REG - Gunsynd PLC - Final Results
06/12/2022 11:30
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RNS Number : 7747I Gunsynd PLC 06 December 2022
Gunsynd plc
("Gunsynd" or the "Company")
Final Results for the Year Ended 31 July 2022
Gunsynd (AIM: GUN, AQSE: GUN) is pleased to announce that its Final Results
for the year ended 31 July 2022 will shortly be posted to shareholders and are
available on the Company's website: http://www.gunsynd.com/
(http://www.gunsynd.com/) .
This announcement contains inside information for the purposes of the UK
Market Abuse Regulation.
The Directors of the Company are responsible for the release of this
announcement.
For further information please contact:
Gunsynd plc +44 (0) 78 7958 4153
Hamish Harris / Peter Ruse
Cairn Financial Advisers LLP +44 (0) 20 7213 0880
James Caithie / Liam Murray
Peterhouse Capital Limited +44 (0) 20 7469 0936
Lucy Williams
CHAIRMAN'S REPORT (INCORPORATING THE STRATEGIC REVIEW)
I am pleased to present the annual report and financial statements for the
year ended 31 July 2022. The Company made a loss for the year to 31 July
2022 of £2,426,000 (2021: profit £2,012,000) after taxation. The loss was a
result of unrealised losses on the value of investments held. The Company had
net assets of £3,851,000 (2021: £6,303,000) at 31 July 2022, and cash
balances of £824,000 (2021: £1,071,000).
Review of Investments
Charger Metals Limited ("Charger")
Gunsynd currently holds 3,175,000 shares in Charger representing approximately
5.12% of Charger's issued share capital, of which 1,200,000 shares are subject
to an escrow period of 24 months following its IPO on 7 July 2021.
Charger is a Western Australian ("WA") focussed base metals (Ni,Cu,Co-PGE) and
lithium exploration company which currently holds three highly prospective
projects in WA and the Northern Territory ("NT") in Australia. The principal
activity of Charger during the financial year was the entering into agreements
to acquire interests in mineral exploration and evaluation tenements,
conducting exploration work on those interests as well as seeking out further
exploration, acquisition and joint venture opportunities.
Bynoe Lithium Project, NT (Charger 70%)
The Bynoe Project is located within the Litchfield Pegmatite Field, Northern
Territory, Australia, approximately 80km southeast of Darwin and is considered
prospective for the preferred lithium mineral, spodumene.
The project is surrounded by the extremely large tenement holdings of Core
Lithium Limited's Finniss Lithium Project, which has commenced development and
mining. During the year, Charger completed an aeromagnetic survey and
approximately 3,000 soil geochemistry samples were analysed. When combined
with additional publicly available drilling information the interpretation by
Charger's consultants concluded that the project shows potential to host
multiple lithium-caesium-tantalum (LCT) pegmatite systems. Charger received
approval for its Mine Management Plan from the Department of Industry, Tourism
and Trade (Mining and Petroleum) as a precursor to drilling. Charger applied
for an aboriginal heritage clearance early this year through the Aboriginal
Areas Protection Authority, a NT governmental agency. Once received, drilling
can commence in cleared areas.
Lake Johnston Lithium Project, WA (Charger 70%-100%)
Previous government and industry explorers had identified pegmatites at the
Lake Johnston Project, located approximately 470km east of Perth, Western
Australia. More recent work by Charger has confirmed that a number of these
pegmatites have LCT affinities, making them prospective for lithium. LCT
pegmatites have formed within a 50km long corridor and include the high
priority Medcalf spodumene discovery and much of the Mount Day LCT pegmatite
field.
During the year approximately 7,100 soil geochemistry samples throughout the
Lake Johnston Project, including the Mt Day and Medcalf Prospect areas, were
analysed. The Medcalf Prospect has the most advanced target and is being
prepared for drilling. The drill target consists of a swarm of about 20
anastomosing, spodumene-bearing pegmatite dykes that outcrop in an area
between 500m and 800m long, within a corridor 300m wide. A program of
approximately 40 RC holes is proposed to test the Medcalf Prospect
spodumene-pegmatites. Ahead of drilling, Charger must complete a Spring flora
survey and an aboriginal heritage protection survey. The Mt Day prospect has
many outcrops of LCT pegmatites, however further fieldwork is required before
drill targets will be proposed.
Coates Ni Cu Co Platinum Group Elements (PGE) Project, WA (Charger 70%-85% interest)
Charger recognised that the Coates mafic intrusive complex is prospective for
nickel, copper and platinum group elements mineralisation following a review
of geochemical results from an earlier exploration company. The Coates Project
is located approximately 60km northeast of Perth, Western Australia. This year
Charger initially completed a SkyTEM helicopter-borne geophysical survey and
then a follow-up, higher precision, ground-based FLTEM geophysical survey.
Charger initiated 5 drill holes at the T1 Prospect, where EM conductor targets
coincide with a geochemical anomaly. Drilling returned 593m of diamond core,
with 4 holes reaching the prescribed target depth. One hole was abandoned due
to poor rock conditions. Assays have not yet been received.
Rincon Resources Pty Ltd ("Rincon")
Gunsynd holds 8.9 million shares representing approximately 17% of Rincon's
issued share capital.
Rincon (ASX:RCR) is a Western Australian ("WA") focussed gold and base metals
exploration company quoted on the ASX. It holds the rights to three highly
prospective gold and copper projects in WA, with a main focus on the South
Telfer Project, covering 50,000-hectares in Paterson province. Rincon
progressed exploration activities across its projects in Western Australia.
Rincon has a 100% interest in three highly prospective gold and base metal
projects in Western Australia: The South Telfer Copper-Gold Project, Laverton
Gold Project, and Kiwirrkurra Copper-Gold (IOCG) Project. Each project has
been subject to historical exploration, which has identified prospective
mineralised systems. Rincon is systematically exploring these projects, aiming
to delineate economic resources.
South Telfer Copper-Gold Project
The South Telfer Project consists of six exploration and two prospecting
licences covering approximately 540km(2) and greater than 60km strike of
prospective geology known to host significant Telfer and Havieron style gold
and copper mineralisation. The project area has seen previous, yet limited
exploration completed by Newcrest Mining (ASX: NCM) (Newcrest) which
identified significant outcropping gold and copper mineralisation at the
Hasties Prospect and low-level bedrock gold anomalism at Westin. During the
period, Rincon completed its maiden reverse circulation (RC) drilling program,
totalling 27 holes for 4,944m. The program aimed to validate historical
drilling results as well as test extensions to the known shallow copper-gold
mineralisation at both Hasties Main and Hasties South-East (SE) zones along a
+1km long mineralised trend. Drilling broadly defined a moderate to steep east
dipping reef/breccia style copper-gold system at Hasties Main Zone, currently
defined over a strike of approximately 300m in length, a depth of over 100m
below surface and up to 50m wide at surface, with mineralisation remaining
open in all directions. Multiple, significant zones of copper-gold
mineralisation were intercepted from both the Hasties Main and Hasties SE
Zones.
The Phase 2 drilling program recommenced in April 2022 following the arrival
of a diamond drill rig to site 6 to drill the EIS co-funded diamond hole,
22STDC002. This was drilled to 660m, successfully intersected the target fold
axis zone near the apex of the dolerite sill, approximately 350m below the
surface, and about 150m below the deepest drilled copper gold mineralisation
at Hasties. The hole proceeded to drill through the dolerite and also tested
the eastern limb contact zone. Multiple zones of intense alteration, veining,
brecciation and sulphides (mainly pyrite & minor chalcopyrite) were
intersected throughout and proximal to target zones, including zones of
disseminated sulphides (chalcopyrite ± pyrite), alteration and veining also
within the dolerite. Unfortunately, 22STDC002 did not intersect any
significant copper-gold mineralisation.
On 28 September 2022, Rincon announced the results of the latest geophysical
modelling at its 100% owned South Telfer Copper-Gold Project, located in the
Paterson Province, Western Australia. Reinterpretation of existing geophysical
aeromagnetic data using 3D inverted magnetic modelling techniques has defined
a significant new target ('Mammoth') 700m to the northeast of the company's
existing Westin Prospect, located 25km southwest of the giant Havieron deposit
(5.5Moz Au, 218kt Cu2) and 35km directly along strike of the world-class
Telfer Gold Mine. Mammoth is the largest of three new targets defined over a
strike length of 15km along the highly prospective Telfer - Westin Trend
within the company's highly underexplored Westin tenement area.
