29 Sep 2017 07:00
29 September 2017
Sovereign Mines of Africa PLC
("SMA" or "the Company")
Interim Results for the six months ended 30 June 2017
Sovereign Mines of Africa PLC (AIM:SMA), is pleased to announced its interim results for the six months ended 30 June 2017.
Enquiries:
SOVEREIGN MINES OF AFRICA PLC
Giles Clarke - c/o Camarco
+44 20 3757 6983
SHORE CAPITAL - NOMINATED ADVISER & BROKER
Toby Gibbs / Jerry Keen
+44 207 408 4090
CAMARCO
Tom Huddart / Jane Glover / Billy Clegg
+44 20 3757 4980
SOVEREIGN MINES OF AFRICA PLC
CHAIRMAN'S STATEMENT
On 20 January 2017, the Company announced it had completed the farm-out of its 75% interest in the Mandiana Gold Project in the Republic of Guinea, West Africa to Volcanic Metals Corp. In connection with the farm-out Volcanic has changed its name to "Volcanic Gold Mines Inc." and now trades under its new name on the TSX Venture Exchange, under the symbol "VG". In consideration for the farm-out the Company received 2,502,489 common shares in Volcanic, as announced on 7 November 2016.
Having previously pursued a wider strategy of targeting assets in a number of sectors, the Company is now pursuing a more targeted strategy. A Memorandum of Understanding ("MOU") was signed on 28 September 2017 with an Indian business to acquire its specialist eyewear manufacturing company. Further announcements will be made in due course.
The Company is currently deemed a cash shell under AIM Rule 15, pursuant to which it is required to make an acquisition which constitutes a reverse takeover under AIM Rule 14. Trading in the Company's shares was suspended on 21 July 2017. Trading in the Company's shares will remain suspended until publication of a re-admission document and the approval of any transaction at a general meeting of the Company. If no transaction is completed the Company's shares are scheduled to be cancelled from trading on AIM on 21 January 2018 pursuant to AIM Rule 41.
We would like to thank all our shareholders for their continued support during this period of change within the Company and we look forward into the second half of 2017 with confidence.
Financial
The Company reports a loss from continuing operations of £95,433 for the six-month period ended 30 June 2017, compared to a loss of £43,795 for the corresponding period in 2016. The loss in the period represents the costs of running the Company during this transitional phase. The Company also reported a profit from discontinued operations in relation to the sale of its interest in the Mandiana Gold Project of £656,140, representing the market value of the Volcanic shares received as consideration for the disposal on 20 January 2017.
The Company had cash resources of £278,235 at 30 June 2017 which will provide sufficient finance to cover the Company's ongoing expenditure.
Post year end the Company has sold a total of 1,533,989 of its equity shares in Volcanic. The average share price for the sales is CAD$0.43, resulting in total consideration, net of commission, of £402,640.
Related Party Transaction
On 28 September 2017 the Company agreed a contract with Westleigh Investments Holdings Ltd to provide bookkeeping and other secretarial services for a fee of £19,000 per six months. The independent directors, being Jeremy Sparrow and Rupert Fraser, consider, having consulted with the Company's nominated adviser, Shore Capital, that the terms of the contract with Westleigh Investments Holdings Ltd are fair and reasonable insofar as the Company's shareholders are concerned.
C G Clarke
Chairman
29 September 2017
SOVEREIGN MINES OF AFRICA PLC
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended 30 June 2017
|
|
Note |
| Six months ended 30 June 2017 Unaudited £ | Six months ended 30 June 2016 Unaudited £ | Year ended 31 December 2016 Audited £ |
|
Administrative costs Other administrative expenses |
|
|
|
(95,433) |
(44,976) |
(207,683) |
|
Finance income |
|
|
| - | 1,181 | 6,136 |
|
|
| ------------------ | ------------------ | ------------------ |
| ||
Loss on ordinary activities before taxation |
| (95,433) | (43,795) | (201,547) |
| ||
|
|
|
|
|
|
|
|
Tax on loss on ordinary activities |
|
|
| - | - | - |
|
|
|
|
| ------------------ | ------------------ | ------------------ |
|
Loss for the financial period from continuing operations |
|
|
| (95,433) | (43,795) | (201,547) |
|
|
|
|
|
|
|
|
|
Profit from discontinued operation |
| 4 |
| 656,140 | - | - |
|
|
|
|
| ------------------ | ------------------ | ------------------ |
|
Profit/(loss) for the period attributable to owners of the parent |
| 560,707 | (43,795) | (201,547) |
| ||
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
| - | - | - |
|
Items that may be reclassified to profit or loss: |
|
|
|
|
| ||
Revaluation of available-for-sale investments |
| 144,894 | - | - |
| ||
|
|
|
| ------------------ | ------------------ | ------------------ |
|
Total comprehensive income/(loss) for the period attributable to owners of the parent |
| 705,601 | (43,795) | (201,547) |
| ||
|
|
| =========== | =========== | =========== |
| |
Total comprehensive income/(loss) attributable to owners of the parent arising from: |
|
