Last checked at 28 Jun 2016 07:00
Embargoed: 0700hrs 28 June 2016
Pathfinder Minerals Plc
("Pathfinder", the "Company" or the "Group")
Final results for the year ended 31 December 2015
Chairman's Statement
Introduction
The process to regain control of Pathfinder's mining licences in Mozambique is ongoing. It is every bit as lengthy as the board has in the past advised it might be. It is, however, no less likely to deliver a successful outcome. Some important developments have occurred both within the year under review and since then.
Steps to recover the company's assets
There remain two principal strategies through which we are aiming to recover the mining concessions, which were transferred away from the Company in late 2011, into the control of our former local partners.
The first is via the legal process which the Company is pursuing in Mozambique. Having successfully sought declarations from the English High Court in 2012 that Pathfinder's ownership of its licence-holding subsidiary in Mozambique ("CMDN") was valid; and that the agreements by which Pathfinder acquired its shares in that subsidiary were executed under English Law, we were able to take to Mozambique an iron clad ruling.
Thereafter began the process to have the English court's ruling recognised in Mozambique via its Supreme Court. We continue to await a decision from the Supreme Court and I am afraid neither the board nor its legal advisers has been afforded any visibility on when we might expect such a decision. There was, however, an important development during 2015 which may favourably impact the outcome.
In late 2014, the Supreme Court refused the Company's first application for recognition of orders by the English court for a small amount of costs to be paid by Jacinto Veloso, Diogo Cavaco and JV Consultores Internacionais Limitada (the "Defendants"). In September 2015 the Supreme Court rejected Pathfinder's application for permission to appeal its earlier decision. While on the surface that might seem to bode unfavourably for the more important pending application for recognition of the English court's substantive ruling referred to above, the Supreme Court's admission of a key argument in the appeal application may have positive implications in that respect.
This optimism arises from the second avenue of appeal pursued by the Company, which is called a 'harmonisation of laws' appeal. It is an appeal based on the existence of a previous conflicting decision. In Pathfinder's case the Supreme Court refused to recognise the judgments in question because it found that the customary clauses conferring jurisdiction on the English Courts (which were contained in the underlying agreements through which the Company acquired CMDN) did not satisfy the requirements of Mozambique law.
However, in a previous unrelated decision, the Supreme Court had agreed to recognise a foreign judgment where the jurisdiction of the foreign court was derived from a clause similar to that in the Pathfinder agreements. The Supreme Court therefore admitted Pathfinder's 'harmonisation of laws' appeal.
Unfortunately, as a matter of Mozambique law, a successful appeal on this point does not affect the underlying decision not to recognise the relevant costs orders in this case. Its effect will be only to clarify the law going forward - which is a more important outcome for Pathfinder than the application for recognition of the order for a relatively small amount of costs.
It is impossible to predict what the outcome will be from the Supreme Court and, whatever it is, the Company may still seek to recover its assets or seek compensation for its loss through other judicial processes.
There remain several other legal proceedings ongoing in the commercial court in Maputo, each of which relates to the same issue of the Company's ownership and control of CMDN, on which the English High Court has already ruled. It is not known when judgment on those proceedings will be received and, whatever their outcome, it is likely that appeals will follow.
Review of business
While the laborious legal process continues, it is of course not the only strategy through which the company is pursuing a resolution. The second strategy relies on the Company's ongoing dialogue with the Mozambique Government regarding the defective process by which Pathfinder's licences were transferred away from its control in 2011 and into the control of the Defendants using a company named 'Pathfinder Moçambique, S.A.' but in no way associated with Pathfinder Minerals.
We have in recent months made a good deal of progress and, while any talks with the Mozambique Government are sensitive in nature, I am heartened by the apparent understanding of the events which have occurred now being demonstrated by senior members within the Government and I am optimistic that, while there can be no certainty of a successful outcome, we are on the right track to a resolution.
To this end, we appointed last month Eduardo C. Mondlane Jr as our regional representative in Mozambique.
Eduardo has been providing strategic advisory services in Africa for 30 years across industries including aerospace, infrastructure, energy, power and financial services. In the immediate term, Eduardo is assisting the Company in the previously mentioned ongoing dialogue with the Mozambique Government. In the longer term, should Pathfinder be successful in regaining control of the mining licences, we envisage Eduardo having an integral role with the Company, assisting in the management of our local operating subsidiaries and with our relationships with regional and national authorities and with local communities. In the event Pathfinder is successful in regaining control of its licences, the Company has agreed to issue Eduardo shares equivalent to up to 25 per cent of the enlarged issued share capital of Pathfinder.
