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Company Paternoster Resources PLC
TIDM PRS
Headline

Preliminary Results and Notice of AGM

Released 07:00 06-Jun-2014
Number 9897I07

RNS Number : 9897I
Paternoster Resources PLC
06 June 2014
 



 

6 June 2014

Paternoster Resources plc

("Paternoster" or the "Company")

 

Preliminary results for the year ended 31 December 2013 and Notice of AGM

 

Paternoster is pleased to announce its preliminary results for the year ended 31 December 2013.

 

In addition, the Company is pleased to announce that its Annual General Meeting will be held at Adams & Remers LLP, 32 Duke Street, St James's, London SW1Y 6DF on 30 June 2014 at 10.30 am.

 

Copies of the annual report and accounts, along with the Notice of Annual General Meeting, will be posted to shareholders shortly and will be made available on the Company's website: www.paternosterresources.com 

 

For more information please contact:

 

Paternoster Resources plc:


Nicholas Lee, Chairman

+44 20 7580 7576

        

Nominated Advisor and Joint Broker:


Westhouse Securities


Antonio Bossi

+44 20 7601 6100

        

Joint Broker:


Peterhouse Capital Limited


Jon Levinson

+44 20 7562 3351

 

 


EXECUTIVE CHAIRMAN'S STATEMENT

 

INTRODUCTION

The year ended 31 December 2013, has been a year of investment for the Company.  During this period, it has invested over £1 million in opportunities in the natural resources sector.

FINANCIAL

During 2013, no significant investment realisations were made and the running costs of the Company were broadly offset by investment income received, resulting in a small loss from continuing operations of £33,148 (2012: profit of £449,833). The net asset value of the Company as at 31 December 2013 was £2,644,268 (2012: £2,656,343). 

The Company's investment portfolio at 31 December 2013, is divided into the following categories:

Category

Principal investments

Cost or valuation (£)

Unlisted/pre IPO

Bison Energy Services Limited and Andiamo Exploration Limited

374,692

Listed special situations

Brady Exploration plc, Astar Minerals plc, Plutus Resources plc and Shumba Coal Limited

828,816

Listed value opportunities

Glencore Xstrata plc, Quadrise Fuels International plc, Cairn Energy plc, Ophir Energy plc, BG Group plc, Red Rock Resources plc, Jubilee Platinum plc and North American Petroleum plc

825,476

Total investment portfolio


2,028,984

Cash


411,739

Total


2,440,723

 

The unlisted/pre IPO category includes investments where there are short-term milestones which are either likely to lead to a liquidity event or a significant uplift in value.

The listed special situations category includes investments where the Company has a more significant level of influence and, whilst these companies are listed, it is likely that a significant event will need to take place before returns can be fully realised. 

The listed value opportunities category comprises investments where the Company seeks to take advantage of interesting value plays but in situations that have a good degree of liquidity so that they can be converted to cash quickly and easily when required.

At 31 December 2013, the Company had cash balances of £411,739 (2012: £1,454,495) reflecting the investments made during the year.  However, it is important to note that the majority of investments held in the listed value opportunities category can easily be moved into cash if required.

 

REVIEW OF THE YEAR

Details of the investments made in the year, together with development of investments during the year and significant developments since the year end are set out in the Strategic Report.

 



 

OUTLOOK

The Company is focused on achieving further returns from within its current portfolio, whilst seeking to add more interesting and attractive investments. At the same time, given the current market environment, the Company is keen to ensure that it maintains a healthy cash balance or cash equivalents in order to take advantage of new opportunities as they arise.

The current portfolio represents an exciting mix of companies, a number of which are poised for significant further developments.

I firmly believe that shareholders can continue to look forward to a very exciting and financially rewarding future for the Company.

STRATEGIC REPORT

 

The Directors present their Strategic Report on the Group for the year ended 31 December 2013.

 

REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS

INVESTMENTS MADE DURING THE YEAR

During the year new investments have been made in:

·       Jubilee Platinum plc - a platinum producer listed on AIM

·       Andiamo Exploration Limited - a private company exploring for copper and gold in Eritrea

·       Plutus Resources plc - a cash shell investment company listed on AIM focused on the natural resources sector

·       Shumba Coal Limited - a private company with a billion tonne JORC coal resource in Botswana

·       North American Petroleum plc - a company newly created on ISDX focused on acquiring oil assets in North America

 

DEVELOPMENTS ON INVESTMENTS DURING THE YEAR

Astar Minerals plc was re-focused to become an investment company pursuing opportunities in the natural resources sector.  Additional funds of £336,000 were raised to enable it to pursue this new strategy and to settle outstanding creditors.

