TIDMSVE
RNS Number : 6656C
Starvest PLC
11 February 2020
11 February 2020
Starvest Plc ("Starvest" or "the Company")
Audited results for the year ended 30 September 2019
Chairman's Statement
I am pleased to present my annual statement to Shareholders for
the year ended 30 September 2019 and the nineteenth since the
Company was formed in 2000.
Results for the year
The trading environment for natural resources focused companies
was subdued through most of the fiscal 2019 period due to a
stagnant market largely influenced by global market sentiment and
Brexit negotiations. But the latter parts of 2019 saw a marked
improvement following UK elections and a jump in the gold price
which refocused the attention of investors and we noted improved
share prices in many of our investee companies.
Despite the flat trading environment throughout the period to 30
Sept 2019, several investee companies in our portfolio delivered
strong exploration and operational results. We achieved an increase
of 17% in our Trading Portfolio Value over the 12 months to 30 Sept
2019, and we saw a 25% increase in our Net Asset Value over the
same period, along with a 21% increase in our Net Asset Value per
Share. The Market Capitalisation of the company grew by 9% in the
12 months to 30 September 2019.
Greatland Gold plc remains one of our best-performing investee
stocks for a second year running following its outstanding
gold-copper discovery in Australia. The share price of Greatland
Gold plc increased approximately 75% in the 12 months to 30 Sept
2019 and has continued its upward trend since. Sustained positive
efforts by Ariana Resources at its 50/50 JV Kiziltepe mine
continued to meet and often exceed forecasted production and
generate revenue. Ariana also achieved good progress at its
Salinbas exploration property. Cora Gold returned positive
exploration results from its Sanankoro property, expanding the
known mineralisation along strike and at depth.
We believe there are many undervalued opportunities available in
the natural resource sector and we are actively evaluating new
opportunities. Collectively, members of the Board have many years
of experience in the natural resources industry and capital
markets, and we can benefit by employing our sector knowledge and
market experience in sourcing unrecognised opportunities.
Investing policy
The Company's investing policy is reproduced belwo and made
available on our website, www.starvest.co.uk. At our December 2017
AGM the shareholders approved a proposal to add Direct Investment
in mining projects to our Investing Policy. This allows the Company
to take ownership of its own mining projects and utilise these for
stock positions in new and existing investee companies. We continue
to monitor the markets and may take on projects in the near
term.
Trading portfolio valuation
A brief review of the major portfolio companies follows below.
Other investee companies are listed on the websites from which
further information may be obtained.
Shareholder information
The Company's shares are traded on AIM.
Announcements made to the London Stock Exchange are available
from the Company's website, www.starvest.co.uk where historic
reports and announcements are also available.
Callum N Baxter
Chairman and Chief Executive
11 February 2020
Investing policy statement
About us
The Board, under the leadership of the previous Chairman, Bruce
Rowan, had managed the Company as an investment company since
January 2002. Following the appointment as Chairman of Callum
Baxter, the Board continues with a similar investment strategy,
that is, with a focus on the natural resources sector.
Collectively, the current Board has significant experience of
investing in small company new issues and pre-IPO opportunities in
the natural resources and mineral exploration sectors.
Company objective
The Company was established as a source of early stage finance
to fledgling businesses, to maximise the capital value of the
Company and to generate benefits for Shareholders in the form of
capital growth and modest dividends.
Investing strategy
Natural resources: Whilst the Company has no exclusive
commitment to the natural resources sector, the Board sees this
sector as having considerable growth potential in the medium term.
Historically, investments were generally made immediately prior to
an initial public offering on AIM or NEX as well as in the
aftermarket. As the nature of the market has changed since 2008, it
is more likely that the future investment portfolio will include
companies that have completed an IPO but remain in the early stages
of identifying or, with the appropriate financial backing,
developing a commercial resource.
Direct Project: The Company's investing policy is to hold shares
in companies. However, the Company believes there may be
opportunities to acquire shares in companies on favourable terms by
taking a direct interest in mining projects and using these
projects as consideration for shares in such companies; those
companies would therefore become Starvest investee companies. The
projects will be operated by the investee company; Starvest will
not manage any project. Prior to selling any projects to corporate
entities, Starvest may therefore have an interest in a number of
projects. The addition of the Direct Project strategy to the
Company's Investing Policy was approved by shareholders at the
Company's AGM held 1st December 2017.
Investment size: Initial investments are usually up to
GBP100,000. These companies are invariably not generating cash, but
rather they have a constant requirement to raise new equity in
order to continue exploration and development. Therefore, after
appropriate due diligence, the Company may provide further funding
support and make later market purchases, so that the total
investment may be greater than GBP100,000.
High risk: The business is inherently high risk and cyclical,
dependent upon fluctuations in world economic activity which
affects the demand for minerals. However, the Company affords
investors the opportunity to participate in diverse early-stage
ventures, which the Board believes will offer the potential for
significant returns for the foreseeable future.
Lack of liquidity: Shares of investee companies typically lack
liquidity, even if they are quoted on AIM, NEX, ASX, or TSX-V.
Therefore, in the early years it is rarely possible to sell an
investment at the quoted market price so investors must remain
patient until the investee company develops and ultimately attracts
market interest. If and when an explorer finds a large exploitable
resource, it may become the object of a third-party bid, or
otherwise become a much larger entity; either way an opportunity to
realise cash is expected to follow.
Success rate: Of the 25 to 30 investments held at any one time,
it is expected that no more than five will prove to be 'winners';
from half of the remainder we may expect to see modest share price
improvements. Overall, the expectation is that in time portfolio
returns will be acceptable if not substantial. Accordingly, the
Board is unable to give any estimate of the quantum or timing of
returns.
Profit distribution: When profits have been realised and
adequate cash is available, the Board intends to distribute up to
half the profits realised.
Other matters: The Company currently has an investment in Equity
Resources Limited, which itself is an investment company.
The Company takes no part in the active management of investee
companies, although directors of the Company are, or have been,
directors on the boards of several such companies. Callum Baxter,
Chairman, is currently an Executive Director of one such
company.
