TIDMPRIM
RNS Number : 4823O
Primorus Investments PLC
18 May 2018
Primorus Investments plc
("Primorus" or the "Company")
Final results for year ended 31 December 2017
Chairman's Statement
I am pleased to present the Chairman's Statement and Strategic
report for the year ended 31 December 2017.
Overview
Primorus Investments plc ("Primorus") has a strong balance sheet
with no debt and with current assets (including cash of GBP561,000)
as at 31 December 2017 amounting to GBP1,286,000. (2016:
GBP1,295,000)
It has been a successful year for the Company with the addition
of several new investments as detailed below in Investments. 2017
was dominated by portfolio acquisition, consolidation and
rationalisation through the participation in our first secondary
funding rounds and the sale of our legacy stake in GMOW and the
strong growth seen at Engage Technology and Fresho.
Highlights for the year were as follows:
-- HHDL received planning permission for the Extended Flow Test of the HH-1 oil discovery;
-- Engage Technology platform expanded significantly and
appointed Microsoft UK Cloud Services Director as non-executive
Director;
-- Sale of entire stake in Gold Mines of Wales for 83,333,333
shares in Alba Mineral Resources plc;
-- Participation in a successful A$4m second round investment in
Fresho Pty Ltd at a 40% premium to first round;
-- Second round investment in WeShop at a 20% premium to first
round. Platform usage grows markedly since second-round investment,
with registered users surging 76% in Q1 2018 to 150,000 and unique
users topped 1m for the first time.
-- Appointment of TPI Limited as exclusive Company Broker;
-- Directors purchased 97m ordinary shares in the Company via on-market purchases;
-- Successfully raised approximately GBPGBP3.4m during the
period through the issue of approximately 1.7 billion Primorus
shares at placing prices of 0.15p and 0.20p per share;
-- A post year end sale of 5% stake in HHDL for consideration of GBP1m; and
-- A further investment post year end in Engage of GBP500,000.
Significant progress has also been made elsewhere in our
portfolio and we look forward to providing updates as key news
develops at TruSpine, Sport80, FOMO Money, Nomad Energy, SOA,
Farina and StreamTV.
We regularly meet the CEOs and management of companies which are
seeking funds to further their businesses. It is notable the
comments we receive on the perceived difficulty in securing funding
outside of the VC/VCT and private equity universe. Several
companies pointed out to us that there is simply a dearth of
investors able to participate directly in pre-IPO and private
funding rounds and that VC/VCT funding terms are onerous to the
point of being unattractive.
It is important for shareholders to understand that whilst we do
everything possible to support our existing investments because it
is in our interest to do so, we do not have a direct effect on the
exact timing of any given IPO and or trade sale. We do however
maintain regular dialogue with the companies in question and use
the Board's extensive experience in public markets to make a value
judgement on when and if a transaction may occur.
Thus, these timings may change over time as the facts change but
we will update shareholders as material changes occur.
Recently we have seen sustained core investment progress,
portfolio rebalancing and more clarity on the likely timing of
several of our investments towards IPO. Going forward we hope to
receive material news from several of our investments as they
commence the formal IPO process.
Investments
Horse Hill Developments Limited
The Company currently owns a 5% direct interest in Horse Hill
Developments Limited ("HHDL"), which 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 announced on 28 February 2018, the Company disposed of half
of its original 10% stake in HHDL for a total consideration of
GBP1m. This sale was designed to increase existing cash reserves,
rebalance the portfolio make-up and reduce the expected cash calls
resulting from the soon-to-commence 90 day extended flow test
("EWT") of the HH-1 discovery well. As a result of this
transaction, Primorus retains a 5% direct shareholding in HHDL. We
remain optimistic that the EWT will return substantial
flow-rates.
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.
The carrying value of this investment remains unchanged however
the Board looks forward with considerable interest to the upcoming
long-term extended flow test programme in 2018 and its likely
potential impact on our investment value going forward.
SOA Energy
SOA Energy ("SOA") is an oil exploration and development company
with prospects in the Dead Sea region of Israel. Primorus
participated in a private funding round by purchasing 14,977 shares
at GBP6.67 per share. SOA is currently seeking a significant
funding package to further their development plans. We are
encouraged by funding progress made by SOA and we expect a funding
deal to be completed soon.
Fresho Pty Ltd
Fresho Pty Ltd ("Fresho"), a company in which Primorus holds an
investment of approximately GBP250,000, representing approximately
3.1% of Fresho's issued share capital, is positioning itself as a
leading Australian B2B company servicing the restaurant and food
service industries. By aggregating and streamlining the food order
process via Fresho's unique cloud-based platform, both customers
and suppliers are able to make savings in time, money and wastage
and also generate powerful reporting and business data
analytics.
We continued to be impressed by the team at Fresho. We met
management in Melbourne in October 2017 and were not only pleased
with the business performance to date but also by the financial
interest generated in Fresho which enabled them to raise A$4m in
what we understand to have been a keenly sought-after funding
round.
Pleasingly the Fresho platform continues to perform strongly
with order volumes and customers numbers in Australia and now New
Zealand growing strongly. Fresho maintains a strong cash balance
and it is anticipated that it should get to a breakeven basis,
including R&D spend, sometime in the second half of 2018.
Whilst much of the data regarding Fresho is now "commercial in
confidence", the Board of Primorus believes the Fresho platform is
exceeding our expectations.
