RNS Number : 7374A
Contango Holdings PLC
13 September 2018
 

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

 

13 September 2018

 

Contango Holdings Plc

("Contango" or "the Company")

Final Results

 

Contango Holdings Plc, a London listed natural resources company, is pleased to present its final results for the year ended 31 May 2018.

 

Highlights:

 

·     Listed on the standard list of the London Stock Exchange on 1 November 2017 ("IPO")

·     The Company raised a total of £1 million prior and during the IPO, for the purposes of identifying a and acquiring a natural resources business or project

·     Entered into a Memorandum of Understanding ("MOU") on 22 December 2017 to acquire an interest in a near term producing asset in Zimbabwe from Consolidated Growth Holdings

·     The Company is currently undertaking due diligence on the asset

 

A copy of the Annual Report and Financial Statements for the year ended 31 May 2018 will be made available shortly on the Company's website at www.contango-holdings-plc.co.uk.

 

Statement from the Chairman

 

Dear Shareholder,

 

We have pleasure in presenting the financial statements for the year end 31 May 2018 and to provide you with a summary of our first full year of operation.

 

Operating Review

Our first year has been one of considerable activity, with the Company's Initial Public Offering ("IPO") on the Standard List of the Main Board of the London Stock Exchange in November 2017 proving one of the key highlights. The Company was able to successfully raise capital through a pre-IPO financing round, which was subsequently followed up by a capital raise of £763,500 in the IPO. In total the Company raised a little over £1 million, which in turn provided the platform to review a number of projects in the natural resources sector with the intent of identifying undervalued and capital starved projects that fulfilled the investment criteria we set out during the time of the IPO.

 

In December 2017, we notified our shareholders that we had entered into a Memorandum of understanding with Consolidated Growth Holdings to acquire a mining asset in Zimbabwe. Through its broad network of relationships, the Board had previously reviewed a series of projects before deciding on the identified transaction, believing it has the potential to offer significant value to all Contango shareholders. Moreover, given the recent changes in the political climate in Zimbabwe the Board is of the opinion that future opportunities in the country may also become available to complement the existing proposed acquisition, which is focusing on a near-term production.

 

The nature of the transaction constituted a Reverse Takeover and our shares were subsequently suspended pending the publication of a new prospectus. The Company and its advisers are now progressing the transaction through the final due diligence and documentation phases and look forward to updating the shareholders in due course.

 

Financial

 

Funding

The Company is funded through investment from its Shareholders. During the year, the Company successfully completed its Standard Listing IPO onto the London Stock Exchange, raising £1.06million before costs over the year.

 

Revenue

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

 

Expenditure

Since completing the successful listing during the year, the Company has continued to maintain low ongoing overheads, ensuring that the spending of any monies has been dedicated towards the transaction costs related to the transaction noted above.

 

Liquidity, cash and cash equivalents

At 31 May 2018, the Company held £637,558 (2017: £51,750), which is all denominated in pounds sterling.

 

Dividend

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

 

Outlook

The mining sector has generally continued to improve with the capital markets more accessible and there has been a notable rise in merger and acquisition activity by major and mid-tier companies seeking new opportunities.

 

Against this background of recovery in the sector and increasing appetite for risk, Contango has remained diligent in its objective of acquiring a robust mining project, that can weather the commodity cycle and deliver value for its shareholders. On 22 December 2017 the Directors of the Company were pleased to enter into a Memorandum of Understanding with regards to the possible acquisition of Consolidated Growth Holdings Limited's interest in a near-term producing mining asset in Zimbabwe ('Proposed Acquisition'). The Proposed Acquisition is conditional on the completion of legal due diligence and re-admission of the enlarged entity on the Main Market.

 

The headline terms of the Memorandum of understanding propose for transaction to take place at 5 pence per share, representing a 33% premium to the mid-market share price of Contango at time of suspension and a 66% premium to the IPO price.