Corporate events
At the last Annual General Meeting, the Company's shareholders approved a share capital reorganisation which took effect the following day. The consequence was that every 10 'old' shares were exchanged for 1 'new' share in a manner which did not itself impact the market value of individual holdings.
The capital reorganisation later facilitated the raising, through two share issues, of much needed funds to continue the process to recover the Company's assets. On 17 March 2016 the Company announced that it had raised £200,000 via a subscription for new shares and, on 31 March 2016, investor demand through the PrimaryBid crowdfunding platform, led to the announcement of a further £100,000 being raised, also via a subscription for new shares. One third of the total funds raised in March were contributed by the Company's chief executive, Nick Trew. I should like to place on record my admiration for his determination, in doing so, to see a positive outcome for all shareholders; there is no better demonstration of the belief the board has that Pathfinder will ultimately be successful in restoring control of its assets.
A number of changes to the composition of the board occurred both during 2015 and after. In October 2015, John McKeon stepped down as a non-executive director of the Company to devote more time to his other business interests. As an early investor in Pathfinder, John was instrumental in creating the valuable opportunity of which the Company was subsequently deprived. We continue to strive to deliver for him, and all shareholders, a positive outcome following the appalling actions of the individuals who have taken the Company's assets unlawfully for personal gain.
Post year-end, on 10 March 2016, James Normand resigned from the board as Finance Director and, on 29 March 2016, we welcomed Robert Easby as his replacement. Robert qualified as a Chartered Accountant in 2000 and spent his early career in audit compliance and as a Company Law specialist within a large regional Chartered Certified Accountancy practice.
On 22 June 2016, Pathfinder announced that it had been successful in obtaining final charging orders from the English High Court against the aggregate 19,824,000 shares held in Pathfinder by Jacinto Veloso's company and Diogo Cavaco (the "Defendants"). The English High Court has previously ordered the Defendants to pay £1.1 million worth of costs to Pathfinder in respect of the 2012 English proceedings but the Defendants have not complied with any of the costs orders. The effect of the charging orders is to charge their shares in the Company with payment of the amount of the costs orders plus interest, currently totalling in excess of £1.4 million.
Financial results and current financial position
The most important financial measurement continues to be whether Pathfinder has sufficient cash to see through its strategy to recover its assets. The board has taken a number of definitive actions, both during the year under review and since, to reduce the central overhead of the Company to enhance its ability to continue pursuing its recovery strategy. During 2015 the board reduced from four members to three; the Company has foregone a physical head office; all salaries have been materially reduced; and the Company continues to exercise prudence with expenditure.
As detailed in last year's Annual Report, in April 2015 the Company received a claim for the return of all the VAT recovered by the Company since HMRC accepted the Company's VAT registration in October 2013. Professional advice on the claim obtained by the board was that the claim had been based on incorrect assumptions about the Company's business plan and consequently was flawed. The Company challenged the claim and, on 17 December 2015, Pathfinder announced the welcome news that HMRC had rescinded its decision to cancel the Company's VAT registration and to demand the repayment of refunded VAT and interest; and that HMRC would refund the Company's VAT repayment claims that had been suspended since December 2014.
The financial statements of the Pathfinder Group for 2015 follow later in this report. The Income Statement shows a loss of £1.1 million (2014 - £1.1 million). Since the Company has been prevented from conducting any activity relating to mining, the large majority of this loss can be attributed to the Company's attempts to recover its expropriated licences.
The Group's Statement of Financial Position shows net assets at 31 December 2015 of £42,000 (31 December 2014 - £1.1 million). The assets are held largely in the form of cash deposits (totalling £80,000 at the end of the period).
The Company's cash resources were bolstered post year-end by the £295,500 of net proceeds received from the March 2016 subscriptions. The proceeds of the subscriptions have provided the Company with the ability to continue pursuing the recovery of the licences, while seeking other sources of funding.
Outlook
While there can be no certainty of a successful outcome, the board believes that its ongoing dialogue with the Mozambique Government will ultimately deliver a positive resolution for shareholders. We are at the same time continuing to pursue our legal strategy vigorously in the event that we should need to rely upon it to resolve the matters or provide compensation for the Company's loss. I remain extremely grateful for the support that shareholders have shown in the wake of the deeply unpalatable actions of the Defendants, and, while the process may yet be lengthy, I hope to be able to provide positive news in due course.
