Last checked at 16 Jun 2011 11:05
Athol Gold Limited 16 June 2011(formerly Hameldon Resources Limited.)
Final Results
For the year ended 31 December 2010
Dear Shareholders,
I would like to introduce myself as your new Chairman and am pleased to announce the results of your Company for the year ended 31 December 2010 and other news. As most of the events mentioned occurred prior to my joining the board, I will provide an overview for 2010 and then give a guide to what we expect for 2011.
OVERVIEW
For the first nine months of the year the directors continued their search for suitable investment opportunities in the natural resources sector. Then in October 2010 the board decided to bring in a new management team and appointed Tom Winnifrith, manager of the SF t1ps Smaller Companies Gold Fund, as the Company's Chief Investment Officer with a mandate to invest in the shares of principally gold and precious metal companies quoted on stock exchanges in the UK, Canada and Australia, and at the same time the Gold Fund participated in a £500,000 fund raising by the Company. Then in November the Company raised an additional £670,000 through a private placing.
The Company's first investment was in Ascot Mining Plc ("Ascot ") via a subscription for £430,000 of convertible loan stock with attached warrants. Ascot Mining has a focus on gold production in Costa Rica, its flagship asset being the Chassoul Gold Mine, where gold production is targeted to reach 1,200 ounces per month in 2011. The market value of Athol's investment in Ascot at the year-end was £1.7 million.
FINANCIAL STATEMENTS
During the year Athol's net assets have grown from £318,000 to £2,512,000, and the net asset value per share has gone up by 278% from 0.23p to 0.64p. After allowing for the performance related investment management charge of £236,000 there has been a small reduction in overhead costs from £258,000 in 2009 to £247,000 for 2010. We expect there to be a much greater reduction in overhead costs in 2011.
PROSPECTS FOR 2011
Our largest investment remains Ascot Mining Plc. It continues to make progress both operationally and with its proposed move from Plus to AIM, which we believe will result in a material re-rating of its shares.
In February the Company made its second largest investment to date acting as a cornerstone investor in a £1.1 million placing by Ariana Resources Plc at 4.75p (each share coming with one warrant at 4.75p). Ariana is just over a year away from production and needs no further equity funding, so we are extremely optimistic about its prospects.
We remain positive about the outlook for gold prices, gold equities and our portfolio in particular. In addition to our two largest holdings, Ascot and Ariana, a number of our other investments are also entering exciting phases in their development. So far in 2011 the gold price has held up well but gold equities have performed poorly. However, as the gold price rises further and as M & A activity in the sector picks up we expect a substantial re-rating of mid cap gold equities which will inevitably boost your company's net asset value.
Jennifer Allsop, Chairman
www.atholgold.com
2010 | 2009 | ||
Notes | £'000 | £'000 | |
Continuing operations: | |||
Net gain on disposal of investments | 23 | - | |
Change in fair value of investments | 1,525 | - | |
Total income | 1,548 | - | |
Operating expenses | (483) | (258) | |
Operating profit | 3 | 1,065 | (258) |
Finance cost | (2) | - | |
Profit/(loss) before taxation | 1,063 | (258) | |
Taxation expense | 5 | - | - |
Profit/(loss) from continuing operations | 1,063 | (258) | |
Discontinued Operations: | |||
(Loss) from discontinued operations | 6 | - | (16,770) |
Profit/(loss) for the year and total comprehensive income, attributable to owners of the Company | 1,063 | (17,028) | |
Earnings/(loss) per share attributable to owners of the Company during the year |
7 |
pence |