Eagle Mountain Mining Limited ("Eagle Mountain")
Gunsynd holds 2.5 million shares in Eagle Mountain representing approximately
1% of its issued share capital.
Eagle Mountain Mining Limited (ASX:EM2), is a copper focused exploration and
development company with a key objective of becoming a low emission producer
at its high-grade Oracle Ridge project in Arizona, USA, to supply the rapidly
growing green energy market. Eagle Mountain commenced its first large diameter
drilling in the Talon area to collect samples for metallurgical testwork which
is necessary for future feasibility studies. Preparations for the
refurbishment of the underground mine are well advanced to enable underground
diamond drilling at the Oracle Ridge Copper Project. The company received $1
million investment from Managing Director Charles Bass, demonstrating his
strong and ongoing support for Eagle Mountain, which is well-funded with $11.1
million cash held at 30 June 2022.
Pacific Nickel Limited ("Pacific Nickel")
Gunsynd currently holds 3,083,741 shares in Pacific Nickel representing
approximately 1.1% of its issued capital.
During the year, Pacific Nickel advised:
- Work continued on the Definitive Feasibility Study (DFS).
Planning for construction of the wharf, haul road linking the mining areas,
camp and mining facilities was undertaken. Australian Mine Design and
Development (AMDAD) were appointed to review the Kolosori Project for project
start-up factors and to prepare a reserve statement for the DFS. Key areas
of focus include the water moisture content of the DSO and the haul road
location and design.
- The 1 July 2022 lifting of Covid 19 border restrictions in the
Solomon Islands allowed overseas consultants and contractors to visit the
site. A LiDAR survey has been arranged to provide a detailed topographical map
of the Kolosori area. Preparations are underway to construct a second field
trial stockpile for detailed assessment of the DSO drying characteristics. The
DFS will be finalised once the LiDAR survey and moisture content assessment
have been completed.
- Following the recent granting of the Mining Lease for the
Kolosori Nickel Project, Pacific Nickel is now focussed on the key steps to
achieve commercial nickel laterite direct shipping ore (DSO) cargoes from
mid-2023.
- Pacific Nickel is working to complete the Kolosori Definitive
Feasibility Study (DFS). Key design and development activities for the
remainder of 2022 that are required to achieve DSO shipping in 2023 include
the construction of the DSO loadout wharf and the haul road to the initial
mining area. Discussions are underway with a local contractor to commence
these early works as soon as possible. Pacific Nickel has also engaged with
HBS PNG Pty Ltd, a well-established PNG mining contractor via an early
involvement mandate. Pacific Nickel report that it has recently completed
construction of a trial ore stockpile which has been designed to blend ore
types and approximate the characteristics of stockpiles expected during DSO
production and shipping.
- Pacific Nickel is working closely with Glencore to complete the
agreement for a USD $22 million project financing facility and DSO offtake
sales for all of Kolosori's nickel laterite production.
First Tin Limited ("First Tin")
Gunsynd currently holds 1,083,333 shares in First Tin representing
approximately 0.4% of its issued capital.
First Tin (LSE:1SN) successfully completed its IPO on the Standard List of
the London Stock Exchange in April 2022, raising £20 million (before
expenses) of new equity capital, positioning it to invest into and add value
to its advanced portfolio of tin assets. As part of the IPO, First Tin
acquired the Taronga tin asset in NSW Australia, the 5(th) largest
undeveloped tin reserve globally. Taronga will now be developed alongside
First Tin's other lead asset of Tellerhäuser which is located in Saxony in
Germany.
First Tin recently commenced Definitive Feasibility Studies ("DFS") at Taronga
and Tellerhäuser, which are both scheduled to be completed in Q4 2023. In
addition, Environmental and permitting work continued at Taronga and
Tellerhäuser with all required permits expected to be granted by the end of
2023. First Tin also commenced drill campaigns at Taronga and Tellerhäuser
comprising 24,000 metres of diamond and RC drilling. The intention is to both
expand the existing known resources while also drilling new satellite
exploration targets
Rogue Baron PLC ("Rogue Baron")
Rogue Baron PLC (AQSE: SHNJ) is a leading company in the premium spirit sector
listed on the Access segment of the AQSE Growth Market. Gunsynd currently
holds 21,543,563 ordinary shares in Rogue Baron, representing approximately
24% of its issued share capital. Gunsynd also retains a balance of £111,464
of Convertible Loan Notes consisting of accrued interest.
Rogue Baron's flagship Shinju Whisky won two medals in October 2021 including
a double gold with a perfect score of 100 when voted best whisky at the 2021
Santé International Spirit Competition.). In November 2021 Shinju won another
gold medal, this time at the prestigious John Barleycorn awards.
In April 2022, Rogue Baron announced it had secured new distribution deals in
both the UK and Spain for Shinju. Rogue Baron also announced its first
sales in both Austria and Switzerland. Rogue Baron also hired a key sales
person in the USA where it continues to progress discussions on a large
increase in its distribution capability. In the period Rogue Baron
successfully released an 8 year old version of its Shinju whisky and announced
it intended to release a 12 and 15 year old version in the future.
Low 6 Limited ("Low6")
Low6 has developed a next-generation sports gaming technology platform that
powers franchises with their own branded gaming experiences to engage their
digital fanbases.
Low6's current focus is to charge customers, typically iGaming operators and
sporting franchises, for developing and licensing digital free-to-play games
that they embed in their mobile apps/websites as a way of driving users to
their core operations. The current financial year is progressing well with
signed contracts, signed term sheets or advanced contractual negotiations
being achieved in respect of a significant portion of that year's revenue
which, due to the investment made in Low6's technology platform, is hoped to
be high margin. At the same time Low6's cost base and burn rate have been
reduced significantly.
Oscillate plc ("Oscillate"; formerly DiscovOre plc)
Oscillate is an investment company listed on the AQSE Growth Market Exchange
with the ticker, AQSE: MUSH. In April 2021, Gunsynd invested £200,000 into
Oscillate being 10 million shares at 2p representing circa 4.5% of Oscillate.
Oscillate underwent internal repositioning and restructuring during what has
been a difficult year.
Oyster Oil and Gas Limited ("Oyster")
Gunsynd has a holding valued at £130,000, and there has been no material
change since year end. The oil price gives the Company some confidence of
restoring value to this investment. Gunsynd will update the market as and when
material developments occur.
Finance Review
As noted above, the Company made a loss for the year of £2,426,000 (2021:
profit £2,012,000) after taxation. The majority of the loss generated was
from decrease in value of the Company's investment portfolio. The Company
had net assets of £3,851,000 (2021: £6,303,000) at 31 July 2022, and cash
balances of £824,000 (2021: £1,071,000).
Outlook
In the last annual report, I stated "Debate lingers over whether the economic
effects resulting from Covid19 pandemic are a temporary hiccup or the
harbinger of structural changes. We are far from convinced that the current
inflation level is just a blip, hence our positioning towards predominantly
gold, copper and battery metals."
On the one hand the board was proven correct in its macro economic stance but
failed to see the breakdown of the traditional perceived inverse relationship
between gold and inflation. Whilst the reverse of last year's profit and
subsequent share price depreciation is obviously a disappointment, we maintain
that our positioning predominantly towards gold, copper and battery metals is
one that should be persisted with given the apparently unstoppable
determination of governments to head towards net zero despite the costs
involved regarding higher power prices. Worries re scarcity with respect to
battery metals have now seen motor companies directly deal with mining
companies for supply as per Ford and BHP's nickel supply agreement
(https://www.bhp.com/news/media-centre/releases/2022/07/bhp-signs-mou-for-nickel-supply-with-ford-motor-company).
Whilst good progress was made by a number of companies in our portfolio not
least Eagle Mountain and Pacific Nickel this unfortunately hasn't been as yet
reflected in their share price performance. Now that the Chinese government
appears to have finally accepted the obvious i.e. that continual lockdowns is
not a sustainable policy, this bodes well for the Chinese economy and copper
in particular.
