TIDMPRS
RNS Number : 5251S
Paternoster Resources PLC
26 June 2018
For immediate release 26 June 2018
Paternoster Resources plc
("Paternoster" or "the Company")
Financial Statements for the year ended 31 December 2017
The Company is pleased to announce that the financial statements
for the year ended 31 December 2017 - extracts from which are set
out below - will shortly be posted to shareholders, and made
available on the website www.paternosterresources.com
For more information, please contact:
Paternoster Resources plc: +44 (0) 20 7580 7576
Nicholas Lee, Chairman
Nominated Adviser: +44 (0) 20 7628 3396
Beaumont Cornish
Roland Cornish/Rosalind Hill Abrahams/Felicity Geidt
Joint Broker: +44 (0) 20 7186 0050
Shard Capital Partners LLP
Damon Heath
Erik Woolgar
Joint Broker:
Peterhouse Capital Limited +44 (0) 20 7562 3351
Lucy Williams
INTRODUCTION
During the year ended 31 December 2017, the Company has
continued to trade as an investment company focused on investing in
the natural resources sector.
FINANCIAL
During 2017, the Company made a loss from continuing operations
of GBP1,135,685 (2016: profit of GBP486,048). The net asset value
of the Company as at 31 December 2017 was GBP2,448,769 (2016:
GBP3,584,454).
The Company's investment portfolio at 31 December 2017 is
divided into the following categories:
Category Principal investments Cost or valuation
(GBP)
Metal Tiger plc, MX Oil plc,
Plutus Powergen plc, Arc Minerals
plc, Pires Investments plc,
I3 Energy plc, Cora Gold plc
Listed investments and Shumba Energy Limited 1,811,625
------------------------------------
Cash resources 211,795
Listed investments
and cash 2,023,420
----------------------------------------------------------
Unlisted investments 440,748
Total 2,464,168
----------------------------------------------------------
At 31 December 2017, the Company had cash balances amounting to
GBP211,795 (2016: GBP648,165).
Since the year end, the company has raised new funds and on 1
May 2018, the Company released its First Quarter Update 2018 which
showed that it had net assets, on an unaudited basis, of GBP3.1
million, the majority of which comprised listed investments of
GBP1.8 million and cash of GBP1.1 million.
REVIEW OF THE YEAR
During the year, the share price of Plutus PowerGen plc
("Plutus"), one of the Company's principal investments reduced
significantly, contributing to a reduction in the value of the
investment portfolio. This is compared against a very strong
performance of the Plutus share price during 2016 when it increased
by some 110%. Furthermore, whilst Cradle Arc Investments plc
(formerly Alecto Minerals plc) and Polemos plc which were both
suspended during the year have come back to the market post year
end, this has been at lower prices than was originally expected and
so, prudently, these reduced valuations have been reflected in the
2017 year end portfolio valuation.
During 2017, the Company's investment in Glenwick translated
into holdings in I3 Energy plc and Cora Gold plc and the share
prices of both of these companies struggled towards the end of
2017. However, since the year end, the I3 Energy plc share price
has increased by around 300%. Paternoster has realised some
significant profits from this investment whilst still retaining a
meaningful shareholding.
More details of the development of investments during the year
and significant developments since the year end are set out in the
Strategic Report.
OUTLOOK AND STRATEGY
On 18 January 2018, the Board of Paternoster Resources plc
announced that it had entered into an arrangement with RiverFort
Global Capital Ltd ("RiverFort"), the specialist provider of
capital to junior companies whereby Paternoster would have the
opportunity to invest in transactions arranged by RiverFort
alongside other co-investors. At the same time, the Company raised
GBP850,000 from both private and institutional investors.
RiverFort is a highly-respected provider of specialist
financing, primarily to the natural resources sector, providing
equity, convertible debt and senior project finance solutions.
RiverFort is the investment director of Cuart Investments PCC
Limited, a Gibraltar Experienced Investor Fund. Since its
formation, RiverFort has been able to arrange attractive returns
for its investors. In 2016, its first year of operation, Cuart
Investments PCC Limited - Cuart Growth Capital Fund I achieved an
increase in its audited NAV of over 15% between July and December
2016. The increase in NAV for 2017, on an unaudited basis, is
expected to be over 20%. From the date of its formation to 31 March
2018, RiverFort, on behalf of Cuart Growth Capital Fund I, its
co-investors and other investment partners, has arranged over US$76
million of investments. The RiverFort team has an international
footprint and a range of financial, entrepreneurial and industrial
expertise. Riverfort is authorised and regulated by the Financial
Conduct Authority.
