TIDMGUN
RNS Number : 4811T
Gunsynd PLC
12 October 2017
Gunsynd plc
("Gunsynd" or the "Company")
Final Results and Notice of Annual General Meeting
Gunsynd (AIM: GUN, ISDX: GUN) is pleased to announce that its
Final Results for the year ended 31 July 2017 and Notice of Annual
General Meeting will both be posted shortly to shareholders and
will be available on the Company's website: http://www.gunsynd.com/
.
The Annual General Meeting to be held at 12.00 p.m. on 3
November 2017 at the offices of Hill Dickinson LLP at Broadgate
Tower, 20 Primrose Street, London, EC2AV 6DN.
For further information, please contact:
Gunsynd plc
Hamish Harris +44 20 7440 0640
Cairn Financial Advisers
LLP
James Caithie / Liam
Murray +44 20 7213 0880
Peterhouse Corporate
Finance
Lucy Williams +44 20 7469 0930
CHAIRMAN'S REPORT (INCORPORATING THE STRATEGIC REVIEW)
I am pleased to present the annual report and financial
statements for the year ended 31 July 2017.
Finance Review
The Company made a profit for the year of GBP492,000 (2016: loss
of GBP564,000) after taxation. This profit originated from realised
gains on disposals of its listed investments of GBP408,000 along
with market value revaluation gains of GBP417,000 (2016: losses
GBP54,000). The Company had net assets of GBP3,266,000 (2016:
GBP1,307,000) including cash balances of GBP372,000 (2016:
GBP358,000) at 31 July 2017.
During the period, the Company announced it had raised
approximately GBP1.55 million through the issue of approximately
3.65 billion new shares at an average placing price of 0.0425 pence
per share. The funds have been used to make further investments and
for general working capital purposes.
Review of Investments
The reporting period has been one of activity and pleasing
results for the Company. We have substantially increased our
investment portfolio with new investments in Oyster Oil and Gas and
United Oil and Gas.
The Company has divested the majority of its stakes held in
Zenith and Alba and completely disposed of legacy positions in
Integumen and Georgia Mining and a recent investment in Pires
Investments.
Oyster Oil and Gas Limited ("Oyster")
Oyster is an international energy group focused on oil and gas
exploration and production activities in underexplored hydrocarbon
basins. Oyster currently operates 4 blocks in the Republic of
Djibouti (100% interest); 3 blocks are located onshore and 1 block
offshore, also the sole interest holder in 1 onshore block in the
Republic of Madagascar.
In February 2017, Oyster announced that, following negotiations
with the Office des Mines Nationales et des Industries
Stratégiques, agreement had been reached to provide a 2 year
extension to the current exploration phase of the Production
Sharing Contract ("PSC)" to July 2019. The technical work program
for 2017 has also been defined, which will include field work and
detailed surveys to improve the structural definition and drilling
locations on the prospects. Oyster has announced its intention to
float in AIM in 2017 and has appointed advisers. As at today's date
Gunsynd holds 3,062,500 shares in Oyster, and also holds a
convertible loan for a principal amount of approximately
GBP250,000, as well as 216,875 warrants to subscribe for new shares
of Oyster, at a placing price of CAD0.55 per Oyster share.
United Oil and Gas Limited ("UOG")
UOG is an independent oil & gas start-up established in 2015
by a former Tullow Oil team. Its strategy is to acquire assets
where the management team's experience can drive near-term activity
and unlock previously untapped value. Two deals have been completed
since August 2016, providing UOG with a material stake in two
licences: PL090 onshore UK, and Podere Gallina onshore Italy. UOG
is listed on the main market of the London Stock Exchange by way of
a standard listing. As at today's date Gunsynd holds 6,058,599
shares in UOG.
Horse Hill Developments Limited ("HHDL")
The Company currently owns a 2% direct interest in Horse Hill
Developments Limited. HHDL is a special purpose company that owns a
65% participating interest and operatorship of Licence PEDL137 and
the adjacent Licence PEDL246 in the UK Weald Basin.
As reported in March 2016, the final total aggregate stable dry
oil flow rate from two Kimmeridge limestones plus the overlying
Portland sandstone in HH-1 stands at 1,688 barrels of oil per day
("bopd"), a UK record for an onshore discovery well. Over the 30 to
90 hour flow periods from each of the 3 zones in HH-1, no clear
indication of any reservoir pressure depletion was observed.
During the reporting period it was announced that Xodus oil
& gas consultants had upgraded the Portland sandstone P50 Oil
in Place (OIP) to 32 million barrels, a 53 per cent increase on
previous calculations. The Company also announced that it had been
informed by the Operator, HHDL, that the Oil & Gas Authority
("OGA") had consented to extend the PEDL137 and PEDL246 licences
until 2021. The Company was informed by HHDL that it understood
that its planning application for long term production testing and
further appraisal drilling would be determined at a scheduled
Surrey County Council planning meeting to be held during October
2017.
Sunshine Minerals ("Sunshine")
Gunsynd holds a 10% stake in this company (and a loan note
convertible into a further 10%) which is a nickel and bauxite
exploration company focussing on the Solomon Islands. Whilst the
bauxite prospecting licence has been granted, the grant of the
prospecting licence for the Jejevo nickel licence is still under
consideration by the government. The nickel price has moved
meaningfully since our investment which bodes rather well for the
future subject to the licence being granted.