The board took the decision to take profits on one of our listed investments
at prices much higher than they are today which has allowed the Company to
maintain a healthy cash balance. The board undertook substantial due
diligence on a number of projects during the period not least an Australian
gas project which we subsequently decided not to invest in. Gunsynd has
not raised money since 2020 and is still adequately funded for the foreseeable
future. Gunsynd maintains a low fixed cost structure and this will continue
through volatile and uncertain conditions across global markets.
We maintain a level of diversification in our portfolio with positions in
natural resources, gaming and beverages.
The Board continues to look at investments in line with its investment policy
as highlighted on the Company's website. This could potentially include
increasing a stake(s) in investments already held. Such investment(s) may or
may not lead to a reverse takeover.
The Board would also like to take this opportunity to thank shareholders for
their continued support.
s172 Statement
The Directors continue to act in a way that they consider, in good faith, to
be most likely to promote the success of the Company for the benefits of the
members as a whole.
This section serves as the Directors' Section 172 statement and should be read
in conjunction with the Director's Statement and Strategic Report and the
Report from the Company's Corporate Governance Committee. This disclosure
describes how the Directors have had regard to the matters set out in section
172(1)(a) to (f) and forms the Directors' statement required under section
414CZA of The Companies Act 2006.
The matters set out in Section 172(1) (a) to (f) are that a Director must act
in the way they consider, in good faith, which would be most likely to promote
the success of the Company for the benefit of its stakeholders as a whole, and
in doing so have regard (amongst other matters) to:
• Consider the likely consequences of any decision in the long term,
• Act fairly between the members of the Company,
• Maintain a reputation for high standards of business conduct,
• Consider the interests of the Company's employees,
• Foster the Company's relationships with suppliers, customers and others,
and
• Consider the impact of the Company's operations on the community and the
environment.
In the above Chairman's Report, the Company has set out the short to long term
strategic priorities, and described the plans to support their achievement.
The Company is an early-stage investment company quoted on a minor exchange
and its members will be fully aware, through detailed announcements,
shareholder meetings and financial communications, of the Board's broad and
specific intentions and the rationale for its decisions. The Company pays its
employees and creditors promptly and keeps its costs to a minimum to protect
shareholders' funds. When selecting investments, issues such as the impact on
the community and the environment have actively been taken into consideration;
as is clear from the portfolio set out in the Chairman's report.
The application of the s172 requirements during the year can be demonstrated
through the choice of investments made in the year, as described in the
Chairman's report, all of which have been chosen to maximise profits for our
members, whilst ensuring they meet our requirements on their impact on the
local communities and environment.
Stakeholder mapping and engagement activities within the reporting period.
The Company continuously interacts with a variety of stakeholders important to
its success, such as equity investors, business partners, workforce,
government bodies, suppliers and advisors. The Company strives to strike the
right balance between engagement and communication. Furthermore, the Company
works within the limitations of what can be disclosed to the various
stakeholders with regards to maintaining confidentiality of market and/or
commercially sensitive information.
The table below acts as our Section 172 statement by setting out the key
stakeholder Groups and how the Group has engaged with them over the reporting
year.
Who: Key Stakeholder Groups Why: why is it important to engage this group of stakeholders How: how Gunsynd engaged with the stakeholder group and outcomes
Equity Investors and Business Partners Access to capital is of vital importance to the Group to ensure long-term The Board engages with investors at the AGM, through RNS releasers and
success. maintains regular dialogue with key investors, and business partners.
Workforce The Company's long-term success is predicated on the commitment of our The Company has few employees, and has in place appropriate policies, to
workforce to our vision and the demonstration of our values on a daily basis. reward key personnel.
Regular communication takes place with all staff, and the Company has not
experienced any problems.
Key suppliers and Advisors A good relationship with key suppliers is essential to ensure timely supplies Regular communication takes place with all key advisors and suppliers.
so as to not interrupt mining and processing.
The Company has not experienced any problems with suppliers or corporate
Key advisors are essential to ensure we maintain good governance in all areas. governance issues during the year.
Hamish Harris
Chairman
5 December 2022
FINANCIAL STATEMENTS
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 JULY 2022
2022 2021
Note £000 £000
Continuing operations
Income
Unrealised (loss)/gain on financial investments 11 (2,168) 2,371
Realised gain on financial investments 11 221 236
(1,947) 2,607
Administrative expenses
Salaries and other staff costs 6 (300) (278)
Other costs 8 (224) (245)
Share based payment charge 19 - (24)
Total administrative expenses (524) (547)
Impairment of financial investments 11 - (130)
Write down of convertible loan notes - (2)
Other income 7 15 26
Finance income 30 58
(Loss)/Profit before tax (2,426) 2,012
Taxation 9 - -
(Loss)/Profit for the period attributable to equity shareholders of the (2,426) 2,012
Company
Other comprehensive income / (expenditure) for the period net of tax - -
Total comprehensive earnings for the period attributable to shareholders (2,426) 2,012
Earnings per ordinary share
Basic (pence) 10 (0.540) 0.558
Diluted (pence) n/a 0.428
The notes form an integral part of these financial statements.
STATEMENT OF FINANCIAL POSITION AS AT 31 JULY 2022
2022 2021
Note £000 £000
ASSETS
Non-current assets
Financial investments 11 2,944 5,124
Total non-current assets 2,944 5,124
Current assets
Trade and other receivables 12 163 174
Cash and cash equivalents 17 824 1,071
Total current assets 987 1,245
Total assets 3,931 6,369
Current liabilities
Trade and other payables 13 (80) (66)
Total current liabilities (80) (66)
Total liabilities (80) (66)
Net assets 3,851 6,303
Equity attributable to equity holders of the company
Ordinary share capital 14 382 382
Deferred share capital 14 2,299 2,299
Share premium reserve 14 13,459 13,459
Investment in own shares 15 (26) -
Share based payments reserve 39 131
Retained earnings (12,302) (9,968)
Total equity 3,851 6,303
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JULY 2022
Deferred Share Investment Share-based
Share Share premium in own payments Retained
capital capital reserve shares reserve earnings Total
£000 £ 000 £000 £000 £000 £000 £000
At 31 July 2020 216 2,299 11,828 - 192 (12,065) 2,470
Profit for the year - - - - - 2,012 2,012
Total comprehensive income for the period - - - - - 2,012 2,012
Transactions with owners:
Issue of share capital 166 - 1,690 - - - 1,856
Share issue costs - - (59) - - - (59)
Share options issued - - - - 24 - 24
Share options lapsed - - - - (84) 84 -
Transfer within Equity on lapse of share options - - - - (1) 1 -
At 31 July 2021 382 2,299 13,459 - 131 (9,968) 6,303
Loss for the year - - - - - (2,426) (2,426)
Total comprehensive Loss for the period - - - - - (2,426) (2,426)
Transactions with owners:
Adjustment for shares held in Trust - - - (26) - - (26)
Transfer within Equity on lapse of share options - - - - (92) 92 -
At 31 July 2022 382 2,299 13,459 (26) 39 (12,302) 3,851
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 JULY 2022
2022 2021
Note £000 £000
Cash flow from operating activities
(Loss)/Profit after tax (2,426) 2,012
Tax on losses - -
Finance income net of finance costs (10) (58)
Unrealised loss/(gain) on revaluation of financial investments 2,168 (2,371)
Realised (gain) on sale of financial investments (221) (236)
Share based payment - 24
Write down of convertible loan notes - 2
Impairment provision - 130
Adjustment for issue of own shares (26) -
Foreign exchange movements 1 3
Changes in working capital:
Decrease in trade and other receivables 11 7
Increase/(decrease) in trade and other payables 14 (32)
Cash outflow from operations (489) (519)
Taxation received - -
Net cash outflow from operating activities (489) (519)
Cash flow from investing activities
Payments for financial investments 11 (158) (2,143)
Disposal proceeds from sale of financial investments 11 400 1,042
Repayment of loans to investee company - 62
Unsecured loans to investee company - (6)
Net cash inflow/(outflow) from investing activities 242 (1,045)
Cash flows from financing activities
Proceeds on issuing of ordinary shares 14 - 1,856
Cost of issue of ordinary shares - (59)
Net cash inflow from financing activities - 1,797
Net increase in cash and cash equivalents 17 (247) 233
Cash and cash equivalents at the beginning of the year 1,071 838
Cash and cash equivalents at the end of the year 18 824 1,071
NOTES TO THE FINANCIAL STATEMENTS
1 Presentation of the financial statements
Description of business & Investing Policy
Gunsynd plc is public limited company domiciled in the United Kingdom. The
Company's registered office is 78 Pall Mall, London SW1Y 5ES.