Shumba Coal Limited was successfully listed on the Botswana stock exchange and the company is continuing to progress its listing in Mauritius which is expected to lead to enhanced liquidity.  It is continuing to develop its major coal asset in Botswana.  It has completed additional drilling in order to increase its measured and indicated resources and acquired four new licences.  Opportunities continue to open up for the company regarding local power generation and export opportunities.

North American Petroleum plc continued to acquire acreage within the US onshore oil sector.

The Company's investment in Quadrise Fuels International plc continued to increase in value and the Company has taken the opportunity to realise some significant gains.

 

DEVELOPMENTS ON INVESTMENTS SINCE THE YEAR END

There have been a number of significant developments within the Company's portfolio since the year end.

On 13 January 2014, Ortac Resources Limited, a mining company listed on AIM, agreed to invest $1.5 million in Andiamo, with an option to invest a further $2 million, to finance its exploration and development activities.  Since then, Andiamo has achieved some very good results from its various drilling activities.

On 16 January 2014, Plutus Resources plc acquired 25% of Attune Energy, a business focused on the generation of power from flexible stand by power generation farms to produce revenues through the sale of this power to established national energy suppliers during periods of peak electricity demand or grid instability. The company is continuing to progress a reverse takeover of this business and expects to make further announcements shortly.

On 18 February 2014, North American Petroleum plc raised an additional £725,000, at the prevailing market price, to finance its continued expansion into US onshore oil assets.  North American Petroleum's current proven reserves have been assigned a value of over US$21 million.  The Company made an additional investment of £50,000 as part of this fund raising.

On 14 March 2014, Astar Minerals plc announced that it has raised around £1 million, implemented its investment policy and strengthened the board.  Furthermore, within the natural resources sector the company has stated its intention to look closely at opportunities in the oil and gas sector in Mexico.  The company recently announced that it had entered into a joint venture with a local partner to further develop these opportunities.

On 21 May 2014, Brady Exploration plc announced that it had raised £400,000 to pursue a revised investment strategy, focusing on opportunities in the Far East.  At the same time the board has been strengthened in order to pursue this strategy.

The investors in Bison Energy Services Limited are continuing to actively work on ways to create value from this investment and expect to be able to announce how this is progressing in due course.

The Company has continued to take profits on its investment in Quadrise Fuels International plc and has now sold its entire holding.

 

KEY PERFORMANCE INDICATORS

The key performance indicators are set out below: 

COMPANY STATISTICS

31 December

2013

31 December

2012

Change %

 

Net asset value

£2,644,268

£2,656,343

-0%

Net asset value - fully diluted per share

0.43p

0.43p

+0%

Closing share price

0.34p

0.31p

+10%

Share price discount to net asset value - fully diluted

(21%)

(28%)


Market capitalisation

£1,965,000

£1,791,000

+10%

 

KEY RISKS AND UNCERTAINTIES

Early stage investments in the natural resources sector carry a high level of risk and uncertainty, although the rewards can be outstanding.  At this stage there can be no certainty of outcome and, in addition, there is often a lack of liquidity in the Company's investments which are either unquoted or quoted on AIM, such that the Company may have difficulty in realising the full value in a forced sale.  Accordingly, a commitment is only made after thorough research into both the management and the business of the target, both of which are closely monitored thereafter. Furthermore, the Company limits the amount of each commitment, both as to the absolute amount and percentage of the target company.  Details of other financial risks and their management are given in Note 19 to the financial statements.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Details of the Group's financial risk management objectives and policies are set out in Note 19 to these financial statements.

GOING CONCERN

The Group's assets comprise mainly cash and quoted securities and, accordingly, the Company has adequate financial resources to continue in operational existence for the foreseeable future. Therefore, the directors believe that as at the date of this report it is appropriate to continue to adopt the going concern basis in preparing the financial statements.

ON BEHALF OF THE BOARD

 

 

 

 

Nicholas Lee

Executive Chairman

5 June 2014

 


 

GROUP STATEMENT OF COMPREHENSIVE INCOME

 



2013

2012


Note

£

£

CONTINUING OPERATIONS:




Net gains on investments

4

164,301

690,806

Investment income

5

65,913

1,209

TOTAL INCOME


230,214

692,015

Operating expenses

6

(263,362)

(241,157)

(LOSS)/PROFIT BEFORE TAXATION


(33,148)

450,858

Taxation

10

-

(1,025)

(LOSS)/PROFIT FOR THE YEAR AND TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT


(33,148)

449,833

EARNINGS PER SHARE

11



BASIC:




- Basic (loss)/earnings per share


(0.006p)

0.078p

FULLY DILUTED:




- Fully diluted (loss)/earnings per share


(0.006p)

0.073p


GROUP STATEMENT OF CHANGES IN EQUITY

 

 


Share

  capital

Share premium

 

Other reserves (Note 18)

 

Retained

losses

 

Total

equity


£

£

£

£

£







BALANCE AT 1 JANUARY 2012

3,830,796

2,774,849

31,690

(4,469,244)

