TIDMEML
RNS Number : 7530Y
Emmerson PLC
17 May 2021
Emmerson Plc / AIM: EML / Sector: Mining
17 May 2021
Emmerson Plc ("Emmerson", "the Company" or "the Group")
Audited Results for the year ended 31 December 2020
Emmerson Plc, focused on developing the low cost, high margin
Khemisset Potash Project ("Khemisset" or "the Project"), is pleased
to announce its audited results for the 12 months ended 31 December
2020. The Group's Annual Report, which includes an unqualified
audit report and audited Financial Statements for the year ended 31
December 2020, will be made available on the Company's website at
www.emmersonplc.com.
Highlights
-- Significant operational, corporate and commercial progress
made towards establishing Africa's first large-scale potash
mine
-- Feasibility Study ("FS") published confirming Khemisset' s
ability to become a low capex, high margin potash mine with
outstanding economic metrics
-- Grant of Mining Licence (post period end) providing the
exclusive right to develop and mine Khemisset ahead of the
anticipated initiation of construction by the end of 2021
-- Socio-economic study completed that demonstrated measurable
and verifiable confirmation of the significant benefits that the
Project will deliver at a local, regional and national level
-- Environmental and Social Impact Assessment completed to IFC standards
-- Conceptual, phased development plan completed post period end
demonstrating major value enhancing opportunities including
significantly reduced up-front capex of US$254.6 million
(pre-contingency) and potential for subsequent phases to be funded
from internal cash flows
-- Appointment of CEO with demonstrable experience in taking
large potash mines from concept through to construction
-- Appointment of new highly experienced Chairman on 27 April
2021 with 20 years of experience in the mining sector, particularly
in the areas of corporate finance and financing strategy
-- Completion of AIM admission on 27 April 2021 and cancellation
of the Company's ordinary shares on the Official List and from
trading on the Main Market, providing Emmerson with a listing on
the world's most successful growth market
-- Raised a total of GBP7.2 million (during and post period end)
in oversubscribed placings to fund the accelerated development of
Khemisset
Graham Clarke, CEO of Emmerson said:
"Never has there been a more important time to develop a
world-class potash mine, and this is what we believe we have in
Khemisset. Many market commentators have pointed to the emergence
of a 'structural bull market' for commodities, and this has already
seen the prices for key agricultural commodities including grains,
oilseeds, sugar and dairy increasing this year and corn prices
above $7 a bushel for the first time in eight years. Even cynics of
this commodities supercycle should realise that potash really is a
uniquely valuable commodity which will not be fuelled purely by
market speculators, but ultimately by global demographics and
population growth.
"Not only are we in the right place at the right time, Emmerson
has assembled the right team to deliver this exceptional asset in
to production. Our operational team in Morocco are exceptionally
talented and diligent, driven by a desire to see this strategic
national asset developed into a mining operation which will set a
benchmark in the industry. Similarly, we boast a team of
individuals in the UK and globally with the corporate and
commercial experience to identify the optimum route to production
and the means to deliver it.
"The remainder of 2021 is set to be punctuated with milestone
events which will materially de-risk our asset and clearly define
Khemisset as a new world-class potash mine."
Statement from Mark Connelly (Chairman July 2018 - April
2021)
The work conducted during 2020 has ensured that Khemisset, our
low capex, high margin potash mine in Morocco, is still on course
to become Africa's first large, commercial potash mine. This is an
incredible achievement and testament to both the quality of our
asset, and the also the dedication and skill of our team at
Emmerson.
2020 began with the selection of the preferred project site
following a comprehensive Options Study. As part of this, we
completed road connection design and costing, which included
c.3.2km of paved roads to be constructed to connect the Project to
the existing highway, with an additional c.9.6km of gravel internal
roads; the total budgeted cost for the construction of these is
c.US$2.0 million including a 15% contingency. Following
confirmation of zero capital cost required at Casablanca Port, the
road connection will be the only pre-production capex required for
the entire logistics solution for Khemisset.
Perhaps the standout news event of the year was the delivery of
our FS in June, which demonstrated that Khemisset can become a
world class, low capital cost, high margin potash mine; this is a
very rare asset in the global fertiliser industry. The economics of
the project are highly compelling; with an IRR of nearly 39% and a
post-tax NPV8 of US$1.4 billion, it is clearly extremely robust in
normal potash market conditions, generating average revenue of over
US$480 million and EBITDA of over US$300 million for the life of
the mine.
The results of the FS provided the catalyst for engagement with
various potential financing groups, across debt, equity, and
non-traditional financing products. Over the last couple of years,
we have engaged with numerous potential funding partners and have
identified several which we believe would make excellent partners
for the Company in the development of Khemisset.
Other advances made during the year included the completion of
the socio-economic study that provided measurable and verifiable
confirmation of the significant benefits that the project will
deliver at a local, regional, and national level. This includes the
creation of 2,385 jobs, tapering into 1,500 permanent positions
when production is underway. With an initial mine life of nearly 20
years, which we expect to extend once in production, these will be
jobs for life. Further outputs from the study highlighted the total
investment over the life of the Project estimated to be US$2.5bn
with the economic impact of the Project increasing the local GDP
per capita by 40%.
We also completed the baseline and all the workstreams required
for Environmental and Social Impact Assessment ('ESIA') for the
Project, which was then submitted to the relevant governmental
bodies for approval. The environmental and social impact of a new
major project is of real importance to any company that concerns
itself with maintaining a record of sustainability, so this was
done to the highest standard recommended by the World Bank. The
ESIA package comes as a capstone to two concurrent phases: an
extensive baseline programme, which commenced in the early stages
of the project development; and the ESIA study, which commenced
earlier in the year under review. We look forward to updating
shareholders on the outcome during the course of 2021.
Looking now to corporate developments, we were well supported by
the markets in a GBP1.72 million fundraising during the period, and
again post period end with a GBP5.5 million raising in March 2021.
This has put us in a very strong position as we look to finalise
the detailed design and engineering work and, ultimately, move
towards construction.
In terms of human capital, a key highlight during the year was
the appointment of Graham Clarke as CEO in July 2020. Graham is a
highly experienced fertiliser industry executive with over 25 years
of experience in underground potash mining and a proven ability to
attract talent and build operating teams with the capability to
deliver large, complex projects in the fertiliser space. Graham's
most recent experience of taking a large, highly complex,
underground mine all the way from a concept through to construction
is truly unique and incredibly important for Emmerson as we
transition from junior explorer into a mine developer.
With Graham's appointment, our previous CEO Hayden Locke moved
into a new role which focusses primarily on the financing
negotiations and commercial aspects of moving Khemisset into
production. This is an area which Hayden is exceptionally
well-versed in and he remains a core member of the Emmerson team,
with Graham responsible for steering the operational and corporate
development of the Company.
Post period end, we appointed James Kelly to the board as
non-executive director, and later as the new Chairman upon my
retirement. In James, Emmerson will have a highly experienced
Chairman who is well qualified to lead the board in this exciting
period as we prepare the project financing. I feel truly honoured
to have served as the Company's Chairman over the past three years,
a period during which Emmerson has emerged as one of the most
exciting pre-production companies listed in London, with a truly
exceptional asset in Khemisset.
In my parting statement as Chairman, I would like to thank the
exceptionally motivated and dedicated management team and Board of
Emmerson for all their hard work and skill during the year and most
importantly, to our shareholders for their continued support during
what was a challenging year for many. I will remain a fervent
supporter of Emmerson and I look forward to celebrating the
milestones the Company reaches over the coming weeks and months in
the lead up to construction.
Statement from James Kelly (Chairman from April 2021)
It gives me great pleasure to provide my inaugural statement as
the new Chairman of Emmerson. Although newly appointed, I have
watched the Emmerson story unfold with great interest over the past
three years. From the acquisition of Khemisset in 2018, a
compelling asset with a JORC compliant resource, to the asset we
have today, a pre-production asset with robust fundamentals proven
in the FS, a Mining Licence secured and ESIA completed; it is clear
that the Emmerson team has delivered an exceptional project to the
market. Now, with anticipated construction in the near future, I am
extremely excited to be part of the Emmerson team as we move into
this, our most defining stage of development.
The first few months of 2021 have set the pace for news flow for
the remainder of the year, with multiple high impact developments,
both operational and corporate, demonstrating how Emmerson is
moving through the gears towards financing, construction and
ultimately production.
In February 2021, the Company was delighted to receive the
Mining Licence for the project from the Moroccan Ministry of
Energy, Mines and the Environment. Importantly, this encompasses
the full resource base allowing simple expansion of the operations
in the future without the requirement to re-permit. This was a
highly significant development for the Company, which followed
months of close collaboration with the Government of Morocco to
ensure that we deliver the optimum mining operation to benefit all
stakeholders.
With this in mind, the recent months have seen the team focus on
multiple additional workstreams aimed at further de-risking the
project and preparing for funding due diligence. These included an
assessment to confirm the opportunities for phased development of
the project aimed at materially reducing the upfront capital cost
with the flexibility around potentially phased development. Post
period end, in April 2021 we announced the completion of a
conceptual phased development plan; results demonstrated major
value enhancing opportunities, including significantly reduced
up-front capex of US$254.6 million (pre-contingency). This phased
development plan shows the inherent optionality in the Khemisset
project providing us with significant flexibility in both the
initial production rate as well as how the operation evolves once
in production. This optionality could prove instrumental in
ensuring Khemisset reaches full production potential whilst
minimising dilution to our existing shareholders by reducing the
upfront capex.