Brazil Tungsten Holdings Limited ("BTHL")
Production decreased in the last quarter as the mine focused on
the development of the incline joining Feijão Bravo to Central 497
Level ("Central"). Once completed, ore production from Central will
be taken to the surface via mechanised equipment (tracked loaders
and bobcats) which will significantly increase daily ROM ore
production and extraction. September's production was 12 tonnes of
concentrate which was an improvement over previous months (April
through to June being in the range of 7-10 tonnes). Thirteen tonnes
of concentrate where shipped to a customer on October 4th for a
price of US$245/mtu which is a 50% increase on the prior shipment
in July. Improved mechanisation, higher tungsten prices and the
prospect of government approvals for the Tarantula mine should
hopefully translate into much improved prospects for this
investment.
Alba Mineral Resources plc ("Alba")
The investment thesis for Alba rest on its stake in HHDL (as
mentioned above) and its stake in the Brockham oil licence. Whilst
we still hold a position we divested a substantial part of our
holding at a very good profit and with last sales at a price well
above today's share price.
Zenith Energy Limited ("Zenith")
Despite holding much promise Zenith has underperformed due to
lack of operational progress and perceptions of a particularly poor
PR strategy. Gunsynd saw the issues arising early and coupled with
warning signs such as the CFO abruptly departing, we decided to
divest a substantial portion of our investment at a rather decent
profit which proved to be the entirely correct thing to do. As at
today's date Gunsynd holds 383,334 shares in Zenith.
Investing Policy
The Company's investing policy, as approved by shareholders on
12 September 2014. Is set out below in full:
"The Company's Investing Policy is to invest in and/or acquire
companies and/or projects 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
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 New 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 a proposed investment and/or
acquisition may range from a minority position to full ownership
and may comprise one investment or multiple investments. The
proposed 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 New Board may focus on investments where
intrinsic value may be achieved from the restructuring of
investments or merger of complementary businesses.
The New 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 New 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 New 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 New 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 New 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 New 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 New 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."
In the recent past the regulatory landscape has changed in that
early stage pre-resource mining, oil and gas deals are now, we
believe, looked upon less favourably by exchanges globally. This
being the stage of the investment cycle offering the greatest
potential returns to investors means that we have to adapt to
changed circumstances. Our last investments have performed
strongly. Two of these have been due to regulatory arbitrage, i.e.
the prospect of TSX companies dual listing on LSE. Sunshine, whilst
very early stage, has seen us take active investment approach. It
is this sort of investing that I believe holds the key to creating
substantial shareholder value in the small cap space. Passive
investment is extraordinarily hard in this space which is why we
believe so few institutional investors invest in it. Accordingly,
going forward and in line with our investment policy, we will also
look at sectors other than natural resources where we are able to
invest in a manner that provides not only potential for very high
risk-adjusted rewards but also affords Gunsynd the opportunity to
help the investee company maximise its return to shareholders.
Outlook
Whilst unfortunately not yet reflected in the share price
Gunsynd is in a far better shape than it was this time last year.
This, however, is merely the start. We intend to be very active in
the next twelve months.
The Board would like to take this opportunity to thank our
shareholders for their continued support and I look forward to
reporting further progress over the next period and beyond.
Hamish Harris
Executive Chairman
12 October 2017
DIRECTORS' REPORT
The directors present their annual report on the Company and its
audited financial statements for the year ended 31 July 2017.
Principal activity
As at 31 July 2017 the principal activity of the Company is that
of investing by seeking to acquire companies and/or projects within
the natural resources sector which the Board considers, in its
opinion, have potential for growth. The Company will consider
opportunities in all relevant 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.
Results and dividends
The income statement is set out on page 15 and has been prepared
in Sterling, the functional and reporting currency of the
Company.
The Company's net profit after taxation attributable to equity
holders of Gunsynd plc for the year was GBP492,000 (2016: restated
loss GBP564,000 loss).
No dividends have been paid or proposed.
Review of the business and future developments
A full review of the Company's performance, financial position
and future prospects is given in the Chairman's Report
(Incorporating the Strategic Review).
Directors and their interests
The Directors who served during the year were:
H Harris
D Strang
D Ormerod - appointed 30 March 2017
C Gordon - resigned 16 June 2017
The interests of the serving Directors at 31 July 2017 or at
date of resignation, in the ordinary share capital of the Company
(all beneficially held) were as follows
31 July 2017 31 July 2016
No. No.
Hamish Harris 48,725,490 1,666,667
Donald Strang 57,058,823 10,000,000
David Ormerod - -
Christopher Gordon - -
In addition to the issued shares shown above, at the current
date, Hamish Harris and Donald Strang each holds options over
75,000,000 ordinary shares, exercisable at 0.05p at any time up to
30 June 2022.
Directors' remuneration
The remuneration of the Executive Directors paid during the year
was fixed on the recommendation of the Remuneration Committee. The
remuneration of the Non-executive Director paid during the year was
fixed on the recommendation of the Executive Directors. This has
been achieved acknowledging the need to maximise the effectiveness
of the Company's limited resources during the year.
Fees paid to each Director for the year ended 31 July 2017 are
set out in note 6 to the financial statements.
Substantial shareholdings
Other than as summarised below, the Directors have not been
advised of any individual interest, or group or interests held by
persons acting together, which at 11 October 2017 exceeded 3% of
the Company's issued share capital.
Number of ordinary shares held % of issued
share capital
----------------------------------------------------------- -------------------------------- ----------------
Beaufort Nominees Limited 862,921,931 17.67%
JIM Nominees Limited 542,602,203 11.11%
Barclayshare Nominees 410,836,283 8.41%
Hargreaves Lansdown (Nominees) Limited 382,700,829 7.84%
Neil Scott 230,000,000 4.71%
HSDL Nominees Limited 224,414,159 4.60%
TD Direct Investing Nominees (Europe) Limited - SMKTISAS 206,564,353 4.23%
Investor Nominees Limited 198,389,229 4.06%
TD Direct Investing Nominees (Europe) Limited - SMKTNOMS 196,944,463 4.03%
Vidacos Nominees Limited 161,494,637 3.31%
Employees
The Company has only one direct employee.