Review of trading portfolio
Introduction
During the year to 30 September 2019, the portfolio comprised
interests in the companies discussed below, as well as other active
companies that are not discussed herein.
Market sentiment remained unchanged during the year to 30
September with a difficult trading environment for exploration and
mining stocks prevailing. As a result, there was reduced capital
market funding for important field exploration programmes and
development work. Despite the adverse setting, several investee
companies in our portfolio have weathered the poor market
conditions and delivered strong exploration and operational
results. Our Trading Portfolio Value has increased by 17% over the
past 12 months. We have also seen a 25% increase in our Net Asset
Value over the 12-month period to 30 September 2019, and a 21%
increase in our Net Asset Value per Share. While the market
capitalisation of the company has increased by 9% the equity
value's discount to net asset value has increased from 35% to 44%
year on year and reflects the difficult market environment for both
investment companies and the natural resource sector.
Transactions
During the year the Company did not raise capital through
placing and subscription.
The Company took part in two placings of Cora Gold Limited, an
exploration company focused on West Africa, and acquired 357,142
and 571,429 additional shares, respectively, bringing the Company's
total holding to 0.95% of Cora's issued shares.
Trading portfolio valuation
A continued flat economic climate and decreased investor
confidence in the natural resources sector has been reflected in
fluctuating share price valuations throughout the year. Despite
this difficult environment some of our investee companies have seen
gains and our portfolio value has increased by 17% in the 12 months
to 30 September 2019 demonstrating the robustness of the portfolio
to weather the difficulties in sector sentiment.
Against this background we continue to value our portfolio of
investments conservatively and use closing market prices for all
valuations. An applied discount is no longer included in the
portfolio value or company net asset value.
The Company's Net Asset Value increased during the year to 30
September 2019 to GBP2.25m and the Company made a profit before and
after tax of GBP386,850 compared with a loss of GBP316,242 in 2018.
In addition, the Company:
-- has no debt other than a bank overdraft facility;
-- continues to believe that it is in a sound position to
benefit from any emerging upturn in markets; and
believes that the fundamentals have not changed: the world is
becoming more affluent with an increasing number of people
expecting consumer items, motor cars, air conditioning, computers
and all other tools of 21(st) Century living which all require
natural resources in order to both produce and power.
Company statistics
The Company considers the following statistics to be its Key
Performance Indicators (KPIs) and is satisfied with the results
achieved in the year given the uncertain market conditions.
The Company considers the following statistics to be its Key
Performance Indicators (KPIs) and is satisfied with the results
achieved in the year given the uncertain market conditions.
30 September 30 September Change
2019 2018 %
at Closing at Closing
values as values as
adjusted adjusted*
* Trading portfolio value GBP1.92 m GBP1.64 m + 17%
* Company net asset value GBP2.25 m GBP1.80 m + 25%
* Net asset value per share 4.03 p 3.33 p + 21%
* Closing share price 2.25 p 2.15 p + 5%
* Share price discount to net asset value 44% 35% + 26%
* Market capitalisation GBP1.26 m GBP1.16 m + 9%
* Excludes formerly reported applied discount. See announcement
of 03 Oct 2018 for original figures and of 02 April 2019 regarding
the discontinuation of an applied discount to NAV calculation.
Since the year end values have improved marginally. As at the
close of business on 31 December 2019 the Company's Net Asset Value
was GBP2.39m.
Review of the current market
The basic resource sector saw continued subdued sentiment
throughout 2019. Demand for raw materials continues to fluctuate
and is likely to be volatile in the near term.
The gold price increased from a low of US$1,211 per troy ounce
in October 2018 to a peak of US$1,520 in August 2019 and has
continued to remain buoyant. Other metals such as copper, lead, and
zinc have seen overall declines over the year with only nickel
showing an increase year on year. Crude oil prices also fell over
the period with Brent Crude decreasing from around US$70/bbl to
$55/bbl.
Within the current environment, industry majors have continued
to focus on returning capital and providing dividends to
shareholders rather than putting investment into exploration and
development of new mines. Some increase in exploration has been
seen in Australia and North America but has yet to be seen in other
regions such as Africa or SE Asia.
This lack of investment into exploration and development of
world-class mines opens the field to junior explorers and
developers to realise value and generate cash flow through
increasing interest in the sector, and from majors
in need of replenishing diminishing reserves.
The current market conditions allow for measured, strategic
investment in undervalued, early-stage, natural resource
projects.
Interests in Gold exploration
Our primary interests in gold exploration companies include the
following:
Ariana Resources plc (www.arianaresources.com)
Ariana Resources PLC (Ariana) is a United Kingdom-based company
engaged in the exploration, development and mining of epithermal
gold-silver and porphyry copper-gold deposits in Turkey.
The company is in a JV on the Kiziltepe mine and has continued
to meet and often exceed forecasted production rates. Ariana earned
revenue of GBP3.7m from the mine in the year ended December 2018
and GBP3.0m for the six months to June 2019, showing a potential
increase in profit for the coming financial year.
Gold production in H1 2019 was forecast to increase by 14% year
over year, and the company expects full-year production of
25,000oz. By 30 June 2019 69% of the US$33m cap-ex loan had been
repaid and the company is on target to complete repayments by April
2020.
Ariana has been developing its exploration projects. A new
operating licence has been obtained for the Salinbas gold project
with environmental impact assessments and pre-feasibility studies
to commence in Q4 2019. At the Tavsan project the company is
nearing completion of an environmental impact assessment and plans
further resource definition work
Significant activities since year end: Ariana announced a
conditional agreement to acquire 100% of Dogu Akdeniz Mineralleri
San. ve Tic. Ltd. ("Dogu"), a subsidiary of KEFI Minerals plc
("KEFI"). Dogu holds a Net Smelter Return ("NSR") on the Kizilcukur
Project and a valuable exploration database encompassing the
Republic of Turkey. It also continued to release positive drill
results from its exploration projects and preliminary figures for
gold production are likely to exceed 2019 forecasts.
