37,000).
Charger Metals Limited ("Charger")
Charger is a Western Australian ("WA") focused Base metals
(Ni,Cu,Co-PGE) and Lithium exploration company which currently
holds three highly prospective projects in WA and the Northern
Territory ("NT") in Australia. Charger has 85% of the Coates North
and 70% interest in the adjacent Coates Ni-Cu-Co-PGE Prospect (WA),
70% interest in the Lake Johnson Lithium and Gold Project (WA) and
70% interest in the Bynoe Lithium and Gold Project (NT).
Charger successfully raised A$6 million in its IPO capital
raising in July 2021, based on which Charger has 50,400,001 shares
in issue. Gunsynd currently holds 3,600,000 shares in Charger
representing approximately 7.14% of Charger's issued share capital,
of which 1,200,000 shares are subject to an escrow period of 24
months following the IPO.
Anglo Saxony Mining Limited ("ASM") to be re-named First Tin Limited ("First Tin")
In March 2021, Gunsynd invested GBP125,000 in ASM, a public
unlisted tin development and exploration company, as part of a
wider GBP6m funding round. ASM plans to establish sustainable tin
production and processing from the Tellerhäuser Mine in Saxony,
Germany. The Tellerhäuser Mine has a 50-year mining licence granted
in 2020 with final permitting well advanced.
The local Erzgebirge area has 800 years of mining history,
including the world's oldest School of Mines. The Tellerhäuser mine
comes with 150,000m of tunnels and other underground development,
approx. 140,000m of historical drilling and 3,000m of channel
sampling from past owners of the project. ASM has ambitions to
become a sustainable tin producer from a zero-waste mine by
carrying out all of its processing and waste to be located in
underground voids. The waste material will be stored and treated
via water treatment facility in-situ and pumped to a nearby storage
plant. ASM is planning to seek admission to the Standard List of
the London Stock Exchange during 2022.
Pacific Nickel Limited ("Pacific Nickel")
In August 2020 Pacific Nickel acquired the 85% of Sunshine
Minerals Limited ("Sunshine") it did not already own. Sunshine owns
80% of Sunshine Nickel Limited (SNL) which holds prospecting
licence tenement PL 01/18 located on the south coast of Santa
Isabel Island in the Solomon Islands. The remaining 20% of SNL is
owned by local landowners. The Jejevo Nickel Project is located
within the PL 01/18 project area. As a shareholder in Sunshine,
Gunsynd received 1,262,967 upfront consideration shares and,
subject to certain conditions being met, will receive 1,641,856
deferred consideration shares.
In May 2021 Pacific Nickel advised that it had completed the
acquisition of an 80% interest in Kolosori Nickel (SI) Limited
("KNL"), a company incorporated in the Solomon Islands. KNL
currently owns PL 05/19, which comprises the Kolosori Nickel
Project. As a shareholder in KNL, Gunsynd received 682,790 upfront
consideration shares. Subject to Pacific Nickel satisfying certain
conditions, Gunsynd will receive a further 1,137,984 deferred
consideration shares.
Following completion of the acquisition of the 80% interest in
KNL by Pacific Nickel, Gunsynd holds no direct interest in KNL but
has an interest in 1,945,757 ordinary shares of Pacific Nickel
representing approximately 0.8% of Pacific Nickel's current issued
share capital.
On 7 October 2021 Pacific Nickel announced it had completed an
initial JORC (2012) mineral resource estimate for the Jejevo
tenement. The mineral resource estimate was carried out by Mining
One Pty Ltd (Mining One) an independent consultant to the Company.
The JORC validation drilling program was completed in June 2021 has
provided confirmation of historical drilling data. The total
mineral resource estimate at Jejevo is 14.42 million tonnes at 1.29
% Ni at a 1.0% Ni cut off.
In October 2021 Pacific Nickel announced that 90 infill holes
had been drilled as part of the second stage 151-hole drill program
at Kolosori designed to increase the confidence of the existing
mineral resource estimate of 5.89Mt at 1.55% Ni at 1.2%. It also
announced that it had submitted a Mining Lease Application for the
Kolosori Nickel Project to the Solomon Islands Ministry of Mines,
Energy and Rural Electrification and had finalised the
Environmental and Social Impact Assessment (ESIA) for the
project.