Emmerson's commitment to the project and Morocco is in line the
Government of Morocco's initiatives to invigorate the economy.
Specifically, the development of Khemisset aligns well with the
strategic plan of making Morocco a hub for fertiliser industry,
primarily in the context of Africa. Morocco is already a major
fruit and vegetable supplier, growing produce for many of the
Northern African markets and agriculture now contributes 14.8% to
Morocco's total GDP. This is an area of significant growth, with
vegetable exports increasing by 26% and fruit exports by +54% in
the five years to 2019. Bringing Khemisset into production will
establish Morocco as Africa's largest vertically integrated
fertiliser producer and is clearly of significant strategic as well
as economic importance to the country.
The support that we have received from the Government of
Morocco, from regional regulatory bodies and from local communities
has been of vital importance and really feeds in to the Company's
vision of "doing the right things in the right way". I believe that
the work that the Emmerson team has achieved over the past three
years has established our business as a very solid and
conscientious corporate citizen and I look forward to continuing
this close cooperation with the people and Government of Morocco as
we move forwards into our construction and production phases,
becoming a major regional employer offering long-term stable
employment.
Our development proposition for Khemisset has also resonated
with those outside of Morocco, and we have enjoyed strong support
from the market over the past 18 months. The Company has conducted
two placings since the beginning of 2020, which has brought over
GBP7.2 million to the business and we have welcomed several new
institutional shareholders to the register. Our second placing,
conducted after the period end in March 2021, was announced in
conjunction with our intention to list on AIM. This move to AIM,
which took effect on 27 April, provides Emmerson with access to a
market and environment which is more suited to the Group's current
size and strategy. Indeed, AIM is cited as the world's most
successful growth market and I believe that it is the right
exchange for us to achieve our objectives with Khemisset over the
coming months.
And it is with this time horizon in mind, that I look forward
with such enthusiasm. We are truly on the cusp of delivering a
world-class low capex, high margin potash mine at a time when the
market dynamics are particularly powerful. The combination of a
rapidly increasing world population together with shrinking
available arable land has established that the use of potash in
fertiliser production is vitally important to ensure global food
security. Many market participants expect potash prices to follow
agricultural commodities and continue to rise throughout 2021 and
beyond and Emmerson is ideally placed to benefit from the
opportunities this presents.
I would like to take this opportunity to firstly thank Mark
Connelly, my predecessor for his guidance and counsel thus far, and
to the entire Emmerson team and our partners and advisers for their
determination and resolve to establish Africa's first commercial
potash mine. Finally, my thanks to our new and long-standing
shareholders for their support and vision as we strive to unlock
the full economic and strategic potential of Khemisset for all
stakeholders.
For further information, please visit www.emmersonplc.com , follow
us on Twitter (@emmerson_plc), or contact:
Emmerson Plc
Graham Clarke
Hayden Locke +44 (0) 20 7236 1177
Shore Capital (Nominated Advisor
and Joint Broker)
Toby Gibbs / John More (Corporate
Advisory)
Jerry Keen (Corporate Broking) +44 (0)20 7408 4090
Shard Capital (Joint Broker)
Damon Heath / Isabella Pierre +44 (0) 20 7628 3396
St Brides Partners (Financial PR/IR)
Megan Denison / Susie Geliher +44 (0)20 7236 1177
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014.
DIRECTORS' REPORT FOR YEARED 31 DECEMBER 2020
The Directors present their report and the audited financial
statements for the year ended 31 December 2020.
General information
Emmerson PLC ("the Company"), was incorporated in the Isle of
Man under the Laws with registered number 013301V on 1 March 2016.
All of the Company's Ordinary Shares were admitted to the London
Stock Exchange's Main Market and commenced trading on 15 February
2017.
Emmerson PLC's primary focus is on developing the Khemisset
Potash Project located in Northern Morocco.
Results for the year and dividends
The total comprehensive income attributable to the equity
holders of the Group for the year was a loss of GBP1,424,000 (2019:
loss of GBP1,164,000).
The Company paid no dividend during the year (2019: GBPnil).
Business performance for the year
As detailed in the Chairman's Statement, development of the
Khemisset Potash Project continued during the period, with several
significant milestones achieved.
During the financial year, the Group made a loss per share of
0.22 pence (2019: a loss per share of 0.17 pence per share). Given
the current stage of the Group's exploration project, the Directors
do not consider there to be any other financial key performance
indicators. The Group is well funded; as at 31 December 2020, it
had a GBP1,143,000 cash position. On 26 February 2021, the Company
issued 95,652,174 new ordinary shares at an issue price of 5.75
pence per share raising gross proceeds of GBP5.5 million (note
16).
Principal risks and uncertainties
The Group operates in an uncertain environment and is subject to
a number of risk factors. The Directors have carried out a robust
assessment of the principal risks facing the Group, including those
that threaten its business model, future performance, solvency or
liquidity. They consider that the following are the principal risk
factors that could materially and adversely affect the Group's
future operating results or financial position:
Deterioration in Global economic conditions or in the potash
market in particular
There is a risk that changes in the relevant law and legislation
could have an adverse effect on the Group's future performance,
expected return and or feasibility of the project.
The Group is also exposed to general economic risk, including
changes in the economic outlook in its principal markets and
government changes in industrial, fiscal, monetary or regulatory
policies.
The Board continues monitoring developments in the market in
order to adapt. The management team has wide-ranging expertise in
mineral exploration which, together with a flexible cost structure,
enable the Group to adapt its organisation to changes in
circumstances.
Funding risk
Although the Group has sufficient working capital for at least
12 months from the date of this report, the Group may not be able
to obtain additional financing as and when needed which could
result in a delay or indefinite postponement of exploration and
development activities.
In common with many exploration entities, the Group will need to
raise further funds in order to progress the Group from
pre-construction phase of its business and eventually into
production of revenues.
Dependence on key personnel
The Company has a small management team and the loss of a key
individual could have an adverse effect on the future of the
Group's business. The Group's future success will also depend in
large part upon its ability to attract and retain highly skilled
personnel. There can be no assurance that the Group will be
successful in attracting and retaining such personnel.
The Group seek to create a workplace that attracts, retains and
engages its workforce. Efforts are also made to attract new talent
and skilled people.
Environmental risk
There may also be unforeseen environmental liabilities resulting
from both future or historic exploration or mining activities,
which may be costly to remedy. In addition, potential environmental
liabilities as a result of unfulfilled environmental obligations by
the previous owners may impact the Group. If the Group is unable to
fully remedy an environmental problem, it may be required to stop
or suspend operations or enter into interim compliance measures
pending completion of the required remedy.
Environmental management systems are in place to mitigate
environmental hazard risks. The Group uses advisors with specialist
knowledge in mining and related environmental management for
reducing the impacts of environmental risk.
Estimates of mineral reserves and resources
Mineral resources are estimates and no assurance can be given
that any particular grade or tonnage will be realised or that they
will be converted into ore reserves or will ever qualify as a
commercially mineable (or viable) deposit which can be legally and
economically exploited. As a result of these uncertainties, there
can be no assurance that any potential mineral resources defined by
the Group's exploration programmes will result in profitable
commercial mining operations.
The Directors are confident that they have put in place a strong
management team capable of dealing with the above issues as they
arise.
Corporate Responsibility
We have defined the scope of our Group's responsible business
practices as falling within the following key focus areas:
-- Health and Safety - ensuring the safety and well-being of our staff
-- Environment - managing our environmental impact areas of waste, energy and water
-- Employees - supporting our people to develop and flourish within the business
-- Community - positive interaction with the communities in which we operate
-- Ethical Standards - operating to the highest ethical standards
We remain committed to ensuring these activities become embedded
in how we operate and contribute towards the success of our
business. This includes not only identifying and managing business
risk but exploring opportunities to add value to the business.
Corporate Governance
The statement on corporate governance can be found in the
corporate governance report below. The corporate governance report
forms part of this Directors report and is incorporated into it by
cross reference.
Financial risk management
The Group has exposure to the following risks from its use of
financial instruments:
-- Liquidity risk
-- Market price risk
-- Interest rate risk: cash flow interest rate risk
-- Foreign exchange risk
-- Credit risk
Further details on the financial risks and suitable risk
management system put in place by the management are in note
10.
Events after the reporting period
Details of significant events that have occurred since 31
December 2020 are provided in note 16 to these financial
statements.
Going concern
The financial statements have been prepared on a going concern
basis. The Group has not yet earned revenues and is in the
pre-construction phase of its business. The operations of the Group
are currently financed from funds raised from shareholders. In
common with many pre-production entities, the Group will need to
raise further funds in order to progress the Group from the
feasibility phase into construction and eventually into production
of revenues.
The Group has cash and cash equivalents of GBP1,143,000 at 31
December 2020 and the Directors are of the view this is sufficient
to fund the Group's committed expenditure and maintain good title
to the exploration licences over the next 12 months from the date
of approval of these financial statements, without raising funds in
this period. On 26 February 2021, the Company issued 95,652,174 new
ordinary shares at an issue price of 5.75 pence per share raising
gross proceeds of GBP5.5 million (note 16).
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Thus, they continue to adopt the going concern
basis of accounting in preparing the financial statements.