Nomad Energy
Nomad Energy is a private oil and gas exploration and
development company primarily focussed on commercialising existing
gas reserves in shallow offshore waters off the Ivory Coast. Nomad
Energy is currently attempting to negotiate a gas sales agreement
with local utilities for the supply of gas to existing and proposed
power stations in the country. Primorus owns 40,000 shares at the
last investor round price of US$7.50 per share.
We have been informed that negotiations over off-take pricing
for its domestic gas project are moving forward, albeit more slowly
than first anticipated. Completing this off-take is the final step
in allowing Nomad to monetise the asset with its partner VITOL and
thereby potential providing a good return on our investment. We
will keep shareholders up to date as these matters progress.
TruSpine Technologies Limited
Primorus invested GBP500,000 in TruSpine Technologies Limited
("Truspine") on a pre-new money valuation of GBP15m. Founded in
December 2014, TruSpine secured intellectual property and
subsequently developed the Faci-LOK and Cervi-FAS minimally
invasive spine stabilisation devices, and the VOSC Catheter
atherosclerosis treatment product 'VOSC Catheter'. This development
is on-going and TruSpine is targeting FDA clearance and
commercialisation of its first product, the Faci-LOK with a view to
an AIM IPO. We have been informed TruSpine will require further
funding to complete this. We understand TruSpine is in negotiations
with a funder at the current time to provide all the funding
required.
Importantly, TruSpine has appointed Mr Simon Stephens as its new
interim CEO. Most recently, Simon has held the position of Research
Director for London Valve Therapies, where he was responsible for
the provision of a new service for the analysis of
CT/Echocardiography scans for bleeding edge transcathether cardiac
interventions mainly for Mitral Valve/Left Ventricular procedures.
He is also a Research Fellow at the Royal Brompton & Harefield
NHS Foundation Trust. In a previous role as CTO for Hometrack, he
was responsible for developing software technologies that resulted
in the company being sold in 2017 for GBP120m. In addition to Mr
Stephens, Professor Abdallah Raweh has joined the medical advisory
board. He is a professor of Cardiology who was trained in Italy,
the UK and US, and who now operates internationally.
We view the appointment of Mr Stephens and Professor Raweh as
key steps in helping to secure the remaining funding required to
complete the FDA fast-track approvals process and build a credible
Board in advance of an IPO. We look forward to updating
shareholders in the near future as to the progress of the
aforementioned TruSpine funding, as that is key to unlocking the
FDA fast-track and IPO processes.
Sport:80 plc
Primorus invested GBP100,000 in Sport:80 plc ("Sport:80") on a
pre-new money valuation of GBP10m as part of a fundraising of up to
GBP1m. Sport:80 is a technology and management company with a
proprietary cloud-based platform focused on transforming the
business operations and management of sports organisations. The
Sport:80 platform is used by 20 prominent sports organisations.
Sport:80 is revenue-generating with four-fold revenue growth per
annum since 2014. It is the intention of Sport:80 to pursue an AIM
IPO.
Sport:80 remains on track to formally commence the IPO process
soon with our best estimate suggesting a likely Q3 2018 listing
subject to financing and regulatory approvals. We view Sport:80 as
a strong IPO candidate and subject to available funds, we may
participate in any IPO funding round.
Farina Investments (UK) Limited
Primorus invested GBP100,000 in Farina Investments (UK) Limited
("Farina") on a pre-new money valuation of GBP4m. Farina is a
boutique corporate finance and asset management company which
specialises in leveraging profit opportunity in the post-crisis
financial landscape. Farina has been carefully structured and
strategically placed to fully capitalise on these opportunities,
thereby optimising capital growth, profitability and returns for
both the company and investors. Farina is currently exploring
various UK listing opportunities either via IPO or reverse
takeover.
Engage Technology Partners Limited
The Company initially invested GBP400,000 in Engage Technology
Partners Limited ("Engage") on a pre-new money valuation of GBP15m
as part of a fully subscribed GBP5.25m funding round. Founded in
2013, Engage builds software to assist with finding, hiring,
compliance and paying of the rapidly growing contingent workforce
in the UK. Engage has developed and is now selling a unique, fully
integrated SaaS platform servicing the HR industry surrounding the
contingent workforce in the UK.
Engage has developed, and is now selling, access to a unique,
fully-integrated SaaS platform servicing the HR industry
surrounding the contingent workforce in the UK. In recent
shareholder updates we have been informed that the platform has
already reached GBP1m of Annual Recurring Revenue ("ARR").
This is significant because from this ARR figure we believe that
top-line revenues and underlying EBITDA for the Engage platform may
grow exponentially as customers are on-boarded and the product
becomes fully self-serve from a customer point of view. The
underlying attraction of SaaS platforms is their ability to scale
rapidly as a result of a low cost of service base to generate very
high EBITDA margins as a result.
We believe testimony to this potential is the appointment of Mr
Paul Bolt as a non-executive director at Engage. Paul is UK Cloud
Services Director at Microsoft. Microsoft have allowed Paul to take
on the non-executive role at Engage whilst retaining his current
post as UK Cloud Services Director allowing him to foster and
mentor potentially globally scalable SaaS platforms.
We have been informed that Engage continues to be courted by a
large number of VC funds in the UK and US but is considering
maintaining its independence via a further capital raise during
2018. On 13 March 2018, the Company announced that it had invested
a further GBP500,000 in Engage at GBP22 per share and now held
approximately 3.6% of the issued share capital of Engage.
As flagged in our announcement of 13 March 2018, we remain
optimistic regarding Engage as an investment because of the rapid
pace of uptake of the product from UK corporates. It is also
noteworthy that Engage has begun discussions with City brokers
regarding a potential IPO in 2019. The Company is hoping to invest
further in Engage in the coming Quarter should the opportunity
arise.