Cora Gold Limited (www.coragold.com)
Cora Gold has continued to develop its flagship Sanankoro
project in Mali during the year, consistently delivery encouraging
drill results with in-fill drilling along with step-out drilling
testing the known mineralisation of the prospect (approx. 8km in
strike length).
The company has cited an exploration target of 30-50mt of gold
at an average grade of 1.0-1.3g/t equating to 1-2m oz of gold.
Preliminary metallurgical test work results showed up to 97% gold
recovery by cyanide leach processes. More recent drilling has not
only expanded the Sanonkoro known mineralisation along strike but
also extended it at depth, to up to 170m, with gold sulphide
mineralisation present.
The company expects to release a resource figure for a limited
portion of the Sanankoro project in Q4 2019, limiting the
calculations to the weathered oxide material found from surface to
100m depth only. A scoping study is also due to be completed before
the year end.
Several placings during the year leave the company well-funded
to carry out further drilling and develop the project in 2020.
Significant activities since year end: Cora Gold released a
maiden resource encompassing only part of the Sanankoro project as
well as a scoping study which reports an IRR of 84%, low capex
costs and a robust all-in sustaining cost of approx. $950/oz.
Greatland Gold plc (www.greatlandgold.com)
The AIM-listed exploration company holds 100% of six exploration
areas in Western Australia and Tasmania. Greatland Gold's most
significant development during the year was a US$65m deal with
Newcrest Mining Limited over its Havieron prospect. Under the
agreement, Newcrest has established a Farm-In with Greatland on the
Havieron Gold-Copper project, whereby through a series of staged
investments, Newcrest may acquire up to 70% of the joint venture
for expenditure of US$65m (GBPGBP50m) over a six-year period.
Newcrest have established a large camp on site to support the
multiple drill rigs currently in operation, with an intention to
expand this in the near future. Drill results to date show an
extension to known mineralisation in the zone both to the north and
west as well as at depth. The limits of mineralisation remain open
and we will be watching this project development with interest.
Elsewhere in the Paterson region Greatland has continued
exploration on other parts of its Havieron licences with IP and
soil sampling as well as early stage drilling on its Black Hills
licence and geophysics modelling on the Paterson Range East
licence.
Greatland Gold continued to advance its exploration target at
Firetower in Tasmania with a 15-hole drill programme designed to
test a 1km long IP anomaly with a chargeability signature which has
been shown to be coincident with mineralisation in older drill
holes. Results released to date from the first six holes are very
encouraging with grades of 1g/t from or near surface. We await with
interest results from the remaining drill holes.
Greatland Gold also carried out field exploration its Panorama
licence in the Pilbara. Here gold nuggets were found which extended
a known mineralised zone to over 6km in length which appears to run
along strike from known historic mineralisation and mines further
north.
Significant activities since year end: Greatland Gold has
continued to release drill results from its Firetower project with
encouraging gold mineralisation reported along with outstanding
gold-copper drill intercepts from its Newcrest operated Havieron
project showing an expanding footprint and increased depth of
mineralisation.
Kefi Minerals plc (www.kefi-minerals.com)
Kefi Minerals is an exploration and development company focused
on gold and copper deposits in the Arabian-Nubian Shield. Its main
projects are Tulu Kapi in Ethiopia and the Jibal Qutman project in
Saudi Arabia.
Kefi have progressed with project development on their Tulu Kapi
Gold Project in Ethiopia and received Prime Ministerial go-ahead in
March 2019.
Project financing now comprises a consortium of Kefi, the
government of Ethiopia, project contractors Lycopodium and
Ausdrill, ANS Mining Share Company and proposed infrastructure
financiers, with an overall cost of US$242m, excluding the US$60m
invested through year-end 2018 and US$50m of mining equipment being
supplied by the mining contractors.
Community resettlement was undertaken and construction contracts
commenced for off-site infrastructure roads and power. The 24-month
mine development is scheduled to begin in October 2019 with full
production expected in 2021.
The company is also progressing with work on the Hawiah
copper-gold exploration licence in Saudi Arabia. Kefi entered into
a JV with Gold and Minerals Ltd in June 2019, with Kefi maintaining
operational control and carrying out satellite multi-spectral and
ground geophysics, which was used to plan scout drilling which
commenced at the end of September 2019.
Interests in energy
We own positions in two companies in the energy sector, Alba
Mineral Resources and Oracle Power.:
Alba Mineral Resources plc (www.albamineralresources.com)
Alba Mineral Resources is a diversified mineral exploration
company focused on oil and gas, gold and base metals with holdings
in Greenland (heavy minerals and copper), the UK (oil and gas,
gold) and Ireland (base metals).
The Company's UK oil and gas interests focus on the Horse Hill-1
project where Alba hold approximately a 10% stake in the HHDL
consortium developing the project. HHDL have submitted planning and
environmental applications to allow for a seven-well permanent
production development. Extended well tests continued during the
year and oil production reached 60,000 barrels in August.
The Clogau Gold Mine, in which Alba hold a 90% stake, has had
significant exploration work done on the historic mine area and
surrounding areas, with ten significant anomalies identified away
from the major mine and gold mineralisation confirmed across
approximately 9km of strike extent in the Dolgellau Gold Belt.
Potential extension of the former mine has also been
identified.
Alba reported a maiden JORC compliant inferred resource of 19m
tonnes at 43.6% total heavy metals, with an in-situ ilmenite grade
of 8.9% and a contained ilmenite of 1.7m tonnes at its Greenland
Thule Black Sands project. The project lies in a strategic position
with Bluejay Mining in an agreement with Rio Tinto further along
the same black sands coastline.
The Company raised over GBP1.29m (before expenses) during the
year and are funded to continue exploration work on the projects
under their operation.
Oracle Power plc (www.oraclepower.co.uk)
Naheed Memon became CEO in July 2019 when Shahrukh Khan stepped
down. Ms Naheed is based primarily in Pakistan, a move that we hope
will speed up progress with the mine and power plant. However, the
company are still awaiting completion of due diligence by the
Chinese investment partners.