2,168,091







Profit for the year and total comprehensive income

-

-

-

449,833

449,833    







Share based payment costs

-

-

38,419

-

38,419    

Transactions with owners

-

-

38,419

-

38,419    

BALANCE AT 31 DECEMBER 2012

3,830,796

2,774,849

70,109

(4,019,411)

2,656,343







Loss for the year and total comprehensive expense

-

-

-

(33,148)

(33,148)    

Share based payment costs

-

-

21,073

-

21,073    

Transactions with owners

-

-

21,073

-

21,073    

BALANCE AT 31 DECEMBER 2013

3,830,796

2,774,849

91,182

(4,052,559)

2,644,268

 

 

 

COMPANY STATEMENT OF CHANGES IN EQUITY

 

 

Share

  capital

Share premium

 

Other reserves (Note 18)

 

Retained

losses

 

Total

equity


£

£

£

£

£







BALANCE AT 1 JANUARY 2012

3,830,796

2,774,849

31,690

(4,479,175)

2,158,160







Profit for the year and total comprehensive income

-

-

-

447,760

447,760    

Share based payment costs

-

-

38,419

-

38,419    

Transactions with owners

-

-

38,419

-

38,419    

BALANCE AT 31 DECEMBER 2012

3,830,796

2,774,849

70,109

(4,031,415)

2,644,339







Profit for the year and total comprehensive income

-

-

-

(21,144)

(21,144)    

Share based payment costs

-

-

21,073

-

21,073    

Transactions with owners

-

-

21,073

-

21,073    

BALANCE AT 31 DECEMBER 2013

3,830,796

2,774,849

91,182

(4,052,559)

2,644,268

STATEMENTS OF FINANCIAL POSITION

 



GROUP


COMPANY

 



2013

2012


2013

2012


Note

£

£


£

£

NON-CURRENT ASSETS







Investment in subsidiary undertakings

12

-

-


-

-

Investments held for trading

13

2,028,984

1,199,608


2,028,984

1,199,608



2,028,984

1,199,608


2,028,984

1,199,608








CURRENT ASSETS







Trade and other receivables

14

237,284

41,680


245,481

40,526

Cash and cash equivalents

15

411,739

1,454,495


400,578

1,441,177



649,023

1,496,175


646,059

1,481,703

TOTAL ASSETS


2,678,007

2,695,783


2,675,043

2,681,311

CURRENT LIABILITIES







Trade and other payables

16

33,739

39,440


30,775

36,972



33,739

39,440


30,775

36,972

NET ASSETS


2,644,268

2,656,343


2,644,268

2,644,339

EQUITY







Share capital

17

3,830,796

3,830,796


3,830,796

3,830,796

Share premium account


2,774,849

2,774,849


2,774,849

2,774,849

Capital redemption reserve

18

27,000

27,000


27,000

27,000

Share option reserve

18

64,182

43,109


64,182

43,109

Retained losses


(4,052,559)

(4,019,411)


(4,052,559)

(4,031,415)

TOTAL EQUITY


2,644,268

2,656,343


2,644,268

2,644,339

 

 

These Financial Statements were approved by the Board of Directors on 4 June 2014 and were signed on its behalf by:

 

 

 

 

N Lee

Director

 

Company number: 269566

 


STATEMENTS OF CASH FLOWS



GROUP


COMPANY

 



2013

2012


2013

2012


Note

£

£


£

£

CASH FLOWS FROM OPERATING ACTIVITIES







(Loss)/profit before tax - continuing operations


(33,148)

450,858


(21,144)

447,760

Share based payment expense


21,073

38,419


21,073

38,419

Investment income


(65,913)

(1,209)


(74,110)

(1,174)

Net gains on investments


(164,301)

(690,806)


(164,301)

(690,806)

Increase in trade and other receivables


(136,577)

(20,982)


(137,731)

(21,646)

Decrease in trade and other payables


(5,701)

(13,384)


(6,197)

(6,246)



(384,567)

(237,104)


(382,410)

(233,693)

Tax paid


-

(1,025)


-

-

NET CASH USED BY OPERATING ACTIVITIES


(384,567)

(238,129)


(382,410)

(233,693)

CASH FLOWS FROM INVESTING ACTIVITIES







Purchase of investments


(892,806)

(1,185,435)


(892,806)

(1,185,435)

Disposal of investments


227,731

2,501,269


227,731

2,501,269

Interest received


6,886

1,131


6,886

1,096

NET CASH FROM INVESTING ACTIVITIES


(658,189)

1,316,965


(658,189)

1,316,930

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS


(1,042,756)

1,078,836


(1,040,599)

1,083,237








Cash and cash equivalents at the beginning of the year


1,454,495

375,659


1,441,177

357,940








CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

15

411,739

1,454,495


400,578

1,441,177

 

 

NOTES TO THE FINANCIAL STATEMENTS

1

GENERAL INFORMATION


Paternoster Resources plc is a public limited company incorporated in the United Kingdom.  The shares of the Company are listed on the AIM stock exchange. The address of its registered office is 30 Percy Street, London W1T 2DB.  The Group's principal activities are described in the Directors' Report.