WeShop Limited
Primorus invested GBP200,000 in WeShop Limited ("WeShop") on a
pre-new money valuation of GBP25m in September 2017. We invested a
further GBP675,000 at a GBP30m valuation in November 2017. WeShop
is a new way to shop online and earn rewards. Users can browse
millions of products from many top brands, discover which have been
recommended by people known to them and earn rewards to withdraw as
cash or donate to charity.
WeShop allows the user to shop with friends to share ideas and
gain inspiration, with everyone earning rewards. An AIM IPO is
planned to take place during 2018.
Stream TV
Primorus invested US$200,000 on a fully-diluted valuation of
US$336m. Stream TV is a Philadelphia-based new media company
created to serve a consumer market seeking enhanced entertainment
and communications experiences through devices with unlimited
accessibility and superior quality. Through its wholly-owned
research subsidiary, SeeCubic B.V., Stream TV has developed
breakthrough glasses-free 3D display technology launched under the
trade name Ultra-D. Stream TV is on the cusp of commercially
launching, via license, a range of TV, tablet and smartphone
glasses-less 3D screens in 2018.
Recently Stream TV has added to their product plan 8K displays
which produce effects approaching hologram-like quality as new
prototypes used by prospective customers. They announced joint
cooperation with Beijing Optical and Electric ("BOE") to
commercialise its Ultra-D Glasses-Free 3D technology in its next
generation 8K panels.
Further licensed products will follow including laptops, PCs,
gaming, medical, and automotive. Stream TV desires to IPO in the
near future.
Gold Mines of Wales
In December 2017, the Company sold its entire 49% stake in Gold
Mines of Wales ("GMOW") for circa 83m shares in Alba Mineral
Resources PLC ("Alba"). We see this as an attractive outcome for
shareholders as we retain some exposure to the project via the
consequent 3.6% shareholding in Alba and by definition increase our
exposure to HHDL in which Alba is a 18.1% shareholder. Furthermore,
the Alba stake is inherently more liquid than our previous direct
stake in GMOW.
Financial Results
The operating loss for the year was GBP703,000 (2016 -
GBP420,000 loss). The net loss after tax was GBP947,000 (2016:
GBP694,000). The increase in the net loss is due to share based
payments expense during the year of GBP311,000 (2016: nil) and loss
on disposal of GMOW of GBP199,000 (2016:nil).
Current assets including cash at 31 December 2017 amounted to
GBP1,286,000 (2016: GBP1,295,000).
Outlook
2017 was dominated by portfolio acquisition, consolidation and
rationalisation through the participation in our first secondary
funding rounds and the sale of our legacy stake in GMOW and the
exceptional growth seen at Engage Technology and Fresho.
The Board remains confident that the private and pre-IPO markets
remain significantly under-served and as such significant
opportunities exist for the Company going forward. We look forward
to 2018 being one in which we can demonstrate our business model by
exiting some more of our investment positions, thereby realising
tangible value for all shareholders.
As evidenced by the above, Primorus has had a busy end to 2017
and start to 2018. We successfully completed the first two
second-round investments and are confident a number of our
investments are making material progress towards either IPO or
trade sale. Furthermore, I am pleased that all Directors have made
significant on-market purchases of Company stock which demonstrates
to investors that the Board are committed and aligned to
shareholders and to generating share price-based outcomes in the
future for the benefit of all.
We will continue to seek out further investments in line with
the Company's investing strategy.
The directors would like to take this opportunity to thank our
shareholders, staff and consultants for their continued
support.
Jeremy Taylor-Firth
Chairman
18 May 2018
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information, please contact:
Primorus Investments plc: +44 (0) 20 7440 0640
Alastair Clayton
Nominated Adviser: +44 (0) 20 7213 0880
Cairn Financial Advisers LLP
James Caithie / Sandy Jamieson
Broker: +44 (0) 20 3621 4120
Turner Pope Investments
Andy Thacker
FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME
YEARED 31 DECEMBER 2017
2017 2016
Notes GBP000 GBP000
Revenue
Realised gain on disposal of AFS investments 2 12 17
Unrealised gain on market value movement
of AFS investments 2 29 45
------- -------
Total gains on AFS investments 41 62
------- -------
Impairment provision on AFS investments - (150)
Share based payments (311) -
Administrative costs (433) (332)
------- -------
Operating (loss) 3 (703) (420)
------- -------
Provision on associate loan - (152)
Share of (loss) of associate 7 (45) (122)
Net (loss) on disposal of associate 7 (199) -
------- -------
(Loss) before tax (947) (694)
Taxation 5 - -
------- -------
(Loss) for the year attributable to equity
holders of the company (947) (694)
------- -------
(Loss) per Share
Basic and diluted (loss) per share (pence) 6 (0.05) (0.07)
------- -------
There are no other recognised gains or losses for the year.
STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2017
2017 2017 2016 2016
ASSETS Notes GBP000 GBP000 GBP000 GBP000
Non-Current Assets
Investment in Associate 7 - 155
Available for Sale Investments 8 3,761 915
--------- ---------
3,761 1,070
Current Assets
Trade and other receivables 9 725 1,074
Cash and cash equivalents 10 561 221
--------- ---------
1,286 1,295
Total Assets 5,047 2,365
------- -------
LIABILITIES
Current Liabilities
Trade and other payables 11 (97) (38)
Total Liabilities (97) (38)
------- -------
Net Assets 4,950 2,327
======= =======
EQUITY
Equity Attributable to Equity
Holders
of the Company
Share capital 13 15,391 15,223
Share premium account 35,296 32,205
Share based payment reserve 471 160
Retained earnings (46,208) (45,261)
--------- ---------
Total Equity 4,950 2,327
======= =======
STATEMENT OF CHANGES IN EQUITY
AT 31 DECEMBER 2017
Share Share Share Retained Total
capital premium based earnings attributable
payment to owners
reserve of the
Company
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 31 December 2015 15,188 31,426 160 (44,567) 2,207
========= ========= ========= ========== ==============
Loss for the year - - - (694) (694)
Total comprehensive income
for the year - - - (694) (694)
Shares issued 35 835 - - 870
Share Issue costs - (56) - - (56)
Transactions with owners
of the company 35 779 - - 814
Balance at 31 December 2016 15,223 32,205 160 (45,261) 2,327
========= ========= ========= ========== ==============
Loss for the year - - - (947) (947)
Total comprehensive income
for the year - - - (947) (947)
Shares issued 168 3,219 - - 3,387
Share Issue costs - (128) - - (128)
Share options issued - - 311 - 311
Transactions with owners
of the company 168 3,091 311 - 3,570
Balance at 31 December 2017 15,391 35,296 471 (46,208) 4,950
========= ========= ========= ========== ==============
STATEMENT OF CASH FLOWS
YEARED 31 DECEMBER 2017
2017 2017 2016 2016
GBP000 GBP000 GBP000 GBP000
Cash Flows from Operating Activities
Operating Loss (703) (420)
Adjustments for:
Share based payment charge 311 -
Change in trade and other receivables (26) 24
Change in trade and other payables 59 -
Change in AFS Investments (2,530) (165)
Taxation (paid) - -
(2,186) (141)
-------- -------
Net Cash used in Operating Activities (2,889) (561)
Cash Flows from Investing Activities
Loan advanced to associate (5) (60)
Loan advanced to related party (25) (289)
Net Cash used in Investing Activities (30) (349)
Cash Flows from Financing Activities
Proceeds from share issues 3,387 870
Share issue costs (128) (56)
-------- -------
Net Cash in generated from Financing
Activities 3,259 814
-------- -------
Net Change in Cash and Cash Equivalents 340 (96)
Cash and Cash Equivalents at beginning
of period 221 317
-------- -------
Cash and Cash Equivalents at end
of period 561 221
======== =======
NOTES TO THE FINANCIAL STATEMENTS
YEARED 31 DECEMBER 2017
1. Accounting Policies
Basis of Preparation
Primorus Investments Plc is a company incorporated in the United
Kingdom. The Company's shares are listed on the AIM market of the
London Stock Exchange, and on the NEX Exchange Growth Market as
operated by NEX Exchange Limited ("NEX").
The Financial Statements are for the year ended 31 December 2017
and have been prepared under the historical cost convention and in
accordance with International Financial Reporting Standards as
adopted by the EU ("adopted IFRS"). These Financial Statements (the
"Financial Statements") have been prepared and approved by the
Directors on 18 May 2018 and signed on their behalf by Donald
Strang and Alastair Clayton.
The accounting policies have been applied consistently
throughout the preparation of these Financial Statements, and the
financial report is presented in Pound Sterling (GBP) and all
values are rounded to the nearest thousand pounds (GBP'000) unless
otherwise stated.
Investing Policy
The Company's investing policy is to acquire a diverse portfolio
of direct and indirect interests in exploration and producing
projects and assets in the natural resources sector in addition to
acquisition(s) in the leisure, corporate services, consultancy and
brand licensing sectors. The Company will consider possible
opportunities anywhere in the world.
The Directors have considerable experience investing, both in
structuring and executing deals and in raising funds. The Directors
will use this experience to identify and investigate investment
opportunities, and to negotiate acquisitions. Wherever necessary
the Company will engage suitably qualified technical personnel to
carry out specialist due diligence prior to making an acquisition
or an investment.
The Company may invest by way of outright acquisition or by the
acquisition of assets, including the intellectual property, of a
relevant business, or by entering into partnerships or joint
venture arrangements. Such investments may result in the Company
acquiring the whole or part of a company or project (which in the
case of an investment in a company may be private or listed on a
stock exchange, and which may be pre-revenue), and such investments
may constitute a minority stake in the company or project in
question.
The Company may be both an active and a passive investor
depending on the nature of the individual investments in its
portfolio. Although the Company intends to be a long-term investor,
the Directors will place no minimum or maximum limit on the length
of time that any investment may be held.
The Directors may 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 by way of example, and without
limitation, delays in collecting accounts receivable, unexpected
changes in the economic environment and unforeseen operational
problems. The Company may in appropriate circumstances issue debt
securities or otherwise borrow money to complete an investment. The
Directors do not intend to acquire any cross-holdings in other
corporate entities that have an interest in the Ordinary
Shares.
There are no restrictions in the type of investment that the
Company might make nor on the type of opportunity that may be
considered other than set out in this Investing policy.
In addition, the Directors may consider from time to time other
means of facilitating returns to Shareholders including dividends,
share repurchases, demergers, and schemes of arrangements or
liquidation.
Going Concern
The Directors noted the losses that the Company has made for the
Year Ended 31 December 2017. The Directors have prepared cash flow
forecasts for the period ending 31 May 2019 which take account of
the current cost and operational structure of the Company.
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.
