19 Sep 2018 10:20
Herencia Resources plc
("Herencia" or the "Company")
HALF-YEARLY FINANCIAL REPORT
For the six months ended 30 June 2018
Herencia Resources plc is pleased to announce the unaudited half-yearly accounts of the Company and its subsidiaries (the "Group") for the six months ended 30 June 2018.
Directors
The names of directors who held office during or since the end of the interim period and until the date of this report are noted below. Directors were in office for the entire period unless otherwise stated.
Carl Dumbrell Executive CEO (Appointed 30 May 2018)
Peter Reeve Non-Executive Chairman (Resigned 20 June 2018)
Jeffery Williams Non- Executive Director
Our focus is to
· Use our available capital resources to fully explore the Company's copper projects in Chile;
· Identify new exploration projects in South America;
· Recapitalise the company;
· Review our current supplier and terms of business;
· Turn around the company's share price.
Working Capital Position
As announced on 11 July 2018 the funding provided at the time under the convertible note facility gave the Company sufficient funds to trade through to approximately the end of September 2018. Due to prudent cash management, the Directors believe that this cash will now provide the Company with sufficient funds through to the end of October 2018. The Company has a number of options which it is currently exploring, and further announcements will be made in due course as appropriate, however the Company's working capital position continues to be severely constrained.
We thank shareholders for their ongoing support and welcome any questions they may have.
Carl Dumbrell
Executive CEO
19 September 2018
Please refer to the project announcements at the Company's website (www.herenciaresources.com) for further information on the Company operations.
For further information please contact:
Carl Dumbrell +61 402 277 282
Jeff Williams +61 418 594 324
Katy Mitchell, WH Ireland Limited +44 161 832 2174
Camilla Horsfall, Blytheweigh (PR) +44 20 7138 3204
CONSOLIDATED STATEMENTS OF COMPRHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2018
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| 6 months ended 30 June | 6 months ended 30 June | 12 months ended 31 December | ||
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| 2018 | 2017 | 2017 | ||
| Notes | (unaudited) | (unaudited) | (audited) | ||
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| £ | £ | £ | ||
Revenue |
| 4 | - | - | ||
Cost of sales
|
| - | - | - | ||
Gross profit
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| - | - | - | ||
Administration expenses Interest expense |
| (424,275) | (145,208) | (620,570) (107,402) | ||
Impairment of goodwill |
| - | - | - | ||
Foreign exchange gains/(losses)
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| - | 12,524 | (85.032) | ||
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Operating profit/(loss) |
| (424,271) | (132,684) | (813,004) | ||
Finance revenue (expense)
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| - | (95,913) | 184,469 | ||
Income/(loss) before tax
|
| (424,271) | (228,597) | (628,535) | ||
Income tax expense |
| - | - | - | ||
Income/(loss) for the period
|
| (424,271) | (228,597) | (628,535) | ||
Discontinued operations |
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Loss from discontinued operations, net of tax |
| - | - | - | ||
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Total loss |
| (424,271) | (228,597) | (628,535) | ||
Other comprehensive income/(loss) |
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Exchange differences on translating foreign operations |
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2,372 |
(42,951) |
(15,168) | ||
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Other comprehensive income/(loss), net of tax |
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2,372 |
(42,951) |
(15,168) | ||
Total comprehensive income/(loss) for the period, net of tax |
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(421,899) |
(271,548) |
(643,703) | ||
Income/(loss) attributable to: |
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Equity holders of the Company |
| (421,899) | (206,879) | (643,703) | ||
Non-controlling interests |
| - | (21,718) | - | ||
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|
(421,899) |
(228,597) |
(643,703) | ||
Total comprehensive income/(loss) attributable to: |
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Equity holders of the Company |
| (421,899) | (240,864) | (643,703) | ||
Non-controlling interests |
| - | (30,684) | - | ||
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|
(421,899) |
(271,548) |
(643,703) | ||
Income/(loss) per share Income/(loss) per ordinary share-basic and diluted | 2 | (0.004)p | (0.04)p |
(0.009)p | ||
The results shown above relate entirely to continuing operations.