Creditor payment policy
The policy of the Company is to:
(a) Agree the terms of payment with suppliers when settling the terms of each transaction;
(b) Ensure that suppliers are made aware of the terms of payment
by inclusion of the relevant terms in contracts; and
(c) Pay in accordance with its contractual and other legal
obligations provided suppliers comply with the terms and conditions
of supply.
Directors' liability
As permitted by the Companies Act 2006, the Company has
purchased insurance cover for the Directors against liabilities in
relation to the Company.
Charitable donations
During the period, the Company made no charitable donations
(2016 - GBPNil).
Financial reporting
The Board has ultimate responsibility for the preparation of the
annual audited accounts. A detailed review of the performance of
the Company is contained in the Chairman's report (incorporating
Strategic Review). Presenting the Chairman's report (incorporating
Strategic Review) and Director's Report, the Board seeks to present
a balanced and understandable assessment of the Company's position,
performance and prospects.
Internal control
A key objective of the Directors is to safeguard the value of
the business and assets of the Company. This requires the
development of relevant policies and appropriate internal controls
to ensure proper management of the Company's resources and the
identification and mitigation of risks which might serve to
undermine them. The Directors are responsible for the Company's
system of internal control and for reviewing its effectiveness. It
should, however, be recognised that such a system can provide only
reasonable and not absolute assurance against material misstatement
or loss.
Events after the reporting period
Events after the reporting period are set out in note 22 to the
financial statements.
Auditor
The Directors will place a resolution before the Annual General
Meeting to re-appoint Chapman Davis LLP as auditor for the coming
year.
Risk management
The directors have in place a process of regularly reviewing
risks to the business and monitoring associated controls, actions
and contingency plans.
The Company's financial risk management policies are set out in
Note 18.
Website publication
The directors are responsible for the maintenance and integrity
of the company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Corporate Governance
Audit and Remuneration Committees have been established and
comprise Hamish Harris (Chairman) and David Ormerod (audit) and
Hamish Harris (Chairman) and David Ormerod (remuneration).
The role of the Remuneration Committee is to review the
performance of the executive Directors and to set the scale and
structure of their remuneration, including bonus arrangements. The
Remuneration Committee also administers and establishes performance
targets for the Company's employee share schemes and executive
incentive schemes for key management. In exercising this role, the
terms of reference of the Remuneration Committee require it to
comply with the Code of Best Practice published in the Combined
Code.
The Audit Committee is responsible for making recommendations to
the Board on the appointment of the auditors and the audit fee, and
receives and reviews reports from management and the Company's
auditors on the internal control systems in use throughout the
Company and its accounting policies.
Going concern
The financial statements have been prepared on a going concern
basis, notwithstanding the profit for the year ended 31 July 2017.
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 GBP492,000 (2016: loss
GBP564,000) after taxation. The Company had net assets of
GBP3,266,000 (2016: GBP1,307,000) and cash balances of GBP372,000
(2016: GBP358,000) at 31 July 2017. 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 October
2018. These forecasts show that the Company expects to have
sufficient financial resources to continue to operate as a going
concern.
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, and the Company
demonstrated its ability to raise further cash by way of completing
placings totalling GBP1,550,000 during the year ended 31 July 2017.
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.
Statement of directors' responsibilities
Company law requires the directors to keep reliable accounting
records which correctly explain the transactions of the Company,
enable the financial position of the Company to be determined with
reasonable accuracy at any time and allow financial statements to
be prepared. The shareholders have resolved, in accordance with the
Companies Act 2006 and the Articles of Association, that the
directors prepare financial statements for each financial period
which give a true and fair view of the state of affairs of the
Company and of its profit or loss for that period.
On this basis the directors have elected to prepare the
financial statements for the Company in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
International Accounting Standard 1 requires that accounts
present fairly for each financial period the company's financial
position, financial performance and cash flows. This requires the
faithful representation of the effects of transactions, other
events and conditions in accordance with the definitions and
recognition criteria for assets, liabilities, income and expenses
set out in the International Accounting Standards Board's
'Framework for the preparation and presentation of accounts'. In
virtually all circumstances, a fair presentation will be achieved
by compliance with all applicable IFRSs. However, directors are
also required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable IFRSs have been followed, subject to
any material departures disclosed and explained in the accounts;
and
-- prepare the accounts on the going concern basis unless it is
inappropriate to presume that the company will continue in
business.
The directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the company and to enable them to ensure that
the accounts comply with the Companies Act 2006. They have a
general responsibility for taking such steps as are reasonably open
to them to safeguard the assets of the company and to prevent and
detect fraud and other irregularities. Legislation in the United
Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Website publication
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website.
Statement of disclosure to auditors
So far as the directors are aware, there is no relevant audit
information of which the Company's auditors are unaware.
Additionally, the directors have taken all the necessary steps
that they ought to have taken as directors in order to make
themselves aware of all relevant audit information and to establish
that the Company's auditors are aware of that information.
By order of the Board of Directors
Hamish Harris
Director
12 October 2017
INFORMATION ON THE BOARD OF DIRECTORS
Hamish Harris, Executive Chairman
Hamish holds a Bachelor of Commerce and has held positions
within market risk management at a number of financial institutions
including Nomura Group, Deutsche Bank AG and BZW plc in Singapore,
Hong Kong and London. Hamish is also a Director on a number of AIM
listed companies. Hamish is a member of both the Audit and
Remuneration committees.
