TIDMPATH
RNS Number : 9119C
Path Investments plc
24 June 2021
24 June 2021
Path Investments plc
("Path" or "the Company")
Final Results for the Year Ended 31 December 2020
Path Investments plc (TIDM: PATH), the natural resources
investment company, announces its audited results for the year
ended 31 December 2020.
Highlights
-- Global COVID-19 pandemic created uncertain markets during
the period
-- Lapsing of FineGems Extraction Corporation ("FGE") acquisition
agreement
-- Signed Asset Purchase Agreement for the acquisition of DT
Ultravert - since terminated.
-- Strict cost control maintained over the year
-- Purchase and cancellation of Deferred share class
-- Post year-end successful share issuance raising GBP3.85 million.
CHAIRMAN'S STATEMENT
Review
The global pandemic has affected all walks of life, and the
markets in semi-precious gemstone and manganese markets have not
been insulated from this. It seemed sensible therefore to allow our
agreement with FGE to lapse in early 2020 and to concentrate our
efforts on assets that are initially less capital intensive and at
the same time potentially highly impactful.
Whilst the proposed purchase of DT Ultravert appeared to meet
those requirements, concerns raised during the transaction led the
Board to question the merits of continuing. In February 2021 they
concluded that it posed an unnecessary risk to the Company and its
shareholders and accordingly the Board terminated the
transaction.
The Directors continued to manage the Company's modest cash
reserves judiciously, waiving all accrued unpaid salaries at year
end. As part of the drive to simplify the capital structure of the
Company on 30 September 2020 the Company purchased all of its
deferred shares for nil consideration and cancelled them. No
deferred shares remain in issue.
In March 2021 the Company was delighted to receive the welcome
support of new shareholders and certain existing holders in a fund
raising with gross proceeds of GBP3.85 million received to
accelerate the Company's investment strategy. We are currently
focussed on one opportunity in particular and anticipate updating
shareholders in due course.
Nigel Brent Fitzpatrick
Non-Executive Chairman
CHIEF EXECUTIVE OFFICER'S REPORT
OPERATIONAL REVIEW
The Company was incorporated and registered in England and Wales
on 2 June 2000 under the Companies Act 1985 as a public company
limited by shares with the name Hallco 459 Plc and with registered
number 04006413. On 28 November 2000, the Company changed its name
to The Niche Group Plc. On 20 February 2016, the Company changed
its name to Path Investments Plc. It is domiciled and its principal
place of business is in the United Kingdom and is subject to the
City Code.
The strategy of the Company is focused on delivering
acquisitions in energy and natural resources production or near
production assets with the objective of providing the Company's
shareholders with access to a low risk and, over time, diversified
portfolio which can offer a dividend stream as well as offering
development potential for capital growth. The Directors are looking
to create a diversified portfolio of assets that is mindful of the
maturity of asset developments, life of income stream and the
potential for growth, and a number of opportunities have been
evaluated and developed. The Company is open to ideas but intends
that the Reverse Takeover will be of a business that can act as the
cornerstone for building a substantial group within the sector.
The Company was admitted to the Official List by way of a
Standard Listing and to trading on the London Stock Exchange's Main
Market for listed securities on 30 March 2017.
The Company has not traded over the past twelve months. Over
that period its expenses have related to pre-deal costs,
professional and associated expenses related to advisory and
consultancy fees, along with general administration expenses.
The Directors believe that attractive opportunities currently
exist to acquire interests in producing energy and resource assets
which are profitable and have future development potential. In
addition to the decreased costs at which interests in assets can be
acquired in the current climate, new entrant advantages include
ongoing reductions in project costs along with, in many cases, the
benefits of significant historically incurred costs, existing
infrastructure and technical understanding. Revenue generation from
some of these assets can be either immediate or imminent.
The Company focuses on identifying acquisition opportunities
which are, in the opinion of the Directors, underperforming,
undeveloped and/or currently undervalued, and where the Directors
believe that their expertise and experience, in conjunction with
that of the incumbent management, can be deployed to facilitate
growth and unlock inherent value.
Within the review period and with the background of the global
Covid-19 pandemic, the Directors concluded that the outlook for the
previously announced FGE transaction had materially worsened.
Accordingly, on 27 May 2020 the Company announced the expiry of the
Share Purchase Agreement with FGE.
On 27 May 2020 the Company announced the conditional acquisition
of a patented proprietary technology, DT Ultravert, for use
initially within the oil and gas sectors from Zoetic International
Plc. Whilst the proposed purchase of DT Ultravert appeared to meet
those requirements, concerns raised during the transaction led the
Board to question the merits of continuing. Post the reporting
period, in February 2021 the Board concluded that it posed an
unnecessary risk to the Company and its shareholders and
accordingly the Board terminated the transaction.
As part of the drive to simplify the capital structure of the
Company, on 30 September 2020 the Company purchased all of its
deferred shares for nil consideration and cancelled them. No
deferred shares remain in issue.