STATEMENTS OF FINANCIAL POSITION
AT 30 JUNE 2018
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| 30 June | 30 June | 31 December | |
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| 2018 | 2017 | 2017 | |
| Notes | (unaudited) | (unaudited) | (audited) | |
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| £ | £ | £ | |
ASSETS |
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Non-current assets |
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Intangible assets and goodwill | 4 | 5,367,189 | 4,187,276 | 5,367,189 | |
Property, plant and equipment | 5 | 16,693 | 10,412 | 16,762 | |
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| 5,383,882 | 4,197,688 | 5,383,951 | |
Current assets |
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Cash and cash equivalents |
| 155,060 | 598,933 | 233,433 | |
Trade and other receivables |
| 52,537 | 186,526 | 149,705 | |
Other assets |
| - | 696 | 721 | |
|
| 207,597 | 786,155 | 383,859 | |
Total assets |
| 5,591,479 | 4,983,843 | 5,767,810 | |
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LIABILITIES
Non-current liabilities |
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Loans and borrowings | 8 | 525,466 | 256,972 | 529,501 | |
Vendor obligations |
| 875,251 | - | 875,249 | |
|
| 1,400,717 | 256,972 | 1,404,750 | |
Current liabilities |
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| |
Trade and other payables |
| 733,988 | 1,158,507 | 985,549 | |
Provisions | 7 | 48,990 | - | 53,526 | |
Loans and borrowings | 8 | 397,149 | 496,086 | 294,603 | |
|
| 1,183,127 | 1,654,593 | 1,333,678 | |
Total liabilities |
| 2,580,844 | 1,911,565 | 2,738,428 | |
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Net Assets |
| 3,010,635 | 3,072,278 | 3,029,382 | |
EQUITY
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Share capital | 10 | 5,208,945 | 4,555,591 | 4,801,049 | |
Share premium | 10 | 24,270,643 | 24,154,645 | 24,270,643 | |
Share based payments reserve |
| 29,150 | 761,360 | 29,150 | |
Other reserves |
| 117,257 | 55,480 | 117,257 | |
Translation reserve |
| (368,894) | (387,711) | (368,894) | |
Retained losses |
| (26,246,466) | (26,159,527) | (25,819,823) | |
Capital and reserves attributable to equity holders |
| 3,010,635 | 2,979,838 | 3,029,382 | |
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Minority interests in equity | 9 | - | 92,440 | - | |
Total equity and reserves |
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3,010,635 |
3,072,278 | 3,029,382 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2018
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| 6 months ended 30 June | 6 months ended 30 June | 12 months ended 31 December |
| Notes | 2018 | 2017 | 2017 |
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| (unaudited) | (unaudited) | (audited) |
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| £ | £ | £
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Net cash outflow from operating activities |
| (571,716) | (267,827) | (902,196) |
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Cash flows from investing activities |
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Interest received |
| 4 | - | - |
Net funds used for investing in exploration | 4 | (423,177) | (171,195) | (330,836) |
Net cash used by investing activities |
|
(423,177) |
(171,195) |
(330,836) |
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Cash flows from financing activities |
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Proceeds from issue of shares |
| - | 954,513 | 954,511 |
Proceeds from director loans | 8 | - | - | - |
Proceeds from convertible notes | 8 | 918,889 | 77,449 | 495,036 |
Net cash generated from financing activities |
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918,889 |
1,032,962 |
1,449,547 |
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Net decrease in cash and cashequivalents |
| (76,000) | 592,940 | 216.515 |
Cash and cash equivalents at the beginning of the period |
|
233,433 |
16,918 |
16,918 |
Exchange fluctuation |
| (2,372) | (10,925) | - |
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|
Cash and cash equivalents at the end of the period |
|
155,061 |
598,933 |
233,433 |
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CONSOLIDATED STATEMENTS OF CHANGES in EQUITY
FOR THE SIX MONTHS ENDED 30 June 2018
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Share capital £ |
Share premium£ |
Translation reserve £ |
Share-based payments reserve £ |
Other reserves £ |
Retained losses £ |
Total £ |
Minority interest £ |
Totalequity £ |
|
Balance at 1 January 2018 |
4,801,049 |
24,270,643 |
(368,894) |
29,150 |
117,257 |
(25,819,823) |