Donald Strang - Executive Director
Donald is a member of the Australian Institute of Chartered
Accountants and has been in business over 20 years, holding senior
financial and management positions in both publicly listed and
private enterprises in Australia, Europe and Africa. He has
considerable corporate and international expertise and over the
past decade has focussed on mining and exploration activities. He
is currently the Finance Director of Cadence Minerals plc and a
Director of Doriemus plc, Primorus Investments plc, and Solo Oil
plc.
David Ormerod - Non-Executive Director
David is an experienced oil and gas professional who has been
involved in public companies at a management and board level for
thirty years. He has experience with operations in Africa, Asia,
US, South America and Australia where he has been involved in
business development, initial drilling through to field
development. He is a member of the AAPG, SEG and a fellow of the
Royal Geological Society. He adds technical governance and strategy
at a critical time in the development of the Company. David is a
member of both the Audit and Remuneration committees.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF GUNSYND PLC
OPINION
We have audited the financial statements of Gunsynd Plc (the
'Company') for the year ended 31 July 2017 which comprise the
statement of comprehensive income, the statement of financial
position, the statement of changes in equity, the statement of cash
flows and notes to the financial statements, including a summary of
significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the company financial statements is applicable law
and International Financial Reporting Standards (IFRSs) as adopted
by the European Union.
In our opinion:
-- the financial statements give a true and fair view of the
state of the Company's affairs as at 31 July 2017 and of the
Company's profits for the year then ended;
-- the Company financial statements have been properly prepared
in accordance with IFRSs as adopted by the European Union;
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
CONCLUSIONS RELATING TO GOING CONCERN
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the company's ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for
issue.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate
opinion on these matters. We have determined the matters described
below to be the key audit matters to be communicated in our
report.
CARRYING VALUE OF AVAILABLE FOR SALE INVESTMENTS
The Company's Available for Sale Investment assets ('AFS
assets') represent the most significant asset on its statement of
financial position totalling GBP2.6m as at 31 July 2017, of which
unlisted investments represented GBP1.4m of the total AFS
assets.
The carrying value of AFS assets represents significant assets
of the company and assessing whether facts or circumstances exist
to suggest that impairment indicators were present, and if present,
whether the carrying amount of these asset may exceed its
recoverable amount was considered key to the audit. This assessment
involves significant judgement applied by management to the
Company's unlisted investments.
We considered it necessary to assess whether facts and
circumstances existed to suggest that impairment indicators were
present, and if present, whether the carrying amount of these
assets may exceed its recoverable amount.
How the Matter was addressed in the Audit
The procedures included, but were not limited to, assessing and
evaluating management's assessment of whether any impairment
indicators have been identified across the Company's AFS assets,
the indicators being:
-- Expiring, or imminently expiring, rights to licences held by the investee Companies
-- A lack of flow of information in regards to the investee
companies exploration activities and/or production
-- Discontinuation of, or a plan to discontinue, exploration
activities in the areas of interest by the Investee Companies
-- Sufficient data exists to suggest carrying value of
exploration and evaluation assets is unlikely be recovered in full
through successful development or sale by the Investee
Companies.
We also reviewed Stock Exchange RNS announcements and Board
meeting minutes for the year and subsequent to year end for
activity to identify any indicators of impairment.
We also assessed the disclosures included in the financial
statements.
OTHER INFORMATION
The Directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the Strategic Report and the
Directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the Strategic Report and the Directors' report have been
prepared in accordance with applicable legal requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the Strategic report or
the Directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of Directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors' responsibilities
statement, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL
STATEMENTS
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) or ISA IAASB will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Keith Fulton
(Senior Statutory Auditor)
For and on behalf of Chapman Davis LLP, Statutory Auditor
London
Chapman Davis LLP is a limited liability partnership registered
in England and Wales (with registered number OC306037).
12 October 2017
FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARED 31 JULY
2017
2017 2016
(restated)
Note GBP000 GBP000
-------------------------------------------------------------------------------------- ------ -------- ------------
Continuing operations
Income
Unrealised profit/(loss) on available for sale assets 417 (54)
Realised Profit on available for sale assets 408 -
825 (54)
Administrative expenses
Salaries and other staff costs 6 (91) (23)
Other costs 8 (261) (186)
Share based payment charge 19 - -
-------------------------------------------------------------------------------------- ------ -------- ------------
Total administrative expenses (352) (209)
(Impairment) of available-for-sale asset 11 - (301)
Other income 7 18 -
Finance income 1 -
Profit/(loss) before tax 492 (564)
Taxation 9 - -
-------------------------------------------------------------------------------------- ------ -------- ------------
Profit/(loss) for the period attributable to equity shareholders of the parent
Company 492 (564)
-------------------------------------------------------------------------------------- ------ -------- ------------
Other comprehensive (expenditure)/income for the period net of tax - -
Total comprehensive income/(expenditure) for the period 492 (564)
-------------------------------------------------------------------------------------- ------ -------- ------------
Earnings/(loss) per ordinary share
Basic (pence) 10 0.017 (0.060)
Diluted (pence) 0.015 (0.060)
-------------------------------------------------------------------------------------- ------ -------- ------------
The notes form an integral part of these financial
statements.