The Company's Investing Policy is to invest in and/or acquire companies and/or
projects within the natural resources sector, life sciences sector
(concentrating on but not being limited to, plant-based nutrition and
environmentally friendly alternatives to food sources) and the alcohol
beverage sector, (concentrating on but not being limited to, ingredients used
within the production of such beverages including sugar cane, agave, and
molasses) which the Board considers, in its opinion, have potential for
growth. The Company will consider opportunities in all sectors as they arise
if the Board considers there is an opportunity to generate potential value for
Shareholders. The geographic focus will primarily be Europe, Australia, the US
and the Caribbean, however investments may also be considered in other regions
to the extent the Board considers that potential value can be achieved.
Where appropriate, the Board may seek to invest in businesses where it may
influence the business at a board level, add their expertise to the management
of the business, and utilise their industry relationships and access to
finance.
The Company's interests in an investment and/or acquisition may range from a
minority position to full ownership and may comprise one investment or
multiple investments. The investments may be in either quoted or unquoted
companies; be made by direct acquisitions or farm-ins; and may be in
companies, partnerships, earn-in joint ventures, debt or other loan
structures, joint ventures or direct or indirect interests in assets or
projects. The Board may focus on investments where intrinsic value may be
achieved from the restructuring of investments or merger of complementary
businesses.
The Board expects that investments will typically be held for the medium to
long term, although short term disposal of assets cannot be ruled out if there
is an opportunity to generate a return for Shareholders. The Board will
place no minimum or maximum limit on the length of time that any investment
may be held. The Company may be both an active and a passive investor
depending on the nature of the individual investment. There is no limit on
the number of projects into which the Company may invest, and the Company's
financial resources may be invested in a number of propositions or in just one
investment, which may be deemed to be a reverse takeover under the AIM
Rules. The Board intends to mitigate risk by appropriate due diligence and
transaction analysis. Any transaction constituting a reverse takeover under
the AIM Rules will also require Shareholder approval. The Board considers
that, as investments are made and new investment opportunities arise, further
funding of the Company may also be required.
Where the Company builds a portfolio of related assets, it is possible that
there may be cross holdings between such assets. The Company does not
currently intend to fund any investments with debt or other borrowings but may
do so if appropriate. Investments in early stage assets are expected to be
mainly in the form of equity, with debt potentially being raised later to fund
the development of such assets. Investments in later stage assets are more
likely to include an element of debt to equity gearing. The Board may also
offer New Ordinary Shares by way of consideration as well as cash, thereby
helping to preserve the Company's cash for working capital and as a reserve
against unforeseen contingencies including, for example, delays in collecting
accounts receivable, unexpected changes in the economic environment and
operational problems.
Investments may be made in all types of assets and there will be no investment
restrictions on the type of investment that the Company might make or the type
of opportunity that may be considered. The Company may consider possible
opportunities anywhere in the world.
The Board will conduct initial due diligence appraisals of potential business
or projects and, where they believe further investigation is warranted, intend
to appoint appropriately qualified persons to assist. The Board believes its
expertise will enable it to determine quickly which opportunities could be
viable and so progress quickly to formal due diligence. The Company will not
have a separate investment manager.
Compliance with applicable law and IAS
The financial statements have been prepared in accordance with UK adopted
International Accounting Standards (IAS) in conformity with the provisions of
the Companies Act 2006.
Composition of the financial statements
The Company financial statements are drawn up in Sterling, the functional
currency of Gunsynd plc and in accordance with IFRS accounting presentation.
The level of rounding for financial information is the nearest thousand
pounds.
Accounting convention
The financial statements have been prepared using the historical cost
convention, as modified by the revaluation of certain items, as stated in the
accounting policies.
Basis of preparation - Going concern
The financial statements have been prepared on a going concern basis. This
basis assumes that the company will have sufficient funding to enable it to
continue to operate for the foreseeable future and the Directors have taken
steps to ensure that they believe that the going concern basis of preparation
remains appropriate.
The Company made a loss for the year of £2,426,000 (2021: profit £2,012,000)
after taxation. The Company had net assets of £3,851,000 (2021:
£6,303,000) and cash balances of £824,000 (2021: £1,071,000) at 31 July
2022. The Directors have prepared financial forecasts which cover a period
of at least 12 months from date that these financial statements are approved
to 31 December 2023. These forecasts show that the Company expects to have
sufficient financial resources to continue to operate as a going concern.
In forming the conclusion that it is appropriate to prepare the financial
statements on a going concern basis the Directors have made the following
assumptions that are relevant to the next twelve months:
- In the event that the Company's investments require further funding,
sufficient funding can be obtained; and
- In the event that operating expenditure increases significantly as a
result of successful progress with regards to the Company's investments,
sufficient funding can be obtained.
The cost structure of the Company comprises a high proportion of discretionary
spend and therefore in the event that cash flows become constrained, costs can
be quickly reduced to enable the Company to operate within its available
funding. As a junior investment company, the Directors are aware that the
Company must go to the marketplace to raise cash to meet its investment plans,
and/or consider liquidation of its investments and/or assets as is deemed
appropriate. The Company has previously constantly demonstrated its ability to
raise further cash by way of completing placings during the prior years, and
are confident of further equity fund raising should the company require such
cash injection. Therefore, they are confident that existing cash balances,
along with the any new funding would be adequate to ensure that costs can be
covered.
Consequently, the Directors have a reasonable expectation that the Company has
adequate resources to continue to operate for the foreseeable future and that
it remains appropriate for the financial statements to be prepared on a going
concern basis.
Financial period
These financial statements cover the financial year from 1 August 2021 to 31
July 2022, with comparative figures for the financial year from 1 August 2020
to 31 July 2021.
Accounting principles and policies
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The financial statements have been prepared in accordance with the Company's
accounting policies approved by the Board and signed on their behalf by Hamish
Harris and Donald Strang, and described in Note 2, 'Accounting principles and
policies'. Information on the application of these accounting policies,
including areas of estimation and judgement is given in Note 3, 'Key
accounting judgements and estimates. Where appropriate, comparative figures
are reclassified to ensure a consistent presentation with current year
information.
2 Accounting principles and policies
Revenue and other income
Revenue is recognised when persuasive evidence of an arrangement exists,
profit has been derived from investments or services have been rendered,
prices are fixed or determinable and there is a probability that economic
benefits will flow to the Company. Realised profits or losses are recognised
at the time in which a contract is entered into to sell and investment.
Unrealised profits or losses are recognised when the fair value of financial
investments is measured at each period end. Other income relates to services
provided and is recognised at the time the service is delivered.
Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief
operating decision maker has been identified as the Board of Directors.
Further details are set out in Note 5.
Share capital
Financial instruments issued by the Company are treated as equity only to the
extent that they do not meet the definition of a financial liability. The
Company's ordinary and deferred shares are classified as equity instruments.
The deferred shares have no voting rights and are not eligible for dividends.
Share-based payments
Where equity settled share options are awarded to employees, the fair value of
the options at the date of grant is charged to the statement of comprehensive
income over the vesting period. Non-market vesting conditions are taken into
account by adjusting the number of equity instruments expected to vest at each
balance sheet date so that, ultimately, the cumulative amount recognised over
the vesting period is based on the number of options that eventually vest.
Market vesting conditions are factored into the fair value of the options
granted. As long as all other vesting conditions are satisfied, a charge is
made irrespective of whether the market vesting conditions are satisfied.
The cumulative expense is not adjusted for failure to achieve a market vesting
condition.
Foreign exchange
Transactions in currencies other than Sterling are recorded at the rates of
exchange prevailing on the dates of the transactions. At each balance sheet
date, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates prevailing on the balance sheet date.
Gains and losses arising on retranslation are included in the income statement
for the period.