2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied throughout all periods presented in the financial statements.

As in prior periods, the Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.  The financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below.

The financial statements are presented in pounds sterling (£) which is the functional currency of the parent company.

An overview of standards, amendments and interpretations to IFRSs issued but not yet effective, and which have not been adopted early by the Group are presented below under 'Statement of Compliance'.


GOING CONCERN

The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in existence for the foreseeable future.  Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.


BASIS OF CONSOLIDATION

The consolidated income statement and statement of financial position include the financial information of the Company and its subsidiary undertakings made up to 31 December 2013.  Acquisitions of subsidiaries are dealt with by the purchase method. The purchase method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities of the subsidiary are included in the consolidated statement of financial position at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group accounting policies. Goodwill is stated after separating out identifiable intangible assets of the acquired subsidiary at the date of acquisition.


STATEMENT OF COMPLIANCE

The financial statements comply with IFRS as adopted by the European Union.  At the date of authorisation of these financial statements the following Standards and Interpretations affecting the Group, which have not been applied in these financial statements, were in issue, but not yet effective. The company does not plan to adopt these standards early.



Effective for accounting periods beginning on or after:


IFRS 2,8,16,24,36

Amendments resulting from Annual Improvements 2010-2012 Cycle

1 July 2014


IFRS 3,13, IAS 40

Amendments resulting from Annual Improvements 2011-2013

1 July 2014


IFRS 7

Deferral of mandatory effective date of IFRS 7 and amendments to transition disclosures

1 January 2015


IFRS 9

Deferral of mandatory effective date of IFRS 9 and amendments to transition disclosures

1 January 2015


IFRS 10

Consolidated Financial Statements - Amendments for investment enttites

1 January 2014


IFRS 11

Joint arrangements

1 January 2014


IFRS 12

Disclosure of Interest in Other Entities - Amendments for investment entities

1 January 2014


IAS 19

Employee Benefits - Amended to clarify the requirements that relate to how contribution from employees or third parties that are linked to service should be attributed to periods of service

1 July 2014


IAS 27

Amendments for investment entities

1 January 2014


IAS 28

Investment in associates

1 January 2014


IAS 32

Financial Instruments: Presentation - Amendments to application guidance on the offsetting of financial assets and financial liabilities

1 January 2014


IAS 36

Impairment of assets

1 January 2014


IAS 38

Amendments resulting from Annual Improvements 2010-2012 Cycle

1 July 2014


IAS 39

Financial Instruments: Recognition and Measurement - Amendments for novation of derivatives

1 January 2014


IFRIC 21

Levies

1 January 2014


The Directors anticipate that the adoption of the above Standards and Interpretations in future periods will have little or no impact on the financial statements of the Company.


CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. These estimates and assumptions are based upon management's knowledge and experience of the amounts, events or actions.  Actual results may differ from such estimates. 

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

In certain circumstances, where fair value cannot be readily established, the Group is required to make judgements over carrying value impairment, and evaluate the size of any impairment required.

SHARE BASED PAYMENTS

The calculation of the fair value of equity-settled share based awards and the resulting charge to the statement of comprehensive income requires assumptions to be made regarding future events and market conditions. These assumptions include the future volatility of the Company's share price. These assumptions are then applied to a recognised valuation model in order to calculate the fair value of the awards.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Group holds investments that have been designated as held for trading on initial recognition. Where practicable the Group determines the fair value of these financial instruments that are not quoted (Level 3), using the most recent bid price at which a transaction has been carried out. These techniques are significantly affected by certain key assumptions, such as market liquidity.  Other valuation methodologies such as discounted cash flow analysis assess estimates of future cash flows and it is important to recognise that in that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realised immediately.


TAXATION

Current taxation is the taxation currently payable on taxable profit for the year.

Deferred income taxes are calculated using the liability method on temporary differences.  Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases.  However, deferred tax is not provided on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.  Temporary differences include those associated with shares in subsidiaries and joint ventures and are only not recognised if the Group controls the reversal of the difference and it is not expected for the foreseeable future.  In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are provided in full, with no discounting.  Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income.  Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the statement of financial position date. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited to equity in which case the related deferred tax is also charged or credited directly to equity.


FOREIGN CURRENCY TRANSLATION

Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction.  Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the statement of financial position reporting date. All exchange differences are dealt with through the profit or loss as they arise except where they arise from translation on consolidation, where they are recognised in other comprehensive income and reclassified to profit or loss on the disposal of the foreign operation.