STATEMENT OF FINANCIAL POSITION AS AT 31 JULY 2017
2017 2016
(restated)
Note GBP000 GBP000
--------------------------------- ------ --------- ------------
ASSETS
Non-current assets
Available-for-sale investments 11 2,585 1,009
Total non-current assets 2,585 1,009
--------------------------------- ------ --------- ------------
Current assets
Trade and other receivables 12 486 102
Cash and cash equivalents 17 372 358
--------------------------------- ------ --------- ------------
Total current assets 858 460
--------------------------------- ------ --------- ------------
Total assets 3,443 1,469
--------------------------------- ------ --------- ------------
Current liabilities
Trade and other payables 13 (177) (162)
Total current liabilities (177) (162)
--------------------------------- ------ --------- ------------
Total liabilities (177) (162)
--------------------------------- ------ --------- ------------
Net assets 3,266 1,307
--------------------------------- ------ --------- ------------
Equity attributable to equity
holders of the company
Ordinary share capital 14 489 123
Deferred share capital 14 1,729 1,729
Share premium reserve 14 10,540 9,439
Share based payments reserve 174 174
Retained earnings (9,666) (10,158)
Total equity 3,266 1,307
--------------------------------- ------ --------- ------------
The financial statements were approved and authorised for issue
by the Board of Directors on 12 October 2017 and were signed on its
behalf by:
Hamish Harris Donald Strang
Chairman Director
Company number: 05656604
The notes form an integral part of these financial
statements.
STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31 JULY 2017
Deferred Share Share-based
Share Share premium payments Retained
capital capital reserve reserve earnings Total
GBP000 GBP 000 GBP000 GBP000 GBP000 GBP000
-------------------------------------------- --------- ---------- --------- ------------- ---------- --------
At 1 August 2015 (restated) 73 1,729 9,186 174 (9,594) 1,568
(Loss) for the year - - - - (564) (564)
-------------------------------------------- --------- ---------- --------- ------------- ---------- --------
Total comprehensive loss for the period - - - - (564) (564)
Transactions with owners:
Issue of share capital 50 - 300 - - 350
Share issue costs - - (47) - - (47)
At 31 July 2016 (restated) 123 1,729 9,439 174 (10,158) 1,307
-------------------------------------------- --------- ---------- --------- ------------- ---------- --------
Profit for the year - - - - 492 492
-------------------------------------------- --------- ---------- --------- ------------- ---------- --------
Total comprehensive income for the period - - - - 492 492
Transactions with owners:
Issue of share capital 366 - 1,185 - - 1,551
Share issue costs - - (84) - - (84)
At 31 July 2017 489 1,729 10,540 174 (9,666) 3,266
-------------------------------------------- --------- ---------- --------- ------------- ---------- --------
Details of the nature of each component of equity are set out in
Notes 15
The notes form an integral part of these financial
statements.
STATEMENT OF CASH FLOWS FOR THE YEARED 31 JULY 2017
2017 2016
(restated)
Note GBP000 GBP000
--------------------------------------------------------- ------ --------- ------------
Cash flow from operating activities
Profit/(loss) after tax 492 (564)
Tax on losses - -
Other income (15) -
Finance income net of finance costs (1) -
Unrealised Revaluation of AFS assets (417) 54
(Profit)/loss on sale of AFS Asset (408) -
Impairment/(reversal) of available-for-sale asset 11 - 301
Changes in working capital:
(Increase) in trade and other receivables 6 (51)
Increase in trade and other payables 15 8
Cash outflow from operations (328) (252)
Taxation received - -
--------------------------------------------------------- ------ --------- ------------
Net cash outflow from operating activities (328) (252)
--------------------------------------------------------- ------ --------- ------------
Cash flow from investing activities
Payments for investments in AFS assets 11 (1,873) (145)
Disposal proceeds from sale of AFS Asset 11 1,137 -
Finance income 1 -
--------------------------------------------------------- ------ --------- ------------
Net cash (outflow) from investing activities (735) (145)
--------------------------------------------------------- ------ --------- ------------
Cash flows from financing activities
Proceeds on issuing of ordinary shares 14 1,161 350
Cost of issue of ordinary shares (84) (47)
--------------------------------------------------------- ------ --------- ------------
Net cash inflow from financing activities 1,077 303
--------------------------------------------------------- ------ --------- ------------
Net increase/(decrease) in cash and cash equivalents 17 14 (94)
Cash and cash equivalents at the beginning of the year 358 452
Cash and cash equivalents at the end of the year 17 372 358
--------------------------------------------------------- ------ --------- ------------
The notes form an integral part of these financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
1 Presentation of the financial statements
Description of business & Investing Policy
Gunsynd plc (formerly Evocutis plc) is public limited company
domiciled in the United Kingdom. On 2 August 2016, the Company
changed its name to Gunsynd Plc from Evocutis Plc, by statutory
notice of change filed at Companies House. The Company's registered
office is 2 Chapel Court, London SE1 1HH.
The Company's Investing Policy is to invest in and/or acquire
companies and/or projects 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 a 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 (formerly Evocutis 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 profit for the year ended 31 July 2017.
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 GBP492,000 (2016: loss
GBP564,000) after taxation. The Company had net assets of
GBP3,266,000 (2016: GBP1,307,000) and cash balances of GBP372,000
(2016: GBP358,000) at 31 July 2017. 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 October
2018. These forecasts show that the Company expects to have
sufficient financial resources to continue to operate as a going
concern.
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, and the Company
demonstrated its ability to raise further cash by way of completing
placings totalling GBP1,550,000 during the year ended 31 July 2017.
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 2016 to 31 July 2017, with comparative figures for the
financial year from 1 August 2015 to 31 July 2016.
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.