pence |
Basic: | |||
Continuing operations | 0.62 | (0.19) | |
Discontinued operations | - | (12.20) | |
Total | 0.62 | (12.39) | |
Diluted: | |||
Continuing operations | 0.56 | (0.19) | |
Discontinued operations | - | (12.20) | |
Total | 0.56 | (12.39) |
2010 | 2009 | ||
Notes | £'000 | £'000 | |
CURRENT ASSETS | |||
Financial assets | 8 | 2,869 | - |
Trade and other receivables | 9 | 28 | 16 |
Cash and cash equivalents | 42 | 462 | |
2,939 | 478 | ||
CURRENT LIABILITIES | |||
Trade and other payables | 10 | 290 | 160 |
290 | 160 | ||
NET CURRENT ASSETS | 2,649 | 318 | |
NON-CURRENT LIABILITIES | |||
Convertible unsecured loan notes | 11 | 137 | - |
137 | - | ||
NET ASSETS | 2,512 | 318 | |
EQUITY | |||
| Share capital | 12 | 981 | 343 |
| Share premium | 2,838 | 2,391 | |
| Loan note equity reserve | 11 | 45 | - |
| Capital reserve | 15,736 | 15,736 | |
Retained earnings | (17,088) | (18,152) | |
Equity attributable to owners of the Company and total equity | 2,512 | 318 |
Share capital | Share premium | Loan note reserve | Capital reserve | Accumulated losses | Total equity | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
At 1 January 2009 | 343 | 2,391 | - | 15,736 | (1,174) | 17,296 |
Loss for the year | - | - | - | - | (17,028) | (17,028) |
Total comprehensive income for the year | - | - | - | - | (17,028) | (17,028) |
Share based payments | - | - | - | - | 50 | 50 |
At 31 December 2009 | 343 | 2,391 | - | 15,736 | (18,152) | 318 |
Profit for the year | - | - | - | - | 1,063 | 1,063 |
Total comprehensive income for the year | - | - | - | - | 1,063 | 1,063 |
Share based payments | - | - | - | - | 1 | 1 |
Issue of loan notes | - | - | 45 | - | - | 45 |
Share issues | 638 | 505 | - | - | - | 1,143 |
Share issue expenses | - | (58) | - | - | - | (58) |
At 31 December 2010 | 981 | 2,838 | 45 | 15,736 | (17,088) | 2,512 |
2010 | 2009 | ||
£'000 | £'000 | ||
OPERATING ACTIVITIES | |||
Continuing operations: | |||
Profit/(Loss) before taxation | 1,063 | (258) | |
Adjustments for: | |||
Share based payment charge | 1 | 50 | |
Profit on disposal of trading investments | (23) | - | |
Fair value gain on trading investments | (1,525) | - | |
Finance costs | 2 | ||
Operating cashflow before working capital changes | (482) | (208) | |
(Decrease) in trade and other receivables | (12) | (2) | |
Increase/(decrease) in trade and other payables | 130 | (339) | |
Net cash outflow from operating activities from continuing operations | (364) | (549) | |
Discontinued operations: | |||
Net cash flow from operating activities from discontinued operations | - | - | |
Net cash outflow from operating activities | (364) | (549) | |
INVESTING ACTIVITIES | |||
Continuing operations: | |||
Purchases of investments | (1,548) | - | |
Disposals of investments | 227 | - | |
Net cash outflow from investing activities from continuing operations | (1,321) | - | |
Discontinued operations: | |||
Net cash inflow from investing activities from discontinued operations | - | 1,006 | |
Net cash (outflow)/inflow from investing activities | (1,321) | 1,006 | |
FINANCING ACTIVITIES | |||
Continuing operations: | |||
Proceeds from share issues | 1,143 | - | |
Share issue expenses | (58) | - | |
Proceeds from issue of convertible loan notes | 180 | - | |
Net cash inflow from financing activities from continuing operations | 1,265 | - | |
Net (decrease)/increase in cash and cash equivalents | (420) | 457 | |
Cash and cash equivalents as at 1 January | 462 | 5 | |
Cash and cash equivalents as at 31 December | 42 | 462 |
1 | GENERAL INFORMATION |
The Company was incorporated as a Corporation in the Cayman Islands which does not prescribe the adoption of any particular accounting framework. The Board has therefore adopted International Financial Reporting Standards as adopted by the European Union (IFRSs). The Company's shares are listed on the AIM market of the London Stock Exchange.