Fair value measurement
IFRS 13 establishes a single source of guidance for all fair value
measurements. IFRS 13 does not change when an entity is required to use fair
value, but rather provides guidance on how to measure fair value under IFRS
when fair value is required or permitted. The resulting calculations under
IFRS 13 affected the principles that the Company uses to assess the fair
value, but the assessment of fair value under IFRS 13 has not materially
changed the fair values recognised or disclosed. IFRS 13 mainly impacts the
disclosures of the Company. It requires specific disclosures about fair value
measurements and disclosures of fair values, some of which replace existing
disclosure requirements in other standards.
Financial instruments
Financial assets
The Group classifies its financial assets into one of the categories discussed
below, depending on the purpose for which the asset was acquired. The Group's
accounting policy for each category is as follows:
Fair Value through Profit or Loss (FVTPL)
This category comprises in-the-money derivatives and out-of-money derivatives
where the time value offsets the negative intrinsic value. They are carried in
the statement of financial position at fair value with changes in fair value
recognised in the consolidated statement of comprehensive income in the
finance income or expense line. Other than derivative financial instruments,
which are not designated as hedging instruments, the Group does not have any
assets held for trading nor does it voluntarily classify any financial assets
as being at fair value through profit or loss.
Financial instruments
Financial assets
The Group classifies its financial assets into one of the categories discussed
below, depending on the purpose for which the asset was acquired. The Group's
accounting policy for each category is as follows:
Fair Value through Profit or Loss (FVTPL)
This category comprises in-the-money derivatives and out-of-money derivatives
where the time value offsets the negative intrinsic value. They are carried in
the statement of financial position at fair value with changes in fair value
recognised in the consolidated statement of comprehensive income in the
finance income or expense line. Other than derivative financial instruments,
which are not designated as hedging instruments, the Group does not have any
assets held for trading nor does it voluntarily classify any financial assets
as being at fair value through profit or loss.
Amortised Cost
These assets comprise the types of financial assets where the objective is to
hold these assets in order to collect contractual cash flows and the
contractual cash flows are solely payments of principal and interest. They are
initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue and are subsequently carried at
amortised cost using the effective interest rate method, less provision for
impairment. Impairment provisions for current and non-current trade
receivables are recognised based on the simplified approach within IFRS 9
using a provision matrix in the determination of the lifetime expected credit
losses.
During this process the probability of the non-payment of the trade
receivables is assessed. This probability is then multiplied by the amount of
the expected loss arising from default to determine the lifetime expected
credit loss for the trade receivables. For the receivables, which are reported
net, such provisions are recorded in a separate provision account with the
loss being recognised in the consolidated statement of comprehensive income.
On confirmation that the receivable will not be collectable, the gross
carrying value of the asset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to
related parties are recognised based on a forward-looking expected credit loss
model. The methodology used to determine the amount of the provision is based
on whether there has been a significant increase in credit risk since initial
recognition of the financial asset, based on analysis of internal or external
information. For those where the credit risk has not increased significantly
since initial recognition of the financial asset, twelve month expected credit
losses along with gross interest income are recognised. For those for which
credit risk has increased significantly, lifetime expected credit losses along
with the gross interest income are recognised. For those that are determined
to be credit impaired, lifetime expected credit losses along with interest
income on a net basis are recognised.
The Group considers a financial asset in default when contractual payments are
180 days past due. However, in certain cases, the Group may also consider a
financial asset to be in default when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by the
Group. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows.
The Group's financial assets measured at amortised cost comprise trade and
other receivables and cash and cash equivalents in the consolidated statement
of financial position. Cash and cash equivalents include cash in hand,
deposits held at call with banks, other short term highly liquid investments
with original maturities of three months or less, and - for the purpose of the
statement of cash flows - bank overdrafts. Bank overdrafts are shown within
loans and borrowings in current liabilities on the consolidated statement of
financial position.
Financial investments
Non-derivative financial assets comprising the Company's strategic financial
investments in entities not qualifying as subsidiaries, associates or jointly
controlled entities. These assets are classified as financial assets at fair
value through profit or loss. They are carried at fair value with changes in
fair value recognised through the income statement. Where there is a
significant or prolonged decline in the fair value of a financial investment
(which constitutes objective evidence of impairment), the full amount of the
impairment is recognised in the income statement.
Listed investments are valued at closing bid price on 31 July 2022. Unlisted
investments that are not publicly traded and whose fair value cannot be
measured reliably, are measured at fair value through profit and loss. less
impairment
Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place
either:
· In the principal market for the asset or liability; or
· In the absence of a principal market, in the most advantageous
market for the asset or liability
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market
participant's ability to generate economic benefits by using the asset in its
highest and best use or by selling it to another market participant that would
use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair
value, maximising the use of relevant observable inputs and minimising the use
of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in
the financial statements are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to
the fair value measurement as a whole:
· Level 1 - Quoted (unadjusted) market prices in active markets for
identical assets or liabilities
· Level 2 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or indirectly
observable
· Level 3 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on
a recurring basis, the Company determines whether transfers have occurred
between levels in the hierarchy by re-assessing categorisation (based on the
lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes
of assets and liabilities on the basis of the nature, characteristics and
risks of the asset or liability and the level of the fair value hierarchy, as
explained above.
Convertible Loans
Convertible Loans made to companies are classified as financial assets. The
embedded derivative asset, relating to a convertible loan where the carrying
asset converts into a variable number of shares, is held at "fair value
through profit or loss". The carrying value of the loan is measured at fair
value through profit and loss.
Trade and other receivables
Trade receivables are measured at initial recognition at fair value, and are
subsequently measured at amortised cost using the effective interest rate
method. Trade and other receivables are accounted for at original invoice
amount less any provisions for doubtful debts. Provisions are made where
there is evidence of a risk of non-payment, taking into account the age of the
debt, historical experience and general economic conditions. If a trade debt
is determined to be uncollectable, it is written off, firstly against any
provisions already held and then to the statement of comprehensive income.
Subsequent recoveries of amounts previously provided for are credited to the
statement of comprehensive income.
Appropriate allowances for estimated irrecoverable amounts are recognised in
profit or loss in accordance with the expected credit loss model under IFRS 9.
For trade and other receivables which do not contain a significant financing
component, the Company applies the simplified approach. This approach requires
the allowance for expected credit losses to be recognised at an amount equal
to lifetime expected credit losses. For other debt financial assets, the
Company applies the general approach to providing for expected credit losses
as prescribed by IFRS 9, which permits for the recognition of an allowance for
the estimated expected loss resulting from default in the subsequent 12-month
period. Exposure to credit loss is monitored on a continual basis and, where
material, the allowance for expected credit losses is adjusted to reflect the
risk of default during the lifetime of the financial asset should a
significant change in credit risk be identified.
The majority of the Company's financial assets are expected to have a low risk
of default. A review of the historical occurrence of credit losses indicates
that credit losses are insignificant due to the size of the Company's clients
and the nature of its activities. The outlook for the natural resources
industry is not expected to result in a significant change in the Company's
exposure to credit losses. As lifetime expected credit losses are not expected
to be significant the Company has opted not to adopt the practical expedient
available under IFRS 9 to utilise a provision matrix for the recognition of
lifetime expected credit losses on trade receivables. Allowances are
calculated on a case-by-case basis based on the credit risk applicable to
individual counterparties.
Trade and other payables
Trade and other payables are held at amortised cost which equates to nominal
value.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, current balances with banks
and similar institutions and liquid investments generally with maturities of 3
months or less. They are readily convertible into known amounts of cash and
have an insignificant risk of changes in values.
Taxation
The tax expense for the period comprises current and deferred tax. Tax is
recognised in the income statement, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity. In
this case the tax is also recognised in other comprehensive income or directly
in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the balance sheet date in the countries
where the company's subsidiaries and associates operate and generate taxable
income. Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is subject to
interpretation and establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements.
However, the deferred income tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither
accounting nor taxable profit nor loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted or substantially enacted by
the balance sheet date and are expected to apply when the related deferred
income tax asset is realised, or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable
that future taxable profit will be available against which the temporary
differences can be utilised. Deferred income tax is provided on temporary
differences arising on disallowed expenses, expect where the timing of the
reversal of the temporary difference is controlled by the company and it is
probable that the temporary difference will not reverse in the foreseeable
future.
