Mineral & Fin Regulatory News (MAFL)

31 Dec. 2015

31 Dec. 2016

31 Dec. 2017

30 June 2018

CAGR (%)

Working Capital

£918,376

£1,507,360

£2,546,875

£2,623,000

52.4%

Net Asset Value P/S

6.47p

6.25p

7.25p

7.49p

6.0%

IMF - World Economic Outlook (July 2018)

2016

2017

2018 Est.

2019 Est.

World Output

3.2%

3.7%

3.9%

3.9%

Advanced Economies

1.7%

2.4%

2.4%

2.2%

Emerging Markets and Developing Economies

4.4%

4.7%

4.9%

5.1%

Consumer Prices

Advanced Economies

0.8%

1.7%

2.2%

2.2%

Emerging Markets and Developing Economies

4.3%

4.0%

4.4%

4.4%

31/12/15

31/03/16

30/06/16

30/09/16

31/12/16

31/03/17

30/06/17

30/09/17

31/12/17

31/03/18

30/06/18

Op Costs as % of NAV

4.72%

4.06%

4.05%

3.77%

3.88%

1.67%

2.51%

1.76%

1.76%

1.62%

1.21%

18 months to

30 June 2018

12 months to

 31 December 2016

Notes

£'000

£'000

Investment income

2

-

Net losses on disposal of investments

(12)

(169)

Net change in fair value of investments

325

455

315

286

Operating expenses

(260)

(175)

Operating profit

3

55

111

Profit before taxation

55

111

Taxation expense

5

-

-

Profit for the year from continuing operations and total comprehensive income, attributable to owners of the Company

55

111

Profit per share attributable to owners of the Company during the year from continuing and total operations:

6

Pence

Pence

Basic (pence per share)

0.2

0.6

Diluted (pence per share)

0.2

0.6

30 June 2018

31 December 2016

Notes

£'000

£'000

CURRENT ASSETS

Financial assets held at fair value through profit or loss

7

2,269

1,274

Trade and other receivables

8

10

7

Cash and cash equivalents

422

274

2,701

1,555

CURRENT LIABILITIES

Trade and other payables

9

68

50

Convertible unsecured loan notes

10

10

10

78

60

NET CURRENT ASSETS

2,623

1,495

NET ASSETS

2,623

1,495

EQUITY

12

3,095

2,985

5,886

4,934

13

6

6

23

12

15,736

15,736

Retained earnings

(22,123)

(22,178)

Equity attributable to owners of the Company and total equity

2,623

1,495

Share

capital

Share

premium

Share option reserve

Loan note

reserve

Capital

 reserve

Accumulated

losses

Total

equity

£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 1 January 2016

2,885

4,559

12

6

15,736

(22,289)

909

Total comprehensive income for the year

-

-

-

-

-

111

111

Share issues

100

375

-

-

-

-

475

At 31 December 2016

2,985

4,934

12

6

15,736

(22,178)

1,495

Total comprehensive income for the period

-

-

-

-

-

55

55

Share based payment expense

-

-

11

-

-

-

11

Share issues

110

952

-

-

-

-

1,062

At 30 June 2018

3,095

5,886

23

6

15,736

(22,123)

2,623

18 months to

30 June 2018

12 months to

 31 December 2016

£'000

£'000

OPERATING ACTIVITIES

Profit before taxation

55

111

Adjustments for:

Share based payment expense

11

-

Loss on disposal of trading investments

12

169

Fair value (gain)/loss on trading investments

(325)

(455)

Investment income

(2)

-

Operating cash flow before working capital changes

(249)

(175)

(Increase) in trade and other receivables

(3)

(1)

Increase in trade and other payables

18

9

Net cash outflow from operating activities

(234)

(167)

INVESTING ACTIVITIES

Purchase of financial assets

(1,806)

(392)

Disposals of investments

1,124

95

Investment income

2

-

Net cash outflow from investing activities

(680)

(297)

FINANCING ACTIVITIES

Proceeds of share issues

1,062

475

Net cash outflow from financing activities

1,062

475

Net increase in cash and cash equivalents

148

11

Cash and cash equivalents as at 1 January

274

263

Cash and cash equivalents as at 30 June/ 31 December

422

274

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, mainly investing in natural resources, minerals, metals, and oil and gas projects. The registered office of the Company is as detailed in the Company Information on page 2.