SEGMENTAL REPORTING

The accounting policy for identifying segments is now based on internal management reporting information that is regularly reviewed by the chief operating decision maker, which is identified as the Board of Directors.

In identifying its operating segments, management generally follows the Group's service lines which represent the main products and services provided by the Group. The Directors believe that the Group's continuing investment operations comprise one segment.


FINANCIAL ASSETS

The Group's financial assets comprise investments held for trading, associated undertakings, cash and cash equivalents and loans and receivables.


INVESTMENTS HELD FOR TRADING

All investments are determined upon initial recognition as held at fair value through profit or loss were designated as investments held for trading.  Investment transactions are accounted for on a trade date basis.  Assets are de-recognised at the trade date of the disposal. Assets are sold at their fair value, which comprises the proceeds of sale less any transaction cost. The fair value of the financial instruments in the balance sheet is based on the quoted bid price at the balance sheet date, with no deduction for any estimated future selling cost. Unquoted investments are valued by the directors using primary valuation techniques such as recent transactions, last price and net asset value. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the consolidated statement of comprehensive income as "Net gains on investments". Investments are initially measured at fair value plus incidental acquisition costs. Subsequently, they are measured at fair value in accordance with IAS 39. This is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.


ASSOCIATED UNDERTAKINGS

Associated undertakings are those entities in which the Group has significant influence, but not control, over the financial and operating policies.  Investments that are held as part of the Group's investment portfolio are carried in the statement of financial position at fair value even though the Group may have significant influence over those companies. This treatment is permitted by IAS 28 "Investment in Associates", which requires investments held by a company as a venture capital provider to be excluded from its scope where those investments are designated, upon initial recognition, as at fair value through profit or loss and accounted for in accordance with IAS 39, with changes in fair value recognised in the statement of comprehensive income in the period of the change. The Group has no interests in associates through which it carries on its business.


CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

 



 

 

LOANS AND RECEIVABLES

Loans and receivables from third parties are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method. 


FINANCIAL LIABILITIES

The Group's financial liabilities comprise trade payables.  Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instruments.


TRADE PAYABLES

Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest rate method.


SHARE-BASED PAYMENTS

All share based payments are accounted for in accordance with IFRS 2 - "Share-based payments". The Company issues equity-settled share based payments in the form of share options to certain directors and employees. Equity settled share based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share based payments is expensed on a straight line basis over the vesting period, based on the Company's estimate of shares that will eventually vest.

Fair value is estimated using the Black-Scholes valuation model. The expected life used in the model has been adjusted, on the basis of management's best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations.  At each balance sheet date, the Company revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions.  The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to retained earnings.


DIVIDENDS

Dividend distributions payable to equity shareholders are included in "current financial liabilities" when the dividends are approved in general meeting prior to the statement of financial position date.


EQUITY

Equity comprises the following:

·        "Share capital" represents the nominal value of equity shares.

·        "Share premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

·        "Capital redemption reserve" represents the nominal value of shares repurchased or redeemed by the Company.

·        "Option reserve" represents the cumulative cost of share based payments.

·        "Retained losses" represents retained losses.

 

3

SEGMENTAL INFORMATION


The Group is organised around business class and the results are reported to the Chief Operating Decision Maker according to this class. There is one continuing class of business, being the investment in the natural resources sector.

Given that there is only one continuing class of business, operating within the UK no further segmental information has been provided.

 

4

NET GAINS ON INVESTMENTS



2013

2012



£

£


Net realised gains on disposal of investments

33,641

1,922,265


Movement in fair value of investments

130,660

(1,231,459)


Net gain on investments

164,301

690,806

 

5

INVESTMENT INCOME



2013

2012



£

£


Dividends from investments

5,491

-


Deposit interest receivable

1,395

1,209


Other interest receivable

59,027

-



65,913

1,209

 

 

6

OPERATING EXPENSES



2013

2012



£

£


Operating expenses include:




Wages and salaries

141,173

94,580


Share based payment expense

21,073

38,419




AUDITOR'S REMUNERATION


During the year the Group obtained the following services from the Company's auditor:



2013

2012



£

£


Fees payable to the Company's auditor for the audit of the parent company and the Group financial statements

10,000

10,000


Fees payable to the Company's auditor and its associates for other services:




Other services relating to taxation

2,000

2,000



12,000

12,000

 

 

7

DIRECTORS' EMOLUMENTS



2013

2012



£

£






Aggregate emoluments

131,000

89,334


Social security costs

10,173

5,246


Share based payment expense

21,073

38,419



162,246

132,999







 


Name of director

Fees

Benefits

Total

2013

Total

2012

 



£

£

£

£

 







 


N Lee

114,000

-

114,000

72,334

 


G Haselden

17,000

-

17,000

17,000

 



131,000

-

131,000

89,334

 

£42,000 of the fees in respect of Mr N Lee was paid to ACL Capital Limited.

