Final Results

RNS Number : 1811N

Contango Holdings PLC

20 September 2019

 

Contango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural Resources

20 September 2019

Contango Holdings Plc

("Contango" or the "Company")

Audited Final Results for the year ended 31 May 2019

Overview

·    Entered into a Memorandum of understanding with Consolidated Growth Holdings (CGH) in December 2017, to acquire the Lubu Coalfield in Zimbabwe that hosts thermal and coking coal

·    Contango will acquire the Lubu Coalfield from CGH for gross consideration of circa £6.45m through the issue of ordinary shares at a price of 5p, subject to certain conditions being met

·    Re-listing of the ordinary shares anticipated October 2019

·    Already working "on the ground" at the Lubu Coalfield; Contango have advanced funds to accelerate drilling programme prior to IPO for potential purchasers of the coal to review assays 

Operating Review

In December 2017, we notified our shareholders that we had entered into a Memorandum of understanding with Consolidated Growth Holdings (CGH) to acquire a mining asset in Zimbabwe. During the course of this financial year we have been working with our professional advisers and various regulatory bodies to complete all the due diligence and documentation necessary to finalise the transaction that will see Contango Holdings acquire the Lubu Coalfield in Zimbabwe. The transaction entails that Contango acquires the Lubu Coalfield from CGH for gross consideration of circa £6.45m through the issue of ordinary shares at a price of 5p. The shares last traded at 3.75p on 22 December 2017 whilst we raised funds for the IPO at 3p.  

The Board did not envisage that the transaction would take such a lengthy period to finalise, however, we are now optimistic that we can re-list in October 2019 having completed all the due diligence and documentation that was subject to regulatory review. Moreover, we have been working "on the ground" at the Lubu Coalfield by advancing funds to the project so that we can commence a drilling campaign designed to provide independent assays for potential purchasers and off-takers to review with regard to coal quality and composition. This work stream was accelerated given the enquiries from potential customers. 

Financial

Funding

The Company is funded through cash raised from the IPO.

Revenue

The Company has generated no revenue during the year, however is focusing on acquisition targets that will ultimately generate revenue for the Company.

Expenditure

The Company has low ongoing overheads and devoted its cash resources to the transactions costs and advancing certain funds to Consolidated Growth Holdings in order to progress activities on the Lubu Coalfield site.

Liquidity, cash and cash equivalents

At 31 May 2019, the Company held £280,884 (2018: £637,558).

Dividend

The Directors do not intend to declare a dividend in respect of the period under review.

Outlook

The mining sector has continued to generally benefit from improvements in commodity prices. However, these trends have not led to an improvement in in the junior mining sector which continues to be affected by risk averse investors seeking to avoid companies that require development capital given the "financing risk" faced in the sector. The major and mid-tier mining companies have all enjoyed strong interest following the improvement of certain commodities in their portfolio.  

Against this background, Contango is looking forward to closing the transaction and being able to fast track the Lubu Coalfield into revenue especially given the recent work to engage with potential customers by providing independent samples of the coal at the Lubu Coalfield. The Board is acutely aware of the economic environment in Zimbabwe, which presents both challenges and opportunities, but they have not impacted on the rate of progress at the Lubu Coalfield thus far. Also, we are mindful that the IMF has now commenced a twelve month programme of monitoring the economic policies of the country, before embarking on a decision to provide funding. This would be a seminal moment in the country's recent history and allow the sort of investment in the domestic infrastructure to attract further foreign investment in future years. We as a board have taken a long-term view that the country will improve and that the discount on asset valuations will diminish.

Finally, the company will raise further funds upon re-listing and expects to outline the details of the transaction imminently when the prospectus is launched in the very near future.