Oracle signed an MOU with Beijing Jingneng Power Company and
PowerChina International Group in December 2018. With assistance
from these partners, the company plans to develop the mine in a
single phase of 8 million tonnes a year, instead of the previous
two-phased development, reduced the required cap-ex. The company
intends to develop the power plant as a single-phase, 2.660MW unit
with applications submitted to this end. Any required review of
feasibility work relating to the restructuring of the plans is
underway, as are updates to environmental and social impact
assessments.
In order to sustain administration and running costs Oracle
entered into a loan facility with Bandon Hill Capital for up to
GBP200,000. The company also raised GBP500,000 in March and again
in August 2019 through placings.
Significant activities since year end: Oracle announced it has
entered into a Joint Development Agreement with the Private Office
of H.H. Sheikh Ahmed Dalmook Juma Al Maktoum China National Coal
Development Company Limited a subsidiary of China National Coal
Group Corporation
Salt Lake Potash Limited (www.saltlakepotash.com.au)
Salt Lake Potash is the owner of the Goldfields Salt Lakes
Project (GSLP), which comprises nine large salt lakes in the
Northern Goldfields Region of Western Australia. The company's aim
is to develop the first salt-lake brine Sulphate of Potash (SOP)
operation in Australia.
During the year Salt Lake Potash completed a scoping study for
the commercial scale 200,000pa SOP development at Lake Way, with
positive results for low cap-ex and op-ex together with a
sustainable mine/operating life. A bankable feasibility study is
due to be realised in late 2019.
The company completed construction of the first evaporation pond
at Lake Way in June 2019 and is gathering data on methodology and
costs to complete a feasibility study.
Salt Lake also completed a deal for access to process water and
power rights in the Lake Way tenement area, considerably de-risking
the project and finance costs.
During the year the company secured US$150m debt financing from
Taurus. They have a US$30m stage 1 debt to fast-track early
construction and have secured a further AUS$28 from three strategic
investors.
The company plans to initially develop their Lake Way project
with a further eight large potassium rich salt lakes licenced to
them which could allow for significant scaling up of
production.
Post Year End
A bankable feasibility study returned positive results with
estimated post-tax NPV8 of AUS$479m and 28% IRR. Low development
and operating costs will allow for a strong cash flow and early
payback period of 3.5 years, based on a sales price of US$550/t.
The study shows a 20-year mine life is probable with an estimated
245,000t pa premium grade SOP with approx. 42,000t pa KCl.
Sunrise Resources plc (www.sunriseresourcesplc.com)
Sunrise Resources holds ground in Nevada (USA) and Australia
with commodities ranging from precious and base metals as well as
industrial minerals. Its main focus is developing pozzolan-perlite
deposits while looking to JV its other tenements.
The company is currently focusing on the development of its 100%
owned CS Pozzolan-Perlite project in Nevada USA. Sunrise had
targeted first production in the first half of 2019 but permitting
delays had slowed this timeline. Sunrise has continued to progress
development of its pozzolan-perlite project in Nevada with
operation and reclamation permit applications along with emissions
inventory submission. The updated target for permitting completion
is Q4 2019.
Its JV with VR Resources on the copper-silver-gold project in
Nevada is also advancing with plans for drilling on the porphyry
system.
Other investments
The remaining non-core investments are available for sale when
the conditions are deemed to be right. These include Marechale
Capital plc (www.marechalecapital.com), and Block Energy plc
(www.blockenergy.co.uk). In addition, there are a number of failed
or almost failed ventures to which we attribute no value, although
we always hope and seek to crystallise value where possible.
Strategic report
Principal activities and business review
Since Bruce Rowan was appointed Chief Executive on 31 January
2002, the Company's principal trading activity was the use of his
expertise to identify and, where appropriate, support small company
new issues, pre-IPO and on-going fundraising opportunities with a
view to realising profit from disposals as the businesses mature in
the medium term. The directors expect this to continue under the
leadership of Callum Baxter, appointed Chief Executive in September
2015.
The Company's investing policy is stated above.
The Company's key performance indicators and developments during
the year are given in the Chairman's statement and in the trading
portfolio review, all of which form part of the Directors' &
Strategic reports.
Finance Review
Over the past 12 months the Company recorded a profit before and
after tax of GBP386,850, equating to a profit of 0.70 pence per
share with net cash outflow for the year of GBP93,682. This
compares to a loss of GBP316,242 in the previous year that equated
to a basic loss of 0.60 pence per share. The Company's cash
deposits stood at GBP60,167 at the period end.
Key risks and uncertainties
This business carries with it a high level of risk and
uncertainty, although the rewards can be outstanding. The risk
arises from the very nature of early-stage mineral exploration
where there can be no certainty of outcome. In addition, often
there is a lack of liquidity in the Company's trading portfolio,
even for securities quoted on AIM or NEX, such that the Company may
have difficulty in realising the full value in a forced sale.
Accordingly, a commitment is only made after thorough research into
both the management and the business of the target, both of which
are closely monitored thereafter. Furthermore, the Company limits
the amount of each commitment, both as to the absolute amount and
percentage of the target company.
Statement of directors' responsibilities
Directors' responsibilities for the financial statements
The Directors are responsible for preparing the Directors'
report, the Strategic report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law). Under company law
the directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of
affairs and profit or loss of the company for that period. In
preparing those financial statements, the directors are required
to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and estimates that are reasonable and prudent;
-- state whether applicable UK accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors confirm that so far as each of the Directors is
aware:
-- there is no relevant audit information of which the Company's auditor is unaware; and
-- the Directors have taken all the steps that they ought to
have taken as directors in order to make themselves aware of any
relevant audit information and to establish that the auditors are
aware of that information.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Corporate governance statement
The board of Starvest plc are committed to the principles of
good corporate governance and believe in the importance and value
of robust corporate governance and in our accountability to our
shareholders and stakeholders.
The AIM Rules for companies require AIM companies to apply a
recognised corporate governance code. Starvest has chosen to adhere
to the Quoted Company Alliance's Corporate Governance Code for
Small and Mid-Size Quoted Companies (the "QCA Code").