|
| ||||
Continuing operations |
|
|
| (95,433) | (43,795) | (201,547) |
|
Discontinued operation |
|
|
| 801,034 | - | - |
|
|
|
|
| ------------------ | ------------------ | ------------------ |
|
|
|
|
| 705,601 | (43,795) | (201,547) |
|
|
|
|
| =========== | =========== | =========== |
|
|
|
|
|
|
|
|
|
Earnings/(loss) per ordinary share (pence) |
|
|
|
|
| ||
From continuing and discontinued operations: Basic and diluted | 5 |
| 0.065p | (0.005)p | (0.02)p
|
| |
|
|
| =========== | =========== | =========== |
| |
SOVEREIGN MINES OF AFRICA PLC
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2017
|
| As at | As at | As at |
|
| 30 June 2017 | 30 June 2016 | 31 December 2016 |
| Note | Unaudited | Unaudited | Audited |
|
| £ | £ | £ |
FIXED ASSETS |
|
|
|
|
Available for sale financial assets | 4 | 801,034 | - | - |
Intangible assets |
| - | - | - |
|
| ------------------ | ------------------ | ------------------ |
|
| 801,034 | - | - |
|
| ------------------ | ------------------ | ------------------ |
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
Other receivables
|
| 11,652 | - | 2,438 |
Cash at bank |
| 278,235 | 452,866 | 399,446 |
Assets classified as held for sale | 4 | - | - | - |
|
| ------------------ | ------------------ | ------------------ |
|
| 289,887 | 452,866 | 401,884 |
CURRENT LIABILITIES |
|
|
|
|
Trade and other payables |
| (27,348) | (27,131) | (49,883) |
|
| ----------------- | ----------------- | ------------------ |
NET CURRENT ASSETS |
| 262,538 | 425,735 | 352,001 |
|
| ---------------- | ---------------- | ------------------ |
NET ASSETS |
| 1,063,573 | 425,735 | 352,001 |
|
| =========== | =========== | =========== |
|
|
|
|
|
EQUITY ATTRIBUTABLE TO EQUITY |
|
|
|
|
HOLDERS OF THE COMPANY |
|
|
|
|
Share capital | 6 | 3,163,589 | 3,163,589 | 3,163,589 |
Share premium account |
| 5,563,520 | 5,563,520 | 5,563,520 |
Reconstruction reserve |
| (586,100) | (586,100) | (586,100) |
Share-based payment reserve |
| 696,097 | 606,108 | 690,126 |
Retained earnings |
| (7,773,533) | (8,321,382) | (8,479,134) |
|
| ---------------- | ---------------- | ---------------- |
TOTAL EQUITY |
| 1,063,573 | 425,735 | 352,001 |
|
| =========== | =========== | =========== |
SOVEREIGN MINES OF AFRICA PLC
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
Six months ended 30 June 2017
|
| Six months | Six months | Year ended |
|
| to 30 June 2017 | to 30 June 2016 | 31 December 2016 |
|
| Unaudited | Unaudited | Audited |
|
| £ | £ | £ |
|
|
|
|
|
Net cashflow used in operating activities | 3 |
(121,211) |
(49,485) | (101,724) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Finance income |
| - | 1,181 | - |
|
| ------------------------------------------- | ------------------------------------------- | --------------------------------------------------- |
|
| - | 1,181 | - |
Net decrease in cash and cash equivalents |
| (121,211) | (48,304) | (101,724) |
|
|
|
|
|
Cash and cash equivalents at beginning of period |
| 399,446 | 501,170 | 501,170 |
|
| ------------------------------------------- | ------------------------------------------- | --------------------------------------------------- |
Cash and cash equivalents at end of period |
| 278,235 | 452,866 | 399,446 |
|
| =========== | =========== | =========== |
|
|
|
|
|
All cashflows are from continuing operations.
SOVEREIGN MINES OF AFRICA PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 June 2017
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SOVEREIGN MINES OF AFRICA PLC
Notes to the interim consolidated financial information
Six months ended 30 June 2017
1. GENERAL
These unaudited consolidated interim financial statements are for the six months ended 30 June 2017. They do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2016, which were prepared under International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU"). A number of new standards, amendments to existing standards and interpretations were effective from 1 January 2017. The adoption of these amendments did not have an impact on the interim financial statements for the six months ended 30 June 2017.
The consolidated interim financial statements have been prepared under the historical cost convention except for certain fair value adjustments required by certain standards. These statements do not constitute statutory accounts under s434 of the Companies Act 2006 (the "Act").
The statutory accounts for the year ended 31 December 2016 have been filed with the Registrar of Companies. Those accounts have received an unqualified audit report and did not contain statements or matters to which the auditors drew attention under the Act.
The Directors are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, these interim financial statements have been prepared on a going concern basis as the Directors are of the opinion that the Company has sufficient funds to meet their ongoing working capital and committed capital expenditure requirements
The interim financial information is unaudited. The Company's operations are not subject to seasonality or cyclicality. No dividend has been declared or paid in this interim period.
