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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Gunsynd Plc | LSE:GUN | London | Ordinary Share | GB00BMD6PM55 | ORD 0.085P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.135 | 0.13 | 0.14 | 0.135 | 0.135 | 0.135 | 500,000 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Investment Advice | 149k | -1.71M | -0.0031 | -0.42 | 721.24k |
From Apr 2021 to Apr 2024
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.
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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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