Director appointments and resignations during the year
The Directors who held office during the year and to the date of
this report were:
Ed McDermott
Hayden Locke
Robert Wrixon
Graham Clarke Appointed 22/12/20
James Kelly Appointed 22/03/21
Mark Connelly Resigned 27/04/21
Directors interests
The Directors' interest in the shares of the Company at the date
of this report were:
Number of Ordinary % of Issued
Share Ordinary Shares
-------------------------------------- ------------------- -----------------
James Kelly (Non-executive Chairman) 600,000 0.07%
Graham Clarke 500,000 0.06%
Hayden Locke 1,726,644 0.21%
Robert Wrixon* 44,233,411 5.36%
Edward McDermott 475,000 0.06%
*Robert Wrixon's interest is held through Good Spirit
International Limited.
Details of the Directors' fees are given in note 4 to the
financial statements. In addition, the Directors were issued with
share options. Share options disclosures are in note 12.
Disclosure of Information to Auditors
So far as the Directors are aware, there is no relevant audit
information of which the Company's auditors are unaware, and each
Director has taken all the steps that he ought to have taken as a
Director in order to make himself aware of any relevant audit
information and to establish that the Company's auditors are aware
of that information.
Reappointment of auditor
The auditors, PKF Littlejohn LLP, have indicated their
willingness to continue in office and a resolution seeking to
reappoint them will be proposed at the Annual General Meeting.
This report was approved by the Board on 13 May 2021 and signed
on its behalf.
James Kelly
Chairman
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations and have elected to prepare the financial statements in
accordance with International Financial Reporting Standards
("IFRSs"), as adopted by the European Union ("EU").
The financial statements are required to give a true and fair
view of the state of affairs of the Group and of the profit or loss
of the Group for that year.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping proper accounting records that are sufficient to
show and explain the Group's transactions and disclose with reasonable accuracy at any time
its financial position. They have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent and detect fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website; the work carried out by the auditors does not
involve the consideration of these matters and, accordingly, the
auditors accept no responsibility for any changes that may have
occurred in the accounts since they were initially presented on the
website. Legislation governing the preparation and dissemination of
financial statements may differ from one jurisdiction to
another.
Each of the Directors, whose names and functions are listed below, confirm that, to the best
of their knowledge:
* the financial statements, prepared in accordance with
International Financial Reporting Standards as
adopted by the EU, give a true and fair view of the
assets, liabilities, financial position and profit or
loss of the Group;
-- the director's report includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties that they face.
By Order of the Board
James Kelly
Chairman
13 May 2021
CORPORATE GOVERNANCE REPORT
Introduction from the Chairman
The Board is committed to good corporate governance and, so far
as appropriate, given the Group's size and the constitution of the
Board, intends to comply with the QCA Guidelines on Corporate
Governance ("QCA Guidelines"). The Board believes this to be the
most appropriate recognised governance code for the Group.
This is a practical, outcome-oriented approach to corporate
governance that is tailored for small and mid-size quoted companies
in the UK and which provides the Group with the framework to help
ensure that a strong level of governance is maintained.
As Chairman, I am responsible for leading an effective board,
fostering a good corporate governance culture, maintaining open
communications with the shareholders and ensuring appropriate
strategic focus and direction for the Group. Notwithstanding the
Board's commitment to applying the QCA Code, we will not seek to
comply with the QCA Code where strict compliance in the future
would be contrary to the primary objective of delivering long-term
value for the Company's shareholders and stakeholders.
However, we do consider that following the QCA Code, and a
framework of sound corporate governance and an ethical culture, is
conducive to long-term value creation for shareholders. All members
of the Board believe strongly in the importance of good corporate
governance to assist in achieving objectives and in accountability
to stakeholders. In the statements that follow, the Board explains
its approach to governance in more detail.
Establish a strategy and business model which promote long-term
value for shareholders
Emmerson's sole current activity is development of the Khemisset
Potash Project located in Northern Morocco. The project has a large
JORC Resource Estimate (2012) of 537Mt @ 9.24% K20 and significant
exploration potential with an accelerated development pathway
targeting a low capex, high margin mine. Khemisset is perfectly
located to capitalise on the expected growth of African fertiliser
consumption whilst also being located on the doorstep of European
markets. This unique positioning means the project will receive a
premium netback price compared to existing potash producers. The
need to feed the world's rapidly increasing population is driving
demand for potash and Emmerson is well placed to benefit from the
opportunities this presents.
Seek to understand and meet shareholder needs and
expectations
The Company is committed to engaging and communicating openly
with its shareholders to ensure that its strategy, business model
and performance are clearly understood. All Board members have
responsibility for shareholder liaison but queries are primarily
delegated to the Company's Advisors in the first instance or the
Company's CEO. Contact details for the Company's advisors are
available on the Company's website.
Copies of the annual and interim reports are sent to all
shareholders and copies can be downloaded from the Company website
https://www.emmersonplc.com ; alternatively, they are available on
request by writing to the Company Secretary at 55 Athol St,
Douglas, Isle of Man, IM1. Other Company information for
shareholders is also available on the website.
The Company also engages with shareholders at its AGM in each
year, which gives investors the opportunity to enter into dialogue
with the Board and for the Board to receive feedback and take
action if and when necessary. The results of the AGM are
subsequently announced via RNS and published on the Company's
website.
Take into account wider stakeholder and social responsibilities
and their implications for long-term success
The Board is aware that engaging with its stakeholders is key
and ultimately promotes the long -term success of Emmerson Plc. The
Group's stakeholders include shareholders, members of staff of
investee companies and of Advisors and other service providers,
suppliers, auditors, lenders, regulators, industry bodies, and the
surrounding communities of where its investments are located.
The Board as a whole are responsible for reviewing and
monitoring the parties contracted to the Company, including their
service terms and conditions. The audit committee supports Board
decisions
by considering and monitoring the risks to the Company.
The Board is regularly updated on wider stakeholder views and
issues concerning the existing projects both formally at Board
meetings and informally through ad hoc updates. The Board
recognises the importance of its social responsibilities concerning
its investment decisions. The Company is committed to continuing
engagement with all stakeholders.
Embed effective risk management, considering both opportunities
and threats, throughout the organisation
The Directors are responsible for maintaining the Company's
systems of controls and risk management in order to safeguard its
assets.
Risk is monitored and assessed by the Board who meet at least
quarterly and the audit committee who will meet at least annually
and are responsible for ensuring that the financial performance of
the Group is properly monitored and reported. This process includes
reviews of annual and interim accounts, results announcements,
internal control systems, procedures and accounting policies.
The senior management team ("Executive Committee") meet on a
regular basis to consider new risks and opportunities presented to
the Group, making recommendations to the Board as appropriate.
The Board receives guidance from FIM Capital Limited, the
administrator and Company Secretary to the Group, covering updates
to relevant legalisation and rules to ensure they remain fully
informed and able to make informed decisions.
Maintain the board as a well- functioning, balanced team led by
the Chair
The Board consists of three executive directors and two
non-executive directors. Details of each Director are given in a
later section of this report.
The Chairman is responsible for leading the Board, ensuring its
effectiveness in all aspects of its role, promoting a culture of
openness of debate and communicating with the Group's members on
behalf of the Board by facilitating the effective contribution of
Non-Executive Directors and ensuring constructive relations between
Executive and Non-Executive Directors. The Chairman also ensures
that Directors receive accurate, timely and clear information. In
doing so, this fosters a positive corporate governance culture
throughout the Group.
The Chief Executive Officer is responsible for managing the
Group's business and operations within the parameters set by the
Board.
The Non-Executive Directors are responsible for bringing
independent judgement to the discussions held by the Board, using
their breadth of experience and understanding of the business.
Their key responsibilities are to constructively challenge and
contribute to strategic proposals, and to monitor performance,
resources, and standards of conduct, compliance and control, whilst
providing support to executive management in developing the
Group.
The Board is satisfied that it has a suitable balance between
independence and knowledge of the business to allow it to discharge
its duties and responsibilities effectively.
The Board will hold at least 4 meetings each year with further
ad hoc meetings held as required. The Directors devote sufficient
time to ensure the Group's affairs are managed as efficiently as
possible.
Board Attendance During the Year
The number of formal scheduled Board meetings held and attended
by Directors during the year were as follows: -
Mark Connelly* 9/1 1
Hayden Locke 1 0 /1 1
Ed McDermott 1 1 /1 1
Rob Wrixon 8 /11
Graham Clarke n il (appointed 24 December
2020)
*Mark Connelly resigned from the board on 27 April 2021. James
Kelly was appointed to the board on 22 March 2021 and was appointed
as Chairman of the Board on 27 April 2021.
Ensure that between them the Directors have the necessary
up-to-date experience, skills and capabilities
The Directors have extensive experience in the mining industry
and a strong track record of value creation. It is a proven Board
and Management Team and it believes it has the correct balance of
skills, reflecting a broad range of commercial and professional
skills across geographies and industries that is necessary to
ensure the Group is equipped to deliver its investment objective.
Additionally, each Director has experience in public markets.
Information about each Director's experience is given below.
James Kelly (Non-executive Chairman)
James Kelly has over 20 years' experience in the mining and
natural resource industry, with extensive experience in corporate
finance, strategy and capital allocation. James is non-executive
chairman and founder of Trident Royalties plc, a growth focused,
diversified mining royalty and streaming company. Prior to founding
Trident, James was a senior member of the Xstrata Plc group
business development team and following the merger with Glencore
Plc, was part of the team which founded Greenstone Resources LP, a
mining private equity fund focused on post-exploration development
assets. James served as an Executive Director of ASX listed Cradle
Resources Limited from May 2016 to July 2017 having been appointed
a Non-Executive Director in February 2016. James is a Fellow of the
Institute of Chartered Accountants of England and Wales and holds a
BA (Hons) from University College London.