On 21 February 2018, Andrew Nesbitt joined the board of
Paternoster. Andrew is a qualified mining engineer and is a
consultant to RiverFort. He holds a BSc (Eng) Mining and an MBA and
has over 20 years of experience in the natural resources sector. He
has held various production and technical roles with both De Beers
and Goldfields and has carried out a number of feasibility studies
across the world with the leading technical consulting group SRK.
In addition, Andrew is also an experienced investor, having
previously worked as a partner and portfolio manager for Craton
Capital Pty Limited, a global precious metals fund with over US$400
million of assets under management.
On 20 April 2018, the Board announced that, as a first step in
the development of its arrangement with RiverFort, it had agreed to
invest around GBP250,000 in a portfolio of income-yielding
investments arranged by RiverFort which comprise investments in the
form of both senior and convertible debt. This portfolio
represented, on average, around 2.8% of the total investment
amounts originally arranged by RiverFort and therefore demonstrates
the scope for Paternoster to scale-up the size of its investments
as it develops its relationship with RiverFort. This should enable
the Company to quickly grow its portfolio with investments that can
generate both attractive cash returns whilst providing downside
protection.
On 8 June 2018, Paternoster held a general meeting both to
increase its share allotment authorities and to approve the
entering into of an investment adviser agreement with RiverFort.
All resolutions were passed with significant majorities. Going
forward, the Company is now well placed to build its portfolio
significantly and rapidly through making investments that can
generate income and capital growth whilst offering downside
protection.
Nicholas Lee
Chairman
25 June 2018
REVIEW OF THE BUSINESS AND FUTURE DEVELOPMENTS
LISTED INVESTMENTS
PLUTUS POWERGEN PLC
Plutus PowerGen plc ("Plutus"), which is listed on AIM, is a
power company focused on the development, construction and
operation of flexible electricity and gas power generation in the
UK.
In Q1 2017, the company's share price fell significantly as a
result of the uncertainty surrounding the OFGEM statement regarding
TRIAD payments to local embedded power generators. Given that
Plutus benefits from multiple earnings streams, it believes that
its business model going forward continues to be attractive. It
also has a number of projects in the pipeline that are expected to
deliver additional fees and revenues. The company is continuing to
broaden its exposure to the UK energy sector which includes looking
to develop battery energy storage projects. It has also received
planning for two further renewable green diesel power generation
sites and has recently signed a joint venture with a leading UK
supplier of gas and diesel generators.
Plutus has commissioned two new 20MW flexible energy generation
sites in Stowmarket, Suffolk and has energised two sites in
Ipswich. The company now has 120MW of flexible energy generation
sites in operation with a further three 20MW sites expected to come
into operation in 2018. More generally, the company is focused on
moving into gas powered energy generation, energy storage and
hybrid generation sites during 2018. Gas powered sites offer
significantly more attractive returns compared to diesel powered
sites and hybrid sites allow power generation sites of various
types to partner with storage technologies giving the company
access to additional revenue streams.
MX OIL PLC
MX Oil plc ("MX Oil") holds an indirect investment in a Nigerian
oil and gas licence, OML 113, which includes the Aje Field. During
the year, the two wells in the Aje Field within block OML 113 have
continued to produce notwithstanding an interruption in production
at Aje 5 whilst some subsurface intervention was carried out.
As part of the oil production process, a significant quantity of
new data about the underlying reservoir and related geology has
been collected. Consequently, the partners in the licence
commissioned the preparation of an updated Competent Persons Report
("CPR") in order to take into account this new data and to provide
a more accurate update of the future potential of the field.
The revised CPR has now been completed which is an update to the
CPR prepared previously in July 2014 and incorporates all the
developments and new data generated by the project since that date.
The level of reserves reported in this latest CPR represents a
significant increase compared to the previous report and highlights
the future potential of the Aje Field.
Now that the company has received the updated CPR, work is
currently underway on modelling the potential for new oil wells in
both the Turonian and Cenomanian. Subject to the outcome of this
work, it expects to see further development drilling in 2019, with
a view to progressing to a full scale oil and gas integrated
project thereafter.
Also, during the year, shareholders approved the adoption of a
revised investing policy by the company to include interesting
opportunities in adjacent areas of oil services, energy, power and
related technologies.
METAL TIGER PLC
Metal Tiger plc ("Metal Tiger") which is listed on AIM, is
focused on investing in mineral projects with a precious metals and
strategic metals focus. During the year, the company has continued
to invest in MOD Resources Limited ("MOD") which is continuing to
make good progress on its high-grade copper and silver deposit
("T3") in Botswana. The company is looking forward to the results
of the next resource upgrade on this asset, the finalisation of the
definitive feasibility study and further exploration work in this
licence area.
