Source - LSE Regulatory
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 £3.85 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 £3.85 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 £3.85 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 £377,103 (2019 loss: £317,647).

 

Cash flow

During the year, the Company issued convertible loan notes amounting to £55,000 pursuant to an instrument to issue £200,000 nominal convertible unsecured loan stock in 2020 of which a total of £162,100 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




 

INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS OF PATH INVESTMENTS PLC

FOR THE YEAR ENDED 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 £23,900 (2019: £14,400), 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 £16,730 (2019: £10,080), 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 £1,195, 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 we have determined there is uncertainty surrounding going concern for the Company.

Our work included:

·      Obtained and critically analysed management's assessment, which included cash flow forecasts, 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.

 

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:

Enquires of management

Review of Board minutes

Review of legal expenses

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

ended

31 December

 

Year

ended

31 December


Note


2020


2019
















£


£













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:£Nil)

 

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 Redemption

Reserve

Retained Earnings

Total


£

£

£

£

£

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

31 December

2020

As at

31 December

2019














£

  £


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 31 December

2020

 

Year ended 31 December

2019

 







£

£





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) investing activities


155,000

-



                     

                     









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 £468 and net current liabilities of £2,144,788, which included £1,674,233 of directors' accrued salaries, which have been waived in full at the year end. 

On 18 March 2021, the Company successfully raised £3.85 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 £108,767 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 2020

Amendments to IAS 1: Presentation of Financial Statements: Classification of Liabilities as Current or Non-current

1 January 2022

 

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


£

£

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


£

£

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

£

Employment costs



Wages and salaries (including benefits in kind)

Social security costs

Pension costs

454,205

-

-

              

454,205

313,537

20,670

67

              

334,274

 

 

               

               

Included in employment costs above are Directors' accrued salaries, together with employer's national insurance contributions, amounting to £454,205, (2019 :£292,537). 

 

6.         DIRECTORS' REMUNerATION



 

2020

£


 

2019

£


Aggregate emoluments

454,205


319,916


Pension costs

-


67


 

 

               

454,205


               

319,983


 

 

               


               

Remuneration for the highest paid director was £1,320,288 (2019: £225,000), which was waived in it's entirety during the year. The figure at 31 December 2020 includes remuneration accrued but not paid  of £454,205 (2019: £313,213). 

 

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



£


£


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 £6,180,000 (2019: £6,180,000). In addition, the Company has non-trading loan relationship debits to carry forward to offset against future non-trading loan relationship credits of approximately £18,917,000 (2019: £18,917,000).



 

2020


 

2019



£


£

 


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 £1,634,000 (2019: £1,562,000) 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 £377,103 (2019: £317,647) 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




 

£

£









Prepayments


-

10,056





                

                





-

10,056

 

 




                

                

11.          TRade and other payables




2020

2019



 

£

£







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 £150,000 nominal convertible unsecured loan stock. The instrument was subsequently increased to a £200,000 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


£

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.

** £5,000 of which was provided by Ocean Park Developments, £8,000 by Pondermatters Limited (both companies ultimately owned by     Brent Fitzpatrick) and £5,000 by Alexander Fitzpatrick (Brent Fitzpatrick's son).

 

During the year, the Company issued convertible loan notes amounting to £55,000 pursuant to an instrument to issue £200,000 nominal convertible unsecured loan stock in 2020 of which a total of £162,100 has been issued.

 

On 18 March 2021 a total of £53,333 (nominal) of Convertible Loan Stock was repaid in cash and £108,767 (nominal) of Convertible Loan Stock was converted into ordinary shares of the Company.

 

12.  SHARE Capital

 

Allotted, called up and fully paid






Ordinary Shares of 0.1p each

Deferred shares of 39.9p each


No

£

no

£


                     

                     

                     

                     






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 £10,000,000 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.

 

Dividends

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 £0.039 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



£

£

 


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





£

£





                  

                  

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 of grant

Number of ordinary shares under option at 1 January 2019

Granted during year

Exercised during year

Lapsed/ waived during year

Number of ordinary shares under option at 31 December 2019

Weighted average exercise price

Expiry date

03/05/2011

600,000

-

-

-

600,000

£2.80

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 of grant

Number of ordinary shares under option at 1 January 2020

Granted during year

Exercised during year

Lapsed/ waived during year

Number of ordinary shares under option at 31 December 2020

Weighted average exercise price

Expiry date

03/05/2011

600,000

-

-

-

600,000

£2.80

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 of grant

Number of warrants at

1 January 2019

Granted during year

Exercised during year

Lapsed during

 year

Number of warrants  at 31 December 2019

Weighted average exercise price

Exercise date

30/03/2017

1,400,000

-

-

-

1,400,000

1p

29/03/2019

 

Total

1.400,000

-

-

-

1,400,000

1p


 

Date of grant

Number of warrants at

1 January 2020

Granted during year

Exercised during year

Lapsed during

 year

Number of warrants  at 31 December 2020

Weighted average exercise price

Exercise date

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

Expected volatility

Expected life

Risk-free interest rate

Expected dividend yield

Possibility of ceasing employment before vesting

Fair value per option/warrant


         03 May 2011  

            54%

            3.5 years

            1.72%

            -

            -

-          

 

 0.014p

08 Oct 2020

50.0%

10 years

2.50%

-

-

-

 

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 £87,501 (2019: £Nil).

 

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

Options &

Warrants

 

 

Weighted average exercise price per share

 

Number of

Options &

Warrants

 

 

Weighted average exercise price per 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 grant

Held at 1 January 2020

Surrendered during the year

Granted during the Year

Held at 31 December 2020

Exercise price

C Theis

30/03/2017

20,000,000

(20,000,000)

-

-

£0.001

C Theis

30/03/2017

16,000,000

(16,000,000)

-

-

£0.01

C Theis

30/03/2017

6,500,000

(6,500,000)

-

-

£0.02

C Theis

08/10/2020

60,375,000

(60,375,000)

60,375,000

60,375,000

£0.001



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 at 31 December 2019

Convertible loan notes issued during year

Interest accrued during the year

Converted during the year

Repaid during the year

Outstanding at 31 December 2020

Director

£

£

£

£

£

£

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 £Nil (2019: £Nil), and £2,067 (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) £3,850,000 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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