Deferred income tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred income taxes assets and liabilities relate to income
taxes levied by the same taxation authority on either the taxable entity or
different taxable entities where there is an intention to settle the balances
on a net basis.
Impairment of non-current assets
The carrying values of all non-current assets are reviewed for impairment when
there is an indication that the assets might be impaired. Any provision for
impairment is charged to the statement of comprehensive income in the year
concerned.
Impairment losses on other non-current assets are only reversed if there has
been a change in estimates used to determine recoverable amounts and only to
the extent that the revised recoverable amounts do not exceed the carrying
values that would have existed, net of depreciation or amortisation, had no
impairments been recognised.
Employee Benefit Trusts
Employee Benefit Trusts ("EBTs") are accounted for under IFRS 10 and are
consolidated on the basis that the parent has control, thus the assets and
liabilities of the EBT are included on the Company balance sheet and shares
held by the EBT in the Company are presented as a deduction from equity.
Although shares were issued to the EBT in prior years, the prior year accounts
have not been re-stated for the adjustment as the amounts relating to the
prior period was not material.
3 Key accounting judgements and estimates
The preparation of financial statements in conformity with IFRSs requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are
not readily apparent from other sources.
Actual results may differ from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the
revision only affects that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
Significant estimates and assumptions that may have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities at 31 July 2022 are set out below:
Share Based Payments
The Company issued Nil options over its unissued share capital to the
directors during the year to 31 July 2022. (2021: 19.00 million)
The fair value of share based payments is calculated by reference to Black
Scholes model. Inputs into the model are based on management's best
estimates of appropriate volatility, dividend yields, discount rate and share
price. During the year, the Company incurred £Nil share based payment
charge (2021: £24,000 charge).
Unlisted investments
The Company is required to make judgments over the carrying value of
investments in unquoted companies where fair values cannot be readily
established and evaluate the size of any impairment required. It is important
to recognise that the carrying value of such investments cannot always be
substantiated by comparison with independent markets and, in many cases, may
not be capable of being realised immediately. Management's significant
judgement in this regard is that the value of their investment represents
their cost less previous impairment. Further details relating to management's
assessment of the carrying value of unlisted investments can be found in the
Chairman's Report (incorporating the Strategic Review).
Recoverability of receivables
The Company makes assumptions when implementing the forward-looking ECL model
under IFRS 9. The model is used to assess material loans receivable for
impairment. Estimates are made regarding the credit risk and underlying
probability of default in each of the relevant credit loss scenarios. The
Directors makes judgements on the expected likelihood and outcome of each of
the scenarios and these expected values are applied to the loan balances.
Fair value of convertible loans
The Company makes assumptions when measuring the fair value of convertible
loans. At the year end the Company held a balance on its convertible loan with
Rogue Baron plc relating to accrued interest. The Directors expect this
balance to be repaid in cash and, having considered the valuation and the
value of the derivative option to convert, have concluded that the difference
is not material. The fair value of the loan is therefore considered to be the
same as the carrying value of the loan.
4 New accounting requirements
These financial statements have been prepared in accordance with UK-adopted
international accounting standards and in accordance with the requirements of
the Companies Act 2006. The financial statements have been prepared under the
historical cost convention.
Adoption of new and revised standards:
During the financial year, the Company has adopted the following new IFRSs
(including amendments thereto) and IFRIC interpretations that became effective
for the first time.
Standard Effective date, annual period beginning on or after
Amendments to IFRS 16: Covid-19-Related Rent Concessions beyond 30 June 2021 1 April 2021
Annual Improvements to IFRS Standards 2018-2020 Cycle 1 January 2021
Their adoption has not had any material impact on the disclosures or amounts
reported in the financial statements.
Standards issued but not yet effective:
At the date of authorisation of these financial statements, the following
standards and interpretations relevant to the Company and which have not been
applied in these financial statements, were in issue but were not yet
effective.
Standard Effective date, annual period beginning on or after
Amendments to IAS 1: Presentation of Financial Statements: Disclosure of 1 January 2023
Accounting Policies
Amendments to IAS 1:Presentation of Financial Statements: Classification of 1 January 2023
Liabilities as Current or Non-current
Amendments to IAS 8: Accounting policies, Changes in Accounting Estimates and 1 January 2023
Errors - Definition of Accounting Estimates
Amendments to IAS 12: Income Taxes -Deferred Tax related to Assets and 1 January 2023
Liabilities arising from a Single Transaction
Amendments to IFRS 17 Insurance: Insurance contracts 1 January 2023
The adoption of these standards is not expected to have any material impact on
the financial statements of the Company.
5 Segmental analysis
Segmental analysis is not applicable as there is only one operating segment of
the continuing business - investment activities. The performance measure of
investment activities is considered by the Board to be profitability and is
disclosed on the face of the statement of comprehensive Income. The Board
will continually review the segmental analysis of the business on an ongoing
basis and at each reporting date.
6 Information regarding Directors and employees
2022 2021
£000 £000
Included within continuing operations
Fees and salaries 254 258
Social security costs 29 17
Share based payments - 20
Post- employment payments to defined contribution pension scheme 17 3
300 298
2022 2021
Number Number
Average number of persons employed by the Company (including Directors) during
the year
Directors 3 3
Administrative staff 1 1
Total 4 4
The compensation of the Directors, in aggregate, was as follows: 2022 2021
£000 £000
Fees and salaries 231 235
Social security costs 27 15
Share based payments - 20
Post- employment payments to defined contribution pension scheme 15 2
273 272
Full details of the remuneration of individual directors, including the
highest paid director, are set out below:
Fees and Social Pension Total Total
salaries security costs contributions 2022 2021
Directors £000 £000 £000 £000 £000
Mr H Harris 94 12 8 114 97
Mr D Strang 91 10 7 108 96
Mr P Ruse 46 5 - 51 59
231 27 15 273 252
No Directors fees have been accrued (2021: £Nil) and £8,269 remain unpaid at
31 July 2022 (2021: £Nil).
7 Other income
2022 2021
£000 £000
Other fees & services 15 26
Total other income 15 26
8 Profit/(Loss) for the year
The following items have been included in operating profit/(loss):
2022 2021
£000 £000
Fees payable to the Company's auditors:
Audit and assurance services:
- Audit of parent Company financial statements 24 18
Total auditor's fees 24 18
Analysis of other costs:
Legal and professional fees 8 11
Foreign exchange losses 1 7
Other general overheads 215 227
224 245
9 Taxation
2022 2021
Taxation charge based on profit/losses for the year £000 £000
UK Corporation tax - -
Deferred taxation - -
Total tax expense - -
Factors affecting the tax charge for the year:
(Loss)/profit on ordinary activities before taxation (2,426) 2,012
(Loss)/profit on ordinary activities at the average UK standard rate of 19% (461) 382
(2021: 19%)
Effect of:
Deferred tax (asset)/liability not recognised (678) (616)
Expenses not deductible for tax purposes 372 85
Chargeable gains/(losses) 42 -
Remeasurement of deferred tax for changes in tax rates (14) -
Movement in deferred tax not recognised 62 (467)
Current tax charge - -
As set out in Note 2, the Company has not recognised a deferred tax asset in
the financial statements as there is no certainty that taxable profits will be
available against which these assets could be utilised.
