TIDMPFP
RNS Number : 4098C
Pathfinder Minerals Plc
28 June 2016
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 GBP200,000 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 GBP100,000 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
GBP1.1 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 GBP1.4
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 GBP1.1
million (2014 - GBP1.1 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 GBP42,000 (31 December 2014 - GBP1.1 million).
The assets are held largely in the form of cash deposits (totalling
GBP80,000 at the end of the period).
The Company's cash resources were bolstered post year-end by the
GBP295,500 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
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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 Retained Share Total
up earnings premium equity
share
capital
GBP'000 GBP'000 GBP'000 GBP'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 Retained Share Total
up earnings premium equity
share
capital
GBP'000 GBP'000 GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'000 GBP'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
This information is provided by RNS
The company news service from the London Stock Exchange
END
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