The Chairman's Statement on Corporate Governance, which is
included in the Annual Report and which is also available on the
website, provides more details on how the board itself operates as
well as the steps taken to ensure that its staff adhere to
principles such as compliance with the UK anti-bribery
legislation.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 SEPTEMBER 2019
Year ended
Year ended 30 30 September
Note September 2019 2018
GBP GBP
Revenue 287,655 -
Cost of sales (234,442) -
--------------- -------------
Gross profit 53,213 -
Administrative expenses (251,225) (250,147)
Amounts written off against trade
investments 11 (383,612) (686,932)
Amounts written back against trade
investments 11 968,387 615,008
--------------- -------------
Operating profit/(loss) 5 386,763 (322,071)
Interest receivable 6 87 5,829
Profit/(loss) on ordinary activities
before tax 386,850 (316,242)
Tax on profit/(loss) on ordinary
activities 8 - -
Profit/(loss) for the financial
year attributable to
Equity holders of the Company 386,850 (316,242)
=============== =============
Earnings/(loss) per ordinary share
Basic 9 0.70 pence (0.60) pence
Diluted 9 0.70 pence (0.51) pence
There are no other recognised gains and losses in either year
other than the result for the year.
All operations are continuing.
STATEMENT OF FINANCIAL POSITION
30 SEPTEMBER 2019
Year ended Year ended
30 September 30 September
Note 2019 2018
GBP GBP
Current assets
Trade and other receivables 10 114,537 55,992
Trade investments 11 1,916,398 1,498,059
Cash and cash equivalents 60,167 153,849
------------- -------------
Total current assets 2,091,102 1,707,900
------------- -------------
Current liabilities
Trade and other payables 12 (66,003) (119,401)
Total current liabilities (66,003) (119,401)
------------- -------------
Net current assets 2,025,099 1,588,499
============= =============
Capital and reserves
Called up share capital 13 559,279 539,649
Share premium account 1,686,829 1,654,209
Retained earnings (221,009) (607,859)
Equity reserve - 2,500
------------- -------------
Total equity shareholders' funds 2,025,099 1,588,499
============= =============
These financial statements were approved and authorised for
issue by the Board of Directors on 11 February 2020.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 SEPTEMBER 2019
Equity reserve Total Equity attributable
Share capital Share premium Retained earnings to shareholders
GBP GBP GBP GBP GBP
At 1 October 2017 528,982 1,640,876 2,500 (291,617) 1,880,741
============= ============= ============== ================= =========================
(Loss) for the period - - - (316,242) (316,242)
Total recognised income
and expenses for the
period - - - (316,242) (316,242)
------------- ------------- -------------- ----------------- -------------------------
Shares issued 10,667 13,333 - - 24,000
Cost of issue - - - - -
Equity component of - - - - -
convertible loan
------------- ------------- -------------- ----------------- -------------------------
Total contributions by and
distributions to owners 10,667 13,333 - - 24,000
At 30 September 2018 539,649 1,654,209 2,500 (607,859) 1,588,499
------------- ------------- -------------- ----------------- -------------------------
Profit for the period - - - 386,850 386,850
Total recognised income
and expenses for the
period - - - 386,850 386,850
------------- ------------- -------------- ----------------- -------------------------
Shares issued 19,630 32,620 - - 52,250
Cost of issue - - - - -
Equity component of
convertible loan - - (2,500) - (2,500)
------------- ------------- -------------- ----------------- -------------------------
Total contributions by and
distributions to owners 19,630 32,620 - - 49,750
At 30 September 2019 559,279 1,686,829 - (221,009) 2,025,099
------------- ------------- -------------- ----------------- -------------------------
STATEMENT OF CASH FLOWS
FOR THE YEARED 30 SEPTEMBER 2019
Note 30 September 30 September
2019 2018
GBP GBP
Cash flows from operating activities
Operating profit/(loss) 386,763 (322,071)
Net interest receivable 87 5,829
Share based payment charge 52,250 24,000
Reversal of bad debt provision (20,000) -
(Increase) in debtors (58,545) (26,403)
(Decrease)/increase in creditors (5,897) 17,788
Net cash generated/(used) in operating activities 354,658 (300,857)
------------ ------------
Cash flows from investing activities
Purchase of current asset investments 11 (47,000) (50,000)
Sale of current asset investments 286,648 -
Profit on sale of current asset investments (53,213) -
Increase in investment provisions 383,612 686,932
Decrease in investment provisions (968,387) (615,008)
Net cash (used)/generated in investing activities (398,340) 21,924
------------ ------------
Cash flows from financing activities
Proceeds from issue of shares - -
Transaction costs of issue of shares - -
Loan repayment (50,000) -
Net cash flows from financing activities (50,000) -
------------ ------------
Net (decrease)/increase in cash and cash equivalents (93,683) (278,933)
Cash and cash equivalents at beginning of period 153,849 432,782
Cash and cash equivalents at end of year 15 60,167 153,849
============ ============
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 SEPTEMBER 2019
1. Company Information
Starvest plc is a Public Limited Company incorporated in England
& Wales. The registered office is Salisbury House, London Wall,
London, EC2M 5PS. The Company's shares are listed on the AIM market
of the London Stock Exchange. These Financial Statements (the
"Financial Statements") have been prepared and approved by the
Directors on 11 February 2020 and signed on their behalf by Callum
Baxter and Gemma Cryan.
2. Basis of Preparation
These financial statements have been prepared in accordance with
applicable United Kingdom accounting standards, including Financial
Reporting Standard 102 - 'The Financial Reporting Standard
applicable in the United Kingdom and Republic of Ireland'
('FRS102'), and with the Companies Act 2006. The financial
statements have been prepared on the historical cost basis. There
are no fair value adjustments other than to the carrying value of
the Company's trade investments.
Going concern
The Company's day to day financing is from its available cash
resources or via a bank overdraft and, on occasion, by the use of
short-term loans. The continuation of the Company's formal
overdraft facility was last confirmed by the bank in early
2019.