These forecasts demonstrate that the Company has sufficient cash
funds available to allow it to continue in business for a period of
at least twelve months from the date of approval of these financial
statements. Accordingly, the financial statements have been
prepared on a going concern basis.
It is the prime responsibility of the Board to ensure the
Company remains a going concern. At 31 December 2017 the Company
had cash and cash equivalents of GBP561,000 and no borrowings. The
Company has minimal contractual expenditure commitments and the
Board considers the present funds sufficient to maintain the
working capital of the Company for a period of at least 12 months
from the date of signing the Annual Report and Financial
Statements. For these reasons the Directors adopt the going concern
basis in the preparation of the Financial Statements.
New standards, amendments and interpretations adopted by the
Company
No new and/or revised Standards and Interpretations have been
required to be adopted, and/or are applicable in the current year
by/to the Company, as standards, amendments and interpretations
which are effective for the financial year beginning on 1 January
2017 are not material to the Company.
New standards, amendments and interpretations not yet
adopted
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements, were in issue but not yet effective
for the year presented:
- IFRS 9 in respect of Financial Instruments which will be
effective for the accounting periods beginning on or after 1
January 2018.
- IFRS 15 in respect of Revenue from Contracts with Customers
which will be effective for accounting periods beginning on or
after 1 January 2018.
- IFRS 16 in respect of Leases which will be effective for
accounting periods beginning on or after 1 January 2019.
- IFRS 17 Insurance Contracts (effective date 1 January
2021).
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Company.
Sources of Estimation and Key Judgements
The preparation of the Financial Statements requires the Company
to make estimates, judgements and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses and
related disclosure of contingent assets and liabilities. The
Directors base their estimates on historic experience and various
other assumptions that they believe are reasonable under the
circumstances, the results of which form the basis of making
judgements about the carrying value of assets and liabilities that
are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or
conditions.
Revenue
Revenue is measured by reference to the fair value of
consideration received or receivable by the Company for services
provided, excluding VAT and trade discounts. Revenue is credited to
the Income Statement in the period it is deemed to be earned.
Finance Income and Costs
Finance income and costs are reported on an accruals basis.
Taxation
Current tax is the tax currently payable based on taxable profit
for the year.
Deferred income taxes are calculated using the liability method
on temporary differences. Deferred tax is generally provided on the
difference between the carrying amounts of assets and liabilities
and their tax bases. However, deferred tax is not provided on the
initial recognition of goodwill, nor on the initial recognition of
an asset or liability unless the related transaction is a business
combination or affects tax or accounting profit. Deferred tax on
temporary differences associated with shares in subsidiaries and
joint ventures is not provided if reversal of these temporary
differences can be controlled by the Company and it is probable
that reversal will not occur in the foreseeable future. In
addition, tax losses available to be carried forward as well as
other income tax credits to the Company are assessed for
recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no
discounting. Deferred tax assets are recognised to the extent that
it is probable that the underlying deductible temporary differences
will be able to be offset against future taxable income. Current
and deferred tax assets and liabilities are calculated at tax rates
that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at
the balance sheet date.
Changes in deferred tax assets or liabilities are recognised as
a component of tax expense in the income statement, except where
they relate to items that are charged or credited directly to
equity in which case the related deferred tax is also charged or
credited directly to equity.
Foreign Currencies
Transactions in foreign currencies are translated at the
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities in foreign currencies are translated at the
rates of exchange ruling at the balance sheet date. Non-monetary
items that are measured at historical cost in a foreign currency
are translated at the exchange rate at the date of the transaction.
Non-monetary items that are measured at fair value in a foreign
currency are translated using the exchange rates at the date when
the fair value was determined. Any exchange differences arising on
the settlement of monetary items or on translating monetary items
at rates different from those at which they were initially recorded
are recognised in the profit or loss in the period in which they
arise. Exchange differences on non-monetary items are recognised in
other comprehensive income to the extent that they relate to a gain
or loss on that non-monetary item taken to other comprehensive
income, otherwise such gains and losses are recognised in the
income statement.
The Company's functional currency and presentational currency is
Sterling.
Equity
Equity comprises the following:
-- "Share capital" representing the nominal value of equity shares.
-- "Share premium" representing the excess over nominal value of
the fair value of consideration received for equity shares, net of
expenses of the share issue.
-- "Share based payment reserve" represents the value of equity
benefits provided to employees and directors as part of their
remuneration and provided to consultants and advisors hired by the
Company from time to time as part of the consideration paid.
-- "Retained earnings" representing retained profits.
Investment in associates
An associate is an entity over which the Company has significant
influence and that is neither a subsidiary nor an interest in a
joint venture. Significant influence is the power to participate in
the financial and operating policy decisions of the investee but is
not control or joint control over those policies. The investment in
an associate is initially recognised at cost and adjusted for the
Company's share of in the net assets of the investee after the date
of acquisition, and for any impairment in value (equity method),
except when the investment is classified as held-for-sale in
accordance with IFRS 5 Non-current assets held-for-sale and
discontinued operations. If the Company's share of losses of an
associate exceed the cost of the investment in the associate, from
that point the Company discontinues recognising its share of
further losses.
Financial Assets
Financial assets are divided into the following categories:
loans and receivables and available-for-sale financial assets.
Financial assets are assigned to the different categories by
management on initial recognition, depending on the purpose for
which they were acquired, and are recognised when the Company
becomes party to contractual arrangements. Both loans and
receivables and available for sale financial assets are initially
recorded at fair value.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. Trade, most other receivables and cash and cash equivalents
fall into this category of financial assets. Loans and receivables
are measured subsequent to initial recognition at amortised cost
using the effective interest method, less provision for impairment.
