Annual Financial Report

RNS Number : 5616I

Athol Gold Limited

16 June 2011

 



                                                                                         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.

 

END

 

 

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