Oscillate plc ("Oscillate"; formerly DiscovOre plc)
Oscillate is an investment company listed on the AQSE Growth
Market Exchange with the ticker, AQSE: MUSH. Oscillate has a
diverse investment policy which covers the identification of
opportunities in the natural resource sector, medicinal cannabis
and special situations. In April 2021, Gunsynd invested GBP200,000
into Oscillate being 10 million shares at 2p representing circa
4.5% of Oscillate.
In June 2021, Oscillate subscribed for 21,312,460 shares in
Angelfish Investments plc (renamed Igraine plc) representing 24.64%
of the issued share capital. Igraine is currently suspended due to
audited financial reports not being released. In August 2021,
Oscillate acquired 30,000,000 ordinary shares in Psych Capital
Limited, representing approximately 10.4% of its issued share
capital for a consideration of GBP300,000. Psych Capital is focused
on identifying, funding and building future British and European
leaders across psychedelic science and healthcare.
Oyster Oil and Gas Limited ("Oyster")
Due to the delay in the renewal of the exploration licence, the
fluid political situation in Madagascar and the ongoing impact of
Covid, the holding value of the investment has been written down by
GBP130,000 to GBP130,000. Gunsynd will update the market as and
when material developments occur.
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 regularly 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
investments and disposals, and in managing pr oject
investments.
Finance Review
As noted above, the Company made a profit for the year of
GBP2,012,000 (2020: loss GBP991,000) after taxation, which included
an impairment charge of financial investments of GBP130,000 (2020:
GBP716,000) being GBP130,000 (2020: GBP96,000) write down in the
Oyster investment. The majority of the profit generated was from
increases in value of the Company's investment portfolio. The
Company had net assets of GBP6,303,000 (2020: GBP2,470,000) at 31
July 2021, and cash balances of GBP1,071,000 (2020:
GBP838,000).
Outlook
The Board is pleased that a number of Gunsynd's private
investments completed an IPO during the period at significant
premiums to its original entry point, and further looks forward to
the anticipated IPO of Low6 and future drill results from Eagle
Mountain and Rincon. The Company is still well funded for the
foreseeable future. Gunsynd maintains a low fixed cost structure
and this will continue through volatile and uncertain conditions
across global markets.
The Board is conscious of the ongoing economic dislocation
caused by the COVID-19 pandemic. Debate lingers over whether the
effects are a temporary hiccup or the harbinger of structural
changes. We are far from convinced that the current inflation level
is just a blip, hence our positioning towards gold and copper.
Copper also benefits from being a key infrastructure metal with the
USA and other countries seemingly determined to spend a vast
fortune on so called infrastructure. We also believe regardless of
how actually environmentally friendly the reality of electric
vehicles is (let alone the logistics of everyone charging their
cars at once) the dramatic push by governments towards this will be
beneficial for nickel and lithium in particular.
Vigilant but enthusiastic is our mantra in the short term.
Accordingly, we maintain a level of diversification in our
portfolio with positions in natural resources, life sciences and
beverages whilst in possession of a healthy cash balance.
The Board continues to look at investments in line with its
investment policy as highlighted on its website. This could
potentially include increasing a stake(s) in investments already
held. Such investment(s) 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.
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.
The requirements of s172 are for the Directors to:
-- Consider the likely consequences of any decision in the long
term,
-- Act fairly between the members of the Company,
-- Maintain a reputation for high standards of business
conduct,
-- Consider the interests of the Company's employees,
-- Foster the Company's relationships with suppliers, customers
and others, and
-- Consider the impact of the Company's operations on the
community and the environment.
The Company is an early-stage investment company quoted on a
minor exchange and its members will be fully aware, through
detailed announcements, shareholder meetings and financial
communications, of the Board's broad and specific intentions and
the rationale for its decisions. The Company pays its employees and
creditors promptly and keeps its costs to a minimum to protect
shareholders funds. When selecting investments, issues such as the
impact on the community and the environment have actively been
taken into consideration; as is clear from the portfolio set out in
the Chairman's report.
The application of the s172 requirements can be demonstrated
through the choice of investments made in the year, as described in
the Chairman's report, all of which have been chosen to maximise
profits for our members, whilst ensuring they meet our requirements
on their impact on the local communities and environment.