2. ACCOUNTING POLICIES
The principal accounting policies and methods of computation have remained unchanged from those used in the preparation of the 2016 annual financial statements and are expected to be used for the 31 December 2017 annual financial statements.
SOVEREIGN MINES OF AFRICA PLC
Notes to the interim consolidated financial information
Six months ended 30 June 2017
3. CASH FLOWS FROM OPERATING ACTIVITIES
| Six months to | Six months to | Year ended |
| 30 June 2017 | 30 June 2016 | 31 December 2016 |
| Unaudited | Unaudited | Audited |
| £ | £ | £ |
Loss before taxation from continuing operations | (95,433) | (43,795) | (201,547) |
Adjustments for: |
|
|
|
Finance income | - | (1,181) | - |
Share-based payment expense | 5,971 | 5,803 | 89,821 |
| ------------------- | ------------------- | -------------------- |
| (89,462) | (39,173) | (111,726) |
|
|
|
|
Increase in receivables | (9,214) | - | (2,438) |
(Decrease)/increase in payables | (22,535) | (10,312) | 12,440 |
| ---------------- | ---------------- | ---------------- |
Net cashflow used in operating activities | (121,211) | (49,485) | (101,724) |
| ============= | =============
| =============
|
All cashflows are from continuing operations.
4. DISCONTINUED OPERATION
On 20 January 2017, the Company sold its 75% interest in the Mandiana Gold Project ("Mandiana") in Republic of Guinea, West Africa to Volcanic Gold Mines Inc. ('Volcanic'), a Canadian publicly listed mining company. In consideration for the sale, the Company received 2,502,489 common shares in Volcanic representing 9.9% of the outstanding share capital of Volcanic at the time of transaction. The gain on disposal is presented in this interim report as a discontinued operation. At 31 December 2016, the intangible asset was classified as held for sale.
The gain on disposal of £656,140 is calculated is the difference between the fair value of the consideration and the book value at the date of disposal.
The fair value (the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction) of the Volcanic shares on 20 January was £656,140 (2,502,489 at CAD$ 0.43 per share translated at the exchange rate on the day of CAD$/GBP 1.64). The book value of the asset was nil as a result of it being fully written down in 2015.
The shares in Volcanic have been classified as an 'Available for Sale' financial asset in accordance with IAS 39 'Financial Instruments: recognition and measurement'. On initial recognition, the asset is recognised at fair value. The shares are revalued at each balance sheet date with movements being recognised through Other Comprehensive Income.
SOVEREIGN MINES OF AFRICA PLC
Notes to the interim consolidated financial information
Six months ended 30 June 2017
5. LOSS/EARNINGS PER SHARE
|
| Six months to | Six months to | Year ended |
|
| 30 June 2017 | 30 June 2016 | 31 December 2016 |
|
| Unaudited | Unaudited | Audited |
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares in issue | 860,858,955 | 860,858,859 | 860,858,955 | |
|
| =============== | ======================
| ===================
|
|
|
|
|
|
Profit/(loss) after taxation (£) |
|
|
|
|
From continuing operations |
| (95,433) | (43,795) | (201,547) |
From discontinued operations |
| 656,140 | - | - |
|
| ------------------- | ---------------------- | ------------------------- |
|
| 560,707 | (43,795) | (201,547) |
|
| =============== | ======================
| ===================
|
Earnings/(loss) per share from continuing and discontinued operations attributable to equity holders of the parent during the period: |
| |||
|
|
|
|
|
Basic earnings/(loss) Per Share (pence) |
|
|
|
|
From continuing operations |
| (0.011) | (0.005) | (0.02) |
From discontinued operations |
| 0.076 | - | - |
|
| ------------------- | ---------------------- | ------------------- |
|
| 0.065 | (0.005) | (0.02) |
|
| ============= | ===================
| ===================
|
Due to there being a loss during the period from continuing operations, the share options and warrants are anti-dilutive and therefore the diluted earnings/(loss) per share is the same as the basic earnings/(loss) per share.
6. SHARE CAPITAL
Issued and fully paid:
| 2017 | 2016 | 2017 | 2016 |
| No. of shares | No. of shares | £ | £ |
|
|
|
|
|
Ordinary shares of £0.0001 each | 860,859,050 | 860,859,050 | 3,163,589 | 3,163,589 |
| ================== | ================== | ============= | ============== |
SOVEREIGN MINES OF AFRICA PLC
Notes to the interim consolidated financial information
Six months ended 30 June 2017
7. POST BALANCE SHEET EVENTS
Post year end the Company has sold a total of 1,533,989 of its shares in Volcanic. The average share price for the sales is CAD$0.43, resulting in a total consideration, net of commission of £402,640.
A Memorandum of Understanding was signed on 28 September 2017 with an Indian business to acquire its specialist eyewear manufacturing company.
8. COPIES OF INTERIM REPORT
Copies of the interim report are available to the public from the Company at Lakeside Fountain Lane, St Mellons, Cardiff, United Kingdom, CF3 0FB during normal office hours, Saturdays and Sundays excepted, for 14 days from today and are available on the website at www.sovmines.com.