3,029,382 |
- |
3,029,382 | |
Issue of shares | - | - | - | - | - | - | - | - | - | |
Conversion of convertible notes into shares | 407,896 | - | - | - | - | - | 407,896 | - | 407,896 | |
Total comprehensive income/(loss) for the period | - | - | - | - | - | (426,643) | (426,643) | - | (426,643) | |
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Balance at 30 June 2018 | 5,208,945 | 24,270,643 | (368,894) | 29,150 | 117,257 | (26,246,466) | 3,010,635 | - | 3,010,635 | |
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Balance at 1 January 2017 |
4,304,675 |
23,412,246 |
(353,726) |
761,360 |
46,141 |
(25,952,648) |
2,218,048 |
123,124 |
2,341,172 | |
Issue of shares | 212,114 | 742,399 | - | - | - | - | 954,513 | - | 954,513 | |
Conversion of convertible notes into shares | 38,802 | - | - | - | - | - | 38,802 | - | 38,802 | |
Compound instrument equity component | - | - | - | - | 9,339 | - | 9,339 | - | 9,339 | |
Total comprehensive income/(loss) for the period | - | - | (33,985) | - | - | (206,879) | (240,864) | (30,684) | (271,548) | |
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Balance at 30 June 2017 | 4,555,591 | 24,154,645 | (387,711) | 761,360 | 55,480 | (26,159,527) | 2,979,838 | 92,440 | 3,072,278 | |
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NOTES TO THE UNAUDITED HALF-YEARLY ACCOUNTSFOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018
1. Accounting policies
The condensed half-year accounts have been prepared using policies based on International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board as adopted for use in the EU. The condensed half-year accounts have been prepared using the accounting policies which have been applied in the Group's statutory financial statements for the year ending 31 December 2017.
1.1. Basis of preparation and going concern
Herencia Resources plc ('the Company') is incorporated in England and Wales. The half-yearly accounts for the six months ended 30 June 2018 is unaudited and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.
The half-yearly accounts include unaudited comparative figures for the half year ended 30 June 2017. The comparatives for the year ended 31 December 2017 are not the Company's full statutory accounts for that period but have been extracted from the statutory accounts for that period which have been delivered to the Registrar of Companies.
The financial reports have been prepared using the historical cost convention and are presented in UK pounds sterling. The half-yearly accounts for the six months ended 30 June 2018 has been prepared in accordance with IAS 34 'Interim financial reporting'.
The half-yearly accounts for the six months ended 30 June 2018 has been prepared pursuant to AIM Rule 18, which states "An AIM company must prepare a half-yearly report in respect of the six-month period from the end of the financial period for which financial information has been disclosed in its admission document and at least every subsequent six months thereafter (apart from the final period of six months preceding its accounting reference date for its annual audited accounts)."
At 30 June 2018 the Group had cash balances of £155,060. The Group proposes to conduct further exploration activities at its Chilean projects and accordingly, will need to raise additional funds before the end of 2018 to maintain sufficient cash resources for its working capital and particularly, continue its efforts to reduce outstanding obligations.
The Directors have a reasonable expectation that the Group has adequate access to resources to continue in operational existence for the foreseeable future and continue to meet, as and when they fall due, its planned exploration and development activities and other liabilities for at least the next twelve months from the date of approval of these financial statements. For this reason, the Directors continue to adopt the going concern basis in preparing these financial statements.
However, there can be no guarantee that the required funds will be raised within the necessary timeframe, consequently a material uncertainty exists that may cast doubt on the Group's ability to continue to operate as planned and to be able to meet its commitments and discharge its liabilities in the normal course of business for a period not less than twelve months from the date of this report.
2. Income/(loss) per share
The basic and diluted income/(loss) per ordinary share of 0.004p (30 June 2017: 0.04p and 31 December 2017: (0.009p)for the Group has been calculated by dividing the income/(loss) for the period attributable to equity holders of £421,899 (30 June 2017: £228,597 and 31 December 2017: £628,535).