Further, in March 2021 the Company were delighted to receive the
welcome support of new shareholders and certain existing holders in
a fund raising with gross proceeds of GBP3.85 million to accelerate
the Company's investment strategy.
FINANCIAL REVIEW
Loss for the year
In the year ended 31 December 2020, the Company recorded a loss
of GBP377,103 (2019 loss: GBP317,647).
Cash flow
During the year, the Company issued convertible loan notes
amounting to GBP55,000 pursuant to an instrument to issue
GBP200,000 nominal convertible unsecured loan stock in 2020 of
which a total of GBP162,100 has been issued (see note 11).
Christopher Theis
Chief Executive Officer
Enquiries:
Path Investments plc C/O IFC
Christopher Theis
Jack Allardyce
IFC Advisory (Financial PR & IR) 020 3934 6630
Tim Metcalfe
Zach Cohen
Grant Thornton UK LLP (Financial Adviser)
Samantha Harrison
Harrison Clarke
Lukas Girzadas 020 7383 5100
ETX Capital (Broker) 020 7392 1400
Elliot Hance
INDEPENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF PATH INVESTMENTS PLC
FOR THE YEARED 31 DECEMBER 2020
Opinion
We have audited the financial statements of Path Investments Plc
(the 'Company') for the year ended 31 December 2020 which comprise
the Statement of Comprehensive Income, the Statement of Financial
Position, the Statement of Changes in Equity, the Statement of Cash
Flows and notes to the financial statements, including significant
accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and
international accounting standards in conformity with the
requirements of the Companies Act 2006.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 December 2020 and of its loss for the year then
ended;
-- have been properly prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the Company's ability to
continue to adopt the going concern basis of accounting included a
consideration of the inherent risks to the Company's business model
and analysed how those risks might affect the Company's financial
resources or ability to continue operations over the period from
the date of signing the financial statements to July 2022, having
regard to amounts raised subsequent to the year-end date.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
We have determined the materiality for the financial statements
as a whole to be GBP23,900 (2019: GBP14,400), calculated as 1% of
expenses incurred.
We consider this benchmark to be the most significant
determinant of the Company's financial performance used by
shareholders. Until the Company finds a suitable investment, it
will be non-revenue generating, hence we have based our assessment
of materiality on total expenses to reflect activity carried out
during the period.
We set performance materiality at GBP16,730 (2019: GBP10,080),
being 70% of materiality for the financial statements as a
whole.
We agreed with the Board that we would report to them all
individual audit differences identified during the course of our
audit in excess of GBP1,195, in addition to other audit
misstatements below threshold that we believe warrant the reporting
on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed
the risk of material misstatement in the financial statements.
There were no areas within the financial statements which involved
significant accounting estimates or judgements by the directors. We
note that the Company has issued new share options during the year.
Valuing the price of the share option is inherently subjective and
requires judgement by management. We also addressed the risk of
management override of internal controls, including evaluating
whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud. The
Company's finance function is located in the United Kingdom. Our
audit was conducted from our London office, with regular contact
from the key individuals responsible for the accounting
function.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit Matter How our scope addressed this matter
Going concern
------------------------------------------------------------------
Based on our planning procedures Our work included:
we have determined there is uncertainty * Obtained and critically analysed management's
surrounding going concern for the assessment, which included cash flow forecasts,
Company. management accounts, and budgets from management for
a period of at least 12 months from the date of
signing the financial statements and challenged
management in relation to assumptions within the
forecasts;
* Performed sensitivity analysis on the cash flow
forecast;
* Considered the current available financial headroom
with reference to the current cash balances;
* Reviewed meeting minutes for any references to
financial difficulties;
* Reviewed RNS releases and discussed subsequent events
and future plans with management;
Key Observation
There were no identified material
uncertainties relating to events
or conditions that, individually
or collectively, may cast significant
doubt on the Company's ability
to continue as a going concern
for a period of at least twelve
months from when the financial
statements are authorised for issue.
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Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion the part of the directors' remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or
the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements and the part of the directors'
remuneration report to be audited are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- We obtained an understanding of the Company and the sector in
which it operates to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through
discussions with management and application of cumulative audit
knowledge.
-- We determined the principal laws and regulations relevant to
the Company in this regard to be those arising from Companies Act
2006, LSE rules, GDPR, Employment Law, Health and Safety Law,
Anti-Bribery and Money Laundering Regulations and QCA
compliance.
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the Company with those laws and regulations. These procedures
included, but were not limited to:
o Enquires of management
o Review of Board minutes
o Review of legal expenses
o Review of RNS announcements
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing audit
procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates for evidence of bias; and
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor's report.
Other matters which we are required to address
We were appointed by the Directors on 5 August 2020 to audit the
financial statements for the year ending 31 December 2020 and
subsequent financial periods. Our total uninterrupted period of
engagement is 3 years, covering the periods ending 31 December 2018
to 31 December 2020.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the Company and we remain independent of the
Company in conducting our audit.