Hamish Harris
Chairman
22 November 2021
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 31 JULY
2021
2021 2020
Note GBP000 GBP000
------------------------------------------------- ------ -------- ---------
Continuing operations
Income
Unrealised gain on financial investments 11 2,371 176
Realised gain/(loss) on financial investments 11 236 (9)
2,607 167
Administrative expenses
Salaries and other staff costs 6 (278) (186)
Other costs 8 (245) (278)
Share based payment charge 19 (24) (7)
------------------------------------------------- ------ -------- ---------
Total administrative expenses (547) (471)
Impairment of financial investments 11 (130) (716)
Write down of convertible loan notes (2) -
Other income 7 26 -
Finance income 58 29
Profit/(Loss) before tax 2,012 (991)
Taxation 9 - -
------------------------------------------------- ------ -------- ---------
Profit/(Loss) for the period attributable to
equity shareholders of the Company 2,012 (991)
------------------------------------------------- ------ -------- ---------
Other comprehensive income / (expenditure) for - -
the period net of tax
Total comprehensive income/(expenditure) for
the period 2,012 (991)
------------------------------------------------- ------ -------- ---------
Profit/(Loss) per ordinary share
Basic (pence) 10 0.558 (1.064)
Diluted (pence) 0.428 (1.064)
------------------------------------------------- ------ -------- ---------
STATEMENT OF FINANCIAL POSITION AS AT 31 JULY 2021
2021 2020
Note GBP000
----------------------------------------------- ------ --------- ----------
ASSETS
Non-current assets
Financial investments 11 5,124 1,493
Trade and other receivables 12 - 56
Total non-current assets 5,124 1,549
----------------------------------------------- ------ --------- ----------
Current assets
Trade and other receivables 12 174 181
Cash and cash equivalents 17 1,071 838
----------------------------------------------- ------ --------- ----------
Total current assets 1,245 1,019
----------------------------------------------- ------ --------- ----------
Total assets 6,369 2,568
----------------------------------------------- ------ --------- ----------
Current liabilities
Trade and other payables 13 (66) (98)
Total current liabilities (66) (98)
----------------------------------------------- ------ --------- ----------
Total liabilities (66) (98)
----------------------------------------------- ------ --------- ----------
Net assets 6,303 2,470
----------------------------------------------- ------ --------- ----------
Equity attributable to equity holders of the
company
Ordinary share capital 14 382 216
Deferred share capital 14 2,299 2,299
Share premium reserve 14 13,459 11,828
Share based payments reserve 131 192
Retained earnings (9,968) (12,065)
Total equity 6,303 2,470
----------------------------------------------- ------ --------- ----------
STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31 JULY 2021
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 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
------------------------- --------- ---------- --------- ------------- ---------- --------
Profit for the year - - - - 2,012 2,012
------------------------- --------- ---------- --------- ------------- ---------- --------
Total comprehensive
income for the period - - - - 2,012 2,012
Transactions with
owners:
Issue of share capital 166 - 1,690 - - 1,856
Share issue costs - - (59) - - (59)
Share options issued - - - 24 - 24
Share options lapsed - - - (84) 84 -
Transfer within Equity - - - (1) 1 -
At 31 July 2021 382 2,299 13,459 131 (9,968) 6,303
------------------------- --------- ---------- --------- ------------- ---------- --------
STATEMENT OF CASH FLOWS FOR THE YEARED 31 JULY 2021
2021 2020
Note GBP000 GBP000
----------------------------------------------------------------- ------ --------- --------
Cash flow from operating activities
Profit/(Loss) after tax 2,012 (991)
Tax on losses - -
Finance income net of finance costs (58) (29)
Unrealised (gain)/loss on revaluation of financial investments (2,371) (176)
Realised (gain)/loss on sale of financial investments (236) 9
Share based payment 24 7
Write down of convertible loan notes 2 -
Impairment provision 130 716
Foreign exchange movements 3 7
Changes in working capital:
Decrease in trade and other receivables 7 45
(Decrease) in trade and other payables (32) (28)
Cash outflow from operations (519) (440)
Taxation received - -
----------------------------------------------------------------- ------ --------- --------
Net cash outflow from operating activities (519) (440)
----------------------------------------------------------------- ------ --------- --------
Cash flow from investing activities
Payments for financial investments 11 (2,143) (509)
Disposal proceeds from sale of financial investments 11 1,042 154
Repayment of loans to investee company 62 -
Unsecured loans to investee company (6) (26)
Net cash (outflow) from investing activities (1,045) (381)
----------------------------------------------------------------- ------ --------- --------
Cash flows from financing activities
Proceeds on issuing of ordinary shares 14 1,856 1,169
Cost of issue of ordinary shares (59) (78)
----------------------------------------------------------------- ------ --------- --------
Net cash inflow from financing activities 1,797 1,091
----------------------------------------------------------------- ------ --------- --------
Net increase in cash and cash equivalents 17 233 270
Cash and cash equivalents at the beginning of the year 838 568
Cash and cash equivalents at the end of the year 18 1,071 838
----------------------------------------------------------------- ------ --------- --------
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 within the natural resources sector, life
sciences sector (concentrating on but not being limited to,
plant-based nutrition and environmentally friendly alternatives to
food sources) and the alcohol beverage sector, (concentrating on
but not being limited to, ingredients used within the production of
such beverages including sugar cane, agave, and molasses) which the
Board considers, in its opinion, have 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 geographic focus will primarily be
Europe, Australia, the US and the Caribbean, however investments
may also be considered in other regions to the extent the Board
considers that 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 Companies Act.