NOTES TO THE UNAUDITED HALF-YEARLY ACCOUNTSFOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018
3. Segmental information
The activities of the Group are broken down into the operating segments of Mineral Exploration and Central Costs. Segment information by operating segment and by region is as follows:
Segment information by operating segment
| Mineral Exploration | CentralCosts | Total | |||
| £ | £ | £ | |||
6 months ended 30 June 2018 (unaudited) |
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Administration expenses (excluding non-cash items) | (288,725) | (134,481) | (424,206) | |||
Finance revenue/(expense) | - | 4 | 4 | |||
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Non-cash expenditure: |
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Depreciation expense | (69) | - | (69) | |||
Foreign exchange gain/(loss) | - | (2,372) | (2,372) | |||
Segment result | (288,794) | (137,849) | (426,643) | |||
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As at 30 June 2018 |
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Segment assets | 5,367,189 | 226,051 | 5,591,479 | |||
Segment liabilities | (875,251) | (1,705,593) | (2,580,844) | |||
Net assets | 4,491,938 | (1,481,303) | 3,010,635 | |||
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Segment information by operating segment
| Mineral Exploration | CentralCosts | Total |
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| £ | £ | £ |
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6 months ended 30 June 2017 (unaudited) |
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Administration expenses (excluding non-cash items) | (171,376) | 37,668 | (133,708) |
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Finance revenue/(expense) | - | (95,913) | (95,913) |
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Non-cash expenditure: |
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Depreciation expense | (11,500) | - | (11,500) |
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Foreign exchange gain/(loss) | (11,621) | 24,145 | 12,524 |
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Segment result | 194,497 | 34,100 | 228,597 |
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As at 30 June 2017 |
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Segment assets | 4,423,687 | 560,156 | 4,983,843 |
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Segment liabilities | (920,289) | (991,276) | (1,911,565) |
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Net assets | 3,503,398 | (431,120) | 3,072,278 |
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NOTES TO THE UNAUDITED HALF-YEARLY ACCOUNTSFOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018
3. Segmental information (continued)
Segment information by operating segment
| Mineral Exploration | CentralCosts | Total | |||
| £ | £ | £ | |||
12 months ended 31 December 2017 (audited) |
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Administration expenses (excluding non-cash items) | (337,097) | (384,960) | (722,057) | |||
Finance revenue/(expense) | - | 184,469 | 184,469 | |||
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Non-cash expenditure: |
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Depreciation expense | (5,915) | - | (5,915) | |||
Impairment of exploration | - | - | - | |||
Loss on disposal of subsidiary | - | - | - | |||
Foreign exchange gain/(loss) | (72,190) | (12,842) | (85,032) | |||
Segment result | (415,202) | (213,333) | (628,535) | |||
As at 31 December 2017 |
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Segment assets | 5,500,188 | 267,622 | 5,767,810 | |||
Segment liabilities | (1,640,972) | (1,097,456) | (2,738,428) | |||
Net assets | 3,859,216 | (829,834) | 3,029,382 | |||
Segment information by region
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| External Revenue |
| Non-current assets | |||||||||||
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30 June 2018 (unaudited) |
30 June 2017 (unaudited) |
31 December 2017 (audited) |
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30 June 2018 (unaudited) |
30 June 2017 (unaudited) |
31 December 2017 (audited) | |||||||
| £ | £ | £ |
| £ | £ | £ | |||||||
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Chile | - | - | - |
| 5,383,882 | 4,062,445 | 5,383,951 |
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Group | - | - | - |
| 5,383,882 | 4,062,445 | 5,383,951 |
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At the end of the financial period, the Group had not commenced commercial production from its exploration sites and therefore had no turnover in the period.
NOTES TO THE UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018
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4. Intangible assets and goodwill |
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| £ | |||||||
At cost |
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As at 1 January 2018 |
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| 5,367,189 | |||||||
Additions |
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| - | |||||||
At 30 June 2018 |
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| 5,367,189 | |||||||
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Carrying amount As at 30 June 2017 |
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4,187,276 | |||||||
As at 31 December 2017 |
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| 5,367,189 | |||||||
5. Property Plant and equipment |
30 June |
30 June |
31 December |
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| 2018 | 2017 | 2017 |
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| (unaudited) | (unaudited) | (audited) |
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| £ | £ | £ |
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At cost | 60,053 | 106,010 | 60,053 |
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Accumulated depreciation | (43,360) | (94,712) | (43,291) |
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Total property plant and equipment | 16,693 | 11,298 | 16,762 |
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Movements in carrying amounts |