These financial statements are prepared in pounds sterling and rounded to the nearest £'000.

2

PRINCIPAL ACCOUNTING POLICIES

BASIS OF PREPARATION

The financial statements have been prepared under the historical cost convention, and in accordance with International Financial Reporting Standards ("IFRS"), and International Financial Reporting Interpretations Committee ("IFRIC") interpretations. All accounting standards and interpretations issued by the International Accounting Standards Board and IFRIC effective for the periods covered by these financial statements have been applied.

CHANGE IN ACCOUNTING REFERENCE DATE

On 15 June 2018, the Directors agreed to extend the accounting year from 31 December 2017 to 30 June 2018. As a result all the 2018 figures in the accounts refer to the 18 month period to 30 June 2018 and the comparative figures refer to the 12 month period to 31 December 2016.

The principal accounting policies of the Company are set out below, and have been consistently applied to all periods.

GOING CONCERN

The Directors have prepared cash flow forecasts through to 31 December 2019 which assumes 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.

KEY ESTIMATES AND ASSUMPTIONS

Estimates and assumptions used in preparing the financial statements are reviewed on an on-going basis and are based on historical experience and various other factors that are believed to be reasonable under the circumstances. The results of these estimates and assumptions form the basis of making judgments about carrying values of assets and liabilities that are not readily apparent from other sources:

SHARE BASED PAYMENTS

The calculation of the fair value of equity-settled share based awards and the resulting charge to the statement of comprehensive income requires assumptions to be made regarding future events and market conditions. These assumptions include the future volatility of the Company's share price. These assumptions are then applied to a recognised valuation model in order to calculate the fair value of the awards.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company holds investments that have been designated as held at fair value through profit or loss on initial recognition. Where practicable the Company determines the fair value of these financial instruments that are not quoted (Level 3) using the most recent bid price at which a transaction has been carried out. These techniques are significantly affected by certain key assumptions, such as market liquidity. Other valuation methodologies such as discounted cash flow analysis assess estimates of future cash flows and it is important to recognize that in that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realized immediately.

STATEMENT OF COMPLIANCE

The financial statements comply with IFRS as adopted by the European Union. The following new and revised Standards and Interpretations have been adopted in the current period by the Company for the first time and do not have a material impact on the Company.

IFRS 5, IFRS 7, IAS 19

Amendments resulting from September 2014 Annual Improvements to IFRSs

IAS 1

Amendments resulting from the disclosure initiative

A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and not early adopted. None of these are expected to have a significant effect on the Company's financial statements.

INVESTMENT INCOME

Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income on an ex-dividend basis. Interest on fixed interest debt securities is recognised using the effective interest rate method.

TAXATION

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable result for the year. All changes to current tax assets or liabilities are recognized as a component of tax expense in the income statement.

Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the consolidated financial statements with their respective tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability, unless the related transaction is a business combination or affects tax or accounting profit. In addition, tax losses available to be carried forward as well as other income tax credits to the Company are assessed for recognition as deferred tax assets.

Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.

Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to equity are charged or credited directly to equity.

FINANCIAL ASSETS

The Company's financial assets comprise investments held for trading, cash and cash equivalents and receivables, and are recognised in the Company's statement of financial position when the Company becomes a party to the contractual provisions of the instrument.

INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

All investments are designated upon initial recognition as held at fair value through profit or loss (FVTPL). Investment transactions are accounted for on a trade date basis. Assets are de-recognised at the trade date of the disposal. Investments are initially measured at fair value plus incidental acquisition costs. Subsequently, they are measured at fair value in accordance with IFRS 9. This is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted. The fair value of the financial instruments in the balance sheet is based on the quoted bid price at the balance sheet date, with no deduction for any estimated future selling cost. Where practicable unquoted investments are valued by the directors using primary valuation techniques such as recent transactions, last price and net asset value. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Statement of Comprehensive Income as "Net change in fair value of investments"

ASSOCIATED UNDERTAKINGS

Associated undertakings are those entities in which the Company has significant influence, but not control, over the financial and operating policies. Investments that are held as part of the Company's investment portfolio are carried in the statement of financial position at fair value even though the Company may have significant influence over those companies. This treatment is permitted by IAS 28 "Investment in Associates", which requires investments held by a company as a venture capital provider to be excluded from its scope where those investments are designated, upon initial recognition, as at fair value through profit or loss and accounted for in accordance with IAS 39, with changes in fair value recognised in the statement of comprehensive income in the period of the change. The Company has no interests in associates through which it carries on its business.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

LOANS AND RECEIVABLES

Loans and receivable from third parties are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method.

A provision for impairment is made when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. Impaired debts are derecognised when they are assessed as uncollectible.

EQUITY

An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.

The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

Shares to be issued represent the equity which the Company has committed to issue and which has been issued subsequent to the year end.

The loan note reserve represents the value of the equity component of the nominal value of the loan notes issued.

The capital reserve represents amounts arising in connection with reverse acquisitions.

Retained earnings include all current and prior period results as disclosed in the statement of comprehensive income together with the cumulative amount of share based expenses transferred to equity.

FINANCIAL LIABILITIES

Financial liabilities are recognised in the Company's balance sheet when the Company becomes a party to the contractual provisions of the instrument. All interest related charges are recognised as an expense in finance cost in the income statement using the effective interest rate method.

The Company's financial liabilities comprise convertible loan notes, and trade and other payables.

The fair value of the liability portion of the convertible loan notes is determined using a market interest rate for an equivalent non-convertible loan note. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or maturity of the loan notes. The remainder of the proceeds is allocated to the conversion option, which is recognised and included in shareholders' equity, net of tax effects.

Trade payables are recognised initially at their fair value and subsequently measured at amortised cost less settlement payments.

SHARE BASED PAYMENTS

The Company operates equity settled share based remuneration plans for the remuneration of its employees.

All services received in exchange for the grant of any share based remuneration are measured at their fair values. These are indirectly determined by reference to the fair value of the share options awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets).

Share based payments are ultimately recognised as an expense in the income statement with a corresponding credit to retained earnings in equity, net of deferred tax where applicable. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised, if there is any indication that the number of share options expected to vest differs from previous estimates. No adjustment is made to the expense or share issue cost recognized in prior periods if fewer share options ultimately are exercised than originally estimated.

Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium.

Where share options are cancelled, this is treated as an acceleration of the vesting period of the options. The amount that otherwise would have been recognised for services received over the remainder of the vesting period is recognised immediately within profit or loss.

FOREIGN CURRENCIES

The Directors consider Sterling to be the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The financial statements are presented in Sterling, which is the Company's functional and presentation currency.

Foreign currency transactions are translated into Sterling using the exchange rates prevailing at the date of the transactions. Foreign currency exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in the income statement. Non-monetary items that are measured at historical costs in a foreign currency are translated at the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated into the functional currency using the exchange rates at the date when the fair value was determined.

2

PRINCIPAL ACCOUNTING POLICIES (continued)

SEGMENTAL REPORTING

A segment is a distinguishable component of the Company's activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Company's chief operating decision maker to make decisions about the allocation of resources and assessment of performance and about which discrete financial information is available.

As the chief operating decision maker reviews financial information for and makes decisions about the Company's investment activities as a whole, the directors have identified a single operating segment, that of holding and trading in investments in natural resources, minerals, metals, and oil and gas projects. The directors consider that it would not be appropriate to disclose any geographical analysis of the Company's investments.

