Mon, 19th Aug 2019 07:02
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
19 August 2019
Highlands Natural Resources plc
("Highlands" or the "Company")
Highlands, the London listed natural resources and vertically integrated CBD company, will hold its Annual General Meeting ("AGM") at 10.00 a.m. today at 25 Walbrook, London EC4N 8AF. At the AGM, Robert Price, Executive Chairman and CEO of Highlands, will make the following statement:
"Today's AGM is an opportunity to reflect on a year of transformation for Highlands and to reaffirm some of our expected milestones.
Since its establishment on 1 April this year, our progress at Zoetic has seen us plant hemp indoors and outdoors, commence a seed genetics operation, launch two brands with three websites and online and offline sales. Whilst our oil & gas revenues from our East Denver project remain our largest source of income at present, there is every reason to expect that this will change in the coming months as Zoetic continues to grow.
Accordingly, and in line with the placing that we also announced this morning, the Board has taken the decision to divert all of Highlands' discretionary expenditure to Zoetic. We will maintain our activities in natural resources but our spending commitments here have now been curtailed to essential maintenance of those assets only. In addition, following a review conducted over the summer, the Board has identified a number of mineral leases that we hold that are peripheral to our core activities, including all of our project in Utah. These leases have been allowed to lapse saving approximately $160,000 per annum.
Building a new business, especially one focused on the retail market, inevitably has a cost requirement. Whilst Zoetic is being built up, and until such time as it is self-sustainable, the Board has implemented a number of cost-cutting measures across the Highlands group. These include:
· A reduction of headcount and a freeze on new hires (other than for essential replacements)
· Cancellation of the retention of certain consultants, primarily those who had been assisting us on natural resources projects
· A reduction or sub-let of our office space in Denver in line with a reducing headcount
· Revised spending policies, including capex and business development (other than for Zoetic) across the Highlands group
The Board estimates that the effect of these measures will reduce Highlands' operating expenditure by in excess of $65,000 per month. I also wish to remind shareholders that the Company continues to have access to a bank facility of $500,000 which is at present undrawn.
In addition to the above, following consultation with shareholders, with effect from the current financial year, all director and management remuneration, aside from fixed salaries and contractual benefits, will be directly linked to the achievement of objective financial targets by Highlands. It is our intention to bring the remuneration of our employees in line with the interests of our shareholders.
Going forward, any staff remuneration above fixed contractual entitlements will be primarily achieved by the participation in a new share option scheme, as opposed to cash bonuses. When implemented, this scheme will be vigorously tested against the financial performance of Highlands and specifically our share price. Details will be announced in due course but I want to be clear that no staff awards will be made at a price below 10 pence per share prior to today's placing, being the most recent price at which the Company issued new equity, and, in addition, any awards will only vest if Highlands meets the exceptional performance that we expect of our business. Specifically, all awards will be linked to a meaningful increase in our share price being achieved and sustained. In particular, we will no longer issue any warrants or other instruments to staff that are untested as to performance. Furthermore, I have waived my right to participate in any awards made under the new share option scheme for the next 12 months.
Our recent trading has been dominated by our success at Zoetic. We announced the commencement of UK sales last week and, in the US, our Chill brand is currently available in 44 stores and, based on expressions of interest currently received, we expect to be in at least 60 stores by the end of September. In addition, sales of both Chill and Zoetic have begun at LeafyQuick. To date, Chill has been led by our smokables but vapes and chew pouches will be available for sale in the coming weeks. At East Denver, production of both oil & gas has been temporarily impacted this month by problems that Occidental Petroleum had at its nearby processing plant. These have now been resolved but the effect has been to curtail production during the first half of August as Occidental Petroleum limited how much gas it could accept. Production rates at East Denver have recovered in the last 24 hours but over the previous two weeks had been around 40% of levels achieved in July. Whilst this has been disappointing, it was a temporary slowdown only, is not a reflection on our project and we believe that normal production levels will now be maintained for the remainder of the month.
On other matters, we are making good progress in our exploration of a listing on the OTC and we hope to be in a position to announce a firm intention in that regard shortly.
Overall, the outlook for Highlands will be defined in the near term by Zoetic. In a short space of time, we have developed a vertically integrated CBD business that is now making sales on both sides of the Atlantic. As our placing this morning illustrates, we are now attracting the attention of significant investors. Our strategy in this high growth and fast moving industry is only at the beginning but I am confident that, if we execute with diligence and discipline, we have an extraordinary opportunity to generate meaningful returns for our shareholders."
Highlands Natural Resources plc
Robert Price +1 (0) 303 322 1066
Nick Tulloch +44 (0) 1738 472 029
Cantor Fitzgerald Europe +44 (0) 20 7894 7000
Newgate Communications +44 (0) 20 3757 6880