Oliver Stansfield

Executive Director

* ENDS *

For further information, please visit www.contango-holdings-plc.co.uk or contact:

Contango Holdings plc	E: [e-mail]
Brandon Hill Capital Limited Financial Adviser & Broker Jonathan Evans	T: [phone]
St Brides Partners Ltd Financial PR & Investor Relations Catherine Leftley	T: [phone]

 

Statements of comprehensive income

For the year ended 31 May 2019

		Year ended 31 May 2019		Year ended 31 May 2018
	Notes	£		£
Administrative fees and other expenses	4	(320,229)		(326,676)
Operating loss		(320,229)		(326,676)
Finance revenue		-		-
Finance expense				-
Loss before tax		(320,229)		(326,676)
Income tax		-		-
Loss for the year and total comprehensive loss for the year		(320,229)		(326,676)
Basic and diluted loss per Ordinary Share (pence)	5	(0.75)		(1.00)

The notes to the financial statements form an integral part of these financial statements.

Statements of financial position

For the year ended 31 May 2019

		Notes				As at 31 May 2019			As at 31 May 2018
						£			£
Current assets
Other receivables		9				31,311			12,188
Cash and cash equivalents		10				280,884			637,558
Total current assets						312,195			649,746
Current liabilities
Trade and other payables		11				75,748			93,070
Total current liabilities						75,748			93,070
Net assets						236,447			556,676
Equity
Share capital	7				429,500			429,500
Share premium	7				368,978			368,978
Warrant reserve	7				84,874			84,874
Retained earnings	7				(646,905)			(326,676)
Total equity					236,447			556,676

The notes to the financial statements form an integral part of these financial statements.

 

Statements of changes in equity

For the year ended 31 May 2019

 

	Share Capital	Share premium	Warrant Reserve	Retained earnings	Total Equity
	£	£	£	£	£
Balance as at 31 May 2017	1	-		-	1
Loss for the year 31 May 2018	-	-	-	(326,676)	(326,676)
Ordinary Shares and warrants  issued (note 7)	429,500	549,126	84,874	-	1,063,500
Ordinary Share issue costs (note 7)	-	(180,148)	-	-	(180,148)
Balance as at 31 May  2018	429,500	368,978	84,874	(326,676)	556,676

Loss for the year                                                                                                      (320,229)      (320,229)     

Balance as at 31 May  2019

429,500

368,978

84,874

(646,905)

236,447

The notes to the financial statements form an integral part of these financial statements.

 

Statements of cash flows

For the year ended 31 May 2019

	Notes		Year ended 31 May 2019		Year  ended 31 May 2018
			£		£
Operating activities
Loss after tax			(320,229)		(326,676)
Changes in working capital
(Increase)/decrease in trade and other receivables			(19,123)		4,812
Increase/(Decrease) in trade and other payables			(17,322)		24,320
Increase/(Decrease) in Net cash from operating activities			(356,674)		(297,544)
Financing activities
Ordinary Shares issued (net of issue costs)	7		-		883,352
Net cash flows from financing activities			-		883,352
(Decrease)/Increase in cash and short-term deposits			(356,674)		585,808
Cash and short-term deposits as at the start of the period			637,557		51,750
Cash and short-term deposits at the end of the period			280,884		637,558

The notes to the financial statements form an integral part of these financial statements.

Notes to the Financial Statements

For the year ended 31 May 2019

1.    General information

The Company was incorporated in England under the Laws of England and Wales with registered number 10186111 on 18 May 2016.  All of the Company's Ordinary Shares were admitted to the London Stock Exchange's Main Market and commenced trading on 1 November 2017. The company was re-registered as a public company under Companies Act 2006 on 1 June 2017, by the name Contango Holdings plc.

The Company's  focus is to identify, acquire and scale projects focused on mining. At present, the Company is looking to reverse a mining asset into the Company. The Company had no employees during the period other than the Directors.

2.    Summary of Significant Accounting Policies

The Board has reviewed the accounting policies set out below and considers them to be the most appropriate to the Company's business activities.

a) Basis of Preparation

The Company Financial Information has been prepared in accordance with and comply with IFRS as adopted by the European Union, International Financial Reporting Interpretations Committee interpretations and the Companies Act 2006. The financial statements have been prepared under the historical cost convention as modified for financial assets carried at fair value.

At the date of authorisation of these financial statements. certain new standards, amendments and interpretations to existing standards have been published but are not effective, and have not been adopted early by the Company. The Directors anticipate that all of the pronouncements will be adopted in the Company's accounting policies for the first period beginning on or after the effective date of the pronouncement.