James Kelly was appointed to the board on 22 March 2021 and was
appointed as Chairman of the Board on 27 April 2021, replacing Mark
Connelly.
Robert Wrixon (Executive Director)
Led Moroccan Salts Limited since its inception in 2013. Rob has
over 20 years' commercial experience, primarily in the mining
sector, including five years with Xstrata in various strategy
roles, and as MD and CEO of ASX listed Manhattan Corporation
Limited and Haranga Resources Limited. He is a Director and
founding partner of Starboard Global Limited, a natural resource PE
group and holds a PhD in mineral engineering from the University of
California, Berkeley.
Hayden Locke (Executive Director)
An experienced mining executive with 15 years' experience in
mining, private equity and investment banking. Most recently he was
Head of Corporate and Technical Services (Geology, Mining and
Processing) at ASX listed potash developer Highfield Resources.
Prior to this, Hayden was Head of Corporate for ASX listed Papillon
Resources which was sold to B2Gold in 2014 for approximately US$600
million. Hayden studied engineering, commerce and geology.
Edward McDermott (Non-executive Director)
A former investment banker with 15 years' experience in the
management and financing of small companies. Currently a
Non-Executive Director of AIM listed companies Fishing Republic Plc
and FastForward Innovations Ltd. He has previously served as a
Director of AIM listed Stellar Resources Plc and Noricum Gold Ltd.
He is part of the corporate finance team at Optiva Securities
Limited, the Company's joint corporate Broker.
Graham Clarke (CEO and Director)
Graham is a highly experienced potash mining executive with
extensive experience managing large multi-disciplinary teams for
underground fertiliser mines. During his 26 years at Cleveland
Potash, which owned the Boulby Potash Mine in Yorkshire, Graham
held multiple positions from Graduate Trainee through to Director
of Mining and, finally, as Managing Director of ICL UK (the owner
of Cleveland Potash) with full operational responsibility. From
2011 until early 2020, Graham was a key member of the senior
executive team at Sirius Minerals, overseeing all technical aspects
of the development of the Woodsmith Mine, moving it successfully
from concept, through various phases of study and design, into
construction.
Graham Clarke was appointed CEO of the Company in July 2020 and
an executive Director from 24 December 2020.
Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement
All Board appointments have been made after consultation and
detailed due diligence is carried out on all new potential board
candidates. The Board will consider using external advisers to
review and evaluate the effectiveness of the Board and Directors in
future to supplement its own internal evaluation processes.
The Group's Rules require that all Directors are submitted for
election at the AGM following their first appointment to the Board
and at least one third of the Directors are subject to retirement
by rotation on an annual basis to refresh the Board, irrespective
of performance.
Promote a corporate culture that is based on ethical values and
behaviours
The Board is mindful that the tone and culture set by the Board
will impact many aspects of the Group and the way that stakeholders
behave and form views.
The Board has adopted a Bribery and Corruption Policy consistent
with the requirements of the UK Bribery Act 2010 and the Isle of
Man Bribery Act 2013. Compliance with the policy will be regularly
reviewed at Board meetings.
Maintain governance structures and processes that are fit for
purpose and support good decision-making by the board.
A description of each Board member and their experience are
displayed on the website at https://www.emmersonplc.com .
The Board of Directors is responsible for the determination of
the investment decisions of the Company and for its overall
supervision via the investment policy and objectives that it has
set out. The Board is also responsible for the Company's day-to-day
operations, in order to fulfil all their obligations, the Board has
delegated some responsibilities through arrangements with the
Investment Adviser and Administrator.
There is no nomination committee separate to the full Board. The
role of the nomination committee is undertaken by the full
Board.
The Board intends to meet formally at least four times each
year. At each Board meeting the financial performance of the
Company and all other significant matters are reviewed so as to
ensure the Directors maintain overall control and supervision of
the Company's affairs. The Board receives investment reports from
the Asset Manager and Valuation and Portfolio Services Adviser and
Committees.
The Board maintains regular contact with all its service
providers and are kept fully informed of investment and financial
controls and any other matters that should be brought to the
attention of the directors. The Directors also have access where
necessary to independent professional advice at the expense of the
Company.
The Chairman is responsible for leading an effective board,
fostering a good corporate governance culture, maintaining open
communications with the major shareholders and ensuring appropriate
strategic focus and direction.
The Chief Executive Officer has overall responsibility for
managing the day to day operations of the Company and the Board as
a whole is responsible for implementing the Company's strategy.
Committees
Audit Committee
The Audit Committee is a sub-committee of the Board, currently
consisting of James Kelly, Robert Wrixon and Ed McDermott. The
Audit Committee has met at least once since the last Annual General
Meeting ("AGM") and has reviewed the following, where relevant,
with the executive directors and external auditors of the
Group:
-- The audit plans and results of the external auditors'
examination and evaluation of the Group's systems of internal
accounting controls;
-- The Group's financial and operating results and accounting policies;
-- The financial statements of the Group before their submission
to the Directors and external auditors' report on those financial
statements;
-- The quarterly, half-yearly and annual announcements as well
as the related press releases on the results and financial position
of the Group;
-- The co-operation and assistance given by the management to
the Group's external auditors; and
-- The re-appointment of the external auditors of the Group.
The Audit Committee following a review of the qualification,
expertise and resources, effectiveness and independence of the
external auditors recommended to the Board that they be
reappointed.
Remuneration Committee
The Remuneration Committee, consisting of the non-executive
directors, is a sub-committee of the Board and meet at least twice
each year. The salaries, remuneration and other financial benefits
of the key management and the members of the Board of Directors is
determined by the Remuneration Committee having regard to the
performance of individuals and market trends.
Nomination Committee
The Company has not established a nomination committee as it is
satisfied nominations can be considered by the Board.
Communicate how the Group is governed and is performing by
maintaining a dialogue with shareholders and other relevant
stakeholders
The Board welcomes the views of all stakeholders who can contact
the Directors or Company Secretary with any queries they may have.
The Executive Directors and advisers regularly engage with
shareholders.
The Board recognises the importance of maintaining strong
relationships with shareholders, so we understand their views and
are aware of their issues and concerns.
The management team continues to have close dialogue with local
landowners and ensure any concerns are addressed. The management
team has met with the Minister of Mines in Morocco and maintains a
strong working relationship with its office.
The Company communicates with shareholders and other
stakeholders through the Annual Report and Accounts, full-year and
half-year announcements, news announcements, the Annual General
Meeting, and website.
Historical information is available on the website. The Group's
financial reports and Notices of General Meetings can also be found
here https://www.emmersonplc.com/investors/corporate-documents/
.
On behalf of the Board
James Kelly
Chairman
13 May 2021
REPORT OF THE INDEPENT AUDITOR FOR THE YEARED 31 DECEMBER
2020
Opinion
We have audited the group financial statements of Emmerson Plc
(the 'group') for the year ended 31 December 2020 which comprise
the Consolidated Statement of Comprehensive Income, the
Consolidated Statement of Financial Position, the Consolidated
Statement of Changes in Equity, the Consolidated Statement of Cash
Flows and notes to the financial statements, including significant
accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
In our opinion, the financial statements:
-- give a true and fair view of the state of the group's affairs
as at 31 December 2020 and of the group's loss for the year then
ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been prepared in accordance with the requirements of the
Isle of Man Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the group's ability to
continue to adopt the going concern basis of accounting
included:
-- Confirming the group's cash position including verifying
receipt of funds associated with the post year end fund raise;
-- Checking the mathematical accuracy of the spreadsheet used to
model future financial performance;
-- Evaluating the assumptions regarding the use of funds to
develop the Khemisset project and the ability to restrict capital
expenditure, postponement of directors' fees and other means in
order to protect the cash position of the group where necessary;
and
-- Assessing whether management has adequately disclosed the
conditions on the ability of the group to continue as a going
concern in the financial statements.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of
materiality. The quantitative and qualitative thresholds for
materiality determine the scope of our audit and the nature, timing
and extent of our audit procedures. The materiality applied to the
group financial statements was GBP182,000 (2019: GBP150,000), based
on 2% of gross assets, as we believe assets to be the main driver
of the business whilst the group is in the exploration stage and no
revenues are currently being generated. The performance materiality
was GBP109,200 (GBP90,000). For each component in the scope of our
group audit, we allocated a materiality that was less than our
overall group materiality.
We agreed with the audit committee that we would report to the
committee all differences identified during the course of our audit
in excess of GBP9,100 (GBP7,500). We also agreed to report any
other audit misstatements below that threshold that we believe
warranted reporting on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed
the risk of material misstatement in the financial statements. In
particular, we looked at areas involving significant accounting
estimates such as the carrying value of intangible assets and
judgement by the directors and considered future events that are
inherently uncertain. We also addressed the risk of management
override of internal controls, including among other matters
consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
There were two significant components identified; the parent
company and the MSL group which holds the Khemisset project. The
parent company was subject to a full scope audit conducted directly
by the group audit team. The MSL sub-group is located in Morocco
and was audited by a component auditor within the PKF network under
our instruction. The Engagement Partner and group audit team
interacted regularly with the component audit team during all
stages of the audit and was responsible for the scope and direction
of the audit process. In addition, a material but not significant
component was identified and subject to an audit of specified audit
procedures by the group audit team.