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. 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 profit for the year of GBP2,012,000 (2020:
loss GBP991,000) after taxation. The Company had net assets of
GBP6,303,000 (2020: GBP2,470,000) and cash balances of GBP1,071,000
(2020: GBP838,000) at 31 July 2021. The Directors have prepared
financial forecasts which cover a period of at least 12 months from
date that these financial statements are approved to 31 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 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 2020 to 31 July 2021, with comparative figures for the
financial year from 1 August 2019 to 31 July 2020.
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 and other income
Revenue is recognised when persuasive evidence of an arrangement
exists, profit has derived from investments or services have been
rendered, prices are fixed or determinable and there is a
probability that economic benefits will flow to the Company.
Realised profits or losses are recognised at the time in which a
contract is entered into to sell and investment. Unrealised profits
or losses are recognised when the fair value of financial
investments is measured at each period end. Other income relates to
services provided and is recognised at the time the service is
delivered.
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 and deferred shares are
classified as equity instruments. The deferred shares have no
voting rights and are not eligible for dividends.
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.
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 assets
The Group classifies its financial assets into one of the
categories discussed below, depending on the purpose for which the
asset was acquired. The Group's accounting policy for each category
is as follows:
Fair Value through Profit or Loss (FVTPL)
This category comprises in-the-money derivatives and
out-of-money derivatives where the time value offsets the negative
intrinsic value. They are carried in the statement of financial
position at fair value with changes in fair value recognised in the
consolidated statement of comprehensive income in the finance
income or expense line. Other than derivative financial
instruments, which are not designated as hedging instruments, the
Group does not have any assets held for trading nor does it
voluntarily classify any financial assets as being at fair value
through profit or loss.
Amortised Cost
These assets comprise the types of financial assets where the
objective is to hold these assets in order to collect contractual
cash flows and the contractual cash flows are solely payments of
principal and interest. They are initially recognised at fair value
plus transaction costs that are directly attributable to their
acquisition or issue and are subsequently carried at amortised cost
using the effective interest rate method, less provision for
impairment. Impairment provisions for current and non-current trade
receivables are recognised based on the simplified approach within
IFRS 9 using a provision matrix in the determination of the
lifetime expected credit losses.
During this process the probability of the non-payment of the
trade receivables is assessed. This probability is then multiplied
by the amount of the expected loss arising from default to
determine the lifetime expected credit loss for the trade
receivables. For the receivables, which are reported net, such
provisions are recorded in a separate provision account with the
loss being recognised in the consolidated statement of
comprehensive income. On confirmation that the receivable will not
be collectable, the gross carrying value of the asset is written
off against the associated provision.
Impairment provisions for receivables from related parties and
loans to related parties are recognised based on a forward-looking
expected credit loss model. The methodology used to determine the
amount of the provision is based on whether there has been a
significant increase in credit risk since initial recognition of
the financial asset, based on analysis of internal or external
information. For those where the credit risk has not increased
significantly since initial recognition of the financial asset,
twelve month expected credit losses along with gross interest
income are recognised. For those for which credit risk has
increased significantly, lifetime expected credit losses along with
the gross interest income are recognised. For those that are
determined to be credit impaired, lifetime expected credit losses
along with interest income on a net basis are recognised.