Sir Henry Bellingham
Chairman
27 June 2016
Consolidated Statement of Profit or Loss
for the Year Ended 31 December 2015
|
| 2015 |
| 2014 |
|
| £'000 |
| £'000 |
CONTINUING OPERATIONS |
|
|
|
|
Revenue |
| - |
| - |
Other operating income |
| 3 |
| - |
Administrative expenses |
| (1,104) |
| (1,070) |
|
|
|
|
|
OPERATING LOSS |
| (1,101) |
| (1,070) |
Finance income |
| 8 |
| 14 |
|
|
|
|
|
LOSS BEFORE INCOME TAX |
| (1,093) |
| (1,056) |
Income tax |
| - |
| - |
|
|
|
|
|
LOSS FOR THE YEAR |
| (1,093) |
| (1,056) |
|
|
|
|
|
Loss attributable to: Owners of the parent |
|
(1,093) |
|
(1,056) |
|
|
|
|
|
Loss per share expressed in pence per share (restated for 2014): |
|
|
|
|
Basic |
| (1.05) |
| (1.02) |
Diluted |
| (1.05) |
| (1.02) |
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the Year Ended 31 December 2015
| 2015 |
| 2014 |
| £'000 |
| £'000 |
|
|
|
|
LOSS FOR THE YEAR | (1,093) |
| (1,056) |
|
|
|
|
OTHER COMPREHENSIVE INCOME
| - |
| - |
|
|
|
|
TOTAL COMPREHENSIVE INCOME FOR THE YEAR | (1,093) |
| (1,056) |
|
|
|
|
Total comprehensive income attributable to: |
|
|
|
Owners of the parent | (1,093) |
| (1,056) |
Consolidated Statement of Financial Position
31 December 2015
|
| 2015 |
| 2014 |
|
| £'000 |
| £'000 |
ASSETS |
|
|
|
|
CURRENT ASSETS |
|
|
|
|
Trade and other receivables |
| 94 |
| 61 |
Cash and cash equivalents |
| 80 |
| 1,172 |
|
|
174 |
|
1,233 |
|
|
|
|
|
TOTAL ASSETS |
| 174 |
| 1,233 |
|
|
|
|
|
EQUITY |
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
Called up share capital |
| 18,289 |
| 18,289 |
Share premium |
| 11,022 |
| 11,022 |
Retained earnings |
| (29,269) |
| (28,176) |
|
|
|
|
|
TOTAL EQUITY |
| 42 |
| 1,135 |
|
|
|
|
|
LIABILITIES |
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Trade and other payables |
| 132 |
| 98 |
|
|
|
|
|
TOTAL LIABILITIES |
| 132 |
| 98 |
|
|
|
|
|
TOTAL EQUITY AND LIABILITIES |
| 174 |
| 1,233 |
The financial statements were approved by the Board of Directors on 27 June 2016 and were signed on its behalf by:
RP Easby - Director
Company Statement of Financial Position
31 December 2015
|
| 2015 |
| 2014 |
|
| £'000 |
| £'000 |
ASSETS |
|
|
|
|
CURRENT ASSETS |
|
|
|
|
Trade and other receivables |
| 94 |
| 61 |
Cash and cash equivalents |
| 80 |
| 1,172 |
|
|
174 |
|
1,233 |
|
|
|
|
|
TOTAL ASSETS |
| 174 |
| 1,233 |
|
|
|
|
|
EQUITY |
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
Called up share capital |
| 18,289 |
| 18,289 |
Share premium |
| 11,022 |
| 11,022 |
Retained earnings |
| (29,269) |
| (28,307) |
|
|
|
|
|
TOTAL EQUITY |
| 42 |
| 1,004 |
|
|
|
|
|
LIABILITIES |
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Trade and other payables |
| 132 |
| 229 |
|
|
|
|
|
TOTAL LIABILITIES |
| 132 |
| 229 |
|
|
|
|
|
TOTAL EQUITY AND LIABILITIES |
| 174 |
| 1,233 |
The financial statements were approved by the Board of Directors on 27 June 2016 and were signed on its behalf by:
RP Easby - Director
Consolidated Statement of Changes in Equity
for the Year Ended 31 December 2015
| Called up share capital |
| Retained earnings |
| Share premium |
| Total equity |
| £'000 |
| £'000 |
| £'000 |
| £'000 |
|
|
|
|
|
|
|
|
Balance at 1 January 2014
| 18,289 |
| (27,120) |
| 11,022 |
| 2,191 |
Changes in equity |
|
|
|
|
|
|
|
Total comprehensive income | - |
| (1,056) |
| - |
| (1,056) |
Balance at 31 December 2014 | 18,289 |
| (28,176) |
| 11,022 |
| 1,135 |
|
|
|
|
|
|
|
|
Changes in equity |
|
|
|
|
|
|
|
Total comprehensive income | - |