Other/Royalty income is recognised on an accruals basis in
accordance with the economic substance of the agreement and is
reported as part of revenue. Other revenues are recorded as earned
or as the services are performed. As part of the disposal of assets
agreement in March 2014, the Company retained a right to receive
contingent consideration in the form of royalties arising on any
revenues generated by those assets during the 3 year period ending
18 March 2017 or from the sale or licence of the SYN1113 asset at
any time, this agreement was settled in full during the year for
GBP18,000 as detailed in Note 7.
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.
Financial instruments
Available-for-sale investments
Non-derivative financial assets comprising the Company's
strategic investments in entities not qualifying as subsidiaries,
associates or jointly controlled entities. They are carried at fair
value with changes in fair value recognised directly in a separate
component of equity (available-for-sale reserve). Where there is a
significant or prolonged decline in the fair value of an
available-for-sale financial asset (which constitutes objective
evidence of impairment), the full amount of the impairment,
including any amount previously charged to equity, is recognised in
the statement of comprehensive income. On sale, the amount held in
the available-for-sale reserve associated with that asset is
removed from equity and recognised in the statement of
comprehensive income.
Trade and other receivables
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.
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.
Financial investments
Listed investments are valued at closing bid price on 31 July.
For measurement purposes, financial investments are designated at
fair value through statement of comprehensive income. Gains and
losses on the realisation of financial investments are recognised
in the statement of comprehensive income for the period and taken
to retained earnings. 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.
Restatement of market value movements in AFSA
The company has amended its accounting policy for Available For
Sale Assets. The unrealised profits of these quoted investments are
now taken directly through the income statement less any related
costs of purchase. This has resulted in a restatement of the
financial statements for 31 July 2016. This has resulted in an
increased loss for the prior period by GBP54,000 from GBP510,000 to
GBP564,000.
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-currents 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 2017 are set out
below:
Fair value of contingent consideration
The consideration for the sale of intellectual property assets
to Venn Life Science Holdings plc in March 2014 included an element
of contingent consideration that is based on a future royalty
stream from commercialisation of those assets by Venn. An estimate
of the fair value of the contingent consideration has not been
included in these financial statements. However the actual amounts
of royalties receivable in future years is dependent upon a number
of factors, all of which are outside the Company's control. These
include Venn's ability to be able to generate commercial revenues
from the intellectual property assets, the demand for those
products and other economic factors, and as such, the Company has
taken a prudent basis and not accounted for any potential future
royalties. This has been fully settled during the year for
GBP18,000 as detailed in Note 7.
Share Based Payments
The Company made awards of nil million options over its unissued
share capital to the directors during the year to 31 July 2017.
(2016: GBPnil share options issued)
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 GBPnil share based payment charge (2016: GBPnil
charge).
4 New accounting requirements
At the date of authorisation of these financial statements, the
following IFRSs, IASs and Interpretations were in issue but not yet
effective. Their adoption is not expected to have a material effect
on the financial statements unless otherwise indicated:
-- IFRS 9 Financial Instruments (effective date 1 January 2018);
-- IFRS 15 Revenue from Contracts with Customers (effective date 1 January 2018);
-- IFRS 16 Leases (effective date 1 January 2019);
-- IFRS 17 Insurance Contracts (effective date 1 January 2021).
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
2017 2016
GBP000 GBP000
---------------------------------------- -------- --------
Included within continuing operations
Wages and salaries 87 22
Social security costs 4 1
Share based payment expense - -
---------------------------------------- -------- --------
91 23
---------------------------------------- -------- --------
2017 2016
Number Number
------------------------------------------------------------------------------------------ -------- --------
Average number of persons employed by the Company (including Directors) during the year
Directors 3 3
Administrative staff 1 -
------------------------------------------------------------------------------------------ -------- --------
Total 4 3
------------------------------------------------------------------------------------------ -------- --------
The compensation of the Directors, 2017 2016
in aggregate, was as follows:
GBP000 GBP000
------------------------------------- -------- --------
Wages and salaries 75 20
Social security costs 2 1
Share based payment expense - -
77 21
------------------------------------- -------- --------
Full details of the remuneration of individual directors,
including the highest paid director, are set out below:
Fees & Share Based Total Total
salary Payments 2017 2016
GBP000 GBP000 GBP000 GBP000
------------------------------------------- -------- ------------- -------- --------
Directors
Mr H Harris 26 - 26 6
Mr D Strang 26 - 26 6
Mr C Gordon (resigned 16 June 2017) 19 - 19 6
Mr D Ormerod (appointed 30 March 2017) 4 - 4 -
Mr D Lenigas (resigned 21 December 2015) - - - 2
------------------------------------------- -------- ------------- -------- --------
75 - 75 20
------------------------------------------- -------- ------------- -------- --------
Directors fees totalling GBP5,000 have been accrued and remain
unpaid at 31 July 2017. (2016: GBP27,000)
7 Other income
2017 2016
GBP000 GBP000
-------------------- -------- --------
Royalty settlement 18 -
Total other income 18 -
-------------------- -------- --------
On 26 February 2014, the Company announced that it was, subject
to shareholder approval, disposing of certain intellectual property
assets to Venn Life Sciences plc (the "Disposal"). As part of the
terms of the Disposal, the Company was entitled to receive
additional potential consideration based on future net sales made
by Venn. Subsequently, on 20 February 2015, the Purchaser sold the
intellectual property assets the subject of the Disposal to
Innovenn, which is a subsidiary of Integumen plc ("Integumen"),
which was admitted to trading on AIM on 5 April 2017. Integumen at
that date agreed to pay GBP3,000 and has also issued 300,000 new
ordinary shares in Integumen to the Company at a price of 5 pence
per new ordinary share, in full and final settlement of any rights
to additional consideration.