This, in conjunction with additional procedures performed, gave
us appropriate evidence for our opinion on the financial
statements.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit Matter How the scope of our audit responded
to the key audit matter
Carrying value and recoverability
of intangible assets (refer
to note 7)
==============================================================
The group has reported intangible We tested the group's exploration
assets of GBP8,142,000 in and the mining licence issued post
its Statement of Financial year end to confirm good title and
Position as at 31 December standing.
2020 which comprise exploration
and evaluation assets. The We reviewed and evaluated the impairment
carrying value and recoverability assessment prepared by management
of these intangible assets in relation to the Khemisset project.
are tested annually for Our procedures included an assessment
impairment. The estimated of the exploration and evaluation
recoverable amount of this project with reference to the criteria
balance is subjective due listed within IFRS 6, to include whether:
to the inherent uncertainty * exploration and evaluation work to date indicates
involved in forecasting that the carrying amount is unlikely to be recovered
and discounting future cash from further development or sale; and
flows, taking into consideration
the stage of the project
as it progresses towards * substantive expenditure on further exploration and
commencement of construction. evaluation is not budgeted or planned.
We obtained and reviewed the independently
prepared reports commissioned in connection
with the progression of the project
including but not limited to the feasibility
study and competent persons report
included in the schedule one announcement
which was issued in connection with
the AIM listing. We also assessed
the qualifications and independence
of the firms and individuals who prepared
those reports.
We evaluated whether the model used
to calculate value in use complies
with the requirements of IAS 36 'Impairment
of Assets', including validating the
key assumptions and inputs applied
and, where applicable, subjecting
the key assumptions to sensitivity
analysis.
We tested directly, and reviewed the
working papers prepared by the component
auditor, in respect of the capitalised
additions in the year for eligibility
in accordance with IFRS 6. We also
reviewed the work performed by the
component auditor in respect of assessing
compliance with the terms and conditions
contained in the exploration licenses.
The Directors' judgements in their
assessment of recoverability are reasonable
and our work did not identify an impairment
to the year-end carrying value.
==============================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the group financial statements does not cover the other
information and we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and,
in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in
relation to which the Isle of Man Companies Act 2006 requires us to
report to you if, in our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements are not in agreement with the accounting records; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- We obtained an understanding of the group and the sector in
which they operate to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through
industry research, application of cumulative audit knowledge and
experience of the sector.
-- We determined the principal laws and regulations relevant to
the group in this regard to be those arising from the IFRS
accounting standards, AIM Rules for Companies and the operating and
environmental terms governing exploration and evaluation
activities.
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the group with those laws and regulations. These procedures
included, but were not limited to specific enquiries of management,
reviewing board minutes and any legal or regulatory compliance
correspondence.
-- We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to
the non-rebuttable presumption of a risk of fraud arising from
management override of controls, whether key accounting estimates
and judgements made by management when auditing significant
accounting estimates. We address these risks by challenging the
assumptions and judgements made by management when auditing
significant accounting estimates.
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing audit
procedures which included, but were not limited to: the testing of
journals and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course of
business, as well as discussions with management where
relevant.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with our engagement letter. Our audit work has been
undertaken so that we might state to the company's members those
matters we are required to state to them in an auditor's report and
for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone, other than the
company and the company's members as a body, for our audit work,
for this report, or for the opinions we have formed.
David Thompson (Engagement Partner) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
13 May 2021
EMMERSON PLC CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEARED 31 DECEMBER 2020
2020 2019
Note GBP'000 GBP'000
Continuing Operations
Administrative expenses 3 (1,586) (985)
Net foreign exchange gain/(loss) 61 (161)
Operating loss (1,525) (1,146)
Finance income 4 14
Loss before tax (1,521) (1,132)
Income tax 5 - -
-------- --------
Loss for the year attributable to equity owners (1,521) (1,132)
-------- --------
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Exchange gain/(loss) on translating foreign operations 97 (32)
Total comprehensive income attributable to equity owners (1,424) (1,164)
-------- --------
Earnings per share (pence)
Basic and diluted 6 (0.22) (0.17)
The notes below are an integral part of these consolidated
financial statements.
EMMERSON PLC CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
2020 2019
Note GBP'000 GBP'000
Non-current assets
Intangible assets 7 8,142 6,172
Property, plant and equipment 12 38
Total non-current assets 8,154 6,210
Current assets
Trade and other receivables 8 314 271
Cash and cash equivalents 1,143 2,071
-------- --------
Total current assets 1,457 2,342
Total assets 9,611 8,552
-------- --------
Current liabilities
Trade and other payables 9 498 414
Total current liabilities 498 414
Net assets 9,113 8,138
-------- --------
Shareholders equity attributable to equity owners
Share capital 11 12,030 10,408
Share reserve 12 1,163 386
Reverse acquisition reserve 1,651 1,651
Retained earnings (5,740) (4,219)
Translation reserve 9 (88)
Total equity 9,113 8,138
-------- --------
These financial statements were approved by the Board on 13 May
2021 and signed on their behalf by
Robert Wrixon Graham Clarke
Director Director
The notes below are an integral part of these consolidated
financial statements.
EMMERSON PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEARED 31 DECEMBER 2020
Reverse
Share Share Acquisition Retained Translation Total
Capital reserve reserve earnings reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 January
2019 8,265 229 1,651 (3,087) (56) 7,002
Loss for the year - - - (1,132) - (1,132)
Other comprehensive loss:
Exchange loss on translating
foreign operations - - - - (32) (32)
--------- --------- ------------- ---------- ------------ ---------
Total comprehensive loss - - - (1,132) (32) (1,164)
--------- --------- ------------- ---------- ------------ ---------
Issue of share options
and warrants - 157 - - - 157
Issue of shares for cash 2,250 - - - - 2,250
Share issue costs (107) - - - - (107)
--------- --------- ------------- ---------- ------------ ---------
Balance as at 31 December
2019 10,408 386 1,651 (4,219) (88) 8,138
--------- --------- ------------- ---------- ------------ ---------
Balance as at 1 January
2020 10,408 386 1,651 (4,219) (88) 8,138
Loss for the year - - - (1,521) - (1,521)
Other comprehensive income:
Exchange loss on translating
foreign operations 97 97
------- ------ ------ -------- ----- --------
Total comprehensive income - - - (1,521) 97 (1,424)
------- ------ ------ -------- ----- --------
Issue of share options
and warrants - 777 - - - 777
Issue of shares for cash 1,731 - - - - 1,731
Share issue costs (109) - - - - (109)
------- ------ ------ -------- ----- --------
Balance as at 31 December
2020 12,030 1,163 1,651 (5,740) 9 9,113
------- ------ ------ -------- ----- --------
i. The Ordinary Shares issued by the Company have a no par value
and all fully paid. Further information on share capital is in note
11 to the financial statements.
ii. The share reserve arises on the grant of share options and
warrants to Directors and employees under the share option plan.
Disclosures of share-based payments to Directors and employees is
in note 12.
iii. The Reverse acquisition reserve arose from the reverse
takeover.
iv. The Retained earnings are cumulative earnings since
incorporation less any dividends declared.
v. The translation reserve comprises translation differences
arising from the translation of financial statements of the Group's
foreign entities into Sterling (GBP).
The notes below are an integral part of these consolidated
financial statements.
EMMERSON PLC CONSOLIDATED STATEMENT OF CASH FLOWS
YEARED 31 DECEMBER 2020
Notes 2019
2020
GBP'000 GBP'000
Cash flows from operating activities
Loss before tax (1,521) (1,132)
Share based payment 12 777 157
Changes in working capital
(Increase)/decrease in trade and other receivables (43) 81
Increase/(decrease) in trade and other payables 84 (26)
Net cash flows used in operating activities (703) (920)
-------- --------
Cash flows from investing activities
Exploration expenditure 7 (1,970) (2,473)
Property, plant and equipment purchase - 2
Net cash flow used in investing activities (1,970) (2,471)
-------- --------
Cash flows from financing activities
Shares issued (net of issue costs) 11 1,622 2,143
Net cash flow generated from financing activities 1,622 2,143
-------- --------
Increase in cash and cash equivalents (1,051) (1,248)
Cash and cash equivalents at beginning of year 2,071 3,351
Foreign exchange on cash and cash equivalents 123 (32)
-------- --------
Cash and cash equivalents at end of year 1,143 2,071
-------- --------
Major non-cash transactions
Significant non-cash transactions in respect of share issues are
disclosed within note 11.
The notes below are an integral part of these consolidated
financial statements.
NOTES TO THE FINANCIAL STATEMENTS FOR YEARED 31 DECEMBER
2020
1. General information
Emmerson Plc (the "Company") is a company incorporated and
domiciled in the Isle of Man, whose shares were admitted to the
Standard Listing segment of the Main market of the London Stock
Exchange on 15 February 2017. On 27 April 2021, the Ordinary Shares
of the Company were admitted to trading on AIM and the listing of
the Company's ordinary shares on the Official List and their
trading on the Main Market were cancelled.
The principal activity of the Group is the exploration,
development and exploitation of a potash development project in
Morocco.