During the year, we were engaged to provide services to the
Company in the capacity of Reporting Accountant for the proposed
purchase of DT Ultravert. This is a permissible non-audit service
under the FRC's Ethical Standard.
Our audit opinion is consistent with the additional report to
the audit committee.
Use of our report
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone, other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
David Thompson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
24 June 2021
STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended 31 December 2020
Year Year
ended ended
31 December 31 December
Note 2020 2019
GBP GBP
Administrative expenses 3 (266,693) (612,357)
Operating loss 4 (266,693) (612,357)
Finance income 7 - 68
Finance cost 7 (110,410) (105,178)
Profit on sale of investments - 400,000
Loss on ordinary activities before
taxation (377,103) (317,647)
Income tax 8 - -
Loss for the year and total comprehensive
loss attributable to the equity
holders (377,103) (317,647)
============== ==============
Earnings per share
- Basic & diluted attributable
to the equity holders 9 (0.19) (0.16)
All operating income and operating gains and losses relate to
continuing activities.
There was no other comprehensive income for the year
(2019:GBPNil)
The notes form an integral part of the financial statements.
STATEMENT OF CHANGES IN EQUITY
For the Year Ended 31 December 2020
Share Capital Share Premium Capital Retained Total
Redemption Earnings
Reserve
GBP GBP GBP GBP GBP
As at 1 January
2019 8,979,767 25,413,617 - (35,980,923) (1,587,539)
Comprehensive
income
Loss for the period - - - (317,647) (317,647)
Total Comprehensive
loss - - - (317,647) (317,647)
Total contributions - - - - -
by and distributions
to owners of the
Company
As at 31 December
2019 8,979,767 25,413,617 - (36,298,570) (1,905,186)
As at 31 December
2019 8,979,767 25,413,617 - (36,298,570) (1,905,186)
Comprehensive
income
Loss for the period - - - (377,103) (377,103)
Share based payments - - - 87,501 87,501
Total Comprehensive
loss - - - (289,602) (289,602)
Total contributions
by and distributions
to owners of the
Company
Issue of share
capital 6,667 43,333 - - 50,000
Cancellation of
deferred shares (8,783,824) - 8,783,824 - -
As at 31 December
2020 202,610 25,456,950 8,783,824 (36,588,172) (2,144,788)
The Share Capital represents the nominal value of the equity
shares.
The Share Premium represents the amount subscribed for share
capital, in excess of the nominal amount, less costs directly
relating to the issue of shares.
The Capital Redemption reserve represents the value of cancelled
deferred shares.
The Retained Earnings reserve represents the cumulative net
gains and losses less distributions made. Retained Earnings also
includes the share based payment reserve which represents the
cumulative fair value of options and warrants granted.
The notes form an integral part of the financial statements.
STATEMENT OF FINANCIAL POSITION
For the Year Ended 31 December 2020
As at As at
31 December 31 December
2020 2019
GBP GBP
Note
ASSETS
Current assets
Trade and other receivables 10 - 10,056
Cash and cash equivalents 14 468 162
468 10,218
LIABILITIES
Current liabilities
Trade and other payables 11 (2,145,256) (1,915,404)
Net Current Liabilities (2,145,256) (1,915,404)
NET LIABILITIES (2,144,788) (1,905,186)
SHAREHOLDERS' EQUITY
Called up share capital 12 202,610 195,943
Deferred share capital - 8,783,824
Capital redemption reserve 12 8,783,824 -
Share premium account 25,456,950 25,413,617
Retained earnings (36,588,172) (36,298,570)
TOTAL EQUITY (2,144,788) (1,905,186)
The notes form an integral part of the financial statements.
STATEMENT OF CASH FLOWS
For the Year Ended 31 December 2020
Notes Year ended Year ended
31 December 31 December
2020 2019
GBP GBP
Cash flows from operating activities
Cash expended from operations 13 (154,284) (400,201)
Net cash outflow from operating
activities (154,284) (400,201)
Cash flows from investing activities
Proceeds from sale of investment - 400,000
Interest received - 68
Finance costs (410) (178)
Net cash generated from/(used in)
investing activities (410) 399,890
Cash flows from financing activities
Issue of share capital 50,000 -
Loan advance 50,000 -
Issue of convertible loans 55,000 -
Net cash generated from/(used in) 155,000 -
investing activities
Net increase/(decrease) in cash
and cash equivalents 306 (311)
Cash and cash equivalents at beginning
of year 162 473
Cash and cash equivalents at end
of year 14 468 162
The notes form an integral part of the financial statements
The financial statements were approved by the board of directors
and authorised for issue on 24 June 2021 and signed on its behalf
by:
Christopher Theis
Chief Executive Officer
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 31 December 2020
1. ACCOUNTING POLICIES
1.1 Basis of preparation
Path Investments Plc is a public limited company incorporated
and domiciled in the England and Wales, registered under company
number 04006413. The address of the registered office is 15
Victoria Mews, Cottingley Business Park, Bingley, BD16 1PY,
England. The principal activity of the Company is the investment in
both mining and oil and gas development and production
companies.