The Company has not early adopted amended standards and interpretations which are currently in issue but not effective for accounting periods commencing from 1 June 2018 as adopted by the EU. The Directors do not anticipate that the adoption of standards and interpretations will have a material impact on the Company's financial statements in the periods of initial application.

The financial information of the company is presented in British Pound Sterling ("£").

b) Going concern

The directors have, at the time of approving the financial statements, a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, which is defined as twelve months from the signing of this report. The directors accept that there is a material uncertainty in respect of going concern are confident that the Company will be able to raise additional finance as and when required. For this reason, the directors continue to adopt the going-concern basis of accounting in preparing the financial statements.

c) Standards and interpretations issued but not yet applied

At the date of authorisation of this Document, the Directors have reviewed the accounting standards in issue by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee, which are effective for annual accounting periods ending on or after the stated effective date. In their view, none of these standards would have a material impact on the financial reporting of the Company

d) Taxation

The tax currently payable is based on the taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred income tax is provided for using the liability method on temporary timing differences at the balance sheet date between the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised in full for all temporary differences. Deferred income tax assets are recognised for all deductible temporary differences carried forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and carry-forward of unused tax credits and unused losses can be utilised. The carrying amount of deferred income tax assets is assessed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that is probable that future taxable profits will allow the deferred income tax asset to be recovered.

e) Financial Instruments

The Company has applied IFRS 9 for the first time in these financial statements. IFRS 9 sets out requirements for recognising and measuring financial assets and financial liabilities and replaces IAS 39 Financial Instruments: Recognition and Measurement.

The company has applied the new standard with effect from 1 January 2018 [add comment here on impact on opening equity - if none, state no impact]. This has not lead to any changes in the basis of the measurement categories of either financial assets or financial liabilities, [although it has led to changes in the carrying amounts of certain financial assets arising from a change in the measurement of impairment]. The comparative period have not been restated and reflect the requirements of IAS 39.

Financial Assets

On initial recognition, a financial asset is classified as measured at amortised cost, fair value through other comprehensive income (FVTOCI) or fair value through profit or loss (FVTPL).

As at the reporting date the Company holds no financial assets other than cash.

f) Financial liabilities and equity instruments

Classification as debt or equity

Financial liabilities and equity instruments issued by the company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instruments

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 are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities are classified as either financial liabilities at fair value through profit or loss or financial liabilities measured at amortised cost.

Financial liabilities are classified as at fair value through profit or loss if the financial liability is either held for trading or it is designated as such upon initial recognition

Other financial liabilities

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, where applicable, using the effective interest method, with interest expense recognised on an effective yield basis.

Warrants

Warrants classified as equity are recorded at fair value as of the date of issuance on the Company's Balance Sheet and no further adjustments to their valuation are made. Management estimates the fair value of these liabilities using option pricing models and assumptions that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for future financing, expected volatility, expected life, yield, and risk-free interest rate.

g) Derecognition of financial liabilities

The company derecognises financial liabilities when, and only when, the company's obligations are discharged, cancelled or they expire.

h) Financial Risk Management Objectives and Policies

The Company's major financial instruments include bank balances, trade payables and accruals. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments, and the policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Liquidity Risk - the Company raises funds as required on the basis of budgeted expenditure and inflows. When funds are sought, the Company balances the costs and benefits of equity and debt financing. When funds are received they are deposited with banks of high standing in order to obtain market interest rates.

3.    Critical accounting estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of income, expenditure, assets and liabilities. Estimates and judgements are continually evaluated, including expectations of future events to ensure these estimates to be reasonable.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The Company's nature of operations is to act as a special purpose acquisition company.

Going concern is assessed to be a significant judgement which is detailed in accounting policy note 2 (b)

4.    Loss before taxation

Loss before income tax is stated after charging:	Year ended              31 May 2019		Year ended    31 May 2018
	£		£
Directors' remuneration	72,000		48,000
Fee payable to the Company's auditor for the audit of the company's annual accounts Fee payable to the Company's auditor in respect of all other services	16,800 60,750		15,000 28,650

The Company did not employ any staff during the period under review other than the Directors. The Directors are the only members of key management and their remuneration related solely to short-term employee benefits.