10 Earnings per share
(Loss)/profit attributable to ordinary shareholders 2022 2021
The calculation of (loss)/profit per share is based on the loss after taxation
divided by the weighted average number of shares in issue during the period:
(Loss)/profit from operations (£000) (2,426) 2,012
Total (£000) (2,426) 2,012
Number of shares
Weighted average number of ordinary shares for the purposes of basic 449.80 362.57
(loss)/earnings per share (millions)
Weighted average number of ordinary shares for the purposes of diluted 533.84 470.73
(loss)/earnings per share (millions)
Basic (loss)/profit per share (expressed in pence) (0.540) 0.558
Diluted (loss)/profit per share (expressed in pence) n/a 0.428
11 Financial investments
Financial assets at fair value through profit or loss: £000 £000 £000 £000
Level 1 Level 2 Level 3 Total
Fair Value at 31 July 2020 340 - 1,153 1,493
Additions 1,752 - 504 2,256
Fair value changes 1,468 - 903 2,371
Gains/(loss) on disposals 352 - (116) 236
Transfer to level 1 1,542 - (1,542) -
Disposal (1,041) - (59) (1,100)
Impairment provision - - (132) (132)
Foreign Exchange - - - -
Fair Value at 31 July 2021 4,413 - 711 5,124
Additions 114 - 54 168
Fair value changes (2,168) - - (2,168)
Gains/(loss) on disposals 220 - - 220
Transfer to level 1 125 - (125) -
Disposal (400) - - (400)
Impairment provision - - - -
Foreign Exchange - - - -
Fair Value at 31 July 2021 2,304 - 640 2,944
The financial assets splits are as below:
Non-current assets - listed 2,304 - - 2,304
Non-current assets - unlisted - - 454 454
Non-current assets - unlisted convertible loans* - - 186 186
Total 2,304 - 640 2,944
*£111,000 of the convertible loans is an unlisted convertible loan held in a
listed security.
Gains on investments held at fair value through profit or loss
Fair value gain on investments (2,168) - - (2,168)
Realised gain on disposal of investments 221 - - 221
Net gain on investments held at fair value through profit or loss (1,947) - - (1,947)
Level 1 represents those assets, which are measured using unadjusted
quoted prices for identical assets.
Level 2 applies inputs other than quoted prices that are observable
for the assets either directly (as prices) or indirectly (derived from
prices).
Level 3 applies inputs, which are not based on observable market
data.
The Directors carried out an impairment review as at 31 July 2022 and
determined a further impairment charge of £Nil (2021: £130,000) was
required.
Financial investments comprise investments in listed and unlisted Companies,
of which the listed investments are traded on stock markets throughout the
world, and are held by the Company as a mix of strategic and short-term
investments. The listed investments have been valued at bid price, as quoted
on their respective Stock Exchanges, at 31 July 2022.
Fair value hierarchy of financial assets at fair value through profit or loss.
12 Trade and other receivables
2022 2021
Current assets £000 £000
Other receivables 131 152
Prepayments 32 22
163 174
The carrying value of receivables approximates their fair value.
13 Trade and other payables
2022 2021
Amounts due within one year £000 £000
Trade payables 52 23
Other creditors 1 23
Accruals and deferred income 27 20
80 66
14 Share capital and share premium account
Number Ordinary Deferred Share
of shares share share premium
capital capital
Share capital issued and fully paid £000 £000 £000
At 31 July 2020 254,367,047 216 2,299 11,828
Issue of new ordinary shares on 19 November 2020 56,606,789 48 - 518
Issue of new ordinary shares on 4 December 2020 56,393,211 48 516
Exercise of warrants on 22 December 2020 3,589,743 3 - 44
Exercise of warrants on 26 January 2021 15,384,610 13 - 187
Issue of new ordinary shares on 1 February 2021 15,000,000 13 - -
Exercise of warrants on 22 February 2021 2,750,000 2 - 53
Exercise of warrants on 15 March 2021 5,128,176 4 - 62
Exercise of warrants on 6 May 2021 16,492,320 14 - 200
Issue of new ordinary shares on 3 June 2021 15,000,000 13 - -
Exercise of warrants on 1 July 2021 9,084,610 8 - 110
Less: costs of share placing - - - (59)
At 31 July 2021 449,796,506 382 2,299 13,459
No Activity - - - -
At 31 July 2022 449,796,506 382 2,299 13,459
15 Movements in equity
Share capital represents the nominal value of the amount subscribed for
shares. Share premium represents the amount subscribed for shares in excess of
their nominal value less costs of subscription. Ordinary shares carry the
rights to one vote per share at general meetings of the Company and the rights
to share in any distributions of profits or returns of capital and to share in
any residual assets available for distribution in the event of a winding up.
The deferred shares have no voting rights and are not eligible for dividends.
The share-based payment reserve represents amounts arising from the
requirement to expense the fair value of share-based remuneration in
accordance with IFRS 2 'Share-based Payments'.
Investment in Own Shares represents shares held in trust. As at 31 July 2022
the Company held in Trust 30,000,000 (2021: 30,000,000) of its own shares with
a nominal value of £25,500 (2020: £25,500). The Trust has waived any
entitlement to the receipt of dividends in respect of its holding of the
Company's ordinary shares. The market value of these shares at 31 July was
£150,000 (2021: £360,000). In the current period nil were repurchased (2021:
nil) and nil were transferred into the Trust (2021: 30,000,000), with nil
reissued on award of shares to directors.
The shares held in EBT were incorrectly classified as an expense in prior
period. An adjustment has been made in the current period to correct this. The
amounts involved are immaterial and therefor no prior year adjustment was
considered necessary.
Retained earnings are the cumulative net losses recognised in the income
statement and other comprehensive income.
Movements on these reserves are set out in the statement of changes in equity.
16 Related party transactions
The Company had the following transactions with related parties:
The Company charged rent of £15,000 to Cadence Minerals Plc, a company of
which Don Strang is a director (2021: £9,000).
The Company held a convertible loan of £111,000 with Rogue Baron Plc, a
company of which Hamish Harris is a director (2021: £111,000). Additionally,
the Company holds 21,543,653 shares in Rogue Baron plc (2021: 21,543,653).
There were no transactions with Rogue Baron Plc during the year. In 2021, the
Company converted £639,000 of its Convertible Loan to Rogue Baron Plc into
22,033,293 ordinary shares in Rogue Baron Plc.
Compensation of key management personnel of the Company
The Company considers the directors to be its key management personnel. Full
details of the remuneration of the directors are shown in Note 6.
17 Reconciliation of net cash flow to movement in net funds
2022 2021
£000 £000
Net funds at beginning of the year 1,071 838
(Decrease)/increase in cash (247) 233
Net funds at end of the year 824 1,071
Analysis of changes in net funds
At 31 At 31
July Cash July
2021 Flow 2022
£000 £000 £000
Cash and cash equivalents 1,071 (247) 824
Net funds 1,071 (247) 824
Significant non-cash transactions
During the year the significant non-cash transactions during the year were as
follows:
· £2,168,000 of unrealised losses in movement in the market value
of the Company's listed financial investments were revalued through the income
statement
18 Financial instruments and related disclosures
General objectives, policies and processes
The Board has overall responsibility for the determination of the Company's
risk management objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated authority for designing and
operating processes that ensure the effective implementation of the objectives
and policies to the Company's finance function. The Board receives monthly
reports through which it reviews the effectiveness of the processes put in
place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Company's competitiveness and
flexibility.
The Company reports in Sterling. Internal and external funding requirements
and financial risks are managed based on policies and procedures adopted by
the Board of Directors. The Company does not use derivative financial
instruments such as forward currency contracts, interest rate and currency
swaps or similar instruments. The Company does not issue or use financial
instruments of a speculative nature.
Capital management
The Company's objectives when maintaining capital are:
· to safeguard the entity's ability to continue as a going concern,
so that it can continue to provide returns for shareholders and benefits for
other stakeholders; and
· to provide an adequate return to shareholders.
The capital structure of the Company consists of total shareholders' equity as
set out in the 'Statement of changes in equity'. All working capital
requirements are financed from existing cash resources.
Capital is managed on a day to day basis to ensure that all entities in the
Company are able to operate as a going concern. Operating cash flow is
primarily used to cover the overhead costs associated with operating as an AIM
and NEX-listed company.
Liquidity risk
Liquidity risk arises from the Company's management of working capital. It
is the risk that the Company will encounter difficulty in meeting its
financial obligations as they fall due.
The Directors consider that there is no significant liquidity risk faced by
the Company. The Company maintains sufficient balances in cash to pay
accounts payable and accrued expenses.
The Board receives forward looking cash flow projections at periodic intervals
during the year as well as information regarding cash balances. At the
balance sheet date, the Company had cash balances of £824,000 and the
financial forecasts indicated that the Company expected to have sufficient
liquid resources to meet its obligations under all reasonably expected
circumstances and will not need to establish overdraft or other borrowing
facilities.
Interest rate risk
As the Company has no borrowings, it only has limited interest rate risk.
The impact is on income and operating cash flow and arises from changes in
market interest rates. Cash resources are held in current, floating rate
accounts.