The financial statements have been prepared and approved by the
Directors in accordance with International Accounting Standards
('IASs') in conformity with the requirements of the Companies Act
2006.
The financial statements are presented in UK pounds Sterling
which is the Company's functional and presentational currency and
all values are rounded to the nearest pound except where indicated
otherwise.
The financial statements have been prepared under the historical
cost convention or fair value where appropriate. The significant
accounting policies adopted are described below.
The preparation of the Financial statements in conformity with
IFRS requires the use of certain critical accounting estimates, It
also requires the board to exercise its judgement in the process of
applying the Company's accounting policies. The areas involving a
higher degree of judgement or complexity or areas where assumptions
and estimates are significant to the financial statements are
disclosed in Note 1.8.
1.2 Going concern
The financial statements have been prepared on the assumption
that the Company will continue as a going concern. Under this
assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future with neither the intention nor
the necessity of liquidation, ceasing trading or seeking protection
from creditors pursuant to laws or regulations. In assessing
whether the going concern assumption is appropriate, the Directors
take into account all available information for the foreseeable
future, in particular for the twelve months from the date of
approval of the financial statements.
The Directors consider the use of the going concern assumption
to be appropriate. At the latest reported date of 31 December 2020,
the Company had cash and cash equivalents totalling GBP468 and net
current liabilities of GBP2,144,788, which included GBP1,674,233 of
directors' accrued salaries, which have been waived in full at the
year end.
On 18 March 2021, the Company successfully raised GBP3.85
million (before expenses) through a placing of new ordinary shares
and admitted the new shares to trading on the Standard List of the
Main Market of the London Stock Exchange. On the same date the
GBP108,767 of convertible loan notes were settled in full by issue
of shares. The Directors believe that the Company has sufficient
funding to allow it to cover its working capital requirements for a
period of at least twelve months from the date of approval of the
financial statements. It is for this reason they continue to adopt
the going concern basis of accounting in preparing the financial
statements.
1.3 Financial instruments
Classification and measurement
The Company classifies its financial assets into the following
categories: those to be measured subsequently at fair value (either
through other comprehensive income (FVOCI) or through the income
statement (FVPL) and those to be held at amortised cost.
Classification depends on the business model for managing the
financial assets and the contractual terms of the cash flows.
Management determines the classification of financial assets at
initial recognition. The Company's policy with regard to financial
risk management is set out in note 15. Generally, the Company does
not acquire financial assets for the purpose of selling in the
short term.
The Company's business model is primarily that of "hold to
collect" (where assets are held in order to collect contractual
cash flows). When the Company enters into derivative contracts,
these transactions are designed to reduce exposures relating to
assets and liabilities, firm commitments or anticipated
transactions.
Financial Assets held at amortised cost
The classification applies to debt instruments which are held
under a hold to collect business model and which have cash flows
that meet the "solely payments of principal and interest" (SPPI)
criteria.
Other financial assets are initially recognised at fair value
plus related transaction costs, they are subsequently measured at
amortised costs using the effective interest method. Any gain or
loss on derecognition or modification of a financial asset held at
amortised cost is recognised in the income statement.
Financial Assets held at fair value through other comprehensive
income (FVOCI)
The classification applies to the following financial
assets:
- Equity investments where the Company has irrevocably elected
to present fair value gains and losses on revaluation of such
equity investments, including any foreign exchange component, are
recognised in other comprehensive income. When equity investment is
derecognised, there is no reclassification of fair value gains or
losses previously recognised in other comprehensive income to the
income statement. Dividends are recognised in the income statement
when the right to receive payment is established.
Financial Assets held at fair value through profit or loss
(FVPL)
The classification applies to the following financial assets. In
all cases, transaction costs are immediately expensed to the income
statement.
- Debt instruments that do not meet the criteria of amortised
costs or fair value through other comprehensive income. The Company
has a significant proportion of trade receivables with embedded
derivatives for professional pricing. These receivables are
generally held to collect but do not meet the SPPI criteria and as
a result must be held at FVPL. Subsequent fair value gains or
losses are taken to the income statement.
- Equity investments which are held for trading or where the
FVOCI election has not been applied. All fair value gains or losses
and related dividend income are recognised in the income
statement.
- Derivatives which are not designated as a hedging instrument.
All subsequent fair value gains or losses are recognised in the
income statement.
Financial liabilities
Borrowings and other financial liabilities (including trade
payables but excluding derivative liabilities) are recognised
initially at fair value, net of transaction costs incurred, and are
subsequently measured at amortised costs.