The company has also progressed the IPO of its joint venture in
Thailand, however, the timing of this has been postponed pending
greater clarity of the Thailand Government's Mineral Management
Master Plan.
The company also raised GBP4.85 million by way of a private
placement and further funds through the exercise of warrants.
SHUMBA ENERGY LIMITED
During the year Shumba Energy Limited has continued to develop
its coal and energy interests in Botswana. It currently has three
advanced stage projects and one earlier stage alternative energy
project.
ARC MINERALS PLC (formerly ORTAC RESOURCES LIMITED)
The company has made significant progress during the year. It is
now focused on its two high potential African mining assets namely:
Casa Mining Limited ("CASA") a private company that holds
prospective gold mining and exploration licences in the Democratic
Republic of Congo; and Zamsort Limited ("Zamsort"), a company based
in Zambia with interests in copper and cobalt. The company now owns
some 90% of CASA having, during the year, made an offer to acquire
the shares that it did not already own. It has also increased its
ownership in Zamsort to 55%. During the period, the board of the
company has also been restructured.
POLEMOS PLC
Polemos plc is an investment company listed on AIM with a
specific focus on the natural resources sector. During the year,
Polemos plc invested in Oyster Oil and Gas Limited ("Oyster"), a
company already listed on the TSX-V. Oyster currently operates four
blocks in the Republic of Djibouti (100% interest) of which three
blocks are located onshore and one block offshore. It also operates
a 100% working interest in a large onshore block in the Republic of
Madagascar. In July 2017, Polemos raised around GBP500,000 for
working capital purposes and to fund the seeking of investment
opportunities.
In September 2017, Polemos announced the potential acquisition
of a cyber security business SecurLinx Corporation, a US based
cyber security company. As this would constitute a reverse
takeover, its shares weresuspended pending the publication of an
admission document. This transaction, however, could not be
completed and so the company came back to the market on 9 March
2018 as an AIM Rule 15 cash shell which effectively means that it
needs to secure an alternative reverse takeover transaction within
six months of this date.
PIRES INVESTMENTS PLC
Pires Investments plc is an investment company listed on AIM
with a specific focus on the natural resources sector. It is
currently seeking interesting investment opportunities. The
company's principal assets comprise cash and an investment in Eco
(Atlantic) Oil and Gas Limited which, since the year end, has
increased in value significantly. As a result, the company is now
well placed to pursue exciting investment opportunities.
CORA GOLD LIMITED
Cora Gold Limited is a West African focused gold exploration
company. The company's principal project is the Sanankoro gold
discovery in southern Mali. The company listed on AIM in October
2017. Since then it has commenced drilling at Sanankoro which has
yield some positive results. It has also commenced drilling at its
Tekeledougou project in southern Mali which has also produced some
good results. Consequently, the company's share price has increased
by some 40% since the year end.
I3 ENERGY PLC
I3 Energy Limited ("I3 Energy") owns a 100% operated interest in
the Liberator field, an oil discovery situated within Block 13/23d
of the North Sea, immediately adjacent to the Blake field and
situated 2 kilometres from Blake's producing drill centre. The
company was introduced to AIM in July 2017.During Q1 2018, the
companyraised additional funds and also announced that it was in
advanced discussions with various possible partners regarding a
potential joint venture relating to its 100% owned Liberator Oil
Field and its 30(th) Offshore Licencing Round application. In May
2018, it announced that it had been awarded its sole 30(th)
Offshore Licensing Round application target, Block 13/23c 123 km(2)
, on a 100% Interest basis.
Since the year end, I3 Energy's share price has increased by
around 300%. Paternoster has realised some significant gains on
this investment.
UNLISTED INVESTMENTS
CRADLE ARC MINERALS PLC (formerly ALECTO MINERALS PLC)
In December 2016, the company announced the proposed acquisition
of the Mowana Copper Mine in Botswana ("Mowana"). This acquisition
constituted a reverse takeover under the AIM Rules for Companies
and, as a result, the company's shares were suspended. Mowana is a
former producing copper mine that has already been brought back
into production. Unfortunately, the company was not able to
complete the acquisition of Mowana prior to the company being
delisted. However, since then, the company has worked hard to
complete the acquisition and raise the appropriate level of funding
such that it was able to come back to AIM in early 2018, albeit at
a lower price than originally envisaged. Since then, it has
announced a maiden JORC resource for Mowana and an increase in
production at the mine.