Whilst the Directors fully expect a sufficient overdraft
facility to remain in place for the foreseeable future, they are
confident that adequate funding can be raised as required to meet
the Company's current and future liabilities without resorting to
this facility, which has been confirmed within the cash flow
forecast prepared by the Board for the 12 months ending 28 February
2021. In the very unlikely event that such finance could not be
raised, the Directors could raise sufficient funds by disposal of
certain of its current asset trade investments.
To assist the Company with its financing obligations, a
shareholder provided a loan of GBP100,000. In January 2017,
GBP50,000 of this loan was satisfied by the issue of 2,500,000 new
Ordinary shares and the remaining balance of GBP50,000 was repaid
in full in December 2018. As at 30 September 2019, the Company has
no Borrowings.
For the reasons outlined above, the Directors are satisfied that
the Company will be able to meet its current and future
liabilities, and continue trading, for the foreseeable future and,
in any event, for a period of not less than twelve months from the
date of approving the financial statements. The preparation of the
financial statements on a going concern basis is therefore
considered to remain appropriate.
3. Principal Accounting Policies
Revenue
Revenue represents amounts receivable for trade investment
sales. Revenue is recognised on the date of sale contract.
Cost of sales
Direct costs include the book cost of investments sold during
the year.
Administrative expenses
All administrative expenses are stated inclusive of VAT, where
applicable, as the company is not eligible to reclaim VAT incurred
on its costs.
Taxation
Corporation tax payable is provided on taxable profits at the
current rates enacted or substantially enacted at the balance sheet
date.
3. Principal Accounting Policies, continued
Deferred tax
Deferred tax is provided on an undiscounted full provision basis
on all timing differences which have arisen but not reversed at the
balance sheet date using rates of tax enacted or substantively
enacted at the balance sheet date.
Deferred tax assets are only recognised to the extent that it is
probable that they will be recovered against the reversal of
deferred tax liabilities or other future taxable profits, and are
recognised within debtors. The deferred tax assets and liabilities
all relate to the same legal entity and being due to or from the
same tax authority are offset on the balance sheet.
Trade Investments
Current asset trade investments are stated at the lower of cost
and net realisable value. Net realisable value is the lower of bid
price and Directors' valuation. The lower Directors' valuation is
applied where the Company's interest in the investee company
amounts to typically 3% or more of the investee Company's issued
share capital or more than 7% of the investment portfolio or where
there are factors of which the Directors are aware which call for
some further adjustment. At 30 September 2019, these provisions
totalled GBP189,000 (2018: GBP142,000).
Investments in unlisted company shares, are remeasured to
available market values, or directors' valuations at each balance
sheet date. Gains and losses on remeasurement are recognised in the
income statement for the period.
Investments in listed company shares, are remeasured to market
value at each balance sheet date. Gains and losses on remeasurement
are recognised in the income statement for the period.
Financial instruments:
Trade and other receivables
Trade and other receivables are not interest bearing and are
recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method less provision
for impairment.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and deposits held
at call with banks.
Trade and other payables
Trade and other payables are not interest bearing and are
recognised initially at fair value and subsequently measured at
amortised cost.
Convertible debt
The proceeds received on issue of the convertible debt are
allocated into their liability and equity components and presented
separately in the balance sheet. The amount initially attributed to
the debt component equals the discounted cash flows using a market
rate of interest that would be payable on a similar debt instrument
that did not include an option to convert.
The difference between the net proceeds of the convertible debt
and the amount allocated to the debt component is credited direct
to equity and is not subsequently re-measured. On conversion, the
debt and equity elements are credited to share capital and share
premium as appropriate.
Financial liabilities
All financial liabilities are recognised initially at fair value
and are subsequently measured at amortised cost. There are no
financial liabilities classified as being at fair value through the
income statement.
Share capital
The Company's ordinary shares are classified as equity.
3. Principal Accounting Policies, continued
Treasury shares
Where the Company acquired its own shares ('treasury shares')
these are deducted from retained profits. No profit or loss is
recognised on purchase or subsequent sale of treasury shares. On
cancellation of treasury shares, the original purchase costs are
deducted from share capital and profit and loss account by a
reserve transfer within equity.
The share premium account
Represents premiums received on the initial issuing of the share
capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income
tax benefits.
4. Turnover and Segmental Analysis
Turnover
Turnover represents the sales of trade investments on recognised
listed stock exchanges. Turnover for the year to 30 September 2019
was GBP287,655 (2018: GBPnil).
Segmental information
An operating segment is a distinguishable component of the
Company that engages in business activities from which it may earn
revenues and incur expenses, whose operating results are regularly
reviewed by the Company's chief operating decision maker to make
decisions about the allocation of resources and assessment of
performance and about which discrete financial information is
available.
The Company is to continue to operate as a single UK based
segment with a single primary activity to invest in businesses so
as to generate a return for the shareholders. No segmental analysis
has been disclosed as the Company has no other operating segments.
The Directors will review the segmental analysis on a regular basis
and update accordingly.
The Company has not generated any revenues from external
customers during the period.
5. Operating Profit
Year ended Year ended
30 September 30 September
2019 2018
GBP GBP
This is stated after charging:
Reversal of bad debt provision (20,000) -
Auditor's remuneration:
- audit services 14,400 14,400
- other services - -
Director's emoluments - note 7 141,738 137,035
============= =============
6. Interest receivable
Year ended Year ended
30 September 30 September
2019 2018
GBP GBP
---------------------------------------- ------------- --------------------
Bank interest receivable 87 329
Interest on short term loans to related
parties - 5,500
87 5,829
---------------------------------------- ------------- --------------------
7. Directors' Emoluments
There were no employees during the period apart from the
directors. No directors had benefits accruing under money purchase
pension schemes.