Impairment of financial assets
A forward looking expected credit loss (ECL) review is required
for: debt instruments measured at amortised costs. Other financial
assets are held at fair value through other comprehensive income:
loan commitments and financial guarantees not measured at fair
value through profit or loss; lease receivables and trade
receivables that give rise to an unconditional right to
consideration.
As permitted by IFRS 9, the Company applies the "simplified
approach" to trade receivable balances and the "general approach"
to all other financial assets. The general approach incorporates a
review for any significant increase in counter party credit risk
since inception. The ECL reviews including assumptions about the
risk of default and expected loss rates. For trade receivables, the
assessment takes into account the use of credit enhancements, for
example, letters of credit.
1.4 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and at bank and
other short-term deposits. They are stated at carrying value which
is deemed to be fair value.
1.5 New Standards and Interpretations
The IASB and IFRIC have issued the following standards and
interpretations which are in issue but not in force at 31 December
2020:
Effect annual
periods beginning
before or after
January Amendments to IAS 1: Presentation of 1 January 2022
2020 Financial Statements: Classification
of Liabilities as Current or Non-current
------------------------------------------ -------------------
The Directors anticipate that the adoption of these Standards
and Interpretations in future periods will have no material impact
on the financial statements other than in terms of
presentation.
1.6 Share-based payments
The Company operates a number of equity-settled share-based
compensation plans, under which the entity receives services from
employees or suppliers as consideration for equity instruments
(options) of the Company. The fair value of the employee or
supplier services received in exchange for the grant of 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, sales
growth targets and remaining an employee of the entity over a
specified time period); and
-- excluding the impact of any non-vesting conditions (for
example, the requirement of 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.
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-marketing vesting conditions. It recognises the impact
of the revision to original estimates, if any, in the income
statement, 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 when the options are exercised.
1.7 Taxation
Current tax, including UK corporation tax and foreign tax, is
provided at amounts expected to be paid (or recovered) using the
tax rates and laws that have been enacted or substantially enacted
by the balance sheet date.
Deferred tax is recognised, using the liability method, in
respect of temporary differences between the carrying amount of the
Company's assets and liabilities and their tax base.
Deferred tax liabilities are offset against deferred tax assets.
Any remaining deferred tax asset is recognised only when, on the
basis of all available evidence, it can be regarded as probable
that there will be suitable taxable profits, within the same
jurisdiction, in the foreseeable future against which the
deductible temporary difference can be utilised.
Deferred tax is determined using tax rates that are expected to
apply in the periods in which the asset is realised or liability
settled, based on tax rates and laws that have been enacted or
substantially enacted by the balance sheet date.
Current and deferred tax are recognised in the income statement,
except when the tax relates to items charged or credited directly
in equity, in which case the tax is also recognised in equity.
1.8 Sources of estimation uncertainty
The preparation of financial statements requires the use of
estimates and assumptions that affect the reported amount of assets
and liabilities at the date of the financial statements and the
reporting amount of income and expenses during the period. Although
these estimates are based on management's best knowledge of the
amount, event or actions, actual results ultimately may differ from
those estimates.
Share based payments
The share-based payment charge is calculated using the
Black-Scholes model which requires the estimation of share price
volatility, expected life and the bid price discount.
2. SEGMENTAL REPORTING
a. Primary segment - business
The Company has only one business segment, which is investing in
natural resources, primarily either by way of equity or convertible
loans.
b. Secondary segment - geographical
The Company's loss for the period was derived wholly from
activities undertaken in the United Kingdom. The Company's net
assets are located entirely in the United Kingdom.
3. EXPENSES BY NATURE
2020 2019
GBP GBP
Staff costs 454,205 334,274
Other expenses (187,512) 278,263
266,693 612,537
4. OPERATING LOSS
The operating loss is stated after charging:
2020 2019
GBP GBP
Auditors remuneration - audit services 15,000 15,000
Non- Audit Services
Reporting accountants services 15,000 15,000
Total fees 30,000 30,000
5. EMPLOYEES
Number of employees
The average monthly number of employees (including Directors)
during the period was:
2020 2019
Number Number
Administration 3 3
2020 2019
GBP GBP
Employment costs
Wages and salaries (including
benefits in kind) 454,205 313,537
Social security costs - 20,670
Pension costs - 67
454,205 334,274
Included in employment costs above are Directors' accrued
salaries, together with employer's national insurance
contributions, amounting to GBP454,205, (2019 :GBP292,537).
6. DIRECTORS' REMUNerATION
2020 2019
GBP GBP
Aggregate emoluments 454,205 319,916
Pension costs - 67
454,205 319,983
Remuneration for the highest paid director was GBP1,320,288
(2019: GBP225,000), which was waived in it's entirety during the
year. The figure at 31 December 2020 includes remuneration accrued
but not paid of GBP454,205 (2019: GBP313,213).
During the period, retirement benefits are accruing to one
Director (2019: retirement benefits are accruing to one
Director).