2. Basis of preparation
2.1 General
These financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS and IFRIC
interpretations) ("IFRS") in force at the reporting date, and their
interpretations issued by the International Accounting Standards
Board ("IASB") as adopted for use within the European Union. The
financial statements have been prepared under the historical cost
convention except for the revaluation of certain financial
instruments that are measured at fair value.
The financial statements have been rounded to the GBP'000.
2.2 Functional and presentational currency
The financial information of the Group is presented in UK
Sterling, which is also the functional currency of the Company. The
individual financial statements of each of the Company's wholly
owned subsidiaries are prepared in the currency of the primary
economic environment in which it operates (its functional
currency).
2.3 Basis of consolidation
The Consolidated Financial Statements comprise the financial
statements of the Company, Moroccan Salts Limited and Moroccan
Salts Limited's subsidiaries (the "MSL Group") following the
business combination which took place on 4 June 2018.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control.
Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the
investee.
Generally, there is a presumption that a majority of voting
rights result in control. To support this presumption and when the
Group has less than a majority of the voting or similar rights of
an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee,
including:
-- The contractual arrangement with the other vote holders of the investee;
-- Rights arising from other contractual arrangements; and
-- The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
Assets, liabilities, income and expenses of a subsidiary acquired
or disposed of during the period are included in the Group
Financial Statements from the date the Group gains control until
the date the Group ceases to control the subsidiary.
All intra-group balances, transactions, income and expenses and
profits and losses resulting from intra-group transactions that are
recognised in assets, are eliminated in full.
All the Group's companies have 31 December as their year-end.
Consolidated financial statements are prepared using uniform
accounting policies for like transactions.
2.4 Going concern
The financial statements have been prepared on a going concern
basis. The Group has not yet earned revenues and is in the
pre-construction phase of its business. The operations of the Group
are currently financed from funds raised from shareholders. In
common with many pre-production entities, the Group will need to
raise further funds in order to progress the Group from the
feasibility phase into construction and eventually into production
of revenues.
The Group has cash and cash equivalents of GBP1,143,000 at 31
December 2020 and the Directors are of the view this is sufficient
to fund the Group's committed expenditure and maintain good title
to the exploration licences over the next 12 months from the date
of approval of these financial statements, without raising funds in
this period. On 26 February 2021, the Company issued 95,652,174 new
ordinary shares at an issue price of 5.75 pence per share raising
gross proceeds of GBP5.5 million (note 17).
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Thus, they continue to adopt the going concern
basis of accounting in preparing the financial statements.
2.5 Changes in accounting policies
Standards, interpretations and amendments to published standards
effective from 1 January 2020
There were no new standards or interpretations effective and
adopted for the first time for the year beginning on or after 1
January 2020 that had a significant effect on the Group's or
Company's financial statements. These include:
IFRS 3 - (Amendments) Business combinations - definition of a
business
IAS 1 and IAS 8 (Amendments) 'Presentation of financial
statements' and 'Accounting policies, changes in accounting
estimates and errors' - definition of material
Conceptual Framework - Amendments to references to the
conceptual framework in IFRS Standards
IAS 12 - Income taxes - clarification of treatment of deferred
tax liabilities acquired through business combinations
Standards, interpretations and amendments to published standards
not yet effective
The Group has not early applied the following new and amendments
to IFRSs that have been issued but are not yet effective:
IFRS 17 Insurance Contracts and the related
Amendments(1)
Amendments to IFRS 3 Reference to the Conceptual Framework(2)
Amendments to IFRS 9, IAS Interest Rate Benchmark Reform-Phase
39, 2(4)
IFRS 7, IFRS 4 and IFRS 16
Amendments to IFRS 10 and Sale or Contribution of Assets between
IAS 28 an Investor and
its Associate or Joint Venture(3)
Amendments to IAS 1 Classification of Liabilities as Current
or Non-current(1)
Amendments to IAS 1 and Disclosure of Accounting Policies(1)
IFRS Practice Statement 2
Amendments to IAS 8 Definition of Accounting Estimates(1)
Amendments to IAS 16 Property, Plant and Equipment: Proceeds
before Intended Use(2)
Amendments to IAS 37 Onerous Contracts-Cost of Fulfilling
a Contract(2)
Amendments to IFRS Standards Annual Improvements to IFRS Standards
2018-2020(2)
1 Effective for annual periods beginning on or after 1 January 2023.
2 Effective for annual periods beginning on or after 1 January 2022.
3 Effective for annual periods beginning on or after a date to be determined.
4 Effective for annual periods beginning on or after 1 January 2021.
The Directors anticipate that the application of all new and
amendments to IFRSs will have no material impact on the future
results of the Group or Company in the foreseeable future.
2.6 Segment reporting
A business segment is a group of assets and operations engaged
in providing products or services that are subject to risks and
returns that are different from those of other business segments. A
geographical segment is engaged in providing products or services
within a particular economic environment that are subject to risks
and returns that are different from those of segments operating in
other economic environments.
The Directors are of the opinion that the Group is engaged in a
single segment of business being the exploration activity of potash
in one geographical area, being Morocco.
2.7 Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of on entity and a financial liability or equity
instrument of another.
(a) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, and
subsequently measured at amortised cost, fair value through OCI, or
fair value through profit and loss.
The classification of financial assets at initial recognition
that are debt instruments depends on the financial asset's
contractual cash flow characteristics and the Group's business
model for managing them. The Group initially measures a financial
asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at
amortised cost or fair value through OCI, it needs to give rise to
cash flows that are 'solely payments of principal and interest
(SPPI)' on the principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an instrument
level.
The Group's business model for managing financial assets refers
to how it manages its financial assets in order to generate cash
flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial
assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are
classified in four categories:
-- Financial assets at amortised cost (debt instruments)
-- Financial assets at fair value through OCI with recycling of
cumulative gains and losses (debt instruments)
-- Financial assets designated at fair value through OCI with no
recycling of cumulative gains and losses upon derecognition (equity
instruments)
-- Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group
measures financial assets at amortised cost if both of the
following conditions are met:
-- The financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual
cash flows; and
-- The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured
using the effective interest rate (EIR) method and are subject to
impairment. Interest received is recognised as part of finance
income in the statement of profit or loss and other comprehensive
income. Gains and losses are recognised in profit or loss when the
asset is derecognised, modified or impaired. The Group's financial
assets at amortised cost include trade receivables (not subject to
provisional pricing) and other receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is primarily
derecognised (i.e., removed from the Group's consolidated statement
of financial position) when:
-- The rights to receive cash flows from the asset have expired; or
-- The Group has transferred its rights to receive cash flows
from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under a
'pass-through' arrangement; and either (a) the Group has
transferred substantially all the risks and rewards of the asset,
or (b) the Group has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control
of the asset.
Impairment of financial assets
The Group recognises an allowance for expected credit losses
(ECLs) for all debt instruments not held
For trade receivables (not subject to provisional pricing) and
other receivables due in less than 12 months, the Group applies the
simplified approach in calculating ECLs, as permitted by IFRS 9.
Therefore, the Group does not track changes in credit risk, but
instead, recognises a loss allowance based on the financial asset's
lifetime ECL at each reporting date.
The Group considers a financial asset in default when
contractual payments are 90 days past due. However, in certain
cases, the Group may also consider a financial asset to be in
default when internal or external information indicates that the
Group is unlikely to receive the outstanding contractual amounts in
full before taking into account any credit enhancements held by the
Group.
A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows and usually
occurs when past due for more than one year and not subject to
enforcement activity. At each reporting date, the Group assesses
whether financial assets carried at amortised cost are
credit-impaired. A financial asset is credit-impaired when one or
more events that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred.
(b) Financial liabilities
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. All financial
liabilities are recognised initially at fair value and, in the case
of loans and borrowings and payables, net of directly attributable
transaction costs. The Group's financial liabilities include trade
and other payables and loans.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value
through profit or loss. Financial liabilities are classified as
held for trading if they are incurred for the purpose of
repurchasing in the near term. This category also includes
derivative financial instruments entered into by the Group that are
not designated as hedging instruments in hedge relationships as
defined by IFRS 9. Separated embedded derivatives are also
classified as held for trading unless they are designated as
effective hedging instruments. Gains or losses on liabilities held
for trading are recognised in the statement of profit or loss and
other comprehensive income.
Loans and borrowings and trade and other payables
After initial recognition, interest-bearing loans and borrowings
and trade and other payables are subsequently measured at amortised
cost using the EIR method. Gains and losses are recognised in the
statement of profit or loss and other comprehensive income when the
liabilities are derecognised, as well as through the EIR
amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance costs
in the statement of profit or loss and other comprehensive
income.
This category generally applies to trade and other payables.
Derecognition
A financial liability is derecognised when the associated
obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange
or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in profit or loss and
other comprehensive income.
(c) Financial liabilities
Liabilities within the scope of IFRS 9 are classified as
financial liabilities at fair value through profit and loss or
other liabilities, as appropriate.
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires.
Financial liabilities included in trade and other payables are
recognised initially at fair value and subsequently at amortised
cost.
2.8 Taxation
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules, using
tax rates enacted or substantively enacted by the balance sheet
date.
Deferred tax is recognised on temporary differences arising
between the tax bases of assets and liabilities and their carrying
amounts in the financial statements, determined using tax rates
that are expected to apply when the related deferred tax asset or
liability is realised or settled. Deferred tax assets are
recognised only to the extent that it is probable that future
taxable profit will be available against which the temporary
differences can be utilised.