Any change in their value through impairment or reversal of
impairment is recognised in the income statement.
Provision against trade receivables is made when there is
objective evidence that the Company will not be able to collect all
amounts due to it in accordance with the original terms of those
receivables. The amount of the write-down is determined as the
difference between the asset's carrying amount and the present
value of estimated future cash flows.
A financial asset is derecognised only where the contractual
rights to the cash flows from the asset expire or the financial
asset is transferred and that transfer qualifies for derecognition.
A financial asset is transferred if the contractual rights to
receive the cash flows of the asset have been transferred or the
Company retains the contractual rights to receive the cash flows of
the asset but assumes a contractual obligation to pay the cash
flows to one or more recipients. A financial asset that is
transferred qualifies for derecognition if the Company transfers
substantially all the risks and rewards of ownership of the asset,
or if the Company neither retains nor transfers substantially all
the risks and rewards of ownership but does transfer control of
that asset.
Available-for-sale financial assets are non-derivative financial
assets that are either designated to this category or do not
qualify for inclusion in any of the other categories of financial
assets. The Company's available-for-sale financial assets include
unlisted securities. These available-for-sale financial assets are
measured at fair value. Gains and losses are recognised in other
comprehensive income and reported within the available-for-sale
reserve within equity, except for impairment losses and foreign
exchange differences, which are recognised in profit or loss. When
the asset is disposed of or is determined to be impaired, the
cumulative gain or loss recognised in other comprehensive income is
reclassified from the equity reserve to profit or loss and
presented as a reclassification adjustment within other
comprehensive income. Interest calculated using the effective
interest method and dividends are recognised in profit or loss
within finance income
Financial Liabilities
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the Company becomes a
party to the contractual provisions of the instrument.
All financial liabilities initially recognised at fair value
less transaction costs and thereafter carried at amortised cost
using the effective interest method, with interest-related charges
recognised as an expense in finance cost in the income statement. A
financial liability is derecognised only when the obligation is
extinguished, that is, when the obligation is discharged or
cancelled or expires.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits, together with other short-term, highly liquid investments
that are readily convertible into known amounts of cash and which
are subject to an insignificant risk of changes in value.
Share-Based Payments
The Company operates a number of equity-settled, share-based
compensation plans, under which the entity receives services from
employees as consideration for equity instruments (options) of the
Company. The fair value of the employee services received in
exchange for the grant of the options is recognised as an expense.
The total amount to be expensed is determined by reference to the
fair value of the options granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability or sales
growth targets, or remaining an employee of the entity over a
specified time period; and
-- including the impact of any non-vesting conditions (for
example, the requirement for employees to save).
Non-market vesting conditions are included in assumptions about
the number of options that are expected to vest. The total expense
is recognised over the vesting period, which is the period over
which all of the specified vesting conditions are to be
satisfied.
In addition, in some circumstances, employees may provide
services in advance of the grant date, and therefore the grant-date
fair value is estimated for the purposes of recognising the expense
during the period between service commencement period and grant
date.
At the end of each reporting period, the entity revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in profit or loss, with
a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares.
The proceeds received, net of any directly attributable transaction
costs, are credited to share capital (nominal value) and share
premium.
2. Segment Reporting
The Company is now operating as a single UK based segment with a
single primary activity to invest in businesses so as to generate a
return for the shareholders. The revenue from this segment,
generated from sale of investments, was GBP12,000 (2016 -
GBP17,000). The non-current assets of the segment is GBP3,761,000
(2016 - GBP1,070,000).
3. Operating Activities and Auditor's Remuneration
2017 2016
GBP000 GBP000
Included within results from operating activities
are the following:
Operating lease rentals - land and buildings 10 23
Auditor's remuneration:
Audit services:
* Company statutory audit 10 10
Non-audit services:
- -
* Taxation compliance
------- -------
4. Information Regarding Directors and Employees
2017 2016
GBP000 GBP000
Employment costs, including Directors, during
the year:
Wages and salaries 190 72
Share based payments 311 -
501 72
------- -------
Average number of persons, including Directors No. No.
employed
Administration 4 3
------- -------
4 3
------- -------
Directors' remuneration GBP000 GBP000
Emoluments 489 72
------- -------
The Company operates only the basic pension plan required under
UK legislation, contributions thereto during the year amounted
to GBP15.
Emoluments of the Individual Directors
Fees and Share based
salaries payments Total
(non-cash)
2017 GBP000 GBP000 GBP000
A Clayton 112 156 268
J Taylor Firth 42 - 42
D Strang 24 155 179
178 311 489
--------------- --------- ------------ -------
2016 GBP000 GBP000 GBP000
A Clayton 24 - 24
J Taylor Firth 24 - 24
D Strang 24 - 24
72 - 72
--------------- --------- ------------ -------
Directors' interest in share options is set out in note 14.
Key Management Personnel
The key management personnel are considered to be the Directors.
There remuneration is included in note 4 above.
5. Income Tax (Credit)/Expense
The relationship between the expected tax (credit)/expense based
on the effective tax rate of the Company at 19/20% (2016 - 20%) and
the tax (credit)/expense actually recognised in the income
statement can be reconciled as follows:
2017 2016
GBP000 GBP000
Loss for the year before tax (947) (694)
Tax rate 19/20% 20%
Expected tax credit (182) (139)
Expenses not deductible for tax purposes 68 51
Deferred tax asset not recognised 114 88
Actual tax expense - -
------- -------
Deferred Tax
The amount of approximate unused tax losses for which no
deferred tax asset is recognised in the statement of financial
position is GBP1,973,000 (2016 - GBP1,382,000).