| (1,093) |
| - |
| (1,093) |
Balance at 31 December 2015 |
18,289 |
|
(29,269) |
|
11,022 |
|
42 |
Company Statement of Changes in Equity
for the Year Ended 31 December 2015
| Called up share capital |
| Retained earnings |
| Share premium |
| Total equity |
| £'000 |
| £'000 |
| £'000 |
| £'000 |
|
|
|
|
|
|
|
|
Balance at 1 January 2014 | 18,289 |
| (27,251) |
| 11,022 |
| 2,060 |
Changes in equity |
|
|
|
|
|
|
|
Total comprehensive income | - |
| (1,056) |
| - |
| (1,056) |
Balance at 31 December 2014 |
18,289 |
|
(28,307) |
|
11,022 |
|
1,004 |
|
|
|
|
|
|
|
|
Changes in equity |
|
|
|
|
|
|
|
Total comprehensive income | - |
| (962) |
| - |
| (962) |
Balance at 31 December 2015 |
18,289 |
|
(29,269) |
|
11,022 |
|
42 |
Consolidated and Company Statement of Cash Flows
for the Year Ended 31 December 2015
|
| 2015 |
| 2014 |
|
| £'000 |
| £'000 |
Cash flows from operating activities |
|
|
|
|
Cash generated from operations |
| (1,100) |
| (976) |
|
|
|
|
|
Net cash from operating activities |
| (1,100) |
| (976) |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Interest received |
| 8 |
| 14 |
|
|
|
|
|
Net cash from investing activities |
| 8 |
| 14 |
|
|
|
|
|
Decrease in cash and cash equivalents |
|
(1,092) |
|
(962) |
Cash and cash equivalents at beginning of year |
|
1,172
|
|
2,134 |
Cash and cash equivalents at end of the year |
|
80 |
|
1,172 |
Notes to the Statements of Cash Flows
for the Year Ended 31 December 2015
1. RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS
Group
|
|
|
|
| 2015 |
| 2014 |
| £'000 |
| £'000 |
Loss before income tax | (1,093) |
| (1,056) |
Finance income | (8) |
| (14) |
| (1,101) |
| (1,070) |
(Increase)/decrease in trade and other receivables | (33) |
| 124 |
Increase/(decrease) in trade and other payables | 34 |
| (30) |
|
|
|
|
Cash generated from operations | (1,100) |
| (976) |
Company
|
|
|
|
| 2015 |
| 2014 |
| £'000 |
| £'000 |
Loss before income tax | (962) |
| (1,056) |
Finance income | (8) |
| (14) |
| (970) |
| (1,070) |
(Increase)/decrease in trade and other receivables | (33) |
| 124 |
Increase/(decrease) in trade and other payables | (97) |
| (30) |
|
|
|
|
Cash generated from operations | (1,100) |
| (976) |
2. CASH AND CASH EQUIVALENTS
The amounts disclosed on the Statements of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:
| Group |
| Company | ||||
Year ended 31 December 2015 |
|
|
|
|
|
|
|
| 31.12.15 |
| 1.1.15 |
| 31.12.15 |
| 1.1.15 |
| £'000 |
| £'000 |
| £'000 |
| £'000 |
Cash and cash equivalents | 80 |
| 1,172 |
| 80 |
| 1,172 |
|
|
|
|
|
|
|
|
Year ended 31 December 2014 |
|
|
|
|
|
|
|
| 31.12.14 |
| 1.1.14 |
| 31.12.14 |
| 1.1.14 |
| £'000 |
| £'000 |
| £'000 |
| £'000 |
Cash and cash equivalents | 1,172 |
| 2,134 |
| 1,172 |
| 2,134 |
Annual Report and Accounts
Copies of the Annual Report and Accounts, together with a notice convening an annual general meeting, are being posted to shareholders today and are available within the Investor Relations section of the Company's website www.pathfinderminerals.com.
Annual General Meeting
The annual general meeting of the Company will be held at 11 a.m. on 14 November 2016 at Becket House, 36 Old Jewry, London, EC2R 8DD.
Enquiries:
Pathfinder Minerals Plc
Nick Trew, Chief Executive
Tel.: +44 (0)20 3440 7775
WH Ireland Limited (Nomad and Broker)
Paul Shackleton or Mark Leonard
Tel.: +44 (0)20 7220 1666
Vigo Communications
Ben Simons or Ali Roper
Tel.: +44 (0)20 7830 9704
Email: pathfinderminerals@vigocomms.com