2.9 Intangible assets - exploration and evaluation expenditure
Exploration expenditure comprises all costs which are directly
attributable to the exploration of a project area.
When it has been established that a mineral deposit has
development potential, all costs (direct and applicable overheads)
incurred in connection with the exploration and development of the
mineral deposits are capitalised until either production commences
or the project is not considered economically viable.
In the event of production commencing, exploration costs are
amortised through administrative expenses, over the expected life
of the mineral reserves on a unit production basis. Other
pre-trading expenses are written off as incurred. For the purposes
of impairment testing, intangible assets are allocated to specific
projects with each licence reviewed annually. Where a project is
abandoned or is considered to be of no further interest, the
related costs are written off.
Intangible assets are not subject to amortisation and are tested
annually for impairment. The recoverability of all exploration
costs, licenses and mineral resources is dependent on the ability
of the Group to obtain necessary financing to complete the
development of reserves and future profitable production, or
proceeds from the disposition thereof.
2.10 Cash and cash equivalents
For the purpose of presentation in the statement of cash flows,
cash and cash equivalents includes cash on hand and deposits held
at call with financial institutions.
2.11 Foreign currencies
Assets and liabilities in foreign currencies are translated into
sterling at the rates of exchange ruling at the Statement of
Financial Position date. Transactions in foreign currencies are
translated into sterling at the rate of exchange ruling at the date
of the transaction. Exchange differences are taken into account in
arriving at the operating result.
On consolidation of a foreign operation, assets and liabilities
are translated at the closing rate at the date of the Statement of
Financial Position, income and expenses for each Statement of
Comprehensive Income presented are translated at average exchange
rates. All resulting exchange differences shall be recognised in
other comprehensive income and accumulated in equity.
2.12 Share-based payment arrangements
The Group operates equity-settled, share-based compensation
plans, under which the entity receives services from employees as
consideration for equity instruments (options) of the Group. The
fair value of employee services received in exchange for the grant
of share options are recognised as an expense. The total expense to
be apportioned over the vesting period is determined by reference
to the fair value of the options granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market performance vesting conditions; and
-- including the impact of any non-vesting conditions.
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied. At the end of each reporting period the Group
revises its estimate of the number of options that are expected to
vest.
The Group recognises the impact of the revision of original
estimates, if any, in profit or loss, with a corresponding
adjustment to equity.
When options are exercised, the Company issues new shares. The
proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
The fair value of goods or services received in exchange for
shares is recognised as an expense and included within
administrative expenses.
2.13 Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements, are disclosed below:
a) Recoverability of intangible assets
The Group tests annually for impairment or more frequently if
there are indications that the intangible assets might be
impaired.
Determining whether the intangible assets are impaired requires
an estimation of the value in use of the cash generating units to
which the intangible assets belong. Where impairment indicators are
present, the Group is required to evaluate the future cash flows
expected to arise from the cash-generating unit and the suitable
discount rate in order to calculate the present value.
The carrying value of Group's exploration and evaluation
intangible assets at 31 December 2020 is GBP8,142,000 (2019:
GBP6,172,000).
b) Share based payments
The Group has made awards of options on its unissued share
capital to certain directors and employees as part of their
remuneration package.
The valuation of these options involved making a number of
critical estimates relating to price volatility, future dividend
yields, expected life of the options and interest rates. These
assumptions are described in more detail in note 12.
The expense charged to the Statement of Comprehensive Income
during the year in relation to share based payments was GBP777,000
(2019: GBP157,000).
c) Going concern
In their assessment of going concern, the Directors have
prepared cash flow forecasts which require a number of judgments to
be made including the Directors ability to access further financing
and to implement cost saving and deferral measures, where
necessary.
The Directors have prepared a cash flow forecast which assumes
that the Group is not able to raise additional funds within the
going concern period and if that was the case, the forecasts
demonstrate that austerity measures can be implemented or
significant project expenditure delayed to reduce the cash outflows
to the minimal contracted and committed expenditure while also
maintaining the Group's licences and permits. Based on their
assessment of the financial position, the Directors have a
reasonable expectation that the Group will be able to continue in
operational existence for the next twelve months and continue to
adopt the going concern basis of accounting in preparing these
financial statements.
3. Expenses by nature
2020 2019
GBP'000 GBP'000
Project costs 16 43
Directors' fees (note 4) 150 162
Share based payments (note
12) 777 157
Travel and accommodation 33 128
Auditors remuneration including
associates 33 41
Professional and consultancy
fees 577 454
Total 1,586 985
---------------------------------- -------- --------
4. Directors' remuneration
Details of Directors' remuneration during the year are as
follows:
2020 2019
GBP'000 GBP'000
Edward McDermott 36 36
Hayden Locke 24 24
Mark Connelly 36 36
Robert Wrixon 54 66
------------------ -------- --------
150 162
------------------ -------- --------
Graham Clarke (appointed on 24 December 2020), Hayden Locke and
Robert Wrixon also received fees for consultancy services which are
disclosed within note 14.
In addition, the Directors received share options. Further
details on share options are in note 14.
Directors' fees which are directly attributable to the
exploration of a project area have been capitalised as intangible
assets.
5. Income tax
2020 2019
GBP'000 GBP'000
Current tax: - -
Tax
Total tax - -
======== ========
Reconciliation of income tax
Loss before tax (1,521) (1,132)
-------- --------
Loss before tax multiplied by domestic tax
rates applicable to losses in the respective
countries (11) (11)
Effects of:
Non-taxation income/(non-deductible expenses) - -
Losses on which no deferred tax is recognised 11 11
Total tax - -
-------- --------
The weighted average applicable tax rate was 1% (2019: 1%). The
Isle of Man has a 0% tax rate and Morocco has a 23% tax rate.
A deferred tax asset has not been recognised in respect of
deductible temporary differences relating to certain losses carried
forward at the year end, as there is insufficient evidence that
taxable profits will be available in the foreseeable future against
which the deductible temporary difference can be utilised.
The unrecognised deferred tax asset for the Group was
approximately GBP36,000 (2019: GBP25,000). The unrecognised
deferred tax asset relating to Moroccan tax losses amounted to
approximately GBP36,000 (2019: GBP25,000).
6. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
2020 2019
Earnings
Loss from continuing operations for the year attributable to the equity holders of
the Company GBP1,521,000 GBP1,132,000
Number of shares
Weighted average number of ordinary shares for the purpose of basic and diluted
earnings per
share
704,759,944 654,484,033
------------------------------------------------------------------------------------- ------------- -------------
Basic and diluted loss per share 0.22 pence 0.17 pence
-------------------------------------------------------------------------------------- ------------- -------------
The potential number of shares which could be issued following
the exercise of options and warrants currently outstanding amounts
to 53,888,332 (see note 12). Dilutive earnings per share equals
basic earnings per share as, due to the losses incurred, there is
no dilutive effect from the existing share options and
warrants.
7. Intangible assets
The intangible assets consist of capitalised exploration and
evaluation expenditure, including the cost of acquiring the one
mining licence and research permits held by the Company's
subsidiaries. The potash properties are currently unproved
reserves. Once properties are classified as proved reserves, they
will be transferred from intangible assets to tangible assets, and
amortised over the life of the area according to the rate of
depletion of the economically recoverable costs.
2020 2019
GBP'000 GBP'000
Cost:
At the beginning of the year 6,172 3,699
Additions 1,970 2,473
Total 8,142 6,172
------------------------------- -------- --------
Intangible assets are reviewed at each reporting date to
determine whether there is objective evidence of impairment. If any
such indication exists, an impairment loss is recognised in profit
or loss as the difference between the asset's carrying amount and
the present value of estimated future cash flows discounted at the
financial asset's original effective interest rate.
The Directors therefore undertook an assessment of the following
areas and circumstances that could indicate the existence of
impairment:
-- The Group's right to explore in an area has expired, or will
expire in the near future without renewal;
-- No further exploration or evaluation is planned or budgeted for;
-- A decision has been taken by the Board to discontinue
exploration and evaluation in an area due to the absence of a
commercial level of reserves; or
-- Sufficient data exists to indicate that the book value will
not be fully recovered from future development and production.
Following their assessment, the Directors concluded that no
impairment charge was necessary for the period ended 31 December
2020.
8. Trade and other receivables
2020 2019
GBP'000 GBP'000
Other receivables 291 236
Prepayments 23 35
Total 314 271
-------------------- -------- --------
9. Trade and other payables
2020 2019
GBP'000 GBP'000
Other payables 166 175
Accruals 332 239
Total 498 414
----------------- -------- --------
10. Financial instruments
Categories of financial instruments
2020 2019
Financial assets measured at amortised GBP'000 GBP'000
cost
Other receivables 291 236
Cash and cash equivalents 1,143 2,071
---------------------------------------------- --------- ---------
1,434 2,307
---------------------------------------------- --------- ---------
Financial liabilities measured at amortised
cost
---------------------------------------------- --------- ---------
Other payables 166 175
---------------------------------------------- --------- ---------
Financial risk management objectives and policies
The Company is exposed through its operations to credit risk and
liquidity risk. In common with all other
businesses, the Company is exposed to risks that arise from its
use of financial instruments. This note
describes the Company's objectives, policies and processes for
managing those risks and the methods
used to measure them. Further quantitative information in
respect of these risks is presented throughout
this financial information.