GLENWICK PLC
In February 2017, Paternoster subscribed for new ordinary shares
in Glenwick plc ("Glenwick"), principally to gain exposure to its
pre-IPO investment in I3 Energy plc. During the year, I3 Energy plc
("I3 Energy") was introduced to AIM and Paternoster received shares
in I3 Energy. At the same time, Glenwick was progressing the
acquisition of 100% of the share capital of Cora Gold Limited
("Cora Gold"). This transaction ultimately did not take place as
Cora Gold completed its own IPO instead. However, in order to
compensate Glenwick for costs incurred, it received a number of
Cora Gold shares which were then distributed to Glenwick
shareholders. Post period end, Glenwick is now in the process of
being wound up and, whilst the share prices of I3 Energy and Cora
Gold did not perform very well during 2017, post period end they
have both improved, with I3 Energy increasing very significantly.
As a result, Paternoster has made a very attractive return from its
investment in Glenwick.
ERIDGE CAPITAL LIMITED (formerly NEW WORLD OIL AND GAS PLC)
Eridge Capital Limited is an investment company with net assets
comprising cash and a convertible loan in Big Sofa Technologies plc
("Big Sofa"), a company listed on AIM. During the year, the company
changed its name and has migrated to the British Virgin Islands as
this was believed to be a more appropriate jurisdiction for an
unlisted investment company compared to remaining in Jersey. The
company is actively working on a revised strategy in order to
deliver a return to shareholders. Post period end, the Company's
loan in Big Sofa has been repaid and part of the loan has been
converted into shares.
ELEPHANT OIL LIMITED
Elephant Oil Limited, is an oil and gas exploration company
focused on West Africa, which holds a 100% interest in Block B,
onshore Benin, on the prolific West Africa Transform Margin. The
company continues to look at options to develop its asset and
presence in the region.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2017
2017 2016
Note GBP GBP
--------------------------------------------------- ---- ----------- ---------
CONTINUING OPERATIONS:
Net (loss)/gain on investments 4 (811,467) 770,086
Investment income 5 11,934 15,090
--------------------------------------------------- ---- ----------- ---------
TOTAL INCOME (799,533) 785,176
Administrative expenses (336,152) (299,128)
(LOSS)/PROFIT BEFORE TAXATION (1,135,685) 486,048
Taxation 10 - -
--------------------------------------------------- ---- ----------- ---------
(LOSS)/PROFIT FOR THE YEAR AND TOTAL COMPREHENSIVE
INCOME (1,135,685) 486,048
--------------------------------------------------- ---- ----------- ---------
EARNINGS PER SHARE 11
Basic and fully diluted (loss)/earnings per
share (0.112p) 0.051p
--------------------------------------------------- ---- ----------- ---------
STATEMENT OF FINANCIAL POSITION
FOR THE YEARED 31 DECEMBER 2017
2017 2016
Note GBP GBP
----------------------------- ---- ----------- -----------
NON-CURRENT ASSETS
Investments held for trading 12 2,252,373 2,949,517
----------------------------- ---- ----------- -----------
2,252,373 2,949,517
----------------------------- ---- ----------- -----------
CURRENT ASSETS
Trade and other receivables 13 37,863 29,142
Cash and cash equivalents 14 211,795 648,165
----------------------------- ---- ----------- -----------
249,658 677,307
----------------------------- ---- ----------- -----------
TOTAL ASSETS 2,502,031 3,626,824
----------------------------- ---- ----------- -----------
CURRENT LIABILITIES
Trade and other payables 15 53,262 42,370
53,262 42,370
----------------------------- ---- ----------- -----------
NET ASSETS 2,448,769 3,584,454
----------------------------- ---- ----------- -----------
EQUITY
Share capital 16 4,269,546 4,269,546
Share premium account 16 3,191,257 3,191,257
Capital redemption reserve 17 27,000 27,000
Share option reserve 17 73,150 73,150
Retained losses (5,112,184) (3,976,499)
----------------------------- ---- ----------- -----------
TOTAL EQUITY 2,448,769 3,584,454
----------------------------- ---- ----------- -----------
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2017
Other
reserves
Share (Note Retained Total
capital Share premium 18) losses equity
GBP GBP GBP GBP GBP
------------------------------ ---------- -------------- ---------- ------------ ------------
BALANCE AT 1 JANUARY
2016 4,175,796 3,135,007 119,407 (4,481,804) 2,948,406
Profit for the year and
total comprehensive income - - - 486,048 486,048
------------------------------ ---------- -------------- ---------- ------------ ------------
Share issue 93,750 56,250 - - 150,000
Transfer on cancellation
of options - - (19,257) 19,257 -
------------------------------ ---------- -------------- ---------- ------------ ------------
Transactions with owners 93,750 56,250 (19,257) 19,257 150,000
------------------------------ ---------- -------------- ---------- ------------ ------------
BALANCE AT 31 DECEMBER
2016 4,269,546 3,191,257 100,150 (3,976,499) 3,584,454
Loss for the year and
total comprehensive expense - - - (1,135,685) (1,135,685)
------------------------------ ---------- -------------- ---------- ------------ ------------
BALANCE AT 31 DECEMBER
2017 4,269,546 3,191,257 100,150 (5,112,184) 2,448,769
------------------------------ ---------- -------------- ---------- ------------ ------------