 

The Proposed Acquisition, if completed, would constitute a reverse takeover under the Listing Rules. As the Company is currently unable to provide a full disclosure under Listing Rule 5.6.15, it has requested a suspension of listing in its shares whilst negotiations proceed.

 

Whilst the board is resolute in its efforts to execute this acquisition, documentation and due diligence is still underway and accordingly, the Board cannot at this stage guarantee its completion.

 

Brian McMaster

Executive Chairman

13 September 2018

 

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

 

Contango Holdings plc

E: info@contango-holdings-plc.co.uk

 

 

Brandon Hill Capital Limited

Financial Adviser & Broker

Jonathan Evans

                           T: +44 (0)20 3463 5000

 

 

St Brides Partners Ltd

Financial PR & Investor Relations

Susie Geliher

T: +44 (0)20 7236 1177

 

 

 

Statements of comprehensive income

For the year ended 31 May 2018

                 

 

 

 

Year ended

31 May 2018

 

Period ended

31 May 2017

 

 

Notes

£

 

£

 

 

 

 

 

 

 

Administrative fees and other expenses

4

(326,676)

 

-

 

Operating loss

 

(326,676)

 

-

 

 

 

 

 

 

 

Finance revenue

 

-

 

-

 

Finance expense

 

-

 

-

 

Loss before tax

 

(326,676)

 

-

 

 

 

 

 

 

 

Income tax

 

-

 

-

 

 

 

 

 

 

 

Loss for the period and total comprehensive loss for the period

 

(326,676)

 

-

 

 

 

 

 

 

 

Basic and diluted loss per Ordinary Share (pence)

5

(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 2018

 

 

Notes

 

As at

31 May 2018

 

As at

31 May 2017

 

 

 

£

 

£

Current assets

 

 

 

 

 

Other receivables

9

 

12,188

 

17,000

Cash and cash equivalents

10

 

637,558

 

51,750

Total current assets

 

 

649,746

 

68,750

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

11

 

93,070

 

68,749

Total current liabilities

 

 

93,070

 

68,749

Net assets

 

 

556,676

 

-

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

7

 

429,500

 

1

Share premium

7

 

368,978

 

-

Warrant reserve

7

 

84,874

 

-

Retained earnings

7

 

(326,676)

 

-

Total equity

 

 

556,676

 

1

             

 

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 2018

 

 

Share Capital

Share premium

Warrant

Reserve

Retained earnings

Total

Equity

 

£

£

 

£

£

Comprehensive income for the period

 

 

 

 

 

Loss for the period

-

-

-

-

-

Total Comprehensive Loss for the period

-

-

 

-

-

-

Transactions with owners

 

 

 

 

 

Shares issued on incorporation

1

-

-

-

1

Balance as at 31 May 2017

1

-

 

-

1

Loss for the year

-

-

-

(326,676)

(326,676)

Ordinary Shares and warrants issued (note 7)

429,499

549,126

 

     84,874

-

1,063,499

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

                                                                                                                      

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

 

Statements of cash flows

For the year ended 31 May 2018

 

 

Notes

 

 

Year ended

31 May 2018

 

Period ended

31 May 2017

 

 

 

£

 

£

Operating activities

 

 

 

 

 

Loss after tax

 

 

(326,676)

 

-

 

 

 

 

 

 

Changes in working capital

 

 

 

 

 

(Increase)/decrease in trade and other receivables

 

 

4,812

 

(17,000)

(Decrease) in trade and other payables

 

 

24,320

 

68,749

Net cash inflows/(outflows) flows from operating activities

 

 

(297,544)

 

51,749

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Ordinary Shares issued (net of issue costs)

7

 

883,352

 

1

Net cash flows from financing activities

 

 

883,352

 

-

 

 

 

 

 

 

Increase in cash and short-term deposits

 

 

585,808

 

51,750

 

 

 

 

 

 

Cash and short-term deposits as at the start of the period

 

 

51,750

 

-

 

 

 

 

 

 

Cash and short-term deposits at the end of the period

 

 

637,558

 

51,750

 

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 2018

 

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 business 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.