The Group considers a financial asset in default when
contractual payments are 180 days past due. However, in certain
cases, the Group may also consider a financial asset to be in
default when internal or external information indicates that the
Group is unlikely to receive the outstanding contractual amounts in
full before taking into account any credit enhancements held by the
Group. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows.
The Group's financial assets measured at amortised cost comprise
trade and other receivables and cash and cash equivalents in the
consolidated statement of financial position. Cash and cash
equivalents include cash in hand, deposits held at call with banks,
other short term highly liquid investments with original maturities
of three months or less, and - for the purpose of the statement of
cash flows - bank overdrafts. Bank overdrafts are shown within
loans and borrowings in current liabilities on the consolidated
statement of financial position.
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
2021. Unlisted investments that are not publicly traded and whose
fair value cannot be measured reliably, are measured at fair value
through profit and loss. less impairment
Fair Value Measurement
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either:
-- In the principal market for the asset or liability; or
-- In the absence of a principal market, in the most
advantageous market for the asset or liability
The principal or the most advantageous market must be accessible
by the Group.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest.
A fair value measurement of a non-financial asset takes into
account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset
in its highest and best use.
The Company uses valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest
level input that is significant to the fair value measurement as a
whole:
-- Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities
-- Level 2 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is directly
or indirectly observable
-- Level 3 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level input that
is significant to the fair value measurement as a whole) at the end
of each reporting period.
For the purpose of fair value disclosures, the Company has
determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the
level of the fair value hierarchy, as explained above.
Convertible Loans
Convertible Loans made to companies are classified as financial
assets. The embedded derivative asset, relating to a convertible
loan where the carrying asset converts into a variable number of
shares, is held at "fair value through profit or loss". The
carrying value of the loan is measured at fair value through profit
and loss.
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 2021 are set out
below:
Share Based Payments
The Company issued 19.00 million options over its unissued share
capital to the directors during the year to 31 July 2021.
(2020:6.35 million)
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 GBP24,000 share based payment charge (2020: GBP7,000
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.
Fair value of convertible loans
The Company makes assumptions when measuring the fair value of
convertible loans. At the year end the Company held a balance on
its convertible loan with Rogue Baron plc relating to accrued
interest. The Directors expect this balance to be repaid in cash
and, having considered the valuation and the value of the
derivative option to convert, have concluded that the difference is
not material. The fair value of the loan is therefore considered to
be the same as the carrying value of the loan.
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
Amendments to IFRS 3 Business Combinations 1 January 2020
-----------------------------------------------------
Amendments to IAS 1 and IAS 8: Definition of Material 1 January 2020
-----------------------------------------------------
Amendments to IFRS 9, IAS 39 and IFRS 17: Interest Rate 1 January 2020
Benchmark Reform
-----------------------------------------------------
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
Amendments to IAS 1: Presentation of Financial Statements - Not yet confirmed*
Classification of Liabilities
as Current or Noncurrent
-----------------------------------------------------
Amendments to IFRS 3 Business Combinations 1 January 2022*
-----------------------------------------------------
Amendments to IAS 16: Property, Plant and Equipment 1 January 2022*
-----------------------------------------------------
Amendments to IAS 37: Provisions, Contingent Liabilities and 1 January 2022*
Contingent Assets
-----------------------------------------------------
Annual Improvements to IFRS Standards 2018-2020 Cycle 1 January 2022*
-----------------------------------------------------
Amendments to IAS 8: Accounting Policies, Changes to Not yet confirmed*
Accounting Estimates and Errors
-----------------------------------------------------
Amendments to IAS 12: Income Taxes - Deferred Tax arising Not yet confirmed*
from a Single Transaction
-----------------------------------------------------
*Subject to UK endorsement
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
2021 2020
GBP000 GBP000
---------------------------------------- -------- --------
Included within continuing operations
Fees and salaries 258 183
Social security costs 20 3
278 186
---------------------------------------- -------- --------
2021 2020
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, 2021 2020
was as follows:
GBP000 GBP000
---------------------------------------------------- -------- ----------
Fees and salaries 235 163
Social security costs 17 1
Post- employment payments to defined contribution 2 -
pension scheme
254 164
---------------------------------------------------- -------- ----------
Full details of the remuneration of individual directors,
including the highest paid director, are set out below:
Fees and Social Total Total
salaries security costs 2021 2020
GBP000 GBP000 GBP000 GBP000
----------------------- ---------- ---------------- -------- --------
Directors
Mr H Harris 91 6 97 80
Mr D Strang 85 11 96 72
Mr P Ruse (2) 59 - 59 23
Mr G Garnett (1 & 3) - - - (4)
235 17 252 171
----------------------- ---------- ---------------- -------- --------
(1) appointed 16 January 2018
(2) appointed 6 November 2019
(3) resigned 26 November 2019
No Directors fees have been accrued (2020: GBPNil) and GBPNil
remain unpaid at 31 July 2021 (2020: GBP3,000).