7. FINANCE income and costs
2020 2019
GBP GBP
Finance Income
Bank interest - 68
- 68
Finance costs
Bank charges (410) (178)
Convertible loan note interest (110,000) (105,000)
Net finance cost (110,410) (105,110)
8. TAXATION
No corporation tax charge arises in respect of the period due to
the trading losses incurred. The Company has surplus management
expenses available to carry forward and use against trading profits
arising in future periods of approximately GBP6,180,000 (2019:
GBP6,180,000). In addition, the Company has non-trading loan
relationship debits to carry forward to offset against future
non-trading loan relationship credits of approximately
GBP18,917,000 (2019: GBP18,917,000).
2020 2019
GBP GBP
Current tax - -
Loss on ordinary activities before
taxation (377,103) (317,647)
Loss on ordinary activities before
taxation multiplied by average effective
rate of corporation tax of 19% (2019:
19%) (71,650) (60,353)
Effects of:
Non-deductible expenses 760 18,616
Short term timing differences - 28,458
Other adjustments - non taxable gains - (76,000)
Tax losses upon which no deemed tax
asset is recognised 70,890 89,279
Current tax - -
A deferred tax asset of approximately GBP1,634,000 (2019:
GBP1,562,000) in respect of losses has not been recognised due to
the uncertainty regarding the availability of future profits
against which the losses of the Company could be offset.
The UK corporation tax at the standard rate for the year is
19.0% (2019: 19.0%).
The main UK corporation tax rate for the current and prior year
has remained at 19%. No changes in the UK rate of tax were
substantially enacted by the period end.
9. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is
based on the loss on ordinary activities after taxation of
GBP377,103 (2019: GBP317,647) and on the weighted average number of
ordinary shares of 195,977,136 (2019: 195,943,802) in issue. The
basic and diluted earnings per share is 0.19p (2019: 0.16p loss per
share). There was no dilutive effect from the share options or
warrants.
In order to calculate the diluted earnings per share, the
weighted average number of ordinary shares in issue is adjusted to
assume conversion of all dilutive potential ordinary shares
according to IAS 33. Dilutive potential ordinary shares include
convertible loan notes and share options granted to Directors and
consultants where the exercise price (adjusted according to IAS 33)
is less than the average market price of the Company's ordinary
shares during the period.
10. Trade and other receivables
2020 2019
GBP GBP
Prepayments - 10,056
- 10,056
11. TRade and other payables
2020 2019
GBP GBP
Trade payables 365,659 323,416
Other payables (including convertible
loan notes) 457,830 291,198
Accruals and deferred
income 1,271,767 1,300,790
Bank loan 50,000 -
2,145,256 1,915,404
Bank Loan
The loan was repaid in full in May 2021 under the terms and
conditions of the agreement.
Convertible Unsecured Loan Stock
On 3 April 2018 the Company constituted an instrument to issue
GBP150,000 nominal convertible unsecured loan stock. The instrument
was subsequently increased to a GBP200,000 nominal amount on 23
November 2020.
On admission of the Company to AIM or other recognised
investment exchange, the Convertible Loan Stock, at the option of
the loan note holder, is either convertible into shares at the
price at which the Placing associated with the listing occurs or
will be repayable out of the Placing proceeds together with 200%
interest to compensate for the risk associated with the loan.
As at the Last Practicable Date the Directors hold the following
Convertible Loan Stock. All Convertible Loan Stock held directly by
the directors will be converted on Admission into Conversion
Shares:
Director Amount
GBP
C Theis* 51,000
Jack Allardyce 5,000
Brent Fitzpatrick** 46,100
Total 102,100
(*) The amount was provided by Networkguru Limited, a company
owned and controlled by Chris Theis' son.
** GBP5,000 of which was provided by Ocean Park Developments,
GBP8,000 by Pondermatters Limited (both companies ultimately owned
by Brent Fitzpatrick) and GBP5,000 by Alexander Fitzpatrick (Brent
Fitzpatrick's son).
During the year, the Company issued convertible loan notes
amounting to GBP55,000 pursuant to an instrument to issue
GBP200,000 nominal convertible unsecured loan stock in 2020 of
which a total of GBP162,100 has been issued.
On 18 March 2021 a total of GBP53,333 (nominal) of Convertible
Loan Stock was repaid in cash and GBP108,767 (nominal) of
Convertible Loan Stock was converted into ordinary shares of the
Company.
12. SHARE Capital
Allotted, called up and
fully paid
Ordinary Shares Deferred shares
of 0.1p each of 39.9p each
No GBP no GBP
At 1 January 2019 195,943,802 195,943 22,014,596 8,783,824
At 31 December 2019 195,943,802 195,943 22,014,596 8,783,824
At 1 January 2020 195,943,802 195,943 22,014,596 8,783,824
Issue of shares 6,666,667 6,667
Cancellation of shares (22,014,596) (8,783,824)
At 31 December 2020 202,610,469 202,610 - -
The ordinary shares shall confer upon the holders the right to
receive dividends and other distributions and participate in the
income or profits of the Company.