 

 

8

EMPLOYEE INFORMATION



2013

2012



£

£






Wages and salaries

131,000

89,334


Social security costs

10,173

5,246


Share based payment expense

21,073

38,419



162,246

132,999


Average number of persons employed:



2013

2012



Number

Number


Office and management

2

2

 


COMPENSATION OF KEY MANAGEMENT PERSONNEL

 


There are no key management personnel other than the Directors of the Company.

 



 

9

SHARE BASED PAYMENTS


WARRANTS

In 2010 the Company issued warrants, each entitling the holder to subscribe in cash for one share at a price of 10p per share:


Number of

warrants at

1 Jan 2013

 

Issued

in the year

 

Exercised

in the year

Number of

warrants at

31 Dec 2013

 

Exercise

price

 

Vesting

Date

 

Expiry

date


2,125,000

-

-

2,125,000

10p

20.11.2011

20.11.2014


The Directors do not consider the fair value of warrants to be material to the Company accordingly a charge has not been recognised in accordance with IFRS.


EQUITY-SETTLED SHARE OPTION SCHEME


The Company operates share-based payment arrangements to remunerate directors and key employees in the form of a share option scheme. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.

On 26 October 2011, Nicholas Lee was granted options to subscribe for 28,000,000 new ordinary shares in the Company at an exercise price of 0.32p per share.  The options are exercisable for a period of ten years from the date of grant, with one third becoming exercisable on the first, second and third anniversaries of the date of grant respectively.

On 13 March 2012, Nicholas Lee was granted options to subscribe for 14,000,000 new ordinary shares in the Company at an exercise price of 0.48p per share.  The options are exercisable for a period of ten years from the date of grant, with one third becoming exercisable on the first, second and third anniversaries of the date of grant respectively.  The fair value of these options was determined using the Black-Scholes option pricing model and was £0.22p per option.

The significant inputs to the model in respect of the options granted in 2012 and 2011 were as follows:



2012

2011


Grant date share price

0.48p

0.32p


Exercise share price

0.48p

0.32p


No. of share options

14,000,000

28,000,000


Risk free rate

3%

3%


Expected volatility

40%

40%


Option life

10 years

10 years


Calculated fair value per share

0.22p

0.15p


The total share-based payment expense recognised in the income statement for the year ended 31 December 2013 in respect of the share options granted was £21,073 (2012:  £38,419).

 


Number of

options at

1 Jan 2013

 

Issued

in the year

 

Exercised

in the year

Number of

options at

31 Dec 2013

 

Exercise

price

 

Vesting

Date

 

Expiry

date


9,333,334

-

-

9,333,334

0.32p

26.10.2012

26.10.2021


4,666,667

-

-

4,666,667

0.48p

13.03.2013

13.03.2022


9,333,333

-

-

9,333,333

0.32p

26.10.2013

26.10.2021


4,666,667

-

-

4,666,667

0.48p

13.03.2014

13.03.2022


9,333,333

-

-

9,333,333

0.32p

26.10.2014

26.10.2021


4,666,667

-

-

4,666,666

0.48p

13.03.2015

13.03.2022


42,000,000

-

-

42,000,000

0.37p



 



 

10

INCOME TAX EXPENSE



2013

2012



£

£


Current tax - continuing operations

-

1,025


The tax on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average rate applicable to profits of the Consolidated entities as follows:



2013

2012



£

£


(Loss)/profit before tax from continuing operations

(33,148)

450,858


(Loss)/profit before tax multiplied by rate of corporation tax in the UK of 20% (2012: 24.5%)

 

(6,630)

 

110,460


Expenses not deductible for tax purposes

800

543


Unrelieved tax losses carried forward

5,830

-


Brought forward tax losses utilised

-

(109,978)


Total tax

-

1,025


Unrelieved tax losses of £3,555,000 (2012: £3,525,000) remain available to offset against future taxable trading profits. No deferred tax asset has been recognised in respect of the losses as recoverability is uncertain.

 

 

 

11

EARNINGS PER SHARE


The basic earnings per share is based on the profit/(loss) for the year divided by the weighted average number of shares in issue during the year. The weighted average number of ordinary shares for the year ended 31 December 2013 assumes that all shares have been included in the computation based on the weighted average number of days since issue.