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Balance at the beginning of the period | 16,762 | 22,798 | 22,798 |
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Additions | - | - | - |
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Disposals | - | (11,500) | - |
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Depreciation | (69) |
| (5,915) |
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Assets classified as held for disposal | - | - | - |
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Effects of foreign currency exchange Differences arising during the year |
- |
- |
(121) |
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Balance at the end of the period | 16,693 | 11,298 | 16,762 |
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7. Provisions | 30 June | 30 June | 31 December |
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| 2018 | 2017 | 2017 |
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| (unaudited) | (unaudited) | (audited) |
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| £ | £ | £ |
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Employee benefits |
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Balance at the beginning of the period | 53,526 | 92,692 | 92,692 |
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(Utilised)/arising during the year | (4,524) | (49,053) | 6,388 |
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Effect of foreign currency exchange difference Reclassification of amount due to previous Managing Director of the company to creditors | (12) | 1,839 | (179)
(45,375) |
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Balance at the end of the period | 48,990 | 45,478 | 53,526 |
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Comprising |
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Current | 48,990 | 45,478 | 53,526 |
Non-current | - | - | - |
| 48,990 | 45,478 | 53,526 |
NOTES TO THE UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018
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8. Loans and borrowings |
30 June |
30 June |
31 December | ||||
| 2018 | 2017 | 2017 | ||||
| (unaudited) | (unaudited) | (audited) | ||||
| £ | £ | £ | ||||
Current |
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Convertible notes | - | - | - | ||||
Other loans | 397,149 | 496,086 | 294,603 | ||||
| 397,149 | 496,086 | 294,603 | ||||
Non-current |
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Convertible notes | 525,466 | 256,972 | 486,864 |
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Other loans | - | - | 42,637 |
| |||
| 525,466 | 256,972 | 529,501 |
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Director Loans and Related Party Transactions
No other related party transactions have occurred during the period.
Convertible Note
During the six months ended 30 June 2018, the Company made further drawdowns from the funding arrangements entered with its major shareholders, the Australian Special Opportunity Fund ("Lind Partners") and Oriental Darius Co. Ltd ("Oriental").
On 3 January 2018, Oriental and Lind Partners converted US$300,000 in convertible notes into share capital with the Company issuing 1,047,516,433 fully paid shares.
On 18 January 2018, the Company drew down US$400,000 from Lind Partners and Oriental.
On 3 April 2018, the company drew down US$300,000 from Lind Partners and Oriental.
Full details of the terms and conditions of the Secured Convertible Facilities including the conversion issue price and options are contained in the respective announcements.
9. Minority interest | 30 June | 30 June | 31 December |
| 2018 | 2017 | 2017 |
| (unaudited) | (unaudited) | (audited) |
| £ | £ | £ |
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Called up share capital | - | 123,124 | - |
Accumulated losses | - | (21,718) | - |
Translation reserve | - | (8,966) | - |
| - | 92,440 | - |
NOTES TO THE UNAUDITED HALF-YEARLY FINANCIAL REPORT
FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018
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10. Share capital | 30 June | 30 June | 31 December | |||||
| 2018 | 2017 | 2017 | |||||
| (unaudited) | (unaudited) | (audited) | |||||
| £ | £ | £ | |||||
Allotted, issued and fully paid: |
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10.658,517,793 ordinary shares of £0.01p each and 4,266,609,563 deferred shares of £0.09p each |
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(30 June 2017: 4,266,609,563 ordinary shares and |
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31 December 2017: 9,611,001,360 ordinary shares) | 5,208,945 | 4,555,591 | 4,801,049 | |||||
Movement in share capital during the period comprises: | Number ofOrdinary Shares | Number ofDeferred Shares | ShareCapital | Share Premium |
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|
| £ | £ |
Issued and fully paid As at 1 January 2018 shares
Movement: Convertible note conversion
| 9,611,001,360
1,047,516,046
|
4,266,609,563
-
| 4,801,049
407,896
| 24,270,643
-
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Balances as at 30 June 2018 | 10,658,517,793 | 4,266,609,563 | 5,208,945 | 24,270,643 |
11. Control
No one party is identified as controlling the Company.
12 Subsequent events |
On 11 July 2018, the company drew down US$400,000 from Oriental Darius and Lind Partners.
On 28 August 2018, the company advised the Board granted the issue of 150,000,000 ordinary shares ("New Ordinary Shares") in the Company to Mr. John Madden at a price of 0.03 pence per share. The New Ordinary Shares have been granted in lieu of payment equivalent to £45,000 for accounting work completed my Mr. John Madden over the previous 17 months.
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No other matter or circumstances have arisen since the end of the reporting date and the date of this report which significantly affect the results of the operations of the Company.
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13. Contingent liabilities and capital commitments
There have been no changes to the contingent liabilities capital commitments as disclosed in the most recent annual financial report.