STATEMENT OF CASHFLOWS
FOR THE YEARED 31 DECEMBER 2017
2017 2016
Note GBP GBP
------------------------------------------ ---- ----------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss)/profit before tax - continuing
operations (1,135,685) 486,048
Share based payment expense - -
Investment income (11,934) (15,090)
Net losses/(gains) on investments 811,467 (770,086)
OPERATING CASH FLOWS BEFORE MOVEMENTS
IN WORKING CAPITAL (336,152) (299,128)
(Increase) in trade and other receivables (8,721) (16,296)
Increase/(decrease) in trade and
other payables 10,892 (44,299)
NET CASH USED BY OPERATING ACTIVITIES (333,981) (359,723)
------------------------------------------ ---- ----------- ---------
INVESTING ACTIVITIES
Purchase of investments (321,167) (527,351)
Disposal of investments 206,844 1,055,579
Investment income received 11,934 15,090
------------------------------------------ ---- ----------- ---------
NET CASH USED IN INVESTING ACTIVITIES (102,389) 543,318
------------------------------------------ ---- ----------- ---------
NET (DECREASE)/INCREASE IN CASH AND
CASH EQUIVALENTS (436,370) 183,595
Cash and cash equivalents at the
beginning of the year 648,165 464,570
CASH AND CASH EQUIVALENTS AT THE OF THE YEAR 14 211,795 648,165
------------------------------------------ ---- ----------- ---------
NOTES TO THE FINANCIAL STATEMENTS
1 FOR THE YEARED 31 DECEMBER 2017
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 Company'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 Company 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
(GBP) which is the functional currency of the Company. The
comparative figures are for the year ended 31 December 2016.
An overview of standards, amendments and interpretations
to IFRSs issued but not yet effective, and which have not
been adopted early by the Company 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 has
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.
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 Company 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 Company holds investments that have been designated as
held for trading on initial recognition. Where practicable
the Company 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.
STATEMENT OF COMPLIANCE
The financial statements comply with IFRS as adopted by the
European Union. The following new and revised Standards and
Interpretations have been adopted in the current period by
the Company for the first time and do not have a material
impact on the group.
IFRS 12 Disclosures of interests in other entities
-
A number of new standards and amendments to standards and
interpretations have been issued but are not yet effective
and not early adopted. None of these are expected to have
a significant effect on the financial statements of the Company.
REVENUE RECOGNITION
INVESTMENT INCOME
Dividend income from financial assets at fair value through
profit or loss is recognised in the statement of comprehensive
income on an ex-dividend basis. Interest on fixed interest
debt securities is recognised using the effective interest
rate method. Bank deposit interest is recognised on an accruals
basis.
CURRENT TAX
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 Company
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 Company are assessed for recognition as deferred tax
assets.
DEFERRED TAX
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.
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 Company's service lines which represent the main
products and services provided by the Company. The Directors
believe that the Company's continuing investment operations
comprise one segment.
FINANCIAL ASSETS
The Company's financial assets comprise investments held
for trading, associated undertakings, cash and cash equivalents
and loans and receivables, and are recognised in the Company's
statement of financial position when the Company becomes
a party to the contractual provisions of the instrument.
INVESTMENTS HELD FOR TRADING
All investments 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 Company
has significant influence, but not control, over the financial
and operating policies. Investments that are held as part
of the Company's investment portfolio are carried in the
statement of financial position at fair value even though
the Company 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 Company 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.
IMPAIRMENT OF FINANCIAL ASSETS
Financial assets, other than those at FVTPL, are assessed
for indicators of impairment at each balance sheet date.
Financial assets are impaired where there is objective evidence
that, as a result of one or more events that occurred after
the initial recognition of the financial asset, the estimated
future cash flows of the investment have been impacted.
A provision for impairment is made when there is objective
evidence that, as a result of one or more events that occurred
after the initial recognition of the financial asset, the
estimated future cash flows have been affected. Impaired
debts are derecognised when they are assessed as uncollectible.
FINANCIAL LIABILITIES
The Company's financial liabilities comprise trade payables.
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the Company 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.