The Company is an investment company, investing in natural resources, minerals, metals, and oil and gas projects. | |
The principal accounting policies of the Company, which are consistent with those applied in the 2009 financial statements are set out in the annual report and financial statements. | |
GOING CONCERN The Directors have prepared cash flow forecasts through to 30 June 2012 which assume no significant investment activity is undertaken unless sufficient funding is in place to undertake the investment activity. The expenses of the Company's continuing operations are minimal and the cash flow forecasts demonstrate that the Company is able to meet these liabilities as they fall due. On this basis, the Directors have a reasonable expectation that the Company has adequate resources to continue operating for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the Company's financial statements. |
2 | OPERATING PROFIT | ||
2010 | 2009 | ||
£'000 | £'000 | ||
Profit/(loss) from operations is arrived at after charging/(crediting): | |||
Investment management fee | 236 | - | |
Foreign exchange losses | - | 29 | |
Auditors' remuneration: | |||
- fees payable to the Company's auditors and its associates for the audit of the Company's financial statements |
15 |
15 | |
3 | TAXATION |
No provision has been made in respect of current taxation or deferred taxation as the Company is domiciled in the Cayman Islands and no corporation tax is applicable,. |
4 | EARNINGS PER SHARE | |||
The basic and diluted earnings per share is calculated by dividing the profit/(loss) attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year. | ||||
2010 | 2009 | |||
£'000 | £'000 | |||
Profit/(loss) attributable to owners of the Company | ||||
- Continuing operations | 1,063 | (258) | ||
- Discontinued operations | - | (16,770) | ||
1,063 | (17,028) | |||
2010 | 2009 | |||
Weighted average number of shares for calculating basic earnings per share |
171,156,251 |
137,401,194 | ||
Weighted average number of shares for calculating fully diluted earnings per share | 190,070,885 | 137,401,194 | ||
2010 | 2009 | |||
pence | pence | |||
Basic earnings/(loss) per share | ||||
- Continuing operations | 0.62 | (0.19) | ||
- Discontinued operations | - | (12.20) | ||
0.62 | (12.39) | |||
Fully diluted earnings/(loss) per share | ||||
- Continuing operations | 0.56 | (0.19) | ||
- Discontinued operations | - | (12.20) | ||
0.56 | (12.39) |
The diluted loss per share for 2009 was the same as the basic loss per share as the effect of exercise of the outstanding share options, which were cancelled in October 2009, was anti-dilutive.
5 | FINANCIAL ASSETS | ||
2010 | 2009 | ||
£'000 | £'000 | ||
Level 1 - Quoted investments: | |||
At beginning of year | - | - | |
Cost of share purchases | 1,498 | - | |
Proceeds of share disposals | (227) | - | |
Profit on disposal of shares | 14 | - | |
Fair value adjustment | 1,534 | - | |
At end of year | 2,819 | - | |
Level 3 - Unquoted investments: | |||
At beginning of year | - | - | |
Cost of share purchases | 50 | - | |
At end of year | 50 | - | |
Total financial assets at end of year | 2,869 | - | |
The Company has adopted fair value measurements using the IFRS 7 fair value hierarchy Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows: Level 1 - valued using quoted prices in active markets for identical assets Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included in Level 1. Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market criteria. | |||
6 | CONVERTIBLE UNSECURED LOAN NOTES | ||
The convertible loan notes were issued in October. They are zero coupon and unsecured. Unless previously purchased, redeemed or converted they are redeemable at their principal amount on 31 October 2015. The net proceeds from the issue of the loan notes have been split between the liability element and an equity component, representing the fair value of the embedded option to convert the liability into equity of the Company as follows: | |||
2010 | 2009 | ||
£'000 | £'000 | ||
Nominal value of convertible loan notes issued | 180 | - | |
Equity component | (45) | - | |
135 | - | ||
Interest charged | 2 | - | |
Liability component at 31 December | 137 | - | |
The interest charged during the period is calculated by applying an effective average interest rate of 10% to the liability component for the period since the loan notes were issued. The Directors estimate the fair value of the liability component of the loan notes at 31 December 2010 to be approximately £135,000. This fair value has been calculated by discounting the future cash flows at the market rate of 10%.