 

5.    Loss per Ordinary Share

The calculation of the basic and diluted loss per Ordinary Share is based on the following data:

	Year ended 31 May 2019		Year ended 31 May 2018
Earnings
Loss from continuing operations for the period attributable to the equity holders of the Company	(320,229)		(326,676)
Number of Ordinary Shares
Weighted average number of Ordinary Shares for the purpose of basic and diluted earnings per Ordinary Share (number)
	42,949,987		32,596,294
Basic and diluted loss per Ordinary Share (pence)	(0.75)		(1.00)

There are no potentially dilutive Ordinary Shares in issue.

6.    Income tax

Corporation tax is calculated at 19% of the estimated taxable loss for the period.

As the Company continues to be non-trading, no account has been made for Corporation Tax nor  for Deferred Tax in the year ended 31 May 2019. The Company also believes there are no accumulated losses to be carried forward. The Board believes that the previously reported losses in the year ended 31 May 2018 may not be recoverable against future gains.

7.    Share capital

	Number of Ordinary Shares issued and fully paid	Share Capital	Share premium		Warrants Reserve				Total share capital
		£	£		£				£
31 May 2017 Subdivision of £1 shares into 100 1p shares Issue of Ordinary Shares and Warrants: 1 June 2017  26 October 2017 1 November 2017 Share Issue Cost	1 99 4,999,900 12,500,000 25,449,987	- - 50,000 125,000 254,500	- - - 76,906 472,220    (180,148)		- - - 48,094 36,780				- - 50,000 250,000 763,500 (180,148)
As at 31 May 2018 and 2019	42,949,987	429,500	368,978			84,874				883,352

The Ordinary Shares issued by the Company have par value of 1p each and each Ordinary Share carries one vote on a poll vote. The Authorised share capital of the company is £5,000,000 ordinary shares at £0.01 per share resulting in 500,000,000 ordinary shares.

8.    Financial instruments

					As at 31 May 2019	As at 31 May 2018
				£		£
Financial assets
Cash and cash equivalents				280,884		637,558
Financial liabilities
At amortised cost				75,748		93,070

9.    Other receivables

	2019		2018
	£		£
Prepayments	31,311		12,188
	31,311		12,188

10.  Cash and Cash Equivalents

	2019		2018
	£		£
Cash at Bank	280,884		637,558

11.  Trade and other payables

	2019		2018
	£		£
Trade payables	35,350		48,000
Accruals and other payables	40,398		45,070
	75,748		93,070

12.  Events after the reporting date and Capital Commitments

The company advanced to Consolidated Growth Holdings Ltd (CGH) $120,000, $130,000 and $24,000 in June 2019 August and September 2019 respectively. These advances were made in order to accelerate the work programme at the Lubu Coalfield. In the event the proposed acquisition of the Lubu Coalfield project in Zimbabwe does not complete, CGH will be obliged to repay by 24^th December 2019 the funds advanced plus interest at 3% per month rising to 6% after three months in the event that the transaction lapses.

There were no other significant subsequent events.

13.  Related Party Transactions

All directors hold shares and warrants as disclosed on pages 11 and 12 in the Directors' Remuneration Report. Neal Griffiths and Oliver Stansfield are Directors of both Brandon Hill Capital and the Company. Brandon Hill Capital acts as the broker to the Company and are paid an annual retainer of £25,000 per annum.

14.  Warrants

No warrants were issued or exercised in the year ended 31 May 2019.

During the year ended 31 May 2018 the Company issued the following warrants to subscribe for shares:

Warrant exercise Price £0.03 £0.05 Total granted during the year ended 31 May 2018	Number of warrants granted 18,666,667 11,666,650 30,333,317	Vesting Date 26 Oct 2017 1 Nov  2017	Expiry Date 31 Oct 2019 31 Oct 2019	Fair value of individual option £0.0026 £0.0032

The weighted average fair value of each warrant granted last year was  £0.0028.

No warrants have been exercised in the Company.

20 September 2019          

 

END

 

 

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