8 Profit/(Loss) for the year
The following items have been included in operating
profit/(loss):
2017 2016
GBP000 GBP000
------------------------------------------ -------- --------
Fees payable to the company's auditors,
Chapman Davis LLP in relation to the
Company:
Audit and assurance services:
- Audit of parent Company financial
statements 10 12
- Other services - -
------------------------------------------ -------- --------
Total auditor's fees 10 12
------------------------------------------ -------- --------
Analysis of other costs:
Legal and professional fees 10 99
Foreign exchange (gains) (23) -
Other general overheads 274 87
261 186
------------------------------------------ -------- --------
9 Taxation
2017 2016
(restated)
Taxation charge based on losses for GBP000 GBP000
the year
---------------------------------------------- -------- ------------
UK Corporation tax - -
Deferred taxation - -
---------------------------------------------- -------- ------------
Total tax expense - -
---------------------------------------------- -------- ------------
Factors affecting the tax charge for
the year:
Profit/(loss) on ordinary activities
before taxation 492 (564)
---------------------------------------------- -------- ------------
Loss on ordinary activities at the
average UK standard rate of 19/20%
(2016: 20%) 97 (113)
Effect of non-deductible expenses - 60
Future income tax benefit not brought
to account (82) 53
Other deductions for tax purposes including (15) -
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.
Factors affecting the tax charge in future years
Changes to tax legislation could impact on the Company's
effective tax rate. The UK Government has in recent years proposed
some significant changes to the UK taxation system. The UK
Government announced a phased reduction in the main rate of
corporation tax to 19% and the deferred tax balances reflect that
reduction in the UK tax rate, as is appropriate to the Company's
circumstances.
10 Earnings/(Loss) per share
Loss attributable to ordinary shareholders 2017 2016
(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:
Profit/(loss) from operations (GBP000) 492 (564)
Total (GBP000) 492 (564)
--------- ------------
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings/(loss) per
share
(millions) 2,783.3 941.9
Weighted average number of ordinary shares for the purposes of diluted earnings/(loss) per
share (millions) 2,815.9 941.9
Basic earnings/(loss) per share (expressed in pence) 0.018 (0.060)
Diluted earnings/(loss) per share (expressed in pence) 0.017 (0.060)
--------- ------------
11 Available-for-sale investments
GBP000
---------------------------------------------------------- ---------
Fair Value at 31 July 2015 1,219
---------------------------------------------------------- ---------
Additions 145
Revaluation (54)
Impairment provision (301)
Fair Value at 31 July 2016 1,009
---------------------------------------------------------- ---------
Additions 1,888
Market value Revaluations 408
Gains on disposals 417
Disposal (1,137)
Impairment provision -
Fair Value at 31 July 2017 2,585
---------------------------------------------------------- ---------
The available for sale investments splits are as below:
Non-current assets - listed 1,170
Non-current assets - unlisted 965
Non-current assets - unlisted convertible loans 450
---------------------------------------------------------- ---------
2,585
---------------------------------------------------------- ---------
The Directors carried out an impairment review as at 31 July
2016 on the unlisted investments, and determined that an impairment
charge of GBP301,000 was required against its investment in Brazil
Tungsten Holdings Ltd ("BTH"), a BVI based company focused solely
on the producing Bodo Tungsten Mine in Rio Grande do Norte, Brazil.
The Directors considered it prudent in light of lower commodity
prices. The Directors carried out an impairment review as at 31
July 2017 and determined no further impairment was required in
regards to its unlisted investments, as a result of the progress
made by the companies and detailed within the strategic review.
Available-for-sale 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 2017. The market value of
the listed investments at 6 October 2017 was GBP1,111,000.
12 Trade and other receivables
2017 2016
GBP000 GBP000
-------------------- -------- --------
Trade receivables - -
Other receivables 472 82
Prepayments 14 20
-------------------- -------- --------
486 102
-------------------- -------- --------
13 Trade and other payables
2017 2016
Amounts due within one year GBP000 GBP000
------------------------------- -------- --------
Trade payables 65 48
Accruals and deferred income 112 114
177 162
------------------------------- -------- --------
14 Share capital and share premium account
Number Ordinary Deferred Share
of shares share share premium
capital capital
GBP000 GBP000 GBP000
--------------------------------------------------- --------------- ---------- ---------- ---------
Share capital issued and fully paid
--------------------------------------------------- --------------- ---------- ---------- ---------
At 31 July 2015 724,675,828 73 1,729 9,186
--------------------------------------------------- --------------- ---------- ---------- ---------
Issue of new ordinary shares on 23 February 2016 500,000,000 50 - 300
Less: costs of share placing - - - (47)
--------------------------------------------------- --------------- ---------- ---------- ---------
At 31 July 2016 1,224,675,828 123 1,729 9,439
--------------------------------------------------- --------------- ---------- ---------- ---------
All share issues for cash via Placings;
Issue of new ordinary shares on 12 October 2016 545,454,545 55 - 245
Issue of new ordinary shares on 11 January 2017 1,752,500,000 175 - 525
Issue of new ordinary shares on 16 January 2017 141,176,471 14 - 46
Issue of new ordinary shares on 16 January 2017 94,117,646 9 - 31
Issue of new ordinary shares on 21 July 2017 1,125,000,000 113 - 338
Less: costs of share placing - - - (84)
--------------------------------------------------- --------------- ---------- ---------- ---------
At 31 July 2017 4,882,924,490 489 1,729 10,540
--------------------------------------------------- --------------- ---------- ---------- ---------
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 Amounts owed
party transaction with from related
related party
party
At 31 At 31 At 31 At 31
July July July July
2017 2016 2017 2016
GBP000 GBP000 GBP000 GBP000
------------------ --------------- --------------- --------- -------- -------- --------
Horse Hill Cash call
Developments Investee Loan to
Ltd ("HHDL") Company HHDL - 82 82 82
------------------ --------------- --------------- --------- -------- -------- --------
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 only has the outstanding
amounts due from HHDL as at 31 July 2017. The loan outstanding is
included within trade and other receivables, Note 12. The loan to
HHDL has been made in accordance with the terms of the investment
agreement whereby it accrues interest daily at the Bank of England
base rate and is repayable out of future cashflows.