7 Other income
2021 2020
GBP000 GBP000
----------------------- -------- --------
Other fees & services 26 -
Total other income 26 -
----------------------- -------- --------
8 Profit/(Loss) for the year
The following items have been included in operating
profit/(loss):
2021 2020
GBP000 GBP000
------------------------------------------------- -------- --------
Fees payable to the Company's auditors:
Audit and assurance services:
- Audit of parent Company financial statements 18 17
Total auditor's fees 18 17
------------------------------------------------- -------- --------
Analysis of other costs:
Legal and professional fees 11 1
Foreign exchange losses 7 3
Other general overheads 227 274
245 278
------------------------------------------------- -------- --------
9 Taxation
2021 2020
Taxation charge based on profit/losses for the GBP000 GBP000
year
------------------------------------------------------- -------- --------
UK Corporation tax - -
Deferred taxation - -
------------------------------------------------------- -------- --------
Total tax expense - -
------------------------------------------------------- -------- --------
Factors affecting the tax charge for the year:
Profit/(loss) on ordinary activities before taxation 2,012 (991)
------------------------------------------------------- -------- --------
Profit/(loss) on ordinary activities at the average
UK standard rate of 19% (2019: 19%) 382 (188)
Effect of non-deductible expenses 85 5
Unutilised losses carried forward (467) 183
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 Profit/(loss) per share
Profit/(loss) attributable to ordinary shareholders 2021 2020
The calculation of profit/(loss) per share is
based on the loss after taxation divided by the
weighted average number of shares in issue during
the period:
Profit/(loss) from operations (GBP000) 2,012 (991)
Total (GBP000) 2,012 (991)
-------- ---------
Number of shares
Weighted average number of ordinary shares for
the purposes of basic (loss)/earnings per share
(millions) 362.57 93.32
Weighted average number of ordinary shares for
the purposes of diluted (loss)/earnings per share
(millions) 470.73
Basic profit/(loss) per share (expressed in pence) 0.558 (1.064)
Diluted profit/(loss) per share (expressed in
pence) 0.428
-------- ---------
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 2019 - restated 143 - 1,445 1,588
-------------------------------------------- --------- -------- --------- ---------
Additions 193 - 423 616
Fair value changes 176 - - 176
(Loss) 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
-------------------------------------------- --------- -------- --------- ---------
Additions 1,752 - 504 2,256
Fair value changes 1,468 - 903 2,371
(Loss)/Gains on disposals 352 - (116) 236
Transfer to level 1 1,542 - (1,542) -
Disposal (1,041) - (59) (1,100)
Impairment provision - - (132) (132)
Foreign Exchange - - - -
Fair Value at 31 July 2021 4,413 - 711 5,124
-------------------------------------------- --------- -------- --------- ---------
The financial assets splits are as below: -
Non-current assets - listed 4,413 - - 4,413
Non-current assets - unlisted - - 535 535
Non-current assets - unlisted convertible
loans* - - 176 176
-------------------------------------------- --------- -------- --------- ---------
Total 4,413 - 711 5,124
-------------------------------------------- --------- -------- --------- ---------
*GBP111,000 of the convertible loans is an unlisted convertible
loan held in a listed security.
Gains on investments held at fair value
through profit or loss
Fair value gain on investments 2,371 - - 2,371
Realised gain on disposal of investments 352 - (116) 236
------- --- ------- -------
Net gain on investments held at fair
value through profit or loss 2,723 - (116) 2,607
======= === ======= =======
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
2021, and determined a further impairment charge of GBP130,000
(2020: GBP716,000) was required. GBP130,000 (2020: GBP96,000) was
required with regard to the Company's 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 investee 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 2021. The market value of
the listed investments at 30 September 2021 was circa
GBP4,803,000.
Fair value hierarchy of financial assets at fair value through
profit or loss.