Shares
issued
Amounts in lieu
paid to of fees
Pension third parties - see
Year ended 30 September Fees GBP - see note note Total
2019 GBP GBP GBP GBP
------------------------ ------ ---------- --------------- -------- -------
C Baxter 4,000 - 29,000 47,000 80,000
G Cryan 30,000 238 7,500 2,500 40,238
ACR Scutt (resigned
12 March 2019) 6,000 - - - 6,000
M Badros (appointed
21 December 2018) 12,750 - - 2,750 15,500
------------------------ ------ ---------- --------------- -------- -------
52,750 238 36,500 52,250 141,738
------------------------ ------ ---------- --------------- -------- -------
Shares
issued
Amounts in lieu
Pension paid to of fees
GBP third parties - see
Year ended 30 September Fees - see note note Total
2018 GBP GBP GBP GBP
------------------------ ------ ---------- --------------- -------- -------
C Baxter 4,000 - 57,000 19,000 80,000
J Watkins (resigned
8 May 2018) 6,044 - 6,044 - 12,088
G Cryan 20,000 200 15,000 5,000 40,200
ACR Scutt (appointed
8 May 2018) 4,747 - - - 4,747
------------------------ ------ ---------- --------------- -------- -------
34,791 200 78,044 24,000 137,035
------------------------ ------ ---------- --------------- -------- -------
Amounts paid to third parties and shares issued in lieu of
fees
Included in the above are the following amounts paid to third
parties:
-- In respect of the management services of Callum Baxter,
GBP76,000 (2018: GBP76,000) is payable to Baxter Geological, a
company of which he is a director and shareholder. Of this amount,
GBP47,000 was settled in shares in the Company. At 30 September
2019, GBP38,000 (2018: GBP19,000) was outstanding.
-- In respect of the professional services of Gemma Cryan,
GBP10,000 (2018: GBP20,000) was payable to her personal business.
Of this amount GBP2,500 was settled in shares in the Company. At 30
September 2019 GBP3,654 of her net salary remained outstanding
(2018 GBP5,000 fees).
-- In respect of the professional services of Mark Badros,
GBP15,500 (2018: GBPnil) is payable to Timberlake Capital
Management, a company of which he is a director and shareholder. Of
this amount, GBP2,750 was settled in shares in the Company. At 30
September 2019, GBP5,000 (2018: GBPnil) was outstanding.
8. Income Taxes
a) Analysis of charge in the period
Year ended Year ended
30 September 30 September
2019 2018
GBP GBP
United Kingdom corporation tax at 19%
(2018: 19%) - -
Deferred taxation - -
- -
============== ==============
b) Factors affecting tax charge for the period
The tax assessed on the loss on ordinary activities for the year
differs from the standard rate of corporation tax in the UK of 19%
(2018: 19%). The differences are explained below:
Year ended Year ended
30 September 30 September
2019 2018
GBP GBP
Profit/(loss) on ordinary activities
before tax 386,850 (316,242)
============= =============
Profit/(loss) multiplied by standard
rate of tax 73,502 (60,086)
Effects of:
Utilised against carried forward losses (73,502) -
Losses carried forward not recognised
as deferred tax assets - 60,086
- -
============= =============
9. Earnings/(loss) Per Share
The basic earnings per share is derived by dividing the profit
for the year attributable to ordinary shareholders by the weighted
average number of shares in issue.
Year ended Year ended
30 September 30 September
2019 2018
GBP GBP
-------------------------------------------- ------------- -------------
Profit/(loss) for the year 386,850 (316,242)
-------------------------------------------- ------------- -------------
Weighted average number of Ordinary shares
of GBP0.01 in issue 55,057,197 53,012,136
Profit/(loss) per share - basic 0.70 pence (0.60) pence
-------------------------------------------- ------------- -------------
Warrants in issue - 8,500,000
Weighted average number of Diluted Ordinary
shares of GBP0.01 in issue 55,057,197 61,512,136
Profit/(loss) per share - diluted 0.70 pence (0.51) pence
-------------------------------------------- ------------- -------------
10. Trade and Other Receivables
Year ended Year ended
30 September 30 September
2019 2018
GBP GBP
------------------------------------ ------------- --------------------
Prepayments 26,030 55,992
Funds held on account 88,507 -
Short term loans to related parties - -
114,537 55,992
------------------------------------ ------------- --------------------
Short term loans to related parties
-- At 30 September 2019 loans to Equity Resources ltd ("EQR")
totalling GBP20,000 remain unpaid. The purpose of the loans was to
assist EQR meet its necessary operational costs during a period
when it seemed inappropriate that EQR should realise cash from its
investments. The advances were approved at 0% interest with no
formal agreement as to repayment date. The Company holds 28.41% of
the equity in EQR. However, the Company has made a full provision
for these loans, totalling GBP20,000.
-- At 30 September 2019, the loans and interest totalling
GBP44,653 advanced to Block Energy plc ("BEP") (formerly Goldcrest
Resources plc ("GCRP")) was settled in full by way of an agreement
signed on 28(th) February 2019 to issue 500,000 shares in Block
Energy plc at 0.04 pence per share to the Company for a total sum
of GBP20,000.These shares were sold during the year for net
proceeds of GBP30,533.
11. Current Trade Investments
30 September 30 September
2019 2018
GBP GBP
--------------------------------------------------- ------------ ------------
Cost
At 30 September 2018 & 2017 5,572,574 5,522,574
Additions at cost 67,000 50,000
Disposals (233,436) -
At 30 September 2019 & 2018 5,406,138 5,572,574
--------------------------------------------------- ------------ ------------
Market value movement & provisions
At 30 September 2018 & 2017 4,074,515 4,002,591
Released during the year (968,387) (615,008)
Provided during the year 383,612 686,932
At 30 September 2019 & 2018 3,489,740 4,074,515
--------------------------------------------------- ------------ ------------
Fair value amount
At 30 September 2019 & 2018 1,916,398 1,498,059
--------------------------------------------------- ------------ ------------
The fair value carrying values of the investments
above were as follows:
Quoted on AIM 1,916,275 1,373,783
Quoted on NEX - 7,366
Quoted on foreign stock exchanges 123 367
Unquoted at Directors' valuation - 116,543
1,916,398 1,498,059
--------------------------------------------------- ------------ ------------
The Company has holdings in the companies described in the
review of portfolio on above. Of these, the Company has holdings
amounting to 20% or more of the issued share capital of the
following companies:
Capital
and reserves
Loss for at last
Class Percentage the last balance
Country of shares of issued financial sheet Accounting
Name of incorporation held capital year date year end
Equity Resources
Limited -
see note England 31 May
[1] & Wales Ordinary 28.41% (GBP2,224) (GBP34,047) 2018
Note [1]: Equity Resources Limited is considered to be an
associated undertaking. Equity accounting has not been used as
Equity Resources Limited has a written down value of GBPnil.