DIVIDS
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 Company 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 GAIN/(LOSS) ON INVESTMENTS
2017 2016
GBP GBP
---------------------------------------- --------- -------
Net realised gains/(losses) on disposal
of investments 92,473 468,239
Movement in fair value of investments (903,940) 301,847
Net (loss)/gain on investments (811,467) 770,086
----------------------------------------------------------- --------- -------
5 INVESTMENT INCOME
2017 2016
GBP GBP
---------------------------- ------ ------
Dividends from investments - 412
Deposit interest receivable 1,871 -
Other interest receivable 10,063 14,678
11,934 15,090
----------------------------------------------- ------ ------
6 PROFIT/(LOSS) FOR THE YEAR
2017 2016
GBP GBP
---------------------------------------------- -------- -------
Profit for the year has been arrived at
after charging:
Wages and salaries 131,329 141,227
----------------------------------------------------------------- -------- -------
AUDITOR'S REMUNERATION
During the year the Company obtained the following services
from the Company's auditor:
2017 2016
GBP GBP
---------------------------------------------- -------- -------
Fees payable to the Company's auditor
for the audit of the parent company and
the Company financial statements 12,000 12,000
Fees payable to the Company's auditor
and its associates for other services:
Other services relating to taxation 2,100 600
----------------------------------------------------------------- -------- -------
14,100 12,600
----------------------------------------------------------------- -------- -------
7 DIRECTORS' EMOLUMENTS
2017 2016
GBP GBP
------------------------------------- ------- -------
Aggregate emoluments 120,000 141,749
Social security costs 11,329 8,478
131,329 150,227
-------------------------------------------------------- ------- -------
Total Total
Name of director Fees Benefits 2017 2016
GBP GBP GBP GBP
----------------- ------ ---------- ------- -------
N Lee 84,000 - 84,000 72,000
A van Dyke 36,000 - 36,000 20,333
G Haselden - - - 8,500
M Lofgran - - - 40,916
120,00 - 120,00 141,749
------------------------------------ ------ ---------- ------- -------
8 EMPLOYEE INFORMATION
2017 2016
GBP GBP
-------------------------------------- ---------------------- ----------------------
Wages and salaries 120,000 141,749
Social security costs 11,329 8,478
131,329 150,227
--------------------------------------------------------- ---------------------- ----------------------
Average number of persons employed:
2017 2016
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
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 GBP0.22p per option.
On 17 September 2014, Matt Lofgran was granted options to
subscribe for 20,000,000 new ordinary shares in the Company
at an exercise price of 0.26p per share. These options were
cancelled in 2016.
All remaining options were cancelled subsequent to the year
end.
EQUITY-SETTLED SHARE OPTION SCHEME
The significant inputs to the model in respect of the options
granted in 2014, 2012 and 2011 were as follows:
2014 2012 2011
Grant date share
price 0.26p 0.48p 0.32p
Exercise share price 0.26p 0.48p 0.32p
No. of share options 20,000,000 14,000,000 28,000,000
Risk free rate 2.5% 3% 3%
Expected volatility 50% 40% 40%
Option life 10 years 10 years 10 years
Calculated fair value
per share 0.14p 0.22p 0.15p
The total share-based payment expense recognised in the
income statement for the year ended 31 December 2017 in
respect of the share options granted was GBPNil (2016: GBPNil).
Number Number
of Granted Exercised of Exercise Vesting Expiry
options in the in the options price Date date
at year year Cancelled at
1 Jan in the 31 Dec
2017 year 2017
------------ ------------ ----------- ------------ ---------- ------------- ---------- -------------
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
2017 2016
GBP GBP
------------------------------------------------------ ------------ ---------
Current tax - continuing operations - -
------------------------------------------------------ ------------ ---------
The tax on the Company'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:
2017 2016
GBP GBP
------------------------------------------------------ ------------ ---------
Profit/(loss) before tax from continuing
operations (1,135,685) 486,048
-------------------------------------------------------------------------- ------------ ---------
Profit/(loss) before tax multiplied by
rate of corporation tax in the UK of 19.25%
(2016: 20%) (218,619) 97,210
Expenses not deductible for tax purposes 2,728 3,034
Offset against tax losses brought forward - (100,244)
Unrelieved tax losses carried forward 215,891 -
Total tax - -
-------------------------------------------------------------------------- ------------ ---------
Unrelieved tax losses of GBP4,485,000 (2016: GBP3,366,000)
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 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 assumes that all shares have been included
in the computation based on the weighted average number
of days since issue.