General objectives, policies and processes
The Directors have overall responsibility for the determination
of the Company's risk management objectives and policies. Further
details regarding these policies are set out below:
Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
The capital structure of the Group consists of issued capital,
reserves and retained earnings. The Directors reviews the capital
structure on a semi-annual basis. As a part of this review, the
Directors consider the cost of capital, the risks associated with
each class of capital and overall capital structure risk management
through the new share issues and share buy-backs as well as the
issue of new debt or the redemption of existing debt.
The management's strategy remained unchanged from 2019.
Market price risk
The development and success of any project of the Group will be
primarily dependent on the future price of potash. Potash prices
are subject to significant fluctuation and are affected by a number
of factors which are beyond the control of the Company. Future
production from the Khemisset Project is dependent on potash prices
that are adequate to make the project economic.
Credit risk
The Company's credit risk arises from cash and cash equivalents
with banks and financial institutions. For banks and financial
institutions, only independently rated parties with minimum rating
"A" are accepted.
Liquidity risk
Liquidity risk arises from the Directors' management of working
capital. It is the risk that the Company will encounter difficulty
in meeting its financial obligations as they fall due.
The Directors' policy is to ensure that the Company will always
have sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, the Directors seek to maintain a
cash balance sufficient to meet expected requirements.
The Directors have prepared cash flow projections on a monthly
basis through to 30 September 2021. At the end of the period under
review, these projections indicated that the Group is expected to
have sufficient liquid resources to meet its obligations under all
reasonably expected circumstances.
Foreign exchange risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the United States Dollar ("US$") and Morocco Dirham
("MAD"). Foreign exchange risk arises from future commercial
transactions, recognised monetary assets and liabilities and net
investments in foreign operations.
Net assets denominated in US$ and MAD at the year-end amounted
to GBP0.82 million and net liability of GBP0.06 million
respectively.
At 31 December 2020, had the exchange rate between the Sterling
and US$ increased or decreased by 5% with all other variables held
constant, the increase or decrease respectively in net assets would
amount to approximately GBP308,000 (2019: GBP80,000).
At 31 December 2020, had the exchange rate between the Sterling
and MAD increased or decreased by 5% with all other variables held
constant, the increase or decrease respectively in net assets would
amount to approximately GBP93,000 (2019: GBP6,000).
The Group does not hedge against foreign exchange movements.
11. Share capital
The Ordinary Shares issued by the Company have a no par value
and all fully paid. Each Ordinary Share carries one vote on a poll
vote. The Company does not have a limited amount of authorised
capital.
Number GBP'000
of shares
As at 31 December 2019 686,132,385 10,408
------------------------ ------------ ----------
Shares issue for cash 40,470,589 1,720
Less share issue costs - (109)
Warrants exercised - 11
------------------------ ------------ --------
As at 31 December 2020 726,602,974 12,030
------------------------ ------------ --------
12. Share based payments
The following is a summary of the share options and warrants
outstanding as at 31 December 2020:
Date of Expire Vesting Exercise No of Options Share Risk Volatility Option
grant date date Price price Free Value
at grant rate
date
----------- ----------- ----------- ----------- --------------- ---------- ------ ----------- ----------
08-May-18 07-May-23 08-May-18 GBP0.0300 7,250,000 GBP0.0225 1.30% 34% GBP0.0098
08-May-18 07-May-23 08-Nov-18 GBP0.0300 7,250,000 GBP0.0225 1.30% 34% GBP0.0098
08-May-18 07-May-23 08-May-19 GBP0.0300 10,750,000 GBP0.0225 1.30% 34% GBP0.0098
08-May-18 07-May-23 08-Nov-19 GBP0.0300 13,250,000 GBP0.0225 1.30% 34% GBP0.0098
26-Mar-19 24-Mar-24 26-Mar-20 GBP0.0350 6,900,000 GBP0.0400 2.10% 68% GBP0.0242
07-Aug-19 05-Aug-24 07-Aug-19 GBP0.0500 1,500,000 GBP0.0375 2.10% 58% GBP0.0192
01-Aug-20 31-Jul-25 01-Aug-21 GBP0.0010 25,333,333 GBP0.0435 1.10% 71% GBP0.0219
01-Aug-20 31-Jul-25 01-Aug-22 GBP0.0010 7,333,333 GBP0.0435 1.10% 71% GBP0.0219
01-Aug-20 31-Jul-25 01-Aug-23 GBP0.0010 3,333,334 GBP0.0435 1.10% 71% GBP0.0219
01-Aug-20 31-Jul-25 01-Aug-20 GBP0.0010 19,000,000 GBP0.0435 1.10% 71% GBP0.0219
101,900,000
---------------
Date of Expire Vesting Exercise No of Warrants Share Risk Volatility Warrant
grant date date Price price Free Value
at grant rate
date
----------- ----------- ----------- ----------- --------------- ---------- ------ ----------- ----------
04-Jun-18 03-Jun-21 04-Jun-18 GBP0.0300 722,666 GBP0.0225 1% 34% GBP0.0070
04-Jun-18 03-Jun-23 04-Jun-18 GBP0.0300 333,333 GBP0.0225 1% 34% GBP0.0089
04-Jun-18 08-May-21 04-Jun-18 GBP0.0300 10,000,000 GBP0.0225 1% 34% GBP0.0070
11,055,999
---------------
Total outstanding at 31 December
2020 112,955,999
===============
During the year nil share options expired (2019: nil) and nil
were exercised (2019: nil).
During the year 333,333 warrants expired (2019: nil) and 389,333
warrants were exercised (2019: nil).
The weighted average remaining contractual life of the options
and warrants at year-end is 3.3 years.
The options and warrants issued were valued using the
Black-Scholes valuation method and the assumptions used are
detailed above. The expected future volatility has been determined
by reference to the historical volatility.
The total share based payment recognised in the Statement of
Changes in Equity during the year was GBP777,000 (2019:
GBP157,000).
The Group operates equity-settled, share-based compensation
plans, under which the entity receives services from Directors and
employees as consideration for equity instruments (options) of the
Group.
There are 101,900,000 options (2019: 42,500,000 options) at the
year-end that are held by the current Directors and consultants.
Vesting of the options is subject to the option holder providing
continuous service during the vesting period and there are no other
performance conditions attached to the options.
Number issued Expiry of
option year
Share options
Edward McDermott (director) 11,000,000 5 years
Graham Clarke (director) 17,500,000 5 years
Hayden Locke (director) 22,000,000 5 years
Mark Connelly (director) 8,000,000 5 years
Robert Wrixon (director) 11,000,000 5 years
Consultants and other 32,400,000 5 years
----------------------------- -------------- ------------
Total 101,900,000
----------------------------- -------------- ------------
13. Future rental payments
The commitments arising from operating leases are largely rental
payments for buildings. The future minimum lease payments
(payables) under non-cancellable operating leases are:
2020 2019
GBP'000 GBP'000
Within one year 15 14
More than one year - -
-------------------- -------- --------
As at end of year 15 14
--------------------- -------- --------
14. Related party transactions
Directors consultancy fees
Hayden Locke is a Director of the Company and is a director of
Benson Capital Limited, which provide consulting services to the
Company. During the year, Benson Capital Limited received total
fees of GBP 246,000 (2019: GBP378,000). The amount outstanding as
at year-end is GBP83,500 (2019: GBP 103,416).
Robert Wrixon is a Director of the Company and also provides
consulting services to the Company. During the year, Robert Wrixon
received fees of GBP84,000 (2019: GBP84,000). The amount
outstanding as at year-end is GBPnil (2019: GBP nil).
Graham Clarke is a Director of the Company and is a director of
GCUK Consulting Limited, which provide consulting services to the
Company. During the year, GCUK Consulting Limited received total
fees of GBP 170,000 (2019: GBP nil). The amount outstanding as at
year-end is GBP70,000 (2019: GBP nil).
Details of directors' remuneration during the year are given in
note 4.
Other key management personnel
Phil Cleggett is the only key management personnel other than
the Directors. Fees of GBP170,000 (2019: GBP190,000) were paid
during the year to Bremer Consulting Pty Ltd, a company Phil
Cleggett controls and the amount outstanding as at year-end is
GBP60,000 (2019: GBP 45,500).
There are no other related party transactions.
15. Ultimate controlling party
The Directors consider that there is no controlling or ultimate
controlling party of the Company.
16. Events after the reporting date
On 19 January 2021, the Company received gross proceeds of
GBP11,649.99 from the exercise of 389,333 ordinary shares of no par
value at a price of 3 pence per share.
On 9 February 2021, the Company was granted the mining licence
for its 100% owned Khemisset Potash Project from the Moroccan
Ministry of Energy, Mines and the Environment.
On 26 February 2021, the Company issued 95,652,174 new ordinary
shares of no par value each at an issue price of 5.75 pence per
Placing Share. Total gross proceeds were GBP5.5 million.
On 22 March 2021, the Company appointed James Kelly to the board
of directors.
On 24 March 2021, the Company issued 600,000 new Ordinary Shares
to James Kelly at a price of 5.65p each.
On 27 April 2021, the Ordinary Shares of the Company were
admitted to trading on AIM and the listing of the Company's
ordinary shares on the Official List and their trading on the Main
Market were cancelled.
17. Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 17 of UK
MAR until the release of this announcement.
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END
FR EQLFFFELBBBQ
(END) Dow Jones Newswires
May 17, 2021 02:00 ET (06:00 GMT)
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