The Company's share of the gross assets of its Associates at 30
September 2019 is GBP2,521. The share of gross assets has been
derived from the latest available financial information in respect
of the Associates. The company's share of the items making up the
profit and loss account and cash flow statements of its Associates
has not been disclosed as the numbers are not considered
material.
12. Trade and Other Payables: Amounts falling due within one year
30 September 30 September
2019 2018
GBP GBP
----------------- ------------ ------------
Trade creditors 20,348 20,791
Accruals 40,893 42,317
Employment costs 4,762 8,793
Loans - 47,500
----------------- ------------ ------------
66,003 119,401
----------------- ------------ ------------
In September 2015, the Company received a loan of GBP100,000
from a shareholder repayable in 12 months with an interest rate of
0% and with a conversion option at 3 pence per share. On 5 January
2017, GBP50,000 of the loan was satisfied by the issue of 2,500,000
new Ordinary shares at a price of 2 pence per share. In September
2017 the Company agreed with Mr Rowan to extend the existing loan
term to 1 November 2
13. Share Capital
The Called up share capital of the Company was as follows:
Called up, allotted, issued and fully
paid
Number of Shares GBP
--------------------------------------- ---------------- --------
As at 30 September 2017 52,898,163 528,982
--------------------------------------- ---------------- --------
Issued 22 August 2018 in lieu of fees 1,066,666 10,667
As at 30 September 2018 53,964,829 539,649
--------------------------------------- ---------------- --------
Issued 22 January 2019 in lieu of fees 1,327,869 13,279
Issued 19 June 2019 in lieu of fees 635,134 6,351
--------------------------------------- ---------------- --------
As at 30 September 2019 55,927,832 559,279
--------------------------------------- ---------------- --------
Share Warrants
On 11 May 2017, as part of the Placing, the Company issued
8,500,000 warrants to subscribe for new Ordinary Shares in Starvest
at an exercise price of 4.0p per warrant, within a 24 month
exercise period. On 11 May 2019 these warrants expired
unexercised.
14. Share options
The Company's share option scheme, established on 14 February
2005, expired on 31 January 2015. During the year ended 30
September 2019 no new options were granted.
15. Cash and Cash Equivalents
Year ended Year ended
30 September Cash flow 30 September
2018 GBP 2019
GBP GBP
------------------------------ ------------- ------------ -------------
Cash at bank 153,849 (93,682) 60,167
------------------------------ ------------- ------------ -------------
Net cash and cash equivalents 153,849 (93,682) 60,167
------------------------------ ------------- ------------ -------------
16. Capital Commitments
As at 30 September 2019 and 30 September 2018, the Company had
no commitments other than for expenses incurred in the normal
course of business.
17. Contingent Liabilities
There were no contingent liabilities at 30 September 2019 (2018:
GBPnil).
18. Related Party Transactions
There were no related party transactions during the year other
than those disclosed in notes 7 and 10.
The key management of the Company are considered to be the
Directors, the compensation for whom was GBP141,738 (2018:
GBP137,035).
19. Financial Instruments
The Company's financial instruments comprise investments, cash
at bank and various items such as other debtors, loans and
creditors. The Company has not entered into derivative transactions
nor does it trade financial instruments as a matter of policy.
Credit Risk
The Company's credit risk arises primarily from short term loans
to related parties and the risk the counterparty fails to discharge
its obligations. At 30 September 2019 there were no loans
outstanding (2018: GBP64,653).
Liquidity Risk
Liquidity risk arises from the management of cash funds and
working capital. The risk is that the Company will fail to meet its
financial obligations as they fall due. The Company operates within
the constraints of available funds and cash flow projections are
produced and regularly reviewed by management.
Interest rate risk profile of financial assets
The only financial assets (other than short term debtors) are
cash at bank and in hand, which comprises money at call. The
interest earned in the year was negligible. The directors believe
the fair value of the financial instruments is not materially
different to the book value.
Foreign currency risk
The Company has no material exposure to foreign currency
fluctuations.
Market risk
The Company is exposed to market risk in that the value of its
investments would be expected to vary depending on trading activity
of its shares.
Categories of financial instruments
Year ended 30 September Year ended 30 September
2019 2018
GBP GBP
Financial assets
Trade investments 1,916,398 1,498,059
Loans and receivables 114,537 55,992
2,030,935 1,554,051
======================= =======================
Financial liabilities
Loans and payables 66,003 119,401
66,003 119,401
======================= =======================
20. Capital Management
The Company's objective when managing capital is to safeguard
the entity's ability to continue as a going concern and develop its
investment activities to provide returns for shareholders. The
Company's funding comprises equity and debt. The directors consider
the Company's capital and reserves to be capital. When considering
the future capital requirements of the Company and the potential to
fund specific investment activities, the directors consider the
risk characteristics of all of the underlying assets in assessing
the optimal capital structure.
21. Events After the End of the Reporting Period
There are no events after the end of the reporting period to
disclose.
22. Ultimate controlling party
There is no ultimate controlling party.
Copies of the annual report and financial statements are being
posted to Shareholders shortly and will be available for a period
of one month thereafter from the Company's registered office:
Salisbury House, London Wall, London EC2M 5PS or by email at
info@starvest.co.uk
Alternatively, from 11(th) February 2020 the report may be
downloaded from the Company's website at www.starvest.co.uk
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon publication of this
announcement, this inside information is now considered to be in
the public domain.
Enquiries to:
Starvest PLC
Callum Baxter Chairman/CEO 07922 255 933
cbaxter@starvest.co.uk
Grant Thornton UK LLP (Nomad)
Colin Aaronson,Harrison Clarke and Seamus Fricker 02073 835
100
SI Capital Ltd (Broker)
Nick Emerson and Alan Gunn 01483 413 500
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BSGDDBDBDGGB
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