Market risk
Market price risk arises from uncertainty about the future valuations of
financial instruments held in accordance with the Company's investment
objectives. These future valuations are determined by many factors but
include the operational and financial performance of the underlying investee
companies, as well as market perceptions of the future of the economy and its
impact upon the economic environment in which these companies operate. This
risk represents the potential loss that the Company might suffer through
holding its financial investment portfolio in the face of market movements,
which was a maximum of £2,761,000 (2021: £4,949,000).
The investments in equity of quoted companies that the Company holds are less
frequently traded than shares in more widely traded securities.
Consequently, the valuations of these investments can be more volatile.
Market price risk sensitivity
The table below shows the impact on the return and net assets of the Company
if there were to be a 20% movement in overall share prices of the Listed
financial investments held at 31 July 2022.
2022 2021
Other comprehensive income and Other comprehensive income and
Net assets Net assets
£000 £000
Decrease if overall share price falls by 20%, with all other variables held (461) (883)
constant
Decrease in other comprehensive earnings and net asset value per Ordinary (0.001)p (0.002)p
share (in pence)
Increase if overall share price rises by 20%, with all other variables held 461 883
constant
Increase in other comprehensive earnings and net asset value per Ordinary 0.001p 0.002p
share (in pence)
The impact of a change of 20% has been selected as this is considered
reasonable given the current level of volatility observed and assumes a market
value is attainable for the Company's unlisted investments.
Currency risk
The Directors consider that there is no significant currency risk faced by the
Company. The foreign currency transactions the Company enters into are
either denominated in USD, AUD and or CAD. These are all in relation to the
Company's investments in Non-Current Assets. These are not considered to
hold a separate currency risk as movements in foreign currencies form part of
the market price sensitivity risk covered above.
Credit risk
Credit risk is the risk that a counterparty will fail to discharge an
obligation or commitment that it has entered into with the Company. The
Company's maximum exposure to credit risk is:
2022 2021
£000 £000
Cash at bank 824 1,071
Other receivables 163 174
987 1,245
The Company's cash balances are held in accounts with Barclays Bank plc, and
with its Investment Broker accounts.
Fair value of financial assets and liabilities
Financial assets and liabilities are carried in the Statement of Financial
Position at either their fair value (financial investments) or at a reasonable
approximation of the fair value (trade and other receivables, trade and other
payables and cash at bank).
The fair values are included at the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a
forced or liquidation sale.
Trade and other receivables
The following table sets out the fair values of financial assets within Trade
and other receivables.
2022 2021
Financial assets (Note 12) £000 £000
Trade and other receivables - Non interest earning 163 174
There are no financial assets which are past due and for which no provision
for bad or doubtful debts has been made.
Trade and other payables
The following table sets out financial liabilities within Trade and other
payables. These financial liabilities are predominantly non-interest
bearing. Other liabilities include tax and social security payables and
provisions which do not constitute contractual obligations to deliver cash or
other financial assets.
2022 2021
Financial liabilities (Note 13) £000 £000
Trade and other payables 80 66
19 Share schemes
The Company has a share option scheme for all employees (including
Directors). Options are exercisable at a price agreed at the date of
grant. The vesting period is usually between zero and five years. The
exercise of options is dependent upon eligible employees meeting performance
criteria. The options are settled in equity once exercised.
If the options remain unexercised after their expiry date, the options
expire. Options lapse if the employee leaves the Company before the options
vest.
Options issued, cancelled, & outstanding for the year ended 31 July 2022
Weighted
average
exercise
Number price
At 31 July 2020 10,251,399 3.06p
Issued 19,000,000 1.00p
Lapsed (19,046) 446.25p
At 31 July 2021 29,232,353 1.43p
Lapsed (3,529,412) 4.25p
At 31 July 2022 25,702,941 1.04p
Range of exercise prices 1.00p - 4.25p
Weighted average remaining contractual life 1.04 years
Options outstanding & exercisable at 31 July 2022
Exercise Expiry
Date of grant Number price (p) date
12 February 2018 352,941 4.25 11/02/2023
29 July 2020 6,350,000 1.00 29/07/2023
26 August 2020 19,000,000 1.00 26/08/2023
Total 25,702,941
A modified Black-Scholes model has been used to determine the fair value of
the share options on the date of grant. The fair value is expensed to the
income statement on a straight-line basis over the vesting period, which is
determined annually. The model assesses a number of factors in calculating
the fair value. These include the market price on the date of grant, the
exercise price of the share options, the expected share price volatility of
the Company's share price, the expected life of the options, the risk-free
rate of interest and the expected level of dividends in future periods.
For those options granted where IFRS 2 "Share-Based Payment" is applicable,
the fair values were calculated using the Black-Scholes model. The inputs
into the model were as follows:
Risk free rate Share price volatility Expected life Share price at date of grant
26 August 2020 1.3% 27.52% 3 years £0.00875
Expected volatility was determined by calculating the historical volatility of
the Company's share price for 12 months prior to the date of grant. The
expected life used in the model is the term of the options.
Charges to the statement of comprehensive income
2022 2021
£000 £000
Share based payment charges - 24
Warrants issued, cancelled, & outstanding for the year ended 31 July 2022
Weighted
average
exercise
Number price
At 31 July 2020 62,717,950 1.30p
Issued 56,500,000 2.00p
Exercised (49,679,459) 1.30p
Exercised (2,750,000) 2.00p
Lapsed (2,064,103) 1.30p
At 31 July 2021 64,724,388 1.88p
Lapsed (64,724,388) 1.88p
At 31 July 2022 - -
20 Commitments and contingencies
The Company announced it has agreed binding heads of terms with Metals One Plc
("Metals One") to farm into the Black Schist Projects in Finland (the
"Projects"), containing a nickel-zinc-copper-cobalt deposit proximal, and
analogous, to the large Talvivaara mine.
The Company has agreed to provide funding to Metals One of £1 million for the
development of the Project (the "Investment"), for which it will be issued
such number of shares in the capital of Finnaust Mining Northern OY
("Finnaust", which holds the Projects), which equal 25% of the voting rights
in Finnaust (the "Farm-in").
The Investment is conditional upon Metals One's ordinary shares being admitted
to trading on the AIM market of the London Stock Exchange ("Admission") and
simultaneous acquisition of Finnaust. Gunsynd will provide the £1 million
funding and receive the 25% of Finnaust over a period of 18 months in four
equal tranches, beginning on Metals One's Admission and thereafter at
six-monthly intervals, to be invested in the development of the Projects.
The Company had a rental commitment under a short term lease totalling
£23,000 at 31 July 2022, which is due within one year.
21 Ultimate controlling party
There is not considered to be an ultimate controlling party of the company.
22 Events after the end of the reporting period
On 13 September 2022, the Company announced it had conditionally invested
approximately a further £100,000 in one of its investee companies, Rincon
Resources Limited ("Rincon"). This further investment was approved at a
general meeting of Rincon shareholders on 28 October 2022.
On 20 September 2022, the company announced it had invested a further
AUD$175,000 (approximately £100,000) into Charger Metals NL.
On 25 October 2022, the company announces that it has invested AUD$90,000
(approximately £50,000) into Omega Oil & Gas Limited, an ASX listed
Australian energy and resources company focused on natural gas exploration
and oil production.
Note:
Certain statements made in this announcement are forward-looking statements.
These forward-looking statements are not historical facts but rather are based
on the Company's current expectations, estimates, and projections about its
industry; its beliefs; and assumptions. Words such as 'anticipates,'
'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar
expressions are intended to identify forward-looking statements. These
statements are not a guarantee of future performance and are subject to known
and unknown risks, uncertainties, and other factors, some of which are beyond
the Company's control, are difficult to predict, and could cause actual
results to differ materially from those expressed or forecasted in the
forward-looking statements. The Company cautions security holders and
prospective security holders not to place undue reliance on these
forward-looking statements, which reflect the view of the Company only as of
the date of this announcement. The forward-looking statements made in this
announcement relate only to events as of the date on which the statements are
made. The Company will not undertake any obligation to release publicly any
revisions or updates to these forward-looking statements to reflect events,
circumstances, or unanticipated events occurring after the date of this
announcement except as required by law or by any appropriate regulatory
authority.
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