The deferred shares shall confer upon the holders the following
rights and shall be subject to the following restrictions,
notwithstanding any other provisions in these Articles:
Return of Capital
On return of assets on a winding up of the Company after the
holders of Ordinary shares have received the aggregate amount paid
up thereon plus GBP10,000,000 for each such share held by them,
there shall be a distribution to the holders of deferred shares an
amount equal to the nominal value of shares held and thereafter any
surplus held will be distributed to holders of ordinary shares.
Dividend s
Holders of deferred shares have no rights to dividends or other
distributions or to participate in the income and profits of the
Company, except that deferred shareholders have a right to receive
any dividends declared, made or paid out of the proceeds of the
sale of Legacy Assets.
Transfers
The Company may acquire all or any of the deferred shares in
issue at any time for no consideration.
On 30 September 2020 and in accordance with Article 3.4(iii) of
the Company's Articles of Association, the Company acquired and
cancelled the Deferred Shares of GBP0.039 nominal value per
Deferred Share for no consideration. After which no Deferred Shares
will remain in issue and has been reflected in the creation of a
capital redemption reserve account.
13. Reconciliation of operating loss to net cash outflow from
Operating activities
2020 2019
GBP GBP
Operating loss (266,693) (317,647)
Decrease/(increase) in debtors 10,056 (7,836)
Increase in creditors within one year 124,852 314,282
Share based payments 87,501 -
Profit from sale of investments - (400,000)
Convertible loan note interest (110,000) 11,000
Net cash outflow from operating activities (154,284) (400,201)
14. CASH & CASH EQUIVALENTS
2020 2019
GBP GBP
Cash at bank and in hand 468 162
15. financial instruments
The Company's financial instruments comprise cash and cash
equivalents and various other items, such as available for sale
investments and trade receivables and payables, which arise
directly from its operations. It is, and has been throughout the
period under review, the Company's policy to ensure that there is
no trading in financial instruments. The main purpose of these
financial instruments is to finance the Company's operations.
Categories of Financial Instruments
2020 2019
Financial Assets at amortised cost
Cash and cash equivalents 468 162
468 162
Financial Liabilities at amortised
cost
Trade and other payables 1,687,426 1,624,206
Convertible loan notes 457,830 291,198
2,145,256 1,915,404
Net Financial Liabilities (2,144,788) (1,915,242)
Financial Assets and Liabilities
Financial assets and financial liabilities are recognised on the
Company's balance sheet when the Company becomes party to the
contractual provisions of the instrument.
Financial Risk Factors
The Company's activities expose it to liquidity risk. The
Company's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise
potential adverse effects on the Company's financial
performance.
Liquidity Risk
The Company has to date financed its operations from cash
reserves funded from share issues. Management's objectives are now
to manage liquid assets in the short term through closely
monitoring costs. The Company has no borrowing facilities that
require repayment and therefore has no interest rate risk
exposure.
Fair Values of Financial Assets and Liabilities
The Directors consider that the fair value of the Company's
financial assets and liabilities are not considered to be
materially different from their book values.
16. Share options AND WARRANTS
The following share options have been granted by the Company and
are outstanding:
Date Number Granted Exercised Lapsed/ Number Weighted Expiry
of grant of ordinary during during waived of ordinary average date
shares year year during shares exercise
under option year under option price
at 1 January at 31 December
2019 2019
03/05/2011 600,000 - - - 600,000 GBP2.80 02/05/2021
30/03/2017 32,500,000 - - - 32,500,000 0.1p 29/03/2027
30/03/2017 28,375,000 - - - 28,375,000 1p 29/03/2027
30/03/2017 12,312,500 - - - 12,312,500 2p 29/03/2027
Total 73,787,500 - - - 73,787,500 3p
------------ -------------- -------- ---------- -------- ---------------- ---------- -----------
Date Number Granted Exercised Lapsed/ Number Weighted Expiry
of grant of ordinary during during waived of ordinary average date
shares year year during shares exercise
under option year under price
at 1 January option
2020 at 31
December
2020
03/05/2011 600,000 - - - 600,000 GBP2.80 02/05/2021
30/03/2017 32,500,000 - - (32,500,000) - 0.1p 29/03/2027
30/03/2017 28,375,000 - - (28,375,000) - 1p 29/03/2027
30/03/2017 12,312,500 - - (12,312,500) - 2p 29/03/2027
08/10/2020 - 60,375,000 - - 60,375,000 0.1p 07/10/2030
Total 73,787,500 60,375,000 - (73,187,500) 60,975,000 3p
------------ -------------- ----------- ---------- ------------- ------------- ---------- -----------
All options outstanding at the year-end are exercisable at that
date.