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

 

b) Going concern

The Company is an investment company, and currently has no income stream until a suitable acquisition is identified, it is therefore dependent on its cash reserves to fund ongoing costs.

 

The Directors have reviewed the Company's ongoing activities including its future intentions in respect of acquisitions and having regard to the Company's existing working capital position and its ability to potentially raise finance, if required, the Directors are of the opinion that the Company has adequate resources to enable it to continue in existence for a period of at least 12 months from the date of the approval of these 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) Comparative Figures

The comparative figures shown for 2017 cover the 13-month period from the date of incorporation to 31 May 2017.

 

e) Earnings per share

The Company presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share are calculated by dividing the profit or loss attributable to Shareholders by the weighted average number of Ordinary Shares outstanding during the period.  Diluted earnings per share are calculated by adjusting the earnings and number of Ordinary Shares for the effects of dilutive potential Ordinary Shares.

 

f) Cash and cash equivalents

The Company considers any cash no short-term deposits and other short-term investments to be cash equivalents.

 

g) 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 balance sheet 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.

 

h) Financial Assets

Financial Assets within the scope of IAS 39 are classified as either:

i.    Financial assets at fair value through profit and loss

ii.   Loans and receivables

iii.  Held-to-maturity investments

iv.   Available-for-sale Financial assets

 

The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this classification at every reporting date.

 

As at the balance sheet date, the company did not have any financial assets at fair value through profit or loss, and in the categories of held-to-maturity investments and available-for-financial assets.

 

i) 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.

 

Incremental cost directly attributable to the issue of ordinary shares, net of any tax effects, are recognised as a deduction from equity.

 

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.

 

j) Derecognition of financial liabilities

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

 

k) 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. This significantly reduces the level of estimates and assumptions required other than the allocation of joint costs between the issuing of equity and acquiring the exchange listing as part of the admission process. The Directors had regard to the number of shares issued on listing as a proportion of the total shares in issue after the listing. As the shares issued prior to the listing was 41% of the total shares listed, £180,648 was recognised in equity.

 

4          Loss before taxation

 

Loss before income tax is stated after charging:

 

Year

ended

             31 May 2018

 

 

 Period

ended

31 May 2017

 

£

 

£

 

 

 

 

Directors' remuneration

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

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   2018

 

Period ended

31 May 2017

Earnings

 

 

 

Loss from continuing operations for the period attributable to the equity holders of the Company

(326,676)

 

-

Number of Ordinary Shares

 

 

 

Weighted average number of Ordinary Shares for the purpose of basic and diluted earnings per Ordinary Share (number)

 

 

 

32,596,294

 

100

Basic and diluted loss per Ordinary Share (pence)

(1.00)

 

-

 

There are no potentially dilutive Ordinary Shares in issue.

 

The number of ordinary shares as at period ended 31 May 2017, were subdivided into 100 1p shares on 1 June 2017.

 

6          Income tax

 

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

 

The charge for the period can be reconciled to the loss in the Statement of Comprehensive Income as follows:

 

Year ended

31 May 2018

 

Period ended

31 May 2017

 

 

£

 

£

 

 

 

 

 

 

Loss before tax on continuing operations

(326,676)

 

-

 

 

 

 

 

 

Tax at the UK corporation tax rate of 19%

(62,068)

 

-

 

Tax effect of expenses that are not deductible in determining taxable profit

 

9,120

 

 

-

 

Deferred tax asset not recognised

52,948

 

 

 

Tax charge for the period

-

 

-

 

 

The Company has accumulated tax losses of £278,676 (2017 - £nil). No deferred tax asset was recognised in respect of these accumulated tax losses as there is insufficient evidence that the amount will be recovered in future years.