3

OPERATING PROFIT

2018

2016

£'000

£'000

Profit from operations is arrived at after charging:

Auditors' remuneration:

- fees payable to the Company's auditors and its associates for the audit of the Company's financial statements

12

10

4

EMPLOYEE REMUNERATION

The expense recognised for employee benefits is analysed below:

2018

£'000

2016

£'000

Wages and salaries

89

67

89

67

Details of Directors' employee benefits expense are included in the Report on Remuneration on page 11.

Remuneration for key management of the Company, including amounts paid to Directors of the Company, is as follows:

2018

£'000

2016

£'000

Short-term employee benefits

89

67

89

67

5

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.

6

EARNINGS PER SHARE

The basic and diluted earnings per share are 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.

2018

 2016

£'000

£'000

Profit attributable to owners of the Company

- Continuing and total operations

55

111

2018

2016

Weighted average number of shares for calculating basic and fully diluted earnings per share*

33,661,491

17,941,666

Profit per share from continuing and total operations

- Basic (pence per share)

0.2

0.6

- Fully diluted (pence per share)*

0.2

0.6

7

INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

2018

2016

£'000

£'000

1 January - Investments at fair value

1,274

691

Cost of investment purchases

1,806

392

Proceeds of investment disposals

(1,124)

(95)

Loss on disposal of investments

(12)

(169)

Fair value adjustment

325

455

31 December - Investments at fair value

2,269

1,274

Categorised as:

Level 1 - Quoted investments

1,342

189

Level 3 - Unquoted investments

927

1,085

2,269

1,274

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.

LEVEL 3 investments

Reconciliation of Level 3 fair value measurement of investments

2018

2016

£'000

£'000

Brought forward

1,085

515

Purchases

683

339

Disposals

(1,022)

-

Fair value adjustment

181

231

Carried forward

927

1,085

Level 3 valuation techniques used by the Company are explained on page 21 (Fair value of financial instruments)

The Company's two largest Level 3 investments are Cap Energy plc. and TH Crestgate GmbH.

CAP ENERGY PLC

The Company has a 1.3% interest in Cap Energy which has been valued at the issue price of shares in Cap Energy's last fund raise in March 2016.

TH CRESTGATE GMBH ("THC")

Investments in THC include both debt and equity instruments which are carried at cost.

The Company has a 49% interest in THC. While the directors consider that the fair value of the Company's interest in THC is in excess of cost its underlying assets are at an early stage of development and so a fair value is difficult to determine.

8

TRADE AND OTHER RECEIVABLES

2018

2016

£'000

£'000

Prepayments

10

7

Total

10

7

The fair value of trade and other receivables is considered by the Directors not to be materially different to carrying amounts.

At the balance sheet date in 2018 and 2016 there were no trade and other receivables past due.

9

TRADE AND OTHER PAYABLES

2018

2016

£'000

£'000

Trade payables

18

25

Other payables

18

7

Accrued charges

32

18

Total

68

50

The fair value of trade and other payables is considered by the Directors not to be materially different to carrying amounts.

10

CONVERTIBLE UNSECURED LOAN NOTES

The outstanding convertible loan notes are zero coupon, unsecured and unless previously purchased or converted they are redeemable at their principal amount at any time on or after 31 December 2014.

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:

2018

2016

£'000

£'000

Liability component at beginning and end of period

10

10

The Directors estimate the fair value of the liability component of the loan notes at 30 June 2018 to be approximately £10,000 (2016: £10,000)

Outstanding at 1 January

500,000

7.89

500,000

7.89

Granted

600,000

7.50

-

-

Exercised

(295,000)

7.45

-

-

Outstanding at 30 June/ 31 December

805,000

7.65

500,000

7.89

12

SHARE CAPITAL

Number of

 shares

Nominal

Value

Share

 premium

£'000

£'000

AUTHORISED

At 31 December 2016 and 30 June 2018

Ordinary shares of 1p each

160,000,000

1,600

Deferred shares of 24p each

35,000,000

8,400

10,000

ISSUED AND FULLY PAID

At 31 December 2015:

Ordinary shares of 1p each

14,034,562

140

Deferred shares of 24p each

11,435,062

2,745

2,885

4,559

Ordinary shares issued in year

10,000,000

100

375

At 31 December 2016:

Ordinary shares of 1p each

24,034,562

240

Deferred shares of 24p each

11,435,062

2,745

2,985

4,934

Ordinary shares issued in period

11,003,333

110

952

At 30 June 2018:

Ordinary shares of 1p each

35,037,895

350

Deferred shares of 24p each

11,435,062

2,745

3,095

5,886

The restricted rights of the deferred shares are such that they have no economic value.