2013

2012



£

£


(Loss)/profit attributable to equity holders of the Group:




(Loss)/profit from continuing operations

(33,148)

449,833


(Loss)/profit for the year attributable to equity holders of the Group

(33,148)

449,833






Weighted average number of ordinary shares in issue for basic earnings

577,857,956

577,857,956


Weighted average number of ordinary shares in issue for fully diluted earnings*

577,857,956

616,797,847






(LOSS)/EARNINGS PER SHARE




BASIC:




- Basic (loss)/earnings per share from continuing and total operations

(0.006p)

0.078p


FULLY DILUTED:




- Fully diluted (loss)/earnings per share from continuing and total operations

(0.006p)

0.073p


For 2013 the share options in issue are anti-dilutive in respect of the loss per share calculation and have therefore not been included.

 

12

INVESTMENT IN SUBSIDIARY UNDERTAKINGS


COMPANY


2013

2012



£

£


COST




As at 1 January and 31 December

1,480,098

1,480,098


PROVISIONS




As at 1 January and 31 December

1,480,098

1,480,098


NET BOOK VALUE

-

-


The Company has investments in the following subsidiary undertakings :


Name of subsidiary undertaking

Status of Company

Country of incorporation

Nature of business

Description

of holding

Proportion

 held


Viridas GmbH

Private

Germany

Dormant

EURO 25,000 Registered shares

100%


Viridas Brasil Agronegocios Ltd

Private

Brazil

Dormant

R$ 100,000

100%

Viridas GmbH was dissolved in January 2014.

ASSOCIATED UNDERTAKINGS

At the year end the Company held 27% of the issued share capital of Brady Exploration plc ("Brady"), 29% of the issued share capital of Astar Minerals plc ("Astar") and 28% of the issued share capital of Plutus Resources plc (Plutus").  Nicholas Lee is a director of Brady and Astar.  The extent of the Group's involvement in these companies allows it to participate in their financial and operating policies and it is presumed that it is possible to exert significant influence when the equity holding is greater than 20%.  These investments have not been equity accounted for (as permitted by IAS 28), and have been included in investments held for trading (Note 13). Brady and Astar are considered to be related parties (Note 21).

 

 

13

INVESTMENTS HELD FOR TRADING




           GROUP

       COMPANY



2013

2012

2013

2012



£

£

£

£


At 1 January - fair value

1,199,608

1,760,086

1,199,608

1,760,086


Acquisitions

892,806

1,249,985

892,806

1,249,985


Disposal proceeds

(227,731)

(2,501,269)

(227,731)

(2,501,269)


Net gain on disposal of investments

33,641

1,922,265

33,641

1,922,265


Movement in fair value of investments

130,660

(1,231,459)

130,660

(1,231,459)


.At 31 December - fair value

2,028,984

1,199,608

2,028,984

1,199,608


Categorised as:






Level 1 - Quoted investments

1,554,292

1,029,011

1,554,292

1,029,011


Level 2 - Unquoted investments

100,000

-

100,000

-


Level 3 - Unquoted investments

374,692

170,597

374,692

170,597



2,028,984

1,199,608

2,028,984

1,199,608



 

13

INVESTMENTS HELD FOR TRADING (continued)



The table of investments sets out the fair value measurements using the IFRS 7 fair value hierarchy.  Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows:

Level 1 - valued using quoted prices in active markets for identical assets.

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1. 

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.

The valuation techniques used by the company are explained in the accounting policy note, "Investments held for trading".


LEVEL 2 FINANCIAL ASSETS

Level 2 financial assets comprise a convertible instrument valued by reference to the bid price of the underlying equity and taking into account the contractual arrangements in place regarding the asset.


LEVEL 3 FINANCIAL ASSETS

Reconciliation of Level 3 fair value measurement of financial assets



2013

2012



£

£


Brought forward

170,597

-


Purchases

204,095

170.597


Carried forward

374,692

170,597


Level 3 valuation techniques used by the Group are explained on page 20 (Fair value of financial instruments)

 

 

14

TRADE AND OTHER RECEIVABLES




           GROUP

      COMPANY



2013

2012

2013

2012



£

£

£

£


Other receivables

169,846

-

169,846

-


Amounts owed by group company

-

-

8,197

-


Prepayments and accrued income

67,438

8,374

67,438

8,374



237,284

41,680

245,481

40,526

Other receivables include short term loans made on normal market terms.  The Directors consider that the carrying amount of short term loans and other receivables is approximately equal to their fair value.

 

 

15

CASH AND CASH EQUIVALENTS




           GROUP

      COMPANY



2013

2012

2013

2012



£

£

£

£


Cash and cash equivalents

411,739

1,454,495

400,578

1,441,177

The Directors consider the carrying amount of cash and cash equivalents approximates to their fair value.



 

16

TRADE AND OTHER PAYABLES




           GROUP

     COMPANY



2013

2012

2013

2012



£

£

£

£


Trade payables

11,406

24,972

11,406

24,972


Social security and other taxes

-

1,017

-

-


Accrued expenses

22,333

13,451

19,369

12,000



33,739

39,440

30,775

36,972

 

The Directors consider that the carrying amount of trade payables approximates to their fair value.