2017 2016
GBP GBP
------------------------------------------------ ------------- -----------
Profit/(loss) attributable to equity holders
of the Company:
Profit/(loss) from continuing operations (1,135,685) 486,048
-------------------------------------------------------------------- ------------- -----------
Profit/(loss) for the year attributable
to equity holders of the Company (1,135,685) 486,048
-------------------------------------------------------------------- ------------- -----------
Weighted average number of ordinary shares
in issue for basic and fully diluted earnings* 1,016,607,956 959,230,907
EARNINGS/(LOSS) PER SHARE
BASIC AND FULLY DILUTED:
- Basic (loss)/earnings per share from
continuing and total operations (0.112p) 0.051p
- Fully diluted (loss)/earnings per share
from continuing and total operations (0.112p) 0.051p
-------------------------------------------------------------------- ------------- -----------
*No adjustment to earnings per share for fully diluted earnings
has been made as the exercise of options would be anti-dilutive.
12 INVESTMENTS HELD FOR TRADING
2017 2016
GBP GBP
------------------------------------------- --------- -----------
At 1 January - fair value 2,949,517 2,557,659
Acquisitions 321,167 677,351
Disposal proceeds (206,844) (1,055,579)
Net gain/(loss) on disposal of investments 92,473 468,239
Movement in fair value of investments (903,940) 301,847
--------------------------------------------------------------- --------- -----------
.At 31 December - fair value 2,252,373 2,949,517
--------------------------------------------------------------- --------- -----------
Categorised as:
Level 1 - Quoted investments 1,811,625 2,557,368
Level 2 - Unquoted investments 263,513 -
Level 3 - Unquoted investments 177,235 392,149
--------------------------------------------------------------- --------- -----------
2,252,373 2,949,517
--------------------------------------------------------------- --------- -----------
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 loan note
valued by reference to its nominal value, and two equity
investments whose shares were suspended at the year-end
which have been valued at the bid price of the shares on
lifting of the suspension subsequent to the year-end.
LEVEL 3 FINANCIAL ASSETS
Reconciliation of Level 3 fair value measurement of financial
assets
2017 2016
GBP GBP
--------------------------------------- -------------- --------------
Brought forward 392,149 947,221
Reclassified from Level 1 - 293,295
Reclassified to Level 1 - (390,320)
Disposal proceeds - (170,698)
Loss on disposals - (154,095)
Movement in fair value (214,914) (133,254)
--------------------------------------- -------------- --------------
Carried forward 177,235 392,149
--------------------------------------- -------------- --------------
Level 3 valuation techniques used by the Company are explained
on page 22 (Fair value of financial instruments)
In line with the investment strategy adopted by the Company,
Nicholas Lee is on the boards of the following investee
companies:
%age holding
2017 2016
--------------------------------------- -------------- --------------
Pires Investments plc 24.8% 24.8%
MX Oil plc 0.9% 0.9%
Eridge Capital Limited 7.7% 7.7%
--------------------------------------- -------------- --------------
13 TRADE AND OTHER RECEIVABLES
2017 2016
GBP GBP
------------------------------- ------ ------
Other receivables 20,816 20,894
Prepayments and accrued income 17,047 8,248
--------------------------------------------------- ------ ------
37,863 29,142
--------------------------------------------------- ------ ------
The Directors consider that the carrying amount of other
receivables is approximately equal to their fair value.
14 CASH AND CASH EQUIVALENTS
2017 2016
GBP GBP
-------------------------- ------- -------
Cash and cash equivalents 211,795 648,165
---------------------------------------------- ------- -------
The Directors consider the carrying amount of cash and cash
equivalents approximates to their fair value.
15 TRADE AND OTHER PAYABLES
2017 2016
GBP GBP
----------------- ------ ------
Trade payables 22,067 16,920
Accrued expenses 31,195 25,450
-------------------------------------- ------ ------
53,262 42,370
-------------------------------------- ------ ------
The Directors consider that the carrying amount of trade
payables approximates to their fair value.
16 SHARE CAPITAL
Number of shares Share capital Share
Deferred Ordinary Deferred Ordinary premium
GBP GBP GBP
-------------------- ------------ ------------- ----------- ---------- ---------
ISSUED AND FULLY
PAID:
At 1 January 2016:
Deferred shares
of 9.9p each 32,857,956 3,252,938
Ordinary shares
of 0.1p each 922,857,956 922,858 3,135,007
---------------------------------------- ------------ ------------- ----------- ---------- ---------
At 1 January 2016 32,857,956 922,857,956 3,252,938 922,858 3,135,007
Issue of shares 93,750,000 93,750 56,250
---------------------------------------- ------------ ------------- ----------- ---------- ---------
At 31 December 2016
and 2017 32,857,956 1,016,607,956 3,252,938 1,016,608 3,191,257
---------------------------------------- ------------ ------------- ----------- ---------- ---------
17 OTHER RESERVES
Capital Share
redemption option Total
reserve reserve Other reserves
GBP GBP GBP
--------------------------------- --------------- --------- ----------------
Balance at 1 January 2016 27,000 92,407 119,407
Transfer to Profit and loss on
cancellation of options - (19,257) (19,257)
----------------------------------------------------- --------------- --------- ----------------
Balance at 31 December 2016 and
2017 27,000 73,150 100,150
----------------------------------------------------- --------------- --------- ----------------
18 RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company is exposed to a variety of financial risks which
result from both its operating and investing activities.