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
2017 2016
GBP000 GBP000
------------------------------------- -------- --------
Net funds at beginning of the year 358 452
Increase/(decrease) in cash 14 (94)
Net funds at end of the year 372 358
------------------------------------- -------- --------
Analysis of changes in net funds
At 31 At 31
July Cash July
2016 Flow 2017
GBP000 GBP000 GBP000
---------------------------- -------- -------- --------
Cash and cash equivalents 358 14 358
Net funds 358 14 358
---------------------------- -------- -------- --------
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 GBP372,000 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 available-for-sale investment portfolio
in the face of market movements, which was a maximum of
GBP2,585,000 (2016: GBP1,009,000).
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 available-for-sale investments held at 31 July
2017.
2017 2016
-------------------------------------------------- -------------------------------- --------------------------------
Other comprehensive income and Other comprehensive income and
Net assets Net assets
-------------------------------------------------- -------------------------------- --------------------------------
GBP000 GBP000
-------------------------------------------------- -------------------------------- --------------------------------
Decrease if overall share price falls by 20%,
with all other variables held constant (427.0) (201.8)
Decrease in other comprehensive earnings and net
asset value per Ordinary share (in pence) (0.015p) (0.02p)
Increase if overall share price rises by 20%,
with all other variables held constant 427.0 201.8
Increase in other comprehensive earnings and net
asset value per Ordinary share (in pence) 0.015p 0.02p
-------------------------------------------------- -------------------------------- --------------------------------
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 investment in
Brazil Tungsten Holdings Ltd, and no balances at 31 July 2017 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:
2017 2016
GBP000 GBP000
-------------------- -------- --------
Cash at bank 372 358
Other receivables 486 102
858 460
-------------------- -------- --------
The Company's cash balances are held in accounts with Barclays
Bank plc.
Fair value of financial assets and liabilities
Financial assets and liabilities are carried in the Statement of
Financial Position at either their fair value (available-for-sale
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 in scope of IAS 39
The following table sets out financial assets within Trade and
other receivables which fall within the scope of IAS39. These
assets are non-interest earning.
2017 2016
Financial assets in scope of IAS39 GBP000 GBP000
---------------------------------------- -------- --------
Trade and other receivables (Note 12) 486 102
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 in scope of IAS39
The following table sets out financial liabilities within Trade
and other payables which fall within the scope of IAS39. 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, which are outside the scope of IAS39.
2017 2016
Financial liabilities in scope of IAS39 GBP000 GBP000
------------------------------------------ -------- --------
Total trade and other payables (Note
13) 177 162
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 outstanding Weighted
average
exercise
Number price
----------------------------- ------------ ----------
At 31 July 2015 32,650,840 0.60p
------------------------------- ------------ ----------
Options granted - -
At 31 July 2016 32,650,840 0.60p
------------------------------- ------------ ----------
Options granted - -
At 31 July 2017 32,650,840 0.60p
------------------------------- ------------ ----------
Range of exercise prices 0.22p - 8.65p
------------------------------- ------------------------
Weighted average remaining 2.60 years
contractual life
------------------------------- ------------------------
19 Share schemes continued
Options outstanding at 31 July 2016
Exercise Expiry
Date of grant Number price (p) date
-------------------------------------- ------------ ----------- ------------
6 August 2008 1,031,990 8.65p 06/08/2018
1 October 2010 1,618,850 5.25p 30/11/2020
1 April 2015 30,000,000 0.22p 01/04/2020
-------------------------------------- ------------ ----------- ------------
Total 32,650,840
-------------------------------------- ------------ ----------- ------------
Options exercisable Weighted
exercise
Number price (p)
---------------------- ------------ -----------
At 31 July 2016 32,650,840 0.60p
---------------------- ------------ -----------
At 31 July 2017 32,650,840 0.60p
---------------------- ------------ -----------
Charges to the statement of comprehensive income
2017 2016
GBP000 GBP000
----------------------------- -------- --------
Share based payment charges - -
----------------------------- -------- --------
Warrants in issue
As at 31 July 2017 and at 31 July 2016, no warrants remained
outstanding, no warrants expired during the year. (2016:
375,000,000 warrants expired) No warrants were issued during the
year. (2016: nil)
20 Commitments and contingencies
The directors have confirmed that there were no contingent
liabilities or capital commitments which should be disclosed at 31
July 2017.
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 7 August 2017, The Company announced that it had agreed to
grant 150 million share options to Donald Strang and 150 million
share options Hamish Harris ("New Options"). Each New Option will
entitle the holder to subscribe for new ordinary shares of 0.01p
each in the Company ("Shares") at an exercise price of 0.05 pence
per Share and are exercisable at any time until 30 June 2022, which
represents a premium of circa 11 per cent over the closing
mid-price on 4 August 2017. Also on this date, existing options
over 10,000,000 ordinary shares issued to each of Donald Strang and
Hamish Harris which vested on 2 April 2015 with an exercise price
of 0.22 pence have been cancelled following the award of options
noted above.
The Directors of the Company accept responsibility for the
contents of this announcement.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR MTBITMBMBBBR
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