| |||
7 | SHARE CAPITAL | ||
Number of ordinary shares | Value £'000 | ||
Authorised (par value of 0.25p): | |||
At 31 December 2009 and 31 December 2010 | 4,000,000,000 | 10,000 | |
Issued and fully paid (par value of 0.25p each): | |||
At 31 December 2009 | 137,401,194 | 343 | |
Shares issued in year | 254,883,672 | 638 | |
At 31 December 2010 | 392,284,866 | 981 | |
On 26 October 2010, 27,480,000 shares were issued at 0.25p each for cash, as a result of a private placing. On 22 November 2010, 15,217,008 shares were issued at 1p each in lieu of directors fees. On 25 November 2010, 80,000,000 shares were issued at 0.25p each as a result of the conversion of loan notes. On 2 December 2010, 111,666,664 shares were issued at 0.6p each for cash as the result of a private placing. Between 17 December and 22 December 2010, a total of 20,520,000 shares were issued at 0.25p each as a result of the conversion of loan notes. | |||
8 | SHARE OPTIONS | ||||
The Company adopted an employee Share Option Scheme in order to incentivise key management and staff. The fair value of options granted was determined using Black-Scholes valuation models. Significant inputs into the calculations were as follows: § 15% volatility based on expected share price (ascertained by reference to historic share prices of the Company for the 12 months prior to the date of grant) § share price of 0.82p per share at date of grant of options § exercise price of 0.82p per share § a risk free interest rate of 3.5% § 0% dividend yield § estimated option life of five years. The Company had 5,487,804 options outstanding at the end of 2010 (2009: Nil). The share based payment charge for the year was £1,000 (2009: £50,000). The options outstanding at the year-end vest on the third anniversary of the date of grant and if not previously exercised lapse on the tenth anniversary of the date of grant. | |||||
The movements on share options and their weighted average exercise price are as follows: | |||||
2010 | 2009 | ||||
Weighted average exercise price | Weighted average exercise price | ||||
Number | (pence) | Number | (pence) | ||
Outstanding at 1 January | - | - | 13,677,084 | 13.32 | |
Granted | 5,487,804 | 0.82 | - | - | |
Lapsed | - | - | - | - | |
Cancelled | - | - | (13,677,084) | (13.32) | |
Outstanding at 31 December | 5,487,804 | 0.82 | - | - | |
9 | POST BALANCE SHEET EVENTS |
Since the balance sheet date the Company has issued further shares as follows: Between 11 January and 18 January 2011, 54,000,000 shares were issued at 0.25p each as a result of the conversion of loan notes Between 31 January and 3 February 2011, 72,996,988 shares were issued for cash at 0.83p each as the result of a private placing. On 21 February 2011, 32,901,200 shares were issued at 1p each as a result of the conversion of loan notes Also on 21 February 2011, 19,156,627 shares were issued at 0.83p each as a result of the conversion of loan notes |
10 | RELATED PARTY TRANSACTIONS |
The chief investment officer and investment manager of the Company are also responsible for the investment management of SF t1ps Smaller Companies Gold Fund and SF t1ps Smaller Companies Growth Fund, which have major shareholdings in the Company, as detailed in the Directors' report. The fee due to t1ps Investment Management in respect of 2010 was £236,000 which has been charged in the Income statement and included in accrued expenses at the year-end. There was no equivalent amount in 2009. In February 2011 £329,012 convertible loan notes (convertible at 1p per share) were issued to t1ps Investment Management (IOM) Ltd in settlement of fees due for the period to 25 January 2011. |
11 | PUBLICATION OF NON-STATUTORY ACCOUNTS |
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The statement of financial position at 31 December 2009 and the statement of comprehensive income, the statement of changes in equity, the statement of cash flows and the associated notes for the year then ended have been extracted from the Company's financial statements upon which the auditor's opinion is unqualified and does not include any statement under section 498 of the Companies Act 2006. The accounts for the year ended 31 December 2010 will be posted to shareholders and laid before the Company at the Annual General Meeting in due course. Copies will also be available from the registered office of the Company and via the Company's website www.atholgold.com.
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