The following warrants have been granted by the Company and
subsequently lapsed without excercise :
Date Number Granted Exercised Lapsed Number Weighted Exercise
of grant of warrants during during during of warrants average date
at year year year at 31 December exercise
1 January 2019 price
2019
30/03/2017 1,400,000 - - - 1,400,000 1p 29/03/2019
Total 1.400,000 - - - 1,400,000 1p
------------ ------------- -------- ---------- -------- ---------------- ---------- -----------
Date Number Granted Exercised Lapsed Number Weighted Exercise
of grant of warrants during during during of warrants average date
at year year year at 31 December exercise
1 January 2020 price
2020
30/03/2017 1,400,000 - - 1,400,000 - 1p 29/03/2019
Total 1.400,000 - - 1,400,000 - 1p
------------ ------------- -------- ---------- ---------- ---------------- ---------- -----------
The fair value of equity settled share options and warrants
granted is estimated at the date of grant using a Black-Scholes
option pricing model, taking into account the terms and conditions
upon which the options were granted. The following table lists the
inputs to the model:
Options Options
--------------------- --------------------- ------------
Date of grant 03 May 2011 08 Oct 2020
Expected volatility 54% 50.0%
Expected life 3.5 years 10 years
Risk-free interest 1.72% 2.50%
rate
Expected dividend - -
yield
Possibility of - -
ceasing employment
before vesting
Fair value per - -
option/warrant
0.014p 0.6p
--------------------- --------------------- ------------
On 8 October 2020 the options dated 30 March 2017, held by Chris
Theis and Andrew Yeo were surrended and reissued with an exercise
price of 0.1p and an expiry date of 7 October 2030.
The expense recognised by the Company for share based payments
during the year ended 31 December 2020 was GBP87,501 (2019:
GBPNil).
The average volatility is used in determining the share based
payment expense to be recognised in the period. This was calculated
by reference to the standard deviation of the share price over the
preceding 12-month period.
Movement in the number of options and warrants outstanding and
their related weighted average exercise price are as follows:
At 31 December 2020 At 31 December 2019
Number of Weighted average Number of Weighted average
Options & exercise price per Options & exercise price per
Warrants share Warrants share
At 1 January 75,187,500 3p 75,187,500 3p
Granted 60,375,000 0.1p - -
Exercised - - - -
Expired or waived (74,587,500) 1p - -
------------------- ------------------------- ------------------------ ---------------- ------------------------
At 31 December 60,975,000 3p 75,187,500 3p
------------------- ------------------------- ------------------------ ---------------- ------------------------
The weighted average remaining contractual life of options as at
31 December 2020 was 7.2 years (2019: 7.2 years).
17. RELATED PARTY TRANSACTIONS
The following share options were held by the directors during
the year:
Director Date of Held at Surrendered Granted Held at Exercise
grant 1 January during during 31 December price
2020 the year the Year 2020
---------- ------------ ------------ -------------- ----------- ------------- ---------
C Theis 30/03/2017 20,000,000 (20,000,000) - - GBP0.001
C Theis 30/03/2017 16,000,000 (16,000,000) - - GBP0.01
C Theis 30/03/2017 6,500,000 (6,500,000) - - GBP0.02
C Theis 08/10/2020 60,375,000 (60,375,000) 60,375,000 60,375,000 GBP0.001
102,875,000 (102,875,000) 60,375,000 60,375,000
------------ -------------- ----------- -------------
As at 31 December 2020, included in other payables were the
following convertible loan notes issued to the Directors together
with accrued interest thereon.
Outstanding Convertible Interest Converted Repaid Outstanding
at 31 December loan notes accrued during during at 31 December
2019 issued during the year the 2020
during the year year
year
Director GBP GBP GBP GBP GBP GBP
C Theis* 150,000 - - - - 150,000
C Theis 3,000 - - - - 3,000
A Yeo 75,000 - - - - 75,000
N Fitzpatrick 54,000 - - - - 54,000
Total 282,000 - - - - 282,000
---------------- ------------ ---------- ---------- -------- ----------------
* these loan notes were issued to Networkguru Limited, a company
owned by Chris's Theis' son, who subscribed under the convertible
loan note instrument.
Included in other payables are loans of GBPNil (2019: GBPNil),
and GBP2,067 (2019:2,067) made by each of the Directors Nigel
Fitzpatrick and Chris Theis.
18. ultimate controlling party
The Company considers that there is no ultimate controlling
party.
19. SUBSEQUENT EVENTS
Subsquent to the year end the Company announced that it has
raised (before expenses) GBP3,850,000 by way of a subscription and
placing of 1,400,000,000 new ordinary shares of 0.1 pence each in
the Company at a price of 0.25 pence per Ordinary Share. The
proceeds of the Fundraise will be used to support the Company's
continuing investment strategy, as outlined in the Company's
prospectus.
In addition, participants in the Fundraise were issued with one
warrant for every two Placing Shares subscribed for with an
exercise price of 0.25 pence per Ordinary Share and one warrant for
every two Placing Shares subscribed for with an exercise price of
0.5 pence per Ordinary Share. The Warrants have a five-year
exercise period from the date of grant.
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