12 Trade and other receivables
2021 2020
Non current assets GBP000 GBP000
--------------------------- --------- --------
Loan to Investee Company - 56
- 56
------------------------------------- --------
2021 2020
Current assets GBP000 GBP000
-------------------- -------- --------
Other receivables 152 157
Prepayments 22 24
-------------------- -------- --------
174 181
-------------------- -------- --------
The carrying value of receivables approximates their fair
value.
13 Trade and other payables
2021 2020
Amounts due within one year GBP000 GBP000
------------------------------- -------- --------
Trade payables 23 52
Other creditors 23 26
Accruals and deferred income 20 20
66 98
------------------------------- -------- --------
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 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
-------------------------------------- --------------- ---------- ---------- ---------
Issue of new ordinary shares
on 19 November 2020 56,606,789 48 - 518
Issue of new ordinary shares
on 4 December 2020 56,393,211 48 516
Exercise of warrants on 22 December
2020 3,589,743 3 - 44
Exercise of warrants on 26 January
2021 15,384,610 13 - 187
Issue of new ordinary shares
on 1 February 2021 15,000,000 13 - -
Exercise of warrants on 22 February
2021 2,750,000 2 - 53
Exercise of warrants on 15 March
2021 5,128,176 4 - 62
Exercise of warrants on 6 May
2021 16,492,320 14 - 200
Issue of new ordinary shares
on 3 June 2021 15,000,000 13 - -
Exercise of warrants on 1 July
2021 9,084,610 8 - 110
Less: costs of share placing - - - (59)
-------------------------------------- --------------- ---------- ---------- ---------
At 31 July 2021 449,796,506 382 2,299 13,459
-------------------------------------- --------------- ---------- ---------- ---------
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 deferred shares have no voting rights and are not
eligible for dividends.
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
2021 2020 2021 2020
GBP000 GBP000 GBP000 GBP000
------------------ ------------------- --------------- ---------- --------- ---------- ---------
Short term
Rogue Baron Investee Company Loan (56) 56 - 56
------------------ ------------------- --------------- ---------- --------- ---------- ---------
Additionally, the Company converted GBP639,00 of its Convertible
Loan to Rogue Baron plc into 22,033,293 ordinary shares in Rogue
Baron plc.
Of the total Directors' fees paid detailed in Note 6, GBP41,000
of the amount paid to H Harris was paid to Marlin Atlantic Finance
Ltd, a company which Mr Harris controls, and GBP50,000 of the
amount paid to P Ruse was paid to KGS Consulting Ltd.
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 2021
as disclosed in the table above. The loans outstanding are included
within trade and other receivables, Note 12.
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
2021 2020
GBP000 GBP000
------------------------------------- -------- --------
Net funds at beginning of the year 838 568
Increase in cash 233 270
Net funds at end of the year 1,071 838
------------------------------------- -------- --------
Analysis of changes in net funds
At 31 At 31
July Cash July
2020 Flow 2021
GBP000 GBP000 GBP000
---------------------------- -------- -------- --------
Cash and cash equivalents 838 233 1,071
Net funds 838 233 1,071
---------------------------- -------- -------- --------
Significant non-cash transactions
During the year the significant non-cash transactions during the
year were as follows:
-- GBP130,000 impairment provision in respect of Oyster Oil
& Gas Ltd was expensed through the income statement
-- GBP 2,371,000 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.
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 GBP1,071,000 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 GBP4,994,000
(2020: GBP1,233,000).
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 2021.
2021 2020
----------------------------------------------------- --------------------- ---------------------
Other comprehensive Other comprehensive
income and income and
Net assets Net assets
GBP000 GBP000
----------------------------------------------------- --------------------- ---------------------
Decrease if overall share price falls by 20%, with
all other variables held constant (883) (68)
Decrease in other comprehensive earnings and net
asset value per Ordinary share (in pence) (0.002)p (0.073)p
Increase if overall share price rises by 20%, with
all other variables held constant 883 68
Increase in other comprehensive earnings and net
asset value per Ordinary share (in pence) 0.002p 0.073p
----------------------------------------------------- --------------------- ---------------------
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 2021 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:
2021 2020
GBP000 GBP000
-------------------- -------- --------
Cash at bank 1,071 838
Other receivables 174 237
1,245 1,075
-------------------- -------- --------
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.
2021 2020
Financial assets (Note 12) GBP000 GBP000
----------------------------------------------------- -------- --------
Trade and other receivables - Non interest earning 174 181
Loan to investee company - Non interest earning - 56
Loan to investee company - interest earning @ 12% - -
p.a.