6. Loss per Share
Weighted Basic per
average share amount
No. of shares
2017 GBP000 (pence)
Loss after tax (947)
Earnings attributable to ordinary
shareholders (947)
=======
Weighted average number of shares 1,743,253,998 (0.05)
==============
Total basic and diluted loss
per share (0.05)
==============
2016 GBP000 (pence)
Loss after tax (694)
Earnings attributable to ordinary
shareholders (694)
=======
Weighted average number of shares 1,052,549,167 (0.07)
==============
Total basic and diluted loss
per share (0.07)
==============
7. Investment in associate
2017 2016
GBP000 GBP000
Investment in associate - 155
-------- --------
2017 2016
GBP'000 GBP'000
Carrying amount at 1 January 155 277
Share of associate loss (45) (122)
Value at disposal of associate (110) -
-------- --------
Carrying amount at 31 December - 155
-------- --------
On 1 December 2017, the Company completed the sale of its entire
49% interest in Gold Mines of Wales Limited to Alba Mineral
Resources PLC ("Alba") for a total consideration of 83,333,333
shares in Alba. Alba's closing share price on December 1 2017 was
0.38p, these shares had a market value of approximately GBP316,667
and will represent 3.6% of the so enlarged issued capital in Alba.
These shares are subject to a six month orderly market agreement
and were issued immediately upon completion of the sale.
Disposal of Associate GBP'000
Sale Proceeds 316
Value of loan to associate satisfied on
disposal (405)
Value of associate at disposal (110)
--------
(Loss) on disposal of associate (199)
--------
8. Available for Sale Investments
2017 2016
Investment in listed and unlisted securities GBP000 GBP000
Valuation at beginning of the period 915 750
Additions at cost 3,052 291
Disposal proceeds (247) (37)
Gains on disposals 12 16
Gain on Market value revaluation 29 45
Impairment in value of unlisted investment - (150)
---------- ----------
Valuation at the end of the period 3,761 915
========== ==========
The available for sale investments splits are as below:
Non-current assets - listed 466 135
Non-current assets - unlisted 3,295 780
3,761 915
The Directors have reviewed the carrying value of the unlisted investments, and have considered
no impairment is required in the current year to 31 December 2017. For the year ended 31 December
2016, an impairment of GBP150,000 against the Company's investment in Boletus Resources Ltd
has been deemed appropriate on the basis that Boletus's potential projects are not deemed
commercially viable.
Available-for-sale investments comprise both listed and unlisted investments. 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.
9. Trade and Other Receivables
Current trade and other receivables 2017 2016
GBP000 GBP000
Trade receivables - -
Other receivables 24 11
Due from associate undertaking - 400
Due from related party (see note 16) 683 658
Prepayments and accrued income 18 5
725 1,074
------- -------
The directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
10. Cash at Bank and Cash Equivalents
2017 2016
GBP000 GBP000
Cash at Bank 561 221
------- -------
11. Trade and Other Payables
2017 2016
Current trade other payables GBP000 GBP000
Trade payables 44 16
Taxation and social security 13 3
Accruals and deferred income 40 19
------- -------
97 38
------- -------
All amounts are short term and the carrying values are
considered to be a reasonable approximation of fair value.
12. Risk Management Objectives and Policies
Financial assets by category
The categories of financial asset included in the balance sheet
and the headings in which they are included are as follows:
Current assets 2017 2016
GBP000 GBP000
Loans and receivables 725 1,074
Cash 561 221
------- -------
1,268 1,295
------- -------
Financial Liabilities by Category
The categories of financial liability included in the balance
sheet and the headings in which they are included are as
follows:
Current liabilities
Financial liabilities measured at amortised
cost 97 38
--- ---
The Company is exposed to market risk through its use of
financial instruments and specifically to credit risk, and
liquidity risk which result from both its operating and investing
activities. The Company's risk management is coordinated at its
headquarters, in close co-operation with the board of Directors,
and focuses on actively securing the Company's short to medium term
cash flows by minimising the exposure to financial markets. Long
term financial investments are managed to generate lasting returns.
The Company does not actively engage in the trading of financial
assets for speculative purposes nor does it write options. The most
significant financial risks to which the Company is exposed to are
described below.
Interest rate sensitivity
The Company is not substantially exposed to interest rate
sensitivity, other than in relation to interest bearing bank
accounts.
Credit risk analysis
The Company's exposure to credit risk is limited to the carrying
amount of trade receivables. The Company continuously monitors
defaults of customers and other counterparties, identified either
individually or by Company, and incorporates this information into
its credit risk controls. Where available at reasonable cost,
external credit ratings and/or reports on customers and other
counterparties are obtained and used. Company's policy is to deal
only with creditworthy counterparties. Company management considers
that trade receivables that are not impaired for each of the
reporting dates under review are of good credit quality, including
those that are past due.
None of the Company's financial assets are secured by collateral
or other credit enhancements.
The credit risk for liquid funds and other short-term financial
assets is considered negligible, since the counterparties are
reputable banks with high quality external credit ratings.
Liquidity risk analysis
The Company's continued future operations depend on the ability
to raise sufficient working capital through the issue of equity
share capital. The Directors are confident that adequate funding
will be forthcoming with which to finance operations. Controls over
expenditure are carefully managed.