On 20 February 2017, 4,375,000 new ordinary shares were issued for cash at 8p per share as the result of a private placing.

On 28 February 2017, 3,000,000 new ordinary shares were issued for cash at 10p per share as the result of a private placing.

On 17 March 2017, 3,333,333 new ordinary shares were issued for cash at 15p per share as the result of a private placing.

On 21 December 2017, 110,000 shares and 185,000 shares were issued for cash at 7.5p and 7.89p respectively as the result of the exercise of options.

13

LOAN NOTE EQUITY RESERVE

2018

2016

£'000

£'000

Equity component of convertible loan notes at 1 January

6

6

Equity component of convertible loan notes at 30 June/ 31 December

6

6

14

RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company is exposed to a variety of financial risks which result from both its operating and investing activities. The Company's risk management is coordinated by the board of directors, and focuses on actively securing the Company's short to medium term cash flows by minimising the exposure to financial markets.

MARKET PRICE RISK

The Company's exposure to market price risk mainly arises from potential movements in the fair value of its investments. The Company manages this price risk within its long-term investment strategy to manage a diversified exposure to the market. If each of the Company's equity investments were to experience a rise or fall of 10% in their fair value, this would result in the Company's net asset value and statement of comprehensive income increasing or decreasing by £228,000 ( 2016: £127,000).

FOREIGN CURRENCY RISK

The Company's exposure to foreign currencies is limited to its investments which are quoted on overseas stock markets in currencies other than Pounds Sterling and is not material.

CREDIT RISK

The Company's financial instruments, which are exposed to credit risk, are considered to be mainly cash and cash equivalents and the Company's receivables are not material. The credit risk for cash and cash equivalents is not considered material since the counterparties are reputable banks.

The Company's exposure to credit risk is limited to the carrying amount of the financial assets recognised at the balance sheet date, as summarised below:

2018

£'000

2016

£'000

Cash and cash equivalents

422

274

Other receivables

-

-

422

274

LIQUIDITY RISK

Liquidity risk is managed by means of ensuring sufficient cash and cash equivalents are held to meet the Company's payment obligations arising from administrative expenses. 

CAPITAL RISK MANAGEMENT

The Company's objectives when managing capital are:

· to safeguard the Company 's ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders;

· to support the Company 's growth; and

· to provide capital for the purpose of strengthening the Company 's risk management capability.

The Company actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Company and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes.

15

FINANCIAL INSTRUMENTS

FINANCIAL ASSETS BY CATEGORY

The IAS 39 categories of financial assets included in the balance sheet and the headings in which they are included are as follows:

2018

2016

£'000

£'000

Financial assets:

Cash and cash equivalents

422

274

Investments held at fair value through profit and loss

2,269

1,274

2,691

1,548

FINANCIAL LIABILITIES BY CATEGORY

The IAS 39 categories of financial liability included in the balance sheet and the headings in which they are included are as follows:

2018

2016

£'000

£'000

Financial liabilities at amortised cost:

Convertible unsecured loan notes

10

10

Trade and other payables

36

32

46

42

16

Contingent LIABILITIES AND CAPITAL COMMITMENTS

There were no contingent liabilities or capital commitments at 30 June 2018 or 31 December 2016.

17

POST YEAR END EVENTS

There have been no material post year end events.

18

RELATED PARTY TRANSACTIONS

Details of the directors' remuneration and the options granted to directors are disclosed in the remuneration report on page 11.

19

ULTIMATE CONTROLLING PARTY

1.1

The Directors do not consider there to be a single ultimate controlling party.