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.
2021 2020
Financial liabilities (Note 13) GBP000 GBP000
---------------------------------- -------- --------
Trade and other payables 66 98
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 2021
Weighted
average
exercise
Number price
--------------------------------------------------- --------------- ----------
At 31 July 2019 341,618,850 0.08p
--------------------------------------------------- --------------- ----------
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
--------------------------------------------------- --------------- ----------
Issued 19,000,000 1.00p
Lapsed (19,046) 446.25p
--------------------------------------------------- --------------- ----------
At 31 July 2021 29,232,353 1.43p
--------------------------------------------------- --------------- ----------
Range of exercise prices 1.00p - 4.25p
--------------------------------------------------- ---------------------------
Weighted average remaining contractual life 1.91 years
--------------------------------------------------- ---------------------------
Options outstanding & exercisable at 31
July 2021
Exercise Expiry
Date of grant Number price (p) date
------------------------------------------ ------------ ----------- ------------
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
26 August 2020 19,000,000 1.00 26/08/2023
------------------------------------------ ------------ ----------- ------------
Total 29,232,353
------------------------------------------ ------------ ----------- ------------
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 GBP0.0079
---------------- ------------------------ --------------- ------------------------------
26 August 2020 1.3% 27.52% 3 years GBP0.00875
---------------- ------------------------ --------------- ------------------------------
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
2021 2020
GBP000 GBP000
------------------------------ -------- --------
Share based payment charges 24 7
------------------------------ -------- --------
Warrants issued, cancelled, & outstanding for the
year ended 31 July 2021
Weighted
average
exercise
Number price
---------------------------------------------------- -------------- ----------
At 31 July 2019 - -
---------------------------------------------------- -------------- ----------
Issued 62,717,950 1.30p
---------------------------------------------------- -------------- ----------
At 31 July 2020 62,717,950 1.30p
---------------------------------------------------- -------------- ----------
Issued 56,500,000 2.00p
Exercised (49,679,459) 1.30p
Exercised (2,750,000) 2.00p
Lapsed (2,064,103) 1.30p
---------------------------------------------------- -------------- ----------
At 31 July 2021 64,724,388 1.88p
---------------------------------------------------- -------------- ----------
Range of exercise prices 1.30p - 2.00p
---------------------------------------------------- --------------------------
Weighted average remaining contractual life 0.85 years
---------------------------------------------------- --------------------------
Warrants outstanding & exercisable at 31 July 2021
Date of grant Number Exercise price (p) Expiry date
--------------------------------- -------------------- -------------------- -------------
30 June 2020 10,974,388 1.30 30/06/2022
02 December 2020 53,750,000 2.00 02/06/2022
Total 64,724,388
--------------------------------- -------------------- -------------------- -------------
20 Commitments and contingencies
The Directors have confirmed that there were no contingent
liabilities or capital commitments which should be disclosed at 31
July 2021.
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
During the year, Gunsynd partially disposed of 786,000 Empress
shares for CAD$344,000 (approximately GBP201,000) and at year end
held 214,000 shares which were subsequently disposed in September
2021 for approximately CAD$67,000 (approximately GBP37,000).
Note:
Certain statements made in this announcement are forward-looking
statements. These forward-looking statements are not historical
facts but rather are based on the Company's current expectations,
estimates, and projections about its industry; its beliefs; and
assumptions. Words such as 'anticipates,' 'expects,' 'intends,'
'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions
are intended to identify forward-looking statements. These
statements are not a guarantee of future performance and are
subject to known and unknown risks, uncertainties, and other
factors, some of which are beyond the Company's control, are
difficult to predict, and could cause actual results to differ
materially from those expressed or forecasted in the
forward-looking statements. The Company cautions security holders
and prospective security holders not to place undue reliance on
these forward-looking statements, which reflect the view of the
Company only as of the date of this announcement. The
forward-looking statements made in this announcement relate only to
events as of the date on which the statements are made. The Company
will not undertake any obligation to release publicly any revisions
or updates to these forward-looking statements to reflect events,
circumstances, or unanticipated events occurring after the date of
this announcement except as required by law or by any appropriate
regulatory authority.
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END
FR FLFVLLALVFIL
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November 23, 2021 06:59 ET (11:59 GMT)
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