Capital Management Policies
The Company's capital management objectives are:
-- to ensure the Company's ability to continue as a going concern; and
-- to provide a return to shareholders
The Company monitors capital on the basis of the carrying amount
of equity less cash and cash equivalents.
13. Share Capital
2017 2016
GBP000 GBP000
Allotted, issued and fully paid
2,796,619,344 ordinary shares of 0.01p each
(2016 - 1,110,549,167of 0.01p each) 279 111
28,976,581 deferred shares of 45p each (2016
- 28,976,581) 13,040 13,040
28,976,581 A deferred shares of 4p each (2016-
28,976,581) 1,159 1,159
92,230,985 B deferred shares of 0.99p each
(2016- 92,230,985) 913 913
------- -------
15,391 15,223
------- -------
The deferred shares and the A and B deferred shares do not carry
voting rights.
Ordinary Nominal
Shares Value
Number GBP'000
Ordinary shares of 0.01p each
As at 31 December 2015 762,549,167 76
1 March 2016 - Placing for cash at 0.25p
per share 308,000,000 31
2 March 2016 - Placing for cash at 0.25p
per share 40,000,000 4
As at 31 December 2016 1,110,549,167 111
-------------- --------
2 March 2017 - Placing for cash at 0.15p
per share 158,000,000 16
7 July 2017 - Placing for cash at 0.15p
per share 333,333,334 33
2 August 2017 - Placing for cash at 0.15p
per share 694,736,843 69
23 November 2017 - Placing for cash at 0.20p
per share 500,000,000 50
As at 31 December 2017 2,796,619,344 279
-------------- --------
Details of the share options and warrants the Company has in
issue are disclosed in Note 14.
14. Share-based payments
Details of share options and warrants granted to Directors,
employees & consultants, over the ordinary shares are as
follows:
Exercised
or
At Issued expired At Exercise Date from Expiry
1 January during during 31 December price which
2017 the year the year 2017 exercisable date
No. No. No. No. GBP
Share options
D. Strang 10,000,000 - - 10,000,000 0.004 14/11/2013 14/11/2023
D. Strang 12,000,000 - - 12,000,000 0.003 30/11/2015 31/12/2020
A Clayton 12,000,000 - - 12,000,000 0.003 30/11/2015 31/12/2020
J Taylor-Firth 12,000,000 - - 12,000,000 0.003 30/11/2015 31/12/2020
Consultants 10,000,000 - - 10,000,000 0.004 14/11/2013 14/11/2023
D Strang - 75,000,000 - 75,000,000 0.003 03/08/2017 03/08/2022
A Clayton - 75,000,000 - 75,000,000 0.003 03/08/2017 03/08/2022
56,000,000 150,000,000 - 206,000,000
----------- ------------ ---------- -------------
Warrants
Various 4,075,000 - - 4,075,000 0.004 29/10/2013 14/11/2018
----------- ------------ ---------- -------------
4,075,000 - - 4,075,000
----------- ------------ ---------- -------------
The share price range during the year was GBP0.00075 to
GBP0.0036 (2016 - GBP0.0014 to GBP0.0030).
The weighted average values of options are 2017 2016
as follows:
Weighted average exercise price of options 0.30p -
granted
Weighted average exercise price of options
exercisable at the
end of the year 0.31p 0.33p
Weighted average option life remaining 4.43 years 5.03 years
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 Share price Expected Share
rate volatility life price
at date
of grant
3 August 2017 0.75% 108.7% 5.00 years GBP0.0027
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 has been
adjusted, based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations.
The Company recognised total expenses of GBP311,000 (2016:
GBPnil) relating to equity-settled share-based payment transactions
during the year, and GBPnil was transferred via equity to retained
earnings on the exercise of nil options (2016: nil options) during
the year (2016: GBPnil).
15. Capital Commitments
The directors have confirmed that there were no contingent
liabilities or capital commitments which should be disclosed at 31
December 2017. No provision has been made in the financial
statements for any amounts in relation to any capital expenditure
requirements of the Company's associate or investments, and such
costs are expected to be fulfilled in the normal course of the
operations of the Company.
16. Related Party Transactions
The Company had the following amounts outstanding from its
investee companies (Note 9) at 31 December:
2017 2016
GBP'000 GBP'000
Horse Hill Development Ltd ("Horse Hill") 683 658
--------- ---------
The above loan outstanding is included within trade and other
receivables, Note 9. The loan to Horse Hill 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.
Key Management Personnel
The key management personnel are considered to be the Directors.
There remuneration is included in note 4 to the accounts.
17. Events after the end of the reporting period
On 9 January 2018, the Company announced that it had agreed to
grant 75 million share options each to Alastair Clayton and Jeremy
Taylor-Firth ("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 0.3 pence per Share and
are exercisable at any time until 9 January 2025, which represented
a premium of circa 67 per cent over the closing mid-price on 8
January 2018.
On 9 March 2018, the Company announced it had completed the
disposal of a 5% interest in Horse Hill Developments Limited for
consideration of GBP1m in cash and publicly trading shares.
On 13 March 2018, the Company announced it had invested a
further GBP500,000 in an existing investment, Engage Technology
Partners Limited.
18. Ultimate Controlling Party
There is not considered to be an ultimate controlling party of
the company.
19. Posting of Accounts
The Report and Accounts for the year ended 31 December 2017 will
be posted to shareholders and uploaded to the Company's website in
due course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFEFIWFASESI
(END) Dow Jones Newswires
May 18, 2018 02:00 ET (06:00 GMT)
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