 

7          Share capital

 

 

Number of Ordinary Shares issued and fully paid

Share Capital

Share premium

Warrants Reserve

Share issue costs

Total share capital

 

 

£

£

£

£

£

 

As at 18 and 31 May 2016

1

-

-

-

-

-

 

£1 shares subdivided into 100 1p shares

 

99

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

Issue of Ordinary Shares and Warrants

1 June 2017

 26 October 2017

1 November 2017

 

 

 

 

 

4,999,900


12,500,000

 

25,449,987

 

 

 

 

50,000


125,000

 

254,500

 

         

 -


76,906

 

472,220

 

 

 

 

-


48,094

 

36,780

 

 

 

 

-


-

 

 (180,148)

 

 

 

 

50,000


250,000

 

583,352

 

 

 

 

 

 

 

As at 31 May 2018

42,949,987

429,500

   549,126

84,874

(180,148)

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.

 

On incorporation on 18 May 2016, the Company issued 1 Ordinary Share issued to the Founders at par of £1. These were subdivided into 100 1p shares on 1st June 2017.

 

On 1 June 2017 the Company issued 4,999,999 Ordinary Shares at 1p, par value, each for cash consideration of £50,000.

 

On 26 October 2017 the Company issued 12,500,000 Ordinary Shares of 1p par value at 2p each for a cash consideration of £250,000.

 

On 1 November 2017 on admission to the Main Market of the London Stock Exchange, the Company issued 25,449,987 Ordinary Shares of 1p par value at 3p each for cash consideration of £763,500.

 

8          Financial instruments

 

 

 

 

As at 31 May

2018

As at 31 May

2017

 

 

 

 

 

 

£

£

 

 

Financial assets

 

 

 

 

 

 

Cash and cash equivalents

 

 

637,558

51,750

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

At amortised cost

 

 

93,070

68,749

 

 

                       

 

Financial liabilities held at amortised cost on 31 May 2018 were made up of trade and other payables of £48,000 (31 May 2017: £nil) and accruals of £45,070 (31 May 2017: £68,749).

 

9          Other receivables

 

 

2018

 

2017

 

 

£

 

£

 

Prepayments

12,188

 

17,000

 

 

12,188

 

17,000

 

 

10       Cash and Cash Equivalents

 

 

2018

 

2017

 

 

£

 

£

 

Cash at Bank

637,558

 

51,750 

 

 

11        Trade and other payables

 

 

2018

 

2017

 

 

£

 

£

 

Trade payables

48,000

 

-

 

Accruals and other payables

45,070

 

68,749

 

 

93,070

 

68,749

 

                       

12       Events after the reporting date

 

There were no significant subsequent events.

 

13       Related Party Transactions

 

The four serving directors all purchased shares and received warrants in relation to those shares as disclosed on pages 11 and 12 in the Directors' Remuneration Report.

 

14       Warrant Reserve

 

The following information is relevant in the determination of the fair value of the warrants issued during the year on 26 October and 1 November 2017.

 

                        Option pricing model used                                                      Black-Scholes

                        Price at grant date                                                                                      3p

                        Outstanding Life of Warrants                                                                    1.4

                        Expected Volatility                                                                            58.216%

                        Expected Dividend Yield                                                                              -

                        Risk Free Interest Rate                                                                         0.73%

 

            Calculation of volatility involves significant judgement by the Directors. Volatility number was estimated based on the range of 30-month end volatilities of the main market mining index.

 

            The aggregate fair value related to the share warrants granted during the year has been allocated to share premium as share issue costs in the amount of £84,874 (2017 nil).

 

15        Warrants

 

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

 

Warrant exercise

Price

Number of warrants granted

 

Vesting Date

 

Expiry Date

Fair value of individual option

£0.03

 

18,666,667

 

26 Oct 2017

 

31 Oct 2019

 

£0.0026

 

£0.05

 

11,666,650

 

1 Nov 2017

 

31 Oct 2019

£0.0032

Total granted during the year

30,333,317

 

 

 

 

The weighted average fair value of each warrant granted during the year was £0.0028 (2017: nil).

 

No warrants have been exercised in the Company.

 

 

**ENDS**

 


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