The Company's risk management is coordinated by the Board
of Directors and focuses on actively securing the Company's
short to medium term cash flows by minimising the exposure
to financial markets.
The main risks the Company is exposed to through its financial
instruments are credit risk, foreign currency risk, liquidity
risk and market price risk.
CAPITAL RISK MANAGEMENT
The Company's objectives when managing capital are:
* to safeguard the Company's ability to continue as a
going concern, so that it continues to provide
returns and benefits for shareholders;
* to support the Company's growth; and
* to provide capital for the purpose of strengthening
the Company's risk management capability.
The Company 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 Company 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.
The Company is not subject to externally imposed capital
requirements.
CREDIT RISK
The Company'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 Company's maximum exposure to credit risk is GBP232,611
(2016: GBP728,165) comprising cash and cash equivalents
and loans and receivables.
The ageing profile of trade and other receivables was:
2017 2016
Total book Total book
value value
GBP GBP
----------------------------------------- -------------- --------------
Current 20,816 20,894
Overdue for less than one year - -
20,816 20,894
------------------------------------------------------------- -------------- --------------
18 RISK MANAGEMENT OBJECTIVES AND POLICIES continued
LIQUIDITY RISK
Liquidity risk arises from the possibility that the Company
might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities.
The Company 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 Directors do not consider the Company has significant
exposure to movements in foreign currency in respect of
its monetary assets.
MARKET PRICE RISK
The Company's exposure to market price risk mainly arises
from potential movements in the fair value of its investments.
The Company manages this price risk within its long-term
investment strategy to manage a diversified exposure to
the market. If each of the Company's equity investments
were to experience a rise or fall of 10% in their fair value,
this would result in the Company's net asset value and statement
of comprehensive income increasing or decreasing by GBP225,000
(2016: GBP295,000).
19 FINANCIAL INSTRUMENTS
The Company uses financial instruments, other than derivatives,
comprising cash to provide funding for the Company'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:
2017 2016
GBP GBP
----------------------------------------------- ---------- ----------
FINANCIAL ASSETS:
Cash and cash equivalents 211,795 648,165
Loans and receivables 20,816 20,894
Investments held for trading 2,252,373 2,949,517
------------------------------------------------------------------- ---------- ----------
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:
2017 2016
GBP GBP
----------------------------------------------- ---------- ----------
Trade and other payables 22,067 16,920
------------------------------------------------------------------- ---------- ----------
20 RELATED PARTY TRANSACTIONS
The compensation payable to Key Management personnel comprised
GBP120,000 (2016: GBP141,749) paid by the Company to the
Directors in respect of services to the Company. Full details
of the compensation for each Director are provided in Note
7.
Nicholas Lee's directorships of companies in which Paternoster
has an investment are detailed in Note 12.
21 Contingent LIABILITIES AND CAPITAL COMMITMENTS
There were no contingent liabilities or capital commitments
at 31 December 2017 or 31 December 2016.
22 POST YEAR END EVENTS
On 18 January 2018, the Company announced that it had entered
into an arrangement with RiverFort Global Capital Ltd ("RiverFort"),
the specialist provider of capital to junior companies whereby
Paternoster would have the opportunity to invest in transactions
arranged by RiverFort alongside other co-investors. At the
same time, the Company raised GBP850,000 from both private
and institutional investors as a result of a placing of
772,727,270 new ordinary shares at 0.11p per share.
On 20 April 2018, the Board announced that it had agreed
to invest around GBP250,000 in a portfolio of income-yielding
investments arranged by RiverFort which comprise investments
in the form of both senior and convertible debt.
On 8 June 2018, Paternoster held a general meeting both
to increase its share allotment authorities and to approve
the entering into of an investment adviser agreement with
RiverFort. All resolutions were passed.
23 ULTIMATE CONTROLLING PARTY
The Directors do not consider there to be a single ultimate
controlling party.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BRGDLRUDBGIU
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June 26, 2018 02:00 ET (06:00 GMT)
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