 

 

17

SHARE CAPITAL



Number of shares

Share capital

Deferred

Ordinary

Deferred

Ordinary





£

£


ISSUED AND FULLY PAID:






At 1 January 2012:






Deferred shares of 9.9p each

32,857,956

-

3,252,938

-


Ordinary shares of 0.1p each

-

577,857,956

-

577,858


At 31 December 2012 and 2013

32,857,956

577,857,956

3,252,938

577,858

 

 

18

OTHER RESERVES



Capital redemption reserve

Share

 option reserve

Total

Other reserves



£

£

£


Balance at 1 January 2012

27,000

4,690

31,690


Share based payment costs

-

38,419

38,419


Balance at 31 December 2012

27,000

43,109

70,109


Share based payment costs

-

21,073

21,073


Balance at 31 December 2013

27,000

64,182

91,182

 



 

19

RISK MANAGEMENT OBJECTIVES AND POLICIES


The Group is exposed to a variety of financial risks which result from both its operating and investing activities.  The Group's risk management is coordinated by the Board of Directors, and focuses on actively securing the Group's short to medium term cash flows by minimising the exposure to financial markets.

The main risks the Group is exposed to through its financial instruments are credit risk, foreign currency risk, liquidity risk and market price risk.

CAPITAL RISK MANAGEMENT

The Group's objectives when managing capital are:

·      to safeguard the Group's ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders;

·      to support the Group's growth; and

·      to provide capital for the purpose of strengthening the Group's risk management capability.

The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities.  Management regards total equity as capital and reserves, for capital management purposes.

CREDIT RISK

The Group's financial instruments, that are subject to credit risk, are cash and cash equivalents and loans and receivables.  The credit risk for cash and cash equivalents is considered negligible since the counterparties are reputable financial institutions.  The credit risk for loans and receivables is mainly in respect of short term loans, made on market terms, which are monitored regularly by the Board.

The Group's maximum exposure to credit risk is £581,585 (2012: £1,487,801) comprising cash and cash equivalents and loans and receivables.


LIQUIDITY RISK

Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through maintaining a positive cash balance and controlling expenses and commitments.  The Directors are confident that adequate resources exist to finance current operations.


FOREIGN CURRENCY RISK

The Group's foreign currency risk arises from financial assets held in currencies other than pounds sterling


Net foreign currency monetary assets:

Euro

Total


Functional currency of the operation

£

£






Sterling

11,161

11,161


The Directors do not consider the Group has significant exposure to movements in foreign currency in respect of its monetary assets.


MARKET PRICE RISK

The Group's exposure to market price risk mainly arises from potential movements in the fair value of its investments.  The Group manages this price risk within its long-term investment strategy to manage a diversified exposure to the market.  If each of the Group's equity investments were to experience a rise or fall of 10% in their fair value, this would result in the Group's net asset value and statement of comprehensive income increasing or decreasing by £155,000 ( 2012:  £103,000).

 

20

FINANCIAL INSTRUMENTS


The Group uses financial instruments, other than derivatives, comprising cash to provide funding for the Group's operations.


CATEGORIES OF FINANCIAL INSTRUMENTS


The IAS 39 categories of financial asset included in the statement of financial position and the headings in which they are included are as follows:



2013

2012



£

£


FINANCIAL ASSETS:




Cash and bank balances

411,739

1,454,495


Loans and receivables

169,846

33,306


Investments held for trading

2,028,984

1,199,608


FINANCIAL LIABILITIES AT AMORTISED COST:




The IAS 39 categories of financial liabilities included in the statement of financial position and the headings in which they are included are as follows:



2013

2012



£

£


Trade and other payables

11,406

25,989

 

 

21

RELATED PARTY TRANSACTIONS


Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

The compensation payable to Key Management personnel comprised £131,000 (2012: £89,334) paid by the Group to the Directors in respect of services to the Group.  Full details of the compensation for each Director are provided in Note 7.

Nicholas Lee is a director and controlling shareholder of ACL Capital Limited which invoiced the Company £42,000 in respect of consultancy fees due for the year (2012: £37,000).  £3,500 of this amount was invoiced and paid after the year end.  No other amounts were owed at 31 December 2013.

Nicholas Lee is also a director of Brady Exploration plc ("Brady") and Astar Minerals plc ("Astar").

The Company has a 27% shareholding in Brady.  In addition the Company made a loan in April 2013 of £60,000 to Brady on open market terms, which was repayable on 29 April 2014.  Since the year end the repayment date has been extended to 29 October 2014.

During the year the Company subscribed £111,000 for 74,000,000 shares as part of a placing of Astar Minerals plc shares and at the year end held 29% of Astar's issued share capital.

 

22

POST YEAR END EVENTS


There were no significant post year end events.

 


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